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CASE NO.:

Appeal (crl.) 372 of 2001

PETITIONER:

R.Balakrishna Pillai

RESPONDENT:

State of Kerala

DATE OF JUDGMENT: 28/02/2003

BENCH:

R.C. LAHOTI & BRIJESH KUMAR.

JUDGMENT:

JUDGEMENT

BRIJESH KUMAR,J. WITH

CRL.A.NO.373/01 AND CRL.A.NOS.725-727/02

This is a case in which the appellants before us in

Criminal Appeal No.372 of 2001 and Criminal Appeal No.373

of 2001 have been convicted under Section 5(2) read with

Section 5(1)(d) of the Prevention of Corruption Act, 1947

(for short 'the Act') for having caused, M/s.Graphite India

Ltd. (for short 'M/s.GIL), Bangalore, to obtain valuable thing

namely, electricity by selling it to the said company illegally

and by abusing their official position as public servants

which also resulted in pecuniary advantage to M/s.GIL to the

tune of Rs.19 lakhs and odd. So far the said two appellants

themselves are concerned, it is neither the case of the

prosecution nor the finding of any court that they gained or

acquired any kind of benefit, pecuniary or otherwise, out of

the transaction in question. The High Court, on the other

hand, finds that there is nothing to show that for obtaining

Kerala electricity any illegal gratification was given to the

appellants or any illegal means was employed by M/s.GIL.

The two appellants for the aforesaid conviction

have been sentenced to simple imprisonment for a period of

one year and a fine of Rs.10,000/- each, in default, to

undergo simple imprisonment for a further period of two

months. The conviction and sentence as recorded by the

Trial Court has been maintained by the High Court in appeal.

The appellant in Criminal Appeal No.372 of 2001

Balakrishna Pillai is to be referred hereinafter as 'A-1' and

the appellant in Criminal Appeal No.373 of 2001 P.Kesava

Pillai as 'A-2'. So far the appellant in Criminal Appeals

No.725-727 of 2002 Gopalakrishna Pillai is concerned, he

has been examined as PW 45 in the case and is aggrieved

by adverse comments made against him in the judgment of

the High Court.

The main question which falls for our

consideration in these appeals is as to whether the

appellants A1 and A2 have illegally sold electricity to M/s.GIL

by abusing their official position which amounted to "causing

to obtain" valuable thing to M/s.GIL resulting in pecuniary

advantage as well to M/s.GIL.

During the relevant period namely, October 1984

to May, 1985, A-1 was Minister for Electricity, Government

of Kerala and A-2 was Technical Member/Chairman of the

Kerala State Electricity Board (for short 'KSEB'). The two

have been found to have illegally sold 1,22,41,440 units of

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Kerala electricity to M/s.GIL without sanction of the State

Government as per the requirement under the law. It is

also the prosecution case that no written agreement was

entered into between the KSEB and the Karanataka

Electricity Board (for short 'KEB') for supply of the

electricity.

Undisputedly KSEB supplied electricity to KEB at the

rate of 42 paise per unit. KEB charged for the said high

cost energy used by the industries in Karnataka at the rate

of 80 paise per unit whereas for the electricity supplied to

M/s.GIL the KEB charged at the rate of 64 paise per unit i.e.

to say 16 paise less as compared to the rate charged by it

from its other consumers. It resulted in pecuniary benefit to

M/s.GIL. According to the prosecution the KSEB earmarked

a definite quantity of electricity and supplied the same to

M/s.GIL without sanction of the State Government as

required under the law before selling electricity to any

industry outside the state. It could be possible only at the

instance of the two appellants who are said to have abused

their official position for the benefit of M/s.GIL.

The appellants refuted the prosecution case and chose

to contest. According to the defence case, the electricity

was supplied by the KSEB to KEB on the basis of a decision

taken at the State level by A-1 who was the Minister

concerned and authorised to take such decisions according

to the rules of business. The electricity was being supplied

by the State of Kerala much prior to the relevant period to

different neighbouring States including Karnataka and Tamil

Nadu. Such supplies have been made since prior to 1978 as

and when it was possible to do so. During the relevant

period the electricity was supplied to KEB at the rate of 42

paise per unit. Thereafter it was for the KEB to fix its tariff

for its consumers. No amount of electrical energy out of the

supplies made by K.S.E.B. to State of Karnataka/KEB was

earmarked or specifically provided for M/s.GIL. The request

for supply of electricity was made by the State Government

of Karnataka. The State of Kerala had assured it to help in

the matter as much as possible. So far the question of rate

of electricity is concerned KEB fixed the rate of high cost

energy (Kerala electricity) @ 80 paise per unit and for

M/s.GIL at 64 paise per unit. The State of Kerala or KSEB

had no concern whatsoever with fixation of rate of

electricity supplied by KEB to its consumers including

M/s.GIL. KSEB supplied the electricity to KEB/State of

Karnataka at the rate of 42 paise per unit which was the

highest rate ever charged before. There is no charge,

allegation much less any evidence or finding of any kind of

pecuniary or other benefit accruing to the appellants.

Rather it is not the case of the prosecution that the

appellants were benefitted by the transaction in any

manner. It has also been the case of the appellants that no

provision of law has been violated in making the supplies of

energy to the State of Karnataka. As a matter of fact the

supplies were being made since before and they have only

been continued at a revised price. The supplies were made

to the State of Karnataka/KEB and not to any particular

industry or M/s.GIL. It was for the KEB to distribute the

energy to its consumers according to its own policy and

priorities. Lastly the defence case is that in any case, if at

all, there was any irregularity or technical violation of any

law it would not mean that the appellants are guilty of any

criminal offence.

Coming to the charge as framed against the

appellants for which they have been tried and convicted is

as follows :

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"Secondly, that you the accused 1 and 2

being Minister for Electricity and Technical

Member/Chairman of the K.S.E.B. during the

period from October 1984 and May 1985

abused your official position as public

servants and in pursuance of the above said

conspiracy illegally sold 12241440 units of

Kerala Electricity to M/s.Graphite India Ltd.,

Bangalore, Karnataka State and caused the

said company obtain 'valuable' thing viz.

Electricity and pecuniary advantage to the

tune of Rs.19,58,630.40 and also resultant

profit and thereby committed an offence

punishable under S.5(2) r/w 5(1)(d) of

P.C.Act 1947 and within my cognizance."

As a matter of fact, initially two charges were

framed. First of it read as follows :

"Firstly, that you Sri R.Balakrishnan Pillai

(A1) while functioning as Minister for

Electricity, Govt. of Kerala from May 1982 to

5.6.1985 and P.Kesava Pillai (A2) while

functioning as Technical Member/Chairman of

the K.S.E.B., Thiruvananthapuram from

1.2.1984 to 31.11.1985 and as such being

public servants during the period from July

1984 to November 1985 entered into a

criminal conspiracy to sell electricity to the

State of Karnataka, to be supplied to M/s

Graphite India Ltd., Bangalore, Karnataka

State without the consent of the Govt. of

Kerala, which is an illegal act under the

provisions of the Electricity(Supply) Act,

1948 and Kerala Electricity Board Rules and

in pursuance of the conspiracy abused your

official position and illegally sold 12241400

units of Kerala Electricity to M/s.Graphite

India Ltd., Bangalore, Karnataka State during

the months of October 1984 and May 1985

and caused the said private industry obtain

undue pecuniary advantage to the tune of

Rs.19,58,630.40 and more by way of

resultant profit to the industry, since

Electricity being a valuable thing for the

functioning of the State industries during the

period of acute shortage of energy in

Karnataka State and you the accused 1 and 2

thereby committed an offence punishable

under S.120-B of I.P.C. and within my

cognizance."

But the first charge has been ultimately quashed

by this Court due to lack of sanction(Crl.A.No.1742/95

dt.5.12.1995, 1996(1) SCC 478).

Thus, it is only the second charge which remained

against the appellants and according to the same A-1 and A-

2 (i) abused their official position as public servants (ii) they

conspired and illegally sold 12241400 units of Kerala

Electricity to M/s.GIL (iii)caused the said company (M/s.GIL)

to obtain valuable thing namely electricity and pecuniary

advantage (iv) hence committed offence punishable under

Section 5(2) read with Section 5(1)(d) of the Act. Thus,

according to the charge also there is no accusation against

the appellants for having obtained any advantage pecuniary

or otherwise for themselves by causing the company

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(M/s.GIL) to obtain valuable thing namely, electricity.

It may be relevant to mention here that amongst

others M/s.GIL, and Wheel & Axle Plant (for short 'WAP') ,

an undertaking of the Indian Railways, seem to be quite

important industries from the point of view of Karnataka

State. It is said that M/s.GIL manufactures electrodes and

such other items which are used by other industries in

Karnataka and other neighbouring States including the State

of Kerala. So far WAP is concerned there is evidence on the

record to show that in connection with supply of electricity to

it, the Minister for Railways and Minister for Electricity, State

of Kerala had been holding negotiations on the earlier

occasions and electricity was supplied to WAP, before the

period in question, at the rate of 35 paise per unit. The

goods manufactured by WAP are for the use of the Indian

Railways. It is only to indicate and emphasise the

importance of the said industries running in the State of

Karnataka.

