Discharge Application – trial court allowed – High Court set aside – Apex court confirmed the order of high court. High Court set aside the Order passed by the Magistrate allowing the application filed by the appellant to discharge him. – The appellant was Director of Mines and Geology in the State of Karnataka at the relevant time – Appellant is alleged to have acted in pursuance to the criminal conspiracy and abused his official position with a dishonest and fraudulent intention to cheat the Government of Karnataka and knowingly made a false note in the file that he had discussed this matter with the Deputy Director (Legal) and directed Deputy Director, Mines and Geology, Hospet for issue of MDPs to the new partners, viz., the first accused and the second accused by violating Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter referred to as ‘the Act’, for short) and Mineral Concession Rules, 1960 (hereinafter referred to as ‘the Rules’, for short). There are various allegations regarding other accused under Sections 120B, 420, 379, 409, 447, 468, 471, 477A of the Indian Penal Code, 1860 (hereinafter referred to as ‘the IPC’, for short) and Sections 13(2) and 13(1)(c) and 13(1)(d) of the Prevention of Corruption Act, 1988.- Apex court held that It is, no doubt, true that there may not be any other material to link the appellant with various other acts and omissions which have been alleged against the first accused in particular along with the fifth accused and other accused. However, the fact remains, if the defence of the appellant is not to be looked into, which included the practice obtaining in the past whenever the firm was reconstituted, and also the version of the appellant that he did in fact speak with the Deputy Director (Legal) and acted on his advice and further that this fact would be established if the Deputy Director (Legal) was questioned in his presence, they would appear to be matter which may not be available to the appellant to press before the court considering the application under Section 227 of the Cr.PC. This being the outcome of our discussion, the inevitable consequence is that we are not persuaded to hold that the High Court was in error in the view it has taken.

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 957 OF 2017
M.E. SHIVALINGAMURTHY … APPELLANT(S)
VERSUS
CENTRAL BUREAU OF INVESTIGATION,
BENGALURU … RESPONDENT(S)
J U D G M E N T
K.M. JOSEPH, J.

  1. The appeal is directed against the Order of the High
    Court setting aside the Order passed by the Magistrate
    allowing the application filed by the appellant to
    discharge him.
  2. The charge-sheet came to be filed on the basis of a FIR
    dated 01.10.2011. The appellant was Director of Mines and
    Geology in the State of Karnataka at the relevant time.
    There was a partnership firm by the name M/s Associated
    2
    Mineral Company (‘AMC’, for short). The offences are
    alleged to revolve around the affairs of the said firm.
    First accused is the husband of the second accused. They
    became partners of the firm (AMC) in 2009. Appellant was
    arrayed as the third accused. There was reference in the
    charge-sheet to a conspiracy between the first accused and
    the second accused. It is alleged, inter alia, that they
    obtained an undated letter from one Shri K.M. Vishwanath,
    the Ex-Partner, which is after his retirement with effect
    from 01.08.2009 from the firm, which was addressed to the
    appellant, seeking directions to the Deputy Director of
    Mines and Geology, Hospet in Karnataka to issue the Mineral
    Dispatch Permit (‘MDP’ for short) to the new partners, viz.,
    the first accused and the second accused. It is further
    averred that the investigation revealed that the appellant
    marked the said letter to the Case Worker who put up the
    note seeking orders for referring the matter for legal
    opinion which was also approved and recommended by the
    Additional Director and put up to the appellant for orders.
