Negotiable Instruments Act, 1881 – s.138 r/w. s.142 – The grievance of the complainant-respondent is that in-spite of regular follow-ups and reminders, the company-accused no.1 failed and neglected to clear the respondent’s dues – On repeated demands, the company furnished respondent five cheques – When complainant deposited the cheques, they were returned unpaid with reason “payment stopped by drawer” – Accordingly, the respondent filed two complaints u/s. 190(i)(a) of the Cr.P.C. for offences punishable u/ss. 138 & 142 of the N.I. Act – Both the complaints were filed against three accused persons including appellant herein (accused no.3) – Appellant sought to quash criminal proceedings against her u/s. 482 Cr.P.C, however the same was dismissed by the High Court – Propriety:

* Author

[2024] 3 S.C.R. 647 : 2024 INSC 206

Susela Padmavathy Amma

v.

M/S Bharti Airtel Limited

(Criminal Appeal Nos. 1577-1578 of 2024)

15 March 2024

[B.R. Gavai* and Sandeep Mehta, JJ.]

Issue for Consideration

The High Court rejected the prayer for quashing of criminal

complaints qua the appellant in connection with the offence

punishable u/s. 138 r/w. s.142 of the Negotiable Instruments Act,

1881.

Headnotes

Negotiable Instruments Act, 1881 – s.138 r/w. s.142 – The

grievance of the complainant-respondent is that in-spite of

regular follow-ups and reminders, the company-accused

no.1 failed and neglected to clear the respondent’s dues –

On repeated demands, the company furnished respondent

five cheques – When complainant deposited the cheques,

they were returned unpaid with reason “payment stopped by

drawer” – Accordingly, the respondent filed two complaints

u/s. 190(i)(a) of the Cr.P.C. for offences punishable u/ss. 138

& 142 of the N.I. Act – Both the complaints were filed against

three accused persons including appellant herein (accused

no.3) – Appellant sought to quash criminal proceedings against

her u/s. 482 Cr.P.C, however the same was dismissed by the

High Court – Propriety:

Held: On perusal of the complaint, it is clear that the only allegation

against the present appellant is that she and the accused No.2

had no intention to pay the dues that they owe to the complainant

– It is stated that the 2nd accused and the 3rd accused (appellant

herein) are the Directors, promoters of the 1st accused being

the Company – It is further averred that the 2nd accused is the

authorized signatory, who is in-charge of and responsible for the

day-to-day affairs of the Company, i.e., the 1st accused – It can be

clearly seen that there is no averment to the effect that the present

appellant is in-charge of and responsible for the day-to-day affairs 

648 [2024] 3 S.C.R.

Digital Supreme Court Reports

of the Company – It is also not the case of the respondent that the

appellant is either the Managing Director or the Joint Managing

Director of the Company – The averments made are not sufficient

to invoke the provisions of s.141 of the N.I. Act qua the appellant

– Thus, the criminal proceedings in connection with the offence

punishable u/s. 138 r/w. s.142 of the N.I. Act are quashed and set

aside qua the present appellant. [Paras 19-22]

Negotiable Instruments Act, 1881 – s.138, s.141 – Vicarious

liability of the director:

Held: Merely reproducing the words of the section without a clear

statement of fact as to how and in what manner a director of the

company was responsible for the conduct of the business of the

company, would not ipso facto make the director vicariously liable.

[Para 12]

Case Law Cited

State of Haryana v. Brij Lal Mittal and others [1998] 3

SCR 104 : (1998) 5 SCC 343; S.M.S. Pharmaceuticals

Ltd. v. Neeta Bhalla and another [2005] Suppl. 3 SCR

371 : (2005) 8 SCC 89; Pooja Ravinder Devidasani

v. State of Maharashtra and another [2014] 14 SCR

1468 : (2014) 16 SCC 1; State of NCT of Delhi through

Prosecuting Officer, Insecticides, Government of NCT,

Delhi v. Rajiv Khurana [2010] 9 SCR 387 : (2010)

11 SCC 469; Ashoke Mal Bafna v. Upper India Steel

Manufacturing and Engineering Company Limited (2018)

14 SCC 202 – relied on.

N.K. Wahi v. Shekhar Singh and others [2007] 3 SCR

883 : (2007) 9 SCC 481; Krishi Utpadan Mandi Samiti

and others v. Pilibhit Pantnagar Beej Ltd. and another

[2003] Suppl. 6 SCR 344 : (2004) 1 SCC 391; Laxmi

Dyechem v. State of Gujarat and others [2012] 11

SCR 466 : (2012) 13 SCC 375; K.K. Ahuja v. V.K. Vora

and another [2009] 9 SCR 1144 : (2009) 10 SCC 48;

Lalankumar Singh and others v. State of Maharashtra

[2022] 14 SCR 573 : 2022 SCC OnLine SC 1383 –

referred to.

List of Acts

Negotiable Instruments Act, 1881; Code of Criminal Procedure, 1973.

[2024] 3 S.C.R. 649

Susela Padmavathy Amma v. M/S Bharti Airtel Limited

List of Keywords

Failure to pay dues; Dishonour of cheque for insufficiency,

etc., of funds in the account; In-charge of company; Authorized

signatory; Responsible to company; Conduct of company; Criminal

proceedings; Quashing.

Case Arising From

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal Nos.1577-

1578 of 2024

From the Judgment and Order dated 26.04.2022 in CRLOP

Nos.3470 and 5767 of 2019 of the High Court of Judicature at

Madras

Appearances for Parties

Manoj V George, Ms. Shilpa Liza George, Km Vignesh Ram, Nasib

Masih, Ms. Akshita Agrawal, Ms. Chaahat Khanna, Advs. for the

Appellant.

Lakshmeesh S. Kamath, Ms. Samriti Ahuja, Karan Singh Dalal, Advs.

for the Respondent.

Judgment / Order of the Supreme Court

Judgment

B.R. Gavai, J.

1. Leave granted.

2. The present appeals challenge the common judgment and order

dated 26th April, 2022 passed by the High Court of Judicature at

Madras (hereinafter referred to as “High Court”), in Crl. O.P. Nos.

3470 & 5767 of 2019 and Crl. M.P. Nos. 2224, 2225 & 3255 of 2019,

whereby the High Court rejected the prayer for quashing of C.C.

Nos. 3151 & 3150 of 2017, on the file of learned XVIII Metropolitan

Magistrate, Saidapet, Chennai (now transferred to the learned

Metropolitan Magistrate, Fast Track Court-III, Saidapet, Chennai),

in connection with the offence punishable under Section 138 read

with Section 142 of the Negotiable Instruments Act, 1881 (hereinafter

referred to as “the N.I. Act”).

3. The facts, in brief, giving rise to the present appeals are as follows:

650 [2024] 3 S.C.R.

Digital Supreme Court Reports

3.1 M/s. Bharti Airtel Limited (hereinafter referred to as, “complainant”

or “respondent”), is a company engaged in the business of

providing telecommunication services, under a license issued

by the Government of India, in various telecom circles in India.

3.2 One M/s. Fibtel Telecom Solutions (India) Private Limited

(hereinafter referred to as, “Fibtel Telecom Solutions” or

“Company”), a company registered with the Telecom Regulatory

Authority of India (TRAI) as a telemarketer, had approached the

respondent intending to obtain telecom resources for the purpose

of transactional communication and requested the complainant

for allotment of telecom resources for the said purpose. One

Manju Sukumaran Lalitha is the Director & Authorized Signatory

of Fibtel Telecom Solutions and one Susela Padmavathy Amma,

the appellant herein, is the Director of Fibtel Telecom Solutions.

3.3 Based on the representation made by Fibtel Telecom Solutions,

the respondent had agreed to provide the required services,

whereupon the parties entered into a Service Agreement, vide

which Fibtel Telecom Solutions had to pay Rs. 14,00,000/- as

fixed monthly recurring charges to the respondent. It is the thus

the case of the respondent that Fibtel Telecom Solutions owes

a sum of Rs. 2,55,08,309/-, in lieu of the service provided to

it by the respondent.

3.4 However, the grievance of the respondent is that in-spite of

regular follow-ups and reminders, Fibtel Telecom Solutions

failed and neglected to clear the respondent’s dues. Only

thereafter, upon repeated demands made by the respondent,

Fibtel Telecom Solutions furnished five post-dated cheques to

the complainant, on 17 th June 2016, details of which are as

given below:

Sr. No. Cheque No. Cheque Dated Cheque Amount

1 414199 25.06.2016 Rs. 25,00,000/-

2 414196 31.08.2016 Rs. 50,00,000/-

3 414204 31.08.2016 Rs. 80,00,000/-

4 414195 31.07.2016 Rs. 45,00,000/-

5 414205 30.09.2016 Rs. 80,00,000/-

[2024] 3 S.C.R. 651

Susela Padmavathy Amma v. M/S Bharti Airtel Limited

3.5 On deposit of the cheque mentioned at Sr. No. 1 in the table,

bearing cheque no. 414199 and dated 25th June 2016, by the

respondent, the said cheque was returned to it unpaid with

reason “payment stopped by drawer”. Aggrieved thereby, the

respondent issued a legal notice to Fibtel Telecom Solutions,

on receipt of which & following an oral agreement between

them, a payment schedule was agreed to and a cheque for an

amount of Rs. 25,00,000/- drawn by Fibtel Telecom Solutions

was honoured by it. However, when the complainant deposited

the remaining four cheques as mentioned at Sr. No. 2 to 5 in

the table, the same were returned to it unpaid with reason

“payment stopped by drawer”. Details of deposit & return of

cheques are as given below:

Cheque

No.

Cheque

Presented

On

Cheque

Returned

On

Legal

Notice

Reply

414196 23.09.2016 26.09.2016 13.10.2016 12.11.2016

414204 23.09.2016 26.09.2016 13.10.2016 12.11.2016

414195 25.10.2016 26.10.2016 09.11.2016 No reply

414205 17.10.2016 18.10.2016 10.11.2016 29.11.2016

3.6 Accordingly, the respondent filed two complaints under Section

190(i)(a) of the Code of Criminal Procedure, 1973 (“CrPC” for

short) for offences punishable under Section 138 & 142 of the

N.I. Act, being C.C. No. 3151 of 2017 dated 30th November, 2016

and C.C. No. 3150 of 2017 dated 23rd December, 2016, before

the learned XVIII Metropolitan Magistrate, Saidapet, Chennai.

3.7 Both the complaints have been filed against three accused

persons namely, Fibtel Telecom Solutions, arrayed as Accused

No. 1; Manju Sukumaran Lalitha, arrayed as Accused No. 2 &

Susela Padmavathy Amma, the appellant herein, arrayed as

Accused No. 3.

3.8 Accused No. 3, who is a female senior citizen and the Director

of Fibtel Telecom Solutions, filed Crl. O.P. No. 3470 of 2019

against C.C. No. 3151 of 2017 & Crl. O.P. No. 5767 of 2019

against C.C. No. 3150 of 2017, before the High Court under 

652 [2024] 3 S.C.R.

Digital Supreme Court Reports

Section 482 of the CrPC for quashing of the criminal complaints

qua her.

3.9 Vide impugned judgment and order, dated 26th April, 2022, the

High Court dismissed Crl. O.P. Nos. 3470 & 5767 of 2019 and

Crl. M.P. Nos. 2224, 2225 & 3255 of 2019, but directed the

concerned trial court to dispose of the case within a period of

three months.

3.10 Aggrieved by the rejection of the petition for quashing of criminal

complaints, the appellant herein filed the present appeal.

3.11 Vide order dated 12 th December 2022, this Court had issued

notice and stay of further proceedings qua the appellant was

granted.

4. We have heard Shri Manoj V. George, learned counsel for the

appellant and Shri Lakshmeesh S. Kamath, learned counsel appearing

for the respondent.

5. Shri Manoj V. George, learned counsel for the appellant submitted

that the appellant is an aged-lady and was not involved in the day-today affairs of the Company. It is submitted that even in the complaint

there are no averments that the appellant was in-charge of day-today affairs of the Company. It is further submitted that the appellant

was also not a signatory to the cheque in question. It was only the

accused No.2 who was the signatory to the cheque. It is, therefore,

submitted that the High Court has grossly erred in not allowing the

petition for quashing of criminal complaints qua the appellant. Learned

counsel relied on the judgments of this Court in the cases of N.K.

Wahi vs. Shekhar Singh and others1

, S.M.S. Pharmaceuticals

Ltd. vs. Neeta Bhalla and another2

 Ashoke Mal Bafna vs. Upper

India Steel Manufacturing and Engineering Company Limited3

,

Krishi Utpadan Mandi Samiti and others vs Pilibhit Pantnagar

Beej Ltd. and another4

 and Laxmi Dyechem vs. State of Gujarat

and others5

 in support of his submissions.

1 [2007] 3 SCR 883 : (2007) 9 SCC 481

2 [2005] Suppl. 3 SCR 371 : (2005) 8 SCC 89

3 (2018) 14 SCC 202

4 [2003] Suppl. 6 SCR 344 : (2004) 1 SCC 391

5 [2012] 11 SCR 466 : (2012) 13 SCC 375

[2024] 3 S.C.R. 653

Susela Padmavathy Amma v. M/S Bharti Airtel Limited

6. Shri Lakshmeesh S. Kamath, learned counsel for the respondent,

on the contrary, submitted that the learned judge of the High Court

has rightly, after considering the material on record, dismissed the

petition for quashing of criminal complaints qua the appellant. It is

submitted that the grounds raised are the defense of the accused

and it can only be raised at the stage of the trial. It is, therefore,

submitted that no interference is warranted in the present appeal.

