The sanctioning authority must exhibit independent application of mind by considering all substantiated income sources, including those of a spouse, when assessing disproportionate assets. The exclusion of legitimately disclosed income through mechanical assessment renders a sanction order arbitrary and susceptible to judicial review.

Headnote:(A) Prevention of Corruption Act, 1988 - Section 19 - Sanction for prosecution - Validity of - When granting sanction, authority must exercise independent application of mind to all material facts, including substantiated income of relatives - Mechanical grant of sanction without considering relevant documents or ignoring prior departmental reports is unsustainable. (Paras 12, 19)

(B) Disproportionate Assets - Assessment of - Known sources of income - When calculating disproportionate assets, income of spouse, if clearly substantiated through tax filings and departmental declarations, must be included - Excluding such income without valid reasons results in an arbitrary and unreasonable assessment. (Paras 9-12)

(C) Judicial Review - Interference with sanction order - While courts generally do not interfere with sanction orders at initial stages, they may exercise power under constitutional writ jurisdiction if the order reflects non-application of mind or fails to consider vital material causing an abuse of process. (Para 12)

Facts of the case:
The petitioners challenged an order granting sanction for prosecution in a case involving alleged disproportionate assets. It was contended that the investigating agency failed to include the spouse's independent professional and agricultural income, despite such income being duly declared and supported by statutory filings, leading to a significantly inflated assessment of disproportionate assets.

Findings of Court:
The sanctioning authority failed to provide reasons for disagreeing with internal departmental recommendations and disregarded legitimate, documented income sources of the spouse, rendering the assessment process inherently flawed.

Issues: Whether the sanction order was passed after due application of mind and whether the exclusion of the spouse's legitimate income from the asset calculation was legally tenable.

Ratio Decidendi: An order of sanction must reflect genuine independent satisfaction based on all available materials. Excluding substantiated income of a relative from asset calculations renders the assessment arbitrary; furthermore, a failure to consider material facts or explain disagreement with findings of departmental supervisors vitiates the sanction.

Result: Petition allowed; impugned sanction order set aside.

O R D E R

Per : Justice Vivek Kumar Singh

By way of this petition, under Article 226 of the Constitution of India the petitioners take exception to the order dated 04.04.2005 passed by respondent No.2 granting sanction under Sections 19(1)(b) and (c) of the Prevention of Corruption Act, 1988 (for brevity ‘PC Act, 1988’) to prosecute the petitioner No.2 in connection with Crime No.238/2019 for the offence registered under Sections 13(1)(b) and 13(2) of the PC Act read with Section 120-B of the IPC on the ground that the impugned order is arbitrary, unreasonable and has been passed without due application of mind and without consideration of the material facts, particularly the substantiated income of the petitioner No.1.

Shorn of unnecessary details, the facts germane to the institution of the present petition, are as under :-

(i) The petitioner No.2 was serving in the capacity of Assistant Commissioner, Excise, Indore when the impugned sanction was granted and at present, he is posted as Deputy Commissioner, State Excise, Rewa. The genesis of the case stems from a complaint dated 20.06.2018 lodged by one Kamta Prasad, pursuant to which search operation was conducted by respondent-Lokayukt at the petitioner’s known residential and official premises on 15.10.2019.

(ii) The petitioner No.1, who is the spouse of petitioner No.2 hails from a distinguished legal background and has carried forward the legacy of her family by taking up the noble profession of advocacy and commenced her practice prior to her marriage and was independently earning and duly filing regular Income Tax Returns (in short, ‘ITR’) before her marriage.

(iii) During the course of enquiry, the Lokayukt compiled data pertaining to the assets and expenditure of the petitioners vis-a-vis from 04.09.1998 to 15.10.2019 (check period) and arrived at a conclusion that petitioners income exceeded their known sources of income by approximately 88.20%. Thereafter, on the recommendation of Lokayukt, respondent No.2 granted sanction to prosecute petitioner No.2 under Section 13(1)(b) and 13(2) of the PC Act, 1988 read with 120-B of the IPC.

Learned counsel for the petitioner succinctly submits that petitioner No.1 is a highly qualified law graduate and is from a distinguished legal background and derive substantial income from her legal practice and from other sources, which enable her to sustain herself and contribute to the financial well being of her family and also consistently filing her Income Tax Returns reflecting her professional earnings. He further submits that the petitioner No.1 has purchased an agricultural land in the district Raisen for farming and horticulture activity by utilizing the registered gifts received from her parents, savings which she had made from income of legal profession and bank loan and thereafter started the agricultural activity from which she earned profits. The production, transportation and sale of the agricultural produce was duly verified by the Investigating Agency and no discrepancy was ever found in the balance sheet for the agricultural produce. The true copies of Income Tax Returns have been annexed herewith as Annexure P/2. It is also submitted that the prosecution also admits that all the assets recovered during raid (movable and immovable) were duly accounted in ITR of respective petitioners and petitioner No.2 in compliance of Rule 19 of M.P. Civil Service (Conduct) Rules, 1965 have made declaration to the department. However, proceedings against the petitioners were initiated by arbitrarily rejecting the total income of petitioner No.1 and including the assets and expenditure of her in the account of petitioner No.2 and thereby treating the income of petitioner No.2 to be nearly 88% more than his known source of income. Therefore, the petitioners have challenged the said approach on the ground that the agricultural income of petitioner No.1 has wrongly been deducted as it is a legal income and it is duly disclosed under t

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2026 Supreme(Online)(MP) 1703

Cases Referred (8)