TaxTMI 
TaxTMI 
2004 (2) TMI 745
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.... Quattrocchi and Bofors' President Matin Ardbo to cheat the Government of India inasmuch as that they had agreed to do or caused to be done illegal acts or acts which are legal by illegal means to cause wrongful loss to the Government of India to the tune of SEK 8410.66 million i.e. Rupees 64 crores for the award of the contract for supply of 410 guns of 155mm and by deceiving the Government of India by fraudulent representation that the said gun and gun system was better in quality and cheaper in price and that no agent or middlemen would be used in the negotiations for the contract and they would reduce the price of the gun to the extent they would otherwise pay to their agents by way of commission and thereby cheated the Government of India. These offences are punishable under Section 120-B/420 IPC. 2. The public servants Rajiv Gandhi and S.K. Bhatnagar were also charged for having committed criminal misconduct by abusing their official position so as to gain pecuniary advantages to all of them and having taken illegal gratification for awarding the contract in favor -of Bofors. Hinduja Brothers, Bofors, Martin Ardbo and Win Chadha have also been charged for having abette....
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.... journalism during which period large number of officers of CBI hopped to foreign countries every now and then to collect the evidence against public servants but returned empty handed as till date there is no evidence to show that public servants had taken bribe in awarding the contract of guns to M/s A.B. Bofors & Co. either themselves or through Bofors' agents though it has succeeded in tracing the Swiss accounts of "Commission Agents" employed by M/s A.B. Bofors wherein illegal payments received by them from Bofors as commission were deposited. 7. This case is a nefarious example which manifestly demonstrates how the trial and justice by media can cause irreparable, irreversible and incalculable harm to the reputation of a person and shunning of his family, relatives and friends by the society. He is ostracised, humiliated and convicted without trial. All this puts at grave risk due administration of justice. 8. It is common knowledge that such trials and investigative journalism and publicity of pre-mature, half baked or even presumptive facets of investigation either by the media itself or at the instance of Investigating Agency has almost become a daily occurrence ....
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....e guardians of the public interest, to pursue a campaign of vilification of someone who has been before the court, in a way which causes hate mail to be sent, which causes his family to be under the need to move house, which causes his children to be shunned by other children in the neighborhood, is doing no public service. Furthermore, if it is intended to bring pressure to bear on the courts, then it is wholly misguided." [(Attorney General's reference (1995) 16 Cr.App.R 5] 13. This is one of such cases where public servants who are no more have met somewhat similar fate being victim of trial by media. They have already been condemned and convicted in the eyes of public. Recent instance of such a trial is of Daler Mehandi whose discharge is being sought few days after his humiliation and pseudo trial through media as they have not been able to find the evidence sufficient even for filing the chargesheet. Does such trials amount to public service is a question to be introspected by the media itself. 14. Here is a 'Gun' known as 'Bofors Gun' that created political explosion before it could explode in the battlefield and prove its credentials. Expl....
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....my Headquarters recommending, inter alia, the introduction of 155 mm caliber medium guns both towed and self-propelled to meet its defense operational requirements. The choice for obtaining the said gun system/guns was shortlisted in December 1982 to (1) M/S Sofma of France, (2) M/s. A.B. Bofors of Sweden (briefly called 'Bofors'), (3) M/s International Military Services of U.K and (4) M/s. Voest Alpine of Austria. Bofors had given the undertaking vide letter dated 10.3.1986 that they will have no Indian Agents for the purpose of this contract and promised to reduce the price to the extent of commission they even otherwise would have paid. Finally, the order was placed by the Government of India with Bofors on March 24, 1986 for the supply of 410 numbers (400 plus 10 free) of 155 mm Field Howitzer 77-B gun system/spare guns vide contract No. 6(9)/84/D (GS-IV) for a total amount of SEK 8410.66 million (Swedish Kroners) (equivalent to about Rs. 1437.72 crores or Rs. 1477.2 millions). The related contract for supplying the gun package (towed) and other related agreements/contracts were concluded and signed on March 24, 1986 by M/s A.B. Bofors, the then defense Secretary Shri S....
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....that there is no evidence to establish that the Bofors payments totalling SEK:319.4 million involved a violation of any Indian law. 24. Simultaneously, the Comptroller & Auditor General of India (CAG) was also carrying out its own independent audit into the Contract. The CAG submitted its report to both the Houses of Parliament in July 1988. 25. Despite JPC report, allegations of malpractices in the deal with Bofors, payments of kickbacks and receipt of illegal gratification were persistently reiterated and the matter was reliantly agitated. Meanwhile, there was a change of Government. In the aforesaid circumstances, the Superintendent of Police, CBI/DSP/ACU-IV, New Delhi registered a first information report on January 22, 1990 in crime No. RCI(a)/90/ACU-IV under Section 120-B read with Sections 161, 162, 163,164 and 165A of the Indian Penal Code read with Sections 5(2), 5(1)(d) and 5(2), 5(1)(c) of the Prevention of Corruption Act, 1947 read with Sections 409, 420, 468 and 471 of the Indian Penal Code against 14 accused including Martin Ardbo, Win Chadha and G.P. Hinduja. The rest of the 11 accused are stated in general as directors/employees/holders/beneficiaries of accoun....