7. In the case of State of Haryana vs. Brij Lal Mittal and others6

,

this Court observed thus:

“8. Nonetheless, we find that the impugned judgment of

the High Court has got to be upheld for an altogether

different reason. Admittedly, the three respondents were

being prosecuted as directors of the manufacturers with

the aid of Section 34(1) of the Act which reads as under:

“34. Offences by companies.—(1) Where an offence

under this Act has been committed by a company,

every person who at the time the offence was

committed, was in charge of, and was responsible to

the company for the conduct of the business of the

company, as well as the company shall be deemed

to be guilty of the offence and shall be liable to be

proceeded against and punished accordingly:

Provided that nothing contained in this subsection shall render any such person liable to

any punishment provided in this Act if he proves

that the offence was committed without his

knowledge or that he exercised all due diligence

to prevent the commission of such offence.”

It is thus seen that the vicarious liability of a person for

being prosecuted for an offence committed under the Act

by a company arises if at the material time he was in

charge of and was also responsible to the company for

the conduct of its business. Simply because a person is a

director of the company it does not necessarily mean that

6 [1998] 3 SCR 104 : (1998) 5 SCC 343

654 [2024] 3 S.C.R.

Digital Supreme Court Reports

he fulfils both the above requirements so as to make him

liable. Conversely, without being a director a person can

be in charge of and responsible to the company for the

conduct of its business. From the complaint in question

we, however, find that except a bald statement that the

respondents were directors of the manufacturers, there is

no other allegation to indicate, even prima facie, that they

were in charge of the company and also responsible to

the company for the conduct of its business.”

8. It could thus be seen that this Court had held that simply because

a person is a director of the company, it does not necessarily mean

that he fulfils the twin requirements of Section 34(1) of the said Act

so as to make him liable. It has been held that a person cannot be

made liable unless, at the material time, he was in-charge of and

was also responsible to the company for the conduct of its business.

9. In the case of S.M.S. Pharmaceuticals Ltd. (supra), this Court was

considering the question as to whether it was sufficient to make the

person liable for being a director of a company under Section 141

of the Negotiable Instruments Act, 1881. This Court considered the

definition of the word “director as defined in Section 2(13) of the

Companies Act, 1956. This Court observed thus:

“8. ....... There is nothing which suggests that simply by

being a director in a company, one is supposed to discharge

particular functions on behalf of a company. It happens

that a person may be a director in a company but he may

not know anything about the day-to-day functioning of the

company. As a director he may be attending meetings of

the Board of Directors of the company where usually they

decide policy matters and guide the course of business

of a company. It may be that a Board of Directors may

appoint sub-committees consisting of one or two directors

out of the Board of the company who may be made

responsible for the day-to-day functions of the company.

These are matters which form part of resolutions of the

Board of Directors of a company. Nothing is oral. What

emerges from this is that the role of a director in a company

is a question of fact depending on the peculiar facts in

each case. There is no universal rule that a director of 

[2024] 3 S.C.R. 655

Susela Padmavathy Amma v. M/S Bharti Airtel Limited

a company is in charge of its everyday affairs. We have

discussed about the position of a director in a company in

order to illustrate the point that there is no magic as such

in a particular word, be it director, manager or secretary.

It all depends upon the respective roles assigned to the

officers in a company. .....”

10. It was held that merely because a person is a director of a company,

it is not necessary that he is aware about the day-to-day functioning

of the company. This Court held that there is no universal rule that

a director of a company is in charge of its everyday affairs. It was,

therefore, necessary, to aver as to how the director of the company

was in charge of day-to-day affairs of the company or responsible

to the affairs of the company. This Court, however, clarified that

the position of a managing director or a joint managing director

in a company may be different. This Court further held that these

persons, as the designation of their office suggests, are in charge of

a company and are responsible for the conduct of the business of

the company. To escape liability, they will have to prove that when

the offence was committed, they had no knowledge of the offence

or that they exercised all due diligence to prevent the commission

of the offence.

11. In the case of Pooja Ravinder Devidasani vs. State of Maharashtra

and another7

 this Court observed thus:

“17. ....... Every person connected with the Company will

not fall into the ambit of the provision. Time and again, it

has been asserted by this Court that only those persons

who were in charge of and responsible for the conduct of

the business of the Company at the time of commission

of an offence will be liable for criminal action. A Director,

who was not in charge of and was not responsible for the

conduct of the business of the Company at the relevant

time, will not be liable for an offence under Section 141 of

the NI Act. In National Small Industries Corpn. [National

Small Industries Corpn. Ltd. v. Harmeet Singh Paintal,

(2010) 3 SCC 330 : (2010) 1 SCC (Civ) 677 : (2010) 2

7 [2014] 14 SCR 1468 : (2014) 16 SCC 1

656 [2024] 3 S.C.R.

Digital Supreme Court Reports

SCC (Cri) 1113] this Court observed: (SCC p. 336, paras

13-14)

“13. Section 141 is a penal provision creating vicarious

liability, and which, as per settled law, must be strictly

construed. It is therefore, not sufficient to make a bald

cursory statement in a complaint that the Director (arrayed

as an accused) is in charge of and responsible to the

company for the conduct of the business of the company

without anything more as to the role of the Director. But the

complaint should spell out as to how and in what manner

Respondent 1 was in charge of or was responsible to the

accused Company for the conduct of its business. This is

in consonance with strict interpretation of penal statutes,

especially, where such statutes create vicarious liability.

14. A company may have a number of Directors and to

make any or all the Directors as accused in a complaint

merely on the basis of a statement that they are in charge

of and responsible for the conduct of the business of

the company without anything more is not a sufficient or

adequate fulfilment of the requirements under Section 141.”

(emphasis in original)

18. In Girdhari Lal Gupta v. D.H. Mehta [Girdhari Lal Gupta

v. D.H. Mehta, (1971) 3 SCC 189 : 1971 SCC (Cri) 279 :

AIR 1971 SC 2162] , this Court observed that a person “in

charge of a business” means that the person should be in

overall control of the day-to-day business of the Company.

19. A Director of a company is liable to be convicted for

an offence committed by the company if he/she was in

charge of and was responsible to the company for the

conduct of its business or if it is proved that the offence

was committed with the consent or connivance of, or was

attributable to any negligence on the part of the Director

concerned (see State of Karnataka v. Pratap Chand [State

of Karnataka v. Pratap Chand, (1981) 2 SCC 335 : 1981

SCC (Cri) 453] ).

20. In other words, the law laid down by this Court is that

for making a Director of a company liable for the offences 

[2024] 3 S.C.R. 657

Susela Padmavathy Amma v. M/S Bharti Airtel Limited

committed by the company under Section 141 of the NI

Act, there must be specific averments against the Director

showing as to how and in what manner the Director was

responsible for the conduct of the business of the company.

21. In Sabitha Ramamurthy v. R.B.S. Channabasavaradhya

[Sabitha Ramamurthy v. R.B.S. Channabasavaradhya,

(2006) 10 SCC 581 : (2007) 1 SCC (Cri) 621] , it was held

by this Court that: (SCC pp. 584-85, para 7)

“7. ... it is not necessary for the complainant to specifically

reproduce the wordings of the section but what is required

is a clear statement of fact so as to enable the court to

arrive at a prima facie opinion that the accused is vicariously

liable. Section 141 raises a legal fiction. By reason of the

said provision, a person although is not personally liable for

commission of such an offence would be vicariously liable

therefor. Such vicarious liability can be inferred so far as a

company registered or incorporated under the Companies

Act, 1956 is concerned only if the requisite statements,

which are required to be averred in the complaint petition,

are made so as to make the accused therein vicariously

liable for the offence committed by the company.”

(emphasis supplied)

By verbatim reproducing the words of the section without

a clear statement of fact supported by proper evidence,

so as to make the accused vicariously liable, is a ground

for quashing proceedings initiated against such person

under Section 141 of the NI Act.”

12. It could thus clearly be seen that this Court has held that merely

reproducing the words of the section without a clear statement of

fact as to how and in what manner a director of the company was

responsible for the conduct of the business of the company, would

not ipso facto make the director vicariously liable.

13. A similar view has previously been taken by this Court in the case

of K.K. Ahuja vs. V.K. Vora and another8

.

8 [2009] 9 SCR 1144 : (2009) 10 SCC 48

658 [2024] 3 S.C.R.

Digital Supreme Court Reports

14. In the case of State of NCT of Delhi through Prosecuting Officer,

Insecticides, Government of NCT, Delhi vs. Rajiv Khurana9

, this

Court reiterated the position thus:

“17. The ratio of all these cases is that the complainant

is required to state in the complaint how a Director who

is sought to be made an accused, was in charge of the

business of the company or responsible for the conduct of

the company’s business. Every Director need not be and

is not in charge of the business of the company. If that

is the position with regard to a Director, it is needless to

emphasise that in the case of non-Director officers, it is

all the more necessary to state what were his duties and

responsibilities in the conduct of business of the company

and how and in what manner he is responsible or liable.”

15. In the case of Ashoke Mal Bafna (supra), this Court observed thus:

“9. To fasten vicarious liability under Section 141 of the

Act on a person, the law is well settled by this Court in a

catena of cases that the complainant should specifically

show as to how and in what manner the accused was

responsible. Simply because a person is a Director of a

defaulter Company, does not make him liable under the

Act. Time and again, it has been asserted by this Court

that only the person who was at the helm of affairs of

the Company and in charge of and responsible for the

conduct of the business at the time of commission of

an offence will be liable for criminal action. (See Pooja

Ravinder Devidasani v. State of Maharashtra [Pooja

Ravinder Devidasani v. State of Maharashtra, (2014) 16

SCC 1 : (2015) 3 SCC (Civ) 384 : (2015) 3 SCC (Cri)

378 : AIR 2015 SC 675].)

10. In other words, the law laid down by this Court is

that for making a Director of a Company liable for the

offences committed by the Company under Section 141

of the Act, there must be specific averments against

the Director showing as to how and in what manner the

9 [2010] 9 SCR 387 : (2010) 11 SCC 469

[2024] 3 S.C.R. 659

Susela Padmavathy Amma v. M/S Bharti Airtel Limited

Director was responsible for the conduct of the business

of the Company.”

16. A similar view has been taken by this Court in the case of Lalankumar

Singh and others vs. State of Maharashtra10 to which one of us

(B.R. Gavai, J.) was a party.

17. In the light of this settled legal position, let us examine the averments

made in the complaints.

18. It will be relevant to refer to para 16 of the complaint bearing No.

CC 3151/2017 filed by the respondent before the Court of XVIII

Metropolitan Magistrate, Saidapet, Chennai dated 30th November

2016, which reads thus:

“16. The Complainant states that the Accused has an

intention of cheating the Complainant. The 2nd and 3rd

Accused herein has no intention to pay the dues that

they owe to the Complainant. Instead, making the

complainant believe that the same would be paid and

through which trying to push the liability to future. It is

also pertinent to note that the 2nd and 3rd of the Accused

herein are the Directors, promoters of the 1st Accused

being the Company. The 2nd of the Accused herein

is the authorized signatory, who is in-charge of and

responsible for the day to day affairs of the Company,

the 1st Accused.”

19. It can thus be seen that the only allegation against the present

appellant is that the present appellant and the accused No.2 had

no intention to pay the dues that they owe to the complainant. It is

stated that the 2 nd accused and the 3rd accused (appellant herein)

are the Directors, promoters of the 1st accused being the Company.

It is further averred that the 2 nd accused is the authorized signatory,

who is in-charge of and responsible for the day-to-day affairs of the

Company, i.e., the 1st accused.

20. It can thus be clearly seen that there is no averment to the effect

that the present appellant is in-charge of and responsible for the

day-to-day affairs of the Company. It is also not the case of the

10 [2022] 14 SCR 573 : 2022 SCC OnLine SC 1383

660 [2024] 3 S.C.R.

Digital Supreme Court Reports

respondent that the appellant is either the Managing Director or the

Joint Managing Director of the Company.

21. It can thus clearly be seen that the averments made are not sufficient

to invoke the provisions of Section 141 of the N.I. Act qua the appellant.

22. In the result, we find that the present appeals deserve to be allowed.

It is ordered accordingly. The judgment and order passed by the

High Court dated 26th April, 2022 is quashed and set aside. The

proceedings in CC Nos. 3151 and 3150 of 2017 on the file of learned

XVIII Metropolitan Magistrate, Saidapet, Chennai (now transferred to

the learned Metropolitan Magistrate, Fast Track Court-III, Saidapet,

Chennai) in connection with the offence punishable under Section

138 read with Section 142 of the N.I. Act are quashed and set aside

qua the present appellant.

