TaxTMI 
TaxTMI 
2025 (8) TMI 508
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....ther/co-convict, Manoj Kumar Jayaswal (A-1) and M/s AIPL (A-3), has been convicted by the learned Special Judge, (PC Act) (CBI), Coal Block Cases-01, RADC, New Delhi, in Case No. CBI-41/2020, arising out of FIR No.: RC 221 2016 E 002, under Section 120B read with Section 420 and Section 471 of the Indian Penal Code, 1860, (for short, 'IPC'), registered with Branch, CBI/EO-III/New Delhi, for the offences punishable under Section 420 of the IPC and Section 120B and Section 120B read with Sections 471/420 of the IPC and vide order on sentence dated 11.12.2024, the appellant has been sentenced to undergo rigorous imprisonment for 3 years for each offence along with a total fine of Rs. 20 Lakhs and in default of payment of fine, to undergo simple imprisonment for a period of 4 months for each offence. All the sentences were directed to run concurrently. 3. In the present case, the appellant along with other co-convicts has been convicted in Coal Scam case. He was found guilty of being in conspiracy with convict no.3, Abhijeet Infrastructure Private Ltd. ("AIPL") and convict no. 1, Manoj Kumar Jayaswal, for cheating the 24th Screening Committee, Ministry of Coal, Ministry of Steel and....
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..... 1 was running AIPL on his own and was responsible for the alleged submission of forged documents to Ministry of Steel and Ministry of Coal and forgeries committed at his behest. He has further submitted that the convict no. 1 was the direct beneficiary of coal block allocation to AIPL and after securing of same, all post-allocation correspondence to various authorities including the Ministry of Coal were sent by him. It is further pointed out that in the investigation of the CBI as also the order on charge passed by learned Trial Court primary allegations were against the convict no. 1, Manoj Kumar Jayaswal, brother of the present appellant. 6. Learned Senior Counsel has further submitted that as per the case of CBI, the appellant had misrepresented himself as Director/Joint Managing Director of AIPL and was engaged in acts which amount to the betrayal of trust of shareholders by a key-functionary in a company, however, none of the prosecution witnesses examined before the learned Trial Court has deposed anything incriminating against the present appellant. It has been contended that by way of testimonies of prosecution witnesses, it has been established that convict no. 1 was....
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.... in a very callous manner put the said record to the appellant and he had firmly stated that nothing incriminatory was found by the learned Trial Court as well as the prosecution at the time of framing of charge from the said records. It is, thus, contended that the impugned judgment of conviction suffers from various self-contradictions and illegal findings as the prosecution has failed to cogently prove before the learned Trial Court that the present appellant was managing the affairs of AIPL (A-3) or he was having knowledge of the forgery of the documents and was main beneficiary of the AIPL's scam. 8. Learned Senior Counsel has further submitted that the operation of impugned judgment of conviction is to be stayed as the same is based on erroneous considerations and its operation will lead to irreversible consequences which would not be rectified in future, in case, he is acquitted of the charges levelled against him in the present appeal. Further that, the appellant is currently Managing Director of a listed entity, i.e., M/s JNIL, which is India's one of the largest Alloy Steel Manufacturers and serves critical industries such as automotive, power, engineering, defense and....
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....s wife, 2 sons, one daughter and his father and has played significant role in fostering industrial development, creating employment, promoting entrepreneurship etc., and otherwise has clean antecedents. Also, the gravity of the offence is not very high as the appellant has been sentenced to 3 years of imprisonment. It is further submitted that the hearing of the present appeal is likely to take time and the trials in other coal block cases are also pending since long. It is further submitted that the sentence of convict no. 1 has already been suspended by a Coordinate Bench of this Court vide order dated 23.12.2024 in CRL.A. 1186/2024. It is further submitted that the appellant was not arrested by CBI during investigation and he had not misused the liberty granted to him and had duly complied with all the conditions imposed by him even while travelling abroad on various occasions. It is further submitted that there has been no accusation of the appellant tampering with the evidence or influencing any witness during the course of trial. Even otherwise, the appellant has good case on merits and in case, the impugned judgment is allowed to operate, the injury to be suffered and damag....