    Appellant is alleged to have acted in pursuance to the
    3
    criminal conspiracy and abused his official position with
    a dishonest and fraudulent intention to cheat the
    Government of Karnataka and knowingly made a false note in
    the file that he had discussed this matter with the Deputy
    Director (Legal) and directed Deputy Director, Mines and
    Geology, Hospet for issue of MDPs to the new partners, viz.,
    the first accused and the second accused by violating Mines
    and Minerals (Development and Regulation) Act, 1957
    (hereinafter referred to as ‘the Act’, for short) and
    Mineral Concession Rules, 1960 (hereinafter referred to as
    ‘the Rules’, for short). There are various allegations
    regarding other accused. As far as appellant is concerned,
    it is alleged further in the charge-sheet that the acts of
    the accused, seven in number, including the third accused
    (appellant), constitutes criminal offences punishable
    under Sections 120B, 420, 379, 409, 447, 468, 471, 477A of
    the Indian Penal Code, 1860 (hereinafter referred to as ‘the
    IPC’, for short) and Sections 13(2) and 13(1)(c) and
    13(1)(d) of the Prevention of Corruption Act, 1988. No
    doubt, the origin of this investigation is to be traced to
    4
    an Order passed by this Court dated 29.03.2011 in Special
    Leave Petition (Criminal) No. 7366-7367 of 2010 and
    connected matters ordering investigation into the
    illegalities into the matter of Mining Lease No. 2434 of
    AMC. The allegations include the allegation that the
    accused conspired to commit theft of Government property,
    i.e., mineral ore. They allegedly trespassed into the
    forest area and other areas of Bellary District: carried
    out illegal mining and transported it. Though, second
    accused (A2) to seventh accused(A7) filed applications
    under Section 227 of the Code of Criminal Procedure, 1973
    (hereinafter referred to as ‘Cr.PC’, for short) seeking
    discharge, by Order dated 08.10.2015, the Trial Court
    discharged the second accused and the appellant. It is this
    Order which has been set aside by the High Court by the
    impugned Order.
    APPLICATION BY THE APPELLANT SEEKING DISCHARGE
  3. It is, inter alia, stated as follows:
    Appellant is known for his honesty and dignity as
    a public servant. He earned his name as an excellent
    5
    and honest Officer in all the places where he was
    posted. He was not issued a single article of charges
    while discharging his duties. Though, he started as a
    Member of the Karnataka State Civil Service, he
    was promoted to the Cadre of Indian Administrative
    Service (IAS) as he had an impeccable service record.
    He was posted as Director of Mines in Geology, having
    regard to his service record. By virtue of the
    delegation under Section 26(2) of the Act, the
    execution of the lease deed lies with the Director of
    Mines and Geology. AMC was granted the Mining Lease by
    the State way back in 1966. The firm was reconstituted
    several times by inducting new partners and retiring
    old partners. As and when there is the reconstitution
    of the firm, the firm intimated to the Department of
    Geology of the reconstitution and conducted the mining
    operation in the name of AMC by the newly inducted
    partners. Though, several reconstitutions have taken
    place, no application has been filed under Rule 37 of
    the Rules for transfer of the lease on the ground that
    6
    the assets, viz., the Mining Lease belongs to the firm
    and not to any individual partners. Therefore, there
    was no requirement of making an application under Rule
    37 of the Rules seeking transfer of the Mining Lease.
    Records produced by the official before the Court
    reveal that the Department has understood that
    reconstitution did not amount to transfer as the
    partnership is the owner of the asset, viz., the Mining
    Lease. On inducting first and second accused, the
    reconstituted firm made application to Deputy Director
    seeking MDP by intimating that two new partners were
    inducted. The application was sent to the Director for
    issuance of MDP. In addition to the application filed
    to the Deputy Director seeking MDPs, Shri K.M.
    Vishwanath, Ex-Partner, representing the firm, made
    application to the Director, placing on record that
    firm had been reconstituted by inducting the first and
    the second accused and, accordingly, intimated under
    Rule 62 of the Rules. It is stated further that after
    receiving the application by the Department, the file
    7
    will have to be processed in the Mining Lease Section.
    There is an elaborate procedure followed while
    considering applications in Department of Mines and
    Geology. The Section Officer initially examines the
    file. A detailed note on the application is prepared.
