REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS. 1258-1259 OF 2018

HIMACHAL PRADESH CRICKET

ASSOCIATION & ANR. .....APPELLANT(S)

VERSUS

STATE OF HIMACHAL PRADESH & ORS. .....RESPONDENT(S)

W I T H

WRIT PETITION (CRIMINAL) NO. 135 OF 2017

J U D G M E N T

A.K. SIKRI, J.

Two FIRs are the subject matter of these appeals. One FIR

No. 12 of 2013 dated August 01, 2013 is under Sections 406, 420,

120B of the Indian Penal Code, 1860 (IPC) and Section 13(2) of the

Prevention of Corruption Act, 1988 (PC Act) has been registered

against the appellants herein as well as some other persons.

Second FIR No.14 of 2013 dated October 03, 2013 is under Section

447 read with Section 120B of the IPC, Section 3 of Prevention of

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 1 of 53

Damage to Public Property Act, 1984 and Section 13(2) of the PC

Act. The appellants filed petitions under Section 482 of the Code of

Criminal Procedure, 1973 (Cr.P.C.) before the High Court of

Himachal Pradesh for quashing of the said FIRs. These petitions

have been dismissed by the High Court vide common judgment

dated April 25, 2014. That judgment is impugned in the instant

appeals. When the Special Leave Petitions (out of which these

appeals arise) were filed, notice thereof was issued on January 5,

2015 and stay of further proceedings was also granted in the case

arising out of the said FIRs which are pending before the Special

Judge, Kangra, Dharamshala, Himachal Pradesh. That stay has

been extended from time to time and is, therefore, continuing.

2)During the pendency of these proceedings, investigation was

completed. On the day judgment was pronounced by the High

Court, the chargesheets were filed in the Court of Special Judge.

After the filing of the said chargesheets, the appellants have also

filed Writ Petition (Criminal) No. 135 of 2017 in this Court seeking

quashing of these chargesheets. Both these proceedings were

clubbed and heard together which we propose to dispose of by this

common judgment.

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 2 of 53

3)Appellant No. 1 is a Cricket Association of Himachal Pradesh which

was initially registered as a Society under the Societies Registration

Act, 1860 vide Registration Certificate dated June 08, 1990. On

September 15, 2001, appellant No. 1 made an application for

allotment of land to develop and construct the world class cricket

stadium and consequently, the Commissioner-cum-Secretary

(Education) granted permission for transfer of land to the Himachal

Pradesh Youth Services and Sports Department with certain

conditions. A lease deed dated July 29, 2002 was executed

between appellant No.1 and respondent No. 1 through Director,

Himachal Pradesh Youth Services and Sports Department for the

said land at Village Mouja and Tehsil Dharamshala, District Kangra

for construction of an international cricket stadium which was duly

constructed. On July 14, 2005, a not for profit company in the name

of Himalayan Players Cricket Association was incorporated under

Section 25 of the Companies Act, 1956. Name of this company was

changed to Himachal Pradesh Cricket Association on August 31,

2005.

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 3 of 53

4)Purusant to a proposal to host international cricket matches at

Dharamshala, the International Cricket Council inspected the cricket

infrastructure being developed at Dharmashala by appellant No. 1

and, inter alia, observed that the quality of accommodation left much

to be desired. Need for some more facilities and hotel

accommodation of desired quality was specifically stressed.

5)Having regard to this report, the appellants decided to construct a

club house on the leased land. There was also a parcel of idle land

in the middle of the land allotted for the stadium. Appellant No.1

towards this end made a request to the Director, Youth Services and

Sports for allotment of additional land adjacent to the stadium

admeasuring 720 square metres, vide its letter dated July 03, 2008.

Since it was Gram Panchayat land, consent thereof was also

needed for its allotment to the appellant No.1. Appellant No.1, thus,

approached the Gram Panchayat. Pursuant to meetings between

the office bearers of appellant No. 1 and Gram Panchayat, members

of Uparali Dhari Development Division, Dharamshala, the said Gram

Panchayat issued no objection for allotment of the land. Proposal of

appellant No. 1 for allotment of additional land was mooted with the

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authorities as well. Respondent No. 1 vide letter dated November

16, 2009 took up the matter with the ACS-cum-FC Revenue to the

Government of Himachal Pradesh for approval to lease out

government land in Mohal Kand Mauja Khanyara, Tehsil

Dharamshala, District Kangra, measuring in 3-28-06 hectare in

favour of appellant No. 1. Respondent No. 1 granted approval to

lease out the aforesaid land in favour of appellant No. 1 vide letter

dated November 16, 2009 which was conveyed vide letter dated

November 18, 2009. As a result, lease deed was executed between

appellant No. 1 and respondent No. 1 for lease of the said land

situated at Mohal Kand Mauza Khanyara, Tehsil Dharmashala.

6)Club house was constructed at the stadium premises at

Dharamshala under the name and style of “Aveda HPCA Club

House”. Completion Certificate was issued on March 10, 2011 and

was certified complete in all aspects as per approved plan of the

Executive Officer, Municipal Council, Dharamshala. The Town and

Country Planning Department, Dharamshala also issued no

objection certificate dated March 15, 2011 for use of part of the

infrastructure of cricket stadium as club house for cricket activities.

Respondent No. 1 also approved the tariff for availing the

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accommodation facilities of the club house vide its letter dated

September 08, 2011.

7)The Board of Control for Cricket in India (BCCI) granted permission

to the Himachal Pradesh Cricket Association to convert itself from a

"not for profit" society to a "not for profit" company during its annual

general meeting held on September 19, 2011. A majority of cricket

associations throughout the country have been converting

themselves from a not for profit society to a not for profit company

registered under the Companies Act, 1956 in order to ensure better

and transparent management of their affairs.

Realising that unless world class accomodation was available

for the teams playing at the stadium and the officials concerned

accompanying such teams, the venue at Dharamshala that was

being painstakingly developed by the appellant No. 1 from its own

funds would be grossly underutilised and the State would lose out in

hosting cricket matches, appellant No. 1 and its office bearers began

working out a method to construct a world class motel for such

purposes.

Appellant No. 1 realized that if the use of the same was

restricted only to usage during match days for use of teams and

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 6 of 53

their officials, the same would not be commercially viable. As the

terms of the lease may not be technically wide enough to cover this

allied infrastructure being developed for the game of cricket, vide its

letter dated December 24, 2011, appellant No. 1 wrote to the

respondent to request it to permit commercial activity on the said

land on even non match days and amend the lease terms

accordingly. The above letter was forwarded by the District

Magistrate to the Principal Secretary (Revenue), Government of

Himachal Pradesh and the Principal Secretary (Revenue),

Government of Himachal Pradesh issued no objection for execution

of a supplementary lease enabling commercial activity on the

additional land at Kandi provided that the lease money was charged

in accordance with the Lease Rules, 2011. A supplementary lease

deed was executed between the appellant No.1 and the State of

Himachal Pradesh enabling use of the additional land commercially.

Necessary permissions for development on the said land were

obtained including for commercial hotel. The hotel constructed

under the name and style of “The Pavilion” obtained registration with

the Tourism Department of the State and Tariffs, etc. were also fixed

by the said Department on September 26, 2012. In the meantime,

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 7 of 53

on September 22, 2012 resolution was passed by the appellant No.

1 company to take over the assets and liabilities of the society.

Agreement dated October 01, 2012 was also executed between the

Himachal Pradesh Cricket Association (the society) and Himachal

Pradesh Cricket Association (the Company) to enable the Society to

convert itself into a Company. Accordingly, the Society was

converted into a Company and the Himachal Pradesh Cricket

Association stood converted from a society to a not for profit

company registered under the Companies Act, 1956 and the

Registrar of Companies was informed of the same in due course.

