UNION OF INDIA AND OTHERSversusLT. GEN. (RETD.) S.K. SAHNI

946                       [2022]
               SUPREME COURT     16 S.C.R. 946
                              REPORTS                   [2022] 16 S.C.R.


A                     UNION OF INDIA AND OTHERS
                                       v.
                       LT. GEN. (RETD.) S.K. SAHNI
                      (Criminal Appeal No. 2169 of 2014)
B                              MARCH 23, 2022
              [L. NAGESWARA RAO AND B. R. GAVAI, JJ.]
            Army Rules, 1954 – rr.180, 22 and 40(2) – Army Act, 1950 –
      s.123 –Respondent, commissioned in the Indian Army in 1967, was
      thereafter appointed as Director General, Supplies and Transport
C
      (DGST) in 2005 – A Court of Inquiry (CoI) was ordered to investigate
      into several allegations against him – CoI only recommended for
      award of recordable censure against the respondent, but the Army
      Commander and GOC-in-C directed disciplinary action under the
      Army Act, 1950 and Army Rules, 1954 – After his retirement in 2006,
D     respondent filed a writ petition before High Court for quashing
      proceedings against him – High Court held that appellants cannot
      take any action against the respondent on basis of CoI
      recommendation, but granted liberty to them to give notice to the
      respondent and continue with the proceedings under r.180 of the
      Army Rules, or “exercise any other power available to them under
E
      the Act, insofar as they do not rely upon the proceedings on the
      aforesaid Court of Inquiry” – Appellants, instead of invoking r.180
      of the Army Rules, wherein opportunity was to be provided to the
      respondent, resorted to r.22 of the Army Rules and ordered
      attachment of the respondent under s.123 of the Army Act – This
F     order was set aside by Armed Forces Tribunal (AFT), which declared
      the said action as totally unwarranted and illegal – Appellants were
      however directed to resort to COI after giving an opportunity to
      the respondent and to comply with the requirement u/r.180 of the
      Army Rules – In July 2011, General Court Martial (GCM)
      proceedings, comprising of junior officers than respondent, found
G
      respondent guilty of few charges, and sentenced him (i) To be
      cashiered; and (ii) Rigorous imprisonment for three years subject
      to confirmation – Chief of Army Staff confirmed the same in January
      2012 – Respondent filed appeal before the AFT, which modified the
      sentence to dismissal from service – Respondent filed writ petition
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                                      946
  UNION OF INDIA AND OTHERS v. LT. GEN. (RETD.) S.K.                     947
                      SAHNI

before High Court challenging the decision of AFT – High Court           A
issued notice – Meanwhile, Appellants filed appeal against AFT
decision before the Supreme Court – Respondent filed application
for transfer of his writ petition from High Court to Supreme Court,
which was allowed – Held: There are inherent limitations on the
jurisdiction of Supreme Court and it will not be permissible to re-
                                                                         B
appreciate the evidence as recorded by the GCM unless the Supreme
Court finds that the material factors have been either ignored or
the evidence that has come on record, has been appreciated in a
totally erroneous manner – Materials placed on record to be
considered with these limitations in mind – On facts, on consideration
of material on record, findings and orders passed by the AFT as          C
well as the GCM not found to be sustainable in law – Appeal of
appellant dismissed – Transferred criminal case of respondent
allowed – Respondent acquitted of all the charges levelled against
him – He would be entitled to all pensionary and consequential
benefits in accordance with law – The arrears of such benefits shall
                                                                         D
be computed and paid to the petitioner within a period of three
months from the date of the judgment – Armed Forces Tribunal Act,
2007.
      Dismissing the appeal and allowing the connected Transfer
Case, the Court
                                                                         E
      HELD:1.1. Though nine charges were framed against the
respondent, they are inter-connected and are related to three
transactions. The first charge was that the respondent had agreed
to the proposal of M/s Gujarat Co-operative Grain Growers
Federation Limited (hereinafter referred to as “M/s
GRAINFED”) for addition of two more tendering stations at                F
Gadarwara, District Narsingpur, Madhya Pradesh and Narsingpur
in Madhya Pradesh in addition to 14 tendering stations already
mentioned in the contract. The charge was that this was done
with an intent to defraud the State. It is not even the case of the
appellants herein that any loss was caused to the Army on account        G
of such decision or any additional benefit was accrued to M/s
GRAINFED by such deviation. This is apart from the fact that
the Consolidated Order No. 3 of 1987 itself required any additional
expenditure incurred by the purchaser/savings made by the
supplier to be reimbursed by the Supplier to the Government.
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948            SUPREME COURT REPORTS                    [2022] 16 S.C.R.


A     As such, the findings of the AFT that there was an intention on
      the part of the respondent to defraud would not be sustainable.
      [Paras 31, 35][957-F-H; 958-A; 961-C-E]
            1.2 Insofar as the second charge is concerned, it is with
      regard to the respondent not taking action on the basis of the
B     anonymous complaint dated 4th April 2005. It could thus be seen
      that the Court of Inquiry was directed to examine all associated
      issues and pin point responsibility for lapses, if any. It is thus
      clear that the finding that the respondent had failed to take
      cognizance of the complaint and direct an inquiry with that regard,
      is contrary to the material placed on record. [Paras 36 & 37]
C     [961-E; 963-A-B]
            1.3 The third charge is with regard to the relaxation being
      granted to M/s PUNSUP Limited and M/s MMTC Limited in
      acceptance of tender dated 26th June 2005, vide which 350-400
      grains per 100 grams of Kabli Chana was permitted on price
D     reduction of 0.5% instead of 300-350 grains per 100 grams. The
      only allegation is that the relaxation which was granted was with
      regard to the number of grains that every 100 grams should
      contain. As a matter of fact, even the GCM held that the
      respondent was entitled to benefit of doubt with regard to his
E     intent but has found that the said act was prejudicial to good order
      and military discipline. [Paras 39 & 41][963-C-D; 964-B-C]
            1.4 The AFT specifically came to a finding that the
      respondent has not committed any fraud or did not commit any
      act which resulted in actual loss or wrongful gain to any person.
F     One is unable to appreciate as to on what basis the AFT came to
      a conclusion that the acts lead to an inference that the attempts
      were made to cause a wrongful gain. The finding as recorded by
      the AFT is totally contrary to the material placed on record. [Para
      45][965-F-G]

