D.Venkatasubramaniam & Ors vs M.K.Mohan Krishnamachari & Ors

CRIMINAL APPEAL NO._1766 OF 2009 (Arising out of Special Leave Petition (Crl.) No. 3271 OF 2007)

D. VENKATASUBRAMANIAM & ORS. ... APPELLANTS

VERSUS

M.K. MOHAN KRISHNAMACHARI & ANR. ... RESPONDENTS

With

CRIMINAL APPEAL NO.1767_ OF 2009 (Arising out of Special Leave Petition (Crl.) No. 3269 OF 2007)

ABINESH BABU & ORS. ... APPELLANTS

VERSUS

M.K. MOHAN KRISHNAMACHARI & ANR. ... RESPONDENTS

JUDGMENT

B. SUDERSHAN REDDY, J.

A short question that arises for our consideration in

these appeals is whether it is open to the High Court in

exercise of its jurisdiction under Section 482 of the Code of

Criminal Procedure to interfere with the statutory power of 2

investigation by police into a cognizable offence? If such a

power is available with the Court, what are the parameters

for its interference?

2. It is well settled and this Court time and again,

reiterated that the police authorities have the statutory

right and duty to investigate into a cognizable offence

under the scheme of Code of Criminal Procedure (for

short `the Code'). This Court, on more than one

occasion, decried uncalled for interference by the

Courts into domain of investigation of crimes by police

in discharge of their statutory functions. The principle

has been succinctly stated way back in Emperor V.

Khwaja Nazir Ahmad1 and the same has been

repeatedly quoted with respect and approval. The Privy

Council observed that "just as it is essential that every

one accused of a crime should have free access to a

Court of justice so that he may be duly, acquitted if

found not guilty of the offence with which he is

charged, so it is of the utmost importance that the 1 AIR 1945 PC 18 3

judiciary should not interfere with the police in matters

which are within their province and into which the law

imposes upon them the duty of enquiry".

3. The Privy Council further observed:

"In India as has been shown there is a statutory right on the part of the police to investigate the circumstances of an alleged cognizable crime without requiring any authority from the judicial authorities, and it would, as their Lordships think, be an unfortunate result if it should be held possible to interfere with those statutory rights by an exercise of the inherent jurisdiction of the Court. The functions of the judiciary and the police are complementary not overlapping and the combination of individual liberty with a due observance of law and order is only to be obtained by leaving each to exercise its own function, always, of course, subject to the right of the Court to intervene in an appropriate case when moved under Section 491, Criminal P.C. to give directions in the nature of habeas corpus. In such a case as the present, however, the Court's functions begin when a charge is preferred before it and not until then. It has sometimes been thought that Section 561A has given increased powers to the Court which it did not possess before that section was enacted. But this is not so. The section gives no new powers, it only provides that those which the Court already inherently possess shall be preserved and is inserted, as their Lordships think, lest it should be considered that the only powers possessed by the Court are those expressly conferred by the 4 Criminal Procedure Code, and that no inherent power had survived the passing of that Act."

(emphasis supplied)

4. In State of West Bengal V. S. N. Basak2, a Division

Bench of three Judges of this Court, while referring to

the observations of the Privy Council referred to

hereinabove, observed:

"With this interpretation, which has been put on the statutory duties and powers of the police and of the powers of the Court, we are in accord."

and it was further held:

"The powers of investigation into cognizable offences are contained in Chapter XIV of the Code. Section 154 which is in that Chapter deals with information in cognizable offences and Section 156 with investigation into such offences and under these sections the police has the statutory right to investigate into the circumstances of any alleged cognizable offence ...and this statutory power of the police to investigate cannot be interfered with by the exercise of power under Section 439 or under the inherent power of the court under Section 561A of Criminal Procedure Code".

This Court, having found that the High Court had exceeded

its jurisdiction in interfering with the investigation, interfered

2 (1963) 2 SCR 52 5

with the orders of the High Court by allowing the appeal

preferred by the State.

