Judgment :- The Sarpanch of Sanganonipally Gram Panchayat, Koilkonda Mandal, Mahabubnagar District, the third respondent herein, allegedly committed irregularities while in office, involving misappropriation of funds. The petitioner, a former Mandal Parishad Territorial Constituency member of Koilkonda Mandal, Mahabubnagar District, made a complaint in this regard to the District Collector, Mahabubnagar. Accordingly, action was initiated against the third respondent for recovery of the amounts said to have been misappropriated and a criminal case was also launched against him in Crime No.50/2007 under Section 409 IPC on the file of the Koilkonda Police Station. Aggrieved by the inaction thereafter in prosecuting the third respondent, the petitioner filed Writ Petition No.4735 of 2008 before this Court. During the pendency thereof, G.O.Rt.No.398, Panchayat Raj and Rural Development (PTS.IIA) Department, dated 12.03.2008 was issued by the Government directing the District Collector, Mahabubnagar, to withdraw and set aside the criminal case against the third respondent. Thereupon, the District Collector, Mahabubnagar, issued proceedings dated 13.03.2008 withdrawing the criminal case. When the said orders were brought to the notice of this Court, Writ Petition No.4735 of 2008 was permitted to be withdrawn leaving it open to the petitioner to challenge the validity thereof. Hence this writ petition, calling in question G.O.Rt.No.396 dated 12.03.2008 and the consequential proceedings dated 13.03.2008 of the District Collector, Mahabubnagar District. It is the case of the petitioner that withdrawal of the criminal case against the third respondent is not in public interest as he had suffered a confirmed finding of misappropriation of public funds. The petitioner further contends that merely because the amount misappropriated was repaid by the third respondent, it would not have the effect of wiping out the criminal offence committed by him and therefore, the authorities ought not to have given him a clean chit by withdrawing the case. The District Collector, Mahabubnagar, stated in his counter that the Executive Engineer, Panchayat Raj Sub-Division, Mahabubnagar, submitted his enquiry report dated 16.11.2006 holding that the third respondent had committed misappropriation of SGRY (SC) rice allotted to the Gram Panchayats of Sanganonipally and Vinjamoor for construction of feeder channels to Vaddenna Cheruvu and Rallapadu Tank. It was his finding that the third respondent had misappropriated 93.75 quintals of rice valued at Rs.75,000/-from the work pertaining to Vaddenna Cheruvu and 187.50 quintals of rice valued at Rs.1,50,000/-in respect of the work relating to Rallapadu Tank. It was his finding that the third respondent had misappropriated 93.75 quintals of rice valued at Rs.75,000/-from the work pertaining to Vaddenna Cheruvu and 187.50 quintals of rice valued at Rs.1,50,000/-in respect of the work relating to Rallapadu Tank. These works were undertaken under a welfare scheme of the State. The third respondent was accordingly issued Show Cause Notice dated 30.12.2006 under Section 265 of the Andhra Pradesh Panchayat Raj Act, 1994 (for brevity, ‘the Act of 1994’) proposing recovery of the misappropriated amount of Rs.2,25,000/-. Simultaneously, the Divisional Panchayat Officer, Mahabubnagar, was authorized to file a criminal case against the third respondent under Section 409 IPC, pertaining to criminal breach of trust by a public servant. By proceedings dated 06.06.2007, final orders were passed under Section 265 of the Act of 1994 directing recovery of the misappropriated amount of Rs.2,25,000/-. Aggrieved thereby, the third respondent filed an appeal before the Government. The said appeal was dismissed vide G.O.Rt.No.1223, Panchayat Raj and Rural Development (PTS.IIA) Department, dated 30.08.2007. At that stage, the third respondent remitted the amount of Rs.2,25,000/-found due from him. Owing to this action of the third respondent, it is stated that further action under Section 409 IPC was dropped. The impugned proceedings embody the said decision. Heard Sri Nuthalapati Krishna Murthy, learned counsel for the petitioner, Sri M.Achutha Reddy, learned counsel for the third respondent and the learned Government Pleader for Panchayat Raj for the authorities. Perusal of G.O.Rt.No.396 dated 12.03.2008 reflects that the only reason cited for dropping the criminal case against the third respondent was the fact that departmental action had been closed against him. Basing on this circumstance, recourse was taken to G.O.Ms.No.54, Law (LA&J Homes-Court.B) Department, dated 30.03.2000, which empowered the District Collector to initiate action for withdrawal of the case. It is stated that the Government, after careful examination of the matter, directed the District Collector to withdraw