Misappropriation Of Funds Not 'Official Duty', No Sanction Required To Probe Chandrababu Naidu: Andhra Pradesh Govt Tells High Court

The Andhra Pradesh government today told the High Court that it does not need to obtain sanction to investigate former Chief Minister and Telugu Desam Party leader N Chandrababu Naidu in connection with the multi-crore Skill Development scam case.

Additional Advocate General P. Sudhakar Reddy, State counsels Mukul Rohatgi and Ranjit Kumar submitted that Naidu's actions were deliberate, calculated, and had caused huge loss to the State exchequer. They submitted certain emails to establish that government was well aware regarding cost inflation of the project, and yet proceeded with it in private partnership.

Rohatgi submitted that such actions of "fabricating records and misappropriating funds" cannot be termed as "official duty" within the meaning of Section 17-A Prevention of Corruption Act, which mandates prior sanction to investigate offences relatable to recommendations made or decision taken by public servant in discharge of official functions or duties.

“Argument on Section 17A is completely misconceived. Prima facie, 17A has no bearing. State exchequer has been misused. 17A on the face of it does not apply…Partaking in a scam, by which 370 crores have been deliberated in a calculated manner...this can never be in discharge of public duty… To put it crudely, if a ‘loot’ is made of government fund, it cannot be considered under public duty, just because it has been signed off by a civil servant.”

It was further submitted that inquiry in the case commenced prior to introduction of Section 17-A in July 2018 and hence also, no sanction was required. Reliance was placed on State of Rajasthan v. Tejmal Choudhary, where Top Court held that Section 17A PCA is not retrospective in nature.

Naidu was arrested on September 9 at Nandyal in Andhra Pradesh by the State police’s crime investigation department (CID). Rastogi argued that only 10 days have passed since and the investigation is at a nascent stage. Hence, he urged the Court not to scuttle with investigation. It was submitted that in M/s Neeharika Infrastructure Pvt. Ltd. vs. State of Maharashtra SC opined “when investigation by police is in progress, court shouldn't go into merits of allegations. Police must be permitted to complete investigation. It would be premature to pronounce conclusion based on hazy facts”

State also argued that Arnab Goswami case cited by the petitioner is not relevant to the case at hand since it relates to ‘free speech' of media.

State submitted that under the erstwhile Naidu government, the AP State Skill Development Corporation entered into a tripartite agreement with two private companies (Industry Software and Design Tech Systems) and even before setting up of skill centres, Rs. 300 crore were allegedly transferred. Subsequently, it is alleged, the said two private companies set up another company called Skillar, which sent the money to 6 shell companies. "Never does it happen that state gives money. Here it is dolled out right in the beginning...the manipulation was done solely under the leadership of Naidu, he has sanctioned the setting up of shell companies and transfer of funds," it was argued.

At this juncture, the Court inquired who identified these sub-contractors and what was Naidu's role in it.

State responded that the income tax notices issued to Naidu show the "modus operandi”. It went on to state that forensic audit was conducted which revealed that Design Tech had diverted funds of over 200 crores.

Here, Salve responded that that the project in question was successfully delivered and what Design Tech might have done to save taxes cannot be used to prosecute Naidu. "What State didn’t answer is, the 6 institutions have been set up and are running. If that is so, then the resources of the State have been utilised.”

After hearing the arguments, the Bench informed the counsels that Judgment will be pronounced in two days.

Previous report of the matter can be read here.

Live Updates of the matter can be read here.