TaxTMI 
TaxTMI 
2020 (1) TMI 1547
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....rs of the said firm. First Accused is the husband of the second Accused. They became partners of the firm (AMC) in 2009. Appellant was arrayed as the third Accused. There was reference in the charge-sheet to a conspiracy between the first Accused and the second Accused. It is alleged, inter alia, that they obtained an undated letter from one Shri K.M. Vishwanath, the Ex-Partner, which is after his retirement with effect from 01.08.2009 from the firm, which was addressed to the Appellant, seeking directions to the Deputy Director of Mines and Geology, Hospet in Karnataka to issue the Mineral Dispatch Permit ('MDP' for short) to the new partners, viz., the first Accused and the second Accused. It is further averred that the investigation revealed that the Appellant marked the said letter to the Case Worker who put up the note seeking orders for referring the matter for legal opinion which was also approved and recommended by the Additional Director and put up to the Appellant for orders. Appellant is alleged to have acted in pursuance to the criminal conspiracy and abused his official position with a dishonest and fraudulent intention to cheat the Government of Karnataka and ....
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....d. He was posted as Director of Mines in Geology, having regard to his service record. By virtue of the delegation Under Section 26(2) of the Act, the execution of the lease deed lies with the Director of Mines and Geology. AMC was granted the Mining Lease by the State way back in 1966. The firm was reconstituted several times by inducting new partners and retiring old partners. As and when there is the reconstitution of the firm, the firm intimated to the Department of Geology of the reconstitution and conducted the mining operation in the name of AMC by the newly inducted partners. Though, several reconstitutions have taken place, no application has been filed Under Rule 37 of the Rules for transfer of the lease on the ground that the assets, viz., the Mining Lease belongs to the firm and not to any individual partners. Therefore, there was no requirement of making an application Under Rule 37 of the Rules seeking transfer of the Mining Lease. Records produced by the official before the Court reveal that the Department has understood that reconstitution did not amount to transfer as the partnership is the owner of the asset, viz., the Mining Lease. On inducting first and second A....
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....oined as partner in place of Shri B. Vasudev who retired. Again, AMC was reconstituted by inducting Shri K.M. Prabhu and Smt. Parvathamma. There was further reconstitution by inducting Smt. Sujata Prabhu and Shri K.M. Sujan, as partners. Lastly, on 01.09.2009, the first Accused and the second Accused were inducted as partners. From 1981, on several occasions, the firm was, thus, reconstituted and the application Under Rule 37 of the Rules was not filed before the State Government. Partners filed Form V before the Registrar of Firms intimating reconstitution. Never was an application made Under Rule 37 as and when reconstitution was done on the ground that the firm was the owner of the mining lease. Only intimation Under Rule 62 of the Rules was given. The Case Worker-CW24 has suggested to take legal opinion which was put up along with the note sheet. There was no note put up suggesting the applicability of Rule 37 of the Rules. If there was a suggestion about the applicability of such Rule, the Appellant would have taken appropriate decision. The precedent available also was relied upon. The decision taken was a bonafide decision. The suggestion to take legal opinion was endorsed b....
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....n of assets of a firm, on dissolution or retirement of a partner, would not amount to a conveyance. The principles relating to discharge Under Sections 227 and 228 were discussed, and finally, it was held as follows: 41. In view of the above said citations, it is evident that act of A-3 in directing his subordinates to issue MOP to M/s. Associated Mining Company belonging to Accused Nos. 1 and 2 does not amount to fastening criminal liability of him. In the statement of CWs 7, 21, 24, 26, 109 and 202, absolutely there is no material to show that A-3 has committed criminal conspiracy to help Accused Nos. 1 and 2 in directing his officials to issue Mineral Dispatch Permit and as such there is considerable force in the argument of learned Counsel for Accused No. 3 and I am unable to accept the argument addressed by learned Special Public Prosecutor. Hence, I answer IA. No. 30 deserves to be allowed. I answer. FINDINGS OF THE HIGH COURT 7. After noting the rival contentions, the court notes that for punishing Under Section 120B of the Indian Penal Code, the prosecution is required to prove the conspiracy. The agreement, which is illegal, can be proved by necessary implic....
