REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS. 1258-1259 OF 2018

HIMACHAL  PRADESH  CRICKET ASSOCIATION & ANR. .....APPELLANT(S)

VERSUS

STATE OF HIMACHAL PRADESH & ORS. .....RESPONDENT(S)

W I T H

WRIT PETITION (CRIMINAL) NO. 135 OF 2017

J U D G M E N T

A.K. SIKRI, J.

Two FIRs are the subject matter of these appeals.  One FIR

No. 12 of 2013 dated August 01, 2013 is under Sections 406, 420,

120B of the Indian Penal Code, 1860 (IPC) and Section 13(2) of the

Prevention of  Corruption Act,  1988 (PC Act)  has been registered

against  the  appellants  herein  as  well  as  some  other  persons.

Second FIR No.14 of 2013 dated October 03, 2013 is under Section

447 read with Section 120B of the IPC, Section 3 of Prevention of

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Damage to Public Property Act, 1984 and Section 13(2) of the PC

Act.   The appellants filed petitions under Section 482 of the Code of

Criminal  Procedure,  1973  (Cr.P.C.)  before  the  High  Court  of

Himachal Pradesh for quashing of the said FIRs.  These petitions

have been dismissed  by  the  High  Court  vide  common judgment

dated April  25,  2014.   That  judgment  is  impugned in  the  instant

appeals.   When the  Special  Leave Petitions (out  of  which  these

appeals arise) were filed, notice thereof was issued on January 5,

2015 and stay of further proceedings was also granted in the case

arising out of the said FIRs which are pending before the Special

Judge,  Kangra,  Dharamshala,  Himachal  Pradesh.   That  stay has

been extended from time to time and is, therefore, continuing.

2) During  the  pendency  of  these  proceedings,  investigation  was

completed.   On  the  day  judgment  was  pronounced  by  the  High

Court, the chargesheets were filed in the Court of Special Judge.

After the filing of the said chargesheets, the appellants have also

filed Writ Petition (Criminal) No. 135 of 2017 in this Court seeking

quashing  of  these  chargesheets.   Both  these  proceedings  were

clubbed and heard together which we propose to dispose of by this

common judgment.

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3) Appellant No. 1 is a Cricket Association of Himachal Pradesh which

was initially registered as a Society under the Societies Registration

Act,  1860 vide Registration Certificate dated June 08, 1990.  On

September  15,  2001,  appellant  No.  1  made  an  application  for

allotment of land to develop and construct the world class cricket

stadium  and  consequently,  the  Commissioner-cum-Secretary

(Education) granted permission for transfer of land to the Himachal

Pradesh  Youth  Services  and  Sports  Department  with  certain

conditions.   A  lease  deed  dated  July  29,  2002  was  executed

between  appellant  No.1  and  respondent  No.  1  through  Director,

Himachal Pradesh Youth Services and Sports Department for  the

said land at Village Mouja and Tehsil Dharamshala, District Kangra

for construction of an international cricket stadium which was duly

constructed.  On July 14, 2005, a not for profit company in the name

of  Himalayan Players Cricket  Association was incorporated under

Section 25 of the Companies Act, 1956.  Name of this company was

changed to  Himachal  Pradesh Cricket  Association on August  31,

2005.   

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4) Purusant  to  a  proposal  to  host  international  cricket  matches  at

Dharamshala, the International Cricket Council inspected the cricket

infrastructure being developed at Dharmashala by appellant No. 1

and, inter alia, observed that the quality of accommodation left much

to  be  desired.   Need  for  some  more  facilities  and  hotel

accommodation of desired quality was specifically stressed.   

5) Having regard to this report, the appellants decided to construct a

club house on the leased land.  There was also a parcel of idle land

in the middle of the land allotted for the stadium.  Appellant No.1

towards this end made a request to the Director, Youth Services and

Sports  for  allotment  of  additional  land  adjacent  to  the  stadium

admeasuring 720 square metres, vide its letter dated July 03, 2008.

Since  it  was  Gram  Panchayat  land,  consent  thereof  was  also

needed for its allotment to the appellant No.1.  Appellant No.1, thus,

approached the Gram Panchayat.  Pursuant to meetings between

the office bearers of appellant No. 1 and Gram Panchayat, members

of Uparali Dhari Development Division, Dharamshala, the said Gram

Panchayat issued no objection for allotment of the land.  Proposal of

appellant No. 1 for allotment of additional land was mooted with the

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authorities as well.  Respondent No. 1 vide letter dated November

16, 2009 took up the matter with the ACS-cum-FC Revenue to the

Government  of  Himachal  Pradesh  for  approval  to  lease  out

government  land  in  Mohal  Kand  Mauja  Khanyara,  Tehsil

Dharamshala,  District  Kangra,  measuring  in  3-28-06  hectare  in

favour of appellant No. 1.  Respondent No. 1 granted approval to

lease out the aforesaid land in favour of appellant No. 1 vide letter

dated November 16,  2009 which was conveyed vide letter  dated

November 18, 2009.  As a result, lease deed was executed between

appellant  No. 1 and respondent No. 1 for  lease of  the said land

situated at Mohal Kand Mauza Khanyara, Tehsil Dharmashala.   

6) Club  house  was  constructed  at  the  stadium  premises  at

Dharamshala  under  the  name  and  style  of  “Aveda  HPCA Club

House”.  Completion Certificate was issued on March 10, 2011 and

was certified complete in all  aspects as per approved plan of the

Executive Officer, Municipal Council, Dharamshala.  The Town and

Country  Planning  Department,  Dharamshala  also  issued  no

objection certificate  dated March 15,  2011 for  use of  part  of  the

infrastructure of cricket stadium as club house for cricket activities.

Respondent  No.  1  also  approved  the  tariff  for  availing  the

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accommodation  facilities  of  the  club  house  vide  its  letter  dated

September 08, 2011.   

7) The Board of Control for Cricket in India (BCCI) granted permission

to the Himachal Pradesh Cricket Association to convert itself from a

"not for profit" society to a "not for profit" company during its annual

general meeting held on September 19, 2011.  A majority of cricket

associations  throughout  the  country  have  been  converting

themselves from a not for profit society to a not for profit company

registered under the Companies Act, 1956 in order to ensure better

and transparent management of their affairs.   

Realising that unless world class accomodation was available

for  the teams playing at  the stadium and the officials  concerned

accompanying  such  teams,  the  venue  at  Dharamshala  that  was

being painstakingly developed by the appellant No. 1 from its own

funds would be grossly underutilised and the State would lose out in

hosting cricket matches, appellant No. 1 and its office bearers began

working  out  a  method to  construct  a  world  class  motel  for  such

purposes.

Appellant  No.  1  realized  that  if  the  use  of  the  same  was

restricted only to usage during match days for use of  teams and

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their officials, the same would not be commercially viable.  As the

terms of the lease may not be technically wide enough to cover this

allied infrastructure being developed for the game of cricket, vide its

letter  dated  December  24,  2011,  appellant  No.  1  wrote  to  the

respondent to request it  to permit commercial activity on the said

land  on  even  non  match  days  and  amend  the  lease  terms

accordingly.   The  above  letter  was  forwarded  by  the  District

Magistrate  to  the  Principal  Secretary  (Revenue),  Government  of

Himachal  Pradesh  and  the  Principal  Secretary  (Revenue),

Government of Himachal Pradesh issued no objection for execution

of  a  supplementary  lease  enabling  commercial  activity  on  the

additional land at Kandi provided that the lease money was charged

in accordance with the Lease Rules, 2011.  A supplementary lease

deed was executed between the appellant  No.1 and the State of

Himachal Pradesh enabling use of the additional land commercially.

Necessary  permissions  for  development  on  the  said  land  were

obtained  including  for  commercial  hotel.   The  hotel  constructed

under the name and style of “The Pavilion” obtained registration with

the Tourism Department of the State and Tariffs, etc. were also fixed

by the said Department on September 26, 2012.  In the meantime,

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on September 22, 2012 resolution was passed by the appellant No.

1  company to  take  over  the  assets  and  liabilities  of  the  society.

Agreement dated October 01, 2012 was also executed between the

Himachal Pradesh Cricket Association (the society) and  Himachal

Pradesh Cricket Association (the Company) to enable the Society to

convert  itself  into  a  Company.   Accordingly,  the  Society  was

converted  into  a  Company  and  the  Himachal  Pradesh  Cricket

Association  stood  converted  from  a  society  to  a  not  for  profit

company  registered  under  the  Companies  Act,  1956  and  the

Registrar of Companies was informed of the same in due course.   