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....9. During the course of investigation, a set of documents was received in December, 1999 from the Swiss Authorities in execution of the Letter Rogatory dated February 7, 1990. These documents have revealed that, besides payments made by M/s Bofors to M/s Svenska Inc./W.N. Chadha and M/s AE Services Ltd./Ottavio Quattrocchi, payments were also made by M/s AB Bofors to M/s Mc Intyre Corporation to the tune of SEK 800,797,709.92 during the period May 1986 to December 1986. This Company was a Panamanian company registered in Panama on February 14, 1986. 30. Thus the investigation revealed that payments to the tune of SEK 80.80 million were also made by M/s AB Bofors to S.P, Hinduja, G.P. Hinduja and P.P. Hinduja through M/s Mc Intyre Corpn besides monies paid to Win Chadha and Quattrocchi. 31. Interestingly the CBI did not file the charge sheet for the offences punishable launder Section 161 and 165A which meant that the public servants had taken gratification other than the legal remuneration while awarding the contract in favor of Bofors and further that the petitioners namely Bofors, Hindujas, Quattrocchi and for that purpose Win Chadha had abetted the commission of the said o....
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....rocchi, a family friend who had uninterrupted access to PM House as he was to gain immensely in terms of commission as Bofors had set the dead line for the award of the contract. 36. Induction of Mr. Quatrocchi at later stage by AB Bofors as per prosecution shows the ulterior motives and extraneous consideration which guided Mr. Gandhi and Mr. Bhatnagar to award the contract in favor of Bofors by bulldozing the process of selection by way of even not giving the opportunity to the competitive contender Sofma to come up with the proposal for reduction of the price. Large number of documents have been relied upon which prosecution collected during investigation viz the details of payments made by Bofors to Hindujas, Win Chadha and Quattrocchi from time to time as commission for award of contract, details of which were supplied by Swiss authorities as and when sought by CBI through letter rogatories. 37. The contentions raised by Mr. Mukul Rohtagi when summed up are like this:- (i) To achieve one big design of awarding contract to Bofors everybody was acting differently in his own way but the conspiracy was to get the award either by way of using their contacts, or by wa....
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....ugh their agents as S.K. Bhatnagar got the file cleared in favor of Bofors in one day though so many functionaries were involved in the decision. Element of illegal gratification or misuse of official position is not only inferable but ingredient of strong suspicion surfaces when it is further viewed in the post contract events. (vi) When the Swedish radio broke out the news that money has been paid to procure the contract by Bofors and the names were not coming out, the then Chief of Army Staff, Mr. Sunderjee on 13th June 1987 by a written note suggested that Bofors contract may be cancelled. But Mr. Bhatnagar returned the note to the Army Chief and stuck to his earlier view by his subsequent note dated 15th July 1987. (vii) Furthermore, in the draft note prepared by Sh. N.N. Vohra, Additional Secretary for the Cabinet, the views of the Army Chief were specifically mentioned. But Mr. Bhatnagar deleted the same in his letter dated 27th July, 1987 sent to the PMO stating that cancellation of the contract would be premature, financially inviable and adverse to the security scenario. (viii) Further that Mr. Gandhi also took the decision on 4.7.87 that the ma....
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....investigation is altogether different and this single circumstance alone bares the designs of the public servants and the Commission agents as well as Bofors who had entered into secret conspiracy for getting the contract. Had the Government of Sweden threatened to blacklist Bofors because they were getting bad name among the nations much more would have been revealed which even till date CBI has not been able to reveal in spite of their best efforts. (xii) Note of Joint Secretary dated 14th July 1987 (Page-1154; Vol.-9) classified as 'Secret' shows that there was a suggestion that since the superiors of Bofors and President should come to India forthwith and also bring all relevant documents and they should report In Delhi by Monday i.e. 6th July or latest by 7th July, 1987 i.e. within four days. But this suggestion was put in cold storage and thwarted by Rajiv Gandhi in the CCP which took place on 4th July, 1987 at the residence of PM which is apparent from the statement of N.N. Vohra (PW9). (xiii) The statement of Mr. Vohra shows the desperation of Rajiv Gandhi to stop the superiors of the Bofors from coming to this country that wherever they had landed....
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..... All these facts demonstrate the angle of conspiracy between Quattrocchi and Rajiv Gandhi and this angle is fortified from the movement of files and action of Ministries and other steps taken by the defense Ministry in concluding the contract. (v) Agreement dated 15.11.1985 (Annexure IV Form XIV, page 255) which was made between Bofors and M/S A.E services shows that the agreement between Quattrocchi and Bofors was not an open ended agreement which normally in such contract is but was a time bound agreement that is if by 1st April, 1986 letter of award of contract is not issued and there is no renewal of the agreement, the contract would expire. This agreement itself projects the amount of clout Quattrocchi had with the power that be. (vi) The statement of account in Lord Financial Bank shows corresponding payments made by Bofors to AE Services in terms of Clause 5 of the agreement (page 2706 Volume XIV). The entry shown in the statement is withdrawal of 7.33 crore $ out of total amount of 7.34 million $ in the account of Kolbar investments. The amount received by AE services is exactly 3% of the commission paid by Government to M/s. Bofors 39. Let us see what....