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....ral turpitude". It is submitted that under erstwhile Companies Act, 1956, it was essential that the twin conditions attracting the disqualification, i.e., conviction for commission of an offence and such offence is involving moral turpitude, were fulfilled. Such determination attracting disqualification was primarily dependent on the fact that the offence involved moral turpitude as a condition precedent. 12. Learned Senior Counsel for CBI has further drawn attention of this Court towards Section 196(3)(d) of the Companies Act, 2013, wherein it has been provided that, "no Company shall appoint or continue the appointment of any person as Managing Director, Whole Time Director or Manager who has at any time been convicted by a Court of any offence and sentenced for a period of more than six months" and has submitted that the provision providing for disqualification for being appointed as Managing Director, Whole Time Director, or, Manager of a Company, has undergone severe change from law in 1956 to 2013 as the disqualification stipulated by Section 267 of erstwhile Companies Act was not applicable to Manager, however, under Section 196(3)(d) of the Companies Act, 2013, such disq....
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....and cons. It is further submitted that Rama Narang (supra) is a case wherein, the applicant was a Managing Director and it was duly noted in the said case that statutory provisions are more stringent in case of a Managing Director as he is personally responsible for conducting the business of the company. It has further been argued that under the present provisions, conviction for any offence entails disqualification provided that the sentence awarded is for a period of more than six months. Therefore, even if, a person is convicted for the offence punishable under Section 138 of the Negotiable Instrument Act, 1881, or an offence under IPC, such disqualification will be applicable. 14. Learned Senior Counsel for CBI has further submitted that the majority judgment of the Hon'ble Supreme Court in Afjal Ansari (supra), provided that the Court exercising power under Section 389 of the CrPC must consider that the very notion of irreversible consequences is centered on factors including the individual's criminal antecedents, the gravity of the offence, and its wider social impact, while simultaneously considering the facts and circumstances of the case. It is further submitted that t....
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.... Attention of this Court has been drawn towards the record (Attendance Sheet) of the Screening Committee dated 09.12.2004 to show that the present appellant had appeared as director of the AIPL (A-3), convict company, and AK Srivastava, PW-14, and VS Garg were also described as General Manager (Projects) and director respectively, before the said Committee. It is further pointed out that both convict no. 1 and convict no. 2 were involved in a game of musical chairs to present a deceptive scenario before the Screening Committee and have interpreted the minutes of the Screening Committee to support/belie the statement of PW-14 to support their own individual cases. It is further submitted that VS Garg, whose statement was recorded as PW-29 but not examined, had stated that he was new to the company and was not aware of the issue and never dealt with the convicts and the same was the reason for not examining him before the learned Trial Court during the course of trial. 17. Learned Senior Counsel has further drawn attention of this Court towards the testimony of PW-14 and statement of the present appellant recorded under Section 313 of the CrPC to show that as per those statements,....
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....nLine Del 7271, to contend that the application seeking similar reliefs was dismissed by the said Court despite recording a finding that there was a prima facie case in favour of the appellant/applicant therein. Thus, it is prayed that the present application be dismissed. 19. In rejoinder thereto, learned Senior Counsel for the appellant has submitted that the latter is 65 years of age and is presently Managing Director of a listed company wherein public shareholders are involved. He has handed over a chart showing the status of the appeals filed in the cases arising out of the Coal Block Scam cases and the same shows that 43 cases are pending even after 12 years. Learned Senior Counsel has further relied on the ratio of Hon'ble Supreme Court in Rama Narang (supra) in respect of the exercise of power to stay of conviction wherein the person was a Managing Director of a public company. He further submitted that the present appellant duly satisfies the twin test of loss of an existing privilege/qualification and irreversible consequences/damages as laid down by the Hon'ble Supreme Court in Afjal Ansari (supra). It is, thus, prayed that the present application be allowed and the o....
