2019 (12) TMI 1691 - HC - Indian Laws

Applicability of period of limitation provided in the Service Rules for initiation of judicial proceedings in cases where criminal proceedings are sought to be launched against retired public servants especially to proceedings initiated under the Prevention of Corruption Act 1988 - HELD THAT - The issue seems to be covered by a judgment of the Apex Court in the case of State of Punjab Vs. Kailash Nath 1988 (11) TMI 346 - SUPREME COURT . The respondent therein was posted in the Industrial supply section of the Directorate of Industries where various types of raw materials including wax and important licences were dealt with. A First Information Report was lodged against the respondent on 19.06.1980. The respondent approached the High Court of Punjab and Haryana for quashing of the FIR. When the petition was dismissed the final report was filed on 28.08.1985. In the meantime the respondent retired as Superintendent Directorate of Industries Punjab on 30.09.1983. The respondent once again approached the High Court for quashing of the final report and prosecution against him. The prayer was allowed by the High Court and the prosecution was also quashed relying on a decision in the case of Des Raj Singal Vs. State of Punjab 1985 (9) TMI 361 - PUNJAB AND HARYANA HIGH COURT . When the State of Punjab filed an SLP calling in question the decision of the High Court leave having been granted and when the Appeal was heard the Apex Court noticed that Rule 2.2 of the Punjab Civil Service Rules had been interpreted by the High Court that the said Rule placed an embargo on initiating judicial proceedings for prosecution of a Government servant on the expiry of four years of the cause of action or the event referred to in the said Rule. The Apex Court held that the third proviso to Rule 2.2 cannot be interpreted as laying down an absolute or general embargo on prosecution of a Government servant if the conditions stated therein are satisfied. It was held that even if on first impression the said Rule may appear to be placing such an embargo it has to be interpreted by taking recourse to the well-settled rule of reading down a provision so as to bring it within the framework of its source of power without of course frustrating the purpose for which such provision was made. It was therefore held that Rule 2.2 which can be called a substantive clause reserves to the Government the right of withholding or withdrawing a pension or any part of it whether permanently or for a specified period and the right of ordering the recovery from a pension of the whole or part of any pecuniary loss caused to Government if in a departmental or judicial proceeding the pensioner is found guilty of grave misconduct or negligence during the period of his service including service rendered upon re-employment after retirement. The occurrence of the events and accrual of cause of action in the present set of matters were between the years 2003 and 2006. The private complaint under Section 200 of Cr.P.C. was registered on 06.08.2012 while the FIR was registered on 14.08.2012. It is an admitted fact that except petitioners No.6 and 7 in Crl.P.No. 5130/2016 who retired in the year 2013 and 2015 respectively the other petitioners had already retired way back in the year 2006-2007. Some of the petitioners continue to serve. However as noticed earlier the State Government had declined to sanction prosecution against the serving employees. It was also observed in the Government Order that two of the employees had already retired and therefore the State Government declined to sanction prosecution - the criminal proceedings against the owners of the vehicles were quashed by this Court. Further as held by the State Government since Section 21 of the Taxation Act protects the Officers who acted in good faith and since sanction to prosecute was declined by the State Government the same benefit is required to be granted to the petitioners who are similarly placed. Some of the petitioners have already got the benefit of the order passed by the Government. Conclusion - i) The Government servants cannot constitute a class by themselves so as to bring their case within the purview of reasonable classification if the purpose of granting immunity from prosecution is ensuring peace of mind in old age. ii) No limitation period applies for offences under the Prevention of Corruption Act punishable with imprisonment exceeding three years and prosecution cannot be barred on the ground of delay. Appeal allowed.

Summary

The core legal questions considered in this judgment are:

1. Whether the period of limitation prescribed under the Service Rules, specifically Rule 214 of the Karnataka Civil Services Rules (KCSRs), applies to criminal proceedings initiated against retired public servants under the Prevention of Corruption Act, 1988 (P.C. Act).

2. Whether prior sanction for prosecution under Section 19 of the P.C. Act and Section 197 of the Code of Criminal Procedure (Cr.P.C.) is mandatory for initiating criminal proceedings against retired or serving Government officials.

3. Whether the immunity or protection granted under Section 21 of the Karnataka Motor Vehicles Taxation Act, 1957 (Taxation Act) and the KCSRs extends to bar prosecution for alleged short levy of taxes or penalties.

4. The applicability of limitation periods under criminal law, especially under Section 468 of the Cr.P.C. and the absence of limitation under the P.C. Act.

5. The constitutional validity and scope of service rules that seek to impose embargoes on initiating judicial proceedings against Government servants after a certain period, particularly post-retirement.

Issue-wise Detailed Analysis

1. Applicability of Limitation under Service Rules to Criminal Proceedings Against Retired Officials

The petitioners relied heavily on Rule 214(3) of the KCSRs, which prohibits initiation of judicial proceedings against Government servants for causes of action arising more than four years prior to such institution, including after retirement or during re-employment. The petitioners contended that the criminal proceedings initiated in 2012 for acts allegedly committed between 2003 and 2006 were barred by this limitation.

The respondent countered by emphasizing that Rule 214 is designed to protect Government servants from recovery of pecuniary loss from pensions and does not apply to criminal proceedings under the P.C. Act and IPC. Reliance was placed on a Division Bench decision which held that the term "judicial proceedings" in Rule 214(3) applies only to civil proceedings, not criminal ones.

However, the petitioners referred to other Division Bench decisions which interpreted Sub-Rule (6) of Rule 214 to include criminal proceedings within the ambit of "judicial proceedings." They argued that the earlier decision was rendered per incuriam, ignoring this sub-rule.