The findings as recorded by the High Court are

that there was scarcity of electricity in Kerala itself during

the relevant period of supplies namely, October 1984 to May

1985. The documentary evidence including letter written by

the Chief Minister of Karnataka to A-1 and the DO Letter

sent by PW 22 to A-2 proved that they agreed to supply

Kerala Electricity to M/s.GIL, more particularly in view of the

fact that the said letters were not replied by A1 and A2 to

refute its contents. It was also found that by charging at a

lower rate for supply of Kerala Electricity to M/s.GIL there

was a total saving of more than Rs.28 lacs to M/s.GIL. No

sanction was given by Government of Kerala to supply

electricity to M/s.GIL. It is also held specifically "from

the materials available on record it could be clearly seen

that A1 and A2 agreed to give specific quantity of electricity

to Graphite India Ltd. If A1 or A2 had not agreed to give

specific quantity of electricity by K.S.E.B. to Graphite India

Ltd. and electrical energy was not supplied to Graphite India

Ltd. by K.S.E.B. through KEB, KEB would have charged for

the imported energy supplied (Kerala energy) to Graphite

India Ltd. at the rate payable for high cost energy (80 paise

per unit) and Graphite India Ltd. would not have saved

Rs.19,58,630.40 during the relevant period. .The sale of

electrical energy to Graphite India Ltd. without the sanction

of the Government of Kerala was illegal". (emphasis supplied

by us)

The High Court has further found in paragraph

216 as follows :

"From the evidence available, it is also

possible to conclude that Graphite India Ltd.

had also played an important role in getting

the electricity supplied to it. It is evident

from the statement of A1 under Section 313

Cr.P.C. no request was made by the Power

Minister of Karnataka or any official KEB who

had a meeting with him on 28.9.1984 for

supplying electricity to Graphite India Ltd.

Then why he had agreed to supply energy to

Graphite India Ltd.? Inference is irresistible

that he had agreed to supply electricity to

Graphite India Ltd. at the instance of PW.47

who met him on the same day."

(emphasis supplied by us)

The High Court has also found as follows :

"..From Section 43 it is crystal clear that

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the Board can enter into an arrangement

with any government or persons for the

purchase or sale of electricity to be

generated or used outside the state only if

the sanctioned scheme provides for such sale

or purchase. The proviso to Section 43 says

that for entering into an arrangement for sale

of electricity to a person or Government

outside the State, consent of the State

Government is necessary. It further provides

that for entering into an arrangement with

any person other than any Government, the

sanction of the Government of the State

within which the electricity is to be used is to

be obtained."

It has also been held that A2 had no authority to agree or

direct to supply energy to M/s.GIL without sanction of

Government of Kerala. In paragraph 224 in the end it is

observed as follows :

"As no records were maintained by the Power

Department of Kerala and K.S.E.B. regarding

supply of electrical energy to Graphite India

Ltd., it is only legitimate to infer that the

factum of supplying electrical energy to

Graphite India Ltd. was deliberately and

intentionally suppressed by A1 and A2. A1

and A2 agreed to supply specific quantity of

electrical energy to Graphite India Ltd. So,

we have no hesitation in holding that there

was dishonest intention for A1 and A2 in

agreeing to supply electrical energy to

Graphite India Ltd."

We have heard Shri U.R.Lalit, learned senior

counsel appearing for A1 and Shri P.P.Rao, learned senior

counsel appearing for A2 at length. Shri K.R.Sasiprabhu has

also made his submissions in regard to the adverse

observations made in the judgment against the appellant

Shri G.Gopalakrishna Pillai in that appeal. Shri V.K.Beeran,

Addl.Advocate General, State of Kerala made submissions

on behalf of the respondents and has also furnished a brief

note of his arguments.

So as to be clear about the nature of grievance

against the appellants, it is to be indicated that the learned

counsel for the respondents has very fairly stated that it is

not the case of the prosecution that the appellants were

benefited in any manner financially or otherwise by supply of

electricity to M/s.GIL. He has also indicated that so far the

rate at which supply of electricity has been made to the

State of Karnatka i.e. at the rate of 42 paise per unit is also

not a cause of any grievance. But the grievance is that by

supply of electrical energy to M/s.GIL by K.S.E.B. in definite

and earmarked quantity, A1 and A2 caused M/s.GIL to

obtain valuable thing namely, electricity which also resulted

in an advantage to M/s.GIL to the tune of Rs.19 lacs and

odd. The supply of electricity was made without any

agreement in writing or any other record of supplies, in

violation of the relevant rules which leads to the conclusion

that the supply of electricity was made illegally further

leading to the inference of dishonest intention on the part of

A 1 and A 2. At this stage it would also be appropriate to

indicate one of the findings recorded in connection thereof

by the High Court in its judgment:

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"We find nothing unusual in PW 47

approaching A1 or A2 for getting electricity

and if he succeeded in getting energy for his

employer, it only indicated that he had

faithfully and diligently performed his duty.

There is no evidence to show that for

obtaining Kerala energy during the relevant

period, any illegal gratification was given to

A1 or A2 by Graphite India Ltd. through PW

47 or any illegal means was employed by PW

47 or Graphite India Ltd. to obtain energy

during the relevant period. It was for A1 and

A2 to protect the interest of Kerala State

and when there was scarcity of energy, they

should not have agreed to supply energy to

Graphite India Ltd.."

To a straight question put to the learned counsel for the

respondent as to the evidence indicating scarcity of

electricity in the State of Kerala during the relevant period

he categorically replied that virtually there was no such

evidence available on the record.

In the background of the prosecution case it may have

to be seen as to whether it was supply/sale of electricity by

K.S.E.B. to M/s.GIL or it was supply of electricity by State of

Kerala to State of Karnataka through their respective

electricity boards, namely, K.S.E.B. and K.E.B. It may also

have to be seen in what circumstances arrangement of

supply of electricity came about between KEB and K.S.E.B.

It is not in dispute that the State of Kerala has quite often

been supplying electricity to the neighbouring States

namely, Karnataka, Tamil Nadu and Andhra Pradesh etc. A

chart of supply of electricity by Kerala has been shown by

Shri P.P.Rao which shows that such supplies were being

made since at least 1978 with some intermittent gaps here

and there. So it was not unusual indeed that such supplies

were undertaken by K.S.E.B. in 1984-85. It has been stated

by PWs 4, 6 and 8 that supply of electricity was being made

by the State of Kerala to the State of Karnataka as

Karnataka has generally been a deficit State so far as the

electricity is concerned. Similarly, there is evidence on

record which is not in dispute that supplies have been made

to other States also; for example State of Tamil Nadu.

There have been periods of surplus of electricity in the State

of Kerala. Ext.P.25(h) is a statement relating to supplies of

electricity by the State of Kerala to other States during the

period from April, 1982 to March, 1987. It also shows that

at times the State of Kerala has also imported electricity

from other States though significantly low in quantity during

certain periods. It is thus clear that this practice of supply

of electricity by the State of Kerala to the other States has

been in vogue. There have been negotiations from time to

time in that connection, between the Minister, Power &

Energy, State of Kerala and Ministers of other States

including Railway Minister for supply of electricity to Wheel

and Axle plant.

As it concerns the supply of electricity in

question, we find that a meeting took place between the

Minister for Power, State of Karnataka and the Minister for

Power and Energy, State of Kerala on 28.9.1984 at the

instance of the former. It is evident from Exh.P-56(a) a

letter dated 28.9.84 written by the Chairman, K.E.B.

(Karnataka Electricity Board) to the Secretary to the

Government, Public Works and Electricity Department,

Bangalore, State of Karnataka informing that he alongwith

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Minister for Power, State of Karnataka had been to Kerala

to explore the possibility of getting some assistance for

supply of electricity and in that connection they had met the

Minister A 1 on 28.9.1984. We feel it would be appropriate

to reproduce the text of the letter since it has been heavily

relied upon by the prosecution also to show that the

appellant had agreed to supply electricity to M/s.GIL. The

text of the letter is quoted as below :

"As you are kindly aware of the fact that the

Hon'ble Minister for Power and myself had

been to Kerala to explore the possibility of

getting some assistance. We met the Minister

on the evening of 28th instant and the

discussions were cordial. The Minister for

Power in Kerala said that Kerala is still

interested to assist Karnataka to the

maximum extent possible. He also

mentioned that due to poor rain-fall in the

recent weeks, the assistance to Tamil Nadu

has been scaled down considerably. He said

that if the North East monsoon improves, it

may be possible to give some assistance and

this will be known only by the end of October

1984. When we raised the issue of Kerala

share of 58 MWs from Ramagundam Thermal

Project being passed on to Karnataka, he

said, he has an open mind on this subject.

He wanted the discussions to be continued at

Bangalore with our Hon'ble Chief Minister to

discuss this issue as well as of Mananthvady

project. He pointed out that if this project

came through, the beneficiary would be,

Karnataka itself, as most of this energy will

have to be utilised in Karnataka as Malabar

area though an industrial area, has not been

fully developed. I do not know the merits

and de-merits of this case but I am

convinced that the Hon'ble Minister is

particular about this.

