Karnataka High Court
M/S Ilc Industries Ltd vs The State Of Karnataka Through on 16 October, 2020
Author: John Michael Cunha
Bench: John Michael Cunha
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 16TH DAY OF OCTOBER, 2020
BEFORE
THE HON'BLE MR. JUSTICE JOHN MICHAEL CUNHA
CRIMINAL PETITION No.3712/2017
BETWEEN:
1. M/S. ILC INDUSTRIES LTD.,
A REGISTERED COMPANY,
D-6/7, Near INDUSTRIAL ESTATE, DAM ROAD,
HOSPET - 583 203.
REPRESENTED BY ITS
REPRESENTATIVE SRI.K.SOMASHEKAR.
2. K.SOMASHEKHAR,
AGED ABOUT 46 YEARS,
S/O K SUBRAMANYAM,
DIRECTOR,
M/S. ILC INDUSTRIES LD.,
D-6/7, NEAR INDUSTRIAL ESTATE, DAM ROAD,
HOSPET - 583 203.
...PETITIONERS
(BY SRI. RAVI L VAIDYA, ADVOCATE)
AND:
THE STATE OF KARNATAKA,
THROUGH THE CENTRAL BUREAU
OF INVESTIGATION,
ANTI - CORRUPTION BRANCH,
2
GANGANAGAR,
BANGALORE - 32. ...RESPONDENT
(BY SRI.P.PRASANNA KUMAR, ADVOCATE)
THIS CRIMINAL PETITION IS FILED UNDER SECTION
482 OF CR.P.C. PRAYING TO SET ASIDE THE ORDER DATED
19.11.2016 PASSED IN THE SAID SPL.C.C.NO.37/2014
REJECTING THE APPLICATION FILED BY THE PETITIONERS
UNDER SECTION 239 READ WITH 227 OF CR.P.C. SEEKING
FOR THEIR DISCHARGE AND ALLOW THE APPLICATION
FILED BY THE PETITIONERS UNDER SECTION 239 READ
WITH 227 OF CR.P.C. AND THEREBY DISCHARGE THEM IN
SPL.C.C.NO.37/2014 ON THE FILE OF THE LEARNED XXXII
ADDL. CITY CIVIL AND S.J., AND SPL. JUDGE FOR CBI
CASES, BANGALORE.
THIS CRIMINAL PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 14.10.2020 AND COMING ON
FOR PRONOUNCEMENT OF ORDER, THROUGH VIDEO
CONFERENCE, THIS DAY, THE COURT MADE THE
FOLLOWING:
ORDER
This petition is filed by accused Nos.2 and 3 in Spl.C.C.No.37/2014 arising out of RC No.17(A)/2012 seeking to set aside the order dated 19.11.2016 passed by the learned XXXII Addl. City Civil & Sessions Judge and Special Judge for CBI Cases at Bangalore (CCH.No.34) rejecting the application filed by petitioners under sections 239 read with 227 of Cr.P.C.
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2. The material allegations leveled against the petitioners as per the charge sheet are that while FOC Case No.17/2009-10 was under investigation, all the accused persons entered into a criminal conspiracy among themselves and in furtherance of that conspiracy, accused No.2 exported the seized iron ore to China. It is alleged that heap Nos.13 and 14 belonging to accused No.2 was stocked in the plot belonging to accused No.4. It was a seized material. It is further alleged by filing WP No.14551/2010, accused No.2 deliberately misled the Hon'ble High Court by informing the High Court that the iron ore was yet to be loaded in vessels MV Prem Vidya and MV Raazi for export, although the said 2 vessels had already loaded with the cargo and already sailed. The further allegation is that in order to take the port clearances, accused No.1 took bribe of Rs.2,500/- each from the representatives of M/s. Taurus Shipping Pvt. Ltd. and thus accused No.2 obtained port clearances in connivance with accused No.1. The application filed by the petitioners 4 seeking their discharge under Sections 239 read with 227 of Cr.P.C. has been rejected by the impugned order dated 19.11.2016.
3.1 In the course of arguments, the learned counsel for petitioners- Sri. Ravi L. Vaidya has primarily raised two fold contentions. First, the proceedings having been initiated against the petitioners based on the second FIR, the entire proceedings are vitiated. Second, the seizure of the alleged iron ore by the forest officials in FOC 17/09-10 is without jurisdiction and therefore the subsequent registration of the FIR in RC 17(A)/2012 and the consequent proceedings pending on the file of the learned Special Judge including the order of framing charge are illegal and without jurisdiction and amounts to abuse of process of Court.
