1. Sanction for prosecution of a public servant for alleged excess payment to a contractor — Challenge to the validity of the sanction order. (Para 3 )
Back
Next 
2000 Supreme(SC) 25
SUPREME COURT OF INDIA
G.B.Pattanaik : U.C.Banerjee
Gopikant Choudhary
Versus
State Of Bihar
Case No. : 7 , 8 of 2000
Date of Decision : 1/6/00
A sanction for prosecution is invalid if passed by an authority other than the one designated under the Rules of Business for the specific amount involved, particularly when the competent authority has already refused sanction and no fresh evidence has been collected.
Headnote:(A) Rules of Business - Sanction for prosecution - Competent authority - Cases of defalcation, misappropriation or embezzlement of public funds involving more than Rs. 10,000.00 are required to be placed before the Chief Minister, whereas cases involving lesser amounts shall be placed before the Minister in-charge of the department concerned - Where the amount involved was Rs. 2,750.00, the Minister in-charge was the competent authority - Once the competent authority had applied mind and refused sanction, a subsequent order by a higher authority without any fresh material is unsustainable in law. (Paras 4, 6)
Facts of the case:
An Executive Engineer was accused of failing to perform duties in accordance with rules, resulting in an excess payment of Rs. 2,750.00 to a contractor. The matter was initially placed before the Minister in-charge, who refused to accord sanction for prosecution. After the official retired, a subsequent order of sanction was passed by the Chief Minister. The legality of this subsequent order was challenged before the High Court and subsequently before the Supreme Court.
Findings of Court:
The court found that there was no application of mind when the subsequent order was passed. No fresh materials were collected by the investigating agency to justify a reconsideration of the earlier refusal. Since the amount involved was below the threshold of Rs. 10,000.00, the Minister in-charge was the appropriate authority to deal with the sanction, and there was no necessity for the matter to be placed before the Chief Minister.
Issues: Whether the order of sanction for prosecution passed by the Chief Minister was sustainable in law given the amount involved and the prior refusal by the competent authority.
Ratio Decidendi: The sanctioning authority must be the one designated under the Rules of Business based on the amount involved. A subsequent order of sanction passed by a higher authority without the collection of fresh materials and in contradiction of a prior decision by the competent authority is unjustified and lacks application of mind.
Result: Impugned order of sanction set aside.
Legal Category Hierarchy
Table of Contents
2. State contends non-discharge of duty is the gravamen; Appellant argues subsequent sanction by a higher authority without fresh material is unjustified. (Para 3 , 5 )
3. Sanction order lacked application of mind and ignored Rules of Business regarding the competent authority based on the amount of alleged loss. (Para 4 , 6 )
4. A sanction order passed by an incompetent authority under the Rules of Business, without application of mind or fresh evidence, is unsustainable. (Para 4 , 6 )
5. Impugned order of sanction for prosecution set aside. (Para 6 , 7 )
6. Who is the competent authority to grant sanction for prosecution under the Rules of Business based on the amount involved?
For cases of defalcation, misappropriation, or embezzlement of public funds involving more than 10,000, the Chief Minister is the competent authority; for amounts less than that, the Minister in-charge of the department is the competent authority. (Para 4 , 6 )
7. Can a higher authority grant sanction for prosecution after a competent authority has already refused it?
A subsequent sanction order is unsustainable if it is passed without the application of mind and without the collection of fresh materials that would justify reconsidering the earlier refusal by the appropriate authority. (Para 5 , 6 )
8. Does the nature of the charge (non-discharge of duty) override the monetary threshold for determining the sanctioning authority?
No, if the failure to perform duty resulted in a specific monetary loss to the exchequer, the Rules of Business regarding the amount of loss determine the competent sanctioning authority. (Para 4 , 6 )
(1) LEAVE granted.
(2) THE short question that arises for consideration in these appeals is whether the impugned order of sanction for prosecution given by the Chief Minister can at all be sustained in law.
(3) THE appellant was serving as Executive Engineer and the allegation is that in respect of some work a sum of Rs. 2,750.00 was paid in excess to the contractor. Mr. B.B. Singh, learned counsel for the State of Bihar submitted that the non-discharge of the duty by the Executive Engineer in accordance with the rules is the gravamen of the charge and not the excess amount which ultimately can be said to have been paid to the Contractor.
(4) WE do not find any force in the said contention, inasmuch as in the very document itself it has been indicated that failure on the part of the Executive Engineer to perform his duty in accordance with the rules has been responsible for making the State pay excess amount to the tune of rs. 2,750.00. Under the Rules of Business, all cases of defalcation, misappropriation or embezzlement of public funds involving more than Rs. 10,000.00 are required to be placed before the Chief Minister and cases involving lesser amount shall be placed before the Minister in-charge of the department concerned.
(5) IN the case in hand, the matter was initially placed before the Minister of Law who refused to accord sanction after applying his mind to the entire materials and an order to that effect was passed. Subsequent to the same, the appellant retired in the year 1994 and it is only in 1997, the Chief Minister appears to have passed the impugned order. The appellant assailed the legality of, the aforesaid order in the High Court, but the High Court having not interfered with, he has approached this Court. It is contended on behalf of the appellant that no fresh materials were collected subsequent to the earlier order refusing to sanction prosecution and appropriate authority having applied its mind and having passed the said order, the subsequent order was wholly uncalled for and unjustified. In the counter-affidavit filed by the State, it has been indicated that before passing the earlier order, the matter had not been referred to the Chief Minister who was the competent authority and, therefore, when the matter was referred to the Chief Minister, the Chief Minister having passed the order there is no infirmity with the order of sanction in question. He also produced the relevant file before us to indicate as to how the file has been processed after the earlier order refusing to sanction prosecution.
(6) WE find from the file that was produced that there has been no application of mind when the subsequent order was passed in the year 1997. It further appears that between the order refusing to sanction and the order that was passed in 1997, the investigating agency had not collected any fresh materials requiring fresh look at the earlier order. It is also apparent that the alleged excess amount said to have been paid on account of non- performance of the duty by the appellant is to the tune of rs. 2,750.00 and, therefore, under the Rules of Business, the file pertaining to sanction would have been finally dealt with by the Law Minister and, in fact, he had done so. In this view of the matter, neither there was any necessity for the authorities concerned to place the file before the Chief Minister nor the Chief Minister had any occasion to reconsider the matter and pass fresh order sanctioning prosecution particularly when, taking into account the loss sustained to the ex-chequer is to the tune of Rs. 2,750.00. That apart, the person concerned has already retired in the year 1994 and it is unthinkable that for a loss of rs. 2,750.00 State would pursue the proceedings against such person. In this view of the matter, we set aside the impugned order of sanction dated 10-12-1997 passed by the Chief Minister for prosecuting the appellant.
(7) THESE appeals are