Though he has agreed to spare

some energy to M/s.Graphite India, he

expressed inability to give any power during

the peak hours. But, M/s.Graphite India

needs power during peak hours also. This

problem will have to be sorted out after

further examination."

It is clear from the above letter that the State of Karnataka

was in need of importing electricity and in that connection

the Minister and the Chairman of the Electricity Board,

Karnataka met A1. According to the said letter A1 had

indicated that the State of Kerala would assist in the mater

to the maximum possible and also indicated the fact that

assistance to State of Tamil Nadu has been scaled down. It

is also clear that it was given out that some assistance was

possible depending upon improvement in North East

monsoon, which will be known only by the end of October,

1984. Agreeing to this kind of assistance A1 had also made

a reference to the issue of Kerala share of 58 MWs from

Ramagundam Thermal Project as well as issue relating to

Mananthvady project. It is significant to note that the

Chairman, Electricity Board, Karnataka writes though A1 had

agreed to spare some energy to M/s.GIL but he had

expressed inability to give any power during the peak hours.

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The Chairman, KEB then informed the Secretary to the

Government, Department of Power, Government of

Karnataka that M/s.GIL needed power during peak hours

also and this problem was to be sorted out. The above

letter clearly shows that the State of Karnataka had

approached the State of Kerala through A1 for assistance in

supply of electricity. It also emerges from the above letter

that emphasis was at the instance of the State of Karnataka

for supply of energy to M/s.GIL in response whereof A1 is

said to have agreed to spare some energy but expressed his

inability to provide it during peak hours. The Karnataka

authorities do not seem to have given up and decided to

pursue with the State of Kerala to sort out the problem

about the supply of energy to M/s.GIL during the peak

hours. It was a talk at the Ministerial level between the two

States. The Ext.P.56(a) however, does not indicate any

assurance of supply of electricity to the State of Karnataka

much less for M/s.GIL particularly. This letter hardly shows

any interest on the part of A1 or A2 to take into account the

requirement of M/s.GIL. The emphasis seems to be on the

part of the State of Karnataka to stress upon the

requirement of M/s.GIL. There seem to be representatives

of the two States and their Electricity Boards. No other

party seems to be there in the meeting.

The other relevant document upon which great

emphasis has been made is Ext.P-22(a). It is a letter dated

January 24, 1985 written by the Chief Minister of State of

Karnataka to A1. It will again be beneficial to quote the

letter written by the Chief Minister. It is as follows:

"The power position in Karnataka is very

acute due to several reasons including the

poor monsoons in Sharavathi basin. I am

thankful to you for having agreed to supply

power for two specific industries situated in

Karnataka.

Three or four industries which are

critical in importance and from the State

point of view are suffering from the crippling

shortage of power. These are M/s.Dandeli

Ferro Alloys, Calcium Carbide at Bellary

(M/s.Panyam) and one or two others. I

understand the Speaker of Karnataka

Legislature had a talk with you in this regard

and the Secretary, Public Works & Electricity

Department had sent a telex message. May I

request you to kindly supply from your grid

energy to an extent of only five million units

per month for the next three months. I am

sure since the quantum we need is

insignificant you will be able to help us out."

The above letter also depicts the scenario of

shortage of electricity power in the State of Karnataka and it

was requested to extend some more help. It is also evident

that there was nothing which was kept secret in the matter

of supply of electricity to the State of Karnataka by the State

of Kerala. The negotiations were at the level of the Ministers

concerned of the respective States and the Chief Minister of

the State of Karnataka. There seems to be nothing which

could be said to be a guarded secret. Rather it appears that

it was quite usual for such kind of import and export of

electricity during the times of crisis. The prosecution

however, draws an inference that A1 had agreed to supply

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electricity to two specific industries situated in Karnataka

though none of the two are specifically named in the letter.

Even if they are taken to be M/s.GIL and Wheel and Axle

Plant, it was the Chief Minister of Karnataka who expressed

thanks for the same. The background as to what transpired

in the meeting of 28.9.84 cannot be overlooked. It shows

State of Karnatka was keen and interested in providing

energy to its heavy industries. But it does not mean that

KEB was not giving supplies to other industries out of

imported Kerala energy viz. industries other than M/s.GIL

and Wheel and Axle Plant. According to the letter, A1 is only

said to have agreed for supply which implies initiative and

request from the other end viz. Karnataka authorities. Non-

reply to the letter of the Chief Minister dated January 24,

1985 by A 1 is one of the main circumstance, the

prosecution banks upon to infer that supply was made by

the Kerala Electricity Board to M/s.GIL which inference we

feel, cannot be drawn. Non-reply of letter is inconsequential,

more particularly in view of the letter referred to earlier,

namely Ext.P-56(a). Agreement to supply electricity was to

the State of Karnataka/KEB on the request made and need

emphasised by the Karnataka Government and none else.

On behalf of the prosecution Ext.P.44(m) is also

referred to, which is a letter dated 6.3.1995 containing the

statement of supply of electricity to Wheel and Axle plant

and M/s.GIL, Bangalore during the period from October,

1984 to January, 1985. From the said document it was

sought to be shown that major part of the electricity

supplied by Kerala State was consumed by Wheel and Axle

and M/s.GIL but it is to be noted that it is not the total

supply which has gone to M/s.GIL. A note contained on the

foot of one of the pages of the said exhibit indicates that

only 34% of the energy supplied to Karnataka by Kerala was

utilised by M/s.GIL and 66% was utilised by other

consumers. There is no dispute about the fact that electric

energy was imported by the State of Karnataka from the

State of Kerala out of which the State of Karnataka had

made energy available to M/s.GIL and Wheel and Axle plant

amongst its other consumers. M/s.GIL and Wheel and Axle

plant seem to be heavy industries catering to the needs of

the Indian Railways and to other industries in general

including industries in the neighbouring States. Their

consumption of electricity and requirement may be heavy.

Therefore, the State of Karnataka seemed to be quite

anxious for supply of energy keeping in view their

requirement amongst other industries as indicated in the

letter of the Chief Minister. Whatever may be the view of

some officers of M/s.GIL but the fact remains that there is

nothing to indicate that electricity was supplied by the

State of Kerala to or exclusively for M/s.GIL. We feel

that, it is hardly material for this case that the State of

Karnataka supplies energy produced by itself to any

particular industry or consumer and the energy imported

from other States to other industries or vice-versa or both in

some proportion, it is a matter of their policy. The State

can always subsidize or fix the rates at which energy is to be

supplied to its consumers. The electrical energy was

supplied by the State of Kerala to the pool of Karnataka

Electricity Board.

Next we find that so as to fasten the responsibility

of quantifying the amount of energy to be supplied to

M/s.GIL learned counsel for the respondent has heavily

placed reliance upon Ext.P-56(e). It is a letter sent by PW-

22 Shri Rudrappa, Chairman, Electricity Board, Karnataka

dated 12.12..(sic.) to Chairman, KSEB i.e.A2 stating

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therein that KSEB had to supply about 25 MUs of energy per

day to Karnataka towards energy assistance agreed for

Wheel and Axle plant and M/s.GIL. A grievance was made

that short supplies were being made and it was requested

that instructions might be issued to increase the supplies to

cover the assistance assured to the two industries and for

further supply of energy to meet the requirement in

Kasargod area. It is again not a statement of or on behalf of

KSEB, A1 or A2 earmarking any definite amount of

electricity to Wheel and Axle plant and M/s.GIL. This letter

also talks of supply of energy by Kerala for Kasargod area.

It is though mentioned in the letter "towards the energy

assistance agreed to Wheel and Axle plant and M/s.GIL" but

there is no document, letter or statement or material to

indicate that any definite quantity was ever earmarked for

supply to any of the two plants, namely Wheel and Axle

plant or M/s.GIL. Supplies to WAP is not subject matter of

charge. The energy was to be supplied to the State of

Karnataka on its request made to A 1. On their own

showing as per Ext.P.25(a) no assurance was given by A1

and A2. All that was assured was that the State of Kerala

would try to help out as much as possible keeping in view

the monsoon situation. Non-reply to the letter Ext. P-56(e)

is also sheet-anchor of the prosecution case. We find that

non-reply to the said letter is hardly of any consequence.

On the contrary, the letter demonstrates that the

KSEB/State of Kerala was not supplying the alleged assured

electrical energy, how it can then be inferred that A1 or

KSEB was interested or keen to supply energy to any one

particular industry. Supply for Kasargod area is also

demanded. Non- reply to the letter only shows

disinterestedness of the KSEB, A1 and A2 to any such kind

of demand raised on behalf of KEB. It seems to be in

conformity with the response of A1 given in the meeting

held on 28.9.1984 with his counterpart of the State of

Karnataka. The assistance was assured only to the extent

possible and it was not for any particular industry. In our

view Ext.P-56(e) also fails to lead to any inference that A1

or A2 had assured or promised or had earmarked any

amount of quantity of electrical energy to be supplied to the

State of Karnataka much less to M/s.GIL.