    The file, along with note sheet, is sent to the
    Superintendent of the Mining Leases Section who is a
    senior Officer who examines the note sheet and puts up
    the same before the Additional Director. The
    Additional Director, who is the senior-most
    departmental Officer in the Department, examines the
    entire file and puts up the file before the Director.
    He passes an order considering the law applicable. If
    it is within the jurisdiction, he disposes the
    application. If an order from the State Government is
    required, it is so referred with comments. The Director
    signs the lease deed by virtue of delegation under
    Section 26(2) of the Act.
    8
  4. Appellant found that the firm was constituted by Shri
    Jali Mahadevappa an Shri Jali Mallikarjun in the year 1966
    and the lease was obtained in the name of AMC as a firm
    registered under the Partnership Act. The lease, as per the
    records, is the asset of the firm. The firm, viz., AMC, was
    reconstituted on 30.06.1983 by inducting Shri L. Lingaraju
    as one of the partners on account of retirement of Shri J.
    Mallikarjun. On 13.02.1984, the firm was reconstituted
    again wherein Shri B. Ananda joined as a partner and Shri
    J. Lingaraju retired. On 13.02.1982, Smt. B. Vasanthi
    joined in place of Shri J. Vamadevappa who retired from the
    firm. On 13.06.1986, Shri B. Vasudev entered the firm as
    a partner and Smt. B. Vasanthi retired from the firm. By
    Deed of Partnership dated 10.06.1990, Shri Mohammed Kasim
    joined the firm and Shri B. Ananda retired from the firm.
    Again, Smt. Asha Mohammad Haroon joined as partner in place
    of Shri B. Vasudev who retired. Again, AMC was reconstituted
    by inducting Shri K.M. Prabhu and Smt. Parvathamma. There
    was further reconstitution by inducting Smt. Sujata Prabhu
    and Shri K.M. Sujan, as partners. Lastly, on 01.09.2009,
    9
    the first accused and the second accused were inducted as
    partners. From 1981, on several occasions, the firm was,
    thus, reconstituted and the application under Rule 37 of
    the Rules was not filed before the State Government.
    Partners filed Form V before the Registrar of Firms
    intimating reconstitution. Never was an application made
    under Rule 37 as and when reconstitution was done on the
    ground that the firm was the owner of the mining lease. Only
    intimation under Rule 62 of the Rules was given. The Case
    Worker-CW24 has suggested to take legal opinion which was
    put up along with the note sheet. There was no note put up
    suggesting the applicability of Rule 37 of the Rules. If
    there was a suggestion about the applicability of such Rule,
    the appellant would have taken appropriate decision. The
    precedent available also was relied upon. The decision
    taken was a bonafide decision. The suggestion to take legal
    opinion was endorsed by the Additional Director which is
    produced before the Court as Exhibit D-765, the note sheet.
    During the course of the examination of the file, it was
    brought to the notice of the appellant that Rule 37 was not
    10
    applicable. A communication was sent to the Deputy
    Director, Hospet that the permits will have to be issued
    to the AMC but not in the names of the partners. The
    appellant further submitted that after receipt of the file,
    he contacted the Deputy Director (Legal) telephonically who
    informed that the reconstitution of the firm had taken place
    by inducting new partners and permits may be issued in the
    name of the Company and not in the name of the partners which
    was denied by the said Deputy Director (Legal) at a later
    stage. He sought support of Section 27 of the Act which
    protected acts done in good faith under the Act. He pointed
    out that during the investigation, he gave details of
    various firms who have leases with the Government which have
    not obtained permission under Rule 37. The procedure which
    was consistently followed for obtaining MDPs by intimating
    reconstitution under Rule 62 was brought to the notice. It
    was contended that taking a bonafide administrative
    decision on the understanding of Rule 37 and based on
    previous precedents, should not be considered as cheating.
    Reading of the charge-sheet and allegations, according to
    11
    the appellant, basically surrounded around Section 420 of
    the IPC.
