Jharkhand High Court
Satyendra Nath Tiwari & Satyendra ... vs Union Of Jharkhand Thr Cbi on 21 September, 2012
Equivalent citations: 2013 (2) AJR 79, 2013 (1) AJR 524
Author: R.R.Prasad
Bench: R.R.Prasad
In the High Court of Jharkhand at Ranchi Cr.M.P.No.816 of 2011 Satyendra Nath Tiwari @ Satyendra Tiwary @ Satyendra Narayan Tiwari.........................Petitioner VERSUS Union of India through C.B.I...............Opposite Party CORAM: HON'BLE MR. JUSTICE R.R.PRASAD For the Petitioner :M/s. B.P.Pandey,Sr. Advocate and V.K.Sharma, Advocate For the C. B. I : Mr. M. Khan, Advocate Reserved on 15.6.2012 Delivered on .9.2012 7/ .9.12. This application has been filed for quashing of the entire criminal proceeding of R.C.case no.14(A) of 2009-R including the charge sheet (Annexure 2) submitted in the case on 31.12.2010 as well as the order dated 5.11.2011 whereby and whereunder learned Special Judge, C.B.I, Ranchi took cognizance of the offences punishable under Sections 120B, 420, 468 and 471 of the Indian Penal Code and also under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 against the petitioner.
Pursuant to the order passed by this Court in W.P (PIL) No.803 of 2009, the C.B.I made a preliminary enquiry in relation to irregularities committed by the engineers and contractors of Road Construction Department in the matter of procurement of Bitumen for the purpose of construction of roads. The C.B.I having found grave irregularities in the matter of procurement of Bitumen, lodged a case was which registered as R.C.Case no.14(A) of 2009-R on the allegation that Road Construction Department awarded a contract to M/s. Engineering Project India (P) Limited (in short 'EPIL') for widening and strengthening of Chhatarpur - Jalpa road (K.M 0 to 32.5) for estimated cost of Rs.7,59,05,000/-. On getting contract, M/s. EPIL entered into a memorandum of understanding (MOU) with M/s. Kalawati Construction (P) Ltd. whereby the aforesaid work was entrusted to M/s. Kalawati Construction (P) Ltd. for its execution.
2As per the work order issued, M/s. EPIL was supposed to procure 1700 M.T Bitumen to be utilized in the execution of the work from the Oil Companies of the Government of India. In course of time, M/s. Kalawati Construction (P) Ltd. submitted 114 invoices claiming to have procured Bitumen under those invoices to the extent of 1688.584 M.T for execution of the work. But 61 invoices covering 1128.4780 M.T Bitumen were found to be forged/fake. Out of it, some of them were duplicate copies of the genuine invoices under which Bitumen had been procured in connection with other work and the rest invoices had never been issued by the Government Companies.
Thus, it has been alleged that the contractor, M/s.Kalawati Construction (P) Ltd. had never procured Bitumen under 61 invoices to the extent of 1128.4780 M.T worth Rs.2,23,66,468/- still bills were raised which were certified by the engineers to have been used in the execution of work and therefore, the engineers, who were in connivance with the contractor allowed the contractor to withdraw the amount covered under those fake invoices.
On submission of the charge sheet, cognizance of the offence was taken vide order dated 5.1.2011 which is under challenge.
Mr.B.P.Pandey, learned Sr. counsel appearing for the petitioner submitted that the petitioner happened to be the Director of M/s. Kalawati Construction (P) Ltd. who had been entrusted to execute the work relating to widening and strengthening of the road by M/s. EPIL who had been awarded contract by Road Construction Department. During enquiry, when it was found that payment of the amounts has been taken by the contractor covered under 61 fake/forged invoices, a case was lodged not only against the company but also against this petitioner, who happened to be the Director of the company as well as against other accused persons without there being any materials to show that this petitioner being the Director of the company did any act constituting offence of cheating, forgery or misappropriation. 3
In this regard, it was further submitted that the work was done under the supervision of M/s. EPIL, who had authorized one Udai Tiwary, an employee of M/s. Kalawati Construction (P) Ltd. to procure Bitumen from the Government company and the invoices under which Bitumen was claimed to have been procured bears the signature of Udai Tiwary, on the basis of which bills were raized but the payment of the said bill was made to M/s.EPIL and not to M/s. Kalawati Construction (P) Ltd. to whom, as per the memorandum of understanding, payment was made by M/s. EPIL. In spite of that, this petitioner has been made accused simply for the reason that he happened to be the Director of the Company, M/s. Kalawati Construction (P) Ltd.
Thus, on the ground that the petitioner is vicariously liable for the commission of offence committed by the company, the petitioner is being posecuted in absence of any allegation that the petitioner, being the Director was In-charge of or responsible to for day-to-day affairs of the company which is quite illegal.
