Delhi District CourtCbi vs . (1) Smt.Sheila Kaul (Since Deceased) on 29 February, 2016­1­

                    IN THE COURT OF SH. SANJEEV AGGARWAL: 
                         SPECIAL JUDGE: CBI­03 (PC ACT): DELHI


CC No.12/15                                       RC  :  48(A)/1996
                                             PS   : CBI/ACB/ND
                                             U/s  : 120­B r/wSec.409IPC andSec.
                                                         13(2)r/wSec.13(1)(d)and13(1)
                                                          (c)of PC Act, 1988.


CBI  Vs.                 (1)    Smt.Sheila Kaul (since deceased)
                                W/o Lt. Sh.K.N.Kaul
                                   formerly Minister for Urban Affairs & 
                                Employment, New Delhi,
                                R/o Everest House, Opp. Pawan Cinema,
                                G.T.Road, Ghaziabad (U.P).


                         (2)    P.K.Thungon
                                S/o Sh.P.W.Thungon
                                Formerly Minister of State in the M/O UA&E, ND
                                R/o flat no.7, Yashwant Place, New Delhi
                                Permanent address­ Thungon House, Bomdila,
                                West Kameng District, Arunanchal Pradesh.


                         (3)    Lakhpa Tsering
                                S/o Sh.Tsering Gyurme
                                R/o Village Dirang, Distt.West Kameng
                                Arunanchal Pradesh
                                presently residing at RZ­53, Raj Nagar, 
                                Palam Colony, New Delhi.



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          1 of 194    
                                             ­2­

                              (4)    Smt.Krishna
                                     w/o Late Sh.Krishna
                                     R/o 65, Hari Nagar Ashram,
                                     New Delhi.


                              (5)    Smt.Tulsi Balodi (since deceased)
                                     W/o Sh.P.B.Balodi
                                     R/o 67, Type­II, Minto Road,
                                     New Delhi.


Date of Institution                       :  06.06.1998
Judgment Reserved                         :  10.02.2016
Judgment Delivered                        :  24.02.2016


J U D G M E N T1.                       In brief, prosecution case is, that  the Hon'ble Supreme 

Court of India, vide order dated 14.02.96 passed during the hearing 

of writ petition No.585 of 1994 directed the CBI to enquire into the 

allegations   of   corruption   and   bribery   in   the   matter   of   out   of   turn 

allotment   of   Government   accommodation/shops   etc.   and   if   the 

allegations   are   substantiated   then   to   register   cases   against   the 

persons   who   are   prima   facie   found   responsible.     After   the 

preliminary enquiries, case RC 48(A)/96­DLI was registered in ACB 

branch of CBI, New Delhi on 16.06.96 against Smt. Sheila Kaul and 

others   on   the   allegation   that   Smt.   Sheila   Kaul   while   working   as 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      2 of 194    
                                               ­3­

Union   Minister   in   the   Ministry   of   Urban   Development   (Lateron 

renamed as Ministry of Urban Affairs and Employment) New Delhi 

entered   into   a   criminal   conspiracy   with   her   Minister   of   State 

Sh.P.K.Thungon and others and by abusing her official position as 

the Union Minister for Urban Development (UDM) and as a public 

servant in her capacity as the custodian of Government shops/stalls, 

dishonestly allotted shops on economic licence fee basis with a view 

to cause pecuniary gain to the allottees and corresponding wrongful 

loss   to   the   Government   in   contravention   of   the   rules/instructions 

governing   such   allotments   without   calling   for   any   competitive 

tenders/applications   from   general   public.     Thorough   investigation 

has revealed three distinct instances of criminal conspiracy as well 

as abuse of official position by Smt.Sheila Kaul and others during 

the   period   from   October,   1991   to   July,   1995.     The   instant   case 

relates to the acts of criminal conspiracy, abuse of official position 

and   criminal   breach   of   trust   committed   by   the   accused   persons 

during the period 1993 to 1994 as per details given hereunder:­2.                       Investigation   has   revealed   that   Smt.Sheila   Kaul   (A­1) 

remained posted as Union Minister for Urban Development, which 

Ministry   was   later   on  renamed  as  the   Ministry   of   Urban  Affairs   & 

Employment,   New   Delhi,   during   the   period   from   June   1991   to 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        3 of 194    
                                            ­4­

September,   1995   and   Sh.P.K.Thungon   (A­2)   remained   posted   as 

Minister of State in the said Ministry during the period from January, 

1993 to September, 1995.  The accused persons A­3 to A­5 are the 

private   persons   who   in   criminal   conspiracy   had   obtained   undue 

pecuniary benefits.3.                       Investigations further revealed that the accused persons 

A­1   to   A­5   entered   into   a   criminal   conspiracy   during   the   period 

between   September,   1993   to   June,   1994   with   an   object   of 

dishonestly or fraudulently obtaining undue pecuniary advantage in 

the matter of allotment of shops on economical licence fee basis in 

contravention   of   the   rules   governing   such   allotments   and   in 

pursuance to the said criminal conspiracy Smt.Sheila Kaul (A­1) by 

abusing her official position as the Minister for Urban Development 

and   in   this   capacity   as   the   custodian   of   the   government   shops, 

without any public interest, sanctioned allotments of three shops on 

09.04.94,   without   calling   for   any   tenders   or   applications   from   the 

general public in Pleasure Garden Market (Opposite Red Fort) and 

Hanuman   Road   Market   causing   undue   pecuniary   advantage   to 

Sh.L.Tsering (A­3), Smt. Krishna (A­4) and Smt. Tulsi Balodi (A­5). 

In furtherance of the said conspiracy A­1 and A­2 the accused public 

servants committed the offences of criminal breach of trust with an 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                     4 of 194    
                                            ­5­

object   of   causing   undue   pecuniary   advantage   to   their 

relations/friends (A­3 to A­5) and dishonestly or fraudulently allowed 

A­3 to A­5 to convert for their own use, without any public interest, 

the   Government   shops   entrusted   to   the   Ministry   of   Urban 

Development.4.                       Investigations further revealed that as per para 2 (a) of 

the   manual   of   office   procedure   prepared   by   the   Directorate   of 

Estates regarding licenses in respect of markets, all the vacancies 

arising in respect of shops/stalls were required to be filled up  as a 

matter   of   rule   by   inviting   open   tenders   from   the   public.     A 

provision for reservation for 22.5% of the vacancies for Scheduled 

Castes was also made and applications were required to be invited 

from   these   communities   in   respect   of   reserved   quota   to   whom 

allotments   were  to   be  made   by  draw  of   lots   on   payment   of   such 

economic licence fee as may be decided by the government.  As 

per para­2(b) of this manual all allotments were to be made on leave 

and licence basis and the allottees were required to pay full amount 

of   security   deposit   equivalent   to   6   month's   licence   fee   and   one 

month's advance licence fee, execute a licence deed and produce 

an affidavit giving the local as well as the permanent home address 


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      5 of 194    
                                                ­6­
                                                                                                                                                                               st 
and a recent passport size photograph attested by a Magistrate 1

class/Gazetted Officer at the time of obtaining possession slip from 

the Directorate of Estates.5.                       Investigations   further   revealed   that   in   1979,   an   office 

memorandum No.17017/4/77­WZ, dated 24.03.79 was issued by the 

then Ministry of Works & Housing vide which policy to be adopted 

for development, construction and management of shopping centres 

in various government colonies in Delhi was circulated.  As per para 

2(i)(a) of this O.M., the construction of shopping centres was to be 

undertaken by the CPWD and thereafter the shops were to be sold 

by   auction   by   the   Land   &   Development   Officer,   after   fixing 

minimum   reserve   price   in   consultation   with   the   Finance   Division. 

Para   3   of   this   O.M.   further   states   that   this   would   be   the   general 

policy to be adopted in future for the disposal of shops, exceptions 

may   be   made   if   the   circumstances   so   warrant.   There   is   no 

mention of any reservation of any kind in this O.M.6.                       The manual of office procedure regarding management 

of   Central   Govt.   markets   in   Dehli/N.Delhi   was   again   revised   upto 

1.2.92   by   the   Directorate   of   Estates.     As   per   para   3(a)(i),   all 

vacancies were required to be filled, as a rule, by inviting tenders 


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          6 of 194    
                                            ­7­

from the public. Similar provision for reservation of 22.5% of the 

vacancies for Scheduled Caste candidates which was existing in the 

earlier   manual   of   1974   was   also   incorporated.     Para   12   of   this 

manual mentions that the Govt. may,  for reasons to be recorded  

in   writing,   relax   all   or   any   of   the   provisions   of   the  

rules/instructions   governing   the   policy   of   allotment   of   shops  

etc.7.                       Investigations  further revealed that in pursuance to the 

said criminal conspiracy Sh.P.K.Thungon (A­2) dishonestly initiated 

a   note   on   06.12.93   mentioning   therein   that   shops/stalls   have   not 

been allotted  to SC/ST candidates at all, although there is 22.5% 

reservation   for   SC/ST   candidates   in   such   matters.     He   further 

mentioned   that   he   has   received   some   applications   from   SC/ST 

candidates namely Sh.Kessang Tsering and Sh. L.Tsering (A­3). He 

recommended that shop no.12 and 13 which were reported to be 

lying   vacant   in   Lajpat   Rai   market   may   be   allotted   to   Sh.Kessang 

Tsering and Sh.L.Tsering (A­3) respectively.   He further stated that 

shop   nos.   85,   325   and   405   in   New   Lajpat   Rai   Market   were   also 

reported   to   be   lying   vacant   and   there   was   another   case   of   Ms. 

Krishna (A­4) w/o Late Sh.Krishan, who was a widow and had two 


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      7 of 194    
                                            ­8­

school going children, was also pending with the Department and on 

extreme compassionate ground her case for allotment of either of 

the   shop   in   New   Lajpat   Rai   Market   should   also   be   considered. 

Smt.Sheila Kaul (A­1) ordered on this note that there are some more 

VIP   references   pending   and   Director   of   Estates   ­1   may   put   up 

composite proposal at an early date.  It was pointed out by DE­I in 

his note dated 27.12.93 that any shop falling vacant in P.G.Market 

(New Lajpat Rai Market) can only be disposed of through an open 

auction/competitive   tender.     However,   as   desired   by   Smt.Sheila 

Kaul,   he   placed   22   other   applications   received   in   the   office   for 

consideration of the Urban Development Minister.   Secretary (UD) 

Sh.   K.   Padmanabhaiah   enquired   from   DE­I,   as   to   what   was   the 

policy regarding lease/sale and fixation of lease price/sale price for 

those   shops   and   what   was   the   policy   relating   to   allotment   and 

whether there was any waiting list or otherwise how is the candidate 

selected for allotment.8.                       A detailed note mentioning policy of the Government was 

put up by Sh. Harcharanjit Singh, Director of Estates on 17.01.94 to 

Secretary   (UD)   who   recommended   that   the   persons   who   had 

applied for allotment of shop may participate in the auction, if they 

so desire.  On this note which was put up on 18.01.94 by Secretary 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                     8 of 194    
                                            ­9­

(UD),   Sh.P.K.Thungon   (A­2)   again   put   up   his   note   on   19.01.94 

strongly   recommending   the   cases   of   Sh.Kessag   Tsering   and   Sh. 

L.Tsering   (A­3)   suggesting   therein   that   shop(s)   no.85   and   405   in 

New Lajpat Rai Market may be alloted to them and a shop should 

also be allotted to Smt.Krishna by invoking provisions of Clause­3 of 

the policy of 1979.9.                       On this note, Smt.Sheila Kaul (A­1) on 09.04.94 by over­

ruling the objections of the office and by abusing her official position 

as the Minister for Urban Development and as such custodian of the 

government   property   in   the   shape   of   shops,   dishonestly   or 

fraudulently ordered allotment of shop no.405 to Sh.L.Tsering (A­3) 

and shop no.85 to Smt. Krishna (A­4), with a view to cause undue 

pecuniary benefit to the allottees (A­3 and A­4), without any public 

interest and also to favour Sh.P.K.Thungon who was her Minister of 

State,   without   recording   any   reasons,   whatsoever,   for   non 

consideration of the other 22 applications which were also put up by 

the office.  Sh. L. Tsering (A­3) is nephew of Sh.P.K.Thungon (A­2) 

and   Sh.P.K.Thungon   intentionally   concealed   this   fact   in   his 

recommendation.     Smt.   Krishna   (A­4)   is   the   sister­in­law   of 

Sh.Karmbir Singh Mann­ a common friend of both the Ministers i.e. 

Smt.   Sheila   Kaul   and   Sh.   P.K.Thungon.     These   allotments   were 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                     9 of 194    
                                           ­10­

opposed   by   the   office,   but   Sh.   P.K.Thungon   vide   his   note   dated 

16.05.94   mentioned   that   he   has   discussed   this   matter   with   Smt. 

Sheila Kaul and the allotment orders be issued the same day itself 

and the possession may be given after the licence fee was fixed.  As 

such allotment orders were issued by the office on 16.05.94 itself 

charging economical licence fee of Rs. 298 for shop no.85 and Rs.

291   for   shop   no.405   per   month.     Had   these   shops   been   put   to 

auction   these   would   have   fetched   at   least   Rs.   10,000/­   each   per 

month   as   revenue   for   the   Government   which   were   allotted   at   a 

pittance by Smt. Sheila Kaul in criminal conspiracy with the allottees 

as well as Sh. P.K.Thungon.10.                      When the orders sanctioning allotment of shop no.85 and 

405   were   received   in   the   office,   a   note   was   recorded   by   Sh.   P. 

Bhardwaj, Assistant Director (M) on 27.04.94 mentioning therein that 

shops in the rehabilitation market are required to be disposed off by 

L&DO by open public auction and not on leave and licence basis. 

He   further,   proposed   that   in   the   first   instance   views   of   Finance 

Division   may   be   obtained.     Dy.   Director   (M)   Sh.   G.B.Singh   while 

concurring with the views of his AD further mentioned that it was for 

the   first   time   that   UDM   had   made   allotment   of   shops   in   a 

rehabilitation   market   where   Government   had   already   conferred 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                     10 of 194    
                                            ­11­

ownership rights.  He further stated that UDM had not indicated the 

rate of licence fee on which the said 2 shops were to be allotted.  He 

also gave details of 4 shops which were allotted in the last few years 

on tender basis.  The shop in Ring Road Market fetched a monthly 

rent of Rs.4,005/­ in 1994 and in Andrews Ganj Market it fetched a 

rent   of   Rs.2700/­   during   the   same   year.     A   shop   in   Sector   8, 

R.K.Puram was allotted @ Rs.4,672/­ per month in 1987.  He further 

pointed   out   that   as   per   existing   policy,   those   shops   had   to   be 

disposed of through public auction and any allotment of those shops 

to a person without calling tender(s) would be a departure form the 

general  policy   involving   financial   implications   and   loss   of   revenue 

and   hence   concurrence   of   Finance   Division   would   be   necessary 

before implementation of the orders of UDM for the allotment of the 

said 2 shops.     Sh. S.Pattanayak, Director of Estates­II concurred 

with DD (M) and marked the file to finance division for comments.11.                      In   the   Finance   Division   case   was   examined   by 

Sh.V.P.Sharma, Desk Officer on 06.05.94 and he pointed out that 

both the shops were located in the P.G.Market which is situated just 

opposite   to   the   Red   Fort   at   the   heart   of   Delhi   which   is   a   hub   of 

commercial   activity.     He   further   mentioned   that   the   reasons 

mentioned   by   the   Hon'ble   Minister   for   allotting   those   shops   may 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      11 of 194    
                                              ­12­

appear to be genuine, yet while helping individuals the interest of the 

Government should also be kept in view and if the 2 individuals to 

whom the said 2 shops have been allotted, are to be helped, they 

should be allotted shops in any of the other markets because these 

2 shops in P.G.Markets could fetch quite a sizeable revenue for the 

Government,   if   put   on   tender.     The   file   was   routed   through   Smt. 

Neena   Garg,   Director   (F),   Sh.Girish   Bhandari,   Joint   Secretary   & 

Financial   Advisor   and   Sh.   N.P.Singh,   Addl.   Secretary.     All   these 

officers were basically opposed to allotment of these shops in this 

fashion.   The file was again received  by Sh. P.K.  Thungon, MOS 

who recorded his note on 12.05.94 mentioning therein that 2 shops 

in question be allotted on regular basis on payment of licence fee to 

the said allottees.  He further discussed this matter with Smt. Sheila 

Kaul and recorded his note on 16.05.94 after which he ordered that 

allotment   orders   be   issued   on   the   same   day   although   the 

possession   could   be   given   after   the   licence   fee   was   fixed.     The 

concerned   Executive   Engineer   of   CPWD   was   also   influenced   to 

furnish the economic licence fee at the earliest.12.                      Investigations   further   revealed   that   a   photocopy   of 

request addressed to Urban Development Minister was received in 

the office of Director of Estates on 29.03.94 for allotment of shop no.RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        12 of 194    
                                            ­13­2, Hanuman Road Market to Mrs. Tulsi Balodi (A­5). Her husband 

Sh. P.B.Balodi was working as Attendant in Prime Minister's office. 

There is no other record to show as to how this application reached 

in   the   office   of   Director   of   Estates.     But,   it   was   processed   at   a 

lightening   speed   on   30.03.94   by   Sh.   S.Pattanayak,   DE­II   himself 

and   on   that   very   day,   it   was   recommended   by   Sh.   Haracharanjit 

Singh,   DE­I   and   the   Secretary   (UD)   for   approval   of   allotment. 

Smt.Sheila Kaul (A­1) dishonestly as well as by abuse of her official 

position   approved   the   proposal   on   09.04.94   without   any   public 

interest   with   an   object   of   causing   undue   pecuniary   advantage   to 

Sm.Tulsi Balodi in pursuance of the said criminal conspiracy.  Smt. 

Sheila   Kaul   (A­1)   confirmed   vide   order   dated   23.07.94   that   the 

allotment has been made on economical licence fee basis.  Offer of 

allotment   was   issued   on   31.5.94   and   necessary   documents   were 

submitted on 06.06.94 by Smt.Tulsi Balodi and the occupation slip 

was issued on the same day.  She took possession of the shop on 

07.06.94.13.                      All the aforesaid three allotments effected on 09.04.94 by 

Smt.   Sheila   Kaul  were   not   covered   under   the   policy   of   1979  and 

were   totally   arbitrary.     These   allotments   were   made   to   favour 

nephew of her MOS Sh. P.K. Thungon, a close acquaintance and 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      13 of 194    
                                               ­14­

CPWD contractor Sh.Karambir Singh Mann whose sister­in­law Smt. 

Krishna is one of the allottees and personal attendant of the then 

P.M Sh. P.V.Narsimha Rao resulting into a huge loss of revenue to 

the   Government   and   corresponding   gain   to   the   allottees.     The 

aforesaid  acts of allotments amount to obtaining valuable thing or 

pecuniary advantage without any public interest in pursuance to the 

criminal   conspiracy   and   abuse   of   position   and   further   to 

misappropriate   government   property   which   was   entrusted   to 

Smt.Sheila Kaul being the Minister incharge of Urban Development 

Ministry of Government of India.14.                      Investigations further revealed that tenders were invited 

from the public for the allotment of various shops pursuant to the 

orders   of   the   Hon'ble   Supreme   Court   and   these   tenders   were 

opened on 24.02.1997 and the highest rate quoted for shop number 

2   Hanuman   Road   Market   was   Rs.9200/­   per   month   as   against 

economic   licence   fee   of   about   Rs.576/­   p.m.   charged   from   the 

allottee   of   the   shop   in   question,   which   clearly   shows   that   huge 

undue   pecuniary   favour   was   shown   to   the   accused   allottees 

resulting in a corresponding wrongful loss to the public exchequer.15.                      There   was   no   public   notice   or   advertisement   inviting 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         14 of 194    
                                              ­15­

applications   from   eligible   persons   and   the   allottees   from   whom 

applications   were   received   belonged   to   a   very   limited   circle 

centering around Smt. Sheila Kaul and Sh. P.K.Thungon or VVIP. 

These applications were received directly in the office of the Minister 

and there was no verification of antecedents of the applicants and 

the claims made by them in their application.  Such allotments were 

made in pursuance of criminal conspiracy and by abuse of position 

therefore no verification was made.  Smt. Sheila Kaul (A­1) ordered 

allotments of shop no.85 and shop no.405 in P.G.Market without the 

applications being processed by the office by following the normal 

office procedure and allotments were ordered without verifying the 

eligibility   of   the   applicants.   None   of   the   allottees   was   entitled   to 

allotment of shops on economical licence fee basis in this fashion 

and   they   knowingly   obtained   undue   pecuniary   advantage   in 

conspiracy with Smt. Sheila Kaul and Sh. P.K.Thungon.16.                      By   the   aforesaid   acts   the   accused   public   servants 

abused   their   official   position   and   caused   undue   pecuniary 

advantage in pursuance of the said criminal conspiracy to A­3 to A­5 

and   such   acts   were   without   any   public   interest.     Thus   by   the 

aforesaid acts Smt. Sheila Kaul (A­1), Sh. P.K.Thungon (A­2) and 

the three allottees namely Sh. L. Tsering (A­3), Smt. Krishna (A­4) 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        15 of 194    
                                            ­16­

and Smt. Tulsi Balodi (A­5) committed offences punishable u/S 120­

B r/w 409IPCandSection 13 (2)r/wSection 13(1)(d)and13(1)(c)of the Prevention of Corruption Act, 1988.   Smt. Sheila Kaul (A­1) 

also   committed   substantive   offences   u/S   409IPCand   13(2)   r/wSection 13(1)(d)&13(1)(c)of PC Act 1988.17.                      Smt. Sheila Kaul (A­1) and Sh. P.K.Thungon (A­2) were 

no more public servants.  However, sanctionu/S 197Cr.P.C for their 

prosecution had been obtained from the competent authority.18.                      After filing of the chargesheet, the accused persons were 

summoned for the offence(s) punishable u/S 120­BIPCr/wSection 

409IPC r/wSec.13(2)r/wSec.13(1)(d)and13(1)(c)of the PC Act, 

1988 and accused Smt.Sheila Kaul was also summoned in addition 

for substantive offence(s) u/S 409IPCandSec.13(2)r/wSec.13(1)(c) of thePC Act.19.                      After summoning, the requisite documents were supplied 

to the accused persons.  Vide detailed order dated 27.03.09 on the 

point   of   charge,   it   was   found   there   was   sufficient   material  on  the 

record for the commission of offence punishable under Section 120­

B r/wSec.409IPC and 13(2) r/wSec.13(1)(c)and13(1)(d)of PC 

Act   against   A­1   to   A­5.       Besides   that   there   was  found   sufficient 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      16 of 194    
                                               ­17­

material   to   frame   charge(s)   for   substantive   offence(s)   punishable 

u/S 409IPCandSec.13(2)r/wSec.13(1)(c)and13(1)(d)r/w Sec.

120­BIPCagainst A­1. Consequent thereto, formal charge(s) was 

framed against all the accused persons to which all of them pleaded 

not guilty and claimed trial.20.                      It   would  be pertinent   to  mention  herein  that  during  the 

trial,   A­5   Smt.Tulsi   Balodi   expired   and   proceedings   against   her 

stood   abated   vide   order   dated   21.08.14,   similarly   A­1   Smt.Sheila 

Kaul also  expired  and proceedings  against   her  also  stood  abated 

vide order dated 12.08.15.21.                      Prosecution   in   support   of   its   case   has   examined   35 

witnesses.22.                      PW­1 is Sh.Rajeev Nayan Sharma, Dy. Director, Ministry 

of Finance, New Delhi. He is a formal witness who has stated that in 

the   year   1998   he   was   posted   as   Accounts   Officer   in   Land   & 

Development Office (L&DO) , Nirman Bhawan, New Delhi under the 

Ministry of Urban Affairs (hereinafter referred to as UD) and on the 

instructions of his officer, he delivered the file no.J.13011/5/91­LD of 

Lands Division of UD Ministry in the office of CBI to Mr.P.C.Sharma 

vide memo Ex.PW1/1.RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         17 of 194    
                                              ­18­23.                      PW­2   is   Sh.Trilok   Chand,   Stenographer,   P.A   to   MOS 

Agriculture, Krishi Bhawan, New Delhi.   He stated that in the year 

1994 he was  posted   as  LDC in  Market­I  Section,   he  was dealing 

with   Sector­1   to   5,   R.K.Puram   Market   and   Janpat   Market,   at   the 

instance   of   his   boss   Asst.   Director   P.Bhardwaj,   he   filled   up   few 

authority   slips   for   taking   possession,   he   identified   the   possession 

slips no.049522 and 049523 in the book no.976 stating that the said 

counterfoils   are   in   his   handwriting   and   they   bear   signatures   of 

Mr.P.Bhardwaj.   The   slips   are   Ex.PW2/1   and   Ex.PW2/2.     He   also 

after seeing the counterfoil number 049521/976 stated that the same 

was in the handwriting of Ram Chander, whose handwriting he was 

familiar with and also bears signatures of Mr.P.Bhardwaj, same is 

Ex.PW2/3.24.                      PW­3 is Sh.Ram Chandra, who was working in the year 

1993 as  Assistant   in  the  Ministry  of UD  and thereafter,  posted   to 

Directorate   of   Estates   in   Admn.   A   Section   and   was   transferred 

thereafter to Market­1 Section in October 1993.   He stated that he 

had seen the seizure memo D­95 in the chargesheet, same bears 

his signatures, vide this memo he had produced 44 counter slips of 

the authority slips to the CBI. The copy of the said memo D­16 is 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        18 of 194    
                                              ­19­

Ex.PW3/A, bearing his signatures. The counter slips were handed 

over   by   him,   also   included   three   counter   slips   D­17   which   are 

Ex.PW2/1   to   Ex.PW2/3.The   counter   slips   Ex.PW2/3   was   in   his 

handwriting and that of Ex.PW2/2 bears his signatures.25.                      PW­4   is   Mr.M.N.Mandal,   who   was   working   with   the 

L&DO at the relevant time. He after seeing the original memo D­55 

which is lying in chargesheet no.3 in RC 48(A)/96­DLI stated that the 

same   bears   his   signatures   and   is   Ex.PW4/A.   Vide   this   seizure 

memo he handed over the files mentioned therein pertaining to L & 

DO department.26.                      PW­5   is   Mr.Jaidev   Singh,   another   formal   witness.   He 

stated   that   in   1994,   he   was   working   as   UDC   in   Income   tax 

department.   After   seeing   the   indemnity   bond   he   stated   that   the 

same   bears   his   signatures   at   point   A,   which   is   Ex.PW5/A, 

whereupon he has signed as a witness.  The said indemnity bond 

pertains to accused A­4.27.                      PW­6   is   R.D.Sahay,   he   deposed   that   from   1989   to 

December   2000   he   remained   posted   in   the   Ministry   of   UD, 

Directorate of Estate. After seeing the handing over memo D­6 in 

chargesheet no.3 he stated that vide this memo he handed over 52 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        19 of 194    
                                            ­20­

files,   the   details   of   which   are   also   mentioned   therein,   which   also 

bears his signatures, same is Ex.PW6/A.28.                      PW­7  is   Sh.Pradeep   Chand  Phuloria.   He  has  deposed 

that he was working at the relevant time in CPWD. He did not prove 

any  document,   only  deposed  that  he  was  residing  at  the address 

G­268, Naroji Nagar, New Delhi and that one Rajesh Kumar never 

resided   with   him,   though   the   licence   fee   Ex.PW8/A   contains   his 

address mentioned above and the said Rajesh never resided with 

him at the said address.29.                      PW­8 is Sh.Inder Kumar. He has deposed that accused 

Smt.Krishna (A­4) is the wife of his brother Late Sh.Kishan Maan. 