Headnotes prepared by: Ankit Gyan Result of the case:

Appeals allowed.

chunk of land acquired for different projects at different points in time – Enhancement in compensation granted by the High Court varied from project to project – Supreme Court found that the High Court did not analyze each case independently, matters remanded to High Court – High Court while passing the impugned orders enhancing the compensation for the acquired land, relied upon said decisions which were set aside and were remanded to High Court for reconsideration – Plea of the appellant-Corporation that after the remand, the matter was heard in part by the High Court – Respondentsland owners contended that there were numerous cases in which similarly placed land owners have already been paid compensation at enhanced rate granted by the High Court and those judgments of the High Court attained finality and are not subject matter of these appeals:

* Author

[2024] 3 S.C.R. 661 : 2024 INSC 208

The Executive Engineer, KNNL

v.

Subhashchandra & Ors.

(Civil Appeal No. 4053 of 2024)

12 March 2024

[Surya Kant* and K.V. Viswanathan, JJ.]

Issue for Consideration

Huge chunk of land measuring 13000 acres was acquired by

the State of Karnataka for the appellant-Corporation for different

projects. High Court while passing the impugned orders enhancing

the compensation for the acquired land, relied upon its own

decisions which judgments did not find favour with this Court

in earlier litigation as regards the same chunk of land and were

remanded to High Court for reconsideration.

Headnotes

Land Acquisition Act, 1894 – Award of compensation – Big

chunk of land acquired for different projects at different points

in time – Enhancement in compensation granted by the High

Court varied from project to project – Supreme Court found

that the High Court did not analyze each case independently,

matters remanded to High Court – High Court while passing

the impugned orders enhancing the compensation for the

acquired land, relied upon said decisions which were set

aside and were remanded to High Court for reconsideration

– Plea of the appellant-Corporation that after the remand, the

matter was heard in part by the High Court – Respondentsland owners contended that there were numerous cases in

which similarly placed land owners have already been paid

compensation at enhanced rate granted by the High Court

and those judgments of the High Court attained finality and

are not subject matter of these appeals:

Held: It is not in dispute that a batch of cases was remanded by

this Court for reconsideration by the High Court – It is also an

admitted fact that those matters pertained to the same broader

acquisition, though they possibly pertain to different projects – In a

peculiar situation where some of the judgments of the High Court

attained finality as the compensation amount, as enhanced, stands

paid whereas the others are still subject matter of adjudication, 

662 [2024] 3 S.C.R.

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these cases also remanded to the High Court so that a holistic

view pertaining to the subject acquisition, at least project wise, can

be taken by the High Court – High Court to make an endeavour

to infuse uniformity in the matter of award of compensation, to the

extent possible, in accordance with law. [Para 14]

List of Acts

Land Acquisition Act, 1894.

List of Keywords

Land Acquisition; Drinking water and irrigation projects/schemes;

Award of compensation; Compensation enhanced.

Case Arising From

CIVIL APPELLATE JURISDICTION : Civil Appeal No.4053 of 2024

From the Judgment and Order dated 22.03.2018 of the High Court

of Karnataka at Kalaburagi in MSA No.200214 of 2017

With

Civil Appeal Nos.4076, 4070, 4064, 4056, 4068, 4054, 4055, 4057,

4058, 4059, 4060, 4061, 4062, 4063, 4065, 4066, 4067, 4069, 4071,

4072, 4073, 4074, 4075, 4077, 4078, 4079, 4080, 4081, 4082, 4083,

4084, 4085, 4086, 4087, 4088 And 4089-4090 Of 2024

Appearances for Parties

Naveen R. Nath, Sr. Adv., Ms. Hetu Arora Sethi, Abhimanyu Verma,

Ms. Lalit Mohini Bhat, Ms. Disha Gupta, Advs. for the Appellant.

Anand Sanjay M Nuli, Mrs. Kiran Suri, Sr. Advs., Suraj Kaushik,

Agam Sharma, Nanda Kumar, Dharm Singh, M/s. Nuli & Nuli,

Sharanagouda Patil, Harshvardhan Malipatil, Jyotish Pandey, Ms.

Supreeta Sharanagouda, S. J. Amith, Mrs. S. Anuradha Bhat, Harisha

S.R., Advs. for the Respondents.

Judgment / Order of the Supreme Court

Judgment

Surya Kant, J.

1. Permission to file special leave petition is granted in Diary

No.12213/2023.

[2024] 3 S.C.R. 663

The Executive Engineer, KNNL v. Subhashchandra & Ors.

2. Delay condoned.

3. Leave granted.

4. These civil appeals impugn the judgements dated 28.02.2017,

28.11.2017, 15.02.2018, 20.02.2018, 21.02.2018, 02.03.2018,

22.03.2018, 06.04.2018, 13.04.2018, 26.04.2018, 07.12.2018,

12.12.2018, 14.01.2020, 24.01.2020 and 03.03.2021, passed by the

High Court of Karnataka at Kalaburagi Bench, whereby compensation

for the acquired land was enhanced. The appellant-Karnataka

Neeravari Nigam Limited (in short, “Corporation”) claims to be the

beneficiary of the subject-acquisition.

5. The Corporation has been entrusted with the assignment to plan,

execute and operate drinking water and irrigation projects and

schemes in the State of Karnataka. About 13000 acres of land was

acquired by the State of Karnataka for the appellant-Corporation for

various projects like (1) Bennethora Project (2) Gandori Nala Project

(3) Lower Mullamari Project and (4) Amarja Project. Certain civil

appeals also refer to a fifth project, namely, the Upper Tunga Project.

This huge chunk of land measuring 13000 acres also included the

parcels of lands owned by the respondent-land owners of different

villages. The acquisition was carried under the Land Acquisition

Act, 1894 (in short, “Act”). The present civil appeals pertain to the

Bennethora Project, Lower Mullamari Project and Amarja Project

situated in Kalaburagi, Karnataka.

6. The acquisition proceedings in these appeals, as per the project-wise

classification, progressed as follows-

(i) Bennethora Project

a) Civil Appeal Nos.4053, 4054, 4055, 4956, 4061, 4064,

4065, 4066, 4067, 4068, 4069, 4070, 4071, 4072, 4073,

4074, 4075, 4076, 4077, 4078, 4079, 4080, 4081, 4082,

4083, 4085, 4086, 4087 of 2024 pertain to this project. In

this batch of civil appeals coming under the Bennethora

Project, land measuring a consolidated total of 131 acres

and 451 guntas (Approx. 142 acres) was acquired

through different notifications issued under Section 4 of

the Act followed by declarations under Section 6 of the Act.

The Section 4 notifications and the Section 6 declarations

were issued on the following dates-

664 [2024] 3 S.C.R.

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Date of Section 4

Notification

Date of Section 6

Notification

18.02.1982 10.05.1984

17.03.1983 23.02.1984

05.04.1990 22.11.1990

05.07.1990 09.05.1991

23.08.1990 04.04.1991

07.02.1991 28.11.1991

16.05.1991 26.03.1992

13.06.1991 20.12.1991

19.06.1991 17.12.1992

11.07.1991 27.08.1997

06.08.1992 13.01.1994

b) The Special Land Acquisition Officer (in short, “SLAO”)

passed the awards for the acquired lands on different

dates, whereby compensations were granted at the

following ratesDate of SLAO award Compensation granted by

SLAO (Rupees/acre)

23.01.1985 3,167

28.02.1985 3,500

08.01.1991 5,400

20.05.1991 6,000 for wet lands

15.06.1992 9,800

30.01.1993

28,000 for dry lands &

42,000 for wet lands

03.02.1993 15,000

22.11.1993 15,000

27.11.1993 15,000

24.12.1993 15,000

31.05.1994 9,000

c) The rates of compensation awarded by the SLAO were

enhanced by the Reference Court, keeping in view the year

when the acquisition process commenced. The enhanced

compensation amounts granted by the Reference Court

was further enhanced, upon appeal, by the District Court. 

[2024] 3 S.C.R. 665

The Executive Engineer, KNNL v. Subhashchandra & Ors.

d) The dissatisfied landowners further approached the High

Court for a higher compensation, which was subsequently

granted vide the impugned judgements. The original rates

of compensation awarded by the SLAO, the enhanced

compensation amounts granted by the Reference Court,

the compensation amounts as further enhanced by the

District Court and impugned compensation amounts

granted by the High Court, vide the impugned judgements,

can be understood as followsAmount

granted

by SLAO

(Rupees/

acre)

Amount

granted by

Reference

Court

(Rupees/

acre)

Amount

granted

by District

Court

(Rupees/

acre)

Amount

granted

by the

High Court

(Rupees/

acre)

3,167 11,000 19,000 1,09,034

3,500 11,000 26,100 83,500

5,400 25,500 50,500 1,52,059

15,000 28,500 74,000 1,64,223

15,000 32,000 74,000 1,64,223

9,000 32,000 67,000 1,76,388

15,000 32,000 81,400 1,76,388

6,000 36,000 Rs.90,200 2,28,088 for

wet lands

28,000 for

dry lands &

42,000 for

wet lands

42,000

for limited

extent of

land instead

of 28,000

55,888 for

dry lands

83,832 for

wet lands

 1,52,059

for dry lands

2,28,088 for

wet lands

9,800 42,000 75,750 1,64,223 for

dry lands

2,46,334 for

wet lands

(ii) Amarja Project

a) Civil Appeal Nos.4057, 4058, 4059, 4060 & 4062, 4084 of

2024 pertain to this Project. In the batch of civil appeals

coming under the Amarja Project, land measuring a 

666 [2024] 3 S.C.R.

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consolidated total of 15 acres 83 guntas (Approx. 17

acres) was acquired through a notification issued under

Section 4 of the Act followed by a declaration under Section

6 of the Act. The Section 4 notification and the Section 6

declaration were issued on the following datesDate of Section 4

Notification

Date of Section 6

Notification

07.04.1988 06.07.1989

b) Thereafter, the SLAO passed the award for the acquired

lands whereby compensations was granted at the following

rateDate of SLAO award Compensation granted by

SLAO (Rupees/acre)

06.03.1990 7,000

c) The rate of compensation awarded by the SLAO was

enhanced by the Reference Court, keeping in view

the year when the acquisition process commenced.

The enhanced compensation amount granted by the

Reference Court was further enhanced, upon appeal,

by the District Court.

d) The dissatisfied landowners further approached the High

Court for a higher compensation, which was subsequently

granted vide the impugned judgements. The original rate

of compensation awarded by the SLAO, the enhanced

compensation amount granted by the Reference Court, the

compensation amount as further enhanced by the District

Court and impugned compensation amount granted by

the High Court, vide the impugned judgements, can be

understood as followsAmount

granted

by SLAO

(Rupees/

acre)

Amount

granted by

Reference

Court

(Rupees/

acre)

Amount

granted

by District

Court

(Rupees/

acre)

Amount

granted

by the

High Court

(Rupees/

acre)

7,000 30,000 79,200 1,78,429 

[2024] 3 S.C.R. 667

The Executive Engineer, KNNL v. Subhashchandra & Ors.

(iii) Lower Mullamari Project

a) Civil Appeal Nos. 4063, 4088, 4089 of 2024 pertain to this

Project. In the batch of civil appeals coming under the Lower

Mullamari Project, land measuring a consolidated total of

19 acres 59 guntas (Approx. 20 acres) was acquired

through notifications under Section 4 of the Act followed

by declarations under Section 6 of the Act, which were

issued on different dates. The Section 4 notifications and

the Section 6 declarations were issued on the following

datesDate of Section 4

Notification

Date of Section 6

Notification

30.05.1991 11.05.1992 / 03.09.1992

14.01.1993 07.04.1994

04.03.1993 07.04.1994

b) Thereafter, the SLAO passed the awards for the acquired

lands on different dates, whereby compensations were

granted at the following ratesDate of SLAO award Compensation granted by

SLAO (Rupees/acre)

04.05.1983

8,000 for dry lands & 10,000

for wet lands

18.11.1995 10,000 for dry lands & 15,000

for wet lands

01.01.1996 8,000

c) The rates of compensation awarded by the SLAO were

enhanced by the Reference Court, keeping in view the year

when the acquisition process commenced. The enhanced

compensation amounts granted by the Reference Court

was further enhanced, upon appeal, by the District Court.

d) The dissatisfied landowners further approached the High

Court for a higher compensation, which was subsequently

granted vide the impugned judgements. The original rates

of compensation awarded by the SLAO, the enhanced

compensation amounts granted by the Reference Court, 

668 [2024] 3 S.C.R.

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the compensation amounts as further enhanced by the

District Court and impugned compensation amounts

granted by the High Court, vide the impugned judgements,

can be understood as followsAmount

granted

by SLAO

(Rupees/

acre)

Amount

granted by

Reference

Court

(Rupees/

acre)

Amount

granted

by District

Court

(Rupees/

acre)

Amount

granted

by the

High Court

(Rupees/

acre)

8,000 for

dry lands &

10,000 for

wet lands

70,000 - 1,15,086

10,000 for

dry lands &

15,000 for

wet lands

50,000 for

dry lands

75,000 for

wet lands

-

1,24,992 for

dry lands

1,86,440 for

wet lands

8,000 33,000 74,750/75,543 1,33,500

7. It may thus be seen that the enhancement in the compensation

granted by the High Court varies from project to project and while

the minimum amount is Rs.83,500/- per acre, the maximum amount

is seen to have gone up to Rs.1,78,429/- per acre for dry lands and

Rs. 2,46,334/- for wet lands.

