SC upholds the Vires of Bihar and Orissa Spl. Courts Act including provisions for Confiscation of Assets amassed by public servants [Read Judgment]

In a significant judgment rendered today, the Apex Court has upheld the constitutionality of two legislations passed by the states of Bihar and Odisha to tackle corruption in their respective states.

Called upon to decide the correctness of the judgments rendered by the High Court of Judicature of Orissa at Cuttack and the High Court of Judicature at Patna upholding the constitutional validity of the Orissa Special Courts Act, 2006 (for short, “the Orissa Act”) and the Bihar Special Courts Act, 2009 (for short, “the Bihar Act”), respectively, a Bench of the Apex Court comprising of Justice Anil R Dave and Justice Dipak Misra has held that the provisions in both the enactments providing for confiscation of property or money or both neither violates Article 14 nor Article 20(1) nor Article 21 of the Constitution, and that the establishment of Special Courts under the Orissa Act as well as the Bihar Act is not violative of Article 247 of the Constitution.

The Supreme Court however declared that Rule 12 of the Bihar Special Court Rules, 2010 which lays down that the learned Special Judge shall follow summary procedure, is ultra vires the Bihar Act as the statute provides for warrant procedure.

The appellants are/were public servants and facing criminal cases for various offences including the offences under the Prevention of Corruption Act, 1988 (for short, ‘the 1988 Act’), particularly Section 13(1)(e) of the 1988 Act on the allegation that they were having property disproportionate to their known sources of income. The grievance of appellants in these appeals related to the impact and effect of the legislations brought during the pendency of the proceedings.

The State legislature keeping in view the accumulation of extensive properties disproportionate to the known sources of income by persons who had held or are holding high political and public offices, thought it appropriate to provide special courts for speedy trial for certain class of offences and for confiscation of properties involved; and accordingly, enacted the Orissa Act which was passed by the Orissa Legislative Assembly that got the assent of the President of India. The State Government in exercise of its power conferred under Section 27 of the Orissa Act framed a set of Rules, namely, the Orissa Special Courts Rules, 2007 (for short “2007 Rules”).

The constitutional validity of the Act as well as the Rules (prior to the amendment of the Rule) was assailed before the High Court in a batch of writ petitions.

The High Court of Orissa referred to the decision in Kishore Chandra Patel v. State of Orissa, and observed that in the aforesaid judgment, the constitutional validity of Part III regarding confiscation of monies and properties of the accused persons, who were facing the criminal trial in the Special Court constituted under the Orissa Special Courts Act, 1990 by the State Government for speedy disposal, was held to be legal and valid and did not violate any of the fundamental rights and were not inconsistent with the statutory rights conferred either under the Code or the Criminal Law Amendment Act or Civil Procedure Code. The High Court also took note of the fact that the earlier Division Bench had issued certain directions and an ordinance was brought in to cure the flaws and the Court had ultimately found that the amended Act was constitutional. Keeping the same in view, the Division Bench by the impugned order opined that section 5 of the Act is constitutional.

After making reference to the authority in Delhi Administration v. V.C. Shukla , the Court opined that the attack based on discrimination was unfounded and accordingly answered the issues against the writ petitioners. While dealing with the question no. 3 which pertained to the repugnancy of the Orissa Act to the provisions of the Prevention of Money Laundering Act, 2002 as amended by Amendment Act 2009, it has been opined that there was no repugnancy between the two statutes, for the procedure under both the statutes relating to confiscation of monies and properties of the accused are different and further the Prevention of Money Laundering Act, 2002 does not efface the prosecution against the persons facing prosecutions under the 1988 Act.

