Prevention Of Corruption Act| Erroneous Understanding Of Circular Is No Reason To Presume Culpable Mental State: Madras High Court

While stating that forcing petitioners to undergo the ordeal of criminal prosecution which has lost its legs to stand, will be an abuse of the process of law, the Madras High Court held that an erroneous understanding of the circulars and guidelines per se will not be a reason to presume culpable mental state under Prevention of Corruption Act.

The High Court held so while considering the petitions seeking the discharge of the accused from the criminal case which was pending on the file of the Special Court for the Cases under the Prevention of Corruption Act, Chennai.

A Single Judge Bench of Justice G. Jayachandran observed that "Erroneous understanding of the circulars and guidelines per se will not be a reason to presume culpable mental state under Prevention of Corruption Act. The abuse of power leading to pecuniary loss to the State or gain to individual ought to prima facie available."

“The circulars of the Registration Department, instructs the SRO, District Registrar and the DIG of Registrations, who are authorities in hierarchy to decide the value of the property for the purpose of collecting stamp duty and for the exercise of power under Section 47 of the Registration Act to the effect that while determining the guideline value of a property, they should go by the guideline value already fixed and they have right to revise only upward due to efflux of time or surge in the price”.

The Bench further observed that “In case of land converted from agricultural use to residential use and no guideline value fixed, then the value of the neighboring lands of same classification has to be taken into consideration. If no land of same classification is available in the neighborhood, to determine the guideline value, then the highest guideline value in that village or the market value may be taken into consideration for fixation of value to collect stamp duty”.

Senior Advocate R. John Sathyam appeared for the petitioner, whereas Advocate S. Udaya Kumar appeared for the respondent.

The brief facts of the case were that the first accused, a public servant, and Deputy Inspector General of Registration in Chennai Zone during 2014, was alleged to have bypassed prescribed procedures. It was claimed that she, as the appellate authority for guideline values, instead of setting Rs.1000/- for VIP City and Vanthanam Nagar layouts, fixed Rs.500/- and Rs.400/- respectively, causing a total loss of Rs.2,25,88,058/- to the Government. Ignoring regulations, she abused her position, causing revenue loss, obtaining undue gain, and committing an offense under Section 13 (2) r/w 13(1)(d) of Prevention of Corruption Act, 1988. Similarly, it was alleged that the second accused, who is also a Public Servant, collaborated with first accused in submitting a dishonest report to re-fix Vanthanam Nagar's value at Rs.350/-, aiding third parties and obtaining undue advantage. Therefore, it was claimed that such act, in violation of rules, falls under Section 13 (2) r/w 13(1)(d) of Prevention of Corruption Act, 1988.

After considering the submission, the Bench noted that the circulars of the Registration Department instruct the hierarchy of authorities i.e., SROs, District Registrars, and DIG of Registrations, and that while determining property guideline values for stamp duty and Section 47 of the Registration Act, revisions should only be upward due to time or price surge, no downward revisions are allowed.

“The Central Valuation Committee's procedure for District Registrars, as of 1st October, 2014, mandates personal field inspection, fixing value based on local market rates, not lower than nearby highest site value, allowing new category creation with DIG's approval if needed, and offering appeal to the concerned DIG for aggrieved parties”, added the Bench.

The Bench found from a plain reading of the charge sheet that initially, the circulars and guidelines dictated values of Rs.1000/- and Rs.700/- for specific land categories on 1st April 2012, which were subsequently implemented.

However, during appeal proceedings, a distinct perspective emerged, and the IG (Registration) intervened, considering factors like land conversion and local assessments which resulted in revised values of Rs.350/- for VIP City and Rs.500/- for Vandanam Nagar layouts, added the Bench.

The High Court explained that the determinations made by the IG (Registration) in their capacities as appellate and revisional authorities, carry significant weight and directly influence the criminal prosecution.

“It becomes apparent that the guideline values were not set at the time of presenting sale deeds for registration. The subsequent adjudication and the established Rs.350/- and Rs.500/- values, affirmed by the IG (Registration), erase the foundation for the alleged pecuniary loss to the state and the purported dishonest intent”, added the Court.

Hence, the Bench stated that the criminal law process initiated based on these allegations appears to be undermined by the outcome of the adjudication process.

Consequently, the High Court quashed the proceedings.

Cause Title: R.S Rajan v. State

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