8. Having regard to the big chunk of land acquired for different projects

referred to above, at different points in time, the enhancement

made by the High Court in a few cases, where the compensation of

Rs.1,20,814/- per acre for dry lands and Rs.1,81,221/- per acre for

wet lands was awarded, came to be challenged before this Court

in a batch of appeals, including C.A. No.2591/2022 (The Executive

Engineer, KNNL Vs. Annarao @ Anveerappa & Anr.), in which this

Court, vide Judgment dated 10.05.2022, having found that the

High Court has not analyzed each case independently, much less

notification wise, concerning particular village or area and that the

parameters delineated in various decisions of this Court were not

adverted to, held as follows: 

[2024] 3 S.C.R. 669

The Executive Engineer, KNNL v. Subhashchandra & Ors.

“In the impugned judgment(s) and order (s), the High court

has made no effort to analyze the concerned case(s) either

notification-wise or for that matter, village-wise, including

the other parameters required to be observed for arriving

at a just compensation amount.

Further, in most of the appeals, the appellant (Karnataka

Neeravari Nigam Limited} was not made party in the appeal

proceeding before the High Court.

It is also the grievance of the appellant that most of

the cases, entertained at the instance of land owners,

were grossly delayed and yet they have been granted

enhancement, and in some cases along with interest.

The fact remains that the High Court in the impugned

judgment(s) and order(s) has not analyzed each case

independently much less notification-wise concerning

particular village or area and keeping in mind the

parameters delineated in the reported decision, adverted

to earlier.

In our opinion, it is appropriate that the parties are relegated

before the High Court for reconsideration of the entire

matter afresh and in accordance with law.

Learned counsel appearing for the land owners were at

pains to point out that some matters pertaining to some

of the notifications, referred to in the present appeal

proceedings, have reached upto this Court and decided

in favour of the land owners, including in some cases

the appellants have acted upon the decision by paying

compensation amount. Even the effect of such orders

passed by this Court can be examined by the High Court

on its own merits and in accordance with law.

Accordingly, we keep all contentions available to both

sides open, to be considered by the High Court on its

own merits and in accordance with law.

The impugned judgment(s) and order(s) are set aside and

the concerned appeals/petitions are remanded to the High

Court for reconsideration in the above terms. 

670 [2024] 3 S.C.R.

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The parties to appear before the High Court on 11.07.2022,

when the High Court may assign suitable date for hearing

of the concerned batch of cases which, as aforesaid, must

proceed notification-wise pertaining to concerned village

as a separate group.

Needless to observe that some of the notifications pertain

to the year 1983, therefore, it would be appropriate that

the High Court disposes of the appeal(s) expeditiously.

The appeals are disposed of in the above terms.”

9. The High Court judgments, which were set aside and the cases

remanded back for fresh consideration, also included the judgments

rendered by the High Court in MSA No.200020/2018 (LAC) titled

Rajshekhar s/o Sangappa deceased by Lrs. vs. The Special Land

Acquisition Officer, MSA No.200014/2018 (LAC) titled Kalappa

S/o Paudapppa v. The Special Land Acquisition Officer and MSA

No.200147/2017 (LAC) titled Motibee W/o Mashak Patel v. The Spl.

Land Acquisition Officer & Anr. decided on 19.02.2018, 21.02.2018 and

09.01.2018 respectively, awarding compensation of Rs.1,64,223/acre,

Rs.1,64,223/acre and Rs.1,52,059/acre respectively for the dry lands.

Consequently, Rajshekhar’s case (supra) has also been remanded to

the High Court for fresh adjudication. The abovementioned judgements

of the High Court had in turn placed reliance on MSA No. 200055/2016

(LAC) titled Malkajappa @ Mallikarjun vs. The Special Land Acquisition

Officer & Anr, decided by the High Court on 13.03.2017, which has

also been remanded to the High Court vide this Court’s order dated

10.05.2022 in Annarao @ Anveerappa case (supra).

10. We find that in the present batch of appeals, the brief impugned

order passed by the High Court in CA No.4053/2024, has solely

relied upon its own decision in Rajshekhar’s case (supra). In some

of the other appeals, namely CA Nos. 4954, 4055, 4056, 4064, 4065,

4066, 4067, 4068, 4079, 4080, 4081, 4082, 4083, 4087 and 4088

of 2024, the High Court has relied upon its decision in Malkajappa

@ Mallikarjun (supra), Kalappa (supra) (which placed reliance on

Malkajappa @ Mallikarjun (supra)) and Motibee (supra)(which placed

reliance on Malkajappa @ Mallikarjun (supra)). These judgments

did not find favour with this Court in Annarao @ Anveerappa case

(supra), whereby the matters have been remanded to the High Court

for reconsideration.

[2024] 3 S.C.R. 671

The Executive Engineer, KNNL v. Subhashchandra & Ors.

11. Learned senior counsel for the appellant-Corporation, submits that

after the remand, the matter has been heard in part by the High Court.

12. On the other hand, learned senior counsel for the respondents-land

owners submits that there are numerous cases in which similarly

placed land owners have already been paid compensation at

enhanced rate granted by the High Court. Those judgments of the

High Court have attained finality and are not subject matter of these

appeals.

13. Learned senior counsel for the appellant(s), however, counters this

submission, as according to him, those matters pertain to different

villages and the respondents cannot claim parity with those cases.

14. We have considered the rival submissions made by learned senior

counsel for the parties. It is not in dispute that a batch of cases has

been remanded by this Court for reconsideration by the High Court,

as seen above. It is also an admitted fact that those matters pertain

to the same broader acquisition, though they possibly pertain to

different projects. In a peculiar situation where some of the judgments

of the High Court attained finality as the compensation amount, as

enhanced, stands paid whereas the others are still subject matter

of adjudication, we deem it appropriate to remand these cases also

to the High Court so that a holistic view pertaining to the subject

acquisition, at least project wise, can be taken by the High Court.

The High Court will make an endeavour to infuse uniformity in the

matter of award of compensation, to the extent it is possible, in

accordance with law.

15. It goes without saying that the High Court, while undertaking this

exercise, will not reduce the compensation to a rate which has

already been paid to some of the land owners and which has attained

finality. The rest of the contentions from both sides are kept open to

be gone into by the High Court.

16. It is clarified that we have not expressed any opinion on the merits

of the case.

17. The parties are directed to appear before the High Court of Karnataka

at Kalaburagi Bench on 18.03.2024. We request the High Court to

take up these matters also, along with the Rajshekhar’s case (supra)

and other cases, which are already part heard before the High Court.

Since the acquisition is more than three decades old, we request 

672 [2024] 3 S.C.R.

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the High Court to decide the matters expeditiously and preferably

within three months from the date of this judgement.

18. The instant civil appeals are disposed of in the above terms.

Headnotes prepared by: Divya Pandey Result of the case:

Appeals disposed of.

Criminal Law – Code of Criminal Procedure, 1973 – s. 482 – Inherent powers – Scope of exercise of power for quashing the criminal proceedings: Held: The High Court ought to have quashed the criminal proceedings when it was apprised of the fact that the substance of the Criminal Complaint served only a cast of doubt on the validity of a commercial transaction and an appropriate civil remedy was already being pursued. [Para 17] Abuse of Law – Dispute essentially civil in nature, given a cloak of criminality – Circumstances: Held: Circumstances such as the Complainant/ Respondent No. 2 registering the FIR after the filing of the Civil Suit by the Accused/Appellants, the Complainant selectively implicating the Appellants in a Criminal case, the Complainant’s failure to contest the matter before this Hon’ble Court, and the bonafides of the Accused/Appellants in paying the rent before their alleged purchase of the Suit property, can be concluded as an attempt on the part of the Complainant to shroud a civil dispute with a cloak of criminality. [Para 15]

[2024] 3 S.C.R. 673 : 2024 INSC 227

Dr Sonia Verma & Anr.

v.

The State of Haryana & Anr.

(Criminal Appeal No. 1433 of 2024)

07 March 2024

[Vikram Nath and Satish Chandra Sharma, JJ]

Issue for Consideration

The issue for consideration was a challenge to a decision of the

High Court of Punjab & Haryana, refusing to quash the F.I.R.

registered u/s. 506, 420, 34, 120-B and 467 of the Penal Code,

1860, against the Appellants/Accused, on the ground that the

dispute between the parties was essentially civil in nature.

Headnotes

Criminal Law – Code of Criminal Procedure, 1973 – s. 482 –

Inherent powers – Scope of exercise of power for quashing

the criminal proceedings:

Held: The High Court ought to have quashed the criminal

proceedings when it was apprised of the fact that the substance of

the Criminal Complaint served only a cast of doubt on the validity

of a commercial transaction and an appropriate civil remedy was

already being pursued. [Para 17]

Abuse of Law – Dispute essentially civil in nature, given a

cloak of criminality – Circumstances:

Held: Circumstances such as the Complainant/ Respondent

No. 2 registering the FIR after the filing of the Civil Suit by the

Accused/Appellants, the Complainant selectively implicating

the Appellants in a Criminal case, the Complainant’s failure to

contest the matter before this Hon’ble Court, and the bonafides

of the Accused/Appellants in paying the rent before their alleged

purchase of the Suit property, can be concluded as an attempt

on the part of the Complainant to shroud a civil dispute with a

cloak of criminality. [Para 15]

Case Law Cited

Paramjeet Batra v. State of Uttarakhand (2013) 11 SCC

673– relied on.

674 [2024] 3 S.C.R.

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List of Acts

Code of Criminal Procedure, 1973.

List of Keywords

Criminal proceedings; Quashing; Inherent Powers.

Case Arising From

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.1433

of 2024

From the Judgment and Order dated 19.07.2023 of the High Court

of Punjab & Haryana at Chandigarh in CRMM No.34512 of 2023.

Appearances for Parties

A.Sirajuddin, Sr. Adv., Chand Qureshi, Mrs. Arpana Soni, Ms. Preeti

Chauhan, Mohit Yadav, Mrs. Aarti Pal, Surendra Ramgopal Agarwal,

Waseem Akhtar Khan, Advs. for the Appellants.

Abhinav Bajaj, A.A.G., Saksham Ojha, Samar Vijay Singh, Keshav

Mittal, Ms. Sabarni Som, Fateh Singh, Advs. for the Respondents.

Judgment / Order of the Supreme Court

Order

1. Leave granted.

2. The Appellants before us are aggrieved by the order dated

19.07.2023 passed in CRM-M-34512-2023 (the ‘Impugned Order’)

whereby the High Court of Punjab and Haryana at Chandigarh

refused to quash FIR No. 375/2022 dated 31.10.2022 (the

‘Subject FIR’), registered against the Appellants for offences under

Section(s) 506, 420, 34, 120-B and 467 of the Indian Penal Code,

1860 (the ‘IPC’).

Brief Facts:

3. The uncontested facts are as follows: (i) the Appellants are doctors

who are running the Surendra Maternity and Trauma Hospital (the

‘Hospital’), located in village Suthani, Tehsil Bawal, Rewari, Haryana;

(ii) the Appellants were paying rent to Respondent No. 2’s son at the

rate of Rs. 25,000/- per month for the Hospital property until August

2022; (iii) the original owner of the land upon which the Hospital

stands was Kaptan Singh i.e., husband of Respondent No. 2.

[2024] 3 S.C.R. 675

Dr Sonia Verma & Anr. v. The State of Haryana & Anr.

4. Thereafter, as per the Appellants version, vide registered sale deed

No. 1485 dated 23.08.2022 (the ‘RSD’), the Appellants purchased

the land on which the Hospital stood i.e., Khewat No. 1, Khatauni

No. 1, Mustkil No. 33, Killa No. 26, village Suthani, Tehsil Bawal,

Rewari, Haryana (the ‘Suit Property’), for a sale consideration of

Rs. 43,00,000/-, from one Sher Singh. Pursuant to this purchase,

the Appellants discontinued the payment of rent to Respondent No.

2’s son.

5. Fearing dispossession from the Suit Property, the Appellants filed Civil

Suit No. 294/2022 on 27.09.2022, before the Court of Addl. Civil Judge,

Bawal, seeking a decree of permanent injunction against Respondent

No. 2, her husband and one Babu Lal (the ‘Civil Suit’). In the Civil

Suit, an order granting ad-interim injunction was passed in favour

of the Appellants on 18.11.2022. While granting this protection, the

Court found that the Appellants had a prima facie case as they had

produced three registered sale deeds carrying similar description of

the Suit Property in order to establish the chain of transfer leading

to their ownership. As per the Appellants, the Suit Property was

first transferred by Kaptan Singh to Babu Lal vide Sale Deed dated

20.07.2020 and thereafter from Babu Lal to Sher Singh vide Sale

Deed dated 22.08.2022.

6. On 29.10.2022, FIR No. 372/2022 was registered by the Appellants

against three persons, including Kaptan Singh and son of Respondent

No. 2 for offences under Section(s) 506, 120-B of the IPC. The

Appellants alleged that the accused persons had fraudulently collected

rent from them for a prolonged period, despite lacking ownership over

the Suit Property and were continuously threatening the Appellants

to vacate the Suit Property.

7. Two days later, the Subject FIR was registered against the

Appellants and Sher Singh by Respondent No. 2, who claimed

that she was the owner in possession of the land upon which the

Hospital stood, citing it as Killa No. 8, instead of Killa No. 26.

