TaxTMI 
TaxTMI 
2011 (11) TMI 538
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....of the said private company. 3. The sole respondent, Mr. Ramesh Gandhi, is one of the members of the above-mentioned private company and shown to be the seventh accused in the above-mentioned FIR. He filed writ petition No. 352/2001 on the file of the Calcutta High Court praying that the above-mentioned FIR be quashed. By the judgment under appeal, the Calcutta High Court allowed the writ petition quashing the FIR. 4. The substance of the accusation in the FIR is that all the accused entered into a criminal conspiracy to confer an illegal and unjust benefit on the above-mentioned private company. In the process, the accused, "intentionally and dishonestly" suppressed certain relevant and crucial facts (in the various cases filed before the Calcutta High Court and also this Court to which the accused were parties), which resulted in orders being passed both by this Court as well as by the High Court favourable to the private company. 5. FIR reads as follows: "DELHI SPECIAL POLICE ESTABLISHMENT, RANCHI BRANCH FIRST INFORMATION REPORT Crime No.RC 13(A)/2000(R), Date and time of Report : 15.11.2000 at 1700 Hrs. Place of occurrence with State : Calcutta (West Bengal), ....
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....pplied only to the actual users and not to the traders like M/s. CTCC. As a result of the aforesaid overt acts of the accused public servants as mentioned above, M/s. CTCC, illegally obtained the supply of the Steam Coal at a cheaper rate applicable to the actual users, even after the lapse of the period stipulated by the Hon'ble Supreme Court, causing wrongful loss to the tune of Rs.90,00,000/- approximately to the CCL. It has been alleged that Coal India Limited (CIL), Calcutta vide NIT (Notice Inviting Tender) dated 9/15-1-91 offered sale of existing stock of following categories of coal under "BULK SALE SCHEME" on as is where is basis. (i) Slurry (ii) Dirty Slurry (iii) Middlings (iv) Rejects It was also stipulated vide item no.23 of the terms and conditions of the NIT that in case of failure on the part of the buyer to lift 90% of the quantity within 90 days of allocation, security deposit and the Bank Guarantee would be liable to be forfeited by the Company. In response to the aforesaid NIT, M/s. CTCC, offered to buy following quantity/quality of coal at the prescribed rate. M/s. CTCC was allotted the entire quantity w.e.f. 25.7.91 which was to be lifted ....
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....angdih Colliery vide letter dated 7.4.93 and 21.4.93 respectively of Coal India Limited, Calcutta. As against the aforesaid allotted quantity M/s.CTCC deposited the amount equal only to the value of 3000 MT each and lifted the same from the respective sources. In pursuance of criminal conspiracy M/s. CTCC further requested the then General Manager, Argada Area, CCL, Shri K.M. Singh, vide letter dated 7.4.94 to allot Steam Coal from Sirka, Religara and Giddi 'C' Collieries (All high demand collieries), in lieu of left over quantity of Slurry Grade 'D' (165724 MT), Middlings Grade 'F' (88500 MT) and Dirty Slurry Grade'F' (45000 MT) of the previous scheme, i.e. Bulk Sale Scheme. Steam Coal of the aforesaid three sources namely Sirka, Religara and Giddi 'C' was to be allotted, as per the policy of the CIL/CCL, exclusively to the industrial consumers (Actual users) and not to the traders like M/s. CTCC at all, during the relevant period. Also, the rate of Steam Coal applicable to the industrial Consumers (Actual users) was approximately Rs.200/- per MT less than the rate fixed for the traders and M/s. CTCC being the traders, was not authorised to get the Steam Coal at the rate whi....
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.... High Court Calcutta for modification of the order dated 18.4.94 on following points. (i) M/s. CTCC did not fulfil the terms and conditions of NITs in question and thus the penalty was to be imposed on them; (ii) Steam Coal of the aforesaid collieries was not meant for traders like M/s. CTCC. (iii) Traders, if allotted Steam Coal, were to pay @ Rs.200/- approximately (per MT) more than the rate allowed to the Industrial Consumers (Actual users). However, they, in pursuance to the criminal conspiracy, simply recommended challenging the authority of the Coal Controller for issuing direction vide letter dated 12.4.94, in the Hon'ble High Court, Calcutta since the Coal Controller was authorised to issue such letters, the Hon'ble High Court, Calcutta vide order dated 6.4.95 dismissed the Revision Petition filed by the CIL with direction to implement the order dated 12.4.94 of the Coal Controller. M/s. CTCC, however, did not deposit the value of the Coal to be lifted again, on some pretext or the other as they were not in a position to sale such a huge quantity of coal at monopolistic price, those days, since the buyers were getting coal directly from the Coal India Limite....
