TaxTMI 
TaxTMI 
2024 (9) TMI 57
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.... 3.6 Revised Mining Plan 3.6.1 - 3.6.2 22-23 9. 3.7 Information submitted by KECML to the Coal Controller 3.7.1 - 3.7.2 23-25 10. 3.8 Audit Objection raised by the CAG 3.8.1 - 3.8.3 25-29 11. 3.9 Preliminary Enquiry registered by respondent - CBI 3.9.1 - 3.9.2 29-31 12. 3.10 Litigation between KPCL and KECML 3.10.1 -3.10.6 31-33 13 C. SUBMISSIONS 14. 4. Arguments by Counsel for the Appellants 4.1 - 4.17 33-42 15. 5. Arguments by Counsel for the respondent - CBI 5.1 - 5.15 42-50 16. 6. Rejoinder Arguments by Counsel for the appellants 6.1 - 6.4 50 - 53 17. D DISCUSSION AND ANALYSIS 7.1-7.3 53-54 18. Did CBI Primarily Rely on the Audity Repot of the CAG? 8.1-8.3 55-57 19. Could the Audit Report of the CAG fasten any liability on KECML? 9.1-9.5 57-60 20. Import of the Judgment dated 24th March, 2016 of the Karnataka High Court 10.1-10.3 60-63 21. Sanctity of an Audit Report in Law 11.1-11.5 63-66 22. Denial of Sanctions by the Sanctioning Authorities and the effect on the Appellants 12.1-12.5 66-74....
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....Online Gau 308; (2005) 275 ITR 502 19 The King Emperor v. Khawaja Nazir Ahmand AIR (1945) PC 18 20 Manohar Lal Sharma vs. Principal Secretary and Another (2014) 9 SCC 516 GLOSSARY Abbreviations of Acts Act of 1973 Coal Mines (Nationalization) Act, 1973 CAG Act Comptroller and Auditor General (Duties, Powers and Conditions of Service)Act, 1971 Cr.P.C Code Criminal Procedure, 1973 CVC Central Vigilance Commission IPC Indian Penal Code MMDR Act, Mines and Minerals (Development & Regulation) Act, 1957 P.C. Act Prevention of Corruption Act Abbreviations of Companies AEPL M/s Aryan Energy Private Limited EMTA M/s Eastern Mineral and Trading Agency GCWL M/s Gupta Coalfields and Washeries Limited KECML M/s Karnataka Emta Coal Mines Limited KPCL M/s Karnataka Power Corporation Limited SAS M/s. SAS India Private Limited Abbreviations of Companies AEPL M/s Aryan Energy Private Limited EMTA M/s Eastern Mineral and Trading Agency GCWL M/s Gupta Coalfields and Washeries Limited KECML M/s Karnataka Emta Coal Mines Limited KPCL M/s Karnataka Power Corporation Li....
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....ase being intricately intertwined with several documents including Agreements, Memorandum of Understandings9, correspondence etc. referred to by both sides, the factual narrative must be delineated chronologically at some length to appreciate the context of the case. 3.1. JOINT VENTURE AGREEMENT 3.1.1 A Joint Venture Agreement10 was executed between Karnataka Power Corporation Limited11 and M/s Eastern Mineral and Trading Agency12 for a period of 25 years for the development of captive coal mines and supply of coal to the Thermal Power Plant operated by KPCL namely, Bellary Thermal Power Station13 with the tentative date of commissioning scheduled in December, 2005. KPCL was allocated three coal blocks by the Government of India under the Western Coalfield Limited command area situated in the State of Maharashtra for the development/operation of coal mines dedicated to feeding BTPS. 3.1.2 The JVA was executed between KPCL and EMTA on 13th September, 2002 which gave birth to the Joint Venture Company14 namely, M/s KECML. The shareholding of EMTA in the JVC was to the extent of 76 per cent and that of KPCL was 24 per cent. In the JVA, it was agreed that there would be five d....
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....learance from Ministry of Environment & Forest Govt. of India; (n) preparation of Mining Plan and its approval from Ministry of Coal, Govt. of India; xxxxx (r) arrangement of approval for coal linkage from KPCL Coal Mines to the power stations of KPCL; (s) arrangement of railway siding nearest to the KPCL Coal Mines, and xxxxx {u) undertake all other allied jobs for coal mining & washery operations. ARTICLE 5 BUSINESS OF THE COMPANY To achieve the main objects of the Company as mentioned in clause 3 of Article 2, EMTA shall be responsible for development, operation of KPCL coal mines and delivery of coal to BTPS or any other thermal power station under KPCL, the terms and conditions of which shall be governed by an agreement to be executed by and between Company and EMTA. EMTA's Scope of work shall comprise as follows: 1. Development and Operation of KPCL coal mines 2. Establishing coal washery at Pit head a) EMTA shall ensure establishment of coal washery at the pit head so that the coal to be supplied by the company should meet the required specification of KPCL and KPCL is not liable ....
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.... xxxxx c) The price shall be firm at the agreed price i.e. Rs.1650.47 per MT for a quantity of one million tonnes in the first year of BTPS - operation subject to price variation as per clause 3.D(b)-l(a) but limited to 50% increase in base price only. And 100% variation in statuary charges as per clause 3.D(a). xxxxx 2. Basis of payment and price adjustment KPCL shall pay the price of coal for the quantity and quality of coal on receipt at BTPS on rake to rake basis as detailed herein below: A) QUANTITY ... B) QUALITY ... C) PRICE ADJUSTMENT The size of coal, ash content, and GCV of coal would be checked and compared with the guaranteed values as indicated below: (a) GCV (ARB) 4500 in Kcal/KG (b) Permissible variation Max. 4500 Kcal/Kg & Min. 4000 Kcal/Kg. (c) Ash content (ADB) 0 to 25 mm with fines (upto-2 mm) not exceeding 20% Suitable price adjustment would be carried out be KPCL for variation in properties compared to the guaranteed value as indicated in the following paragraphs. i) ASH CONTENT(ADB)... ii) GCV (ARB) a) No Pro rata price adjustm....
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....y of coal from KPCL coal mines to KPCL power plants as per the guaranteed values indicated in 3 c) of Article 6 and specification stated in Annexure - I attached to this agreement. xxxx 6. It shall establish Washery at the pit head and get all clearances required for setting up the washery to effect washing of coal to meet the specification." xxxx [ emphasis added ] 3.1.3 Annexure-I appended to the aforesaid JVA specifies the desired characteristics of the coal and contains a computed statement relating to the expected coal quality with the range for the maximum and minimum. The calorific value15 in Gross Calorific Value16 has been mentioned in the first column under the head 'Description' and in the column of "Expected Product Coal" that states as follows: 'DESIRED CHARACTERISTICS OF WCL COAL EXPECTED COAL QUALITY WITH THE RANGE FOR MAXIMUM & MINIMUM DESCRIPTION UNITS EXPECTED PRODUCT COAL RANGE MINUMUM MAXIMUM Gross C.V. Kcal/K.gm 4995 xxxxxx Size of Coal mm 0-25 mm ....
