Delhi District Court
6.1998. Ld. Counsel Further Argued That ... vs Union Of India (1988) 1 Scc on 1 February, 2019
CBI/31/2016
IN THE COURT OF SH. PULASTYA PRAMACHALA
SPECIAL JUDGE (PC ACT) CBI : EAST DISTRICT
KARKARDOOMA COURTS, DELHI
Registration No. : CBI/31/2016
Under Section : 120B r/w Sec 420 & Sec 13(2) r/w 13(1)(d) of
Prevention of Corruption Act, 1988 &
substantive offences u/s 420/471 IPC &
section 13(2) r/w 13(1)(d) of PC Act, 1988.
Zone : CBI/ACB/ND
FIR No. : RC-57A/99
CNR No. : DLET01-000013-2002
In the matter of :-
CBI
VERSUS
1. SH. SYAMAL KUMAR GHOSH
Former Chairman cum Managing Director, BALCO
S/o Late Salani Kant Ghosh,
R/o - C-2, Belvedere Tower,
Suraj Kund Road, Charmwood Village,
Faridabad, Haryana.
2. SH. PRAKASH CHAND AGGARWAL
Former Director (Commercial) BALCO
S/o Late Sh. Hari Das Agrawal,
R/o D-696, Ground Floor,
Chitranjan Park,
New Delhi - 19.
3. SH. GURINDER SINGH SANDHU
Senior Dy. Director (Business Planning), SAIL
Page 1 of 137 (Pulastya Pramachala)
Special Judge (PC Act) CBI, East District
Karkardooma Courts, Delhi
CBI/31/2016
S/o Late Jarnail Singh,
R/o H. No. D- 157,
Anand Vihar, Delhi - 92
4. SH. PRAVEEN N. SHAH
Director M/s Anish Metals Pvt. Ltd.
S/o Sh. Nagin Das Shah,
R/o H. No. 501-502, Salsa Building,
R.R. Thakkar Marg, Malabar Hill,
Mumbai.
5. SH. KIRTI SHAH
Director M/s Anish Metals Pvt. Ltd.
S/o Sh. Babu Lal Shah,
R/o Flat No. 4, 2nd Floor,
Pethe Apartments, Chitranjan Road,
Near Hotel Pritam,
Vile Parle (East), Mumbai.
........ACCUSED PERSONS
Name and particulars of complainant : Source Information
Date of Institution : 09.12.2002
Date of receiving in this Court : 12.09.2011
Date of reserving judgment : 18.01.2019
Date of pronouncement : 01.02.2019
Decision : All the accused persons
are convicted)
(Section 437-A Cr.P.C. complied with on behalf of all accused
persons i.e. A1, A2, A3, A4 & A5)
JUDGMENT
THE CASE SET UP BY THE PROSECUTION :-
1. Briefly stated, present case was registered on the basis of source information alleging therein that Sh. S.K. Ghosh, while functioning Page 2 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 as CMD, BALCO during the year 1998-99, abused his official position as public servant and entered into a criminal conspiracy with Sh. P.C. Agarwal, Director (commercial) and consignment agents namely Sh. Praveen N. Shah and Sh. Kirti Agarwal, both Director of M/s Anish Metals Pvt. Ltd. with sole objective of causing undue pecuniary advantage to them and thereby causing corresponding loss to BALCO. It was further alleged that in furtherance of the said criminal conspiracy, Sh. S.K. Ghosh, CMD abused his powers and authorised Director (Commercial) Sh. P.C. Aggarwal to take decision on the issue of marketing with regard to price adjustment, which was in violation of established norms of the company. Director (commercial) on the basis of authority afforded by the CMD, abused his powers as a public servant in collusion with CMD Sh. S.K. Ghosh, Sh. G.S. Sandhu GM (C & E) and consignment agents, by issuing a circular dated 31.03.99 regarding discount, which was to be an incentive for trade, but kept it secret even from key officers like Director (finance) and other potential buyers.
2. It is further alleged that during 1998-99, Sh S.K. Ghosh (CMD), Sh.
G.S. Sandhu GM (C & E) and Sh. P.C. Aggarwal (Director Commercial) committed grave acts of commission and omission, thereby allowing unprecedented level of discounts to the tune of Rs.38 crore, of which Rs. 29 crores was released in the last quarter of the year 1998-99. It is further alleged that the main beneficiary of these discounts were M/s Anish Metals Pvt. Ltd., Mumbai, which alone benefited to the tune of Rs. 11 crore approximately by way of Page 3 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 grant of such discounts. It has been further alleged that the discount permitted by accused were unjustified from the point of view of prevailing competitive market conditions. Moreover, these discounts did not achieve the primary objective of increase in sales of any significant degree, as they had been sanctioned after purchase of the materials by the buyers. Thus, grant of Rs. 19 crores of discounts from January 1999 to March 1999 was willful and deliberate act on the part of the accused officers in collusion with M/s Anish Metals Pvt. Ltd., its Directors and other beneficiaries to defraud the company/BALCO with the sole objective of causing illegal pecuniary gain to the private agents/firms and corresponding loss to BALCO.
3. It is alleged that investigation disclosed that M/s Anish Metals Pvt. Ltd., vide their letter date 13.05.98 requested General Manager (C & E) i.e. Sh. G.S. Sandhu to enter into Memorandum of Understanding (MOU) for lifting of 8000 MTS aluminum rolled products alongwith extrusions and also 5000 MTS of alloy wire rods during June 1998 to March 1999. Sh. G.S. Sandhu put up a note dated 15.05.98 and thereby proposed for entering into MOU with M/s AMPL with regard to alloy wire rods only and he did not initiate any proposal for MOU with regard to rolled products, for which MOU had been sought by M/s AMPL.
4. It is further alleged that in the note dated 15.05.98, Mr. G.S. Sandhu suppressed facts of granting special discount only to M/s AMPL. He did not mention the name of M/s AMPL, while bringing out the name of the beneficiaries of the special discount for lifting alloy wore rods Page 4 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 during January-March 1998. It is further alleged that a proposal dated 23.01.98 was initiated by Regional Manager (Western Region) Mumbai for grant of incentives to M/s AMPL for lifting of alloy wire rods during January-March 1998. It is further alleged that aforesaid proposal was examined in the Head Office by Sh. G.S. Sandhu and Inter Office Memo (IOM) dated 27.01.98 was issued to the Regional Manager (WR), thereby conveying the approval of grant of additional discount of Rs. 1500 PMT and interest free credit of 45 days or cash discount of Rs. 1800 PMT for lifting wire rods between 1000 to 1200 MTS till 31st March 1998. The facility of additional discount of Rs. 1500 PMT was granted only to M/s AMPL. It is further alleged that though, there was no concurrence of Director (Finance) on aforesaid proposal, yet same was approved by Sh. P.C. Agarwal, Director (commercial), which was later on extended to M/s Gupta Cables for lifting of alloy wire rod during March 1998 and not to any other agent/customers. It is further alleged that Sh. G.S. Sandhu in his aforesaid note dated 15.05.98, created a false impression to show that the said special discount had been granted/extended to customers for lifting of alloy wire rods during January - March 1998.
5. It is further alleged that Sh. G.S. Sandhu (A-3) thereafter, put up a draft MOU along with his above note, incorporating therein the General Terms and Conditions for approval. It is further alleged that in pursuance of the said criminal conspiracy S.K. Ghosh (A-1) and P.C. Aggarwal (A-2) did not explore the possibilities of having MOU with other customers/consignment agents for lifting of either alloy Page 5 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 wire rods or rolled products, in order to increase the sales. It is further alleged that proposal of 15.05.98 for entering into MOU with AMPL was recommended for grant of Rs. 2300/- as cash discount and Rs. 1500/- PMT as special discount to AMPL and later on P.C. Aggarwal (A-2) without obtaining concurrence of finance department, himself approved the proposal on having been authorized by Sh. S.K. Ghosh (A-1). The above proposal for entering into MOU with AMPL for lifting of Alloy Wire Rods was turned down by finance department vide note dated 19.06.98 itself with a remark that "there seems to be no justification to extend Special Discount of Rs. 1500/- PMT further".
6. It is further alleged that Sh. G.S. Sandhu (A-3) deliberately withheld the above file with him w.e.f. 19.06.98 till 13.08.98, on which date he put up a note dated 13.08.98, thereby reiterating his earlier recommendations despite non-concurrence of the proposal by the finance department. The proposal was further examined by Shri V.K. Verma, G.M. (F) and Shri Shashi Sahni, Dy. G.M. (F), who pointed out that the proposal did not appear to be justified on the ground that the dispatches were more than the production. Sh. G.S. Sandhu marked the file to Sh. P.C. Aggarwal, Director (Commercial), who recorded his note dated 07.10.98 and recommended for approval. He marked the proposal to Director (Finance)/CMD. The file was pending with Director (Finance) till 30.10.98. However, when Shri P. Majumdar/Director (Finance) was away on tour on 26.10.98, Sh. G.S. Sandhu taking benefit of the absence of Director (Finance), put up the note dated 26.10.98, Page 6 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 thereby making false statements to the effect that in order to increase sales and profits, certain proposals had been put up by Marketing Department for approval of the competent authority, though, the proposal put up in January - March, 1998 quarter relating to alloy wire rods was extended in the current year 1998-99 by signing MOU with certain bulk buyers. In fact, the proposal was pending only with regard to M/s AMPL as there was no other proposal pending at all.
7. It has been further alleged that Sh. S.K. Ghosh (A-1) delegated powers to Sh. P.C. Aggarwal (A-2) to take decision on the matters of marketing and accordingly P.C. Aggarwal approved the aforesaid proposal on the same day.
8. It is further alleged that even before the approval of the proposal, Sh. P.C. Aggarwal and Sh. G.S. Sandhu had already signed the MOU with AMPL on 01.06.98 itself for sale of 5000 MTs of alloy wire rods with additional discount of Rs. 1500/- PMT. On the same day i.e. 01.06.98, both Sh. P.C. Aggarwal, Director (Commercial) and Sh. G.S. Sandhu, General Manager (C & E) signed one more MOU with M/s AMPL for sale of 8000 MTs of rolled products along with 600 MTS of extrusions with an additional 15 days interest free credit or cash discount in lieu thereof, which worked out to Rs. 750 PMT, even when there was no approval of the competent authority for entering into such MOU's with M/s AMPL. It is further alleged that the above two MOUs ought to have been executed/signed on behalf of BALCO, only after obtaining approval of the competent authority i.e. Board of Directors, as the value of the materials under Page 7 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 the aforesaid MOUs exceeded the powers of Sh. P.C. Aggarwal (A-
2). It is further alleged that A1, A2 & A3, being officers of BALCO entered into criminal conspiracy with A4 & A5 (both Directors of M/s AMPL), abused their official position as public servants and caused undue pecuniary advantage to themselves or to A4 & A5 and cheated BALCO to the extent of Rs. 299.20 lacs.
9. At the time of filing chargesheet, accused G.S. Sandhu was working as public servant, hence, sanction was obtained to prosecute him from the competent authority. Though, at the time of filing chargesheet, A1 and A2 were not working as public servants, hence, no sanction was required for them.
CHARGE :-
10.After completion of investigation, accused persons namely Sh. S.K. Ghosh (A1), Sh. P.C. Aggarwal (A2), Sh. G.S. Sandhu (A3), Sh. Praveen N. Shah (A4) and Sh. Kirti Shah (A5) were chargesheeted for offences punishable under Section 120B r/w Sec 420 & Sec 13(2) r/w 13(1)(d) of Prevention of Corruption Act, 1988 and for substantive offences u/s 420/471 IPC & section 13(2) r/w 13(1)(d) of PC Act, 1988. On 03.01.2012, charges were framed against all the accused persons for aforesaid offences, to which they pleaded not guilty and claimed trial.
PROSECUTION EVIDENCE :-
11.Prosecution examined 23 witnesses in support of its case, as per following descriptions :-
Page 8 of 137 (Pulastya Pramachala)Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 Name Description Exhibited Documents PW1/Sh. He was partner of M/s Quality -
Jitender Metals 120-124, Thakur Dwar Dev Road, Mumbai. He was one of Chand the consignment agents of Shah BALCO since 1992. They used to take rolled products, extrusions and wire rods from BALCO. He showed his ignorance about any special scheme of discounts being offered by BALCO. He further deposed that they were never offered any special discount by BALCO, as was being offered to M/s Anish Metal Pvt.
PW-2/Sh. He was proprietor of M/s Metal Ex. PW-2/A (Statement of Ashok India, which was dealing in the witness) Kanodia business of aluminum products since 1987.
They were consignment agent of M/s BALCO and used to receive delivery against payment made by them from time to time. He also showed his ignorance about any special scheme of discounts being offered by BALCO. He further deposed about facing difficulty in getting material even after depositing the amounts on account of materials being supplied to MOU parties. He further explained about the nature of extrusions that aluminum items never get old.
PW-3/Sh. He was posted as Assistant Ex. PW-3/1 (letter dated
Upender Manager in National Aluminum 16.10.01, whereby details of
Mishra Company Ltd and was looking price list applicable during
after work of Marketing said period were supplied to
Department. He identified CBI);
signature of Sh. L.C. Khatri, who Ex. PW-3/2 (enclosures
was Resident Manager in Delhi containing four pages with
office regard to details of prices of
aluminum ingot and rods
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prevailing during 1998-99);
PW-4/R.K. During the year 2000, he was Ex. PW-4/1 (letter dated
Kher posted as Manager Marketing 04.02.99 issued by Sh. Kirti
and was looking after Marketing Shah Director of Anish
Division. He proved letter dated Metal Pvt. Ltd.);
04.02.99 issued by Sh. Kirti
Shah Director of Anish Metal
Pvt. Ltd.
Ex. PW-4/2 (note dated 06.02.99 in response to aforesaid letter);
Ex. PW-4/3 (copy of letter dated 25.10.01, which is internal communication for furnishing documents required by CBI); Ex. PW-4/4 (letter dated 22.10.01 issued by PW4 to Regional Manager, North Zone BALCO informing him about requirement of CBI);
Ex. PW-4/5 (copy of letter dated 28.12.98 addressed to M/s Anish Metals, D.C. Metals, Mumbai and Ramesh Metals Syndicate, Mumbai with regard to non-moving stock of extrusion from Korba/BBU Works);
PW-5/Sh. He was posted as Regional Ex. PW-5/1 (fax message Ravindra Manager, BALCO, Western dated 31.03.99 issued by P. Region, Mumbai and he was Sh. G.S. Sandhu (A3) with Junagade responsible for selling regard to providing company's products to additional discount to customers and consignment consignment agents from agents of Western region. He 01.01.99 to 31.03.99); deposed that there was a policy of the company that the primary products i.e. ingots, properzi rods etc were not being sold to consignment agents.
These were being sold to the customers and other agents directly as per company policy. He further deposed that the quantity linked discount was a policy decided primarily on yearly basis and sometimes reviewed periodically by HO marketing and same was communicated to Regional Office Page 10 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 and the special discount was being allowed from time to time periodically, thereby reviewing the quantity discount based on market conditions prevailing at that time determined by Head Office Marketing. He proved fax message dated 31.03.99 issued by Sh. G.S. Sandhu (A3) with regard to providing additional discount to consignment agents from 01.01.99 to 31.03.99.
PW-6/Sh. During the period June 1998 to Ex. PW-6/1 (file D-17 Mohan February 2000, he was posted regarding sale of old and Singh as Assistant Manager in Central non moving stocks from Parmar Marketing Division, Head godown and BBU);
Quarter. He proved file D-17 with Ex. PW-6/2 (note put up by
regard to sale of old and non Sh. B.K. Bhatia for sale of
moving stocks from godown and old and non moving stocks
BBU. of rolled products);
Ex. PW-6/3 (the letter bearing no. HO/MKT/98-99/SL/BBU/75 dated 4.2.99, issued by Sh. B.K. Bhatia AGM Marketing addressed to all Regional Managers in the Country to display the list of items on the notice board and also contact the prospective buyer for getting best offers in sealed covers latest by 15.2.99);
Ex. PW-6/4 (letter no. HO/MKT/98-99/SL/GODOWN/72 dated 3.2.99, issued by Sh. B.K. Bhatia AGM Marketing addressed to all Regional Managers in the Country was pertaining to liquidating products lying in different godowns which were received prior to 1.4.98 and also for getting best offers in sealed covers latest by 15.2.99);
Ex. PW-6/5 (14 enclosures from Page 46 to 59 including copy of the aforesaid letter were also dispatched. The enclosures were having details of non moving stock lying in the godowns and BBU);
Ex. PW-6/6 (Notes N-5 to N-7 which are comparative statements in respect of (i) BBU Works, (ii) Godowns (Foils, extrusions, HR products and CR products);
Ex. PW-6/7 (File-6 relating to sales of extrusions from stock of old and non moving stock lying at Korba of BALCO);
Page 11 of 137 (Pulastya Pramachala)Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 Ex. PW-6/8 (photocopy of Ex Stock List of Extrusion (old and non moving stocks) of BALCO Korba sent by Central Marketing Division BALCO);
Ex. PW-6/9 (the note sheet page 23/N to 29/N written by Sh. P.C. Aggarwal dated 25.2.99);
Ex. PW-6/10 (Inter Office Memo dated 26.2.99, page 105/C written to RM Western Region, issued by witness, on the direction of GM (C&E) Sh. G.S. Sandhu to the effect that competent authority had approved the supply of 418 MT Extrusions (Korba + BBU), as per list dated 8.12.98 to M/s Anish Metal Pvt. Ltd. Mumbai and further requested to issue intent of confirmation order and arrange funds and dispatch clearance to Korba and BBU, so that dispatch could be made);
PW-7/Sh. He was posted as Marketing Ex. PW-7/1 (inter office
R.K. Manager. He deposed that memo dated 18.2.99
Narang company had four regional containing sealed quotation
offices and the products of the from M/s Star Aluminum
company were marketed Corporation);
through these regional offices. Ex. PW-7/2 (is the open
He proved the file pertaining to envelope of the sealed
sale of old and non moving stock quotation);
from godowns and BBU
containing inter office memo,
notes, sealed quotation, fax
message etc.
Ex. PW-7/3 (photocopy of note dated 5.4.99, vide which he had informed about the sale of entire stock from Delhi godown as on 31.3.99 and marked the same to Regional Manager Northern Region);
Ex. PW-7/4 (inter office memo dated 2.2.99 issued by witness to AGM Mr. B.K. Bhatia Central Marketing Unit, thereby giving details of old/non moving stock lying in Delhi and Faridabad Godowns and as per this memo, the position of the stock in Delhi Godown was shown as extrusions (KORBA) 34.642 tons, extrusions BBU 7.378 tons, CRP 3.116 tons and foil 2.0439 tons total 47.1799 tons);
Page 12 of 137 (Pulastya Pramachala)Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 Ex. PW-7/5 (inter office memo dated 2.2.99 in reference to fax messages dated 15.1.99, 21.1.99 and 29.1.99 of AGM Mr. B.K. Bhatia);
Ex. PW-7/6 (fax message dated 15.1.99);
Ex. PW-7/7 (fax dated 29.1.99);
PW-8/Sh. He was Chairman of Madhya Ex. PW-8/1 (File no. 1, S.K. Das Pradesh Electricity Board. containing page 1 to 117, Gupta However, he was appointed as maintained in office);
part time non-official Director on Ex. PW-8/2 (memorandum
the Board of Directors of BALCO of articles of association of
by the Government of India BALCO);
w.e.f. 15.02.99 to 01.03.2011.
He further deposed that under Ex. PW-8/3 (true copy of
Articles of the Association of the delegation of powers by
company, the Board of Directors board to CMD in the
were responsible to regulate meeting held on 01.09.87);
affairs of the company in the Ex. PW-8/4 (true copy of
matter provided therein. He office order dated 19.11.97
proved certain files, vide which powers were sub
memorandum of articles of delegated in favour of
association of BALCO, office Director Commercial and
order dated 19.11.97, schedule other officers in Marketing
of sub delegation of powers to Department by the CMD);
Director (commercial), etc.
Ex. PW-8/5 (true copy of delegation of powers to Director (commercial));
Ex. PW-8/6 (file relating to marketing strategy for the year 1998-99 for sale of various products of BALCO); Ex. PW-8/7 (File bearing no. HO/CMKT/Approvals Volume-I relating to policy approval D-13);
Ex. PW-8/8 (File no. 2 (D-12) i.e. general discussion on sale during January-March 1999);
Ex. PW-8/9 (File of MOUs for the year 1998-99 of M/s AMPL, which is related to sale of old and non moving stock from Godown/BBU.
Page 13 of 137 (Pulastya Pramachala)Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 Ex. PW-8/10 (File no. 4 relating to MOU for sale of rolled product and wire rods/ingots);
PW-9/Sh. He was posted as Marketing -
T.K. Manager BALCO at Bidhan
Ghosh Bagh Unit at Asansol, West
Bengal from July 2000 till
September 2002 till his
retirement.
He deposed about his duties, procedure and functioning of BALCO with regard to sale of products to customers through two channels. First was trade channel (consignment agent) and second was directly to customers. Under trade channel, rolled and extrusion products were supplied to consignment agents as per set company policy and agreement with them and secondly to the direct customers through telephone inquiry, newspaper inquiry and by approaching directly to the customers. Orders were finalized as per company policy and supplied against payment and agreement with them. He further deposed that for sales of products they had no tender inquiry/procedure. The materials produced in excess of order and material generated in the factory due to cancellation of order, was called ex-stock or uncovered stock, which was not saleable and slow moving items. The detailed list of such products/items used to be displayed on the office notice board serially and product wise with their packing condition at the interval of three months for adding and subtracting revised items. He further deposed that the biggest consignment agent with regard to the rolled products in Eastern Regional during 1998-99 was M/s Sumitra Metal Pvt. Ltd, whose monthly requirement was about 70 to 75 MT during 1998-99. M/s Gupta Cable Groups was the major buyer of alloy wire rods in Bhuvneshwar, Odisha but there was no buyer in West Bengal.
PW10/Sh. He had taken agency of BALCO -
Narender in May, 1994, which was dealing
Aggarwal in trade of aluminum products.
He was having regular and good
relations with BALCO till 1998.
He deposed about the business
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relationship between his firm
and BALCO.
PW-11/Sh. During October 1997 to August Ex. PW-11/1 (D-2 vide
Subhash 2001, he was posted as which he had handed over
Chand Company Secretary in Bharat documents mentioned at Sr.
Hans Aluminum Co. Ltd. His main No. 1 to 4 to CBI);
duties were to ensure Ex. PW-11/2 (copy of MOU
compliance of provisions of (D-5) dated 29.4.1998
Companies Act, 1956 including entered into by BALCO and
conduct of Board/General Body the Ministry of Mines for the
Meetings, maintenance of year 1998-99 );
statutory records, coordination
with ministry and other govt. Ex. PW-11/3 (part of D-5
departments and legal cases mentioned at S.No. 4 of
which were handled at Ex.PW11/1, containing
registered office of the company. observation of Director
He had furnished certain Finance BALCO on the
documents to CBI and proved notings given by Director
the same. Commercial.
Ex. PW-11/4 (photocopy of
note relating to
rationalization of prices -
price committee meeting -
adjustment of prices duly
signed by Sh. J.M. Dhir
(AGM Marketing), Sh.