and set aside the criminal case against the third respondent. It is pertinent to note that the finding of misappropriation of public funds levelled and held proved against the third respondent attained finality owing to the dismissal of his appeal and his subsequent action in voluntarily remitting the misappropriated amount. The departmental action initiated under Section 265 of the Act of 1994 was only for recovery of the amounts misappropriated. It is pertinent to note that the finding of misappropriation of public funds levelled and held proved against the third respondent attained finality owing to the dismissal of his appeal and his subsequent action in voluntarily remitting the misappropriated amount. The departmental action initiated under Section 265 of the Act of 1994 was only for recovery of the amounts misappropriated. That action necessarily had to be closed once the amount sought to be recovered was remitted by the third respondent. Therefore, closure of the departmental action under Section 265 of the Act of 1994 had no impact whatsoever on the criminal case. For reasons undisclosed, no disciplinary action under Section 249 of the Act of 1994 was initiated against the third respondent despite the seriousness of the issue. Be that as it may, it is a settled proposition that civil and criminal proceedings arising out of the same cause of action would run their independent course and merely because the civil liability had been settled, it would not automatically mean that the criminal proceeding should also be closed. This would be all the more so when the case involved a public servant misusing public monies. Being the elected Sarpanch of the village, the third respondent was a ‘public servant’ for the purposes of Section 21 IPC as per Section 258 of the Act of 1994. He therefore stood under a fiduciary obligation to properly utilize the funds and material resources allocated for implementing welfare schemes. Once that obligation was violated by him, the third respondent was liable to be prosecuted under Section 409 IPC, which reads as under: “409. Criminal breach of trust by public servant, or by banker, merchant of agent. Whoever, being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.” It is however the case of the authorities that they had the power to withdraw the criminal case instituted against the third respondent under the above provision. Reference in this regard is made to G.O.Ms.No.54 dated 30.03.2000. Reference in this regard is made to G.O.Ms.No.54 dated 30.03.2000. Perusal of the said G.O. reflects that it was issued in the context of Police Standing Order 724, which reads as under: “S.O.724. Withdrawal of cases :--(1) The Government consider it desirable that, in all grave cases in magisterial courts, the Public Prosecutor should consult the District Collector before withdrawing from the prosecution of an accused. (G.O.19, Judl., Dt.2-1-1906) (2) In cases of simple nature where the Superintendent of Police directs the withdrawal, the prosecuting counsel should be instructed to move the court under Section 321 of the Code of Criminal Procedure, 1973. (Act No.2 of 1974). (G.O.Ms.No.112, Home, Dt.10-1-1950, Government. Memo.233039 Prisoners III/51-3, Home, Dt.31-1-1952). (3) The Government have directed that District Collectors should obtain the approval of the Government before authorizing or directing the Public Prosecutor to withdraw from the prosecution – (a) for reasons of State, (b) on grounds of public policy, and (c) in cases where sanction has been accorded for the prosecution either by the Government or by the Board of Revenue or by an authority in the concerned department of the Government other than the Revenue Department, and also cases where prosecution has been launched in pursuance of any order, direction or instruction issued by any department of the Government in the Secretariat. (G.O.Ms.1401, Home, Dt.7-4-1949, G.O.Ms.1164, Law (Courts-II), Dt.6-11-1954)” As cases of ‘simple nature’ referred to in the Standing Order were not defined anywhere, G.O.Ms.No.54 dated 30.03.2000 was issued for the purpose of clarification. It would be relevant to extract certain instructions contained in the said G.O. “3. The Government after careful examination decided to issue the following guidelines regarding the procedure to be adopted in clarification and amplification of the procedure indicated by reference 1st read above. It would be relevant to extract certain instructions contained in the said G.O. “3. The Government after careful examination decided to issue the following guidelines regarding the procedure to be adopted in clarification and amplification of the procedure indicated by reference 1st read above. (Police Standing Order 724) (a) … (b) … (c) … (d) The Superintendent of Police or the District Collector and the District Magistrate, as