JUDGEMENT
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(1.)This case has had a chequered history and it is necessary to state the facts in some detail in order to appreciate the questions which arise for determination before us. The principal autor in the drama in this case is Dr. Jagannath Mishra. one time Chief. Minister of the State of Bihar. The main controversy around which all questions revolve is whether the prosecution launched against Dr. Jagannath Mishra at a time when he was not in power has been rightly allowed to be withdrawn by thechief Judicial Magistrate or whether such withdrawal is invalid and must be set aside so that the prosecution can continue against Dr. Jagannath Mishra.
(2.)The fact-situation out of which this case arises relates to the affairs of a cooperative Bank called the 'patna Urban Cooperative Bank' (hereinafter referred to as the 'cooperative Bank'). The Cooperative Bank was registered in May 1970 and it commenced its banking business with Nawal Kishore Sinha as its Chairman, K. P. Gupta as its Honorary secretary, M. A. Hyderi as its Manager and A. K. Singh as a loan clerk. It was not seriously disputed that most of the members of the Cooperative Bank were closely associated with Nawal Kishore Sinha. The object of the Cooperative Bank was to help people financially to set up small industries and businesses and to assist people in ordinary circumstances to carry on their vocation or business. There was a sub-committee formed, called "loan Sub-Committee", consisting of Nawal Kishore Sinha, K. P. Gupta and one Purnendu Narain, an advocate, to attend to the work of sanctioning and granting of loans. The Chairman, i. e. , Nawal Kishore Sinha, was, according to the bye-laws, the ultimate deciding authority in regard to all the functions of the Cooperative Bank and the Honorary secretary, i. e. , K. P. Gupta along with the Chairman had to exercise supervisory control over all the activities of the Cooperative Bank, while the Manager, i. e. M. A. Hyderi, was concerned only with its day-to-day working. Dr. Jagannath Mishra who was then a Member of the Legislative council was closely associated with Nawal Kishore Sinha and he helped the Cooperative Bank and Nawal Kishore Sinha in diverse ways in connection with the affairs of the Cooperative Bank and also assisted in mobilisation of resources for the Cooperative Bank. Sometime in 1974 separate audits into the functioning of the Cooperative Bank were carried out by the Reserve Bank of India as well as the Cooperative Department of the State of Bihar for the years 1972-73 and 1973-74 and as a result of these audits, there came to light a large number of irregularities such as non-maintenance of cash books in a proper manner and grant of overdraft facilities without current account as also illegal practices and acts of defalcation and malversation of funds of the Cooperative Bank. The audit reports disclosed that huge amounts running into lakhs of rupees had been squandered away by giving loans to non-members, giving loans even without applications, agreements or promissory notes, giving loans without hypothecation or security, giving short-term loans instead of realising cash from sale proceeds of hypothecated goods, giving loans to the same persons in different names and giving loans to fictitious persons and non-existing firms or industries. There were instances where loans had been granted on the security of Gandhi Maidan and Patna Railway Station. The audit team of the Reserve Bank in its report came to the conclusion that Nawal Kishore Sinha and others were responsible for 'bad loans' to the tune of Rs. 12 lakhs and misappropriation and embezzlement of funds to the extent of Rs. 25 lakhs.