Shashi Sahani DGM (F & A)
and Sh. G.S. Sandhu GM
(C & E);
PW12/Sh. He was working as Director Ex. PW-12/1 (note initiated
K.S. Finance in Hindustan Fertilizer by Karan Khundia, GM
Ponnuswa Corporation w.e.f. 31.07.98. Marketing vide note dated mi Earlier he had joined BALCO as 02.03.98 on the marketing General Manager (Finance) in policy for sale of various October 1994 and left the Aluminum product during services of BALCO on 31.07.98. 1998-99) He further deposed the policy Ex. PW-12/2 (Annexure-I to with regard to marketing of Annexure-VII are the Page 15 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 products by BALCO, which were enclosure of the draft made anually for every year, and proposal) same were vetted by finance as Ex. PW-12/3 ( Note of Sh. per procedure. He identified R. Hari Haran with regard to signature of officials of BALCO examination of aforesaid and proved the documents proposal on 20.03.98) related to them.
Ex. PW-12/4 (Note of Sh. S.R. Ramuka with regard to examination of aforesaid proposal on the same day i.e. on 20.03.98) Ex. PW-12/5 (comments on the methods that the service agents were not performing upto the market bearing signature of Sh. G.S. Sandhu) Ex. PW-12/6 (point wise replies provided by GM (M) Sh. Karan Khundia at page 7) Ex. PW-12/7 (note of PW12 thereby giving his comments to Director (F)).
Ex. PW-12/8 (note of Mr. P. Mazumdar giving his comments under marketing policy at page 12 and 13/N and sent the same to CMD on 06.04.98 mentioning that the marketing policy might be considered for approval) Ex. PW-12/9 (note of CMD at page 13/N of file D-18 bearing his signature at point D) Ex. PW-12/10 (note of Sh. Karan Khundia, dated 21.4.98 giving his comments on the observations made by Director (F) from pages 14 to16/N).
Ex. PW-12/11 (note of Director (C) which is placed at page 16-17 and bears signature of Sh. P.C. Aggarwal Director (C) at point F) Ex. PW-12/12 (note of Sh. P. Mazumdar Director (F) which is placed at page 18-19 of file D-18 bearing signature of Sh. Mazumdar at point A with date 30.4.98) Ex. PW-12/13 (note of CMD bearing signature of S.K. Ghosh the then CMD at point B at page 19/N of file D-18) Page 16 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 Ex. PW-12/14 (Note of Sh. P.C. Aggarwal at point A, thereby marking the file to GM (C&E)/GM (M)/GM(F);
Ex. PW-12/15 (note of Karan Khundia page 21/N of D-18, which bears signature of Sh. Karan Khundia at point A and also bears signature of Sh. G.S. Sandhu, GM (C & E) at point B and signature of witness Sh. K.S. Ponnuswami at point C); Ex. PW-12/16 (note of Sh. P.C. Aggarwal thereby approving marketing policy documents for the year 1998-99 bearing signature of P.C. Aggarwal at point A);
Ex. PW-12/17 (letter dated 18.05.98 of P.C. Aggarwal, thereby marketing policy was forwarded to all Regional Managers) Ex. PW-12/18 (aforesaid note was approved by DC and sent to GM (F) bearing signature of Sh. G.S. Sandhu at point A and signature of Sh. P.C. Aggarwal at point C.) Ex. PW-12/19 ( letter dated 13.05.1998 of AMPL indicating that the terms of MOU that AMPL would take aluminum rolled products (both CRP & HRP)/Extrusions, guaranteed off take 10000 tons p.a.) Ex. PW-12/20 (is a note with regard to the capacity of customer, which was signed by DGM (Fin.), Sh. S.R Ramuka at point A and marked to Director(Fin.) Mr. Majumdaar); Ex. PW-12/21 (Note of PW12 dated 16.06.1998 was put up by him after having consultation with D(F) Mr. P. Majumdar). Ex. PW-12/22 (note of Ramuka DGM (Fin.) bearing his signatures at point B);
Ex. PW-12/23 (Note of PW-12 dated 19.06.1998 bearing his signatures at point A1).
Ex. PW-12/24 (the proposal for sale of 5000 MT along with the statistics of sale, and MOU for sale of 5000 MT for alloy wire rods per year from 1998-99 to 2000-01 signed by Praveen Shah at point A from AMPL Mumbai and Sh. P.C Aggarwal & Sh. G.S Sandhu, BALCO at point B & C) Ex. PW-12/25 (record note of page 41 to 44 in the file D-18 already Ex. PW-8/6 with regard to discussion of meeting held on 06.05.1998 on marketing policy for 1998-99, attended by Page 17 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 PW-12, Sh. K.M Kundia, GM Marketing and Sh. G.S Sandhu GM (C&E) Ex. PW-12/26 (page 63 and 64 of D 18 Ex. PW8/6 are the record notes of discussion of RM meet held on 08-09.06.1998 at Delhi on Marketing policy of the company); PW13/Sh. He joined BALCO as Ex. PW-13/1 (circular titled H.K. probationary officer at Korba, 'Secret' dated 31.03.99 Wadhwa Chattisgarh in 1997 and lastly signed by Sh. G.S. Sandhu) worked with BALCO as AGM (Marketing) during 2000-01.
He deposed about the company, hierarchy of officers of BALCO and about the pricing policy, audit of policies and also about discount to be given by the BALCO. He also deposed about MOU as well as delegations of powers, sources through which BALCO was selling its material/products. He further deposed that during his tenure, BALCO had four regional offices at Delhi, Bombay, Calcutta and Madras (now Chennai). He also deposed about the functioning of regional office with regard to indents and supply of requisite material and the policy adopted by the company at the relevant time. He proved a circular titled 'Secret' dated 31.03.99 signed by Sh. G.S. Sandhu.
PW14/Sh. During the year 1998-99, he was Ex. PW-14/1 (note dated J.M. Dhir working as AGM (Marketing) in 03.11.98) Central Marketing, New Delhi. Ex. PW-14/2 (note dated He deposed that as AGM 16.1198 (D-13 page 13 & (Marketing) his duty was to 14) regarding suggestion to coordinate sales of various approve dispatches) products including wire rods, ingots and rolled products, etc. Ex. PW-14/3 (The note on with regional marketing offices, page 15 and 16 of file D-12 marketing coordination cell at bearing signatures of Sh.
KORBA and plant production. It G.S. Sandhu on page 16 at
was also his duty to coordinate point A)
monthly production plan as per Ex. PW-14/4 (The note
set targets and market dated 18.11.1998 on pages
requirements. He identified note 16 and 17 of Sh. S. Shome
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dated 03.11.98 of pricing bearing his signatures at committee bearing signatures of point A on page 17.) Sh. K. Khundia and Sh. G.S. Sandhu with regard to improving sales.
Ex. PW-14/5 (On page 17 and 18 note dated 18.11.1998 of Sh. Shashi Sahni, DGM (F) bearing his signature at point A.) Ex. PW-14/6 (note dated 19.11.1998 bearing signature of Sh. G.S. Sandhu on page 19. It also bears signature of CMD Sh. S.K. Ghosh at point D with regard to approval of the same.) Ex. PW-14/7 (circular dated 21.11.1998 issued under signature of PW-14, thereby notifying the reduction/discounts in different products, which is mentioned at page 85 of file D- 13 already Ex.PW8/7 and bears his signature at point A.) Ex. PW-14/8 (The note dated 09.12.1998, endorsed by CMD Sh. S.K. Ghosh by putting his signature at point E on page
20) Ex. PW-14/9 (The note appearing on page 21 & 22 endorsed by CMD Sh. S.K. Ghosh) Ex. PW-14/10 (circular/office order dated 16.12.1998, issued by Sh. G.S. Sandhu GM (C&E) under his signatures to GM (Fab.)/GM (F&A) with copy to RMs of all regions, thereby notifying the approved adjustment of prices mentioned above alongwith the landed price comparison CRP dated 16.12.1998 in D-9) Ex. PW-14/11 (note of Sh. P.C. Aggarwal appearing on page 29 and 30 under his signatures at point A with proposed price/discount with correction from page 29 to 34) Ex. PW-14/12 (note of PW14 dated 15.01.99 with regard to hefty price reduction announced by HINDALCO qua its primary and semi fabricated products ranging between Rs. 4200 to Rs. 8000) Ex. PW-14/13 (note put up by PW14 on the instructions of his seniors Sh P.C. Aggarwal and Sh. G.S. Sandhu, on the lines of internal meeting held on 02.02.1999, vide which a view was Page 19 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 taken that LC opening charges would be reimbursed to consignment agents on sale of semi fabricated products from 01.04.1998 to 31.03.1999 at flat rate of Rs.300/- per ton for supplies against LC. This note bears his signature at point A on page 17.) Ex. PW-14/14 (noting dated 03.02.99 of Sh. G.S. Sandhu) Ex. PW-14/15 (note dated 05.02.99 of Sh. S. Shome appearing on pages from 16 to 14 ) Ex. PW-14/16 (note dated 05.02.99 from page 14 to 12 of Sh. Shashi Sahni) Ex. PW-14/17 (noting of Sh. G.S. Sandhu appearing on page 10 of note dated 05.02.99) Ex. PW-14/18 (MOU (D-14 page 7 & 8) executed between Anish Metals Pvt. Ltd. And BALCO) Ex. PW-14/19 (Note sheet prepared by PW14 on page 1 & 2 of Ex. PW8/9 bearing his signature at point A. ) Ex. PW-14/20 (page 3 & 4 of notesheet regarding MOU for sale of 8000 tones of Rolled products and 600 Tones of extrusion for the year 1998-99.) Ex. PW-14/21 (Note sheet pages 1 to 14 of Ex. PW8/10 (D14) bearing signature of Sh. P.C. Aggarwal) Ex. PW-14/22 (Fax dated 18.03.99 regarding minutes of meeting held with M/s AMPL for supply of aluminum rolled products, aluminum ingots and aluminum wire rods during 1998-99) Ex. PW-14/23 (Fax dated 03.06.98 regarding MOU with M/s AMPL for supply of semi fabricated products and alloy rods during 1998-99).
Page 20 of 137 (Pulastya Pramachala)Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 PW15/Sh. He was posted as Dy. Manager Marked PW-15/1 to PW- T.K. (Finance & Accounts) in BALCO, 15/9 (photocopies of credit Haldar Mumbai Office. He explained notes appearing in File no.
about his duties and further 11 of BALCO (P.A.I.L for
deposed that discount towards financial year 1998-99
payment to customer/agent internal paging from 4 to 12
towards trade discount, cash (D-39));
discounts and other discounts Marked PW-15/10 to PW-
were issued by Finance & 15/25 (photocopies of credit
Accounts Department through notes appearing in File no.
Credit Notes and Debit Notes in 12 of BALCO (H.A.L for
respect of recovery of interest financial year 1998-99
for delayed payment and other internal paging from 5 to 22
recoveries and credit notes of (D-40));
discounts were adjusted against
payment for further supplies of Marked PW-15/26 to PW-
materials. The bills/invoices 15/33 (photocopies of credit
were issued by the accounts notes appearing in File no.
department located at two 13 of BALCO (P.M.P.L for
different plants located at Korba financial year 1998-99
(KB) and Bidhan Bagh Unit internal paging from 5 to 14
(BBU) in respect of material (D-41));
supplied to any party and a copy
of invoice/bill used to be
forwarded to the concerned
regional office for the purpose of
initiating necessary action like
raising of credit notes or debit
notes and for recovery action.
Parties were required to make
payment to the company
through cheque, DD, LC, etc.
He also identified photocopies of
credit notes.
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PW16/Sh. He was posted as AGM Ex. PW-16/1 (letter dated
Bhawnesh (Marketing) in Central Marketing 08.12.1998 appearing on
Kumar Office of BALCO at New Delhi. internal page 77 of file Ex
Bhatia He identified noting and PW6/7 (D-16), which was
signatures of Sh. G.S. Sandhu, prepared on the instructions
Sh. P.C. Aggarwal, Sh. J.M. Dhir, and discussions with GM (C
Sh. Amir Chand, Sh. S.K. & E) G. S. Sandhu and
Sharma, Sh. S. Shome, Sh. S.K. Director (Commercial) Sh.
Ghosh & Sh. Shashi Sahani and P. C. Aggarwal)
proved related documents, notes Ex. PW-16/2 (page 82 of file
and entries of aforesaid officials. Ex PW6/7 (D-16), which is a
He also identified his signatures letter dated 06.01.1999
over certain other documents bearing no. WR/MKT/CA
which were already proved by through this letter, three
other witnesses . sealed quotations were sent
to AGM (Central Marketing)
Sh. J. M. Dhir by Manager
(Marketing), Mumbai Sh. P.
Chatoupadhya.)
Ex. PW-16/3 (page no. 89 of file Ex PW6/7 (D-16) which is an envelope addressed to Regional Manager (Marketing), BALCO is a quotation of Rakhi Agencies Pvt. Ltd., 3328, Kucha Kashgiri Bazar, Sita Ram, Delhi) Ex. PW-16/4 (minutes dated 14.01.1999 of Central Marketing Department regarding comparative statement of Sale of old and non-moving stock of extrusions from Korba, (part of D-
16)) Ex. PW-16/5 (comparative statement running into 3 sheets from internal pages 96 to 98 of D-16, prepared by committee members after opening all four sealed covers namely Rakhi Agencies P. Ltd., Delhi, Ramesh Metals Syndicate, Mumbai, D. C. Metals, Mumbai and Anish Metals, Mumbai) Ex. PW-16/6 (page 96 of D-16, which is Sales of Old and Non-moving stock of extrusions based on the comparative chart Ex PW16/5, bearing signature of Sh. S. K. Sharma at point A and signature of PW16 at point B ) Ex. PW-16/7 (page no. 87 of D-16, which is an envelope Page 22 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 through which offer was received from M/s Ramesh Metal Syndicate, bearing signature of Sh. Amir Chand at point A, signature of Sh. S. K. Sharma at point A and signature of PW16) Ex. PW-16/8 (offer received from M/s Rakhi Agencies Pvt. Ltd., Delhi sent by the Northern Region, Delhi through which M/s Rakhi Agencies P. Ltd. offered to lift 40 M. T. of extrusions and asked for Rs.4000/- per M. T. as discount over and above the prevailing discount (part of D16) Ex. PW-16/9 (the offer of M/s Ramesh Metals Syndicate, Mumbai, vide which it offered to lift 79 M. T. of non-moving stock of extrusions from Korba and 50 M. T. of non-moving stock of extrusions from B. B. U. and asking for discount between Rs. 10000/- to Rs. 20,000/- per M. T. on basic rates over and above the prevailing discount, bearing signature of Sh. Amir chand at point A, Sh. S. K. Sharma at point B and of PW16 at point C ) Ex. PW-16/10 (the internal paging 85 (part D-16), which is offer of M/s Anish Metals P. Ltd., Mumbai, vide which it offered to lift 300 M.T. of non-moving stock of extrusions from Korba/BBU and sought for discount of Rs.5000/- per M. T. on basic rates over and above the prevailing discount and also for interest free credit for 90 days, bearing signature of Sh. Amir chand at point A, signature of Sh. S. K. Sharma at point B and his signature at point C) Ex. PW-16/11 (D-16 (internal paging 4 to 20) is note sheets, which is running into 9 pages) Ex. PW-16/12 (noting internal paging 21-30 from D-16) Ex. PW-16/13 (internal paging I to H of letter dated 04.02.99) Ex. PW-16/14 (internal paging I to I of letter dated 04.02.99) Ex. PW-16/15 (quotation of M/s Star Aluminum Corporation which is internal page no. 63 of (D-17) with regard to material lying at godown and BBU. ) Ex. PW-16/16 (internal page no. 81 (D-17) of letter dated 19.02.1999 addressed to AGM (BKB) Delhi sent by MM (S) Page 23 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 WR, vide which offers in sealed cover of Kamal Metals Corporation, Ahamdabad, M/s D C Metals, Mumbai and M/s Ramesh Metals Syndicate, Mumbai were sent) Ex. PW-16/17 (copy of Ex. PW16/16) Ex. PW-16/18 (page no. 78 (D-17 internal) i.e. quotation received form Kamal Metals Corporation, Ahamdabad for material lying at godown) Ex. PW-16/19 (internal page no. 75 and 76 (D-17) which are quotations received from M/s DC Metals, Mumbai for material lying at godown and BBU) Ex. PW-16/20 (internal page no. 75 and 76 (D-17) which are quotations received from M/s Ramesh Metals Syndicate, Mumbai for material lying at godown and BBU). Ex. PW-16/21 (internal page no. 71 (D-17), which is a letter dated 16.02.1999 addressed to PW16 sent by RM (SR) Madras, bearing signature of PW 16 at point A) Ex. PW-16/22 (quotation along with covering letter appearing on internal page no. 69 and 70 (D-17), which was received from Agarvanshi Aluminum Ltd., Secunderabad, Andhra Pradesh in respect of material lying at Pondicherry godown. ) Ex. PW-16/23 (quotation, received from M/s Tamilnadu Industrial Enterprises, Chennai in respect of material lying at Pondicherry godown appearing on internal page no. 66 and 67 (D-17)) Ex. PW-16/24 (copy of aforesaid quotation received M/s Tamilnadu Industrial Enterprises, Chennai) Ex. PW-16/25 (fax message dated 17.02.99 (internal page no. 62, D-17), addressed to Regional Manager NR Delhi, Regional Manager SR Chennai, Regional Manager WR Mumbai, Regional Manager ER Calcutta) bearing signature of PW16.
Ex. PW-16/26 (note dated 05.03.1999 of Sh. S. Shome, AGM (Finance), bearing his signature at point A.) Ex. PW-16/27 (noting of PW16 appearing on internal page N- 8 bottom to N-11 i.e. from X-2 to X-3, bearing his signature at Page 24 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 point A on internal page N-11. ) Ex. PW-16/27 (noting dated 11.03.99 of Sh. S. Shome appearing from bottom of N-11 to N-12 from portion X-4 to X-
5) Ex. PW-16/28 (note dated 11.03.99 from portion X-6 to X-7 on internal page N-12 to N-13) Ex. PW-16/29 (noting dated 11.03.99 of Sh. P.C. Aggarwal at point X-8) Ex. PW-16/30 (letter dated 13.03.99 of M/s Anish Metal Pvt. Ltd. Addressed to BALCO, which was received by Sh. P.C. Aggarwal) Ex. PW-16/31 (Original of the aforesaid letter (D-17 internal page 110 to 112)) Ex. PW-16/32 (noting of PW16 appearing in the file D-17 internal paging N-14 and N-15 from portion X1 to X2) Ex. PW-16/33 (noting of Sh. P.C. Aggarwal appearing at point X, bearing his signature at point B) Ex. PW-16/34 & Ex. PW-16/35 (Annexures VA and VB mentioned in the note of PW16 placed in the file D-17 (internal pages 114 and 113) Ex. PW-16/36 (note of Shashi Sahni dated 20.03.99 in the file D-17 (internal paging N-16)) Ex. PW-16/37 (noting of Sh. P.C. Aggarwal from portion X2 to X3) Ex. PW-16/38 (noting of Director (Finance) appearing at point X-4 on noting portion N-17 to N-19 of D-17) Ex. PW-16/39 (endorsement of CMD appearing at Mark X N-
19) Ex. PW-16/40 (note of Sh. P.C. Aggarwal dated 26.03.99 running from X-1 from N-20 to N-23) Ex. PW-16/41 (noting of GM (C&E) appearing at point X2, bearing signature of Sh. G.S. Sandhu at point B) Ex. PW-16/42 (fax message dated 27.03.99 sent to RM (NR), Page 25 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 RM (WR) and DGM (O) BBU conveying the approval of Sh. P.C. Aggarwal under the signature of PW16, which appear at point A) PW17/Sh. He joined BALCO in April 1998 Ex. PW-17/1 (last para of Shyamal as AGM (Finance) and was page 25 to 28 appearing Shome looking after marketing finance from 'X' to 'X' of D-12, which in July 1998. He identified the is a noting of Mr. P.C. records and other documents Agarwal dated 01.01.99, pertaining to BALCO. He also whereby he gave detailed identified signatures and notings note regarding BALCO); of Sh. G.S. Sandhu, Sh. P.C. Ex. PW-17/2 (last para of Aggarwal, Sh. J.M. Dhir, Sh. V.K. page 28 to 29 appearing Verma, Sh. S. Shome, Sh. S.K. from 'Y' to 'Y' of D-12, which Ghosh & Sh. Shashi Sahani, Sh. is a noting of Mr. P. P.C. Sharma, Karan Khudia, Sh. Majumdar dated 12.01.99);
K.S. Punnuswami, Sh. P
Majumdar, Sh. B.K. Bhatia & Sh. Ex. PW-17/3 (last para of
Hari Haran. He also identified page 29 appearing from 'Z'
and proved documents i.e. MOU to 'Z' of D-12, which is a
executed between BALCO & noting of Mr. S.K. Ghosh
Anish Metals, minutes of dated 12.01.99);
meeting dated 07.01.99 held Ex. PW-17/4 (last para of
between BALCO and Anish page 29 appearing from 'Z1'
Metals, fax messages, letters, to 'Z1' of D-12, which is a
notes as well as other related noting of Mr. P. C Aggarwal,
documents. He also identified whereby Mr. P.C. Aggarwal
his signatures over certain other accepted proposal of
documents which were already marketing department price
proved by other witnesses. He deduction/discount to be
also deposed about delegation effective from 01.01.99 to
of powers in BALCO. 31.03.99);
Ex. PW-17/5 (inter office memo dated 27.02.99 (Page 108- 109 of D-16), bearing signature of Sh. B.K. Bhatia, AGM (Marketing) at point A. This memo is regarding supply of old and non-moving stock of extrusion from Korba and BBU produced prior to 01.04.98);
Ex. PW-17/6 (noting of Mr. B.K. Bhatia, bearing his signature at point C);
Page 26 of 137 (Pulastya Pramachala)Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 PW-18/Sh. He was posted as Director Ex. PW-18/1 (handwritten P. (Finance) in BALCO, which was note of Marketing Manger Mazumdar fully owned PSU controlled by Mrs. R. Sethi appearing at Ministry of Mines headed by page no. 20 of the file Ex. CMD, assisted by Functional PW-8/6, bearing his Directors viz. Director Finance, signature at point F) Director Commercial, Director Ex. PW-18/2 (note of Sh. Operation Projects and Director B.K. Bhatia bearing his Personnel. He deposed about signature at point A) the procedure and functioning of the company as well as about Ex. PW-18/3 (MOU dated duties of all the officers including 01.06.98) CMD.
He also identified and proved documents i.e. notings, letters and other documents dealt with by the officers of the company. He further identified signatures of the officials/officers working under and with him during the relevant period. He also identified his signatures over certain other documents which were already proved by other witnesses. He also deposed about delegation of powers in BALCO and calculation of loss incurred by BALCO due to discounts.
PW19/Sh. He was posted as Chairman, Ex. PW-19/A (sanction Arvind SAIL during July 2002. He order dated 15.07.2002 Pande proved sanction order dated granted against Sh. G.S. 15.07.2002 granted against Sh. Sandhu (A3)) G.S. Sandhu (A3) and identified his signature alongwith official seal on all six pages at point A. He further deposed that before according sanction against A3, he carefully examined FIR, statement of witness recorded by CBI, copies of documents collected by CBI and applied his mind and accorded sanction for prosecution u/s 19 PC Act, against A3.