We also find that in Exh.P-57 which contains the

Minutes of the Meeting and the Resolutions of the KEB, at

one place it is indicated KSEB agreeing to supply certain

quantity of energy for M/s.GIL. Firstly, it is to be indicated

that such mention of KSEB agreeing for certain quantity of

energy for M/s.GIL is based on their own discussion or

deliberation in the meeting. Secondly, all that it is said is

that "KSEB has agreed" i.e. to say the demand for supply,

keeping in mind the needs of M/s.GIL, must have come

from KEB. It is not that KSEB had been earmarking definite

quantities of supplies of energy for M/s.GIL. It is the way of

writing which was completely an internal affair of KEB itself

on the basis of which no inference can be drawn that KSEB

had earmarked certain quantity of energy to be supplied to

M/s.GIL. On the other hand there is a categorical denial that

there was any commitment on the part of KSEB to supply

energy for M/s.GIL. This would be evident from Exh.P-7(d),

a letter written by the Chief Engineer (MMC), KSEB. It is also

evident that Kerala/KSEB had not been supplying energy

according to what is indicated in the Minutes of the Meeting

and correspondence of KEB. Further, Exh.P-43(a) which is a

letter written by M/s.GIL to the Chairman, KEB for fixing

lower rate for imported energy and Exh.P-43(b) which is

summary of proceedings of meeting held in the chamber of

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Minister for Finance (Karnataka) on 17.9.1984 to review the

power position, clearly indicate that allocation of electrical

energy as well as the price to be charged was a matter

between the State of Karnataka/KEB and its consumers

which included M/s.GIL as well. The Kerala State/KSEB has

no say in the matter.

Coming to the oral evidence in support of

prosecution case, a reference has been made to the

statements of PWs 22, 23 and 45. As indicated earlier, it

may be recalled that in his statement PW22 has stated

about meeting between the Minister of Karnataka with the

Power Minister of Kerala. He was present in the meeting

with Minister of Karnataka. The main purpose was to request

Kerala Government to help out Karnataka State in its crisis

of power shortage. Learned State counsel draws our

attention to the part of his statement where he said that he

could not recollect definitely but some additional energy was

given for M/s.GIL by KEB. He further stated that energy

was supplied on KSEB account, i.e. to say from the energy

supplied by Kerala to Karnataka. This statement of PW 22

does not lead to any conclusion of supply of energy to M/s

GIL by KSEB. There is nothing which goes against A1 and

A2. During the discussion on the question of supply of

energy by Kerala State to Karnataka it is quite possible and

natural as well, that Karnataka Minister may have

mentioned the names of its big consumers of energy to

emphasise the gravity of shortage situation and huge

requirement of electricity. On such stray reference during

the talks it cannot be concluded that the supply was made to

GIL. On such an analogy to whomsoever imported energy

was disbursed or allocated or supplied by KEB or State of

Karnataka, it could be said that electricity was supplied to

each of them by Kerala State/KSEB, A1 or A2. Nothing has

been indicated in the statements of PWs 23 and 45 to reach

to a conclusion that the supplies were not made to the State

of Karnataka on its request but to GIL. On the other hand,

we find that PW-23 has stated that the total current received

from Kerala was taken to the general pool and was then

allotted and distributed according to the instructions of the

Chief Minister. He further stated that M/s.GIL was one

amongst the eight industries to which Karantaka

Governemnt allotted and earmarked energy. PW-14 who is

an officer of M/s.GIL stated in his statement "Kerala

Government has never given any current to us. Kerala

Government has not entered into any agreement with any

authority to supply current to our industry".

A reference may also be made to Ext.P-44(c), a

letter written by the Chief Engineer, Electricity (General)

KEB to M/s.GIL. Through this letter it was intimated to

M/s.GIL that during the months of October and November,

1984 the import of energy from Kerala had been grossly

inadequate. Cut in electricity consumption had to be

imposed and in case supply of energy from Kerala was not

resumed, M/s.GIL might have to restrict its consumption to

the entitlement fixed. It further said that M/s.GIL might

consider the possibility of using its good offices with Kerala

authorities for resumption of supplies. It is evident from this

letter that it is not that Kerala was readily supplying energy

as required by the State of Karnataka or as may have been

needed for M/s.GIL, rather it goes to substantiate that

Kerala authorities (A1) had indicated that their help would

only be to the extent maximum possible, depending upon

the ensuing monsoon etc. What is more importantly

revealed is that Karnataka authorities wanted M/s.GIL also

to make efforts with Kerala authorities for supply of energy

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to Karnataka. In this background even if M/s.GIL is

assumed to have made some efforts with the Kerala

authorities on the asking of Karnataka authorities for supply

of energy to Karnataka, so that it may also be benefited, we

feel it would not mean that the appellants or other

authorities in Kerala supplied energy to M/s.GIL. It is

evident that State of Karnataka was more keen and anxious

about supply of energy from Kerala and had very much in its

mind requirement of M/s.GIL as well. PW 45 who was also

present at the time of meeting held on 28.9.1984 between

the Ministers of Power Karnataka and Kerala, stated that the

Karnataka State had requested for supply of energy looking

to the needs of power intensive industries including Wheel

and Axle plant and M/s.GIL. The Minister A1 had only said

to Karnataka Minister that he would look into the demand.

In regard to the meeting held on 16.10.84 in the chamber of

the Chief Minister, Karnataka and the Kerala authorities

where PW 45 was present being Secretary, Power, State of

Kerala, stated that the meeting was in relation to inter-state

waters. He further stated that specifically matter of supply

of power to M/s.GIL was not told. Again in regard to

another meeting stated to be held on 9.2.85, the witness

stated that main topic of discussion was Mananthavady

project and among other things discussed, Karnataka

government had made a request for supply of electricity for

some industries in Karnataka which included M/s.GIL also ,

but no decision was taken. The witness also stated that

Minutes of the Meeting held on 28.9.84 were not prepared

but he specifically denied the suggestion that any

instructions were given by A1 not to prepare the Minutes.

The fact needs no mention that a Minister is not supposed

to prepare the minutes of the meetings. PW 45 also stated

that Karnataka as deficit State had been taking power from

Kerala based on agreement entered into sometime in 1979-

80. At yet another place the witness has stated that

sometime in 1984 there was an agreement to supply power

to Wheel and Axle plant, Bangalore at the instance of the

Minister for Railways. PW 45 has also made a statement to

the effect "it has not come to my notice that any condition

was attached with respect to the current that was supplied

by Kerala to Karnataka". He further stated that energy

imported by Karnataka from Kerala could be utilised by

Karnataka in any manner they wished. But Kerala could

make recommendations as was indicated in Ext.D-7

(document marked subject to proof "it is a letter from

Kerala Industries Department written in the year 1980"). To

yet another question "Has Kerala got anything to do with the

allotment made by Karnataka Govt. of the Kerala Power as

stated in Ext.P.22(b)?". PW 45 replied : "The allocation was

a matter for the Karantaka Electricity Board and not Kerala

Govt." The witness denied that there was any undertaking

by the Karnataka Govt. for supply of current to M/s.GIL.

The above facts have been stated only by a prosecution

witness.

From the evidence of prosecution as indicated above, it

does not emerge that Kerala Govt./KSEB or A1 and A2 made

any commitment or gave any assurance or earmarked any

quantity of electrical energy to M/s.GIL, strictly speaking not

even to the State of Karnataka. Once the supply is made by

the State of Kerala it is for the State of Karnataka/K.E.B. to

make distribution of the electricity received, in the manner it

may deem fit and proper. It is for the State of Karnataka to

consider the requirement of energy for different purposes,

different sectors and industries looking to its priorities and

policies and the need of industrial and economic growth of

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the State. It is quite evident from the material on the

record that State of Karnataka had been quite concerned to

make electricity available to the industries in the State

particularly heavy industries like M/s.GIL and Whlee and

Axle Plant etc.

Next we come to the question of fixation of price

for supplies made to M/s.GIL by the KEB/Karnataka Govt.

So far the State of Kerala is concerned it supplied electricity

to the State of Karnataka at the flat rate of 42 paise per

unit. Learned counsel for the respondents has at the outset

submitted that there is no grievance about the rate of

electricity, as agreed for supply of energy by Kerala to

Karnataka. The supply of electricity imported from Kerala

was called high cost energy. KEB had fixed its rate at 80

paise per unit for its consumers. The lower rate as charged

by KEB from M/s.GIL is not even alleged to have been fixed

at the instance of the Kerala authorities, KSEB or the A1 or

A2. It appears that M/s.GIL wrote to the Chairman, KEB for

supply of high cost energy to it at a lower rate and in that

connection it referred to the rate charged in the year 1980.