Respondent No. 2 stated that the property was transferred in her

favour by Kaptan Singh vide Transfer Deed dated 22.08.2017

and that she has never alienated the property. She alleged that

the Appellants, in collusion with Sher Singh forged the RSD and

wrongly entered the area of the property in the RSD with the

intention of usurping her property. 

676 [2024] 3 S.C.R.

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8. A charge-sheet was filed in respect of the Subject FIR on 17.03.2023

and as on date, the Appellants have been granted anticipatory bail

by the High Court.

9. The Appellants then approached the High Court under Section 482

CrPC seeking quashing of the Subject FIR. Vide the Impugned Order,

the High Court held that the allegations relate to Killa No. 8 in Mustkil

No. 33, which the Appellants never claimed to have purchased.

On this basis, the Court held that the ingredients of the offences

alleged were made out against the Appellants and consequently, the

application for quashing was dismissed.

Contentions & Analysis:

10. Learned Counsel for the Appellants forcefully contends that the

dispute between the parties is essentially civil in nature and as the

appropriate civil remedy is already being pursued by the Appellants,

the criminal proceedings arising out of the Subject FIR amount to

an abuse of the process of law. In this context, it is also urged

that the High Court erred in failing to consider the litigation history

between the parties i.e., the pending Civil Suit and the FIR filed by

the Appellants against the family of Respondent No. 2.

11. Per Contra, Learned Counsel for the State of Haryana submits that

there exists sufficient prima facie evidence for the Trial Court to

proceed against the Appellants and that the mere existence of a civil

profile does not justify quashing of criminal proceedings.

12. It is pertinent to note that despite being served, Respondent No. 2

has not contested the matter before us.

13. We have heard the learned counsel for the parties and perused the

record.

14. In the considered opinion of this Court, the dispute herein, which forms

the genesis of the criminal proceedings initiated by Respondent No.

2 is entirely civil in nature i.e., whether the Appellants are in lawful

possession of the Suit Property or, in essence, whether the RSD is

valid. To that extent, the Appellants have already taken recourse to

the appropriate civil remedy to establish their claim before the Civil

Court. The grievance of Respondent No. 2 i.e., whether the RSD is

forged and fabricated is an issue that will be considered by the Civil

Court while making its determination. 

[2024] 3 S.C.R. 677

Dr Sonia Verma & Anr. v. The State of Haryana & Anr.

15. A closer examination of the surrounding facts and circumstances

fortifies the conclusion that an attempt has been made by the

Respondent No. 2 to shroud a civil dispute with a cloak of criminality.

The following aspects of the case are pertinent to note: (i) Respondent

No. 2 registered the Subject FIR subsequent to the filing of the Civil

Suit and the filing of FIR No. 372/2022 by the Appellants; (ii) the

chain of sale deeds produced by the Appellants contain identical

descriptions of the Suit Property and yet Respondent No. 2 has

pursued criminal action only against the Appellants and Sher Singh

and not against Babu Lal and her husband; (iii) Respondent No. 2

has failed to contest the present matter before this Court; (iv) the

admitted position that the Appellants were bonafide in their payment

of rent before their alleged purchase of the Suit Property.

16. This Court in Paramjeet Batra v. State of Uttarakhand & Ors.

1

 has

expounded on the scope of exercise of power under Section 482

CrPC whilst dealing with similar matters:

“7. While exercising its jurisdiction under Section 482 of the

Code the High Court has to be cautious. This power is to

be used sparingly and only for the purpose of preventing

abuse of the process of any court or otherwise to secure

ends of justice. Whether a complaint discloses a criminal

offence or not depends upon the nature of facts alleged

therein. Whether essential ingredients of criminal offence

are present or not has to be judged by the High Court.

A complaint disclosing civil transactions may also have a

criminal texture. But the High Court must see whether a

dispute which is essentially of a civil nature is given a cloak

of criminal offence. In such a situation, if a civil remedy is

available and is, in fact, adopted as has happened in this

case, the High Court should not hesitate to quash criminal

proceedings to prevent abuse of process of court.”

17. Therefore, when the High Court was apprised of such a matter

wherein the substance of the criminal complaint served only to cast

doubt on the validity of a commercial transaction (in this case, a sale

deed for the transfer of property), and the appropriate civil remedy

1 Criminal Appeal No. 2069 of 2012

678 [2024] 3 S.C.R.

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was already being pursued, the High Court ought to have quashed

the criminal proceedings.

18. For the reasons stated above, the Impugned Order is set aside and

the entire criminal proceedings arising out of the Subject FIR are

quashed and set aside. Needless to say, this order shall not have

any effect on the Civil Suit pending between the parties and the

same shall be decided in accordance with law.

19. Resultantly, the appeal stands allowed.

20. Pending applications, if any, shall also stand disposed of.

Headnotes prepared by: Result of the case:

Prastut Mahesh Dalvi, Hony. Associate Editor Appeal allowed.

(Verified by: Liz Mathew, Sr. Adv.)

Prevention of Corruption Act, 1988 – s. 13(1)(e) r/w. s. 13(2) – Penal Code, 1860 – s. 109 – Income Tax Act, 1961 – The appellant-R was exonerated by the Income Tax Appellate Tribunal by order dated 31.08.2007 – It was contended that in view of the orders made by the Income Tax Appellate Tribunal in the reopening proceedings, which were based on the search conducted by the CBI, there is absolutely no ground to proceed with the criminal trial – It was further argued, with respect to the appellant-P, that he was a minor for a large portion of the check period and therefore could not be made an accused – Propriety:

* Author

[2024] 3 S.C.R. 679 : 2024 INSC 221

Puneet Sabharwal

v.

CBI

(Criminal Appeal No. 1682 of 2024)

19 March 2024

[Vikram Nath and K.V. Viswanathan,* JJ.]

Issue for Consideration

The charges were framed against the appellants. While the

charge against the appellant-P was u/s. 109 IPC r/w. s.13(1)

(e) and 13(2) of the Prevention of Corruption Act, 1988, the

charge against appellant-R was u/s. 13(1)(e) r/w. s.13(2) of the

Prevention of Corruption Act, 1988. In substance, the charge

was that appellant-R owned assets disproportionate to known

sources of income and the appellant-P son of R has abetted him

in the commission of the said offence. The High Court, by the

impugned order, dismissed the petitions for quashing criminal

proceedings. The question that arises for consideration is whether

the courts below were justified in refusing to quash and set aside

the order on charge dated 21.02.2006 and the charges as framed

on 28.02.2006.

Headnotes

Prevention of Corruption Act, 1988 – s. 13(1)(e) r/w. s. 13(2)

– Penal Code, 1860 – s. 109 – Income Tax Act, 1961 – The

appellant-R was exonerated by the Income Tax Appellate

Tribunal by order dated 31.08.2007 – It was contended that in

view of the orders made by the Income Tax Appellate Tribunal

in the reopening proceedings, which were based on the

search conducted by the CBI, there is absolutely no ground

to proceed with the criminal trial – It was further argued, with

respect to the appellant-P, that he was a minor for a large

portion of the check period and therefore could not be made

an accused – Propriety:

Held: In the instant case, the probative value of the Orders of

the Income Tax Authorities, including the Order of the Income Tax

Appellate Tribunal and the subsequent Assessment Orders, are

not conclusive proof which can be relied upon for discharge of the 

680 [2024] 3 S.C.R.

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accused persons – These orders, their findings, and their probative

value, are a matter for a full-fledged trial – In view of the same,

the High Court has rightly not discharged the appellants based on

the Orders of the Income Tax Authorities – The appellants herein

are being prosecuted under the provisions of the Prevention of

Corruption Act while they seek to rely on an exoneration under

the Income Tax Act – The scope of adjudication in both of these

proceedings are vastly different – The authority which conducted

the income tax proceedings and the authority conducting the

prosecution is completely different (CBI) – The CBI was not and

could not have been a party to the income tax proceeding – The

charges were framed under the Prevention of Corruption Act, while

the appellants seek to rely upon findings recorded by authorities

under the Income Tax Act – The scope of adjudication in both

the proceedings are markedly different and therefore the findings

in the latter cannot be a ground for discharge of the Accused

Persons in the former – The proceedings under the Income Tax

Act and its evidentiary value remains a matter of trial and they

cannot be considered as conclusive proof for discharge of an

accused person – As far as the contention about the minority of

the appellant-P is concerned, it need not detain the Court since

for the last seven years of the check period admittedly he was

not minor –Thus, the appellants have not made out a case for

interference with the order on charge dated 21.02.2006 and the

order of framing charge dated 28.02.2006. [Paras 32, 37, 40,

23, 44]

Case Law Cited

State of Karnataka v. Selvi J. Jayalalitha & Ors. [2017]

5 SCR 525 : (2017) 6 SCC 263 – relied on.

Radheshyam Kejriwal v. State of West Bengal &

Anr. [2011] 4 SCR 889 : (2011) 3 SCC 581; Ashoo

Surendranath Tewari v. CBI & Anr. (2020) 9 SCC 636;

J. Sekar v. Directorate of Enforcement [2022] 3 SCR

698 : (2022) 7 SCC 370 – held inapplicable.

P. Nallamal v. State (1996) 6 SCC 559; Vishwanath

Chaturvedi (3) v. Union of India & Ors. [2007] 3 SCR

448 : (2007) 4 SCC 380; Sheoraj Singh Ahlawat &

Ors. v. State of U.P. & Anr. [2012] 10 SCR 1034 :

(2013) 11 SCC 476; State of T.N. v. N. Suresh Rajan 

[2024] 3 S.C.R. 681

Puneet Sabharwal v. CBI

& Ors. [2014] 1 SCR 135 : (2014) 11 SCC 709; CBI

& Anr. v. Thommandru Hannah Vijayalakshmi & Anr.

[2021] 13 SCR 364 : (2021) 18 SCC 135; Onkar Nath

Mishra & Ors. v. State (NCT of Delhi) & Anr. [2007]

13 SCR 716 : (2008) 2 SCC 561; State of Karnataka

v. L. Muniswamy & Ors. [1977] 3 SCR 113 : (1977)

2 SCC 699 – referred to.

List of Acts

Prevention of Corruption Act, 1988; Penal Code, 1860; Income

Tax Act, 1961.

List of Keywords

Disproportionate Assets; Known source of income; Income tax

return; Income tax proceeding; Evidentiary value; Conclusive proof;

Quashing; Criminal Proceedings; Framing of charge; Discharge;

Exoneration in civil adjudication; Criminal Prosecution; Criminal

trial.

Case Arising From

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.1682

of 2024

From the Judgment and Order dated 01.12.2020 of the High Court

of Delhi at New Delhi in WPCRL No.200 of 2010

With

Criminal Appeal No.1683 of 2024

Appearances for Parties

Mukul Rohatgi, Siddharth Agarwal, Ardhendu Mauli Prasad, Sr.

Advs., Ninad Laud, Ms. Ranjeeta Rohatgi, Ms. Shrika Gautam,

Karan Mathur, Ms. Rashika Narain, Sangramsingh R. Bhonsle,

Zubin Dash, Ms. Samridhi S Jain, Nrupal A Dingankar, Ms.

Pushkara A Bhonsle, Naman Sherstra, Mahesh Jadhav, Advs. for

the Appellant.

K.M. Natraj, A.S.G., Mukesh Kumar Maroria, Sanjay Kumar Tyagi,

Rajan Kumar Chaurasia, Padmesh Mishra, Navanjay Mahapatra,

Shantanu Sharma, B.K. Satija, Manoj K. Mishra, Abhinav S.

Raghuvanshi, Advs. for the Respondent.

682 [2024] 3 S.C.R.

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Judgment / Order of the Supreme Court

Judgment

K.V. Viswanathan, J.

1. Leave granted.

2. The present appeals call in question the correctness of the judgment

of the High Court of Delhi at New Delhi dated 01.12.2020 in Writ

Petition (Criminal) No. 200 of 2010 and Writ Petition (Criminal) No.

339 of 2010. These proceedings in the High Court, in turn, challenged

the Order on charge dated 21.02.2006, as well as the charges

framed on 28.02.2006, by the Special Judge, Delhi. While the charge

against the appellant Puneet Sabharwal was under Section 109 IPC

read with Section 13(1)(e) and 13(2) of the Prevention of Corruption

Act, 1988, the charge against appellant R.C. Sabharwal was under

Section 13(1)(e) read with 13(2) of the Prevention of Corruption Act,

1988. In substance, the charge was that appellant R.C. Sabharwal

owned assets disproportionate to known sources of income and the

appellant Puneet Sabharwal, son of R.C. Sabharwal, has abetted

him in the commission of the said offence. The High Court, by the

impugned order, dismissed the petitions. Aggrieved, the appellants

are before us.

Brief Facts:

3. On 23.08.1995, based on source information, the Anti-Corruption

Bureau, New Delhi, District New Delhi registered a First Information

Report in Crime No.RC-74(A)/95-DLI.

4. On 28.08.1995, a charge-sheet was filed against both the appellants.

In substance, the allegations, as set out in the charge-sheet, were

as follows:

(i) That the appellant R.C. Sabharwal was Additional Chief Architect

in New Delhi Municipal Corporation;

(ii) That while being posted in various capacities from the year

1968 onwards, he had amassed huge assets which are

disproportionate to his known sources of income;

(iii) That the assets were acquired by R.C. Sabharwal either in

his name or in the name of his family members. Details of the

assets were set out.

