Chandrababu Naidu verdict: what SC judges agreed on & where they differed

New Delhi: The Supreme Court Tuesday was split over Telugu Desam Party (TDP) president and former Andhra Pradesh chief minister N. Chandrababu Naidu’s petition to quash the First Information Report (FIR) registered against him in the alleged Rs 371-crore skill development corporation scam.

More specifically, while the bench comprising Justice Aniruddha Bose and Justice Bela M. Trivedi rejected Naidu’s petition challenging his remand in the case, what they differed on was the applicability of Section 17A of the Prevention of Corruption Act, 1988.

Section 17A was inserted in the 1988 act with effect from 26 July 2018. The provision deals with the inquiry or investigation of offences related to recommendations made or decisions taken by a public servant in the discharge of their official functions or duties. Section 17A requires previous approval of the central or state government before any ‘inquiry, enquiry or investigation’ against such an offence.

The bench now differed on whether the provision would apply retrospectively to cases before July 2018, when the amendment was introduced.

While Justice Bose was of the view that the provision would apply retrospectively, Justice Trivedi differed.

The FIR against Naidu in the alleged skill development scam was registered on 9 December, 2021. The allegations of his involvement in the embezzlement of public funds pertain to the period between 2014 and 2019 — that is, when he was heading the state’s TDP government.

Andhra Pradesh’s Crime Investigation Department arrested Naidu, 73, on 9 September.

After he was remanded in judicial custody on 10 September 2023, he challenged this before the Andhra Pradesh High Court, which rejected his petition. He then moved the Supreme Court.

In the meantime, the Andhra Pradesh HC granted Naidu four weeks of interim bail on medical grounds on 31 October. He was also granted bail in November last year.

Justice Bose’s view

The main argument before the apex court revolved around non­-compliance with Section 17A of the Prevention of Corruption Act, 1988 when Naidu was implicated under several other sections of the same act: 12, 13(2) and 13(1)(c) and 13(1)(d).

While Section 12 deals with “punishment for abetment of offences”, Section 13 is concerned with “criminal misconduct by a public servant”.

In his petition, the TDP leader contended that due process was not followed, which negates the entire proceedings, including the remand order. His main argument was that he took decisions in his capacity as chief minister — that is, as a public servant — and that prior approval, as required under Section 17A, was not sought before his arrest.

Justice Bose said that Section 17A restricts police officers at the enquiry stage from proceeding against a public servant in connection with any offence alleged to have been committed by him, relatable to any recommendation made or decision taken by such public servant, without previous approval of the authorities. He asserted that it is the time of commencement of an enquiry, inquiry, or investigation that matters for the application of Section 17A, and not the time of the alleged offence.

As for the question of whether prior sanction is required to initiate proceedings against a public servant over an alleged offence committed before July 2017, Justice Bose said that “Section 17A does not distinguish between alleged commission of offence prior to 26.07.2018 or post thereof”.

He further said that “the point of time Section 17A of 1988 act would become applicable is the starting point of enquiry, inquiry, or investigation and not the time of commission of the alleged offence”. He then added that in the event any inquiry, enquiry, or investigation on the part of the prosecution is triggered post 26 July 2018, the mandate of Section 17A would be applicable.

“In absence of such previous approval, the action initiated under the 1988 act shall be held illegal,” he said.

He added that since the investigation in the case commenced in 2021, after Section 17A became operational, the mandate of Section 17A must be fulfilled. In other words, he said that Naidu cannot be proceeded against for offences under the Prevention of Corruption Act, 1988, as no previous approval of the appropriate authority has been obtained.

However, he also said that the concerned authorities can still seek approval under the provision.

Justice Bose further ruled that Section 17A would also apply in cases of provisions such as sections 13(1)(c) and 13(1)(d), which were substituted with a new provision by the 2018 amendment — the same amendment that inserted Section 17A.

Before their substitution, these sub-clauses further defined criminal misconduct by a public servant.

These provisions were invoked against Naidu in 2021 because they were in force at the time of the commission of the alleged acts of corruption. However, there was confusion over whether the new requirement for approval under Section 17A would apply to prosecution under these sub-clauses that were dropped with the 2018 amendment.

Justice Bose, however, refused to interfere with the remand order, noting that the special judge had the jurisdiction to pass such an order even if offences under the law could not be invoked at that stage. In other words, he held that lack of approval under Section 17A would not lead to the striking down of the remand order.

Justice Trivedi’s view

In comparison, Justice Trivedi ruled that Section 17A would only apply to the amended, or newly inserted offences under the law, and not to the offences that existed before the amendment. The intention of the legislature, she said, was to make Section 17A applicable only to the new offences as amended in 2018 and not to the offences that existed before that amendment.

Any other interpretation, she said, “may lead to an anomalous situation resulting in absurdity”.

She also looked at the object of Section 17A and said that it was added to the law “to protect the honest and innocent public servants from undergoing the harassment by the police for the recommendations made or decisions taken in discharge of official functions or duties”.

The purpose of the provision, she added, cannot be to give benefit to dishonest and corrupt public servants.

“If any enquiry or inquiry or investigation carried out by a police officer in respect of the offence committed by a public servant is held to be non est or infructuous by making Section 17A retrospectively or retroactively applicable, the same would not only frustrate the object of the PC Act but also would be counter-productive,” she observed.

For context, in Indian legal parlance, the Latin Maxim “non est” is taken to mean ‘does not exist’ or ‘can’t be found’.

Justice Trivedi also held that the special court was within its jurisdiction to pass the remand order.

The allegations

The case pertains to the alleged misappropriation of funds from the Andhra Pradesh State Skill Development Corporation (APSSDC), leading to a loss of over Rs 300 crore to the state government. According to court orders, Naidu’s government, through the APSSDC, collaborated with tech giant Siemens India to set up skill development centres.

A Memorandum of Agreement was signed between APSSDC and Siemens, with the understanding that the tech major and another company, Design Tech, would provide 90 percent of the funding, and the government would contribute the rest. Siemens was tasked with establishing six centres of excellence.

According to media reports, the prosecution has alleged that the TDP government released Rs 371 crore in a hurry within three months of the launch of the project without Siemens investing even a single rupee. Out of this amount, the prosecution alleged that Rs 241 crore was diverted to shell companies, which provided invoices without providing any services. These companies, it further said, were used to siphon the public funds running into crores of rupees.

The prosecution has alleged that Naidu influenced the government’s release of substantial cash amounts to specific private entities, facilitated through intermediaries. Subsequently, these entities allegedly transferred the received cash to Naidu, through various individuals, including Naidu’s former personal secretary, his close associate, and his son.

The prosecution had alleged that an analysis of cash deposits into the mentioned accounts revealed significant amounts deposited in the T.D.P. account. This, it said, aligned with the timeline of the alleged misappropriation of APSSDC funds and their diversion to various accused individuals.

In addition, the prosecution asserted that at the time, the finance secretary raised objections, emphasising that funds should only be released with necessary security in the form of bank guarantees, the prosecution had said. Despite objections, the chief secretary, with the CM’s endorsement, allegedly ordered the release of funds.

(Edited by Uttara Ramaswamy)