That part of the letter may be extracted as follows :

"During 1980 second quarter we have

received 27 lakh units of power per month

from Kerala (Ref.T/COM/EC/55/5054

dt.7.6.80). We were charged on no loss no

profit basis that is 37 paise per unit inclusive

of taxes when the Kerala rate was 28 paise

on Karnataka. Due to two tier system of

pricing for our normal allocation of power at

the normal rate of 28 paise plus taxes and

duties for 60% and 78 paise plus taxes and

duties for 40% our average energy cost at

present is 48 paise plus taxes and demand

charges. Now if we are charged 80 paise plus

extras for the additional 40 lacs, our cost of

energy will go up beyond our capacity to pay

which will cripple our unit to further

sickness."

It has also been mentioned in the letter that M/s.GIL had

also played some role in negotiating earmarked power on

barter basis from Kerala for their industry as per the advise

of the government and that fact should not be overlooked.

It was also emphasised that being situated in Karnataka the

industry was contributing to the industrial infrastructure of

the State and providing employment and getting additional

revenue to the State Government. It appears looking into

the request made by M/s.GIL and the precedent in the year

1980, the KEB calculated the rate at which electricity could

be supplied to M/s.GIL. Ext.P-57 is the copy of the

resolution of KEB fixing the rate of energy for M/s.GIL.

Wheeling charges were fixed by KEB at the rate of 20% as

against 10% charged from Wheel and Axle plant since

M/s.GIL was also to draw energy during peak hours. In this

manner after making calculations a decision was taken by

the KEB to supply the high cost energy to M/s.GIL at the

rate of 64 paise per unit instead of 80 paise. It was the

decision of the KEB itself which made its own calculation on

the basis of which it decided to supply the energy received

from KSEB at the rate of 42 paise per unit, to M/s.GIL at the

rate of 64 paise per unit. It was 22 paise per unit more than,

at which KEB was purchasing it from Kerala. In the matter

of fixation of the price chargeable in Karnataka the KSEB or

A1 and A2 had no role to play at all. It would also be evident

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from the representation made by M/s.GIL that on earlier

occasions also concessional rate was charged by KEB from

M/s.GIL on the supplies of imported energy. KEB may levy

surcharge or subsidize any particular sector, it would be a

matter relating to their policy. KSEB has not charged the

State of Karnataka at lower rate for the energy made

available by KEB to M/s.GIL out of the supplies of KSEB. The

State of Karnataka does not seem to have made any

grievance in any quarter at all, for supply of high cost

energy by it to M/s.GIL at a lower rate. For the

concession made by Karnataka State/KEB, like on some

earlier occasions, giving some benefit to M/s.GIL, there is

hardly any reason to criminally prosecute the appellants for

it. The charge as against A1 and A2 regarding pecuniary

benefit caused to M/s.GIL has nothing to do whatsoever with

A1 and A2 in any manner, none suggested much less

proved. The State of Karnataka/KEB appear to have

provided such concession to M/s.GIL and Wheel and Axle

Plant and may be to others also on earlier occasions. It was

a matter for the State of Karnataka/KEB alone to be

concerned about.

Next, in support of their case that the appellants

acted illegally and in violation of law in supplying the

electricity to M/s.GIL, reliance has been placed on Section

43 of the Electricity (Supply) Act, 1948. Section 43 reads

as under :

"43. Power of Board to enter into

arrangements for purchase or sale of

electricity under certain conditions.-

(1)The Board may enter into arrangements

with any person producing electricity within

the State for the purchase by the Board, on

such terms as may be agreed, of any surplus

electricity which that person may be able to

dispose of.

(2) Where a sanctioned scheme so

provides, the Board may, on such terms as

may be agreed upon, enter into

arrangements with any Government or

person for the purchase or sale of electricity

to be generated or used outside the State:

Provided that the Board may not enter

into such arrangements with any such

Government or person without the consent of

the State Government, or into arrangements

with any such person without the consent of

the Government of the State within which the

electricity is to be generated or used."

The other provision which has been pressed into

service, to make out a case of violation of rules, Rule 68 of

Kerala State Electricity Board Rules, 1957 has been referred

to which provides "sale of electricity outside the State shall

be with the prior consent of the government". It would be

relevant to note that both the above noted provisions relate

to the power of the Board to sell or purchase electricity.

According to sub-section (2) of Section 43 the Board is

authorised to enter into an arrangement with any

government or person for sale or purchase of electricity for

use outside the State provided the consent of the state

government is taken for any such arrangement. Rule 68

also puts similar bar while providing for sale of electricity

outside the State that it shall be with prior consent of the

government. In the case in hand it is amply clear that the

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arrangement of sale and supply of electricity from Kerala to

Karnataka has been negotiated at a level higher than the

Electricity Board, to be specific at the level of the two state

governments through their respective Ministers. Secretary,

Power, Kerala Government was also there. It is evident from

the documents referred to earlier that the Minister for

Power, State of Karnataka had approached the Power

Minister of the State of Kerala for exploring possibility of

supply of electricity to the State of Karnataka which was

then facing acute deficit of electric energy. The Chairman of

the KEB who was accompanying the Minister of Power, State

of Karnataka apprised of whatever transpired in the meeting

between the two, to the Secretary, Department of Power,

State of Karnataka. So also it is on the record that a

subsequent meeting also took place between the Ministers

as well as with the Chief Minister of Karnataka. The supply

of electricity from Kerala to Karnataka was in pursuance of

and under the arrangement arrived at, as an outcome of the

negotiations between the Ministers of the two States and the

Chief Minister of State of Karnataka. The Chairmen of the

Electricity Boards of the two States have also been present

during the negotiations along with Secretary, Power, Kerala

Government. In these circumstances, the provisions of

Section 43 of the Electricity (Supply) Act, 1948 and Rule 68

of Kerala State Electricity Board Rules, 1957 relating to

consent of State Government for any such arrangement

would not be attracted.

Learned counsel appearing for the appellants have

also drawn our attention to the Rules of Business of the

Government of Kerala. Rules 4, 5 and 9 of the Rules of

Business read as under :

"4. The Business of the Government shall be

transacted in the Department specified in the

First Schedule, and shall be classified and

distributed between those departments as

laid down therein.

5. The Governor shall, on the advice of the

Chief Minister, allot the business of the

Government among the Ministers by

assigning one or more departments to the

charge of a Minister :

Provided that nothing in this rule shall

prevent the assigning of one department to

the charge of more than one Minister.

9. Without prejudice to the provisions of

Rule 7, the Minister in charge of a

Department shall be primarily responsible for

the disposal of the business appertaining to

that Department."

First Schedule referrable to Rule 4 quoted above contains

the Department of Power at Serial No.23 of the List. The

Minister in charge of the Department is primarily responsible

for disposal of business pertaining to that department as

provided under Rule 9 of the Rules of Business. In this

background it is submitted that none else but A1 as Minister,

Power would be competent to give consent of any such

arrangement. Learned counsel for A1 has referred to certain

decisions on the point of Rules of Business, viz. M/s.Bijoya

Lakshmi Cotton Mills Ltd. v. State of West Bengal & Ors.,

AIR 1967 SC 1145, Samsher Singh v. State of Punjab &

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Anr., AIR 1974 SC 2192, in support of the contention that

ministerial decision according to Rules of Business would be

the decision of the Governor. We do not think it would be

necessary to go further into the detail as the position under

Rules of Business is quite clear. It has not been denied by

the other side that Minister would be competent to give

consent according to the Rules of Business. But the

submission is that there is no document or formal order of

consent for arrangement of supply of electricity. A reference

has been made to the statement of PW 17 the Chairman,

KSEB during the period 1987-88, who stated that to his

knowledge there was no sanction of the Government of

Kerala to supply Kerala energy to M/s.GIL. At this stage it

would also be necessary to point out that there has not been

any arrangement of supply of electricity between the State

of Kerala/KSEB and M/s.GIL. Like M/s.GIL, there would be

many recipients and consumers of Kerala Electricity supplied

to KEB/Karnataka. The Minister of Power, State of

Karnataka had initiated the negotiations with A1, the Power

Minister of State of Kerala for import of electrical energy.

From the documents referred to earlier, it is also clear that

the State of Karnataka has been emphasising about

shortage of electricity keeping in view need of M/s.GIL as

well, apart from other industries in Karnataka. The price of

42 paise per unit was settled with the State of

Karnataka/KEB and it is nobody's case that the same was

not being paid accordingly by Karnataka to the Kerala. On

its part the State of Karnataka was selling high cost energy

(imported energy) at the rate of 80 paise to its consumers in

Karnataka in place of 42 paise at which rate it had bought

from Kerala and so far M/s.GIL is concerned it was at the

rate of 64 paise per unit. It was a transaction between State

of Karnataka/KEB and its consumers including M/s GIL.

There was thus no occasion of any document being there

showing consent of government of Kerala for supply of

energy to M/s.GIL. There would obviously be none. In this

light, the statement of PW 17 who was the Chairman of

KSEB during 1987-88, to the effect that there was no

sanction of the Government of Kerala to supply power to

M/s.GIL has no material bearing or relevance. The supplies

were to the State of Karnataka/KEB and the decision had

been taken at the higher level namely, at the level of the

government itself. Therefore, it is not correct to say that

there was violation of Rule 43(2) of the Electricity (Supply)

Act, 1948 or Rule 68 of the Rules. The supply of electricity

made under the arrangement arrived at on negotitions

entered into between two States does not need any prior

consent u/s 43 of Electricity (Supply) Act, 1948 or under

Rule 68 of the Rules. These provisions are not attracted.

