LAW FOR ALL

Wednesday, October 31, 2012

the question of the competence of the commanding officer of the accused, who signed and issued the charge sheet, to convene and conduct the summary court-martial against that very accused. - Section 116 provides that the summary court-martial may be held by the commanding officer of any corps, department or detachment of the regular Army, and he shall alone constitute the court. - There is no violation of principles of natural justice. No illegality has been committed in convening the summary court-martial by the commanding officer nor there is any illegality in the conduct of the summary court- martial. The respondent pleaded guilty to the charge before the summary court-martial and the summary court-martial found him guilty. It was only then that the order of dismissing the respondent from service was passed. It is now settled that no reasons are required to be recorded by the court-martial. 23. Civil appeal is allowed. The judgment and order of the Single Judge dated 7.09.2006 and the order of the Division Bench dated 28.08.2008 are set aside. No order as to costs.

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1961 OF 2010

Union of India & Ors. …. Appellants

Versus

Dinesh Prasad
….Respondent

JUDGMENT

R.M. Lodha, J.

This appeal raises the question of the competence of the
commanding officer of the accused, who signed and issued the
charge sheet, to convene and conduct the summary court-martial
against that very accused.
2. The above question arises in this way. The respondent,
Dinesh Prasad, joined the 11th Assam Rifles as washerman/rifleman
in 1995. For the period between 26.07.1998 and 11.10.2000 (FN), he
absented himself from unit unauthorisedly while in active service.
On 03.08.2001, Col. A.S. Sehrawat, Commandant, under his signature
served a charge sheet under Section 39(a) of the Army Act, 1950
(for short, ‘Army Act’) on the respondent for the absence without
leave for 808 days. The Commandant constituted summary court-
martial to try the respondent for the above charge. The respondent
pleaded guilty to the charge before the summary court-martial. The
summary court- martial, after taking into consideration the facts
and circumstances of the case, passed an order on 04.08.2001
dismissing the respondent from service. The Reviewing Officer has
confirmed the punishment of dismissal from the service awarded to
the respondent.
3. The respondent challenged the punishment awarded to him by
the summary court-martial in a writ petition before the Gauhati
High Court. The respondent (petitioner therein) explained in the
writ petition the reason for his absence. According to him, he lost
his mental balance while in service and was suffering from mental
depression. At the time of arguments before the Single Judge, it
was submitted on his behalf that the very Commandant of the
Battalion, who signed and issued the charge sheet to him, convened
and presided over the summary court-martial and on conclusion of
which the punishment of dismissal from service was imposed which
vitiated the court-martial proceedings as he was denied a fair
trial.
4. The learned Single Judge held that while issuing a charge
sheet the Commandant tentatively made up his mind that there was
some material against the delinquent and accordingly, after having
issued charge sheet, Col. A.S. Sehrawat, who was Commandant of the
Battalion, ought not to have convened the court-martial and in any
event ought not to have conducted the proceedings of the court-
martial leading to the punishment of dismissal from the service.
The Single Judge held that in the facts of the case, the
proceedings of the summary court-martial held against the
delinquent were vitiated on account of likelihood of bias. By the
judgment and order dated 07.09.2006, the Single Judge allowed the
writ petition and set aside the respondent’s dismissal from
service. It was observed, however, that it would be open for the
concerned authority to proceed in the matter afresh in accordance
with law, if it so desired.
5. Being not satisfied with the judgment and order dated
07.09.2006, the present appellants preferred writ appeal. The
Division Bench of the Gauhati High Court found that under Section
116 of the Army Act, the summary court-martial proceedings could be
held by the commanding officer of any corps, department or
detachment of the regular Army and it need not necessarily be the
commanding officer of the Battalion in which the accused was
serving. The Division Bench thus in its order of 28.08.2008 was
of the view that there was no justification to interfere with the
view taken and the conclusion reached by the Single Judge in the
impugned judgment. It is from this order that the present appeal
by special leave has arisen.
6. It is necessary to refer to the relevant statutory
provisions in the Army Act and the Army Rules, 1954 (for short,
‘Army Rules’) for consideration of the question raised before us.
Section 3(v) defines ‘commanding officer’ as under:

“S.3(v)- "commanding officer", when used in any
provision of this Act, with reference to any separate
portion of the regular army or to any department
thereof, means the officer whose duty it is under the
regulations of the regular Army, or in the absence of
any such regulations, by the custom of the service,
to discharge with respect to that portion of the
regular Army or that department, as the case may be,
the functions of a commanding officer in regard to
matters of the description referred to in that
provision”.

7. Section 4 of the Army Act makes applicable its provisions
to certain forces under the Central Government. In exercise of the
powers conferred by sub-section (1) of Section 4 of the Army Act,
the Central Government has issued SRO 117 dated 28.03.1960 and SRO
318 dated 6.12.1962. SRO 318 has been subsequently amended by SRO
325 dated 31.8.1977. SRO 318 dated 6.12.1962 (as amended by SRO 325
dated 31.8.1977) reads as follows:
“S.R.O. 318 dated 6th December, 1962 (as amended by
S.R.O. No. 325 dated 31st August, 1977). - In
exercise of the powers conferred by sub-section (1)
of Section 4 of the Army Act, 1950 and in
supersession of the notification of the Government of
India in the late Affair Department No. 93-X dated
25th June 1942, as subsequently amended, the Central
Government hereby –
(i) Applies to every unit of the Assam Rifles, (and
to recruits and personnel or the said Assam Rifles
when undergoing training in any army training
establishments) being a force raised and maintained
in India under authority of the Central Government,
all the provisions of the said Act, except those
specified in Part A of the Schedule annexed hereto,
subject to the modifications set forth in Part B of
the that (sic) Schedule, when attached to or acting
with any body of the regular army; and
(ii) suspends, while this notification remains
in force the operation of sections 6,7,8 and 9 of the
Assam Rifles Act, 1941 (5 of 1941)”.

8. Chapter VI of the Army Act deals with the offences.
Sections 34 to 70 fall under Chapter VI. Section 39, to the extent
it is relevant, reads as under:-

“39. Absence without leave.- Any person subject to
this Act who commits any of the following offences,
that is to say, -
(a) absents himself without leave; or
(b) to (g) ……………….

shall on conviction by court-martial, be liable to
suffer imprisonment for a term which may extend to
three years or such less punishment as is in this Act
mentioned”.

9. Section 108 describes the kinds of courts-martial. The
said provision reads as under:
“108. Kinds of courts-martial. – For the purposes of
this Act there shall be four kinds of courts-martial,
that is to say, -

(a) general courts-martial;
(b) district courts-martial;
(c ) summary general courts-martial; and
(d) summary courts-martial”.

10. Section 116 provides that the summary court-martial may be
held by the commanding officer of any corps, department or
detachment of the regular Army, and he shall alone constitute the
court. As per sub-section (2) of Section 116, the proceedings
shall be attended throughout by two other persons who shall be
officers or junior commissioned officers or one of either, and who
shall not as such, be sworn or affirmed.
11. Section 71 provides for punishments awardable by courts-
martial. One of the punishments that is awardable by the courts-
martial is dismissal of the delinquent from service.
12. The Army Rules have been framed by the Central Government
in exercise of its powers under Section 191 for the purposes of
carrying into effect the provisions of the Army Act. The powers of
the commanding officers in relation to investigation of charges and
trial by court-martial are provided in Chapter V of the Army Rules.
Rule 31 provides that the charge sheet shall be signed by the
commanding officer of the accused and shall contain the place and
date of such signature.

13. Rule 39 deals with ineligibility and disqualification of
officers for court-martial. It reads as under:
“39 Ineligibility and disqualification of
officers for court-martial;

(1) An officer is not eligible for serving on a court-
martial if he is not subject to the Act.

(2) An officer is disqualified for serving on a
general or district court-martial if he--

(a) is an officer who convened the Court; or

(b) is the prosecutor or a witness for the
prosecution; or

(c) investigated the charges before trial, or
took down the summary of evidence, or was a
member of a court of inquiry respecting the
matters on which the charges against the
accused are founded, or was the squadron,
battery, company, or other commander, who made
preliminary inquiry into the case, or was a
member of a previous court-martial which tried
the accused in respect of the same offence; or

(d) is the commanding officer of the accused,
or of the corps to which the accused belongs;
or

(e) has a personal interest in the case.

(3) The provost-marshal or assistant provost-marshal
is disqualified from serving on a general court-
martial or district court-martial.”

14. Rules 106 to 133 of the Army Rules provide for the
proceedings for conduct of summary court-martial. The summary
court-martial has to follow the procedure provided in these Rules.
Arraignment of the accused is provided in Rule 111. Rule 115 deals
with general plea of ‘guilty’ or ‘not guilty’. Rule 116 deals with
the procedure after plea of ‘guilty’. Rule 116 provides as
follows:

“116 Procedure after plea of "Guilty":-

(1) Upon the record of the plea of "Guilty", if there
are other charges in the same charge-sheet to which
the plea is "Not Guilty", the trial shall first
proceed with respect to the latter charges, and,
after the finding of these charges, shall proceed
with the charges on which a plea of "Guilty" has been
entered; but if they are alternative charges, the
Court may either proceed with respect to all the
charges as if the accused had not pleaded "Guilty" to
any charge, or may, instead of trying him, record a
finding upon any one of the alternative charges to
which he has pleaded "Guilty" and a finding of "Not
Guilty" upon all the other alternative charges.