With respect to the Bihar Act, it was contended before the Patna High Court that the declaration made under Section 5 which brings the case of the accused under the purview of the Bihar Act to be tried by the Special Judge, exposes him to the risk of confiscation of property which the accused does not face under the 1988 Act; that when there are sufficient provisions in the CrPC pertaining to disposal of property at conclusion of the trial under Section 452, there was no justification or warrant to introduce a provision for confiscation; that no guidelines have been provided by the legislature for working of Section 5(1) and 5(2) of the 2009 Act and it is completely unguided giving total discretion to the State Government to pick and choose any particular case; that Section 5(1) suffers from unreasonable classification because certain offences covered under the 1988 Act would be tried by the Special Judge under the 1988 Act and offence defined under the Bihar Act would be tried according to the procedure which is more rigorous; that the necessity of speedy trial by itself is too vague to withstand the test of reasonable classification; that there is no intelligible differentia which can sustain the classification and hence, it is hostile, discriminatory and contrary to the basic tenet of Article 14 of the Constitution; that there has been excessive and unguided delegation of power to the executive and, therefore, the manner of classification to be undertaken is contrary to the constitutional scheme.

Resisting the aforesaid submissions, it was urged on behalf of the State that the plea that accused persons would be exposed to harsher punishment relating to confiscation which is a greater penalty that was prescribed for the offence under the 1988 Act, is unsustainable inasmuch as the Act does not alter the punishment for the offence as provided under the 1988 Act and, in any case, the confiscation proceeding is an independent proceeding to be conducted by the authorized officer and it cannot be treated as a part of the criminal proceeding; that the procedure prescribed for adjudication of the issues relating to confiscation of properties does not suffer from any arbitrariness inasmuch as the confiscation including taking over possession of the confiscated property is independent and the plea that the findings recorded by the authorized officer in every likelihood to cause prejudice and bias during the trial, is absolutely unsustainable inasmuch as the statute itself provides the exclusion of consideration of the said material and the findings during the trial.

Adverting to the rival submissions, the High Court opined that the nature of property sought to be confiscated 24 under the Act is different and, therefore, the assail has no substance; that the provision in Section 13 of the Act and related provisions in Chapter–III cannot be faulted on account of ordinary principles of criminal jurisprudence that penalty or punishment must follow determination of guilt of the accused for confiscation, a pro tem one, is of a different nature; that the Act guarantees fairness to the accused by making the order of confiscation subject to an appeal before the High Court as well as subject to the final determination of guilt of the accused in the trial; that the general criticism that the procedure for confiscation invites the wrath of Article 14 of the Constitution does not deserve acceptance; and that the proceeding for confiscation is to be adjudicated by the Authorized Officer who has to be a Sessions Judge or Additional Sessions Judge and hence, there is fair and adequate protection provided for considering the case of the delinquent before passing an order of confiscation. Adverting to the likelihood of bias, the High Court opined that a trained judicial mind of a person holding post of Sessions Judge/Additional Sessions Judge is not expected to suffer from prejudice and the legislature has cautiously entrusted the confiscation proceeding to an “Authorized Officer” whereas the trial has been entrusted to the “Special Court”, and that is why the words i.e. “Authorized Officer” and “Special Court” have been separately defined and the distinction is evident and it is quite clear that confiscation proceeding and criminal trial against accused of an offence are not conducted by the same judicial officer; and, therefore, the likelihood of bias is not allowed to have any room.

It was also urged before the High Court that the confiscation proceedings as provided under the Act is impermissible because it leaves no option to the affected person but to disclose his defence prior to holding of the trial and such compulsion upon him to disclose true state of affairs in the confiscation proceeding frustrates the right guaranteed by the Article 20(3) of the Constitution. The High Court did not find any substance in the said submission and opined that grant of opportunity in confiscation proceeding to the delinquent official cannot be construed as compelling him to be a witness against himself. It also opined that considering the nature of the two proceedings, both could be maintained together or one after another, for the order of confiscation has been made subject to a final judgment in the trial by the Special Court.

The Patna High Court proceeded to dismiss the writ petitions.

