A) ABSTRACT / HEADNOTE

The judgment in M/s. Fertico Marketing and Investment Pvt. Ltd. and Others v. Central Bureau of Investigation and Another addresses the scope, nature, and legal consequences of consent under Section 6 of the Delhi Special Police Establishment Act, 1946 in the context of investigations conducted by the Central Bureau of Investigation within a State. The case arose from allegations of diversion and black-marketing of coal supplied under a Fuel Supply Agreement, allegedly executed through collusion between private company officials and State Government public servants. The principal challenge before the Court related to the legality of the CBI investigation on the ground that prior consent of the State Government had not been obtained before registration of the FIR and completion of investigation.

The Supreme Court undertook a detailed examination of the federal scheme underlying Sections 5 and 6 of the DSPE Act, the distinction between private individuals and public servants, and the jurisprudence governing procedural irregularities in investigation. The Court clarified that no consent under Section 6 is required for investigation against private individuals, where general consent exists. In relation to public servants of the State Government, the Court held that post-facto consent granted by the State Government was valid in law, particularly where the accused were not named in the FIR and where no prejudice or miscarriage of justice was demonstrated.

Relying upon settled precedents such as H.N. Rishbud v. State of Delhi and Union of India v. Prakash P. Hinduja, the Court reaffirmed that defects or irregularities in investigation do not vitiate criminal proceedings unless they result in failure of justice. The judgment reinforces doctrinal clarity on federal consent, investigative jurisdiction of the CBI, and the prejudice test under criminal procedure, while remitting unresolved ancillary issues back to the High Court for determination.

Keywords: DSPE Act, Section 6 consent, CBI jurisdiction, post-facto consent, prejudice test, federalism

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The controversy arose against the backdrop of coal allocation and distribution under the policy framework of Coal India Limited, which mandated execution of Fuel Supply Agreements with private purchasers. The appellants were beneficiaries under such an agreement and were alleged to have diverted subsidized coal into the black market. The alleged acts involved coordination between private company officials and certain officers of the District Industries Centre, Chandauli, leading to financial loss to the Central Government.

The Central Bureau of Investigation registered an FIR invoking Sections 120B and 420 IPC along with Section 13 of the Prevention of Corruption Act, 1988. Initially, only private individuals and unknown public servants were named. During investigation, two State Government officers were identified as conspirators, and sanction under Section 19 of the PC Act was obtained prior to filing of the charge-sheet.

The proceedings were challenged before the Allahabad High Court under Section 482 CrPC primarily on the ground that the investigation was void ab initio for want of prior consent of the State Government under Section 6 of the DSPE Act. The Single Judge’s differing views led to a reference to a Division Bench, followed by remand and eventual dismissal of the petitions based on the validity of post-facto consent.

The Supreme Court was thus called upon to resolve the legal tension between federal consent requirements, investigative jurisdiction of the CBI, and the impact of procedural irregularities on criminal prosecution, especially where allegations of corruption involving public servants were concerned.

D) FACTS OF THE CASE

Coal India Limited introduced a policy on 18 October 2007 requiring execution of Fuel Supply Agreements for coal procurement. Pursuant to this policy, an FSA was executed on 30 April 2008 between Coal India Limited and the appellant company. On 25 March 2011, a joint surprise inspection by the CBI revealed that coal procured under the FSA was allegedly diverted and sold in the open market.

The investigation disclosed that false reports regarding operational capacity and usage were allegedly submitted with the connivance of officials of the District Industries Centre. These misrepresentations enabled continued supply of coal at subsidized rates, resulting in an alleged loss of ₹36.28 crores to the exchequer. An FIR dated 13 April 2011 was registered against the company’s Director and unknown officials.

During investigation, two State Government officers were identified as active participants in the conspiracy. Sanction for their prosecution was granted on 31 May 2012 under Section 19 of the PC Act, and a charge-sheet was filed on the same date. Several accused approached the High Court seeking quashing of proceedings, contending that the CBI lacked jurisdiction in absence of State consent under Section 6 of the DSPE Act.

The State Government later issued a notification on 7 September 2018 granting post-facto consent for investigation against the said public servants. The High Court upheld the investigation, holding that post-facto consent was sufficient and that private individuals could not challenge absence of consent. These findings formed the basis of the appeal before the Supreme Court.