After seeing the licence deed in file D­2 he stated that the same at 

page no.22 to 26 bears his signatures at point C and is Ex.PW8/C 

and he has put his signatures thereon at the instance of his elder 

brother   Karamvir   Maan.   After   seeing   the   photographs   at   S.No.13 

and 14 on the said documents, he stated that the same are of (A­4) 

Smt.Krishna. He was also declared hostile on certain points by the 

Ld.SPl.PP for CBI, but despite that he did not support the case of 

prosecution, as earlier recorded in his statementu/S 161Cr.P.C.RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      20 of 194    
                                               ­21­

30.                      PW­9  is   Sh.Ashok   Kapur.     He  was   working   as  PrivateSecretary to A­2 P.K.Thungon, MOS (UD), Government of India. He 

after seeing the file D­4 which contains the notings dated 06.12.93 

at page no.16, 19.01.94 at page 24, 12.5.94 at page 33 and 16.5.94 

at page 33, stated same bears the signatures of A­2 then MOS at 

point A, which are Ex.PW9/A to Ex.PW9/D. The photocopies of said 

notings are also kept in file no.D­1, D­2, D­3.31.                      He   further   deposed   after   seeing   the   file   D­1   which 

contains   the   photocopies   of   his   notings   and   impression   of   his 

signatures that the same bears seal in original of Director of Estates 

and endorsement of DE­I and DE­II in original.   The original of the 

noting is in file D­2 at page 6 which is Ex.PW9/E, which bears his 

signatures at point A.  The photocopies of the said notings is kept in 

file D­1 at page 8, as per the notings, it is mentioned allotment for 

shop no.85 and 405, P.G.Market have been allotted in the name of 

Smt.Krishna and L.Tsering.  It is also mentioned in the said decision 

that the rent of the shops would be fixed within fortnight, further it 

has been mentioned that MOS (UD) had desired the stipulated date 

be adhered to and rent be fixed within 2 weeks.32.                      PW­10   is   Sh.K.Dharmarajan,   who   during   the   relevant 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         21 of 194    
                                                ­22­

period was posted as Joint Secretary in the Ministry of UD.   After 

seeing file D­5 (original in chargesheet no.III as D­2), he stated that 

he dealt with the said file in respect of management and disposal of 

shops in seven markets, shopping centers constructed by CPWD in 

Central Government Colonies.  The issue in this file related to fixing 

of reserve price for these shops that were required to be disposed 

off by auction as per the policy in existence.   File D­5 contains his 

note dated 03.02.94 at page no.122 (original in chargesheet no.III as 

D­2).     The   same   is   Ex.PW10/A.     The   file   also   contains   his   note 

dated 15.02.94 at page 123 to 126,(original in chargesheet no.III as 

D­2), same is Ex.PW10/B.33.                      He   after   seeing   the   file   D­11   (original   in   chargesheet 

no.III as D­84), stated that he dealt with the said file in respect of 

management   and   allotment   of   shops   in   the   markets,   which   were 

constructed   by   CPWD   in   Central   Government     Colonies.   It   also 

deals with respect to certain allotments made by then Union Minister 

to place shops at the disposal of Directorate of Estates for allotment 

of shops to persons on a pre­determined licence fee basis which at 

that time was against the policy guidelines of the government. File 

D­11 contains his note dated 01.05.92 at page no.10 to 14(original 

in chargesheet no.III as D­84) the same is Ex.PW10/C.  The file also 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          22 of 194    
                                           ­23­

contains his note dated 01.06.92 at page no.14 and 15, the same is 

Ex.PW10/D, the file also contains his note dated 09.10.92 at page 

19 (original in chargesheet no.III as D­84), same is Ex.PW10/E.34.                      He further deposed that a letter dated 18.05.94 at page 

45 of the above file was written by him to Mr.Balachander the then 

Private   Secretary   to   Minister   of   Welfare   in   response   to   his   letter 

dated 25.04.92 informing him regarding allotment of shops in Lodhi 

Road complex  under the  control  of L&DO  had  to  be  disposed   off 

only by public auction and that allotment of shops on rental basis or 

on premium at pre­determined rates was not within the purview of 

existing   policy   of  government at  that  time,  the  office  copy  of  said 

letter   is   Ex.PW10/F.     He   was   also   asked   to   explain   the   policy 

prevailing in the year 1993­1994 for allotment of shops, to which he 

deposed   that  the   government   policy   at   that   time   for   the 

allotment   of   shops   under   the   control   of   L&DO   in   various 

markets in government residential colonies was that they were 

to be disposed off on auction basis.  For this purpose, a reserve 

price   would   be   fixed.     There   was   no   policy   at   that   time   for 

making   allotments   in   individual   either   on  licence   basis   or  on 

premium on pre determined prices.RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                     23 of 194    
                                                ­24­35.                      PW­11 is Mr.G.V.Krishna Rau. He has deposed that at 

the   relevant   period   he   was   on   deputation   to   the   Government   of 

India, Ministry of UD. For about 2½ years he was working as Land 

and Development Officer  and thereafter as Dy. Secretary,    Lands 

and   Water   Supply   in   the   Ministry.     He   after   seeing   the   file 

D­11(original in chargesheet no.III as D­84) stated that it contains 

his note dated 20.04.92 which was submitted by him as Land and 

Development   Officer  and  marked   to  Dy.   Secretary   (Lands),  which 

relates   to   the   disposal   of   shops,   stalls,   etc.   constructed   in 

government colonies by the L&DO, explaining the background and 

the reasons for non disposal of these shops and stalls and need for 

revision of reserve price and requesting the Ministry to take a clear 

cut   policy   view  regarding   disposal   of  these   shops   and  stalls.   The 

note is Ex.PW11/A (D­11).36.                      He   after   seeing   the   file   D­4  stated   that   same   contains 

note dated 31.12.93 at page 19 and 20 on the noting side, he dealt 

with this file as Dy. Secretary, Land and Water Supply, the same 

note was accorded by him, he marked it to Directorate of Estates, 

the said note is Ex.PW11/B (D­4), which bears his signatures,  he 

submitted   this   note   in   response   to   the   query   raised   by   then 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           24 of 194    
                                            ­25­

Secretary, UD who wanted to know, what was the policy regarding 

lease/sale and fixing of lease price / sale price for these shops , in 

this note he explained the basis of disposal of shops, stalls in govt. 

colonies by the L&DO only through public  auction in  terms of the 

policy   laid   down   in   OM   dated   24.3.79   and   the   efforts   made   to 

dispose   off   these   shops   and   the   exploration   of   possibilities   for 

transferring these shops of the local bodies as reserve price.37.                      He after seeing the note 03.12.93 at page 113 on file D­5 

(D­2 in charge sheet no.3) the said note is Ex.PW11/E bearing his 

signatures   the   same   pertains   to   issue   of   disposal   of   shops   and 

refixation   of   reserve   price.   He   also   after   seeing   the   note   dated 

16.12.93 at page 116 on file D­5 (D­2 in chargesheet no.3) which is 

Ex.PW11/F   bearing   his   signatures   the   same   pertains   to   issue   of 

disposal of shops and refixation of reserve price.38.                      He after seeing another note dated 11.01.94 at page 117 

to page 122 on file D­5(D­2 in chargesheet no.3), the said note is 

Ex.PW11/G   bearing   his   signatures.   It   is   a   self   contained   note 

desired   by   the   Joint   Secretary   and   this   also   relates   to   the   same 

issue of disposal of shops and refixation of the reserve price as well 

as the alternate of refixing the reserve price etc. the status relating 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      25 of 194    
                                               ­26­

to   shop   no.85   P.G.Market,   related   to   refixation   of   price   was   also 

explained and the file was referred back to Directorate of Estates. 

The office memorandum is Ex.PW11/C.39.                      He  was   also   shown   file   D­5  (D­2  in  chargesheet   no.3) 

which contains  the copy of his earlier note dated 20.4.92 at page 

106 to 108 same is  Ex.PW11/A­1 he was also shown note  dated 

05.5.93 at page 109 on file D­5 (D­2 in chargesheet no.3) the note is 

Ex.PW11/D bearing his signatures. It also relates to the same issue 

of disposal of shops and refixation of reserve price.   He was also 

shown note dated 08.04.94 at page 129 to 130 on file D­5 (D­2 in 

chargesheet   no.3)   the   said   note   is   Ex.PW11/H   bearing   his 

signatures.     He   was   also   shown   note   dated   06.09.93   in   file   D­4 

which was regarding the revision of reserve price which was underconsideration   and   he   submitted   the   file   to   Joint   Secretary,   UD 

stating that MOS (UD) wanted to know the position immediately with 

regard   to   the   fixation   of   revised   reserve   price.   The   said   note   is 

Ex.PW11/J, which bears his signatures at point A.40.                      PW­12 is Sh.Desh Pal Singh.He has deposed that during 

the   relevant   time   i.e.   in   June   1994   he   was   posted   in   Planning 

Commission, NIC Division, looking after the computer maintenance 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         26 of 194    
                                            ­27­

of the adjoining buildings i.e. Dak Bhawan, Sanchar Bhawan, Shram 

Shakti   Bhawan,   he   was   maintaining   the   computers   of   office   and 

residence   of   Ministers   and   Member   of   Parliaments.     After   being 

shown licence deed contained in file D­1 from pages 24 to 29 he 

stated that the same pertains to L.Tsering who is the son of brother 

in   law   (i.e.   brother   of   wife   of   Mr.P.K.Thungon)   of   the   accused 

P.K.Thungon, the license deed is Ex.PW12/A bearing his signatures 

at point A.   and that of L.Tsering at point B. He also deposed that 

L.Tsering   used   to   meet   him   in   the   office   of   Ministry   of   Water 

Resources.   He   also   told   him   that   he   used   to   reside   with 

Mr.P.K.Thungon.41.                      PW­13 is Sh.S.P.Singh. He stated that in June 1994 he 

was   posted   in   DGW,   CPWD,   Nirman   Bhawan     He   was   shown 

licence deed contained in file D­3 at page no.14 to 19 which relates 

to   allotment   of   shop   no.2   Hanuman   Road   Market   to   the   accused 

Tulsi Balodi A­5.   He knew her through one of his friends and he 

signed on the request of his friend Sh.S.K.Sharma and the licence 

deed is Ex.PW13/A.42.                      PW­14   is   Sh.Sunil   Kumar   Sharma,   another   fomal 

witness. He also deposed that in year 1994 he was owrking as LDC 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      27 of 194    
                                             ­28­

in DGW, CPWD , Nirman Bhawan, New Delhi at that point of time he 

was   residing   in   Minto   Road,   New   Delhi   and   P.B.Balodi   was   also 

residing   in   the   same   locality.   After   seeing   the   licence   deed 

Ex.PW13/A   )(D­3)   paged   no.14   to   19,   he   stated   that   the   same 

pertains   to   allotment   of   shop   no.2,   Hanuman  Road   Market   to   the 

acused   Krishna   Balodi   w/o   P.B.Balodi   and   on   the   request   of 

Mr.Balodi he put his signatures on licnece deed Ex.PW13/ A and the 

indemnity bond pertaining to her also bears her signatures at point A 

which is Ex.PW14/A.43.                      PW­15   is   Mr.V.P.Sharma.   He   deposed   that   at   the 

relevant time he was posted as Desk Officer in the Finance Division 

of Ministry of UD . After seeing the file D­4, relating to allotment of 

shops he stated that the said file was marked to him for examination 

and scrutiny from financial angle, after examination of the same, he 

submitted   a   note   dated   05.05.94   detailing   his   views,   same   is 

Ex.PW15/A,  which  bears  his signatures at point  A.    File D­4 also 

contains   a   note   of   then   Dy.   Director   G.B.Singh,   he   identified   his 

signatures at point A, as he had seen him writing and signing. The 

said note is Ex.PW15/B.44.                      PW­16 is Mr.Prem Ballabh Balodi, husband of A­5.   He 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                       28 of 194    
                                           ­29­

deposed that in the year 1991 he joined the personal staff  of the 

then Prime Minister of India.  Accused Tulsi Balodi is his wife, who 

was alloted a shop at Hanuman Road, Delhi. At that time she was 

working   as   a   labourer   in   a   private   company.   After   receiving   the 

allotment   letter,   he   accompanied   his   wife   to   the   Directorate   of 

Estates for submitting the requisite documents.45.                      He after seeing the copy of application for allotment of 

shop stated that same is photocopy of the application submitted by 

his wife, which bears her signatures at point A,   the copy of said 

application   is   Mark   PW­16/X.   The   file   D­3   also   contains   the 

photographs   of   his   wife   at   S.No.C­9   and   C­10   which   are 

Ex.PW16/A­1 and A­2. The indemnity bond is already Ex.PW14/A, 

bearing her signatures at point B­1 and B­2, undertaking at page 30 

is   Ex.PW16/B   bearing   her  signatures   at   point   A.   Licence   deed  at 

page 14 to 19 is already Ex.PW13/A, bearing her signatures on all 

pages.     He   knew   Sh.S.K.Sharma,   who   was   his   neighbourer,   and 

their children used to study together. The affidavits at page 20 and 

21   also   bears   signatures   of   his   wife   at   point   A,   same   is 

Ex.PW16/C­1 and C­2.  Occupation slip also bears signatures of his 

wife   at   point   A,   same   is   Ex.PW16/D.   The   forwarding   letter   vide 

which these documents were submitted to the Directorate of Estates 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                     29 of 194    
                                              ­30­

also bears signatures of his wife, same is Ex.PW16/E.46.                      PW­17 is R.K.Khandekar.   He has deposed that in the 

year 1994, he was posted as OSD to the Prime Minister of India and 

after seeing the file D­3 relating to  allotment of shop to Smt.Tulsi 

Balodi,   which   contains   2   photographs   already   Ex.PW16/A­1   and 

A­2, he stated that he has attested the said two photographs.47.                      PW­18 is Sh.Sushil Kumar Satrawala. He has deposed 

that in the year 1991 he was on deputation to the Ministry of Heavy 

Industry, Govt. of India and remained posted in the office of Minister 

of   State,   Heavy   Industries,   Mr.P.K.Thungon   till   January   1993.Thereafter, Mr.P.K.Thungon took over the charge of MOS, UD and 

he   took   him   alongwith   him   to   the   said   Ministry.     In   March   1993, 

Mr.P.K.Thungon was given additional charge of Minister of State for 

Water Resources and he was also working there with him.  Lakhpa 

Tsering is the relative of Mr.P.K.Thungon and after seeing the file 

D­1,   he   identified   two     photographs   of   Lakhpa   Tsering.   The   said 

photographs are Ex.PW18/A­1 and A­2.48.                      PW­19   is   Sh.Sardar   Singh.   He   deposed   that   he   was 

posted at the relevant time as Executive Engineer (Licence fee) in 

the office of Chief Engineer, Zone­I, CPWD, New Delhi, his duties 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        30 of 194    
                                            ­31­

were   to   calculate   economic   licence   fee   for   the   government 

properties   and   private   properties   taken   on   hire   by   government 

departments.   The properties may include shops and stalls located 

in   the   market   ,   the   usual   practice   for   revising   or   renewing   the 

economic licence fees for shops was for the period of 3 years, in 

case of Ministries, it can be of 5 years or it can be earlier depending 

upon land rates.  The basis of calculating licence fee is, cost of land 

at   the   prevailing   rate   during   the   period   and   the   cost   of 

structure/building of a particular land and the land rates are usually 

referred by L&DO.  They were the authority to fix the land rates and 

the   cost   of   building   decided   on   the   schedule   of   rates   of   CPWD 

during the period.  They work out total cost and some percentage is 

taken for calculation.49.                      After seeing the file no.L&DO/PS­IV/Policy­II/83  (Part­I) 

(D­4) and also page no.31/C, he stated that it was received in their 

office which is already Ex.PW26/D, the same was from Directorate 

of Estates on the subject of licence fee in respect of shop no.85 and 

405, Pleasure Garden Market, requesting for licence fee in respect 

of   the   above   mentioned   shops   and   to   intimate   the   sender 

immediately,   in   response   to   the   said   letter,   he   had   sent   a 

compliance   note   which   was   at   page   32   of   the   file,   bearing   his 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      31 of 194    
                                             ­32­

signatures, same is Ex.PW19/A.   Alongwith the said letter, he had 

enclosed two enclosures, one of the same is on the record, which is 

at page 33, bearing his   signatures which is Ex.PW19/B.   He also 

deposed,   as   per   annexures,   the   licence   fee   was   calculated   in 

respect   of   shop   no.85   as   Rs.298/­   per   month   w.e.f   01.04.93, 

similarly for shop no.405 it was Rs.291/­ w.e.f 01.04.93.50.                      PW­20 is Sh.G.C.Bhandari, who has deposed that at the 

relevant time in the year 1994, he was working as Joint Secretary 

and Financial Advisor in the Ministry of UD, on deputation from his 

parent cadre Ministry of Defence, Department of Defence Account. 

His   duties   were   to   make   budget   for   the   Ministry   ,   give   financial 

advise on policy matters.51.                      He   deposed   that   one   file   no.L&DO/PS­IV/Policy­II/83 

(D­4)   had   come   to   him   with   noting   dated   05.05.94   already 

Ex.PW15/A   made   by   Mr.V.P.Sharma,   who   was   Dy.   Director,   who 

had marked the said file on 05.05.94 to Director (Finance) and in 

turn on 06.05.94 Director (Finance) marked the file to him i.e.  JS 

(Finance), his noting dated 09.05.94 bears his signatures at point A, 

which is already Ex.PW15/DA. He had recorded his noting regarding 

disposal of government shops and he suggested that a reasonable 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                       32 of 194    
                                                ­33­

method for disposal of government shops be evolved, unless such a 

policy is evolved if at all, all shops have to be given on licence fee 

basis for a period of 2­3 years. He also referred to the notings of 

then MOS dated 19.01.94, which is Ex.PW9/B.52.                      PW­21 is Mr.K.D.Singh. He has deposed that he joined 

Directorate of Estates in 1989 and remained posted there till 2006 in 

various   Sections   like   Marketing,   Vigilance,   General,   Quarter 

Allotment   Type­III   Section.   After   seeing   the   attested   photocopy   of 

seizure memo (D­14) (original kept in CC No.15/11 chargesheet no.

3   as   document   D­61),   he   stated   that   the   same   was   bearing   his 

signatures,   vide   which   he   handed   over   certain   documents   as 

mentioned   in   the   said   seizure   memo   which   is   Ex.PW21/A.     He 

further   deposed   that   he   handed   over   on   10.03.97   photocopy   of 

attested copies of comparative statement (D­9) in respect of tenders 

called for various shops / stalls of the Directorate of Estates which 

was   opened   on   24.02.97.   They   contain   the   impression   of   his 

signatures at point A in respect of attesting the same. Copy of the 

same   duly   attested   by   him   has   been   kept   in   CC   No.15/11 

chargesheet no.3, same is mark PW­21/1.53.                      He   further   deposed   that   after   the   directions   of   Hon'ble 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           33 of 194    
                                             ­34­

Supreme Court, they had called the tenders for various shops / stalls 

and   rates   would   have   been   quoted   therein,   on   this   basis 

comparative   statements   were   prepared   by   the   Directorate   of 

Estates.54.                      He also deposed that he handed over the photocopy of 

Manual   of   Office   Procedure   regarding   licenses   in   respect   of 

markets, office memorandum no.17017/4/77­W2 dated 24.3.79 and 

also   the   Manual   of   Office   Procedure   regarding   management   of 

Central   Government   Market   in   Delhi/New   Delhi   revised   upto 

01.02.92   of  Directorate   of   Estates   which   are  on  record  as  D­6  to 

D­8.   He had also attested these documents and handed over the 

same   to   IO   which   was   kept   in   CC   No.15/11   chargesheet   no.3, 

bearing his official stamp and signatures. Same are Ex.PW21/B­1 

and B­2.55.                      PW­22   is   Harcharanjit   Singh.   He   deposed   that   he 

remained posted as Director of Estates from 1991 to April 1997. At 

that time Sh.S.Patnayak was Director of Estates­II, Smt.Sheila Kaul 

was   the   Minister   of   UD,   Sh.   P.K.Thungon   was   posted   as   MOS. 

After   seeing   the   document   D­6   Ex.PW21/B­1,   Ex.PW21/B­2   (D­8) 

and Ex.PW11/C (D­7), he stated that these allotments pertain to the 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                       34 of 194    
                                            ­35­

period   when   he   was   Director   of   Estates,   Nirman   Bhawan,   New 

Delhi.   There   were   some   shops   in   various   government   colonies, 

which   were   lying   vacant   and   had   not   been   disposed   off   despite 

efforts by the government by calling tenders, thereafter reducing the 

reserve     price   by   50%,     during   this   period,   the   then   UD  Minister 

proposed that these shops may be given on economic licence basis, 

allotment of shops on economic licence fee was a normal method of 

allotment prior to 1994, even the rules notified in 1992 gave power 

to the Minister to relax the rules and to make allotments.56.                      He  further  deposed  that  there  was some  orders in  the 

year 1979, under which the allotment of shops were to be made only 

on economic licence fee basis,  thereafter in year 1992, rules were 

modified to bring in a provision for disposing the shops by calling 

tenders,   but   the   tendering   process   was   not   successful,   as   the 

reserve price was very high.  He further deposed that normally, the 

Minister   should   record   the   reasons   for   relaxing   the   rules,   but   no 

specific reason was mentioned in the rules.57.                      He was shown file D­3 regarding allotment of shops at 

Hanuman Road Market in favour of Tulsi Balodi. He stated that he 

had handled this file, the file contains his notings on page 2 at point 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      35 of 194    
                                               ­36­

C, which is Ex.PW22/A, bearing his signatures.  He was also shown 

allotment file (D­2) regarding allotment of shop no.85 at P.G.Market, 

near   Chandni  Chowk   in   favour   of   Smt.Krishna.   He  stated   that   he 

had   also   handled   said   file,   his   notings   at   page   18   bears   his 

signatures, same is Ex.PW22/B and the file (D­2) also contains his 

notings at page 19 and his signatures at point X(original of these 

documents are in file D­4), the said noting is Ex.PW22/C.   He also 

deposed that the file D­2 also contains his notings on page 20 to 22 

also having his signatures, same is Ex.PW22/D.58.                      The witness was also shown file D­1 regarding allotment 

of shop no.405 at P.G.Market, Delhi in favour of L.Tsering.  He also 

deposed   that   he   had   dealt   with   this   file   and   the   file   contains   his 

notings, the original of these notings are already on record in file D­4 

and  same  is  Ex.PW22/B   to  Ex.PW22/D.     The witness  after   going 

through the file D­4 identified his notings and signatures at page 18, 

19, 20 to 22 which are already Ex.PW22/B to Ex.PW22/D.59.                      PW­23   is   Sh.Ram   Pal   Joshi.   He   has   deposed   that   he 

knew Mr.P.K.Thungon and he also knew father of Lakhpa Tsering, 

as also Lakhpa Tsering, who is son of P.K.Thungon's wife's brother. 

After seeing the file D­1, pertaining to shop no.405, P.G.Market, he 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         36 of 194    
                                            ­37­

stated that the said licence deed Ex.PW12/A bears his signatures at 

point C, the indemnity bond was also witnessed by him at point A, 

which is Ex.PW23/A.60.                      PW­24 is Mr.V.K.Malhotra.  He deposed that in the year 

1998   he   was   posted   as   Joint   Secretary   in   the   Ministry   of   Home 

Affairs, during said tenure his duties were to process the cases sent 

by CBI for sanction of prosecution.   He proved the sanction order 

dated   23.04.98   u/S   197   Cr.P.C   against   Smt.Sheila   Kaul   and 

P.K.Thungon u/S 120­B r/w Section 409 of IPC and Section 13(2) 

r/w Se.13(1)(c) and (d) of PC Act, which is Ex.PW24/A.61.                      PW­25   is   O.P.Khanna.   He   has   deposed   that   he 

remained OSD to MOS, UD Mr.P.K.Thungon in the year 1992­93. 

As OSD his duties were to attend phone calls, visitors, appointments 

and another jobs assigned by Minister. He had been shown the file 

D­1  regarding   the   shop   no.405,   P.G.Market,   relating   to   L.Tsering, 

which contains the notings dated 06.12.93 (already Ex.PW10/DA), 

19.01.94 already Ex.PW10/DB, 12.05.94 and 16.05.94 (marked as 

Mark PW­25/1 and 25/2). He was also shown the transfer certificate 

of   L.Tsering   issued   by   DPS,   R.K.Puram,   New   Delhi,   which   he 

attested   under   his   signatures   and   official   stamp,   same   is 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      37 of 194    
                                           ­38­

Ex.PW25/A.62.                      PW­26 is Sh.G.B.Singh.   He has deposed that he was 

holding the charge of Dy. Director (Office & Market) from November 

1993 till he left the Directorate of Estate in June, 1995 on promotion 

to Ministry of Home Affairs. He had been shown file D­4 pertaining 

to   L&DO/PS­IV/Policy­II/83   (Part­I),   on   seeing   the   noting   dated 

06.12.1993   at   page   no.16/N   which   was   of   P.K.Thungon   as   MOS 

(UD),   he   identified   his   signatures   and  deposed   that   vide   the   said 

note,   P.K.Thungon   had   recommended   for   allotment   of   shops   to 

Sh.Kessang Tsering, Sh.L.Tsering and Mrs. Krishna.   The file was 

marked by P.K.Thungon to UD Minister, the then Smt.Sheila Kaul, 

who   also   put   up   note   that   there   are   some   more   VIP   references 

pending, who then further marked the file to Director of     Estate­I, 

who further marked the file to him and he again marked the file to 

Market­I Section on 20.12.93.63.                      He further deposed that AD Market of Market Section­I 

put   up   a   note   pertaining   to   as   per   the   directions   of   then   UDM 

indicating shops no. 85, 325 and 405 in Lajpat Rai Market and in 

para   4   of   Section   note,   there   is   also   a   reference   of   policy   of 

allotment of these shops on auction basis where ownership rights 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                    38 of 194    
                                               ­39­

have   been   granted.   The   file   was   then   marked   to   him,   he   further 

endorsed the said note on 24.12.93 under his signatures and same 

is Ex. PW26/A.64.                      He   identified   the   signatures   of   DE­I   Sh.   Harcharanjit 

Singh on the noting dated 27.12.93. He further deposed that he had 

received the file on 04.5.94 from the then AD (Market) upon which 

he   recorded   his   noting   dated   04.5.94   Ex.   PW26/B   (page   26/N) 

indicating the policy for allotment in the markets where ownership 

rights   have   already   been   granted   by  the   government.     He   further 

deposed   that   since   allotment   of   shops   in   these   markets   to   any 

person   was   departure   from   general   policy,   he   recommended   that 

concurrence   of   the   Finance   Division   may   be   obtained   in   the   first 

instance before the matter is further processed.65.                      He   further   deposed   that   he   endorsed   the   note   dated 

30.5.94 Ex. PW26/C of the then AD (Market) Sh. P Bhardwaj and 

identified his signatures, who also mentioned that no decision had 

been   taken   regarding   revised   license   fee   w.e.f   01.4.91.   He   also 

made his noting Ex. PW26/D in File D­4 at page 31, wherein he had 

asked the Executive Engineer (License Fee) CPWD to indicate the 

formula   in   respect   of   shop   nos.   85   and   405,   Pleasure   Garden 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         39 of 194    
                                               ­40­

Market, New Delhi.66.                      He had been further  shown  notings  dated 12.5.94   and 

16.05.94 of the then MOS (UD) P.K.Thungon at point A which are 

already Ex.PW9/C and Ex.PW9/D.  Vide these notings, he had sent 

a UO note Ex.PW26/D to CPWD on 16.05.94 as the MOS and UDM 

decided to allot the shop no.85 and 405 at Pleasure Garden Market, 

Delhi.67.                      He had been further shown file Mark D­2 pertaining to 

shop   no.85,   P.G.Market,   Delhi   allotted   to   Smt.Krishna   which 

contained a licence deed for the aforesaid shop and the deed was 

executed   and   signed   by   him   as   Dy.Director   of   Estates   and   also 

bears his signatures. The deed is already Ex.PW8/A.68.                      He   had   been   further   shown   the   allotment   letter   dated 

03.6.94   Ex.   PW26/E   in   respect   of   shop   no.85,   P.G.Market,   Delhi 

allotted to Smt.Krishna and he identified his initials on the same. He 

had   been   further   shown   letter   of   allotment   dated   03.6.94   Ex. 