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.... account in MONT BLANC direct from Bofors in respect of contract in question and its receipt refers to instant contract number No. 6(9)84(D)(GS)(4)10910709. (f) Similarly document showing in the account of TULIP amount of commission received for the contract from Bofors and not for any other contract. Another such amount is in the name of Lotus. (g) There are large number of such receipts of commission received in the aforesaid coded accounts. Similarly the commission was received from ABB in the account of TULIP. (h) Chart prepared by the Investigating Judge of Switzerland after giving due notice to Hinduja Brothers and Therefore credibility is attached to this document shows that money came from Bofors first in the account of Tulip, Lotus, Mont Blank and after transferring the amount, was deposited in Ashoka Middle East Corporation Nigeria which is owned by P.P. Hinduja, G.P. Hinduja and S.P. Hinduja. (i) There is name of Ashoka Middle East Corporation on the list and their account in Liberia which shows that this account is in the name of P.P. Hinduja as the proprietor and owner of the firm and form is signed by him. The entire account is proj....
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....of Price Negotiating Committee or with regard to the note of draft prepared by Mr. N.N. Vohra, Additional Secretary and the recommendations of General Sunder Ji for cancellation. 41. The case of the public servants was spearheaded by Mr. Kapil Sibal, learned senior counsel who assiduously assailed the conclusions of the learned Special Judge. Mr. Sibal's contentions, in brief, are like this:- (i) There is not even a single suspicious circumstance which may suggest that the commission earned by Mc Intyre Corporation was meant to be bribe taken on behalf of Mr. Rajiv Gandhi and Mr. S.K. Bhatnagar. The learned Special Judge does not even record the finding that either of these two public servants were aware of the existence of Hindujas much less that Hindujas would earn something if the contract goes through. (ii) The prosecution evidence is overwhelming and incontrovertible that the contract was awarded by the civil authorities because the user namely the Military firmly made up its mind in favor of Bofors and public servants had no option than to award contract in Bofors' favor. (iii) In the impugned order Special Judge has made observations ref....
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....arrangement that was in existence stood superseded and one of such arrangements was not to have middleman or commission agent while concluding the contract. This contract did not contain the stipulation that the Bofors will have no agent. Said clause reads like this:- "All the provisions of this Contract including the Annexures, Enclosures and Clauses shall be harmoniously construed. The parties have executed this Contract on the basis that the provisions in the Clauses and Annexures both inclusive represent the entire Contract. This Contract sets forth the entire undertaking of the Parties in respect of transactions contemplated hereby and supersedes all prior agreements, arrangements, representations or understanding relating to the subject matter hereof." (viii) By no stretch of imagination public servants can be accused to have cheated the Government on any aspect including the price, quality or any other aspect. It is neither the case of the prosecution nor any evidence in this regard. (ix) In commercial transaction the State can choose its method and price is not always the whole criteria for awarding the contract, reliance is placed upon Air India ....
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....e of the accused which has not been subjected to cross-examination nor has the accused any opportunity of producing his defense is no evidence in the eyes of law. (xi) Even if worst is assumed that the petitioners namely Hindujas and for that purpose others had abetted the offence committed by the public servants still the fact remains that they cannot be allowed to cross-examine on behalf of the public servants either to project their defense or that of the public servants who are no more. By the doctrine of reasonable procedure they cannot be allowed to usurp the right of the public servants or for that purpose the accused who are dead for cross-examining the witnesses sought to be produced against the alleged accused persons even to prove the defense of the surviving accused persons. The Supreme Court has in Mrs. Maneka Gandhi v. UOI [1978] 2 SCR 621 (at page 281) laid down that on the concept of reasonableness of a procedure as projected in the procedure contemplated under Article 21 the Court should not be allowed to adopt an unreasonable procedure. In nut-shell the procedure should not only be reasonable but right just and fair and not arbitrary. (xii) As pe....
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....ich tantamount to acquittal and neither petitioners nor Win Chadha or Quattrocchi in any way can be held guilty for abetment of conspiracy as no evidence involving the charge of conspiracy can be used against the petitioners as in order to prove the charge of abetment of conspiracy, the first essential requirement of law is to prove charge of conspiracy against public servants. (xv) The observations of the judge in the order dated 29th August, 2002 dismissing the application for dropping the proceedings under Article 21 of the Constitution for failure of expeditious justice show that the prosecution has collected no evidence. The observations are self-contradictory and shake the foundation on which the charges were framed. The observations are based on the material witnesses from Sweden including Mr. Morbarg and Las Gothlan and no further evidence has been acquired by the CBI. (xvi) The charges have been framed mainly on the presumption that though the remuneration received by Hindujas were towards the consultancy services provided by Hindujas till May' 86 for negotiations of the award of contract of Bofors but these must have been received on behalf of Rajiv ....
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....onal, conjectural and undesirable in nature as it refers to a character and traits and personality of Sh. Rajiv Gandhi, which was not a matter for consideration before the learned Judge exposes the highly unjudicious and extraneous approach by the learned Special Judge. Observations are:- "Rajiv Gandhi was not nave and impetuous. He pretended to be a maverick. All this was, however, a deliberate posturing and part of a well conceived and pre-arranged plan to apparently show the non-involvement of middlemen/agents in the deal and to achieve the oblique purpose by direct negotiations on the one hand and to have secret middlemen on the other hand." (xxi) The observation of the learned Special Judge in para 234 is contradictory to the case of the prosecution to the effect that there was no proper policy of the Government of India prohibiting agents in the deal. (xxii) It is neither the case of the prosecution nor is there any evidence and the learned Special Judge has assumed himself that the JPC was not only constituted under public pressure and that of opposition, but it was packed with people sympathetic to the ruling party, even though the controversy did....