[2024] 3 S.C.R. 683

Puneet Sabharwal v. CBI

(iv) The check period was taken from the date when the appellant

R.C. Sabharwal joined as an Assistant Architect in NDMC i.e.

20.08.1968 to the date of the search i.e. 23.08.1995.

(v) That the total income of the appellant R.C. Sabharwal from

salary was Rs. 10,00,042/-. Detailed breakup of salary for the

years was given. The income from the salary of his spouse

was Rs. 8,72,249.42

(vi) Apart from the above salaried income, income accruing

to the accused R.C. Sabharwal from several enterprises,

companies and trusts was also set out. Rental income was

also mentioned as well as income from insurance policies

and income arising out of interest. After computing all the

income, it was mentioned that the total income was of Rs.

1,23,18,091/-

(vii) Expenditure was provided to the extent of Rs. 18,23,108/-.

Movable assets to the tune of Rs. 4,25,450/- was mentioned.

It was also alleged that there were bank balances in the name

of appellant R.C. Sabharwal and in the name of his family

members to the tune of Rs. 82,63,417/-.

(viii) As far as the immovable assets are concerned, a set of twentyfour properties were set out which were in all valued at Rs.

2,27,94,907/-.

(ix) That the appellant R.C. Sabharwal could not satisfactorily

account for the assets disproportionate to his known sources

of income.

(x) That the appellant R.C. Sabharwal was a party to the criminal

conspiracy with his son, being appellant Puneet Sabharwal,

who had received Rs. 79 lakhs through encashment of Special

Bearer Bonds and he facilitated commission of the offence as

a conspirator.

(xi) That in furtherance of the said criminal conspiracy, assets were

acquired by R.C. Sabharwal in the name of M/s Morni Devi Brij

Lal Trust, M/s Morni Merchants and other firms in which the

sole beneficiary was appellant Puneet Sabharwal, his son. It

was further alleged that appellant R.C. Sabharwal dealt with

all the financial matters of the said trusts/firms.

684 [2024] 3 S.C.R.

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(xii) It was concluded that a criminal case was made out against

appellant R.C. Sabharwal and Puneet Sabharwal for offence

punishable under 120-B IPC r/w 5(2) r/w 5(1)(e) of PC Act, 1947

corresponding to 13(2) r/w 13(1)(e) of PC Act, 1988.

(xiii) Further, it was concluded that against R.C. Sabharwal a case

under Section 5(2) r/w 5(1)(e) of PC Act, 1947 corresponding to

13(2) r/w 13(1)(e) of PC Act, 1988 was made out for possession

of assets worth Rs. 2,05,63,341/- disproportionate to his known

sources of income.

Order on Charge:

5. On 21.02.2006, the Special Judge pronounced an order on charge

after elaborately discussing the principles governing discharge. The

learned Judge rendered the following findings in the order on charge:

(i) The expression “known sources of income” can only have

reference to the sources known to the prosecution;

(ii) The prosecution cannot be expected to know the firms of the

accused persons;

(iii) The income from firms of the accused persons would be within

the special knowledge of the accused, under Section 106 of

the Evidence Act and it was for the accused to ‘satisfactorily

account’ for the charge of owing disproportionate assets, which

can only be discharged at trial;

(iv) Insofar as the appellant Puneet Sabharwal is concerned, reliance

was placed on the statement of Chartered Accountant Anil

Mehta to the effect that the properties were purchased benami

by appellant R.C. Sabharwal in the name of his son and sister;

(v) The learned judge relied upon P. Nallamal v. State, (1996) 6

SCC 559, wherein this Court held that a non-public servant

can be tried in the same trial along with the public servant for

abetment of offence under Section 13(1)(e) r/w 13(2) of the

PC Act.

(vi) There was sufficient material to show the existence of grave

suspicion arising out of the material placed before the Court

regarding involvement of both the appellants for commission of

offences under Section 109 IPC read with Section 13(1)(e) r/w 

[2024] 3 S.C.R. 685

Puneet Sabharwal v. CBI

13(2) of the PC Act as far as the appellant Puneet Sabharwal

was concerned and under Section 13(1)(e) read with 13(2) of

the Prevention of Corruption Act, 1988 as far as R.C. Sabharwal

was concerned.

Charges:

6. Thereafter, by order dated 28.2.2006, charges were also framed. For

the sake of convenience, the charges against both the appellants

are set out hereinbelow:

“CHARGE NO. 1

That you being a public servant employed as Additional

Chief Architect, NDMC, New Delhi, during the period

20.8.1968 to 23.08.1995 were found in possession of

assets to the tune of Rs. 3,10,58,324/- as against your

income and that of your family members Income, to the tune

of Rs. 1,23,18,091/- and expenditure of Rs. 18,23,108/-

and you were found in possession of total assets to the

tune of Rs. 2,05,63,341/- which were disproportionate to

your known sources of income and which you could not

satisfactorily account for and thereby you committed an

offence U/s. 13(1)(e) punishable U/s. 13(2) of the PC Act,

1988 and within my cognizance.

And I hereby direct you to be tried by this court for the

said offence.

CHARGE NO. 2

That while your father Shri R.C. Sabharwal being a public

servant employed as Additional Chief Architect, NDMC,

New Delhi during the period 20.08.1968 to 23.08.1995 you

intentionally aided him in commission of the offence U/s

13(1)(e) read with 13(2) of the PC Act as he was found in

possession of assets to the tune of Rs. 3,10,58,324/- as

against his income and that of his family members income,

to the tune of Rs. 1,23,18,091/- and expenditure of Rs.

18,23,108/- and he was found in possession of total assets

of the tune of Rs. 2,05,63,341/, which were disproportionate

to his known sources of income and which he could not

satisfactorily account for and thereby you committed an 

686 [2024] 3 S.C.R.

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offence, of abetment U/s 109 IPC read with 13(1)(e) and

Sec. 13(2) of the PC Act, 1988 and within my cognizance.

And hereby direct you to be tried by this court for the

said offence.”

[emphasis supplied]

Orders on the income tax front:

7. After the order of the Trial Court, both with regard to the order on

charge and the framing of charges, and before the High Court

disposed of the Petitions before it, leading up to the impugned order,

certain developments took place on the income tax front.

8. The Income Tax Appellate Tribunal pronounced its judgment on

31.08.2007 in appeals and cross appeals filed by the assessees

[which included the Appellants herein] and the department, with

regard to the reopening of the assessments for the years 1989-1990

to 1995-1996 and 1997-1998 to 2001-2002.

9. Earlier, the Assessing Officer had reopened the assessment for

Assessment Year 1996-1997 and made certain additions and deletions

in the hands of the Appellants herein and other assessees. Thereafter,

the CIT (Appeals) had upheld the validity of the reopening while

approving or disapproving some of the additions and deletions made

by the Assessing Officer. However, the Tribunal had, on 07.03.2005,

held that the reopening of the assessment for the Assessment Year

1996-1997 was not justified since the conditions precedent for

reopening the assessment were not fulfilled. Consequently, the issues

regarding the merits of additions or deletions were not adjudicated

by the Tribunal in the said Order.

10. However, the Tribunal in its order dated 31.08.2007, while hearing

appeals and cross-appeals concerning the reopening of assessment

for the years 1989-1990 to 1995-1996 and 1997-1998 to 2001-2002,

found that materials did exist for reopening the assessment for the

said assessment years. Thereafter, it examined the merits of the

additions made on substantive basis and additions denied, in the

years under consideration in the hands of appellant R.C. Sabharwal.

It noted that the Tribunal was required to examine the additions

and deletions carried out by the Assessing Officer and the CIT

(Appeals) in the assessment year 1996-1997 because, in the view 

[2024] 3 S.C.R. 687

Puneet Sabharwal v. CBI

of the Tribunal, the issue of additions in all the other years under

consideration flowed from the base assessment year of 1996-1997.

11. While considering the various additions and deletions, the Tribunal

inter alia considered the addition carried out by the Assessing Officer

[which was thereafter deleted by the CIT (Appeals)] in the hands of

the appellant R.C. Sabharwal herein with respect to income of M/s

Morni Devi Brij Lal Trust. The Assessing Officer had justified these

additions on the grounds that:

(i) The source of investment made by the founders of the said

trust being Smt. Morni Devi and Sh. Brij Lal was not explained.

(ii) The special bearer bonds which were encashed in the account

of the said Trust were not out of investments from the Trust

since the said bonds were purchased prior to the formation of

the Trust itself. Some other person had invested the amount

and encashed it in the hands of the trust.

(iii) The founder of the trust was not shown to have the income

necessary to purchase the said bonds.

12. The CIT (Appeals) had deleted these additions. In examining this

issue and approving the said deletion, the Tribunal rendered the

following findings:

(i) The Appellant R.C. Sabharwal had no obligation to explain the

source of investment of the founders of the trust being Smt.

Morni Devi and Sh. Brij Lal.

(ii) The Trust itself had been filing its return of income since it

came into existence and had been assessed separately. No

evidence was produced to show that the assessee was the

benami owner of the trust.

(iii) As regards the credits representing deposits of Special Bearer

Bonds, relying upon Section 3 of the Special Bearer Bonds

(Immunities and Exemptions) Act, 1981 it was held that no person

who has subscribed to or has otherwise acquired Special Bearer

Bonds shall be required to disclose, for any purpose whatsoever,

the nature and source of acquisition of such bonds and that

complete immunity has been granted to the bond holders. The

presumption of the Assessing Officer that the bearer bonds were

acquired by the trust was held to be not correct; 

688 [2024] 3 S.C.R.

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(iv) Reference is made by the Tribunal to the findings of the CIT

(Appeals) that the special bearer bonds were tendered for

encashment by the trust and that Assessing Officer exceeded

his jurisdiction in making an enquiry and calling upon the trust

to explain the nature and source of acquisition of such bonds.

(v) Reference is made by the Tribunal to the findings of the CIT

(Appeals) that the trust would be a person within the meaning

of the Special Bearer Bonds (Immunities and Exemptions) Act,

1981.

(vi) The Tribunal then quotes the findings of the CIT (Appeals)

whereunder it was held that once the assessment has been

made and the department has accepted the existence of the

trust it could not be reversed without bringing on record any

adverse material. The onus was on the department to show that

the trust was benami and there was no evidence in that regard.

(vii) The Tribunal then quotes the findings of the CIT (Appeals)

whereunder it was concluded that the Assessing Officer had

not been able to prove that the Trust was benami and that the

income of the trust belonged to R.C. Sabharwal. Holding so,

the additions to the tune of Rs. 8,14,230/- was deleted. No

further comments were given by the Tribunal in regard to this

addition/deletion.

13. Thereafter, on the issue of appellant Puneet Sabharwal having

received funds from the Morni Devi Brij Lal Trust which was held to

belong to appellant R.C. Sabharwal, it was found that since Morni

Devi Brij Lal Trust was a separate entity and since the appellant

Puneet Sabharwal was running its business, its income could not be

added in the hands of the appellant R.C. Sabharwal. The Tribunal

also considered the additions/deletions with regard to various other

firms and assessees which we do not seek to set out herein for the

purposes of brevity.

14. Ultimately, only on the aspect of deposits in the joint bank accounts

of minors, so far as it fell within the limitation period, the Tribunal

restored the matter back to the Assessing Officer for deciding the

issue afresh and the appeal of the revenue was allowed to that limited

extent. Holding so, the appeals were disposed of. Consequently,

on 30.12.2009, the Assessing Officer passed an assessment order 

[2024] 3 S.C.R. 689

Puneet Sabharwal v. CBI

accepting the explanation of the assessee on the aspect remitted

and the income of the assessee Puneet Sabharwal was fixed at

Rs. 67,550/-.

Proceedings in the High Court:

15. These orders which came subsequent to the orders of the Trial

Court were placed before the High Court. It was contended that in

view of the orders made by the Income Tax Appellate Tribunal in the

reopening proceedings, which reopening was based on the search

conducted by the CBI, there is absolutely no ground to proceed with

the criminal trial. It was further argued, with respect to the appellant

Puneet Sabharwal, that he was a minor for a large portion of the

check period and therefore could not be made an accused.

16. Repelling the contentions, the High Court held as follows:

(i) Simply because for a large part of the period of investigation,

the appellant Puneet Sabharwal was a minor, would not by itself

be a reason to disregard the fact that at least for the seven

years of the investigation period he was a major;

(ii) Under Section 3(2) of Special Bearer Bonds (Immunities and

Exemptions) Act, 1981, the immunities under the Act are

inapplicable to offences committed under the Prevention of

Corruption Act or similar offences;

(iii) Prosecution has sought to rely upon statements of several

witnesses;

(iv) In State of Karnataka v. Selvi J. Jayalalitha & Ors. (2017)

6 SCC 263, this Court had held that income tax assessment

orders are apropos tax liability on income and they do not

necessarily attest to the lawfulness of the sources of income;

(v) That what was relevant was whether there was a strong

suspicion that the accused has committed the offence and that

in the view of the High Court there was indeed a case for trial.

Holding so, the Writ Petitions were dismissed.

Contentions:

17. Before us Mr. Mukul Rohatgi and Mr. Siddharth Agarwal, learned

senior counsel for the appellants reiterated the contentions raised

before the High Court. 

690 [2024] 3 S.C.R.