PW20/Sh. He worked in BALCO since Ex. PW-20/A (office noting Shashi December 1994 to March 2002 of Sh. G.S. Sandhu dated Sahni in different capacities. In 13.08.98, which is part of D-
Page 27 of 137 (Pulastya Pramachala)Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 June/July 1998, he was posted 13, page no. 48 (4/N) (Ex.
in Delhi as DGM (Finance) in PW-8/7) bearing signature
Corporate Office and his of Sh. G.S. Sandhu at point
function was to act as Associate X);
Finance to Director Ex. PW-20/B (part of note
(Commercial) in marketing bearing OK at point Z);
division. CMD used to head
BALCO. Director (Commercial) Ex. PW-20/C (noting of Mr.
used to head marketing division Verma appearing from
and Director (Finance) used to portion X3 to X4 and his
head finance department. He signature at point X5);
further deposed that BALCO Ex. PW-20/D (noting of Mr.
had its plants at Korba Amir Chand from point X1
(Chhatisgarh) and Bidhan Bagh to X2 (on page 47 (5/N) of
(West Bengal). Marketing part of D-13));
department used to sell products
Ex. PW-20/E (noting of Mr.
and marketing policy was
Sandhu appearing from
framed every year with approval
point X6 to X7 (page no. 47
of CMD, in accordance with
to 46, 5/N & 6/N), bearing
MOU between Government of
his signature at point X8);
India and BALCO and in the
MOU, quantum of sale and profit Ex. PW-20/F (noting dated
used to be decided. The power 30.09.98 of Mr. Sandhu,
to fix the prices was delegated to appearing from point X9 to
CMD by the Board of Directors X10 bearing his signature at
and it was further delegated to point X11.
Director (Commercial) by CMD Ex. PW-20/G (Annexure A
with certain parameters alongwith circular dated
regarding limitation of quantity 13.01.99);
and price. There were four
regional offices situated at Ex. PW-20/H (Annexure B
Mumbai, Chennai, Kolkata and alongwith circular dated
Delhi. 13.01.99);
Regional Managers headed the regional offices and there was pricing committee at Corporate office, to fix the prices and other terms and conditions such as credit periods, discounts, etc., according to market conditions. Pricing committee comprised of Director (Finance), Director (Commercial) and Page 28 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 Executive Director (Finance). This committee used to put up their proposal to CMD and CMD was to approve it. During the period 1998-99, there was no ED (Finance), therefore, GM (Commercial), PW20 being DGM (Finance) and AGM (Finance) used to sit in this pricing committee alongwith Director (Finance) and Director (Commercial). He further deposed about the procedure and functioning of the company as well as about duties of all the officers including CMD. He also identified and proved documents i.e. notings, letters and other documents dealt with by the officers of the company and fax messages. He further identified signatures of the officials/officers working under and with him during the relevant period. He also identified his signatures over certain other documents, which were already proved by other witnesses. He also deposed about delegation of powers in BALCO. He also explained the contents of certain notes. PW21/Sh. In the year 2002, he was posted Ex. PW-21/A (chargesheet Jyoti as Dy. SP, CBI, New Delhi and dated 09.12.2002, bears his Kumar he was handed over signature at point X);
charge/investigation of this case.
He initiated the process for receipt of sanction order from the competent authority. On receipt of the sanction order, he filed chargesheet before the court against accused persons.
PW22/Sh. During 2000-2001, he was Ex. PW-22/1 (letter dated A.P. Singh working as Dy. SP & Addl. SP in 07.11.01 (D-26, running CBI. On 26.07.2000, he was page 201), sent by Sh.
entrusted with investigation of Praveen Shah (A4) to
this case and he remained IO till PW22, under his signature
23.01.2002. He took up at point Y and it bears
investigation and examined a signature of PW22 at point
number of witnesses and X);
recorded their statements. Ex. PW-22/2 (letter dated
PW22 also collected from time 02.11.01 (D-30) sent by A4
to time relevant documents, to PW22 under his
mostly in the form of letters signature at point Y. It was
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received by him from various signed by PW 22 at point X authorities (mostly from as mark of receiving this BALCO). He completed field letter sent by him); investigation and handed over charge of this case to another IO Sh. Jyoti Kumar, Dy. SP and examined witnesses in this case.
Ex. PW-22/3 to Ex. PW-22/31 ((D-31), enclosures (running into 29 out of 31 pages) sent alongwith letter Ex. PW-22/2). Ex.PW-22/32(memorandum bearing signature of Sh. Kirti Shah (A5) at point X on page no. 2 and at point A respectively).
Ex.PW-22/33 (letter dated 17.10.2001 bearing signature of PW22 at point X, appearing on page no. 73 of D-35, which was written by PW22 to Sh. J.M. Dhir.
Ex.PW-22/34 (Letter dated 17.10.01 of PW22 to Sh. S.C. Krishnan, MD BALCO (part D-35, page no. 72);
Ex. PW-22/D1 (letter dated 12/14.02.01 (D-19); Ex. PW-22/D2 (letter dated 23.01.01 of Sh. K. Khundia received by PW22);
Ex. PW-22/D3 (letter dated 18.01.01 of Sh. K. Khundia received by PW22);
PW23/Sh. He was entrusted investigation Ex. PW23/A (seizure memo
A.K. of this case on 29.11.99 by the dated 29.02.2000 (D-11,
Sharma then SP Sh. H.C. Avasthi. He running in two pages),
identified signature of Mr. bearing his signature at
Avasthi at point X on the FIR point X);
(already Ex. A-1).
During investigation, he had seized certain documents from BALCO, prepared seizure memo, in respect of seizure of those documents, recorded statements of four witnesses including Mr. Majumdar, Mr. Wadhwa. Thereafter, he handed over the case file to Sh. A.P. Singh, the then Dy. S.P. on the instructions of the then S.P., as he was transferred from that branch. He further identified seizure memo dated 29.02.2000 Page 30 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 (D-11, running in two pages), bearing his signature at point X on each pages, vide which he had received documents from H.K. Wadhwa (Marketing) BALCO. He further identified signature of Mr. Wadhwa at point Y on each page of this memo and proved the same as Ex. PW23/A.
12.PLEA OF ALL ACCUSED PERSON UNDER SECTION 313 CR.P.C. ● SIGNIFICANT PLEA OF ACCUSED SH. S.K. GHOSH (A1) :-
A1 took plea that he is innocent and he has been falsely implicated in the present case on the basis of perfunctory investigation. He further took plea that being competent authority, he had not given any approval for the supply of 418 MT Extrusion (Korba + BBU) to M/s Anish Metal Pvt. Ltd., Mumbai as is mentioned in the letter Ex. PW6/10. In reply to the question no. 119, A1 admitted that the delegation given to Director Commercial was in order. However, there was no such practice/guidelines that such delegation had to be notified through a general office order and subsequently to be reported to the Board of Directors. A1 further contended that the authorisation dated 12.01.99 was related to a particular transaction, which was not a general authorisation and did not relate to further transactions. A1 further contended that approved marketing policy document for the year 1998-99 was under the signature of A2, which was not put up before him for approval. He further contended that forwarding letter dated 18.05.98 (Ex. PW12/17) of A2, note (Ex. PW12/18) of A3, letter dated 13.05.98 Page 31 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 (Ex. PW12/19) of M/s AMPL, note (Ex. PW12/20) of Sh. S.R. Ramuka (DGM (Finance)), note (Ex. PW12/21) of Sh. P. Majumdar, further note (Ex. PW12/22) of Sh. Ramuka, note (Ex. PW12/23) of Sh. Shyamal Kumar Ghosh and the MOU Ex. PW12/24 signed by A4 as well as A2 & A3 were not in his knowledge, nor they were ever put up before him. He further contended that circular (Ex. PW13/1 dated 31.03.99 signed by A3 was not in his knowledge nor was it issued with his approval. With regard to the noting dated 11.01.99 of A3, A1 stated that he had not delegated any such blanket authority to Director (Commercial). Neither Director (Commercial) had obtained any concurrence from Director (Finance) nor from him, as the same was neither put up before Director (Finance) nor before him. He further took plea that Director (Finance) received a fax message dated 22.06.99 (Ex. PW18/D2) from Sh. V.K. Verma, GM (Finance) at Korba. Vide this fax message, Sh. Verma intimated that the effect of discount if extended for rolled products dispatches during January 1999 to March 1999, the effect on profit of the company already projected would get reduced by approximately Rs. 4 crores. Sh. Verma enclosed the copy of circular fax message dated 31.03.99 (Ex. PW13/1) with his fax message Ex. PW18/D-2. The contents of the fax messages were brought to notice of CMD by Director (Finance) vide his note dated 22.06.99 Ex. PW17/DX-1. He mentioned in his said note that such discounts were not financially concurred by him and approved by the CMD. Since A1 had not approved the said Page 32 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 transaction therefore, Director (Finance) was asked by him to intimate GM (Finance) Korba to ignore the said circular dated 31.03.99. Accordingly, Sh. Mazumdar vide fax dated 23.06.99 intimated GM (Finance) Korba to ignore the circular dated 31.03.99, and asked him to take step to cancel Credit Notes, if any issued. A1 further controverted that the letter dated 27.02.99 (Ex. PW16/13) bears approval of competent authority, which fact is wrongly mentioned therein. A1 in reply to question no. 307 submitted that It was not an approval. He had stated in his note that clarifications sought by the Director (Finance) and Finance Department must be made and noted in file and Director (Finance) reference to CVC direction may be discussed with Director (V) for clarification. He further stated that tabulations of offers vis-a-vis all alternatives with respect to benefit to BALCO must be worked out alongwith Associate Finance and after observing the above mentioned steps, Director (Commercial) must judge the best possible option for BALCO and must take a decision on this commercial matter. Sh. P.C. Aggarwal had not taken action on the points suggested by him in this note. He further denied having note dated 26.03.99 (Ex. PW16/40) before him for approval and contended that the fax message dated 27.03.99 bearing signature of Sh. Bhawnesh Kumar Bhatia, did not bear approval of competent authority. In reply to question no. 320, A1 took plea that he had directed Director (Commercial) in the note to keep note of observations of Director (Finance) at points A & B of note of Director (Finance) and then to take a Page 33 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 decision in the best interest of the company. It was in consonance with the note Ex. PW17/2 recorded by Director (Finance). A1 further stated that note dated 01.03.99 (Ex.
PW11/8) of A2 contains noting dated 02.02.99 of Sh. J.M. Dhir, thereby mentioning requirement of approval from competent authority. In reply to question 343, A1 took plea that he had not approved noting dated 16.02.99 of A2 and further recorded in the note that observations of Director (Finance) must be replied in the file and tabulations of alternatives must be done with regard to the best possible benefit to BALCO. He further stated in his note that Director (Commercial) must take financial impact from Associate Finance and since it was a commercial matter, Director (Commercial) was authorised to follow above mentioned steps and then take a decision in the best interest of BALCO. A1 further contended that minutes of meeting dated 07.01.99 between BALCO and M/s AMPL was not approved by him. Similarly, he further controverted having approved proposal Ex. PW12/24. He further took plea that A2 had to follow the following steps and then take a decision in the commercial matter in the best interest of BALCO in the note dated 17.02.99 :- (i) observations of Director (Finance) must be replied in the file; (ii) Tabulations of alternatives must be done with regard to the best possible benefit to BALCO; (iii) Director (Commercial) must take financial impact from Associate Finance. A1 further took plea that he had not approved or given any consent for entering into MOU's in question, which is apparent from Ex. A1 & Ex. A5. He Page 34 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 further stated that he had acted in good faith in the best interest of BALCO.
● SIGNIFICANT PLEA OF ACCUSED SH. P.C. AGGARWAL (A2):-
A2 took plea that he was falsely implicated in the present case on the grounds of false allegations leveled by Director (Finance), who himself was a weak marketing wizard and the Finance wing was extremely weak to harmonise with Marketing wing to shoulder in facing the challenges of competition. He further stated that the decision on the commercial matter as advised by A1 was taken and implemented in the interest of BALCO, only after having discussions, clarifications with Director (Vigilance), BALCO, keeping in view the observation of Director (Finance) and CVC and the decision yielded much higher profits by Rs. 13,55,824/- to BALCO in comparison with highest bidder. In reply to question 105, A2 stated that BALCO in its 218 th meeting held at New Delhi on 18.08.99 approved the annual accounts for 1998-99 and opined that an analysis with detailed reasoning on selling & distribution expenses during 1998-99 be made by Director (Commercial) and same be circulated to all the Directors after getting it perused from Director (Finance) and accordingly A2 recorded a detailed note on the above-mentioned subject and submitted it to Director (Finance) firstly on 01.09.99 and again on 11.09.99. However, Director (Finance) kept the aforesaid note pending with him for 254 days and offered his observations only on 23.05.2000 that too after reminders and reprimand of new Page 35 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 CMD Sh. A.K. Rastogi. He further stated that CMD had sub-
delegated his powers to Directors including Director (Commercial) on 19.11.97 on sales of main products upto Rs. 5 crores in each case. There was no delegation or mention of any specific amount for entering into memorandum of understandings with parties. He performed all marketing and commercial functions within the delegation and authorisation by CMD from time to time for achieving the targets of turnover, profits etc. as per MOU signed with Government of India. The sales and marketing policy was duly put up before the Board and discussed in detail in conjunction with prevailing marketing conditions. The Board never approved or denied the detailed marketing policy and without the approval of marketing and sales policy by CMD, the Finance Department would not have released the credit notes worth Rs. 38.36 crores to customers towards discount. In reply to question 119, A2 stated that Director (Finance) concurred the proposal submitted by Director (Commercial) meriting consideration and approval regarding discounts upon which, the CMD authorised Director (Commercial) to take a decision in the best interest of BALCO. The directions of CMD could not be denied and was to be implemented without any say. A2 further stated that Finance had no role to prepare a policy but to examine the financial aspects of the proposals as without the approval of Marketing & Sales policy. How could Finance issue credit notes worth Rs. 38.36 crores towards discounts to parties. Director (Finance) could Page 36 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 make amendments in sales policy and implemented same, when he was acting as Director (Commercial), besides authorizing issuance of credit/debit notes and settlement of parties accounts during 1998-99. He further took plea that sales policy was formulated by forming a committee under the directions of CMD. ● PLEA OF ACCUSED SH. G.S. SANDHU (A3) :-
A3 took plea that he was innocent and had been falsely implicated in this case. He further stated that he had never taken any pecuniary benefit at any time or resorted to unfair means, corrupt practices, or conspired with anyone for personal profit or with intention to defraud the Company he had served. He further stated that the present case is an attempt by certain BALCO persons to drag him into their petty ego clashes, maybe because during his tenure in BALCO, he brought in lot of transparency in order booking & sales, which gave a fillip to the Marketing Department and hurt the interests of Hindalco and some consignment agents. However, he and his family were made to undergo mental trauma, financial difficulties, social humiliation and professional loss which no one can compensate to him now. He further contended that so far as MOM dated 07.01.99 is concerned, he was only a co-signee on the Minutes of Meting dated 07.01.1999 alongwith PW14, PW17 and A2. Neither he called for the meeting nor did he request PW 17 to attend the same. He further contended that there is no MOU dated
13.05.98 in pursuant to letter dated 13.05.98 (Ex PW-12/19) of M/s AMPL. The MOUs pertaining to this letter are Ex PW-12/24 Page 37 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 for alloy wire rods and Ex PW-14/18 for rolled products & extrusions. The terms & conditions proposed in the MOUs were as per the detailed discussions between WR Office/Mumbai, CMO/BALCO and AMPL, who, being the biggest lifters in Western Region had been having such MOUs in previous years also eg. Ex PW-5/PD2/1. A3 further contended that he was only a co-signee on these MOUs and had only carried out instructions given to him and further that his being a co-signee, was a procedural and administrative requirement as per BALCO work practice and his participation by signing was not a corroborative act. It is further contended that incidentally, the approval of GM(F) and A1 dated 23.1.98 for M/s AMPL was also given when Director (Finance) was on tour. Director (Finance) never questioned such approvals at that time. The aforesaid policy got extended up to June 98, since it was already included in the proposed Marketing Policy 98-99, which was to be approved before 31.3.98, but was mired in delays caused by ego problems between Director (Finance) & A2. The note dated 01.05.98 of PW-14 Sh. Dhir is self-explanatory, which had the consent of A2, Director (Finance) & A1 and Director (Finance) had never questioned the adoption of this policy till 30.10.98, when he incorrectly commented that GM (Finance) was not competent to concur/consent, after policy had been in force since Jan '1998, and credit notes were being issued as per this policy by finance department. Thereafter, A1 and A2 had approved MOU of M/s AMPL on 26.10.98. It is further contended that note dated Page 38 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 01.01.1998, prepared by CMO/Dhir, there were series of notes prior to 01.06.98 and later also, which prove marketing decision of signing MOU was both commercially correct and taken with approval of Finance & CMD. He further contended that the note dated 01.06.1998 (Ex PW-14/19) was concurred by GM (Finance)/PW-12 on 20.5.98, which fact is further confirmed by PW12 note/memo dated 08.10.1998 to Regional Manager (WR) with regard to M/s AMPL's MOU. Therefore, the note dated 26.10.1998 was another routine note and not one with mala fide intentions. The corrections in Dhir's note dated 01.06.98 were made by Dhir himself that too on the same day, which is further brought out by CFSL report dated 01.10.1999, submitted by MoM/BALCO to CVC in inquiry against A2 in Sept 2000. Therefore, the allegations that the alterations were made by A3 were baseless & motivated.
● SIGNIFICANT PLEA OF ACCUSED SH. PRAVEEN N. SHAH (A4) & SH. KIRTI SHAH (A5) :-
A4 & A5 took plea that all the allegations against them as stated by the witnesses are false, untrue, malafide, motivated and targeted to black mail and same is a conspiracy to close their flourishing business. They further took plea that they were made scape goat in the larger political conspiracy. They were doing their business very diligently and with utmost sincerity at all times. They were never involved in any conspiracy as alleged at any point of time. Witnesses have deposed against them only to fulfill their personal motives of internal politics in BALCO. A4 & Page 39 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 A5 further contended that it was absolutely incorrect, false, imaginary and baseless that BALCO was favoring AMPL at any point of time, because PW-10 was consignment agent in Delhi only and AMPL was consignment agent at Mumbai, Ahmedabad, Abu Road, Nagpur, Pune, Dadar and Nagar Haveli, Silvasa, Delhi, Faridabad, having an all India base from about 1966. The allegations of PW-10 are at the behest of the CBI, under duress and for ulterior motives, which are without any substance on record. Also the evidence as stated by PW-10 that he was facing problem in running his business due to M/s AMPL agency of BALCO at Delhi, proves that PW-10 was unable to compete in the market and therefore was holding a grudge against M/s AMPL and was trying to settle score by making false, incorrect, imaginary, baseless allegation. The contention of PW-10 that M/s AMPL was given special discount is false and incorrect. BALCO was having one and the same terms and conditions for all agencies across the country. They further contended that all the consignment agents of BALCO were invited to attend the meeting at Korba on 25-01-1999 including PW-10, which was attended by PW-10. However it is incorrect that any issue relating to special discount by BALCO to M/s AMPL was discussed or other agents were demanding similar discounts or in response the BALCO Management denied giving any special discounts to M/s AMPL.
13.ARGUMENTS MADE ON BEHALF OF ACCUSED PERSONS AS WELL AS CBI :-Page 40 of 137 (Pulastya Pramachala)
Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 ARGUMENTS MADE ON BEHALF OF A1
14.Crux of arguments made by ld. counsel for A1 are as follows :-
Ld. Counsel for A1 argued that there is no evidence on record to substantiate allegation that A-1 approved two MOUs dated 01.06.1998. Ld. counsel further argued that in the evidence of PW12, PW14 & PW18, it has come on record that these two MOUs were required to be approved by the CMD for execution, however, same were executed without the approval of the CMD i.e. Sh. S.K. Ghosh (A-1). Ld. counsel for A1 further argued that the allegation of providing the alleged benefits to M/s AMPL, as mentioned in 'Minutes of meeting (in short MOM) Ex. PW-14/20 (page 11 to 14 of (D-14) by the accused persons is concerned, there is no evidence to substantiate this allegation against A-1. There is no iota of evidence even to suggest that A-1 was, in any way, involved in 'the Minutes of Meeting held on 7 th January 1999; through which alleged benefits were extended to M/s AMPL. There is no evidence on record to even show that the accused/applicant was in conspiracy with other co-accused persons, as prosecution itself in its charge-
sheet while mentioning this allegation, has asserted that it was without the approval of the competent authority. It is further argued that evidence of PW-14 Sh. J.M. Dhir, PW-17 Sh. Shyamal Shome, PW-18 Sh. P. Mazumdar and PW-20 Sh. Shashi Sahni amply makes it clear that the proposal in question was not approved by A-
1. The file, after note dated 03.03.99 of Sh. S.K. Ghosh (A1) was not put up before him. Even aforesaid financial objections/irregularities pointed out by PW-20 Shri Shashi Sahni in Page 41 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 his note dated 10.03.99 and 11.03.99 were not brought to the notice of A-1. He further argued that in the light of above evidence, it has come on record that A1 did not approve the proposal for additional facilities under minutes dated 07.01.99. It is further argued that it is crystal clear even from the notings in the file (D-14) after 03.03.1999. Had it been the approval of the accused/applicant on 03.03.1999, then there was no need for A-2 and A-3 to further process the file after 03.03.1999 and then approve the aforesaid proposal on 17.03.1999 by A-2. Once additional inputs and financial impact of the proposal under the said minutes dated 07.01.1999 were provided by PW-20 to Finance, then in those circumstances A- 2 ought not to have approved the proposal himself. Thus, there is no evidence to connect A-1 with this allegation. Ld. counsel for A1 further argued that the note dated 17.02.1999 made by A-1 was not blanket. It was subject to certain conditions mentioned therein, which were not followed and thus, it is clear that A-1 had not given any approval to such proposal, and A-2 proceeded on his own to approve the proposal to sell 418 MTs of extrusion to M/s AMPL. The above facts clearly establish that the accused/applicant had no adverse role to play in the matter.
15.To substantiate his arguments, ld. counsel for A1 relied upon a case law titled Purushothaman v. State of Kerala, 2005 (12) SCC 631 to stress upon following observations:-
"13. To constitute a conspiracy, meeting of minds of two or more persons for doing an illegal act or an act by illegal means is the first and primary condition and it is not necessary that all the conspirators must know each and every detail of the conspiracy. Neither is it Page 42 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 necessary that every one of conspirators takes active part in the commission of each and every conspiratorial acts. The agreement amongst the conspirators can be inferred by necessary implication. In most of the cases, the conspiracies are proved by the circumstantial evidence, as the conspiracy is seldom an open affair. The existence of conspiracy and its objects are usually deduced from the circumstances of the case and the conduct of the accused involved in the conspiracy. While appreciating the evidence of the conspiracy, it is incumbent on the court to keep in mind the well known rule governing circumstantial evidence viz., each and every incriminating circumstance must be clearly established by reliable evidence and the circumstances proved must form a chain of events from which the only irresistible conclusion about the guilt of the accused can be safely drawn, and no other hypothesis against the guilt is possible. Criminal conspiracy is an independent offence in the Penal Code. The unlawful agreement is sine qua non for constituting offence under the Penal Code and not an accomplishment. Conspiracy consists of the scheme or adjustment between two or more persons which may be express or implied or partly expressed and partly implied. Mere knowledge, even discussion, of the plan would not per se constitute conspiracy. The offence of conspiracy shall continue till the termination of agreement.