G           1.5 The orders passed by the AFT as well as the GCM are
      not sustainable in law. Transferred Case filed by the petitioner is
      allowed; (ii) The order dated 18th February 2011 passed by the
      GCM holding the petitioner guilty and imposing penalty on him
      and the impugned order dated 10th October 2013, passed by the
      AFT are quashed and set aside; (iii) The petitioner is acquitted
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  UNION OF INDIA AND OTHERS v. LT. GEN. (RETD.) S.K.                       949
                      SAHNI

of all the charges levelled against him; and (iv) The petitioner           A
would be entitled to all pensionary and consequential benefits in
accordance with law. The arrears of such benefits shall be
computed and paid to the petitioner within a period of three
months from the date of this judgment. [Para 47][966-B-E]
      Ex. Lt. Gen. Avadhesh Prakash v. Union of India and                  B
      Another [Decision dated 24-01-2019 of Supreme
      Court in Criminal Appeal No. 140 of 2019]; Union of
      India and Another v. Charanjit S. Gill and Others (2000)
      5 SCC 742 : [2000] 3 SCR 245 and Brig P.S.Gill v.
      Union of India and Others [Orders dated 24 th May,
      2011 of AFT in OA No. 147 of 2010] – referred to.                    C

                        Case Law Reference
[2000] 3 SCR 245                 referred to              Para 19
      CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 2169 of 2014.                                                          D
      From the Judgment and Order dated 10.10.2013 of the Armed
Forces Tribunal, Chandigarh Regional Bench at Chandimandir in Original
Application No.262 of 2011.
      With
                                                                           E
      Transferred Case (Criminal) No. 1 of 2017
      R. Balasubramanian, Sr. Adv., Rajan Kr. Chourasia, S. K. Tyagi,
Anukalp Jain, Arvind Kumar Sharma, Mukesh Kumar Maroria, K. K.
Tyagi, Iftekhar Ahmad, Sarvam Ritam Khare, Rajeev Kumar Bansal, P.
Narasimhan, Advs. for the appearing parties.                               F
      The Judgment of the Court was delivered by
      B.R. GAVAI, J.
       1. Criminal Appeal No.2169 of 2014 is filed by Union of India and
others challenging the orders passed by Armed Forces Tribunal,             G
Chandigarh Regional Bench at Chandimandir (hereinafter referred to
as the “AFT”) dated 10th October 2013 in MA No. 1871 of 2012 and
OA No. 262 of 2011 to the effect that it reduces the sentence of three
years rigorous imprisonment and cashiering imposed on the respondent
herein-Lt. Gen. (Retd.) S.K. Sahni to dismissal from the service as
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950             SUPREME COURT REPORTS                          [2022] 16 S.C.R.


A     provided in Section 71(e) of the Armed Forces Tribunal Act, 2007
      (hereinafter referred to as the “AFT Act”), and 21st March 2014 in MA
      Nos. 3201 and 3202 of 2014 in OA No. 262 of 2011, whereby the learned
      AFT refused to grant leave to appeal.
             2. Transferred Case (Criminal) No. 1 of 2017 is filed by the
B     petitioner therein (respondent herein), originally before the High Court
      of Punjab and Haryana being Criminal Writ Petition No. 1895 of 2013,
      challenging the dismissal of MA No. 1871 of 2012 and OA No. 262 of
      2011, which was filed challenging the order dated 18th February 2011,
      passed by the General Court Martial (hereinafter referred to as the
      “GCM”), vide which the respondent herein was held guilty of first, third,
C     fourth, fifth, seventh and ninth charges and was sentenced as under:
            (i) To be cashiered; and
            (ii) Rigorous imprisonment for three years subject to confirmation.
            3. As such, both, the appeal filed by the Union of India and others,
D     and the transferred case, filed by the respondent herein have been heard
      together. For the sake of convenience, the facts are taken from Criminal
      Appeal No. 2169 of 2014.
             4. The respondent was commissioned in the Indian Army on 16th
      December 1967 and earned promotions and was promoted to the rank
E     of Lieutenant General in May 2003. The respondent was thereafter
      appointed as Director General, Supplies and Transport (hereinafter
      referred to as “DGST”) with effect from 1st February 2005. He was
      also awarded the “Ati Vishisht Seva Medal” in January 2005.
             5. An anonymous complaint was received in the Directorate of
F     Supplies and Transport (hereinafter referred to as the “Directorate”) on
      4th April 2005. On 8th April 2005, the complaint was forwarded and a
      request was made to the respondent to examine the complaint and
      forward his comments on the file on priority for perusal of the Directorate.
      It is contended by the respondent that he replied to the same on 12th
      September 2005.
G
             6. A Court of Inquiry was ordered against the respondent under
      the directions of General Officer Commanding-in-Chief, Western
      Command (hereinafter referred to as “GOC-in-C”), to investigate into
      the following seven allegations:
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  UNION OF INDIA AND OTHERS v. LT. GEN. (RETD.) S.K.                         951
                SAHNI [B.R. GAVAI, J.]