8) Within a couple of months, from the aforesaid developments, there

was a change of political executive in the State of Himachal Pradesh

pursuant to the elections of legislative assembly.  According to the

appellants,  with  the  change  of  political  power,  tirade  against  the

appellants started by the new Government.  In fact, even during the

election  campaign,  the  Congress  (I)  had  published  a  ‘Congress

Chargesheet’ wherein serious allegations were levelled against the

appellants.   The  appellants  department  sprung  into  action  and

started seeking information from the appellants on various aspects,

though  this  information  was  already  available  with  the  State

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Government.  A formal FIR No. 12 of 2013 dated August 01, 2013

was registered which, according to the appellants, is the result of the

said  ‘Congress  Chargesheet’.   In  fact,  some time  before  that,  a

complaint  under  Section  156(3)  Cr.P.C.  was  made by  one  Vinay

Sharma  against  appellant  No.  1  and  its  office  bearers  in  which

orders were passed by Special  Judge,  Kangra on July  02,  2013

directing  the  police  authorities  to  investigate  the  said  case  and

submit the report to it.  Thus, two parallel proceedings were started.  

9) Further  allegation  of  the  appellants  is  that  investigation  was

personally monitored by respondent No. 2 herein who was the Chief

Minister at that time.  He had also made various public statements

from time to time that he was interested in taking over the entire

function of the Cricket Association and its assets.  According to the

appellants, at the behest of respondent No. 2, even the Registrar of

Societies,  Himachal  Pradesh  issued  notice  dated  September  7,

2013 on the issue of formation of company under Section 25 of the

Companies  Act,  1956 and  taking  over  the  assets  of  the  society.

Against this notice, Writ Petition No. 7593 of 2013 was filed wherein

the  High  Court  passed  the  orders  keeping  in  abeyance  the

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allegations  raised  in  the  notice  dated  September  7,  2013 of  the

Registrar of Societies.   

10) Another FIR No. 14 of 2013 dated October 03, 2013 came to be

registered against the appellants and others alleging commission of

offences  under  Section  447  read  with  Section  120B of  the  IPC,

Section 3 of the Prevention of Damage to Public Property Act, 1984

and Section 13(2) of the PC Act.  Many other actions were taken by

the respondents, which according to the appellants, were mala fide

moves, reference whereto shall be made at the appropriate stage.

At this juncture, the appellants filed petition under Section 482 of

Cr.P.C.  on January 06,  2014 seeking quashing of  FIR No.  12 of

2013 which stands dismissed vide impugned judgment dated April

25, 2014.

11) The High Court in the impugned judgment has taken note of catena

of judgments of this Court pertaining to powers of the High Court

within  the  scope  of  Section  482  of  Cr.P.C.   Thereafter,  it  has

observed  that  after  lodging  of  the  FIR,  investigation  has  been

conducted and the material collected during investigation discloses

that 18 persons made accused in the aforesaid FIR are prima facie

involved  in  the  commission  of  offences.   On  this  ground,  it  has

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brushed aside the argument of the appellants that it was a case of

vengeance, political vendeta and  mala fide.  The High Court  has

also observed that allegations of mala fide based on the facts after

lodging of the FIR are of no consequence and cannot be the basis

for quashing the proceedings.  For this purpose, it has referred to

the judgment of this Court in State of Bihar & Anr. v. P.P. Sharma

& Anr.1.  It has also observed that even otherwise, the file does not

disclose at this stage how it is the case of mala fide.  In the opinion

of the High Court, in such circumstances, merits of the case is to be

tested during trial inasmuch as FIR and Final Report of Investigating

Agency discloses that case for trial is made out.  As the power under

Section 482 Cr.P.C. is to be exercised carefully, cautiously and in

rarest of rare cases, keeping in mind the law laid down by this Court,

the High Court refused to quash the proceedings.  We may also

record here that one of the submissions of the appellants before the

High  Court  was  that  appellant  No.  2  and  other  persons  are  not

public servants and, therefore,  provisions of PC Act could not be

invoked against them.  This argument has also been found to be

unmerited on the ground that some of the accused persons arrayed

with the appellants are public servants and also that allegation in the 1 1992 Supp (1) SCC 222  

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FIR  is  that  all  these  accused  persons  has  the  conspiracy  and

wrongful gain to themselves and wrongful loss to the State, in the

process, the officials misused their position to show favour to other

accused persons.

12) Mr. Patwalia, learned senior counsel appearing for the appellants, at

the  outset,  drew the  attention  of  this  Court  to  the  fact  that  M/s.

Subhash Ahluwalia,  Subhash Negi,  Ajay  Sharma,  Deepak Sanan

and T.G. Negi, who are the IAS Officers, were associated with the

grant of three leases.  They were the main persons who took active

part  in  deciding  that  the  three  leases  should  be  granted  to  the

appellants and on that basis, final decision was taken.  However, as

far as these Officers are concerned, prosecution sanction has either

been denied or they have not been prosecuted at all.  Likewise, Mr.

Gopal  Chand,  who  belongs  to  Himachal  Pradesh  Administrative

Service, was arrayed as one of the accused person, but in his case

also,  the sanction though given earlier  stood withdrawn.  He has

even been promoted to IAS cader.  Mr. Patwalia submitted in tabular

form  status  of  Officers  who  have  allegedly  conspired  with  the

appellants, which is as under:

Sl. Name of Officer Post  at  the  time  of Role as per FIR Sanction

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No. alleged offence

FIR No. 12 of 2013 dated 01.08.2013 under Sections 406/420/120B IPC and Section 13(2), Prevention of Corruption Act

1 Subhash Ahluwalia

IAS,  Director-cum- Special  Secretary, Youth  Services  and Sports  Department, Government  of Himachal Pradesh.

Sh. Subhash Ahluwalia, at the time of grant of lease of  the  Government  Land to  HPCA  for  the construction  of  Cricket Stadium  had  ignored  the rules  and  had  not mentioned  the  provisions of  Lease  Rules,  1993  in his  noting.   Further,  Sh. Subhash Ahluwalia was a signatory  to  the  Lease Deed dated 29.07.2002.

Not Charged

(Not  enough evidence  of malafide intention).

2 Subhash Negi IAS,  Secretary, Youth  Services  and Sports  Department, Government  of Himachal Pradesh

Sh. Subhash Negi,  at  the time  of  grant  of  lease  of the  Government  Land  to HPCA for the construction of  Cricket  Stadium  had ignored the rules and had not  mentioned  the provisions of Lease Rules 1993 in his noting.

Not Charged

(Not  enough evidence  of malafide intention).

3 T.G. Negi IAS,  Principal Secretary,  Youth Services and Sports Department, Government  of Himachal Pradesh.

Sh.  T.G.  Negi  made  no efforts to reject the notings of  accused  Sh.  Ajay Sharma  and  instead forwarded  the  same  for approval  of  the  Chief Minister.

Not Charged

(Not  enough evidence  of malafide intention).

4 Ajay Sharma IAS,  Director-cum- Special  Secretary, Youth  Services  and Sports  Department, Government  of Himachal Pradesh.

In  2008,  then  Chief Minister  P.K.  Dhumal marked the application of HPCA  for  permission  of construction  of  Club House and its commercial use  to  Sh.  Ajay  Sharma

Prosecution sanction declined  by Central Government on

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and asked him to prepare the proposal for the same. Sh.  Ajay  Sharma,  by abusing  his  official position  proposed  for permission  to  the  HPCA with  the  approval  of  the Chief  Minister.   The  land was  leased  only  for construction  of  cricket stadium  and  not  club house.  Sh. Ajay Sharma, by  abusing  his  office  in criminal  conspiracy  with HPCA,  contrary  to  the terms  and  conditions  of the  lease  deed  has provided undue benefit  to the HPCA  and loss to the State Government.

25.08.2015.

Prosecution sanction withdrawn by the  State Government on 09.04.2018.

5 Deepak Sanan IAS,  Principal Secretary-cum- Financial Commissioner, Revenue Department, Government  of Himachal Pradesh.

Sh. Deepak Sanan issued NOC  for  the  commercial use  of  Government  land which  was  leased  to HPCA for the construction of  Hotel  Pavilion  by reversing  the  earlier decision  of  Council  of Minister.   Sh.  Deepak Sanan  also  notified  the Lease Rules, 2011, on the basis  of  which supplementary  lease  was executed,  in  accordance with Rule 9.

