Clean Chit given in Departmental Disciplinary proceedings? Law and Caselaw Explained

The Author, Jeevesh Nagrath is an advocate practising on the civil and criminal litigation side in Delhi for the past 23 years. He was earlier the Special Public Prosecutor for CBI before the High Court of Delhi and Special Counsel for State of Punjab before the Supreme Court of India. 

Are the proceedings pending against public servants under the provisions of Prevention of Corruption Act, 1988 (‘the PC Act’) liable to be closed, on “public servants” getting cleansed by a clean chit given in departmental disciplinary proceedings?

A public servant for his act of mis-conduct, or of obtaining undue advantage, or in other words for his acts of bribery and corruption is subject to both civil and criminal proceedings. An act of “corruption” by a “public servant” gives rise to two separate proceedings against such public servant – on the one hand, the public servant is prosecuted in a court of law for committing a criminal offence under the PC Act; and on the other hand, such public servant faces departmental disciplinary proceedings before his superior officer in the department as per the terms and conditions of his employment.

Prosecution proceedings under the PC Act, if they result in conviction, will entail imprisonment and fine for the public servant as provided under the PC Act, whereas proving of charges in departmental proceedings will lead to imposition of major and/or minor penalty, as per his service conditions.

Prosecution under the PC Act will be judicial proceedings in a Court of Law, whereas departmental proceedings are conducted by other officers.

There is no statutory/ codified law enacted by the Parliament that a clean chit (exoneration) given to a public servant in departmental disciplinary proceedings conducted will entitle him to demand closure and quashing of the criminal proceedings pending against him under the PC Act.

The Hon’ble Supreme Court of India in Capt. M. Paul Anthony v/s. Bharat Gold Mines Limited & Anr.[1], Divisional Controller, Karnataka State Road Transport Corporation v/s. M.G. Vittal Rao[2] and in State Bank of India v/s. Neelam Nag[3], held that civil and criminal proceedings are separate and both can go on simultaneously, though separately. In fact, it was held that when the two proceedings are on the same set of facts and nature of charges in criminal case are grave and involve complicated questions of facts and law and there is common evidence, it is desirable to stay the departmental proceedings till conclusion of criminal trial. This test is to be applied on a case to case basis and not as a matter of routine course. The departmental proceedings should be resumed if the criminal proceedings are getting unduly delayed so that if the employee is found guilty he can be removed, or if he is not found guilty then his honor is restored.  

A Constitution Bench (5 Judges) of Hon’ble Supreme Court of India had, in the case of M.S. Sheriff v/s. State of Madras[4], held that as between the civil and the criminal proceedings, criminal matters should be given precedence and that while no hard and fast rule can be laid down but the possibility of conflicting decisions in the civil and criminal courts is a relevant consideration. It was held that law envisages such an eventuality when it expressly refrains from making the decision of one court binding on the other, or even relevant, except for certain limited purposes, such as sentence or damages, the only relevant consideration is the likelihood of embarrassment.

A constitution bench (5 Judges) of the Hon’ble Supreme Court of India in its Judgment in the case of Iqbal Singh Marwah V/s. Meenakshi Marwah[5] has held that though an effort should be made to avoid conflicting findings between the civil and criminal courts, the standards of proof required in the two proceedings are entirely different. Further, that while civil cases are decided on the basis of preponderance of probabilities in evidence, in a criminal case the burden lies on the prosecution to prove its case beyond reasonable doubt. The constitution bench held that there is no Law that the findings recorded in one proceeding should be treated as final or binding in the other and that both the cases should be decided on the basis of the evidence adduced in the case, and relied on its earlier Constitution Bench decision in the case of M.S. Sheriff v/s. State of Madras.

In Depot Manager A.P. State Road Transport Corporation v/s. Mohd. Yousuf Miya & Ors.[6] it has been held by the Hon’ble Supreme Court of India that purpose of a departmental enquiry and that of a prosecution are different and distinct and the rules of evidence are also different and that each case is to be considered on its own facts and circumstances. Further, there is no bar to simultaneously proceed with both criminal trial and departmental enquiry.