5. In State of Bhihar & Anr. V. J.A.C. Saldanha &

Ors.3, a three Judge Bench, speaking through Desai, J.,

after referring the precedents including Khwaza Nazir

Ahmad, held:

"There is a clear cut and well demarcated sphere of activity in the field of crime detection and crime punishment. Investigation of an offence is the field exclusively reserved for the executive through the police department, the superintendence over which vests in the State Government. The executive, which is charged with a duty to keep vigilance over law and order situation is obliged to prevent crime and if an offence is alleged to have been committed it is its bounden duty to investigate into the offence and bring the offender to book. Once it investigates and finds an offence having been committed it is its duty to collect evidence for the purpose of proving the offence. Once that is completed and the investigating officer submits report to the Court requesting the Court to take cognizance of the offence under Section 190 of the Code its duty comes to an end. On a cognizance of the offence being taken by the Court the police function of investigation comes to an end subject to the provision contained in Section 173(8), there commences the adjudicatory function of the judiciary to 3 (1980) 2 SCR 16 6

determine whether an offence has been committed and if so, whether by the person or persons charged with the crime by the police in its report to the Court, and to award adequate punishment according to law for the offence proved to the satisfaction of the Court. There is thus a well defined and well demarcated function in the field of crime detection and its subsequent adjudication between the police and the Magistrate. This has been recognised way back in King Emperor v. Khwaja Nazir Ahmad [1944] L.R. 71 IA 203.

... ... ... ... ...

This view of the Judicial Committee clearly demarcates the functions of the executive and the judiciary in the field of detection of crime and its subsequent trial and it would appear that the power of the police to investigate into a cognizable offence is ordinarily not to be interfered with by the judiciary."

6. M.C. Mehta (Taj Corridor Scam) V. Union of India

& Ors.4 was a public interest litigation in which this

Court, after noticing the precedents, held that when a

cognizable offence is reported to the police, they may

after investigation take action under Section 169 or

Section 170 of the Code. If the officer-in-charge of the

police station forms an opinion that there is no

4 (2007) 1 SCC 110 7

sufficient evidence against the accused, the officer-in-

charge may, under Section 169 of the Code, release

the accused from custody or, if the officer forms an

opinion that there is sufficient evidence, he may, under

Section 170 of the Code, forward the accused to a

competent Magistrate. After analyzing the earlier

judgments, this Court observed:

...that there is a clear-cut and well-demarcated sphere of activities in the field of crime detection and crime punishment. Investigation of an offence is the field reserved for the executive through the police department, the superintendence over which vests in the State Government. The executive is charged with a duty to keep vigilance over law and order situation. It is obliged to prevent crime. If an offence is committed allegedly, it is the State's duty to investigate into the offence and bring the offender to book. Once it investigates through the police department and finds an offence having been committed, it is its duty to collect evidence for the purposes of proving the offence. Once that is completed, the investigating officer submits report to the court requesting the court to take cognizance of the offence under Section 190 Cr.P.C and his duty comes to an end."

7. Now, we shall revert to the facts of the case in order to

consider whether the High Court properly applied the

settled legal position to the facts of the case. 8

On 18th September, 2006, M/s IVR Prime Urban

Developers Ltd. (`IVR' for short) entered into a Memorandum

of Understanding (MOU) with the respondent herein wherein

it was agreed upon by the respondent that he would

facilitate the sale of about 600 acres of land situated at

Sandavellor village of Kancheepuram District, Tamilnadu in

favour of IVR for a valuable consideration of Rs.28 lakhs per

acre. It was mutually agreed upon between the parties that

IVR would retain an amount of Rs.2 lakh per acre towards

security for timely performance of respondent's obligation

under the MOU. The completion of the sale of the said land

was to be done in two phases. The first phase for an extent

of 450 acres was required to be completed before 31st

November, 2006 and the second phase of remaining 150

acres on or before 28th February, 2007. The respondent

agreed to arrange and facilitate registration of sale deeds of

a minimum of 75 acres per week in favour of IVR. The

respondent had also undertaken the obligation to collect and

deliver all the relevant documents and records concerning 9

the said lands as required by IVR for registration of the sale

deeds. It was further agreed upon that the retention amount

accumulated to be forfeited by IVR on failure to comply with

the terms of the MOU by the respondent. The MOU further

provided that the same shall be cancelled by IVR if it was

convinced that the respondent was unable to perform his

part of the obligation under the MOU.