In support of his submission, learned counsel has referred to a decision rendered in a case of S.K.Alagh vs State of Uttar Pradesh and others [(2008) 5 SCC 662] and also in a case of Maksud Saiyed vs. State of Gujarat [(2008) 5 SCC 668).
It was further submitted that there has been absolutely no allegation that the petitioner in any manner had obtained any benefit for himself or got the other accused benefited in any manner and thereby no offence gets attracted even under Section 13(1)(d) of the Prevention of Corruption Act.
Under the circumstances, the order taking cognizance is fit to be quashed so far this petitioner is concerned.
As against this, Mr.Khan, learned counsel appearing for the C.B.I submitted that it is true that the contract was awarded to M/s.EPIL by the Road Construction Department but M/s. EPIL by virtue of memorandum 4 of understanding entered into with M/s. Kalawati Construction (P) Ltd. entrusted the work to be executed by M/s. Kalawati Construction (P) Ltd. to which this petitioner is the Director and hence, he is liable to be prosecuted when certain officers have been found to have been committed by M/s. Kalawati Construction (P) Ltd. or its employees and that under the agreement entered into in between the aforesaid two companies, M/s. Kalawati Construction (P) Ltd. was supposed to procure Bitumen from the Government company and the said company claimed to have procured Bitumen from the Government company through 114 invoices but of them 61 invoices were found fake/forged.
Thus, 1128.4780 M.T of worth Rs.2,23,66,486/- covered under those 61 forged invoices were never used, still payments of those amount were taken by M/s.EPIL but M/s.EPIL, as per the terms of the agreement, made payment to M/s. Kalawati Construction (P) Ltd. and thereby the petitioner, being Director of the company can be said to be the beneficiaries and thereby he is being rightly prosecuted.
Thus, having heard learned counsel appearing for the parties, it appears to be the case of both the parties that contract was awarded by Road Construction Department to M/s. EPIL, who entrusted the work to be executed by M/s. Kalawati Construction (P) Ltd. to which the petitioner, being Director of M/s. Kalawati Construction (P) Ltd. had entered into memorandum of understanding (MOU) with M/s. EPIL but the work was to be supervised by M/s. EPIL, who had authorized one Udai Tiwary, an employee of M/s. Kalawati Construction (P) Ltd. to procure Bitumen from the Government company. The Bitumen was claimed to have been procured under 114 invoices. Out of them, 61 invoices were found to be forged which are having signatures of Udai Tiwary over it and that the payments including of the amounts covered under those 61 invoices were made to M/s. EPIL when entry was made by the Junior Engineer in the measurement book of having utilized those Bitumen and counter signed by the Assistant Engineer on the 5 basis of which bills were prepared by the Executive Engineer and that subsequently payment as per agreement was made to M/s. Kalawati Construction (P) Ltd by M/s. EPIL.
Thus, from these facts it is evident that it was M/s. Kalawati Construction (P) Ltd. who had entered into an agreement with M/s. EPIL who had authorized one of its employees, namely, Udai Tiwary to procure Bitumen from the Government company who on behalf of the company claimed to have lifted Bitumen and that payment was made to M/s. Kalawati Construction (P) Ltd by M/s. EPIL, still this petitioner is being prosecuted for simple reason that he happened to be the Director of the company, that too in absence of any allegation that he was In- charge of or responsible to day-to-day affairs of the company presumably under the principle of vicarious liability but in that situation one who happens to be the Director cannot be held liable vicariously for the commission of offence of the company.
In this regard, I may refer to a decision rendered in a case of S.K.Alagh vs State of Uttar Pradesh and others (supra) wherein in paragraph 21 of the said judgment it has been observed as follows:
"We may, in this regard, notice that the provisions of the Essential Commodities Act, Negotiable Instruments Act, Employees' Provident Funds and Miscellaneous Provisions Act, 1952 etc. have created such vicariously liability. It is interesting to note that Section 14-A of the 1952 Act specifically creates an offence of criminal breach of trust in respect of the amount deducted from the employees by the company. In terms of the explanations appended to Section 405 of the Indian Penal Code, a legal fiction has been created to the effect that the employer shall be deemed to have committed an offence of criminal breach of trust. Whereas a person in charge of the affairs of the company and in control thereof has been made vicariously liable for the offence committed by the company along with the company but even in a case falling under Section 406 of the Indian Penal Code vicariously liability has been held to be not extendable to the Directors or officers of the company."
Under the circumstances as stated above, if the petitioner is allowed to face rigor of the trial it would certainly amount to abuse of the process of law and there would be miscarriage of justice. 6
Accordingly, entire criminal proceeding of R.C case no.14(A) of 2009-R including the order dated 5.1.2011 is hereby quashed.
In the result, this application stands allowed.
(R.R.Prasad, J.) ND/