(2) After the record of the plea of "Guilty" on a
charge (if the trial does not proceed on any other
charges), the Court shall read the summary of
evidence, and annex it to the proceedings or if there
is no such summary, shall take and record sufficient
evidence to enable it to determine the sentence, and
the reviewing officer to know all the circumstances
connected with the offence. The evidence shall be
taken in like manner as is directed by these rules in
case of a plea of "Not Guilty".

(3) After such evidence has been taken, or the
summary of evidence has been read, as the case may
be, the accused may address the Court in reference to
the charge and in mitigation of punishment and may
call witnesses as to his character.

(4) If from the statement of the accused, or from the
summary of evidence, or otherwise, it appears to the
Court that the accused did not understand the effect
of his plea of "Guilty", the court shall alter the
record and enter a plea of “Not Guilty”, and proceed
with the trial accordingly.”

(5) If a plea of "Guilty" is recorded and the trial
proceeds with respect to other charges in the same
charge-sheet, the proceedings under sub-rules (2) and
(3) shall take place when the findings on the other
charges in the same charge-sheet are recorded.

(6) When the accused states anything in mitigation of
punishment which in the opinion of the Court requires
to be proved, and would, if proved, effect the amount
of punishment, the court may permit the accused to
call witnesses to prove the same.

(7) In any case where the Court is empowered by
section 139 to find the accused guilty of an offence
other than that charged, or guilty of committing an
offence in circumstances involving a less degree of
punishment, or where it could, after hearing the
evidence, have made a special finding of guilty
subject to exceptions of variations in accordance
with sub-rule (3) of rule 121, it may, if it is
satisfied of the justice of such course accept and
record a plea of guilty of such other offence, or of
the offence as having been committed in circumstances
involving such less degree of punishment, or of the
offence charged subject to such exceptions or
variations”.

15. Rule 123 provides for procedure on conviction and Rule 124
deals with the sentence. Rule 187(3)(a) provides that every
battalion is ‘corps’ for the purpose of summary court-martial.
16. It may be immediately stated that by virtue of Section 4
of the Army Act read with S.R.O.318 dated 6.12.1962 (as amended by
S.R.O. 325 dated 31.08.1977), the Army Act has been made
applicable to the Assam Rifles. The respondent was thus subject to
the provisions of the Army Act.
17. That the Commandant, Col. A.S. Sehrawat, signed and issued
the charge sheet to the respondent and convened and presided over
the summary court-martial is not in dispute. It is also not in
dispute that the summary court-martial presided over by Col. A.S.
Sehrawat awarded to the respondent the punishment of dismissal
from service. Whether the above procedure has vitiated the court-
martial proceedings against the respondent is the question. The
courts-martial are of four kinds, (a) general courts-martial; (b)
district courts-martial; (c) summary general courts-martial; and
(d) summary courts-martial as per Section 108. Rule 39 of the Army
Rules deals with ineligibility and disqualification of officers for
court-martial. In terms of this Rule, an officer is disqualified
for serving on general court-martial or district court-martial if
he is an officer who convened the court. A commanding officer of
the accused or of the corps to which the accused belongs is also
disqualified for serving on general court-martial or district court-
martial. However, no disqualification is attached to the officer
who convened the court or the commanding officer of the accused or
of the corps to which the accused belongs for serving on the other
two kinds of courts-martial, namely, summary general courts-
martial or summary courts-martial. There is neither any
impediment nor embargo in the Army Act or the Army Rules for an
officer who convened the summary general courts-martial or summary
courts- martial or the commanding officer of the accused or of the
corps to which the accused belongs to serve on such court. Section
116 of the Army Act rather provides that a summary court-martial
may be held by the commanding officer of any corps, department or
detachment of the regular Army and he shall alone constitute the
court (summary court-martial). If the provision contained in
Section 116 of the Army Act is read with Rules 31 and 39 of the
Army Rules, there remains no manner of doubt that Col. A.S.
Sehrawat, who was commanding officer of the respondent, did not
suffer from any disability, ineligibility or disqualification to
serve on the summary court-martial to try the respondent despite
the fact that he signed and issued the charge sheet against the
respondent.
18. As a matter of fact, the competence or eligibility of
Col. A.S. Sehrawat to serve on the summary court-martial for trial
of the respondent was not at all put in issue by the respondent in
the entire writ petition. The petitioner therein set up the
following grounds, namely; (1) the charge against the petitioner
for absenting himself without leave being an offence under Section
39(a) of the Army Act has to be proved beyond reasonable doubt;
(2) the petitioner’s absence from Unit Headquarters was not
willful and intentional; it was for the reason beyond his control;
and (3) the punishment awarded by the summary court-martial was
not rational and commensurate with the offence proved; it did not
maintain the proportion; the punishment was oppressive and out of
tune of the occasion. It was only in the course of arguments
before the learned Single Judge that a submission was made on
behalf of the petitioner that the very Commandant of the Battalion,
who signed and issued the charge sheet to him, convened and
presided over the summary court-martial and on conclusion of which
the punishment of dismissal from service was imposed which vitiated
the court-martial proceedings as he was denied a fair trial. In
our view, the learned Single Judge was clearly in error in
allowing such argument. Firstly, the argument was raised without
any foundation in the writ petition. No plea of actual or
likelihood of bias was raised in the writ petition. There was also
no plea taken in the writ petition that he was denied fair trial
in the course of summary court-martial. Secondly, and more
importantly, the learned Single Judge overlooked and ignored the
statutory provisions referred to hereinabove. The Division Bench
also failed in considering the matter in right perspective and in
light of the provisions in the Army Act and the Army Rules.
19. Absence without leave is one of the offences under the Army
Act. On conviction by the court-martial of the said offence, the
offender is liable to suffer imprisonment for a term which may
extend to three years. Alternatively, for such offence any of the
punishments provided in Section 71 may be awarded by the court-
martial. Clause (e) of Section 71 provides dismissal from the
service as one of the punishments awardable by the court-martial
for such an offence. The respondent was served with the charge
sheet which was in conformity with Rule 31 of the Army Rules and
Sections 39 and 116 of the Army Act. The respondent admittedly
absented himself from unit line for 808 days. He did not obtain
any leave. He pleaded guilty before the summary court-martial. The
summary court-martial followed the procedure provided under Rule
116 of the Army Rules and awarded punishment of his dismissal
from service. Neither constitution of the summary court-martial
nor the procedure followed by that court can be said to suffer from
any illegality. The facts are eloquent inasmuch as respondent
remained absent without leave for more than two years in the
service of about five years. The order of dismissal, in the facts
and circumstances of the case, by no stretch of imagination, can be
said to be disproportionate or oppressive or founded on extraneous
consideration.
20. The decision of this Court in Vidya Parkash v. Union of
India and Ors[1]. squarely applies to the present situation.
Unfortunately, the judgment in Vidya Parkash1 was not brought to
the notice of the Single Judge and the Division Bench. The facts
in Vidya Parkash1 were these: the appellant was posted as Jawan in
Panagarh. He left Panagarh with his wife and children for Kanpur
without taking any leave. According to Vidya Parkash, he became
unwell and he was under treatment of a doctor. When he reported to
Panagarh unit with his fitness certificate, he was served
with a charge sheet wherein it was ordered by Major P.S. Mahant
that he would be tried by summary court-martial. The summary court-
martial which was presided over by Major P.S. Mahant ordered his
dismissal from service. Vidya Parkash challenged that order in a
writ petition before Delhi High Court. Inter alia, a plea was
set up that the commanding officer Major P.S. Mahant was not
legally competent to preside over a summary court-martial. The
Division Bench of the Delhi High Court dismissed the writ petition.
It was held that no objection was taken as to the competence of
Major P.S. Mahant to act as a Judge in summary court-martial. It
was from the order of the Delhi High Court that the matter reached
this Court. This Court considered Sections 108 and 116 of the
Army Act, Rule 39(2) of the Army Rules and held that the summary
court martial held by the commanding officer Major P.S. Mahant was
in accordance with the provisions of Section 116 of the Army Act.
This Court further observed :
“13 - The Commanding Officer of the Corps,
Department or Detachment of the Regular Army to which
the appellant belongs, is quite competent in
accordance with the provisions of Section 116 of the
said Act and as such the constitution of the summary
court martial by the Commanding Officer of the Corps
cannot be questioned as illegal or incompetent. It is
neither a general court martial nor a district court
martial where the appellant's case was tried and
decided. In case of general court martial or district
court martial Rule 39(2) of the Army Rules, 1954 is
applicable and the Commanding Officer is not
competent to convene general or district court
martial. The summary court martial was held by the
Commanding Officer of the corps, Major P.S. Mahant
and there are two other officers including Capt. K.J.
Singh and another officer to attend the proceedings.
In such circumstances, the summary court martial
having been convened by the Commanding Officer of the
corps according to the provisions of the Army Act,
1950, the first submission made on behalf of the
appellant fails.”