3.2 Dilating on the first contention, learned counsel referred to the report submitted by the Central Empowered Committee(CEC) to the Hon'ble Supreme Court and with reference to para 13(I) thereof emphasized that in view of 5 the recommendation made therein, CBI was required to carryout a detailed investigation covering all aspects of the illegalities associated with raising, transportation, sale, purchase, storage and disposal of about 33.98 lakh MT of iron ore extracted between 01.01.2009 and 31.05.2010 by 4 exporters viz. M/s. ILC Industries Limited (about 9.86 lakh MT), M/s. Dream Logistics Company (India) Pvt. Limited (about 9.16 lakh MT), M/s. S.B. Logistics (about 7.74 lakh MT) and M/s. Shree Mallikarjuna Shipping Pvt. Ltd. (about 7.23 lakh MT) from Belekeri Port. In sub-clause (IV) of para 13, it was further recommended that "The CBI may be directed to further investigate all aspects of the illegality in respect of the iron ore seized on 20.3.2010 from Belekeri Port by the Forest Department and substantial part of which is alleged to have been illegally exported. All proceedings related to the above matter investigated by the CID, Karnataka including the proceedings in case No.189/2010 filed by them may be directed to be kept in abeyance."
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3.3 Submission of the learned counsel for the petitioners is that in view of the above recommendations and the consequent order passed by the Hon'ble Supreme Court giving direction to the CBI to register the FIR and to investigate the case relating to the illegal extraction of about 50.79 lakhs MT of iron ore from the forest areas of Karnataka during the period January 1, 2009 to May 31, 2010, FIR was registered in RC No.14(A)/2012 in respect of 9.86 lakhs MT. In respect of part of the very same quantity, FIR in RC No.17(A)/2012 has been registered.
3.4 The contention of the petitioners is that they having been sought to be prosecuted on the basis of the second FIR in RC 17(A)/2012, the proceedings initiated against them are patently illegal and without jurisdiction. On this point, learned counsel has pointed out that the Hon'ble Supreme Court in its order dated 07.09.2012 WP(Civil)562/2009, has noted that "out of the aforesaid quantity of 50.79 lakhs MT which got illegally exported outside the country, over 8 lakhs MTs iron ore, found lying 7 at Belekari Port was actually under orders of seizure by the Forest Department authorities and the Court before it was exported in violation not only of different laws but in teeth of the seizure order." Based on this part of the order, learned counsel for petitioners emphasized that FIR in RC No.17(A)/2012 relates to forest produce of the total quantity of 9.86 lakhs MT, which is the same subject of the investigation in RC No.14(A)/2012 and therefore, prosecution of the petitioners based on the second FIR is wholly illegal and violative of Article 21 of the Constitution of India.
3.5 In support of his submission, learned counsel for petitioners has placed reliance on the decision of the Hon'ble Supreme Court in the case of AMITBHAI ANILCHANDRA SHAH Vs. CENTRAL BUREAU OF INVESTIGATION AND ANOTHER reported in (2013) 6 SCC 348 with reference to para 37, 38 and 42.
3.6 Insofar as the second contention put forward by the learned counsel for petitioners regarding the jurisdiction 8 of the forest officials to seize the alleged iron ore is concerned, the learned counsel would submit that what was seized by the forest officials in FOC 17/2009-10 was the iron ore which is a "mineral" as per Section 2(7) of the Karnataka Forest Act, 1969. As per the provisions of the said Act, forest officials could deal only with the forest produce defined thereunder i.e., the mineral when found in, or was brought from the forest. It is the argument of the learned counsel that no material is produced by the prosecution to show that the seized iron ore "was found in or brought from the forest" so as to invest powers on the forest officials to seize the said mineral. On the other hand, the material produced before the Court goes to show that the alleged iron ore was seized from Belekeri port. Therefore, the very substratum of the prosecution case is rendered vulnerable.