        “i. Procurement of Kabuli Chana through contract finalized during    A
        April 05 by Army Purchase Organization;
        ii. Tendering and procurement of Barley crushed and Gram
        kibbled during financial year 2005-2006 by Army Purchase
        Organization;
        iii. Testing and sampling of items of ration by CFL Delhi as per     B
        laid down specification arid its subsequent purchase/procurement
        from various firms/dealers as per approved sample and ASC
        specifications;
        iv. Tendering and procurement of 979 Metric Tonnes of Masoor
        Whole which was supplied by GRAINFED; -                              C

        v. Violation, if any, of the laid down quality norms, ASC
        specifications and other desired parameters with regard to
        moisture content, number counts per 100 gm weight, system of
        imposing price reduction of commodities contracted.
                                                                             D
        vi. Any undue favour granted to any contractor for procurement
        of meat by HQ Central Command during financial years 2003-
        2004 and 2004-2005
        vii. Any irregularity with regard to permitting a civil contractor
        to dump excavated soil within the compound of ASC Centre
                                                                             E
        and College of any undue favour taken from any contractor by
        and Army pers at ASC Centre and College.”
       7. The Court of Inquiry only recommended for award of recordable
censure against the respondent while recommending disciplinary action
qua other officials under the Army Act, 1950 (hereinafter referred to as
                                                                             F
the “Army Act”) and Army Rules, 1954 (hereinafter referred to as the
“Army Rules”). However, as per the direction of Army Commander,
the respondent’s name was included in the list for disciplinary action.
The Court of Inquiry was finalized on 24th June 2006, and thereafter, the
GOC-in-C directed a disciplinary action against the respondent.
      8. As contended by the respondent, the GOC-in-C, despite               G
recommendation mentioned in the Inquiry Report for an administrative
action, directed disciplinary action while admitting that there was no
evidence of the acts of financial consideration qua the respondent. The

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952             SUPREME COURT REPORTS                         [2022] 16 S.C.R.


A     respondent, on attaining the compulsory retirement age of 60 years, retired
      on 30th September 2006.
             9. The respondent filed a writ petition before the High Court of
      Delhi being WP (C) No. 11839/2006 seeking for quashing and setting
      aside of the proceedings and recommendations of the Court of Inquiry
B     in terms of order dated 26th May 2005 and order dated 18th July 2006
      directing attachment of the respondent. The High Court of Delhi allowed
      the said writ petition, vide order dated 11th January 2007, in the following
      terms:
              “For the reasons afore-recorded, we are of the considered view
C             that the respondents have not complied with the provisions of
              Rule 180 of the Rules, as such, they cannot take any further
              proceedings against the respondents on the basis of the Court
              of Inquiry held in furtherance to the order of the competent
              authority dated 26.9.2005. However, the respondents are at
              liberty to give notice to the respondent and continue with the
D             proceedings under Rule 180, and in the alternative, even to take
              recourse to the provisions of Rule 22, or exercise any other
              power available to them under the Act, insofar as they do not
              rely upon the proceedings on the aforesaid Court of Inquiry.”
             10. The appellants, instead of invoking Rule 180 of the Army Rules,
E     wherein opportunity was to be provided to the respondent, resorted to
      Rule 22 of the Army Rules and issued a fresh notice and passed an
      order dated 31st August 2007 and ordered attachment under Section 123
      of the Army Act.
             11. The respondent challenged the above by filing a writ petition
F     in the High Court of Delhi being WP(C) No. 6632/2007, which was then
      transferred to the learned AFT, Principal Bench at New Delhi. The said
      learned AFT, vide its order dated 3rd September 2009, set aside the
      subsequent act of the Army Authorities and held that resorting to Rule
      22 of the Army Rules was totally unwarranted and illegal. The appellants
G     were however directed to resort to Court of Inquiry after giving an
      opportunity to the respondent and to comply with the requirement under
      Rule 180 of the Army Rules.
             12. The GOC-in-C, vide its order dated 22nd September 2009,
      directed reconvening/reassembling of the Court of Inquiry on the basis
      of the liberty granted by the learned AFT, New Delhi vide its order
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   UNION OF INDIA AND OTHERS v. LT. GEN. (RETD.) S.K.                          953
                 SAHNI [B.R. GAVAI, J.]

dated 3rd September 2009. The GOC-in-C vide its order dated 12th April         A
2010, on the basis of the Court of Inquiry, directed disciplinary action
against the respondent.
       13. On 30th July 2010, a convening order, directing assembly of
the GCM under the Army Act, was issued. The GCM consisted of 7
Members, out of which, 6 Members were holding ranks of Major General           B
which was lower than the respondent’s rank. The Presiding Officer,
however, was of the rank of Lieutenant General, but was allegedly junior
to the respondent. Even the Judge-Advocate General (hereinafter
referred to as “JAG”) was allegedly junior to the respondent and was
only holding the rank of Colonel. On the same day, i.e., 30th July 2010, a
charge-sheet comprising of nine charges was served upon the respondent.        C