21. The legal position exposited by this Court in Vidya
Parkash1 renders the impugned judgments unsustainable.
22. Learned counsel for the respondent placed heavy reliance
upon the decisions of this Court in Punjab National Bank and Ors.
v. Kunj Behari Misra[2], Maneka Gandhi v. Union of India & Anr.[3]
and Roop Singh Negi v. Punjab National Bank & Ors.[4] , in
support of his submission that the order of dismissal from service
by the summary court-martial was in violation of principles of
natural justice. We are afraid none of these decisions has any
application to the facts of the present case. There is no
violation of principles of natural justice. No illegality has been
committed in convening the summary court-martial by the commanding
officer nor there is any illegality in the conduct of the summary
court- martial. The respondent pleaded guilty to the charge before
the summary court-martial and the summary court-martial found him
guilty. It was only then that the order of dismissing the
respondent from service was passed. It is now settled that no
reasons are required to be recorded by the court-martial.
23. Civil appeal is allowed. The judgment and order of the
Single Judge dated 7.09.2006 and the order of the Division Bench
dated 28.08.2008 are set aside. No order as to costs.

………………………J.
(R.M. Lodha)

.....……………………J.
(Anil R.
Dave)
NEW DELHI
OCTOBER 30, 2012.

-----------------------
[1] (1988) 2 SCC 459
[2] (1998) 7 SCC 84
[3] AIR 1978 SC 597
[4] (2009) 2 SCC 570

whether the matter should be remanded to the High Court for reconsideration of the LPA, making it clear that in the event such a course of action is considered to be not feasible or appropriate, the contentions of the parties on the merits of the dispute would be considered by us. To resolve the aforesaid question a brief recital of the core facts will be required. - what was challenged in the appeal is the main order dated 3.10.2000 passed in the Writ Petition as well as the order dated 6.1.2004 passed in the Review Petition. What was stated before the Division Bench of the High Court is that the appellant had no grievance against the main order dated 3.10.2000 as it originally stood and the grievance arose only after para 23 of the order dated 3.10.2000 was explained in the subsequent order dated 6.1.2004 passed in the Review Petition. If the above was the stand taken by the appellant, it was naturally incumbent on the part of the appellate bench to consider the appeal against the main order dated 3.10.2000 passed in the writ petition as well as the order dated 6.1.2004 passed in the Review Petition. A scrutiny of the order dated 23.9.2009 passed by the High Court in the writ appeal clearly indicates that apart from incidental references to the claim of the appellant to the land in question, the High Court has proceeded as if the writ appeal was directed against the order dated 6.1.2004 passed in the Review Petition. The said fact being ex facie apparent and the same not having been corrected despite the application for review filed by the appellant (Review Petition No.11/2009), we are of the view that these appeals have to be allowed; the order dated 23.9.2009 should be set aside and the matter remanded to the High Court for a fresh consideration.

IN THE SUPREME COURT OF INDIA

CIVIL APPELATE JURISDICTION

CIVIL APPEAL Nos. 7601-7602 OF 2012
(Arising out of SLP © No. 26640-26641 of 2011)

Young Men Christian Association … Appellant

Versus

Holy Mother of Aurobindo Ashram
& Ors. … Respondents

O R D E R

RANJAN GOGOI, J

Leave granted.

2. The order dated 23.9.2009 passed by the High Court of Guwahati in a
Letters Patent Appeal No. (Writ Appeal No. 18/(SH)/2005) as well as the
order dated 16.6.2011 declining the review application filed by the
appellant is the subject matter of challenge in the present appeal.

3. In view of the limited notice issued by this Court on 16.9.2011, at
the very outset, we had heard learned counsel for the parties as to whether
the matter should be remanded to the High Court for reconsideration of the
LPA, making it clear that in the event such a course of action is
considered to be not feasible or appropriate, the contentions of the
parties on the merits of the dispute would be considered by us. To resolve
the aforesaid question a brief recital of the core facts will be required.

4. The respondent No.1 in the present appeal i.e. the Holy Mother of
Aurobindo Ashram had filed a writ petition before the High Court
challenging an order dated 8.11.1976 allotting two plots of lands measuring
0.69 acres i.e. 30,290 sq. yards and 0.67 acres, i.e. 29,290 sq.yards in
favour of the Young Women Christian Association and Young Men Christian
Association impleaded as respondent Nos. 5 and 6 in the writ petition. The
case of the respondent – writ petitioner before the High Court was to the
effect that two plots of land numbered as plot 5 and 5A included within an
estate known as ‘Morven Estate’ was gifted to the respondent No. 1 way back
in the year 1955. The land in question was covered by a lease agreement
made in favour of the original owner - Shri HL Hadow for a period of 99
years, w.e.f. 1.9.1865. On expiry of the period of lease, i.e. 99 years,
the Government of Meghlaya, though by order dated 2.1.1976, had conveyed
its decision to renew the lease for another period of 75 years in favour of
the respondent No.1 – writ petitioner formal orders in this regard were not
forthcoming. At the same time by order dated 8.11.1976 part of the property
was allotted to the respondents in question. Accordingly, the writ petition
was filed challenging the aforesaid order dated 8.11.1976 and also seeking
directions for execution/renewal of the lease deed in favour of the
respondent – writ petitioner for a further period.

5. By order dated 3.10.2000 a learned Single Judge of the High Court
allowed the writ petition; the orders impugned were set aside and the State
of Meghalaya was directed to issue formal orders for execution/renewal of
the lease deed in favour of the respondent No. 1 – writ petitioner.

In paragraph 23 of the order of learned Single Judge it was however
observed as:
“23. Before parting with the record, it is made clear that the
possession of the private respondents over a portion of the land shall
not be disturbed in view of the specific averment made in the writ
petition.”

6. In view of the use of the expression “private respondents” in para 23
of the order of the learned Single Judge dated 3.10.2000, the appellant –
YMCA, it is contended, had no cause to be aggrieved by the said order.
However, notwithstanding the directions contained in para 23 noted above,
as interference with the possession of the land by the appellant was made
Review Petition No. 4 (SH) of 2002 was filed before the High Court seeking
suitable clarification of the observations contained in para 23 of the
order dated 3.10.2000. By order dated 6.1.2004 the learned Single Judge
clarified that the word “private respondents” mentioned in para 23 meant
the respondent – YWCA and no other party.

7. The position having been so clarified by the order dated 6.1.2004 in
Review Petition No. 4 (SH) of 2002, Writ Appeal No.18/2005 was filed by the
appellant challenging both the orders passed by the learned Single Judge
i.e. order dated 3.10.2000 in the main writ petition and the order dated
6.1.2004 passed in Review Petition No. 4 (SH) of 2002. Along with the
appeal an application for condonation of delay of three years and 135 days
that had occurred in respect of the main order dated 3.10.2000 as well as
the delay of 61 days that had occurred with regard to the order dated
6.1.2004 passed in the review petition was prayed for. In the application
for condonation of delay it was stated by the appellant that it was not
aggrieved by the order dated 3.10.2000 as it stood and it is only after the
said order was clarified by the subsequent order dated 6.1.2004 that the
cause of action to file the appeal had arisen.

8. Shri Hansaria, learned senior counsel appearing for the appellant,
has submitted that a reading of the order dated 23.9.2009 passed in Writ
Appeal No. 18/2005 would go to show that the Division Bench of the High
Court had no occasion to consider the claim of the appellant to the land in
question on merits. In fact a reading of the said order shows that the
appeal i.e. Writ Appeal No.18/2005 was construed to be against the order
dated 6.1.2004 passed in the Review Petition and the same was disposed of
in the above terms. Learned counsel has submitted that Writ Appeal No.
18/2005 being against the main order dated 3.10.2000 as well as the order
dated 6.1.2004 passed in the Review Petition, in the fitness of things, the
entire matter ought to be remanded to the High Court for due consideration
on merits.

9. On the other hand, Shri Sorabjee, learned senior counsel appearing
for respondent No. 1 has drawn our attention to the application for
condonation of the delay that has occurred in instituting the LPA as well
as the order dated 3.8.2004 condoning the delay. Shri Sorabjee has
submitted that the aforesaid application and order clearly demonstrate that
the appellant had given up its challenge to the main order dated 3.10.2000
passed by the learned Single Judge in the Writ Petition and had confined
its challenge to the order dated 6.1.2004 by clearly admitting before the
Division Bench that it is aggrieved only by the order dated 6.1.2004 passed
in the Review Petition. It is submitted that in view of the aforesaid clear
and categorical stand taken by the appellant there will be no occasion for
this Court to remand the matter to the High Court for a fresh
consideration.

10. We have considered the submissions of the parties and have looked
into the relevant record referred to in the course of the arguments
advanced.

11. A reading of the memo of appeal filed by the appellant before the
High Court clearly shows that what was challenged in the appeal is the main
order dated 3.10.2000 passed in the Writ Petition as well as the order
dated 6.1.2004 passed in the Review Petition. What was stated before the
Division Bench of the High Court is that the appellant had no grievance
against the main order dated 3.10.2000 as it originally stood and the
grievance arose only after para 23 of the order dated 3.10.2000 was
explained in the subsequent order dated 6.1.2004 passed in the Review
Petition. If the above was the stand taken by the appellant, it was
naturally incumbent on the part of the appellate bench to consider the
appeal against the main order dated 3.10.2000 passed in the writ petition
as well as the order dated 6.1.2004 passed in the Review Petition. A
scrutiny of the order dated 23.9.2009 passed by the High Court in the writ
appeal clearly indicates that apart from incidental references to the claim
of the appellant to the land in question, the High Court has proceeded as
if the writ appeal was directed against the order dated 6.1.2004 passed in
the Review Petition. The said fact being ex facie apparent and the same not
having been corrected despite the application for review filed by the
appellant (Review Petition No.11/2009), we are of the view that these
appeals have to be allowed; the order dated 23.9.2009 should be set aside
and the matter remanded to the High Court for a fresh consideration.