Prosecution sanction declined  by Central Government on 25.08.2015.

Prosecution sanction withdrawn by the  State Government on 09.04.2018.

6 Gopal Chand HPAS,  Additional Secretary,  Revenue Department, Government  of Himachal Pradesh

Sh.  Gopal  Chand  had recommended  for  the commercial  use  of  land leased to HPCA in Mohal Kand and marked the file to  Sh.  Deepak  Sanan, whereas  under  Schedule

Prosecution sanction granted  on 03.04.2014 withdrawn by the  State Government

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20 of the Business Rules, he  could  have recommended  the  matter to be taken to the Cabinet.

on 03.08.2016.

Promoted  to IAS.

FIR No. 14 of 2013 dated 03.10.2013 under Sections 447/120B IPC, Section 3  of the Prevention of Damage to Public Property  Act, 1984 and Section 13(2) of the

Prevention of Corruption Act

7 K.K. Pant IAS,  Deputy Commissioner, Kangra,  Himachal Pradesh

On  14.03.2008,  Sh.  K.K. Pant  chaired  a  meeting with  other  accused, without  following  due procedure  and  without having  any  statutory power  for  doing  so,  for reallocation  of  Type  IV, UGC  accommodation  in the  possession  of  the Education  Department and  the  presumptions drawn in the meeting were made with the intention to give  undue  advantage  to HPCA.   Sh.  K.K.  Pant overlooked  the  report regarding  condition  of building.

Prosecution sanction declined  by Central Government on 27.03.2015.

8 P.C. Dhiman IAS,  Principal Secretary, Education Department, Government  of Himachal Pradesh

Sh.  P.C.  Dhiman  issued NOC to the Department of Youth  Services  and Sports,  contrary  to  the recommendations/ conditions of the Director, Higher  Education,  and without  mentioning  the disposal  of  building  in accordance  with rules/norms  and  recovery costs from HPCA.   

Prosecution sanction declined  by Central Government on 24.08.2015.

9 Devi  Chand Executive  Engineer, Devi  Chand  Chauhan, Prosecution

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Chauhan Dharamshala Division, HPPWD

while  working  as Executive Engineer (Civil), Dharamshala,  HPPWD Division  forwarded  the report  sent  by  the  then SDO  Sub-Division  No.  1, Dharamshala,  regarding dilapidated  condition  of Type IV accommodations, without  following procedure as laid down by the  Government  of  India, Central  Public  Works Department  Code,  whihc led  two  illegal  demolition of  two  storied  building (Type IV accommodation) of  the  Education Department  existing adjacent  to  the  present Cricket  Stadium  gate, which was an eyesore to the HPCA and alleged to be a security threat to the players.  Thus, the motive of the Executive Engineer was  to  intentionally  give an  advantage  to  HPCA thereby  misusing  his official position.

sanction declined  by Department Secretary but recommende d by the then Chief Minister  Sh. Virbhadra Singh. Hence, prosecution sanction granted  on 23.09.2014 and 15.10.2014 (FIR  No. 14/13  dated 03.10.2013)

13) Thus,  the  Government  Officers  who  have  granted  lease  are  not

been prosecuted.  He, thus, submitted that the main Government

functionaries were left out which shows that the Government wanted

to  protect  its  own  Officers  but,  at  the  same  time,  roped  in  the

appellants and others because of political enmity.   

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14) Dilating on the aforesaid plea, namely, the entire prosecution is due

to political vendetta, without any legal basis, Mr. Patwalia submitted

that the genesis of the prosecution starts with the failed attempt by

the then State Government to take over appellant No. 1 in the year

2005  under  the  provisions  of  the  HP  Sports  (Registration,

Recognition and Regulation of Associations) Act,  2005 due to the

interim protection granted by the Himachal Pradesh High Court on

May 18, 2005.  This Act was subsequently repealed.  According to

him, in view of the repeated interference by State Governments in

the  internal  affairs  of  autonomous cricket  associations,  the  BCCI

has informally encouraged such member associations to re-register

themselves as not for profit charitable Section 25 Companies under

the Companies Act, 1956, as amended, for better legal compliances,

transparency and to avoid interference in internal affairs by State

Governments.   Accordingly,  various  member  associations  of  the

BCCI  have  converted  themselves  to  Section  25  not  for  profit

charitable companies governed by the provisions of the Companies

Act,  1956.   Appellant  No.  1 also followed the suit  as  a  result  of

aforesaid  mandate  of  the  BCCI.   Accordingly,  a  not  for  profit

company in the name of Himalayan Players Cricket Association was

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incorporated under  Section 25 of  the Companies Act,  1956.   On

August 31,  2005, the said Company was permitted to change its

name to Himachal Pradesh Cricket Association and was issued a

fresh certificate of incorporation.  During this process, the HP Sports

(Registration, Recognition and Regulation of Associations) Act, 2005

stood repealed and no further steps were taken in the interregnum

to  convert  the  society  to  a  section  25  company.   Thereafter,  on

September  19,  2011,  the  BCCI  took  up  the  pending  request  of

appellant No. 1 to permit it to convert itself to a Section 25 not for

profit company and granted the same.  Pursuant to the permission

by the BCCI, amendments were carried out by the members at the

AGM of the appellant No. 1 on September 22, 2012 resolving to

convert  the  appellant  No.  1  society  to  a  Section  25  Company.

Accordingly,  an  agreement  was  executed  on  October  01,  2012

converting the society to a Section 25 Company and informing the

Registrar  of  Companies  of  the  same.   On  October  31,  2012,

appellant No. 1 now registered as a Section 25 Company under the

Companies  Act,  1956  informed  the  Registrar  of  Societies  of  the

State of Himachal Pradesh of the change in the memorandum and

rules of the appellants.  Further, on November 02, 2012, once again

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 18 of 53

the intimation regarding change in status of appellant No. 1 from a

not for profit  society to a not for profit  company was given to the

Registrar  of  Societies,  State  of  Himachal  Pradesh.   Thus,  from

October 01, 2012, appellant No. 1 has been existing as a Company

with  due  intimation  to  the  State  of  Himachal  Pradesh  paying  its

lease rent and taxes in accordance with law.  He also argued that

the effect of such statutory conversion from a firm to a company by

statutory provisions for income tax purposes has been considered

by the Bombay High Court in the case of Commissioner of Income

Tax,  Mumbai  v.  Texspin Engg.  and Mfg.  Works,  Mumbai2 and

Punjab  & Haryana High Court  in  the case of  Commissioner  of

Income Tax (Central), Ludhiana v. M/s. Rita Mechanical Works,

Ludhiana3 wherein it has been held as under:

"There is a difference between vesting of the property, in this case, in the limited company and distribution of the property. On vesting in the limited company under Part IX of the Companies Act, the properties vest in the company as they exist. ...

“In  the  present  case,  we  are  concerned  with  a partnership  firm  being  treated  as  a  company  under  the statutory provisions of  Part  IX of  the Companies Act.  In such cases, the company succeeds the firm. Generally, in the  case of  a  transfer  of  a  capital  asset,  two important ingredients are: existence of a party and a counter-party

2 (2003) 263 ITR 345

3 (2012) 344 ITR 544

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 19 of 53

and, secondly, incoming consideration qua the transferor. In our view, when a firm is treated as a company, the said two conditions are not attracted. There is no conveyance of  the  property  executable  in  favour  of  the  limited company. It is no doubt true that all properties of the firm vest in the limited company on the firm being treated as a company  under  Part  IX  of  the  Companies  Act,  but  that vesting is not consequent or incidental to a transfer. It is a statutory vesting of properties in the company as the firm is treated as a limited company. On the vesting of all the properties statutorily in the company, the cloak given to the firm is replaced by a different cloak and the same firm is now treated as a company, after a given date. ..."

15) On  the  aforesaid  basis,  submission  of  Mr.  Patwalia  was  that

conversion of  a not for  profit  society to a not  for  profit  charitable

company which is expressly permitted by law cannot be construed

as a crime.  The assets - in the present case leased land remain as

they are.   In  fact,  the appellants have constructed a  world class

stadium  and  a  world  class  hotel  on  the  leased  premises.

Importantly, the State Government continues to remain the owner of

the land and has the power under the leases to cancel the same for

violation of terms and conditions of the lease.