  5. The statements of CW7, CW21, CW24, CW26, CW202 and
    CW109 were enlisted by the prosecution in support of the
    charge. The appellant pointed out the statements of the
    witnesses and the documents produced clearly reveal there
    is no material much less prima facie material to frame the
    charges.
    ORDER PASSED BY THE MAGISTRATE
  6. The Court noted the submission of the appellant that
    AMC had been reconstituted on a number of occasions. No
    fault was found in accepting reconstitution. Only when the
    first and second accused became partners in the year 2009,
    the appellant was faulted. Reliance is seen placed on the
    judgment of the judgment of the Division Bench of the High
    Court in Sree Ramakrishna Mining Company v. Commissioner
    of Income-Tax, Mysore1. Thereafter, reliance is placed on
    decisions which were rendered under the Indian Stamp Act,
    1 1966 SCC Online Kar 73 / ILR 1966 Mys. 1945
    12
    1899 for the proposition that an instrument evidencing the
    distribution of assets of a firm, on dissolution or
    retirement of a partner, would not amount to a conveyance.
    The principles relating to discharge under Sections 227 and
    228 were discussed, and finally, it was held as follows:
    “41.In view of the above said citations,
    it is evident that act of A-3 in directing his
    subordinates to issue MOP to M/s. Associated
    Mining Company belonging to accused Nos.1 and
    2 does not amount to fastening criminal
    liability of him. In the statement of CWs
    7,21,24,26,109 and 202, absolutely there is
    no material to show that A-3 has committed
    criminal conspiracy to help accused Nos.1 and
    2 in directing his officials to issue Mineral
    Dispatch Permit and as such there is
    considerable force in the argument of learned
    Counsel for accused No.3 and I am unable to
    accept the argument addressed by learned
    Special Public Prosecutor. Hence, I answer
    IA. No.30 deserves to be allowed. I answer.”
    FINDINGS OF THE HIGH COURT
  7. After noting the rival contentions, the court notes
    that for punishing under Section 120B of the IPC, the
    prosecution is required to prove the conspiracy. The
    13
    agreement, which is illegal, can be proved by necessary
    implication. It is to be largely proved from the inference
    of the illegal acts or omissions by the conspirators. The
    incriminating evidence collected by the prosecution, it is
    noted, is that the appellant recommended issuance of MDPs
    in gross violation of the Act despite the office noting to
    the effect that the matter required legal opinion. The stand
    of the appellant that he had discussed the matter with the
    Legal Department is seen negatived by CW21. As to his
    contention that many a time AMC was reconstituted and he
    had really discussed the matter with CW21 before directing
    the issue of MDPs, was found to be a matter of defence which
    could not be pressed at the threshold.
  8. We notice the following findings:
    “12. Applying the formulae of (some/mere
    suspicion – grave suspicion: as
    enunciated in Dilawar Balu Kurane’s
    case (supra) and Union of India -vsPrafulla Kumar Samai and another
    reported in AIR 1979 SC 366, to the
    evidentiary material placed before
    the court against respondent, then
    also the needle tilts more towards
    grove suspicion. The subject matter
    involved in this case is the natural
    14
    resource of the country and the
    alleged offence is said to have
    caused loss to the State exchequer
    substantially. The respondent is a
    responsible officer of the State.
    Consciously he passed the order in
    violation of the statutory
    provisions.
  9. The learned Trial Judge in the order
    impugned has made an omnibus
    observation that his action does
    not fasten criminal liability on
    him and the statement of the
    witnesses does not show that he
    committed criminal conspiracy.
    Though there was no direct
    evidence, the learned Trial Judge
    has lost sight of incriminating
    material appearing in the
    circumstantial evidence placed by
    the prosecution. Limited power
    vested with the Trial Court to sift
    and weigh the evidence is
    transgressed by the learned Trial
    Judge in the impugned order, hence
    requires intervention in this
    revision jurisdiction.”