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....s (Development & Regulation) Act, 1957 and Mineral Concession Rules, 1960 and subject to the provisions of other relevant statutes. (v) Allocation of coal block may be cancelled in case of unsatisfactory progress of implementation of their proposed end use plant, development of captive coal mine or any of them. 3. The allotment of the captive blocks will also be subject to the following conditions: (i) The end use for which coal mined from the captive block should be utilized and all the conditions imposed by the Central Government mentioned in this letter conveying offer by the Screening Committee of captive block to M/s. Karnataka Power Corporation Ltd, may be clearly specified in the mining lease. (ii) All the conditions imposed by the Central Government while conveying the previous approval to the State Government under Section 5(1) of the Mines and Minerals (Development & Regulation) Act, 1957 for grant of mining lease in favour of captive mining party should clearly form part of the lease deed to be executed between the concerned State Government and the party. (iii) In case the captive block has been offered for washing-cum-end us....
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.... within a period of six months. The arrangement of transport of coal, if any, etc. will have to be worked out by the company in consultation with the Ministry of Railways/Ministry of Surface Transport depending on the mode of transport. Yours faithfully, (S. Gulati) Director" (emphasis added) 3.2.2. On 16th April, 2004, the Ministry of Coal and Mines issued a Gazette Notification under Section 3(3)(a)(III)(4) of the Coal Mines (Nationalization) Act, 197319 stating as below: "MINISTRY OF COAL AND MINES (Department of Coal) NOTIFICATION New Delhi, the 16th July, 2004 S.O. 824(E) - In exercise of the powers conferred by item(4) of subclause (Ill) of clause (a) of Sub-section (3) of Section 3 of the Coal Mines (Nationalisation) Act, 1973 (26 of 1973) the Central Government hereby specifies as an end use the supply of coal from the coal mines of Kiloni, Manoradeep and Baranj I-IV blocks by the Karnataka EMTA Coal Mines Limited on an exclusive basis to the Karnataka Power Corporation Limited for generation of thermal power in their proposed 1000 MW (2 x 500 MW) TPS at Ballary, Karnataka subject to condition that t....
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....lity to develop and operate the said coal mines to the Supplier. For this purpose, the Purchaser has entered into a Joint Venture Agreement dated 13.9.2002 with, M/s. Eastern Minerals & Trading Agency (in short EMTA hereinafter), to form a joint venture company (hereinafter' called the "Supplier") for development and operation of such coal) mines. The entire amount of coal produced from such coal mines shall be sold, transported and delivered by the Supplier exclusively to the Purchaser for use at BTPS in accordance with the provisions of this Agreement. xxxxx ARTICLE 1 DEFINITIONS xxxxx "Coal" means washed coal with guaranteed values as per Article-6 and satisfies quality parameter laid down in Annexure -I attached to this agreement. xxxxx "GCV (ADB)" means Gross Calorific value on air dried basis in Kcal/Kg determined through a Bomb Calorimeter as measured at BTPS as per IS 1350 (Part- II). xxxxx "Joint Venture Agreement'' means the agreement dated 13.09.2002 entered into between the Purchaser and M/s. Eastern Minerals & Trading Agency to form a joint venture company. xxxxx ....
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....xure - I. The methodology for verifying the incidence of stonesIshales shall be mutually agreed to between the Purchaser and the Supplier. The size of coal shall be less than 25 mm (0-2 mm fine not >20%). xxxxx ARTICLE 6 CONTRACT PRICE OF COAL 6.1 The Purchaser shall purchase the entire quantity of Specified Coal supplied to it at the commercial terms and conditions stated herein below: 6.1.1 Price a) Purchaser shall purchase the entire quantity of specified coal supplied to BTPS at a price of Rs. l 650.47 per tonne, the detailed break up of which is as per Annexure - II attached to this agreement. Xxxxx 6.1.3 Basis of payment and price adjustment xxxxx C) PRICE ADJUSTMENT The size of coal, ash content and GCV of coal would be checked and compared with the guaranteed values as indicated below: (a) GCV (ARB) 4500 in Kcal/KG (b) Permissible variation max. 4500 Kcal/Kg.& (c) Ash content 32% maximum (d) Size of coal 0 to 25 mm with fines (upto-2mm) not exceeding 20% (e) Total moisture 6% minimum; 15 maximum Suitable price adjustment wo....
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....d 5 of the FSA, a Tripartite Agreement was executed between KECML, KPCL and M/s SGS India Private Limited22 on 20th June, 2008. M/s SGS was appointed as a third-party agency for purposes of sampling and analysis of the coal to be received at BTPS. 3.3.3 For the sake of completion of narration, it may be noted here that although the MoC had approved the Mining Plan submitted by KECML on 08th December, 2004 and the FSA referred to above was executed on 09th May, 2007, the actual mining and coal production could be commenced by KECML only in September, 2008 on account of the litigation initiated by M/s Central India Power Company23 against the MoC in relation to the coal block allocated to KPCL. In July, 2003 CIPCO filed a writ petition24 before the Nagpur Bench of the Bombay High Court seeking reallocation of coal blocks allocated to KPCL. On 21st May, 2006, a status quo order was passed by the High Court in the said petition and KECML and KPCL were also made parties. The said petition was finally dismissed by the High Court on 10th August, 2006 which dismissal order was upheld by this Court on 05th January, 2007. Due to the status quo order operating in all this duration, the coa....
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.... by KECML 2. KECML has agreed to provide minimum 2 mtpa (Min 8000 tonnes on daily average basis) raw coal to Majri washery of GCWL from their Raw Coal Dump Yard. It shall be GCWL's responsibility to arrange/transport Raw Coal from the mines to MAJRI washery process the coal to achieve agreed specifications of the washed coal, transportation of washed coal to Majri railway siding to load minimum two rakes daily, supervise the loading of washed coal, onward delivery at BTPS power plant and co-ordination. xxxxx 4. GCWL has agreed to deliver washed coal of following specifications - Ash (ABD) Less than 32 % GCV (ARB) 4500 Kcal/Kg Size 0-5 mm 5. Yield Parameters GCWL shall ensure, broadly, of 90% if the ash content of the raw coal is 35% to 36% and in the event ash content of the raw coal is found to be 40%, the yield shall be 80%. However, after analysis of the full seam of coal available from the mine the yield percentage will be settled on suitable terms. xxxxx 7. KECML shall pay Rs. 90/- Per MT (excluding all taxes as applicable) of raw coal towards washing charges including charges for loading washed coal to dumpers for....
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....1 In the year 2009, to check the statistics of the coal mine, the appellants approached a Government Laboratory, namely, Central Institute of Mining and Fuel Research27 for testing of the Integrated Baranj Open Cast Mines28. The team of officers from CIMFR visited the site, collected 100 MT of coal for testing and furnished a Detailed Washability Report. The report states that the rejects did not contain any useful c.v. as the GCV of the rejects was 1094 Kcal/Kg and the useful heat value was negative. 3.6 REVISED MINING PLAN 3.6.1 After the mining continued for about two years in terms of the original Mining Plan submitted in the year 2004, KPCL decided to increase the capacity of BTPS from 2.5 Mty to 5 Mty. As a result, the appellants were required to prepare a revised Mining Plan for supplying the increased mining demands. On 20th December, 2010, the appellants addressed a letter to the MoC for seeking approval of the revised Mining Plan. At that stage, a new technology for utilization of the rejects for its carbon value was introduced, described as the Fluidised Bed Combustion29. The letter issued by the appellants to the MoC mentioned that the rejects generated could be g....