21. To attract the provision of 13(1)(d) of the Prevention of Corruption Act, a public servant should obtain for himself or for any other person any valuable thing of pecuniary advantage by corrupt or illegal means or by abusing his position as a public servant. Therefore, for convicting a person under the provisions of Section 13(1)(d) of the Prevention of Corruption Act, 1988, there must be evidence on record that the accused has obtained for himself or for any other person, any valuable thing or pecuniary Page 43 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 advantage by corrupt or illegal means or by abusing his position as a public servant obtains for himself, or for any person, any valuable thing, or pecuniary advantage without any public interest. What we find in the present case is that there is no evidence on record to prove these facts that the appellant-accused had obtained for himself or for any other person any valuable thing or pecuniary advantage. We may clarify that the charge of conspiracy being not proved under Section 120-B IPC, the appellant-accused could not be held responsible for the act done by A-3".
16.Ld. defence counsel for A1 further relied upon State of Madhya Pradesh v. Sheetla Sahai, (2009) 8 SCC 617, to stress upon following observation:-
"37. Criminal conspiracy is an independent offence. It is punishable separately. Prosecution, therefore, for the purpose of bringing the charge of criminal conspiracy read with the aforementioned provisions of the Prevention of Corruption Act was required to establish the offence by applying the same legal principles which are otherwise applicable for the purpose of bringing a criminal misconduct on the part of an accused.
38. A criminal conspiracy must be put to action in as much as so long a crime is generated in the mind of an accused, it does not become punishable. What is necessary is not thoughts, which may even be criminal in character, often involuntary, but offence would be said to have been committed thereunder only when that take concrete shape of an agreement to do or cause to be done an illegal act or an act which although not illegal by illegal means and then if nothing further is done the agreement would give rise to a criminal conspiracy.
Even under the Act, an offence cannot be said to have been committed only because the public servant has obtained either for himself or for any other person any Page 44 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 pecuniary advantage. He must do so by abusing his position as a public servant or holding office as a public servant. In the latter category of cases, absence of any public interest is a sine qua non. The materials brought on record do not suggest in any manner whatsoever that Respondents 1 to 7 either had abused their position or had obtained pecuniary advantage for Respondents 8, 9 and 10, which was without any public interest."
ARGUMENTS MADE ON BEHALF OF A2
17.Crux of arguments made by ld. counsel for A2 are as follows :-
Ld. Counsel for A2 argued that there is no witness/evidence to show any sale transaction, which took place for more than Rs. 5 crores. He further argued that clause (D5) of Ex. PW-8/5 empowered A2 to grant discount of 15 days credit. He further argued that discounts given in the case were covered under Ex. PW14/1. Ld. counsel for A2 further argued that as per PW14, market condition was bad at that time. Ld. counsel for A2 further argued that Ex. PW14/6 was approved by PW18 and discounts were accordingly given. It was further argued by defence counsel that Ex. PW17/2 i.e. file (D12) and Ex. PW11/7 are note of Director (F) giving concurrence with one reservation and authorisation given by CMD to Director (Commercial) to take decision. It was further argued that PW-18 orchestrated entire concert by himself in this case and falsely implicated A-2 without having any marketing experience and not even in finance. He talked about financial loss of Rs. 2.83 crores to BALCO without even mentioning of any gain of single penny to BALCO against sales of 15492 MT valuing Rs. 144 crores lifted by AMPL. It was further argued that PW18 only talked Page 45 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 of debit entries, without checking to credit entries and deliberately avoided the other side. The Director (Finance) wanted to usurp the delegated powers of Director (Commercial) to himself and wanted Director (Commercial) to work under him and report him.
18.To substantiate his arguments ld. counsel for A2 relied upon case law titled Shri Dharambir v. Central Bureau of Investigation, Crl. R.P. Nos. 930/2006, 6/2007, 891/2006, decided on 13.02.2009, wherein reference of another case law titled as K.R. Purushothaman v. State of Kerala (supra) was made, to stress upon following observation:-
"16. It is submitted by Mr. Dutt, learned counsel for the CBI that it is not for us to take into consideration what price was earlier fixed and reasons behind it, but we are only to Judge the aspect of loss suffered by the exchequer when it could have been saved. This, to my mind, is not a correct approach when dealing with commercial venture. Every time a Government loses in a commercial venture, does not ipso facto means that all those who contributed to the decision are guilty of violation of the Prevention of Corruption Act. What is necessary is to show that there is mens rea to cause the wrongful gain or loss by acts of omission or commission that would violate the provisions of Prevention of Corruption Act. Similarly, to show a loss is not sufficient to attract the provisions of the Act. At the cost of repetition price had already been fixed when tenders were finalized. The prosecution does not find any fault with that, but wants to say that the new PNC was wiser than the earlier one. This, to my mind, is hardly sufficient to hold that any dissent would bring a pubic servant within the mischief of the Prevention of Corruption Act. If ultimately the Price Negotiation Committee (PNC) had found that earlier price was not fixed properly, the tender could have been cancelled and fresh one called. Having Page 46 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 not done so, it was not permissible to re-evaluate the entire tender on all aspects other than that provided under the tender. There is, therefore, no material on record to show that the Minister had in any manner exceeded his brief and/or deliberately by any act of omission and commission unfairly caused loss to the Government exchequer. There is no material to indicate any foul play. It has been argued before me that conspiracies are hatched in mysterious ways. Therefore, prosecution should be allowed to proceed to bring out the mysteries. I am not satisfied with this argument. The material on record must spell out a grave suspicion. ...............,"
19. ld. counsel for A2 also relied upon case law titled Dipankar Sengupta & Anr. v. United Bank of India & Ors., 1998 SCC OnLine Cal 81, to stress upon following observation:-
"24. Such procedural or supervisory lapses by itself may not be a misconduct.
25. In Union of India v. Ahmed (supra), it has been held "it is, however, difficult to believe that lack of efficiency, failure to attain the highest standard of administrative ability while holding a high post would themselves constitute misconduct. If it is so, every officer rated average would be guilty of misconduct. Charges in this case as stated earlier clearly indicate lack of efficiency, lack of foresight and indecisiveness as serious lapses on the part of the respondent. These deficiencies in personal character or personal ability would not constitute misconduct for the purpose of disciplinary proceedings."
It has further been held :
"The High Court has noted the definition of misconduct in Stroud's Judicial Dictionary which runs as under:
'Misconduct' means, misconduct arising from ill motive; acts of negligence, errors of judgment, or innocent mistake, do not constitute such misconduct.Page 47 of 137 (Pulastya Pramachala)
Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 ......There may be negligence in performance of duty and a lapse in performance of duty or error of judgment in evaluating the developing situation may be negligence in discharge of duty but would not constitute misconduct unless the consequences directly attributable to negligence would be such as to be irreparable or the resultant damage would be so heavy that the degree of culpability would be very high. An error can be indicative of negligence and the degree of culpability may indicate the grossness of the negligence."
26. In Virendra Prasad v. Union of India and Ors. (supra), it has been held.
"'Misconduct' in common parlance means bad conduct and some sort of an ill motive or bad motive is an essential ingredient in imputing misconduct on to an individual. Mere error of judgment or a mere negligent way of dealing in the matter cannot by itself be termed to be misconduct. It must be coupled with such other act or acts by which motive would be apparent either expressly or even be inferred by implication. Habitual acts of negligence, however, can be termed to be a misconduct and gross negligence also falls within the same category."
20.ld. counsel for A2 further relied upon case law titled as Dr. MCR Vyas v. The Inspector of Police, CBI Anti Corruption Branch, Shastri Bhavan, Chennai, 2014 SCC OnLine Mad 4930, to stress upon following observation:-
"34. In this context, it is worthwhile to refer to the observations made by the Honourable Supreme Court in CBI v. K. Narayana Rao (2012) 9 SCC 512, wherein it is observed as follows:-
"The circumstances proved before and after the occurrence have to be considered to decide about the complicity of the accused. Even if some acts are proved to have been committed, it must be clear that they were Page 48 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 so committed in pursuance of an agreement made between the accused persons who were parties to the alleged conspiracy. Inferences from such proved circumstances regarding the guilt may be drawn only when such circumstances are incapable of any other reasonable explanation. In other words, an offence of conspiracy cannot be deemed to have been established on mere suspicion and surmises or inference which are not supported by cogent and acceptable evidence.
50. Before going into the merits of the arguments advanced by the learned senior counsel, we have to see whether the provisions of the CBI Manual is mandatory or directory. In determining the said question, the subject matter, the importance of the provision, the relation of that provision to the general object intended to be served by the Act will decide whether the provision is mandatory or directory. The provisions referred to above would use the words 'shall' and 'must' and as such it can hardly be directory, since the use of such language is per se indicative of the intent that the provision is mandatory. The effect of non compliance with the rule if could deprive the right of the person, then serious prejudice would be caused to the said person.
51. As pointed out by the learned senior counsel, the CBI have failed to perform their duties and legal obligations inasmuch as they have failed to properly investigate matters involving Dr. Ketan Desai. The facts and circumstances of the present case do indicate that it is of utmost public importance and the CBI entrusted with the duty to discharge their functions and obligations in accordance with law, must do so, bearing in mind constantly the concept of equality enshrined in the Constitution. Investigation, into every accusation made against each and every person, must be conducted on a reasonable basis, irrespective of the position and status of that person, and completed expeditiously.
52. In Vineet Narain Vs. Union of India (1988) 1 SCC 226, the Honourable Supreme Court held as under:-Page 49 of 137 (Pulastya Pramachala)
Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 "The CBI Manual based on statutory provisions of Cr.PC provides essential guidelines for the CBI's functioning. It is imperative that CBI adheres scrupulously to the provisions in the Manual in relation to its investigative functions, like raids, seizure and arrests. Any deviation from the established procedure should be viewed seriously and severe disciplinary action taken against the officials concerned."
54. Following Vineet Narain Case, the Honourable Supreme Court in Shashikant Vs. CBI ((2007) SCC 630) has held that CBI Manual has to be mandatorily followed by the Respondent/CBI police. In a recent judgment the Honourable Supreme Court in State Vs. N.S. Gnaneswaran (2013) 3 SCC 594 followed the above cases and reiterated that CBI Manual has to be mandatorily followed."
21. Ld. counsel for A2 also relied upon case law titled as Shashi Kant v. Central Bureau of Investigation & Ors., (2007) 1 Supreme Court Cases 630, to stress upon following observation:-
"10. In Vineet Narain it was held :
58. I. 12. The CBI Manual based on statutory provisions of Cr.PC provides essential guidelines for the CBI's functioning. It is imperative that CBI adheres scrupulously to the provisions in the Manual in relation to its investigative functions, like raids, seizure and arrests.
Any deviation from the established procedure should be viewed seriously and severe disciplinary action taken against the officials concerned."
12. Para 9.2 reads as under:
"While proposing registration of a preliminary enquiry pertaining to the abuse of official position by a public servant in the matter of business/commercial decision, the important difference between a business risk and a malafide conduct should be kept in mind with view to ensure that while corrupt public servants are suitably dealt with the bona fide business/commercial decisions Page 50 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 taken by public servants in discharge of their duties are not taken up for necessary probe".
22.Ld. counsel for A2 further relied upon case law titled Subramanian Swamy v. A. Raja, (2012) 9 SCC 257, to stress upon following observation:-
"62. Shri P. Chidambaram and Shri A. Raja met on 29.5.2008 and 12.6.2008 for resolving the then outstanding issues relating to the allocation and pricing 2G and 3G Spectrums. Meeting of two Ministers would not by itself be sufficient to infer the existence of a conspiracy.................
63. Criminal conspiracy cannot be inferred on the mere fact that there were official discussions between the officers of the MoF and that of DoT and between two Ministers, which are all recorded. Suspicion, however, strong, cannot take the place of legal proof and the meeting between Shri P. Chidambaram and Shri A. Raja would not by itself be sufficient to infer the existence of a criminal conspiracy so as to indict Shri P. Chidambaram. Petitioners submit that had the Minister of Finance and the Prime Minister intervened, this situation could have been avoided, might be or might not be. A wrong judgment or an inaccurate or incorrect approach or poor management by itself, even after due deliberations between Ministers or even with Prime Minister, by itself cannot be said to be a product of criminal conspiracy.
64. We are of the considered view that materials on record do not show that Shri P. Chidambaram had abused his position as a Minister of Finance or conspired or colluded with A. Raja so as to fix low entry fee by non- visiting spectrum charges fixed in the year 2001. No materials are also made available even for a prima facie conclusion that Shri P. Chidambaram had deliberately allowed dilution of equity of the two companies, i.e. Swan and Unitech. No materials is also available even prima facie to conclude that Shri P. Chidambaram had abused his official position, or used any corrupt or illegal means Page 51 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 for obtaining any pecuniary advantage for himself or any other persons, including Shri A. Raja."
23.Ld. counsel for A2 further relied upon case law titled C. Chenga Reddy & Ors. v. State of A.P., (1996) 10 SCC 193, to stress upon following observation:-
"Abdulla Mohd. Pagarkar v. State (Union Territory of Goa, Daman and Diu), (1980) 3 SCC 110 relied on:
"in a case based on circumstantial evidence, the settled law is that the circumstances from which the conclusion of guilt is drawn should be fully proved and such circumstances must be conclusive in nature. Moreover, all the circumstances should be complete and there should be no gap left in the chain of evidence. Further, the proved circumstances must be consistent only with the hypothesis of the guilt of the accused and totally inconsistent with his innocence. In the present case the courts below have overlooked these settled principles and allowed suspicion to take the place of proof besides relying upon some inadmissible evidence...........
21. In a case based on circumstantial evidence, the settled law is that the circumstances from which the conclusion of guilt is drawn should be fully proved and such circumstances must be conclusive in nature. Moreover, all the circumstances should be complete and there should be no gap left in the chain of evidence. Further, the proved circumstances must be consistent only with the hypothesis of the guilt of the accused and totally inconsistent with his innocence. In the present case the courts below have overlooked these settled principles and allowed suspicion to take the place of proof besides relying upon some inadmissible evidence.
24.Ld. counsel for A2 further relied upon case law titled Central Bureau of Investigation, Hyderabad v. K. Narayana Rao, (2012) Page 52 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 9 SCC 512, to stress upon observation related to criminal conspiracy.
25.Ld. counsel for A2 further relied upon case law titled Nizam & Another v. State of Rajasthan, (2016) 1 SCC 550, to stress upon following observation:-
"8.The Case of the prosecution is entirely based on the circumstantial evidence. In a case based on circumstantial evidence, settled law is that the circumstances from which the conclusion of guilt is drawn should be fully proved and such circumstances must be conclusive in nature. Moreover, all the circumstances should be complete, forming a chain and there should be no gap left in the chain of evidence. Further, the proved circumstances must be consistent only with the hypothesis of the guilt of the accused totally inconsistent with his innocence........
19. In case of circumstantial evidence, court has to examine the entire evidence in its entirety and ensure that the only inference that can be drawn from the evidence is the guilt of the accused."
26.Ld. counsel for A2 further relied upon case law titled as Paramjeet Singh @ Pamma v. State of Uttarakhand, (2010) 10 SCC 439, to stress upon following observation:-
"13. In Sharat Birdhichand Sarda v. State of Maharashtra, AIR 1984 SC 1622, this Court observed that it is well settled that the prosecution's case must stand or fall on its own legs and cannot derive any strength from the weakness of the defence put up by the accused........
This Court also discussed the nature, character and essential proof required in a criminal case which rests on circumstantial evidence alone and held as under:
"(1) The circumstances from which the conclusion of guilt is to be drawn should be fully established;Page 53 of 137 (Pulastya Pramachala)
Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 (2) The facts so established should be consistent only with the hypothesis of the guilt of the accused, that is to say, they should not be explainable on any other hypothesis except that the accused is guilty; (3) The circumstances should be of a conclusive nature and tendency;
(4) They should exclude every possible hypothesis except the one to be proved; and (5) There must be a chain of evidence so complete as not to leave any reasonable ground for the conclusion consistent with the innocence of the accused and must show that in all human probability the act must have been done by the accused."
27.Ld. counsel for A2 further relied upon case law titled as Sukanti Choudhury v. State of Orissa, 2013 SCC OnLine Ori 9, (2013) 128 AIC 472 to stress upon following observation:-
"Referring to statutory provisions under the IPC and judicial pronouncements it was submitted that fraudulent or dishonest intention being the most essential ingredient to constitute offences of cheating and forgery, it is incumbent upon the prosecution to place materials before the court to prima facie satisfy that it is the petitioner who committed such offences with the requisite intention or mens rea. It was strenuously argued that no material has been placed in court by the investigating agency to remotely suggest that the petitioner used forged High School Certificate as genuine intentionally with the knowledge that the Certificate is not genuine.......
14. Offence under Section 471 of the I.P.C. constitutes of the following ingredients:-
(1) The document is a forged one, (2) Accused used the document as genuine, (3) Accused knew or had reason to believe that it was a forged document, and (4) Accused used it fraudulently or dishonestly, knowing or having reason to believe that it was a forged document.....Page 54 of 137 (Pulastya Pramachala)
Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016
22.......In absence of any material indicating the required intention or knowledge on the part of the petitioner in making a forged document or using the same with the required knowledge, criminal proceeding against the petitioner will amount to an abuse of process of court."
28.Ld. counsel for A2 further relied upon case law titled Parshadi Lal v. State of Govt. of NCT of Delhi, 2012 SCC OnLine Del. 6426 , wherein Delhi High Court acquitted accused for offence u/s 468 I.P.C. on the grounds that when accused was acquitted for offence u/s 420 IPC, he could not be convicted u/s 419/468 IPC. (ganesh) ARGUMENTS MADE ON BEHALF OF A3
29.Crux of arguments made by ld. counsel for A3 are as follows:-
Ld. counsel for A3 argued that A3 has never made any alterations, additions etc. to any document other than his own. These alterations were done at a much later stage by someone to falsely implicate A3. There are numerous instances of such corrections, additions by other officials also in their documents, since it was normal practice in BALCO, as testified by PW-12 GM (F) in his examination dated 25.01.14 that nothing amiss was found in any file of Marketing Department during 1998-99 by any of statutory Auditors, Preventive Vigilance etc. nor in the CVC Inquiry conducted against A2. It was further argued that neither sanction order Ex PW-19/A, nor chargesheet Ex PW-21/A or charge framed vide order dated 03.01.12, mention name of A3 in respect of alleged interpolation/addition of "EC" in Ex PW-14/20. Deposition of PW12 and PW14 do not lend any support to the case of prosecution. He further argued that CBI has deliberately concealed material facts in chargesheet to create an impression that A3 had Page 55 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 malafide intentions to deliver unprecedented benefits to A4 & A5 in conspiracy with A1 & A2. A3 further took plea that the Sanction granted against him is null & void, illegal, improper, baseless and technically untenable and thus, whole proceedings against him have no no legal standing. It is further contended that CBI has targeted A3 for harassment as in a DA case (RC No: 12/2000 of Delhi) in April 2000 qua A3, which was based on the details given/declared by A3 in his Annual Property declarations to SAIL & BALCO, as per procedure in PSUs, CBI admitted that "assets were less than they should be" and case had to be closed, vide order dated 04.03.2002, i.e. much before Sanction Order was issued or Charge Sheet was filed in the present case. It is further argued that PW-19 was aware in respect of closure of DA case as well as about dropping of CVC proceedings against A3 much before according Sanction, but still PW-19 did not consider this fact. It is further argued that the sanction granted against A3 on 15.07.2002 was farce because, accused was allowed to take VRS on 31.08.02 by SAIL, though CVC rules do not allow VRS to be given, if criminal proceedings are pending and Sanction for prosecution has already been granted. It is further argued that at least one chance ought to have been given to A3 to explain the entire matter and place the facts before PW-19 before he accorded Sanction. It is further argued that CBI singled out A3 and made it to appear as if A3 was the conspirator and A3 had caused loss to BALCO, whereas the truth was that A3 worked diligently to promote BALCO products, improve the production planning & order execution systems for Page 56 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 better sales and profitability by bringing transparency in its Marketing Team. It is further argued that sanction accorded by PW19 Sh. A Pande is utterly without any application of mind, which is completely bereft of any proof and substance as he did not at all bother to verify the facts from the records, which reflects non-
application of mind, while passing sanction order against A3 in a mechanical manner. It is further argued that A3's role was not essential in offering discounts, granting discounts or taking decisions and thus, A3 was not at all in a position to deliver benefits to A4 & A5. It is further argued that the charge sheet was full of lacunae, contradictions, inconsistencies and intentional concealment of facts. It is further argued that the entire set of documents from marketing department was intentionally not placed on record by CBI only to frame A3. Had these documents been placed in toto with all notes, files etc. in complete and original form by CBI with the charge sheet, the case would have been demolished at the very outset.
30.Ld. counsel for A3 relied upon case law titled Mansukhlal Vithaldas Chauhan v. State of Gujrat, Crl. Appeal No. 502/1993 decided on 03.09.1997 to challenge sanction and stressed upon following observation:-
"18. The validity of the sanction would, therefore, depend upon the material placed before the sanctioning authority and the fact that all the relevant facts, material and evidence have been considered by the sanctioning authority. Consideration implies application of mind. The order of sanction must ex facie disclose that the sanctioning authority had considered the evidence and other material placed before it. This fact can also be Page 57 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 established by extrinsic evidence by placing the relevant files before the Court to show that all relevant facts were considered by the sanctioning authority. (See also:
Jaswant Singh v. The State of Punjab, 1958 SCR 762 = AIR 1958 SC 12; State of Bihar & Anr. v. P.P. Sharma, 1991 Cr.L.J. 1438 (SC)).
19. Since the validity of "Sanction" depends on the applicability of mind by the sanctioning authority to the facts of the case as also the material and evidence collected during investigation, it necessarily follows, that the sanctioning authority has to apply its own independent mind for the generation of genuine satisfaction whether prosecution has to be sanctioned or not. The mind of the sanctioning authority should not be under pressure from any quarter nor should any external force be acting upon it to take decision one way or the other. Since the discretion to grant or not to grant sanction vests absolutely in the sanctioning authority, its discretion should be shown to have not been affected by any extraneous consideration. If is shown that the sanctioning authority was unable to apply its independent mind for any reason whatsoever or was under an obligation or compulsion or constraint to grant the sanction, the order will be had for the reason that the discretion of the authority "not to sanction" was taken away and it was compelled to act mechanically to sanction the prosecution."
31.Ld. counsel for A3 further relied upon case law titled State of Karnataka v. Ameer Jan, Crl. Appeal No. 766/2001 decided on 18.09.2007 to stress upon following observation:-
"For the aforementioned purpose, indisputably, application of mind on the part of the sanctioning authority is imperative. The order granting sanction must be demonstrative of the fact that there had been proper application of mind on the part of the sanctioning authority. We have noticed herein before that the sanctioning authority had purported to pass the order of Page 58 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 sanction solely on the basis of the report made by the Inspector General of Police, Karnataka Lokayuktha. Even the said report has not been brought on record. Thus, whether in the said report, either in the body thereof or by annexing therewith the relevant documents, IG Police Karnataka Lokayuktha had placed on record the materials collected on investigation of the matter which would prima facie establish existence of evidence in regard to the commission of the offence by the public servant concerned is not evident. Ordinarily, before passing an order of sanction, the entire records containing the materials collected against the accused should be placed before the sanctioning authority. In the event, the order of sanction does not indicate application of mind as the materials placed before the said authority before the order of sanction was passed, the same may be produced before the court to show that such materials had in fact been produced."