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....irm was reconstituted on a large number of occasions. The procedure followed was intimation being given to the Department Under Rule 62 of the Rules about the reconstitution. Rule 37 of the Rules was not invoked. This is a case where the action of the Appellant was bonafide. Proceeding on the basis that Rule 37 applies, he further submits, this is not a case where the Appellant could be prosecuted for the criminal offences. The Appellant acted on the basis of the practice. He contacted the Deputy Director (Legal). 12. There is also case of the Appellant that he had directed MDP to be issued in the name of the firm. He had also made it clear that permit be also not issued to the partners. There was no other material produced on record by the prosecution. This is not a case where there is material to establish any criminal conspiracy. 13. Per contra, the learned Counsel for the Respondent-Central Bureau of Investigation, Bengaluru, supported the order. In particular, reliance is placed on the specific stand of the Charge Witness-CW21 to the effect that the Appellant had not sought his legal opinion contrary to the stand of the Appellant. LEGAL PRINCIPLES APPLICABLE IN REGARD....
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....ny document at the stage of framing of the charge. At the stage of framing of the charge, the submission of the Accused is to be confined to the material produced by the Police (See State of Orissa v. Debendra Nath Padhi AIR 2005 SC 359). ANALYSIS OF THE CASE 16. Having set out the legal principles, as aforesaid, let us consider the facts: Undoubtedly, the Appellant came to be appointed as the Director of Mines and Geology of the State of Karnataka by virtue of Notification dated 09.06.2008. He continued in the said post till 25.10.2010. Mining Lease No. 625 was executed on 02.03.1966 between the Governor and AMC, a registered firm. The Managing Partner was one Shri Jali Mahadevappa. The partners of the AMC, viz., Shri K.M. Parvatamma and Shri K.M. Vishwanath sent a letter dated 26.12.2009. It reads as follows: To: The Director Mines & Geology Mineral Khanija Bhavan Race Course Road Bangalore. Sub: Change in Constitution of Associated Mining Company ML No. 2434- Reg. Sir, We undersigned are lease owner of Associated Mining Company of Guru Iron Ore Mines at Venkatagiri Village, Sandur Taluk, Bellary Dist, ....
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....ke about having obtained legal opinion by speaking to Deputy Director (Legal), the Deputy Director (Legal) has taken the stand that he has not given any such opinion. The statement of the Deputy Director (Legal) has been produced by the Appellant along with Criminal Miscellaneous Petition No. 122009 of 2009. He has stated, inter alia, as follows: "However, no opinion was sought from me in this regard". He has further stated that since the contents of the letter dated 26.12.2009 disclosed that the entire lease holding rights were transferred in favour of the first and second Accused, it is contrary to Rule 37 of the Rules. However, ignoring the provisions of Rule 37, the direction was issued to Deputy Director to issue the MDPs in the name of the Company. However, he further states that AMC is a firm not a company. He further stated that if there is no change in the rights of the lessee, then, someone else gets rights over the leasehold rights. The said act will attract provisions of Rule 37 of the Rules. He has also stated that though an application was filed on 29.07.1994 in view of the fact that the Mining Lease was due to expire on 01.03.1996, the lease is renewed from ....
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....ransfer of a lease granted under the provisions of the Rules. It is in the nature of an enabling provision which authorises a transfer by the lessee to a person who has a certificate of approval, and, directs that such transfer could be made with the previous sanction of the Government subject to the other conditions with which we are not concerned. There is a distinction between a statutory provision which contains an express prohibition against the performance of a certain act and one which enables its performance subject to prescribed conditions. While in the former case, there will be no difficulty in coming to the conclusion if nothing else could be said about it that the absolute prohibition against the performance of the act is what is forbidden by law, the same could not be said if the matter falls within the second category. Now the 37th Rule does not, in express terms, forbid a transfer but authorises a transfer with the previous sanction of the Government and subject to other conditions. 24. The provisions of Rule 37, which would control destiny of this case, is, as it was obtained in the year 2009. Also could it not be contended that decisions rendered under the Stam....