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18. Insofar as the appellant Puneet Sabharwal was concerned, it was

contended as follows:

(i) That the High Court erred in holding that merely because for

a large part of the period of investigation, the appellant was a

minor, it would not be by itself a reason to disregard the fact

that for at least seven years of the investigation period he was

a major;

(ii) That the courts below erred in, without more, endorsing the

allegations against the appellant(s) solely on account of being

named as a beneficiary in the trust deed of M/s Morni Devi Brij

Lal Trust. Further, the Court erred in endorsing the allegation

that the trust was holding benami properties of which appellant

R.C. Sabharwal was a beneficial owner;

(iii) That since out of the twenty years of the check period except

7 years of the said period the appellant Puneet Sabharwal

was a minor, it belied logic as to how the said appellant could

have conspired with his father. This indicated gross abuse of

process of law.

(iv) That the charge as framed indicates that criminal proceedings

have been saddled against appellant Puneet Sabharwal merely

by virtue of being his father’s son and none of the ingredients

under Section 109 of the Indian Penal Code were attracted;

(v) That the High Court erred in not taking into account the

exoneration of the appellant’s father by the Income Tax

Appellate Tribunal; that the Income Tax Appellate Tribunal, by

its order of 31.08.2007, rendered a categorical finding that the

father did not hold the properties of the said trust as benami

and even the limited issue on which the Income Tax Appellate

Tribunal remanded the matter, by the order of 30.12.2009, the

assessment officer found the deposits to be income of the son.

19. Insofar as the appellant R.C. Sabharwal is concerned, the argument

was substantially on the basis of the Income Tax Appellate Tribunal

order of 31.08.2007. The contentions were as follows:

(i) The order of Income Tax Appellate Tribunal categorically held

that income arising from properties of various entities were

wrongly added to the income of the appellant;

[2024] 3 S.C.R. 691

Puneet Sabharwal v. CBI

(ii) The appellant was not the owner of those entities and

consequently the properties and money held by those entities

could not be held to be under the ownership of the appellant

R.C. Sabharwal;

(iii) The reassessment for thirteen years was carried out on the

complaint of CBI itself;

(iv) The courts below misapplied the judgment of this Court in Selvi

J. Jayalalitha (supra) and failed to notice the distinguishing

feature namely that, in the present case, it was not a case

of reliance on income tax return but the returns which were

subjected to an inquisition.

(v) The High Court exercising power under Article 226, 227 of the

Constitution of India and Section 482 of Cr.P.C. has power

to look into material placed by the accused in arriving at its

conclusion for discharge.

20. For both the appellants, reliance was placed on Radheshyam

Kejriwal v. State of West Bengal & Anr., (2011) 3 SCC 581, Ashoo

Surendranath Tewari v. CBI & Anr. (2020) 9 SCC 636 and J. Sekar

v. Directorate of Enforcement, (2022) 7 SCC 370 to contend that

where there is exoneration on merits in a civil adjudication, criminal

prosecution on the same set of facts and circumstances cannot be

allowed to continue since the underlying principle is that the standard

of proof in criminal cases is higher.

21. The submissions of the appellants were strongly refuted by Mr.

K.M. Nataraj, learned Additional Solicitor General. Learned ASG

contended as follows:

(i) That at the stage of framing of charges what is relevant is

material as is available on the date of framing of the charge;

(ii) That a court of law is not required to appreciate evidence at the

stage of framing of charges to conclude whether the materials

produced are sufficient or not for convicting the accused;

(iii) That it was settled law that probative value of material on record

cannot be gone into at the stage of framing of charges since

the court was not conducting a mini trial;

(iv) Relying on Sheoraj Singh Ahlawat & Ors. v. State of U.P. &

Anr., (2013) 11 SCC 476, it was contended that all that has 

692 [2024] 3 S.C.R.

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to be seen is whether there is a ground for presuming that the

offence has been committed and not whether there was ground

for convicting the accused;

(v) That even a strong suspicion founded on material which leads

the court to form a presumptive opinion as to the existence of

the factual ingredients constituting the offence would justify the

framing of the charge.

(vi) Reliance placed on the order of the Income Tax Appellate

Tribunal dated 21.08.2007 is subsequent to the framing of

charges and even otherwise cannot be the basis for the

discharge of the accused;

(vii) That the criminal prosecution does not depend upon the

order passed by the Income Tax Appellate Tribunal and,

most importantly, the prosecution was not and could not

have been a party before the Income Tax Authorities and

the ITAT;

(viii) That the Income Tax Appellate Tribunal order can be at best, if

permissible in law, used as a piece of evidence and the Income

Tax Appellate Tribunal order will not have the effect of nullifying

the order framing charges by a criminal court. Reliance has

been placed on Selvi J. Jayalalitha (supra), Vishwanath

Chaturvedi (3) v. Union of India & Ors., (2007) 4 SCC 380

and State of T.N. v. N. Suresh Rajan & Ors., (2014) 11 SCC

709 to contend that the findings of the Income Tax Authorities

are not binding on a criminal court to readily accept the legality

or lawfulness of the source of income.

(ix) The power to quash a proceeding and nip the same in the bud

has to be exercised with great caution and circumspection.

So contending, the learned ASG prayed that no case has been

made out to set aside the order on charge and the charges and the

appeals deserve to be dismissed.

Question:

22. Under the above circumstances, the question that arises for

consideration is: Whether the courts below were justified in refusing

to quash and set aside the order on charge dated 21.02.2006 and

the charges as framed on 28.02.2006?

[2024] 3 S.C.R. 693

Puneet Sabharwal v. CBI

Analysis:

23. Having heard learned counsels for the parties and perused the

records, we are of the opinion that the appellants have not made out

a case for interference with the order on charge dated 21.02.2006

and the order of framing charge dated 28.02.2006. We say so for

the following reasons.

24. The case of the prosecution is that the appellant R.C. Sabharwal,

the father of appellant Puneet Sabharwal, owned assets to the

tune of Rs. 2,05,63,341/- and that this was disproportionate to his

known sources of income which was computed at Rs. 1,23,18,091/-.

The allegation against the son Puneet Sabharwal was that he had

received Rs. 79 lakhs through encashment of Special Bearer Bonds

and he facilitated commission of offence inasmuch as assets were

acquired by appellant R.C. Sabharwal in the name of M/s Morni

Devi Brij Lal Trust, M/s Morni Merchants and other firms in which the

sole beneficiary was appellant Puneet Sabharwal. The order framing

charge invokes Section 109 IPC to be read with Section 13(1)(e)

read with Section 13(2) of the PC Act against Puneet Sabharwal.

25. The main plank of the arguments of the appellants is that the Income

Tax Appellate Tribunal order dated 31.08.2007, has, while allowing

the appeals of the assessees and dismissing the cross appeals

of the department (except to a small extent which too got settled

with the assessment order of 30.12.2009), held that no case was

made out to justify that the income and assets of the entities such

as the Morni Lal Brij Trust were to be added to the income of R.C.

Sabharwal. In view of the same, it is argued that there is no case

for prosecuting them for owning disproportionate assets.

26. It is argued that per se the Income Tax Appellate Tribunal order

should result in quashment of proceedings and the discharge of the

accused. Additionally, it is argued that on the ground that analogous

tax proceedings have ended in favour of the appellants, a criminal

prosecution on identical facts cannot continue. For this, reliance is

placed on the judgments mentioned hereinabove.

27. We have already discussed the substance of the Income Tax

Appellate Tribunal order of 31.08.2007. In law, the submissions of

the appellants ought to fail on both the counts as there is no basis

to nip the criminal prosecution in this case in its bud.

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28. As far as the first argument about the criminal proceedings losing

its efficacy in view of the Income Tax Appellate Tribunal order of

31.08.2007 is concerned, we accept the submission of the respondent

CBI that the prior rulings of the court ending with the judgment in

Selvi J. Jayalalitha (supra) have clearly concluded the issue against

the appellants.

29. This Court, in Selvi J. Jayalalitha (supra), was concerned with

an appeal against an order of acquittal passed in a case of

disproportionate assets under Section 13 of the Prevention of

Corruption Act. The accused persons therein had sought to place

reliance on income tax returns and income tax assessment orders.

In that context the Court had concluded that income tax returns and

orders are not by themselves conclusive proof that they are lawful

sources of income under Section 13 of the Prevention of Corruption

Act and that independent evidence to corroborate the same would

be required. The Court held:

“188. In Anantharam Veerasinghaiah & Co. v. CIT, 1980

Supp SCC 13 : 1980 SCC (Tax) 274] , the return filed by the

petitioner assessee, who was an Abkari contractor, was not

accepted by the ITO as amongst others, excess expenditure

over the disclosed available cash was noticeable and further

several deposits had been made in the names of others. The

assessee’s explanation that the excess expenditure was met

from the amounts deposited with him by other shopkeepers

but were not entered in his book, was not accepted and

penalty proceedings were taken out against him holding

that the items of cash deficit and cash deposit represented

concealed income resulting from suppressed yield and

low selling rates mentioned in the books. The Appellate

Tribunal, however, allowed the appeal of the assessee and

set aside the penalty order. The High Court reversed [CIT v.

Anantharam Veerasingaiah & Co., 1971 SCC OnLine AP 262

: (1975) 99 ITR 544] the decision of the Appellate Tribunal

and the matter reached the Supreme Court.

189. It was held that as per Section 271(1)(c) of the Income

Tax Act, 1961, penalty can be imposed in case where

any person has concealed the particulars of his income

or has deliberately furnished inaccurate particulars of 

[2024] 3 S.C.R. 695

Puneet Sabharwal v. CBI

such income. The related proceeding was quasi-criminal

in nature and the burden lay on the Revenue to establish

that the disputed amount represented income and that

the assessee had consciously concealed the particulars

of his income or had deliberately furnished inaccurate

particulars. The burden of proof in penalty proceedings

varied from that involved in assessment proceedings and

a finding in assessment proceedings that a particular

receipt was income cannot automatically be adopted as

a finding to that effect in the penalty proceedings. In the

penalty proceedings, the taxing authority was bound to

consider the matter afresh on the materials before it, to

ascertain that whether a particular amount is a revenue

receipt. It was observed that no doubt the fact that the

assessment year contains a finding that the disputed

amount represents income constitutes good evidence in

the penalty proceedings, but the finding in the assessment

proceedings cannot be regarded as conclusive for the

purpose of penalty proceedings. Before a penalty can

be imposed, the entirety of the circumstances must be

taken into account and must lead to the conclusion that

the disputed amount represented income and that the

assessee had consciously concealed the particulars

of his income or had deliberately furnished inaccurate

particulars.

190. The decision is to convey that though the IT returns

and the orders passed in the IT proceedings in the instant

case recorded the income of the accused concerned as

disclosed in their returns, in view of the charge levelled

against them, such returns and the orders in the IT

proceedings would not by themselves establish that such

income had been from lawful source as contemplated in

the Explanation to Section 13(1)(e) of the PC Act, 1988

and that independent evidence would be required to

account for the same.

191. Though considerable exchanges had been made

in course of the arguments, centring around Section 43

of the Evidence Act, 1872, we are of the comprehension

that those need not be expatiated in details. Suffice it to 

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state that even assuming that the income tax returns, the

proceedings in connection therewith and the decisions

rendered therein are relevant and admissible in evidence

as well, nothing as such, turns thereon definitively as

those do not furnish any guarantee or authentication of

the lawfulness of the source(s) of income, the pith of the

charge levelled against the respondents. It is the plea of

the defence that the income tax returns and orders, while

proved by the accused persons had not been objected

to by the prosecution and further it (prosecution) as well

had called in evidence the income tax returns/orders and

thus, it cannot object to the admissibility of the records

produced by the defence. To reiterate, even if such returns

and orders are admissible, the probative value would

depend on the nature of the information furnished, the

findings recorded in the orders and having a bearing on the

charge levelled. In any view of the matter, however, such

returns and orders would not ipso facto either conclusively

prove or disprove the charge and can at best be pieces of

evidence which have to be evaluated along with the other

materials on record. Noticeably, none of the respondents

has been examined on oath in the case in hand. Further,

the income tax returns relied upon by the defence as well

as the orders passed in the proceedings pertaining thereto

have been filed/passed after the charge-sheet had been

submitted. Significantly, there is a charge of conspiracy

and abetment against the accused persons. In the overall

perspective therefore neither the income tax returns nor

the orders passed in the proceedings relatable thereto,

either definitively attest the lawfulness of the sources of

income of the accused persons or are of any avail to

them to satisfactorily account the disproportionateness of

their pecuniary resources and properties as mandated by

Section 13(1)(e) of the Act.

199. The import of this decision is that in the tax regime,

the legality or illegality of the transactions generating

profit or loss is inconsequential qua the issue whether

the income is from a lawful source or not. The scrutiny

in an assessment proceeding is directed only to quantify

the taxable income and the orders passed therein do not 

[2024] 3 S.C.R. 697

Puneet Sabharwal v. CBI

certify or authenticate that the source(s) thereof to be

lawful and are thus of no significance vis-à-vis a charge

under Section 13(1)(e) of the Act.