3.7 Further, referring to the provisions of the Karnataka Mineral (Regulation of Transport) Rules, 2008 learned counsel for petitioners would submit that the above 9 rules do not provide for any prior pass or permit by the forest officials to transport minerals. Therefore, there was no basis for the trial Court to hold that the petitioners were involved in the alleged transportation or export of the iron ore contrary to the rules and regulations. Thus, it is contended that the very seizure of the iron ore by the forest officials being illegal and without jurisdiction, the very basis of the charge framed against the petitioners is vitiated.
3.8 Further, learned counsel would submit that even if it is assumed that the seized material was a "mineral", the transportation thereof is regulated by the provisions of the MMDR Act, 1957 particularly Section 4(1-A) and Section 23-C and the Karnataka Mineral (Regulation of Transport) Rules, 2008 framed thereunder. It is the central subject falling under Entry - 54 of the Union List, in respect of which the State Government is denuded of power to legislate. Therefore the Karnataka Forest Act or Rules are not applicable to the transportation of iron ore. In support of this submission, learned counsel has referred to the 10 decision of the Hon'ble Supreme Court in the case of BAIJNATH KEDIA Vs. STATE OF BIHAR AND OTHERS reported in 1969(3) SCC 838 and emphasized that the MMDR Act takes precedence over the Karnataka Forest Act and the Rules.
3.9 On facts, the learned counsel for petitioners, referring to the statement of objections filed by the CBI contended that the calculation furnished by the respondent itself discloses that at the relevant time, petitioners had not exported any quantity of the seized iron ore. On the other hand, the figures dealt in paras 4, 7 and 8 of the statement of objections discloses that petitioners were in possession of the declared quantity of iron ore. As such, no material was available before the learned Special Judge to arrive at the prima-face conclusion that the petitioners were involved in illegal exportation of the seized iron ore as contended in the charge sheet. It is the submission of the learned counsel that even though these contentions were urged before the Special Court, none of these contentions have been 11 considered by the learned Special Judge in proper perspective. The reasoning assigned by the learned Special Judge in the impugned order that neither the Forest Act or Rules is struck down as ultra-vires by any competent court cannot be a reason to proceed against the petitioners for the alleged offences. Thus, the learned counsel sought for setting aside the impugned proceedings in exercise of powers under Section 482 of Cr.P.C.
4.1 Meeting the above arguments, the learned Special Public Prosecutor representing the respondent at the outset submitted that the submissions made by the learned counsel for the petitioners that R.C. No.14(A)/2012 and R.C. No.17(A)/2012 relate to the same subject matter, is not correct. Learned Special Public Prosecutor pointed out that R.C. No.14(A)/2012 relates to the illegal mining in the forest area and transportation thereof without payment of royalty and Forest Development Tax; whereas, Crime No.17(A) is registered in respect of the illegal export of iron ore which was under seizure in FOC No.17/2009-10. 12
4.2 Further, he submitted that, when the above FIRs having been registered pursuant to the orders of the Hon'ble Supreme Court in Writ Petition(Civil) No.562/2009, as observed by this Court in Criminal Petition No.3048/2017 at paragraph 16, the question of illegality in the registration of multiple FIRs is of no consequence and the same cannot be a ground to quash the proceedings, as sought for in the petition.
4.3 In so far as the contention urged by the learned counsel for the petitioners touching the illegality of the seizure of iron ore is concerned, learned Special Public Prosecutor once again referring to the orders of the Hon'ble Supreme Court, submitted that the FIRs having been registered pursuant to the orders of the Hon'ble Supreme Court, the alleged illegality in the seizure of iron ore prior to the registration of the FIRs assumes no consequence and cannot be a ground to quash the proceedings. Likewise, the error pointed out by the learned counsel for the petitioners 13 in the quantity of the iron ore also is a matter of trial and evidence and cannot be a ground to quash the proceedings.
4.4 Further with regard to the material available against the petitioners constituting the ingredients of the offences charged against them, learned Special Public Prosecutor referred to paragraph 22 of the impugned order and submitted that the learned Special Judge has considered the entire material available in proof of the participation of the petitioners in the above offences and therefore there is absolutely no basis to sustain the contentions urged by learned counsel for the petitioners and thus prayed for dismissal of the petition.