PW26/F pertaining to shop no. 405, P.G Market relating to L.Tsering 

which bears his initials at point A.   He had also seen licence deed 

already Ex.PW12/A which bears his signatures at point D on all five 

pages.  He had been shown the indemnity bond already Ex.PW23/A 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          40 of 194    
                                               ­41­

in respect of shop no.405, P.G.Market relating to Lakhpa Tsering. 

He identified his signatures at point B.69.                      He   had   been   further   shown   letter   of   allotment   dated 

31.5.94   Ex.   PW26/G   in   respect   of   Smt.   Tulsi   Balodi   which   was 

issued under his initials . He had been also shown Licence Deed Ex. 

PW13/A in respect of Smt. Tulsi Balodi regarding allotment of shop 

no. 2, Hanuman Road, New Delhi which was executed and signed 

by him at point A.  He had been also shown indemnity bond already 

Ex.PW14/A in respect of shop no.2, Hanuman Road in the name of 

Smt.Tulsi Balodi which bears his signatures at point C.70.                      PW­27 is Sh. Sansar Pattanayak.  He has deposed that 

while   working   as   Director   of   Estates   (DE­II)   in   the   Directorate   of 

Estates   from  1993  to  1995,   he  was  looking   after   the   allotment   of 

residential   accommodation   from   Type­I   to   Type­IV,   office 

accommodation and markets.  He further deposed that there was no 

provision   for   relaxation   in   the   license   fee   in   the   manual   Ex. 

PW20/B­1 and in the event of creation  of vacancies in respect of 

shops and stalls, tenders used to be called.71.                      After   seeing   office   memorandum   Ex.   PW11/C   dated 

24.3.1979   regarding   policy   to   be   adopted   for   development   and 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         41 of 194    
                                          ­42­

construction of shopping centers in various Government colonies he 

stated that construction was to be undertaken by CPWD and there 

was a policy in existence according to which the shops were to be 

auctioned  by L&DO  and there was no provision  for reservation in 

auction, there was a provision for fixing minimum reserve price for 

auction. He further deposed after seeing document (D­8) which is a 

copy   of   Manual   of   Office   Procedure   regarding   management   of 

Central government markets in Delhi revised upto 01.02.1982 issued 

by Directorate of Estates(D­8) is Mark PW25/A, as per same, the 

vacancies were to be filled as a rule, by inviting tenders from the 

public   and   it   also   provided   for   22.5%   reservation   for   SC/ST 

candidates.72.                      After seeing his note dated 23.8.94 Ex. PW25/A under 

his   signatures   in  file   D­5  at   page   N/138   and   N/139   regarding   the 

status of shops/stalls allotted or lying Vacant in Lodhi Road Complex 

(LRC­I), BKS Marg and Hanuman Road, thereafter marked the file to 

DE­I   Sh.   Harcharanjit   Singh.   He   deposed   that   the   rules   were 

approved by A­1 Smt. Shiela Kaul, then UDM on 26.12.94 and he 

had recorded a note Ex. PW25/B for obtaining legal advise on the 

issue   of   charging   monthly   rent   as   well   as   ground   rent.   Note   Ex. 

PW9/A   by   A­2   P.K   Thungon   was   marked   to   UDM   and   finally 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                    42 of 194    
                                           ­43­

received in his office on 20.12.93 and the file came to him on 24.12 

93, he had marked a portion of the note as 'X' as relevant on the 

noting   dated   23.12.93   Ex.   PW26/A   put   up   by   official   of   Market­I 

Section. His noting dated 24.12.93 is Ex. PW 25/C. Thereafter he 

further marked the file to DE­I and the file again came back to him 

on 04.5.94 from Sh. G.B Singh, DD (O&M) on which he further made 

an endorsement Ex. PW27/D "for Concurrence/Comments" under 

his signature at point B and marked the file to DS(F)/Minister of UD.73.                      He further deposed that Smt. Shiela Kaul vide noting Ex. 

PW27/E at page no. 24/N in File D­5 under her signatures allotted 

shop no. 405 and 85 in P.G market to L.Tshering and Smt.Krishna. 

After noting Ex. PW9/C and Ex. PW9/D, the file came to him from 

Additional Secretary and draft allotment letter was put up in respect 

of   L.Tshering and Smt.Krishna   upon which he put up his note at 

place Mark X dated 16.5.94 Ex. PW27/F under his signatures.   He 

also made a noting Ex. PW27/G under his signatures on 16.5.94 in 

relation to intimation of allotment and issuance of License deed and 

indemnity bonds along with letter intimating Licence fee.74.                      He  also made a noting Ex.PW10/DC and processed the 

application of Tulsi Balodi and a noting dated 30.3.94 was made in 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                     43 of 194    
                                          ­44­

respect of the said application, wherein he gave position of allotment 

of shops in three different markets including Hanuman Road and it 

was ascertained from L&DO that a proposal for auctioning vacant 

shops/stalls based on actual FAR had been prepared and was being 

put for approval of UDM, which proposal envisages dispensing with 

the system of economic license fee. The case was thereafter put up 

for consideration/orders and was marked to DE.75.                      PW­28 is Sh.K.Padmanabhaiyah.  He has deposed that 

in   1993   he   was   posted   as   Secretary   in   the   Ministry   of   UD.   After 

seeing the file no.L&DO/PS­IV/Policy­II/83 (Part­I) (D­4) he deposed 

that   he   had   recorded   a   note   dated   27.12.93   at   page   19   of   the 

notesheet   portion,   the   said   notings   also   bears   his   signatures,   the 

same   is   Ex.PW28/A.   His   noting   was   due   to   visit   of   Director   of 

Estates regarding policy/sale relating to allotment of shops or stall. 

After   seeing   his   noting   dated   18.1.94   at   page   21   (wrongly   typed, 

actually it is at page 23 in file D­4) of the noting portion, he stated 

that same bears his signatures and is Ex.PW28/B. The purpose of 

noting was that the Minister of State had earlier remarked that there 

was no policy when he was asking for allotment to certain persons, 

so   he   wanted   to   check   whether   there   was   any   policy   for   either 

leasing or selling shops, if so, how is lease amount fixed, how the 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                   44 of 194    
                                                ­45­

people are selected for allotment etc., he reviewed the note put up 

by the Director and gave his advise in the note of 18.01.94.76.                      PW­29  is   Sh.   Purshottam   Bhardwaj.     He   has  deposed 

that in the year 1994, he was posted as Assistant Director (Market­

I), in the Directorate of Estates. After seeing the file D­4, he said that 

he had dealt with the said file during his tenure.  After going through 

the file he stated that there was a note dated 27.04.94 at page 25 of 

the noting portion which is already Ex.PW15/B which he had put for 

fixation of license fee regarding shop nos.85 and 405, P.G.Market, 

in the name of Smt.Krishna and L.Tsering respectively, also bearing 

his signatures.   He had marked the file to DD(M) for orders .   The 

order of UDM is at page 24 of the above noting, at that time policy 

for allotment of shops in respective area was through public auction 

by calling tenders.77.                      The   said   file   again   came   to   him   on   23.05.94   through 

Directorate of Estates Sh.S.Patnaik for issuance of allotment letters 

for the above shops in the name of above persons. However, it was 

marked to DD(M), but he recorded a note which is at page 34 of the 

noting   portion   of   the   file   bearing   his   signatures.   The   noting   is 

Ex.PW29/A.   Vide this noting, he had recorded that  "letters have 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          45 of 194    
                                           ­46­

been   issued   from   respective   files.   We   have   also   written   to 

Executive Engineer (L.F.) to intimate the present L/F in respect 

of   these   shops."  Thereafter,   file   was   marked   to   dealing   hand 

Sh.Ram Chander, after his noting the file was again put up before 

him   on   30.05.94,   wherein   he   made   a   note   at   page   no.35   of   the 

noting portion which is already Ex.PW26/C having signatures.   He 

also recorded  "no decision has yet been taken to intimate the 

revised licence fee w.e.f 01.04.91", thereafter he again submitted 

the file on 30.05.94 for orders of DD(M) with regard to the licence 

fee to be charged.78.                      After seeing the file D­1 pertaining to shop no.405 and 

allotment letter dated 03.06.94 in favour of L.Tsering, the same is 

Ex.PW26/F,  on the said allotment letter he has also signed.79.                      He was also shown the file D­2 pertaining to shop no.85, 

P.G.Market   and   allotment   letter   dated   03.06.94   in   the   name   of 

Smt.Krishna which is Ex.PW26/E, on the said allotment letter he had 

also signed.  Further, after seeing the file D­4 and page no.20 of the 

correspondence portion, as per the chart mark­ PW29/1 there were 

22   VIP   references   for   allotment   of   shops   in   different   areas   to 

different people.RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                     46 of 194    
                                               ­47­80.                      PW­30 is Sh.P.C.Sharma, retired SSP, who had carried 

out the investigation of this case.   He has deposed regarding the 

investigation carried out by him during the course of present case.81.                      PW­31   is   Sh.D.K.Singh,   he   had   assisted   PW­30 

Sh.P.C.Sharma,   who   was   the   main   IO   of   this   case   and   he   has 

proved one seizure memo Ex.PW34/A (D­61) dated 22.10.96 having 

his signatures.  He had also collected certain documents mentioned 

therein and also recorded statements of certain witnesses.82.                      PW­32   is   Sh.N.P.Singh.   He   during   the   relevant   period 

1993­1996   was   working   as   Addl.Secretary   and   then,   thereafter 

Secretary, Ministry of Urban Affairs & Employment, Dept. Of Urban 

Development.   As   Addl.Secretary   he   used   to   deal   with   matters 

concerning Directorate of Estates, L&DO including matters relating 

to   policy   and   co­ordination.     He   further   deposed   that   during   the 

relevant   time   1994­1995   Minister's   discretionary   allotments   for 

government quarters as well as shops were limited to 20% of the 

total number of cases in a year, however ceiling was never adhered 

to and Ministers  were making allotments in most cases based on 

discretion.  In this situation, it was open to the administration to take 

up the review of the policy once again and this came up only at the 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         47 of 194    
                                           ­48­

time   when   the   Hon'ble   Supreme   Court   had   taken   cognizance   of 

such issues.  The suggestions made by him in various notes of his 

relating   to   the   policy   were   against   the   above   background   and   to 

minimize the loss to the government.  The Ministers were exercising 

the   discretion   to   reject   or   approve   the   applications   for   allotments 

including   those of shops. At that time UDM was Smt.Sheila Kaul 

and MOS was Mr.P.K.Thungon.83.                      PW­33 is Sh.J.P.Singh. He was posted as Secretary to 

the Government of India in the year 1994 pertaining to Ministry of 

Urban Development and Housing.  After seeing the pages 30,31 and 

32 of file D­4, he stated that at page 30, there is a note of N.P.Singh, 

then Addl.Secretary which he had approved as Secretary, Ministry 

of   Urban   Development.   The   said   note   is   Ex.PW20/DA   having   his 

signatures.84.                      PW­34 is Sh.R.Vishwanathan.  He has stated that during 

the relevant period, July 1992 to December 1992, he was dealing 

with the administrative matters pertaining to L&DO office and Lease 

Administration of the properties held by L&DO office. After seeing 

the file D­11 pertaining to allotment of shops, he stated that this file 

was   originally   dealt   with   by   Directorate   of   Estates.   This   file   was 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                    48 of 194    
                                                ­49­

received   by   him   because   a   decision   was   taken   to   transfer   the 

subject matter of allotment of shops to L&DO office under the control 

of   Land   Division   of   Ministry   of   UD.   He   had   received   this   file   on 

11.09.91.  He made notings dated 11.09.91, 30.10.91, 14.01.92 and 

17.01.92   on   page   3   and   4,   the   said   notings   are   collectively 

Ex.PW34/A,   having   his   signatures   (original   notings   are   in   RC 

48(A)/1996, CC 15/2011 chargsheet no.III as D­84).85.                      After   that   he   made   a   note   regarding   the   disposal   of 

shops with the L&DO office and need for review of policy taken in 

1979   in   view   of   the   fact   that   the   shops   with   L&DO   continued   to 

remain vacant for a long time, for this purpose a note for the cabinet 

was required to be submitted for decision, the above noting dated 

06.03.92 at page 5 of file D­11 was shown to the witness, which he 

identified having his signatures, the said noting is Ex.PW34/B.86.                      After his noting, he marked this file to DS(L), who further 

marked this file to L&DO for comments.  The comments of L&DO is 

already   Ex.PW11/A.   Thereafter,   the   file   was   forwarded   to   DS(L), 

who marked the file to JS(UD).  He marked the file to Addl.Secretary 

(UD),   who  marked   the  file  to   Secretary   (UD).    Thereafter,   the  file 

was sent to the MOS for Urban Development and thereafter to the 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          49 of 194    
                                           ­50­

Minister   for   Urban   Development.   The   file   was   received   by   him 

through   the   same   channel   on   04.08.1992.     He   identified   his 

signatures   on   notings   at   page   17   and   18   and   the   notings   are 

Ex.PW34/C (colly.).87.                      He further deposed that a policy decision was taken in 

1979 to transfer the vacant shops in the government colonies to the 

L&DO   for   disposal   through   public   auction.     For   the   purpose   of 

holding   auctions,   a   minimum   reserve   price   was   to   be   fixed   in 

consultation   with   the   finance   division   of   the   Ministry.   Accordingly, 

auctions   were   held   on   the   basis   of   the   reserve   prices   fixed   in 

consultation   with   the   finance   division.     The   auctions   were   not 

successful,   since   there   were   no   interested   bidders.     One   of   the 

reasons   cited   for   disinterest   of   the   bidders   was   the   high   reserve 

price.     As   there   was  no  progress   regarding  disposal   of   shops  for 

more than a decade, it was decided to transfer the shops to local 

bodies, i.e. DMC and NDMC.   It was also decided that the transfer 

could   be   made   in   consideration   of   the   cost   of   the   land   and 

construction   of   the   shops.     There   was  no   positive   response   from 

local bodies also, as they felt that they could not afford to pay the 

cost   of   the   shops.     In   these   circumstances,   the   modalities   for 

disposal   of   shops   were   required   to   be   worked   out   and   a   policy 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                    50 of 194    
                                            ­51­

decision to do so was required to be taken at the highest level.   It 

was   proposed   to   approach   the   Cabinet   with   a   note   containing 

alternative   feasible   proposals   for   disposal   of   shops.   For   this 

purpose,   L&DO   was   asked   to   submit   the   detailed   comments,   as 

inputs to the draft note for the Cabinet.88.                      After seeing file D­5, he stated that his noting is at page 

112   which   bears   his   signatures   and   said   noting   is   Ex.PW34/D 

(original noting is in RC 48(A)/96, CC ­15/2011, charge sheet no.III 

as D­2).  As per this noting, there were about 100 shops, 130 stalls 

and 23 open platforms, awaiting disposal, because of the vacancy of 

the   shops,   there   was   a   proposal   to   refix   the   reserve   price   and 

different alternatives for fixation of reserve price were required to be 

examined in detail, based on the inputs from the L&DO. Thereafter, 

the file was marked to US(L­1), then it was marked to JS(UD), as 

DS was on leave, who marked it to DS(L) after discussion. After a 

note of DS(L), he had again marked it to him.89.                      After seeing file D­5, he stated that page no.116 had his 

note   which   bears   his   signatures,   the   said   noting   is   Ex.PW34/E. 

(original noting is in RC 48(A)/1996, CC 15/2011 chargsheet no.III 

as D­2). Vide this noting, he had mentioned the details of reserve 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      51 of 194    
                                                ­52­

price for different shops, based on three different options for fixation 

as suggested by L&DO.90.                      He further deposed that thereafter, there were different 

representations by individuals, some of them were recommended by 

various VIPs.  He made a noting on page 22 of file D­11 which bears 

his signatures  and said noting is Ex.PW34/F. (original noting is in 

RC 48(A)/1996, CC 15/2011 chargsheet no.III as D­84).   After this 

noting, he marked the file to Director (L) for sending it to the Minister 

through   proper   channel.     He   further   proved   his   notings   dated 

03.08.93, 17.09.93, and 02.05.94 at page 23 to 25 as Ex.PW34/G 

(colly.) which bears his signatures.91.                      After   seeing   file   D­11   he   stated   that   his   noting   dated 

06.09.94   at   page   33   bears   his   signatures   and   said   noting   is 

Ex.PW34/H.   (original   noting   is   in   RC   48(A)/1996,   CC   15/2011 

chargsheet no.III as D­84).92.                      PW­35 is Narendra Nath Singh.  He has deposed that in 

month of June,  1996 he was posted  as Superintendent  of Police, 

ACB, New Delhi and he had ordered for registration of FIR in this 

case.   He had seen the copy of FIR which is already Ex.PW30/A 

bearing his signatures at point A.  He also deposed that he recorded 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           52 of 194    
                                           ­53­

statement of Sh.Girish Bhandari.93.                      After the completion of prosecution evidence, statement 

of   accused   persons   u/S   313Cr.P.Cwere   recorded   separately,   in 

which   the   entire   incriminating   evidence   appearing   against   the 

accused   persons   was   put   to   them.     The   defence   of   accused 

P.K.Thungon (A­2) with regard to the incriminating evidence against 

him was as under­
                             It's a false case against me. There was no
                         clear cut or cogent policy for disposal of
                         vacant shops. The modalities for auction of
                         shops had not been finalized. The shops could
                         not be auctioned earlier on account of high
                         reserve price. Even after reducing the reserve
                         price by 50%, the shops could not be auctioned
                         for want of bidders. Since the reserve price
                         was not finalized as such the tenders could not
                         be invited. The shops were thus lying vacant
                         for a very long time calling for extensive repair
                         and   was   causing         loss                  of             revenue                               to             the
                         Government. The reserve price for auction or
                         inviting tenders had not been finalized till late
                         1995. One of the modes for allotment was by
                         leave and License basis which was adopted by
                         earlier Ministers also as there was a provision
                         for   making   exceptions                            in             the                  matter                            of
                         allotment if the circumstances so warrant.In the present case the allotments were


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                       53 of 194    
                                               ­54­made with the concurrence of the finance
                         division and based upon the suggestions of
                         Directorate of Estates. The allotments were
                         made in view of very sound reasons.At the time of allotment, the payment of
                         economic license fee was being followed which
                         proposal was approved by Sh. G.B Singh and
                         Sh. S Patnayak.There    was    a specific                              stipulation                                     in the
                         License deed that the allottees will pay the
                         charges as may be decide by the Government
                         from time to time with retrospective effect and
                         the    license      could                 be                 revoked                                   by                 the
                         Government without assigning any reasons
                         with    a notice     of        30              days.                       There                        was                  no
                         pecuniary loss caused to the Government. This
                         was    to    safe    guard                    the                  interest                               of              the
                         Government and in view of the fact that the
                         policy in this regard was not finalized.I have not abused my official position or
                         entered into any conspiracy with Smt. Shiela
                         Kaul or the allottees for the allotment of shops
                         to L Tsering who is a scheduled Tribe and Smt.
                         Krishna who is a widow of a freedom fighter.
                         The file of Smt. Tulsi Balodi never came to me.
                         I am innocent.94.                      Similarly,   the   defence   of   accused   L.Tsering   (A­3)   with 

regard to the incriminating evidence against him is as under­

                         I am innocent, I have been dragged in this case  

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           54 of 194    
                                               ­55­

                         for   the   last   about   19   years   and   suffering  

                         mentally,   morally,   financially   and  I   was   driven  

                         back   to   my   state   and   is   now   doing   service  

                         under the private industry/shop and earning my  

                         livelihood and living hand to mouth and I have  

                         to   look   after   my   wife   and   two   school   going  

                         children.   I   am   the   only   bread   earner   of   my  

                         family   and   I   have   to   come   all   the   way   from  

                         Arunachal Pradesh about 2000 K.M away from  

                         Delhi and being a tribal and ST and suffering for  

                         the last about 19 years. Atleast one week time is  

                         needed for coming to Delhi to attend this case  

                         and  have  to  live   without  any  employment   and  

                         without   any   remuneration   from   my   employer.  

                         Sometimes   I   have   to   borrow   money   from   my  

                         parents/friends/relatives   in   order   to   look   after  

                         myself   and   my   family.   I   need   sympathetic  

                         consideration   of   my   case   taking   into  

                         consideration   of   my   suffering   and   being   a  

                         tribal(ST),   I   am   leading   such   a   miserable   life  


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         55 of 194    
                                                ­56­

                         and I was only student when I applied having no  

                         means   to   look   after   myself   financially.   The  

                         application   for   allotment   of   shop     was   made  

                         through proper channel and as soon as I was  

                         asked   to   surrender   the   same   I   did   so  

                         immediately and now I am living in my village  

                         and leading a miserable life.   I have no place in  

                         Delhi   to   live   to   bear   the   expenses   of   this  

                         expensive city. I am living in some Dharamshala  

                         and   any   free   lodging,   boarding   whichever   is  

                         available. I did not conspire with anybody.95.                      That of accused Smt. Krishna (A­4) is as under­

                         I   am   innocent.     I   am   a   widow   and   a   totally  

                         illiterate   person.     I   can   neither   read   nor   write  

                         English   or   Hindi.     After   the   death   of   my  

                         husband, Sh.Karamveer Singh Man who is the  

                         elder brother of my husband used to take care  

                         and look after my family.   I have no means of  

                         livelihood.  I have never met Mrs. Sheila Kaul.  I  

                         do not know anything about this case.   I have  


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          56 of 194    
                                              ­57­

                         been falsely implicated.96.                      However,   none   of   the   accused   persons   chose   to   lead 

evidence in defence.97.                      I   have   heard   Ld.counsels   for   accused   persons 

Sh.S.P.Minocha, Sh.Gurdial Singh and Sh. M.P.Singh and Ld.PP for 

CBI Sh.V.K.Ojha and Spl.PP for CBI Sh.J.S.Wadia and perused the 

record.98.                      Prosecution   has   relied   upon   following   judgments   in 

support of its case­1.Vinayak Narayan Deosthali Vs Central Bureau of 

                         Investigation2015 Cri.L.J.15542.     Runu Ghosh Vs.CBI Crl.A.482/2002, P.Rama Rao Vs 

                         CBI  Crl.A.509 andCrl.A.536/2002 Sukh Ram Vs CBI.99.                      Ld. defence counsel for accused P.K.Thungon has firstly 

argued that the very sanction accorded in the present caseu/S 197Cr.P.C   is   defective,   as   firstly   PW­24   Mr.V.K.Malhotra   was   not 

competent to accord sanction and it is nowhere being revealed in his 

sanction   order   Ex.PW24/A   that   any   material   for   according   the 

sanction was produced before him on the basis of which the opinion 

for giving  the sanction  was arrived  at.   It  is also  argued that  it  is 


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         57 of 194    
                                           ­58­

contrary to the reason that the sanction of a Minister of State and 

that of Union Cabinet Minister has been accorded by an officer of 

rank of Joint Secretary, as nowhere in the sanction order it has been 

stated   that   the   said   Joint   Secretary   was   giving   the   sanction   on 

behalf of Government of India or the President under any delegated 

rules or legislation. Therefore, he has argued that the sanction order 

is invalid and accused P.K.Thungon (A­2) is liable to be acquitted on 

the   said   ground   alone,   as   the   same   goes   to   the   root   of   the 

prosecution case.100.                     He has further argued that there was no clear cut policy 

for disposal of vacant shops, the modalities for auction of shops had 

not   been   finalized.     The   shops   could   not   be   auctioned   earlier   on 

many   occasions   due   to   very   high   reserve   price,   even   after   the 

reduction of reserve price by 50%, the shops could not be auctioned 

for want of bidders, since the reserve price could not be finalized, 

therefore tenders could not be invited, even otherwise the shops in 

question   were   lying   vacant   for   a   long   time,   calling   for   extensive 

repairs   which   was   rather   causing   great   loss   of   revenue   to   the 

Government. The reserve price for auction or for tenders could not 

be finalized till late 1995.  Further, one of the modes for allotment of 

shops was by lease and licence basis which was adopted by earlier 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                     58 of 194    
                                              ­59­

Ministers,   as   there   was   a   provision   for   making   exceptions   in   the 

allotments,   if   the   circumstances   so   warranted.     As   per   office 

memorandum   of   1979,   clause­3   and   clause­12   of   the   Manual   of 

Office   Procedure   regarding   management   of   Central   Government 

markets in Delhi / New Delhi revised upto February 1, 1992.101.                     He   further   argued   that   in   the   present   case,   the 

allotments   were   made   with   the   concurrence   of   Finance   Division 

based   on   suggestions   of   Directorate   of   Estates.   At   the   time   of 

allotment,   the   method   of   payment   of   economic   licence   fee   was 

followed,   which   proposal   was   approved   by   Sh.G.B.Singh   and 

Sh.S.Patnayak, two of the prosecution witnesses examined in this 

case.  He has further argued that there was a specific stipulation in 

the licence deed that the allottees will pay the charges as may be 

decided   by   the   government   from   time   to   time   with   retrospective 

effect and the licence could be revoked by the government without 

assigning   any   reason   with   the   notice   of   30   days.   Consequently, 

there was no pecuniary loss caused to the government, rather this 

was to safeguard the interest of the government and in view of the 

fact that the policy in this regard has not been finalized.  Therefore, 

he argued that he has not abused his official position or entered into 

any   conspiracy   with   (A­1)   Smt.Sheila   Kaul   (since   deceased 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        59 of 194    
                                              ­60­

proceedings abated) or any other allottees for the allotment of shops 

to   accused   L.Tsering   (A­3),   who   is   a   Scheduled   Tribe   and 

Smt.Krishna (A­4), who is a widow of a freedom fighter.  He stated 

that the file of (A­5) Smt.Tulsi Balodi(since deceased  proceedings 

abated)   never   came   to   him.     He   has,   therefore   argued   that   no 

offenceu/S 13(1)(c)or (d) of thePC Actis made out against the 

accused P.K.Thungon (A­2).102.                     He has further argued that even no offenceu/S 409IPC 

is made out, as there was no entrustment of any property i.e. the 

shops   to   the   accused   P.K.Thungon   nor   he   can   be   said   to   have 

dominion over the said shops nor it is the allegation of prosecution 

that he dishonestly misappropriated or converted the said property 

to his own use.   He has further argued that no conspiracy is made 

out, as all the allottees were differently situated and no evidence has 

come   on   the   record   that   there   was   any   agreement   amongst   the 

allottees with (A­2)P.K.Thungon for the allotment of shop(s) nor any 

meeting of mind in this regard, therefore he has argued that accused 

P.K.Thungon deserves to be acquitted on all counts.103.                     Further,   Ld.   counsel   for   accused   L.Tsering(A­3)   has 

argued that accused is a Schedule Tribe, coming from Arunanchal 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        60 of 194    
                                           ­61­