12. We order accordingly and request the High Court to restore the writ
appeal to its original number and dispose of the same as expeditiously as
possible, preferably, within a period of two months from the date of
receipt of this order. Naturally, all such questions that may open in law
to the parties may be urged before the High Court.

...…………………………J.
[P. SATHASIVAM]

.........……………………J.
[RANJAN GOGOI]
New Delhi,
October 19, 2012.

-----------------------
9

Tuesday, October 30, 2012

Mortgage - deposit of title deeds - default - sale underthe State Financial Corporation Act, 1951 - in meanwhile private sale - not valid - High court cannot set aside the corporation sale as it was done underthe State Financial Corporation Act, 1951= the property in question was duly advertised for sale pursuant whereto the fifth respondent had offered the highest amount. On acceptance of the said offer by the UPFC, the entire amount was paid and the sale was confirmed by the Corporation. No sale deed was however executed by the Corporation in favour of the fifth respondent. It also appears that before the property was put up for sale by the Corporation, the original owner, Smt. Nisha Devi Jaiswal had sold the same to the third and fourth respondents, who, in turn, had sold the same to the writ petitioner by sale deed dated 29.08.2001. The aforesaid sale by the original owners to the vendors of the writ petitioner and, thereafter, by said vendors to the petitioner himself was made when the property stood mortgaged in favour of the UPFC. It is in the above circumstances, that the writ petitioner had approached the High court seeking interference with the sale of the property made in favour of the fifth respondent pursuant to the advertisement dated 20.10.2002 issued by the UPFC and further for transfer of the property in favour of the writ petitioner besides restoration of possession thereof which was taken over by the Corporation. 13. The sale made by the UPFC in favour of the fifth respondent was in exercise of the statutory powers vested in the Corporation by Section 29 of the State Financial Corporation Act, 1951. Under the aforesaid provisions of the Act default in re-payment of any loan by an industrial undertaking vests in the Financial Corporation the right to take over the management or possession or both of the industrial concern along with the right to transfer the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation. By virtue of sub-section (2) of Section 29 of the Act such transfer of property by the Corporation will vest in the transferee all rights in the property as if the transfer had been made by the owner thereof. 14. No serious issue either with regard to the validity of the exercise of the power under the Act or the manner of sale of the property by the Corporation pursuant to the advertisement dated 20.10.2002 had been raised in the Writ Petition. What was contended before the High Court is that the Writ Petitioner, Vishnu Dutt Sharma, had purchased the property by sale deed dated 29.08.2001 without any knowledge or information of the mortgage created by the original owner, Smt. Nisha Devi Jaiswal in favour of the Corporation and that the sale pursuant to the advertisement was also without notice to him. A right to the property based on certain equitable principles was also claimed to strengthen which, the offer covered by the interim order of the High Court dated 28.05.2003 was made by the writ petitioner. 15. The issues raised by the writ petitioner before the High court really pertained to the claim of better title of the writ petitioner to the property in question on the basis of the sale deed dated 29.08.2001. The validity of the sale deed dated 29.08.2001 executed in favour of the writ petitioner by his vendors during the subsistence of the mortgage in favour of the Corporation and the rights of the fifth respondent to the said property on the basis of the sale made in his favour by the Corporation pursuant to the advertisement dated 20.10.2002 are the issues that arose in the Writ Petition. Broad and expansive though the powers of the High Court under Article 226 may be, adjudication of the aforesaid questions, some of which also required proof of certain basic facts, in our view, was not appropriate in the domain of public law. Though the High Court in its order dated 05.12.2006 did not expressly say so, the affect of the several directions issued by it, in fact, amounts to an adjudication of the issues outlined above. 16. The essence of the dispute between the parties denuded the lis a public law character. Nor was any issue arising out of public law functions of the State or its authorities involved. In such a situation resort to the public law remedy should not have entertained by the High Court. (Vide Godavari Sugar Mills Ltd. vs. State of Maharashtra[1]). Even if the vindication of the writ petitioner’s rights under the sale deed dated 29.08.2001 is ignored and we are to proceed on the basis that the writ petitioner questioned the sale made by the Corporation, the writ petitioner would not be entitled to an adjudication of the rights of the parties inter se but at best to a judicial review of the administrative action of the Corporation with regard to the sale made (Vide Kisan Sahkari Chini Mills Ltd. and ors. vs. Vardan Linkers and others[2] ) But as already noticed neither the exercise of the statutory power under the Act by the Corporation in the matter of the sale of the property nor the process of the sale transaction was questioned in the Writ Petition either on account of lack of jurisdiction or abuse of authority. In the above facts, the High Court should have refused an adjudication of the Writ Petition and, instead, ought to have required the aggrieved parties to seek their remedies in an appropriate manner and before the competent civil forum. 17. In view of the above discussions, we allow both the appeals and set aside the order dated 05.12.2006 passed by the High Court of Uttarakhand at Nainital.

|REPORTABLE |

IN THE SUPREME COURT OF INDIA

CIVIL APPELATE JURISDICTION

CIVIL APPEAL No. 7597 of 2012
(Arising out of SLP (Civil) 6521/2007)

PRADEEP KUMAR SHARMA … Appellant

Versus

U.P.F.C. RAJPUR ROAD, DEHRADUN & ORS … Respondents

WITH

CIVIL APPEAL No. 7598 of 2012
(Arising out of SLP (Civil) 11835/2007)

J U D G M E N T

RANJAN GOGOI, J

Leave granted.

2. Both the appeals are directed against the judgment and final order
dated 05.12.2006 passed by the High Court of Uttaranchal in Crl. Misc.
Writ Petition No. 196 of 2003 (M/B).
3. A recital of the facts stated by the appellant Uttar Pradesh Finance
Corporation (UPFC) in the appeal filed by it would suffice for the purpose
of the adjudication that is required to be made in the present appeals.
4. A term loan of Rs. 4.55 lacs was sanctioned by the UPFC to one M/s.
Sangam Ice Cream (hereinafter shall be referred to as the borrower), a
proprietorship concern owned by one, Smt. Nisha Devi Jaiswal. To secure
the repayment of the aforesaid loan together with the interest due
thereon, the borrower had created an equitable mortgage, by deposit of
title deeds, of land measuring 192.34 sq. meter or 0.048 acres bearing
Khasra No. 496 along with the constructions standing thereon located at
Mauza Niranjanpur, Pargana Kendriya Doon Tehsil and District Dehradun.
5. After sanction of the aforesaid loan, the borrower availed a part
thereof but defaulted in payment of the installments due. As such default
became chronic and persistent, the UPFC invoking its power under Section
29 of the State Financial Corporation Act, issued notice dated 20.12.1994,
calling upon the borrower to clear all the dues failing which recovery of
proceedings including sale of mortgaged property was contemplated. As
despite the said Notice the dues of the Corporation remained unpaid an
advertisement was issued in the newspaper “Doon Darpan” on 22.09.1996 for
sale of the mortgaged property. The Corporation, however, did not receive
any suitable offer pursuant to the advertisement issued. The fresh second
advertisement, nevertheless, came to be issued only in the edition of
“Amar Ujala” on 20.10.2002. It appears that, in the meantime, the sole
proprietor of the borrower firm, Smt. Nisha Devi Jaiswal, executed a sale
deed in respect of the land in favour of two other persons, i.e. Deepak
Kumar Bishnoi and Smt. Sarita Rani, who, in turn, sold the said property
to one Vishnu Dutt Sharma by sale deed dated 29.08.2001.
6. Pursuant to the second advertisement dated 20.10.2002 published in
the edition of Amal Ujala, one Pradeep Kumar Sharma submitted his offer of
Rs. 4.50 lacs along with a bank draft of Rs. 50,000/- as earnest money.
The UPFC issued another advertisement in the edition of “Dainik Jagaran”
dated 01.11.2002 indicating a price offered by Pradeep Kumar Sharma for
the property in question and calling upon the borrower / members of the
public to submit their better offer, if any. Evidently, there was no
response to the aforesaid advertisement dated 01.11.2002 published in the
“Dainik Jagaran”. Therefore on 31.12.2002, the Corporation accorded its
approval for the sale of the land in favour of Shri Pradeep Kumar Sharma
and on 14.01.2003, a deposit of another sum of Rs. 1.75 lacs was made by
the aforesaid Pradeep Kumar Sharma. On 27.02.2003, the balance amount of
the offered price i.e. Rs.2.25 lacs was tendered to the Corporation.

