Kerala High Court
Sreeraj G vs State Of Kerala on 23 July, 2025
2025:KER:54490
Crl.M.C.No.5278/2025 1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE A. BADHARUDEEN
WEDNESDAY, THE 23RD DAY OF JULY 2025 / 1ST SRAVANA, 1947
CRL.MC NO. 5278 OF 2025
CRIME NO.4/2024 OF VACB, THIRUVANANTHAPURAM, Thiruvananthapuram
PETITIONER/3RD ACCUSED:
SREERAJ G,
AGED 43 YEARS,
S/O GOPALAKRISHNA PILLAI, RESIDING AT
SREEKRISHNAVILASAM NEDUVATHOOR NEELASWERAM P.O
KOTTARAKARA KOLLAM, PIN - 691506.
BY ADVS.
SRI.K.K.VIJAYAN
SRI.G.RANJU MOHAN
SHRI.SREE HARI L.K.
SMT.THEERTHA NAIR A.P.
SRI.B.VINOTH
RESPONDENTS/RESPONDENT/COMPLAINANT:
1 STATE OF KERALA
REPRESENTED BY PUBLIC PROSECUTOR,
HIGH COURT OF KERALA, PIN - 682031.
2 SUPERINTENDENT OF POLICE
VIGILANCE AND ANTI-CORRUPTION BUREAU,
SPECIAL INVESTIGATION UNIT-1,
THIRUVANANTHAPURAM, PIN - 695033.
SPECIAL PUBLIC PROSECUTOR FOR VACB SRI RAJESH.A,
SENIOR PUBLIC PROSECUTOR SMT. REKHA.S FOR VACB.
THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON
16.07.2025, THE COURT ON 23.07.2025 PASSED THE FOLLOWING:
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Crl.M.C.No.5278/2025 2
"C.R"
A. BADHARUDEEN, J.
================================
Crl.M.C No.5278 of 2025-H
================================
Dated this the 22nd day of July, 2025
ORDER
Crl.M.C.No.5278 of 2025 has been filed by the 3 rd accused in
Crime No.4 of 2024 of VACB, Thiruvananthapuram and he seeks
quashment of the said FIR.
2. Heard the learned counsel for the petitioner and the
learned Public Prosecutor appearing for the VACB as well as the State of
Kerala.
3. This crime was registered alleging commission of
offences punishable under Sections 7 and 13(1)(o) of Prevention of
Corruption (Amendment Act 2018) [`PC (Amendment) Act‘ for short
hereafter] as well as under Sections 409 and 120B of the Indian Penal
Code (`IPC‘ for short) after getting prior approval under Section17A of the
PC (Amendment) Act, by accused Nos.1 to 3. The case of the prosecution
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is that High Range Rural Development Society (`HRDS’ for short) is a
charitable society registered under the Travancore-Cochin Literary,
Scientific and Charitable Societies Registration Act District Registrar,
Idukki, and the project implementing agency of DDU-GKY and
Yuvakerala projects which are the Central-State Governments sponsored
schemes intended to provide skill development training courses for poor
youth and works for the public interest, where the 1st accused is the
Secretary, the 2nd accused is an employee and the 3rd accused, the petitioner
herein, is an employee of the State Kudumbashree Mission, holding the
official position of State Program Manager (Finance) and he is the first
responsible officer for preventing the misuse of the public funds provided
to the HRDS. The specific allegation of the prosecution is that all the
three accused entered into a criminal conspiracy and abused their official
position, thereby misappropriated Government funds allocated by the State
Kudumbashree Mission to HRDS as the PIA (Project Implementing
Agency) for the implementation of three Government projects, amounting
to Rs.5,63,24,597/-. Out of this amount the 1st accused misappropriated
Rs.89,70,000/- (Rupees Eighty nine lakh and seventy thousand only), the
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2nd accused misappropriated an amount of Rs.77,83,000/-. Both of them
misappropriated the fund under the pretext of withdrawing salary for the
period from March, 2018 to April, 2023. Furthermore, some employees of
HRDS, along with A1 and A2 collectively misappropriated
Rs.3,74,56,200/- from the total fund of Rs.5,63,24,597/-, under the guise
of salaries, despite the fund being specifically allocated for the
implementation of giving skill development courses and placement
assistance to poor youth of society. The 3rd accused, who has the
responsibility to prevent this defalcation and report the same to the higher
authorities, failed to take any action and instead assisted the 1 st and 2nd
accused , thereby causing huge financial loss to the Government.