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....ot marketable. It was further stated that the quality of the rejects was so poor that no records were maintained regarding its utilization. However, the rejects were used to fill up low land area of siding and road between coal blocks to the washery and for pit dumping near the washery. 3.7.2 To substantiate the statement made that the yield of the washery was 95 to 96 per cent, the appellants relied on the Washability Report prepared by CIMFR, Nagpur unit dated 01st August, 2009 which records that IBOCM coal is amenable to wash with yield varying from 90 to 98 per cent at the desired ash level of 32 per cent. The Report has recorded that the GCV of the mined coal fit for transporting to BPTS is 4464 Kcal/kg and that of the rejects is 1094 Kcal/kg. The data prepared in a format and submitted in a tabulated format by KECML to the Coal Controller for the period between the year 2008-09 and 2012-13 is extracted below: Sl. No. Year Production QTY OF COAL DIRECTYLY DESPTACHED TO SIDING QTY OF COAL DESPATCHED TO WASHERY WASHED COAL PRODUCED REJECTS PRODUCED REJECTS CONSUMED (APPROX.) 1 2 3 4 5 6 7 8 1 2008 09 990839 ....
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....d and the requirement of the captive user, the rejects and middlings are generated from washery. A study report indicates that washing of D-grade coal generates rejects and middling of F and G-grade, and such low quality coal was also being used in power generation. ➢ The purpose of allocation of coal blocks for captive use under section 3(3) of the Coal Mines (Nationalisation) Act, 1973 is not to enable free trading of coal by private companies. The basic concept of captive mining permitted under the aforesaid Act is that the coal obtained from a captive block shall be used entirely and exclusively for the specified and approved end use by the allocatee Company and, therefore, the production of surplus coal should not result in any undue advantage to the captive block allocatee as the coal block is allotted to them for use in their end-use plant only and any additional production from the block should be made available to the Government for utilization. ➢ While allocating the coal block in November 2003, the Government directed the Company to use the rejects for its own captive consumption. ➢ In reply to the clarification sought (Oct....
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.... no provision was made in the FSA made by the Company with KECML for supply of rejects/middling. It did not demand the washery rejects from KECML either for its captive consumption or for its disposal by its own means with the approval of Central Government. The conditions of allocation inter-alia included that if the coal was being washed, tailings, middling or rejects, as the case may be, from washery should be used for captive consumption only by the Company as approved by the Central Government. Further, no coal shall be sold, delivered, transferred or disposed of except for the stated captive mining purpose (power generation) and with the previous approval of the Central Government in writing. We observed that: > Depending on the type of coal being washed and the requirement of the captive user, the rejects and middling are generated from washery. A study report indicates that washing of D-grade coal generates rejects and middling of F and G-grade, and such low quality coal was also being used in power generation. > The purpose of allocation of coal blocks for captive use under section 3(3) of the Coal Mines' (Nationalization) Act, 1973 is not to enable free trading of coa....
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....ity of coal sent to washery from Integrated Baranj OCP, the quantity of rejects generation and the quantity of coal finally dispatched to KPCL. Year Coal produced at Baranj OCP (in Tonnes) Minimum quantity of rejects as per MOU (10%) Average CIL rate of G grade coal (Rs.) Loss (Rs.) 2008-09 990839.026 99083.903 590 58459502.53 2009-10 2252358.28 225235.83 620 139646213.05 2010-11 2274994.46 227499.45 650 147874639.58 2011-12 2188869 218886.9 650 142276485.00 2012-13 (up to May 2012) 570869.3 57086.93 620 35393896.60 52,36,50,736.76 b) It may be noted that the said rejects are only Stones / Boulders not consistent with the size of coal :( - 25 mm) for which the boiler is designed hardly have any calorific value. Therefore the said rejects have been used for leveling, piling etc. towards facilitating Integrated Baranj OCP. c) The Audit comment is a generalized observation without any factual support and as such cannot be concluded that the washery rejects irrespective of the geological location of the source of coal would have Useful Heat....
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.... co-accused. Following are the fourteen persons/entities who have been arrayed as accused by the respondent-CBI : FUNCTIONARIES OF KPCL A-1 SM Jaamdar, (Rtd IAS and the then Managing Director Karnataka Power Corporation Limited "(KPCL") and Chairman of Karnataka EMTA Coal Mines Ltd ("KECML") A-2 Balasubramanium, then Executive Director and Company Secretary, KPCL and Director KECML A-3 Muralidhar Rao, Director (Technical) KPCL, Director - KECML A-4 DC Sreedharan, Director (Technical) KPCL and Director KECML A-5 H.N. Narayana Prasad, the then Director (Technical) KPCL, and Former Director KECML FUNCTIONIARIES OF KECML A-6 Ujjal Kumar Upadhyay, Chairman and MD EMTA Coal Ltd and Managing Director of KECML A-7 Bikash Mukherjee, Director EMTA and Former Director of KECML A-8 Bishwanath Dutta, Director EMTA and Director KECML A-9 Purajit Roy, Executive Director and CFO M/s EMTA Coal Ltd A-10 Ashok Tooley, Director KECML FUNCTIONARIES OF GCWL A-11 Padmesh Gupta , CMD Gupta Coal Washeries Limited CORPORATE ENTITIES & FUNCTIONARIES A-12 Karnataka EMTA Coal Mines Ltd. (KECML) A-13 M/s East....
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.... to grant sanction to prosecute Mr. R. Nagaraja, the Department of Personnel & Training43, Government of India addressed a letter dated 16th September, 2018 to the respondent- CBI stating that the Competent Authority i.e., the Central Government had denied sanction for prosecution of Mr. Yogendra Tripathi, the then Managing Director of KPCL. It is a matter of record that the respondent-CBI did not take any steps to challenge the decision taken by the Sanctioning Authority and the Competent Authority refusing permission to grant sanction for the prosecution of Mr. R. Nagaraja and Mr. Yogendra Tripathi. 3.10.5 The Charge-sheet was finally filed by the respondent-CBI against 14 persons/entities alleging that they had illegally disposed of the coal rejects in IBOCM. A Supplementary Chargesheet was filed on 4th November, 2019. Out of the two charges, one charge relating to allegations of recovery of payment for washing charges was dropped by the respondent-CBI. 3.10.6 On 1st September, 2021, the appellants filed an application before the learned Single Judge under Section 227 read with Section 239 of the Criminal Procedure Code44 for discharging them in the case. By the common imp....
