The Kerala High Court on Friday held that no prosecution sanction under the Prevention of Corruption Act is required to proceed against the accused persons in the Rs 15.85 crore SNDP Yogam microfinance fraud case. The interim order was passed by Justice A. Badharudeen while considering two petitions filed in 2020 seeking the appointment of a Special Investigation Team to probe the crime registered by the Vigilance and Anti-Corruption Bureau in 2016.
Does the Prevention of Corruption Act require sanction to prosecute office-bearers of SNDP Yogam and former KSBCDC officials in this microfinance fraud case?
The court ruled that sanction is not required because SNDP Yogam was not a nodal agency of the Backward Classes Development Department and its office-bearers do not fall under the definition of 'public servant' under the Prevention of Corruption Act. The loans were sanctioned by KSBCDC to SNDP in its capacity as an NGO.
The case pertains to allegations that officers of the SNDP Yogam and former Managing Directors of the Kerala State Backward Classes Development Corporation Ltd (KSBCDC) were involved in a fraudulent scheme involving microfinance loans. The Vigilance and Anti-Corruption Bureau registered the crime in 2016. The petitions before the High Court sought the appointment of a Special Investigation Team headed by an efficient officer to investigate the matter.
The central legal controversy revolved around the applicability of Section 19 of the Prevention of Corruption Act, which mandates prior sanction for the prosecution of public servants. The State government, represented by State Attorney Anoop V. Nair, maintained that sanction was not required. The State Attorney submitted that SNDP Yogam was not a nodal agency of the Backward Classes Development Department (BCDD) and therefore would not attract the definition of 'public servant' under the Act. It was further argued that the loans for the microfinance scheme were sanctioned by KSBCDC to SNDP Yogam in its capacity as a Non-Governmental Organisation, permitting it to disburse the amounts to various beneficiaries.
Conversely, counsel for the petitioners, D. Anil Kumar, contended that sanction to prosecute was mandatory in the present case. The court had previously reserved its verdict on this specific question after hearing detailed arguments in September.
Procedural Background and Conflicting Government Stands
The proceedings revealed a divergence of opinion within the state machinery regarding the requirement of sanction. On an earlier occasion, the court orally criticised the perceived differences between the State government and its law officers. The BCDD Secretary had reported that sanction was not required, while the Special Public Prosecutor for Vigilance had initially taken the stand that sanction was necessary. Subsequently, the State Attorney aligned with the BCDD Secretary's position, arguing that no sanction was needed.
Justice Badharudeen pronounced the interim order in open court, holding that no prosecution sanction is required. The matter has been posted for further consideration on November 17.
Aspect | State Government / State Attorney Stand | Petitioners' Counsel Stand |
|---|---|---|
Requirement of Sanction | Not required | Required |
Status of SNDP Yogam | Not a nodal agency of BCDD; NGO capacity | Implied public servant status |
Nature of Loan Transaction | KSBCDC to SNDP as NGO for disbursement | Alleged misuse of public funds |
The interim ruling clears a significant procedural hurdle for the Vigilance and Anti-Corruption Bureau to proceed with the prosecution of the accused, including Vellappally Natesan and the former Managing Directors of KSBCDC, without awaiting governmental sanction under the Prevention of Corruption Act. The court will continue hearing the petitions for the appointment of a Special Investigation Team on the next date.