32.Ld. counsel for A3 further relied upon case law titled State of Punjab & Anr. v. Mohammed Iqbal Bhatti, 4 (2009) Supreme Court to stress upon following observation:-
"7. Although the State in the matter of grant or refusal to grant sanction exercises statutory jurisdiction, the same, however, would not mean that power once exercised cannot be exercised once again. For exercising its jurisdiction at a subsequent stage, express power of review in the State may not be necessary as even such a power is administrative in character. It is, however, beyond any cavil that while passing an order for grant of sanction, serious application of mind on the part of the concerned authority is imperative. The legality and/or validity of the order granting sanction would be subject to review by the criminal courts. An order refusing to grant sanction may attract judicial review by the Superior Courts. Validity of an order of sanction would depend upon application of mind on the part of the authority concerned and the material placed before it. All such Page 59 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 material facts and material evidences must be considered by it. The sanctioning authority must apply its mind on such material facts and evidences collected during the investigation. Even such application of mind does not appear from the order of sanction, extrinsic evidences may be placed before the court in that behalf. While granting sanction, the authority cannot take into consideration an irrelevant fact nor can it pass an order on extraneous consideration not germane for passing a statutory order. It is also well settled that the Superior Courts cannot direct the sanctioning authority either to grant sanction or not to do so. The source of power of an authority passing an order of sanction must also be considered. [See Mansukhlal vithaldas Chauhan v. State of Gujarat [(1997) 3 SCC 622]."
33.Ld. counsel for A3 further relied upon case law titled CBI v. Ashok Kumar Aggarwal, Crl. Appeal No. 1838/2013 decided on 22.11.2013 to stress upon following observation:-
"8. In view of the above, the legal propositions can be summarised as under:
(a) The prosecution must send the entire relevant record to the sanctioning authority including the FIR, disclosure statements, statements of witnesses, recovery memos, draft charge sheet and all other relevant material. The record so sent should also contain the material/document, if any, which may tilt the balance in favour of the accused and on the basis of which, the competent authority may refuse sanction.
(b) The authority itself has to do complete and conscious scrutiny of the whole record so produced by the prosecution independently applying its mind and taking into consideration all the relevant facts before grant of sanction while discharging its duty to give or withhold the sanction.
(c) The power to grant sanction is to be exercised strictly keeping in mind the public interest and the protection Page 60 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 available to the accused against whom the sanction is sought.
(d) The order of sanction should make it evident that the authority had been aware of all relevant facts/materials and had applied its mind to all the relevant material.
(e) In every individual case, the prosecution has to establish and satisfy the court by leading evidence that the entire relevant facts had been placed before the sanctioning authority and the authority had applied its mind on the same and that the sanction had been granted in accordance with law."
34.Ld. counsel for A3 further relied upon a case law titled Mohd. Iqbal Ahmed v. State of Andhra Pradesh, Crl. Appeal No. 194/1973 decided on 18.01.1979 & C.S. Krishnamurthy v. State of Karnataka, Crl. Appeal No. 462/2005 decided on 29.03.2005, to support his arguments that sanction did not show due application of mind.
35.Ld. counsel for A3 relied upon case law titled Abed Husain v. Central Bureau of Investigation, Crl. Appeal No. 1/2014 decided on 04.10.2018 by Gauhati High Court in respect of criminal conspiracy and to stress upon following observation:-
"68. Reverting back to the present case in hand, having regard to the evidence discussed above, it can be held that the prosecution has utterly failed to bring on record any evidence of conspiracy or any evidence of wrongful gain to attract the provision of corruption act. It was necessary for the prosecution to establish that there have been a meeting on mind at the time when the contract was awarded or deviation of work was made with a view to facilitate each one of them. The prosecution case in its entirety does not lead to a finding that the accused/appellants had wrongful intention at the time of Page 61 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 awarding contract to prove the charges leveled against them nor anything to prove the charge of falsification of the documents on the part of the appellants to attract the offence under Section 477A, IPC."
ARGUMENTS MADE ON BEHALF OF A4 & A5
36.Crux of arguments made by ld. counsel for A4 & A5 are as follows:-
Ld. counsel for A4 & A5 argued that no witness has specifically stated about existence of any conspiracy between the accused persons and no meeting of mind was proved by prosecution between the accused persons. It was further argued that there is no document to show any actual sale on additional discounts after MOU's. There is not a single document to show any actual single sale more than Rs 5.00 crores beyond the authority as per the rules. Non participation in offer of sale of non-moving stocks shows no interest or intention of any conspiracy between accused persons. ld. counsel for A4 & A5 further argued that they met with the group of officials of BALCO including others, who are not the accused herein after offers were opened. They only gave their intent of purchase in writing on competitive rates on the request of BALCO to lift and clear dead stock lying there unsold since long. He further argued that LME was declining. Market rates were decreasing. Other manufacturers were selling their goods at much cheaper rates than BALCO. He further argued that there there is no allegation by any witness with regard to meeting of other accused No 1, 2 & 3 separately at any point of time. He further argued that no witness has proved any illegal financial loss, if any incurred by BALCO. Even there is no calculation of any alleged financial loss Page 62 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 caused to BALCO, rather the balance- sheet of 1998-99 projects profit earned by BALCO. Ld. counsel for A4 & A5 further argued that accused persons committed blinder in lifting material from BALCO, as all junk material was supplied to AMPL against full and timely payment by them, which resulted into heavy loss to all partners, due to which all the partners separated and the age old business of Aluminum trading had to be closed. It is further contended that MOU is not actual sale, but only an understanding to plan the future production by BALCO and to plan the future sale by the Agent. In no case any single sale/transaction had ever exceeded value of Rs 5.00 Crores.
ARGUMENTS MADE ON BEHALF OF CBI
37.Per contra ld. Sr. PP for CBI argued that file (D14) Ex. PW8/10 contains MOUs dated 01.06.98, which is Ex. PW14/18 & Ex. PW- 12/24. He further argued that clause D1 of Ex. PW8/5 refers to power of 5 crores to Director (Commercial). He further argued that testimony of PW14 dated 28.01.15, page no. 2 of para 3 refers to value of 5000 MT and 8000 MT as Rs. 50 crore and Rs. 65 crores. He further argued that page 3 of his testimony describes misdeeds of A2 and A3. He further argued that page no. 11 of file (D-13) Ex. PW8/7 contains note dated 21.10.98, which was prepared out of conspiracy, when Director (Finance) was on tour. He further argued that in cross-examination of PW14, only value of MOU was disputed. He further argued that Ex. PW 22/2 onwards show value of materials lifted by AMPL.
Page 63 of 137 (Pulastya Pramachala)Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016
38.In rebuttal, counsel for A1 argued that notes of file Ex. PW8/7 were not proved as PW8 did not identify any handwriting or signature. He further argued that in his cross-examination, PW8 had admitted that neither he met A1 nor he saw any correspondence of A1. He further argued that none of the witnesses said anything about the notes appearing in the file Ex.PW8/7, so as to explain their relevance or nature, whether same were related to MOU or were for something else. Ld. counsel further argued that no question was put to the accused on the basis of these notes, while recording statement under Section 313 Cr.P.C of accused.
39.Per contra, ld. Sr. PP for CBI drew my attention towards D-13, which is a note of Mr. P. Mazumdar, whereby he gave his comments under marketing policy at page 12 of file Ex. PW8/7 and sent the same to CMD on 06.04.98. He mentioned in file D-13 (Ex.PW12/8) that the marketing policy might be considered for approval of 2300 and 1500 PMT. He further argued that A2 was authorized to take decision as per note of A1, appearing on page 12 of file Ex. PW8/7. He further argued that file D-18 (Ex.PW12/1) deals with marketing policy for the period 1998-99. He further argued that Ex.PW20/E and Ex.PW20/F were the objections raised by finance and thereafter, no approval was given. Hence, additional discount was illegally given. He further contended that as per Ex. PW8/3, which is a copy of delegation of powers by board to CMD for entering into any MOU, CMD was to consult Director (Finance) in case of financial implications. Enclosure of PW8/3 at 3 (ii) mentions requirement of any commitment and or incurring of any liability Page 64 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 whatsoever in excess of Rs. 1 crore was to be placed before Board of Directors. Similar provision is mentioned in 4 (i) & 4 (ii) of this enclosure. It was further contended that for entering into MOU with M/s AMPL, consent of Director (Finance) was not taken and same was against clause (iii) of Ex. PW8/3.
40.Ld. Sr. PP for CBI further contended that malafide intention on the part of accused persons is reflected when the proposal for the sale of old stocks was accepted for M/s AMPL, though this offer was received after the offers of other bidders were opened, which was in violation of CVC guidelines as well. It is further contended that Sh. P.C. Aggarwal (A2) approved it, without consent of Director (Finance). Though, Director (Finance) raised objection vide his note Ex. PW16/11.
APPRECIATION OF EVIDENCE AS WELL AS ARGUMENTS AND FINDINGS:-
41.In order to analyse and appreciate the evidence on the record and rival contentions, it is appropriate to reproduce the charges framed against the accused persons. Same are as follows:
1. It is alleged that during the period 1998 to March 1999, accused Sh. Praveen N. Shah (A4) and Sh. Kirti Shah (A5), both Directors of M/s Aneesh Metal Pvt. Ltd. (AMPL), Bombay, submitted an application dated 13.05.1998 for entering into a Memorandum of Understanding (MOU) for lifting 8000 MTS of aluminium rolled products alongwith extrusions and 5000 MTS. of alloy wire rods to Sh. G.S. Sandhu (A3), General Manager (C&E), who examined the aforesaid application and thereafter put up a note dated 15.05.1998 Page 65 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 and recommended for entering into MOU for lifting of alloy wire rods on discounted rates without any recommendation/proposal for MOU with regard to rolled Products and forwarded the same to Sh. P.C. Aggarwal (A2), Director (Commercial). A2 recommended the aforesaid proposal and forwarded same to A1 for grant of Rs. 2300 PMT (should be Rs. 2400 PMT) as cash discount and Rs.1500 PMT @ discount for approval to M/s AMPL. Sh. Shyamal Kumar Ghosh (A1), CMD (BALCO), on 26.10.98 gave his consent for entering into MOU with M/s AMPL, without the concurrence of the Director (Finance) and without the approval of the Board of Directors, as the proposal was above 5 crores.
2. It is further alleged that thereafter, A2 & A3 entered into two MOUs on 01.06.98 with M/s AMPL on the consent of A1, without concurrence of Director (Finance) and without the approval of the Board of Directors for (i) sale of 5000 MTS of alloy wire rods with additional discount of Rs. 1500 PMT and (ii) on sale of 8000 MTS of rolled products alongwith 600 MTS of extrusion with an additional 15 days interest free credit or cash discount in lieu thereof Rs.750 PMT, though the said proposal dated 15.05.1998 of A3 was turned down on 19.06.98 by the finance department of M/s BALCO (with a remark that "there seems to be no justification to extend special discount of Rs. 1500 PMT further.)". It is further alleged that on 26.10.98, Sh. P. Mazumdar, Director (Finance) was away on tour, A3 taking advantage of this situation, put up the note dated 26.10.98, reiterating his earlier recommendation, making false statements to the effect that in order to increase sales and profit, Page 66 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 certain proposals had been put up by marketing department for approval of the competent authority and A1 directed A2 for approval of said proposal, whereas A2 & A3 had already signed two MOUs with A4 & A5 of M/s AMPL on 01.06.98.
3. It is further alleged that M/s AMPL could lift only 1943 MTS of alloy wire rods against 5000 MTS, against 8000 MTS of rolled products, M/s AMPL could lift only 5827 MTS and against 600 MTS, it further lifted only 100 MTS of extrusions, against committed target of 450 MTS per month upto 31.12.1998. Therefore, M/s AMPL was not eligible for any of the benefit under the aforesaid two MOUs.
4. It is further alleged that A4 requested for inclusion of low valued items/products viz. LP/BCP/CG ingots and CG rods to achieve the target of 5000 MTS of alloy wire rods, which was agreed by A2 & A3 by way of MOU dated 07.01.1999, without concurrence of Director (Finance) and despite several points of objections raised by Finance. In respect of minutes of meeting dated 07.01.1999, it is alleged that A2 made interpolation/addition in his note dated 17.03.99 by including EC rods and EC ingots, which were not trading items lifted by M/s. AMPL and their group companies and also by inserting two letters "EC" at two places on the last page of minutes of meeting dated 07.01.99, thereby forged it and used same as genuine, so as to enable M/s. AMPL to reach target of 5000 MTS to get additional discount of Rs.1500/- PMT.
5. It is further alleged that A2 directed his subordinate Sh. J.M. Dhir for preparing note dated 02.06.98, thereby reflecting execution of MOU with M/s. AMPL, mentioning that approval of CMD was Page 67 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 required, which was deleted by A2, without being in knowledge of Sh. J.M. Dhir and by using white fluid. He further altered the date of note i.e. 02.06.98 as 01.06.98, thereby representing the same as the date of execution of MOU and to represent that the note was made on the same date of signing of MOU by A2 and A3.
6. It is further alleged that in pursuance to aforesaid criminal conspiracy, A2 on 12.03.99 visited Mumbai and held discussions with A5, Director of M/s. AMPL and offered entire quantity of 172 MTS of above material to M/s. AMPL only, which was agreed to by M/s. AMPL. Thus, letter dated 13.03.99 was issued to M/s. AMPL, which was objected by Finance Department of BALCO. However, proposal dated 27.03.99 of A3 was approved by A2 with the consent of A1 in favour of M/s. AMPL. Thus, M/s. AMPL received pecuniary advantage of Rs.177.90 lacs in respect of MOU dated 01.06.98 regarding lifting of rolled products and extrusions including old and non moving stocks and Rs.121.30 lac under MOU dated 01.06.98 in respect of alloy wire rods.
7. It is further alleged that A1, A2 and A3, being officers of BALCO entered into criminal conspiracy with A4 and A5 (both Directors of M/s. AMPL) and abused their official position as public servants and caused undue pecuniary advantage to themselves or to A4 and A5 and cheated BALCO to the extent of Rs.299.20 lacs. Delegation of powers:
42.In order to appreciate the allegations made against the accused persons, it is expedient to look into the scheme of powers conferred upon the accused persons. Several witnesses of prosecution Page 68 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 deposed about delegation of powers. However, it is better to straightaway look into the relevant piece of paper to know about the scheme of powers in BALCO, rather than being guided by oral testimony of any witness. Prosecution proved on the record Memorandum of Articles of Association as pertaining to BALCO, as Ex. PW8/2. Authenticity of this document is not in dispute. Article 71 of this memorandum deals with general powers of Director, providing that Directors shall exercise powers subject to the provisions of the Articles. Article 72 deals with specific powers of Director. Sub clause 19 of this Article empowered Director to enter into all such negotiations and contracts and execute and do all such acts in the name of the company, as they might consider expedient for the purpose of the company. Sub clause 20 of this article provided for some delegation of powers subject to ultimate control and authority being retained.
43.Prosecution also proved delegation of powers by Board of Directors under Article 72 (2) of the Articles of Association to CMD, as Ex. PW8/3. This document is also unchallenged document. As per this document, the delegation of powers was approved by the Board in its 146th Meeting held on 01.09.1987. Clause 1 of this document empowered CMD to exercise full powers of the Board of Directors for managing the business of the company, except for items listed in the enclosure. The reserved items as per enclosure, required approval of the Board of Directors. As per clause 3, CMD could exercise powers in consultation with Director (Finance) in respect of matters having substantial financial implication or concerning the Page 69 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 financial policy of the company. Clause 4 empowered CMD to sub- delegate his powers to the officers of the company in accordance with the Articles of Association.
44.The enclosure to aforesaid document referred to different items under different head, wherein approval of Board of Directors was required. Clause V of the enclosure dealt with items related to Sale. According to this clause, formulation of sales and pricing policies of the main products required approval of Board of Directors.
45.Ex. PW8/4 is copy of office order dated 19.11.1997, issued by Company Secretary of BALCO. Authenticity of this order is also not in dispute. According to this order, CMD sub-delegated powers to functional Directors and other functionaries to the extent indicated in the enclosed chart. That enclosed chart is Ex. PW8/5, which is in the form of schedule of sub-delegation of powers to Director (Commercial), Executive Director/General Managers & other Executives of Marketing Organization. As per Clause D-1, Director (Commercial) had the powers of acceptance of sale of main products subject to condition of adhering to declared prices of the company, excluding duties and taxes upto Rs. 5 crores in each case. In respect of acceptance of sale of by products, he had similar power upto Rs. 30 lacs in each case. As per Clause D-4, Director (Commercial) had full powers upto 2 % rebate on quoted prices, limited to quantities for which powers were delegated to submit offers. Such powers were given in the matters of price negotiations after tender opening when company quoted price was higher than other competitors. For the purpose to allow credit/cash Page 70 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 discount on sales of main products, Clause D-5 empowered Director (Commercial) to grant 15 days credit/equivalent cash discount at prevalent rate, beyond extant policy. However, this was subject to three conditions. a) Limit provided in D-1. b) Depending on market condition. c) Reasons to be recorded in writing. Besides aforesaid conditions, monthly statements of such cases were to be submitted to CMD.
Marketing Policy:-
46.As far as marketing policy for the year 1998-99 is concerned, PW18 emphasised that this policy was never approved by competent authority. Though, there is no specific charge in respect of wrong implementation of marketing policy for the year 1998-99, however, the relevant file/notes dealing with such matter were proved on the record. It is appropriate to discuss the happenings related to approval of marketing policy, which may have some bearing over other aspects of this case. It is worth to mention here that the official files and notings combined therein were not disputed by accused persons. Rather, all accused had been referring to these documents during arguments.
47.The proposal for approval of a draft marketing policy was initiated by GM (Marketing) on 02.03.98, vide a note Ex. PW12/1. A2 approved that proposal and draft on 09.03.98 and the file was marked to A3, who also signed as approval on 16.03.98. The file was marked to GM (Finance) and Director (Finance) for obvious reasons that concurrence of Director (Finance) was required before the same could be sent to CMD/A1. The further notes given by Page 71 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 officials from finance show that several reservations regarding enhancement of cash discount/credit period beside other points, were raised by finance department. PW18/Director (Finance) noted that cash discount was always given on deposit rate basis and as per prevalent deposit rates, the existing cash discount was already on higher side being at Rs. 1400 and hence, there was no need to enhance the same by another Rs. 100 as proposed by marketing. He also noted that alloy rod sale had been good enough in December 1997, January 1998, February 1998 and March 1998 and was on rising trend. This showed existing credit policy being good enough and hence, there was no requirement of further dilution. He forwarded the marketing policy for approval and also pointed out that the subject matters raised in the note would have to be brought to the Board. A1 being CMD asked A2 to resubmit taking into consideration the comments of Director (Finance) and keeping in view the challenge of the year. File was though marked to A2/Director (Commercial), however, instead of A2, AGM (Marketing) made the next note marking it to A3. However, A3 was on tour and the next note was again made by A2 on 22.04.98. The file was further marked to CMD/A1 directly seeking his approval to the proposals already made. A1 asked for quick observations of Director (Finance) on 23.04.98 and Director (Finance) gave his observations on 30.04.98. Thereafter, A1/CMD vide his note dated 04.05.98 observed that "I don't want any war on file. D (C) has to ensure that BALCO achieves TO, gross margin, PBT, PAT. Marketing policy must ensure total legality, full protection of Page 72 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 companies fair treatment to customers, no retrograde steps. Marketing group must make chart of existing inputs/suggested inputs. Incremental expenditure must result in increased sales and profit. I suggest GM (M), GM (C&E)/A3 and GM (F) must sit together immediately to give a clear shape to it. D (C) must ensure its formation and implementation." The file was thereafter, marked to A2/D (C), who gave further directions for meeting among aforesaid three officials. The meeting took place on 06.05.98 and thereafter, GM (M) forwarded the proposed marketing policy for approval of competent authority on 12.05.98. The file was marked to A2, who signed it on 15.05.98. Thereafter, there was marking of file to CMD, however, it was cut by someone and this was the end of this file. Thereafter, A2 issued a letter dated 18.05.98 (Ex. PW12/17) to all regional managers stating that he was sending a copy of approved marketing policy for the year 1998-99.
48.The question is that whether the marketing policy circulated by A2 was approved by competent authority? The aforesaid file does not show any further movement of the same to either Director (Finance) or upto A1, nor does it show any final concurrence of Director (Finance) and approval of A1. A1 has taken plea that he did not authorise A2 to approve this policy and to circulate it. A2 during arguments took plea that he was orally authorised by CMD/A1. It is not the case of defence that this policy was actually sent upto CMD and thereafter, to Board of Directors for approval. I have already discussed the scheme of powers conferred upon different officials. As per enclosure to Ex. PW8/3, in respect of formulation of Sales Page 73 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 and Pricing Policy of the main products, even CMD was not authorised to approve the same conclusively. Rather, it was required to be put before Board of Directors for approval, which was not done. It is well apparent that A2 had assumed this power for himself to circulate this policy downwards, falsely declaring it to be approved by competent authority, which was actually not the case.
49.Now, I shall proceed further to look into evidence related to charges framed in this case. The circulated marketing policy for the year 1998-99 was proved as Ex. PW12/16. Some relevant provisions mentioned therein are as under:-
"F) TERMS OF SALE OF VARIOUS ALUMINIUM PRODUCTS
i) INGOT (LP/BCP/CG/EC/NB) This product will be sold against advance payment.
However, extension of credit facility or cash discount will be reviewed from time to time depending upon market conditions and competitors activities and will be intimated in writing.
ii) ROUND INGOT/ALLOY INGOT:-
This product will be sold against advance payment and no credit/cash discount will be applicable on sale of these products, unless any change is communicated in writing. For specific orders other than standard specifications of BALCO, Region will ensure to take advance of 10% of the total ordered quantity, in the form of earnest money and specify delivery period based on confirmation from works. Once the order alongwith 10% advance is received and commitment of delivery is given, (MCC)/concerned Regions will ensure by regular follow up with works to deliver material in time. In case of expected delay in production, customer will be informed for acceptance of fresh delivery schedule. The entire ordered quantity so produced as per delivery schedule will be required to be lifted by the party immediately by making financial Page 74 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 arrangements, failing which earnest money will get forfeited for deliveries within the committed period. In case production/delivery is delayed on account of BALCO, earnest money will not be forfeited. No interest will be payable on looking advance.
iii) FLAT INGOT No fresh production of flat ingot will be taken up without specific order placed by Marketing. The existing stock of approx. 1000 tonne available in assorted sizes/alloys will be liquidated as per market conditions and specific approval to be taken from HO (Mkt) by submitting proposals in this regard.
iv) PROPERZI ROD (EC/CG) This product will normally be sold to actual users only against advance payment and no discount or credit will be applicable unless any change is communicated in writing. Some quantity may be sold to Traders, subject to availability of the product and based on marketing strategies adopted from time to time and communicated in writing.
v) ALLOY ROD In normal course, however, this product is to be sold to actual users against payment terms in vogue from time to time. However in order to increase the sale depending upon the availability, some quantity can be offered to other buyers also to expand customer base subject to approval of GM's/DC. The following facilities will be applicable on sale of alloy rod:-
Upto 65 T per month 45 days credit or cash discount @ 1800 per tonne.
Above 65 T per month 60 days credit or cash discount @ 2400 per tonne.
vi) PROCESS PRODUCTS:
The Vanadium Sludge & Dross is to be sold against advance payment by way of DD/Pay order/LC.
