Court holds that mere departmental irregularities cannot establish criminal liability against contractors; Special Judge cannot compel police to file charge-sheet without fresh evidence
Indore, September 21, 2026 - In a significant judgment delivered on September 21, 2026, the Madhya Pradesh High Court (Division Bench, Indore) in the case of M/s Geeta Infotech Sales and Service and others versus the State of Madhya Pradesh set aside the order of the Special Judge (Prevention of Corruption Act), Ujjain, rejecting the closure report in a procurement irregularity case. The Court held that repeated rejection of closure reports by the Special Judge without any new material or evidence compelling further investigation was legally unsustainable and quashed the consequential proceedings.
The case arose from allegations of irregularities in the procurement process of materials worth Rs. 96.23 lakhs by Shri S.M. Kumbhare, then Deputy Director, Regional Skill Development Department, Ujjain. It was alleged that purchases were made through limited tenders from firms including the petitioners, violating rules for open tenders and causing financial loss to the government. The Economic Offences Wing of Bhopal conducted investigations and registered a case under Sections 420 (cheating), 120B (criminal conspiracy) of the Indian Penal Code, and Sections 13(1)(d), 13(2) of the Prevention of Corruption Act.
On completion of the investigation, closure reports were submitted three times, but the Special Judge refused to accept them and directed further investigation each time. The petitioners challenged this rejection before the High Court by way of criminal revision under Sections 438 and 442 of the Bharatiya Nagarik Suraksha Sanhita, 2023.
The High Court observed that while the Magistrate or Special Judge is not bound to accept the police's final report or closure report, the Court cannot compel the Investigating Agency to form a particular opinion or file a charge-sheet without fresh material. Repeated rejection of closure reports on substantially the same grounds without additional evidence was held to be contrary to the law.
Crucially, the Court emphasized that mere departmental or procedural irregularities in procurement do not ipso facto establish criminal liability of contractors or suppliers. Criminal liability is personal and must rest on specific material showing dishonest intention, conscious participation, or collusion. The judgment clarified that for an offence under Section 420 IPC (cheating), there must be evidence of fraudulent or dishonest intention from the very inception of the transaction. Similarly, for criminal conspiracy under Section 120B IPC, there must be material proving an agreement to commit an unlawful act or achieve a lawful object by unlawful means, which was absent in this case.
The Court also distinguished between administrative lapses and criminal misconduct. It held that if procurement rules were violated, the responsibility primarily lies with the government officials tasked with compliance, not automatically with the suppliers or contractors. The material before the Court did not show that the petitioners had knowingly engaged in any illegal act or caused wrongful loss or gain.
Consequently, the Court set aside the Special Judge's order dated February 12, 2026, and quashed all proceedings arising solely from that order. The judgment underlines judicial restraint in criminal proceedings, cautioning courts against compelling Investigating Agencies to pursue cases without adequate evidence.
This ruling provides clarity on the limits of judicial intervention in closure reports and reinforces the principle that criminal prosecution must be based on specific, cogent material indicating culpability beyond mere procedural irregularities.
Bottom Line:
Closure report - Special Judge cannot repeatedly reject closure report and compel Investigating Agency to form a particular opinion or file charge-sheet - Mere departmental/procurement irregularities do not by themselves establish offences of cheating, conspiracy or corruption against contractors/suppliers in absence of specific material showing dishonest intention, agreement or conscious participation.
Statutory provision(s):
Sections 420, 120B of Indian Penal Code, 1860; Sections 13(1)(d), 13(2) of Prevention of Corruption Act, 1988; Sections 438, 442 of Bharatiya Nagarik Suraksha Sanhita, 2023