7. While the matter was so situated, Vishnu Dutt Sharma who had
purchased the property by the sale deed dated 29.08.2001 instituted a
suit, i.e. O.S. 75/2003 contending that on 06.02.2003, while he and his
family members were away, possession of the property in question was taken
over by the Corporation. Restoration of possession was the principal
relief prayed for in the aforesaid suit. Thereafter, stating that from the
written statement filed in the suit by the Corporation it transpired that
the property purchased by him (Vishnu Dutt Sharma) stood mortgaged in
favour of the Corporation on account of a loan taken by the original owner
thereof and that pursuant to the said Notice published in the newspaper
“Dainik Jagaran” dated 20.10.2002, the property had been purchased by one
Pradeep Kumar Sharma, a Writ Petition was filed impleading the UPFC and
its Managing Director as the first and second respondents, Deepak Kumar
Bisnoi and Sarita Rani as the third and fourth respondents and the
purchaser Pradeep Kumar Sharma as the fifth respondent.
8. In the said Writ Petition, the prayer made was for quashing of the
sale made in favour of the fifth respondent and for transfer of the
property to the writ petitioner and further for restoration of possession
of the same. The High Court while entertaining the Writ Petition passed
an interim order dated 28.05.2003 permitting the writ petitioner Vishnu
Dutt sharma to make a deposit of Rs. 5 lacs in which event it was directed
that the “accommodation in question shall be handed over to the petitioner
subject to further orders of this court.” By the said order, the High
Court also directed that the sale deed will not be executed in favour of
the fifth respondent Pradeep Kumar Sharma.
9. The writ proceeding before the High Court of Uttaranchal was contested
by the UPFC as well as by the purchaser i.e. the fifth respondent, Pradeep
Kumar Sharma. The Corporation had taken a specific stand before the High
Court that the sale in favour of fifth respondent was finalized by the
Corporation and the entire offered price was tendered by the fifth
respondent. The Corporation had also contended that the property being
subject to an equitable mortgage by deposit of title deeds could not have
been validly transferred by the mortgager/ original owner i.e. Nisha Devi
Jaiswal to the third and fourth respondents in the Writ Petition and in
turn the said respondents could not have transferred the property in
favour of the fifth respondent so long as the mortgage subsisted.
10. Thereafter, by the impugned final order of the High Court dated
05.12.2006, the Writ Petition was disposed of by directing the UPFC to
withdraw the amount of Rs. 5 lacs deposited in the High Court by the writ
petitioner, Vishnu Dutt Sharma, and out of the said amount to repay the
fifth respondent, Pradeep Kumar Sharma, the amount of Rs.4.50 paid by him
to the Corporation along with 9% interest thereon. Specifically, the
High Court in its order dated 05.12.2006 had ordered that the sale made
in favour of fifth respondent, which had not been confirmed, stood
cancelled. Aggrieved by the aforesaid order, two separate appeals have
been filed by the UPFC and the fifth respondent in the Writ Petition i.e.
Pradeep Kumar Sharma. The writ petitioner, Vishnu Dutt Sharma, is the
principal respondent in both the appeals.
11. We have heard Ms. Madhu Tewatia, learned counsel for the appellant –
fifth respondent and Mr. Shrish Kumar Misra, learned counsel for the
appellant Corporation. We have also heard Shri Naresh Kaushik and Shri
Akshay Verma, learned counsel for the respondents.
12. The detailed recital made hereinabove clearly indicates that the
property in question was duly advertised for sale pursuant whereto the
fifth respondent had offered the highest amount. On acceptance of the
said offer by the UPFC, the entire amount was paid and the sale was
confirmed by the Corporation. No sale deed was however executed by the
Corporation in favour of the fifth respondent. It also appears that
before the property was put up for sale by the Corporation, the original
owner, Smt. Nisha Devi Jaiswal had sold the same to the third and fourth
respondents, who, in turn, had sold the same to the writ petitioner by
sale deed dated 29.08.2001. The aforesaid sale by the original owners to
the vendors of the writ petitioner and, thereafter, by said vendors to the
petitioner himself was made when the property stood mortgaged in favour of
the UPFC. It is in the above circumstances, that the writ petitioner had
approached the High court seeking interference with the sale of the
property made in favour of the fifth respondent pursuant to the
advertisement dated 20.10.2002 issued by the UPFC and further for transfer
of the property in favour of the writ petitioner besides restoration of
possession thereof which was taken over by the Corporation.
13. The sale made by the UPFC in favour of the fifth respondent was in
exercise of the statutory powers vested in the Corporation by Section 29
of the State Financial Corporation Act, 1951. Under the aforesaid
provisions of the Act default in re-payment of any loan by an industrial
undertaking vests in the Financial Corporation the right to take over the
management or possession or both of the industrial concern along with the
right to transfer the property pledged, mortgaged, hypothecated or
assigned to the Financial Corporation. By virtue of sub-section (2) of
Section 29 of the Act such transfer of property by the Corporation will
vest in the transferee all rights in the property as if the transfer had
been made by the owner thereof.

14. No serious issue either with regard to the validity of the exercise
of the power under the Act or the manner of sale of the property by
the Corporation pursuant to the advertisement dated 20.10.2002 had
been raised in the Writ Petition. What was contended before the
High Court is that the Writ Petitioner, Vishnu Dutt Sharma, had
purchased the property by sale deed dated 29.08.2001 without any
knowledge or information of the mortgage created by the original
owner, Smt. Nisha Devi Jaiswal in favour of the Corporation and
that the sale pursuant to the advertisement was also without notice
to him. A right to the property based on certain equitable
principles was also claimed to strengthen which, the offer covered
by the interim order of the High Court dated 28.05.2003 was made by
the writ petitioner.
15. The issues raised by the writ petitioner before the High court really
pertained to the claim of better title of the writ petitioner to the
property in question on the basis of the sale deed dated 29.08.2001. The
validity of the sale deed dated 29.08.2001 executed in favour of the writ
petitioner by his vendors during the subsistence of the mortgage in favour
of the Corporation and the rights of the fifth respondent to the said
property on the basis of the sale made in his favour by the Corporation
pursuant to the advertisement dated 20.10.2002 are the issues that arose
in the Writ Petition. Broad and expansive though the powers of the High
Court under Article 226 may be, adjudication of the aforesaid questions,
some of which also required proof of certain basic facts, in our view, was
not appropriate in the domain of public law. Though the High Court in its
order dated 05.12.2006 did not expressly say so, the affect of the several
directions issued by it, in fact, amounts to an adjudication of the issues
outlined above.
16. The essence of the dispute between the parties denuded the lis a
public law character. Nor was any issue arising out of public law
functions of the State or its authorities involved. In such a situation
resort to the public law remedy should not have entertained by the High
Court. (Vide Godavari Sugar Mills Ltd. vs. State of Maharashtra[1]). Even
if the vindication of the writ petitioner’s rights under the sale deed
dated 29.08.2001 is ignored and we are to proceed on the basis that the
writ petitioner questioned the sale made by the Corporation, the writ
petitioner would not be entitled to an adjudication of the rights of the
parties inter se but at best to a judicial review of the administrative
action of the Corporation with regard to the sale made (Vide Kisan
Sahkari Chini Mills Ltd. and ors. vs. Vardan Linkers and others[2] ) But
as already noticed neither the exercise of the statutory power under the
Act by the Corporation in the matter of the sale of the property nor the
process of the sale transaction was questioned in the Writ Petition either
on account of lack of jurisdiction or abuse of authority. In the above
facts, the High Court should have refused an adjudication of the Writ
Petition and, instead, ought to have required the aggrieved parties to
seek their remedies in an appropriate manner and before the competent
civil forum.
17. In view of the above discussions, we allow both the appeals and set
aside the order dated 05.12.2006 passed by the High Court of Uttarakhand
at Nainital.

...……………………J.
[P SATHASIVAM]

………………………J.
[RANJAN GOGOI]

New Delhi,
October 19, 2012.

-----------------------
[1] (2011) 2 SCC 439 [para 8 (vi) ]
[2] 2008) 12 SCC 500 - para 23

-----------------------
10

for granting bail under MCOCA. = twin conditions, viz., (i) the satisfaction of the Court that there are reasonable grounds for believing that the accused is not guilty of the alleged offence; and (ii) that he is not likely to commit any offence while on bail, have to be satisfied. The satisfaction contemplated in clauses (a) and (b) of sub-section (4) of Section 21 regarding the accused being not guilty, has to be based on “reasonable grounds”. Though the expression “reasonable grounds” has not been defined in the Act, it is presumed that it is something more than prima facie grounds. We reiterate that recording of satisfaction on both the aspects mentioned in clauses (a) and (b) of sub- section (4) of Section 21 is sine qua non for granting bail under MCOCA. 22) The analysis of the relevant provisions of the MCOCA, similar provision in the NDPS Act and the principles laid down in both the decisions show that substantial probable cause for believing that the accused is not guilty of the offence for which he is charged must be satisfied. Further, a reasonable belief provided points to existence of such facts and circumstances as are sufficient to justify the satisfaction that the accused is not guilty of the alleged offence. We have already highlighted the materials placed in the case on hand and we hold that the High Court has not satisfied the twin tests as mentioned above while granting bail. - the impugned order having been passed ignoring the mandatory requirements of Section 21(4) of MCOCA, cannot be sustained. Accordingly, the impugned order of the High Court dated 10.08.2011 in Criminal Bail Application No. 872 of 2011 granting bail to the respondent is set aside and the order of the special Judge dated 07.05.2011 in M.C.O. Special Case No.10 of 2010 is restored. In view of the same, the respondent is directed to surrender before the Special Court within a period of two weeks from the date of passing of this order, failing which, the special Court is directed to take appropriate steps for his arrest. 24) The appeal of State of Maharashtra is allowed.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

1

2 CRIMINAL APPEAL NO. 1689 OF 2012

3 (Arising out of SLP (Crl.) No. 1522 of 2012)

The State of Maharashtra .... Appellant(s)