the case may be, shall obtain legal opinion of the Public Prosecutor or the Assistant Public Prosecutor concerned before authorizing or directing any withdrawal from the Prosecution; (e) the Public Prosecutor or the Assistant Public Prosecutor in charge of a case has to consult the Superintendent of Police or the District Collector and the District Magistrate, as the case may be before seeking permission of the Court for withdrawal of prosecution of any person; (f) the provisions of Section 321 of the Code of Criminal Procedure, 1973 and the principles governing the same as laid down in binding judicial precedents shall be kept in view by the Public Prosecutor in advising withdrawal or withdrawing from the Prosecution of any person.” In the present case, the record does not reflect the stage of the criminal case at which the withdrawal took place. However, Section 321 Cr.P.C. makes it clear that be it before framing of a charge or thereafter, it would have application and the consent of the Court is required for such withdrawal from prosecution. The impugned proceedings however reflect that they were issued in complete disregard of the procedure prescribed under Section 321 Cr.P.C. So much so, that the correspondence between the District Collector, Mahabubnagar and the Government, filed as material papers along with the counter, manifests that the Public Prosecutor concerned was not even consulted in the matter. Consequently, no petition was moved before the Court for permission to withdraw from the prosecution under Section 321 Cr.P.C. The power conferred upon the District Collect by G.O.Ms.No.54 dated 30.03.2000 was subject to the provisions of Section 321 Cr.P.C. and therefore, exercise of such power in violation of the statutory procedure cannot be countenanced. Mere existence of the power to withdraw from the prosecution would not entitle the Collector, Mahabubnagar, to exercise the same beyond its inbuilt constraints and bounds. Needless to state, unfettered and whimsical exercise of power is antithetical to the very essence of the rule of law. Mere existence of the power to withdraw from the prosecution would not entitle the Collector, Mahabubnagar, to exercise the same beyond its inbuilt constraints and bounds. Needless to state, unfettered and whimsical exercise of power is antithetical to the very essence of the rule of law. In SHEONANDAN PASWAN v. STATE OF BIHAR (1987) 1 SCC 288, a Constitution Bench of the Supreme Court observed: “The entire development of administrative law is characterised by a consistent series of decisions controlling and structuring the discretion conferred on the State and its officers. The law always frowns on uncanalised and unfettered discretion conferred on any instrumentality of the State and it is the glory of administrative law that such discretion has been through judicial decisions structured and regulated. This Court has therefore, despite fluctuating opinions delivered in different cases, laid down the broad principle and consistently acted upon it, namely, that the power to apply for withdrawal from the prosecution can be exercised only in furtherance of justice.” Reference in this regard may also be made to the observations of the Supreme Court in ERPURU SUDHAKAR v. GOVERNMENT OF ANDHRA PRADESH (2006) 8 SCC 161 : “66. Granting of pardon is in no sense an overturning of a judgment of conviction, but rather it is an executive action that mitigates or sets aside the punishment for a crime. It eliminates the effect of conviction without addressing the defendant’s guilt or innocence. The controlling factor in determining whether the exercise of prerogative power is subject to judicial review is not its source but its subject-matter. It can no longer be said that prerogative power is ipso facto immune from judicial review. An undue exercise of this power is to be deplored. Considerations of religion, caste or political loyalty are irrelevant and fraught with discrimination. These are prohibited grounds. The Rule of Law is the basis for evaluation of all decisions. The supreme quality of the Rule of Law is fairness and legal certainty. The principle of legality occupies a central plan in the Rule of Law. Every prerogative has to be subject to the Rule of Law. That rule cannot be compromised on the grounds of political expediency. To go by such considerations would be subversive of the fundamental principles of the Rule of Law and it would amount to setting a dangerous precedent. Every prerogative has to be subject to the Rule of Law. That rule cannot be compromised on the grounds of political expediency. To go by such considerations would be subversive of the fundamental principles of the Rule of Law and it would amount to setting a dangerous precedent. The Rule of Law principle comprises a requirement of “Government according