Full Text
CRIMINAL APPELLATE JURISDICTION
WRIT PETITION NO. 3286 OF 2024
1. Krishna Bhagwan Kotak } ….Petitioner No.1
(Orig. Accused No.3)
2. M/s. J.M. Baxi & Co. }...Petitioner No.2
(Orig. Accused No.4)
:
1. The State of Maharashtra
2. Central Bureau of Investigation, Anti-Corruption Branch, Mumbai } ….Respondents
Ms. Shilpa G. Talhar, APP for State-Respondent No.1.
Mr. Kuldeep S. Patil with Mr. Ashish Kumar Srivastava, for
JUDGMENT
1) Petitioners have challenged the order dated 23 November 2017 passed by the learned Special Judge on application at Exhibit-116 filed in Special CBI Case No.60/2010 seeking their discharge therefrom. The learned Special Judge has held that there is sufficient material to proceed against Petitioners for framing of charge and has accordingly rejected the discharge application.
2) Petitioner No. 1 is the partner of M/s. J.M. Baxi & Co. (Petitioner No.2). Petitioners are arraigned as Accused Nos. 2 and 3 respectively in Special Case CBI No.60/2010. Petitioners at the relevant time acted as Shipping Agents of Shipping Corporation of India Ltd. (SCI) for handling port related activities. Brief prosecution story is that a criminal conspiracy was entered into by four officials of SCI viz.
(i) Shri. Dhaneshchandra Punamchand Revawala-the then Deputy General Manager, SCI, (ii) Shri. Naishad Rashiklal Saraiya-the then Vice President, Outport Accounts Department, SCI, (iii) Smt. Vaishali Ladi-the then Manager (Outport Accounts), SCI and (iv) Shri. Hari Prakash Kamath-the then Deputy Manager, Finance & Accounts Division (Outport Accounts), SCI, who abused their official position and entered into a criminal conspiracy with Petitioners for granting undue benefits to Petitioner No.2, an agent of SCI. The accusation of abuse of official position and criminal conspiracy against the four SCIL officials stem out of the following broad allegations:
(i) failing to direct Petitioners to comply with conditions laid down in the Agreement dated 12 April 1999. (ii)dishonestly not forwarding the bills pertaining of financial years 2003-04 to 2006-07 submitted by Petitioner No.2-M/s. J.M. Baxi & Co. to the Operating Divisions/user departments for scrutiny;
(ii) not questioning Petitioners about missing and unsupported vouchers from the bills, till the internal auditor disallowed the same in their Audit Report dated 1 June 2006.
(iii) claim by Petitioners of expenses of Rs.3,21,647.50/- for the financial year 2005-06 and Rs.3,08,246/- for the financial year 2006-07 without any supporting documents as reflected from the report of M/s. R.B. Jain & Associates, Chartered Accountants appointed by the CBI.
(iv) not questioning Petitioners about absence of supporting vouchers in respect of various bills which lied unsettled and unscrutinised for a substantial period of time.
3) It appears that out of the total six accused, Shri.D.P. Revawala had retired from the services of SCI on 31 December 2005 and Shri. Hari Prakash Kamath had resigned on 6 January 2010. CBI therefore did not seek prosecution sanction against them. Since Petitioners are private persons, there was no question of seeking prosecution sanction qua them. So far as the other two accused-Mr. N.R. Saraiya and Smt. Vaishali Ladi are concerned, the competent sanctioning authority viz. Chairman and Managing Director of SCI refused to grant prosecution sanction by order dated 18 September 2010.
4) On account of refusal to grant prosecution sanction, Shri. N.R. Saraiya and Smt. Vaishali Ladi sought discharge from Special Case, but their application came to be rejected on 18 September 2012. Therefore, the said two officials filed Criminal Writ Petition No.322 of 2013 challenging the order dated 18 September 2012. Their petition came to be allowed by this Court by order dated 15 February 2017 holding that since there were no separate and independent allegations against them, their prosecution was not maintainable in absence of sanction. Accordingly, Shri. N.R. Saraiya and Smt. Vaishali Ladi came to be discharged from Special Case CBI No.60/2010.