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....an individual, the primary factors that are to be looked into, would be the peculiar facts and circumstances of that specific case, where the failure to stay such a conviction would lead to injustice or irreversible consequences. [Ravikant S. Patil v. Sarvabhouma S. Bagali, (2007) 1 SCC 673, paras 15 and 16.5 : (2007) 1 SCC (Cri) 417] The very notion of irreversible consequences is centred on factors, including the individual's criminal antecedents, the gravity of the offence, and its wider social impact, while simultaneously considering the facts and circumstances of the case. 16. Turning to the case in hand, the appellant was convicted on the basis of a gang chart that hinged solely on an old FIR, where the appellant had already been acquitted vide judgment dated 3-7-2019. Thereafter, the new FIR was registered, in which the appellant had been convicted by the trial court under Section 3(1) of the U.P. Gangsters Act. The sequence of events, beginning from the registration of the new FIR until the rejection of the appellant's plea for suspension of conviction by the High Court, is beset with some fundamental misconceptions and, therefore deserves closer legal scru....
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....Cri) 417], holds that an order granting a stay of conviction should not be the rule but an exception and should be resorted to in rare cases depending upon the facts of a case. However, where conviction, if allowed to operate would lead to irreparable damage and where the convict cannot be compensated in any monetary terms or otherwise, if he is acquitted later on, that by itself carves out an exceptional situation. Having applied the specific criteria outlined hereinabove to the present factual matrix, it is our considered view that the appellant's case warrants an order of stay on his award of conviction, though partially. 20. It remains uncontested that the foundation of the new FIR, which is the origin point of the present proceedings, rests solely on a general statement and involved the rekindling of the old FIR, in which the appellant had already been acquitted. Though the aforementioned gang chart projects the appellant as a repeat offender, the fact remains that he has not been convicted in any prior case, apart from the case presently under consideration. In this context, the detailed circumstances elaborated hereinabove, serve as compelling reasons to advocat....
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....n 114 of the IPC which was stayed by Delhi High Court under the provisions of Section 389(1) of the CrPC. In the said case, the issue which arose for consideration was whether the appellant therein was liable to be visited with the consequence of Section 267 of the Companies Act, 1956, notwithstanding the interim order passed by the Delhi High Court while admitting the appellant's appeal against his conviction and sentence passed by learned ASJ and was, thus, eligible to hold office as a Managing Director. The Hon'ble Supreme Court had observed and held under: - "14. The provisions contained in the Companies Act have relevance to the management of the affairs of companies incorporated under that law. The operation of Section 267 would take effect as soon as conviction is recorded by a competent court of an offence involving moral turpitude. Sections 267, 274 and 283 referred to earlier constitute a code whereunder a Director, Managing Director and the whole-time Director are visited with certain disqualifications in the event of conviction. As already pointed out above, the Companies Act itself makes a distinction in the matter of fixation of the point of time when the dis....
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....e, it may incur a disqualification as in the instant case. In such a case the power under Section 389(1) of the Code could be invoked. In such situations the attention of the Appellate Court must be specifically invited to the consequence that is likely to fall to enable it to apply its mind to the issue since under Section 389(1) it is under an obligation to support its order "for reasons to be recorded by it in writing". If the attention of the Court is not invited to this specific consequence which is likely to fall upon conviction how can it be expected to assign reasons relevant thereto? No one can be allowed to play hide and seek with the Court; he cannot suppress the precise purpose for which he seeks suspension of the conviction and obtain a general order of stay and then contend that the disqualification has ceased to operate. In the instant case if we turn to the application by which interim 'stay' of the operation of the impugned judgment was secured we do not find a single word to the effect that if the operation of the conviction is not stayed the consequence as indicated in Section 267 of the Companies Act will fall on the appellant. How could it then be said that the....
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....y the Delhi High Court must, therefore, be read in that context and cannot extend to stay the operation of Section 267 of the Companies Act. *** *** *** 19. That takes us to the question whether the scope of Section 389(1) of the Code extends to conferring power on the Appellate Court to stay the operation of the order of conviction. As stated earlier, if the order of conviction is to result in some disqualification of the type mentioned in Section 267 of the Companies Act, we see no reason why we should give a narrow meaning to Section 389(1) of the Code to debar the court from granting an order to that effect in a fit case. The appeal under Section 374 is essentially against the order of conviction because the order of sentence is merely consequential thereto; albeit even the order of sentence can be independently challenged if it is harsh and disproportionate to the established guilt. Therefore, when an appeal is preferred under Section 374 of the Code the appeal is against both the conviction and sentence and therefore, we see no reason to place a narrow interpretation on Section 389(1) of the Code not to extend it to an order of conviction, although that issu....