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....ML was only required to dispose off the coal rejects in an environment friendly manner and that KPCL would have no right over the rejects or claim any entitlement over them, reference has been made to the decision of the Division Bench of the Karnataka High Court in the case of KPCL v. Aryan Energy Private Limited45 and Others46 and the clause in the Agreement governing KPCL and AEPL to contend that it was similar to the present case inasmuch as like KECML, AEPL was also required to dispose off the rejects in a manner that would satisfy environmental regulations. In the above case the Karnataka High Court has held that the clauses of the Agreement between the parties appearing before it showed that coal rejects were the property of AEPL and KPCL had no claim over it and that the term regarding disposal of coal rejects was imposed by KPCL only to ensure compliance of the environmental regulations. 4.4.1. Notably, the aforesaid judgement of the High Court was challenged by KPCL before this Court by way of petition for special leave to appeal47. The said petition was disposed of by this Court on 26th April, 2024, noting that during the pendency of the petitions, the parties had set....
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....osecute the appellants particularly when on the advice of the Central Vigilance Commission48, the Central Government refused to grant sanction for the prosecution of Mr. Yogendra Tripathi (IAS), Managing Director, KPCL and Mr. R. Nagaraja, Director (Finance) of KPCL and nominee Director on the Board of KECML. A different treatment cannot be meted out to the appellants. 4.10. That the respondent-CBI has solely relied on the Report of the CAG of 2013 to launch its prosecution in the year 2015. However, the Report of the CAG has not been approved by the Parliament in accordance with the procedure prescribed under Section 19(A) and other provisions of the Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 197149 read with Articles 148 to 151 of the Constitution of India. 4.11. That the analysis of the rejects and the manner in which loss was allegedly caused to KPCL, has primarily been arrived at by the respondent - CBI from the Report of the CAG and once this Court has held that the Report of CAG cannot be the basis for launching prosecution against the appellants, the entire basis of launching the prosecution is eroded. 4.12. Stating that c....
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.... Directory of India, 2010-2011, Grade 'D' coal in terms of the old grades of non-coking coal would be equivalent to Grade 'G-7' and 'G-8' under the new grades of non-coking coal. The GCV range in respect of Grade 'G-7' coal has been fixed between 5201 Kcal/kg and 5500 Kcal/kg and in respect of Grade 'G-8' coal, between 4901 Kcal/kg and 5200 Kcal/kg. In the instant case, even as per the Report of the CIFMR, Nagpur, the coal rejects were found to be below either of the aforesaid grades of non-coking coal, having been pegged at a GCV of 1094 Kcal/kg. Therefore, it is contended that the chargesheet filed by the respondent-CBI quantifying the loss suffered by KPCL at Rs.49,03,54,159/- (Rupees Forty nine crore three lakh fifty four thousand one hundred and fifty nine only), is without any basis and contrary to the records. 4.14. That the Coal Controller did not raise any issue with regard to the disposal of the rejects and the respondent-CBI has neither made the Coal Controller a witness or an accused in the present case. 4.15. The judgements in Radheshyam Kejriwal v. State of West Bengal and Another54; Ashoo Surendranath Tewari v. Deputy Superintendent of Police, EOW, CBI and Anot....
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....sposal of the rejects, there could be no inference of commission of any offence or a shadow cast on the conduct of the appellants, is flawed. 5.2 Learned counsel for the respondent-CBI has canvassed that there was a latent error in the assumption of the appellants that it was for the MoC to incorporate a clause regarding disposal of the rejects in the Mining Plan and in the absence of any such clause, KPCL or KECML could not be held responsible for the disposal of the rejects, which was done in an illegal manner or that when the Mining Plan was silent regarding the manner in which the rejects were to be disposed of, it was for KPCL and KECML to deal with the rejects in an appropriate manner. The aforesaid presumptions are stated to be without any basis and opposed to the letter dated 10th November, 2003, addressed by the MoC to KPCL that lays down the conditions of allotment of the captive coal blocks in para 3 that specifically states in sub-para (iv) as follows: "3 The allotment of the captive blocks will also be subject to the following conditions:* xxxxx (iv) The allocattee would furnish to this Ministry detailed plan for disposal of unusable conta....
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....the order refusing grant of sanction to prosecute Mr. Yogendra Tripathi (IAS), Managing Director, KPCL and Mr. R. Nagaraja, Director (Finance) of KPCL and nominee Director on the Board of KECML by the Sanctioning Authority and the Competent Authority is not a relevant circumstance at the stage of consideration and framing of charge and no benefit can be given to the appellants on that basis. The orders passed by the Competent Authority refusing to grant sanction are sought to be described as mere administrative orders. Learned counsel argued that in any event, the two officers mentioned above were public servants and the factum of the Competent Authority having refused to grant sanction to prosecute them cannot enure to the benefit of the appellants herein who are not public servants and cannot seek any parity with public servants. 5.7 Learned counsel for the respondent-CBI points out that the Order on Charge impugned by the appellants herein was also challenged by the accused No. 1 to 5 (functionaries of KPCL who had since retired), by filing a Petition for Special Leave to Appeal65 in this Court which was dismissed as withdrawn vide order dated 09th February, 2024. 5.8 It i....
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....ormation for starting an investigation into a criminal offence. 5.11 Coming next to the judgement passed by the Karnataka High Court in the case of Aryan Energy (supra) and cited by the other side, it is submitted on behalf of the respondent-CBI that the said judgment was passed on 22nd July, 2021, much after institution of the chargesheet by the respondent-CBI in the present case. Learned counsel submits that the said judgement addresses a situation where no criminal case has been registered against any of the parties appearing before the High Court. The main dispute in that matter was relating to the entitlement of KPCL to the value of the coal rejects. The Commercial Court had decreed the suits in favour of AEPL by holding that as per the contractual stipulations between the parties, AEPL was only required to dispose off the coal rejects in a manner that would satisfy environmental regulations and KPCL was not entitled to the value of the coal rejects. Learned counsel submits that the terminology used in the contract governing the parties was different and therefore the said judgement does not have any relevance to the facts of the instant case. 5.12 Learned counsel for th....
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....ly, learned counsel for the respondent-CBI has canvassed that the findings returned in a civil proceeding are not binding in a prosecution founded on similar allegations and it is for the criminal Court to arrive at any decision on its own and not to reach any conclusion by reference to any previous decisions relating to the parties which cannot be treated as binding upon it. In support of the said submission, he has cited The King Emperor v. Khawaja Nazir Ahmed67. It has thus been argued by the respondent-CBI that the present appeals are devoid of merits and deserve to be dismissed. 5.17. On the scope of Section 227, Cr.P.C. and the power of the Special Judge to pass an order of discharge, learned counsel for the respondent-CBI has cited the decisions in Union of India v. Prafulla Kumar Samal and Another68 and Niranjan Singh Karam Singh v. Jitendra Bhimraj Bijjaya And Others69. The decisions in State of Maharashtra v. Som Nath Thapa70, State of Tamil Nadu v. N. Suresh Rajan and Others71 have been relied on to make a point that at the stage of framing of charges, the Court cannot appraise the evidence as is done at the time of trial and the Court must proceed on an assumption th....