       14. The GCM, vide order dated 18th February 2011, found the
respondent not guilty of the charges No. 2, 6 and 8 whereas found the
respondent guilty of charges No. 1, 3, 4, 5, 7 and 9 and was sentenced as
under:
                                                                               D
    (i) To be cashiered; and
    (ii) Rigorous imprisonment for three years subject to confirmation.
      The findings and sentence of the GCM were confirmed by the
Chief of Army Staff vide its order dated 13th January 2012.
                                                                               E
       15. The respondent filed an appeal before the learned AFT against
the order of the GCM dated 18th February 2011, which was further
confirmed by the order dated 13th January 2012 passed by the Chief of
Army Staff. The learned AFT, vide the impugned order dated 10 th
October 2013, partly allowed the petition. The learned AFT held that
the findings of the GCM as against the respondent were liable to be            F
affirmed. However, the learned AFT held that the sentence of cashiering
and substantive imprisonment of 3 years’ rigorous imprisonment was
harsh and thus, modified the sentence to dismissal from service.
       16. The respondent filed a writ petition being Criminal Writ Petition
No. 1895 of 2013 before the High Court of Punjab and Haryana at                G
Chandigarh, challenging the aforesaid impugned order dated 10th October
2013 passed by the learned AFT. The High Court issued notice vide
order dated 28th October 2013. In the meanwhile, the appellants also
filed an appeal being Criminal Appeal No.2169 of 2014 before this Court,
challenging the order passed by the learned AFT dated 10th October
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954                SUPREME COURT REPORTS                        [2022] 16 S.C.R.


A     2013. Thereafter, the respondent filed an application being CRL.M.P.
      No.24464 of 2014 in Criminal Appeal No.2169 of 2014 seeking transfer
      of Criminal Writ Petition No. 1895 of 2013, pending before the High
      Court of Punjab and Haryana at Chandigarh to this Court.
             17. This Court, vide its order dated 22nd August 2016, allowed the
B     said application and directed transfer of the said petition to this Court, to
      be listed along with Criminal Appeal No.2169 of 2014.
            18. We have heard Shri R. Balasubramanian, learned Senior
      Counsel appearing on behalf of the Union of India and Shri K.K. Tyagi,
      learned counsel appearing on behalf of the respondent.
C             19. Shri Tyagi, learned counsel appearing on behalf of the
      respondent, raised a preliminary point that since the Members of the
      GCM were below the rank of the respondent, the GCM was not properly
      constituted, and as such, violative of sub-rule (2) of Rule 40 of the Army
      Rules. He relies on the order of this Court in the case of Ex. Lt. Gen.
D     Avadhesh Prakash v. Union of India and Another1. He submitted
      that from perusal of the said order, it will be clear that about 80 Lieutenant
      Generals were available in the Indian Army at the relevant time, and as
      such, the Court-Martial which had Members below the rank of Lieutenant
      General, could not have tried the respondent. He therefore submitted
      that the GCM, which is constituted in contravention of sub-rule (2) of
E     Rule 40 of the Army Rules, could not have tried the respondent. He
      further submitted that on the same ground, in view of Rule 102 of the
      Army Rules, since the JAG, who was of the rank of Colonel, which is
      below the rank of Lieutenant General, stood disqualified while acting as
      a JAG. He relies on the judgment of this Court in the case of Union of
F     India and Another v. Charanjit S. Gill and Others 2 in this regard.
             20. Shri Balasubramanian, learned Senior Counsel appearing on
      behalf of the appellants, on the contrary, submitted that though sub-rule
      (2) of Rule 40 of the Army Rules requires that the Members of a Court-
      Martial for the trial of an officer shall not be of a rank below than that of
G     the officer, it also provides that a departure from the said rule is
      permissible, when in the opinion of the convening officer, having regard
      to the exigencies of the public service, the officers of such rank are not
      available. He therefore submits that merely because the GCM consisted
      1
          Criminal Appeal No. 140 of 2019 dated 24.01.2019
      2
H         (2000) 5 SCC 742
   UNION OF INDIA AND OTHERS v. LT. GEN. (RETD.) S.K.                           955
                 SAHNI [B.R. GAVAI, J.]

of the officers below the rank of Lieutenant General itself, would not          A
ipso facto vitiate the proceedings. He submitted that the only requirement
is that such an opinion is required to be recorded in the convening order.
He submitted that insofar as the order of this Court in the case of Ex.
Lt. Gen. Avadhesh Prakash (supra) is concerned, in the said case, the
order was passed by this Court on the concession that such officers
                                                                                B
were available. He further submitted that in the said case, no such
opinion as required under sub-rule (2) of Rule 40 of the Army Rules was
recorded.
       21. For appreciating the rival submissions with regard to the
preliminary objections, it will be relevant to refer to sub-rule (2) of Rule
40 of the Army Rules:                                                           C

        “40. Composition of General Court-martial.-
        (1). …..
        (2). The members of a court-martial for the trial of an
        officer shall be of a rank not lower than that of the                   D
        officer unless, in the opinion of the convening officer,
        officers of such rank are not (having due regard to the
        exigencies of the public service) available. Such
        opinion shall be recorded in the convening order.”
       22. In view of the specific contention with regard to the violation      E
of sub-rule (2) of Rule 40 read with Rule 102 of the Army Rules, we
have summoned the original file. On perusal of the original file, we find
that the convening officer has recorded reasons as to why the officers
of the rank of respondent were not available. We find that the reasons
given, for doing the same, would fall within the exigencies of the public       F
service. The scope of judicial review of such a decision is very limited.
Unless it is found that the decision taken by the authority suffers from
arbitrariness, irrationality or unreasonableness, it would not be permissible
for us to sit in an appeal over the decision of the convening officer. The
limited inquiry that would be permissible is, as to whether the reasons
recorded are having regard to the exigencies of the public service or           G
not. On perusal of the original file, we find that the reasons given are
directly concerned with the exigencies of the public service. We therefore
do not find any merit in the said submission.

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956             SUPREME COURT REPORTS                           [2022] 16 S.C.R.