  10. Accordingly, the petition was allowed setting aside
    the order of the Sessions Judge discharging the appellant.
  11. We heard Shri Kapil Sibal, learned Senior Counsel
    appearing for the appellant. We also heard learned Counsel
    appearing for the respondent.
    15
  12. Shri Kapil Sibal, learned Senior Counsel for the
    appellant, submits as follows:
    The lease was originally in favour of AMC in
    the year 1966. Thereafter, the firm was
    reconstituted on a large number of occasions. The
    procedure followed was intimation being given to
    the Department under Rule 62 of the Rules about the
    reconstitution. Rule 37 of the Rules was not
    invoked. This is a case where the action of the
    appellant was bonafide. Proceeding on the basis
    that Rule 37 applies, he further submits, this is
    not a case where the appellant could be prosecuted
    for the criminal offences. The appellant acted on
    the basis of the practice. He contacted the Deputy
    Director (Legal).
  13. There is also case of the appellant that he had directed
    MDP to be issued in the name of the firm. He had also made
    it clear that permit be also not issued to the partners.
    There was no other material produced on record by the
    16
    prosecution. This is not a case where there is material to
    establish any criminal conspiracy.
  14. Per contra, the learned Counsel for the
    respondent-Central Bureau of Investigation, Bengaluru,
    supported the order. In particular, reliance is placed on
    the specific stand of the Charge Witness-CW21 to the effect
    that the appellant had not sought his legal opinion contrary
    to the stand of the appellant.
    LEGAL PRINCIPLES APPLICABLE IN REGARD TO AN APPLICATION
    SEEKING DISCHARGE
  15. This is an area covered by a large body of case law.
    We refer to a recent judgment which has referred to the
    earlier decisions, viz., P. Vijayan v. State of Kerala and
    another2 and discern the following principles:
    i.If two views are possible and one of them gives rise
    to suspicion only as distinguished from grave
    suspicion, the Trial Judge would be empowered to
    discharge the accused.
    2 (2010) 2 SCC 398
    17
    ii. The Trial Judge is not a mere Post Office to frame
    the charge at the instance of the prosecution.
    iii. The Judge has merely to sift the evidence in order
    to find out whether or not there is sufficient ground
    for proceeding. Evidence would consist of the
    statements recorded by the Police or the documents
    produced before the Court.
    iv. If the evidence, which the Prosecutor proposes to
    adduce to prove the guilt of the accused, even if
    fully accepted before it is challenged in
    cross-examination or rebutted by the defence
    evidence, if any, “cannot show that the accused
    committed offence, then, there will be no sufficient
    ground for proceeding with the trial”.
    v.It is open to the accused to explain away the materials
    giving rise to the grave suspicion.
    vi. The court has to consider the broad probabilities,
    the total effect of the evidence and the documents
    produced before the court, any basic infirmities
    appearing in the case and so on. This, however, would
    18
    not entitle the court to make a roving inquiry into
    the pros and cons.
    vii. At the time of framing of the charges, the probative
    value of the material on record cannot be gone into,
    and the material brought on record by the
    prosecution, has to be accepted as true.
    viii. There must exist some materials for entertaining
    the strong suspicion which can form the basis for
    drawing up a charge and refusing to discharge the
    accused.
  16. The defence of the accused is not to be looked into at
    the stage when the accused seeks to be discharged under
    Section 227 of the Cr.PC (See State of J & K v. Sudershan
    Chakkar and another3). The expression, “the record of the
    case”, used in Section 227 of the Cr.PC, is to be understood
    as the documents and the articles, if any, produced by the
    prosecution. The Code does not give any right to the accused
    to produce any document at the stage of framing of the
    3 AIR 1995 SC 1954
    19
    charge. At the stage of framing of the charge, the
    submission of the accused is to be confined to the material
    produced by the Police (See State of Orissa v. Debendra Nath
    Padhi4).