This view is followed in State Bank of India v/s. R.B. Sharma[7], and in Divisional Controller, Karnataka State Road Transport Corporation v/s. M.G. Vittal Rao.

In K.G. Premshanker v/s. Inspector of Police[8] it was held by the Hon’ble Supreme Court of India that if a civil proceedings and criminal proceedings are for the same cause, judgment of civil court would be relevant if conditions of Sections 40 to 43 of Evidence Act are satisfied, but it cannot be said that the same would be conclusive except as provided in Section 41 of the Evidence Act. Even if it is relevant, the Court has to decide to what extent are the same relevant. The Supreme Court again relied upon its Constitution Bench Judgment in the case of M.S. Sheriff. 

View of the Hon’ble Supreme Court of India, in respect of effect of exoneration of a public servant in departmental disciplinary proceedings on the criminal proceedings against him on same facts.

The Hon’ble Supreme Court of India in its judgment in the case of Superintendent of Police (C.B.I.) V/s. Deepak Chowdhary[9] (2 judges), while dismissing the prayer for quashing the sanction for prosecution under the PC Act on the ground of exoneration in departmental proceedings, held that the ground of departmental exoneration by the disciplinary authority is not relevant, and it is only the facts collected during investigation that are important to see if the offence for which the sanction has been sought for, has been committed or not.

In P.S. Rajya v/s. State of Bihar[10] (2 judges) the Hon’ble Supreme Court of India, held that in the “peculiar facts” of that case, criminal prosecution against the public servant  could not be continued due to exoneration in departmental proceedings because that was not a case of prosecution but was actually a case of “persecution” on the basis of revised valuation fixed by CBI to the house of the public servant despite the fact that the earlier valuation was accepted in the departmental inquiry done by the Vigilance Commission and was also accepted by the Union Public Service Commission and the President had passed the final orders based on the same. The persecution against the Public Servant – an income tax officer- was noted to have been done because he had in discharge of duties impounded books of accounts of a Member of Parliament. It was in these peculiar facts that the Hon’ble Supreme Court had passed the order quashing the proceedings. In P.S. Rajya’s case, as is clear from paragraph no. 21 of the Judgment, the quashing was done by relying on the principles laid down in the case of State of Haryana v/s. Bhajan Lal[11]. P.S. Rajya was not a declaration of Law, that in all cases of exoneration in departmental proceedings, the criminal prosecution must be quashed and closed.

The Hon’ble Supreme Court of India, again in State V/s. M. Krishna Mohan[12]  (2 judges) after noting its earlier Judgment in the case of P.S. Rajya v/s. State of Bihar, held that “The said decision was, therefore, rendered on the facts obtaining therein and cannot be said to be an authority for the proposition that exoneration in departmental proceeding ipso facto would lead to a judgment of acquittal in a criminal trial.”.

The Hon’ble Supreme Court of India again in its Judgement in the case of CBI V/s. V.K. Bhutiani[13] held that the Judgment in the case of P.S. Rajya was on the facts of that case and that a report of exoneration cannot be a “be all or end all”.

The Hon’ble Supreme Court of India, delivered a Judgement in the case of Radheshyam Kejriwal v/s. State of West Bengal[14] [3 Judges by majority of 2:1, the author of majority decision was Hon’ble Mr. Justice C.K. Prasad)]. Radheshyam Kejriwal’s case was not even in respect of exoneration of public servant in departmental disciplinary proceedings. In the case of Radheshyam Kejriwal, the Enforcement Directorate had initiated proceedings against Radheshyam Kejriwal for violation of provisions of Foreign Exchange Regulation Act, 1973 (‘FERA’). Under FERA, the Enforcement Directorate (‘ED’) had initiated adjudication proceedings under Section 51 of FERA before the adjudication officer, and also prosecution under Section 56 of FERA before the magistrate.