16) It was highlighted by him that on the midnight of October 26, 2013,

the  State  Government  had  cancelled  the  leases  and  forcibly

dispossessed the appellants from the leased lands.  However, on

November 05, 2013, the Himachal Pradesh High Court strictured the

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 20 of 53

State Government and ordered status quo ante and handed over

the possession of  the leased lands to the appellants.   The State

Government  thereafter  accepted  this  order  and  withdrew  the

cancellation of lease notices on November 19, 2013.  Subsequently,

another notice dated May 23, 2015 was issued seeking cancellation

of the leases which too stands withdrawn on August 09, 2018.  At

present,  there are no proceedings pending for cancellation of the

leases.

17) Mr. Patwalia argued that there were specific allegations of mala fide

against  respondent  No.  2  from  the  very  inception  of  these

proceedings about how he first caused the FIR to be registered and

thereafter interfered in the investigations, by being head of the SIT.

He also further  stated that  the conduct  of  respondent  No.2 from

opposing the present appeals after having filed a counter affidavit in

the present matter stating that he was not a necessary party and it

was not his job to defend the prosecution, depicts mala fides on his

part.   This,  according to him, was sufficient  to quash the FIR as

investigation was tainted.   In  support,  he referred to the case of

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 21 of 53

Union of India & Ors. v. Sushil Kumar Modi & Ors.4 wherein this

Court held as under:

"4.  ...The  agencies  concerned  must  bear  in  mind  and,  if needed,  be  reminded  of  the  caution  administered  by  Lord Denning  in  this  behalf  in  R.  v.  Metropolitan  Police  Commr. [(1968) 1 All ER 763 : (1968) 2 WLR 893 : (1968) 2 QB 118] Indicating  the  duty  of  the  Commissioner  of  Police,  Lord Denning stated thus: (All ER p. 769)

"I  have  no  hesitation,  however,  in  holding  that,  like  every constable in the land, he should be, and is, independent of the executive. He is not subject to the orders of the Secretary of State,  ….  I  hold  it  to  be  the  duty  of  the  Commissioner  of Police, as it is of every chief constable,  to enforce the law of the land. He must take steps so to post his men that crimes may be detected; and that honest citizens may go about their affairs  in  peace.  He must  decide whether  or  not  suspected persons  are  to  be  prosecuted;  and,  if  need  be,  bring  the prosecution or see that it is brought; but in all these things he is not the servant of anyone, save of the law itself. No Minister of  the Crown can tell  him that  he must,  or  must  not,  keep observation on this place or that; or that he must, or must not, prosecute this man or that one. Nor can any police authority tell him so. The responsibility for law enforcement lies on him. He is answerable to the law and to the law alone.”

...There  can  hardly  be  any  doubt  that  the  obligation  of  the police in our constitutional scheme is no less."

 18) Mr. Patwalia referred to various documents placed on record and

contended  that  they  would  ex  facie show  that  administrative

decisions were taken at various levels and by variou departments by

the  concerned  officers  prior  to  sanction  of  leases  in  favour  of

appellant  No.1.  Therefore, no wrong, much less culpable wrong,

4 (1997) 4 SCC 770

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 22 of 53

was  committed  by  the  appellants  and  others.   He  specifically

referred to the allegation that there is no provision of grant of lease

at a token rate of Re.1/- per month under the applicable lease rules.

His response was that this argument is completely fallacious.  The

leases of the appellants were granted under the H.P. Lease Rules,

1993.  The appellants wanted to set up a cricket stadium with allied

world class infrastructure to enable the ICC to grant international

games to Himachal  Pradesh and,  thus,  were eligible for  grant  of

lease  under  Rule  4(vii)  -  public  purpose  in  the  interest  of  the

development  of  the  State.   The  appellants  were  also  eligible  for

grant  of  larger  areas  under  Rule  5  in  terms  of  the  exemption

provided therein.  In fact, the decision to lease the land at token rate

of Re.1/- per month for construction of cricket stadium was a well

thought out administrative decision by the State Government in the

interest  of  the State and has admittedly put  Dharamshala on the

world  map.   This  decision  was taken  by  the  State  Cabinet  after

considering the advice and presentation from the officers concerned.

RTI  documents  in  the  possession  of  the  appellants  record  the

decision of the Cabinet dated May 27, 2002 as under:

"Item No. 14 Government of Himachal Pradesh

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 23 of 53

General Administration Department (Confidential & Cabinet)

Subject: Leasing out of Government land for the construction of  International  Cricket  Stadium  at  Dharamshala  to  H.P. Cricket Association on usual terms and conditions.  

The  above  proposal  was  discussed  by  the  Cabinet  in  its meeting held on 27.5.2002 and the decision arrived at thereon is reproduced below:-

"The Cabinet  approved the propsoal  regarding lease rates. Advantages  of  the  Project  explained  by  the  AD  were considered  and  it  was  decided  that  land  be  leased  out  at token rate of Re.1/- per month for a period of 99 years."

The implementation report of the above decision may please be sent to this Department within a fortnight from the receipt of this communication.

Sd/- Addl. Secretary (GAD)"

19) Further, Rule 8 provides for lease amount to be paid.   At the time of

grant  of  lease,  the  appellant  being  a  society  had  to  pay  lease

amount under Rule 8(1)(ii) at 8% of the latest highest market value

of the land leased or double the average market value of five years

whichever is less.  The proviso to Rule 8(1) empowers the State

Government  to  reduce the lease amount  in  deserving cases and

reads as under:

"8(1)  Lease Amount. - (1) The lease amount (fresh or renewal of existing lease) shall be charged from the eligible institutions and persons per annum as under:- ......

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 24 of 53

Provided that the State Government may reduce the amount for special reasons in deserving cases."

Therefore, the State Government took a conscious decision in

exercise of  its powers under the proviso to Rule 8(1) of  the H.P.

Lease Rules, 1993 and granted the lease at a token rate of Re.1/-

per month.

20) Based on the aforesaid material and circumstances highlighted by

Mr.  Patwalia,  his  submission  was  that  no  case  was  made  out

against  the  appellants  and  others,  for  prosecuting  them  under

criminal law, much less under the provisions of PC Act and the High

Court  in  its  impugned  judgment  has  totally  glossed  over  these

aspects  by  limiting  the  exercise  to  copiously  quoting  various

judgments  and  on  that  basis,  dismissing  the  petitions  of  the

appellants, without any discussion as to how principles contained in

those judgments is applicable in the instant case.   

21) He  also  submitted  that  in  the  facts  of  the  present  case,  simply

because chargesheet has been filed thereafter and the order taking

cognizance has been passed would not mean that the appellants

cannot  prosecute  these  cases.   He  submitted  that  even  the

chargesheet  and cognizance order  has been challenged by filing

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 25 of 53

Writ Petition (Criminal) No. 135 of 2017 which, according to him, is

maintainable having regard to the fact that the appeals arising out of

petitions under Section 482 of Cr.P.C. are pending in this Court and

those events happened during the pendency of these proceedings.

He  referred  to  the  the  cases  of  Delhi  Judicial  Service

Association, Tis Hazari Court, Delhi  v.  State of Gujarat & Ors.5

and  Monica  Kumar & Anr.  v.  State  of  Uttar  Pradesh & Ors.6,

wherein it is held that this Court has inherent power to quash FIR,

chargesheet, charges etc. in exercise of powers under Articles 32,

136 and 142 to do complete justice in a cause or matter pending

before it and that there is no restriction on this power of the Court.

According to him, the present is not a case where the appellants are

alleging that a judicial order is in violation of their fundamental rights.

The present is a case where the appellants have pleaded that:

(i) there  is  no  criminal  act  on  their  part  and  the  facts  do  not

disclose any offence;

(ii) all Officers who processed the case of the appellants are not

prosecuted;

5 (1991) 4 SCC 406

6 (2008) 8 SCC 781

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 26 of 53

(iii) two Officers Subhash Ahluwalia and T.G. Negi who processed

the case of the appellants were made Principal Secretary to CM and

Advisor to CM, respectively, by the respondent No. 2 and were not

prosecuted;

(iv) there is no criminal act on the part of  the officers and they

performed  their  appropriate  administrative  duties  due  to  which

sanction stands declined by the Central Government and the CVC;

(v) leases were validly granted as per proper procedures and in

accordance with lease rules;

(vi) FIR was registered on the basis of “Congress Chargesheet”;

(vii) investigation was personally supervised by the respondent No.

