Kerala High Court Mandates Reassessment of CBI Sanction Request in KSCDC Corruption Case

Order Refusing Prosecution Sanction Under Section 19 of PC Act Set Aside, Court Directs Fresh Review

In a significant judgment, the Kerala High Court has set aside the order refusing prosecution sanction under Section 19 of the Prevention of Corruption Act (PC Act) in the Kerala State Cashew Development Corporation (KSCDC) corruption case. The judgment, delivered by Justice Kauser Edappagath, mandates a fresh review of the Central Bureau of Investigation’s (CBI) request for sanction and has suspended further proceedings until a decision is made.

The case pertains to alleged corruption and mismanagement in the KSCDC from 2006 to 2015. The main accused include former Managing Director Sri. K.A. Ratheesh, former Chairmen Sri. E. Kasim and Sri. R. Chandrasekharan, and Sri. Jaimon Joseph, proprietor of M/s. JMJ Traders. The CBI’s investigation revealed that the accused conspired to award tenders for the supply of raw cashew nuts, violating government rules and causing substantial financial loss to KSCDC while benefiting themselves and the private party.

The court emphasized the necessity of proper sanction under Section 19 for prosecuting public servants. It found that the sanctioning authority’s refusal, as documented in Ext.P3, lacked sufficient reasoning and a judicious application of mind. The court noted that the authority failed to consider all materials and evidence presented by the CBI .

Justice Edappagath clarified that Sections 19 of the PC Act and 197 of the Criminal Procedure Code (Cr.P.C.) serve different purposes. While Section 19 deals with prosecuting public servants under the PC Act, Section 197 concerns sanction for prosecuting them under the IPC. The court ruled that the refusal to grant sanction under the PC Act does not preclude prosecution under the IPC if no sanction is required under Section 197 .

The court addressed arguments regarding the retrospective application of procedural amendments to Section 19, concluding that the relevant date for considering the necessity of sanction is the date of taking cognizance of the offense, not the date of the offense itself. It highlighted that procedural laws generally apply retrospectively unless specified otherwise by the legislature .

Justice Edappagath remarked, “The sanctioning authority must exercise the discretion to refuse or grant sanction judiciously. Ext. P3 is bereft of reasons and hence, it cannot be sustained” .

The Kerala High Court’s judgment mandates the sanctioning authority to reassess the CBI’s request for prosecution sanction, ensuring all relevant materials are considered. This decision reinforces the legal procedures required for sanctioning the prosecution of public servants and emphasizes judicial scrutiny in corruption cases. The outcome of this reassessment will significantly impact the prosecution of the KSCDC corruption case and the accountability mechanisms within public sector undertakings.

Date of Decision: 24 July 2024