CBI fails to establish grave suspicion against customs officials in corruption case, petitioners discharged

The Bombay HC allowed discharge applications filed by petitioners in a CBI case involving rejection of discharge applications, non-forwarding of departmental bills for scrutiny, delays in uploading soft copies, and incorrect expenditure claims for conveyance of customs officials. The court held that CBI's material fell short of establishing grave suspicion against petitioners, particularly after SCI officials were discharged. Following Supreme Court precedent in Union of India v. Prafulla Kumar Samal, the court ruled that mere suspicion without grave suspicion entitles accused to discharge. The court set aside the Special Judge's order dated 23 November 2017 and discharged the petitioners, finding continuation would constitute abuse of process.

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Issues Involved:
1. Challenge to the order dated 23 November 2017 by the learned Special Judge rejecting the discharge application.
2. Allegations of criminal conspiracy and abuse of official position by SCI officials in collusion with the Petitioners.
3. Refusal of prosecution sanction against certain SCI officials and subsequent discharge of those officials.
4. Examination of whether there is sufficient material to proceed against the Petitioners.
5. The role of the CMD, SCI in refusing prosecution sanction and its impact on the case.
6. The relevance of the CBI auditor's report and its findings.
7. Legal principles regarding the continuation of prosecution against private persons when public servants are discharged.

Issue-Wise Detailed Analysis:

1. Challenge to the order dated 23 November 2017 by the learned Special Judge rejecting the discharge application:
The Petitioners challenged the order dated 23 November 2017, wherein the learned Special Judge held that there was sufficient material to proceed against them for framing of charge and accordingly rejected their discharge application. The Petitioners, being the partner and firm of M/s. J.M. Baxi & Co., were arraigned as Accused Nos. 2 and 3 in Special Case CBI No. 60/2010.

2. Allegations of criminal conspiracy and abuse of official position by SCI officials in collusion with the Petitioners:
The prosecution alleged that four officials of SCI conspired with the Petitioners to grant undue benefits to Petitioner No. 2 by failing to comply with agreement conditions, dishonestly not forwarding bills for scrutiny, and not questioning unsupported vouchers. Specific claims included unsupported expenses of Rs. 3,21,647.50/- for FY 2005-06 and Rs. 3,08,246/- for FY 2006-07, as per the report of M/s. R.B. Jain & Associates, Chartered Accountants appointed by the CBI.

3. Refusal of prosecution sanction against certain SCI officials and subsequent discharge of those officials:
The competent authority, CMD of SCI, refused to grant prosecution sanction against Mr. N.R. Saraiya and Smt. Vaishali Ladi. Consequently, they were discharged by this Court. Shri. Hari Prakash Kamath was also discharged following a similar refusal of prosecution sanction. The CMD's refusal was based on the finding that no separate and independent allegations existed against these officials, and no wrongful loss was caused to SCI.

4. Examination of whether there is sufficient material to proceed against the Petitioners:
The Petitioners argued that the allegations were primarily against public servants and that there were no specific allegations against them. They contended that the invoices submitted by them were disallowed and no payments were made. The CMD of SCI confirmed that no loss was caused to SCI and that the expenses claimed were legitimate, as per standard practice.

5. The role of the CMD, SCI in refusing prosecution sanction and its impact on the case:
The CMD, SCI, after examining the allegations, concluded that the bills in question were never settled or paid, and the claims were reversed by issuing credit notes. The CMD criticized the CBI's reliance on the statement of a single customs official and emphasized the standard practice of escorting customs officers to expedite port activities. The CMD's findings were crucial in determining that no wrongful loss was caused to SCI.

6. The relevance of the CBI auditor's report and its findings:
The CBI auditor's report highlighted unsupported claims by the Petitioners for FY 2005-06 and FY 2006-07. However, it was found that these claims were never settled or paid by SCI. The CMD's order dated 18 September 2010, refusing prosecution sanction, established that no payments were made towards these bills, and the claims were reversed.

7. Legal principles regarding the continuation of prosecution against private persons when public servants are discharged:
The Court referred to the judgments in Kartongen Kemi Och Farvaltning AB and Ors. Versus. State through CBI, Yogesh alias Sachin Jagdish Joshi Versus. State of Maharashtra, and Central Bureau of Investigation Versus. Akhilesh Singh, which held that once the main accused (public servants) are discharged, the charge of abetment of conspiracy against private persons cannot be sustained. The Court concluded that no grave suspicion was raised against the Petitioners, and continuation of prosecution would be an abuse of process of law.

Conclusion:
The petition succeeded, and the order dated 23 November 2017 passed by the learned Special Judge was set aside. The Petitioners were discharged in Special Case No. 60/2010.

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