The Court noted the conflicting interpretations but ultimately relied on the authoritative pronouncement of the Supreme Court in State of Punjab v. Kailash Nath which dealt with a similar provision (Rule 2.2 of the Punjab Civil Service Rules) analogous to Rule 214 of KCSRs. The Supreme Court held that such service rules do not constitute "conditions of service" that can validly bar prosecution for criminal offences committed during service, including after retirement.

The Court emphasized that immunizing Government servants from prosecution after a fixed period would be against public policy and counter-productive, as it could incentivize misconduct near the end of service and allow manipulation of prosecution timelines.

2. Requirement of Sanction for Prosecution

The petitioners highlighted that prosecution sanction was declined by the State Government for five officers, including some who had retired, on grounds that the incidents occurred long ago and that recovery of short levy could be effected under the Taxation Act. They argued that the same protection should apply to all petitioners similarly situated.

The Court noted that sanction under Section 19 of the P.C. Act and Section 197 of Cr.P.C. is mandatory before prosecuting Government servants. The State Government's refusal to grant sanction for prosecution against certain officers was a material consideration. The Court observed that since sanction was refused for some officers on the basis of limitation and alternative recovery mechanisms, continuation of prosecution against others in similar circumstances would be discriminatory and unjust.

3. Immunity Under Section 21 of the Taxation Act and Good Faith Protection

The State Government's order noted that Section 21 of the Taxation Act protects officers acting in good faith from prosecution or legal proceedings. The petitioners argued that this immunity should extend to them since they acted in good faith and the short levy was ultimately recovered from vehicle owners.

The respondent relied on judicial precedents, including Narayan Diwakar v. CBI, to clarify that good faith immunity applies only when the official acts honestly and without mala fide intent. Bad faith or mala fide conduct would negate this protection and could be examined during trial.

The Court accepted that the protection under Section 21 applies to acts done in good faith and that the State Government's decision declining sanction was premised on such considerations. This supported the petitioners' claim for protection from prosecution.

4. Limitation Under Criminal Law and the Prevention of Corruption Act

The respondent submitted that no limitation period is prescribed under the P.C. Act for initiating prosecution. Section 468 of the Cr.P.C. prescribes limitation periods for offences under the IPC based on the severity of punishment. Since offences under the P.C. Act attract punishment exceeding three years, no limitation applies.

The Court recognized this legal position, emphasizing that corruption offences being serious crimes against society cannot be barred by limitation periods. This principle aligns with the public interest in prosecuting corruption regardless of delay.

5. Constitutional Validity and Scope of Service Rules Embargoing Prosecution

The apex legal authority on this point is the Supreme Court's judgment in State of Punjab v. Kailash Nath, which the Court relied on extensively. The Supreme Court held that rules framed under Article 309 of the Constitution relating to "conditions of service" do not empower the State to grant immunity from prosecution for criminal offences committed during service.

The Court noted that prosecution is not a "condition of service" such as salary, leave, or pension, but a legal process independent of service conditions. Therefore, any rule attempting to bar prosecution after a fixed period is ultra vires and against public policy.

The Court also addressed the argument that such immunity is necessary to ensure peace of mind for retired officials, rejecting it as discriminatory and arbitrary, since it would not apply to similarly aged persons outside Government service.

However, the Court acknowledged that while prosecution cannot be barred, stale cases where prosecution is initiated after an inordinate delay may be quashed on grounds of fairness and justice, as was done in the cited case where prosecution was quashed due to the long delay.

Application of Law to Facts and Treatment of Competing Arguments

The petitioners had retired mostly between 2006 and 2007, with allegations relating to events between 2003 and 2006. The complaint and FIR were registered in 2012, after a gap of 6-9 years. The State Government declined sanction for prosecution against some officers, including retired ones, citing limitation and alternative recovery under the Taxation Act.

The Court found that the petitioners were similarly situated and that continuation of prosecution against some while dropping it against others was discriminatory. The Court also noted that the short levy was recovered from vehicle owners, and the petitioners were protected under Section 21 of the Taxation Act for acts done in good faith.

Balancing these facts with the legal principles, the Court held that the prosecution against the petitioners was not maintainable and quashed the chargesheets and all further proceedings.

Significant Holdings

"Whether or not a Government servant should be prosecuted for an offence committed by him obviously cannot be treated to be something pertaining to conditions of service."

"Making a provision that a Government servant, even if he is guilty of grave misconduct or negligence which constitutes an offence punishable either under the Penal Code or P.C. Act or an analogous law should be granted immunity from such prosecution after the lapse of a particular period... would not only be against public policy but would also be counter-productive."

"The Government servants cannot constitute a class by themselves so as to bring their case within the purview of reasonable classification, if the purpose of granting immunity from prosecution is ensuring peace of mind in old age."

"Rule 2.2 which can be called a substantive clause reserves to the Government the right of withholding or withdrawing a pension or any part of it... if, in a departmental or judicial proceeding, the pensioner is found guilty of grave misconduct or negligence during the period of his service, including service rendered upon re-employment after retirement."

"No limitation period applies for offences under the Prevention of Corruption Act punishable with imprisonment exceeding three years, and prosecution cannot be barred on the ground of delay."

"Since sanction to prosecute was declined by the State Government in respect of some officers on the ground of limitation and good faith, the same benefit is required to be granted to the petitioners who are similarly placed."

Ultimately, the Court quashed the chargesheets and all further proceedings against the petitioners, holding that continuation of prosecution was impermissible under the circumstances.