5) It appears that Shri. D.P. Revawala passed away during pendency of Special Case No.60/2010. Shri. Hari Prakash Kamath applied for his discharge before the learned Special Judge and his application was rejected by order dated 5 August 2019. Therefore, Shri. Kamath filed Criminal Writ Petition No.6407 of 2019 before this Court challenging the order dated 5 August 2019. This Court allowed Writ Petition No.6407 of 2019 filed by Shri. Hari Prakash Kamath and discharged him from CBI Special Case No.60/2010.
6) Thus out of the four SCI officials, one has passed away and three have been discharged by this Court and only two Petitioners now remain accused in CBI Special Case No.60/2010. Petitioners also filed application at Exhibit-116 seeking their discharge. The learned Special Judge has however proceeded to reject the application by order dated 23 November 2017, which is the subject matter of challenge in the present petition. By order dated 5 December 2023, this Court has stayed the proceedings before the learned Special Judge.
7) Mr. Kumar Abhishek Singh, the learned counsel appearing for Petitioners would submit that all the allegations in the chargesheet are essentially made with reference to public servant and there is no separate or specific allegation against Petitioners. That it is an admitted position that all the subject invoices submitted by Petitioners to SCI have been disallowed. The factum of the invoices not being cleared/paid has been categorically dealt with by the Chairman and Managing Director of SCI while passing the order dated 18 September 2010 refusing to grant prosecution sanction to the chargesheeted public servants of SCI. That the chargesheet is filed under a complete misunderstanding on the part of the CBI that the invoices were cleared or paid. That the CMD has taken note of standard practice across the country and even internationally where miscellaneous and sundry expenses are genuinely expected to be incurred towards escorting customs officials and related jobs. That in this regard, the CMD has relied upon statements of the CBI’s own witness, Smt. Kasturi Krishnakumar, which again seems to legitimise the expenses claimed by Petitioners on the subject invoices. According to Mr. Singh, since the highest authority of SCI has himself categorically confirmed that no loss is caused to SCI, CBI is unnecessarily overstretching the entire issue despite noticing that none of the subject invoices are ultimately cleared. Thus, there is neither any wrongful gain to Petitioners nor any corresponding losses to SCI in the present case. Mr. Singh would rely upon orders passed by this Court discharging the three public servants particularly, the order passed in the case of Hari Prasad Kamath in support of his submission that this Court has relied upon the CMD’s sanction order at length and has recorded a finding that there is no wrongful loss caused to SCI in respect of the invoices amounting to Rs.6,29,893/-. That the charge ultimately relates to only invoices relating to FY 2005-06 and FY-2006-07, totaling to Rs.6,29,893/- which is also clear from perusal of the audit report dated 9 September 2009 of CBIs auditor M/s. R.D. Jain and Associates. That the recovery of amounts towards corrective measure of Rs.17.[8] lacs and Rs. 53,336/- pertain to previous bills and that there is no recovery to be made in respect of FY 2005-06 and FY 2006-07. Since the subject bills relating to the said period were not cleared, he would therefore submit that there is neither any wrong doing, much less any criminality, pertaining to the said disallowed claims/invoices. That once SCI itself asserts that there is no wrongful loss to itself, it is too far-fetched for CBI to proceed with prosecution on a wrongful assumption of any loss being caused to SCI. That in any case, all the public servants have already been discharged and therefore no ground subsists for prosecution of Petitioners as CBI Special Court does not have jurisdiction to proceed for prosecution against private persons. He would therefore pray for discharge of the Petitioners.
