NARA CHANDRABABU NAIDU vs. THE STATE OF ANDHRA PRADESH & ANR.

A) ABSTRACT / HEADNOTE

This case primarily deals with the interpretation and applicability of Section 17A of the Prevention of Corruption Act, 1988, which was introduced by the Prevention of Corruption (Amendment) Act, 2018. The appellant, Nara Chandrababu Naidu, former Chief Minister of Andhra Pradesh, sought to quash the First Information Report (FIR) registered against him, arguing that the absence of prior approval as mandated by Section 17A vitiated the entire process of enquiry, inquiry, or investigation. The Supreme Court, however, faced divergent opinions on whether this provision applied retrospectively or only to new offences post-amendment. Justice Bose opined that Section 17A required approval for any investigation concerning decisions made in an official capacity post-amendment. Justice Trivedi viewed Section 17A as substantive, thus inapplicable retrospectively. Ultimately, due to the division of opinions, the matter was referred to a larger bench for a conclusive determination.

Keywords: Misappropriation of funds, Section 17A, Retrospective Application, Corruption Inquiry, Criminal Breach of Trust

B) CASE DETAILS

• Judgement Cause Title: Nara Chandrababu Naidu v. The State of Andhra Pradesh & Anr.
• Case Number: Criminal Appeal No. 279 of 2024
• Judgement Date: 16 January 2024
• Court: Supreme Court of India
• Quorum: Aniruddha Bose, J. and Bela M. Trivedi, J.
• Author: Aniruddha Bose, J.
• Citation: [2024] 1 S.C.R. 549; 2024 INSC 41
• Legal Provisions Involved:
  • Indian Penal Code (IPC), 1860 – Sections 166, 167, 418, 420, 465, 468, 471, 409, 209, and 109 read with Sections 120B, 34, 37.
  • Prevention of Corruption Act, 1988 – Sections 12, 13(2), read with 13(1)(c) and (d), and the newly added Section 17A.
  • Code of Criminal Procedure, 1973 – Section 223.
• Judgments Overruled by the Case: None.
• Related Law Subjects: Criminal Law, Anti-Corruption Law, Interpretation of Statutes.

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The case arose from allegations against Naidu concerning the siphoning of public funds intended for the Andhra Pradesh State Skill Development Corporation (APSSDC) project. The accusations extended to multiple offences under the Indian Penal Code and the Prevention of Corruption Act, 1988. The FIR, initially filed against 26 accused in 2021, later included Naidu as an accused in 2023. Naidu contested the validity of the investigation, arguing that Section 17A mandated prior approval for actions against public officials for decisions taken during their official duties. The High Court dismissed his plea, leading to the present appeal.

D) FACTS OF THE CASE

Between 2015 and 2019, during Naidu’s tenure as Chief Minister, public funds were allegedly misappropriated under a project for establishing skill development centers. The Andhra Pradesh State Skill Development Corporation (APSSDC) was set up with a project cost of Rs. 3281 crores, where 90% of the funds were to be contributed by private entities (SIEMENS and Design Tech), and the government’s share was limited to 10%. However, the final arrangement reflected a significant outflow from state funds, raising suspicion of misappropriation.

Investigations by the GST Intelligence and the Anti-Corruption Bureau revealed inconsistencies, especially regarding fake invoices and shell companies allegedly used to siphon funds. Based on these findings, the FIR accused Naidu of conspiring to misappropriate funds by circumventing tender procedures, abusing his official position, and facilitating payments without proper compliance.

E) LEGAL ISSUES RAISED

1. Whether Section 17A of the Prevention of Corruption Act, 1988, which mandates prior approval before investigating public officials for decisions taken in their official capacity, applies retrospectively to actions prior to its 2018 amendment.
2. If Section 17A applies, does the absence of prior approval invalidate the entire investigation against Naidu?

F) PETITIONER/APPELLANT’S ARGUMENTS

• Requirement of Prior Approval: The appellant argued that Section 17A necessitated prior approval before any inquiry or investigation for actions taken in an official capacity. Since no such approval was obtained, the FIR and subsequent proceedings were illegal and should be quashed.
• Procedural Safeguard with Retroactive Effect: It was contended that Section 17A served as a procedural safeguard applicable to ongoing cases even if the alleged offences occurred before the amendment.
• Jurisdiction of Special Judge: The appellant claimed that the remand order was unlawful due to the absence of charges under the Prevention of Corruption Act. Hence, only IPC charges, if any, should proceed independently.

G) RESPONDENT’S ARGUMENTS

• Non-retroactivity of Section 17A: The State argued that Section 17A is substantive, not procedural, and does not apply to offences predating its enactment. Since the offences allegedly took place between 2015 and 2019, Section 17A’s approval mandate was inapplicable.
• Legitimacy of Initial Inquiry: According to the respondents, a legitimate inquiry was initiated as early as 2018, prior to the amendment’s effective date, making the approval requirement redundant in this case.
• Continuity of IPC Offences: Even if Prevention of Corruption Act charges are set aside, IPC charges remain viable, and the appellant could still be tried under these provisions.

H) JUDGEMENT

a. RATIO DECIDENDI

• Justice Aniruddha Bose: Emphasized that Section 17A should apply to any inquiry or investigation involving actions related to official decisions taken post-amendment. Without prior approval, proceedings under the Prevention of Corruption Act are invalid.
• Justice Bela M. Trivedi: Held that Section 17A is substantive, meant only for offences after the 2018 amendment. Actions predating this amendment are not covered, and retrospective application was not intended by the legislature.

b. OBITER DICTA (IF ANY)

• Justice Bose noted that Section 17A required judicial application to determine if an action related to official duty, which lay outside the police’s expertise, emphasizing judicial oversight even at the inquiry stage.

c. GUIDELINES (IF ANY – WRITE IN DETAIL AND IN POINTERS AS THE CASE MAYBE)

• The case did not establish formal guidelines, but the difference in opinions underscores the need for clarification on retrospective vs. prospective application of procedural safeguards in the Prevention of Corruption Act.

I) CONCLUSION & COMMENTS

This case brings critical attention to the procedural safeguard introduced in Section 17A and its impact on ongoing investigations involving public officials. The contrasting opinions highlight the ambiguity in statutory interpretation, particularly regarding retrospective application. By referring the case to a larger bench, the Supreme Court underscores the need for judicial clarity on the procedural safeguard’s scope, balancing accountability with fair procedural requirements for public officials.

J) REFERENCES

1. Dr. S.M. Mansoori (Dead) Through Legal Representatives v. Surekha Parmar & Others [(2023) 6 SCC 156]
2. State of Rajasthan v. Tejmal Choudhary [2021 SCC Online SC 3477]
3. Ebha Arjun Jadeja & Others v. State of Gujarat [(2019) 9 SCC 789]
4. Yashwant Sinha and Others v. Central Bureau of Investigation through its Director and Another [(2020) 2 SCC 338]
5. Subramanian Swamy v. Director, Central Bureau of Investigation & Another [(2014) 8 SCC 682]