200. In Vishwanath Chaturvedi (3) v. Union of India, (2007)

4 SCC 380 : (2007) 2 SCC (Cri) 302], a writ petition was

filed under Article 32 of the Constitution of India seeking

an appropriate writ for directing the Union of India to take

appropriate action to prosecute R-2 to R-5 under the 1988

Act for having amassed assets disproportionate to the

known sources of income by misusing their power and

authority. The respondents were the then sitting Chief

Minister of U.P. and his relatives. Having noticed that

the basic issue was with regard to alleged investments

and sources of such investments, Respondents 2 to 5

were ordered by this Court to file copies of income tax

and wealth tax returns of the relevant assessment years

which was done. It was pointed out on behalf of the

petitioner that the net assets of the family though were

Rs 9,22,72,000, as per the calculation made by the official

valuer, the then value of the net assets came to be Rs

24 crores. It was pleaded on behalf of the respondents

that income tax returns had already been filed and the

matters were pending before the authorities concerned

and all the payments were made by cheques, and thus

the allegation levelled against them were baseless. It was

observed that the minuteness of the details furnished by

the parties and the income tax returns and assessment

orders, sale deeds, etc. were necessary to be carefully

looked into and analysed only by an independent agency

with the assistance of chartered accountants and other

accredited engineers and valuers of the property.It was

observed that the Income Tax Department was concerned

only with the source of income and whether the tax was

paid or not and, therefore, only an independent agency or

CBI could, on court direction, determine the question of

disproportionate assets. CBI was thus directed to conduct

a preliminary enquiry into the assets of all the respondents

and to take further action in the matter after scrutinising

as to whether a case was made out or not. 

698 [2024] 3 S.C.R.

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201. This decision is to emphasise that submission of

income tax returns and the assessments orders passed

thereon, would not constitute a foolproof defence against

a charge of acquisition of assets disproportionate to the

known lawful sources of income as contemplated under

the PC Act and that further scrutiny/analysis thereof is

imperative to determine as to whether the offence as

contemplated by the PC Act is made out or not.”

[Emphasis Supplied]

30. The appellants herein have contended that the decision in J.

Jayalalitha (supra) would not be applicable to the present case

since, according to them, that decision involved only an assessment

order, while the present case involves the findings by an Appellate

Tribunal after an inquisition into the issues involved. The Appellants

herein seek to rely on Paragraph 309 of the decision in J. Jayalalitha

(supra) in support of the same. Paragraph 309 is set-out hereunder:

“309. In contradistinction, the High Court quantified the

amount of gifts to be Rs 1.5 crores principally referring to

the income tax returns and the orders of the authorities

passed thereon. It did notice that there had been a delay

in the submission of the income tax returns but accepted

the plea of the defence acting on the orders of the Income

Tax Authorities. It seems to have been convinced as well

by the contention that there was a practice of offering

gifts to political leaders on their birthdays in the State. Not

only is the ultimate conclusion of the High Court, dehors

any independent assessment of the evidence to overturn

the categorical finding of the trial court to the contrary, no

convincing or persuasive reason is also forthcoming. This

assumes significance also in view of the state of law that

the findings of the Income Tax Authorities/forums are not

binding on a criminal court to readily accept the legality

or lawfulness of the source of income as mentioned in the

income tax returns by an assessee without any semblance

of inquisition into the inherent merit of the materials on

record relatable thereto. Not only this aspect was totally

missed by the High Court, no attempt seems to have

been made by it to appraise the evidence adduced by 

[2024] 3 S.C.R. 699

Puneet Sabharwal v. CBI

the parties in this regard, to come to a self-contained and

consummate determination.”

31. These submissions do not appeal to us for the following reasons:

(i) First of all, the inquisition mentioned in Paragraph 309 of the

said decision, is the inquisition to be made by the criminal

court. That is clear from a complete reading of the above-said

paragraph. In that case, the High Court, while acquitting the

accused, had merely gone by the income tax records which

were produced by the accused persons. However, the Trial

Court had independently examined the issue and had not

mechanically gone by the income tax records. It was while

commenting on this that this Court said an inquisition ought to

have been made on the material.

(ii) Secondly, this Court in J. Jayalalitha (supra), before arriving

at a conclusion regarding the probative value of the income tax

returns, has examined in detail the previous decisions of this

Court where there were not only assessment orders but also

decisions of the Appellate Tribunal and the High Court. It is

only after considering this aspect that the Court laid down that

the Income Tax Returns and Orders passed in IT Proceedings

are not conclusive proof.

(iii) Thirdly, this Court has categorically held that while income tax

returns/orders may be admissible as evidence, the probative

value of the same would depend on the nature of the information

furnished and findings recorded in the order, and would not ipso

facto either conclusively prove or disprove a charge.

(iv) Fourthly, it is important to note that the decision in J. Jayalalitha

(supra) was in a matter involving a full-fledged trial and the

Court was hearing an appeal against an Order of acquittal

passed by the High Court. The Court also noted that income

tax returns or orders could at best be evidences which have to

be evaluated along with the other materials on record.

(v) This Court, in cases involving either discharge [State of

Tamil Nadu v. N. Suresh Rajan & Ors. (2014) 11 SCC 709

Paragraph 32.3] or quash [CBI & Anr. v. Thommandru Hannah

Vijayalakshmi & Anr. (2021) 18 SCC 135 Paragraph 63-64] has

noted that Income Tax Returns are not conclusive proof which 

700 [2024] 3 S.C.R.

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can be relied upon either to quash the criminal proceeding or

to discharge the accused persons.

32. Therefore, in the present case, the probative value of the Orders of

the Income Tax Authorities, including the Order of the Income Tax

Appellate Tribunal and the subsequent Assessment Orders, are not

conclusive proof which can be relied upon for discharge of the accused

persons. These orders, their findings, and their probative value, are

a matter for a full-fledged trial. In view of the same, the High Court,

in the present case, has rightly not discharged the appellants based

on the Orders of the Income Tax Authorities.

33. Insofar as the submission that where there is exoneration in a civil

adjudication, criminal prosecution on the same set of facts and

circumstances cannot be allowed to continue is concerned, the

same is also without merit as far as the present case is concerned.

34. The appellants herein have placed reliance on the decisions of this

Court in Radheyshyam Kejriwal (supra), Ashoo Surendranath

Tewari (supra) and J. Sekar (supra) to argue that once there is an

exoneration on merits in a civil adjudication, a criminal prosecution

on the same set of facts and circumstances cannot be allowed to

continue. In our opinion, none of the above-referred decisions are

applicable to the facts of the present case.

35. In Radheshyam Kejriwal (supra), this Court was concerned with

a fact situation where the Petitioner therein was being prosecuted

under the Foreign Exchange Regulation Act, 1973 for payments

made by him in Indian currency in exchange for foreign currency

without any general or specific exemption from the Reserve Bank

of India. The Enforcement Directorate had commenced both an

adjudication proceeding and a prosecution under the provisions of

the Foreign Exchange Regulation Act, 1973. It so transpired that

the Adjudicating Officer found that no documentary evidence was

available to prove the foundational factum of the Petitioner therein

entering into the alleged transactions which fell foul of the Act and

thereafter directed that the proceedings be dropped. The question

which fell for the consideration before this Court was whether the

result of this adjudication proceeding would lead to exoneration of

the Petitioner in the criminal prosecution.

36. In this background, this Court noticed that the adjudication proceedings

under the Foreign Exchange Regulation Act, 1973 involved an 

[2024] 3 S.C.R. 701

Puneet Sabharwal v. CBI

adjudication on whether a person had committed a contravention

of any provisions of the Act. It is in this context, that the Court went

on to hold that where the allegation in an adjudication proceeding

and proceeding for prosecution is identical and the exoneration

in the former is on merits i.e. that there is no contravention of the

provisions of the Act, then the trial of person concerned would be

an abuse of process of the Court.

37. The decision in Radheyshyam (supra) was in a fact situation where

the adjudicatory and criminal proceedings were being commenced

by the same authority in exercise of powers under the same Act.

Further, as this Court had noted, the civil adjudication proceedings

related to an adjudication as to whether there was contravention of

provisions of the Act and the Rules thereunder, which had an impact

on the prosecution under the Act. However, in the present case,

the appellants herein are being prosecuted under the provisions

of the Prevention of Corruption Act while they seek to rely on an

exoneration under the Income Tax Act. The scope of adjudication in

both of these proceedings are vastly different. The authority which

conducted the income tax proceedings and the authority conducting

the prosecution is completely different (CBI). The CBI was not and

could not have been a party to the income tax proceeding. Given

the said factual background, the decision in Radheyshyam (supra)

is not applicable to the present case.

38. In Ashoo Surendranath (supra), the Petitioner therein was working

as a DGM at the Small Industries Development Bank of India while

there was diversion of funds from the Bank. The allegation against

the Petitioner therein was that he had shared the RTGS details for

the account to which the amount was diverted, to another official who

was the purported kingpin of the crime. The competent authority of

the Bank had refused to provide a sanction for prosecution of the

Petitioner therein, which was supported by the report of the Central

Vigilance Commission. The question therefore posed before the

Court was whether the report of the Central Vigilance Commission

should lead to discharge of the Petitioner therein.

39. In the above-mentioned factual background, this Court set-out the

findings of the Central Vigilance Commission which had recorded

that the e-mail sent by the Petitioner therein had clearly been

sent to the principal accused for the purpose of verification since

the latter was the officer for verification and that this showed that 

702 [2024] 3 S.C.R.

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there was no role that the Petitioner played in perpetrating the

offence. Thereafter, relying upon the decision in Radheyshyam

(supra), the Court concluded that since the allegation has been

found to be “not sustainable at all”, the criminal prosecution could

not be continued.

40. The decision in Ashoo Surendranath (supra) is not applicable to

the present case because the decision in Ashoo Surendranath

(supra) concerned a singular prosecution under the provisions of

the Indian Penal Code where the sanctioning authority had, while

denying sanction, recorded on merits that there was no evidence to

support the prosecution case. In that context, the Court was of the

opinion that a criminal proceeding could not be continued. However,

in the present case, the charges were framed under the Prevention

of Corruption Act, while the appellants seek to rely upon findings

recorded by authorities under the Income Tax Act. The scope of

adjudication in both the proceedings are markedly different and

therefore the findings in the latter cannot be a ground for discharge

of the Accused Persons in the former. The proceedings under the

Income Tax Act and its evidentiary value remains a matter of trial

and they cannot be considered as conclusive proof for discharge of

an accused person.

41. The appellants herein have further sought to place reliance on J.

Sekar (supra) to argue that the letter of the Income-Tax Department

was relied upon to quash prosecution under the Prevention of

Money Laundering Act, 2002. In our opinion, this decision is again

inapplicable to the present case. In J. Sekar (supra), the criminal

proceedings had arisen based upon the information furnished by

the Income Tax Department regarding recovery of unauthorized

cash and other items during their search. It so transpired that the

Income Tax Department accepted the explanation of the accused

regarding the recovered cash which led to closure of the Income

Tax proceedings. Thereafter, even the criminal proceedings led to

filing of a closure report on the ground that no sufficient evidence

was found for continuation of prosecution. The proceedings under

the Prevention of Money Laundering Act, being based on the

Income Tax Department’s information after their search and the

registration of FIR, were found to be unsustainable in view of no

violation being found either by the Department or in the criminal

proceeding. 

[2024] 3 S.C.R. 703

Puneet Sabharwal v. CBI

42. The decision in J. Sekar (supra) is therefore distinguishable on

facts. In the abovementioned case, there was an exoneration

by not only the Income Tax Department, to the effect that no

case was made, there was also an exoneration in the criminal

proceedings which involved the Scheduled Offence. In the present

case, the proceedings under the Income Tax Act which are

sought to be relied upon relate to the assessment of income of

the assessee and not to the source of income and the allegation

of disproportionate assets under the Prevention of Corruption

Act. The said Orders cannot be the basis to abort the criminal

proceeding in the present case.

43. We are not to conduct a dress rehearsal of the trial at this stage.

The tests applicable for a discharge are well settled by a catena of

judgments passed by this Court. Even a strong suspicion founded

on material on record which is ground for presuming the existence

of factual ingredients of an offence would justify the framing of

charge against an accused person [Onkar Nath Mishra & Ors. v.

State (NCT of Delhi) & Anr. (2008) 2 SCC 561 Paragraph 11]. The

Court is only required to consider judicially whether the material

warrants the framing of charge without blindly accepting the decision

of the prosecution [State of Karnataka v. L. Muniswamy & Ors.

(1977) 2 SCC 699 Paragraph 10]. Applying these principles to the

present case, we accept the submission of the learned ASG that

the appellants have not made out the case to say that the charge

is groundless.

44. The other argument about the minority of the appellant Puneet

Sabharwal also need not detain the Court since for the last seven

years of the check period admittedly he was not a minor. All the

defences are available for the appellants to be placed before the

Trial Court.

45. In view of what we have held hereinabove, we are not called upon

to answer the argument raised by the learned ASG that the Income

Tax Appellate Tribunal order being a document which has emerged

subsequent to the framing of the charge, it cannot be taken into

consideration at all.

46. For all the above reasons, we find no merit in these appeals and

the appeals are dismissed. The interim orders stand vacated. All

pending applications stand closed. The trial has been pending for 

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nearly 25 years. We direct that the trial be expeditiously concluded

and, in any case, on or before 31.12.2024. Needless to mention

that the observations made herein are only in the context of the

discharge proceedings.

Headnotes prepared by: Ankit Gyan Result of the case:

Appeals dismissed.