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....purportedly issued by Mr. Avijit Sarkar to GCWL stating that the email was despatched by the said employee from his personal email id and not from the official email id of KECML and he was not authorized by the Board of Directors of KECML to issue any such email. Even otherwise, the Certificate runs contrary to Clause 12 of the MoU, as it purports to give 100% entitlement of the rejects to GCWL. 6.4 During the course of rejoining, arguments have also been advanced on the quantum of the rejects which as per the appellants, has been wrongly quantified by the respondent-CBI at 8,03,859.277 MT. Learned counsel contended that the said figure has been pulled out by the respondent-CBI from the CAG Report though it claims it has not relied on it to register the PE, followed by registration of the FIR. The attention of this Court has been drawn to the mismatch between the quantity of rejects for a period of two months (April and May of the year, 2012-13) claimed to be 207,837.117 MT by referring to a Certificate dated 07th June, 2016 issued by Mr. S.N. Roy, Statutory Auditor of KECML vis-à-vis the quantity of rejects generated for a period of twelve months for the previous year (2....
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....ecious resources as largesse without complying with the mandatory provisions of the MMDR Act and 1973 Coal Act. After a detailed scrutiny, this Court declared that the entire allocation of coal blocks as per the recommendations made by the Screening Committee from the year 1993 onwards through the Government dispensation route suffered from arbitrariness, and that no fair and transparent procedure had been adopted. 7.3 In the course of the proceedings in the aforesaid matter, the respondent-CBI registered a Preliminary inquiry to investigate the irregularities in allocation of coal blocks under the Government Dispensation Route and to State PSUs, who were allowed to form JVA by joining hands with Private Companies for purposes of development and operation of coal mines. PE 5 was registered on 28th September, 2012. It related to all the coal block allocations made during the year 1993 to 2006. It is not in dispute that the coal allocation in favour of KPCL was also a subject matter of investigation, but nothing untoward was noticed in that. The JVA between KPCL and KECML also withstood the test of scrutiny. As a result, allocation of coal blocks made in favour of KPCL were not in....
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....reof, is also factually misleading because CBI's own record shows that the scope of enquiry in respect of PE-5 registered on 28th September, 2012, was entirely different and had no relationship with the JVA and other agreements executed by KPCL and KECML. No other documents have been filed by the respondent - CBI to demonstrate that it had initiated an independent inquiry into the mining operations of KPCL or that it was during the course of its inquiry into the affairs of KPCL and KECML that it had stumbled upon some irregularities in the MoU executed between KECML with GCWL. Quite clearly, the respondent-CBI made the Audit Report of the CAG submitted in 2013, a launching pad for initiating the prosecution of the appellants in respect of the allegations levelled in the present case and subsequently sought to substantiate them by delving into the records maintained by KPCL, KECML and GCWL. In other words, there was no move within the Department to investigate KPCL or KECML before 2015. The PE's registered in the year 2012 did not inculpate the appellants in any manner. The entire focus of the said PE's was on the larger issue of irregularities in the allocation of coal blocks throu....
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....G, KPCL proceeded to raise a demand on the appellants seeking reimbursement to the tune of Rs.52,37,00,000/- (Rupees Fifty two crores thirty seven lacs only) as cost of the rejects and threatened KECML that in case of default of payment, recovery would commence from their running bills. This made KECML file two writ petitions, which were allowed by the High Court with the following observations: xxxxxxx "36. We find that the report of CAG cannot be the sole basis for any liability being caused or for that matter the sole basis for the prosecution to be launched. However, mere drawing up of FIR by the CBI against unknown officials of KPCL, EMTA and KEMTA cannot provide legal basis or impetus for unilateral demand by KPCL for recovery of Rs.52,37,00,000/- (Rupees Fifty Two Crores Thirty Seven Lakh) only. We hold that such action is arbitrary and unsustainable in law." 9.3. The aforesaid judgement was assailed by KPCL by approaching this Court. The said appeals were dismissed by a three Judges Bench of this Court of which one of us (Hon'ble Ms. Hima Kohli, J) was a member with the observations that the Audit Report of the CAG appeared to have been the starting poi....
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....6 of the Constitution. 18 Accordingly, the Civil Appeals filed by the appellant are dismissed." 9.5. We are therefore of the opinion that this Court having already dismissed the appeal filed by KPCL against the judgment of the Karnataka High Court, having held in clear terms that the CAG Report could not form the basis for launching proceedings against the appellants and further, having upheld the findings returned by the Karnataka High Court that the CAG Report appears to have been the starting point for the entire disputes between the parties who till then, were smoothly discharging their obligations under various agreements, there is no reason to take a different view only on the ground that the respondent-CBI was not a party in the aforesaid proceedings. The chronology of the events speak for themselves and need no further elaboration. 10 IMPORT OF THE JUDGMENT DATED 24TH MARCH, 2016 OF THE KARNATAKA HIGH COURT 10.1. Coming next to the submission made by learned counsel for the respondent that the judgement dated 24th March, 2016 passed by the Karnataka High Court in a writ petition filed by KECML against KPCL is of no consequence, as the said judgment was con....
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....e the allegation is found to be not sustainable at all and the person held innocent, criminal prosecution on the same set of facts and circumstances cannot be allowed to continue, the underlying principle being the higher standard of proof in criminal cases. 39. In our opinion, therefore, the yardstick would be to judge as to whether the allegation in the adjudication proceedings as well as the proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceedings is on merits. In case it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceedings, the trial of the person concerned shall be an abuse of the process of the court." [emphasis added] The aforesaid view also finds resonance in Ashoo Surendranath Tewari (supra) and J Sekar alias Sekar Reddy(supra). 10.2. We are of the view that if there was any breach of contract or default on the part of KECML, KPCL was well empowered to determine the lease. However, KPCL did not do so. Instead, on being confronted with the Audit Objections taken by CAG, it raised a demand on KECML for the value of the coal rejects. This deman....
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....by the Auditor-General of India immediately before the commencement of this Constitution in relation to the accounts of the Dominion of India and of the Provinces respectively." 11.3 The duties of the CAG have been described and discussed at some length in the Arun Kumar Aggarwal(supra) in the following words: "60. The audit of the Union and the States is under Section 13 of the Act. The scope of the audit extends to the audit of all expenditure so as to ascertain whether the monies shown in the accounts as having been disbursed were legally available for such disbursement and whether the expenditure conforms to the authority which governs it. The CAG has to satisfy himself that the rules and procedures designed to secure an effective check on the assessment, collection and proper allocation of revenue are being duly observed under Section 16. The CAG also has to examine decisions which have financial implications including the propriety of the decision making. 61. The reports of the CAG are required to be submitted to the President, who shall cause them to be laid before each House of Parliament, as provided under Article 151(1). In relation to the States, rep....