ANALYSIS OF THE CASE

  1. Having set out the legal principles, as aforesaid, let
    us consider the facts:
    Undoubtedly, the appellant came to be
    appointed as the Director of Mines and Geology of
    the State of Karnataka by virtue of Notification
    dated 09.06.2008. He continued in the said post
    till 25.10.2010. Mining Lease No.625 was executed
    on 02.03.1966 between the Governor and AMC, a
    registered firm. The Managing Partner was one Shri
    Jali Mahadevappa. The partners of the AMC, viz.,
    Shri K.M. Parvatamma and Shri K.M. Vishwanath sent
    a letter dated 26.12.2009. It reads as follows:
    “To:
    The Director
    4 AIR 2005 SC 359
    20
    Mines & Geology Mineral
    Khanija Bhavan
    Race Course Road
    Bangalore.
    Sub: Change in Constitution of
    Associated Mining Company ML
    No.2434- Reg.
    Sir,
    We undersigned are lease owner of
    Associated Mining Company of Guru Iron
    Ore Mines at Venkatagiri Village, Sandur
    Taluk, Bellary Dist, bearing ML No.2434
    (Old 625).
    For better management we admitted
    as Partners Mr. G. Janardhan Reddy and
    Mrs. G. Lakshmi Aruna of 123/350
    Veerabagouda Colony, Opp Kumaraswamy
    Temple Club Road, Bellary on 31st July,
  2. Subsequently on 1st August, 2009
    Smt. K.M. Parvatamma and Mr. K.M.
    Vishwanath retired.
    Mr. G. Janardhana Reddy and Mrs. G.
    Lakshmi Aruna are sole Partners of the
    Mine. The admission and Retirement deed
    are enclosed herewith for your perusal.
    This is for your kind information.
    Kindly issue permission to
    transport the ore from Mines to various
    destinations.
    Thanking you,
    Yours sincerely,
    sd/-
    Smt. K. Parvatamma
    sd/-
    Mr.K.M. Vishwanath”
    21
  3. The role, which is attributed to the appellant, begins
    essentially with this letter. It is the case of the
    prosecution that having regard to Rule 37 of the Rules, it
    was incumbent upon the appellant, before acting upon the
    reconstitution of the firm, to obtain the previous sanction
    of the State Government. The Charge Witnesse-CW24-
    D. Hanumantha, undoubtedly, has given statement indicating
    that the letter aforesaid was marked to him to process the
    same. He further stated that he proposed that legal opinion
    may be obtained. Finally, it was submitted to the Additional
    Director. The Additional Director also recommended the
    need to obtain legal opinion. The matter came up before the
    appellant on 04.01.2010. On 04.01.2010, it appears that
    appellant has ordered:
    “… “spoken to Dy. Director (Legal), the
    company remains the same, whereas the
    partners might have been included or removed,
    and this they are supposed to approach the law
    board. In the present case, the partners are
    not asking for MDP (Mineral Dispatch Permits)
    in their names, but in the name of the
    company. Permits may be issued only in the
    22
    name of the company viz., AMC where lease is
    also sanctioned to the same company only. The
    partners are changed, but you are not going
    to issue MDPs to the partners. Hence inform
    DD Hospet that MDPs may be issued only in the
    name of the Company.”…”
  4. The Additional Director has also spoken on similar
    lines.
  5. The case of the prosecution, which has appealed to the
    High Court, is essentially based on the fact that on the
    one hand, the appellant in his Order dated 04.01.2010
    (Draft) which was finalised on 05.01.2010, spoke about
    having obtained legal opinion by speaking to Deputy
    Director (Legal), the Deputy Director (Legal) has taken the
    stand that he has not given any such opinion. The statement
    of the Deputy Director (Legal) has been produced by the
    appellant along with Criminal Miscellaneous Petition No.