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....ontempt petition simultaneously in the Hon'ble Supreme Court against the then CMD, CCL, Ranchi and others in the matter. Hearing of both the petitions was fixed on 9.5.97 and the Hon'ble Supreme Court issued a show cause notice to the concerned officers of CCL. Hearing on the modification petition as mentioned above could not be taken up. As per the commitment of the CCL, the Hon'ble Supreme Court vide its order dated 14.7.97, directed the CCL to complete the supply of the entire quantity of coal allotted to M/s. CTCC within 20 months positively at the rate of 10,000 MT per month and at the modified price fixed by the CIL w.e.f. 1.4.97. On receipt of the aforesaid order, the Dealing Officer of the Sales and Marketing Division of CCL, Ranchi, initiated a proposal suggesting that penalty as per terms and conditions of NIT of "Bulk Sale" and "LSS-II" Schemes should be decided in case M/s. CTCC to notify truck wise allotment on a weekly basis, to ensure timely placement of trucks by the party and to maintain a record to assess the quantity lifted by them within a particular period of time. It was also decided/recommended during a meeting held jointly by the Director (Finance),....
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.... November 1997 but it was delayed by M/s. CTCC in connivance with the officers of CCL, on one pretext or the other upto March 1998, till the peak season started. This was obviously with a view to avoid the lean season. It is also alleged that Shri Sudarshan Singh the then Area Sales Officer, Argada Area, CCL, was made the nodal officer responsible for regulating supplies of coal to M/s. CTCC and its reconciliation but he intentionally did not make any reconciliation and did not adhere to the norms of NIT/direction of the Hon'ble Supreme Cort. Shri Sudarshan Singh also went to the extent of issuing a letter/certificate favouring the party mentioning therein that due to the non-availability of Coal in the Area, the supplies could not be made to M/s. CTCC. This was done with a view to helping the party in the matter of lifting coal even after the expiry of the stipulated period of 20 months. After the expiry of 20 months, accused Shri S.K. Shrivastava the then General Manager (Sales), CCL, Ranchi and Shri Mahesh Gandhi of M/s. CTCC entered into an unwarranted agreement (MOU) on 23.3.2000, vide which M./s. CTCC would be allowed to lift coal according to its own will as no time fr....
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....ntly and dishonestly issuing directions to the CMD, CCL, Ranchi in favour of the private party. This prima facie disclose the commission of offences u/s. 120(B) r/w 420 IPC and Sec. 13(2) r/w sec. 13(1)(d) of P.C. Act, 1988. This R.C. is therefore registered and investigation is taken up. Sd/- 15.11.2000 [A. PRASAD] Dy. Supt. Of Police, CBI/SPE/Ranchi, Investigating Officer Dated 15.11.2000" 6. According to the FIR, the various acts and omissions narrated therein of the accused caused a huge wrongful loss of approximately rupees ninety lakhs to the CCL and a corresponding wrongful gain to the private company. 7. This case has a long and chequered history. It all started with two advertisements issued by CIL in January, 1991 and September, 1991 published in the 'Statesman' newspaper inviting offers for purchase of various grades of coal under two schemes propounded by it named as 'Bulk Sale Scheme' and 'Liberalised Sale Scheme-II'. [It is unfortunate that copies of the above advertisements are not placed on record] 8. What transpired subsequently is described in detail by this Court in judgment dated 18th March, 1997 in Civil Appeal Nos.2004- 2005/19....
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....from Urimari Colliery and 50,750 MT of Grade W-III Steam Coal from Jarangdih Colliery was allotted to them vide allotment letters dated April 7, 1993 and April 20/21, 1993 respectively and that on account of nonavailability of Grade-B Steam Coal at Urimari Colliery and Grade W-III grade steam coal at Jarangdih Colliery it would not be possible for them to lift the required quantity of coal. In the said letter it was also stated that the petitioners had learnt that Sirka Colliery had huge stocks of Grade-B Steam Coal to the tune of 4.16 lakh MT and that he (General Manger) was willing to accept the diversion of orders of other areas booked under LSS-II to the tune of 2.00 lakhs MT in addition to other pending commitments and orders/proposed deliveries to others including the petitioners. By the said letter the petitioners expressed their willingness to accept equivalent quantities of Grade-B Steam Coal from Sirka Colliery in case the General Manager was willing to accept the transfer of allotment for Steam Coal of Urimari and Jarangdih Collieries. The General Manager was requested to accept the proposal of the petitioners at his level and intimate to the General Manager (Sales)/CCL ....