8) The petition is opposed by Mr. Kuldeep Patil, the learned counsel appearing for Respondent-CBI. He would submit that the Petitioners are repeatedly found to have raised and got cleared several fictitious bills, unsupported by any vouchers and has caused wrongful loss to SCI. He would submit that the nature of transaction involved in the present case is of such nature that Petitioners, while acting as agent for SCI, used to possess funds of SCI in advance and they were raising bogus invoices for claiming various amounts out of those funds available with them. That therefore the sanctioning or clearing of bills is not entirely relevant in the facts of the present case as Petitioners had full intention of misappropriating the funds of SCI by raising fictitious bills. That there is ample documentary as well as oral evidence on record pointing out incriminating role of Petitioners. He would rely upon report of the Chartered Accountant, M/s. R.B. Jain & Associates dated 9 August 2009 in which 980 false bills of the year 2005-06 and 45 false bills of the year 2006-07 were found to have been submitted by Petitioner No.2 to SCI. That the said report clearly bears out conduct on the part of the Petitioners in claiming improper bills, which were neither supported by vouchers nor were genuine. That it is prosecution’s case that Petitioners have cheated SCI with connivance with SCI officials. That though the SCI officials are discharged for want of prosecution sanction, the offence of cheating committed by Petitioners would still survive. He would also rely upon observations made by the Central Vigilance Commission about the role played by the Petitioners. He would submit that the claim of Petitioners of non-cause of any loss to SCI is misleading. He would therefore submit that enough documentary, oral and circumstantial evidence is available on record and that therefore the prosecution must be permitted to prove the accusations against Petitioners rather than discharging them at this premature stage. He would pray for dismissal of the petitions.
9) Rival contentions of the parties now fall for my consideration.
10) In the present case, CBI initially sought to prosecute four officials of SCI alongwith Petitioners, with whom Agency Agreement dated 20 April 1999 was executed. It appears that in the Agency Agreement, certain remittances were provided to Petitioners in the Agent Disbursal Account on current basis to fulfill their continuing obligations for SCI’s ship and port related activities in the concerned territory. The Agent was supposed to utilize such amounts remitted by SCI in Agent’s Disbursement Account where bills and demands were received in the name of the Agent. Under Article 26 of the Agreement, in addition to agent’s fees and commission, the agent was also entitled to claim courier charges, expenses, transportation, space handling service tax etc. by producing supporting original bills, invoices of the cash memos etc.
11) It is prosecution’s case that four officials of SCI, Shri. D.P. Revawala, Shri. N.R. Saraiya, Smt. Vaishali Ladi and Mr. Hari Prasad Kamath entered into criminal conspiracy with Petitioners and that they assisted Petitioners in cheating SCI by raising fake and fictitious claims through invoices unsupported by any underlying vouchers or actual transactions. The first element of charge is about the invoices pertaining to FY 2003-04 and FY 2006-07, in which the concerned four officials of SCI have not forwarded several bills submitted by Petitioners to the Operating Division/User Department for scrutiny and therefore the bills had remained unsettled/uncleared. It is CBI’s allegation that even soft copies of bills were not loaded in the system of SCI and that in some cases, the uploading was delayed by more than 240 days. It is CBI’s allegation that SCI officials did not even bother to question Petitioners about missing and unsupported vouchers in respect of those bills, which remained uncleared/unsettled. According to CBI, ultimately M/s. S.B. Billimoria & Co., internal auditor appointed by SCI disallowed the said bills in their audit report dated 1 June 2006. Another allegation by CBI is about failure to adhere to the stipulations of the Agency Agreement by the officials of SCI. The CBI apparently appointed M/s. R.B. Jain & Associates, its own Auditor, and claims of Rs.3,21,647/- for FY 2005-06 and Rs.3,82,506/- during FY 2006-07 towards conveyance of custom officials and sundry/telephone/fax expenses etc were disallowed by the said Auditor.
12) Perusal of the chargesheet filed by CBI in the present case would indicate that the prosecution essentially proceeds on a footing that the four custom officials have cheated SCI and caused wrongful loss to it. However, when proposal for grant of prosecution sanction was placed before the Chairman and Managing Director of SCI, he considered all the five heads of allegations as under: (A) Allegation of not forwarding bills of user department for scrutiny and finalizing the Balance Sheet leading to presumption that the accounts were settled. (B) Allegation of delay in uploading soft copies of accounts.