8)Within a couple of months, from the aforesaid developments, there

was a change of political executive in the State of Himachal Pradesh

pursuant to the elections of legislative assembly. According to the

appellants, with the change of political power, tirade against the

appellants started by the new Government. In fact, even during the

election campaign, the Congress (I) had published a ‘Congress

Chargesheet’ wherein serious allegations were levelled against the

appellants. The appellants department sprung into action and

started seeking information from the appellants on various aspects,

though this information was already available with the State

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 8 of 53

Government. A formal FIR No. 12 of 2013 dated August 01, 2013

was registered which, according to the appellants, is the result of the

said ‘Congress Chargesheet’. In fact, some time before that, a

complaint under Section 156(3) Cr.P.C. was made by one Vinay

Sharma against appellant No. 1 and its office bearers in which

orders were passed by Special Judge, Kangra on July 02, 2013

directing the police authorities to investigate the said case and

submit the report to it. Thus, two parallel proceedings were started.

9)Further allegation of the appellants is that investigation was

personally monitored by respondent No. 2 herein who was the Chief

Minister at that time. He had also made various public statements

from time to time that he was interested in taking over the entire

function of the Cricket Association and its assets. According to the

appellants, at the behest of respondent No. 2, even the Registrar of

Societies, Himachal Pradesh issued notice dated September 7,

2013 on the issue of formation of company under Section 25 of the

Companies Act, 1956 and taking over the assets of the society.

Against this notice, Writ Petition No. 7593 of 2013 was filed wherein

the High Court passed the orders keeping in abeyance the

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 9 of 53

allegations raised in the notice dated September 7, 2013 of the

Registrar of Societies.

10)Another FIR No. 14 of 2013 dated October 03, 2013 came to be

registered against the appellants and others alleging commission of

offences under Section 447 read with Section 120B of the IPC,

Section 3 of the Prevention of Damage to Public Property Act, 1984

and Section 13(2) of the PC Act. Many other actions were taken by

the respondents, which according to the appellants, were mala fide

moves, reference whereto shall be made at the appropriate stage.

At this juncture, the appellants filed petition under Section 482 of

Cr.P.C. on January 06, 2014 seeking quashing of FIR No. 12 of

2013 which stands dismissed vide impugned judgment dated April

25, 2014.

11)The High Court in the impugned judgment has taken note of catena

of judgments of this Court pertaining to powers of the High Court

within the scope of Section 482 of Cr.P.C. Thereafter, it has

observed that after lodging of the FIR, investigation has been

conducted and the material collected during investigation discloses

that 18 persons made accused in the aforesaid FIR are prima facie

involved in the commission of offences. On this ground, it has

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 10 of 53

brushed aside the argument of the appellants that it was a case of

vengeance, political vendeta and mala fide. The High Court has

also observed that allegations of mala fide based on the facts after

lodging of the FIR are of no consequence and cannot be the basis

for quashing the proceedings. For this purpose, it has referred to

the judgment of this Court in State of Bihar & Anr. v. P.P. Sharma

& Anr.

1

. It has also observed that even otherwise, the file does not

disclose at this stage how it is the case of mala fide. In the opinion

of the High Court, in such circumstances, merits of the case is to be

tested during trial inasmuch as FIR and Final Report of Investigating

Agency discloses that case for trial is made out. As the power under

Section 482 Cr.P.C. is to be exercised carefully, cautiously and in

rarest of rare cases, keeping in mind the law laid down by this Court,

the High Court refused to quash the proceedings. We may also

record here that one of the submissions of the appellants before the

High Court was that appellant No. 2 and other persons are not

public servants and, therefore, provisions of PC Act could not be

invoked against them. This argument has also been found to be

unmerited on the ground that some of the accused persons arrayed

with the appellants are public servants and also that allegation in the

11992 Supp (1) SCC 222

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 11 of 53

FIR is that all these accused persons has the conspiracy and

wrongful gain to themselves and wrongful loss to the State, in the

process, the officials misused their position to show favour to other

accused persons.

12)Mr. Patwalia, learned senior counsel appearing for the appellants, at

the outset, drew the attention of this Court to the fact that M/s.

Subhash Ahluwalia, Subhash Negi, Ajay Sharma, Deepak Sanan

and T.G. Negi, who are the IAS Officers, were associated with the

grant of three leases. They were the main persons who took active

part in deciding that the three leases should be granted to the

appellants and on that basis, final decision was taken. However, as

far as these Officers are concerned, prosecution sanction has either

been denied or they have not been prosecuted at all. Likewise, Mr.

Gopal Chand, who belongs to Himachal Pradesh Administrative

Service, was arrayed as one of the accused person, but in his case

also, the sanction though given earlier stood withdrawn. He has

even been promoted to IAS cader. Mr. Patwalia submitted in tabular

form status of Officers who have allegedly conspired with the

appellants, which is as under:

Sl.Name of OfficerPost at the time ofRole as per FIR Sanction

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 12 of 53

No. alleged offence

FIR No. 12 of 2013 dated 01.08.2013 under Sections 406/420/120B IPC and

Section 13(2), Prevention of Corruption Act

1Subhash

Ahluwalia

IAS, Director-cum-

Special Secretary,

Youth Services and

Sports Department,

Government of

Himachal Pradesh.

Sh. Subhash Ahluwalia, at

the time of grant of lease

of the Government Land

to HPCA for the

construction of Cricket

Stadium had ignored the

rules and had not

mentioned the provisions

of Lease Rules, 1993 in

his noting. Further, Sh.

Subhash Ahluwalia was a

signatory to the Lease

Deed dated 29.07.2002.

Not Charged

(Not enough

evidence of

malafide

intention).

2Subhash NegiIAS, Secretary,

Youth Services and

Sports Department,

Government of

Himachal Pradesh

Sh. Subhash Negi, at the

time of grant of lease of

the Government Land to

HPCA for the construction

of Cricket Stadium had

ignored the rules and had

not mentioned the

provisions of Lease Rules

1993 in his noting.

Not Charged

(Not enough

evidence of

malafide

intention).

3T.G. Negi IAS, Principal

Secretary, Youth

Services and Sports

Department,

Government of

Himachal Pradesh.

Sh. T.G. Negi made no

efforts to reject the notings

of accused Sh. Ajay

Sharma and instead

forwarded the same for

approval of the Chief

Minister.

Not Charged

(Not enough

evidence of

malafide

intention).

4Ajay Sharma IAS, Director-cum-

Special Secretary,

Youth Services and

Sports Department,

Government of

Himachal Pradesh.

In 2008, then Chief

Minister P.K. Dhumal

marked the application of

HPCA for permission of

construction of Club

House and its commercial

use to Sh. Ajay Sharma

Prosecution

sanction

declined by

Central

Government

on

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 13 of 53

and asked him to prepare

the proposal for the same.

Sh. Ajay Sharma, by

abusing his official

position proposed for

permission to the HPCA

with the approval of the

Chief Minister. The land

was leased only for

construction of cricket

stadium and not club

house. Sh. Ajay Sharma,

by abusing his office in

criminal conspiracy with

HPCA, contrary to the

terms and conditions of

the lease deed has

provided undue benefit to

the HPCA and loss to the

State Government.

25.08.2015.

Prosecution

sanction

withdrawn by

the State

Government

on

09.04.2018.

5Deepak SananIAS, Principal

Secretary-cum-

Financial

Commissioner,

Revenue

Department,

Government of

Himachal Pradesh.

Sh. Deepak Sanan issued

NOC for the commercial

use of Government land

which was leased to

HPCA for the construction

of Hotel Pavilion by

reversing the earlier

decision of Council of

Minister. Sh. Deepak

Sanan also notified the

Lease Rules, 2011, on the

basis of which

supplementary lease was

executed, in accordance

with Rule 9.