Hypothetically even it is assumed that prior consent of

Government was required in the facts and circumsances of

the case in hand, it would be irresistably taken to be

implied.

The other aspect of the matter which has been

emphasised on behalf of the prosecution is that the

appellants did not enter into any written agreement and that

no memo of meetings was prepared. There is no denial of

the fact on behalf of the appellants that no formal

agreement was drawn or entered into nor the fact that no

minutes of the meetings were prepared. Undoubtedly, it

would have been only proper way to enter into such an

arrangement and to act upon the same thereafter. But the

fact is that no written agreement was prepared. At the

same time, it is also a fact that an arrangement was arrived

at and according to the same electricity was supplied to the

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State of Karnataka/KEB at a price of 42 paise per unit.

There is no denial or objection to the rate fixed nor there is

any grievance that State of Karnataka had not paid for the

electricity supplied by State of Kerala/KSEB. Energy has

been supplied and agreed price has been paid. Out of the

Kerala energy supplied to the State of Karnataka/KEB, a

part of it was consumed by M/s.GIL also amongst its other

consumers. KEB was paid for energy supplied by it to its

consumers including M/s.GIL. Once the energy is supplied to

the State of Karnataka/KEB it would be for them to

disburse it in the manner they may think it best in their

interest. It would also be evident from a letter of the Chief

Minister of Karnataka dated May 8, 1985 addressed to A1

filed as Annexure P-9 to the affidavit of Chairman, KSEB

before the Enquiry Commission (Vol.II, P.304 in Criminal

Appeal No.372 of 2001) that electricity was being earmarked

by the Karnataka authorities to M/s.GIL and other industries.

There is nothing to indicate that there was any restriction

from any corner limiting use of Kerala energy supplied to the

State of Karnataka by any particular industry or M/s.GIL. As

indicated earlier, the State of Karnataka itself was quite

keen to have substantial supply of energy for its major

industries including M/s.GIL and Wheel and Axle Plant etc.

Loss if any at all, though there is no grievance to that effect

was that of the Karnataka Government while it decided to

supply energy to M/s.GIL at a lower rate as compared to its

other consumers. So far the State of Kerala is concerned it

sold electricity to the State of Karnataka at the rate of 42

paise irrespective of the fact that the same was utilised by

M/s.GIL and Wheel and Axle plant or any other sector or

segment of the consumer and at whatever price. Therefore,

the fact that no formal written agreement was entered into

will not be of any significance particularly so far the criminal

case is concerned. Per se it entails no criminal liability and in

the set of facts of case in hand it does not even constitute

any incriminating circumstance to lend any support to the

prosecution case.

There is no occasion to draw any inference due to non-

execution of a written agreement that the supplies have

been illegally made with dishonest intention. There is

nothing to indicate that Karnataka State/KEB could not

make available electricity to M/s.GIL like it did to its other

consumers. As a matter of fact electrical energy was only

continued to be supplied to Karnataka/KEB during the

relevant period as well with upward revised rates to the

advantage of the State of Kerala.

We are not undermining the

requirement or necessity to execute an agreement in writing

for any contract entered into for and on behalf of State or

such bodies like KSEB but such omission, in the facts and

circumstances of the case, would not lead to any inference

of commission of any offence. It is though always necessary

that an act must be performed in a manner it ought to be

under the law. The State Government may of course take

steps as may be necessary to see that such omissions may

not occur and such transactions may take place by means of

a written agreement. Otherwise, there always remains a

risk of the other party resiling from the contract or may

raise disputes about the terms and conditions of the

agreement. A written instrument avoids the scope of

uncertainty and leaves no room for speculation about the

terms and conditions of a contract.

Yet another circumstance which has been referred

to and so found by the High Court is that A1 and A2 supplied

electricity to the State of Karnataka at a time when there

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was scarcity of energy in the State of Kerala. We have

already indicated earlier that learned counsel appearing for

the respondents has very fairly submitted that virtually there

was no evidence on the record to show that there was

scarcity of electricity in Kerala during that period. On the

other hand, it has been pointed out by the learned counsel

for A 2 that there was no scarcity in Kerala. It has been

pointed out that sometime during the period prior to the

relevant period of supplies there had been some cut

imposed on supply of electricity in Kerala but not during the

relevant period. Prosecution could show nothing to

substantiate the finding of the High Court regarding scarcity

of electricity in Kerala during the relevant period. The

finding is thus vitiated due to lack of evidence to

substantiate the same.

A reference has been made to the statement of

PW 37 Assistant Engineer, in sub-Division, Bangalore,

regarding meter reading about supplies made to M/s.GIL,

out of the energy imported from Kerala as well as about the

preparation of the bills on the basis thereof. It is a matter

for the State of Karnataka or KEB to keep account of the

energy supplied to M/s.GIL, since they have obviously to

realise the charges of electricity consumed by M/s.GIL It

negatives the prosecution case that Kerala/KSEB sold energy

to M/s.GIL. It is an exercise in futility to show and establish

that the Kerala energy was being consumed by M/s.GIL as

well. It is nobody's case that the imported energy could not

at all be consumed by M/s.GIL like others do. The State of

Karnataka/KEB had to keep an account of imported energy

viz. high cost energy which was being supplied to its

consumers so as to charge them for the same accordingly.

We also find that there is nothing to indicate that

KSEB, A1 and A2 had earmarked or fixed any quantity of

electricity for M/s.GIL. One or two letters (referred to and

dealt with earlier) in which officials of KEB have written that

some particular quantity of electricity was to be supplied to

M/s.GIL and non-reply of such letters would hardly lead to

any such inference or conclusion that any fixed quantity of

electricity was earmarked for supply to M/s.GIL by

Kerala/KSEB. Learned counsel for the respondent has

particularly relied upon the statement of PW 22 which reads:

"Whether any energy was spared as agreed to by A1 as

stated in P.56(a) letter to be supplied to M/s.GIL (Q)?" "I

cannot recollect definitely. But some additional energy was

given to M/s.GIL by KEB (A)". That energy was supplied on

KSEB account. By KSEB account I mean from current

supplied by Kerala to Karnataka". It only confirms the fact

that Kerala/KSEB supplied energy to Karnataka/KEB alone.

The above statement negatives the allegation of earmarking

of any definite quantity of electrical energy to M/s.GIL by

KSEB, the additional energy was given to M/s.GIL by KEB.

Right from the very beginning as indicated earlier, the State

of Karnataka was quite anxious to make available the

electricity to its heavy industries including M/s.GIL and

Wheel and Axle plant. It is not understandable how it leads

to inference or to the conclusion that Kerala State/KSEB sold

energy to M/s.GIL. Therefore, to fasten the responsibility or

coming to any conclusion that any amount of energy was

earmarked and sold in definite quantity to M/s.GIL by KSEB

or A1 and A2 would only be conjectural and based on

surmises. Such a finding or inference cannot be sustained.

On the basis of the discussion held by us, our

conclusions are as follows :

1. That Electricity was being supplied by the State of Kerala

to State of Karnataka and other States since long before

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the relevant period..

2. That the Minister for Power and Energy, State of

Karnataka along with Chairman of Karnataka Electricity

Board approached the appellants seeking assistance to

help out during the crisis of scarcity of electricity in their

State. They had a meeting in that connection with A1 and

A2 on 29.9.1984 and laid emphasis upon its dire need

also keeping in view the need of its industries and

M/s.GIL as well as Wheel and Axle Plant.

3. That the letter written by the Chairman, KEB to the

Secretary, Power, Government of Karnataka dated

29.9.84 indicates that no firm commitment was made by

the State of Kerala/KSEB for supply of electricity except

some assurance for assistance to the maximum possible.

This letter also indicates that it was told that during peak

hours it was not possible to provide electricity for

M/s.GIL.

4. That the supply of electricity was continued in pursuance

of the talks initiated by the Minister of Power and Energy,

Karnataka but at a revised rate which was enhanced to 42

paise per unit.

5. That the imported Kerala energy was priced at 80 paise

per unit as high cost energy by the State of

Karnataka/KEB at which rate it supplied to its consumers.

But on representation of M/s.GIL to the State of

Karnataka/KEB after calculation, lowered the rate of high

cost energy to 64 paise per unit for M/s.GIL.

6. That it was concern of the State of Karnataka/KEB to fix

any rate of imported energy and its disbursement to its

consumers as it would find fit and proper.

7. That no fixed quantity of electricity was earmarked or sold

by the State of Kerala/KSEB to M/s.GIL. M/s.GIL was

supplied electricity by the State of Karnataka/KEB @ 64

paise per unit as fixed by KEB.

8. That it is nobody's case that State of Karnataka or

anybody felt aggrieved by fixation of lesser rate of high

cost energy by KEB for M/s.GIL.