4. While canvassing quashment of the FIR, it is submitted
by the learned counsel for the petitioner that the Government of India
Ministry of Rural Development had approved the action plan of
Kudumbashree (State Poverty Eradication Mission) for training and
placement of a fairly large number of candidates, whereby Kudumbashree
(State Poverty Eradication Mission) invited applications for implementing
the projects, wherein categories like Logistics, Retail, Health Care
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Tourism etc. were area for imparting training by issuing trade certificate in
skills like Ware House Pickers, Food and Beverages service, Geriatric
Assistant etc. The petitioner herein is the State Program Manager
(Finance) in Kudumbashree (State Poverty Eradication Mission) under the
Government of Kerala. The Project Implanting Agency, High Range
Rural Development Society was granted sanction to carry out the training
and to certify the candidates under three separate and distinct project by
three separate sanction orders. Thereafter, Memorandum of
Understanding was executed in between Kudumbashree through its
Executive Director with the Secretary of High Range Rural Development
Society and as per Annexure C proceedings High Range Rural
Development Society is shown as item No.4 with the total project
sanctioned cost of Rs.3,82,98,636/- and the first installment sanctioned
was Rs.91,37,159/-. On 15.01.2019, the HRDS requested release of the
second instalment payable under the project by Kudumbashree and on
29.03.2019, the Executive Director of Kudumbashree issued proceedings
to release the second instalment to the High Range Rural Development
Society and copy of the same is Annexure D. According to the learned
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counsel for the petitioner, thereafter, subsequent installments also were
released. The petitioner is the last in the hierarchy concerning the release
of funds to any entity by Kudumbashree. The applications from PIA for
release of funds addressed to the head of Kudumbashree (Executive
Direction) is processed at 5 different levels, starting from Director
Finance, Chief Finance Officer, Accounts Officer, Chief Operating Officer
and lastly to the petitioner. Apart from that, the petitioner’s prime
contention is that the amount alleged to be misappropriated is the amount
towards the salary drawn from the fund and the petitioner, who is at the
inferior tier of the hierarchy, has nothing to do with the said allegation.
Therefore, none of the offences would attract against the petitioner.
5. In the statement filed by the Investigating Officer, all the
grounds raised to quash the FIR against the 3 rd accused were objected and
the prime contention raised by the Vigilance and Anti Corruption Bureau
can be seen from paragraphs 6 to 14. The same are extracted hereunder:
“6. It is submitted that as per the order of
Executive Director Kudumbashree No
KSHO/M-SKILLS/7975/36/2017 granted permission to conduct skill
development course to HRDS for total number of 474 students and
also sanctioned an amount of Rs38292747/-. Subsequently the State
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KudumbaShree Mission had given three installments to the PIA( a
total sum of Rs3,22,02,607/-) for conducting skill development
training for 474 students. From this amount, Al and Secretary of
HRDS Sri.AjiKrishnan took Rs50,60,000/-(Fifty Lakh Thousand)
from Government grant in the guise of salary in his Sixty capacity
as Project Director from 1st April 2018 to 31st March 2023.
Similarly, second accused Sri. Praise Pious, an employee of HRDS
got Rs 45,38,000/-(Forty Five Lakh Thirty Eight Thousand) in guise
of salary in his capacity as project head ard from1st April 2018 to
31st March 2023. Accused 1 and 2 Ytogether took a total of
Rs95,98,000/- (Ninety Five Lakh Ninety Eight Thousand) from the
Government fund. Some of the other employees of HRDS and
associates of Al also had been given with salary from Government
grant and all employees of HRDS along with Al and A2 had took a
total amount of Rs2, 16,44,250/- (Two Crores Sixteen Lakh Forty-
Four Thousand Two Hundred and fifty) from the government grant
allotted to HRDS which was allotted for conducting skill training
program and placement assistance to 474 students.