Pradesh.   He has been unnecessarily dragged  into this case  and 

when he had applied for the shop, he had no financial means to look 

after him. The application for allotment of shop was made through 

proper channel. As soon as he was directed to surrender the same, 

he did so immediately and there was no conspiracy whatsoever with 

anyone. Same is the argument of accused Smt.Krishna (A­4), who 

has argued that she is a widow and a totally illiterate person, who 

can   neither   write   nor   read,   after   the   death   of   her   husband, 

Sh.Karamveer Singh Maan who is the elder brother of her husband, 

used to take care and look after her family, she had no means of 

livelihood,   she   never   met   (A­1)Smt.Sheila   Kaul   (since   deceased 

proceedings abated) and she has been falsely implicated.104.                     On the other hand, Ld. Public Prosecutors for CBI have 

rebutted the abovesaid arguments of the defence and have argued 

that the sanctionu/S 197Cr.P.C was a legal and valid sanction. The 

same had been accorded by PW­24 in the delegated capacity after 

going through the entire material placed before him.   In any case, 

the said sanction had been granted by him by the order and in the 

name   of   Government   of   India   in   such   delegated   capacity   and 

therefore, he was competent to accord sanction as well as the fact 

that   there   was   sufficient   material   on   the   record   to   grant   sanction 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                    61 of 194    
                                            ­62­

which   had   been   accorded   in   accordance   with   law   in   view   of   the 

materials placed before the sanctioning authority.  In any case, they 

have argued that no sanction even otherwise was required, as it is 

settled law that committing conspiracies or committing offence(s) is 

no part of duty of public servant regarding which there is umpteen 

number of judgments available.105.                     They have further argued that it is admitted case that at 

the relevant time of allotment of shops, accused no.2 P.K.Thungon 

was Minister of State (UD), who had made a proposal for allotment 

of   shops   in   favour   of   L.Tsering   (A­3),   who   is   the   son   of   his   real 

brother­in­law   i.e.   he   is   the   son   of   real   brother   of   his   wife   and 

another allotment was made in favour of accused Smt.Krishna (A­4), 

who was the sister­in­law of the common friend of the Minister of 

State   i.e.   Mr.P.K.Thungon   (A­2)   and   (A­1)   Smt.Sheila   Kaul,   UDM 

and  the   third   allotment   was  made,   though  not   on  the   proposal  of 

A­2,   but   was   recommended   directly   by   the   Directorate   of   Estates 

and   was   approved   by   UDM   was   that   of   Smt.Tulsi   Balodi   (A­5), 

whose husband PW­16 P.B.Balodi was working at the relevant time 

in   the   personal   staff   of   the   then   Prime   Minister   of   India.   He   has 

argued   that   all   the   allotments   were   made   flouting   the   norms   of 

allotment   prevalent   at   that   time,   which   as   per   the   office 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                     62 of 194    
                                          ­63­

memorandum of year 1979 was to be alloted by way of open public 

auction or by inviting tenders and allotments of shops no.405 and 85 

in P.G.Market  i.e. Lajpat Rai Market, which is situated opposite Red 

Fort   near   the   commercial   hub   of   Chandni   Chowk   was   in   clear 

violation   of   the   notes   made   by   the   other   Senior   Officers   of   the 

Ministry, who had clearly opined that such a course was against the 

norms and the office memorandum in force and the said allotments 

should only be made by following the said norms, failing which the 

government   will   suffer   substantial   loss   of   revenue   due   to   the 

strategic location of the said shops.106.                     There was even proposal to allot these shops in other 

newly   constructed   Central   Government   Markets   which   were 

available, rather the said shops in said Central Government markets 

situated in government colonies were also allotted around the same 

time or few years back on tender basis.  He has further argued that 

any   departure   from   the   established   norms   in   terms   of   office 

memorandum of 1979 and the Manual of Office Procedure regarding 

licences in respect of the markets issued by Directorate of Estates 

had to be on the basis of reasonable classification and no reasons 

for   exercising   the   discretion   had   been   indicated   in   the   notes   of 

approval.  It is also argued that it is settled law that the Courts can 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                    63 of 194    
                                           ­64­

examine the administrative discretion, if the same is totally arbitrary, 

unfair,   unreasonable   and   is   contrary   to   the   Principles   of   Fairness 

underArticle 14of the Constitution of India.107.                     They have also argued that the allotments in the present 

case were clearly flouting all the established norms and were marred 

by   favouritism   and   nepotism,   as   there   were   many   other   persons 

similarly situated as A­3 and A­4 to whom the allotments were made 

without calling any tenders or following the established procedure of 

public auction, which would have fetched great amount of revenue 

for   the   government.     Therefore,   they   have   argued  that   A­2,   while 

holding   the   office   of   Minister   of   State   had   obtained   pecuniary 

benefits for A­3 and A­4 in abuse of his such position and such act 

was   without   any   public   interest.     They   have   further   argued   that 

prosecution   had   lead   sufficient   evidence   on   record   to   prove 

conspiracy between A­1, A­2, A­3, A­4 and A­5, which is generally 

the inference to be drawn from the evidence adduced and no direct 

evidence is generally available.  They have also argued thatSection 

409IPC is also made out in the present case, as the shops were 

under the custody / entrustment of A­1 and A­2 or they can be said 

to have dominion over the said shops which they allotted in blatant 
violation of established norms by abusing the   procedure i.e. the OM of 1979, 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                     64 of 194    
                                              ­65­

therefore   they   have   argued   that   all   the   accused   persons   are   liable   to   be 

convicted.108.                     I have gone through the rival contentions and gone through the 

materials.109.                     The origin of the present case emanates from the note on page 16 

of file D­4 Ex.PW9/A which is a note dated 06.12.93 by the Minister of State, 

UD, which was A­2 Mr.P.K.Thungon at that time. The said note is as under­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        65 of 194    
                                                 ­66­110.                     In   the   said   note,   A­2   is   himself   writing   that   there   has 

been   a  proposal   that   the   shops   should   be  disposed   off   by   public 

auction.  But the procedure of public auction could be adopted, if the 

activity of L&DO was a regular one and since, the shops were falling 

vacant occasionally due to cancellation etc.,  therefore it would be 

futile to go through the entire auction process.  He also noted that 

no shop had been alloted to SC/ST candidates, though there was 

a   reservation   of   22.5%   in   such   matters   and   some   applications 

were   received   by   him   from   SC/ST   candidates   pertaining   to 

L.Tsering and Kessang Tsering and it was also found that 2 shops 

in Lajpat Rai Market were lying vacant i.e. bearing no.12 and 13 

which may be alloted to them. Further, shop no.85, 325 and 405 

were also lying vacant in the same market and there was another 

case of Smt.Krishna who was a widow having two school going 

children, having no means of livelihood and she may be alloted 

either of the above shops. On 08.12.1993 the matter was put up 

before   then   UDM   Smt.Sheila   Kaul,   who   stated   that   there   were 

some more VIP references pending. DE­I may put up (remaining 

portion not legible).111.                     Thereafter,   on  page   17   on   file   D­4,   there   is   a   note 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                            66 of 194    
                                                ­67­

dated 23.12.93 by Market­I Section by Sh.Vijay Kumar, the said 

note   has   been   proved   by   PW­26   Sh.G.B.Singh   as   Ex.PW26/A 

who has endorsed the said note, which is reproduced as under ­112.                     In   the   said   note,   it   is   noted   that   the   MOS,   UD   had 

recommended to UDM for allotment of shops in Lajpat Rai Market to 


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           67 of 194    
                                      ­68­

Smt.Krishna,   however  "it   may   be   mentioned   that   any   shop   falling 

vacant in markets where ownership rights have been granted, will be 

alloted on auction.  In markets where ownership rights have not been 

granted and shops continue to be on licence fee basis, whenever any 

shop falls vacant, it has to be alloted by calling tenders" and on page 

18 of file D­4  it is noted that at present there are four markets  where 

ownership   rights   have   already   been   conferred   under   the   Directorate   of 

Estates and in all these markets, if any shop falls vacant, it can only be 

disposed   off   through   open   auction/competent   tenders.   Even   the   new 

markets which have come up in various government colonies, the shops 

are to be alloted on auction/tender basis.  The requisite note prepared by 

Sh.Harcharanjit   Singh,   Director   who   has   been   examined   as   PW­22,   is 

reproduced as under­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                 68 of 194    
                                           ­69­113.                     Then, at  page 19 and 20 of file D­4  there is a note by 

then   Secretary   (UD)   Mr.K.Padmanabhaiah   which   is   Ex.PW28/A, 

same is reproduced as under ­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                     69 of 194    
                                               ­70­

                         Thereafter, on the same page there is a note by PW­11 

G.V.Krishna Rau (DS, L&WS) dated 31.12.93 which is Ex.PW 11/B, 

the same is reproduced as under ­114.                     In the said note, the said officer writes the detailed policy history 

starting from OM dated 24.3.79 which was only basis for disposal of shops for 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          70 of 194    
                                                  ­71­

the L&DO in the government colonies, therefore the new shopping centers are 

to be disposed off, as per the said note by public auction by L&DO, but since 

the reserve price was very high, therefore no bidder came forward and there 

was a proposal to refix the reserve price which has been submitted separately 

from the Lands Division. Regarding the shop no.85 it was stated that even the 

reserve price for this shop had not been fixed, therefore shop no.85, PG Market 

had not been disposed off by auction.115.                     Thereafter,   the   file   went   to   the   Director   of   Estates   PW­22 

Harcharanjit Singh, who made notings at page nos. 20,21,and 22 in the file D­4 

which he has proved in his testimony as Ex.PW22/D(exhibit mark inadvertently 

not put on the said noting). The same is reproduced as under­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                            71 of 194    
                              ­72­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                       72 of 194    
                                            ­73­116.                     In the said note, the Director of Estates gives the detail 

history of allotment in the markets, where the ownership rights were 

conferred on original allottees, as per the cabinet decision of 1978, 

one   of   them   was   Lajpat   Rai   Market   (P.G.Market).     It   was   also 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      73 of 194    
                                              ­74­

discussed   that   the   policy   for   allotment   and   management   of 

shopping centres in Central Government colonies was reviewed, it 

was   decided   on  1979  with   the   concurrence  of   Finance  Ministry 

that   the   shopping   centres   constructed   in   newly   constructed 

Central Government colonies will be disposed off   by the L&DO 

through   open   auction   which   amounts   to   their   disposal   on 

leasehold basis.  It is also stated in the said detailed note that in 

1991,   they   were   considering   the   proposal   for   regularization   of 

shops in P.G. Market including shop no.85 which was vacated in 

1981, it was decided that L&DO may be requested to go ahead 

with the disposal of this shop as per their norms and procedures, 

in   other   words   any   shop   falling   vacant   in   the   markets   where 

ownership rights have been conferred is to be transferred to L&DO 

for auction. It was also stated in the said note that the shop no.85, 

325 and 405 situated in Lajpatrai market (PG Market) are located 

in   a   market   where   ownership   rights   had   been   conferred,   these 

may be auctioned by L&DO.117.                     Thereafter,   the   matter   went   again   to   the   Secretary, 

UDM Mr. K.Padmanabhaiah, who has made another noting dated 

18.1.94 on page 23 of file D­4,  same is reproduced as under­

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        74 of 194    
                                              ­75­118.                     In the said note, the Secretary, UD noted that in the P.G. Market 

(the one under consideration), the procedure was to allot   shops on perpetual 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        75 of 194    
                                            ­76­

lease basis. For this purpose L&DO was required to auction the shops falling 

vacant by fixing reserve price, but since the reserve price was very high, hence 

not many persons participated in the auction, however the reserve price was 

being   lowered   substantially   to   1/4th  of   the   earlier   reserve   price   and   he   also 

opined that there was no reservation for SC/ST which should be extended in 

future, but there  are 22  persons whose  names have  been recommended  by 

various VIPs for allotment of shops and they may also apply / participate in the 

auction, if they so desire.  Thereafter, the matter went again to the table of A­2 

who was then MOS (UD), who made a detailed note dated 19.01.94 Ex.PW9/B 

in the same file at page 24, same is reproduced as under­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                       76 of 194    
                                              ­77­119.                     In   the   said   note,   he   differed   from   the   noting   of 

Secretary, UD dated 18.1.94 and recommended for allotment 

of   shops   to   L.Tsering   and   Kessang   Tsering   and   also   to 

Smt.Krishna   on   the   ground   that   the   above   persons   were 

hailing from North­East of India, who were feeling alienated so 

as to integrate them into main stream and Smt.Krishna was a 

very poor lady who should be alloted shop on compassionate 

basis.  Thereafter, UDM recommended the allotment of shops 

no.405   and   85   to   L.Tsering   (A­3)   and   Smt.Krishna   (A­4) 

respectively vide note Ex.PW27/E.120.                     Vide notes on page 25 and 26 on file D­4 made by 

Mr.G.B.Singh PW­26, who was working as Dy.Director (Office 

and Market) in the Directorate of Estates, the said notes on 

page   25   is   Ex.PW15/B   which   was   proved   by   V.P.Sharma, 

Desk Officer and the endorsement of Mr.G.B.Singh is at page 

26 of the said noting file which is Ex.PW27/D, it also bears the 

signatures of PW­27 Sansar Patnayak.   The said notes are 

reproduced as under­



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         77 of 194    
                              ­78­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                       78 of 194    
                                           ­79­121.                     The said notes at page 25 and 26 also gives the history 


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                     79 of 194    
                                               ­80­

of   allotment   and   the   policy   of   public   auction   regarding   these   two 

shops alloted in PG Market to L.Tsering (A­3) and Smt.Krishna (A­4) 

stating   that   in   PG   Market   where   ownership   rights   have   been 

conferred, the shops are to be disposed off by public auction and not 

by leave and licence basis. It was also noted on page 26 that in the 

past,   UDM   had   made   allotments   to   different   persons   in   newly 

constructed   markets   in   government   colonies   like   Lodhi   Road 

complex, DIZ area, Hanuman Road on leave and licence basis on 

payment   of   economic   licence   fee.   The   allotments   of   these   shops 

were made as per the orders of UDM after referring the matter to the 

Finance   Division.   It   was   for   the   first   time   that   UDM   had   made 

allotment of shops in a rehabilitation market where the government 

had already conferred ownership rights.122.                     It   was   also   stated   that   the   economic   licence   fee   of 

rehabilitation markets have not been revised since 1964, although in 

other   markets,   licence   fee   has   been   revised   thrice   after   01.04.85 

and the UDM had also not indicated the rate of licence fee to be 

charged.  It was also stated that four shops as mentioned in the said 

note at page 26, as above had been allotted on the last few years on 

tender basis, therefore as per the existing policy, the two shops in 

question were also to be alloted on the basis of public  auction  and 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          80 of 194    
                                                  ­81­

allotment   of   any   shop   in   these   markets   to   any  other  person   would   be   a 

departure from public policy involving financial implications and loss of revenue, 

therefore concurrence of Finance Division may be taken.123.                     Thereafter,   the   matter   was   sent   to   Finance   Division   and   vide 

detailed note dated 05.05.94 (running into 3 pages)  at pages 27,28,29 of file 

D­4 which are Ex.PW15/A, the opinion of the Finance Division of the Ministry of 

UD was taken, which is reproduced as under­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                             81 of 194    
                              ­82­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                       82 of 194    
                              ­83­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                       83 of 194    
                                          ­84­124.                     In the said note also, the detailed policy regarding 

the allotment of shops in the ownership markets including the 

PG   Market   was   discussed   based   on   OM   dated   24.03.79 

stating   that  any  allotment  of  the  shops   in  the  said  markets 

may be disposed off by way of public auction, but since there 

was   an   exception   clause   at   para   3   of   the   said   OM   dated 

24.03.79   that   some   exceptions   could   be   made  "if   the 

circumstances   so   warrant"  and   the   said   exception   was 

tested in 1989, when the then UDM approved allotment of 15 

shops  in Hanuman road and other markets which was also 

objected   by   then   Joint   Secretary   (Finance)   stating   that   the 

wholesale exception could make it a rule than exception.125.                     Regarding the allotment of two shops in question, it 

was   reiterated   that   the   existing   policy   was   that   the   shops 

which were allotted to certain individuals with the approval of 

UDM,   as   referred   to   above,   were   also   to   be   disposed   off 

through   public   auction,   since   the   shops   were   situated   in   a 

market where ownership rights had been conferred and also 

even if, examined from the purely financial point of view, PG 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                    84 of 194    
                                          ­85­

Market was situated at the heart of Delhi, just opposite Red 

Fort   and   it   was   hub   of   commercial   activity   and   because   of 

this, if the two shops were to be disposed off through public 

auction it will earn for government quite a handsome amount 

of   revenue.     He   also   stated   that   some   other   shops   as 

mentioned   at   page   no.26   above   were   put   on   tender   basis 

which   generated   quite   a   good   amount   of   revenue   for   the 

government and therefore, if the two shops in question were 

to put to tender, it could fetch quite a sizeable revenue for the 

government, since these two shops are high potential entities 

from the financial point of view.126.                     Thereafter, the  matter  was  again  put  up  before 

Joint   Secretary   and   Finance   Advisor   in   the   Ministry   of 

UD Sh.Girish Bhandari PW­20, the   detailed   note   at   page 

no.29 and 30 in file D­4 has  been  proved  as  Ex.PW15/DA 

also  bearing  signatures  of  PW­20  at  point  A, the  same  is 

reproduced as under­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                    85 of 194    
                              ­86­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                       86 of 194    
                              ­87­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                       87 of 194    
                                             ­88­127.                     In   the   said   note   it   has   been   noted   that   the 

Director of Estates has mentioned there is a departure 

from existing policy, one solution could be to allot shops 

in any other areas where 15 shops were alloted in 1989, 

same may be considered.   In the alternative, if it is not 

so   decided,   the   rates   of   licence   fee   on   which   these 

shops are to be alloted be worked out and the said shop 

be given on licence fee basis for a limited period of 2 to 

3 years.128.                     Thereafter, on  page 30,31 and 32 of file D­4 

the matter went to Sh.N.P.Singh, who was working as 

Addl.   Secretary,   Ministry   of   Urban   Affairs   and 

Employment,   Dept.   of   UD,   the   detailed   note   made   by 

him as above has been proved as Ex.PW20/DA bearing 

his   signatures   at   point   X   dated   11.05.94,   same   is 

reproduced as under­



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                       88 of 194    
                              ­89­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                       89 of 194    
                              ­90­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                       90 of 194    
                                                 ­91­129.                     He   also   noted   that   as   per   the   existing   policy,   the   two 

shops were to be sold by public auction after fixing the reserve price, 

however   since   the   grounds   for   exception   have   already   been 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                            91 of 194    
                                         ­92­

examined by MOS, UD at page 24 mentioned as above, and the matter has 

also   been   examined   by   the   Finance   Division,   therefore   the   shops   may   be 

alloted to the persons mentioned in the order on leave and licence basis for a 

maximum period of 5 years nor ruling out the option of public auction or tender 

in due course.  Thereafter, the Secretary UD as well as MOS, UD i.e. Accused 

no.2,   who   vide   noting   on  page   no.33   Ex.PW9/C   in   file   D­4,  reproduced   as 

under ­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                    92 of 194    
                                              ­93­130.                     Vide said noting MOS (UD) ordered for allotment of shop 

no.405 and 85 respectively to L.Tsering (A­3) and Smt.Krishna (A­4) 

on regular basis on payment of licence fee.  It was also stated that 

the  ownership   may  be  transferred   to  them  after  the   reserve  price 

had been worked out.  The UDM also agreed for the allotments and 

therefore,   it   was   ordered   that   allotment   order   be   issued   and 

possession be given after the licence fee is fixed vide endorsement 

dated 16.05.94 Ex.PW9/D and vide endorsement dated 16.05.94 by 

PW­27   Sansar   Patnayak   Ex.PW27/F,   it   was   ordered   that   draft 

allotment letters be issued in favour of these persons.131.                     The defence of the accused person is that, as per the 

OM No.17017/4/77­W2 issued by the Government of India, Ministry 

of Works & Housing dated 24.03.79 Ex.PW11/C, which OM was with 

regard to policy to be adopted for development and construction of 

shopping centers in various government colonies in Delhi, clause­2 

of the said OM is the general rule whereas clause­3 is the exception 

thereto vide which Minister had the discretion to allot the shops by 

exercising exception clause, which reads as under ­2.  Keeping these factors in view, the general  

                         question of development and construction of  

                         shopping   centres   in   various   Govt.   colonies  

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         93 of 194    
                                              ­94­

                         and Community Centre Complexes has been  

                         considered   in   consultation   with   Lands  

                         Division and Finance Division and it has been  

                         decided that the following proceeding should  

                         be   followed   in   the   matter   of  

                         development/construction/management   of  

                         shopping   centres   in   various   Govt.   colonies  

                         and   Community   Centre   Complexes   /  

                         Commercial   Centres   in   the   land   under   the  

                         control of the Central Government :(1) Construction   of   Convenient/Local  

                             Shopping Centres:(a)   Sanctioned   Schemes:   Govt.   have  

                             sanctioned   construction   of   one  

                             Convenient   Shopping   Centre   each   in  

                             Badarpur­Mehrauli   Road   area   and   Sadiq  

                             Nagar;   the   project   estimate   for  

                             construction   of   15,300   houses   in   Delhi  

                             already   sanctioned,   also   provides   for  

                             construction           of                       Convenient/Local  

                             Shopping   Centres   in   various   colonies  

                             where quarters would be constructed.  In  


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          94 of 194    
                                                  ­95­

                                these   cases,   the   construction   would   be  

                                undertaken by the CPWD and, thereafter,  

                                the   shops   would   be   sold   by   auction   by  

                                the  Land  and  Development  Officer, after  

                                fixing   minimum   reserve   price   in  

                                consultation with the Finance Division.3. While   the   above   would   be   the   general  

                         policy   to   be   adopted   in   future,   exceptions  

                         may be made if the circumstances so warrant.132.                     They   have   also   relied   upon   Clause   3   (a)(i)   and   the 

exception clause 12 of the Manual of Office Procedure Ex.PW12/B­2 

regarding   management   of   Central   Government   Markets   in 

Delhi/New   Delhi,   revised   upto   February   1,   1992   issued   by   the 

Directorate of Estates, which are also reproduced as under ­3.(a)(i)        All   vacancies   shall   be   filled,   as   a  

                         rule, by inviting tenders from the public.12. Relaxation of Rules

                                        The Government may, for reasons to be  
                         recorded   in   writing,   relax   all   or   any   of   the  
                         provisions of the rules/instructions governing  
                         the   policy   of   allotment,   regularisation,  
                         restoration   of   shops   etc.,   in   Central  
                         Government   Markets   managed   by   the  

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                            95 of 194    
                                                ­96­

                         Directorate of Estates.133.                     It   was   also   argued   that   as   per   the   Manual   of   Office 

Procedure regarding management of Central Government Markets 

in   Delhi/New   Delhi,   revised   upto   February   1,   1992   issued   by   the 

Directorate   of   Estates,   the   Minister   was   fully   competent   to   make 

exceptions by recording the reasons in writing and  in this case there 

was   cogent   reasons   for   exercising   the   said   discretion,   as   (A­3) 

L.Tsering was Scheduled Tribe candidate from North­East, and the 

people   from   North­East   had   to   be   given   representation   so   as   to 

integrate   them   in   the   main   stream.   Regarding   other   candidate 

Smt.Krishna   (A­4),   the   discretion   was   exercised,   as   she   was   a 

widow having very poor economic condition, and the said discretion 

had earlier also been exercised in the year 1989 by the then UDM 

who had similarly alloted 15 shops in different markets situated in 

various   government   colonies   to   different   people   on   the   basis   of 

abovementioned   OM/Manual.     Therefore,   the   said   discretion   had 

also   been   earlier   exercised   and   no   fault   had   been   found   in   the 

same, therefore the exercise of discretion in this case in favour of 

these two persons cannot be faulted.134.                     Further,   the   defence   counsels   have   relied   upon   the 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           96 of 194    
                              ­97­

noting made by PW­11 G.B.Krishna Rau, dated 24.04.92 who was 

working as Land and Development Officer in file D­5 page 106, 107 

and 108, same is Ex.PW11/A­1, the said notings are reproduced as 

under ­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                       97 of 194    
                              ­98­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                       98 of 194    
                                             ­99­135.                     In the said detailed notes at page 106, he has stated that it 

was   decided   in   1979   that   shopping   centers   constructed   in   newly 

constructed central government colonies be disposed off by public auction, 

but   the   same   could   not   be   done   due   to   high   reserve   price,   in   the 

meanwhile there was a proposal to transfer the shops to local bodies, but 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                       99 of 194    
                                            ­100­

the   same   also   could   not   materialize,   thereafter   there   was   a   move   for 

refixation of the reserve price and in the year 1989, some shops were 

disposed off  on licence  fee basis  on  the recommendations  of  the then 

UDM.136.                     Thereafter, at  page 114, 115 and 116 of file D­5  there is a 

note   by   R.Vishwanathan,   Desk   Officer   dated   14.12.93   which   is 

Ex.PW34/E, same is reproduced as under­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                       100 of 194 
                              ­101­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                        101 of 194 
                              ­102­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                        102 of 194 
                                             ­103­137.                     There   is   also   a   note   at  page   117   to   page   122 

Ex.PW11/G by the same officer which is reproduced as under­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        103 of 194 
                              ­104­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                        104 of 194 
                              ­105­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                        105 of 194 
                              ­106­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                        106 of 194 
                                         ­107­138.                     In the aforesaid note, he has also  stated regarding 

the fixing  of reasonable  reserve price for disposal  of shops 

situated in government colonies and the markets constructed 

by   CPWD   were   transferred   to   L&DO   for   auction,   but   there 

was no response from bidders due to very high reserve price, 

thereafter there was a proposal to refix the reserve price even 

reducing   the   rates   by   50%.     He   also   stated   about   the 

allotment of 15 shops on licence basis by then UDM in year 

1989 and there was a proposal for disposal and maintenance 

of   shopping   centers   mentioned   in   his   note   that   same   be 

transferred   to   the   local   bodies   and   in   the   detailed   note   he 

stated   that   the   proposal   regarding   fixation   of   revised   price 

should   be   revisited   and   it   should   be   made   reasonable   to 

attract prospective bidders and it was also to be kept in mind 

that   the   shops   were   lying   in   dilapidated   condition   requiring 

extensive repairs by the CPWD.139.                     There is another note at  page 123 to 126 dated 

15.02.94   in   file   D­5   by   Sh.K.Dharmarajan  same   is 

Ex.PW10/B, which is reproduced as under­
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                    107 of 194 
                              ­108­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                        108 of 194 
                              ­109­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                        109 of 194 
                              ­110­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                        110 of 194 
                                                   ­111­140.                     In   the   said   note,   he   had   given   the   detailed   background   for   the 

disposal   of   shops   constructed   in   government   colonies   which   were   to   be 

disposed   of   by  the   L&DO,   as   per  the   1979   OM  and   regarding   the   fact   that 

Director of Estates was managing 32 markets, four of them were rehabilitation 


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                               111 of 194 
                                                ­112­

markets and that in 1979 decision was taken that in future, shops will not be 

given on licence fee basis, but be given on lease basis by public auction and the 

fact that the reserve price being very high could not attract bidders and the re­

fixation of reserve price.141.                     Further,   though   A­5   Smt.Tulsi   Balodi   expired   and   proceedings 

against her stood abated on 21.08.2014, but the manner in which the allotment 

was made to A­5 needs to be discussed.  In this regard, a note date 30.03.94 

has been proved as Ex. PW10/DC which also bears the signatures of PW­27 

Sansar Patnayak at point A.  The page no.1 and 2 of file D­3 is reproduced as 

under:­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                            112 of 194 
                              ­113­




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                        113 of 194 
                                             ­114­142.                     It is apparent from the said note that an application was 

received   from   A­5   Tulsi   Balodi   for   allotment   of   shop   in   market   of 

Hanuman Road, though as per the existing policy, the said shop had 

also   to   be  alloted   by   following   the   process   of   public  auction   after 

fixing   the   reserve   price   vide   OM   dated   24.03.79,   however   a 

favourable note was put up for allotment of shop in her favour vide 

endorsement Ex.PW22/A of the same date i.e. 30.03.14. The matter 

was   put   up   before   Secretary,   who   approved   the   matter   on   same 

day.   The UDM Smt.Sheila Kaul (A­1) approved it on 09.04.1994. 

Thereafter,   shop   no.2,   Hanuman   Road   Market   was   alloted   to   her 

without even getting any concurrence from the Finance Division or 

getting   the   matter   examined   by   other   officials   of   the   UD   Ministry 

including Joint Secretary and Director of Estates etc.   It is clearly 

mentioned in the said note itself that it had been ascertained from 

L&DO that a proposal for auctioning the vacant shops /stalls based 

on   actual   FAR   covered   has   been   prepared   and   was   put   up   for 

approval of UDM, yet the said note was approved by the UDM on 

09.04.1994.143.                     Relying   upon   the   aforesaid   notings,   the   Ld.   defence 

counsels have argued that the shops in question were lying vacant 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        114 of 194 
                                            ­115­

for a long period of time and no bidder had come forward for auction 

due   to   high   reserve   price   and   most   of   the   shops   were   lying   in   a 

dilapidated condition requiring extensive repairs on behalf of CPWD. 