Versus

Vishwanath Maranna Shetty .... Respondent(s)

J U D G M E N T

P. Sathasivam, J.
1) Leave granted.
2) This appeal is directed against the judgment and order dated
10.08.2011 passed by the High Court of Judicature at Bombay in Criminal
Bail Application No. 872 of 2011 whereby learned single Judge of the High
Court granted bail to the respondent herein - Accused No.9 in MCOC Special
Case No. 10 of 2010 pending before the Special Court under the Maharashtra
Control of Organised Crime Act, 1999 for Greater Bombay.
3) Brief facts:
(a) According to the prosecution, an “organised crime syndicate” headed
by wanted accused Bharat Nepali and Vijay Shetty is operating overseas.
The said syndicate has indulged in various continuous unlawful activities
in the nature of extortion and contract killings in Mumbai and other places
through their members. All the accused persons pending on the file before
the MCOC Special Court, Greater Bombay are alleged to be the members of the
said syndicate.
(b) On 03.06.2010, one Farid Tanasha, known criminal, was shot dead at
his residence at Tilaknagar, Chembur, Mumbai. On the same day, an FIR
being No. 122 of 2010 was registered against the accused persons under
Sections 302 and 452 read with Section 34 and Section 120-B of the Indian
Penal Code, 1860 (in short ‘IPC’) and under Sections 3, 25 and 27 of the
Arms Act, 1959 at Tilaknagar Police Station.
(c) During investigation, DCB, CID, Unit No. 6, Mumbai learnt that the
murder was committed on the instructions of Bharat Nepali and Vijay Shetty
(wanted accused). Further, it was revealed in the investigation that one
Dattatray Bhakare (Accused No. 7 therein) - a builder, had contracted
Bharat Nepali and Vijay Shetty for eliminating Farid Tanasha (since
deceased), who agreed to help the members of a Co-op. Housing Society in
order to settle their dispute with the builder. It was also revealed in
the investigation that the said builder allegedly financed a sum of Rs. 90
lakhs for the said killing.
(d) It was further revealed during investigation that the respondent
herein was an active member of the “organised crime syndicate” and was
managing funds of the syndicate and through him the money changed hands
from co-accused Dattatray Bhakare to Jafar Razialam Khan @ Abbas and Mohd.
Sakib Shahnawaz Alam Khan, Accused Nos. 1 & 2 respectively, who killed
Farid Tanasha.
(e) On 25.09.2010, Commissioner of Police, Greater Bombay, accorded
sanction for prosecution of the arrested accused persons including the
respondent herein under Section 3(1)(i), (2) and (4) of the Maharashtra
Control of Organised Crime Act, 1999 (in short ‘the MCOCA’) and hence the
respondent is alleged to have committed the offences provided hereinabove
along with the offence under Section 302 read with Section 120B of the IPC.

(f) The respondent herein preferred an application for bail in Special
Case No. 10 of 2010 before the MCOC Special Court, Greater Bombay. By
order dated 07.05.2011, the Special Court dismissed the said application.
(g) Being aggrieved, the respondent herein preferred Criminal Bail
Application No. 872 of 2011 before the High Court. By impugned order dated
10.08.2011, the High Court accepted the case of the respondent and granted
him bail by imposing certain conditions.
(h) Questioning the order granting bail to the respondent, the State of
Maharashtra has filed the present appeal by way of special leave.
4) Heard Mr. Chinmoy Khaladkar, learned counsel for the appellant-State
and Mr. U.U. Lalit, learned senior counsel for the respondent-accused.
5) The only point for consideration in this appeal is whether in the
light of the allegations made and materials placed by the prosecution, the
High Court was justified in granting bail, particularly, in the light of
restriction imposed under Section 21(4) of MCOCA?
6) Learned counsel for the State, after taking us through the averments
in the FIR, confessional statement of Mohd. Rafiq Abdul Samad Shaikh @
Shankar (Accused No. 6 therein), relevant provisions of MCOCA and other
materials, submitted that the Special Court was fully justified in
rejecting the application for bail filed by the respondent, who is arrayed
as Accused No. 9. On the other hand, according to him, the High Court,
having failed to notice the involvement of the respondent and his role in
passing of the amount from Dattatray Bhakare - a builder to the actual
killers, A-1 and A-2, granted bail to him.
7) Per contra, Mr. U.U. Lalit, learned senior counsel for the
respondent, by pointing out the confessional statement of co-accused, who
retracted later, and in the light of the provisions of MCOCA, submitted
that the High Court was fully justified in granting bail to the respondent.
8) In order to appreciate the rival contentions, it is useful to refer
the relevant provisions of MCOCA which are extracted hereinbelow. There is
no dispute that apart from Section 302 read with Section 120-B of IPC, the
respondent was charged with Section 3(1)(i), 3(2) and 3(4) of MCOCA. The
relevant provisions of MCOCA read as under:
Section 2 of MCOCA deals with various definitions:
“2. Definitions. (1) In this Act, unless the context otherwise
requires,—
(a) ‘abet’, with its grammatical variations and cognate
expressions, includes,—
(i) the communication or association with any person with the
actual knowledge or having reason to believe that such person is
engaged in assisting in any manner, an organised crime syndicate;
(ii) the passing on or publication of, without any lawful
authority, any information likely to assist the organised crime
syndicate and the passing on or publication of or distribution of
any document or matter obtained from the organised crime syndicate;
and
(iii) the rendering of any assistance, whether financial or
otherwise, to the organised crime syndicate;
* * *
* * *
(d) ‘continuing unlawful activity’ means an activity prohibited by
law for the time being in force, which is a cognizable offence
punishable with imprisonment of three years or more, undertaken either
singly or jointly, as a member of an organised crime syndicate or on
behalf of such syndicate in respect of which more than one charge-
sheets have been filed before a competent court within the preceding
period of ten years and that court has taken cognizance of such
offence;
(e) ‘organised crime’ means any continuing unlawful activity by an
individual, singly or jointly, either as a member of an organised
crime syndicate or on behalf of such syndicate, by use of violence or
threat of violence or intimidation or coercion, or other unlawful
means, with the objective of gaining pecuniary benefits, or gaining
undue economic or other advantage for himself or any other person or
promoting insurgency;
(f) ‘organised crime syndicate’ means a group of two or more
persons who, acting either singly or collectively, as a syndicate or
gang indulge in activities of organised crime;
(g)…….”

“3. Punishment for organised crime- (1) Whoever commits an offence of
organised crime shall,
(i) if such offence has resulted in the death of any person, be
punishable with death or imprisonment for life and shall also be
liable to a fine, subject to a minimum fine of rupees one lac;
(ii) in any other case, be punishable with imprisonment for a term
which shall not be less than five years but which may extend to
imprisonment for life and shall also be liable to a fine, subject to a
minimum fine of rupees five lacs.
(2) Whoever conspires or attempts to commit or advocates, abets or
knowingly facilitates the commission of an organised crime or any act
preparatory to organised crime, shall be punishable with imprisonment
for a term which shall be not less than five years but which may
extend to imprisonment for life, and shall also be liable to a fine,
subject to a minimum of rupees five lacs.
(3) Whoever harbours or conceals or attempts to harbour or conceal,
any member of an organised crime syndicate; shall be punishable with
imprisonment for a term which shall not be less than five years but
which may extend to imprisonment for life and shall also be liable to
a fine, subject to a minimum fine of rupees five lacs.
(4) Any person who is a member of an organised crime syndicate shall
be punishable with imprisonment for a term which shall not be less,
than five years but which may extend to imprisonment for life and
shall also be liable to a fine, subject to a minimum fine of rupees
five lacs.
(5) Whoever holds any property derived of obtained from commission of
an organised crime or which has been acquired through the organised
crime syndicate funds shall be punishable with a term which, shall not
be less than three years but which may extend to imprisonment for life
and shall also be liable to fine, subject to a minimum fine of rupees
two lacs.”
“4. Punishment for possessing unaccountable wealth on behalf of member
of organised crime syndicate.
If any person on behalf of a member of an organised crime syndicate
is, or, at any time has been, in possession of movable or immovable
property which he cannot satisfactorily account for, he shall be
punishable with imprisonment for a term which shall not be less than
three years but which may extend to ten years and shall also be liable
to fine, subject to a minimum fine of rupees one lac and such property
shall also liable for attachment and forfeiture, as provided by
section 20.”
“21. Modified application of certain provisions of the Code.-
(1)…
(2)…
(3)…
(4) Notwithstanding anything contained in the Code, no person accused
of an offence punishable under this Act shall, if in custody, be
released on bail or on his own bond, unless—
(a) the Public Prosecutor has been given an opportunity to oppose
the application of such release; and
(b) where the Public Prosecutor opposes the application, the court
is satisfied that there are reasonable grounds for believing that he
is not guilty of such offence and that he is not likely to commit any
offence while on bail.”

9) The very same provisions have been considered by this Court in
Ranjitsing Brahmajeetsing Sharma vs. State of Maharashtra & Anr. (2005) 5
SCC 294. In this case, the provisions of MCOCA were invoked against one
Telgi who was arrested and proceeded against for alleged commission of
offence of printing counterfeit stamps and forgery in various States
including the State of Maharashtra. He was figured as Accused No. 23 and
one Shabir Sheikh as Accused No.25. After narrating all the details, this
Court posed the following question:
“36. Does this statute require that before a person is released on
bail, the court, albeit prima facie, must come to the conclusion that
he is not guilty of such offence? Is it necessary for the court to
record such a finding? Would there be any machinery available to the
court to ascertain that once the accused is enlarged on bail, he would
not commit any offence whatsoever?”