Prosecution

sanction

declined by

Central

Government

on

25.08.2015.

Prosecution

sanction

withdrawn by

the State

Government

on

09.04.2018.

6Gopal Chand HPAS, Additional

Secretary, Revenue

Department,

Government of

Himachal Pradesh

Sh. Gopal Chand had

recommended for the

commercial use of land

leased to HPCA in Mohal

Kand and marked the file

to Sh. Deepak Sanan,

whereas under Schedule

Prosecution

sanction

granted on

03.04.2014

withdrawn by

the State

Government

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 14 of 53

20 of the Business Rules,

he could have

recommended the matter

to be taken to the Cabinet.

on

03.08.2016.

Promoted to

IAS.

FIR No. 14 of 2013 dated 03.10.2013 under Sections 447/120B IPC, Section 3 of

the Prevention of Damage to Public Property Act, 1984 and Section 13(2) of the

Prevention of Corruption Act

7K.K. Pant IAS, Deputy

Commissioner,

Kangra, Himachal

Pradesh

On 14.03.2008, Sh. K.K.

Pant chaired a meeting

with other accused,

without following due

procedure and without

having any statutory

power for doing so, for

reallocation of Type IV,

UGC accommodation in

the possession of the

Education Department

and the presumptions

drawn in the meeting were

made with the intention to

give undue advantage to

HPCA. Sh. K.K. Pant

overlooked the report

regarding condition of

building.

Prosecution

sanction

declined by

Central

Government

on

27.03.2015.

8P.C. Dhiman IAS, Principal

Secretary, Education

Department,

Government of

Himachal Pradesh

Sh. P.C. Dhiman issued

NOC to the Department of

Youth Services and

Sports, contrary to the

recommendations/

conditions of the Director,

Higher Education, and

without mentioning the

disposal of building in

accordance with

rules/norms and recovery

costs from HPCA.

Prosecution

sanction

declined by

Central

Government

on

24.08.2015.

9Devi Chand Executive Engineer,Devi Chand Chauhan, Prosecution

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 15 of 53

Chauhan Dharamshala

Division, HPPWD

while working as

Executive Engineer (Civil),

Dharamshala, HPPWD

Division forwarded the

report sent by the then

SDO Sub-Division No. 1,

Dharamshala, regarding

dilapidated condition of

Type IV accommodations,

without following

procedure as laid down by

the Government of India,

Central Public Works

Department Code, whihc

led two illegal demolition

of two storied building

(Type IV accommodation)

of the Education

Department existing

adjacent to the present

Cricket Stadium gate,

which was an eyesore to

the HPCA and alleged to

be a security threat to the

players. Thus, the motive

of the Executive Engineer

was to intentionally give

an advantage to HPCA

thereby misusing his

official position.

sanction

declined by

Department

Secretary

but

recommende

d by the then

Chief

Minister Sh.

Virbhadra

Singh.

Hence,

prosecution

sanction

granted on

23.09.2014

and

15.10.2014

(FIR No.

14/13 dated

03.10.2013)

13)Thus, the Government Officers who have granted lease are not

been prosecuted. He, thus, submitted that the main Government

functionaries were left out which shows that the Government wanted

to protect its own Officers but, at the same time, roped in the

appellants and others because of political enmity.

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 16 of 53

14)Dilating on the aforesaid plea, namely, the entire prosecution is due

to political vendetta, without any legal basis, Mr. Patwalia submitted

that the genesis of the prosecution starts with the failed attempt by

the then State Government to take over appellant No. 1 in the year

2005 under the provisions of the HP Sports (Registration,

Recognition and Regulation of Associations) Act, 2005 due to the

interim protection granted by the Himachal Pradesh High Court on

May 18, 2005. This Act was subsequently repealed. According to

him, in view of the repeated interference by State Governments in

the internal affairs of autonomous cricket associations, the BCCI

has informally encouraged such member associations to re-register

themselves as not for profit charitable Section 25 Companies under

the Companies Act, 1956, as amended, for better legal compliances,

transparency and to avoid interference in internal affairs by State

Governments. Accordingly, various member associations of the

BCCI have converted themselves to Section 25 not for profit

charitable companies governed by the provisions of the Companies

Act, 1956. Appellant No. 1 also followed the suit as a result of

aforesaid mandate of the BCCI. Accordingly, a not for profit

company in the name of Himalayan Players Cricket Association was

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 17 of 53

incorporated under Section 25 of the Companies Act, 1956. On

August 31, 2005, the said Company was permitted to change its

name to Himachal Pradesh Cricket Association and was issued a

fresh certificate of incorporation. During this process, the HP Sports

(Registration, Recognition and Regulation of Associations) Act, 2005

stood repealed and no further steps were taken in the interregnum

to convert the society to a section 25 company. Thereafter, on

September 19, 2011, the BCCI took up the pending request of

appellant No. 1 to permit it to convert itself to a Section 25 not for

profit company and granted the same. Pursuant to the permission

by the BCCI, amendments were carried out by the members at the

AGM of the appellant No. 1 on September 22, 2012 resolving to

convert the appellant No. 1 society to a Section 25 Company.

Accordingly, an agreement was executed on October 01, 2012

converting the society to a Section 25 Company and informing the

Registrar of Companies of the same. On October 31, 2012,

appellant No. 1 now registered as a Section 25 Company under the

Companies Act, 1956 informed the Registrar of Societies of the

State of Himachal Pradesh of the change in the memorandum and

rules of the appellants. Further, on November 02, 2012, once again

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 18 of 53

the intimation regarding change in status of appellant No. 1 from a

not for profit society to a not for profit company was given to the

Registrar of Societies, State of Himachal Pradesh. Thus, from

October 01, 2012, appellant No. 1 has been existing as a Company

with due intimation to the State of Himachal Pradesh paying its

lease rent and taxes in accordance with law. He also argued that

the effect of such statutory conversion from a firm to a company by

statutory provisions for income tax purposes has been considered

by the Bombay High Court in the case of Commissioner of Income

Tax, Mumbai v. Texspin Engg. and Mfg. Works, Mumbai

2

and

Punjab & Haryana High Court in the case of Commissioner of

Income Tax (Central), Ludhiana v. M/s. Rita Mechanical Works,

Ludhiana

3

wherein it has been held as under:

"There is a difference between vesting of the property,

in this case, in the limited company and distribution of the

property. On vesting in the limited company under Part IX

of the Companies Act, the properties vest in the company

as they exist. ...

“In the present case, we are concerned with a

partnership firm being treated as a company under the

statutory provisions of Part IX of the Companies Act. In

such cases, the company succeeds the firm. Generally, in

the case of a transfer of a capital asset, two important

ingredients are: existence of a party and a counter-party

2(2003) 263 ITR 345

3(2012) 344 ITR 544

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 19 of 53

and, secondly, incoming consideration qua the transferor.

In our view, when a firm is treated as a company, the said

two conditions are not attracted. There is no conveyance

of the property executable in favour of the limited

company. It is no doubt true that all properties of the firm

vest in the limited company on the firm being treated as a

company under Part IX of the Companies Act, but that

vesting is not consequent or incidental to a transfer. It is a

statutory vesting of properties in the company as the firm

is treated as a limited company. On the vesting of all the

properties statutorily in the company, the cloak given to the

firm is replaced by a different cloak and the same firm is

now treated as a company, after a given date. ..."

15)On the aforesaid basis, submission of Mr. Patwalia was that

conversion of a not for profit society to a not for profit charitable

company which is expressly permitted by law cannot be construed

as a crime. The assets - in the present case leased land remain as

they are. In fact, the appellants have constructed a world class

stadium and a world class hotel on the leased premises.