II) SEMI FABRICATED PRODUCTS:-
i) AGAINST TENDER ENQUIRIES
Company's listed price of the product to be quoted against tenders for sale to Govt./PSUs like Defence, Page 75 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 railway, DGS&D, SRTC's, ASRTU etc. However when the bid is opened and it is found that BALCO do not stand as lowest bidder, the region can negotiate on discount and credit terms etc.
ii) OTHER CUSTOMERS BESIDES THOSE MENTIONED AT (i) & CONSIGNMENT AGENTS
a) QUANTITY DISCOUNT (ANNUAL SLABS)
i) Major cities (Delhi/Faridabad/Bombay/Ahmedabad/Pune/Calcutta/ Chennai/ Bangalore, Hyderabad) Extrusion Rolled Product Foils Slab (T) Rate of Slab (T) Rate of Slab (T) Rate of Discount Discount Discount (%) (%) (%) 60 & upto 2.5 360 & upto 2 Upto 36 2 120 800 Above 120 3 Above 800 & 3 Above 2.5 & upto 180 upto 1600 36 & upto 72 Above 180 3.5 Above 1600 3.5 Above 3 & upto 300 & upto 2400 72 Above 300 4 Above 2400 4 Nil Nil
ii) INCENTIVE SLAB In order to promote higher sale by individual customer/all units of a group inclusive of consignment agents, the clubbing of quantities of all units will be allowed, subject to customer/consignment agent achieves sale of 360 T extrusion and or 5000 T Rolled products during the year 1998-99, for which an extra discount of Rs. 500 PT on entire quantity will be applicable as an incentive.
However, a consignment agent will become eligible for this extra incentive for lifting the quantities referred to as Page 76 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 above only when he has been able to lift the minimum quantities unit wise.
iii) The slab and discount structure for customers/consignment agents lifting material in smaller cities other than cities defined above as under:-
Rate of Discount Rate of Discount Rate of Rate of Slab (T) (%) Slab (T) (%) Slab (T) Discoun t (%) 30 T & 2.5 150 T & upto 2 Upto 18 2 upto 60 400 Above 60 3 Above 400 & 3 Above 18 2.5 & upto 90 upto 800 & upto 36 Above 90 3.5 Above 800 & 3.5 Above 36 3 & upto upto 1600 150 Above 4 Above 1600 4 Nil Nil 150
iv) PERIODIC REQUIREMENT ON MONTHLY BASIS (for supplies within 30 days from date of first supply) Extrusion Rolled Product Foils Slab (T) Rate of Slab (T) Rate of Slab (T) Rate of Discount Discoun Discoun (%) t (%) t (%) 5 T & upto 2 30 T & 1.5 Upto 5 T 1.5 10 upto 60 Above 10 2.5 Above 60 2 Above 5 T 2 T T
b) APPLICABILITY OF QUANTITY DISCOUNT:-Page 77 of 137 (Pulastya Pramachala)
Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 The quantity discount is to be allowed on basic listed price plus alloy & temper charges as ruling on the date of dispatch of material and only after party/consignment agent achieves the required quantity (e.g. on achieving 60 T in Ext. & 360 T in Rolled Product in major cities and 30 T Ext & 150 T in Rolled Product in smaller cities, for each centre of operation separately.) Thereafter,, quarterly reconciliation is to take place for issuing credit notes depending upon actual quantity lifted, subject to their qualifying in the specified slabs. The quantity so lifted from Korba and BBU can be clubbed together for arriving at a particular quantity slab for the purpose of entitlement of discount.
c) CREDIT OR CASH DISCOUNT (for sale from works/godowns and through consignment agents) Irrespective of any linkage to quantity, customers making 100% payment in advance will be eligible for cash discount @ Rs. 1500 per tonne. However, if party asks for credit in lieu of cash discount, 30 days interest free credit will be applicable from the date of invoice, against 100% collateral security by way of LCs for the value for dispatches to be made. In respect of consignment agents, the credit period will be 35 days (includes 5 days transit time) from the date of invoice and 40 days by rail (10 days transit time). In case of consignment agents making 100 % payment in advance by way of DD/pay order/LC, for immediate presentation of documents at works before dispatch of material, the cash discount will be applicable for 35 days by reckoning Rs. 1500 per tonne equivalent to 30 days credit. (i.e. Rs. 1750 per tonne.). After having enjoyed cash discount, the consignment agent will not further be allowed to avail of the transit time. For payments realised by way of cheque in BALCO's account within five days of dispatch of material against collateral security, the consignment agents will be entitled to cash discount @ 1500 per tonne.
f) In brief, other terms and conditions of sale applicable to consignment agents are as under:-
Page 78 of 137 (Pulastya Pramachala)Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016
i) Freight & Insurance (Transit/Godown) charges.
The details of charges to be made applicable for various destinations with immediate effect is placed at Annex.I. These charges will be applicable both for material to be supplied 'on freight to pay '&' freight prepaid' for purpose of calculation of excise duty under finance bill 1996, as per guidelines issued on the subject vide IOM No. G- 4352(I)/151 dated 5.2.97 & to be implemented strictly. This will, however, be subject to review after the rate contract is finalised with the transporters and the same will be communicated in writing. In case consignment agent lifts material under 'freight to pay', the transportation charges will be paid directly by the party to the transporters at actuals and in such cases, the company will not entertain any shortages (pilferage), damages, delay delivery in transit etc. The insurance of material in transit or material held in godown will be done by the consignment agent, for full value of material from all risks and insurance policy will be taken with joint beneficiary i.e. in favour of BALCO and consignment agent. The entire responsibility of lodging of complaints and settlement thereof will rest with them. The company will not bear any liability for reimbursement of premium & same will be borne by the consignment agent.
H) GENERAL CONDITIONS FOR
CUSTOMERS/CONSIGNMENT AGENTS
i) To allow pro-rata cash discount by reckoning 30
days equivalent to Rs. 1500 per tonne on semi-fabricated products, if full payment is received within normal interest free credit period applicable on sale of various semi- fabricated products."
50.The first controversy starts with a note of proposal/Ex. PW12/8 dated 15.05.98 by A3, to enter into MOU, which was moved on the basis of application of A4 dated 13.05.98 (Ex. PW12/19). In this letter, request was made to enter into MOU for three years from 1998-2001 for rolled products and alloy rods. A3 in his note dated Page 79 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 15.05.98 referred to discounts mentioned in marketing policy under process of approval i.e. Rs. 2400 PMT and proposed further/additional discount of Rs. 1500 PMT i.e. the total discount at Rs. 3900/- PMT for sale of alloy rods to AMPL on the basis of entering into MOU with the same. He forwarded the draft MOU for approval and marked the file to A2. A2 signed the same as mark of approval, file was thereafter, sent to GM (F). GM (Finance) gave his type written note and submitted it to Director (Finance). Director (Finance) made his note "to speak" on 29.05.98. Thereafter, GM (F) once again made his handwritten note, so as to ask for stock position and sale statistics. The file was thereafter, marked to DGM (F) and thereafter, note dated 18.06.98/Ex. PW12/22 was given, wherein it was mentioned that during the period from January 1998 to 16th June 1998, there was production of 4151 tones and dispatch of 4438 tons. The closing stock was 160 tonnes on 16.06.98. On the basis of this statistics, GM (F) vide note Ex. PW12/23 mentioned that he had discussed the same with Director (Finance) and it was found that dispatches were more than the production. The closing stock was only 160 ton. Therefore, there seemed no justification to extend the special discount of Rs. 1500 PMT additionally. File was marked to A3, who again gave his note on 13.08.98, stating that the figures of dispatch included supplies through MOUs signed with M/s AMPL and M/s Gupta Cables. He further mentioned that sale picked up from February 1998 due to special terms offered to those customers and sent back the file for reconsideration. File was thereafter, put up before A2, who Page 80 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 approved note of A3 vide Ex. PW20/B. Thereafter, file was marked to GM (F & A), who requested to provide details regarding production dispatches and dispatches to above two parties from October - December 1997 and May - August 1998. Thereafter, file kept on moving till 30.10.98.
51.This proposal was not approved yet on 01.06.98, still A2 & A3 entered into two MOUs with M/s AMPL, thereby agreeing to give 15 days credit in addition to credit/cash discount and quantity discount as per policy for the year 1998-99, in respect of rolled products, extrusions and foils. This MOU was proved as Ex. PW14/18. As per this MOU, 8000 tonnes of rolled products and foils were to be lifted by M/s AMPL from April 1998 to March 1999 from Korba and BBU. They were also to lift 50 tonnes per month of extrusions from Korba and BBU i.e. 600 tonnes per year. The total quantity of rolled products were to include approx 50 % of hot rolled products. They were also to lift proportionate quantities on regular monthly basis. Price as ruling on the date of dispatch of material was to be applicable. The net result of the additional cash discount/credit was in the sum of Rs. 750 PMT.
52.Another MOU was proved as Ex. PW12/24. This MOU was for lifting 5000 tonnes of alloy wire rods from June 1998 to March 1999. Facility was given to allow credit or cash discount as per companies policy. Current policy was also mentioned therein to show that for lifting 60 tonnes per month of alloy rod, there was interest free credit of 60 days or cash discount of Rs. 2400 PT. In addition to this, additional discount @ Rs. 1500 PT was allowed for Page 81 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 lifting 5000 tonnes till 31.03.99. M/s AMPL was to lift minimum 450- 500 tonnes per month. Both aforesaid MOUs were signed by A2 & A3 on behalf of BALCO and A4 on behalf of M/s AMPL.
53.Prosecution has alleged and argued that such MOUs could not be signed by A2 & A3, without concurrence of Director (Finance) and approval of competent authority i.e. A1. Defence argued that Director (Commercial)/A2 was empowered to grant interest free credit of 15 days. A2 further argued that he was empowered by A1 to take decision in the best interest of BALCO and such decision was taken to increase the Sales.
54.However, it has to be remembered that power of A2 to extend interest free credit for 15 days, was limited to sale value of Rs. 5 crores only. The MOUs were entered for such a quantity (i.e. 8000 T & 600 T + 5000 T) that their sale value in every circumstance could not be only 5 crore or lesser (despite discounting prevalent rates heavily). In fact, the financial impact of aforesaid MOUs had to be ascertained on the basis of prevailing price of those products. Defence has not taken plea that the total financial implication, out of aforesaid two MOUs was upto five crore only. Therefore, the aforesaid argument of A2 is without any merit. Further more, even as per clause D-1 of Ex. PW8/5, A2 could have exercised the powers of CMD only. He could not have absolute powers, or more power than CMD. Even for CMD, clause-3 of Ex. PW8/3 made it mandatory to exercise powers of Board of Directors, only in consultation with Director (Finance). Consultation with Director (F) had to be on positive notes. Therefore, in case of dissent of Director Page 82 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 (F), even CMD was bound to put up the matter before Board of Directors. In such situation, it is beyond any doubt that Director (C)/A2 could not have taken a final decision, over a matter having financial implication, without concurrence of Director (F).
55.In fact, the exercise initiated by A3 by moving his note dated 15.05.98, was in itself in recognition of the requirement to have approval from the competent authority, for the purpose of entering into aforesaid two MOUs. The subsequent notes made by A2, nowhere claimed that draft of MOU sent by A3 did not require approval of higher authorities. For such reasons, A3 & A2 had forwarded note (Ex. PW12/8 and subsequent ones) for concurence and approval, referring it to officers of Finance.
56.It is also worth noting that the deliberation for approval to enter into MOUs with M/s AMPL continued even after 01.06.98, without specific disclosure from A2 or A3 to others that such MOUs were already entered into with M/s AMPL on 01.06.98. Such fact was only indirectly mentioned in note dated 13.08.98 by A3 and then PW20 gave additional remedies, taking view of MOUs already being executed, in his note after 30.09.98.
57.Even as per testimony of Sh. J.M. Dhir/PW14 (who was working under A2 & A3), no approval was taken before signing aforesaid two MOUs, though, the value of 5000 tonnes of alloy rods was about Rs. 50 crores and value of 8000 tonnes of rolled products alongwith 600 tonnes of extrusion was about Rs. 65 crores at that time. He further deposed that on 02.06.98, he was called by A2 and was given aforesaid two MOUs. A2 instructed him to prepare notes Page 83 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 for approval of those MOUs. Thereafter, he prepared two notes on 02.06.98 i.e. Ex. PW14/19 & Ex. PW14/20 on the instructions of A2, for approval of MOUs (Ex. PW12/24 & Ex. PW14/8). He mentioned in his note Ex. PW14/19 that value was above 50 crores, however, white fluid was applied over remaining part of the sentence. PW14, however, read that part which was "and as such ..... approval of CMD". He had marked note Ex. PW14/19 to A3/A2/GM (Finance) Korba/ D (F)/CMD. However, white fluid was found applied over the words GM (F) Korba; D (F) on tour and CMD. PW14 read these words before the court and deposed that he had no knowledge, as to who had applied the fluid over these words. He further deposed that he had put date of 02.06.98 on his notes, however, the digit 2 was made as 1. He did not know as to who had done this.
58.It is to be seen that after note of PW14, A3 gave his concurrence in both notes with date of 01.06.98, thereby recommending to approve the MOUs. Again A3 okeyed both notes with date of 01.06.98. Though, in note Ex. PW14/20, it was shown to be marked to GM (Finance), rather than Director (Finance), but it was not actually put before even GM (Finance). Rather, A2 wrote that "this has already been approved by you over phone for your formal concurrence". He had mentioned name of Sh. V.K. Verma i.e. GM (F). Thereafter, there is subsequent note referring to a telephonic talk with Korba (Finance) Sh. Tandon, to mention that GM (F) opined that 15 days extra credit could be extended by D (C) as per DOP para D5. It was further written that same may be regularised by approval of D (C). Thereafter, the file was marked to A3, who signed as mark of Page 84 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 approval on 06.06.98 and then A2 also signed the same on 06.06.98.
59.The next development was that on 26.10.98 A3 moved a file with his note with heading "proposals pending for approval". Same is Ex. A1 (admitted document). In this note, A3 noted as under:
"In order to increase sales and profits, certain proposals had been put up by marketing department for approval of competent authority. One such proposals relating to alloy rods and special discounts allowed for bulk lifting had been put up in Jan 98 for Jan-March quarter and it was given to understand that the proposal had been approved by competent authorities and action had been taken in line with this decision. Same policy was extended for the current year 1998-99 by signing of MOUs with certain bulk buyers and it resulted in sustained growth in profit and sales. During discussions in the last few days, it has been informed that these policies are not approved by the competent authority and the matter is pending with finance department for concurrence. In fact, a doubt has been raised even about the marketing policy introduced for 1998-99 as to whether it has been approved by competent authority. As a result of the above, serious handicap is being faced in procuring orders from customers and maintaining regular flow of materials. Reasons have informed that customers are now booking orders with competitors as a result of this uncertainty in policies followed by BALCO. This will have a very serious repercussions on our present and future business which we have built up after a lot of effort. It is requested that matter may please be taken up suitably and clear instructions/policies be handed out to marketing department for implementation and working."
60.The file was marked to A2. A2 gave his detailed note on 26.10.98 itself, mentioning that proposal of alloy wire rods MOU was still pending in finance for concurrence, although the same was already Page 85 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 approved by the then GM (F)/Mr. Ponnu Swami (PW12 herein) way back in May/June 1998 itself, on the strength of which only they (A2 & A3) had entered into MOU with customer. Thereafter, he referred to depressed condition of market and his fear of loosing sustainable business. He further referred to deal for sale of 5000 MT of AWR being held up in finance and credit notes for approx 25 lacs being pending for release to customers. He also mentioned that marketing policy had been chalked out comprehensively by GM (F), A3 & GM (M) as directed by CMD, then why a doubt was being aired about its approval by competent authority again. He submitted his note for suitable guidance and approval to CMD/A1.
61.A1 at that time, recorded in his note dated 26.10.98 (Ex. A2) as under:
"The above mentioned subject enumerated by GM (C&E) and D (C), requires immediate action. Since the subject is commercial, D (C) may take decision keeping company's market share, turn over and profitability in the long run. Whenever financial impact has to be seen, associate finance's concurrence may be taken. In any case, keeping co's interest in view D (C) may decide and direct in this particular subject."
62.The file was thereafter sent back to A2 and A2 gave his noting on same day, which is as under:
"I have seen the notings and directions of CMD. Keeping CO's interest in view, please immediately act on the following-
i) to release the credit note on the actual supplies already made to the party of AWR from (June to Sept.
98).Page 86 of 137 (Pulastya Pramachala)
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ii) to make up the shortfall in supplies, if any till September 98 in next 2/3 months to keep the party in fold and do not allow them to slip over from us.
iii) wherever financial impact is involved, associate finance's concurrence is to be always obtained.
iv) please procure the orders and business as chalked out in the marketing policy for 98-99 and must ensure that in no case out share of market is lost."
63.Thus, with aforesaid final directions being issued by A2, this process came to an end at that time. However, the file initiated with note of A3 on 15.05.98 i.e. Ex. PW12/8 was still alive and it is relevant to refer back to the subsequent developments taken place therein. For the purpose of recapitulating the background of this file, it is again mentioned that this file was in movement for approval to enter into MOUs with M/s AMPL. After note of GM (F & A) dated 18.08.98, Manager (M) had given details of the production, dispatch and dispatches to M/s AMPL and M/s Gupta Cables for certain period, vide his note dated 24.08.98 (Ex. PW20/D). In this note, it was mentioned that there was no MOU with M/s Gupta Cables and against total dispatch of 1489 tonnes during October - December 97, M/s AMPL had not lifted anything, though, M/s Gupta Cable had lifted 299 tonnes. Against total dispatch of 2962 tonnes during May 98 to 13.08-98, M/s AMPL had lifted 598 tonnes upto July 98, while M/s Gupta Cables had lifted 276 tonnes upto 13.08.98.The production during May, 98 to 13.08.98, was much lower than the dispatch, being at 2272 tonnes. Thereafter, the file moved ahead and reached to DGM (F) through AGM (M) and A3. DGM (F) in his note dated 24.09.98 (Ex. PW20/E) mentioned that stock of alloy rod was 27 tonnes as on 31.08.98. He further referred to monthly DO Page 87 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 sent by marketing to CMD for August 98, wherein it was mentioned that demand for alloy wire rod was likely to further pick up by September/October 98 with the finalisation of tenders of SEB. He further mentioned that dispatches to M/s AMPL was approx 20 % of the total dispatches only and for such reasons as well as due to favourable market conditions, special discount of Rs. 1500 for lifting 5000 tonnes of alloy rods to M/s AMPL did not appear to be justified. Thereafter, once again A3 gave his note dated 30.09.98, wherein he again referred to policy adopted in January- March 98. He further referred to wresting the initiative from competitors in market share and increased sales, profits as well as keeping stocks to bare minimum. He also showed his resentment for not approving the proposals and concluded his note with some sarcastic comments for approach of finance. The next note was given by A2 on 30.09.98 itself, thereby asking DGM (F) to discuss the issue urgently. Thereafter, DGM (F) again gave his note, referring to his discussion with A2 and also referring to the fact that additional discount of Rs. 1500 PMT for lifting 5000 MT during June 98 to March 99 was already extended. He gave his proposal for suitable decision for the purpose of formulating MOU with any party. He emphasised to broaden the customer base etc. Obviously this proposal was given after being made to understand that the facility of additional discount was already agreed with the party and extended to M/s AMPL. The next note was given by A2 i.e. Ex. A4 on 07.10.98, wherein he justified signing MOU with one such party, (did not mention the name of party). He also mentioned that MOU Page 88 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 was signed on 01.06.98, which had shown expected results. Thereafter, file was put up to Director (Finance)/PW18. In his note dated 30.10.98 (Ex. A5), PW18 mentioned that the same subject was separately dealt on 26.10. and a separate note was put to CMD for approval. He also mentioned that CMD had authorised D (C) /A2 to take a commercial decision keeping in view the various factors. He further mentioned that as per note of CMD, wherever financial impact was there, financial concurrence of associate finance was to be taken. He further mentioned that associate finance's views were recorded, which showed that MOU had already been entered into with the party and he suggested certain steps to be taken in that regard. He further mentioned that GM (F) was not the associate finance of the commercial wing and in fact GM (F) in his note dated 19.06.98 had recorded that there was no justification to extend the special discounts. He further stated that the contention of D (C)/A2 that the then GM (F) had approved (though he was not the approving authority) the proposal in June 98, is not tenable in view of the factual details brought out in his note. Director (Finance)/PW18 concluded his note stating that since the decision had already been taken by D (C)/A2, the file was returned accordingly. Thereafter, file was sent back to A2 on same day and he signed it on same day.
64.The other development took place when on 07.01.99 a minutes of the meeting was prepared and signed by AGM (F), AGM (M), A3 & A2. Same is Ex. PW14/20. In this meeting held with M/s AMPL represented by A4 & Sh. T.P. Bhagat, reference was made about Page 89 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 previous MOU signed with M/s AMPL regarding sale of 8000 MT of rolled products and 600 MT of extrusions. It was recorded that the group had lifted 5827 MT of rolled products from April to December 98 and they were required to lift 2173 MT during the last three months to achieve the target of 8000 MT. It was further recorded that out of discussions held with A4, to lift around 4000 MT of rolled products during January - March 99, the company was given further incentive above the quantity of 8000 MT in the terms that it was entitled for cash discounts of Rs. 3000 for quantity between 8001 to 9000 MT; CD of Rs. 4000 against quantity of 9001-10000 MT and CD of Rs. 4000 for entire quantity above 8000 MT against lifting 10001 MT and above quantity. Reference was also made to another MOU between BALCO and M/s AMPL regarding sale of 5000 MT of alloy wire rods during June 98 to March 99. It was recorded that during June 98 to December 98, M/s AMPL had lifted 1943 MT of alloy wire rod. M/s AMPL had proposed that they were in position to lift other primary products to fulfill the MOU targets. Accordingly, further facility was given to M/s AMPL against aforesaid MOU, to off-set sales tax to the tune of Rs. 1900 per ton. CG rod was also included in this MOU for the purpose of lifting alongwith alloy rod. Later on, EC rod was also included and ingots of CG/LP/BCP category were also included in this MOU to meet the quantity target.
65.On 08.01.99, A2 moved a file with his proposal of aggressive tie-up with bulk lifters by offering heavy discounts, in order to ensure liquidation of stock within next quarter. This note is Ex. PW14/21.
Page 90 of 137 (Pulastya Pramachala)Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 Thereafter, though, the file was marked to D (F)/CMD, however, once again A2 himself wrote further note in his own writing on 21.01.99. In this note, he referred to discussion with M/s AMPL on 07.01.99 and sought approval of higher discounts on bulk lifting. He recorded that the company would be entitled for higher benefit, if they lift as per promise and asked to review the total position to achieve the sale figures of 9000 MT in January 1999. He marked the file to A3. A3 vide his note dated 03.02.99, referred to dispatch of 9026 MT in January 1999, on the basis of customers having reposed their confidence in the commitments given by BALCO. He also referred that M/s AMPL kept their words by taking 2310 MT of material in January 1999. He finally asked for approval to the commitment already arrived at between M/s AMPL and BALCO on 07.01.99 for the period 01.01.99 to 31.03.99. File was again marked to D(C)/A2. A2 gave his note dated 03.02.99 seeking concurrence, stating that party had commenced lifting bulk quantity as per agreement reached with them. File was then marked to D (F)/CMD. D (F)/PW18 marked the file to DGM (F) to examine the details and to give his views, vide his note dated 15.02.99. Thereafter, a detailed note was given by MFA on 20.02.99, wherein reservation was raised about extra discount being given on higher side without justification. It was also pointed out that there were no detail of discussions held with other customers than M/s AMPL. It was also pointed out that the margin available to CG rods was lower as compared to alloy rod and by extending additional discount, the margin would further come down, for which there was Page 91 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 no justification. Same reasoning was given in respect of ingots. Thereafter, DGM (F) also gave his note dated 23.02.99 pointing out that as per marketing policy, CG rods and Ingots could be sold to actual users and not to traders. He further recorded that it was unjustified to agree for a discount for the incremental sale of 2001 tones of rolled products. Thereafter, GM (F) in his note dated 25.02.99, also supported the reservations raised by above mentioned officers. He also asked to get the proposal examined by DGM (F). Thereafter, A3 gave his detailed note dated 27.02.99 referring to stock build up in the last few months and inventory carrying cost. He also referred to M/s AMPL as a direct consumer. He also clarified that the benefits proposed in the file were in addition to those extended to usual buyers. He asked for expeditious concurrence over the proposal.