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....ication: - "6. The Applicant submits that if a person is convicted of an offence and sentenced to more than 6 months imprisonment, then disqualifications under S.196 Companies Act, 2013 might ensue which will result in irreversible consequences. The individual may be protected from the operation of these disqualifications in the event the Appellate Court suspends the Impugned Order(s). 7. The Applicant, aged 65 years, is the Promoter and Managing Director of Jayaswal Neco Industries Limited ['JNIL'], a public listed company since 1998. JNIL is amongst top 350 Companies in India by Revenue Count and is engaged in the manufacturing of alloy steel, wire rods, bars, bright bars, along with steel billets, pig iron, sponge iron, pellets and iron & steel castings. It is India's one of the largest Alloy Steel Manufacturers. It serves critical industries such as automotive, power, engineering, defence and railways with a workforce of over 9,500 employees. The Applicant has played a pivotal role in the growth of JNIL securing significant business opportunities & fostering industrial development. He has contributed significantly to its revenue growth in that the Net Revenue ....
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....ra), to submit that the power under Section 389 of the CrPC to stay the order of conviction has to be exercised in exceptional circumstances. Reliance was placed on paragraph 56 thereof which reads as: - "56. Bare perusal of the aforementioned decisions reveal how this Court has differently dealt with approaches made by, inter alia, a Managing Director of a company, a Member of the Legislative Assembly, a Member of Parliament, a film actor intending to join politics, a bank officer, a civil post holder and a Principal of an institution, while they sought for stay of conviction." 25. It was also submitted that the appellant has been convicted in coal block cases which requires further consideration of this Court while deciding the present application. Reliance was placed on Girish Kumar Suneja (supra) to show that the Coal Block Allocation cases form one identifiable category of cases that are distinct from other cases since they have had a massive impact on public interest. It is further contended that the present appellant alongwith the company M/s JNIL is also facing prosecution under coal allocation matters where he is being charged individually as an accused. It was....
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....f those who are nothing but a liability to our country." 61. The Court considered the plea of the petitioner in that case to disqualify persons who were charged with heinous offences to contest elections to public offices. The Law Commission, in its 244th Report, had also recommended that a person against whom the charges have been framed be disqualified from standing for elections. 62. The Supreme Court in Public Interest Foundation v. Union of India (supra), had extensively referred to the recommendations of the Law Commission and, after noting various decisions, had observed as under: "118. We have issued the aforesaid directions with immense anguish, for the Election Commission cannot deny a candidate to contest on the symbol of a party. A time has come that the Parliament must make law to ensure that persons facing serious criminal cases do not enter into the political stream. It is one thing to take cover under the presumption of innocence of the accused but it is equally imperative that persons who enter public life and participate in law making should be above any kind of serious criminal allegation. It is true that false cases are foisted on pros....
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....eath occurred due to blow given on the head. If in the FIR, which is the earliest version, and, also in his statement in the court which was recorded after more than 4 years on 20-1-1993, Jaswinder Singh did not assign any role of causing injury on the head of the deceased to the appellant, whether his subsequent statement given after several years, wherein he assigned the specific role to the appellant of hitting the deceased on the head by a fist and thereby making him responsible for causing the death of the deceased should be believed, will certainly require consideration at the time of hearing the appeal. If the statement which Jaswinder Singh gave after several years wherein he attributed the head injury to the appellant is not accepted for the reason that it is at variance with the version in the FIR and his earlier statement, the appellant cannot be held guilty under Section 304 Part II IPC. These features of the case which touch upon the culpability of the appellant, prima facie appear to be in his favour. Another feature which has a bearing is that the findings on factual aspects of the case recorded in favour of the appellant by the learned Sessions Judge resulting in ac....