8. On realizing that the respondent could facilitate the

transfer of only 64 acres of land in favour of IVR out of

the huge chunk of the land, IVR got issued legal notice

to the respondent on 15th November, 2006, calling

upon him to facilitate and complete the sale of 450

acres of land within the agreed timeframe. Since there

was no response to the legal notice, IVR terminated the

MOU on 30th November, 2006 and also forfeited the

retention amount in terms of the MOU.

9. Thereafter, IVR entered into two MOUs with the owners

of the land and M/s Altirven Steels Limited for purchase

of 330 acres and 200 acres of land respectively. This is 10

the same land which the first respondent had

undertaken to facilitate the sale in favour of IVR. It is

stated that pursuant to the said MOUs, IVR has

completed purchase of 346 acres of land by paying a

total sale consideration of Rs.121.35 crores.

10. On 12th January, 2007, the respondent herein lodged

first information with the Sub Inspector of Police,

Central Crime Branch, Tamilnadu against the appellants

alleging commission of offences under Sections 406

and 420 of the Indian Penal Code (IPC) and the same

was registered on 26th February, 2007 in FIR No. 93 of

2007. It is not necessary for the purpose of disposal of

these appeals to notice the details of allegations leveled

in the said First Information Report as we propose not

to make any comment or observation which may

hamper further pending proceedings. The police,

having registered the case against the appellants had

commenced its investigation. Even while the

investigation was in progress, for some inexplicable 11

reasons, the respondent moved the High Court under

Section 482 of the Code, in Criminal Original Petition

No. 6194 of 2007 seeking directions to the police to

seize an amount of Rs.2,28,00,000/- from the

appellants claiming that he was entitled for an amount

of Rs.1,28,00,000/- for facilitating the registration of

64 acres of land under the MOU which amount is

alleged to have been withheld by the appellants

together with a sum of Rs.1 crore which is stated to

have been paid by him to the appellants. The petition

filed in the High Court makes an interesting reading in

which it was stated that the following questions arise

for the consideration of the High Court:

A. Whether the accused have not committed serious cognizable offences?

B. Whether the termination of MOU is legally and morally correct?

C. Whether the petitioner had not sustained a huge monetary loss of Rs.5 crores, which was invested in the said project?

12 D. Is it not the duty of the respondent police to seize the petitioner's money of Rs.1,28,00,000/- from accused Nos. 1 to 3?

E. Is it not the duty of the respondent police to seize the petitioner's money of Rs.1,00,00,000/- from accused Nos. 4 to 6?

F. Whether the claim of accused Nos. 1 to 3 that the petitioner has to pay a sum of Rs.2 crores as liquidated damages is justified?

11. Be it noted, that there is no allegation of dereliction of

any duty on the part of the investigating agency. There

is also no allegation of any collusion and deliberate

delay on the part of the investigating agency in the

matter of investigation into the case that has been

promptly registered on the information lodged by the

respondent. The petition almost reads like a civil suit

for recovery of the money. As noted hereinabove, the

petition has been filed within one week of registration

of the crime by which time the police had already

started serious investigation as is evident from the 13

material available on record. It is also required to

notice that none of the appellants have been impleaded

as party respondents to the petition filed under Section

482 of the Code. The State represented by its Sub

Inspector of Police, Central Crime Branch, Egmore,

Chennai alone was impleaded as the respondent. The

investigating agency in its counter filed in the High

Court stated that after obtaining necessary legal

opinion, a case was registered and `commenced the

investigation'. It is also stated in categorical terms that

the police had "inquired all the connected witnesses,

recorded their statements and also collected the

material documents and confirmed commission of

cognizable offences by all the accused". The High

Court, within a period of one month from the date of

filing of the petition, finally disposed of the same

observing that "it is obligatory on the part of the

respondent police to conduct investigation in

accordance with law, including recording of statements 14

from witnesses, arrest, seizure of property, perusal of

various documents, filing of charge sheet. It is also

needless to state that if any account is available with

the accused persons, or any amount is in their

possession and any account is maintained in

Natinoalised Bank, it is obligatory on the part of the

respondent police to take all necessary steps to

safeguard the interest of the aggrieved persons in this

case." The Court accordingly directed the police to

expedite and complete the investigation within six

months from the date of receipt of a copy of the order.