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.... letter the Coal Controller has stated : Having noted the entire circumstances and facts of the case and the availability of steam coal at Sirka you are advised to forthwith give effect to the transfer of these allotments of steam coal from Urimari/Jarangdih collieries to Sirka Colliery for delivery of equivalent quantity of steam coal Grade B to the party as requested for by them and recommended by the concerned area, at the earliest. 6. Civil Appeal arising out of S.L.P. (Civil) No. 26366 of 1995 relates to sale of washery products on the basis of the Notification dated July 24, 1967, before amendment introduced therein by Notification dated June 4, 1992. On January 17, 1991 and advertisement was published in the 'Statesman' inviting offers for bulk purchase of rejects, Middlings, Slurry and Dirty Slurry in various washeries of CCL including the Gidi Washery. In response to the said advertisement, the petitioners, on March 2, 1991, submitted offers for purchase of 1,79,000 MT Slurry, 90,000 MT Middlings and 90,000 MT Dirty Slurry. By letters dated May 11/14, 1991 CIL accepted the offer of the petitioners and agreed to supply to the petitioners 1,79,000 MT Slurry Grade-D, 90....
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....aid letter of the petitioners for favourable consideration. On April 9, 1994 the petitioners submitted a representation to the Coal Controller requesting him to transfer of then-allotted quantity of Dirty Slurry remaining to be booked and lifted against allotment and the entire quantity of recent allotment of 1,65,724 MT of Dirty Slurry for release of equivalent quantity of Steam Coal by road from Sirka/Gidi-C/Religara collieries. The Coal Controller, sent a communication dated April 12, 1994 to the Chairman-cum-Managing Director, CCL, wherein, after taking note of the representation dated April 7, 1994 submitted by the petitioners to the General Manager (Argada area) and the letter from the General Manager, Argada area to the General Manager (Sales)/CCL dated April 8, 1994, he stated : Having noted the entire circumstances and facts and the availability of the coal at Sirka/Religara/Gidi-C desired to be lifted by the party, you are advised to forthwith effect to the transfer of allotments of Dirty Slurry and in the party letter dated 2.4.94 and 9.4.94 for release of equivalent quantity of steam coal from Sirka/Religara/Gidi-C collieries as requested for by them and recommended ....
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....y the Coal Controller, the private company approached the Calcutta High Court by filing two writ petitions, i.e. W.P. Nos. 940 and 941 of 1994. The brief history of the said writ petitions is taken note of by this Court in para 7 of the judgment dated 18th March, 1997, extracted above. Eventually, both the writ petitions were allowed by the judgment of the Calcutta High Court dated 6th April, 1995 and the same was confirmed by the Division Bench in Letters Patent Appeals by a judgment dated 31^st October, 1995. Aggrieved by the same, CIL approached this Court by the above-mentioned Civil Appeal Nos. 2004-2005 of 1997. Both the appeals were dismissed. 9. The matter did not end there. Complaining that the Coal India Ltd. and its officers failed to comply with the judgment of this Court dated 18th March, 1997 in the above-mentioned Civil Appeal Nos. 2004-2005 of 1997, the private company filed contempt petitions Nos. 261-262 of 1997. The said contempt petitions were disposed of by an order dated 14th July, 1997 by this Court. The operative portion of the said order is as follows:- "We, however, find that in the contempt petitions the prayer of the applicants is that they may be ....
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....urt or from the Calcutta High Court. According to the FIR, the private company failed to comply with the twin obligations arising under the two contracts referred to earlier, i.e. lifting of the coal contracted to be purchased by it in accordance with the schedule agreed upon and making the payment of money towards the sale price of the coal in terms of the schedule of the payment agreed upon. The substance of the FIR is that the failure to bring the above mentioned crucial facts to the notice of the Courts (both the Calcutta High Court and this Court), is deliberate and due to a conspiracy between all the accused of which the respondent is one. 13. By the judgment under appeal, the said FIR was quashed. The only reason given is that the supply of coal to the private company had been made in terms of a decision given by the Calcutta High Court as approved by this Court at a price fixed by this Court. Therefore, no Magistrate can examine the allegation that such a supply of coal resulted in an unjust pecuniary advantage to the private company. The operative portion of the judgment reads as under: "It was contended that the object of the First Information Report and the investi....