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.... relied on the minutes of the meeting and had taken various defenses. Learned Trial Court had, after considering the submissions made on behalf of Manoj Kumar Jayaswal (A-1), opined that AK Srivastava, PW-14, had made improvements in his statement and had shifted the burden on Manoj (A-1) by alleging that he had answered the queries on behalf of AIPL, A-3. Thus, statement of PW-14 that Manoj Kumar Jayaswal (A-1) had answered queries during the 24th Screening Committee meeting was rejected by the learned Trial Court. Learned Trial Court had further noted that the present appellant had not named anyone who gave responses during the said Screening Committee meeting on behalf of M/s AIPL and no effort was made on his behalf to elicit favourable responses from the relevant witnesses regarding the fact that who had answered the queries on behalf of AIPL before the Screening Committee. 29. It was further noted that the present appellant was the promoter Director of M/s AIPL, A-3, since its incorporation in 1984 and from 30.10.2003, he was the authorized signatory of the said accused company. It has come on record that when the present appellant was yet to be appointed as authorized sig....
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....noj Kumar Jayaswal (A-1) had appeared as Joint Managing Director of Jayaswal Neco Ltd. 31. In view of the aforesaid, it cannot be stated, at this stage, that the judgment of conviction is prima facie unsustainable. The grounds taken in the present appeal would be evaluated on its own merits during the final hearing. 32. It has been argued that the appellant would face "irreversible consequences" if the judgment of conviction is not stayed. In support of the aforesaid submission, certain facts relating to the company, M/s JNIL, have been placed on record, as noted hereinbefore. Reliance was placed upon by the learned Senior Counsel appearing on behalf of the appellant on the judgment of Hon'ble Supreme Court in Rama Narang (supra) to submit that disqualification incurred by Section 267 of the Companies Act, 1956, (similar to Section 196(3)(d) of the Companies Act, 2013) if given effect to cannot be undone at a subsequent date, if the conviction is set aside at later stage. However, it was further observed by the Hon'ble Supreme Court in the said case that while granting stay of the order of conviction, the Court must examine pros and cons of a case. The relevant observation ma....
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....he Company had, in making the appointments, committed an infraction of the mandatory prohibition contained in the said provision. The section not only prohibits appointment or employment after conviction but also expects discontinuance of appointment or employment already made prior to his conviction. This in our view is plainly the mandate of Section 267. As rightly pointed out by the Division Bench of the High Court, Section 274 of the Companies Act provides that a disqualification which a Director incurs on conviction for an offence involving moral turpitude in respect of which imprisonment of not less than six months is imposed, the Central Government may, by notification, remove the disqualification incurred by any person either generally or in relation to any company or companies specified in the notification to be published in the Official Gazette. Such a power is, however, not available in the case of a Managing Director. Secondly, Section 283 of the Companies Act provides that the office of a Director shall become vacant if convicted and sentenced as stated hereinabove but sub-section (2) thereof, inter alia, provides that the disqualification shall not take effect for thi....
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....tment of managing director, whole-time director or manager.- **** **** **** (3) No company shall appoint or continue the employment of any person as managing director, wholetime director or manager who - (a) is below the age of twenty-one years or has attained the age of seventy years: Provided that appointment of a person who has attained the age of seventy years may be made by passing a special resolution in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such person; [Provided further that where no such special resolution is passed but votes cast in favour of the motion exceed the votes, if any, cast against the motion and the Central Government is satisfied, on an application made by the Board, that such appointment is most beneficial to the company, the appointment of the person who has attained the age of seventy years may be made.]"; (b) is an undischarged insolvent or has at any time been adjudged as an insolvent; (c) has at any time suspended payment to his creditors or makes, or has at any time made, a composition with them; or ....
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....y not arbitrary-on the contrary, the classification is in public interest and for the public good with a view to bring persons who have allegedly committed corrupt activities, within the rule of law. It is hence not possible to accept the submission that by treating the entire batch of Coal Block Allocation cases in a particular manner different from the usual cases that flood the courts, there is a violation of Article 14 of the Constitution. **** **** **** 45. Insofar as the present appeals are concerned, the cases fall in a class apart, arising as they do out of the illegal and unlawful allocation of coal blocks. It is only in respect of these cases that this Court monitored the investigations and it is only in respect of these cases that the order was passed by this Court on 25-7-2014 [Manohar Lal Sharma v. Union of India, (2015) 13 SCC 35 : (2015) 13 SCC 37 : (2016) 1 SCC (Cri) 418 : (2016) 1 SCC (Cri) 419]. The cases are concerned with large-scale corruption that polluted the allocation of coal blocks and they form a clear and distinct class that need to be treated in a manner different from the cases that our justice-delivery system usually deals with. The ....