9. That since the arrangement was arrived at, in pursuance

of negotiations at the Ministerial level of the two States

and the Minister of Power, State of Kerala as Minister in

charge being authorised to take decisions under the Rules

of Business of the State of Kerala, there was no occasion

for taking any consent from the government. Provisions

of Section 43 of the Electricity (Supply) Act, 1948 or Rule

68 are not attracted. There is no violation of the said

provisions.

10. That the fact that arrangement entered into was not

reduced into an agreement in writing, lost relevance for

the purposes of this case since the same having been

acted upon and the electricity having been supplied to the

State of Karnataka/KEB for which there is no complaint

that State of Kerala/KSEB has not received the agreed

price. In any case, no inference of criminal liability could

be drawn.

11. There is no evidence to support the conclusion of the

High Court that during the relevant period there was

scarcity of electricity in the State of Kerala.

12. That according to the prosecution as well as the

findings of the Courts, the appellants have not benefited

monetarily or otherwise as a result of arrangement or by

M/s.GIL.

In the light of the above conclusions, it may now

be examined as to what offence if at all, has been made out

against the appellants. The charge and the conviction of

the appellants is under Section 5(1)(d) read with Section

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5(2) of the Prevention of Corruption Act, 1947. It reads as

follows:

"5. Criminal misconduct in discharge of

official duty - (1) A public servant is said to

commit the offence of criminal misconduct -

xxx xxxx xxxx

(d) if he, by corrupt or illegal means or by

otherwise abusing his position as public

servant, obtains for himself or for another

person any valuable thing of pecuniary

advantage.

(2) Any public servant who commits criminal

misconduct shall be punishable with

imprisonment for a term which shall not be

less than one year but which may extend to

seven years and shall also be liable to fine:

Provided that the court may, for any

special reasons recorded in writing, impose a

sentence of imprisonment or less than one

year."

The ingredients of the offence are (i)abuse of

position as public servant; (ii)obtaining for himself or for

another any valuable thing or pecuniary advantage;(iii)by

corrupt or illegal means. Keeping in view the above

ingredients of the provision, the charge as levelled against

the appellants is that by abusing their official position as

public servants they conspired and illegally sold 12241440

units of Kerala electricity to M/s.GIL, Bangalore and thus

caused GIL to obtain a valuable thing, namely, electricity

resulting in pecuniary advantage to the said company to the

tune of Rs.19,58,630.40 paise. At this stage it would be

appropriate to indicate that the prosecution has not pursued

the charge of conspiracy against A1 and A2. Nor it is their

case that A1 and A2 obtained for themselves any valuable

thing or pecuniary advantage out of the whole transaction.

As a matter of fact the finding of the High Court is also to

the same effect. The emphasis is only on illegal sale of

energy by KSEB to M/s GIL thereby causing valuable thing

namely electricity to be obtained by M/s.GIL which resulted

in profit to M/s.GIL to the tune of Rs.19,58,630.40 paise.

One of the submissions advanced on behalf of the

appellants is that the offence as provided under clause (d) of

sub-section (1) of Section 5 of the Prevention of Corruption

Act is to obtain any valuable thing or pecuniary advantage

for himself or for any other person. There is no such

ingredient constituting an offence by "causing" to obtain a

valuable thing for any other person. In our view the

argument is too technical to be appreciated. If a person

obtains any valuable thing or pecuniary advantage for any

other person can well be said to be causing "to obtain" to

any particular person any benefit or advantage. Such an act

may be covered by the concept of 'actus reus' that is to say

an act of accessory, aiding, abetting, counselling and

procuring an offence. But in comparison to mens rea, actus

reus i.e. mental element is considerably narrower and more

demanding than that required for the principal offender.

The distinction between mens rea and actus reus is indicated

in Blackstone's Criminal Practice . In the case in hand

however, obtaining any valuable thing or pecuniary

advantage for any other person has also been brought

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within the definition of the offence. Therefore, it will have to

be examined as to whether there has been "obtainment" of

a valuable thing or pecuniary advantage by the appellants

for M/s.GIL. In this connection, learned counsel for the

appellants have placed reliance upon a decision of this Court

in the case of Subash Parbat Sonvane . The facts of the

case were different as the court was considering a case of

bribery under Section 13(1)(d)(i) of the Prevention of

Corruption Act, 1988. The meaning of the word 'obtain' was

considered and in that context referred to observations

made in the case of Ram Kishan . The word 'obtains' on

which much stress was laid does not eliminate an idea of

acceptance of what is given or offered to be given, though it

connotes also an element of effort on the part of the

receiver. M.W.Mohiuddin's case was also referred to,

which also related to a case of bribery and while dealing

with the meaning of the word 'obtains', it was observed :

"whether there was an acceptance of what is given as a

bribe and whether there was an effort on the part of the

receiver to obtain the pecuniary advantage by way of

acceptance of the bribe depends on the facts and

circumstances of each case." It was found true in that case

that the accused had made a demand for the money. In so

far the cases covered under Section 5(1)(d) of the

Prevention of Corruption Act, 1947 we find a clearer picture

from the decision in the case of C.K.Damodaran Nair as

relied upon by the learned counsel for the appellants and

also considered in the case of Subash Parbat Sonvane

(supra). It is laid down as follows :

"12. The position, will, however, be different

so far as an offence under Section 5(1)(d)

read with Section 5(2) of the Act is

concerned. For such an offence prosecution

has to prove that the accused 'obtained' the

valuable thing or pecuniary advantage by

corrupt or illegal means or by otherwise

abusing his position as a public servant and

that too without the aid of the statutory

presumption under Section 4(1) of the Act as

it is available only in respect of offences

under Section 5(1)(a) and (b) - and not

under Sections 5(1)(c), (d) or (e) of the Act.

'Obtain' means to secure or gain (something)

as the result of request or effort (Shorter

Oxford Dictionary). In case of obtainment

the initiative vests in the person who receives

and in that context a demand or request

from him will be a primary requisite for an

offence under Section 5(1)(d) of the Act

unlike an offence under Section 161 IPC,

which, as noticed above, can be,

established by proof of either 'acceptance' or

'obtainment'."

(emphasis supplied by us)

In the light of the meaning of the word 'obtains' it

may have to be seen as to whether there was any element

of effort on the part of the appellants by reason of which it

could be said that electricity was caused to be obtained by

them to M/s.GIL that too on a lower rate causing pecuniary

advantage to M/s.GIL. The position of the appellants has to

be considered as that of a receiver or one

who illegally obtained valuable thing. The documentary

evidence as well as the oral evidence as referred to in the

earlier part of this judgment clearly establishes that the

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State of Karnataka/KEB contacted the Minister of Power

State of Kerala (A1) for assistance in the matter of supply of

electricity due to grim situation of shortage of energy in

their State. Times and again in different meetings and

otherwise the State of Karnataka/KEB had been emphasising

their requirement of electricity and supply of more energy

stressing upon the need for their industry some of which

were named including M/s.GIL and Wheel and Axle Plant,

so much so that they had even advised M/s.GIL also to

make effort and use their good offices with Kerala

Authorities for supply of more electricity. So far the

response of the appellants is concerned it is clear that they

had only told that they would look into their demands and

would like to assist to the maximum possible which would

also depend upon the ensuing monsoon situation. The effort

has throughout been on the part of the State of

Karnataka/KEB to obtain more and more energy stressing

the pressing need of the State on various counts. It is not

to be found that the State of Kerala/KSEB, A1 or A2 ever

made efforts to sell Kerala energy to KEB nothing to say of

M/s.GIL. Had that been so there was no occasion for the

State of Kerala/KEB to advise M/s.GIL to use their good

offices with Kerala Authorities for supply of energy. It is

also evident from documentary evidence that despite

assurance on the request of Karnataka/KEB to assist it was

not always possible for KSEB to make supply. It is also clear

from the evidence that whatever energy was exported from

Kerala was taken in the general pool of electricity in the

State of Karnataka/KEB and the distribution thereof used to

be made by the State of Karnataka/KEB and the Chief

Minister. Some stray utterances made in some letters or

internal documents of the KEB that KSEB had agreed for

certain quantity of energy for M/s.GIL would in no way lead

to the inference that the State of Kerala/KSEB, A1 or A2 had

earmarked any supply for M/s.GIL. Even according to them,

KSEB had only "agreed" to spare electrical energy for

M/s.GIL which definitely shows that initiative was on the

part of the State of Karnataka/KEB. There is no case of

initiative or effort on the part of KSEB for supply of energy.

It is rather the other way round. The reliance placed by the

prosecution on such letters or non-reply of certain letters is

misplaced. The primary requisite of offence u/s. 5 (1)(d) of

'obtaining' any valuable thing or pecuniary advantage for

any other person, in absence of any effort, initiative or

request on the part of the appellants shatters the charge in

view of decision in the case of Damodaran (supra). So far

causing pecuniary advantage or profit to M/s.GIL is

concerned we have made a detailed discussion about the

same that it was purely a matter between the State of

Karnataka/KEB and M/s.GIL to decide what price was to be

charged by KEB from M/s.GIL for supply of imported energy.