Since,   the   process   of   reserve   price   was   undergoing   change, 

therefore (A­2) P.K.Thungon was fully justified in allotting the shops 

to (A­3) L.Tsering and (A­4) Smt.Krishna. In fact, such a discretion 

had   already   been   exercised   by   previous   UDM,   as   per   which   15 

shops   were   alloted   to   different   persons   in   year   1989,   as   per   the 

exception clause­3 of the OM dated 24.03.79.  Therefore, it is stated 

that   there   is   nothing   wrong   in   discretion   exercised   by   A­2 

P.K.Thungon.144.                     The  Ld.  defence  counsels  have   relied  upon the  cross­ 

examination   of   various   witnesses   examined   by   the   prosecution   in 

support of their contention to prove that the discretion in the present 

case   has   been   validly   exercised.       For   instance,   in   the   cross 

examination of PW­10 K.Dharmarajan, who had proved the notings 

in   the   file   D­5   as   Ex.PW10/A   to   Ex.PW10/F.   He   in   his   cross 

examination   has stated   that  the  policy  prevailing   in 1994 was  the 

policy which was formulated in 1979 by way of OM.  It was correct 

that as per clause­3 of the OM, there were exceptions which were to 

be made to the general policy, if the circumstances so required.  He 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                       115 of 194 
                                          ­116­

in   his   further   cross­examination   also   stated   that   in   the   note 

Ex.PW10/DB   contained   in   file   D­1,   it   was   correct   that   in   the   said 

note he recommended allotment by exercise of clause­3 of the OM, 

as   the   applicant   belonged   to   North­East   and   they   should   be 

integrated with the main stream.  Similarly, in the cross­examination 

of PW­11 G.B.Krishna Rau, who has proved his notings Ex.PW11/A 

to Ex.PW11/G.  He has stated that it was correct that as on 08.04.94 

there   was   no   revised   reserve   price   fixed   for   the   shops   that   were 

lying vacant and to dispose off these shops by public auction.  It was 

correct that the shops had been lying vacant for 8 to 10 years and 

the revision of the reserve price for the disposal of the shops was 

under consideration. The earlier Minister had allotted some shops on 

licence   basis.     He   further   deposed   that   as   per   his   note   dated 

05.05.93 Ex.PW11/D, it was earlier suggested to decide as a policy 

to dispose off all shops on licence fee basis.145.                     Similarly, PW­20 G.C.Bhandari in his cross examination 

has   stated   that   in   order   to   keep   the   auction   of   the   shops,   he 

recommended   that   the   shops   may   be   alloted   to   the   persons   on 

leave   and   licence   basis   for   a   maximum   period   of   5   years. 

Sh.N.P.Singh   further   observed   in   his   note   that  "Directorate   of 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                    116 of 194 
                                            ­117­

Estates does not seem to have any clear cut or cogent policy 

which   would  facilitate   quick  disposal   of  government   property 

like   shops,   kiosks,   stalls   to   the   deserving   persons   either   on 

basis of auction or by tenders".  He further deposed that shops in 

question had been lying vacant for more than 15 years, as there was 

no   bidder.     In   his   further   cross   examination   he   stated   that   the 

physical   condition   of   the   shops   had   deteriorated   which   had 

necessitated the disposal of shops immediately.  He further deposed 

that Sh.Krishna Rau had suggested in his note that  "considering 

that these shops remained un­alloted, un­utilized for almost 10 

years,   in   some   cases   they   do   require   extensive   repairs,   this 

work   is   undertaken   perhaps   that   is   likely   to   cause   more 

avoidable   delay   and   this   additional   cost   to   be   incurred   on 

repairing most of the shops will have to be added to the reserve 

price".146.                     Thereafter,   PW­22   Harcharanjit   Singh   in   his   cross 

examination   has   stated   that   it   was   correct   that   the   Minister   had 

approved   category   of   persons   for   relaxation   falling   under   the 

category of widows, handicap, unemployed graduates, SC/ST and 

other   compassionate   grounds.     It   was   correct   that   the   allotments 


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                       117 of 194 
                                                ­118­

made   vide   files   D­1,   D­2   and   D­3   were   covered   under   these 

categories approved.147.                     Thereafter,   PW­26   Sh.G.B.Singh,   who   was   working   as 

Dy.Director (Office and Market Section) under Directorate of Estates 

in   his   cross   examination   has   stated   that   the   matter   had   been 

referred to the Finance Division and the licence fee was charged in 

accordance   with   the   directions   of   Finance   Department.     It   was 

correct   that   an   undertaking   was   given   by   the   allottees   that   the 

licence fee and other charges would be payable by them, as may be 

decided from time to time by the government and the same would be 

chargeable retrospectively.  It was correct that it was the condition of 

the   licence,   it   could   be   revoked   by   the   government   at   any   time 

without   stipulation  of  any  period and  to  this  effect   an undertaking 

was also given by the office.148.                     It   was   also   correct   that   there   was   a   provision   in   the 

manual for allotment of shops that the rules may be relaxed by the 

competent authority in appropriate cases after giving reasons.  It is 

correct   that   the   note   by   Mr.P.K.Thungon,   then   MOS   (UD)   dated 

06.08.93 Ex.PW10/A contains the reasons for relaxing the rules for 

allotment of shop to the candidates mentioned therein.   The matter 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           118 of 194 
                                           ­119­

for   allotment   of   rules   was   examined   by   Sh.N.P.Singh,   then 

Addl.Secretary vide his note dated 11.05.94 Ex.PW20/DA, who also 

observed   that   Directorate   of   Estates   does   not   seem   to   have   any 

clear   cut   or   cogent   policy   which   would   facilitate   quick   disposal   of 

government   property   either   on   the   basis   of   auction   or   by   inviting 

tender.149.                     He further stated in cross examination that it was correct 

that in note Ex.PW15/A, it is recorded that the said exception was 

tested in 1989, when the UDM had approved allotment of 15 shops 

in various markets.  He further deposed that it was correct that till he 

left the Ministry of UD, the issue relating to charges including the 

ground rent was not finalized and it is also reflected so in his note 

dated 19.05.95.150.                     Similarly,   PW­27   Sansar   Patnayak   in   his   cross 

examination   has   stated   that   A­2   P.K.Thungon,   who   was   then 

working as MOS (UD) had recommended the allotment of shops to 

(A­3)L.Tsering and (A­4) Smt.Krishna on compassionate ground by 

exercising exception clause.  He further deposed that he was aware 

that the reserve price for auction or inviting tenders for allotment of 

shops had not been fixed even till late 1995.RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      119 of 194 
                                          ­120­151.                     Similarly,   PW­38   Sh.K.Padmanabhaiah,   who   was 

working as Secretary, UD at the relevant time of allotment of two 

shops to A3 and A­4 has deposed in his cross­examination that the 

MOS (UD) had recorded earlier that there was no well defined policy 

in matter of disposal of shops.  It was correct that in his note, he had 

recorded   that   earlier   also   vacant   shops   were   put   for   auction,   but 

since   the   reserve   price   was   too   high,   the   same   could   not   be 

auctioned and the auction was not successful and during his tenure 

the reserve price was not finalized.152.                     Thereafter, PW­29 Purshottam Bhardwaj has also stated 

in   his   cross­examination   that   it   was   correct   that   there   was   an 

exception clause in the office manual for allotment of shops which 

was   then   prevailing.   There  was  also   reservation   for  SC/ST   in  the 

matter   of   allotment   of   shops   by   inviting   applications   from   these 

reserved categories for allotment to be made by draw of lots and 

that A­2 had recommended the allotment of shops to A­3 and A­4 on 

the basis of exception clause.153.                     Similarly, PW­34 Sh.R.Vishwanathan has deposed in his 

cross examination that it was correct that modalities for disposal of 

the   shops   were   required   to   be   reviewed   in   view   of   high   reserve 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                    120 of 194 
                                            ­121­

price, but the same could not be finalized till he worked there.  It was 

correct that the reserve price of the shops was reduced by 50% after 

the unsuccessful auction in the first instance and still there were no 

bidders   at   the   reduced   price.   He   also   recorded   in   his   note   dated 

14.12.93 Ex.PW34/E that most of the shops are lying in dilapidated 

condition requiring extensive repairs, the local bodies had asked for 

the shops free of cost.  Lastly, he stated that the policy for allotment 

of shops was under review after the failure of previous auction, but 

the same could not be finalized till he remained there.154.                     Based   on   the   cross   examination   of   the   aforesaid 

prosecution   witnesses,   the   Ld.defence   counsels   have   argued   that 

what   kind   of   sin   (A­2)   P.K.Thungon   has   done,   as   the   shops   in 

question   were   lying   vacant   for   10­15   years,   which   were   rather 

causing   loss   to   the   State   Exchequer,   as   the   said   shops   required 

extensive repairs and despite repeated attempts for auctioning these 

shops, no bidder came forward due to very high reserve price. Even 

the efforts to reduce the reserve price did not attract any bidders and 

even the local bodies were ready to accept the said shops free of 

cost only.  He has further argued that the previous UDM in 1989 had 

exercised the exception clause­3, as per the OM of 1979 and had 

allotted 15 shops to different persons and in the present case also, 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                       121 of 194 
                                            ­122­

the   said   exception   clause   had   been  exercised   by  A­2   after   going 

through   the   entire   material   on   record.   Even   the   matter   had   been 

examined   by   all  the   concerned   higher  officials   of   the   UD  Ministry 

and   it   was   also   having   the   financial   concurrence,   therefore   there 

was   no   loss   to   the   government,   rather   the   said   allotment   was   in 

public interest and the exercise of discretion was validly made, as 

per   clause­3   of   OM   and   manual   of   Office   Procedure   for 

management of Central Government Markets Ex.PW21/B­2.155.                     Before proceeding further it would be relevant to find out, 

if there is any relation between A­2, A­3, A­4 and A­5.  In this regard, 

PW­8 Sh.Inder Kumar has deposed that they were five brothers and 

one of them was Karamveer Maan and another was Kishan Maan, 

who has died and accused Krishna (A­4) is the wife of his brother 

Late   Sh.Kishan   Maan.     IO   PW­30   Retired   SSP   P.C.Sharma   has 

deposed in his cross examination that name of a common friend of 

Minister of State and Minister, to whose sister­in­law, the allotment 

was made was Karamveer Singh Maan.   The said assertion made 

by the IO in his cross examination has not been controverted by the 

Ld. counsel for accused Krishna.  Now, reverting to another accused 

(A­3)   L.Tsering,   PW­12   Mr.Deshpal   Singh   has   deposed   that   he 

knew   (A­2)   P.K.Thungon,   as   he   was   officially   maintaining   the 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      122 of 194 
                                           ­123­

computers at the office and residence of Ministers and Member of 

Parliament.     He also deposed that accused (A­3) L.Tsering is the 

son   of   brother­in­law  (i.e.   brother   of   wife   of   Mr.P.K.Thungon),   the 

said fact has not been controverted in the cross examination of this 

witness.   Therefore, it is established that (A­3) L.Tsering is closely 

related to A­2 P.K.Thungon.156.                     Though,   (A­5)   Smt.Tulsi   Balodi   has   expired   and 

proceedings   against   her   stood   abated   vide   order   dated   21.08.14, 

however it would be pertinent to point out her status in the society 

and the reason as to why allotment was made to her as well in this 

case, which was made on the same day on which the application 

was received with utmost alacrity.  In this regard, her husband, Prem 

Ballabh  Balodi has  appeared as PW­16. He stated  that   he  joined 

Ministry of Home Affairs as Peon and in the year 1991,   he joined 

the personal staff of the then Prime Minister of India and accused 

Tulsi Balodi (A­5) was his wife and his wife was alloted a shop at 

Hanuman Road.   In his cross examination  he also stated  that  he 

was attached with Mr.Narsimha Rao, when he was Home Minister, 

but   was   not   personally   attached   with   him.     He   used   to   visit   his 

residence as and when such a duty was assigned to him, after he 

became Prime Minister, he was deputed to his office by the Ministry 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      123 of 194 
                                           ­124­

of Home Affairs not by Sh. Narsimha Rao.   He also stated that he 

knew Smt.Sheila Kaul (A­1) (deceased), who used to come to the 

residence of Mr.Narsimha Rao, when he was the Prime Minister.157.                     From the aforesaid testimonies, it is established that all 

the accused persons A­3, A­4 and A­5 had connections with big and 

mighty persons of the lutyens zone, as A­3 is closely related to A­2, 

A­4 was related to one Karamveer Singh Maan, who was a close 

friend of A­2 and A­1 Smt.Sheila Kaul, whereas deceased A­5 was 

the   wife   of  a  peon  PW­16  who  was  working   in   the  personal  staff 

attached   with   the   then   Prime   Minister   of   India   Sh.Narsimha   Rao. 

Now in this scenario, it has to be seen, whether the discretion which 

has been exercised by A­1 (deceased) and A­2 in allotting the shops 

to   A­3,   A­4   and   A­5   (deceased)   by   using   their   powers,   as   per 

exception   clause­3   in   the   OM   of   1979   Ex.PW11/C   or   as   per 

clause­12,   as   per   the   Manual   of   Office   Procedure   regarding 

management   of   Central   Government   Markets   in   Delhi/New   Delhi 

revised   upto   February   1,   1992   which   is   Ex.PW21/B­2,   has   been 

validly   exercised   by   giving   sound   reasons   for   exercising 

administrative   discretion   or   the   same   is   totally   unfair,   arbitrary, 

malafide, violatingArticle 14of the  Constitution of India.RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      124 of 194 
                                                 ­125­158.                     In   this   regard   it   would   be   useful   to   quote   from   the 

Administrative   Law,   Seventh   Edition,   S.P.Sathe,   Lexis   Nexis 

Butterworths Page(s) 398 and 399 as under­
                                Government   largesse   is   public   property   and  
                         government   cannot   dole   it   out   arbitrarily.     In   the 
                         distribution   of   largesse,   such   as   a   contract,  
                         advertisement, licence, allotment of government land  
                         or   a   privilege,   the   discretion   must   be   exercised   in  
                         public   interest   and   in   accordance   with   the  
                         Constitution.   Arbitrary disposal of largesse violates  
                         art   14.   All   people   must   have   equal   opportunity   of 
                         being considered for such largesse and there should  
                         be   neither   any   favouritism   nor   nepotism   in   its  
                         allotment.  Although the government is free to decide 
                         whom to allot largesse to, unlike a private person, it  
                         cannot allot the largesse as it likes.Discretion in this regard must be so used as to  
                         give   equal   opportunities   to   all   eligible   persons   to  
                         compete   for   it.     The   State   can   of   course   decide   the  
                         criteria of eligibility.   For example, it may decide to  
                         give   certain   types   of   benefits   only   to   co­operative  
                         societies or to give preferential treatment to persons 
                         from   the   weaker   sections   of   society.     Where   the  
                         government reserved some units of the Sal forests in  
                         favour of new industrial units set up for extraction of  
                         Sal oil, without making similar reservation in favour  
                         of the old industrial units, the reservation could not  


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                             125 of 194 
                                                ­126­

                         be held to be discriminatory.  The policy was based on  
                         the   recommendation   of   an   expert   committee,   was 
                         supposed to step­up production of Sal seed and was  
                         not likely to incur financial hardship.  Such decisions  
                         regarding   eligibility   must   be   based   on   reasonable  
                         classification and should not be arbitrary.However,   even   if   such   eligibility   criteria   are  
                         valid,   their   application   to   individual   persons   also  
                         comes   under   judicial   scrutiny   and   the   court   would 
                         strike down a decision if the actual allotment is not in  
                         accordance   with   such   criteria   of   eligibility   or   is  
                         otherwise   discriminatory.   Blacklisting   a   contractor  
                         from government contracts merely on the ground that  
                         his   relations,   carrying   on   similar   business   were  
                         defaulters in paying sales tax, was held violative of  
                         arts 14 and 19(1)(g) of the Constitution. In the case of  
                         government contracts, where rules required that such  
                         a contract had to be given to persons connected with 
                         arrack   trade,   giving   it   to   strangers   who   had   no 
                         connection   with   that   trade   was   held   arbitrary.  
                         Allotment   of   petrol   pumps   to   near   friends   and 
                         relations   of   ministers   was   held   invalid.     Similarly,  
                         out­of­turn   allotments   of   houses   in   Delhi   by   a 
                         minister   were   held   to   be   discriminatory.   Where   a 
                         contract for bottling of arrack was given to a chosen  
                         few without inviting quotations or tenders, the court  
                         struck it down. Similarly, a contract awarded at high  
                         rates   without   floating   public   tenders,   thus   causing 


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           126 of 194 
                                                ­127­

                         loss to the public exchequer, was held to be arbitrary  
                         and, therefore, void.Although the government is free to decide who  
                         to give an advertisement to, a guideline saying that  
                         they may not be given to newspapers that were rabid  
                         or abusive, or 'raging fanatical' was held to be vague  
                         and therefore could result in discrimination.InR.D.   Shetty   Vs   International   Airport  

                         Authority(1979) 3 SCC 489, 503; AIR 1979 SC  

                         1628, 1635 Bhagwati J said­
                         It is a well settled rule of administrative law that an  
                         executive   authority   must   be   rigorously   held   to   the  
                         standards   by   which   it   professes   its   actions   to   be 
                         judged   and   it   must   scrupulously   observe   those 
                         standards   on   pain   of   invalidation   of   an   act   in 
                         violation of them.The   learned   judge   further   said   in  

                         (1979) 3 SCC 489, 505 that­
                         The Government is still the Government when it acts  
                         in the matter of granting largesse and it cannot act  
                         arbitrarily.  It does not stand in the same position as  
                         a private individual.In   M/s   Kasturilal   Vs   Jammu   and  

                         Kashmir AIR 1980 SC 1992; Also seeSterling  

                         Computers   Ltd.   Vs   M&N   Publications   Ltd.RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           127 of 194 
                                               ­128­(1993) 1 SCC 445,  the Supreme Court once again  
                         reiterated the principle that where the government  
                         was   dealing   with   the   public,   whether   by   way   of  
                         giving   jobs   or   entering   into   contract   or   granting  
                         other forms of largesse, it could not act arbitrarily at  
                         its sweet will.   The limitations on the government's  
                         power   were   two­fold:   (i)   it   must   give   equal 
                         opportunities to all to compete for such a contract or  
                         largesse; and (ii) the contents of the contract should  
                         not be detrimental to the interests of the State.  These  
                         limitations are applicable with regard to persons or  
                         parties with whom it can contract as well as to the  
                         terms of the contract.159.                     Further   from   the   various   judgments   rendered   by   the 

Hon'le Supreme Court from time to time, the law in this regard has 

been   crystallized,   relevant   extract   of   following   judgment   is 

reproduced as under­
           InChaitanya Kumar and Others Vs. State of Karnataka  
           and Others, (1986) 2 SCC 594

                  Under the Karnataka Excise(Bottling of Liquor) Rules,
           as they stood at the relevant time, bottling licences could
           only be granted to persons already connected with the
           liquor trade. But neither the advertisement confined its
           invitation to such persons only, nor the Exise Commissioner
           took into account that criterion while recommending that 8
           persons for the contract. The Exise Commissioner excluded
           from consideration for the award of the bottling contracts
           those persons who were eligible for the grant of bottling
           licences and recommended such person as were not eligible
           for the grant of bottling licences under the rules.This was
           an usual, wilful and perverse way of exercising the power of

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           128 of 194 
                                             ­129­

           distributing State largesse. Even if the award of the bottling
           contracts was not at the expense of the exchequer, there
           could be no question that what was done was the
           distribution by the State of favours loaded with bounty by
           way of enabling the recipients of the favours to earn
           enormous profits. Moreover, the recommendation of the
           Excise Commissioner to award the bottling contracts to the
           eight 'chosen' persons was not wholly consistent with the
           very principle on which he had excluded as many as 119 out
           of 131 applications from consideration. The almost
           surreptitious manner in which Rule 3 was amended
           subsequent to the filing of some of the writ petitions also
           appears to give an indication regarding the anxiety of the
           Government to favour the chosen ones with the bottling
           contracts. Even if the notification dated November 23, 1984
           containing the draft amendment of Rule 3 was published on
           November 23, 1984, there was hardly any time for anyone to
           make any objections since only five days time was given.
           The so-called policy decision and the principle purported to
           be enunciated by the Excise Commissioner were a mere
           pretext designed to eliminate all except the chosen.Further,   inShivsagar  Tiwari  Vs.  Union   of   India   and  
Others, (1996)6 SCC 558 it was held as under:­6. The CBI has since inquired into the matter in some
                       detail and has by now submitted 4 interim reports.
                       According to the CBI, orders of allotment in respect
                       of the shops/stalls in question were passed by Smt.
                       Shiela Kaul, the then Minister of Urban Development,
                       and "all the 6 shops have been allotted by her to her
                       own relatives/employees/domestic servants of her
                       family members and family friends. She has allotted 2
                       shops to her 2 gransons, one shop to the maid
                       servant of her son, Sh. Vikram Kaul who is residing in
                       Dubai, one shop to handloom manager of the firm
                       owned by her son-in-law and another shop to a close
                       friend. One shop has been allotted to the nephew of
                       the Minister of State, Sh. P.K.Thungon. While making
                       allotments in respect of stalls, she has allotted most
                       of stalls to the relatives/friends of her personal staff
                       and officials of Dte. of Estates". The CBI has also
                       reported that Smt. Sheila Kaul had made ten different
                       categories of persons as the basis for deciding

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        129 of 194 
                                          ­130­

                       allotments, but even this categorisation was not
                       adhered to while making allotments. The further
                       findings are: (1) "Many other organisations/persons
                       who had also applied for allotment and no reasons,
                       whatsoever, were assigned for non-allotment of
                       shops/stalls to them"; and (2) "At the time of
                       discretionary allotments made by Smt. Shiela Kaul in
                       1993 and 1994 persons who were relations of her
                       personal staff were considered and allotted shops"7. In the order dated 19.07.1996 this Court noted that a
                       regular case underSections 120-B,420,468/471IPC
                       andSection 13(2)r/wSection 13(1)(d)of the
                       Prevention of Corruption Act, 1988, has been
                       registered against Smt. Shiela Kaul and her
                       Additional Private Secretary Rajan S Lala and Others.
                       The order of that date has also noted about various
                       other steps taken, which include issuance of show
                       cause why allotments of shops/stalls should not be
                       cancelled. It was desired that the notices be served
                       within a week and the Estate Officer, after considering
                       their replies, if any, place a report before the Court
                       within four weeks.8. Such a report was filed under the affidavit of Sh.
                       Harcharan Jeet Singh, Director of Estates, which was
                       taken up for consideration on 06.09.1996. The
                       affidavit of the Director has stated that from 1994
                       onwards 52 shops/stalls had been sanctioned by the
                       then Minister of Urban Development(Smt. Shiela Kaul)
                       out of which 7 shops were allotted by Smt. Kaul
                       before she had approved the policy of 1994 and the
                       remaining 45 shops were allotted after the policy of
                       1994. In the affidavit the gist of objections allotted
                       after the policy of 1994. This court thought it
                       appropriate to give an opportunity of hearing to all
                       these persons before any action was taken. A
                       direction was, therefore, given to the Director to issue
                       individual notices to the 52 persons(wrongly
                       mentioned as 42 in the order) to be personally
                       present in the court or be represented through their
                       counsel on 27th September. These allottees so
                       appeared either in person or through counsel and
                       they were heard. The sum and substance of the
                       representations of the allottees was that they had
                       been given an allotment either because of their being
                       unemployed youths, freedom fighters, handicapped,
                       members of Scheduled Castes/Scheduled Tribes,

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                     130 of 194 
                                               ­131­

                       widow or poverty stricken.9. Question is whether they were selected in
                       accordance with law, which aspect has its importance
                       because apparently a large number of other persons
                       could as well fall within the categories in question
                       and had applied also. From the report of the CBI it is
                       clear that the allottees had been selected, not by
                       following the tender system, as required by the policy
                       of 1994, but because of their relationship with the
                       Minister or her personal staff, or being employees or
                       friends of such persons. If that be so, the allotments
                       were wholly arbitrary and speak of misuse of power.
                       The all important question is what is required to be
                       done to undo the wrong and how the wrongdoer is to
                       be dealt with within the parameters known to law.10.It would be apposite in this context to refer to the
                       recent decision of this Court in common cause, aRegistered Society v. Union of India, in which one of
                       us(Kuldeep Singh J) reiterated the need to act fairly
                       and justly in the matter of grant of largesses, pointing
                       out that any arbitrary distribution of national wealth
                       would violate the law of land, Mention was made of
                       the judgment inLucknow Development Authority v.
                       M.K.Gupta, stating that the same approved
                       "misfeasance in public office" as a part of the law of
                       the tort. It was pointed out that public servant
                       become liable in damages for malicious, deliberate or
                       injurious wrongdoing.160.                     This   is   the   case   in   which   the   allotments   of   shops   / 

government quarters were set aside by Hon'ble Supreme Court as 

arbitrary allotments and as per the directions of Hon'ble Supreme 

Court, the FIR was registered against the accused persons including 

A­1 and A­2.161.                     The Hon'ble Supreme Court in the following latest case, 

pertaining to 2G Scam Spectrum held as under:­


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          131 of 194 
                                      ­132­

            Natural Resources Allocation, IN RE Special ReferenceNo. 1 of 2012, (2012) 10 SCC 1146. To summarise in the context of the present Reference,
            it needs to be emphasised that this Court cannot conduct a
            comparative study of the various methods of distribution of
            natural resources and suggest the most efficacious mode,
            if there is one universal efficacious method in the first
            place. It respects the mandate and wisdom of the executive
            for such matters. The methodology pertaining to disposal
            of natural resources is clearly an economic policy. It entails
            intricate economic choices and the Court lacks the
            necessary expertise to make them. As has been repeatedly
            said, it cannot, and shall not, be the endeavour of this Court
            to evaluate the efficacy of auction vis-a-vis other methods
            of disposal of natural resources. The court cannot mandate
            one method to be followed in all facts and circumstances.
            Therefore, auction, an economic choice of disposal of
            natural resources, is not a constitutional mandate. We may,
            however, hasten to add that the Court can test the legality
            and constitutionally of these methods. When questioned,
            the courts are entitled to analyse the legal validity of
            different means of distribution and give a constitutional
            answer as to which methods are ultra vires and intra vires
            the provisions of the Constitution. Nevertheless, it cannot
            and will not compare which policy is fairer than the other,
            but, if a policy or law is patently unfair to the extent that it
            falls foul of the fairness requirement ofArticle 14of the
            Constitution, the court would not hesitate in striking it
            down.147. Finally, market price, in economics, is an index of the
            value that a market prescribes to a good. However, this
            valuation is a function of several dynamic variables: it is a
            science and not a law. Auction is just one of the several
            price discovery mechanisms. Since multiple variables are
            involved in such valuations, auction or any other form of
            competitive bidding, cannot constitute even an economic
            mandate, much less a constitutional mandate.148.     In our opinion, auction despite being a more
            preferable method of alienation/allotment of natural
            resources, cannot be held to be a constitutional
            requirement or limitation for alienation of all natural
            resources and therefore, every method other than auction
            cannot be struck down as ultra vires the constitutional
            mandate.149. Regard being had to the aforesaid precepts, we have

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                 132 of 194 
                                              ­133­

            opined that auction as a mode cannot be conferred the
            status of a constitutional principle. Alienation of natural
            resources is a policy decision, and the means adopted for
            the same are thus, executive prerogatives. However, when
            such a policy decision is not backed by a social or welfare
            purpose; and precious and scarce natural resources are
            alienated for commercial pursuits of profit maximising
            private entrepreneurs, adoption of means other than those
            that are competitive and maximise revenue may be arbitrary
            and face the wrath ofArticle 14of the Constitution. Hence,
            rather than prescribing or proscribing a method, we believe,
            a judicial scrutiny of methods of disposal of natural
            resources should depend on the facts and circumstances
            of each case, in consonance with the principles which we
            have culled out above. Failing which, the Court, in exercise
            of power of judicial review, shall term the executive action
            as arbitrary, unfair, unreasonable and capricious due to its
            antimony withArticle 14of the Constitution.162.                     There is no doubt in view of the aforesaid settled law and 

in   view   of   the   judgment   of   Hon'ble   Supreme   Court   inShivsagar 

Tiwari(supra),   the   allotments  of   shops   made   by  A­1   and   A­2   to 

their close relatives, kith and kin of close friends as well as to the 

family members of a person serving the then Prime Minister is totally 

arbitrary,   unfair,   unreasonable   and   violation   ofArticle   14of 

Constitution   of   India.     There   is   no   reasonable   classification   or 

exercise of discretion   in a fair manner, rather it is a case of gross 

favouritism and nepotism.163.                     Regarding   the   sanction   part,   as   already   stated   above, 

Ld. defence counsel Sh.S.P.Minocha on behalf of A­2 P.K.Thungon 

has argued that the sanction in the present case had been accorded 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         133 of 194 
                                          ­134­

by PW­24 V.K.Malhotra vide sanction order dated 23.04.1998 viz­a­

viz   (A­1)   Sheila   Kaul  (deceased)   and  (A­2)  P.K.Thungon.     At   that 

time he was working as Joint Secretary to the Government of India, 

Ministry   of   Home   Affairs.     He   had   argued   that   the   said   sanction 

order   is   invalid,   as   firstly,   PW­24   was   not   competent   to   grant 

sanction to a Cabinet Minister i.e. (A­1) and MOS (A­2), no rule has 

been stated in the sanction order Ex.PW24/A that he was having any 

delegated powers on behalf of Hon'ble President of India to accord 

the sanction to prosecute (A­1) and (A­2) u/S 197Cr.P.C.  Secondly, 

no material was produced or placed before the sanctioning authority, 

therefore the sanction order had been passed without going through 

any   material,   in   a   mechanical   manner   without   due   application   of 

mind.164.                     I have gone through the said contentions of Ld. defence 

counsel   and   the   contrary   arguments   of   Ld.   Public   Prosecutor   for 

CBI.     The   said   sanction   order   has   been   proved   as   Ex.PW24/A. 