7. It is submitted that as per the order
of Executive Director KudumbaShree
No.KSHO/M-SKILLS/7934/Skills/2019 permission has been granted
to conduct skill development course to HRDS for a total number of
430 students and also sanctioned an amount of Rs2,7921674/-.
Subsequently State KudumbaShree Mission had given two
installments as total sum of Rs1,27,00408/- for conducting skill
development training program for 430 students to the PIA. From
this amount, Al and Secretary of HRDS Sri. AjiKrishnan took
Rs22,40000/-(Twenty two lakhs and forty thousand) from the
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Government grant in guise of salary as Project Director from 1st
November 2020 to 31st March 2023. Similarly, Second Accused Sri.
Praise Pious, an employee of HRDS got Rs 1905000/-(Nineteen
lakh five thousand) in the guise of salary as project head from 1st
November 2020 to 31st March 2023. Accused 1 and 2 together took
Rs 41,45000/- (Forty one lakh forty five thousand) in total from the
Government fund. Some of the other employees of HRDS and
associates of Al also had been given with a salary from Government
grant and all employees of HRDS along with Al and A2 had took
total amount of Rs 7742295/- (Twenty seven lakh forty two thousand
and two Ninety five Rupees) from the Government grant allotted to
HRDS which was allotted for conducting skill training program and
placement assistance to 490 students.
8. It is submitted that as per the order of
the Executive Director KudumbaShree
No.KSHO/M-SKILLS/2661/YUVA KERALAM/2020 permission has
been granted to conduct skill development course to HRDS for a
total number of 393 students and also sanctioned an amount of
Rs2,24,40213,/-. Subsequently State KudumbaShree Mission had
given two installments (a total sum of Rs1,10,53,189/- for
conducting skill development training to 393 students to the PIA.
From this amount Al and Secretary of HRDS Sri.Aji Krishnan took
Rs16,70,000/-(Sixteen lakh and seventy thousand) from the
Government grant as in the guise of salary in his capacity as
Project Director from 1st April 2021 to 31st March 2023. Similarly,
Second Accused Sri. Praise Pious, an employee of HRDS got
Rs13,40000/-(Thirteen Lakh and Forty Thousand) in the guise of
salary in his capacity of project head from 1st April 2021 to 31st
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March 2023. Accused 1 and 2 together took Rs 30,10000/- (Thirty
Lakh and Ten Thousand) in total from the Government fund. Some
other employees of HRDS and associates of Al also got salary from
the Government grant and all employees of HRDS along with Al
and A2 had took total amount of Rs 80,69655/- (Eighty Lakh Sixty
Nine Thousand Six hundred and fifty five) from the government
grant allotted to HRDS which was allotted for conducting skill
training program and placement assistance to 393 students.
9. It is submitted that Al and Secretary
of HRDS Sri. AjiKrishnan took Rs89,70000/-(Eighty nine lakh and
seventy thousand rupees) fund from the three Government Projects
in the guise of salary as Project Director. Similarly, Second
Accused Sri.Praise Pious, an employee of HRDS took Rs77,83000/-
(Seventy seven Lakh and eighty three thousand rupees) from the
Government fund in the guise of salary as project head. During the
investigation it is found that State KudumbaShree Mission had
given Rs5,63,24597/- (Five crore sixty three lakh twenty four
thousand five hundred and ninety seven Rupees) to HRDS the PIA
for conducting three projects of Skill development course and
placement assistance to poor youth in the State. The accused A1, A2
and some associates of Al took a total amount of Rs 3,7456200/-
from the Government grant allotted for implementing the said
Projects.