E) LEGAL ISSUES RAISED

i. Whether investigation by the CBI without prior consent of the State Government under Section 6 of the DSPE Act is illegal and without jurisdiction?
ii. Whether post-facto consent granted by the State Government cures the alleged defect of absence of prior consent?
iii. Whether private individuals can challenge CBI investigation on the ground of lack of State consent?
iv. Whether absence of prior consent results in vitiation of proceedings without proof of prejudice or miscarriage of justice?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for the appellants submitted that Section 6 of the DSPE Act is mandatory in nature and that absence of prior consent strikes at the root of CBI jurisdiction. It was argued that offences under the Prevention of Corruption Act necessarily involve public servants, and therefore investigation without consent was unconstitutional and violative of federal principles.

It was further contended that invocation of Section 120B IPC presupposes a meeting of minds between public servants and private individuals, rendering the entire investigation illegal in absence of valid consent. Reliance was placed on Ms. Mayawati v. Union of India to contend that unauthorized CBI investigation amounts to abuse of process.

G) RESPONDENT’S ARGUMENTS

The counsels for the respondent submitted that general consent dated 15 June 1989 authorized investigation against private individuals. It was argued that Section 6 consent is directory, and any procedural lapse does not vitiate proceedings unless prejudice is shown.

It was further argued that the public servants were not named in the FIR and that post-facto consent dated 7 September 2018 validly cured any irregularity. The absence of pleadings on prejudice or miscarriage of justice disentitled the appellants from relief.

H) JUDGEMENT 

The Supreme Court upheld the validity of the investigation against both private individuals and public servants. The Court held that the notification dated 15 June 1989 constituted valid general consent enabling CBI investigation against private individuals for PC Act offences and allied IPC offences. No separate consent was required for them under Section 6 of the DSPE Act.

In respect of public servants, the Court held that since they were not named in the FIR and were identified during investigation, post-facto consent granted by the State Government was legally sustainable. The Court relied on H.N. Rishbud v. State of Delhi to reiterate that illegality in investigation does not vitiate proceedings unless miscarriage of justice is shown.

The Court rejected reliance on Mayawati, holding it factually inapplicable. The absence of pleadings or proof of prejudice was decisive. However, the Court remitted unanswered issues framed by the High Court for fresh consideration, keeping merits open.

a) RATIO DECIDENDI

The ratio decidendi of the judgment lies in the affirmation that absence of prior consent under Section 6 of the DSPE Act does not ipso facto vitiate criminal proceedings. The Court held that consent requirements must be interpreted in a manner consistent with federal balance but without allowing technical objections to defeat substantive justice.

The Court conclusively held that private individuals cannot challenge investigation on the ground of lack of State consent, and that post-facto consent for investigation against State public servants is valid, particularly where no prejudice or miscarriage of justice is demonstrated. The prejudice test remains central to adjudging the impact of investigative irregularities.

b) OBITER DICTA

The Court observed that federal consent provisions under the DSPE Act must not be weaponized to obstruct corruption investigations. It noted that procedural safeguards are intended to protect legitimate State interests, not to create immunity for accused persons on technical grounds.

The emphasis on prejudice and failure of justice underscores a pragmatic approach to criminal procedure. The Court’s observations reinforce the principle that criminal trials are concerned with truth-finding rather than procedural perfection.

c) GUIDELINES 

i. Consent under Section 6 of the DSPE Act is not required for investigation against private individuals where general consent exists.
ii. Post-facto consent for investigation against State public servants is legally permissible.
iii. Investigative irregularities do not vitiate proceedings unless prejudice or miscarriage of justice is established.
iv. High Courts must decide all framed issues and cannot leave substantive questions unanswered.

I) CONCLUSION & COMMENTS

The judgment strengthens the doctrinal clarity on the interplay between federal consent and anti-corruption investigations. It prevents abuse of Section 6 of the DSPE Act as a technical shield against prosecution, while preserving the constitutional balance between Centre and States.

By reaffirming the prejudice test, the Court aligns procedural law with substantive justice. The decision has significant implications for pending and future CBI investigations involving State officials, particularly in corruption-related offences.

J) REFERENCES

a) Important Cases Referred
i. H.N. Rishbud v. State of Delhi, [1955] 1 SCR 1150
ii. State of Karnataka v. Kuppuswamy Gownder, [1987] 2 SCR 295
iii. Union of India v. Prakash P. Hinduja, [2003] 1 Supp. SCR 307
iv. Ms. Mayawati v. Union of India, [2012] 7 SCR 33

b) Important Statutes Referred
i. Delhi Special Police Establishment Act, 1946
ii. Prevention of Corruption Act, 1988
iii. Indian Penal Code, 1860
iv. Code of Criminal Procedure, 1973