The said order of the High Court is impugned in these

appeals.

12. Shri Uday U. Lalit, learned senior advocate appearing

for the appellants, submitted that the impugned order

suffers from serious and incurable infirmities requiring

interference of this Court. The respondent virtually

sought to recover the amounts from the appellants in a

proceeding filed under Section 482 of the Code which is 15

impermissible in law. It was further submitted that the

High Court exceeded its jurisdiction in issuing directions

to the investigating agency to act in a particular

manner which is unsustainable.

13. Mr. K.V. Mohan, the learned counsel for the

respondent, on the other hand, supported the order

and submitted that the High Court rightly interfered in

the matter in the interest of justice.

14. The question that arises for our consideration is

whether the contents of the petition submitted by the

respondent reveal any cause for issuing directions

guiding the Investigating Officer in the matter of

exercise of statutory power and duty to investigate into

crime that had already been registered and

investigation was actually in progress? Whether such a

direction could have been issued by the High Court in

exercise of its jurisdiction under Section 482 of the

Code?

16

15. It is too fairly well settled and needs no restatement at

our hands that the saving of the High Court's inherent

power is designed to achieve a salutary public purpose

which is that a Court proceeding ought not to be

permitted to degenerate into a weapon of harassment

or persecution. It is unfortunate that it is the exercise

of the inherent power by the High Court in this case

that had ultimately resulted in harassment of the

appellants as is evident from the subsequent events.

Pursuant to the impugned order, the investigating

authorities have approached the appellant No.1 (in

S.L.P (Crl) No. 3269 of 2007), took him into custody

and exhibited him on television channel. The police

have demanded to pay an amount of Rs.2,28,00,000/-

and threatened that he would be arrested if he fails to

comply with their demand. Accordingly, the appellants

have paid Rs.10 lakhs in cash in the police station itself

and issued a cheque for an amount of Rs.2.18 cores

drawn on Tamilnadu Mercantile Bank. However, the 17

cheque was not encashed on account of the instructions

to the bank to stop the payment in view of the interim

order dated 4th May, 2007 of this Court. The police

offered explanation stating that the matter was settled

voluntarily between the parties and therefore, the

accused were not arrested and remanded to custody. It

is difficult to buy this idea that there was a settlement

between the parties in the police station. It is not

difficult to discern as to how and under what

circumstances the appellants may have agreed to pay

the amounts and also issued a cheque. It is not known

as to how and under what authority the police could

intervene and settle any disputes between the parties.

It is needless to observe that the police have no such

authority or duty of settling disputes.

16. It is the statutory obligation and duty of the police to

investigate into the crime and the Courts normally

ought not to interfere and guide the investigating

agency as to in what manner the investigation has to 18

proceed. In M.C. Abraham & Anr. V. State of

Maharashtra & Ors.5, this Court observed:

"Section 41 of the Code of Criminal Procedure provides for arrest by a police officer without an order from a Magistrate and without a warrant. The section gives discretion to the police officer who may, without an order from a Magistrate and even without a warrant, arrest any person in the situations enumerated in that section. It is open to him, in the course of investigation, to arrest any person who has been concerned with any cognizable offence or against whom reasonable complaint has been made or credible information has been received, or a reasonable suspicion exists of his having been so concerned. Obviously, he is not expected to act in a mechanical manner and in all cases to arrest the accused as soon as the report is lodged. In appropriate cases, after some investigation, the investigating officer may make up his mind as to whether it is necessary to arrest the accused person. At that stage the court has no role to play. Since the power is discretionary, a police officer is not always bound to arrest an accused even if the allegation against him is of having committed a cognizable offence. Since an arrest is in the nature of an encroachment on the liberty of the subject and does affect the reputation and status of the citizen, the power has to be cautiously exercised. It depends inter alia upon the nature of the offence alleged and the type of persons who are accused of having committed the cognizable offence. Obviously, the power has to be exercised with caution and circumspection."