66.File was now marked to A2, who mentioned in his note that his proposal was duly concurred and agreed by associate finance on 03.02.99 and thereafter, file was returned back by Finance on 25.02. with many interrogative comments. He further insisted for approving the marketing proposal within shortest possible time. He further referred to the remarks made by A3, mentioning that supplies were already being made to the party as per discussions held on 07.01.99. He submitted the file to CMD for approval vide his note dated 01.03.99.
67.CMD/A1 vide his note dated 03.03.99, observed that issues raised by finance must be replied and noted by marketing. He further asked D (C) with Associate Finance to analyse all scenario in a Page 92 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 tabulated form with respect to benefits to BALCO. He further observed that D (C) must achieve turn over, profits etc. guided by MOU and that in a specific market condition, D (C) must follow the above mentioned procedure, rules and regulations and must take a decision to the best interest of BALCO. Thereafter, CMD marked the file to A2 and on same day A2 marked the file to A3 for necessary action as per directions of CMD. On same day A3 marked the file to DGM (F) and AGM (F) to discuss it urgently.
68.DGM (F)/PW20 once again gave his detailed note, thereby giving the financial impacts. Briefly, he stated in his note that additional impact without considering the benefits of existing MOU for rolled products and notional figure of existing benefits of lifting of 5000 MT of alloy wire rods as per existing marketing policy and MOU, was worked out in Annexure B. He further mentioned that IFC or equivalent CD was available as per marketing policy to all and it was not as per MOU and practically could not be applicable because of lesser lifting. He further mentioned that availing of credit period/CD could not be considered in respect of semi fabricated and inclusion of Ingots as well as CG rods in existing MOU. Such notes were given by him on 10.03.99 and 11.03.99. Thereafter, A2 gave his concluding observation on 17.03.99, stating that they had to clear the stock before 31.03.99 and they had to push higher dispatches in January, February and March 99. Therefore, there was no alternative, but to enter into MOUs with large and potential buyers for liquidating the stocks. He directed to issue credit notes etc. as per MOU i.e. minutes dated 07.01.99 to the party and Page 93 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 regularise the entries. He also added to include EC Ingots + EC rods also in the deal.
69.Prior to aforesaid development to approve one additional MOU dated 07.01.99 with M/s AMPL, some other developments had also taken place for correction in prices and discounts on sale of rolled products.
70. PW14/Sh. J.M. Dhir put up a note on 02.02.99 qua the reduction of prices of rolled products and extrusions by M/s HINDALCO on 15.01.1999 thereby resulting in the prices of BALCO being higher than HINDALCO, wherein he had given the brief synopsis of information made available to him by A2, A3, PW20/Sh. Shashi Sahni, PW17/Sh. S. Shome and Regional Managers qua the meeting/discussions held with consignment agents at Korba on 25.01.1999. PW14 had also written about the internal meeting held on 02.02.1999 in the chamber of Director (C)/A2 attended by GM (C&E)/A3, DGM (F)/Sh. Shashi Sahni/PW20 and AGM (AF)/Sh. S. Shome/PW17, wherein discussions were held not to reduce the basic price and to offer additional discounts payable after 31.03.1999 linked with quantity slab to provide inbuilt incentives to increase sales by individual agents and also to negate the effect on company's turnover during 1998-99. On the same lines a view was taken that LC opening charges will be reimbursed to consignment agents on sale of semi fabricated products from 01.04.1998 to 31.03.1999 at flat rate of Rs.300/- per ton for supplies against LC.
71.This note of PW14 is Ex.PW14/13. This note was put up by PW14 on the instructions of his seniors i.e. A2 & A3. As per his testimony, Page 94 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 the facts mentioned therein were not in his personal knowledge but were told to him by the aforesaid persons. He marked the file to A3 for finalization of the decision of the internal meeting held on 02.02.1999 and processing of the proposal for approval of Competent Authority. Thereafter A3 in his note dated 03.02.99, mentioned that the order position for extrusions and rolled products was very critical in last 2/3 months thereby resulting in increase of stocks. He also mentioned that HINDALCO had increased their capacities for rolled products and were offering much lower prices than BALCO besides better unannounced commercial terms calling for suitable strategy. A3 suggested that one way would be to agree with agents to a reasonable level of discounts payable after 31st March without issuing open circular to keep the matter confidential. He also wrote that general price reduction will be otherwise equal or bettered by competitors. He also mentioned that due to budget in February, liftings will be effected and there were chances that some more price reductions would be forced on competitors due to rising inventories and dipping London Metal Exchange (LME) price levels. He further said that discounts/incentives offered link to assured off- takes was a sound business prudence in the current market situation. In the end of his note, A3 observed that the proposals were based on repeated discussions and negotiations and he forwarded the same for approval. He also recommended for keeping decisions strictly confidential. In last line he also wrote that this had been agreed verbally with Consignment Agents (CA). This Page 95 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 noting of A3 dated 03.02.1999 is Ex.PW14/14. He marked the file to DGM (F)/Sh. Shashi Sahni and Director (C)/A2.
72.PW20/DGM (F) Sh Shashi Sahni marked it to PW17/AGM (F)/Sh. S. Shome. Thereupon, Sh. S. Shome gave his note thereby summarizing the situation and proposed that in view of the same additional discounts proposed for lifting during January to March 1999 be reconsidered on the rolled products in total, to retain the market share and also not to retrospectively give effect to reimbursement of LC opening charges w.e.f. 01.04.1998, as it would become additional cost to the company. He suggested to provide the same from 15.11.1998 to 31.03.1999. This note of Sh. S. Shome is Ex.PW14/15.
73.Thereafter, PW20/DGM (F)/Sh. Shashi Sahni gave his note dated 05.02.99, wherein he endorsed the views of PW17. He also stated that the comparison with HINDALCO had been shown without considering the MODVAT, which if not considered then additional options were to be considered for the same. He further stated that as regards combining of lifting of various centres of a group was concerned, the present marketing policy was very clear that quantity discounts (including bulk quantity discounts) were based upon the performance/achievement of individual centre of operation, which seemed logical also as each centre of operation was for different area and the performance/achievement had to be in that area alone. Therefore, he did not recommend combining of various centres of same consignment agency, being against the existing marketing policy. He further mentioned the financial impact Page 96 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 due to average discount of Rs. 3000/- PMT considering the projective sales of 10000 MT of rolled products to consignment agents during January to March, 1999. This noting is Ex.PW14/16.
74.PW20/Sh. Shashi Sahni further marked the file to A2/Director (C) mentioning that this would require approval of CMD and also that A2/Director (C) might like to take an appropriate view in the matter. A2/Director (C) marked it to A3 to once again review the working attached therewith and to submit the report, vide his endorsement dated 07.02.99. A3 thereafter, gave his note dated 01.03.1999 i.e. Ex.PW11/8, wherein he mentioned that both Sh. Shashi Sahni and Sh. S. Shome were present throughout discussions with the agents on 02.02.1999 in Chamber of Director (C) P.C. Aggarwal. They were also present in the consignment agent's meeting at Korba as well as at various internal meetings on review of market situation, price changes by competitors etc. They had further discussed the situation in detail in the Chamber of D (C) on 22.02.1999. A3 further stated that Mr. Shome had predicted that HRP stock at the end of the year 31.03.1999 would be 324 MT only. A3 observed that it was surprising to note that an exact figure had been mentioned for a situation, which might emerge only after more than five weeks, that too in market situation which was changing daily due to dropping of LME levels, increasing stocks, shortage of fresh orders and fierce competition. He further observed that it was only hoped that AGM (F) had sufficient reasons (not mentioned) for such a forecast because it had been seen that ever since 01.04.1998 the HRP stock had constantly increased and they had lack of orders Page 97 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 due to which ingot production had increased. A3 also observed that similar arguments had been given for CRP mentioning production of the same as 2500 MT, whereas it should be 2800 MT at least if the ingot production was to be cut down. He further observed that there had been increase in the stocks, but the same had not been taken into consideration, while working out criticism of the proposal put up by them. A3 further observed that it was not possible to offer discounts on individual sizes just like it was not possible to fix prices on individual sizes on rolled products. He stated that these were facts and realities, which were known to market people engaged in day to day operations, but might not be known to other departments, who were not in touch with customers. A3 also justified that reimbursement charges of the opening of LCs charges from 01.04.1998 be restored, keeping in view that the situation had worsened due to repeated price reduction by competitors, drop in LME level and the fact that many customers had opened their LCs in the beginning of the year. A3 further stated that DGM (F)/Sh. Shashi Sahni while expressing his views qua the proposal had not mentioned about the additional revenue/turnover that would accrue due to increase in sales. He further stated that Finance Department was expected to analyze the implication of inventory carrying costs, interest, loss etc. while commenting on the proposal, but that was not done and only negative aspects had been brought out by Finance Department. A3 further stated that it was expected that marketing finance group or for that matter any finance functionary should analyze such proposals for both negative and Page 98 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 positive aspects so that competent authority could take a balanced view.
75.In the last paragraph of his note, A3 stated that BALCO had been able to dispatch 9026 MT in January, 1999 and 953 MT in February, thereby reducing the stocks by about 2800 MT. He further mentioned that even if some discounts had been given, the overall effect was higher sales therefore higher turnover and profit and lower stocks, besides consolidating their market share. He further stated that by keeping marketing decisions/strategies strictly confidential between themselves and customers, the idea was to prevent the opposition from adjusting their prices and take away the limited orders available in the current adverse market situation. A3 further stated that the dispatches in the last two months had proved beyond doubt that the strategy and decisions had been correct. He also stated that maintaining so called price competitiveness, keeping rigid views and adding to stocks was neither good business sense nor a good commercial practice. He further stated that above discounts etc. had already been finalized with the customers in an open meeting after prolonged negotiations and it was in the interest of their business that formal approval was accorded to the proposal, as results had already proved the correctness of the decisions.
76.A3 in the concluding line, mentioned that in note dated 11.01.1999 regarding price adjustment, A1/CMD had recorded that Director (C) had to take a decision in such commercial matters and authority had been delegated to Director (C) accordingly for the best interest Page 99 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 of the company. He finally marked the note to A2/Director (C) with a request to take a decision in the above matter also.
77.Thereafter, A2/Director (C) accorded the approval to the proposal vide his note dated 01.03.99 Ex.PW11/9, stating that the decision taken by Marketing Department was in line with the then marketing scenario for clearing the stocks. He also mentioned that CMD had already authorized him on 12.01.1999 to take the commercial decision in the best interest of the company. Therefore, he accorded the approval to the proposal in continuation of his earlier approval on same date. A2 further marked the file to A3, who further sought an approval stating that in line with earlier discussions on the subject and recommendations thereof, the same could be extended to godown customers and other customers as well, but not in cases where negotiated (contract) price was applicable. He further stated that this had been conveyed to regions also. The said noting of A3 is Ex.PW14/17. The same was approved by A2 on 05.03.1999. Thereafter, A3 marked the file to PW14 for taking necessary action on 31.03.1999, after issuing a circular dated 31.03.1999 under his signatures, which is Ex.PW5/1. In this circular A3 mentioned the discounts applicable during 01.01.1999 to 31.03.1999 on dispatch of rolled products. As per the mentioned discounts, there was discount of Rs. 2500 PMT for dispatch upto 150 MT, discount of Rs. 3000 for dispatch above 150 and upto 300 MT and dispatch of 3500 for dispatch above 300. It was also mentioned that quantity supplied to different centres of operation of the consignment agents was to be clubbed for arriving at the above Page 100 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 mentioned slabs of discounts. Credit notes were to be issued on 01.04.99.
78.There was another deliberation over liquidation of old and non- moving stocks of rolled products, extrusions and foils from godowns and from unit of BBU. For this purpose, PW16/Sh. B.K. Bhatia/AGM (M) moved a note dated 03.02.99 with his proposal to sell aforesaid materials on best offer basis. This note is Ex. PW6/2. After deliberations, bids were invited from all and same were opened. For different locations different bidders had given their quotations viz. M/s Star Aluminum, M/s D.C. Metals, M/s Kamal Metal, M/s Agrawanshi, M/s Ramesh Metal, M/s TIE Chennai. Their quotations were examined in finance department and vide note dated 08.03.99/Ex. PW16/27, the highest bidders for different materials and for different centers were pointed out. PW20/DGM (F) pointed out that except for offer for Pondicherry godown of CRP and extrusions, the other offers gave net realisation at very low level, which was even lower to scrap value. Matter was referred to A2, who vide his note dated 11.03.99 observed that for other places, pressure to be exerted on other major customers/CA, who could give better price and could lift entire quantity upto 31.03.99. M/s AMPL had not participated in this bid, however subsequently, better offers were sought from other prospective customers and M/s AMPL proposed vide their letter dated 13.03.99 to lift entire quantity of 172 MT of extrusion and rolled products and foils, lying at various godowns and BBU. This offer was better than quotations given by other bidders. PW20 in his note dated 20.03.99 gave his Page 101 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 observation, stating that offer of M/s AMPL was better except in the case of rolled products at the Ahmedabad godown. He further pointed out that in case of 35.05 MT of rolled products at BBU, the material was being lifted on current price with all existing benefits under consignment agency and MOU. He further observed that such proposal required approval of competent authority, including approval for considering the single offer after opening and analysing the existing offer.
79.Thereafter, A2 gave his observations vide note dated 20.03.99, stating that Pondicherry materials to be given to highest bidders i.e. M/s Agrawanshi. Ahmedabad material was to be given to M/s Kamal Metals and rest of all materials approximately 170 MT was to be given to M/s AMPL group, being highest bidder compared to others. Thereafter, PW18/D (F) made his extensive note raising several questions regarding parameters to declare a stock to be old and non-moving. He further observed that the offer from M/s AMPL was received after opening tenders of other bidders as this firm did not participate in the tender initially. He further observed that a party could not be approached after opening other bids, as this would violate CVC's directions.
80.Thereafter, A1 vide his note dated 26.03.99 Ex. PW16/39 recorded as under:
"Please clarify D(F)'s observations and specially for Anish Metals. D (C) may follow the following steps:Page 102 of 137 (Pulastya Pramachala)
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i) Clarification sought by D (F) and finance department must be made and noted in file for record. D (F)'s reference to CVC direction may be discussed with D (V) for clarifications
ii) Tabulation of offers vis a vis all alternatives i.e. take back material to plant with reference to benefits to BALCO must be worked out alongwith associate finance.
iii) after observing the above mentioned steps, D (C) must judge the best possible option to BALCO and must take a decision on the commercial matter."
Thereafter, A2 vide his note dated 26.03.99 i.e. Ex. PW16/40 accepted the offer of M/s AMPL for sale of 170 MTs of old and non- moving stocks. Thus, for Pondicherry proposal of M/s Agrawanshi was accepted. For Ahmedabad godown proposal of M/s Kamal Metals was accepted and rest of the materials were given to M/s AMPL.
81. On the other hand on 14.01.99, a proposal from Central Marketing Department signed by marketing managers and AGM/PW17, was moved for sale of old and non-moving stock of extrusions from Korba and BBU. Once again bids were invited from all customers. Four offers were received including offer of M/s D (C) Metals, M/s Ramesh Metals, M/s Rakhi Agency and M/s AMPL. All these bidders had given their quotations against demand of discounts. It was proposed to consider quotation of M/s Rakhi Agency for their offer for 40 tonnes of extrusion from Korba against discount of Rs. 4000 besides prevailing discounts. It was further proposed to accept quotation of M/s AMPL for 300 MTs against discount of Rs.
Page 103 of 137 (Pulastya Pramachala)Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 5000 PMT + 90 days interest free credit, besides all other prevailing discounts. Once again all such proposals were analysed by different officials of finance. D (F) raised objections for releasing all materials to M/s AMPL as proposed by A2, because M/s AMPL was second highest bidder. D (F) proposed auction of materials, which was resisted by A2. The notings again reached to A1 and vide his note dated 17.02.99, once again following observations were made by A1:-
"i) Observations of D(F) must be replied in the file.
ii) Tabulations of alternatives (action) must be done wrt the best possible benefit to BALCO.
iii) D (C) must take financial impact from associate finance wrt (2).
iv) Since it is a commercial matter, I authorise D (C) to follow above mentioned steps and then take a decision in the best interest of BALCO."
82. Thereafter, A2 vide his note dated 17.02.99 asked to tabulate the alternatives, to indicate the impact and marked the file to AGM (F)/DGM (F). Both these officers gave their observations. PW20/DGM (F) in his note mentioned that A2 had directed to workout financial impact only irrespective of the fact that whether the proposal was concurred by them or not. He emphasized that observations of Director (F) given earlier as well as his own observations given earlier were relevant and had definite financial impact on the proposal, which must be considered. He also observed that the sale was proposed with benefits of consignment Page 104 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 agencies and MOU, whereas, marketing policy did not allow consignment agency's benefit on discounted sale. He further pointed out that observations of D (F) had not been replied in the file and the procedures had not been followed. He further pointed out that no alternative situation was spelt out by marketing. He also observed that net realisation was very low and if the sale was allowed MOU benefits, then the impact alone on rolled products (8000 MT) worked @ Rs. 60 lacs in the form of additional interest free credit of 15 days. Hence, the total additional impact was to be Rs. 83 lacs on net realisation of approx Rs. 272 lacs. He submitted his note to A2 and A2 gave his observations in length and took final decision on the basis of authorisation given by A1 to direct supply of entire quantity of 418 MT of extrusions from BBU and Korba to M/s AMPL. The entire supply was to be made at current prices. He allowed discounts by separate credit notes after entire quantity was lifted in the following terms:
"a) Rs. 5000 PMT on entire 418 MTS
b) Additional credit facility of 15 days over and above MOU
entered with the party.
c) All benefits/facilities available to consignment agents + MOU
agreement facility
d) To allow the differential amount in packing and alloy charges
+ 10 per".
83.Thereafter, note was sent to A3 for compliance, who issued further directions to AGM (M) etc. Page 105 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016
84.I have already observed that A2 had circulated the marketing policy for the year 1998-99 with false assertions that it was so approved by competent authority. Such conduct of A2 is a relevant fact in this case, so as to show bent of his mind since beginning. He could not have asserted that the marketing policy was approved by competent authority, in absence of any such approval accorded by the competent authority. I have already mentioned that the marketing policy could have been approved by Board of Directors only, because for this purpose, even CMD was not delegated the relevant power. However, the last note in the concerned file i.e. Ex. PW12/15 shows that the file was not even put up to CMD and it does not bear his approval. Thus, it was completely highhandedness of A2 to circulate this policy vide his letter dated 18.05.98, claiming it to be duly approved by competent authority.
85.In any case, on 15.05.98 at least A2 & A3 were well aware of the terms formulated in marketing policy 1998-99. A3 in his note dated 15.05.98/Ex. PW12/18 did mention that policy proposal from 1998- 99 was under finalisation. On 15.05.98, in the name of finalisation of this policy, only thing was required i.e. approval of competent authority. Otherwise, A2 & A3 both had signed the last note of that proposal i.e. Ex. PW12/15 on 15.05.98 itself. For such reasons only, A3 recorded that formal approval was awaited.
86.Now the question is that on one hand A2 & A3 were party to give their consent for approval of marketing policy for the year 1998-99, wherein in respect of alloy wire rods, cash discount of Rs. 2400 PT was provided against lifting 65 tonnes per month and cash discount Page 106 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 for semi fabricated product, including rolled products, extrusions and foils were limited to maximum 4 %. To be specific against lifting above 2400 tonnes of rolled products discount was provided at 4 %. Against lifting above 300 tonnes of extrusions, discount was provided at 4 % and against lifting above 72 tonnes of foils, discount was provided @ 3 % only. Neither of A2 or A3 had even suggested in their respective note for aforesaid marketing policy to provide additional discount to any bulk lifter. Still, on same day i.e. on 15.05.98, A2 & A3 proposed for additional discount to be extended to M/s AMPL in the name of bulk lifting during whole financial year. Thus, two parallel stand were taken by A2 & A3 on same day in respect of discount to be offered to general customers and to M/s AMPL. This is the aspect, which requires complete scrutiny.
87.The disturbing feature of the case is that on one hand vide note dated 15.05.98, A3 & A2 proposed to enter into MOU with M/s AMPL with certain additional discounts to the company. The note was forwarded for the purpose of approval. This means that A3 & A2 knew that any such MOU with M/s AMPL could have been executed only on the basis of approval granted by competent authority. It is well apparent that the proposal of additional discount being offered to M/s AMPL was having its financial implications. Therefore, concurrence of Director (F) was required before same could be approved by A1. This proposal was still with finance department for their input and stand to be taken on the same, but A2 & A3 rushed forward to execute two MOUs (Ex. PW14/18 & Ex.
Page 107 of 137 (Pulastya Pramachala)Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 PW12/24) on 01.06.98 itself. They were aware that they could not have done so without specific approval from the competent authority, otherwise, there was no point in moving this proposal on 15.05.98 and forwarding the same to finance department, thereby seeking approval. Thus, the execution of aforesaid MOUs by A2 & A3 on 01.06.98, was an act against powers conferred to them.
88.The proposal to seek approval to enter into such MOU was pending on one hand and in the meantime, PW14/Sh. J.M. Dhir was asked to prepare a note, consequent to execution of MOU with M/s AMPL on 01.06.98. PW14 was obviously working under A2 & A3 and had to act as per their instructions. In the concluding line of his note, PW14 mentioned that the value of this order was above 50 crores and thereafter, he further wrote about requirement of approval. However, that particular line was applied with a white fluid. PW14 deposed that he did not know who did this. He further deposed that he had prepared this note on 02.06.98, but the no. '2' was made as '1', so as to make the date as 01.06.98. He did not know who had changed this date as well. He further deposed that he had marked the note to several persons, including A3, A2, GM (F) Korba, D (F) & CMD. Interestingly, white fluid was applied over three other functionaries i.e. GM (F) Korba, D (F) & CMD also. His note Ex.PW14/19 thus, had further observations from A3 with date of 01.06.98 and A2 with date of 01.06.98. Interestingly, in his note A3 referred to the note of GM (F) dated 20.05.98 stating that matter was examined and recommended by GM (F). Thereafter, A3 further recorded that since some delay was occurring, matter was further Page 108 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 discussed with party and MOU has been entered into on terms as originally proposed. He concluded his note as "may be approved pl.". Thereafter, file was sent to A2, who simply recorded Okay with date of 01.06.98 itself.