to law”. The ethos of “Government according to law” requires the prerogative to be exercised in a manner which is consistent with the basic principle of fairness and certainty. Therefore, the power of executive clemency is not only for the benefit of the convict, but while exercising such a power the President or the Governor, as the case may be, has to keep in mind the effect of his decision on the family of the victims, the society as a whole and the precedent it sets for the future.” Viewed thus, the impugned proceedings, having been passed in utter disregard of the applicable and prescribed procedure, are patently unsustainable in law. That apart, another crucial aspect seems to have been completely overlooked by the authorities. The subject case dealt with established misappropriation of public resources by a public servant, the third respondent. Merely because the third respondent thought it fit to return the misappropriated amounts after he suffered an adverse order in his appeal before the Government, it would not have the effect of wiping out his criminal liability in the matter. As pointed out in VISHWA NATHI v. STATE OF JAMMU AND KASHMIR 1983 (1) CRIMES 635 = (1983) SCC 1 215,refund of the amount by a public servant, when the act of his defalcation came to be discovered, does not absolve him of the offence under Section 409 IPC. It must be remembered that the discretion under Section 321 Cr.P.C. is to be exercised by the Court carefully, with due regard to all the relevant facts. Every crime is an offence against the society and if the accused committed an offence, society demands that he should be punished. Punishing the person who perpetuated the crime is an essential requirement for maintenance of law and order and peace in the society. Therefore, the withdrawal of the prosecution shall be permitted only when valid reasons are made out [RAHUL AGARWAL v. RAKESH JAIN AIR 2005 SC 910 . Punishing the person who perpetuated the crime is an essential requirement for maintenance of law and order and peace in the society. Therefore, the withdrawal of the prosecution shall be permitted only when valid reasons are made out [RAHUL AGARWAL v. RAKESH JAIN AIR 2005 SC 910 . The observations in para 31 of SHEONANDAN PASWAN1 are also of relevance: “31.We may also reiterate what was pointed out by this Court in State of Orissa v. C.Mohapatra [ (1976) 4 SCC 250 ] that in a given case it may not be (SCC p. 255, para 10) “conducive to the interest of justice to continue the prosecution ... since the prosecution with the possibility of conviction” may rouse feelings of bitterness and antagonism and disturb the calm and peaceful atmosphere which has been restored. We cannot forget that ultimately every offence has a social or economic cause behind it and if the State feels that the elimination or eradication of the social or economic cause of the crime would be better served by not proceeding with the prosecution, the State should clearly be at liberty to withdraw from the prosecution. ……… There may be broader considerations of public peace, larger considerations of public justice and even deeper considerations of promotion of long lasting security in a locality, of order in a disorderly situation or harmony in a factious milieu which may legitimately persuade the State to “sacrifice a pending case for a wider benefit”. The imperative of public justice may in such cases transcend and overflow the legal justice of a particular litigation. We are wholly in agreement with what this Court stated in Balwant Singh v. State of Bihar: [ (1977) 4 SCC 448 ] (SCC p. 449, para 2) “... communal feuds which may have been amicably settled should not re-erupt on account of one or two prosecutions pending. Labour disputes which might have given rise to criminal cases, when settled, might probably be another instance where the interests of public justice in the broader connotation may perhaps warrant withdrawal from the prosecution”. ……… These are broadly the considerations which can be brought under the rubric of public justice so as to justify an application for withdrawal from prosecution. Labour disputes which might have given rise to criminal cases, when settled, might probably be another instance where the interests of public justice in the broader connotation may perhaps warrant withdrawal from the prosecution”. ……… These are broadly the considerations which can be brought under the rubric of public justice so as to justify an application for withdrawal from prosecution. But, of course, we must make it clear that in this area no hard and fast rule can be laid down nor can any categories of cases be defined in which an application for withdrawal of the prosecution could legitimately be made. It must ultimately depend on the facts and circumstances of each case in the light of what is necessary