2;

(viii) chargesheet filed is the outcome of this tainted investigation;

(ix) prosecution  is  mala  fide  and  vexatious  to  settle  personal

political scores;

(x) even  otherwise  the  State  Government  continues  to  remain

owner of the land which is on lease and on which the appellants

have constructed assets worth above 150 crores;

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 27 of 53

(xi) these assets are for  use of  the public of the State and are

being used as such.   Further,  filing of  chargesheet  and an order

taking cognizance is not  a final  judicial  order.   It  is  a preliminary

process in criminal law and is open to challenge in higher judicial

fora such as this Court.

22) Last submission of the learned senior counsel was that, in any case,

at best the matter could have been subject matter of a civil dispute

between the appellants and the respondents but  has  mala fidely

been  given  the  cloak  of  a  criminal  proceeding  to  harass  the

appellants with a  mala fide  prosecution.  The salutary principle of

law, viz.  Actus Reus Non Facit Reum Nisi Mens Sit Rea has been

erroneously ignored by the High Court and he cited the case of C.K.

Jaffer  Sharief  v.  State7 and  R.  Balakrishna  Pillai  v.  State  of

Kerala8.  He also pleaded that, in another politically motivated case

by  respondent  No.  2,  the  same  view  has  been  taken  by  the

Himachal Pradesh High Court in the case of A.N. Sharma v. State

of  H.P. (Cr.  MMO  No.  134/2015)  against  which  Special  Leave

Petition  filed  by  the  State  Government  stands  dismissed  by  this

Court.   7 (2013) 1 SCC 205

8 (2003) 9 SCC 700

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 28 of 53

23) He, thus, concluded his argument with the submission that case was

clearly covered by the judgments of this Court in State of Haryana

& Ors. v. Bhajan Lal & Ors.9 and Vineet Kumar & Ors. v. State of

Uttar Pradesh & Anr.10

24) Insofar  as  respondent  No.  1  i.e.  State  of  Himachal  Pradesh  is

concerned,  learned  Advocate  General  submitted  that  State  has

already  taken  a  decision  not  to  continue  with  these  criminal

proceedings.  He, in fact, supported the case of the appellants and

submitted  that  State  has  no  objection  if  these  proceedings  are

quashed.   However,  there  was  a  strong  opposition  on  behalf  of

respondent  No.  2  to  the  relief  sought  by  the  appellants  and

refutation of the arguments advanced by the appellants.

25) Mr. Anoop George Chaudhary, learned senior counsel appearing for

the respondent No. 2, submitted that the Special Leave Petition was

infructuous ab initio  inasmuch as chargesheet was filed against 18

accused  persons  out  of  whom only  appellant  No.  2  had  sought

quashing thereof.  It was further submitted that, in any case, on the

very day of passing impugned judgment by the High Court i.e. April

9 (1992) Supp. (1) SCC 335

10 (2017) 13 SCC 369

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 29 of 53

25, 2014, the Investigating Agency filed the challan under Section

173  Cr.P.C.  and  on  perusal  thereof,  the  Special  Court  took

cognizance  vide  order  dated  September  06,  2014  and  issued

summons to the accused persons.  Therefore,  the Special  Leave

Petition had, in any case, had become infructuous because of the

aforesaid  developments.   He  also  submitted  that  insofar  as

appellant No. 1, namely, Himachal Pradesh Cricket Association is

concerned, it was not arrayed as accused person; no challan was

filed against it and, therefore, no cognizance was also taken.   

26) Rebutting the allegations of mala fide, he submitted that because of

the irregularities committed in the allotment of land etc. by the then

Government, it was one of the issue in the Assembly Elections in the

year 2012 and the Congress had complained against the aforesaid

irregularity by stating the same with the preparation of  'Congress

Chargesheet'.   That  would  not  mean  that  it  was  out  of  political

vendetta.  In fact, the misdeeds of earlier Government was exposed.

In any case, after 2012 elections, when the earlier Government did

not  come  back  to  power,  inquiry  was  ordered  to  the  affairs  of

appellant No. 1 which was conducted by the Anti-Corruption Bureau

(ACB).   As  a  result  of  said  inquiry,  FIR  was  registered  which

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 30 of 53

culminated in filing of the challan as prima facie case was made out

by collecting requisite material.  He also referred to the Constitution

Bench judgment in the case of  Lalita Kumari  v.  Government of

Uttar  Pradesh  &  Ors.11 as  per  which  preliminary  inquiry  before

registering an FIR should be conducted to ascertain whether  the

information received, reveals any cognizable offence.  He submitted

that  due  procedure  was  followed  in  accordance  with  the  said

judgment.

27) On merits, Mr. Chaudhary submitted that on the basis of final report

and  consequently  the  cognizance  order  a  clear  case  of

cheating/fraud  criminal  breach  of  trust/criminal

misconduct/usurpation of public land worth crores of rupees/loss to

state exchequer is made out against the accused persons.  Hence,

no  cogent  grounds  exist  for  quashing  of  criminal  proceedings.

Reliance in this regard has been placed upon a judgment rendered

by  this  Court  in  Indian  Oil  Corporation  v.  NEPC  India  Ltd.  &

Ors.12:

"12.   The  principles  relating  to  exercise  of  jurisdiction under Section 482 of the Code of Criminal Procedure to

11 (2014) 2 SCC 1

12 (2006) 6 SCC 736

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 31 of 53

quash  complaints  and  criminal  proceedings  have  been stated and reiterated by this Court in several decisions. To mention  a  few—Madhavrao  Jiwajirao  Scindia  v. Sambhajirao  Chandrojirao  Angre  [(1988)  1  SCC  692  : 1988 SCC (Cri) 234], State of Haryana v. Bhajan Lal [1992 Supp (1) SCC 335 :  1992 SCC (Cri)  426],  Rupan Deol Bajaj  v.  Kanwar Pal Singh Gill  [(1995) 6 SCC 194 : 1995 SCC  (Cri)  1059],  Central  Bureau  of  Investigation  v. Duncans Agro Industries Ltd.  [(1996) 5 SCC 591 : 1996 SCC  (Cri)  1045],  State  of  Bihar  v.  Rajendra  Agrawalla [(1996) 8 SCC 164 : 1996 SCC (Cri) 628], Rajesh Bajaj v. State NCT of Delhi  [(1999) 3 SCC 259 : 1999 SCC (Cri) 401], Medchl Chemicals & Pharma (P) Ltd. v. Biological E. Ltd.  [(2000) 3 SCC 269 : 2000 SCC (Cri) 615],  Hridaya Ranjan  Prasad  Verma  v.  State  of  Bihar  [(2000)  4  SCC 168 :  2000 SCC (Cri)  786],  M. Krishnan  v.  Vijay  Singh [(2001)  8  SCC  645  :  2002  SCC  (Cri)  19]  and  Zandu Pharmaceutical  Works  Ltd.  v.  Mohd.  Sharaful  Haque [(2005) 1 SCC 122 : 2005 SCC (Cri) 283] . The principles, relevant to our purpose are:

(i)  A complaint  can  be  quashed  where  the  allegations made in the complaint, even if they are taken at their face value  and accepted  in  their  entirety,  do  not  prima facie constitute  any  offence  or  make  out  the  case  alleged against the accused.

For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material  nor  an  assessment  of  the  reliability  or genuineness  of  the  allegations  in  the  complaint,  is warranted  while  examining  prayer  for  quashing  of  a complaint.

(ii) A complaint may also be quashed where it is a clear abuse of the process of the court,  as when the criminal proceeding  is  found  to  have  been  initiated  with  mala fides/malice for wreaking vengeance or to cause harm, or where  the  allegations  are  absurd  and  inherently improbable.

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 32 of 53

(iii)  The power to quash shall  not,  however,  be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with abundant caution.

(iv)  The complaint is not required to verbatim reproduce the  legal  ingredients  of  the  offence  alleged.  If  the necessary  factual  foundation  is  laid  in  the  complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed. Quashing  of  the  complaint  is  warranted  only  where  the complaint is so bereft of even the basic facts which are absolutely necessary for making out the offence.

(v) A given set of facts may make out: (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceeding are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed,  is  not  by  itself  a  ground  to  quash  the  criminal proceedings.  The  test  is  whether  the  allegations  in  the complaint disclose a criminal offence or not."