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.... Merely because the CAG is an independent constitutional functionary does not mean that after receiving a report from it and on the PAC scrutinizing the same and submitting its report, the Parliament will automatically accept the said report. The Parliament may agree or disagree with the Report. It may accept it as it is or in part. It is not in dispute that the Audit Report of the CAG has not been tabled before the Parliament for soliciting any comments from the PAC or the respective Ministries. Therefore, the views taken by the CAG to the effect that tremendous loss had been caused to the public exchequer on account of the coal rejects being disposed of by the KPCL and KECML remains a view point but cannot be accepted as decisive. The respondent-CBI has largely relied on the findings and the conclusions drawn in the Audit Report of the CAG to launch the prosecution against the appellants on an assumption that the said Report has the seal of approval of the Parliament and has attained finality, which is not the case. 12. DENIAL OF SANCTIONS BY THE SANCTIONING AUTHORITIES AND THE EFFECT ON THE APPELLANTS 12.1. It is relevant to note that the very same Audit objections taken b....
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..... It is the matter of fact that the nominees of KPCL who have been appointed to the Board of KECML are not persons well versed in mining matters. As KPCL was not capable of handling mining operations, a joint Venture Company was formed. The Board of KECML and the nominees of KPCL on the Board entirely depended on the inputs provided by the Managing Director, Statutory Auditor and other personnel for making their decisions. 4. The Mining Plan for the operationalization of the mine was prepared by Dr. Seam who was a Ministry of Coal official and not an employee of KECML or KPCL. The Mining Plan was approved by the Ministry of Coal when it did not contain any provisions for disposal of the rejects. In such a situation, the Board of Directors of KECML and especially the KPCL nominees (A-1 to A-7) could not be blamed for the non-compliance of the Allotment Letter and there is no act of omission or commission on the part of KPCL's employees including Shri R. Nagaraja. 5. A perusal of the KPCL Office Notes (Document No.199 to 202) for the period indicates that by way of letter dated 12.01.2009, the Managing Director of KPCL had specifically raised the issue of whether wa....
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....ting the specification if raw coal was supplied. The difficulty for the Management of KPCL was that if the raw coal did not match the specification, it would not be utilization for the generation of power. This would result in stoppage of generation resulting in power crisis in the State of Karnataka. The better alternative would have been to wait for the certificate of the Coal Controller regarding whether the raw coal met the requirements of KPCL of not. Hence, no confirmation was given. This was a managerial decision taken in the best interest of the State of Karnataka as the power generation could not be compromised to save washing cost. The cost of procurement of power would be tremendous and outweighed any temporary disadvantage caused by not abiding by the Board Minutes of 13.06.2009. This decision was vindicated by the letter issued by the Coal Controller's Office on 09.12.2009 wherein it concluded that to obtain the agreed parameter of coal quality, washing would be required. Therefore, it cannot be said that there was an act of omission or negligence or error in judgment on part of the KPCL nominees on the Board of KECML. The decision was taken keeping the best interests ....
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....he absurdly high amount has been claimed. Hence, there is absolutely no evidence to show that any reject has been sold and if so, what is the quantity of rejects sold. In such a situation, there is no basis for assuming that KPCL has suffered any unlawful loss or that GCWL has gained unlawfully during this process. 21. CBI has produced a Debit Note No.KECML/DN/08-09/09 dated 31.03.2009 for Rs.4,30,38,500/- which was recovered at GCWL (and not at KECML) and there is a statement from GCWL that this Debit Note was not honoured. An examination of the Debit Note, Annual Accounts of KECML for 2008-09 and other documents produced along with the Report would indicate that this Debit Note is a fabricated document for the following reasons : a. The Note is generated as on the last date of the financial year 2008-2009 but is forwarded only in the next financial year in September 2009 indicating that it is an afterthought. b. This Debit Note does not find a mention in the Annual Accounts of 2008- 2009 i.e. it should have created an income stream for KECML. c. If the Debit Note was a genuine document, then KECML had to classify the sales of washer rejects of ....
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.... submitted by the respondent-CBI, it observed that there was no evidence to show that any rejects generated by washing of coal had been sold or that KPCL had suffered an unlawful loss during the process. As a result, the Board of KPCL refused to grant sanction to the respondent-CBI to prosecute Mr. R. Nagaraja for offences alleged to have been committed by him. It is noteworthy that no appeal has been filed by the respondent - CBI against denial of sanction. 12.3. Similarly, the request made by the respondent-CBI for seeking sanction to prosecute Mr. Yogendra Tripathi, the then Managing Director, KPCL was denied by the Competent Authority in the Central Government in terms of the letter dated 16th April, 2018, issued by the DoPT. The order passed by the DoPT shows that it took note of the Report of the respondent-CBI, the records submitted by it along with the Report, the advice received from the CVC and then summarized the allegations levelled by the respondent-CBI that formed the basis of its proposal to seek sanction for prosecution of the aforesaid officer. The said request was finally rejected by the Competent Authority in the Central Government with the following observati....
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....nt material/documents, including evidence submitted by the Investigating Agency with the proposal, has approved the proposal to decline sanction for prosecution against Shri Yogendra Tripathi, IAS (KN:85) in the instant case, under Section 19 of the Prevention of Corruption Act, 1988." 12.4. The aforesaid order reveals that before applying its mind, the Competent Authority in the Central Government had sought comments from the Government of Karnataka who had stated that there was no material produced by the respondent-CBI in support of the allegation that Mr. Yogendra Tripathi had conspired to illegally dispose off the coal rejects or with malafide intention deferred the agenda in the 41st Board Meeting of the KPCL. The Competent Authority separately sent the said proposal submitted by the respondent-CBI to the CVC for seeking advice. After examining all the records sent by the investigation agency including the evidence submitted by it, the Office of the Prime Minister who is the Competent Authority in the Central Government, approved the proposal to decline the sanction for prosecuting Mr. Yogendra Tripathi. Yet again, no appeal has been filed by the respondent - CBI before th....
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....ted by the reply furnished by the Minister of State, MoC, in the Lok Sabha in response to an unstarred question seeking an answer from the Government of India as to whether it had framed any National Policy for exploitation of the coal rejects. The reply given was that the Government had not framed any National Policy for exploitation of coal rejects and the same was still under consideration. That being the position, it was left to KPCL and KECML to devise a satisfactory and safe method to dispose off the coal rejects. This was done in terms of Article 5(2)(b) of the JVA that required KECML to dispose off the rejects in a manner that would ensure that there was no threat to the environment. We do not find any irregularity in the route adopted to dispose off the coal rejects. 14. WAS KECML REQUIRED TO ACCOUNT FOR THE COAL REJECTS ? 14.1. Much emphasis has been laid by the respondent-CBI on the contents of the allocation letter dated 10th November, 2003 issued by the MoC, Government of India to KPCL to canvass that the coal mined from the allocated blocks was to be exclusively used to meet the requirements of coal in the proposed thermal power station namely, BTPS and on the c....