5. The first and principal contention urged by learned counsel for petitioners that in respect of the same offences, second FIR is filed in RC.No.17(A)/2012 and therefore, the trial based on the charge sheet laid in RC.No.17(A)/2012 is factually incorrect. In fact R.C.No.14(A)/2012 relates to illegal mining in the forest area and transportation thereof. It is registered under 14 sections 120-B read with 420, 379, 411, 447 of IPC and sections 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988 and sections 21 read with 4(1), 4(1)(A) and 23 of the Mines and Minerals (Development and Regulation) Act, 1957 and Section 24 of Karnataka Forest Act 1963. The material allegations constituting the above offences, as alleged in the FIR, are as follows:
"In view of the above findings of the CEC and the Hon'ble Lokayukta of Karnataka, it is revealed that M/s ILC Industries Limited has exported about 9.86 lakh MT of iron ore through Belekeri Port between 1.1.2009 and 31.05.2010. Of the 9.86 lakh MT, a substantial portion is prima facie seen to be mined illegally in forest areas of Bellary, Belekeri and other places of Karnataka and transported without the valid permits issued by the Department of Mines and Geology and Department of Forest and also without payment of the required Royalty and Forest Department Tax. This is done in connivance and in conspiracy with Shri S.Muthiah, the then DCF, Bellary and his subordinates, Shri S.P.Raju the then Dy.Director, Mines & 15 Geology Department, Hospet and his subordinates, the Mining Lease Holders, stockyardists, traders, transporters, unregistered dealers, stevedores and other public servants of various departments. The accused persons have thus, caused a wrongful loss to the Government of Karnataka and a corresponding gain to themselves. The above prima facie constitutes cognizable offences under Section 120-B r/w 420, 379, 411, 447 of IPC and Section 13(2) r/w 13(1)(d) of Prevention of Corruption Act 1988, Section 21 r/w 4(1), 4(1)(A) and 23 of the Mines and Minerals (Development and Regulation) Act and Section 24 of Karnataka Forest Act 1963."
6. Whereas FIR 17(A)/2012 is registered under sections 120-B read with 409, 420 of IPC and Sections 7, 12, 13(2) read with 13(1)(c) & (d) of Prevention of Corruption Act, 1988. The material allegations in the FIR are as follows:
"In compliance of the above order, the CBI/ACB/Bangalore registered 4 separate Regular Cases i.e., RC 13(A)/2012 to RC 16 16(A)/2012, as per recommendation in Para 13(1) of the CEC report and Preliminary Enquiry, PE.No.5(A)/2012 as per recommendation in Para 13(II) of the CEC report and this Case No.RC 17(A)/2012 has been registered taking over the FIR No.189/2010 earlier registered by Ankola Police Station, for further investigation as per Para 13(IV) of the CEC report.
This case RC-17(A)/2012 was registered on 13.09.2012 against Shri Mahesh J. Biliye, Dy.Port Conservator, who was working as incharge Port Conservator, Belekeri Port and others under sections 120-B, 406, 409, 379, 411, 447 IPC; Section 13(2) r/w 13(1)(c) & (d) of PC Act 1988 and Section 24 of Karnataka Forest Act, 1963.
In the investigation, the illegal sale and export of the seized iron ore by M/s Bhagawathi International (A-2) has been probed. Apart from M/s Bhagawathi International (A-2), involvement of other accused persons/companies viz., Shri Mahesh Biliye (A-1), M/s ILC Industries Ltd., (A-4), Shri K.Somasekhar (A-5) and 17 Shri Santosh B.N. (A-3) has come to light.
The evidence collected during
investigation revealed that the above
named accused persons have prima facie
committed cognizable offences under
Section 120-B r/w 409, 420 of IPC and
Sections 7, 12, 13(2) r/w 13(1)(c) & (d) of P.C. Act 1988 and substantive offence thereof."