In an answer to the same, this Court held as under:
“38. We are furthermore of the opinion that the restrictions on the
power of the court to grant bail should not be pushed too far. If the
court, having regard to the materials brought on record, is satisfied
that in all probability he may not be ultimately convicted, an order
granting bail may be passed. The satisfaction of the court as regards
his likelihood of not committing an offence while on bail must be
construed to mean an offence under the Act and not any offence
whatsoever be it a minor or major offence. If such an expansive
meaning is given, even likelihood of commission of an offence under
Section 279 of the Indian Penal Code may debar the court from
releasing the accused on bail. A statute, it is trite, should not be
interpreted in such a manner as would lead to absurdity. What would
further be necessary on the part of the court is to see the
culpability of the accused and his involvement in the commission of an
organised crime either directly or indirectly. The court at the time
of considering the application for grant of bail shall consider the
question from the angle as to whether he was possessed of the
requisite mens rea. Every little omission or commission, negligence or
dereliction may not lead to a possibility of his having culpability in
the matter which is not the sine qua non for attracting the provisions
of MCOCA. A person in a given situation may not do that which he ought
to have done. The court may in a situation of this nature keep in mind
the broad principles of law that some acts of omission and commission
on the part of a public servant may attract disciplinary proceedings
but may not attract a penal provision.”

“44. The wording of Section 21(4), in our opinion, does not lead to
the conclusion that the court must arrive at a positive finding that
the applicant for bail has not committed an offence under the Act. If
such a construction is placed, the court intending to grant bail must
arrive at a finding that the applicant has not committed such an
offence. In such an event, it will be impossible for the prosecution
to obtain a judgment of conviction of the applicant. Such cannot be
the intention of the legislature. Section 21(4) of MCOCA, therefore,
must be construed reasonably. It must be so construed that the court
is able to maintain a delicate balance between a judgment of acquittal
and conviction and an order granting bail much before commencement of
trial. Similarly, the court will be required to record a finding as to
the possibility of his committing a crime after grant of bail.
However, such an offence in futuro must be an offence under the Act
and not any other offence. Since it is difficult to predict the future
conduct of an accused, the court must necessarily consider this aspect
of the matter having regard to the antecedents of the accused, his
propensities and the nature and manner in which he is alleged to have
committed the offence.”
“46. The duty of the court at this stage is not to weigh the
evidence meticulously but to arrive at a finding on the basis of broad
probabilities. However, while dealing with a special statute like
MCOCA having regard to the provisions contained in sub-section (4) of
Section 21 of the Act, the court may have to probe into the matter
deeper so as to enable it to arrive at a finding that the materials
collected against the accused during the investigation may not justify
a judgment of conviction. The findings recorded by the court while
granting or refusing bail undoubtedly would be tentative in nature,
which may not have any bearing on the merit of the case and the trial
court would, thus, be free to decide the case on the basis of evidence
adduced at the trial, without in any manner being prejudiced thereby.”

10) It is relevant to note that MCOCA was enacted to make special
provisions for prevention and control of, and for coping with, criminal
activity by organized crime syndicate or gang, and for matters connected
therewith or incidental thereto. The Statement of Objects and Reasons for
enacting the said Act is as under:
“Organised crime has for quite some years now come up as a very
serious threat to our society. It knows no national boundaries and is
fuelled by illegal wealth generated by contract killings, extortion,
smuggling in contrabands, illegal trade in narcotics, kidnappings for
ransom, collection of protection money and money laundering etc. The
illegal wealth and black money generated by the organised crime being
very huge, it has had serious adverse effect on our economy. It was
seen that the organised criminal syndicates made a common cause with
terrorist gangs and foster terrorism which extend beyond the national
boundaries. There was reason to believe that organised criminal gangs
have been operating in the State and, thus, there was immediate need
to curb their activities.
It was also noticed that the organised criminals have been making
extensive use of wire and oral communications in their criminal
activities. The interception of such communications to obtain evidence
of the commission of crimes or to prevent their commission would be an
indispensable aid to law enforcement and the administration of
justice.
2. The existing legal framework i.e. the penal and procedural laws
and the adjudicatory system were found to be rather inadequate to curb
or control the menace of organised crime. Government, therefore,
decided to enact a special law with stringent and deterrent provisions
including in certain circumstances power to intercept wire, electronic
or oral communication to control the menace of the organised crime.
It is the purpose of this Act to achieve these objects.”

We have already mentioned the relevant definitions including the definition
of ‘abet’, ‘continuing unlawful activity’, ‘organised crime’ and
‘organised crime syndicate’.
11) Keeping the above Objects and Reasons and various principles in mind,
statutory provisions of MCOCA, restrictions for the grant of bail and the
materials placed by the prosecution, let us consider whether the respondent
has made out a case for bail?
12) Considering the arguments advanced by both the sides, we have
meticulously analysed the reasoning of the special Court rejecting the
application for bail filed by the respondent herein and impugned order of
the High Court granting him bail. The materials placed indicate that the
respondent is having an association with the overseas base wanted accused
Nos. 1 and 2. It also indicates that the respondent knowingly handled the
funds of the syndicate. The statement of one of the witnesses indicates
that the respondent had asked the said witness to collect a sum of Rs.25
lakhs from the co-accused – Ravi Warerkar, however, the same was not
materialized. In addition to the same, there is a statement of co-accused
–Mohd. Rafiq that he collected Rs.15 lakhs from co-accused – Dattatray
Bhakare and delivered it to the respondent. The confessional statement
further indicates that the wanted accused - Vijay Shetty used to make calls
using cell phone no. 0061290372184 to the respondent. The confessional
statement also reveals that Accused No. 6 received Rs. 6 lakhs from the man
of the respondent-accused. On perusal of the materials relied on by the
prosecution, the special Judge concluded that the respondent had been
working for the wanted accused, Vijay Shetty, and he used to receive ill-
gotten money for him and prima facie the ingredients of the offence
punishable under Section 4 of MCOCA attracts against the respondent-
accused.
13) In the earlier part of our judgment, we extracted Section 21(4) of
MCOCA which bars the Court from releasing the accused of an offence
punishable under the said Act subject to the conditions prescribed in
clauses (a) and (b) therein. We are of the view that sub-section (4) of
Section 21 mandates that it is incumbent on the part of the Court before
granting of bail to any person accused of an offence punishable under MCOCA
that there are reasonable grounds for believing that he is not guilty of
such offence and he is not likely to commit any offence while on bail.
14) In the Narcotic Drugs and Psychotropic Substances Act, 1985 (in short
‘the NDPS Act’), similar provision, namely, Section 37, corresponding to
Section 21(4) of the MCOCA has been substituted by Act 2 of 1989 with
effect from 29.05.1989 with further amendment by Act 9 of 2001 which reads
as under:
“37. Offences to be cognizable and non-bailable.—(1) Notwithstanding
anything contained in the Code of Criminal Procedure, 1973 (2 of
1974),—
(a) every offence punishable under this Act shall be cognizable;
(b) no person accused of an offence punishable for offences under
Section 19 or Section 24 or Section 27-A and also for offences
involving commercial quantity shall be released on bail or on his own
bond unless—
(i) the Public Prosecutor has been given an opportunity to oppose the
application for such release, and
(ii) where the Public Prosecutor opposes the application, the court is
satisfied that there are reasonable grounds for believing that he is
not guilty of such offence and that he is not likely to commit any
offence while on bail.
(2) The limitations on granting of bail specified in clause (b) of
sub-section (1) are in addition to the limitations under the Code of
Criminal Procedure, 1973 (2 of 1974) or any other law for the time
being in force, on granting of bail.”

Sub-clause (2) also makes it clear that the limitations on granting of bail
specified in clause (b) of sub-section (1) are in addition to the
limitations under the Code of Criminal Procedure, 1973 or any other law for
the time being in force, on granting of bail.
15) The above provision was considered by this Court in Union of India
vs. Rattan Mallik Alias Habul, (2009) 2 SCC 624. In this case, Union of
India filed an appeal before this Court challenging the order of the
Allahabad High Court suspending the sentence awarded by the trial Court to
the respondent/accused therein for having committed offences under Sections
8/27-A and 8/29 of the NDPS Act and granting him bail. Considering the
limitation imposed in sub-section (1) (b) of Section 37 of the NDPS Act,
this Court held thus:
“12. It is plain from a bare reading of the non obstante clause in
Section 37 of the NDPS Act and sub-section (2) thereof that the power
to grant bail to a person accused of having committed offence under
the NDPS Act is not only subject to the limitations imposed under
Section 439 of the Code of Criminal Procedure, 1973, it is also
subject to the restrictions placed by clause (b) of sub-section (1) of
Section 37 of the NDPS Act. Apart from giving an opportunity to the
Public Prosecutor to oppose the application for such release, the
other twin conditions viz. (i) the satisfaction of the court that
there are reasonable grounds for believing that the accused is not
guilty of the alleged offence; and (ii) that he is not likely to
commit any offence while on bail, have to be satisfied. It is manifest
that the conditions are cumulative and not alternative. The
satisfaction contemplated regarding the accused being not guilty, has
to be based on “reasonable grounds”.
13. The expression “reasonable grounds” has not been defined in the
said Act but means something more than prima facie grounds. It
connotes substantial probable causes for believing that the accused is
not guilty of the offence he is charged with. The reasonable belief
contemplated in turn, points to existence of such facts and
circumstances as are sufficient in themselves to justify satisfaction
that the accused is not guilty of the alleged offence (vide Union of
India v. Shiv Shanker Kesari). Thus, recording of satisfaction on both
the aspects, noted above, is sine qua non for granting of bail under
the NDPS Act.
14. We may, however, hasten to add that while considering an
application for bail with reference to Section 37 of the NDPS Act, the
court is not called upon to record a finding of “not guilty”. At this
stage, it is neither necessary nor desirable to weigh the evidence
meticulously to arrive at a positive finding as to whether or not the
accused has committed offence under the NDPS Act. What is to be seen
is whether there is reasonable ground for believing that the accused
is not guilty of the offence(s) he is charged with and further that he
is not likely to commit an offence under the said Act while on bail.
The satisfaction of the court about the existence of the said twin
conditions is for a limited purpose and is confined to the question of
releasing the accused on bail.”