10. It is also submitted that petitioner
and 3rd accused in the Crl MC stated that the Project Director and
Project Head of the Project implementing agency (PIA) are entitled
for salary from out of the allotted fund as per the chapter 3.3A of
Standard Operating Procedure. The said contention of the
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petitioner is not correct. In fact chapter 3.3A of SOP is a standard
form which describes about the PIA’S project execution readiness
assessment which included in the list of standard forms in chapter
3. Standard form 3.3A is intended to describe the organization set
up and responsible persons of PIA. (R2. A)
It is submitted that during the Investigation, the statement of one
Sri. Das Vincent (State Program Manager PIA Co-Ordination and
Development) was recorded and he clearly stated that form No
SF3.3A is only intended to show the readiness of PIA for
implementing the project. It does not describe the salary eligibility
of any of the employees of PIA from the project fund. It only
describes PIA’s name and address, name of organization
management team etc. He also pointed out that Chapter 8.5A of
SOP describes that only trainers, master trainers, Q-team members
of PIA are entitled to salary from the project fund allotted to PIA
and nowhere else in the SOP does not mention about the entitlement
for the project head and project director of the PIA (R2.B).
11. It is submitted that Chapter 8.5A of
SOP Volume 2 describes the instructions for payment of salaries to
trainers, master trainers and PIA Q-team members. The salary to
be paid to the trainers, master trainers and PIA Q-team members is
completely within the purview of PIA organization. PIA may pay
over and above of the salary specified in the latest terms of
employment based on the performance parameter decided by the
competent authority of the PIA. The same may be booked under the
project. Here it is clear that only trainers, master trainers, Q-team
members of, PIA are only entitled to salary from the project fund
(R2.C) as mentioned in the SOP.
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12. It is submitted that neither in chapter
3.3A nor in chapter 8.5A or in the other provisions of the SOP the
salary relating to Project Director, Project Head or any other
members of PIA other than trainers, master trainers, Q-team
members of PIA from project fund is mentioned.
13. It is submitted that during the
investigation statement of Sri. Pradeep Kumar.R (Chief operating
officer) was recorded. As per his statement Sreeraj.G, accused A3 is
the State program manager (Finance) of State Kudumba Shree
Mission and Sreeraj.G was entrusted with the duty/responsibility to
verify all financial statements and audit report of PIA in connection
with implementation of DDU-GKY and Yuva Keralam Projects. A3
Sreeraj.G had never reported the matter that Al Ajikrishnan and A2
Praise pious and other employees of HRDS is withdrawing huge
amount of money in the guise of salaries from the Government grant
allotted to PIA. (R2.D)
14. It is submitted that during the
Investigation it is found that State KudumaShree Mission allotted Rs
5,63,24597/- to The High Range Rural Development Society
(HRDS) as PIA for conducting skill development courses and
thereafter placement assistance to Poor Youth of the State under
three different projects. But A1, A2 and some employees of HRDS
misappropriated the major portion of the Government fund in the
guise of salary. As a result of the criminal conspiracy with Al and
A2 Petitioner in this Crl.MC and A3 in VC 04/2024/SIU-1
Sreeraj.G did not take any steps to prevent misappropriation of
Government fund by other accused persons.”
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6. The Apex Court in [(2012) 10 SCC 303], Gian Singh v.
State of Punjab, has dealt with the powers of the High Court under
Section 482 r/w Section 320 of the Cr.P.C and the consequent authority of
the High Court to quash criminal proceedings, FIRs or complaints under
its inherent jurisdiction as in contradistinction to the power with criminal
courts for compounding offenses under Section 320 of the CrPC. In this
case, the High Court observed that quashing was dependent on the unique
circumstances of each case and though no fixed category can be established,
heinous and severe offences should not be quashed even if the parties have
settled. Regarding exercise of the said power by the High Court, the Apex
Court stated in paragraphs 60 and 61 as under:
“60. … criminal cases having overwhelmingly and
predominantly civil flavour stand on a different footing for the
purpose of quashing particularly the offences arising from
commercial, financial, mercantile, civil partnership or such like
transactions or the offences arising out of matrimony related to dowry
etc or the family disputes where the wrong is basically private or
personal in nature and the parties have resolved their entire dispute.