A            23. Insofar as the order of this Court in the case of Ex. Lt. Gen.
      Avadhesh Prakash (supra) is concerned, in the said case, the contention
      made on behalf of the petitioner therein was that the respondents therein
      could have tried to make Lieutenant General available. In any case,
      from the said order, it is not clear as to whether the subjective satisfaction
      as required under sub-rule (2) of Rule 40 of the Army Rules was, in fact,
B
      recorded or not. Another reason that weighed with this Court for
      interfering with the order of the learned AFT was that the learned AFT
      had recorded that since the appellant therein had already retired from
      the service, there was no illegality in constitution of GCM. This Court
      found that such a finding was not permissible on the bare reading of
C     Rule 40 of the Army Rules.
             24. Insofar as the merits of the present matter are concerned,
      Shri Balasubramanian submits that after the learned AFT had concurred
      with the findings of the GCM that the charges against the respondent
      stood proved, there was no occasion for the learned AFT to have interfered
D     with the penalty imposed on the respondent. Insofar as the appeal of
      the appellants herein is concerned, the learned Senior Counsel for the
      appellants submitted that since there are concurrent findings of fact with
      regard to the charges being proved, no interference would be warranted
      in the appeal of the appellants. He therefore submitted that the appeal
      of the appellants deserves to be allowed and the Transferred Case
E     (Criminal) No. 1 of 2017 filed by the petitioner (respondent in Criminal
      Appeal No. 2169 of 2014) be dismissed.
             25. Shri Tyagi, learned counsel appearing for the respondent, on
      the contrary, would submit that the findings as recorded by the GCM as
      well as the learned AFT are recorded on the basis of conjectures and
F     surmises. He submitted that in the GCM, the standard that is required to
      be followed is of a criminal trial. It is therefore submitted that unless the
      charges against an officer are proved beyond reasonable doubt, he cannot
      be held guilty in GCM. It is submitted that like a criminal trial, the benefit
      of doubt must go to the officer and not to the prosecution. He, however,
G     submitted that in the present case, the GCM as well as the learned AFT
      have given the benefit of doubt to the prosecution.
            26. He submits that as a matter of fact, not a single charge stands
      proved beyond reasonable doubt against the respondent. However, the
      respondent has been convicted by the GCM without any evidence. He
H     therefore submitted that the Transferred Case (Criminal) No. 1 of 2017
   UNION OF INDIA AND OTHERS v. LT. GEN. (RETD.) S.K.                          957
                 SAHNI [B.R. GAVAI, J.]

filed by the petitioner (respondent in Criminal Appeal No. 2169 of 2014)       A
deserves to be allowed and the appeal filed by the appellants be dismissed.
      27. With the assistance of the learned counsel for the appellants
and the respondent, we have perused the order passed by the GCM as
well as the learned AFT and the materials placed on record.
       28. At the outset, we may state that there are inherent limitations     B
on the jurisdiction of this Court and it will not be permissible to
reappreciate the evidence as recorded by the GCM unless this Court
finds that the material factors have been either ignored or the evidence
that has come on record, has been appreciated in a totally erroneous
manner. With these limitations in mind, we will consider the materials         C
placed on record.
       29. Though nine charges have been framed against the respondent,
he has been found guilty insofar as charges No. 1, 3, 4, 5, 7 and 9 are
concerned. He has been found not guilty insofar as charges No. 2, 6
and 8 are concerned. The learned AFT has also concurred with the               D
finding of fact holding the respondent guilty of the aforesaid charges.
The learned AFT has observed that the evidence led with regard to all
these charges is mostly common and as such, has decided all the said
points together.
       30. The learned AFT has come to a finding of fact that though the       E
contracts were finalized by the Army Purchase Organization (hereinafter
referred to as the “APO”), insofar as the provisioning of dry supplies for
the troops is concerned, it found that both the APO as well as the
Directorate, are concurrently and co-jointly responsible for the monitoring,
examination and the progress of the contracts.
                                                                               F
      31. The respondent, at the relevant time, was holding the post of
DGST. Though nine charges have been framed against the respondent,
they are inter-connected and are related to three transactions as under:
        (i)      That the respondent had agreed to the proposal of M/s
                 Gujarat Co-operative Grain Growers Federation Limited
                                                                               G
                 (hereinafter referred to as “M/s GRAINFED”) for
                 addition of two more tendering stations at Gadarwara,
                 District Narsingpur, Madhya Pradesh and Narsingpur
                 in Madhya Pradesh in addition to 14 tendering stations

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958             SUPREME COURT REPORTS                         [2022] 16 S.C.R.


A                      already mentioned in the contract. The charge was that
                       this was done with an intent to defraud the State;
              (ii)     That though the respondent had enquired in the complaint
                       dated 4th April 2005 alleging fake tendering and presence
                       of Kesari Peas and Akra, which were unfit for human
B                      consumption, he had omitted to ensure investigation of
                       the alleged presence of Kesari Peas and Akra in Dal
                       Masur Whole. Therefore, the respondent was
                       instrumental in feeding the food to the Army Personnel,
                       which was not as per the standards. As a continuation
                       of the same transaction, with an intent to defraud, he
C                      had agreed to the proposal of M/s GRAINFED for
                       upgradation of Dal Masur Whole supplied by the firm
                       knowing that the said item had been found and declared
                       unfit for human consumption; and
              (iii)    That the respondent had approved deviation with
D                      relaxation to M/s PUNSUP Limited and M/s MMTC
                       Limited of permitting 350-400 grains per 100 grams of
                       Kabli Chana as against 300-350 grains per 100 grams,
                       and that this was done with an intent to defraud.
             32. Insofar as the first charge is concerned, the findings of the
E     learned AFT would reveal that the request of M/s GRAINFED for two
      additional tendering stations at Gadarwara and Narsingpur was made
      on 3rd March 2005 to the Chief Director of Purchase (hereinafter referred
      to as the “CDP”), APO. The APO forwarded the said request for
      comments/views of the Directorate vide communication dated 9th March
F     2005. The perusal of the orders of the learned AFT as well as the GCM
      would reveal that, after accepting the recommendation of PW-6-Major
      General (Retd.) S.C. Mohan, the respondent did not agree to the request
      of M/s GRAINFED. However, the proposal was put up before him for
      reconsideration pursuant to the note prepared by PW-13-Col. (Retd.)
      N.K. Yadav, Director Provisioning, stating that the entire quantity against
G     the acceptance of tender has already been tendered at Gadarwara within
      the delivery period. The respondent therefore agreed to the request of
      M/s GRAINFED for two additional tendering stations and the decision
      of the respondent was intimated to the APO.

