Supreme Court Declines to Dismiss FIR Against Naidu, Remains Divided on PC Act Application

Background

Former Andhra Pradesh Chief Minister N Chandrababu Naidu was arrested on September 9, 2023 by the state’s Crime Investigation Department (CID) in connection with an alleged scam in the Skill Development Corporation. He was accused of misappropriating funds worth around Rs 370 crore from the corporation through fictitious companies between 2014 and 2019. He was booked under various sections of the Indian Penal Code (IPC) and the Prevention of Corruption Act, 1988 (PC Act).

High Court Order

Naidu approached the Andhra Pradesh High Court seeking to quash the FIR and the judicial remand order against him. However, the high court rejected his plea on September 22, 2023, saying that it could not conduct a mini-trial at this stage and that the investigation was nearing completion. The high court also observed that there was prima facie material to show Naidu’s involvement in the scam.

Supreme Court Verdict

Naidu then moved the Supreme Court challenging the high court order and contending that the FIR and the investigation were illegal as they were initiated without obtaining the mandatory sanction under Section 17A of the PC Act. Section 17A requires prior approval from a competent authority before conducting an inquiry or investigation into an offence related to any recommendations made or decision taken by a public servant in the discharge of his public functions. Naidu argued that in his case, the approval should have been taken from the Governor.

However, the Supreme Court on January 17, 2024 refused to quash the FIR and the criminal proceedings against Naidu with respect to the charges levelled under the IPC. The apex court said that there was sufficient material to proceed against him and that he could not claim any immunity from prosecution.

The Supreme Court, however, remained divided on his prosecution under the PC Act. A division bench comprising Justices Aniruddha Bose and Bela M Trivedi differed in their interpretation of Section 17A and its applicability in this case. The point of contention was whether Section 17A, which was introduced in July 2018, could be applied retrospectively to an offence that allegedly took place in 2017.

Justice Bose held that Section 17A was to be applied retrospectively and that the police could not have proceeded against Naidu without getting the sanction. He said that in absence of such approval, the action under the PC Act would be illegal. He, however, clarified that the authorities could now seek sanction and proceed afresh.

Justice Trivedi, on the other hand, held that Section 17A was a substantive and not procedural provision and that it could not be applied retrospectively. She said that the object of the PC Act was to combat corruption and that Section 17A was to protect honest public servants from harassment. She said that applying Section 17A retrospectively would frustrate the object of the PC Act and benefit dishonest public servants. She said that absence of approval would never be a ground to quash an FIR.

Due to the split verdict, the case was referred to a larger bench, which will be constituted by Chief Justice D Y Chandrachud.