From   the   said   sanction   order,   it   appears   that   entire   material   was 

perused by the Sanctioning Authority, as is evident from the detailed 

sanction order (running into 6 pages).  From the said sanction order, 

it   is   clear   that   the   Sanctioning   Authority   had   gone   through   the 

material documents pertaining to the present case before according 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                     134 of 194 
                                              ­135­

the sanction.  It is also written in the sanction order at page no.6 that 

the   said   sanction   had   been   accorded   in   the   name   of   Hon'ble 

President   of   India   and   the   Central   Government   after   carefully 

examining the material placed before it, had come to the conclusion 

that   facts   and   circumstances   of   the   case   warrant   that 

(A­1)Smt.Sheila   Kaul   (deceased)   and   (A­2)P.K.Thungon   be 

prosecuted for the offence(s) mentioned in the said sanction order. 

Therefore, sanctionu/S 197Cr.P.C was accorded to prosecute A­1 

and A­2.165.                     In   his   cross   examination,   PW­24   has   denied   the 

suggestion that he had passed the sanction order in a mechanical 

manner,   rather   it   appears   that   the   sanction   order   was   passed 

independently without being influenced by any draft sanction order 

sent by CBI, as he in his cross examination has stated that no draft 

sanction order in this case was received from CBI and it was drafted 

in his office.  He denied the suggestion that he was not competent to 

grant   sanction   for   prosecution   of   A­1   (deceased)   who   was   then 

working as a Cabinet Minister and A­2 who was then holding charge 

as Minister of State.166.                     Even   otherwise,   for   the   sake   of   argument,   if   it   is 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         135 of 194 
                                             ­136­

assumed that the said sanction order is not a valid sanction order, as 

PW­24   was   not   having   either   the   delegated   powers   to   pass   the 

sanction order on behalf of Hon'ble President of India or that he was 

not competent to do so for various other reasons, even then it was 

held in many judgments of the Apex Court that it is not every offence 

committed   by   a   public   servant   which   requires   sanction   u/s   197Cr.P.C.   It is no part of the duty of public servant while discharging 

his   official   duty   to   enter   into   criminal   conspiracy   or   to   indulge   in 

criminal misconduct.   In this regard the following judgments are re­

produced as under:­1.HHB Gill Vs. The KingAIR 1948 PC 133

                            A public servant can only be said to act or purport
                         to act in the discharge of his official duty, if his act is
                         such as to lie within the scope of his official duty.
                         Thus, a Judge, neither acts nor purports to act as a
                         judge in receiving bribe.2.Amrik Singh vs. State of PepsnAIR 1955 SC 309 = 1955 Cr.LJ 865

                            It is not every offence committed by a public
                         servant which requires sanction U/s 197Cr.P.C. It is
                         no part of the duty of public servant while
                         discharging his official duty to enter into criminal
                         conspiracy or to indulge in criminal misconduct.3.Hariha Prasad Vs. State of Bihar1972 CrlJ 707

                           As far as offence of criminal conspiracy
                         punishable U/s 120 r/w 409IPCand alsoSection 5(2)RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        136 of 194 
                                            ­137­

                         ofPC Act, are concerned, they cannot be said to be of
                         the nature mentioned insection 197Cr.P.C. To put it
                         shortly, it is no part of public servant while
                         discharging his official duties, to enter into criminal
                         conspiracy or to indulge in criminal misconduct, want
                         of sanction U/s 197Cr.P.Cis therefore no bar.4.State of Kerala Vs. Padmanbhan     JT1999 SC499Sanction for prosecution U/s 197Cr.P.Cis not
                         required if offences are U/s 409 r/w 120-BIPC; and
                         accused cannot claim immunity on the ground of
                         want of sanction, if he ceased to be a public servant
                         on the day when Court has taken cognizance of the
                         said offence.5. Prakash Singh Badal Vs. S.O.Punjab
                            (2007) 1 SCC 1

                            The offence of cheating U/s 120BIPCr/w S 467,
                         468, 471IPC, can, by no stretch of imagination, be
                         regarded as having been committed by any public
                         servant while acting or purporting to act in discharge
                         of his official duty. Sanction U/s 197Cr.P.Cis not
                         required.167.                     In view of the law laid down in the above judgments, the 

act of illegal allotment of shops to A­3, A­4 and A­5 after entering 

into conspiracy with each other on   behalf of A­1 and A­2, thereby 

causing loss to the State Exchequer without public interest, thereby 

causing pecuniary advantage to the said allottees A­3, A­4 and A­5 

(deceased), cannot be said to be any part of their official duties that 

is to say that there is no nexus between the act and discharge of 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                       137 of 194 
                                            ­138­

their official duties, as it is no part of their official duties to indulge 

into   official   conspiracy   or   misconduct,   therefore   there   is   no 

irregularity or illegality in the sanction.168.                     Now, it is to be seen whether the said acts of allotment of 

shops to A­3, A­4 and A­5 also attract criminal liability, as per the 

provisions ofPC ActandIPC.  In this regard, it would be relevant to 

point out that (A­1) Smt. Sheila Kaul (deceased), (A­2) P.K.Thungon, 

(A­3) L.Tsering, (A­4) Smt.Krishna and (A­5) Tulsi Balodi (deceased) 

have been charged u/S 120­BIPCr/wSec.409IPC and 13(2) r/wSec.13(1)(c)and13(1)(d)of   PC   Act.     No   charges   were   framed 

against the aforesaid accused persons under any of the substantive 

offence(s).   The charge for substantive offence(s) was only framed 

against A­1 Smt.Sheila Kaul (deceased) u/S 120­BIPCr/wSection 

409IPC andSection 13(2)r/wSection 13(1)(c)and13(1)(d)of PC 

Act.   Since the charges against accused persons who were facing 

trial   at   present   namely   A­2   P.K.Thungon,   A­3   L.Tsering   and   A­4 

Smt.Krishna have only been framed with regard to conspiracy part 

as   pointed   out   above,   therefore   it   has   to   be   seen   whether   any 

conspiracy is made out from the facts proved by the prosecution as 

discussed above.RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      138 of 194 
                                              ­139­169.                     Regarding conspiracy part, relevant law was discussed 

by Hon'ble Supreme Court in the case titledK.R.Purushothaman 

Vs State of Kerala(2005) 12 Supreme Court Cases 631, relevant 

extract is reproduced as under:­11.   Section   120­AIPCdefines   "criminal 
                         conspiracy".     According   to   this   Section   when 
                         two or more persons agree to do, or cause to 
                         be done (i) an illegal act, or (ii) an act which is 
                         not illegal by illegal means, such an agreement 
                         is designated a criminal  conspiracy.   In Major 
                         E.G.Barsay V. State of Bombay Subba Rao J., 
                         speaking for the Court has said :(SCR p.228)
                                "The gist of the offence is an agreement 
                                to break the law.   The parties to such an 
                                agreement   will   be   guilty   of   criminal 
                                conspiracy, though the illegal act agreed 
                                to be done has not been done.   So too, it 
                                is not an ingredient of the offence that all 
                                the   parties   should   agree   to   do   a   single 
                                illegal   act.     It   may   comprise   the 
                                commission of a number of acts."12.InState V. Naliniit was observed by S.S.M. 
                         Quadri, J. at JT para 677: (SCC pp.568­69, para662)
                                "In   reaching   the   stage   of   meeting   of 
                                minds,   two   or   more   persons   share 
                                information about doing an illegal act or a 
                                legal act by illegal means.  This is the first 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         139 of 194 
                                            ­140­

                             stage   where   each   is   said   to   have 
                             knowledge   of   a   plan   for   committing   an 
                             illegal act or a legal act by illegal means. 
                             Among   those   sharing   the   information 
                             some or all may form an intention to do an 
                             illegal act or a legal act by illegal means. 
                             Those who do form the requisite intention 
                             would   be   parties   to   the   agreement   and 
                             would be conspirators but those who drop 
                             out   cannot   be   roped   in   as   collaborators 
                             on   the   basis   of   mere   knowledge   unless 
                             they   commit   acts   or   omissions   from 
                             which   a   guilty   common   intention   can   be 
                             inferred.     It   is   not   necessary   that   all   the 
                             conspirators   should   participate   from   the 
                             inception   to   the   end   of   the   conspiracy;some   may   join   the   conspiracy   after   the 
                             time   when   such   intention   was   first 
                             entertained by any one of them and some 
                             others may quit from the conspiracy.   All 
                             of   them   cannot   but   be   treated   as 
                             conspirators.   Where in pursuance of the 
                             agreement   the   conspirators   commit 
                             offences   individually   or   adopt   illegal 
                             means to do a legal act which has a nexus 
                             with the object of conspiracy, all of them 
                             will   be   liable   for   such   offences   even   if 
                             some   of   them   have   not   actively 
                             participated   in   the   commission   of   those 
                             offences."RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        140 of 194 
                                              ­141­13.  To   constitute   a   conspiracy,   meeting   of 
                         minds   of   two   or   more   persons   for   doing   an 
                         illegal act or an act by illegal means is the first 
                         and primary  condition and it is not necessary 
                         that   all   the   conspirators   must   know   each   and 
                         every   detail   of   the   conspiracy.     Neither   is   it 
                         necessary   that   every   one   of   the   conspirators 
                         take active part in the commission of each and 
                         every   conspiratorial   acts.     The   agreement 
                         amongst   the   conspirators   can   be   inferred   by 
                         necessary   implication.     In   most   of   the   cases, 
                         the   conspiracies   are   proved   by   the 
                         circumstantial   evidence,   as   the   conspiracy   is 
                         seldom   an   open   affair.     The   existence   of 
                         conspiracy and its objects are usually deduced 
                         from   the   circumstances   of   the   case   and   the 
                         conduct   of   the   accused   involved   in   the 
                         conspiracy.  While appreciating the evidence of 
                         the conspiracy, it is incumbent on the court to 
                         keep   in   mind   the   well­known   rule   governing 
                         circumstantial   evidence   viz.   each   and   every 
                         incriminating   circumstance   must   be   clearly 
                         established   by   reliable   evidence   and   the 
                         circumstances   proved   must   form   a   chain   of 
                         events   from   which   the   only   irresistible 
                         conclusion about the guilt of the accused can 
                         be   safely   drawn,   and   no   other   hypothesis 
                         against   the   guilt   is   possible.     Criminal 
                         conspiracy   is   an   independent   offence   in   the 
                         Penal   Code.     The   unlawful   agreement   is   sine 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         141 of 194 
                                                 ­142­

                         qua   non   for   constituting   offence   under   the 
                         Penal   Code   and   not   an   accomplishment.Conspiracy   consists   of   the   scheme   or 
                         adjustment   between   two   or   more   persons 
                         which   may   be   express   or   implied   or   partly 
                         express   and   partly   implied.     Mere   knowledge, 
                         even discussion, of the plan would not per se 
                         constitute   conspiracy.     The   offence   of 
                         conspiracy shall continue till the termination of 
                         agreement.14.    Suspicion   cannot   take   the   place   of   legal 
                         proof   and   prosecution   would   be   required   to 
                         prove each and every circumstance in the chain 
                         of circumstances so as to complete the chain. 
                         It   is   true   that   in   most   of   the   cases,   it   is   not 
                         possible   to   prove   the   agreement   between   the 
                         conspirators   by   direct   evidence   but   the   same 
                         can be inferred from the circumstances giving 
                         rise to conclusive or irresistible inference of an 
                         agreement   between   two   or   more   persons   to 
                         commit   an   offence.     It   is   held   inNoor   Mohd.  
                         Mohd.   Yusuf   Momin   V.   State   of   Maharashtra,  
                         that: (SCC pp.699­700, para 7)
                                "[I]n   most   cases   proof   of   conspiracy   is 
                                largely   inferential   though   the   inference 
                                must   be   founded   on   solid   facts.Surrounding                         circumstances                                                                and 
                                antecedent   and   subsequent   conduct, 
                                among   other   factors,   constitute   relevant 
                                material."RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                             142 of 194 
                                              ­143­15.  It   is   cumulative   effect   of   the   proved 
                         circumstances   which   should   be   taken   into 
                         account in determining the guilt of the accused. 
                         Of   course,   each   one   of   the   circumstances 
                         should   be   proved   beyond   reasonable   doubt. 
                         The   acts   or   conduct   of   the   parties   must   be 
                         conscious   and   clear   enough   to   infer   their 
                         concurrence as to the common design and its 
                         execution.   While speaking for the Bench it is 
                         held by P. Venkatarama Reddi, J. inState (NCT  
                         of   Delhi)   V.   Navjot   Sandhu(p.63)   as   follows:(SCC pp.691­92, para 103)
                         "103.   We   do  not  think   that  the   theory   of 
                         agency can be extended thus far, that is 
                         to say, to find all the conspirators guilty of 
                         the   actual   offences   committed   in 
                         execution  of  the   common   design   even  if 
                         such offences were ultimately committed 
                         by some of them, without the participation 
                         of others.   We are of the view that those 
                         who  committed  the  offences  pursuant  to 
                         the   conspiracy   by   indulging   in   various 
                         overt   acts   will   be   individually   liable   for 
                         those offences in addition to being liable 
                         for   criminal   conspiracy;   but,   the   non­
                         participant  conspirators   cannot be found 
                         guilty   of   the   offence   or   offences 
                         committed   by   the   other   conspirators.There   is   hardly   any   scope   for   the 
                         application   of   the   principle   of   agency   in 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         143 of 194 
                                               ­144­

                         order to find the conspirators  guilty of a 
                         substantive   offence   not   committed   by 
                         them.  Criminal offences and punishments 
                         therefor are governed by the statute.  The 
                         offender   will   be   liable   only   if   he   comes 
                         within the plain terms of the penal statute. 
                         Criminal liability for an offence cannot be 
                         fastened   by   way   of   analogy   or   by 
                         extension of a common law principle.170.                     It   has   been   further   held   in   a   case  1999   Cri.L.J.3124 

State of Tamil Nadu through Superintendent of Police CBI/SIT 

Vs Nalini and others WITH T.Suthenthiraraja alias Santhan and 

others   Vs   State   by   DSP,   CBI,   SIT,   Chennai   WITh 

P.Ravichandran and others Vs State by DSP, CBI, SIT, Chennai 

WITH   Robert   Payas   and   others   Vs   State   by   DSP,   CBI,   SIT, 

Chennai   WITH   S.Shanmugavadivelu   and   others   Vs   State   by 

DSP, CBI, SIT, Chennai WITH S.Nalini and others Vs State by 

DSP, CBI, SIT, Chennai, as under:­

                                    "110.   The   first   condition   which   is  
                         almost   the   opening  lock   of  that   provisions   is  
                         the   existence   of   "reasonable   ground   to  
                         believe"   that the  conspirators  have  conspired  
                         together.   This condition will be satisfied even  
                         when   there   is   some   prima   facie   evidence   to  
                         show   that   there   was   such   a   criminal  

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          144 of 194 
                                              ­145­

                         conspiracy.     If   the   aforesaid   preliminary  
                         condition is fulfilled then anything said by one  
                         of   the   conspirators   becomes   substantive  
                         evidence   against   the   other,   provided   that  
                         should have been a statement "In reference to  
                         their   common   intention".                                                    Under   the  
                         corresponding provision in the English Law the  
                         expression   used   is   "in   furtherance   of   the  
                         common   object".No   doubt,   the   words   "in  
                         reference to their common intention" are wider  
                         than   the   words   used   in   English   Law,   (videSardar   Sardul   Singh   Caveeshar   v.   State   of  
                         Maharashtra, (1964) 2 SCR 378: 1965 (1) Cri.L.J.
                         608: (AIR 1965 SC 682).111.   But   the   contention   that   any  
                         statement   of   a   conspirator,   whatever   be   the  
                         extent of time, would gain admissibility underSection 10if it was made "in reference" to the  
                         common  intention,  is  too  broad a  proposition  
                         for  acceptance.     We  cannot  overlook  that   the  
                         basic principle which underlies inSection 10of  
                         the   Evidence   Act   is   the   theory   of   agency.  
                         Every conspirator is an agent of his associate  
                         in   carrying   out   the   object   of   the   conspiracy.Section   10,   which   is   an   exception   to   the  
                         general   rule,   while   permitting   the   statement  
                         made by one conspirator to be admissible  as  
                         against   another   conspirator   restricts   it   to   the  
                         statement   made   during   the   period   when   the  
                         agency   subsisted.     Once   it   is   shown   that   a  

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         145 of 194 
                                              ­146­

                         person became snapped out of the conspiracy,  
                         any   statement   made   subsequent   thereto  
                         cannot   be   used   as   against   the   other  
                         conspirators underSection 10.112. Way back in 1940, the Privy  Council has  
                         considered   this   aspect   and   Lord   Wright,  
                         speaking   for   Viscount   Maugham   and   Sir  
                         George Rankin inMirza Akbar v. King­Emperor,  
                         AIR  1940   PC  176   :   (1940   (41)   Cri.L.J.871)   has  
                         stated the legal position thus :"   The   words   'common   intention'  
                         signify a common intention existing at the time  
                         when   the   thing   was   said,   done   or   written   by  
                         one of them.  Things said, done or written while  
                         the   conspiracy   was   on   foot   are   relevant   as  
                         evidence   of   the   common   intention,   once  
                         reasonable ground has been shown to believe  
                         in   its   existence.     But   it   would   be   a   very  
                         different   matter   to   hold   that   any   narrative   or  
                         statement or confession made to a relevant as  
                         evidence   of   the   common   intention,   once  
                         reasonable ground has been shown to believe  
                         in   its   existence.     But   it   would   be   a   very  
                         different   matter   to   hold   that   any   narrative   or  
                         statement or confession made to a third party  
                         after the common intention or conspiracy was  
                         no longer operating and had ceased to exist is  
                         admissible   against   the   other   party.     There   is  
                         then no common intention of the conspirators  

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         146 of 194 
                                               ­147­

                         to which the statement can have reference.   In  
                         their   Lordships'   judgmentS.10embodies   this  
                         principle.   That is the construction which has  
                         been   rightly   applied   toS.10in   decisions   in  
                         India,   for   instance,   in   ILR   55   Bom   839   :   (AIR  
                         1932 Bom 56 : (1932) 33 Cri L.J.76) and (1911)  
                         ILR 38 Cal 169.   In these cases the distinction  
                         was   rightly   drawn   between   communications  
                         between conspirators while the conspiracy was  
                         going on with reference to the carrying out of  
                         conspiracy   and   statements   made,   after   arrest  
                         or  after   the  conspiracy   has  ended,  by  way  of  
                         description of events then past."171.                     Regarding   A­1   Smt.Sheila   Kaul   (deceased)   and   A­2 

P.K.Thungon, there is definitely a conspiracy, as they were UDM and 

MOS(UD) respectively at the time of allotment of shops, therefore 

they   were   fully   aware   of   the   manner   of   allotment   of   shops   which 

were   to   be   disposed   off   on   the   basis   of   auction   as   per   the 

established   norms,   as   per   the   OM   of   1979   and   also   the   existing 

norms,   whereby   the   allotments  had  to   be  made   by  way  of   public 

auction   and   open   tenders,   yet   they   in   blatant   violation   of   these 

norms   made   illegal   allotments   to   their   favourites,   which   is   most 

arbitrary and unreasonable and in violation of fair play underArticle 

14of Constitution of India.RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          147 of 194 
                                             ­148­172.                     They   were   also   fully   aware   that   shops   allotted   in 

P.G.Market,   which   was   a   market   where   ownership   rights   had 

already   been   conferred,   could   have   only   been   done   by   public 

auction,   yet   they   allotted   the   shops   in   the   said   market   to   (A­3) 

L.Tsering and (A­4) Smt. Krishna at a very paltry amount on licence 

fee basis causing financial loss to the State Exchequer, which was 

against   public   interest.     The   notings   Ex.PW26/A   in   file   D­4, 

Ex.PW11/B in file D­4, Ex.PW28/B in file D­4 were the notings made 

by the senior officers including Secretary, Ministry of UD pointing out 

that open auction was the method for disposal of these shops and in 

case, the applicants (A­3) L.Tsering and (A­)4 Smt.Krishna or any 

other applicant wanted to participate in the open auction, they can 

do so by participating in the public auction and since the shops were 

located in the market where ownership rights have been conferred, 

these   may   be   auctioned   by   L&DO.     Similarly,   in   the   note 

Ex.PW15/B,   the   same   opinion   was   also   expressed   by   the   other 

officials of the Directorate of Estates and the Finance Division also 

expressed   that   since  shops  in  P.G.Market  were  located   in  a very 

strategic location, it will generate   quite a good amount of revenue 

for   the   government,   if   the   shops   were   put   on   public   auction,   yet 

these objections of the Finance Division   and other officials of the 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        148 of 194 
                                            ­149­

Urban Development Ministry were glossed over by the MOS (UD) 

and   UDM   by   allotting   the   shops   to   (A­3)   L.Tsering   and   (A­4) 

Smt.Krishna,   so   there   was   a   clear   cut   conspiracy   or   agreement 

amongst (A­1) Smt.Sheila Kaul (deceased) and (A­2) P.K.Thungon 

to make allotments in violation of the established norms by illegal 

means.173.                     Regarding   the   contention   of   Ld.   defence   counsel 

Sh.S.P.Minocha that after the death of A­1, A­2 cannot be convicted 

independently for conspiracy, as the offence of criminal conspiracy 

consist in pre­agreement between two or more persons to commit a 

criminal offence irrespective of further consideration whether or not 

those   offence(s)   have   actually   been   committed.     Therefore,   he 

argued that atleast two persons are required to constitute conspiracy 

and   since   A­1   had   died   during   the   trial,   therefore   A­2   cannot   be 

convicted for the offence of conspiracy.   The said argument of Ld. 

defence   counsel   is   without   any   substance   as   it   has   been   held   in 

Kannangara   Aratchise   Dharmasena   Vs   King   (1950)   51   Cr.L.J 

1597 (PC) that­

            one conspirator may be tried and convicted in 

            the absence of his companions in crime.RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                      149 of 194 
                                               ­150­174.                     Further,   it   has   been   held   inPara   14   of  Bimbadhar 

Pradhan   Vs   State   of   OrissaAIR   1956   Supreme   Court   469  as 

under ­

                         In this connection the observations of this 

                         Court int he case of ­'Dalip Singh v. State 

                         of Punjab', 1953  SC 364 (367­368) (AIR V40)(G),   and   of   the   Federal   Court   in   ­'Kapildeo   Singh   v.   The   King',   1950   FC 

                         80(81) (AIR V 37)(H), are relevant.  It is not 

                         essential   that   more   than   one   person 

                         should   be   convicted   of   the   offence   of 

                         criminal   conspiracy.     It   is   enough   if   the 

                         court   is   in   a   position  to  find  that   two  or 

                          more persons  were actually concerned in
                                                                    

                         the   criminal   conspiracy.If   the   courts 

                         below   had   come   to   the   distinct   findings 

                         that   the   evidence   led   on   behalf   of   the 

                         prosecution was unreliable, then certainly 

                          no  conviction  could  have been  based  on
                                                                       

                         such evidence and all the accused would 


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          150 of 194 
                                             ­151­

                         have been equally entitled to acquittal.175.                     In view of the law laid down in the aforesaid judgment, 

by same analogy, it would be trite that even after the death of A­1 

(who died during the trial after framing of charge), A­2 can be tried 

and convicted for the charge of conspiracy, as the evidence clearly 

suggest   A­1   and   A­2   were   actually   and   actively   involved   in   the 

offence of conspiracy.176.                     Regarding   the   role   of   (A­3)   L.Tsering   in   the   said 

conspiracy,   though   A­3   was   related   to   (A­2)   P.K.Thungon,   but   it 

cannot be said that A­3 was having any part in the conspiracy, as no 

evidence   has   come   on   the   record   that   there   was   any  meeting   of 

mind between A­2 and A­3 with regard to allotment of shop by illegal 

means in his favour, as he may be under some sort of impression 

that A­2, who was then serving as MOS(UD), was having power to 

do so and that such act was a legal act and both A­1 (deceased) 

and A­2 were having powers to allot shop in his favour by following 

legal recourse.177.                     Similarly, regarding (A­4) Smt.Krishna, no evidence has 

come on the record that A­4 ever met A­1 or A­2.  It seems allotment 

was put through by her brother­in­law Karamveer Singh Maan, who 


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        151 of 194 
                                            ­152­

was the common friend of A­1 and A­2.   Therefore, there was no 

meeting of mind between A4 and A1 or A­2.178.                     Similarly, allotment of shop in favour of (A­5) Tulsi Balodi 

(deceased)   was   put   through   her   husband   PW­16   Prem   Ballabh 

Balodi,   who   was   working   in   the   personal   staff   of   the   then   Prime 

Minister of India.  Therefore, there was no meeting of mind between 

A­5 and A­1 or A­2 with regard to conspiracy.179.                     Further, none of A­3, A­4 and A­5 were connected with 

each other, having any sort of connection inter se nor there was any 

common thread running through all of them, so as to give inference 

of conspiracy among them.180.                     Now, question which arises for consideration is that the 

conspiracy agreement between A­1 Smt.Sheila Kaul (deceased) and 

(A­2)   P.K.Thungon   was   with   regard   to   which   offence(s).     All   the 

accused   persons,   who   were   facing   trial   i.e.   A­1   Smt.Sheila   Kaul 

(deceased), A­2 P.K.Thungon, A­3 Lakhpa Tsering, A­4 Smt.Krishna 

and A­5 Tulsi Balodi (deceased) have been charged u/S 120­BIPCr/wSection 409IPC and 13(2) r/wSection 13(1)(c)and13(1)(d)of 

PC Act.181.                     RegardingSection 409IPC, no offenceu/S 409IPC is 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                       152 of 194 
                                   ­153­

made out, as there was no entrustment of the shops allotted to A­3, 

A­4 and A­5 upon A­1, who had ultimately allotted the said shops to 

A­3, A­4 and A­5, as she was the final authority to allot the shops 

nor it can be said that A­1 or A­2 were having dominion over the 

said shops which they dishonestly misappropriated or converted to 

their own use or disposed off the same in violation of any direction of 

law   prescribing   the   mode   in   which   the   said   trust   was   to   be 

discharged.     Perusal   of   record   reveals   that   the   possession   letter 

Ex.PW26/G   dated   31.05.94   in   file   D­3,   which   is   the   letter   of 

allotment of A­5 Tulsi Balodi(deceased) was issued by Directorate of 

Estates,   Government   of   India.     Similarly,   letter   of   allotment 

pertaining   to   A­3   L.Tsering   dated   03.06.94   Ex.PW26/F   in   file   D­1 

was   also   issued   by   Directorate   of   Estates,   Government   of   India. 