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     UNION OF INDIA AND OTHERS v. LT. GEN. (RETD.) S.K.                         959
                   SAHNI [B.R. GAVAI, J.]

       33. With regard to the aforesaid charge, it will also be relevant to     A
refer to the order passed by the learned AFT, in the case of Brig P.S.
Gill v. Union of India and Others3. In the said case, the petitioner
therein (Brig. P.S. Gill), at the relevant time, was working as CDP, APO.
The relevant portion of the said findings are as under:
           “2. From a bare reading of the aforesaid charges it appears that     B
           the petitioner in the capacity of his being Chief Director of
           Purchase, Army Purchase Organisation, Ministry of Defence
           contrary to APO/MOD Consolidated Order No.3 of 1987, with
           intent to defraud/improperly approved addition of two more
           tendering stations namely Gadarwara and Narsingpur in
           Madhya Pradesh. For the purpose of drawing the charges,              C
           reliance appears to have been placed by the respondents on the
           exhibits, the details of which may be charted out as under:
                    Exhibit                   Page                  Para
                    L                         239                   -           D
                    LXIX                      294                   -
                    XXVII                     193                   2
                    VI                        141-143               1 and 2
                    II                        83-85                 -           E
                    V                         139-140               -
                    LXXV                      303-305               -
                    XXVIII to XXXIII/I        194-204/80            -
           From the perusal of the exhibits noted above, there is nothing to    F
           show that the addition of two tendering stations was not within
           the powers of the petitioner. Nothing could be pointed out to
           show the relevancy of these documents for making out prima
           facie case against the petitioner. Further the statement of the
           witness namely, PW1 Brig PPS Bal of CDP Army Purchase                G
           Organisation, AHQ New Delhi was scrutinised. He was
           categorical in his statement that he was aware of the Consolidated
           Order No.3 of 1987 (Ext.2) permits the inclusion of additional
           tendering station. Ext.1 is related to the letter dated 06.10.2008
3
    OA No. 147 of 2010 dated 24 th May 2011                                     H
960            SUPREME COURT REPORTS                         [2022] 16 S.C.R.


A             written to M/s M.P. Trade & Investment Facilitation Corporation
              Ltd. for “procurement of 1000 MT Gram Crushed (Kibbled)
              against A/T even no. dated 05.12.2007 from M/s. MPTRIFAC-
              Addition of Tendering Station-Delhi. This one example was
              quoted by the witness. This itself indicates that the addition of
              tendering stations is within the discretion of the competent
B
              authority to the effect that “stores can be tendered at Delhi as a
              special case in the subject A/T, subject to the condition that any
              additional expenditure incurred by the purchaser/savings accruing
              to the supplier, on account of this addition of tendering Station,
              shall be reimbursed by the Supplier to the Government” which
C             is also exactly the requirement mandated in defence Consolidated
              Order No.3 of 1987. Further with regard to the making of the
              additional tendering stations by the accused-petitioner as per
              the reply of PW1, the contract was amended as required by
              Government of India orders and the amended contract was also
              communicated by Exh. VI. There was no objection to such
D
              acceptance of tendering stations from Audit authorities or by
              PCDA. Apart from it, witness also makes it clear in his answer
              to Question No.4 that the tenderer has option to select stations
              where he can tender stores as per the contract. The APO does
              not dictate the tendering stations. However, they must lend
E             themselves to ease of inspection and movement of stores to
              consignee depots. Lastly this witness also clarified that by
              making the addition of two tendering stations no monetary
              benefits could be acquired by petitioner nor there was any extra
              expenditure borne out by the respondents owning to acceptance
              of two new stations by the accused-petitioner. Further by adding
F
              these two new stations, no violation of any rule or order was
              made by the accused petitioner.”
             34. It could thus be seen that the very same AFT has come to a
      finding that the CDP, APO was within the powers to include additional
      tendering stations. It has further been found that there was no objection
G     to acceptance of such tendering stations from Audit Authorities or by
      CDP, APO. It is further to be observed that the learned AFT has clearly
      noted that the Consolidated Order No. 3 of 1987 permitted inclusion of
      additional tendering station subject to the condition that the additional
      expenditure incurred by the purchaser/savings accrued to the supplier,
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  UNION OF INDIA AND OTHERS v. LT. GEN. (RETD.) S.K.                         961
                SAHNI [B.R. GAVAI, J.]