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....erstood the clauses in the JVA and the FSA to mean the same and it was satisfied with the manner in which KECML was discharging its obligations under the agreements till Audit Objections were raised by the CAG in October, 2013. That's when KPCL did a complete flip flop and for the first time, raised a demand on KECML seeking reimbursement towards the value of the coal rejects, a decision that was successfully assailed by the appellants in the High Court and the challenge laid by KPCL to the said judgement was repelled by this Court. 15. CAN KECML BE BLAMED FOR NOT SETTING UP THE COAL WASHERY AT THE PITHEAD ? 15.1. As for the allegation levelled by the respondent-CBI that KECML violated the terms of Articles 2(4)(g) and 5(2)(b) of the JVA having failed to setup the coal washery at the pithead, the sequence of events narrated above, shows that the fault does not lie at the door of the appellants. It was on account of some litigation between CIPCO and MoC in relation to the coal blocks allocated to KPCL wherein interim orders were granted by the High Court in favour of CIPCO, that the project got delayed. Production of coal could commence only in September, 2008 after the afores....
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....n the submission made by the respondent-CBI that the coal block allocation was only in favour of KPCL and it ought to have a right over the rejects to the exclusion of KECML and others. 16. DID THE COAL REJECTS HAVE ANY USEFLUL CALORIFIC VALUE MAKING IT A SALEABLE COMMODITY ? 16.1. We find that the Detailed Washability Report of the Government Laboratory namely, CIMFR, Nagpur has been ignored by the respondent-CBI. It was the said Report that formed the basis of the information furnished by KECML with respect to production, stock, despatch of coal to the washery etc., as was demanded by the office of the Coal Controller, a department that falls under the MoC. The said Report stated in so many words that the rejects did not contain any useful c.v. Reliance placed by the respondent-CBI on the revised Mining Plan submitted by the appellants to the MoC in 2010, that mentions a new technology for utilization of rejects for its carbon value, namely FBC is of no consequence as the said technology had not even been introduced when MoC approved the original Mining Plan, submitted by KECML in the year 2004. Even otherwise, it is not in dispute that for applying the said technology, a p....
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....rt was agreed to be released in favour of Aryan Energy. 17.2 We do not see why the aforesaid decision would not have any persuasive value when the clauses in the agreement between KPCL and KECML for disposing off the coal rejects are identical. On going through the agreements executed between KPCL and Aryan Energy, the High Court had shot down the plea of KPCL that it was entitled to the coal rejects. Though KPCL assailed the said decision before this Court, it settled its dispute with Aryan Energy and the appeals preferred by it were disposed of as compromised. The contention of the respondent-CBI that the order of the High Court of Karnataka is not relevant for the present case since there was no criminal case registered therein, cannot be a distinguishing feature when the terms and conditions of the contract between KPCL and Aryan Energy on the aspect of disposal of the coal rejects is pari materia. We are of the opinion that the judgment in the case of Aryan Energy does have persuasive value. 18. INHERENT JURISDICTION OF THE HIGH COURT UNDER SECTION 482, Cr.P.C 18.1. For seeking quashing of the chargesheet and the order framing charges, learned counsel for the appellants ....
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....ase, this court had further observed that the discretion vested in the High Court under Section 482 Cr.P.C can be exercised suo moto to prevent abuse of the process of a Court, and/or to secure the ends of justice. After listing the factors that ought to weigh with the High Court to make a just and rightful choice, it was observed thus: "30. Based on the factors canvassed in the foregoing paragraphs, we would delineate the following steps to determine the veracity of a prayer for quashment raised by an accused by invoking the power vested in the High Court under Section 482 CrPC: 30.1. Step one: whether the material relied upon by the accused is sound, reasonable, and indubitable i.e. the material is of sterling and impeccable quality? 30.2. Step two: whether the material relied upon by the accused would rule out the assertions contained in the charges levelled against the accused i.e. the material is sufficient to reject and overrule the factual assertions contained in the complaint i.e. the material is such as would persuade a reasonable person to dismiss and condemn the factual basis of the accusations as false? 30.3. Step three: whether the m....
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....r v. State (NCT of Delhi), Department of Home and Another93, referring to the provisions of Section 482, Cr.P.C, this Court held as follows: 16. There is nothing in the words of this section which restricts the exercise of the power of the Court to prevent the abuse of process of court or miscarriage of justice only to the stage of the FIR. It is settled principle of law that the High Court can exercise jurisdiction under Section 482 CrPC even when the discharge application is pending with the trial court [G. Sagar Suri v. State of U.P., (2000) 2 SCC 636, para 7 : 2000 SCC (Cri) 513. Umesh Kumar v. State of A.P., (2013) 10 SCC 591, para 20 : (2014) 1 SCC (Cri) 338 : (2014) 2 SCC (L&S) 237] . Indeed, it would be a travesty to hold that proceedings initiated against a person can be interfered with at the stage of FIR but not if it has advanced and the allegations have materialised into a charge-sheet. On the contrary it could be said that the abuse of process caused by FIR stands aggravated if the FIR has taken the form of a charge-sheet after investigation. The power is undoubtedly conferred to prevent abuse of process of power of any court. xxxxx 28. In S....
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....here there is an express legal bar engrafted in any of the provisions of the Code or the Act concerned (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the Act concerned, providing efficacious redress for the grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge." 18.6. In State of Karnataka vs. L. Munniswamy94, Y.V. Chandrachud, J. as he then was (speaking for a three Judge Bench) observed thus: " 7. ... In the exercise of this wholesome power, the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed. The saving of the High Court's inherent powers, both in civil and criminal matters, is designed to achieve a salutary public purpose which ....
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....s in Article 136 itself qualifying that power. But, the very nature of the power has led the Court to set limits to itself within which to exercise such power. It is now the well established practice of this Court to permit the invocation of the power under Article 136 only in very exceptional circumstances, as when a question of law of general public importance arises or a decision shocks the conscience of the Court. But, within the restrictions imposed by itself, this Court has the undoubted power to interfere even with findings of fact, making no distinction between judgments of acquittal and conviction, if the High Court, in arriving at those findings, has acted "perversely or otherwise improperly". (See State of Madras v. A. Vaidyanatha Iyer [AIR 1958 SC 61 : 1958 SCR 580 : 1958 Cri LJ 232] and Himachal Pradesh Administration v. Om Prakash [(1972) 1 SCC 249 : (1972) 2 SCR 765] )......." 5. A doubt has been raised about the competence of a private party, as distinguished from the State, to invoke the jurisdiction of this Court under Article 136 of the Constitution against a judgment of acquittal by the High Court. We do not see any substance in the doubt. Appellate pow....
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....cedural limitation in the manner of exercise and the occasion for exercise? Is there no duty to act fairly while hearing a case under Article 136, either in the matter of grant of leave or, after such grant, in the final disposal of the appeal? We have hardly any doubt that here is a procedure necessarily implicit in the power vested in the summit court. It must be remembered that Article 136 confers jurisdiction on the highest court. The founding fathers unarguably intended in the very terms of Article 136 that it shall be exercised by the highest judges of the land with scrupulous adherence to judicial principles well established by precedents in our jurisprudence. Judicial discretion is canalised authority, not arbitrary eccentricity..... xxxxx 10. Once we hold that Article 136 is a composite provision which vests a wide jurisdiction and, by the very fact of entrusting this unique jurisdiction in the Supreme Court, postulates, inarticulately though, the methodology of exercising that power, nothing more remains in the objection of the petitioner. It is open to the court to grant special leave and the subsequent process of hearing are (sic is) wellestablished. T....
