Supreme Court Sets Aside Conviction & Dismissal From Service Of Retired Army Lt General In Alleged Ration Scam

The bench of Justices L Nagswara Rao and BR Gavai set aside the conviction and dismissal of service while considering a criminal appeal preferred by Union of India assailing order dated 10th October 2013 passed by Armed Forces Tribunal, Chandigarh Regional Bench at Chandimandir ("AFT") dated 10th October 2013.

In the impugned order, the AFT had reduced the sentence of three years rigorous imprisonment and cashiering imposed on the Lt. Gen. (Retd.) S.K. Sahni to dismissal from the service u/s Section 71(e) of the Armed Forces Tribunal Act, 2007 ("AFT Act").

The bench was also considering a transferred case preferred by Lt Gen SK Sahni which was originally before Punjab and Haryana High Court challenging the General Court Martial ("GCM") on February 18, 2011 had held Sahni guilty of first, third, fourth, fifth, seventh and ninth charges.

While dismissing Union's appeal and allowing officer's appeal,  the bench in Union of India & Ors v Lt Gen SK Sahni noted that the AFT had come to a finding that the officer had committed the offence under Section 52(e) of the Army Act which says "does any other thing with intent to defraud, or to cause wrongful gain to one person or wrongful loss to another person."

However, the Supreme Court wondered how the AFT could make an inference that the officer made attempts to cause wrongful gain when it had come to a specific finding that he had not committed any fraud or any act which resulted in actual loss or wrongful gain.

"We are afraid as to whether such a finding would be sustainable in law. The learned AFT has specifically come to a finding that the respondent has not committed any fraud or did not commit any act which resulted in actual loss or wrongful gain to any person. We are unable to appreciate as to on what basis the learned AFT comes to a conclusion that the acts lead to an inference that the attempts were made to cause a wrongful gain. The finding as recorded by the learned AFT is totally contrary to the material placed on record.

We, therefore, find that the orders passed by the learned AFT as well as the GCM are not sustainable in law. The appeal of the appellants deserves to be dismissed and the Transferred Case (Criminal) No. 1 of 2017 filed by the petitioner (respondent in Criminal Appeal No. 2169 of 2014) be allowed."

The bench directed that the retired Lieutenant General would be entitled to all pensionary and consequential benefits in accordance with law. Directions were also issued to compute and pay the arrears of such benefits to him within three months.

Factual Background

Lt Gen SK Sahni was commissioned in the Indian Army on 16th December 1967 and earned promotions and was promoted to the rank of Lieutenant General in May 2003. The respondent was thereafter appointed as Director General, Supplies and Transport ("DGST") with effect from 1st February 2005.

An anonymous complaint was received in the Directorate of Supplies and Transport ("Directorate") on 4th April 2005. On 8th April 2005, the complaint was forwarded and a request was made to the respondent to examine the complaint and forward his comments on the file on priority for perusal of the Directorate.

A Court of Inquiry was ordered against the respondent under the directions of General Officer Commanding­in­Chief, Western Command ("GOC­in­C"), to investigate into the following seven allegations.

One of the allegation was with regards to procurement of kabuli chana through a contract finalized during the relevant period by the Army Purchase Organization.

Although the Court of Inquiry only recommended for award of recordable censure against the respondent while recommending disciplinary action qua other officials under the Army Act, 1950 but the direction of Army Commander, respondent's name was included in the list for disciplinary action.

On retirement, the respondent preferred a writ before the Delhi High Court seeking for quashing and setting aside of the proceedings and recommendations of the Court of Inquiry in terms of order dated 26th May 2005 and order dated 18th July 2006 directing attachment of the respondent. The High Court of Delhi on January 11, 2007 allowed the writ petition.

The appellants however instead of granting opportunity to the respondent, issued a fresh notice and passed an order for attachment.

Aggrieved, the respondent approached the Delhi High Court. The case was transferred to AFT, New Delhi. The AFT while declaring appellant's order for attachment as illegal directed the appellants to resort to Court of Inquiry after giving opportunity to the respondent.

On September 22nd, 2009 the GOC­ in C directed reconvening/reassembling of the Court of Inquiry and on April 12, 2010 directed disciplinary action against the respondent based on the Court of Inquiry.

On July 30, 2010, a convening order directing assembly of GCM under Army Act was issued and GCM on February 18, 2011 found the respondent guilty of charges No. 1, 3, 4, 5, 7 and 9 and sentenced him to be cashiered and for Rigorous imprisonment for three years subject to confirmation.

The AFT had also opined that though the contracts were finalized by the Army Purchase Organization ("APO"), insofar as the provisioning of dry supplies for the troops was concerned, it found that both the APO as well as the Directorate, were concurrently and co­jointly responsible for the monitoring, examination and the progress of the contracts.