28) Dubbing the allegations of  mala fide against respondent No. 2 as

frivolous,  it  was argued that  the High Court  has rightly  found no

merit therein.  In any case, argued the learned senior counsel, the

High Court rightly observed that once the chargesheet is filed, such

a plea becomes redundant as held in  State of A.P.  v.  Golconda

Linga Swamy and Anr.13 and  Umesh Kumar  v.  State of Andhra

Pradesh & Anr.14.  The learned senior counsel also questioned the

13 (2004) 6 SCC 522

14 (2013) 10 SCC 591

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 33 of 53

move  on  the  part  of  State  Government  to  withdraw the  case  in

question.  It was argued that no fresh ground or subsequent aspect

has emerged or come in public  domain for  doing the same and,

therefore,  such  course  of  action  was  not  permissible  as  held  in

State of Tamil Nadu & Ors. v. K. Shyam Sunder & Ors.15, Andhra

Pradesh  Dairy  Development  Corporation  Federation  v.  B.

Narasimha  Reddy & Ors.16 and  State of Himachal Pradesh  v.

Nishant Sareen17.   Moreover, argued the learned senior counsel,

the  only  procedure  prescribed  in  law  was  to  take  the  route  of

Section 321 of Cr.P.C. which has not happened in the instant case.

29) Replying  to  the  arguments  of  the  appellants  that  it  was  a  civil

dispute, Mr. Chaudhary argued that FIR/Final Report clearly depicts

that  there  is  sufficient  evidence  of  cheating,  criminal  breach  of

trust/criminal  misconduct,  conspiracy  and  destruction  of  evidence

against  the accused persons,  therefore,  it  was not  merely  a civil

case and, thus, the authorities have rightly registered the FIR and

filed  criminal  proceedings.   He  also  argued  that  at  the  time  of

cognizance,  there was sanction for  prosecution against  all  public

15 (2011) 8 SCC 737

16 (2011) 9 SCC 286

17 (2010) 14 SCC 527

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 34 of 53

servants (wherever applicable) and even if sanction is subsequently

withdrawn, it would not impact trial.  It was further submitted that in

the case of two remaining accused i.e. Ajay Sharma and Deepak

Sanan, challan was not presented for want of sanction under PC

Act,  as the permission seeking sanction was pending with Union

Home Ministry  though sanction for  IPC offences was granted  by

State Government.  The prosecution sanction against Gopal Chand,

an HCS Officer was initially granted but later on withdrawn without

there being any change of  circumstance.   The necessity  of  non-

grant/requirement of  prosecution sanction can be decided by trial

court during the course of trial and it is not a ground for Himachal

Pradesh Cricket Association to seek quashing of entire prosecution.

30) The learned senior counsel also defended non-prosecution of Ajay

Sharma  and  Deepak  Sanan,  two  IAS  Officers.   He  specifically

pointed  out  that  allegations  in  the  chargesheet  against  appellant

No.2 which, according to him, disclosed that  prima facie case was

established  against  him  and,  therefore,  there  was  no  reason  to

quash the chargesheet.

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 35 of 53

31) Insofar as Writ Petition (Criminal) No. 135 of 2017 is concerned, it

was argued that  such a writ  petition was not  maintainable under

Article 32 of the Constitution, more so, when order of cognizance

had not  been challenged  at  all.   Support  from the  judgments  in

Ujjam Bai  v.  State of U.P.18,  Naresh Shridhar Mirajkar & Ors.  v.

State  of  Maharashtra  &  Anr.19 and  Northern  Corporation  v.

Union of India & Ors.20 was taken in this behalf.  He reiterated that

there were serious allegations against  the accused persons and,

therefore,  no  case  for  quashing  of  the  chargesheet/challan  was

made out.   

32) Before we undertake the exercise of deliberating on the arguments

of the counsel for the parties and reach our conclusions, it would be

in the fitness of things to recapitulate the events in brief with focus

on the allegations of alleged criminality which have been fastened

upon  the  appellants  and  others.   Appellant  No.  1  was  initially

registered as a Society under the Societies Registration Act, 1860 in

the year 1990.  It is now a not for profit company incorporated under

Section 25 of  the Companies Act,  1956.   One of  the allegations

18 (1963) 1 SCR 778

19 AIR 1967 SC 1

20 (1990) 4 SCC 239

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 36 of 53

pertains to the so-called illegalities committed in the conversion of

the  society  into  deemed  company  under  Section  25  of  the

Companies  Act,  1956.   Be  that  as  it  may,  the  Society,  after  its

formation,  had  applied  for  land  at  Village  Mauja  and  Tehsil

Dharamshala,  District  Kangra  for  construction  of  an  international

cricket stadium.  A proper lease was executed between appellant

No. 1 and the State of Himachal Pradesh through Director, Himachal

Pradesh Youth Services and Sports Department.  It happened more

than 16 years ago.  In respect of this lease, the allegation is that it

was executed at a monthly rent of  Re.1/- which was allegedly done

to favour the appellants.  Admittedly, proviso to Rule 8 of the Rules

empowers  the  State  Government  to  adopt  such  a  course  and

decision to this effect was taken after due deliberations at a very

high level, keeping in view the necessity of such a stadium in the

State, which did not have any cricket stadium.

33) After  the allotment  of  the  land  to  appellant  No.  1,  it  constructed

cricket  stadium thereupon.   Appellant  was  desirous  of  making  a

world-class  cricket  stadium which  could  host  international  cricket

matches as well.  For this purpose, it submitted proposal to the ICC.

The ICC got the stadium and playground inspected through Mr. Alan

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 37 of 53

Hurst, it's match  referee.  He inspected the stadium and submitted

his report dated September 20, 2007.  The venue was not approved,

at that stage, for hosting international matches.  A perusal of the

report submitted by the said referee would disclose that there were

no adequate hotel facilities in the area and, therefore, 'tour support

was lacking'.  Two hotels were shown to Mr. Hurst and it was found

by  him that  each  of  them were  at  substantial  distance  from the

ground.   Moreover,  the facilities  in  the said  hotels  were also not

adequate.  Notwithstanding the same, insofar as the cricket ground

is  concerned,  the match referee had lauded it  for  its  quality  and

settings.   It  can  be  seen  from  the  general

comments/recommendations/conclusions  in  his  report  and  the

relevant portion whereof reads as under:

"This ground has one of the best settings imaginable.  The people involved in its development have been innovative and are passionate and visionary.  They have done a great job so far  in  getting  this  ground  to  where  it  is  and  should  be congratulated  and  encouraged.   I  have  no  doubt  that  with adequate finances, in the near future, this ground can become one of the best in the country.  The idea of having a 'hotel' as an  integral  part  of  the  ground  with  dual  use  as  corporate boxes  during  games  is  not  new,  however,  the  circular restaurant  planned  for  the  top,  with  360  deg  views  of  the Himalayas and surrounding area will make it unique.

Having said this, I believe that at this stage there is still a lot of work  to  be  done  that  relates  to  its  suitability  for  staging International cricket.  I am informed that sufficient finance has

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 38 of 53

recently  been  obtained  to  complete  everything,  and further work is now underway.  I have listed below the issues I still have concerns with and things that need to be changed.  If all of these things are addressed, I would have no hesitation in recommending this ground as suitable as an International ODI venue.  The administrators have ensured me that all of these things will  be addressed with urgency.  They are extremely keen to get into the BCCI ground rotation system as soon as possible."

34) It is clear from the above that Mr. Hurst was of the view that the

cricket ground at this picturesque place with scenic beauty can be

transformed  into  one  of  the  best  cricket  grounds  in  the  country,

which would be suitable for international events if the deficiencies

pointed out therein are taken care of.  Apart from providing other

facilities to improve the infrastructure (which could be easily taken

care of), main concern was to have a hotel as an integral part of the

ground  with  the  dual  use  as  corporate  boxes  during  the  game.

Because of the above, appellant No.1 felt need to construct a club

house on the lease land and also seek allotment of some other land

for  the  purpose  of  construction  of  a  hotel,  keeping  in  view  the

observations  contained  in  the  aforesaid  inspection  report.

Accordingly, it sent request for promotion to construct a club house

on the lease land which was accorded by respondent No.1 through

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 39 of 53

Directorate of Youth Services and Sports on June 23, 2008 subject

to completing all the formalities.