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....n 1986. (xxvii) As regards the telephone call by Rajiv Gandhi to P.M of Switzerland which has been referred by Oza, and corroborated by the subsequent letter sent by Rajiv Gandhi to Karkan his counterpart wherein he has referred to such a conversation on telephone as, a post contract conduct cannot be used as evidence for a conspiracy prior to the contract. (xxviii) The letter of 28th February by the P.M. to Karkan was that the Swedish Government should not make an inquiry as promised in view of the appointment of JPC because the findings of the Swedish Government will go long way in getting rid of the rumours in India about the contract. Even if it is assumed that Rajiv Gandhi advised the Swedish Government not to continue with the investigation that India has appointed JPC for this purpose it cannot be taken to be post contract such conduct which may fortify the allegation of conspiracy and further the Bofors people were also summoned before the JPC is not an evidence that they made no effort of any kind whatsoever to scuttle or withhold the inquiry conducted by JPC. So much so subsequently letter to the Swedish Government was sent that he had also no objection ....
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....he case of the prosecution nor is it borne from any evidence. There cannot be any higher fanciful flight of imagination. (xxxiii) Thus any amount of evidence collected by the prosecution right from the stage when Mr. S.K. Bhatnagar started participating in the proceedings culminating in the award of contract and the date of signing of the contract by Mr. Rajiv Gandhi is wholly irrelevant, immaterial and irreceivable in evidence not only against the public servants but also against other alleged co-conspirators. Thus prosecution can confine its evidence only from the point and to the extent of allegation of conspiracy between the Hindujas and Quattrocchi and Bofors for awarding the contract. Since in the instant case the prosecution has as per its own investigation assigned the role of conspiracy to Hindujas post March, 1986 the charge of conspiracy to cheat the Government by corrupt or illegal means against public servants cannot stand. (xxxiv) Allegation of conspiracy of Hindujas and Quattrocchi or Chadha with S.K. Bhatnagar or Rajiv Gandhi at the point of awarding the contract cannot stick as even if is presumed that they had been operating in India as commissio....
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....ed to be agreed by a letter for the purpose of varying, adding to or subtracting from the terms of the contract reduced in writing on 24th March, 1986. 45. Hindujas were defended by none less but Mr. Ram Jethmalani, learned Senior Advocate. Mr. Amit Desai complimented his arguments representing one of Hinduja brothers. 46. Mr. Ram Jethmalani tried to show that the investigation and the conclusions are not only tainted but varnished with an attempt to tarnish the image of Hindujas who are involved in philanthropic activities in this country and merely because they were associated with Bofors as their agents for counter-global trading activities they cannot be charged for the alleged offences. In order to avoid repetitiveness I shall attempt to concise their contentions collectively. These are:- (i) Hindujas are only consultants and commission agents for Bofors in procuring the contract. If the reliance placed by the prosecution on the documents referred is accepted it no where leads to the fact that the Hindujas were acting in conspiracy with the Rajiv Gandhi or SK Bhatnagar for manipulating the award of contract and accepting the consultancy commission as a bribe. Bo....
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....ies in lieu of sale of their commodities but also gives them liberty to persuade other importers and also appropriate agency who purchase other commodities for the purchase of their goods. In the instant case, Bofors has used the services of Hindujas towards consultancy fees of discharging the obligation cast upon the Bofors by Clause 31.1. (vi) When the news of procuring of the contract by the Bofors by giving bribe to Indian politicians broke out in Swedish Radio on 16th and 17th April, 1987, the Bofors agents were called and first meeting of Indian Ambassador and Bofors Agents took place on 20.4.1987. Bofors people explained that payment of this order was made by them to Hindujas as consultancy fees. They denied having made any payment to the Hindujas on account of the awarding of contract in question. However, the aforesaid payment was accounted in the books of accounts of the Company. (vii) It is the case of the prosecution that the money alleged to have been received by the Hinduja was payment pursuant to the 19.10.1979 agreement between them and Therefore question of element of ingredients of conspiracy cannot arise. Nor can the ingredients of Section 420 b....
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....this as it is admissible in evidence. (xii) So far as S.P. Hinduja and G.P. Hinduja are concerned, the main allegations of prosecution are that though they were at the relevant time neither partners nor Directors of Mc Intyre in whose account the alleged money/illegal gratification was deposited allegedly by way of safe deposit on behalf of Rajiv Gandhi and merely because they are brothers of P.P. Hinduja who was the sole proprietor of said company cannot be presumed to be participating in the negotiations on behalf of the Bofors. However, it appears that they have been involved for the offence punishable under Section 420 and abetment to offences of illegal gratification and misuse of official position mainly on the presumption that the money deposited in P.P. Hinduja's accounts was diverted for the promotion of business of S.P. Hinduja and G.P. Hinduja thereby they were party to the receipt of money as illegal gratification on behalf of Rajiv Gandhi. In other words S.P. Hinduja and G.P. Hinduja are being charged of being financial beneficiaries of money received by Mc Intyre or their brother P.P. Hinduja. Such a presumption cannot form basis for aforesaid charges. Th....