(C) Allegation of incorrect claims made by Petitioners for Rs.3,21,647.50/- during FY 2005-06 and Rs.3,08,246/- during FY 2006-06 towards conveyance of custom officials and sundry/telephone/fax expenses etc.
(D) Allegation of non-compliance with agreement conditions under Articles 11 and 12. (E) Allegation of non-compliance with other agreement conditions under Articles 15, 16, 17 and 26.
13) After considering the allegations in the above five headings, the CMD, SCI held that so far as the allegation of non-forwarding of bills of user departments for scrutiny was concerned, the concerned bills have factually not been settled and no payment has been made to the Petitioners in respect of the said bills. The relevant findings recorded by the CMD, SCI in his order dated 18 September 2010 read thus: The aforesaid facts clearly show that the bills for the said F.Y. 2005- 06 and 2006-07 have not been settled and that payments have not been made for the said bills to M/s. J.M. Baxi & Co., in view of the fact that the scrutiny and authorization of the said bills is still pending to be done by the Operating Division of the SCI. Therefore, it is submitted that the CBI is not correct to presume that the said accounts have been settled merely because of the fat that the bills were included in the accounts of the respective years, which was required to be done as a legal necessity of the accounts having to be prepared on the accrual basis. It is germane to note that there is no financial loss, much less a wrongful loss, caused to the SCI as no payments have been made to the said agent M/s. J.M. Baxi & Co., without scrutiny and authorisation and in fact, the amount due to the said agent have been frozen as detailed above.
14) So far as the allegation of delay in uploading soft copies of the bills are concerned, it cannot be said, by any stretch of imagination, that Petitioners can have any remote role to play in that regard. The said allegation related only to SCI officials. Therefore, the findings recorded by CMD in relation to the said allegation need not be examined in the present case.
15) The third allegation of incorrect claims made by Petitioners for Rs.3,21,647.50/- during FY 2005-06, Rs.3,08,246/- during FY 2006-07 appears to be the main allegation against Petitioners and it is claimed that no such expenditure towards conveyance of custom officials was actually incurred by Petitioners. After examining the allegations and evidence on record, CMD held that even those bills for Rs. 3,21,647.50/- and Rs.3,08,246/- were actually settled and remained pending with Operating Division for scrutiny /authorisation. The relevant findings recorded by the CMD, SCI in this regard are as under: Firstly, the aforesaid CBI Report as well as the report of the CBIappointed Chartered Accountants M/s. R.B. Jain, themselves mention merely that M/s. J.M. Baxi & Co. had claimed the aforesaid amounts, however, it is nowhere mentioned in the said reports that the SCI had actually sanctioned or authorised or settled or paid the said amounts. While in all fairness, it is stated that it may be true that the General accounts submitted by M/s. J.M. Baxi & Co. had been uploaded to the computerized accounts, however, as has been mentioned in the CBI Report as well as in R.B. Jain’s report [in fact, it is an allegation made by the CBI as discussed in Part “A”, supra], these accounts for FY 2005-06 and FY 2006-07 were never settled and therefore, these bills were never authorized/sanctioned/settled by the SCI. As has already been covered elsewhere, the said bills were pending with the Operating Divisions for scrutiny/authorisation. Therefore, when the said bills were merely claimed by the concerned agent M/s. J.M. Baxi & Ci., and were not in fact sanctioned/ settled/ authorised by the SCI till M/s. R.B. Jain, CA, examined them, how can it be said that any officials of the SCI were responsible for that ? SCI officials can possible be said to be responsible only if they had wrongfully sanctioned/ authorised the said bills and had actually paid the amounts to the said agent, however, in the absence of any such act on their part and when the said bills were yet to be sanctioned/authorised, the officials of SCI cannot be held responsible, much less for a criminal act.