    122009 of 2009. He has stated, inter alia, as follows:
    “However, no opinion was sought from me in
    this regard”. He has further stated that since the
    contents of the letter dated 26.12.2009 disclosed
    23
    that the entire lease holding rights were
    transferred in favour of the first and second
    accused, it is contrary to Rule 37 of the Rules.
    However, ignoring the provisions of Rule 37, the
    direction was issued to Deputy Director to issue
    the MDPs in the name of the Company. However, he
    further states that AMC is a firm not a company.
    He further stated that if there is no change in the
    rights of the lessee, then, someone else gets
    rights over the leasehold rights. The said act will
    attract provisions of Rule 37 of the Rules. He has
    also stated that though an application was filed
    on 29.07.1994 in view of the fact that the Mining
    Lease was due to expire on 01.03.1996, the lease
    is renewed from the year 2000 to 2010 by the
    Minister since the Forest Department gave
    permission. He goes on to state that the lease
    ought to have been renewed with effect from
    02.03.1996 for a period of ten years.
    24
  6. It is necessary to notice Rule 37 of the Rules which
    were made in 1960. Rule 37 reads as follows, inter alia:
    “37. Transfer of lease :- (1) The lessee shall
    not, without the previous consent in writing
    of the State Government and in the case of
    mining lease in respect of any mineral
    specified in Part ‘A’ and Part ‘B’ of the
    First Schedule to the Act, without
    the previous approval of the Central
    Government :-
    (a) assign, sublet, mortgage, or in any
    other manner, transfer the mining
    lease, or any right, title or
    interest therein, or
    (b) enter into or make any bonafide
    arrangement, contract, or
    understanding whereby the lessee
    will or may be directly or
    indirectly financed to a
    substantial extent by, or under
    which the lessee’s operations or
    undertakings will or may be
    substantially controlled by, any
    person or body of persons other than
    the lessee:”
    (Emphasis supplied)
  7. The Trial Court has placed reliance on judgment of the
    Division Bench of the Mysore High Court in Sree Ramakrishna
    Mining Company (supra). In fact, the Court in the said case,
    25
    considered Rule 37 of the Mineral Concession Rules of 1949,
    which read as follows:
    “37. Transfer of lease:- The lessee may
    with the previous sanction of the State
    Government and subject to conditions
    specified in the first proviso to rule 35 and
    in rule 38, transfer his lease or any right,
    title, or interest therein, to a person
    holding a certificate of approval on payment
    of a fee of Rs.100 to the State Government.”
    (Emphasis supplied)
  8. It is clear that the provision, as obtained prior to
    1960, when the Rules were made, was different.
  9. In the aforesaid case, the question came to be decided
    in a Reference under Section 66 of the Income Tax Act, 1922.
    One of the questions which fell for decision was the effect
    of there being no previous sanction of the Government under
    Rule 37 for the transfer of lease. We may notice that the
    Court in Sree Ramakrishna Mining Company (supra), inter
    alia, held as follows:
    “The 37th Rule, as can be seen from its
    language does not concern itself with the
    formation of a partnership such as the one
    before us, and, its principal purpose is to
    provide for the transfer of a lease granted
    under the provisions of the Rules. It is in
    26
    the nature of an enabling provision which
    authorises a transfer by the lessee to a
    person who has a certificate of approval,
    and, directs that such transfer could be made
    with the previous sanction of the Government
    subject to the other conditions with which we
    are not concerned. There is a distinction
    between a statutory provision which contains
    an express prohibition against the
    performance of a certain act and one which
    enables its performance subject to
    prescribed conditions. While in the former
    case, there will be no difficulty in coming
    to the conclusion if nothing else could be
    said about it that the absolute prohibition
    against the performance of the act is what is
    forbidden by law, the same could not be said
    if the matter falls within the second
    category. Now the 37th rule does not, in
    express terms, forbid a transfer but
    authorises a transfer with the previous
    sanction of the Government and subject to
    other conditions.”
