M.R.SHAH,J. - (1.) Feeling aggrieved and dissatisfied with the impugned judgment and order dated 07.05.2018 passed by the High Court of Jammu and Kashmir at Srinagar in O.W.P. No. 1961/2015, by which the High Court in exercise of its extra-ordinary jurisdiction has quashed the criminal proceedings being FIR No. 32/2012 and has declared Rule 3.16 of the Vigilance Manual, 2008 dealing with the Preliminary Enquiry (PE) being in direct conflict with the Constitution Bench Judgment of this Court in the case of Lalita Kumari v. Government of Uttar Pradesh, reported in the case of Lalita Kumari v. Government of Uttar Pradesh, reported in AIR 2014 SC 187 = 2014 (2) SCC 1, and consequently has declared the same ultra vires, the State has preferred the present appeal.
(2.) That an FIR being FIR No. 32/2012, Police Station, VOK was registered against the respondent herein under Section 5(1)(d) r/w 5(2) of the J&K Prevention of Corruption Act, 2006 (hereinafter referred to as the 'J&K PC Act, 2006') and Section 120B of the Ranbir Penal Code (hereinafter referred to as the 'RPC') alleging inter alia that during 2010- 11, the Director Health Services, Kashmir along with the other accused persons misappropriated the huge amount of government money by way of effecting purchases of sub-standard medical kits under National Rural Health Mission (NRHM) at highly exorbitant rates and in violation of the conditions of supply orders placed by the department. It was alleged against the respondent as under: "i) The respondent herein purchased various drug kits under NRHM Scheme from 4 CPSEs through limited tender and all the 4 CPSEs surprisingly quoted same rates. It was decided to place supply orders to the tune of 25% from each of the CPSEs. ii) The quoted rates by the 4 CPSEs were far in excess when compared to rates on which purchases had been affected during previous year. The Respondent herein wilfully ignored the rates at which the same kind of drug kits were purchased by the department from private companies as per rate contract dated 28-03-2009 valid for one year approved by Rate Contract Committee No.1 of Health and Medical Education whereby the rates of drug kits were far less than as quoted by the 4 CPSEs, the comparison is as under: - JUDGEMENT_93_LAWS(SC)10_2021_1.html It is pertinent to point out that the Respondent herein had full knowledge of approved rates of drug kits valid for year 2009-10, as he was then posted as Assistant Director, Family Welfare and Reproductive Child Health Care and was designated as member of Sub-Committee of Purchase Committee No.1 which approved the rates for the year 2009-10. iii) No market survey was conducted to ascertain the genuineness of rates quoted by the firms nor any negotiations were done to ensure that Government exchequer was not put to any loss etc during the year 2010-11. iv) No samples of drug kits were obtained to verify the quality control check over packing and Packaging of medicines and kits. v) The Respondent herein purchased NRHM kits not from the original manufacture but from suppliers at exorbitant rates. vi) The purchased kits and the medicines were not of required standard. Further maximum drugs/items constituting the three types of kits were actually been manufactured by private agencies and not by the CPSEs themselves or by their subsidiaries as a result of which undue benefit has accrued to the private agencies under the garb of PPP, which was never the intent of it. vii) As per the guidelines laid down by Ministry of Health and Family Welfare Govt. of India and Ministry of Chemicals and Fertilizers Govt. of India, Purchase Preference Policy (PPP) for CPSEs was valid only in respect of 102 drugs/medicines, whereas various components of the three mentioned drug kits were not figuring in 102 listed drugs under PPP. viii) As per the guidelines of GOI, the rates of drugs constituting the drug kits should be as per rates fixed by National Pharma Pricing Authority with discount of up to 35%. It is pertinent to point out that the purchasing department did not seek any rate list of NPPA or rate analysis from the supplier CPSEs to ascertain whether the rates quoted are actually as certified by NPPA and further to see whether a discount up to 35% has been given on such rates. ix) All the 4 CPSEs raised objection to the condition laid down in Clause No.02 of the Supply Orders wherein it was stated that all the drugs and items should be manufactured by the firm itself and no drug/item will be accepted manufactured by any other concern. The Respondent herein issued corrigendum thereby modifying the earlier order which conveyed that the items can be purchased from other sources also and thus the already purchased substandard items were passed by the New Board, thereby causing a loss of Rs. 1,04,99,429/- to the State exchequer."
(3.) The respondent-accused approached the High Court by way of O.W.P. No. 1961/2015 invoking its extra-ordinary jurisdiction to quash the aforesaid criminal proceedings, raising the following questions: "a) Whether Section 3 of the Prevention of Corruption Act is a mandatory provision and its non-adherence vitiates the investigation? b) Whether prior sanction of a Magistrate under Section 155 Jammu and Kashmir Cr.P.C. is mandatory for investigating cognizable offences along with non-cognizable? c) Whether under the pretext of Preliminary Verification the investigating agency can verify the veracity of a complaint before registration of FIR? d) Whether an offence like that of Criminal Conspiracy can be committed by a juridical person like a company?" Heavy reliance was placed on the decision of this Court in the case of State of Haryana v. Bhajan Lal, 1992 Supp. (1) SCC 335 as well as the decision of this Court in the case of Lalita Kumari (supra). ;