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....in the form of getting the award or in the form of global counter trading the presumption is that the money received by way of nine payments from Bofors was towards their commission, it is contended that Hindujas from 1993 during the course of investigation informed the CBI that they were involved in the counter trading activities internationally and in particular they had association with Nitro Nobal Group i.e Bofors from early 1970's in respect of commodity trading in Iran and other countries and these nine payments related to global counter trade activity. This aspect could have been established either by office employees of Bofors or the Directors and Constituted Attorneys of Mc Intyre Corporation. No statements have been recorded of any of the Bofors officers nor they are cited as witnesses and further the Directors and Constituted Attorneys of Mc Intyre Corporation are not available as they have died. (xvii) It is not understandable from which material the learned Special Judge has drawn the conclusion that SP Hinduja and GP Hinduja initially opened accounts in their names but later on a thought occurred to them and cancelled it and opened account in the name of ....
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....at the concept of Government of India has been dealt with by the Supreme Court in Samsher Singh v. State of Punjab and Anr. (1974) IILLJ 465 SC wherein it was held that:- "In all cases in which the President or the Governor exercises his functions conferred on him by or under the Constitution with the aid and advice of his Council of Ministers he does so by making rules for convenient transaction of the business of the Government of India or the Government of the State respectively or by allocation among his Ministers of the said business, in accordance with Articles 77(3) and 166(3) respectively. Wherever the Constitution requires the satisfaction of the President or the Governor for the exercise of any power or function by the President or the Governor, as the case may be, as for example in Articles 123, 213, 311(2), Proviso (c), 317, 352(1) and 360 the satisfaction required by the Constitution is not the personal satisfaction of the President or of the Governor but is the satisfaction of the President or of the Governor in the constitutional sense under the Cabinet system of Government. The reasons are these. It is the satisfaction of the Council of Ministers on whose a....
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.... to them. Once they are made as co-conspirators then the charge of conspiracy to cheat is not sustainable. 51. On the premise that every functionary of the Government, including the Minister, whose decision is final in any matter, is by way of fiction the Government, the Supreme Court in another case Common Cause A Registered Society v. Union of India and Ors., [1999] 3 SCR 1279 set aside its own order whereby the Minister was directed to pay a compensation of Rs. 50 lacs to the Government of India by observing that under Article 32 of the Constitution which is not permissible as the Court cannot direct the Government to pay the exemplary damages to itself and Therefore the plea that such a direction was made to the petitioner personally and he was treated as a separate distinct entity from the Government did not find favor. 52. Mr. Jethmalani further contended that the argument adopted by the trial court while dismissing the contention against the charge of cheating was not at all sound nor was it addressed properly as the doctrine of collective responsibility applies to a Minister's act as well his officials' act. Had it not been so there was no concept of responsib....
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....national counter trading was sufficient to dislodge the presumption if any available either under Section 4 or Section 114 of the Evidence Act or any other premise and these are not mere Explanations which find corroboration and support from proved and not proved, admissible or inadmissible documents collected by the CBI during the investigation and forwarded to the CBI by the investigating Swedish Judge, All this indicates that the money received was towards consultancy or counter trade payments and not as a commission for procuring the contract. 56. Mr. Jethmalani further contended that prosecution's case has to be supported by way of evidence either documentary or oral. Prosecution itself does not make out its case that Hindujas have received this payment for Rajiv Gandhi and the Explanation of the petitioners has all the more reasons to be believed and acted upon and it is highly far fetched that the learned trial judge has used the Explanation given by the other two brothers namely SP and GP Hinduja against them presuming that they are also having some connection with the company in whose account the money was deposited whereas the fact remains that PP Hinduja alone is ....
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....y such evidence the document is nothing but a waste paper as it does not fulfill the requirement of proof by way of secondary evidence as provided by Section 63 of The Indian Evidence Act. Since these documents are not public documents and are rather commercial documents even the certified copies of these documents cannot be taken to have been proved by way of secondary evidence. Even if it is presumed to have been proved as public document the proof of document has to be in terms of Section 78 Clause 6 of The Indian Evidence Act. Section 63 reads as under:- 63 - Secondary evidence. - Secondary evidence means and includes - (1) Certified copies given under the provisions hereinafter contained; (2) Copies made from the original by mechanical processes which in themselves insure the accuracy of the copy, and copies compared with such copies; (3) Copies made from or compared with the original; (4) Counterparts of documents as against the parties who did not execute them; (5) Oral accounts of the contents of a document given by some person who has himself seen it. Section 78(6) provides as under:- 78(6) - Public do....
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....tion 8 of the Indian Evidence Act the conduct of a party to the proceedings is important and in the instant case Rajiv Gandhi and SK Bhatnagar are not parties to the proceedings being dead persons and Therefore the conduct involving conspiracy imputed to them is not admissible qua Hindujas. (v) It is well settled law and has been fortified in cases after cases and mainly in Sardul Singh case AIR 1943 PC 176 that any conduct of co-conspirator subsequent to the culmination of a conspiracy is not a conspiracy. The argument that such evidence even if it is the conduct of deceased conspirator is admissible under Section 8 of the Evidence Act has no force and is untenable on the very terms of Section 8. It is reasonably clear that evidence of acts, statement of a co-conspirator either under trial or not on trial but outside the period of conspiracy would not be admissible in proof or of specific issue of the existence of the conspiracy. (vi) Merely because the result of the conspiracy is continuing does not make the conspiracy of continuing nature. To constitute a continuing conspiracy there must be continuity of action to produce the unlawful result. Similarly extra ju....