35) As  far  as  construction  of  hotel  is  concerned,  the  case  of  the

appellants is that there was a parcel of idle land in the middle of the

land alloted for the stadium and for allotment of this land, request

was made to the Director,  Youth Services and Sports.   This land

belongs to Gram Panchayat.  Gram Panchayat issued no objection

for the allotment of land on September 14, 2009 pursuant to which

respondent No.1 granted approval to lease out this land in favour of

appellant No.1 on November 16, 2009 and the lease deed was also

executed on December 14,  2009.   Thereafter,  for  the purpose of

hotel, additional land was given.

36) Pertinently, insofar as this lease deed is concerned, since the land

was to be used for commercial purpose, namely, the club house, it

provided rental  at  commercial  rate i.e.  the market rate which the

appellant  No.1 was supposed to pay.   After  the execution of  the

lease,  club  house  was  constructed  and  the  Town  and  Country

Planning  Department,  Dharamshala  also  issued  No  Objection

Certificate for the use of part of infrastructure of cricket stadium as

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 40 of 53

club house for cricket activities.  It is also pertinent to mention that

Principal  Secretary  (Revenue),  Government  of  Himachal  Pradesh

issued no objection for execution of supplementary lease enabling

commercial activities on additional land provided that lease money

was charged in accordance with the Lease Rules, 2011.  This led to

execution  of  supplementary  lease  deed dated  June 23,  2012 on

which  commercial  hotel  was  constructed  after  obtaining  requisite

permissions.   

37) From the aforesaid events, following aspects can be culled out:

Appellant No.1 has been given lease of land on which cricket

stadium was  constructed  and  thereafter  lease  for  additional  land

meant for club house and also supplementary lease for commercial

activity i.e. the hotel.  It is only in respect of the land which is meant

for cricket stadium that rental of Re.1/- per month was agreed to be

charged by invoking proviso to Rule 8.  Thus, it is not contrary to

law.   State of Himachal did not have any cricket ground, much less

State of art cricket ground.  It is, for this reason, that the land was

given on lease for the purpose of constructing the cricket ground,

which may become pride of Himachal Pradesh, at nominal rental.

Insofar as lease in respect of club house and supplementary lease

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 41 of 53

for commercial activity (i.e. hotel) is concerned, the lease money has

been  fixed  in  accordance  with  Lease  Rules,  2011,  namely,  at

commercial rates.  There can hardly be any element of criminality in

the afofresaid allotments inasmuch as six very senior officers in the

State Government (four of them of IAS Cadre and one belongs to

Himachal Pradesh Administrative Service) who had examined the

matter  and  only  after  their  approval,  the  allotments  were  made.

There is  no culpability  attributed to them, which is a very crucial

factor.

38) What  is  more  important  is  that  the  matter  was  looked  into  by

Director-cum-Special  Secretary,  Youth  Services  and  Sports

Department  as  well  as  Secretary,  Youth  Services  and  Sports

Department and it is only after the examination of the proposal by

them and their final approval, lands in question were allotted.   

39) The  respondents  have  submitted  status  report  before  the  High

Court, pursuant to the directions issued by it.  As per the said status

report as well  as the FIRs, allegations against the appellants and

others who are arrayed as accused persons are that appellant No.2

along with other accused indulged in illegal activities.  It is alleged

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 42 of 53

that Shri R.S. Gupta, the then Deputy Commissioner, had prepared

report  ignoring  the  report  of  Divisional  Forest  Officer  who  had

assessed the value of  trees at  Rs.50 lakhs at  that  time,  thereby

causing wrongful loss to the Government.  Further, one Shri Deepak

Sanan, the then Revenue Secretary, provided a helping hand to the

accused  persons  for  granting  permission  to  set  up  and  run  a

commercial hotel and the matter was not taken to the Cabinet which

was in violation of Schedule 20 of H.P. Rules of Business.  It is also

alleged  that  Himachal  Pradesh  Cricket  Association  Society  was

merged into a company just to prevent the State Government from

controlling it.  These are the main allegations.  

40) Insofar  as  other  allegations are  concerned,  two Officers,  namely,

Shri  R.S.  Gupta  and  Shri  Deepak  Sanan  are  implicated.   While

doing  so,  other  senior  Officers  who  took  active  part  in  decision

making have not been touched.   

41) In  the  two  FIRs,  seven  IAS  Officers,  one  Officer  belonging  to

Himachal  Pradesh  Administrative  Service  and  one  Executive

Engineer,  Dharamshala  Division  in  Himachal  Pradesh  PWD

Department played their significant role at one stage or the other.

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 43 of 53

Interstingly, in the FIRs, these nine Officers were also implicated and

specific role attributed to them which has been already mentioned in

the tabulated format while recording the arguments of Mr. Patwalia.

This  would  demonstrate  that  insofar  as  Mr.  Subhash  Ahluwalia

(IAS),  Director-cum-Special  Secretary,  Youth  Services and  Sports

Department  is  concerned,  allegation  against  him  was  that  he

ignored the rules and did not mention the provisions of Lease Rules,

1993.  He was also signatory to lease deed dated July 29, 2002.  It

is important to mention that entire FIRs proceed on the basis that

appellants  conspired  with  these  Officers,  among  others.   The

imputation against Mr. Subhash Ahluwalia is that in fixing the rent at

Re.1/- per month, he not only ignored the rules and did not even

mention  in  his  noting  thereby  implying  that  he  was  party  to  the

alleged  conspiracy.   Similar  allegations  are  against  other  eight

persons  as  well  alleging  their  role  at  different  stages.

Notwithstanding  the  same,  three  Officers,  namely,  Subhash

Ahluwalia, Subhash Negi and T.G. Negi were not even charged on

the purported ground that there were not enough evidence and mala

fide intention.  In respect of Mr. Ajay Sharma, Central Government

had  declined  the  sanction.   Though,  State  Government  had

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 44 of 53

accorded the sanction for  prosecution earlier  but it  has also later

withdrawn.  Same is the position in respect of Deepak Sanan.  Mr.

Gopi Chand, who belongs to HPAS, though the prosecution sanction

was granted earlier, in his case also, not only prosecution sanction

was  withdrawn  by  the  State  Government,  he  has  even  been

promoted to  IAS Cadre.   In  case  of  Mr.  K.K.  Pant  and Mr.  P.C.

Dhiman, other IAS Officers, prosecution sanction is declined.  This

leaves  us  only  Mr.  Devi  Chand  Chauhan,  Executive  Engineer,

Dharamshala Division in PWD, though in his case also, prosecution

sanction  was  earlier  rejected  but  subsequently  granted  on  the

recommendation of the then Chief Minister.  There are two Gram

Panchayat members, who had issued no objection for allotment of

land  for  club  house,  who  have  been  prosecuted.   These  three

Officers are public servants who remain as accused persons.  This

Court gets an impression that in the entire conspiracy story put up

by the prosecution, high Government officials are deliberately let off

and very junior Officers were become scapegoat in order to ensure

that a case under PC Act survives in respect of appellants as well

who are not public servants.  Even otherwise, when the aforesaid

eight  persons  are  not  charged or  proceeded against  for  want  of

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 45 of 53

prosecution, this lends support to the allegations of the appellants in

imputing motives for their prosecution.

42) This  Court,  on  a  360°  scanning  of  the  matter,  arrives  at  the

conclusion that the elements of criminal intent or criminal acts are

lacking.  Following factors do stand established from record:

(i) there  is  no  criminal  act  on  their  part  and  the  facts  do  not

disclose any offence;

(ii) none of the officers who processed the case of the appellants

are not prosecuted;

(iii) two Officers Subhash Ahluwalia and T.G. Negi who took active

part in the decision making were made Principal Secretary to CM

and Advisor to CM, respectively, by respondent No. 2 and were not

prosecuted;

(iv) As per the prosecution, there is no criminal act on the part of

the  officers  and  they  performed  their  appropriate  administrative

duties  due  to  which  sanction  stands  declined  by  the  Central

Government and the CVC.  That itself is sufficient to absolve others

from any criminal prosecution;

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 46 of 53

(x) even  otherwise  the  State  Government  continues  to  remain

owner of the land which is on lease and on which the appellants

have constructed assets worth above 150 crores;

(xi) these assets are for  use of  the public of the State and are

being used as such.   Further,  filing of  chargesheet  and an order

taking cognizance is not  a final  judicial  order.   It  is  a preliminary

process in criminal law and is open to challenge in higher judicial

fora such as this Court.