Against the order dated February 18, 2011 the respondent filed an appeal before AFT. AFT, while partly confirming GCM's order, modified the sentence of imprisonment to dismissal of service.

Submission Of Counsels

Appearing for the respondent, Advocate KK Tyagi while relying on the judgement in Ex. Lt. Gen. Avadhesh Prakash v. Union of India and Another submitted that since the Members of the GCM were below the rank of the respondent, the GCM was not properly constituted.

He further submitted that the findings as recorded by the GCM as well as AFT were recorded on the basis of conjectures and surmises and that in the GCM, the standard that is required to be followed is of a criminal trial. It was also argued that unless the charges against an officer were proved beyond reasonable doubt, he cannot be held guilty in GCM and that is like a criminal trial, the benefit of doubt must go to the officer and not to the prosecution.

Appearing for the Union, Senior Advocate Balasubramanian submitted that merely because the GCM consisted of the officers below the rank of Lieutenant General itself, would not ipso facto vitiate the proceedings. He submitted that the only requirement is that such an opinion is required to be recorded in the convening order.

It was also his submission that AFT had concurred with the findings of the GCM that the charges against the respondent stood proved, there was no occasion for the learned AFT to have interfered with the penalty imposed on the respondent.

Supreme Court's Analysis

The bench in the judgement authored by Justice BR Gavai with regards to the contention that GCM was not properly constituted said,

"On perusal of the original file, we find that the convening officer has recorded reasons as to why the officers of the rank of respondent were not available. We find that the reasons given, for doing the same, would fall within the exigencies of the public service. The scope of judicial review of such a decision is very limited. Unless it is found that the decision taken by the authority suffers from arbitrariness, irrationality or unreasonableness, it would not be permissible for us to sit in an appeal over the decision of the convening officer. The limited inquiry that would be permissible is, as to whether the reasons recorded are having regard to the exigencies of the public service or not. On perusal of the original file, we find that the reasons given are directly concerned with the exigencies of the public service. We therefore do not find any merit in the said submission."

The bench then proceeded to examine the three transactions based on which 9 charges were framed against the respondent.

With regards to transaction wherein respondent had agreed to the proposal of M/s Gujarat Co­operative Grain Growers Federation Limited for addition of two more tendering stations at Gadarwara, District Narsingpur, Madhya Pradesh and Narsingpur in Madhya Pradesh, the bench to adjudicate referred to the judgement in Brig P.S. Gill v. Union of India and Others.

Terming the same as "unsustainable" the bench said,

"It could thus be seen that the very same AFT has come to a finding that the CDP, APO was within the powers to include additional tendering stations. It has further been found that there was no objection to acceptance of such tendering stations from Audit Authorities or by CDP, APO. It is further to be observed that the learned AFT has clearly noted that the Consolidated Order No. 3 of 1987 permitted inclusion of additional tendering station subject to the condition that the additional expenditure incurred by the purchaser/savings accrued to the supplier, on account of this addition of tendering station, shall be reimbursed by the Supplier to the Government. There was a specific finding that on account of addition of two tendering stations, neither any monetary benefits could be accrued to the petitioner therein (Brig P.S. Gill), nor there was any extra expenditure borne out by the Army owing to acceptance of two new stations by the petitioner therein (Brig P.S. Gill). In any case, it is clear from the said order that the authority to accept such additional tendering stations was with the CDP, APO."

On the 2nd charge wherein the respondent failed to take action based on anonymous complaint, bench said,

"It could thus be seen that the Court of Inquiry was directed to examine all associated issues and pin point responsibility for lapses, if any. It is thus clear that the finding that the respondent had failed to take cognizance of the complaint and direct an inquiry with that regard, is contrary to the material placed on record."

For the 3rd charge wherein relaxation was granted to M/s PUNSUP Limited and M/s MMTC Limited in acceptance of tender dated 26th June 2005, vide which 350­- 400 grains per 100 grams of Kabli Chana was permitted on price reduction of 0.5% instead of 300­- 350 grains per 100 grams, the bench said,

"It is not the case of the appellants that the Kabli Chana so supplied was of inferior quality or not as per the standards. The only allegation is that the relaxation which was granted was with regard to number of grains that every 100 grams should contain. On the contrary, on account of reduction in price, there has been a substantial saving to the public exchequer, leave aside any pecuniary gain to the supplier. As a matter of fact, even the GCM in paragraph (26) held that the respondent was entitled to benefit of doubt with regard to his intent but has found that the said act was prejudicial to good order and military discipline."

Thus while considering the observation by AFT wherein it was held that it cannot be said that the respondent has actually committed fraud or did any such act, which resulted in actual loss or wrongful gain to any person, the bench said that the orders passed by GCM and AFT are not sustainable in law.

Case Title: Union of India & Ors v Lt Gen SK Sahni| Criminal Appeal 2169 of 2014

Citation : 2022 LiveLaw (SC) 310