Importantly, the State Government continues to remain the owner of

the land and has the power under the leases to cancel the same for

violation of terms and conditions of the lease.

16)It was highlighted by him that on the midnight of October 26, 2013,

the State Government had cancelled the leases and forcibly

dispossessed the appellants from the leased lands. However, on

November 05, 2013, the Himachal Pradesh High Court strictured the

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 20 of 53

State Government and ordered status quo ante and handed over

the possession of the leased lands to the appellants. The State

Government thereafter accepted this order and withdrew the

cancellation of lease notices on November 19, 2013. Subsequently,

another notice dated May 23, 2015 was issued seeking cancellation

of the leases which too stands withdrawn on August 09, 2018. At

present, there are no proceedings pending for cancellation of the

leases.

17)Mr. Patwalia argued that there were specific allegations of mala fide

against respondent No. 2 from the very inception of these

proceedings about how he first caused the FIR to be registered and

thereafter interfered in the investigations, by being head of the SIT.

He also further stated that the conduct of respondent No.2 from

opposing the present appeals after having filed a counter affidavit in

the present matter stating that he was not a necessary party and it

was not his job to defend the prosecution, depicts mala fides on his

part. This, according to him, was sufficient to quash the FIR as

investigation was tainted. In support, he referred to the case of

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 21 of 53

Union of India & Ors. v. Sushil Kumar Modi & Ors.

4

wherein this

Court held as under:

"4. ...The agencies concerned must bear in mind and, if

needed, be reminded of the caution administered by Lord

Denning in this behalf in R. v. Metropolitan Police Commr.

[(1968) 1 All ER 763 : (1968) 2 WLR 893 : (1968) 2 QB 118]

Indicating the duty of the Commissioner of Police, Lord

Denning stated thus: (All ER p. 769)

"I have no hesitation, however, in holding that, like every

constable in the land, he should be, and is, independent of the

executive. He is not subject to the orders of the Secretary of

State, …. I hold it to be the duty of the Commissioner of

Police, as it is of every chief constable, to enforce the law of

the land. He must take steps so to post his men that crimes

may be detected; and that honest citizens may go about their

affairs in peace. He must decide whether or not suspected

persons are to be prosecuted; and, if need be, bring the

prosecution or see that it is brought; but in all these things he

is not the servant of anyone, save of the law itself. No Minister

of the Crown can tell him that he must, or must not, keep

observation on this place or that; or that he must, or must not,

prosecute this man or that one. Nor can any police authority

tell him so. The responsibility for law enforcement lies on him.

He is answerable to the law and to the law alone.”

...There can hardly be any doubt that the obligation of the

police in our constitutional scheme is no less."

18)Mr. Patwalia referred to various documents placed on record and

contended that they would ex facie show that administrative

decisions were taken at various levels and by variou departments by

the concerned officers prior to sanction of leases in favour of

appellant No.1. Therefore, no wrong, much less culpable wrong,

4(1997) 4 SCC 770

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 22 of 53

was committed by the appellants and others. He specifically

referred to the allegation that there is no provision of grant of lease

at a token rate of Re.1/- per month under the applicable lease rules.

His response was that this argument is completely fallacious. The

leases of the appellants were granted under the H.P. Lease Rules,

1993. The appellants wanted to set up a cricket stadium with allied

world class infrastructure to enable the ICC to grant international

games to Himachal Pradesh and, thus, were eligible for grant of

lease under Rule 4(vii) - public purpose in the interest of the

development of the State. The appellants were also eligible for

grant of larger areas under Rule 5 in terms of the exemption

provided therein. In fact, the decision to lease the land at token rate

of Re.1/- per month for construction of cricket stadium was a well

thought out administrative decision by the State Government in the

interest of the State and has admittedly put Dharamshala on the

world map. This decision was taken by the State Cabinet after

considering the advice and presentation from the officers concerned.

RTI documents in the possession of the appellants record the

decision of the Cabinet dated May 27, 2002 as under:

"Item No. 14

Government of Himachal Pradesh

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 23 of 53

General Administration Department

(Confidential & Cabinet)

Subject: Leasing out of Government land for the construction

of International Cricket Stadium at Dharamshala to H.P.

Cricket Association on usual terms and conditions.

The above proposal was discussed by the Cabinet in its

meeting held on 27.5.2002 and the decision arrived at thereon

is reproduced below:-

"The Cabinet approved the propsoal regarding lease rates.

Advantages of the Project explained by the AD were

considered and it was decided that land be leased out at

token rate of Re.1/- per month for a period of 99 years."

The implementation report of the above decision may please

be sent to this Department within a fortnight from the receipt

of this communication.

Sd/-

Addl. Secretary (GAD)"

19)Further, Rule 8 provides for lease amount to be paid. At the time of

grant of lease, the appellant being a society had to pay lease

amount under Rule 8(1)(ii) at 8% of the latest highest market value

of the land leased or double the average market value of five years

whichever is less. The proviso to Rule 8(1) empowers the State

Government to reduce the lease amount in deserving cases and

reads as under:

"8(1) Lease Amount. - (1) The lease amount (fresh or renewal

of existing lease) shall be charged from the eligible institutions

and persons per annum as under:-

......

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 24 of 53

Provided that the State Government may reduce the amount

for special reasons in deserving cases."

Therefore, the State Government took a conscious decision in

exercise of its powers under the proviso to Rule 8(1) of the H.P.

Lease Rules, 1993 and granted the lease at a token rate of Re.1/-

per month.

20)Based on the aforesaid material and circumstances highlighted by

Mr. Patwalia, his submission was that no case was made out

against the appellants and others, for prosecuting them under

criminal law, much less under the provisions of PC Act and the High

Court in its impugned judgment has totally glossed over these

aspects by limiting the exercise to copiously quoting various

judgments and on that basis, dismissing the petitions of the

appellants, without any discussion as to how principles contained in

those judgments is applicable in the instant case.

21)He also submitted that in the facts of the present case, simply

because chargesheet has been filed thereafter and the order taking

cognizance has been passed would not mean that the appellants

cannot prosecute these cases. He submitted that even the

chargesheet and cognizance order has been challenged by filing

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 25 of 53

Writ Petition (Criminal) No. 135 of 2017 which, according to him, is

maintainable having regard to the fact that the appeals arising out of

petitions under Section 482 of Cr.P.C. are pending in this Court and

those events happened during the pendency of these proceedings.

He referred to the the cases of Delhi Judicial Service

Association, Tis Hazari Court, Delhi v. State of Gujarat & Ors.

5

and Monica Kumar & Anr. v. State of Uttar Pradesh & Ors.

6

,

wherein it is held that this Court has inherent power to quash FIR,

chargesheet, charges etc. in exercise of powers under Articles 32,

136 and 142 to do complete justice in a cause or matter pending

before it and that there is no restriction on this power of the Court.

According to him, the present is not a case where the appellants are

alleging that a judicial order is in violation of their fundamental rights.

The present is a case where the appellants have pleaded that:

(i)there is no criminal act on their part and the facts do not

disclose any offence;

(ii)all Officers who processed the case of the appellants are not

prosecuted;

5(1991) 4 SCC 406

6(2008) 8 SCC 781

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 26 of 53

(iii)two Officers Subhash Ahluwalia and T.G. Negi who processed

the case of the appellants were made Principal Secretary to CM and

Advisor to CM, respectively, by the respondent No. 2 and were not

prosecuted;

(iv)there is no criminal act on the part of the officers and they

performed their appropriate administrative duties due to which

sanction stands declined by the Central Government and the CVC;

(v)leases were validly granted as per proper procedures and in

accordance with lease rules;

(vi)FIR was registered on the basis of “Congress Chargesheet”;

(vii)investigation was personally supervised by the respondent No.