17. It is further observed:

5

(2003) 2 SCC 649 19

"The principle, therefore, is well settled that it is for the investigating agency to submit a report to the Magistrate after full and complete investigation. The investigating agency may submit a report finding the allegations substantiated. It is also open to the investigating agency to submit a report finding no material to support the allegations made in the first information report. It is open to the Magistrate concerned to accept the report or to order further enquiry. But what is clear is that the Magistrate cannot direct the investigating agency to submit a report that is in accord with his views. Even in a case where a report is submitted by the investigating agency finding that no case is made out for prosecution, it is open to the Magistrate to disagree with the report and to take cognizance, but what he cannot do is to direct the investigating agency to submit a report to the effect that the allegations have been supported by the material collected during the course of investigation."

18. This Court while observing that it was not appropriate

for the High Court to issue a direction that the case

should not only be investigated but a charge sheet

must be submitted, held:

"In our view the High Court exceeded its jurisdiction in making this direction which deserves to be set aside. While it is open to the High Court, in appropriate cases, to give directions for prompt investigation etc. the High Court cannot direct the investigating agency to submit a report that is in accord with its views as that would amount to unwarranted interference with the investigation of the case 20

by inhibiting the exercise of statutory power by the investigating agency."

(emphasis is of ours)

19. It is worthwhile to notice that the directions in the said

case were issued by the High Court of Bombay in writ

petition filed in public interest in which a grievance has

been made that though the Provident Fund

Commissioner has lodged a complaint against several

Directors, the investigation has made no progress on

account of the fact that the Directors were Government

servants and enjoying considerable influence. The High

Court issued series of directions which were challenged

in this Court contending that the High Court was in

error in exercising jurisdiction under Article 226 of the

Constitution resulting in unjustified interference of the

investigation of the case. It is, therefore, clear that if

the High Court, in exercise of its power under Article

226 of the Constitution of India, cannot direct the

investigating agency to investigate the case in accord 21

with its views as that would amount to unwarranted

interference, equally no such directions could be issued

in exercise of inherent jurisdiction under Section 482 of

the Code.

20. Tested in the light of the principles aforesaid, the

impugned order, in our considered opinion, must be

held to be an order passed overstepping the limits of

judicial interference. It was observed by this Court on

more than one occasion, that even in Public Interest

Litigation proceedings, appropriate directions may be

issued and the purpose in issuing such directions is

essentially to ensure performance of statutory duty by

the investigating agency. The duty of the Court in such

proceedings is to ensure that the agencies do their

duties in compliance with law. The inherent power of

the High Court is saved to interfere with the

proceedings pending before a Criminal Court if such

interference is required to secure the ends of justice or

where the continuance of the proceedings before a 22

Court amounts to abuse of the process of Court. Such a

power under Section 482 of the Code is always

available to the High Court in relation to a matter

pending before a criminal Court.

21. The High Court, in the instant case, did not even advert

to the relevant facts. As stated in the order itself, it was

more guided by the arguments made across the Bar

that the police has not taken any steps to arrest the

persons and seize the amounts involved in this case

from the appellants though there is no such factual

foundation as such laid in the petition. It has altogether

ignored the counter filed by the police that the police

had already examined ten witnesses within a short

span of time after the registration of crime and

recorded their statements. The High Court, without

recording any reason whatsoever, directed the police

that it is obligatory on their part to record statements

from witnesses, arrest, seizure of property and filing of

charge sheet. It is difficult to discern as to how such 23

directions resulting in far reaching consequences could

have been issued by the High Court in exercise of its

jurisdiction under Section 482 of the Code. The High

Court interfered with the investigation of crime which is

within the exclusive domain of the police by virtually

directing the police to investigate the case from a

particular angle and take certain steps which the police

depending upon the evidence collected and host of

other circumstances may or may not have attempted to

take any such steps in its discretion. It is not necessary

that every investigation should result in arrest, seizure

of the property and ultimately in filing of the charge

sheet. The police, in exercise of its statutory power

coupled with duty, upon investigation of a case, may

find that a case is made out requiring it to file charge

sheet or may find that no case as such is made out. It

needs no reiteration that the jurisdiction under Section

482 of the Code conferred on the High Court has to be

exercised sparingly, carefully and with caution only 24

where such exercise is justified by the test laid down in

the provision itself.