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.... learned Special Judge still framed charges against AB Bofors, a body corporate for the offences which necessarily had means read as an essential ingredient and provides for imprisonment. 64. It is contended by Mr. Sen Gupta that Learned Special Judge has proceeded under the wrong premises while relying on the analogy under Section 11 of IPC wherein a person was defined as inclusive of body corporate or company as a person who also commits an offence of cheating. Section 415 defines cheating and in this regard person referred to is a person who has been deceived and not a person who deceives and person who has been deceived can be body corporate or company but by no stretch of imagination the word 'person' whenever appearing in Section 415 can include a body corporate or a company as the person who deceives has to be liable for imprisonment which body corporate is not. Thus any person being in charge of and responsible to the affairs of the company alone can be prosecuted for offences which provides for mandatory imprisonment. 65. According to Mr. Sen Gupta wherever word "person" is appearing in any of the sections of IPC it necessarily refers a person who is a victim....
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..... Gupta contended that as they gave in writing that they had no commission agent in India for this contract which meant that they would not pay any commission and whatever commission they were to pay to them would be reduced in the price, the accused moved an application before the learned Judge on 1st February, 2002 requesting him to direct the Government to inform him about the Government policy, that no commission agent would be permitted, the prosecution came up with the case that there was no government policy or document in this regard to be handed over to Bofors. Judge has made a reference in this regard in Para 23 that no such government policy has been brought to his notice. It is contended that in the absence of such a policy payment of commission to Hindujas and for that purpose to Win Chadha or Quattrocchi does not attract offence under Section 420 IPC. 70. Mr. Sengupta further contended that inspire of the letter rogatory sent by the CBI that they are not prosecuting the Bofors Company because of the act of its executives, record of discussion that took place between the defense Secretary and Martin Ardbo, Chairman of Bofors wherein he was told that there is no poli....
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....by Bofors to the Government that they would not continue with any commission agent nor would the commission agent deal with the Government on their behalf in the deal, though such an undertaking or commitments by the Bofors ultimately did not form part of the contract which was reduced into writing and rather previous commitments or undertakings or negotiations including the appointment of representative or commission agents were superseded by Clause 33 of the contract. 73. According to Mr. Gupta Martin did not give any categorical undertaking that he would not have any commission agent nor would he deal through them. He only told Mr. Bhatnagar in response to his suggestion that he would consider this suggestion of Mr. Bhatnagar. In other words Mr. Martin kept the question of dealing through commission agent open and the conversation between Mr. Bhatnagar and Mr. Martin in a meeting of 3rd May, 1985 which is recorded in the minutes of meeting nowhere binds Martin that he would not involve any commission agent nor would use the services of any commission agents or middlemen. Record of discussion shows that Martin said that he would consider the advice of defense Secretary on the ....
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....o as they could not lay hand upon any secret or known account of these public servants where the alleged money might have found its abode either in Swiss Banks or any other Bank or vault. However, their efforts, particularly due to the cooperation of Swiss authorities and Swiss Banks fructified in tracing the money received as "commission" by middlemen/agents employed by Bofors for negotiating the contract. They are Win Chadha, Quattrocchi and Hindujas. 78. Again not an iota of evidence has surfaced that may even remotely suggest or suspect that the money received as "commission" by them was held by them as a money for the public servants for such a long period. On the other hand, the evidence is that Hindujas used the money for their own business by way of withdrawing from the main account and transferring it to other accounts of theirs. 79. Had there been any such arrangement or conspiracy that as many as three agents would be paid "commission in the garb of illegal gratification for public servants for awarding contract there was no difficulty because of the "confidentiality clause" for the recipients and the givers to give indication in the accounts as nominee or joint-ho....
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....n on the part of the bank's clerical staff. Thus from the legal point of view a numbered account has no specific significance. 84. Having failed to lay hand upon any kind of evidence as to payment of illegal gratification to public servants or holding the monies received by the Agents as trustee, CBI like a drowning person clutched a flimsy straw by introducing the doctrine of "misusing an official position" by way of inducting even an element of "conspiracy" which is unknown to such a penal offence purely on the conjectural and inferential premise that by hastening the decision in favor of Bofors and without considering the offer of a rival viz. "Sofma" that too made subsequent to the letter of intent was issued in favor of Bofors the public persons had misused their official position. 85. On the face of it such a theory is difficult to ram down the throat for the simple reason that when the contenders were short listed and called upon to give the undertaking that they would neither involve Indian agents nor would pay commission to them and would rather reduce the price by the corresponding amount of commission they would even otherwise have paid to their Agents they re-....
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....ed into a criminal conspiracy with the agents viz. Quattrocchi and Hinduja brothers and Win Chadha to cheat the Government of India by fraudulently and dishonestly representing that no agent or middlemen would be used for negotiating the contract and they had reduced the price of gun corresponding to the amount they would even otherwise have paid as commission and after getting the contract they paid the originally agreed commission to its aforesaid agents and thereby induced the Government of India to do an act that caused wrongful loss. M/s A.B. Bofors and Martin Ardbo also made false documents by fraudulently agreeing to pay to Svenska Corporation i.e Mr. Quattrocchi 80 million SEK in Installments whereas it had informed to the Government of India that there was no such arrangement with any agent or middlemen. 89. Charges for the offences punishable under Section 120-B/420 IPC, Section 5(2) read with Section 5(1)(d) of the P.C. Act, 1947 and under Section 161 IPC against the petitioners for having entered into criminal conspiracy with the public servants to cheat the Government of India and having abetted the public servants to commit 'criminal misconduct' by abusing ....