2;

(viii)chargesheet filed is the outcome of this tainted investigation;

(ix)prosecution is mala fide and vexatious to settle personal

political scores;

(x)even otherwise the State Government continues to remain

owner of the land which is on lease and on which the appellants

have constructed assets worth above 150 crores;

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 27 of 53

(xi)these assets are for use of the public of the State and are

being used as such. Further, filing of chargesheet and an order

taking cognizance is not a final judicial order. It is a preliminary

process in criminal law and is open to challenge in higher judicial

fora such as this Court.

22)Last submission of the learned senior counsel was that, in any case,

at best the matter could have been subject matter of a civil dispute

between the appellants and the respondents but has mala fidely

been given the cloak of a criminal proceeding to harass the

appellants with a mala fide prosecution. The salutary principle of

law, viz. Actus Reus Non Facit Reum Nisi Mens Sit Rea has been

erroneously ignored by the High Court and he cited the case of C.K.

Jaffer Sharief v. State

7

and R. Balakrishna Pillai v. State of

Kerala

8

. He also pleaded that, in another politically motivated case

by respondent No. 2, the same view has been taken by the

Himachal Pradesh High Court in the case of A.N. Sharma v. State

of H.P. (Cr. MMO No. 134/2015) against which Special Leave

Petition filed by the State Government stands dismissed by this

Court.

7(2013) 1 SCC 205

8(2003) 9 SCC 700

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 28 of 53

23)He, thus, concluded his argument with the submission that case was

clearly covered by the judgments of this Court in State of Haryana

& Ors. v. Bhajan Lal & Ors.

9

and Vineet Kumar & Ors. v. State of

Uttar Pradesh & Anr.

10

24)Insofar as respondent No. 1 i.e. State of Himachal Pradesh is

concerned, learned Advocate General submitted that State has

already taken a decision not to continue with these criminal

proceedings. He, in fact, supported the case of the appellants and

submitted that State has no objection if these proceedings are

quashed. However, there was a strong opposition on behalf of

respondent No. 2 to the relief sought by the appellants and

refutation of the arguments advanced by the appellants.

25)Mr. Anoop George Chaudhary, learned senior counsel appearing for

the respondent No. 2, submitted that the Special Leave Petition was

infructuous ab initio inasmuch as chargesheet was filed against 18

accused persons out of whom only appellant No. 2 had sought

quashing thereof. It was further submitted that, in any case, on the

very day of passing impugned judgment by the High Court i.e. April

9(1992) Supp. (1) SCC 335

10(2017) 13 SCC 369

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 29 of 53

25, 2014, the Investigating Agency filed the challan under Section

173 Cr.P.C. and on perusal thereof, the Special Court took

cognizance vide order dated September 06, 2014 and issued

summons to the accused persons. Therefore, the Special Leave

Petition had, in any case, had become infructuous because of the

aforesaid developments. He also submitted that insofar as

appellant No. 1, namely, Himachal Pradesh Cricket Association is

concerned, it was not arrayed as accused person; no challan was

filed against it and, therefore, no cognizance was also taken.

26)Rebutting the allegations of mala fide, he submitted that because of

the irregularities committed in the allotment of land etc. by the then

Government, it was one of the issue in the Assembly Elections in the

year 2012 and the Congress had complained against the aforesaid

irregularity by stating the same with the preparation of 'Congress

Chargesheet'. That would not mean that it was out of political

vendetta. In fact, the misdeeds of earlier Government was exposed.

In any case, after 2012 elections, when the earlier Government did

not come back to power, inquiry was ordered to the affairs of

appellant No. 1 which was conducted by the Anti-Corruption Bureau

(ACB). As a result of said inquiry, FIR was registered which

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 30 of 53

culminated in filing of the challan as prima facie case was made out

by collecting requisite material. He also referred to the Constitution

Bench judgment in the case of Lalita Kumari v. Government of

Uttar Pradesh & Ors.

11

as per which preliminary inquiry before

registering an FIR should be conducted to ascertain whether the

information received, reveals any cognizable offence. He submitted

that due procedure was followed in accordance with the said

judgment.

27)On merits, Mr. Chaudhary submitted that on the basis of final report

and consequently the cognizance order a clear case of

cheating/fraud criminal breach of trust/criminal

misconduct/usurpation of public land worth crores of rupees/loss to

state exchequer is made out against the accused persons. Hence,

no cogent grounds exist for quashing of criminal proceedings.

Reliance in this regard has been placed upon a judgment rendered

by this Court in Indian Oil Corporation v. NEPC India Ltd. &

Ors.

12

:

"12. The principles relating to exercise of jurisdiction

under Section 482 of the Code of Criminal Procedure to

11(2014) 2 SCC 1

12(2006) 6 SCC 736

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 31 of 53

quash complaints and criminal proceedings have been

stated and reiterated by this Court in several decisions. To

mention a few— Madhavrao Jiwajirao Scindia v.

Sambhajirao Chandrojirao Angre [(1988) 1 SCC 692 :

1988 SCC (Cri) 234], State of Haryana v. Bhajan Lal [1992

Supp (1) SCC 335 : 1992 SCC (Cri) 426], Rupan Deol

Bajaj v. Kanwar Pal Singh Gill [(1995) 6 SCC 194 : 1995

SCC (Cri) 1059], Central Bureau of Investigation v.

Duncans Agro Industries Ltd. [(1996) 5 SCC 591 : 1996

SCC (Cri) 1045], State of Bihar v. Rajendra Agrawalla

[(1996) 8 SCC 164 : 1996 SCC (Cri) 628], Rajesh Bajaj v.

State NCT of Delhi [(1999) 3 SCC 259 : 1999 SCC (Cri)

401], Medchl Chemicals & Pharma (P) Ltd. v. Biological E.

Ltd. [(2000) 3 SCC 269 : 2000 SCC (Cri) 615], Hridaya

Ranjan Prasad Verma v. State of Bihar [(2000) 4 SCC

168 : 2000 SCC (Cri) 786], M. Krishnan v. Vijay Singh

[(2001) 8 SCC 645 : 2002 SCC (Cri) 19] and Zandu

Pharmaceutical Works Ltd. v. Mohd. Sharaful Haque

[(2005) 1 SCC 122 : 2005 SCC (Cri) 283] . The principles,

relevant to our purpose are:

(i) A complaint can be quashed where the allegations

made in the complaint, even if they are taken at their face

value and accepted in their entirety, do not prima facie

constitute any offence or make out the case alleged

against the accused.

For this purpose, the complaint has to be examined as a

whole, but without examining the merits of the allegations.

Neither a detailed inquiry nor a meticulous analysis of the

material nor an assessment of the reliability or

genuineness of the allegations in the complaint, is

warranted while examining prayer for quashing of a

complaint.

(ii) A complaint may also be quashed where it is a clear

abuse of the process of the court, as when the criminal

proceeding is found to have been initiated with mala

fides/malice for wreaking vengeance or to cause harm, or

where the allegations are absurd and inherently

improbable.

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 32 of 53

(iii) The power to quash shall not, however, be used to

stifle or scuttle a legitimate prosecution. The power should

be used sparingly and with abundant caution.

(iv) The complaint is not required to verbatim reproduce

the legal ingredients of the offence alleged. If the

necessary factual foundation is laid in the complaint,

merely on the ground that a few ingredients have not been

stated in detail, the proceedings should not be quashed.

Quashing of the complaint is warranted only where the

complaint is so bereft of even the basic facts which are

absolutely necessary for making out the offence.