22. Yet another aspect of the matter, the appellants have

not been impleaded as party respondents in the

criminal petition in which the whole of the allegations

are levelled against them. The High Court never

thought it fit to put the appellants on notice before

issuing appropriate directions to the police to arrest,

seize the property and file charge sheet. This Court in

Divine Retreat Centre V. State of Kerala & Ors.6

observed:

"We are concerned with the question as to whether the High Court could have passed a judicial order directing investigation against the appellant and its activities without providing an opportunity of being heard to it. The case on hand is a case where the criminal law is directed to be set in motion on the basis of the allegations made in anonymous petition filed in the High Court. No judicial order can ever be passed by any court without providing a reasonable opportunity of being heard to the person likely to be affected by such order and particularly when such 6 (2008) 3 SCC 542 25

order results in drastic consequences of affecting one's own reputation."

(emphasis is of ours)

23. The High Court in the present case, without realizing

the consequences, issued directions in a casual and

mechanical manner without hearing the appellants. The

impugned order is a nullity and liable to be set aside

only on that score.

24. We are not impressed by the submission made by the

learned counsel for the respondent that the High Court

did not issue any directions but merely disposed of the

petition with the observations reminding the police of

its duty. The question that arises for consideration is

whether there was any occasion or necessity to make

those "observations" even if they are to be considered

to be observations and not any directions. It is not

even remotely suggested that there was any deliberate

inaction or failure in the matter of discharge of duties

by the police. There was no allegation of any 26

subversion of processes of law facilitating the accused

to go scot-free nor there is any finding as such

recorded by the High Court in its order. The power

under Section 482 of the Code can be exercised by the

High Court either suo motu or on an application (i) to

secure the ends of justice; (ii) the High Court may

make such orders as may be necessary to give effect to

any order under the Code; (iii) to prevent abuse of the

process of any Court. There is no other ground on

which the High Court may exercise its inherent power.

In the present case, the High Court did not record any

reasons whatsoever why and for what reasons, the

matter required its interference. The High Court is not

expected to make any casual observations without

having any regard to the possible consequences that

may ensue from such observations. Observations

coming from the higher Courts may have their own

effect of influencing the course of events and process of

law. For that reason, no uncalled for observations are 27

to be made while disposing of the matters and that too

without hearing the persons likely to be affected. The

case on hand is itself a classic illustration as to how

such observations could result in drastic and

consequences of far reaching in nature. We wish to say

no more.

25. Learned counsel for the respondent placed reliance on

the decision of this Court in D.K. Basu V. State of

West Bengal7 in support of his submission that the

police is entitled to arrest and seize property in

exercise of their power under the Code. We fail to

appreciate the relevancy of that decision to decide the

case on hand. We are equally unable to appreciate the

relevancy of the decisions in Inder Mohan Goswami

& Anr. V. State of Uttaranchal & Ors.8 and Central

Bureau of Investigation V. A. Ravishankar Prasad

& Ors.9. Those are not the cases where any directions

were issued in exercise of jurisdiction under Section 7 (1997) 1 SCC 416 8 (2007) 12 SCC 1 9 (2009) 6 SCC 351 28

482 of the Code to the police in the manner in which

the High Court did in this case. We find that none of the

decisions upon which reliance has been placed by the

learned counsel for the respondent has any bearing on

the questions that had arisen for our consideration in

these appeals.

26. Before parting with the case, we may, however,

observe that the observations made in this order and

the order passed by the High Court shall have no

bearing whatsoever on the pending proceedings which

shall go on in accordance with law.

27. For the aforesaid reasons, we find it difficult to sustain

the impugned judgment of the High Court.

Leave granted. The appeals are accordingly allowed

and the impugned order is set aside.

....................................J. (R.V. RAVEENDRAN)

NEW DELHI, ...................................J. 29

SEPTEMBER 14, 2009. (B. SUDERSHAN REDDY)