In this category of cases high court may quash criminal proceedings if
in its view because of compromise between the offender and victim the
possibility of conviction is remote and bleak and continuation of
criminal case would put accused to great oppression and prejudice
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Crl.M.C.No.5278/2025 13and extreme injustice would be caused to him by not quashing the
criminal case. Despite full and complete settlement and compromise
with the victim. In other words, the high Court must consider whether
it would be unfair or contrary to the interest of justice to continue
with the criminal proceedings or continuation of the criminal
proceeding would tantamount to abuse of process of law…
61. …….. The offences of mental depravity under the Penal
Code, 1860 or offences of moral turpitude under special statutes like
Prevention of Corruption Act or the offences committed by the public
servants while working in that capacity, the settlement between
offender and victim can have no legal sanction at all.”
7. The Apex Court in [2017 SCC OnLine SC 1189], Aahir
v. State of Gujrat, observed that, economic offenses involving financial
and economic well-being of the state have implications which lie beyond
the domain of a mere dispute between the private disputants. The High
Court would be justified in declining to quash where the offender is
involved in an activity akin to a financial or economic fraud or
misdemeanour. The consequences of the act complained of upon the
financial or economic system will weigh in the balance. Thus, it can be
concluded that economic offences by their very nature stand on a different
footing than other offences and have wider ramifications. They constitute a
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class apart. Economic offences affect the economy of the country as a
whole and pose a serious threat to the financial health of the country. If
such offences are viewed lightly, the confidence and trust of the public
will be shaken.
8. The Apex Court in [2015 SCC OnLine SC 815], State v. R
Vasanthi Stanley declined to quash the proceedings in a case involving
alleged abuse of the financial system. It was observed as under:
“15. …….. A grave criminal offence or serious economic
offence or for that matter the offence that has the potentiality to create
a dent in the financial health of the institutions is not to be quashed on
the ground that there is delay in trial or the principle that when the
matter has been settled it should be quashed to avoid the head on the
system. That can never be an acceptable principle or parameter, for
that would amount to destroying stem cells of law and order in many a
realm and further strengthen the marrow of unscrupulous litigations.
Such a situation should never be conceived of.”
9. In a latest decision of the Apex Court reported in [2024
SCC OnLine SC 3823], Anil Bhavarlal Jain & Anr. v. State of
Maharashtra & Ors., the Apex Court considered an appeal where the
High Court was not inclined to quash the FIR alleging commission of
offences punishable under Sections 409, 420 and 120B of IPC as well as
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Section 13(2) r/w 13(1)(d) of the PC Act and after referring earlier
decisions, the Apex Court held that quashing of offences under the PC Act
would have a grave and substantial impact not just on the parties involved,
but also on the society at large. As if the High Court committed no error in
declining the exercise of its inherent powers in the said case, to quash the
FIR.
10. Thus the law is well settled that while quashing the FIR
registered for the offences under the PC Act, liberal view is not the
sanction of law. When the materials would, prima facie, show or
otherwise the materials would suggest something showing economic abuse
by way of misappropriation, interferrence with the investigation to find out
the truth of the allegation by quashing the FIR could not be resorted to as a
routine manner.
11. While appraising the contentions raised by the petitioner
as well as the learned Public Prosecutor along with the report filed by the
Investigating Officer, the prosecution case is that accused Nos.1 and 2
together obtained a total sum of Rs.2,16,44,250/- (Rupees Two crores
sixteen lakh forty four thousand two hundred and fifty only) from the
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Government grant allotted to HRDS which was allotted specifically for
conducting skill training program and placement assistance to 474
students. The allegation against the petitioner herein is that he, being the
State Program Manager (Finance) of State Kudumbashree Mission, and
one Sreeraj.G, were entrusted with the duty and responsibility to verify all
financial statements and audit report of PIA in connection with
implementation of DDU-GKY and Yuva Keralam Projects, after having
knowledge regarding the money obtained by the 1 st and 2nd accused, never
reported the matter to the higher authorities to find out the
misappropriation. In fact, the allegation against the accused including the
petitioner would require effective investigation. Going by the allegations,
it could not be said that the FIR sought to be quashed by the petitioner,
which would make specific allegations against him in the matter where
crores of rupees alleged to be misappropriated, cannot be considered, as
the allegation raised are against all the accused, including the petitioner
and hence the investigation in this matter should proceed further. In view
of the above, the prayer in the petition is liable to fail.