Lastly, the allotment letter of A­4 Smt. Krishna dated 03.06.94 in file 

D­2   Ex.PW26/E   was   also   issued   by   Directorate   of   Estates, 

Government of India.  These allotment letters clearly shows that the 

property / shop(s) did not vest with the UDM or MOS(UD), but with 

the Directorate of Estates, Government of India i.e. the shops vested 

with the Government of India, as a sovereign.   It may be that A­1 

and   A­2   recommended   for   allotment   of   shops,   which   were   finally 

approved   by   A­1,   who   was   the   final   authority   for   issuance   of 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                              153 of 194 
                                             ­154­

allotment letters pertaining to allotment of shops to A­3, A­4 and A­5, 

but there was no entrustment as such, nor A­1 or A­2 could be said 

to   have   any   dominion   of   said   shops,   thereforeSection   409IPC 

would not be made out.182.                     Ld.Spl.PP   for   CBI   Sh.   J.S.Wadia   has   relied   upon 

following judgments in support of his contention regardingSection 

409IPC ­1.State of MP vs Veeraswara Rao AgnihotriAIR 1957 SC 5922. Om Prakash Gupta Vs S.O.UP AIR 1957 SC 4583.Bikram Singh Vs State1974 Cri.L.J (Delhi) 4184. Somnath Puri Vs State of Rajasthan AIR 1972 SC 1490183.                     The   preposition   of   law   laid   down   in   the   aforesaid 

judgments is not in dispute. However, same is not applicable to the 

peculiar   facts   and   circumstances   of   the   present   case.     From   the 

above discussion,Section 409IPC is not made out, thoughSection 

13(2)r/wSection   13(1)(c)is a  separate   and distinct   offence   fromSection   409IPC,   but   as   discussed   above   since   there   was   no 

entrustment or misappropriation for the detailed reasons discussed 

above,Section 13(1)(c)would also not be attracted in the present 

case.RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        154 of 194 
                                              ­155­184.                     RegardingSection   13(1)(d)(iii),   the   law   has   been   laid 

down in the following judgments ­ 

                               In a case decided by Hon'ble Supreme Court titledM.Narayanan Nambiar Vs State of Kerala1963(2) Cri.L.J.186, it 

was held as under:­6.   As   the   first   contention   turns   upon   the 
                         provisions   ofS.5(1),   it   will   be   convenient   to 
                         read the same:5.(1) A   public   servant   is   said   to   commit   the 
                         offence of criminal misconduct in the discharge 
                         of his duty­(a)   if   he   habitually   accepts   or   obtains   or 
                         agrees to accept or attempts to obtain from any 
                         person for himself or for any other person, any 
                         gratification (other than legal remuneration) as 
                         a motive or reward such as is mentioned in S.
                         161 of the Indian Penal Code, or(b)  if   he   habitually   accepts   or   obtains   or 
                         agrees   to   accept   or   attempts   to   obtain   for 
                         himself   or   for   any   other   person,   any   valuable 
                         things   without   consideration   or   for   a 
                         consideration which he knows to be inadequate 
                         from any person whom he knows to have been, 
                         or to be, or to be likely to be concerned in any 
                         proceeding or business transacted or about to 
                         be transacted by him, or having any connection 
                         with the official functions of himself or of any 
                         public   servant   to   whom   he   is   subordinate,   or 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         155 of 194 
                                              ­156­

                         from   any   person   whom   he   knows   to   be 
                         interested   in   or   related   to   the   person   so 
                         concerned, or(c)    if   he   dishonestly   or   fraudulently 
                         misappropriates   or  otherwise   converts   for   his 
                         own use any property entrusted to him or under 
                         his   control   as   a   public   servant   or   allows   any 
                         other person so to do, or(d)  if   he,   by   corrupt   or   illegal   means   or   by 
                         otherwise   abusing   his   position   as   public 
                         servant,   obtains   for   himself   or   for   any   other 
                         person   any   valuable   thing   or   pecuniary 
                         advantage.We are concerned in this case withS.5(1) (d)of 
                         the Act.   Under that clause if a public servant 
                         by   corrupt   or   illegal   means   or   by   otherwise 
                         abusing his position as public servant obtains 
                         for   himself   or   for   any   other   person   valuable 
                         thing or pecuniary advantage, he will be guilty 
                         of   criminal   misconduct,   punishable   underS.
                         5(2)of   the   Act   with   imprisonment   for   a   term 
                         which   shall   not   be   less   than   one   year   and 
                         which may extend to 7 years, and shall also be 
                         liable   to   fine.     The   learned   counsel   contends 
                         that clause (d) being a penal provision, shall be 
                         strictly  construed;  and  that if  so construed,  it 
                         would   only   take   in   cases   of   direct   benefit 
                         obtained by a public servant for himself or for 
                         any   other   person   from   a   third   party   in   the 
                         manner described therein and does not cover a 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         156 of 194 
                                               ­157­

                         case   of   a   wrongful   loss   caused   to   the 
                         Government by abuse of his power.10.  ................   .     First   taking   the   phraseology 
                         used in the clause, the case of a public servant 
                         causing   wrongful   loss   to   the   Government   by 
                         benefiting a third party squarely falls within it. 
                         Let us look at the clause "by otherwise abusing 
                         the   position   of   a   public   servant,"   for   the 
                         argument   mainly   turns   upon   the   said   clause. 
                         The   phraseology   is   very   comprehensive.     It 
                         covers  acts done "otherwise" than by corrupt 
                         or   illegal   means   by   an   officer   abusing   his 
                         position.     The   gist   of   the   offence   under   this 
                         clause   is,   that   a   public   officer   abusing   his 
                         position as a public servant obtains for himself 
                         or  for  any  other  person  any  valuable   thing  or 
                         pecuniary advantage.  "Abuse" means mis­use 
                         i.e. using his position for something for which it 
                         is not intended.  That abuse may be by corrupt 
                         or   illegal   means   or   otherwise   than   those 
                         means.     The   word   'otherwise'   has   wide 
                         connotation and if no limitation is placed on it, 
                         the   words   'corrupt',   'illegal',   and   'otherwise' 
                         mentioned   in   the   clause   become   surplusage, 
                         for on that construction every abuse of position 
                         is gathered by the clause.   So some limitation 
                         will   have   to   be   put   on   that   word   and   that 
                         limitation   is   that   it   takes   colour   from   the 
                         preceding words along with which it appears in 
                         the clause, that is to say, something savouring 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           157 of 194 
                                               ­158­

                         of dishonest act on his part.  The contention of 
                         the learned counsel that if the clause is widely 
                         construed even a  recommendation  made  by a 
                         public   servant   for   securing   a   job   for   another 
                         may come within the clause and that could not 
                         have been the intention of the Legislature.  But 
                         in   our   view   such   innocuous   acts   will   not   be 
                         covered by the said clause.   The juxtaposition 
                         of the word 'otherwise' with the words 'corrupt 
                         or illegal means', and the dishonesty implicit in 
                         the  word  "abuse"  indicate  the  necessity   for  a 
                         dishonest   intention   on   his   part   to   bring   him 
                         within the meaning of the clause.   Whether he 
                         abused   his   position   or   not   depends   upon  the 
                         facts of each case; nor can the word 'obtains' 
                         be sought in aid to limit the express words of 
                         the section.  'Obtain' means acquire or get.  If a 
                         corrupt   officer   by   the   said   means   obtains   a 
                         valuable thing or a pecuniary advantage, he can 
                         certainly  be said to obtain the said thing or a 
                         pecuniary   advantage;   but   it   is   said   that   in 
                         clauses (a) and (c) the same word is used and 
                         in the context of those clauses it can only mean 
                         getting   from   a   third   party   other   than   the 
                         Government   and   therefore   the   same   meaning 
                         must   be  given  to  the  said   word   in  clause   (d). 
                         'Obtains' in clauses (a) and (b) in the context of 
                         those provisions may mean taking a bribe from 
                         a   third   party,   but   there   is   no   reason   why   the 
                         same meaning shall be given to that word used 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          158 of 194 
                                                ­159­

                         in   a   different   context   when   that   word   is 
                         comprehensive enough to fit in the scheme of 
                         that   provision.     Nor   can   we   agree   that   as 
                         dishonest misappropriation has been provided 
                         for   in   clause   (c),   the   other   cases   of   wrongful 
                         loss   caused   to   the   Government   by   the   deceit 
                         practised by a public officer should fall outside 
                         the   section.     There   is   no  reason   why   when   a 
                         comprehensive Statute was passed to prevent 
                         corruption   this   particular   category   of 
                         corruption   should   have   been   excluded 
                         therefrom   because   the   consequences   of   such 
                         acts are equally harmful to the public as acts of 
                         bribery.     On   a   plain   reading   of   the   express 
                         words   used   in   the   clause,   we   have   no   doubt 
                         that every benefit obtained by a public servant 
                         for himself, or for any other person by abusing 
                         his position as a public servant falls within the 
                         mischief of the said clause.185.                     It   has   been   further   held   in   a   case   decided   by   Hon'ble 

High   Court   of   Delhi   titledRunu   Ghosh   Vs   CBI   Crl.A.482/2002,P.Rama Rao Vs CBI Crl.A.509/2002andSukh Ram Vs CBI Crl.A.536/2002 decided on 21.12.2011, as under:­66.   This   question   lies   at   the   core   of   the 
                         reference to this Division Bench.   The material 
                         portion   of   the   reference,   while   adverting   toSections   13(1)(d)and   then   dealing   with   the 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           159 of 194 
                                              ­160­

                         phraseology   ofSection   13(1)(d)(iii)and   other 
                         preceding sub­clauses, reads thus:Whether the absence of adverbs like 
                               wilfully,   fraudulently,   dishonestly, 
                               corrupt   or   illegal   means   to   qualify 
                               the verb obtains in this clause would 
                               mean that a public servant commits 
                               criminal   misconduct   if   he   while 
                               holding   such   office   obtains   for   any 
                               person   (and   not   for   himself)   any 
                               pecuniary   advantage   which   is 
                               without   any   public   interest?     The 
                               statute appears to offer no guidance 
                               as   to   what   can   be   said   to   be   a 
                               decision or act that is without public 
                               interest.Though the reference order elaborately lists out 
                         the   salient   facts   in   the   Appeals,   notes   rival 
                         contentions,   and   even   notices   relevant   case 
                         law,   it   is   necessary   to   recapitulate   the   pre­
                         existing law, i.e.Section 5(1)(d)of the 1947 Act, 
                         and   juxtapose   it   with   the   1988   Act.     The 
                         controlling   clauses,   in   both  provisions,   are   in 
                         pari materia (a public servant is said to commit 
                         the   offence   of   criminal   misconduct   if   he   ...).Section 5(1)(d)reads as follows:(d) if he, by corrupt or illegal means 
                               or by otherwise abusing his position 
                               as public servant, obtains for himself 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         160 of 194 
                                              ­161­

                             or for any other person any valuable 
                             thing                  or                                           pecuniary 
                             advantage...Section   13(1)(d)(i),   (ii) 
                             and   (iii),   on   the   other   hand,   read 
                             thus:(i)   by   corrupt   or   illegal   means, 
                             obtains for himself  or for  any other 
                             person   any   valuable   thing   or 
                             pecuniary   advantage;   or   Crl.A.Nos. 
                             482/02, 509/02 & 536/02 Page 45(ii)   by   abusing   his   position   as   a 
                             public servant, obtains for himself or 
                             for   any   other   person   any   valuable 
                             thing or pecuniary advantage; or(iii)   while   holding   office   as   servant, 
                             obtains for any person any valuable 
                             thing   or   pecuniary   advantage 
                             without   any   public   interest....   It   is 
                             clear   from   the   above   comparison 
                             that   in   clause   (i),   the   reference   to 
                             "corrupt   or   illegal"   means,   (of   a 
                             public servant obtaining ­for himself, 
                             or  someone   else­any   valuable   thing 
                             or   pecuniary   advantage)   has   been 
                             retained.   However, the reference to 
                             doing           of            such                                 an                         act 
                             "otherwise" (which was there in the 
                             previous law, i.e.Section 5(1)(d)has 
                             been   omitted.     The   latter   parts   of 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        161 of 194 
                                              ­162­Section   5(1)(d),   i.e.   the   public 
                                servant   obtaining   for   himself   or   for 
                                any   one   else   any   valuable   thing   or 
                                pecuniary advantage, by abusing his 
                                position   as   a   public   servant   has 
                                been retained, inSection 13(1)(d)(ii).A new offence (or sub­species, of the existing 
                         offence) has been carved out, inSection 13 (1)(d)(iii)   which   criminalizes,   as   "criminal 
                         misconduct"   the   act   of   a   public   servant, 
                         holding   office,   which   results   in   someone   else 
                         (any   person)   benefitting   by   getting   a   valuable 
                         thing   or   pecuniary   advantage,   without   any 
                         public   interest.     There   is   no   doubt   that 
                         Parliament created this new offence of criminal 
                         misconduct,   where   abuse   of   office,   or   use   of 
                         corrupt or illegal means by a public officer, is 
                         inessential   to   prove   the   crime.     What   the 
                         prosecution   has   to   establish,   in   accordance 
                         with law, is that the public officer, obtained for 
                         someone   else­not   necessarily   by   abusing   his 
                         office,   or   using   corrupt   or   illegal   means 
                         ­pecuniary   advantage   or   a   valuable   thing 
                         ­without public interest.79.      What then is the behaviour or act which 
                         attracts   such   opprobrium   as   to   result   in 
                         criminal   responsibility?     It   is   not   every   act 
                         which results in loss of public interest, or that 
                         is   contrary   to   public   interest,   that   is   a 
                         prosecutable offence.   There can be no doubt 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         162 of 194 
                                              ­163­

                         that  all   acts  prejudicial   to  public  interest,   can 
                         be   the   subject   matter   of   judicial   review.     In 
                         those   cases,   courts   consider   whether   the 
                         decision   maker   transgressed   the   zone   of 
                         reasonableness,   or   breached   the   law,   in   his 
                         action.  However, it is only those acts done with 
                         complete and manifest disregard to the norms, 
                         and   manifestly   injurious   to   public   interest, 
                         which   were   avoidable,   but   for   the   public 
                         servants   overlooking   or   disregarding 
                         precautions and not heeding the safeguards he 
                         or   she   was   expected   to,   and   which   result   in 
                         pecuniary   advantage   to   another   that   are 
                         prosecutabe   underSection   13(1)(d)(iii).     In 
                         other   words,   if   the   public   servant   is   able   to 
                         show that he followed all the safeguards, and 
                         exercised   all   reasonable   precautions   having 
                         regard   to   the   circumstances,   despite   which 
                         there was loss of public interest, he would not 
                         be guilty of the offence.  The provision aims at 
                         ensuring efficiency, and responsible behaviour, 
                         as much as it seeks to outlaw irresponsibility in 
                         public   servants   functioning   which   would 
                         otherwise           go                        unpunished.                                                            The 
                         blameworthiness for a completely indefensible 
                         act of a public servant, is to be of such degree 
                         that   it   is   something   that   no   reasonable   man 
                         would   have   done,   if   he   were   placed   in   that 
                         position,   having   regard   to   all   the 
                         circumstances.     It   is   not   merely   a   case   of 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          163 of 194 
                                               ­164­

                         making a wrong choice; the decision should be 
                         one such as no one would have taken.81.  As  noticed  previously,   the   silence  in  the 
                         statute,   about   the   state   of   mind,   rules   out 
                         applicability of the mens rea or intent standard 
                         (i.e.   The   prosecution   does   not   have   to   prove 
                         that   the   accused   intended   the   consequence, 
                         which occurred or was likely to occur).  Having 
                         regard   to   the   existing   lawSection   13(1)(e)(which   does   not   require   proof   of   criminal 
                         intent)   as   well   as   the   strict   liability   standards 
                         prevailing   our   system   of   law,   therefore,   a 
                         decision is said to be without public interest, (if 
                         the   other   requirements   of   the   provision,   i.e.Section 13(1)(d)(iii)are fulfilled) if that action of 
                         the public servant is the consequence of his or 
                         her   manifest   failure   to   observe   those 
                         reasonable safeguards against detriment to the 
                         public   interest,   which   having   regard   to   all 
                         circumstances, it was  his or her duty to have 
                         adopted.186.                     Regarding the offenceu/S 13(1)(d)of the PC Act 1988, 

in view of the law as laid down by Hon'ble High Court of Delhi in 

Runu Ghosh (supra), it is to be seen whether the prosecution has 

been   able   to   prove   offence   u/S   13(1)(d)(iii)   ofPC   Actwhich 

criminalizes criminal misconduct  of a public servant holding public 

post which results in somebody else i.e. any person benefiting by 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          164 of 194 
                                          ­165­

getting a valuable thing or pecuniary advantage without any public 

interest   and   the   prosecution   has   to   establish   to   prove   the   said 

offence   that   the   public   officer   obtained   for   someone   else   not 

necessarily by abusing his office or using corrupt or illegal means 

pecuniary advantage or a valuable thing without any public interest. 

It has been further held in the said judgment that it is not every act 

which results in loss of public interest or that is contrary to public 

interest, which is prosecutable offence.   It is only those acts done 

with complete and manifest disregard to the norms and manifestly 

injurious   to   public   interest   which   is   avoidable,   but   for   the   public 

servants   overlooking   or  disregarding   precautions   and   not   heeding 

the   safeguards   he   or   she   was   expected   to,   which   resulted   in 

pecuniary advantage to another is  prosecutableu/S 13(1)(d)(iii).  In 

other   words,   if   public   servant   is   able   to   prove   or   show   that   he 

followed all the safeguards and exercised all reasonable precautions 

taking into account the circumstances, despite which there was loss 

of public interest, he would not be guilty of the offence.  In the said 

judgment, in Para 82 some instances of the same have been given. 

The said Para 82 is reproduced as under:­82.  It would be useful to in this context, take  



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                    165 of 194 
                                             ­166­

                         recourse to certain examples.   For instance, in  

                         not   adopting   any   discernable   criteria,   in  

                         awarding   supply   contracts,   based   on  

                         advertisements calling for responses, published  

                         in newspapers having very little circulation, two  

                         days   before   the   last   date   of   submission   of  

                         tenders, which result in a majority of suppliers  

                         being left out of the process, and the resultant  

                         award of permits to an unknown and untested  

                         supplier,   would   result   in   advantage   to   that  

                         individual, and also be without public interest,  

                         as   the   potential   benefit   from   competitive   bids  

                         would be eliminated.  Likewise, tweaking tender  

                         criteria, to ensure that only a few applicants are  

                         eligible, and ensure that competition (to them)  

                         is   severely   curtailed,   or   eliminated   altogether,  

                         thus stifling other lines of equipment supply, or  

                         banking on only one life saving drug supplier,  

                         who with known inefficient record, and who has  

                         a history of supply sub­standard drugs, would  


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        166 of 194 
                                              ­167­

                         be acts contrary to public interest.  In all cases,  

                         it can be said that the public servant who took  

                         the   decision,   did   so   by   manifestly   failing   to  

                         exercise reasonable proper care and precaution  

                         to guard against injury to public interest, which  

                         he was bound, at all times to do.  The intention  

                         or desire to cause the consequence may or may  

                         not be present; indeed it is irrelevant; as long  

                         as the decision was taken, which could not be  

                         termed by any yardstick, a reasonable one, but  

                         based   on   a   complete   or   disregard   of   the  

                         consequence, the act would be culpable.187.                     Here also, the allotment of shops to A­3, A­4 and A­5 by 

not   adopting   the   criteria   of   OM   of   1979   i.e.   by   going   for   public 

auction/open   public   tender   which   resulted   in   many   other   persons 

similarly   situated   being   left   out   from   the   consideration   zone   and 

which resulted in allotment of shops to A­3, A­4 and A­5, who were 

either family member or were having some sort of connections in the 

Ministry with A­1 (deceased) or A­2 and the fact that the two other 

shops   were   alloted   at   a   very   strategic   location   i.e.   P.G.Market 


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         167 of 194 
                                          ­168­

(Lajpat   Rai   market)   which   was   just   opposite   Red   Fort   near   the 

commercial hub of Chandni Chowk, cannot be said to be in public 

interest.     The   said   recourse   severely   curtailed   or   eliminated 

altogether   the  participation   of  other   public  persons   in  the   auction, 

therefore the decision of allotment of shops in favour of A­3, A­4 and 

A­5 cannot be said to have been taken by exercising reasonable or 

proper   care   and   precaution   to   guard   against   the   public   interest 

which A­1 and A­2 being the Cabinet Minister and MOS  were bound 

to follow, being repository of public trust and faith.188.                     As already discussed above, in the note dated 23.12.93 

Ex.PW26/A, it was clearly mentioned that the shops in P.G.Market 

i.e.   Lajpat   Rai   Market,   the   ownership   rights   had   already   been 

conferred,   therefore   any   allotment   could   have   only   been   done   by 

public auction.  Same was the observation made in note Ex.PW11/B 

dated 31.12.93 as well as in the note of then Secretary, UD dated 

18.01.94 Ex.PW28/B, as also in the note Ex.PW15/B dated 04.05.94 

in which it was stated that it was the first time that UDM had made 

allotment of shops in a rehabilitation market (P.G.Market i.e. Lajpat 

Rai   market)   where   government   had   already   conferred   ownership 

rights.   It was also noted that since 1964, they had not revised the 

economic   licence   fee   of   rehabilitation   markets,   although   in   other 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                    168 of 194 
                                               ­169­

markets the revision of licence fee had been done thrice after 1985. 

Similarly,   in   the   note   Ex.PW15/A,   though   it   was   stated   that   the 

previous UDM had also allotted 15 shops in 1989, as per exception 

clause­3   of   OM   of   1979,   but   even   at   that   time   the   same   was 

dissented   by JS (Finance) noting that the wholesale exception will 

tend   to   make   it   as   a   rule   rather   than   an   exception,   but   the   said 

objection was not considered and the then UDM went ahead with 

the allotment(s).189.                     In   the   said   note   Ex.PW15/A,   it   was   pointed   out   that 

purely from the financial point of view, PG Market was situated at 

the   heart   of   Delhi,   just   opposite   Red   Fort   and   it   was   hub   of 

commercial activity and because of this, if the two shops were to be 

disposed off through public auction, it will earn for government quite 

a   handsome   amount   of   revenue   and   it   was   also   mentioned   that 

some shops were also put on tenders in some other markets in the 

control of Directorate of Estates in years 1987, 1988 and 1994 which 

were   133   INA   market,   51   Sector­VIII   R.K.Puram,   148   Ring   Road 

market and 31 Andrews Ganj, and it was observed that the shops 

mentioned therein attracted quite a good amount of tender amount 

in each case.   Therefore, if the two shops at the P.G.Market were 

also allotted on tender basis, it would fetch more amount than the 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          169 of 194 
                                               ­170­

four shops mentioned above and it will be observed that the shop at 

INA market was alloted in year 1988 for a sum of Rs.3,100/­, Sector­

VIII, R.K.Puram in year 1987 for a  sum of  Rs.4,672/­, Ring  Road 

market in year 1994 for a sum of Rs.4,005/­ and lastly Andrews Ganj 

in year 1994 for a sum of Rs.2,700/­.190.                     Therefore, despite the note dated 05.05.94 Ex.PW15/A, 

the said objection was not at all considered which was made by the 

Finance   Division   of   Urban   Development   Ministry,   yet   in   utter 

disregard   to   the   said   objection,   A­1   (deceased)   on   the 

recommendation of A­2 went ahead and allotted two shops bearing 

nos.85   and   405   to   A­4   and   A­3   respectively   on   regular   basis   on 

payment of licence fee vide order dated 12.05.94 signed by A­2 and 

that of A­1 (deceased) dated 16.05.94, who concurred with order for 

the issuance of allotment letters.191.                     In   fact,   a   note   was   also   made   by   JS   and   FA   (UD) 

Sh.Girish Bhandari Ex.PW15/DA that the Directorate of Estates has 

mentioned that the allotment of shops was to be done by auction, 

therefore there was a departure from existing policy, therefore one 

option could be to allot shops in any of the other areas where 15 

shops were allotted in 1989, but since it appears that A­1 and A­2 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          170 of 194 
                                                ­171­

were  in   a   hurry   to   allot   the   shops   to   their   known   persons   by  not 

adhering or considering the objections made by various officers of 

the Urban Development Ministry as well as by the Finance Division 

and finally  the  allotment  letters were  issued   to  A­3 and A­4.   For 

example­ A­4 was alloted shop no.85, P.G Market at a paltry licence 

fee of Rs.298/­ per month vide letter Ex.PW26/E.  Similarly, A­3 was 

alloted   shop   no.405,   P.G.Market   vide   letter   dated   03.06.94 

Ex.PW26/F   at   a   monthly   licence   fee   of   Rs.291/­   and   that   of   A­5 

(deceased) was allotted shop no.2, Hanuman Road, New Delhi vide 

allotment letter Ex.PW26/G at a paltry licence fee of Rs.596/­ per 

month.192.                     Judicial   notice   of   this   fact   can   be   taken   that   shop   at 

Hanuman Road which is situated next to Cannaught Place, is also 

very   strategically   placed,   since   it   is   a   hub   of   commercial   activity, 

same would have also fetched handsome amount of revenue to the 

Government, rather it was allotted to A­5 at a paltry amount of Rs.

596/­ for the reasons best known to A­1 and A­2.193.                     Though,   A­5   has   expired,   yet   it   is   relevant   to   discuss 

that, though the process of allotment of shops to A­3 and A­4 went 

through various layers of bureaucratic channels i.e. official notings 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                            171 of 194 
                                           ­172­

and contrary notings were made by Desk Officer, Joint Secretary, 

Secretary,   Director   and   UDM   and   matter   was   also   dealt   with   by 

Finance Division of the Urban Development Ministry, as the opinion 

of Finance Division was also sought, but in the case of A­5, no such 

thing was done.  In fact, it appears that a note was put regarding the 

allotment on 30.03.94 vide note Ex.PW10/DC, though observing that 

the market at Hanuman Road had also to be disposed off by auction 

by   L&DO   after   fixing   the   reserve   price   in   consultation   with   the 

Finance Division, as per OM of 1979, yet all these objections were 

not taken into consideration and a note was put up for allotment of 

the shop at Hanuman Road in favour of A­5 and on the same day, 

the matter proceeded at a lightening speed and it was approved by 

the Secretary on 30.03.94 itself and finally by UDM on 09.04.94.  It 

is not clear who received application and from whom.194.                     Thereafter the allotment letters were issued and it would 

be worthwhile to note that A­5 was none else, but wife of PW­16 

Sh.Prem Ballabh Balodi, who at the relevant time was working in the 

personal staff of then Prime Minister of India.  Neither detailed notes 

were   made   nor   official   concurrence   or   the   opinion   of   Finance 

Division was taken, rather it appears that same was a case of  fait  



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                     172 of 194 
                                          ­173­

accompli,   as   probably   all   the   bureaucrats   of   the   Urban 

Development Ministry were full aware that the said allotment had to 

be made without any demur or protest, therefore there was no point 

in raising any objection, therefore the application of A­5 did not pass 

through   the   layers   of   notings   of   Secretary   or   any   other   Senior 

Officers   in   the   Urban   Development   Ministry   as   well   as   Finance 

Division, as was done atleast in the case of A­3 and A­4.  Rather, it 

appears that on the receipt of application, the allotment was done on 

the same day to A­5.  This undue, haste also leads to the conclusion 

that all norms were set aside for making the said allotment, come 

what may.195.                     Regarding the contrary argument of Ld. defence counsel 

Sh.S.P.Minocha that the shops in question could not be disposed off 

by public auction despite repeated steps taken by the Government, 

as the reserve price was too high, therefore no bidder came forward, 

which   has   been   admitted   by   numerous   prosecution   witnesses 

examined on the record.  There was even a proposal for transfer of 

these shops to local bodies, but they were also not ready to accept 

the same except free of cost. Thereafter, the matter was pending for 

refixation of reserve price, as reserve price was very high. He has 



RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                    173 of 194 
                                          ­174­

also   argued   that   it   has   been   admitted   by   many   prosecution 

witnesses   that   the   shops   in   question   were   lying   in   a   dilapidated 

condition   for   a   very   long   time,   rather   were   causing   loss   to   the 

government on account of repair and loss of revenue.   He further 

argued   that   allotments   of   15   shops   was   similarly   made   by   the 

previous UDM in year 1989, as per clause­3 of the exception clause 

of OM of 1979 and further, the shops in question had been allotted 

without   prescribing   any   period   of   leave   and   licence   with   the 

condition that the government reserves its right to cancel the licence 

and lease, take possession of shops after giving 30 days notice and 

all   the   allottees   had   also   given   an   undertaking   in   this   effect. 