7. With regard to involvement of the petitioners in the alleged offences, the learned Special Judge in the impugned order at para 21 has observed as under:-
"Prosecution material also makes it clear that the entire sale of iron ore took place after the iron ore material was seized by the Forest Department. Both A.2-Co. who sold the iron ore & A.5-Co. who purchased the same were knowing it very well that the iron ore was seized by the Forest Dept. Further, A.5-Co. was the stevedore to store the iron ore material at Belekeri Port and as such, both of them are criminally liable for this act. In addition, A.2-Co. itself has exported 42207 MTs of iron ore in the month of April-2010, much after the seizure of iron ore material. A.3/Sri K.V. 18 Nagaraj & A.4/Sri. K.V.N.Govindraj are the Directors of A.2-Co- M/s. Swastik Steel (Hospet) Pvt. Ltd. Prosecution material also discloses that Sri. K.V.N. Govindraj-A.4 used to look after the business of iron ore at Belekeri Port and he issued Provisional commercial Invoice Dt.21.04.2010 for USD 2526019.99 for the sale and export of 42207 WMTs of iron ore fines to M/s. Elite Brilliant Ltd., Hongkong by the Vessel- M.V.Mary-F. My attention is drawn by the learned Spl. PP to the document in D.168 which is copy of the Provisional Commercial Invoice raised by A.2-Co. on M/s. Elite Brilliant Ltd., Hongkong for export of 42207 WMTs of iron ore fines in this respect which is signed by A.4-Sri. K.V.N. Govindraj."
8. The learned magistrate has also referred to document No.168 viz., the commercial invoice raised by A.2-Co. on M/s. Elite Brilliant Ltd., Hongkong for export of 42207 WMTs of iron ore fines in this respect which is signed by A-4-Sri K.V.N. Govindraj. In the wake of this material, the contention urged by the petitioners that they are sought to be prosecuted without any material and that the charge 19 sheet filed against the petitioners is arising out of the 2nd FIR in respect of the same offence is liable to be rejected.
9. That apart, a reading of the impugned order reveals that the petitioners claimed discharge on the ground that the material produced along with the charge sheet did not prima facie disclose their involvement and that they have been falsely implicated in the alleged offences. I have gone through the application filed by the petitioners under Section 227 of Cr.P.C. Petitioners did not seek for discharge on the ground of second FIR as contended before this Court.
10. Coming to the argument of learned counsel for petitioners that the proceedings initiated against the petitioners are vitiated on account of the illegality in the seizure of the iron ore by the forest officials and for lack of competence and jurisdiction on the part of the forest officials to seize the said iron ore which is a "mineral" as defined under the Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter referred to as "MMDR 20 Act") and is regulated by the provisions of the MMDR Act is concerned, in my view, it does not affect either the jurisdiction of CBI to investigate into the alleged offences nor does it affect the order passed by learned Special Judge in dismissing the applications filed by the petitioner for discharge.
11. Indisputably, the investigation in the instant case was undertaken pursuant to the orders of the Hon'ble Supreme Court in Writ Petition (Civil) No.562/2009 dated 07.09.2012. In the said order, there was a specific direction to the CBI to immediately institute FIR(s) and to investigate the case(s) relating to (i) illegal extraction of about 50.79 lakhs MT of Iron Ore from the forest areas of Karnataka during the period from 01.01.2009 to 31.05.2010; (ii) the illegal transport of the aforesaid quantity of iron ore from the area(s) of extraction to Belekeri Port and (iii) from there its illegal export to other countries. Pursuant to this direction, four FIRs were registered by the CBI. R.C.No.14(A) of 2012 relates to the illegal mining in the 21 forest area and transportation thereof without payment of royalty and forest development tax. R.C.No.17(A) of 2012 is registered in respect of iron ore which was under seizure in FOC.17/2009-10. This order and the FIRs registered in respect of the alleged offences therefore make it evident that the scope of investigation essentially related to the period subsequent to the seizure and the consequent order passed by learned Magistrate entrusting the seized material to the custody of accused No.1 namely the Conservator of Ports. In the said circumstances, the illegality, if any, committed by the forest officials in effecting the seizure of the iron ore and even if the said seizure was effected without jurisdiction, it does not concern the CBI, since the investigation was undertaken by the CBI only in respect of the acts committed by the petitioners and other accused subsequent to the seizure and subsequent to the entrustment of the seized property to the custody of Conservator of Ports. Even otherwise, the above FIRs having been registered and investigation having been conducted pursuant to the orders of the Hon'ble Supreme 22 Court, the contention urged by the petitioners in this regard does not furnish a ground to the petitioner to seek discharge under Section 239 Cr.P.C.
Consequently, the petition being devoid of merit is liable to be dismissed and is accordingly dismissed.
In view of dismissal of the petition, I.A.No.1/2017 for stay does not survive for consideration and the same is also dismissed.
Sd/-
JUDGE Sv.Bmv.Bss.