(v) A given set of facts may make out: (a) purely a civil

wrong; or (b) purely a criminal offence; or (c) a civil wrong

as also a criminal offence. A commercial transaction or a

contractual dispute, apart from furnishing a cause of action

for seeking remedy in civil law, may also involve a criminal

offence. As the nature and scope of a civil proceeding are

different from a criminal proceeding, the mere fact that the

complaint relates to a commercial transaction or breach of

contract, for which a civil remedy is available or has been

availed, is not by itself a ground to quash the criminal

proceedings. The test is whether the allegations in the

complaint disclose a criminal offence or not."

28)Dubbing the allegations of mala fide against respondent No. 2 as

frivolous, it was argued that the High Court has rightly found no

merit therein. In any case, argued the learned senior counsel, the

High Court rightly observed that once the chargesheet is filed, such

a plea becomes redundant as held in State of A.P. v. Golconda

Linga Swamy and Anr.

13

and Umesh Kumar v. State of Andhra

Pradesh & Anr.

14

. The learned senior counsel also questioned the

13(2004) 6 SCC 522

14(2013) 10 SCC 591

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 33 of 53

move on the part of State Government to withdraw the case in

question. It was argued that no fresh ground or subsequent aspect

has emerged or come in public domain for doing the same and,

therefore, such course of action was not permissible as held in

State of Tamil Nadu & Ors. v. K. Shyam Sunder & Ors.

15

, Andhra

Pradesh Dairy Development Corporation Federation v. B.

Narasimha Reddy & Ors.

16

and State of Himachal Pradesh v.

Nishant Sareen

17

. Moreover, argued the learned senior counsel,

the only procedure prescribed in law was to take the route of

Section 321 of Cr.P.C. which has not happened in the instant case.

29)Replying to the arguments of the appellants that it was a civil

dispute, Mr. Chaudhary argued that FIR/Final Report clearly depicts

that there is sufficient evidence of cheating, criminal breach of

trust/criminal misconduct, conspiracy and destruction of evidence

against the accused persons, therefore, it was not merely a civil

case and, thus, the authorities have rightly registered the FIR and

filed criminal proceedings. He also argued that at the time of

cognizance, there was sanction for prosecution against all public

15(2011) 8 SCC 737

16(2011) 9 SCC 286

17(2010) 14 SCC 527

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 34 of 53

servants (wherever applicable) and even if sanction is subsequently

withdrawn, it would not impact trial. It was further submitted that in

the case of two remaining accused i.e. Ajay Sharma and Deepak

Sanan, challan was not presented for want of sanction under PC

Act, as the permission seeking sanction was pending with Union

Home Ministry though sanction for IPC offences was granted by

State Government. The prosecution sanction against Gopal Chand,

an HCS Officer was initially granted but later on withdrawn without

there being any change of circumstance. The necessity of non-

grant/requirement of prosecution sanction can be decided by trial

court during the course of trial and it is not a ground for Himachal

Pradesh Cricket Association to seek quashing of entire prosecution.

30)The learned senior counsel also defended non-prosecution of Ajay

Sharma and Deepak Sanan, two IAS Officers. He specifically

pointed out that allegations in the chargesheet against appellant

No.2 which, according to him, disclosed that prima facie case was

established against him and, therefore, there was no reason to

quash the chargesheet.

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 35 of 53

31)Insofar as Writ Petition (Criminal) No. 135 of 2017 is concerned, it

was argued that such a writ petition was not maintainable under

Article 32 of the Constitution, more so, when order of cognizance

had not been challenged at all. Support from the judgments in

Ujjam Bai v. State of U.P.

18

, Naresh Shridhar Mirajkar & Ors. v.

State of Maharashtra & Anr.

19

and Northern Corporation v.

Union of India & Ors.

20

was taken in this behalf. He reiterated that

there were serious allegations against the accused persons and,

therefore, no case for quashing of the chargesheet/challan was

made out.

32)Before we undertake the exercise of deliberating on the arguments

of the counsel for the parties and reach our conclusions, it would be

in the fitness of things to recapitulate the events in brief with focus

on the allegations of alleged criminality which have been fastened

upon the appellants and others. Appellant No. 1 was initially

registered as a Society under the Societies Registration Act, 1860 in

the year 1990. It is now a not for profit company incorporated under

Section 25 of the Companies Act, 1956. One of the allegations

18(1963) 1 SCR 778

19AIR 1967 SC 1

20(1990) 4 SCC 239

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 36 of 53

pertains to the so-called illegalities committed in the conversion of

the society into deemed company under Section 25 of the

Companies Act, 1956. Be that as it may, the Society, after its

formation, had applied for land at Village Mauja and Tehsil

Dharamshala, District Kangra for construction of an international

cricket stadium. A proper lease was executed between appellant

No. 1 and the State of Himachal Pradesh through Director, Himachal

Pradesh Youth Services and Sports Department. It happened more

than 16 years ago. In respect of this lease, the allegation is that it

was executed at a monthly rent of Re.1/- which was allegedly done

to favour the appellants. Admittedly, proviso to Rule 8 of the Rules

empowers the State Government to adopt such a course and

decision to this effect was taken after due deliberations at a very

high level, keeping in view the necessity of such a stadium in the

State, which did not have any cricket stadium.

33)After the allotment of the land to appellant No. 1, it constructed

cricket stadium thereupon. Appellant was desirous of making a

world-class cricket stadium which could host international cricket

matches as well. For this purpose, it submitted proposal to the ICC.

The ICC got the stadium and playground inspected through Mr. Alan

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 37 of 53

Hurst, it's match referee. He inspected the stadium and submitted

his report dated September 20, 2007. The venue was not approved,

at that stage, for hosting international matches. A perusal of the

report submitted by the said referee would disclose that there were

no adequate hotel facilities in the area and, therefore, 'tour support

was lacking'. Two hotels were shown to Mr. Hurst and it was found

by him that each of them were at substantial distance from the

ground. Moreover, the facilities in the said hotels were also not

adequate. Notwithstanding the same, insofar as the cricket ground

is concerned, the match referee had lauded it for its quality and

settings. It can be seen from the general

comments/recommendations/conclusions in his report and the

relevant portion whereof reads as under:

"This ground has one of the best settings imaginable. The

people involved in its development have been innovative and

are passionate and visionary. They have done a great job so

far in getting this ground to where it is and should be

congratulated and encouraged. I have no doubt that with

adequate finances, in the near future, this ground can become

one of the best in the country. The idea of having a 'hotel' as

an integral part of the ground with dual use as corporate

boxes during games is not new, however, the circular

restaurant planned for the top, with 360 deg views of the

Himalayas and surrounding area will make it unique.

Having said this, I believe that at this stage there is still a lot of

work to be done that relates to its suitability for staging

International cricket. I am informed that sufficient finance has

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 38 of 53

recently been obtained to complete everything, and further

work is now underway. I have listed below the issues I still

have concerns with and things that need to be changed. If all

of these things are addressed, I would have no hesitation in

recommending this ground as suitable as an International ODI

venue. The administrators have ensured me that all of these

things will be addressed with urgency. They are extremely

keen to get into the BCCI ground rotation system as soon as

possible."

34)It is clear from the above that Mr. Hurst was of the view that the

cricket ground at this picturesque place with scenic beauty can be

transformed into one of the best cricket grounds in the country,

which would be suitable for international events if the deficiencies

pointed out therein are taken care of. Apart from providing other

facilities to improve the infrastructure (which could be easily taken

care of), main concern was to have a hotel as an integral part of the

ground with the dual use as corporate boxes during the game.

Because of the above, appellant No.1 felt need to construct a club

house on the lease land and also seek allotment of some other land

for the purpose of construction of a hotel, keeping in view the

observations contained in the aforesaid inspection report.

Accordingly, it sent request for promotion to construct a club house

on the lease land which was accorded by respondent No.1 through

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 39 of 53

Directorate of Youth Services and Sports on June 23, 2008 subject

to completing all the formalities.