in order to promote the ends of justice.” As pointed out in SHEONANDAN PASWAN1,merely because a Court discharges or acquits an accused arraigned before it, the Court cannot be construed to have compromised with the crime. Corruption, particularly at high places, should be put down with a heavy hand. Prof.C.Raj Kumar, Honorary Consultant to the National Human Rights Commission, India, states that development objectives of countries are inextricably linked to efficient and effective use of resources and that if resources that are supposed to be used for fulfilling development objectives are transferred or wasted due to corruption, it would inevitably impede development and delay progress In his paper ‘Corruption, Development and Good Governance: Challenges for promoting access to justice in Asia’ submitted to the United Nations Development Programme.The learned Author refers to the observations of Daniel Kaufmann Back to Basics – 10 Myths About Governance and Corruption, FIN.&DEV., Sept. 2005 at 41, 41. “………Research generally shows that countries can derive a very large ‘development dividend’ from better governance. We estimate that a country that improves its governance from a relatively low level to an average level could almost triple the income per capita of its population in the long term, and similarly reduce infant mortality and illiteracy.” A necessary requisite for ‘good governance’ would be honest and incorruptible public servants. Though Mahatma Gandhi pointed out long ago that corruption and hypocrisy ought not to be inevitable products of democracy, it is a sad truism that corruption remains rampant, an inextricable and dominant thread in the fabric of our society. Though Mahatma Gandhi pointed out long ago that corruption and hypocrisy ought not to be inevitable products of democracy, it is a sad truism that corruption remains rampant, an inextricable and dominant thread in the fabric of our society. In such a situation, instead of weeding out this virulent sickness from our ethos, the action of the authorities in seeking to let off the hook a public servant, who has practically admitted his guilt in the misappropriation of public funds, not only sets an egregious example for others of the same ilk but is also appallingly retrogressive in the larger public interest. If mere refund of the amount misappropriated is justification enough for pardoning a public servant, Section 409 IPC may as well be discarded from the statute. It would be apt to recall that in SHEONANDAN PASWAN1, the Supreme Court pointed out that it would be desirable in the interest of public justice that high political personages accused of offences should face the judicial process and get discharged, rather than seem to manoeuvre the judicial system and thus endanger the legitimacy of the political as well as the judicial process. The Supreme Court further pointed out that it would be possible that in a particular case personal harassment or inconvenience may be caused by non-withdrawal of the prosecution if the accused is really innocent and is ultimately liable to be discharged, but such harassment or inconvenience must be considered as an inevitable cost of public life, which the repositories of public power should have no hesitation to pay, as justice must not only be done but must also appear to be done. A feeble attempt was made by the learned counsel for the third respondent to attack the locusof the petitioner to maintain this writ petition. A fitting answer to this challenge is not far to gather. In SHEONANDAN PASWAN1,the Supreme Court pointed out that a criminal proceeding was not a proceeding for vindication of a private grievance but was a proceeding initiated for the purpose of punishing the offender in the interest of the society and therefore, any member of the society would have locusnot only to initiate the prosecution but also to resist withdrawal of such prosecution, if initiated. The writ petition is therefore maintainable, notwithstanding any vested interest that the petitioner may have in prosecuting the same. The writ petition is therefore maintainable, notwithstanding any vested interest that the petitioner may have in prosecuting the same. In that view of the matter, the move by the authorities in withdrawing the criminal case against the third respondent was not only in violation of the prescribed procedure but was also tainted by illegality and arbitrariness, being opposed to public interest. The Writ Petition is accordingly allowed setting aside G.O.Rt.No.398 dated 12.03.2008 and the consequential proceedings dated 13.03.2008 passed by the District Collector, Mahabubnagar. The State shall resume the prosecution of the third respondent under Section 409 IPC and see it to its logical conclusion. In the circumstances of the case, there shall be no order as to costs.