Various arguments were advanced on behalf of the appellants who were aggrieved by the judgments of the Orissa and Patna High Courts, which can be summarized as under:

Repelling the first argument that the Orissa Act which was introduced as a money bill has no connection with the concept of money bill, the Supreme Court held that the present controversy is wholly covered by the pronouncement in Mohd. Saeed Siddiqui v. State of Uttar Pradesh and another wherein a three-Judge Bench while dealing with such a challenge, held that Article 212 precludes the courts from interfering with the presentation of a Bill for assent to the Governor on the ground of non-compliance with the procedure for passing Bills, or from otherwise questioning the Bills passed by the House, for proceedings inside the legislature cannot be called into question on the ground that they have not been carried on in accordance with the Rules of Business. Thereafter, the Court referring to Article 199(3) ruled that the decision of the Speaker of the Legislative Assembly that the Bill in question was a Money Bill is final and the said decision cannot be disputed nor can the procedure of the State Legislature be questioned by virtue of Article 212.

Dealing with the challenge on the ground of infringement of Article 247, the Apex Court said that the language employed in Article 247 does not take away the jurisdiction of the State legislature for constitution of courts. The purpose of Article 247, which commences with a non-obstante clause, is to confer power on the Parliament to create additional courts for the better administration of a particular Union law, but it cannot be said that the State cannot make laws for adjudication and administration of justice in respect of a parliamentary legislation more so, when initially power was conferred under Section 3 of the 1988 Act and assent has been accorded for establishment of Special Courts for adjudication of the offence. Section 3 of the 1988 Act empowers the State Government to constitute special courts and when a category of offence has been segregated and for the said purpose the Orissa Act has been enacted and assent has been taken, the power to constitute special courts cannot be found to be fallacious, the Court said.

The counsel for the appellants further contended that the State Government had not complied with the requisite procedure for obtaining the assent of the President as in the letter written by the State Government to the competent authority for obtaining assent only certain provisions of the Orissa Act were mentioned but there is no reference to other provisions and certain other legislations, which also cover the same field.

Meeting this contention, the Apex Court extracted the contents of the letter dated 28.10.2006 written by the competent authority of the State to the appropriate authority for obtaining assent, and referring to the same said that it is demonstrable that the State Government had sought assent of the President in respect of certain provisions of the 1988 Act, the Code of Criminal Procedure, 1973 and the Criminal Law Amendment Ordinance, 1944.

The Court while negativing the challenge mounted on the ground of repugnancy with the central statutes, held : “In the course of hearing, we have also found that the entire Bill was sent for the assent with the aforesaid forwarding letter and there has been correspondence thereafter. On a perusal of the communication and the finding recorded by the High Court and keeping in view the purpose of communication and taking note of the fact that the entire Bill was sent to the President for obtaining assent, it can safely be concluded 83 that the President was apprised of the reason when the assent was sought. The assent has been given in general terms so as to be effective for all purposes. It cannot be said that the general assent by the President was not obtained. Thus, we are of the considered opinion that the provisions of the Orissa Act are definitely not repugnant to the 1988 Act, the Code of Criminal Procedure, 1973 and the Criminal Law Amendment Ordinance, 1944.”

Next referring to the contention of the appellants that Section 5 of the Orissa Act confers uncanalised and unfettered discretion on the State Government to make a declaration as a consequence of which the delinquent officer will have to face the prosecution in the Special Court, and that no guidance has been provided and in the absence of any guidance, the exercise of power would be arbitrary and the State Government is at liberty to pick and choose any person as it desires, the Supreme Court preferred to save the provision by applying the doctrine of reading down, holding that there is no element of discretion and only prima facie satisfaction. The Court said that the State Government before making a declaration is only required to see whether the person as understood in the context of the provision is involved in an offence under Section 13(1)(e) of the Orissa Act and once that is seen, the concerned authority has no other option but to make a declaration. That is the command of the legislature and once the declaration is made, the prosecution has to be instituted in a Special Court and that is the mandate of Section 6(1) of the Orissa Act.