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.... the Constitution cannot be barred by the Statute since it is an extraordinary power. 19.4 In State of Punjab and others v. Rafiq Masih (White Washer) others98, in the same strain, this Court has held that Article 136 is a special jurisdiction and can be described as a 'residuary power, extraordinary in its amplitude, its limits when it chases injustice, is the sky itself'. It is a corrective jurisdiction that vests a discretion in this Court to settle the law clearly and makes the law operational thereby making it a binding precedent for the future instead of keeping it vague. 19.5 In Mekala Sivaiah v. State of Andhra Pradesh99, this Court commented on the circumstances in which the power under Article 136 is exercised and held thus: "14. Before adverting to the merits of the contention raised, it is important to reiterate that Article 136 of the Constitution of India is an extraordinary jurisdiction which this Court exercises when it entertains an appeal by special leave and this jurisdiction, by its very nature, is exercisable only when this Court is satisfied that it is necessary to interfere in order to prevent grave or serious miscarriage of justice. 1....
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....ance of directly invoking Article 136 of the Constitution of India and filing a petition for special leave before this court to challenge the impugned orders passed by the learned Special Judge, CBI framing charges against them and dismissing their application for seeking discharge. 19.9 Given the broad amplitude of the extraordinary powers of this Court under Article 136 of the Constitution of India, the respondent-CBI cannot be heard to urge that since a Chargesheet has already been filed against the appellants and charges framed, the appellants should be left to take all the pleas available to them before the learned Special Judge, CBI during the course of the trial and that no interference is called for by this Court at this stage. Such an approach does not commend itself to this Court in the facts and circumstances of this case. 20. APPLICATION OF MIND AT THE STAGE OF SECTION 227, Cr.P.C 20.1 We may note that there is no quarrel with the broad proposition canvassed by learned counsel for the respondent- CBI that at the stage of Section 227, Cr.P.C., the Special Judge, CBI had to sift the evidence to find out whether there was sufficient ground for proceedings against ....
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....ce or a mouthpiece of the prosecution, but has to consider the broad probabilities of the case, the total effect of the evidence and the documents produced before the Court, any basic infirmities appearing in the case and so on. This however does not mean that the Judge should make a roving enquiry into the pros and cons of the matter and weigh the evidence as if he was conducting a trial." [ emphasis added ] 20.3. To the same effect is the view expressed in Niranjan Singh KS Punjabi (supra) where this court has observed as follows: "5. Section 227, introduced for the first time in the new Code, confers a special power on the Judge to discharge an accused at the threshold if 'upon consideration' of the record and documents he considers 'that there is not sufficient ground' for proceeding against the accused. In other words his consideration of the record and document at that stage is for the limited purpose of ascertaining whether or not there exists sufficient grounds for proceeding with the trial against the accused. If he comes to the conclusion that there is sufficient ground to proceed, he will frame a charge under Section 228, if not he will discharge the....
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....ed has been made out. To put it differently, if the court thinks that the accused might have committed the offence on the basis of the materials on record on its probative value, it can frame the charge; though for conviction, the court has to come to the conclusion that the accused has committed the offence. The law does not permit a mini trial at this stage." [ emphasis added ] 20.5 The aforesaid parameters had to be kept in mind by the learned Special Judge, CBI at the time of considering the records/documents submitted by the respondent-CBI and the material produced by the appellants. In our view, the said consideration is lacking in the impugned orders for the reasons noticed above. 21. CONCLUSION 21.1 Though multiple arguments have been advanced by learned counsel for the appellants to assail the impugned orders passed by the learned Special Judge, CBI, including a plea that no offence is made out under Section 13(1)(d) of the P.C. Act for various reasons, this Court has consciously elected to confine itself only to those aspects that in our opinion, would be sufficient to arrive at a prima facie view that the allegations levelled against the appellants have....
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....ited, declined sanction for the prosecution of the aforesaid officer. (e) The respondent-CBI did not approach the Court to challenge the aforesaid decisions. Having accepted the decision taken by the Sanctioning Authority/Competent Authority in the Central Government and dropping the charges against the seniormost functionaries in KPCL, who were also holding positions in the Board of KECML, there is no justification to press charges against the appellants herein whose role is similar to them. (f) The decision dated 24th March, 2016 of the Karnataka High Court in a writ petition filed by KECML against KPCL has been wrongly overlooked. The High Court had an occasion to scrutinize the very same agreements and the CAG report that formed the basis of the investigation conducted by the respondent-CBI to return positive findings in favour of the appellants. The view taken by the Karnataka High Court has been upheld by this Court in a judgment rendered on 20th May, 2022 which was just a few days after Charges were framed by the learned Special Judge, CBI on 3rd March, 2022. (g) Yet again, an interpretation of the very same clauses in the agreement relating to the....
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....ating that the Government had not framed any National Policy for exploitation of coal rejects and the same was still under consideration. In the absence of a policy to dispose off the coal rejects, the appellants cannot be blamed for complying with the terms and conditions stipulated in the JVA. (k) KECML could not be faulted for failing to set up the coal washery at the pithead, in terms of the JVA as that was for reasons beyond its control which included a prolonged litigation between the MoC and CIPCO in relation to the very same coal blocks allocated to KPCL which in turn delayed the project considerably. Production of coal could only commence in September, 2008 when the curtains were drawn on the aforesaid litigation. The Board of KPCL consciously acceded to the proposal made by KECML that a MoU be executed with GCWL for washing of mined coal at its washery. Pertinently, GCWL was not an unknown entity to KPCL as the latter had prior dealings with the said Company for washing of mined coal in another project. This decision taken by the parties in their commercial wisdom has been sought to be selectively tainted with criminal intention attributed to the appellants, with....
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....reting the clauses of the agreements governing the parties and by heavily banking on the observations made in the Audit Report of the CAG that has not attained finality till date. In view of the glaring infirmities mentioned hereinabove, the impugned orders deserve interference in exercise of the powers vested in this court under Article 136 of the Constitution of India. 21.4 For all the reasons enumerated above, the present appeals succeed. The order on charge dated 24th December, 2021 and the order framing charges dated 3rd March, 2022 passed by the learned Special Judge, CBI qua the appellants before this Court are unsustainable and accordingly quashed and set aside. FOOTNOTE 1 In short 'P.C. Act' 2 In short CBI 3 Hereinafter referred to as 'learned Special Judge, CBI' 4 Case No. CBI/317 /2019; CNR No. DLCT11-001312-2019 in RC No. 220-2015- E-0002; Branch: CBI/EOU-IV, EO-II/New Delhi 5 In short 'IPC' 6 In short "KECML" 7 (2014) 9 SCC 614 8 (2017) 14 SCC 809 9 In short 'MoU' 10 In short 'JVA' 11 In short 'KPCL' 12 In short 'EMTA' 13 In short 'BTPS' 14 In short 'JVC' 15 In short 'C.V.' 16 In short 'G.C.V.' 17 In short 'MoC&#....