  10. The provisions of Rule 37, which would control destiny
    of this case, is, as it was obtained in the year 2009. Also
    could it not be contended that decisions rendered under the
    Stamp Act may not be relevant to understood the scope of
    Rule (37) of the Rules. No doubt, there is a case for the
    appellant that on a number of reconstitutions took place
    in regard to the firm-AMC, and on no occasion, was an issue
    relating to infraction of Rule 37, raised. All that the
    27
    appellant did was, he acted in accordance with the practice
    obtaining in the Department. There is the case for the
    appellant that in this regard, Rule 37, as such, was not
    pointedly invoked by either the Additional Director or the
    SDA.
  11. It is here that again it becomes necessary that we
    remind ourselves of the contours of the jurisdiction under
    Section 227 of the Cr.PC. The principle established is to
    take the materials produced by the prosecution, both in the
    form of oral statements and also documentary material, and
    act upon it without it been subjected to questioning through
    cross-examination and everything assumed in favour of the
    prosecution, if a scenario emerges where no offence, as
    alleged, is made out against the accused, it, undoubtedly,
    would enure to the benefit of the accused warranting the
    Trial Court to discharge the accused.
  12. It is not open to the accused to rely on material by
    way of defence and persuade the court to discharge him.
  13. However, what is the meaning of the expression
    “materials on the basis of which grave suspicion is aroused
    28
    in the mind of the court’s”, which is not explained away?
    Can the accused explain away the material only with
    reference to the materials produced by the prosecution? Can
    the accused rely upon material which he chooses to produce
    at the stage?
  14. In view of the decisions of this Court that the accused
    can only rely on the materials which are produced by the
    prosecution, it must be understood that the grave
    suspicion, if it is established on the materials, should
    be explained away only in terms of the materials made
    available by the prosecution. No doubt, the accused may
    appeal to the broad probabilities to the case to persuade
    the court to discharge him.
  15. In this case, as already noticed, going by the
    statements made by the subordinates working in the Office
    of the appellant, on receipt of the letter from the
    erstwhile partners of AMC dated 26.12.2009, two of his
    subordinates, including the Additional Director, did
    recommend that the matter requires a legal opinion. The
    noting, which is undisputed in this case, made by the
    29
    appellant, would appear to suggest that he had spoken to
    the Deputy Director (Legal). The prosecution case largely
    depends upon the statement of the Deputy Director (Legal)
    who takes a definite stand that no opinion was sought from
    him. A matter, under Rule 37 of the Rules, therefore,
    according to the prosecution case, which ought to have gone
    to the State Government for prior sanction, came to be dealt
    with by the appellant as Director of Mines. This led to the
    issue of MDPs. It is, no doubt, true that there may not be
    any other material to link the appellant with various other
    acts and omissions which have been alleged against the first
    accused in particular along with the fifth accused and other
    accused. However, the fact remains, if the defence of the
    appellant is not to be looked into, which included the
    practice obtaining in the past whenever the firm was
    reconstituted, and also the version of the appellant that
    he did in fact speak with the Deputy Director (Legal) and
    acted on his advice and further that this fact would be
    established if the Deputy Director (Legal) was questioned
    in his presence, they would appear to be matter which may
    30
    not be available to the appellant to press before the court
    considering the application under Section 227 of the Cr.PC.
  16. This being the outcome of our discussion, the
    inevitable consequence is that we are not persuaded to hold
    that the High Court was in error in the view it has taken.
    Consequently, the appeal fails and it stands dismissed. We,
    however, make it clear that the observations made by us are
    for the purpose of deciding the application under Section
    227 of the Cr.PC. and they are not to trammel the Court.

…………………………………………………J.
[SANJAY KISHAN KAUL]
…………………………………………………J.
[K.M. JOSEPH]
NEW DELHI;
JANUARY 07, 2020.