The adjudication officer under FERA found that there is no ground for imposing any penalty / liability and there is no contravention of FERA by Radheshyam Kejriwal. This order was not challenged by ED and it became final. In this context the Hon’ble Supreme Court held that when the finding of adjudication officer under FERA i.e. the same statute, and for the same offence / acts have become final and accepted by ED, then the same authority i.e. ED cannot be permitted to continue with prosecution before the criminal court on the same facts. It was in these facts and context, that the majority of Hon’ble judges came to the conclusion that “(i)n the face of the aforesaid finding by the Enforcement Directorate in the adjudication proceedings that there is no contravention of any of the provisions of the Act, it would be unjust and an abuse of the process of the court to permit the Enforcement Directorate to continue with the criminal prosecution.” 

The matter was again considered by the Hon’ble Supreme Court of India in its judgment in the case of State (NCT of Delhi) V/s. Ajay Kumar Tyagi[15] (unanimous Judgment by 3 Judges, authored by Hon’ble Mr. Justice C.K. Prasad). A three-judge bench was constituted on a reference being made by a two-judge bench, which was of the view that there are conflicting decisions of the Hon’ble Supreme Court of India on the issue whether exoneration of  a public servant in departmental proceedings should lead to quashing of criminal prosecution.

In Ajay Kumar Tyagi’s case, the Hon’ble Court considered its earlier decision in the case of P.S. Rajya and clarified that the said case did not lay down that on exoneration of a public servant in departmental proceedings, the criminal prosecution on identical charge or evidence has to be quashed. Merely because the matter was quashed does not mean that it was quashed on that ground, but it was quashed on its peculiar facts. The judgments in the case of M. Krishna Mohan, Deepak Chowdhary and V.K. Bhutiani were relied upon and it was held:

“24.       Therefore, in our opinion, the High Court quashed the prosecution on total misreading of the judgment in P.S. Rajya case. In fact, there are precedents, to which we have referred to above, that speak eloquently a contrary view i.e. exoneration in departmental proceeding ipso facto would not lead to exoneration or acquittal in a criminal case. On principle also, this view commends us. It is well settled that the standard of proof in a department proceeding is lower than that of criminal prosecution. It is equally well settled that the departmental proceeding or for that matter criminal cases have to be decided only on the basis of evidence adduced therein. Truthfulness of the evidence in the criminal case can be judged only after the evidence is adduced therein and the criminal case can not be rejected on the basis of the evidence in the departmental proceeding or the report of the inquiry officer based on those evidence.

25.         We are, therefore, of the opinion that the exoneration in the departmental proceeding ipso facto would not result in the quashing of the criminal prosecution. We hasten to add, however, that if the prosecution against an accused is solely based on a finding in a proceeding and that finding is set aside by the superior authority in the hierarchy, the very foundation goes and the prosecution may be quashed. But that principle will not apply in the case of the departmental proceeding as the criminal trial and the departmental proceeding are held by two different entities. Further, they are not in the same hierarchy.”

The Hon’ble Supreme Court of India in a subsequent Judgment in the case of Ashoo Surendranath Tewari V/s. Deputy Superintendent of Police, EOW, CBI[16] (3 Judges) by relying on paragraph 38 (vii), of the judgment in the case of Radheshyam Kejriwal, held that since the accused in that case was exonerated by the CVC, he was entitled to quashing of the criminal prosecution as well.

In the case of Ashoo Surendranath Tewari, the prosecution under the Prevention of Corruption Act was given up due to lack of sanction and the prosecution of the accused was being pursued only under the provisions of the Indian Penal Code. This is the first distinguishing factor as to why this is not a Judgement on the proposition that exoneration of a public servant in disciplinary proceedings in the department should lead to automatic exoneration of prosecution under the Prevention of Corruption Act, 1988.