In the result, this petition is dismissed with direction to the
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petitioner/3rd accused to co-operate with the investigation.
Sd/-
(A. BADHARUDEEN, JUDGE)
rtr/
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APPENDIX OF CRL.MC 5278/2025
PETITIONER’s ANNEXURES
Annexure A COPY OF FIRST INFORMATION REPORT IN CRIME NO:
04/2024/SIU-1.
Annexure B COPY OF THE SANCTION ORDER
KSHO/M-SKILLS/7975/36/2017, DATED 24TH MARCH
2018.
Annexure C COPY OF THE PROCEEDINGS ORDER
KSHO/M-SKILLS/7975/36/2017 DATED 28TH MARCH
2018 ISSUED BY THE EXECUTIVE DIRECTOR.
Annexure D COPY OF THE PROCEEDINGS ORDER
KSHO/M-SKILLS/7975/36/2017 DATED 29TH MARCH
2019.
Annexure E COPY OF THE PROCEEDINGS ORDER
KSHO/M-SKILLS/7975/36/2017 DATED 15TH
DECEMBER 2020.
Annexure F COPY OF THE REVISED SANCTION ORDER KSHO/M-
SKILLS/7975/36/2017 DATED 11TH OCTOBER 2021.
Annexure G COPY OF THE SANCTION ORDER NO: KSHO/M-
SKILLS/7934/DDUGKY-II/40/2019 DATED 15TH JUNE
2020.
Annexure H COPY OF THE PROCEEDINGS ORDER NO: 7934/M-
SKILLS/2019/KSHO DATED 8TH AUGUST 2020 ISSUED
BY THE EXECUTIVE DIRECTOR.
Annexure I COPY OF THE REVISED SANCTION ORDER KSHO/M-
SKILLS/7934/DDUGKY-II/40/2019 DATED 17TH
AUGUST 2022.
Annexure J COPY OF THE PROCEEDINGS ORDER
KSHO/M-SKILLS/7934/DDUGKY-II/40/2019 DATED
12TH DECEMBER 2022.
Annexure K COPY OF THE PROCEEDINGS ORDER NO:
I/1155551/2024 DATED 5TH JUNE 2024.
Annexure L COPY OF THE SANCTION ORDER
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Crl.M.C.No.5278/2025 19
KSHO/M-SKILLS/2661/YUVA KERALAM/10/2020 DATED
20TH MARCH 2020.
Annexure M COPY OF THE PROCEEDINGS ORDER
KSHO/M-SKILLS/2661/YUVA KERALAM/10/2020
ISSUED BY THE EXECUTIVE DIRECTOR DATED 20TH
MARCH 2020.
Annexure N COPY OF THE PROCEEDINGS ORDER
KSHO/M-SKILLS/2661/YUVA KERALAM/ 10/2020
DATED 6TH AUGUST 2022.
Annexure O COPY OF THE REVISED SANCTION ORDER KSHO/M-
SKILLS/2661/YUVA KERALAM/ 10/2020 DATED 05TH
JANUARY 2023.
Annexure P COPY OF THE PROCEEDINGS ORDER NO:
I/96516/2023 DATED 14TH JULY 2023.
Annexure Q COPY OF THE RELEVANT PORTION OF STANDARD OF
PROCEDURE PART II CHAPTER 8.5.
Annexure R COPY OF THE RELEVANT PORTION OF STANDARD
OPERATING PROCEDURE CONTAINED IN CHAPTER 3
AND 3.3A PART I
Annexure S COPY OF THE RELEVANT PAGE OF PROGRAMME
GUIDELINES ISSUED BY GOVERNMENT OF INDIA,
CONTAINED IN CHAPTER 5.