on account of this addition of tendering station, shall be reimbursed by     A
the Supplier to the Government. There was a specific finding that on
account of addition of two tendering stations, neither any monetary
benefits could be accrued to the petitioner therein (Brig P.S. Gill), nor
there was any extra expenditure borne out by the Army owing to
acceptance of two new stations by the petitioner therein (Brig P.S. Gill).
                                                                             B
In any case, it is clear from the said order that the authority to accept
such additional tendering stations was with the CDP, APO. In view of
this specific finding of the learned AFT recorded in the order dated 24th
May 2011, we find that the finding, to the contrary, recorded by another
Bench of the learned AFT vide the impugned order dated 10th October
2013 in the case of the present respondent, would not be sustainable.        C
        35. In any case, it is not even the case of the appellants herein
that any loss was caused to the Army on account of such decision or
any additional benefit was accrued to M/s GRAINFED by such deviation.
This is apart from the fact that the Consolidated Order No. 3 of 1987
itself required any additional expenditure incurred by the purchaser/        D
savings made by the supplier to be reimbursed by the Supplier to the
Government. As such, the findings of the learned AFT that there was
an intention on the part of the respondent to defraud, in our view, would
not be sustainable.
       36. Insofar as the second charge is concerned, it is with regard to   E
the respondent not taking action on the basis of the anonymous complaint
dated 4th April 2005. The related charge is that though the Dal Masur
Whole was found to also contain Kesari Peas and Akra, the respondent
cleared the samples and the supply of said Dal Masur Whole was
cleared. It is the case of the appellants that on account of this, the Dal
Masur Whole, which was not as per the standards, was fed to the Army         F
Personnel. It is their further case that the respondent also did not take
immediate steps for preventing the consumption of the same. It is to be
noted that after the receipt of the said anonymous complaint, the samples
were sent for analysis and the presence of traces of Kesari Peas was
revealed during analysis of samples on 13th May 2005. The respondent         G
thereafter issued instructions to freeze the stocks. It is further to be
noted that the DGST, vide order dated 12th April 2005, had directed a
Departmental Court of Inquiry to inquire into whether there were any
irregularities in tendering/inspection procedure of Dal Masur Whole

                                                                             H
962            SUPREME COURT REPORTS                        [2022] 16 S.C.R.


A     offered by M/s GAINFED. It will be apposite to refer to the said order
      dated 12th April 2005:
              “1. A departmental Court of Inquiry composed as under will
              assemble at the place, date and time to be fixed by the Presiding
              Officer to investigate whether there were any irregularities in
B             tendering/inspection procedure of Masur Whole offered by M/
              S Gujarat Coop Grain Growers’ Federation Ltd. for inspection
              by CFL ASC, Delhi against AT No.J-13028/1/4-03/45-RP/2005-
              PUR III dated 28 Feb 2005:-
                      Presiding Officer        – Brig V Marwaha
C                                                 DDST, HQ Delhi Area
                      Technical Members – Col SC Chakravarty
                                                          Dir ST (FI)
              2. The court will specifically examine the following issues:-
D
              (a) Whether the complete qty of 979.600 MT was tendered by
                  15 Mar 2005. If so why was the BIO instructed to inspect
                  only 440.800 MT.
              (b) Was it ascertained by the BIO that the complete qty i.e.
                  979.600 MT has been tendered and a report made to that
E                 effect.
              (c) Why did the BIO not carry out sampling of the consignment,
                  and why were the samples of bags rejected, not brought for
                  the perusal of CO/Lab analysis.

F             (d) The decision of CO, CFL ASC Delhi to repack and retender
                  the stocks as and when ready when the AT Note is against
                  Risk Purchase; resulting in automatic extn of DP.
              (e) The acceptance of a cert from the contractor that the balance
                   of the consignment ie, 538.400 MT is packed in the same
G                  quality bags as the 440.800 MT; and thereby ordering its
                   rebagging.
                                      CONFIDENTIAL
              3. The Court will examine all associated issues, and pin point
              responsibility for lapses if any.
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   UNION OF INDIA AND OTHERS v. LT. GEN. (RETD.) S.K.                           963
                 SAHNI [B.R. GAVAI, J.]

        4. The proceedings duly completed will be submitted personally          A
        to ADGST (SM) by 19 Apr 2005.”
        37. It could thus be seen that the Court of Inquiry was directed to
examine all associated issues and pin point responsibility for lapses, if
any. It is thus clear that the finding that the respondent had failed to take
cognizance of the complaint and direct an inquiry with that regard, is          B
contrary to the material placed on record.
      38. It is further to be noted that the GCM has itself, in its order
dated 18th February 2011, come to a conclusion that 560.727.380 Metric
Tons of Dal Masur Whole was declared gone bad within warranty period
for which recoveries were made from M/s GRAINFED.                               C
       39. That leaves us with the third charge with regard to the relaxation
being granted to M/s PUNSUP Limited and M/s MMTC Limited in
acceptance of tender dated 26th June 2005, vide which 350-400 grains
per 100 grams of Kabli Chana was permitted on price reduction of 0.5%
instead of 300-350 grains per 100 grams. It is to be noted that, leave          D
apart the respondent or anyone else gaining from the said relaxation,
there is a specific finding that on account of the decision of reducing
0.5% contract amount for such a relaxation, there has been a benefit to
the public exchequer. It will be relevant to refer to the finding of the
learned AFT in the case of Brig P.S. Gill (supra):
                                                                                E
        “There is no dispute on the point that DGST was the competent
        authority for making relaxation in the specification. There is also
        ample evidence that the DGST being competent authority
        permitted to despatch 400 grains per 100 gms. in the place of
        300-350 grains per 100 gms. DGST also appears to have made
        reduction of 0.5% from the contract amount, in that the                 F
        Government money to the tune of Rs.7,57,480.16 was saved in
        the matter of supplier M/s. Punjab State Civil Supplies
        Corporation Ltd pertaining to Charge Nos. 3 and 4. Similarly,
        within his powers, he granted relaxation to M/s. MMTC to the
        tune of Rs.4,48,050.00.”                                                G
      40. It could thus be seen that the learned AFT has specifically
come to a finding that on account of such decision, public money to
the tune of Rs.7,57,480.16 was saved in the case of supplier
M/s Punjab State Civil Supplies Corporation Ltd. Similarly, an amount
                                                                                H
964             SUPREME COURT REPORTS                             [2022] 16 S.C.R.