35)As far as construction of hotel is concerned, the case of the

appellants is that there was a parcel of idle land in the middle of the

land alloted for the stadium and for allotment of this land, request

was made to the Director, Youth Services and Sports. This land

belongs to Gram Panchayat. Gram Panchayat issued no objection

for the allotment of land on September 14, 2009 pursuant to which

respondent No.1 granted approval to lease out this land in favour of

appellant No.1 on November 16, 2009 and the lease deed was also

executed on December 14, 2009. Thereafter, for the purpose of

hotel, additional land was given.

36)Pertinently, insofar as this lease deed is concerned, since the land

was to be used for commercial purpose, namely, the club house, it

provided rental at commercial rate i.e. the market rate which the

appellant No.1 was supposed to pay. After the execution of the

lease, club house was constructed and the Town and Country

Planning Department, Dharamshala also issued No Objection

Certificate for the use of part of infrastructure of cricket stadium as

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 40 of 53

club house for cricket activities. It is also pertinent to mention that

Principal Secretary (Revenue), Government of Himachal Pradesh

issued no objection for execution of supplementary lease enabling

commercial activities on additional land provided that lease money

was charged in accordance with the Lease Rules, 2011. This led to

execution of supplementary lease deed dated June 23, 2012 on

which commercial hotel was constructed after obtaining requisite

permissions.

37)From the aforesaid events, following aspects can be culled out:

Appellant No.1 has been given lease of land on which cricket

stadium was constructed and thereafter lease for additional land

meant for club house and also supplementary lease for commercial

activity i.e. the hotel. It is only in respect of the land which is meant

for cricket stadium that rental of Re.1/- per month was agreed to be

charged by invoking proviso to Rule 8. Thus, it is not contrary to

law. State of Himachal did not have any cricket ground, much less

State of art cricket ground. It is, for this reason, that the land was

given on lease for the purpose of constructing the cricket ground,

which may become pride of Himachal Pradesh, at nominal rental.

Insofar as lease in respect of club house and supplementary lease

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 41 of 53

for commercial activity (i.e. hotel) is concerned, the lease money has

been fixed in accordance with Lease Rules, 2011, namely, at

commercial rates. There can hardly be any element of criminality in

the afofresaid allotments inasmuch as six very senior officers in the

State Government (four of them of IAS Cadre and one belongs to

Himachal Pradesh Administrative Service) who had examined the

matter and only after their approval, the allotments were made.

There is no culpability attributed to them, which is a very crucial

factor.

38)What is more important is that the matter was looked into by

Director-cum-Special Secretary, Youth Services and Sports

Department as well as Secretary, Youth Services and Sports

Department and it is only after the examination of the proposal by

them and their final approval, lands in question were allotted.

39)The respondents have submitted status report before the High

Court, pursuant to the directions issued by it. As per the said status

report as well as the FIRs, allegations against the appellants and

others who are arrayed as accused persons are that appellant No.2

along with other accused indulged in illegal activities. It is alleged

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 42 of 53

that Shri R.S. Gupta, the then Deputy Commissioner, had prepared

report ignoring the report of Divisional Forest Officer who had

assessed the value of trees at Rs.50 lakhs at that time, thereby

causing wrongful loss to the Government. Further, one Shri Deepak

Sanan, the then Revenue Secretary, provided a helping hand to the

accused persons for granting permission to set up and run a

commercial hotel and the matter was not taken to the Cabinet which

was in violation of Schedule 20 of H.P. Rules of Business. It is also

alleged that Himachal Pradesh Cricket Association Society was

merged into a company just to prevent the State Government from

controlling it. These are the main allegations.

40)Insofar as other allegations are concerned, two Officers, namely,

Shri R.S. Gupta and Shri Deepak Sanan are implicated. While

doing so, other senior Officers who took active part in decision

making have not been touched.

41)In the two FIRs, seven IAS Officers, one Officer belonging to

Himachal Pradesh Administrative Service and one Executive

Engineer, Dharamshala Division in Himachal Pradesh PWD

Department played their significant role at one stage or the other.

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 43 of 53

Interstingly, in the FIRs, these nine Officers were also implicated and

specific role attributed to them which has been already mentioned in

the tabulated format while recording the arguments of Mr. Patwalia.

This would demonstrate that insofar as Mr. Subhash Ahluwalia

(IAS), Director-cum-Special Secretary, Youth Services and Sports

Department is concerned, allegation against him was that he

ignored the rules and did not mention the provisions of Lease Rules,

1993. He was also signatory to lease deed dated July 29, 2002. It

is important to mention that entire FIRs proceed on the basis that

appellants conspired with these Officers, among others. The

imputation against Mr. Subhash Ahluwalia is that in fixing the rent at

Re.1/- per month, he not only ignored the rules and did not even

mention in his noting thereby implying that he was party to the

alleged conspiracy. Similar allegations are against other eight

persons as well alleging their role at different stages.

Notwithstanding the same, three Officers, namely, Subhash

Ahluwalia, Subhash Negi and T.G. Negi were not even charged on

the purported ground that there were not enough evidence and mala

fide intention. In respect of Mr. Ajay Sharma, Central Government

had declined the sanction. Though, State Government had

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 44 of 53

accorded the sanction for prosecution earlier but it has also later

withdrawn. Same is the position in respect of Deepak Sanan. Mr.

Gopi Chand, who belongs to HPAS, though the prosecution sanction

was granted earlier, in his case also, not only prosecution sanction

was withdrawn by the State Government, he has even been

promoted to IAS Cadre. In case of Mr. K.K. Pant and Mr. P.C.

Dhiman, other IAS Officers, prosecution sanction is declined. This

leaves us only Mr. Devi Chand Chauhan, Executive Engineer,

Dharamshala Division in PWD, though in his case also, prosecution

sanction was earlier rejected but subsequently granted on the

recommendation of the then Chief Minister. There are two Gram

Panchayat members, who had issued no objection for allotment of

land for club house, who have been prosecuted. These three

Officers are public servants who remain as accused persons. This

Court gets an impression that in the entire conspiracy story put up

by the prosecution, high Government officials are deliberately let off

and very junior Officers were become scapegoat in order to ensure

that a case under PC Act survives in respect of appellants as well

who are not public servants. Even otherwise, when the aforesaid

eight persons are not charged or proceeded against for want of

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 45 of 53

prosecution, this lends support to the allegations of the appellants in

imputing motives for their prosecution.

42)This Court, on a 360° scanning of the matter, arrives at the

conclusion that the elements of criminal intent or criminal acts are

lacking. Following factors do stand established from record:

(i)there is no criminal act on their part and the facts do not

disclose any offence;

(ii)none of the officers who processed the case of the appellants

are not prosecuted;

(iii)two Officers Subhash Ahluwalia and T.G. Negi who took active

part in the decision making were made Principal Secretary to CM

and Advisor to CM, respectively, by respondent No. 2 and were not

prosecuted;

(iv)As per the prosecution, there is no criminal act on the part of

the officers and they performed their appropriate administrative

duties due to which sanction stands declined by the Central

Government and the CVC. That itself is sufficient to absolve others

from any criminal prosecution;

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 46 of 53

(x)even otherwise the State Government continues to remain

owner of the land which is on lease and on which the appellants

have constructed assets worth above 150 crores;

(xi)these assets are for use of the public of the State and are

being used as such. Further, filing of chargesheet and an order

taking cognizance is not a final judicial order. It is a preliminary

process in criminal law and is open to challenge in higher judicial

fora such as this Court.