Next, dealing with the argument that the persons holding “high public or political office” are being put in a different class to face a trial in a different court under a different procedure facing different consequences, is arbitrary and further the provision suffers from serious vagueness, the Supreme Court said it was unable to accept the submission of the counsel for the appellants that the words “high public or political office” not being defined, creates a dent in the provision. The Apex Court said that the said words convey a category of public servants which is well understood and there is no room for arbitrariness.

Considering the next aspect of challenge pertaining to the classification made by the legislature in respect of the accused persons facing trial under Section 13(a) to (d) and the accused persons under Section 13(1)(e) of the Act on the ground that there is no intelligible differentia for making such a classification qua the offence, the Supreme Court held that the legislative policy behind establishment of Special Courts for trial of accused involved in the offence under Section 13(1)(e) of the 1988 Act in respect of certain categories of accused is absolutely impeccable and it is saved from the vice of Article 14 of the Constitution. The Court said : “The offences under Section 13(1) (a) to (d) in a broad way can be called incident specific or situation specific whereas the offence under Section 13(1)(e) is period specific and it is not incident specific. There can be different check periods.”

The bench further observed : “the holders of high post or high public office do definitely enjoy a distinguished position in contrast to other categories of officers or post holders. They form a separate class. The legislature, regard being had to the position the public servant holds, has put them in a different class. There is a manifest reason that sustains the said classification.”

Dealing with the contention of the appellants that corruption is an all India phenomenon and persons in other States are prosecuted under the 1988 Act, whereas in the State of Odisha, they are tried in a more rigorous manner and therefore the same brings in inequality which causes discomfort to Article 14 of the Constitution, the Supreme Court emphatically rejecting the said argument held that a legislation passed by one State legislature cannot be equated with the legislation passed by another State legislature. Nor can its validity be tested on that foundation.

“The State legislature has passed the Orissa Act having regard to the obtaining situation in the State as the objects and reasons of the said Act do reflect. The legislature in its wisdom has enacted the law. The persons who are functioning in certain other States may be required to face trial under the 1988 Act, but on that score there can be no violation of Article 14 of the Constitution. The scale suggested, cannot be the scale to judge.”

Rejecting the contention of the appellants that confiscation of property amounted to pre-trial punishment, the Supreme Court that confiscation contemplated was purely interim in nature, and therefore, it is not a punishment as envisaged in law, and therefore, Article 20(1) is not attracted. Proceeding on the same footing, the Supreme Court further held that the property of an accused facing trial under the 1988 Act could be attached and there can be administration by third party of the said property and eventual forfeiture after conviction.

The Supreme Court held : “An accused has no vested right as regards the interim measure. He is not protected by any constitutional right to advance the plea that he cannot be made liable to face confiscation proceedings of the property which has been accumulated by illegal means. That being the litmus test, the filament of reasoning has to rest in favour of confiscation and not against it. Therefore, we are of the considered view that the provision does not violate any constitutional assurance.”

Repelling the contention of the appellants based on Article 20(3) of the Constitution that when the concerned person/accused discloses his stand before the authorised officer serious prejudice is likely to be caused to him during trial as he is compelled to disclose his defence before trial though he is entitled in law not to do so, the Apex Court negativing the same held that there is a statutory protection that the material produced before the Authorised Officer shall not be used during trial and whatever is produced before the authorised officer is not to be looked into by the trial court and neither the prosecution nor the defence can refer to the same.

The Supreme Court however declared that Rule 12 of the Bihar Special Court Rules, 2010 which lays down that the learned Special Judge shall follow summary procedure, is ultra vires the Bihar Act as the statute provides for warrant procedure. The Apex Court held : “When the Bihar Act provides to follow the warrant procedure prescribed by the Code for trial of cases before a Magistrate, the 2010 Rules could not have prescribed for summary procedure. The rules have to be in accord with the Act. The rules can supplement the provisions of the Act but decidedly they cannot supplant the same. Therefore, we declare that part of Rule 12 which lays down that the learned Special Judge shall follow summary procedure, is ultra vires the Bihar Act.”

Read the Judgment here.