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....nd impetuous. He pretended to be a maverick. All this was, however, a deliberate posturing and part of a well conceived and pre-arranged plan to apparently show the non-involvement of middlemen/agents in the deal and to achieve the oblique purpose by direct negotiations on the one hand and to have secret middlemen on the other hand. (Reproduction was necessary) Para 231 It is useful to refer to the statement of Arun Nehru. He was not in the defense Ministry or otherwise concerned with this matter. He stated that on the direction of the Prime Minister he had to discuss the 155 mm gun deal with Swedes and others. It was Rajiv Gandhi's style of functioning. Shri V.P. Singh was also not the concerned Ministry, but he was asked by Shri Rajiv Gandhi to speak to Mr. Palme instead of asking Sh. Narsimha Rao who was then defense Minister. He would ask several people to do the same thing at the same time. Each person would not know what the other person is up to." (ii) Presumption raised as to the monies received by commission agents as trustees for bribe taken by public servants. Para 311 "All this shows that the moneys paid or at least a sub....
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....e money. Layers of secrecy and privacy are thus laid to achieve the desired ends." Observations in para 78 are entirely presumptive:- Para 78- "Irrespective of the correctness, propriety or otherwise of awarding the contract to Bofors, if any part of the amounts paid by Bofors to the agent firms/companies was passed on to and received by any public servant, as there are reasons to believe, it could be nothing but illegal gratification and the offence of bribery would be committed. If this was done pursuant to an agreement or understanding between Bofors, the concerned firms/companies and any public servant or servants, as there are reasons to believe, the agreement would be illegal and amount to criminal conspiracy. Even if the agents had received the payments as "gratification" in relation to the contact as explained earlier in this FIR, such receipts would be illegal." (order dated 29.8.2002) 92. I deem it needless to refer to catena of authorities laying down the principles for framing the charges for the sake of precision and refer to the celebrated authority of Supreme Court in this regard as these principles have been fortified in cases after cas....
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.... public servants. Thus, in the absence of public servants against whom main charge of conspiracy was made, charge of abetment of conspiracy with public servants to cheat the Govt. of India and misuse of official position by public servants and taking bribe by public servants for awarding the contract to M/s A.B. Bofors against the intermediary or the petitioners who are not public servants can neither be framed nor subjected to trial. 95. It is clear from the evidence that the user of the armament namely the Army had the ultimate decisive voice and Therefore allegation of selecting a less qualitative and more expensive has no basis. It was the technically expert opinion of the Army that the Government should go for 'Bofors' because of its peculiar feature of "shoot and scoot". None of the public servants had any role in selecting the gun. 96. After 17.2.86 when the Army indicated its choice, finally through Deputy Chief of Staff who was member of the Technical Committee and expressed its stand that even if Bofors gun is costlier, that is the gun which the Army wants, it was obvious that if the army changed its mind in favor of Bofors, it did not do so because of inter....
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....lic servants though shown as commission paid by Bofors to them for the award of the contract. Everything is shrouded in conjectures, in surmises and fancies and is not based upon any documentary evidence or the investigation, 101. Learned Judge has introduced his own perception and knowledge that the amounts paid by Bofors to their commission agents were to be passed on and paid to the public servants and were obtained and held by them as trustee. They all held these monies for one year. Hindujas not only transferred part of the money to other accounts of theirs but also used for their business purposes. In spite of the fact that no evidence was there to show that Indian politicians and defense personnel for themselves actually received pay offs, learned Special Judge accuses the CBI for having not gathered the evidence in support of the allegations projected in the F.I.R. How can a judge create evidence of his own when there exists none? 102. In the absence of any evidence or material no inference could have been drawn that the monies received by Hindujas and Quattrocchi as commission were received as bribery on behalf of the public servants. Therefore, the charge for the of....
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....Gandhi or Bhatnagar used any direct or indirect influence on anybody including Technical Committee of Army Experts or on Negotiating Committee that comprised of seven members or so and all were high officials of the Government of India for the award of the contract to Bofors or as to the price. Rightly so. Had it been so, then every public servant, whosoever was member of the Technical as well as Price Negotiating Committee would have landed themselves in the net of CBI for prosecution along with the petitioners and public servants. 107. The only argument of the CBI is that presumption should be drawn that the haste with which the contract was awarded was a result of the conspiracy between Hindujas, Quattrocchi, Bofors and the public servants to award contract in favor of Bofors prior to the visit of Rajiv Gandhi to Switzerland. The prosecution has not brought anything on record as to what different role was played by the members of the Negotiating Committee than the role played by Mr. Bhatnagar. Thus the element of dishonest intention is utterly wanting. 108. Section 4 of the Prevention of Corruption Act, 1947 relates to presumption where public servant accepts gratification....