(3.)On the basis of these audit reports, the Registrar, Cooperative Societies, at the instance of the Reserve Bank, made an order on 10/07/1974 supersedingthe management of the Cooperative Bank, removing Nawal Kishore Sinha and other Directors on the Board from their office as Chairman and Directors and appointing an officer of the Cooperative Department as Special Officer to look after the affairs of the Cooperative Bank. The Registrar, Cooperative Societies followed up this action by putting up a note dated 4/11/1974 to the secretary, Cooperation pointing out that, according to the audit reports, prima facie charges of defalcations, embezzlement of funds, conspiracy etc. were made out against the officials of the Cooperative Bank and legal action should be taken against them after taking the opinion of the Public Prosecutor. The secretary, Cooperation by his note dated 7/11/1974 sought the opinion of the Law Department in regard to the action to be taken as suggested in the note of the Registrar, Cooperative Societies. The Law Department recorded its opinion in the relevant file on 18/11/1974 that a prima facie case of conspiracy and criminal breach of trust was made out against the loanees and the office bearers of the Cooperative Bank. On the basis of this opinion, a draft complaint was prepared on 16/12/1974 by the Assistant Public Prosecutor, Patna for being filed in the court of the Chief Judicial Magistrate, Patna and on the same day, an office noting was made on the file suggesting that the advice of the Law Department on the draft complaint be obtained. This course of action was approved by the secretary, Cooperation and the Minister for Cooperation also approved of it on 1/01/1975 and it also received the approval of the then Chief Minister, Shri Abdul Ghafoor on 2/01/1975. The file was then sent back to the Law Department and the Law Department again reiterated its earlier advice for launching the prosecution and on the file being received back on 17/01/1975, the secretary, Cooperation, endorsed the file on 21/01/1975 to the Additional Public Prosecutor, Shri Girish Narain Sinha, for necessary action, that is, to file the prosecution. Thus. by 21/01/1975 a firm decision was taken to launch a criminal prosecution against the loanees and the members of the Board of Directors of the Cooperative Bank including the Chairman Nawal Kishore Sinha and a complaint in that behalf duly approved by the Law Department and signed by Shri Jagdish Narain Verma, District Cooperative Officer, Patna on 25/01/1975 was ready with the Additional Public Prosecutor, for being filed in the court of the Chief Judicial Magistrate. But before the Additional Public Prosecutor could file the complaint. Dr. Jagannath Mishra who was then Minister incharge of Agriculture and Irrigation wrote a buffsheet note dated 24/01/1975 asking the secretary, Cooperation to send the concerned file along with the audit reports to him before instituting the criminal case. It may be pointed out that under the Notification dated 30/04/1974 issued under Article 166 (3) of the Constitution read with Rule 5 of the Rules of Executive Business of the State of Bihar, the then Chief Minister Shri Abdul Ghafoor, was holding inter alia the portfolio of law but, according to the affidavit of Shri Neelanand Singh dated 19/10/1982 filed on behalf of respondent 1 in this court, Shri Abdul Ghafoor had, with a view to lessen his heavy burden, requested Dr. Jagannath Mishra to look after thework of the Law Department. Since Dr. Jagannath Mishra asked for the concerned file, Shri Abdul Ghafoor, on a reference made to him directed on 27/01/1975 that the file may be sent to Dr. Jagannath Mishra. The secretary, Cooperation accordingly recalled the complaint and other papers from the Additional Public Prosecutor on 28/01/1975. The file was then placed before R. K. Srivastava, Minister of Cooperation and he made an endorsement on the file on 31/01/1975 pointing out various instances of criminal conspiracy, criminal breach of trust and misappropriation of public funds which had come to light against the Directors of the Cooperative Bank and sent the file to Dr. Jagannath Mishra en route to the Chief Minister since they wanted to see the file before the complaint was actually lodged. It does not appear from the record as to when the file was actually sent to Dr. Jagannath Mishra but in any event the file was in the hands of Dr. Jagannath Mishra on 24/02/1975. The file remained with Dr. Jagannath Mishra for over two and a half months and no endorsement was made by him on that file until the middle of May 1975 with the result that prosecution could not be filed against Nawal Kishore Sinha and the other Directors. Meanwhile, on 11/04/1975, Shri Abdul Ghafoor was thrown out and in his place Dr. Jagannath Mishra became Chief Minister. Dr. Jagannath Mishra made an order in his own hand in Hindi in the file on 16/05/1975 regarding the action to be taken against Nawal Kishore Sinha and others and the English translation of this order ran as follows : Much time has passed. On perusal of the file it appears that there is no allegation of defalcation against the Chairman and the Members of the Board of the Bank. Stern action should be taken for realisation of loans from the loanees and if there are difficulties in realisation from the loanees surcharge proceedings should be initiated against the Board of Directors. The normal condition be resorted in the Bank after calling the Annual General Meeting and holding the election. Sd/- 16/05/1975 Jagannath Mishra