43) Insofar as conversion of Society into not for profit company under

Section  25  of  the  Companies  Act,  1956  is  concerned,  it  was

obviously done as per the mandate of BCCI.  There can hardly be

an element of criminality therein.  This Court fails to understand as

to  how any  criminal  intent  can  be attributed  in  merging the  said

society into a company, that too, to prevent the State Government

from controlling it, which is the motive attributed by the respondents

themselves.   It  rather  shows the intent  of  the State  Government

which wanted to grab the control of the Cricket Association.  Such a

tendency on the part  of  the State authorities is condemned by a

Committee  headed  by  former  Chief  Justice  R.M.  Lodha  and

approved by this Court.  If at all, this is a reflection upon the State

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 47 of 53

Government.   It  also  lends  credence  to  the  submission  of  the

appellants  that  when  the  State  Government  fail  to  achieve  the

aforesaid purpose, it went after the appellants.  If at all, the subject

matter  was  a  civil  dispute  between  the  appellants  and  the

respondents.

44) We  may  also  mention  that  record  reveals  that  respondent  No.2

personally  supervised  the  investigation.   However,  we  are

eschewing the discussion as to  whether  chargesheet  is  result  of

mala fide or political vendetta, since we feel that, ex facie, no case

of cheating/fraud or criminal breach of trust is made out.  However,

at  the same time,  it  would  be necessary to point  out  that  in  the

proceedings  filed  by  the  appellants  under  Section  482   Cr.P.C.,

respondent No.2 was impleaded as the allegations of  mala fides

were  attributed  to  him.   Since,  we  are  not  looking  into  these

allegations,  respondent  No.2 does not  have much role to play in

these proceedings.  That apart, respondent No.2 has filed counter

affidavit stating that he is not a necessary party and it is not his job

to defend the prosecution.  Having regard to the stand taken by the

respondent No.1 not to prosecute these cases, even otherwise, no

purpose would be served in continuing with these proceedings.   

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 48 of 53

45) In view of our aforesaid discussion, argument of respondent No.2

that the appeals have become infructuous cannot be accepted.   

46) We are conscious of the scope of powers of the High Court under

Section 482 of Cr.P.C.  The inherent jurisdiction is to be exercised

carefully and with caution and only when exercise is justified by the

tests specifically laid down in the Section itself.   Further, inherent

power under this provision is not the rule but it is an exception.  The

exception is applied only when it is brought to the notice of the Court

that grave miscarriage of justice would be committed if the trial is

allowed  to  proceed  where  the  accused  would  be  harassed

unnecessarily.   If  the trial  is allowed to linger when  prima facie  it

appears  to  the  Court  that  the  trial  could  likely  to  be  ended  in

acquittal.  It is, for this reason, principle which is laid down by catena

of judgments is that the power is to be exercised by the High Court

either  to  prevent  abuse  of  process  of  any  court  or  otherwise  to

secure the ends of justice.  However, whenever it is found that the

case is coming within the four corners of the aforesaid parameters,

the powers possessed by the High Court under this provision are

very wide.  It means that the Court has to undertake the exercise

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 49 of 53

with great caution.  However, the High Court is not to be inhibited

when the circumstances warrant  exercise of  such a power to do

substantial justice to the parties.  This provision has been eloquently

discussed in Bhajan Lal's case which has become locus classicus.

Principle Nos. (i) and (ii) of  Indian Oil Corporation are, therefore,

become applicable.  The entire subject matter has been revisited in

a recent  judgment  in  Vineet  Kumar and some of  the discussion

therein which takes note of earlier judgments is reproduced below:

"26.  A  three-Judge  Bench  in  State  of  Karnataka  v.  M. Devendrappa [State of Karnataka v. M. Devendrappa, (2002) 3 SCC 89 : 2002 SCC (Cri) 539] had the occasion to consider the ambit  of  Section 482 CrPC. By analysing the scope of Section 482 CrPC, this Court laid down that authority of the Court exists for advancement of justice and if any attempt is made to abuse that authority so as to produce injustice the Court has power to prevent abuse. It further held that Court would  be  justified  to  quash  any  proceeding  if  it  finds  that initiation/continuance of it amounts to abuse of the process of court or quashing of these proceedings would otherwise serve the ends of justice. The following was laid down in para 6: (SCC p. 94)

“6.  …  All  courts,  whether  civil  or  criminal  possess,  in  the absence  of  any  express  provision,  as  inherent  in  their constitution, all such powers as are necessary to do the right and to undo a wrong in course of administration of justice on the  principle  quando  lex  aliquid  alicui  concedit,  concedere videtur et id sine quo res ipsae esse non potest (when the law gives  a  person  anything  it  gives  him  that  without  which  it cannot exist). While exercising powers under the section, the court  does  not  function  as  a  court  of  appeal  or  revision. Inherent jurisdiction under the section though wide has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in

Criminal Appeal Nos. 1258-1259 of 2018 & Anr.    Page 50 of 53

the section itself. It is to be exercised ex debito justitiae to do real  and  substantial  justice  for  the  administration  of  which alone  courts  exist.  Authority  of  the  court  exists  for advancement of justice and if any attempt is made to abuse that authority so as to produce injustice, the court has power to prevent abuse. It would be an abuse of process of the court to allow any action which would result in injustice and prevent promotion of justice. In exercise of the powers court would be justified  to  quash  any  proceeding  if  it  finds  that initiation/continuance of it amounts to abuse of the process of court or quashing of these proceedings would otherwise serve the  ends  of  justice.  When  no  offence  is  disclosed  by  the complaint, the court may examine the question of fact. When a complaint is sought to be quashed, it is permissible to look into the materials to assess what the complainant has alleged and whether any offence is made out even if the allegations are accepted in toto.”

27.  Further in para 8 the following was stated: (Devendrappa case  [State of Karnataka  v.  M. Devendrappa, (2002) 3 SCC 89 : 2002 SCC (Cri) 539] , SCC p. 95)

“8.  …  Judicial  process  should  not  be  an  instrument  of oppression,  or,  needless  harassment.  Court  should  be circumspect and judicious in exercising discretion and should take all  relevant  facts  and circumstances into consideration before issuing process, lest it would be an instrument in the hands of a private complainant to unleash vendetta to harass any person needlessly. At the same time the section is not an instrument  handed  over  to  an  accused  to  short-circuit  a prosecution and bring about its sudden death. The scope of exercise of  power  under  Section 482 of  the Code and the categories of  cases where the High Court  may exercise its power  under  it  relating  to  cognizable  offences  to  prevent abuse of process of any court or otherwise to secure the ends of justice were set out in some detail by this Court in State of Haryana v.  Bhajan Lal  [State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 : 1992 SCC (Cri) 426].”

In  the  instant  case,  the  High  Court  simply  noted  those

judgments  which  put  a  note  of  caution  in  exercising  the  powers

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under  Section  482  Cr.P.C.  to  quash  such  proceedings  and

dismissed  the  petition  with  a  shallow  examination  of  the  case,

thereby  glossing  over  the  material  facts  (which  are  noted

hereinabove)  and  failing  to  examine  that  these  pertinent  aspects

were sufficient to demonstrate that no criminal case was made out,

particularly  when  all  the  concerned  officers,  who  had  taken  the

decision, were let off on the ground that they had not committed any

wrong.

47) As far as Writ Petition (Criminal) No. 135 of 2017 is concerned, the

appellants came to this Court challenging the order of cognizance

only because of the reason that matter was already pending as the

appellants had filed the Special Leave Petitions against the order of

the  High  Court  rejecting  their  petition  for  quashing  of  the

FIR/Chargesheet.  Having regard to these peculiar facts, writ petition

has also been entertained.   In  any case,  once we hold that  FIR

needs  to  be  quashed,  order  of  cognizance  would  automatically

stands vitiated.   

48) As  a  consequence,  criminal  appeals  are  allowed  thereby  setting

aside the impugned judgment of the High Court, allowing the petition

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filed by the appellants under Section 482 Cr.P.C. and quashing the

FIR No. 12 of 2013 dated August 01, 2013 under Sections 406, 420,

120B of the IPC and Section 13(2) of the PC Act and FIR No.14 of

2013 dated October 03, 2013 under Section 447 read with Section

120B  of  the  IPC,  Section  3  of  Prevention  of  Damage  to  Public

Property Act, 1984 and Section 13(2) of the PC Act.  In view thereof,

writ petition also stands disposed of accordingly.   

No order as to cost.

.............................................J. (A.K. SIKRI)

.............................................J. (ASHOK BHUSHAN)

NEW DELHI; NOVEMBER 02, 2018.

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