There is no allegation nor evidence to show that the State of

Kerala/KSEB or A1 and A2 had any say or hand in lowering

of the price for M/s.GIL by the State of Karnataka/KEB. It

may be indicated that earlier also there have been

instances of supply of imported energy at a lower rate to

M/s.GIL and Wheel and Axle Plant by KEB. In any case it

was a matter between the State of Karnataka/KEB and

M/s.GIL or other industries. Therefore, it is also incorrect to

say that the appellants caused any profit to occur to

M/s.GIL.

We have already recorded a finding that in the

facts and circumstances of the case the provisions of Section

43 of the Electricity (Supply) Act, 1948 or Rule 68 of the

Rules were not attracted. It cannot be said factually, that

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electricity was sold by State of Kerala/KSEB, A1 or A2 to

M/s.GIL nothing to say of illegally, nor it can be said that

there was any abuse of their position by A1 and A2 in supply

of energy to Karnataka/KEB. Once the supplies were made

to the State of Karnataka to help out during the period of

scarcity of energy, as requested, it is not understandable

how only a part of supply which the State of

Karnataka/KEB, amongst others allocated to M/s.GIL that

alone could be said to be illegal or that the appellants

caused to be obtained valuable thing to M/s GIL illegally by

abuse of their official position. KSEB did not sell energy to

M/s GIL, all supplies were made to KEB. The charge that

the appellants had illegally sold energy to M/s GIL or caused

it to be obtained by M/s.GIL is not all substantiated and

miserably fails.

On behalf of the appellants reliance has also been

placed upon a decision of this Court in the case of Kurban

Hussein Mohammedali Rangwalla . The case relates to

Section 304A IPC i.e. in entirely different set of facts. The

conviction was set aside under Section 304A and converted

to one under Section 285 IPC. It is submitted that the

limited purposes for which this decision is being relied upon

is that an act which may be punishable must be proximate

and direct cause of the injury caused. On this basis it is

submitted that if some profit has been caused to M/s.GIL by

lowering of the price by State of Karnataka/KEB it is not

proximate or direct cause of anything done by A1 and A2.

The act of the State of Karnataka/KEB intervenes between

the supplies made by the State of Kerala/KSEB to KEB who

in turn supplied the same to its consumers including

M/s.GIL at a lower price. It is not the direct effect or

proximate cause to any benefit, if at all, accrued to M/s.GIL.

We feel that it would not be necessary to go further into this

aspect in view of our findings recorded on the facts and

relating to ingredients of the offence.

To consider yet another aspect, the general

principle of criminal jurisprudence is that element of mens

rea and intention must accompany the culpable act or

conduct of the accused. In respect of this mental element

generally, the Blackstone's Criminal Practice describes it as

under :

"In addition to proving that the accused

satisfied the definition of the actus reus of

the particular crime charged, the prosecution

must also prove mens rea, i.e., that the

accused had the necessary mental state or

degree of fault at the relevant time. Lord

Hailsham of St Marylebone said in Director of

Public Prosecutions v. Morgan [1976] AC 182

at p.213 : 'The beginning of wisdom in all the

"mens rea" cases is as was pointed out by

Stephen J in Tolson (1889) 23 QBD 168 at

p.185, that 'mens rea' means a number of

quite different things in relation to different

crimes'. Thus one must turn to the definition

of particular crimes to ascertain the precise

mens rea required for specific offences."

The author then comments :

"Criminal offences vary in that some may

require intention as the mens rea, some

require only recklessness or some other state

of mind and some are even satisfied by

negligence. The variety in fact goes

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considerably further than this in that not only

do different offences make use of different

types of mental element, but also they utilise

those elements in different ways."

It is clear thus that the accused must have the mental state

or degree of fault at the relevant time. It may of course

differ from crime to crime according to the definition thereof.

The matter of degrees may also differ. That is to say

generally the mental state and the criminal act must

coincide. The criminal act may be one which may be

intended by the wrong doer. It is as well known mere

intention is not punishable except when it is accompanied by

an act or conduct of commission or omission on the part of

the accused. As indicated earlier, situation varies in respect

of different kinds of crimes as in some of them even

negligence or careless act may constitute an offence or there

may be cases of presumptions and putting the accused to

proof to the contrary. In the case in hand we have found

that there is no sale of energy to M/s GIL by KSEB nor the

appellants had any say in price fixation for M/s GIL by KEB.

In this light we may pass on to Criminal Law - J.C.Smith,

Brian Hogan , where proposition of law is put as follows :

"It is a general principle of criminal law that a

person may be convicted of a crime unless

the prosecution have proved beyond

reasonable doubt both (a) that he caused a

certain event or that responsibility is to be

attributed to him for the existence of a

certain state of affairs, which is forbidden by

criminal law, and (b) that he had a defined

state of mind in relation to the causing of the

event or the existence of the state of affairs.

The event, or state of affairs, is called the

actus reus ad the state of mind the mens rea

of the crime."

We further find the said principle of criminal

jurisprudence stated in Criminal Law by K.D.Gaur , wherein

it is stated as follows :

"Criminal guilt would attach to a man for

violations of criminal law. However, the rule

is not absolute and is subject to limitations

indicated in the Latin maxim, actus non facit

reum, nisi mens sit rea. It signifies that

there can be no crime without a guilty mind.

To make a person criminally accountable, it

must be proved that an act, which is

forbidden by law, has been caused by his

conduct, and that the conduct was

accompanied by a legally blameworthy

attitude of mind. Thus, there are two

components of every crime, a physical

element and a mental element, usually called

actus reus and mens rea respectively."

Glanville Williams in Criminal Law has also stated

as follows in connection with the intention accompanying the

act :

"The chief problems in the general part of

criminal law pertain to the requirement of a

criminal state of mind, mens rea; but these

cannot be adequately discussed without a

preliminary exploration of the nature of an

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actus reus".

It is further stated :

"Although thoughts are free, the uttering of

them is another matter. Speaking or writing

is an act, and is capable of being treason,

sedition, conspiracy or incitement; indeed ,

almost any crime can be committed by mere

words, for it may be committed by the

accused ordering an innocent agent (e.g., a

child under eight) to do the act. But to

constitute a criminal act there must be (as

said already) something more than a mere

mental resolution. Apparent, but not real,

exceptions to this proposition are treason and

conspiracy. It is treason to compass the

King's death, but the law requires an overt

act manifesting the intention; and this act

must be something more than a confession of

the intention. It must be an act intended to

further the intention; perhaps, too, it must

actually do so"

Thus, looking to the definition of the crime in the case

in hand namely, clause (d) of sub-section (1) of Section 5 of

the Act, according to the principle indicated above it is

necessary that the act must have been done illegally

abusing his position as public servant for obtaining benefit

pecuniary or otherwise for himself or for someone else. This

is an offence which would require an intention to

accompany the act. The element of mental state would be

necessary to do a concious act to get the required result of

pecuniary advantage or to obtain any valuable thing, even if

it is for someone else, then too element of mental state

must be there at the relevant time. In view of the facts and

circumstances indicated in the discussion held earlier in this

judgment, and findings recorded on facts, we firstly hold

that facts leading to charges are not proved and we also

find that the element of mens rea and intention is totally

lacking. The electrical energy was exported to

Karnataka/KEB at the request of State of Karnataka during

the period of crisis of shortage of energy which is not

objected to, so as to be illegal but for a part of it which is

allocated by the State of Karnataka/KEB to M/s.GIL which

constitutes no offence. The prosecution failed to prove the

case of sale of electricity by KSEB to M/s.GIL or the KSEB or

A1 and A2 having caused profit to M/s.GIL. Admittedly,

appellants did not stand to gain in any manner. The

prosecution case thus fails.

In the result, the appeals No.372/01 and 373/01

are allowed and the judgment and order of conviction and

sentence passed against the appellants by the Trial Court

and upheld by the High Court under Section 5(2) read with

Section 5(1)(d) of the Prevention of Corruption Act are set

aside. The appellants need not surrender and their surety

bonds are discharged.

In view of the fact that the judgment of the High

Court has been set aside, no orders are required to be

passed in Criminal Appeals No.725-27/02, having rendered

infructuous, they stand finally disposed of as such.

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Blackstone's Criminal Practice 1992, edited by Peter Murphy, page 64, A-5.2

2. 2002 (5) SCC p.86 Subash Parbat Sonvane Vs. State of Gujarat

3. Ram Kishan Vs. State of Delhi, AIR 1956 SC 476

4 M.W.Mohiuddin Vs. State of Maharashtra, (1995) 3 SCC 567

5.C.K.Damodaran Nair Vs. Government of India, (1997) 9 SCC 477

Kurban Hussein Mohammedali Rangwalla Vs. State of Maharashtra, 1965 (2) SCR

622

7 ibid A2.1 p.18

Criminal Law, Smith, Hogan, 6th Edition, p.31

Criminal Law - cases and materials, K.D.Gaur, Third edition, p.23

Criminal Law - Glanville Williams - The General Part - Second Edition p.1

1