Further, in the case of Ashoo Surendranath Tewari it was not urged before the Hon’ble Supreme Court,

1. 1. 1. that the judgment in the case of Radheshyam Kejriwal was neither in respect of departmental disciplinary proceedings against a public servant nor for exoneration in prosecution under the provisions of the Prevention of Corruption Act, 1988.
      2. that in the case of Radheshyam Kejriwal, the case was under FERA where the Adjudicating Officer and prosecuting agency were both ED and the violation was under the same act i.e. FERA.
      3. that under the Prevention of Corruption Act, 1988, and in departmental disciplinary proceedings the authorities, the forum and hierarchy and appellate authority are different and the statute under which the proceedings are conducted are also different.  
      4. that an earlier coordinate 3-judge bench of the Hon’ble Supreme Court in the case of State V/s. Ajay Kumar Tyagi, which is binding, has held that exoneration in civil proceedings will not automatically lead to exoneration in criminal proceedings under the Act.  This was a binding precedent.
      5. that a coordinate 3-judge bench of the Hon’ble Supreme Court in the case of State V/s. Ajay Kumar Tyagi has held that P.S. Rajya V/s. State of Bihar does not lay down as a proposition of law that exoneration in departmental proceedings leads to exoneration in criminal proceedings.
      6. the prior binding judgments of the Hon’ble Supreme Court in the cases of (a) M.S. Sheriff V/s. State of Madras (which is a judgment of a 5-judge bench), (b) Iqbal Singh Marwah V/s. Meenakshi Marwah (which is a judgment of a 5-judge bench), (c) State (NCT of Delhi) V/s. Ajay Kumar Tyagi (which is a judgment by a coordinate bench of 3-judges) were not brought to the notice of the Hon’ble Supreme Court, and thus not considered. 

Though it does not say so, but arguendo, if the Judgment of P.S. Rajya, is also considered to have held that exoneration of a public servant in departmental proceedings must in all cases lead to exoneration in criminal prosecution, then, the Judgment of P.S. Rajya which was rendered by a bench of 2 Judges is also per incuriam as it fails to consider the judgment of an earlier coordinate bench of 2 judges in the case of Superintendent of Police (C.B.I.) V/s. Deepak Chowdhary and the Judgment by the constitution bench of the Hon’ble Supreme Court of India in the case of M.S. Sheriff V/s. State of Madras (which was also later followed by another constitution bench of the Hon’ble Supreme Court of India in Iqbal Singh Marwah V/s. Meenakshi Marwah).

Various High Courts across the country have taken divergent views on the subject. Some have followed Ajay Kumar Tyagi as laying down the correct law, while others have followed Radheshyam Kejriwal and Ashoo Surendranath Tewari as laying down the correct law.

The Hon’ble Supreme Court of India, in its recent Judgment delivered in the case of Puneet Sabharwal v/s. CBI[17] on 19.03.2024 has, clarified that Radheshyam Kejriwal’s case was concerned with prosecution by ED under FERA and the adjudicatory and criminal proceedings were being commenced by the same authority exercising powers under the same act i.e. FERA on identical facts. The Judgment in the case of Ashoo Surendranath has also been explained to be under the singular provision of Indian Penal Code.

In my view, on getting a clean chit (exoneration) in disciplinary proceedings by the department, public servants are not automatically cleansed and the pending proceedings against them under the provisions of Prevention of Corruption Act, 1988, are not liable to be automatically closed on that ground alone, because the two proceedings, albeit on the same set of facts, are separate, different, under different statutes, conducted, prosecuted and adjudicated by different agencies, have different hierarchies and are subject to different appellate bodies and procedures for adjudication, unless the test laid down by the Hon’ble Supreme Court of India in the case of State of Haryana v/s. Bhajan Lal is satisfied, and on which basis the Hon’ble Supreme Court had quashed the prosecution by terming it as persecution in the case of P.S.Rajya.

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