A     of Rs.4,48,050/- was saved in the case of relaxation granted to
      M/s MMTC Limited.
             41. It is not the case of the appellants that the Kabli Chana so
      supplied was of inferior quality or not as per the standards. The only
      allegation is that the relaxation which was granted was with regard to
B     number of grains that every 100 grams should contain. On the contrary,
      on account of reduction in price, there has been a substantial saving to
      the public exchequer, leave aside any pecuniary gain to the supplier. As
      a matter of fact, even the GCM in paragraph (26) held that the respondent
      was entitled to benefit of doubt with regard to his intent but has found
      that the said act was prejudicial to good order and military discipline.
C
            42. In any case, it is to be noted that clause 6 (a)(iv) in the tender
      inquiry of the APO, which has been in vogue for decades, permitted the
      same to be done. It will be relevant to refer the same, which reads thus:
               “6 (a)(iv). When an appeal is preferred by the supplier against
D              the decision of the inspecting officer the final finding of the
               appellate authority viz. QMG’s Branch, ST-7/8 will automatically
               supersede the original report of the Inspecting Officer
               irrespective of the fact whether the said inspecting officer
               recommended the consignment to be accepted subject to quality
               allowance price reduction etc. In the event of any supplies being
E              found not conforming to the prescribed specification but being
               considered of acceptable quality the Chief Director of Purchase
               may, at his sole discretion, accept the supplies subject to such
               reduction in price as he considers reasonable, in the light of the
               defects found in the supplies or the quality of the supplies
F              accepted. In case, the reduction in price is up to 5%, the
               consignment will be accepted without any reference to the
               contractor for acceptance of the price reduction and the
               contractor will not raise any objection thereto. However, if any
               consignment is acceptable on price reduction over 5% the
               consent of the contractor will be obtained before acceptance of
G              supplies.”
             43. It could thus be seen that the finding in that regard, in our
      view, is also not sustainable. It will also be apposite to refer to the following
      observations of the learned AFT in the impugned order:

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  UNION OF INDIA AND OTHERS v. LT. GEN. (RETD.) S.K.                         965
                SAHNI [B.R. GAVAI, J.]

        “38. However, we are of the opinion that though these charges        A
        stand proved which show that he had failed to perform the duties
        of the post of which he was assigned the duties and had done
        such acts prejudicial to good order and military discipline and he
        cannot escape the responsibilities in this regard. It is true that
        his acts were prejudicial to army discipline and he had committed
                                                                             B
        such acts with intent to defraud but it cannot be said that he
        actually committed fraud or did any such act which resulted in
        actual loss or wrongful gain to any person though his acts lead
        to an inference that attempts were made to cause a wrongful
        gain and, therefore, he cannot escape his liabilities.”
       44. It could thus clearly be seen that the learned AFT has come to    C
a conclusion that it cannot be said that the respondent has actually
committed fraud or did any such act, which resulted in actual loss or
wrongful gain to any person. However, in the same breath, the learned
AFT observes that the acts lead to an inference that attempts were
made to cause a wrongful gain, and therefore, the respondent cannot          D
escape his liabilities. Observing this, the learned AFT comes to a finding
that the offence under Section 52(f) of the Army Act, 1950, which reads
thus, was made out against the respondent:
        “52. Offences in respect of property.-
        …..                                                                  E

        (f). does any other thing with intent to defraud, or to cause
        wrongful gain to one person or wrongful loss to another person.”
       45. We are afraid as to whether such a finding would be sustainable
in law. The learned AFT has specifically come to a finding that the          F
respondent has not committed any fraud or did not commit any act which
resulted in actual loss or wrongful gain to any person. We are unable to
appreciate as to on what basis the learned AFT comes to a conclusion
that the acts lead to an inference that the attempts were made to cause
a wrongful gain. The finding as recorded by the learned AFT is totally
contrary to the material placed on record.                                   G
      46. We, therefore, find that the orders passed by the learned AFT
as well as the GCM are not sustainable in law. The appeal of the
appellants deserves to be dismissed and the Transferred Case (Criminal)

                                                                             H
966                SUPREME COURT REPORTS                        [2022] 16 S.C.R.


A     No. 1 of 2017 filed by the petitioner (respondent in Criminal Appeal No.
      2169 of 2014) be allowed.
              47. In the result, we pass the following order:
          A. Criminal Appeal No. 2169 of 2014:
B          (i)     Criminal Appeal No. 2169 of 2014 filed by the appellants is
                    dismissed.
          B. Transferred Case (Criminal) No. 1 of 2017:
           (i)      Transferred Case (Criminal) No. 1 of 2017 filed by the
                    petitioner (respondent in Criminal Appeal No. 2169 of 2014)
C                   is allowed;
           (ii)     The order dated 18th February 2011 passed by the GCM
                    holding the petitioner guilty and imposing penalty on him
                    and the impugned order dated 10th October 2013, passed by
                    the learned AFT are quashed and set aside;
D
           (iii)    The petitioner is acquitted of all the charges levelled
                    against him; and
           (iv)     The petitioner would be entitled to all pensionary and
                    consequential benefits in accordance with law. The arrears
                    of such benefits shall be computed and paid to the petitioner
E                   within a period of three months from the date of this judgment.

      Devika Gujral and Amarendra Kumar                          Appeal dismissed and
      (Assisted by : Rituja Chouksey, LCRA)                  Transferred Case allowed.


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