Therefore, he has argued that what infraction of law or norms A­1 or 

A­2 had done in the present case.196.                     This argument of Ld. defence counsel for A­1 is without 

any   substance   for   the   reasons   already   discussed   above.     Merely 

because many shops had been earlier allotted by the previous UDM 

out   of   turn   without   following   the   norms   of   auction/tender   as   per 

clause­3, does not mean that the present allotment is also right, as 

two wrong do not make it right, though it is further said in light vain 

three rights make a left, but the fact remains wrong doings cannot 

be undone by doing something else wrong. Merely because the said 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                     174 of 194 
                                            ­175­

earlier   allotment   made   by   the   previous   UDM   in   1989   was   not 

challenged, does not mean that there is no illegality or infirmity in the 

present allotment(s).  It would not be out of place to mention that in 

the note Ex.PW15/A made by the Finance Division with regard to 

the proposal of allotment of shops to A­3 and A­4, it was observed 

that at the time of allotment of 15 shops by the previous UDM, the 

then   Joint   Secretary   (Finance)   had   also   seriously   objected   to   it 

observing that the said wholesale exception would tend to make it 

as a rule rather than exception.  Therefore, it is not that at that time 

none had objected to recourse to the exception clause­3 by the then 

UDM for allotment of 15 shops.   The present case allotment(s) of 

three shops is also distinguishable from the allotment of 15 shops by 

the   earlier   UDM,   which   were   made   in   new   government   colony 

markets,   which   were   newly   constructed.   They   were   not   having 

strategic location as well as economic condition, as was in this case, 

as the two shops were allotted in P.G.Market (Lajpat Rai Market), 

opposite Red Fort, whereas the third shop was alloted in Hanuman 

Road   next   to   commercial   heart   of   Delhi,   Connaught   Place. 

Therefore, pecuniary loss caused to the State Exchequer has been 

immense due to indiscriminate acts of A­1 and A­2.197.                     Further,   PW­20   K.D.Singh   (corrected   as   PW­21   vide 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                       175 of 194 
                                             ­176­

ordersheet dated 15.05.13) has deposed that after the directions of 

Hon'ble   Supreme   Court,   they   had   called   tender(s)   for   various 

shops/stalls and rates would have been quoted therein, on this basis 

comparative statement was prepared by the Directorate of Estates. 

The said comparative statement is Ex.PW20/1 (again corrected as 

Ex.PW21/1).  Perusal of said record would reveal that the said shop 

no.2   which   was   allotted   to   Smt.Tulsi   Balodi(A­5)(deceased)   at 

Hanuman   Road,   Connaught   Place,   was   allotted   to   the   highest 

bidder, which invited a tender of Rs.9,000/­ per month.  The next two 

bidders of the said shop was Rs.8,000/­ each and the last was Rs.

7,100/­, whereas the said shop had been allotted to A­5 at a paltry 

amount   of   Rs.596/­   per   month.     Therefore,   there   was   huge 

pecuniary   loss   to   the   State   Exchequer   and   the   same   resulted   in 

huge pecuniary advantage to A­5 without any public interest.   The 

same cannot be said to be in public interest.198.                     Though,   no   comparative   statement   of   the   auction   of 

shop   nos.85   and   405   have   been   placed   on   the   record   after   the 

cancellation of allotments by the Hon'ble Supreme Court, but judicial 

notice   of   this   fact   can   be   taken   that   the   said   shops   would   have 

fetched more revenue due to even more strategic location of these 

shops,   next   to   Chandni   Chowk,   especially   when   ownership   rights 
RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        176 of 194 
                                               ­177­

had   been  conferred   in   respect   of   said   shops,   therefore   pecuniary 

loss to the  State Exchequer  and pecuniary advantage  to  A­3 and 

A­4 can well be imagined.199.                     Abraham Lincoln said in his famous quote:"  Nearly  all  men can stand adversity,  but if 

                             you want to test a man's character, give him 

                             power."200.                     The Ministers are repository of power of people, which 

people have given them by electing them.  They look upon them for 

amelioration of their  condition,  not to betray them by squandering 

meagre resources of the nation, further as said by father of nation 

Sh.Mahatma Gandhi :­

                         ' The world has enough for everyone's need, but not 

                            enough for everyone's greed'201.                     Greed   of   man   is   insatiable,   but   people   in   high   places 

especially   Ministers   should   lead   by  example,   as  the   whole   nation 

and society look upon them for emulation, so that the faith of the 

people in democracy and rule of law remain unflinched, which are 

the basic structure of our constitution.202.                     The famous poet folk rock singer Bob Dylan ( it is often 


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           177 of 194 
                                                   ­178­

said, he was the true voice of American spirit) aptly wrote in his epic 

song   album  'The   Times   They   are   A­   changin'  released   in   1964 

with regard to American political society at that time­

                         * 'Come Senators, Congress man 
                         Please heed the call
                         Don't stand in the doorway
                         Don't block up the hall
                         for he that gets hurt
                         will be he who has stalled
                         There's a battle outside and 
                         it is ragin
                         it'll soon shake your windows
                         and rattle your walls
                         for the times they are a­ chang in'
                                                                         
                                                                            (* ­ a excerpt from said song)203.                     Now,   as   already   discussed   above   in   detail   that   the 

allotment(s) of present shops to A­3, A­4 and A­5 (deceased) was 

most unfair, arbitrary and in violation ofArticle 14of Constitution of 

India, as no criteria or classification was made for allotting the shops 

to a particular person or a class of persons, rather the same were 

made in blatant violation of all established norms of allotment(s) by 

following favouritism and nepotism.204.                     Since   acts   of   A­1   (deceased)   and   A­2   being   Public 

servants resulted in pecuniary advantage or getting valuable thing in 

favour of A­3 and A­4 and A­5 (deceased) in terms of allotment of 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                               178 of 194 
                                             ­179­

shops   by   abusing   their   official  position,   which   was  clearly  against 

any public interest.205.                     Therefore,   there   was   a   clear   cut   conspiracy   between 

A­1(deceased) and A­2 for committing the illegal act or to commit 

the offence punishableu/S 13(1)(d)(iii)r/wSection 13(2)of the PC 

Act. Since A­1 has already expired and the proceedings against her 

has   stood   abated,   therefore   only  A­2  stands   convicted   u/S   120­BIPCr/wSection13   (1)(d)(iii)r/wSection   13(2)of   PC   Act,   1988. 

However,  (A­3) L.Tsering and (A­4) Smt. Krishna  are acquitted  of 

the charge(s) under Section 120­B r/wSec.409IPC and 13(2) r/wSec.13(1)(c)and13(1)(d)of PC Act.     (A­5) Tulsi Balodi has also 

expired  and proceedings against her stood abated vide order dated 

21.08.14.ANNOUNCED IN THE OPEN COURT
ON 24.02.2016
                                                                            (SANJEEV AGGARWAL)
                                                                            Special Judge, 
                                                                          CBI­03(PC Act)
                                                                          Delhi/24.02.2016




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        179 of 194 
                                               ­180­

                    IN THE COURT OF SH. SANJEEV AGGARWAL:SPECIAL JUDGE: CBI­03 (PC ACT): DELHI


CC No.12/15                                       RC  :  48(A)/1996
                                             PS   : CBI/ACB/ND
                                             U/s  : 120­B r/wSec. 13(2)r/w Sec.13(1)(d)(iii) ofPC Act, 1988.CBI  Vs.                 (1)    P.K.Thungon
                                S/o Sh.P.W.ThungonFormerly Minister of State in the M/O UA&E, ND
                                R/o flat no.7, Yashwant Place, New Delhi
                                Permanent address­ Thungon House, Bomdila,
                                West Kameng District, Arunanchal Pradesh.ORDER ON SENTENCE1.                 Vide   judgment   dated   24.02.2016    (A­2)   P.K.Thungon 

            was   convicted    u/S   120­BIPCr/wSection13   (1)(d)(iii)r/wSection 13(2)of PC Act, 1988.2.                 I   have   heard   Sh.   J.S.Wadia,   Ld   PP   for   CBI   and   Ld. 

            Defence   counsels  for   A­2   Sh.   S.P.Minocha   and   Sh.   Gagan 

            Minocha.3.                 Ld.   counsels   for   the   convict   Sh.   S.P.Manocha   and   Sh.Gagan Manocha have filed an affidavit in support of mitigating 

            circumstances,   as   well   have   addressed   their   oral   arguments 

            stating that convict is aged 70 years of age at present. He is a 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                          180 of 194 
                                                  ­181­

            scheduled tribe belonging to Arunachal Pradesh. The wife of the 

            convict   is   suffering   from   acute   liver   decease   for   which   she   is 

            taking regular treatment. It is also stated that his wife had also 

            suffered a brain stroke and she had also undergone the surgery, 

            which has severally effected her mobility.4.                 It is further stated that his two sons are settled in Arunachal 

            Pradesh  and  only  one   son  is   temporarily  staying  in   Delhi   and 

            therefore   the   convict   is   the   only   person   to   look   after   his   wife 

            emotionally as well as physically.5.                 It   is   also   stated   that   even   as   per   the   allegations   of   the 

            prosecution there is no element of bribery involved in the present 

            case. The convict had only recommended the case of L. Tsering 

            and  Smt. Krishna  on  compassionate  grounds.  It is  also   stated 

            that   the   convict   is   actively   associated   with   various   social 

            organizations   and   he   has   extensively   contributed   for   the 

            betterment of Arunachal Pradesh by doing various good deeds. It 

            is   also   stated   that   he   has   already   faced   trial   for   18   years. 

            Therefore leniency be shown to him in awarding sentence to him. 

            It is also stated that the convict is in custody in another case from 

            21.07.15. Therefore benefit may be accorded to him U/s 427/428Cr.P.C.   He   has   also   relied   upon   the   following   judgments   in 


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                              181 of 194 
                                                 ­182­

            support of his contentions:(i) 2011(2) C.C. Cases(HC)  126 titled asRam Rattan Vs. Statethrough Central Bureau of Investigation(ii) Crl. Appeal No. 404 of 2014 titled as V.K.Verma Vs. CBI6.                 On   the   other   hand,   Ld.   Spl.   PP   for   CBI   has   refuted   the 

            aforesaid arguments of Ld. counsel for the convict, stating that 

            severe punishment be granted to the convict, as he had abused 

            his   official   position   as   a   public   servant   by   corrupt   means   and 

            thereby   obtained   pecuniary   advantage   in   favour   of   certain 

            allottees who were either his close relatives or were very close to 

            him or to the then UDM Smt. Shiela Kaul. He has further argued 

            that no leniency can be shown to the Ministers who occupy high 

            pedestal(s) of public office, and   yet violate the trust reposed in 

            them   by   the   public.   He   has   also   argued   that   the   convict   has 

            already been convicted in another case for corruption, wherein 

            he has been sentenced for 4 ½ years R.I.  Therefore it is prayed 

            that considering his past record no ground for leniency is made 

            out.7.                 I have gone through the rival contentions and perused the 


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                            182 of 194 
                                               ­183­

            affidavit filed by the convict as well as the judgments relied upon 

            by the Convicts (SUPRA)8.                 Counsel   for   convict   has   also   relied   upon   the     judgment 

            dated 25.04.1978, decided by Hon'ble High Court of Delhi tilted 

            as  K.C.   DASS,   N.K.CHATERJEE   VS.   STATE   OF   DELHI 

            CRLJ­1979­0­362/DLT­1978­14­16/ILR   (DEL)­1978­2­341,  the 

            relevant para(s) of the same are reproduced as under:2.   THESE   are   three   petition   for   habeas  
                         corpus.  The  point   raised   in   all   of   them   is  
                         the same. It is a point of principle. It relates  
                         to set off the period of detention undergone  
                         by the accused unders. 428of the Criminal  
                         Procedure Code, 1973.The   three   accused   in   the   three   writ  
                         petitions were convicted of crimes in more  
                         cases   than   one.   They   were   awarded  
                         separate sentences at different times. Each  
                         of the accused was arrested in one case to  
                         begin   with   and   thereafter   he   was   also  
                         placed   under   arrest   at   different   times   in  
                         other   cases.   This   means   that   formally   he  
                         was put under arrest in other cases, though  
                         he was already in detention.Take   a   simple   illustration.   An   accused   is  


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           183 of 194 
                                                 ­184­

                         arrested   in   one   case   on   1­1977.   He   is  
                         arrested in another case on 1­1­1978, while  
                         the trial of the first case is proceeding. In  
                         the   first   case   he   is   convicted   and  
                         sentenced   on   31­1­1978   to   two   years  
                         imprisonment.   Under   S.   428   the   accused  
                         will   be   entitled   to   set   off   his   period   of  
                         detention   from   1­1­1977   to   31­1­1978  
                         against the term of imprisonment imposed  
                         on him in the first case. This legal position  
                         is incontestable.To take the illustration further, suppose in  
                         the second case the accused is convicted  
                         on   31­3­78   and   sentenced   to   three   years  
                         imprisonment.   Now   the   accused   claims  
                         that   he   is   entitled   to   set   off   the   pre­trial  
                         detention   in   the   second   case   as   well.   In  
                         other   words   he   claims   that   the   period   of  
                         detention from 1­1­1977 to 31­3­1978 be set  
                         off   against   the   sentence   of   imprisonment  
                         imposed   on   him   in   the   second   case.   The  
                         short question is : Is he entitled to set off  
                         the   period   of   detention   against   his  
                         sentence in the second case though he had  
                         the benefit of s. 428 once in the first case?


                         The   Delhi   Administration   opposes   these  
                         petitions.   Counsel   for   the   Administration  
                         submitted   that   the   accused   person   is  
                         entitled to set off in the second case only  


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                             184 of 194 
                                                ­185­

                         upto the date of conviction in the first case  
                         as   the   period   of   detention   undergone   by  
                         the accused in prison after conviction was  
                         being   undergone   under   the   sentence  
                         imposed in the first case and not during the  
                         investigation, inquiry or trial of the second  
                         case.S.   428   of  the   Code   lays   down   the   rule   of  
                         "set off". It reads :"Where   an   accused   person   has,   on  
                         conviction,          been                       sentenced                                               to  
                         imprisonment   for   a   term,   the   period   of  
                         detention, if any, undergone by him during  
                         the   investigation,   inquiry   or   trial   of   the  
                         same   case   and   before   the   date   of   such  
                         conviction, shall be set off against the term  
                         of imprisonment imposed on him on such  
                         conviction, and the liability of such person  
                         to   undergo   imprisonment   on   such  
                         conviction   shall   be   restricted   to   the  
                         remainder,   if   any,   of   the   term   of  
                         imprisonment imposed on him."On a truand interpretation of the section it  
                         appears to us that in the second case also  
                         in which the accused person was convicted  
                         on 31  March, 1978 he will be entitled to set  
                                st


                         off  the  period   of  pre   trial  detention  i.e.   1
                                                                                                                                     st 


                         January,   1977   to   31   March,   1978   against  
                                                     st


                         the   sentence   of   three   years   imposed   on  


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           185 of 194 
                                                ­186­

                         him.   The   status   does   not   make   any  
                         distinction between  the   first   case   and   the  
                         second case. The principle is the same. It  
                         has   to   be   applied   to   all   cases   even­
                         handedly and uniformly.The   key   words   of   the   section   are   "the  
                         period   of   detention,   if   any,   undergone   by  
                         him during the investigation, inquiry or trial  
                         of   the   same   case   and   before   the   date   of  
                         such   conviction".   This   "period   of  
                         detention" shall be set off against the term  
                         of   imprisonment   imposed   on   him   on  
                         conviction. The liability of  such  person  to  
                         undergo   imprisonment   shall   be   restricted  
                         to   the   remainder   of   the   term   of  
                         imprisonment imposed on him.The   words   "of   the   same   case"   are  
                         important.   The   section   speaks   of   the  
                         "period   of   detention"   undergone   by   the  
                         accused person, but it expressly says that  
                         the   detention   mentioned   refers   to   the  
                         detention  during   the   investigation,   inquiry  
                         or   trial   of   the   case   in   which   the   accused  
                         person   has   been   convicted.   The   section  
                         makes it clear that the period of detention  
                         which   it   allows   to   be   set   off   against   the  
                         term   of   imprisonment   imposed   on   the  
                         accused on conviction must be during the  
                         investigation, inquiry or trial of the case in  


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           186 of 194 
                                                ­187­

                         which   the   accused   person   has   been  
                         convicted. The section makes it clear  that  
                         the  period   of   detention   which   it  allows   to  
                         be set off against the term of imprisonment  
                         imposed   on   the   accused   on   conviction  
                         must be during the investigation, inquiry or  
                         trial in connection with the "same case" in  
                         which   he   has   been   convicted.   (See  
                         Government  of  P.P. v. A.V. Rao,  AIR 1977  
                         SC 1097 (1100) (1).S. 428 provides that the period of detention  
                         of  an  under   trial   prisoner   shall   be   set   off  
                         against the term of imprisonment imposed  
                         on him on conviction. Will it not be true to  
                         say   that   the   accused   is   an   under   trial  
                         prisoner   in   the   second   case   in   our  
                         illustration. It it is so he will be entitled to  
                         set off his pre conviction period against the  
                         term   of   imprisonment   imposed   on   him   in  
                         the second case as in the first. We see no  
                         ground   to   deny   him   the   benefit   in   the  
                         second case.The   provision   as   to   set   off   expresses   a  
                         legislative policy (SeeGovernment of A.P.Supra). We sit here to carry out the will of  
                         Parliament. The Supreme Court has said :"S­428 is absolute in its terms. It provides  
                         for  set   off  the   pre­conviction   detention   of  


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           187 of 194 
                                                 ­188­

                         an   accused   person   against   the   term   of  
                         imprisonment   imposed   on   him   on  
                         conviction"(B. P. Andre v. Supdt. Central Jail, AIR 1975  
                         SC 164 (168) (2).The principle of S. 428 has to be applied in  
                         all cases whether the accused is convicted  
                         in   one   case   or   many,   whether  
                         simultaneously   or   at   different   times.   The  
                         reason   is   that   in   the   second   case   the  
                         accused   person   remains   as   untried   and  
                         unsentenced   prisoner   till   his   trial   is  
                         concluded.   At   the   end   of   the   trial   he   is  
                         convicted   and   sentenced   to   a   term   of  
                         imprisonment.   Before   trial   is   finished   he  
                         remains an unconvicted person accused of  
                         a   crime.   Nothing   more   than   this.   The  
                         statute says that if on trial he is convicted  
                         and   a   term   of   imprisonment   is   imposed  
                         allow   him   set   off   of   the   period   of   pretrial  
                         detention. Therefore, if the accused person  
                         is in detention  as an unconvicted,  untried  
                         or   unsentenced   prisoner   and   is,   on   trial,  
                         convicted   and   sentenced   to   a   term   of  
                         imprisonment   he   is   entitled   to   set   off.Whether such period of pre trial detention  
                         is common to a considerable extent in the  
                         two   cases   is   of   no   consequence   to   the  
                         application of s. 428.RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                            188 of 194 
                                                ­189­3. IF the sentences awarded on conviction  
                         are   to   run   concurrently   s   427   applies.   IF  
                         sentences   in   the   two   cases   in   our  
                         illustration   are   not   ordered   to   run  
                         concurrently, the remainder of the term of  
                         imprisonment, after adjustment of the pre­
                         trial   period   already   undergone   in   the  
                         second class, shall commence at the expiry  
                         of   the   term   of   imprisonment   in   the   first  
                         case after setting off the pre trial detention  
                         period. In both cases he will be entitled to  
                         set off.The view we take was also taken by one of  
                         us   sitting   singly   (v.D.   Misra,   J.)   in   two  
                         cases   :   Bahadur   Chand   v.   G.K.   Marwaha,  
                         Criminal   Writ   14   of   1977   decided   on   13
                                                                                                                                     th 


                         May,   1977(3)   and   Sunil   Kumar   v.   State  
                         Criminal   Misc.   (Main)   No.   2079   of   1975  
                         decided   on   August   21,   1975(4).A   learned  
                         single Judge of Rajasthan High Court has  
                         also taken the same view inChella V. State  
                         of Rajasthan, 1977 Cr.L.J. 589(5).A learned single Judge of this Court in K.C.  
                         Dass @ N.K. Chatterjee v. State, Cr. Misc.  
                         (Main)  No. 121 of 1978  decided  on March,  
                         10,1978(6) held to the contrary. He held that  
                         in the second case the accused person is  
                         entitled   to   set   off   the   period   of   detention  


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                           189 of 194 
                                             ­190­

                         upto the date of conviction in the first case.  
                         In our illustration, according to the learned  
                         Judge he will be entitled to set off from 1
                                                                                                                                  st 


                         January, 1977 to 31  January, 1978 and not  
                                               st


                         upto   31   March,   1978.   The   learned   Judge  
                                  st


                         thought that on conviction in the first case  
                         the   accused   person   was   serving   the  
                         sentence and was not in pre­trial detention  
                         so far as the second case is concerned. We  
                         do   not   agree   with   this   reasoning.   The  
                         accused person is in pre­trial detention as  
                         regard the second case. It is certainly a pre  
                         conviction period and the statute operates  
                         in his favour.We have not dealt with the particular  
                               facts of each case. We have settled a  
                               point or principle. We therefore direct  
                               the Superintendent of Jail to compute  
                               the period of detention in each of the  
                               cases   in   the   light   of   opinion  
                               expressed by us. The petitioners may  
                               be informed in jail.9.                 In view of the said judgment, which is squarely applicable 

            to the facts of the present case, the convict in the present case 

            will   be   entitled   to   set   off   his   detention   in   J/C   during   pre­

            conviction   period   in   another   case   against   the   term   of 

            imprisonment imposed upon him in the present case i.e. to say 


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        190 of 194 
                                            ­191­

            that the period of imprisonment already undergone by him in 

            another case, wherein he had been convicted already, would 

            also be set off from the period of imprisonment imposed in the 

            present case u/S 428 Cr.P.C.   The sentence of the convict in 

            this case shall run concurrently with the previous sentence of 

            imprisonment   imposed   upon   him  in   another   case   i.e.   to   say 

            that the convict has been accorded benefit u/S 427 as well as 

            428 of Cr.P.C.10.                It was said long ago by Lord Acton(1834­1902) English 

            historian

             'Power tends to corrupt and absolute power corrupts 

             absolutely'10.                Then it is also said

             'Power does not Corrupt People, People Corrupt Power' - 

             William Gaddis11.                Either way the fact remains that power is no blessing in 

            itself, except when it is used for benefit of common man. The 

            Ministers are the sole   repository of the power of the people, 

            which   they   have   reposed   in   them,for   their   amelioration,   with 

            power comes great responsibility for exercise of said power. It 


RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        191 of 194 
                                           ­192­

            is   a   two   edged   sword,   if   not   used   correctly,   it   can   slay   the 

            wielder. Then there is a perception amongst man on the street."Steal a little, and they put you in jail, steal a lot and they 

             make you king"  ­ Bob Dylan(from the song album 'Sweet 

             heart like you')12.                This perception though not right, has to be demolished, 

            so that there is transparency in Governance for the people, for 

            whom   it   is   meant,   those   who   wield   power,   must   be   held 

            accountable   for   it.   They   cannot   exercize   power   of   people, 

            arbitrarily for their own ends, or for a favourite few by corrupt 

            means, it has to be eradicated as it has tendency to multiply, 

            as all vices do, it is often said

             "Corruption is like a ball of snow, once it's set a rolling it 

             must increase' -Charles Caleb Colton, English Cleric, 

             writer and collector(1780­1832)13.                Though sometimes latitude can be shown to a person who 

            commits the crime due to poverty or  passion, but not to a person 

            who   in   zenith   of   public   position   abuses   his   power   for   corrupt 

            means in detriment to just expectations of the nation and society. 

            Severe punishment has to be visited upon these puissant public 

            servants, so that others who are waiting in the wings or those 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                       192 of 194 
                                             ­193­

            who have already accomplished the fait accompli shiver, while 

            thinking about the consequences of any such wrong doing while 

            occupying   such   high   public   positions.   In   this   context,   I   would 

            quote   very   beautiful  COUPLET   OF   BAHADUR   SHAH 

            ZAFAR( Poet king or last mughal emperor of India)

            ZAFAR AADMI USS KONA JANIYE GA WOH HO KITNA HI 
            SAHAB­E­ FAHAM­O­ZAKA
            JISE AISH MEIN YAAD­E­KHUDA NA RAHI, JISE TAISH MEIN 
            KHAUF­E­KHUDA NA RAHA
            (call him not a man ZAFAR HOWSOVER WISE, WHO, IN JOY 
            FORGETS HIS LORD, IN RAGE RESPECTS NO QUALMS)14.                In these  circumstances,  the judgment   relied   upon  by  the 

            Ld.   counsel   for   the   convict   (Supra)   praying   for   lenient 

            punishment is not available to the convict in the peculiar facts 

            and   circumstances   of   the   present   case.     As   a   resultant,   the 

            interest of justice shall be met if the convict is sentenced  to a 

            rigorous imprisonment of 3 ½ years and also fine of Rs.1 Lakh, 

            in default of payment of fine SI for 6 monthsu/S 13(1)(d)(iii)r/wSec. 13(2)of Prevention of Corruption Act, 1988.  The convict in 

            the present case will be entitled to set off his detention in J/C 

            during pre­conviction period in another case against the term 

            of imprisonment imposed upon him in the present case i.e. to 

RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                        193 of 194 
                                              ­194­

            say that the period of imprisonment already undergone by him 

            in   another   case,   wherein   he   had   been   convicted   already, 

            would also be set off from the period of imprisonment imposed 

            in   the   present   case   u/S   428   Cr.P.C.     The   sentence   of   the 

            convict   in   this   case   shall   run   concurrently   with   the   previous 

            sentence of imprisonment imposed upon him in another case 

            i.e. to say that the convict has been accorded benefit u/S 427 

            as well as 428 of Cr.P.C.15.                Copy   of   the   judgment   alongwith   order   on   sentence   be 

            given to the convict free of cost.  File be consigned to record 

            room.ANNOUNCED IN THE OPEN                                      (Sanjeev Aggarwal)  
COURT ON 29.02.2016                                       Special Judge, 
                                                            CBI­03(PC Act)
                                                            Delhi/29.02.2016




RC NO. 48(A)/1996
CBI vs. Sheila Kaul & ors.                                                                                                                                         194 of 194