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....ng the letter of intent though there was no cut off date for the price negotiating committee but still Mr. Bhatnagar informed Mr. Arun Singh about the offer of Sofma after the issuance of letter of intent, Mr. Arun Singh felt that issuance of letter of intent should not come in the way of consideration of offer of Sofma and it was on his advice that Bofors was asked to revise its offer and once the Bofors agreed to give 10 guns free its price got reduced from that of Sofma. It was only after 12 days i.e. on 24th March, 1986 that the contract was signed with M/s AB Bofors. So far as General Sunderji' plea for cancellation of the contract is concerned it was on the moral ground and not from commercial or technical aspects. 112. Thus by no stretch of imagination these circumstances lead to even remote inference or suspicion about criminal misconduct by the public servants in abusing the official position as contemplated under Section 5(1)(d) of the Prevention of Corruption Act. It envisages that a public servant is said to commit the offence of criminal mis-conduct if he, by corrupt or illegal means or by otherwise abusing his position as a public servant obtains for himself or....
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....t is basic criminal jurisprudence that the court cannot give findings against a person who is not in a position to defend himself. Legal presumption that every accused is innocent unless is proved to be guilty is also available in respect of public servants. So far as Quattrocchi and Ardbo are concerned their case has already been segregated for the purpose of trial as one is absconding and other has not been repatriated. In the instant charge sheet public servants, AB Bofors, Win Chadha and Hindujas have been clubbed together. Win Chadha has also died and Therefore trial against him also cannot proceed. Even if we assume that Ardbo and Quattrocchi's trial has been segregated still the trial of public servants cannot proceed. 118. When the charges for the main offence of awarding a contract against illegal gratification and misconduct by abuse of official position and charge under Section 120B/420 IPC against public servants for having conspired with A.B. Bofors, Hindujas, Chadha and Quattrocchi to cheat the Government of India prove damp squib, charges of conspiracy with public servants to cheat the Government of India or abetting the public servants to commit offences unde....
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....so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat." Explanation--A dishonest concealment of facts is a deception within the meaning of this section." 122. Cheating is also alleged inasmuch as that the Government of India was deceived about price and quality of the Bofors gun being cheaper and superior than that of Sofma. As regards the price there was no misrepresentation that it was cheaper than Sofma. Ultimate decision was that of the negotiating committee which was based on competing offers. The negotiating committee and the Government of India had come to the conclusion that the Bofors contract was cheaper than that of Sofma. The very fact that the user of the gun namely the army had recommended the Bofors gun as the appropriate gun for Indian needs after evaluating its specifications, technique etc. and so much so they also recommended that even if Bofors gun was little more expensive it was the only gun which satisfies Indian needs rules out such an allegation. 123. The con....
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....ld be as if left hand did not know what the right hand was doing. 126. Further, the defense of the petitioners-Hindujas that they had received the nine payments towards commission for counter globe trading agreement with M/s A.B. Bofors and the monies received by them did not pertain to the commission on account of the contract in question is again difficult to accept at this stage as the documents produced by the prosecution give sufficient indications and create strong doubt that these monies were received as commission for the contract in question as in some of the accounts the particulars of the contract in question are projected against the payments received by them from M/s A.B. Bofors. Same is the position in respect of Quattrocchi and Win Chadha. 127. Documents received by the CBI in execution of Letter Rogatory revealed that besides payment to M/s Svenska Inc./Win Chadha and M/s AE Services/Ottavio Quattrochi, payments were also made by M/s A.B. Bofors to M/s Me Intyre Corporation during the period of May, 1986 to December, 1986. 128. These payments were received in the code names of LOTUS, TULIP and MONT BLANC. These payments have been projected as commission in ....
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....a for cheating the Government of India to the extent of amount of commission Bofors would have and had paid and Hindujas and Quattrocchi and Chadha would have received. 133. As regards the charge against M/s. A.B. Bofors punishable under Section 465 IPC for making false documents, the learned Special Judge has discussed the circumstances and the documents in detail and also the purpose for making these documents and I find myself in agreement with the conclusions arrived by the learned Special Judge in this regard. I do not feel inclined to interfere with. 134. For instance, the agreement between M/s. A.B. Bofors and Moineao dated 27th December, 1985 mentioned that Bofors had decided to cancel the earlier agreement between the parties and have made fresh settlement, which has been culled out in the impugned order in para 362. It is obvious that the object for making these documents was to show that Bofors has agreed to pay US $ 80 million SKE in installment, which is the exact amount, which was paid to Hindujas as commission through M/s. Me Intyre Corporation in three different coded accounts. 135. Similarly, another agreement between M/s. A.B. Bofors and M/s. Svenska Inc.....
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....on, it is difficult to accept the proposition of 'punishing a company' wherein means read element is necessary. It is all the more difficult in the event of mandatory punishment that leads to imprisonment. (2) Where the legislature has granted discretion to the court in the matter of sentencing, it is open to the court to use its discretion. Where, however, the legislature, for reasons of policy, has done away with this discretion, it is not open to the court to impose only a part of the sentence prescribed by the legislature, for that would amount re-writing the provisions of the statute." 138. In view of the law laid down by the Supreme Court it is difficult to frame the charges for the offences punishable under Sections 120B/420 IPC against M/s AB Bofors as both the offences involve element of means read and prescribe mandatory punishment leading to imprisonment. However, its President Martin Ardbo as and when he becomes available shall be charged for these offences. 139. As regards the offence punishable under Section 465 IPC read with Section 464 IPC there is discretion with the court to either impose a sentence of imprisonment or sentence of fine and, T....