After saying so, on going into the materials placed and the reasoning of
the High Court for grant of bail, this Court has concluded that the order
passed by the High Court clearly violates the mandatory requirement of
Section 37 of the NDPS Act and set aside the same with a liberty to decide
afresh in the light of the limitations imposed. In the case on hand, we
have already extracted the limitation/restrictions imposed in Section 21(4)
of MCOCA for granting bail.
16) It is relevant to point out that the materials placed by the
prosecution show that one Vijay Shetty and the respondent are members of
Bharat Nepali’s “organized crime syndicate”. It is also the definite stand
of the prosecution that the said Bharat Nepali as well as Vijay Shetty, who
murdered Farid Tanasha are said to be out of India and are indulging into
the organized crime through the members of the syndicate. The materials
placed further show that Dattatray Bhakare-a builder, was doing a project
at Chembur, Mumbai and some members of the Co-operative Housing Society had
some dispute with him, therefore, they had approached Farid Tanasha, who
had a criminal background and he also agreed to help those persons in their
dispute with the builder. On knowing this, Dattatray Bhakare contacted
Bharat Nepali and Vijay Shetty for eliminating Farid Tanasha and for that
he allegedly financed a sum of Rs.90 lakhs which was paid to the said
wanted accused persons through the arrested accused persons. The
investigation also reveals that about Rs. 9 lakhs were given to the main
shooter – Mohd. Sakib Shahnawaz Alam Khan (Accused No.2) through Mohd.
Rafiq (Accused No. 6). The said Accused No.6 made a confessional statement
as far as the respondent herein is concerned. It was alleged that Accused
No.6, on the instructions of the wanted accused - Vijay Shetty, used to
collect money from the respondent and on several occasions, he handed over
the same to Accused No. 2. It was also alleged that on the instructions of
the wanted accused – Vijay Shetty, Accused No. 6 paid a sum of Rs. 15 lakhs
to the respondent herein on 28.05.2011. It is the further case of the
prosecution that in the third week of June, 2010, Accused No. 6 received an
amount of Rs. 6 lakhs from an employee of the respondent. The substance of
the allegation against the respondent is that part of the amount, which was
given to the shooter for killing Farid Tanasha, had been passed on through
him to the actual shooter. It is not in dispute that sanction under
Section 23(2) of MCOCA had been accorded by the Commissioner of Police on
25.09.2010.
17) Considering the materials, particularly, in the light of the bar
under Section 21(4) of MCOCA, the Special Court rightly rejected the
application for bail filed by the respondent herein. From the materials
placed, prima facie, it is clear that the respondent-accused had
association with the wanted accused, Vijay Shetty and Bharat Nepali, who
are notorious criminals and the act of the respondent comes within the
definition of ‘abet’ as defined in Section 2(1)(a) of MCOCA.
18) As rightly pointed out by the learned counsel for the State that the
High Court ought to have appreciated the statement of the co-accused-
Mohammad Rafiq that on 28.05.2010, he collected Rs. 15 lakhs from co-
accused- Dattatray Bhakare and delivered it to the respondent. The
confessional statement further indicates that the wanted accused, Vijay
Shetty used to make calls from cell phone no. 0061290372184 and call
records also indicate that the cell phone that was being used by the
respondent did receive overseas calls. The confessional statement
further indicates that he received Rs. 6 lacs from the man of the
respondent. The material placed by the prosecution also indicate that the
respondent has been working for the wanted accused-Vijay Shetty and he used
to receive ill-gotten money for him. We have already extracted Section
21(4) which interdict grant of bail to the accused against whom there are
reasonable grounds for believing him to be guilty of offence under MCOCA.
19) We are satisfied that the High Court failed to appreciate the fact
that the materials placed against the respondent consist of the confession
made by the co-accused – Mohd. Rafiq which has been recorded under Section
18 of MCOCA, the statement of the employee of the respondent which
indicates that the respondent handed over cash to him in the third week of
June, 2010 and that the money received by the respondent and handed over to
the main accused were part of the illegal transactions. The act of the
respondent, prima facie, is well within the definition and also the
statement of object and reasons of the MCOCA which we have already
extracted. The act of the respondent is of the abetment of the offence
enumerated in MCOCA. At any rate, the materials placed by the prosecution
show that the respondent had received ill-gotten money for the wanted
accused – Vijay Shetty and, therefore, ingredients of Section 4 of MCOCA
were attracted against him. We are satisfied that all these aspects have
been correctly appreciated by the Special Court.
20) Though the High Court has adverted to all the above-mentioned aspects
and finding that all those aspects have to be considered during the trial
and even after finding that “it cannot be said that there are no reasonable
grounds for believing that the applicant (respondent herein) has not
committed an offence punishable under the MCOCA”, on an erroneous view,
granted him bail which runs contrary to Section 21(4) of MCOCA.
21) While dealing with a special statute like MCOCA, having regard to the
provisions contained in sub-section (4) of Section 21 of this Act, the
Court may have to probe into the matter deeper so as to enable it to arrive
at a finding that the materials collected against the accused during the
investigation may not justify a judgment of conviction. Similarly, the
Court will be required to record a finding as to the possibility of his
committing a crime after grant of bail. What would further be necessary on
the part of the Court is to see the culpability of the accused and his
involvement in the commission of an organized crime either directly or
indirectly. The Court at the time of considering the application for grant
of bail shall consider the question from the angle as to whether he was
possessed of the requisite mens rea. In view of the above, we also
reiterate that when a prosecution is for offence(s) under a special statute
and that statute contains specific provisions for dealing with matters
arising there under, these provisions cannot be ignored while dealing with
such an application. Since the respondent has been charged with offence
under MCOCA, while dealing with his application for grant of bail, in
addition to the broad principles to be applied in prosecution for the
offences under the IPC, the relevant provision in the said statute, namely,
sub-section (4) of Section 21 has to be kept in mind. It is also further
made clear that a bare reading of the non obstante clause in sub-section
(4) of Section 21 of MCOCA that the power to grant bail to a person accused
of having committed offence under the said Act is not only subject to the
limitations imposed under Section 439 of the Code of Criminal Procedure,
1973 but also subject to the restrictions placed by clauses (a) and (b) of
sub-section (4) of Section 21. Apart from giving an opportunity to the
prosecutor to oppose the application for such release, the other twin
conditions, viz., (i) the satisfaction of the Court that there are
reasonable grounds for believing that the accused is not guilty of the
alleged offence; and (ii) that he is not likely to commit any offence while
on bail, have to be satisfied. The satisfaction contemplated in clauses
(a) and (b) of sub-section (4) of Section 21 regarding the accused being
not guilty, has to be based on “reasonable grounds”. Though the expression
“reasonable grounds” has not been defined in the Act, it is presumed that
it is something more than prima facie grounds. We reiterate that recording
of satisfaction on both the aspects mentioned in clauses (a) and (b) of sub-
section (4) of Section 21 is sine qua non for granting bail under MCOCA.
22) The analysis of the relevant provisions of the MCOCA, similar
provision in the NDPS Act and the principles laid down in both the
decisions show that substantial probable cause for believing that the
accused is not guilty of the offence for which he is charged must be
satisfied. Further, a reasonable belief provided points to existence of
such facts and circumstances as are sufficient to justify the satisfaction
that the accused is not guilty of the alleged offence. We have already
highlighted the materials placed in the case on hand and we hold that the
High Court has not satisfied the twin tests as mentioned above while
granting bail.
23) In our opinion, the impugned order having been passed ignoring the
mandatory requirements of Section 21(4) of MCOCA, cannot be sustained.
Accordingly, the impugned order of the High Court dated 10.08.2011 in
Criminal Bail Application No. 872 of 2011 granting bail to the respondent
is set aside and the order of the special Judge dated 07.05.2011 in M.C.O.
Special Case No.10 of 2010 is restored. In view of the same, the respondent
is directed to surrender before the Special Court within a period of two
weeks from the date of passing of this order, failing which, the special
Court is directed to take appropriate steps for his arrest.
24) The appeal of State of Maharashtra is allowed.

...…………….…………………………J.

(P. SATHASIVAM)

..…....…………………………………J.

(RANJAN GOGOI)

NEW DELHI;
OCTOBER 19, 2012.

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