43)Insofar as conversion of Society into not for profit company under

Section 25 of the Companies Act, 1956 is concerned, it was

obviously done as per the mandate of BCCI. There can hardly be

an element of criminality therein. This Court fails to understand as

to how any criminal intent can be attributed in merging the said

society into a company, that too, to prevent the State Government

from controlling it, which is the motive attributed by the respondents

themselves. It rather shows the intent of the State Government

which wanted to grab the control of the Cricket Association. Such a

tendency on the part of the State authorities is condemned by a

Committee headed by former Chief Justice R.M. Lodha and

approved by this Court. If at all, this is a reflection upon the State

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 47 of 53

Government. It also lends credence to the submission of the

appellants that when the State Government fail to achieve the

aforesaid purpose, it went after the appellants. If at all, the subject

matter was a civil dispute between the appellants and the

respondents.

44)We may also mention that record reveals that respondent No.2

personally supervised the investigation. However, we are

eschewing the discussion as to whether chargesheet is result of

mala fide or political vendetta, since we feel that, ex facie, no case

of cheating/fraud or criminal breach of trust is made out. However,

at the same time, it would be necessary to point out that in the

proceedings filed by the appellants under Section 482 Cr.P.C.,

respondent No.2 was impleaded as the allegations of mala fides

were attributed to him. Since, we are not looking into these

allegations, respondent No.2 does not have much role to play in

these proceedings. That apart, respondent No.2 has filed counter

affidavit stating that he is not a necessary party and it is not his job

to defend the prosecution. Having regard to the stand taken by the

respondent No.1 not to prosecute these cases, even otherwise, no

purpose would be served in continuing with these proceedings.

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 48 of 53

45)In view of our aforesaid discussion, argument of respondent No.2

that the appeals have become infructuous cannot be accepted.

46)We are conscious of the scope of powers of the High Court under

Section 482 of Cr.P.C. The inherent jurisdiction is to be exercised

carefully and with caution and only when exercise is justified by the

tests specifically laid down in the Section itself. Further, inherent

power under this provision is not the rule but it is an exception. The

exception is applied only when it is brought to the notice of the Court

that grave miscarriage of justice would be committed if the trial is

allowed to proceed where the accused would be harassed

unnecessarily. If the trial is allowed to linger when prima facie it

appears to the Court that the trial could likely to be ended in

acquittal. It is, for this reason, principle which is laid down by catena

of judgments is that the power is to be exercised by the High Court

either to prevent abuse of process of any court or otherwise to

secure the ends of justice. However, whenever it is found that the

case is coming within the four corners of the aforesaid parameters,

the powers possessed by the High Court under this provision are

very wide. It means that the Court has to undertake the exercise

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 49 of 53

with great caution. However, the High Court is not to be inhibited

when the circumstances warrant exercise of such a power to do

substantial justice to the parties. This provision has been eloquently

discussed in Bhajan Lal's case which has become locus classicus.

Principle Nos. (i) and (ii) of Indian Oil Corporation are, therefore,

become applicable. The entire subject matter has been revisited in

a recent judgment in Vineet Kumar and some of the discussion

therein which takes note of earlier judgments is reproduced below:

"26. A three-Judge Bench in State of Karnataka v. M.

Devendrappa [State of Karnataka v. M. Devendrappa, (2002)

3 SCC 89 : 2002 SCC (Cri) 539] had the occasion to consider

the ambit of Section 482 CrPC. By analysing the scope of

Section 482 CrPC, this Court laid down that authority of the

Court exists for advancement of justice and if any attempt is

made to abuse that authority so as to produce injustice the

Court has power to prevent abuse. It further held that Court

would be justified to quash any proceeding if it finds that

initiation/continuance of it amounts to abuse of the process of

court or quashing of these proceedings would otherwise serve

the ends of justice. The following was laid down in para 6:

(SCC p. 94)

“6. … All courts, whether civil or criminal possess, in the

absence of any express provision, as inherent in their

constitution, all such powers as are necessary to do the right

and to undo a wrong in course of administration of justice on

the principle quando lex aliquid alicui concedit, concedere

videtur et id sine quo res ipsae esse non potest (when the law

gives a person anything it gives him that without which it

cannot exist). While exercising powers under the section, the

court does not function as a court of appeal or revision.

Inherent jurisdiction under the section though wide has to be

exercised sparingly, carefully and with caution and only when

such exercise is justified by the tests specifically laid down in

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 50 of 53

the section itself. It is to be exercised ex debito justitiae to do

real and substantial justice for the administration of which

alone courts exist. Authority of the court exists for

advancement of justice and if any attempt is made to abuse

that authority so as to produce injustice, the court has power

to prevent abuse. It would be an abuse of process of the court

to allow any action which would result in injustice and prevent

promotion of justice. In exercise of the powers court would be

justified to quash any proceeding if it finds that

initiation/continuance of it amounts to abuse of the process of

court or quashing of these proceedings would otherwise serve

the ends of justice. When no offence is disclosed by the

complaint, the court may examine the question of fact. When

a complaint is sought to be quashed, it is permissible to look

into the materials to assess what the complainant has alleged

and whether any offence is made out even if the allegations

are accepted in toto.”

27. Further in para 8 the following was stated: (Devendrappa

case [State of Karnataka v. M. Devendrappa, (2002) 3 SCC

89 : 2002 SCC (Cri) 539] , SCC p. 95)

“8. … Judicial process should not be an instrument of

oppression, or, needless harassment. Court should be

circumspect and judicious in exercising discretion and should

take all relevant facts and circumstances into consideration

before issuing process, lest it would be an instrument in the

hands of a private complainant to unleash vendetta to harass

any person needlessly. At the same time the section is not an

instrument handed over to an accused to short-circuit a

prosecution and bring about its sudden death. The scope of

exercise of power under Section 482 of the Code and the

categories of cases where the High Court may exercise its

power under it relating to cognizable offences to prevent

abuse of process of any court or otherwise to secure the ends

of justice were set out in some detail by this Court in State of

Haryana v. Bhajan Lal [State of Haryana v. Bhajan Lal, 1992

Supp (1) SCC 335 : 1992 SCC (Cri) 426].”

In the instant case, the High Court simply noted those

judgments which put a note of caution in exercising the powers

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under Section 482 Cr.P.C. to quash such proceedings and

dismissed the petition with a shallow examination of the case,

thereby glossing over the material facts (which are noted

hereinabove) and failing to examine that these pertinent aspects

were sufficient to demonstrate that no criminal case was made out,

particularly when all the concerned officers, who had taken the

decision, were let off on the ground that they had not committed any

wrong.

47)As far as Writ Petition (Criminal) No. 135 of 2017 is concerned, the

appellants came to this Court challenging the order of cognizance

only because of the reason that matter was already pending as the

appellants had filed the Special Leave Petitions against the order of

the High Court rejecting their petition for quashing of the

FIR/Chargesheet. Having regard to these peculiar facts, writ petition

has also been entertained. In any case, once we hold that FIR

needs to be quashed, order of cognizance would automatically

stands vitiated.

48)As a consequence, criminal appeals are allowed thereby setting

aside the impugned judgment of the High Court, allowing the petition

Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 52 of 53

filed by the appellants under Section 482 Cr.P.C. and quashing the

FIR No. 12 of 2013 dated August 01, 2013 under Sections 406, 420,

120B of the IPC and Section 13(2) of the PC Act and FIR No.14 of

2013 dated October 03, 2013 under Section 447 read with Section

120B of the IPC, Section 3 of Prevention of Damage to Public

Property Act, 1984 and Section 13(2) of the PC Act. In view thereof,

writ petition also stands disposed of accordingly.

No order as to cost.

.............................................J.

(A.K. SIKRI)

.............................................J.

(ASHOK BHUSHAN)

NEW DELHI;

NOVEMBER 02, 2018.

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