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....the Coal India Ltd. Shri Malhotra further submitted that even in the legal proceedings before the Calcutta High Court and this Court, these factors were not brought to the notice of the Courts by any one of the accused. It is argued that if only the fact that the private company had already defaulted in its obligations arising out of the two contracts entered into by it with the CIL had been brought to the notice of the Courts, Courts would not have intervened in favour of the private company. The gravamen of the charge in the FIR in issue is that the failure to bring such crucial facts, which were most crucial for adjudicating the rights and obligations of the private company and CIL, to the notice of the Courts is the consequence of a criminal conspiracy by all the accused to enable the private company to derive an unjust and illegal benefit at the cost of CIL. Shri Malhotra, therefore, submitted that the judgment under appeal clearly failed to consider this aspect and, therefore, unsustainable in law. 16. On the other hand, Shri Gopal Subramanium, learned senior counsel appearing for the respondent submitted that the judgment under appeal does not call for any interference as....
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....the above question, it requires a detailed examination of the relevant material. The fact that the supplies of coal were made to the private company pursuant to the orders of the Calcutta High Court and confirmed by this Court by itself does not rule out the possibility of a crime having been committed. It is well known that decisions are rendered by courts on the basis of the facts pleaded before them and the issues arising out of those pleaded facts. As we have already pointed out, the only issue projected on the basis of the facts placed before Calcutta High Court and this Court is the competence of the Coal Controller to give directions which in substance amounted to variation of the terms of the contracts to which the private company and Coal India Ltd. are parties. This court in Civil Appeal Nos.2004-2005 of 1997 declared that the Coal Controller had the requisite legal authority to give such directions but did not examine any other issue. 20. The exact terms and conditions subject to which the CIL accepted the offer of private company are not available on record in the instant case. But it appears from the FIR (which is the subject matter of dispute) that the private comp....
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.... is passed in favour of the applicant/plaintiff which is upheld by all the courts including the final Court. Let us also think of a case where this Court does not dismiss Special Leave Petition but after granting leave decides the appeal finally by recording reasons. Such order can truly be said to be a judgment to which Article 141 of the Constitution applies. Likewise, the doctrine of merger also gets attracted. All orders passed by the courts/authorities below, therefore, merge in the judgment of this Court and after such judgment, it is not open to any party to the judgment to approach any court or authority to review, recall or reconsider the order. 39. The above principle, however, is subject to exception of fraud. Once it is established that the order was obtained by a successful party by practising or playing fraud, it is vitiated. Such order cannot be held legal, valid or in consonance with law. It is nonexistent and non est and cannot be allowed to stand. This is the fundamental principle of law and needs no further elaboration. Therefore, it has been said that a judgment, decree or order obtained by fraud has to be treated as nullity, whether by the court of first ins....
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....erate pursuant to a conspiracy between all the accused to secure an illegal and wrongful monetary gain to the private company. Therefore, in our opinion the Judgment under appeal cannot be sustained. 26. Coming to the question of the scope of the jurisdiction to quash an FIR, either in the exercise of statutory jurisdiction under Section 482 of Cr.P.C. or under Article 226 of the Constitution of India, the law is well settled and this Court in a catena of decisions laid down clear principles and indicated parameters which justify the quashing of an FIR. We do not propose to catalogue all the cases where the issue was examined but notice only two of them and indicate the consistent principles laid down by this Court in this regard. 27. In R.P. Kapur Vs. State of Punjab, AIR 1960 SC 866, this Court at para 6 held: ".................It is well-established that the inherent jurisdiction of the High Court can be exercised to quash proceedings in a proper case either to prevent the abuse of the process of any court or otherwise to secure the ends of justice. Ordinarily criminal proceedings instituted against an accused person must be tried under the provisions of the Code, and t....
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....sing its jurisdiction under s. 561-A the High Court would not embark upon an enquiry as to whether the evidence in question is reliable or not. That is the function of the trial magistrate, and ordinarily it would not be open to any party to invoke the High Court's inherent jurisdiction and contend that on a reasonable appreciation of the evidence the accusation made against the accused would not be sustained. Broadly stated that is the nature and scope of the inherent jurisdiction of the High Court under s. 561-A in the matter of quashing criminal proceedings, ...................." 28. In State of Haryana and others Vs. Ch. Bhajan Lal and others AIR 1992 SC 604, this Court after reviewing large number of cases on the question of the quashing the FIR held at paras 108 and 109 as follows: "108.In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extra-ordinary power under Article 226 or the inherent powers Under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of ca....