89.The question is that why this separate note was required to seek approval, which was got initiated through PW14. There was no logic in seeking approval separately now, especially when proposal dated 15.05.98 was still pending approval. Further more, the note dated 20.05.98 of GM (F) as referred by A3 did not reach marketing department at all. Note Ex. PW12/20 and the consequent notes i.e. Ex. PW12/21 to Ex. PW12/23, would show that file was not sent back to A3 before 19.06.98. In that situation, A3 was not even officially privy to what was recorded by GM (F) in that matter and if he had managed to go through the file before it reached to him, then A3 could have also seen that initial observations of GM (F) were not approved by D (F). Rather, on 29.05.98 D (F)/PW18 asked GM (F) to speak and thereafter, GM (F) made his further note under his handwriting, so as to seek certain data, which were so provided by his subordinate official vide note Ex. PW12/22 dated 18.06.98. Thus, it was wrongly and falsely recorded by A3 in his note appearing in Ex. PW14/19 that GM (F) had examined and recommended the initial proposal to enter into MOUs. The apparent reason behind such false and misleading noting coupled with the haste shown by A2 & A3 in executing MOUs with M/s AMPL, was their common intention to go ahead with execution of such MOUs with M/s AMPL, so as to extend benefit in the form of additional Page 109 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 discounts without even approval from competent authorities. Out of their guilty consciousness only, PW14 was asked to prepare the note Ex. PW14/19, because they wanted to somehow lend colour of authenticity and authority for executing aforesaid two MOUs on 01.06.98. In these circumstances, the appearance of white fluid over the last line of the note of PW14 as well as over name of GM (F) Korba/D (F)/CMD and change of date from 02.06.98 to 01.06.98 in the note of PW14, show that no one else could be interested except A2 & A3 to do these hanky panky. A2 & A3 did not want the matter to reach before D (F) and therefore, such white fluid was applied over their name. The approval from CMD could not have been taken without routing the file through finance, so as to seek their concurrence and therefore, such white fluid was applied by them.
90.Argument was raised by defence that there was no evidence to show that such manipulation in the date or in the note of PW14 was done by A2 or A3. However, it is well apparent that there could not be any other direct evidence against A2 & A3. Such alteration was done with ulterior motives and out of a guilty intention, hence, it cannot be expected to have an eyewitness for such manipulation. Even science of comparison of handwriting etc., could not have thrown any light because there was no particular pattern in handwriting of any accused, while making aforesaid alterations. However, the circumstances appearing out of the whole transaction point out towards A2 & A3 only as the responsible persons to do these alterations. It is not improbable that after the MOUs were Page 110 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 executed on 01.06.98, then some deliberations would have taken place between A2 & A3 for the purpose of a cover up and in consequence to the same, on next day, PW14 would have been asked to prepare such note. There was no purpose for PW14 to put date of 01.06.98, because he could not have known the ideas going through the minds of A2 & A3. He even recorded that approval of CMD was required, in view of value of order being above Rs. 50 crores. Therefore, I find his testimony to be reliable in respect of his ignorance that he did not change the date and that he did not know who did these alterations. It is worth to note that he had prepared two notes simultaneously i.e. Ex. PW14/19 & Ex. PW14/20 and none of the notes were sent back to him. The only possibility remains that since A2 & A3 did not want the note to go further before any other officer, especially officer of finance department, therefore, the white fluid was applied and therefore, they also went on to change the date in the note of PW14 as they wanted to show that all these notes were prepared on same day of execution of aforesaid two MOUs.
91.The other note Ex. PW14/20 was also having date of 02.06.98 even under the note of A3. Thus, in this note the date was changed with note of PW14 as well as with note of A3. Thereafter, A2 had put his approval with date of 01.06.98, which shows that all these dates were changed either by A2 or A3, out of a common deliberation, with intention to show that such proceedings were prepared on 01.06.98 itself. A2 went on to record himself that GM (F) had already approved the note over phone and he forwarded the file to Page 111 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 him for formal concurrence. However, still this so-called formal concurrence was not received on the file, rather it was made to write on the file that GM (F) had informed over phone that D (C) was authorised to extend 15 days extra credit and it could be regularised with approval of D (C) and A2 went on to sign as mark of his approval with date of 06.06.98.
92.Question is that how could A2 & A3 forget to have same kind of concurrence in the note Ex. PW14/19, which A2 otherwise sought on the note Ex. PW14/20. Both these notes dealt with two different MOUs. The note Ex. PW14/19 dealt with that MOU, wherein additional discount of 1500 PMT was given to M/s AMPL over lifting of 5000 MT of alloy wire rods. PW14 had pointed out that value of the order was above Rs. 50 crores, still neither A3 nor A2 sought concurrence from Director (F) and approval from A1. They opted to keep silence in that note. In the second note Ex. PW14/20, though A2 pretended to show that file was forwarded for formal concurrence from GM (F), but he forgot that GM (F) was not the authority to give financial concurrence, rather it was Director (F). In this note, MOU dealing with extending extra 15 days credit facility to M/s AMPL was dealt with and out of a ploy, it was got written in the file that A2 was already empowered to extend such facility. However, A2 was in fact required to have concurrence from D (F). Any telephonic talk could not be a substitute for a clear cut note on the file from Director (F) regarding such concurrence or regarding acknowledgement of power of A2 to take such decision without concurrence. Therefore, the end given to this file was an out come Page 112 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 of ploy hatched by A2 & A3, so as to keep the matter to themselves only. All such circumstances, therefore, unmistakenly point out towards A2 & A3 as the persons responsible for making alterations in both notes Ex. PW14/19 and Ex. PW14/20. Such act of A2 & A3 further reflects that they were conscious of their misdeeds, still they opted to continue with the same.
93.The next interesting part is that in the file initiated with note dated 15.05.98, A3 had given his remarks on 13.08.98. In this note, he though mentioned about previous MOUs signed with M/s AMPL and M/s Gupta Cables as well as dispatches to M/s AMPL and M/s Gupta Cables upto April 98 and pleaded that the dispatch picked up because of special terms offered to these customers for supply of alloy wire rods during period Feb-March 98, which was extended upto 30.04.98. However, he did not mention at all that another MOU was already executed with M/s AMPL on 01.06.98, nor did he mention that two new MOUs executed with M/s AMPL on 01.06.98 already stood approved in a different file initiated with note of PW14 dated 02.06.98 (made as 01.06.98). A2 had simply signed aforesaid note of A3 dated 13.08.98 on 17.08.98, thereby endorsing 'okay'. However, A2 also kept mum over execution of MOUs with M/s AMPL on 01.06.98 and same being already approved by him on 06.06.98. This silence was because of the fact that A2 & A3 did not want others to know about their highhanded actions in going ahead with executing MOUs with M/s AMPL and in going ahead with showing these MOUs to be approved in a different file by virtue of notes Ex. PW14/19 & Ex. PW14/20. It appears from this file that A2 Page 113 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 had discussion with DGM (F)/PW20 on 30.09.98, when PW20 was informed about additional discounts being already extended to M/s AMPL by virtue of aforesaid two MOUs. Thereafter only, PW20 had no other option but to suggest measures while formulating MOU with any party.
94.The next remarkable development is that though A2 & A3 opted to execute MOUs with M/s AMPL on 01.06.98 without any authority and though, they went on to show approval of the same in a different file vide notes Ex. PW14/19 and Ex. PW14/20, but there had not been any exigency shown till 07.10.98, when A2 had again pressed hard vide note Ex. A4 for approval of MOUs with M/s AMPL. However, all of sudden an exigency was shown to be created on 26.10.98 by A3, when he moved another proposal in absence of Director (F)/PW18. On 26.10.98 vide note Ex. A1, A3 referred to bulk lifting during Jan - March 98 on the basis of special discounts, signing of MOUs with certain bulk buyers, while extending the same policy for the year 1998-99 and he being informed that those marketing policies were not approved by competent authority and that matter was pending with finance department for concurrence. He sought suitable and clear instructions/policies to be handed over to marketing department for implementation and working. Thereafter, A2 on same day noted that the proposal of alloy wire rods MOU was still pending in finance for concurrence, although the same was already approved by the then GM (F) way back in May/June 98 itself and on the strength of that concurrence, they had entered into MOU with customer. Even this Page 114 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 time, A2 & A3 kept mum over approval accorded by A2 himself to these MOUs in a different file on 06.06.98. (Vide note Ex.PW14/19 & Ex. PW14/20).
95.Question is that how could A3 have any doubt that he alongwith A2 had entered into MOU with M/s AMPL without any approval? When did he have any concurrence from finance department? Did not he know that it was for Director (F) to give concurrence and then for A1 to give final approval for his proposal to enter into MOUs with M/s AMPL? In my opinion, he was well aware of the answers and the anxiety shown in the note dated 26.10.98 was an artificial anxiety. A3 had already made one false remark in his previous note (part of Ex. PW14/19) that GM (F) had concurred the proposal to enter into MOUs with M/s AMPL. Same misconduct was committed by A2, when he also falsely remarked in his note dated 26.10.98 that the then GM (F) had already approved the proposal to enter into MOU. If this was the belief being nurtured by A3 and A2, then they would not have continued pressing hard for approval in the file initiated with proposal dated 15.05.98, though, they kept on doing so even much after May/June 98. Both of them knew that neither GM (F) was entitled to give any such concurrence, nor any such concurrence was given by him and communicated to them. They had been falsely taking such plea, with only purpose to cover up their misdeeds.
96.Unfortunately, A1 though claimed that he had not given any approval to marketing policy, but he did not raise any query from A3 or A2 in response to their aforesaid notes i.e. Ex. A1 & A2 as to why Page 115 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 the marketing policy was not put to him till date for his consent and for approval of Board of Directors. If he was actually not privy to illegal designs of A2 & A3, then he would have rather raised question against remarks of A3 & A2, so as to seek a report as to when marketing policies stood approved and why should not there be doubt being aired about that marketing policy, which was circulated by A2 on his own. A1 was also expected to ask about the complete particulars of the proposal to enter into MOUs with M/s AMPL, because such proposal initiated vide note dated 15.05.98 had never reached him till date. In such situation, in normal circumstances, A1 had a reason to be shocked out of aforesaid two notes presented by A3 & A2 on 26.10.98. A1 had not even gone through the remarks put by finance department, especially by Director (F) over the proposal to enter into such MOUs. However, the note of A1 dated 26.10.98 shows otherwise. It shows that he was not at all taken aback with the claim of A3 & A2 about false doubts being aired regarding approval of marketing policy or with the information of MOUs entered with M/s AMPL even without his knowledge in file. A1 rather, noted that the subject required immediate action and he authorised A2 to take decision because subject was commercial. Though, he recorded that whenever financial impact was to be seen, associate finance's concurrence could be taken, however, in any case keeping company's interest in view, A2 could decide and direct in that particular subject.
97.The subject of aforesaid notes was anxiety shown by A3 & A2 for not releasing credit notes for period June-September 98 to M/s Page 116 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 AMPL, though, A3 & A2 claimed that such MOUs had financial concurrence. Ld. counsel for A1 argued that not taking a final decision by A1 could be out of his incompetence or negligence, but it was not his approval. However, I am unable to concur with such argument, because the authority being given to A2 to decide and direct in that particular subject was illegally given to A2 by A1. I say so because scheme of delegation of powers of BALCO says so. At the cost of repetition, I would again mention here that clause III of delegation of powers in favour of A1 (Ex. PW8/3) made it mandatory for A1 to take a final decision in a matter having financial implications in consultation with Director (F). Therefore, it was not concurrence of associate finance, which could have been suffice to take a decision in the subject put forward by A3 & A2, rather, it had to be concurrence of Director (F).
98.I do not find it to be a case of negligence or incompetence of A1 only, because, I have already explained the natural and probable reaction of A1 in case he was not a party to illegal designs of A2 & A3. The note given by A1, thereby authorising A2 to take a final decision, was not only an illegal decision, but such decision was given by A1 only to facilitate illegal designs of A2 & A3 in giving effect to MOUs signed with M/s AMPL, which had no legal sanctity at all for want of approval from competent authority and for want of concurrence from Director (F). It is well apparent that the argument raised on behalf of A1 was raised only to save his skin.
99.The illegal action of A2 had an element of audacity as well because in his subsequent note after aforesaid authority being given by A1, Page 117 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 A2 did not even bother to take views of associate finance in the name of concurrence and he went on to straightaway give direction to release the credit note. A1, A2 & A3 had been using very noble terms regarding interest of BALCO, but the court cannot be guided by those terms. The court has to see and analyse the actual action taken by these accused persons. A2 gave such direction immediately on same day i.e. on 26.10.98 and for the sake of formality, he recorded direction to obtain associate finance's concurrence wherever financial impact was involved. Thus, as per their illegal design, A2 & A3 took advantage of absence of Director (F)/PW18 on 26.10.98 and in connivance with A1, they went on to give effect to extend additional benefits to M/s AMPL on the basis of two illegally executed MOUs on 01.06.98.
100.A2 & A3 had been giving reference to past policies extended upto April 98 to justify additional discounts being offered to M/s AMPL. None of these accused persons could show, if additional discounts extended to M/s AMPL after 01.06.98 were ever extended to any other customer of BALCO. In the notes, they had been using ambiguous terms like "signing of MOUs with bulk buyers", though, none of the accused could take even a plea that apart from M/s AMPL any MOU was executed with some other customer as well. Thus, in the files they had been using such dubious terms, so as to show their neutrality, though as a matter of fact, they were bent upon to extend additional financial benefits to M/s AMPL only. For such objective, they even flouted the marketing policy crafted by themselves only. PW10 was also a dealer of BALCO and in his Page 118 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 testimony he stated that NALCO was not even producing rolled products and extrusions. Therefore, they were dependent upon BALCO for supply of these products. Such statement was not challenged by defence in cross-examination and still plea of market competition was raised unsuccessfully. The final situation remained that on one hand the other customers were being given cash discounts in respect of rolled products at maximum rate of 4 %, but M/s AMPL was extended additional discount @ of 750 PMT in the form of 15 days credit facility.
101.Now, I shall deal with some other plea taken by defence regarding approach of Director (F)/PW18 and regarding declining London Metal Exchange (LME) and bad market condition. A2 & A3 had been critical of Director (F) and according to them, Director (F) was extremely week to harmonise with marketing wing. A2 also took plea that Finance had no role to prepare a policy and they were only to examine the financial aspects. On the other hand, A3 took plea that he had brought in lot of transperancy etc. Both of them took plea that because of measures adopted by them, there was increase in the sales and profit also.
102.The question is that whether Director (F) had not been at all ready to concur with any proposal for reduction in price or discounts to be extended to the customers, on the grounds of bad market condition, reduction of prices by rivals etc. As per undisputed evidence as appearing in the testimony of PW14 as well as in the testimony of PW18, there had been some measures taken for reduction in prices etc. in the last quarter of the year 1998. A note Ex. PW14/1 dated Page 119 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 03.11.98 was initiated on strategies to improve sale, which was also signed by A3. Deliberation had taken place over such note and report of pricing committee and certain measures were proposed for extending quantity discounts in respect of EC/CG rods as well as foils. PW18/Director (F) had concurred with the same and signed the same on 03.11.98. Similarly, another note dated 16.1198/Ex. PW14/2 was initiated in respect of alloy wire rods. Certain suggestions were made for discounts on EC/CG rods as well as LP/CG ingots and even that proposal was favourably considered by Director (F)/PW18 on 19.11.98. In December 1998 as well, there was readjustment in the prices/discounts as per market conditions vide note Ex. PW14/8 and this time also Director (F)/PW18 recommended for approval. Similar readjustment in prices was approved by Director (F)/PW18 on 16.12.98 vide note Ex. PW14/9. On 11.01.99, A3 had again recommended in his note to take decision regarding adjustment of prices. A2 had also forwarded that note. Director (F)/PW18 at that time also did not create any hindrance as such. He only pointed out some financial implications but also concurred for approval of the proposal forwarded by A2 & A3. Accordingly, A2 again approved price reduction/discount effective from 01.01.99 to 31.03.99 vide note Ex. PW14/11, on the basis of authorisation given by A1. Thus, it can be seen that finance department was not always inimical to all proposal for correction in the prices or for discounts to be given in view of peculiar market conditions. It is also apparent that A2 & A3 on one hand were involved in these processes of price correction, which were Page 120 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 approved, and on other hand, they had been simultaneously pressing hard for additional discounts for M/s AMPL.
103.Thus, the problem had been that apart from general policies for other customers, time and again A2 & A3 had been trying to extend benefits to M/s AMPL, in addition to the benefits available to other customers. In the line of their such approach, once again they had meeting with A4 and Sh. T.P. Bhagat on 07.01.99 and they again recorded a minutes of meeting, thereby agreeing to extend further benefits to M/s AMPL, in addition to the benefits available to other customers. By this time, all these parties had realised that M/s AMPL was not able to lift products proportionately in accordance with two MOUs executed on 01.06.98. It was well apparent that on their failure to act as per terms and conditions of aforesaid MOUs, M/s AMPL could not have availed the extra benefits/discounts. Therefore, in the new agreement signed by A2 & A3 alongwith PW14 and PW17 on behalf of BALCO on 07.01.99, once again some additional benefits were extended to M/s AMPL. This time, in respect of rolled products, foils and extrusions, a different slab was created from 8001 to 10001 and above. Such slab was created only for the purpose of M/s AMPL and the accused persons agreed to provide additional benefit ranging from Rs. 3000 to Rs. 4000 PMT on lifting of quantity above 8001. I fail to understand that what was the need for giving such benefit to M/s AMPL only. M/s AMPL was still required to lift 2173 MT, out of their commitment based on MOUs dated 01.06.98. They were already extended additional discounts by virtue of aforesaid MOUs. Now, in the name of Page 121 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 persuading this customer to lift around 4000 MT of rolled products, they were offered more discounts.
104.Similarly, out of MOU dated 01.06.98 M/s AMPL were still short of the target lifting of alloy wire rods as they had lifted only 1943 MT upto December 98, against target of 5000 MT upto March 99. In order to help M/s AMPL to meet the target of quantity, by virtue of agreement taken place on 07.01.99, they were given further option to lift CG/LP/BCP ingots and CG rods against further benefit of set off of sales tax to the tune of Rs. 1900 PMT. These items were otherwise not covered under MOU dated 01.06.98.
105.As per their past habit, once again proposal to approve aforesaid agreement dated 07.01.99 was moved only after signing aforesaid agreement, by A2 on 08.01.99. In the note Ex. PW15/21, he did not disclose about signing additional agreement dated 07.01.99. He kept this proposal with him till 21.01.99, when he wrote additional note, thereby mentioning agreement dated 07.01.99 with M/s AMPL. He unlike past, did not seek any approval of this additional agreement dated 07.01.99 and simply forwarded his note to A3 giving some different colour to the subject, so as to achieve some targets. A3 also recorded his note talking about action being taken for increasing sales and about strategic alliances with major customers. He also talked about such strategic alliances to be kept confidential and reported that they had dispatched 9026 MT in January 99. M/s AMPL had reportedly lifted 2310 MT. A3 giving all these backgrounds, concluded his note while seeking approval to minutes dated 07.01.99 arrived at between BALCO and M/s AMPL.
Page 122 of 137 (Pulastya Pramachala)Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 Thereafter, A2 forwarded it to Director (F) for concurrence. Director (F)/PW18 asked his subordinates to examine the details and then it was once again pointed out by finance department that extra discounts being given, appeared on the higher side. Similarly set off of sales tax was not found justified, which was not in consonance with existing policy. It was also pointed out that CG rods and ingots being included was not justifiable because margin on the same were much lower than other products. After detailed observations of finance department, note was again sent to A3, who vide his note dated 27.02.99 again pressed hard to approve the minutes and sent the file to A2. I have already referred to the notes given by A2 and thereafter subsequent note given by A1 on 03.03.99.
106.Once again, it is to be seen that A1 did not seek any fresh report to be placed before him, rather he again authorised A2 to take a decision to the best interest of BALCO. To many, such note of A1 may appear as an act of escapist. However, it was not only escapism. A1 was actually acting illegally and against the delegation of powers conferred upon him. He had to ensure that for all matters having financial implications, either there was concurrence from Director (F)/PW18 or in case of differences, the matter was put up to Board of Directors to take a final decision. Instead of doing so, time and again he had been authorising A2 to take a final decision. A1 could not have been oblivious of earlier price reduction/price correction/discounts offered in the month of November, December and January with concurrence of Director (F)/PW18. How it could not be objected by A1 that there could not Page 123 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 be a separate policy for M/s AMPL. How, A1 could be oblivious of the fact that apart from M/s AMPL, no other bulk buyer was being contacted, nor was there any reference to any such attempt if made or meeting held with other major buyers/consignment agents. If the concern of the company was to sale their products at any cost, just to meet a target of quantity by the end of March 99, then instead of keeping anything confidential, the company could have made it open to all the customers and consignment agents about the additional discounts being offered by them, so that any of the customers/consignment agents could approach them in order to lift such materials on such terms. However, instead of approaching any other customer and consignment agents, A2 & A3 had been time and again talking about M/s AMPL only, which was for apparent reason that they were more interested in extending benefits to M/s AMPL by way of additional discounts. The slogan of sale of products and meeting quantity targets was being used as cover up to justify their single pointed agenda to propose additional benefits to M/s AMPL on one or other pretext. This was the reason for again signing minutes of meeting dated 07.01.99, even without following the procedure to take concurrence from Director (F)/PW18 and approval in advance.
107.I will reproduce the chronology of dates regarding file of different proposals being in movement and notes being recorded by different officials simultaneously. This chronology would show that at the same time two different policies were being pushed by A2 & A3.
Page 124 of 137 (Pulastya Pramachala)Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 One policy was meant for general customers and another policy was meant for M/s AMPL.
CHRONOLOGY OF DATES Notings Notes with Notes with Notes Notes for Notes Notes with proposal to proposal with approval with with proposal enter into to proposal of proposal proposal for MOU with approve regarding Minutes for for approval of AMPL MOU pending of reduction reductio marketing already approvals Meeting in prices n in policy entered & dt. of Semi prices of 1998-99 with concurr- 07.01.99 Feb Rolled AMPL ence of with products products Finance AMPL 02.03.98 of 15.05.98 of 02.06.98 of 26.10.98 08.01.99 11.01.99 02.02.99 GM (M) Ex. A3 (Ex. AGM (M) of A3 (Ex. of A2 Ex. of A3; A2 of AGM PW12/1 PW12/18, (shown to A1 to Ex. PW14/21 Ex. (M) Ex.
Ex. be A3) PW11/5 PW14/13 PW12/20 to 01.06.98)
Ex. Ex.
PW12/23; PW14/19 &
Ex. PW20/A Ex.
to Ex. PW14/20
PW20/F; Ex.
A4 & A5)
09.03.98 of 20.05.98 of 01.06.98 of 26.10.98 21.01.99 12.01.99 03.02.99
A2 DGM (F) A3; A2 of A2; A1 of A2 of D (F) of A3
GM (F)
20.03.98 of 29.05.98 of 05.06.98 of 26.10.98 03.02.99 12.01.99 05.02.99
MFA D (F) AGM (M) of A2 of A3 of A1 of AGM
(F)
20.03.98 of 16.06.98 of 06.06.98 of 03.02.99 13.01.99 05.02.99
DGM (F) GM (F) A3 & A2 of A2 of A2 of DGM
(F)
Page 125 of 137 (Pulastya Pramachala)
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20.03.98 of 18.06.98 of 15.02.99 07.02.99
GM (F) DGM (F) of D (F) of A2
23.03.98 of 19.06.98 of 20.02.99 01.03.99
GM (M); A3 GM (F) of MFA of A3
24.03.98 of 13.08.98 of 23.02.99 01.03.99
A2 A3 of DGM of A2
(F)
Undated of 17.08.98 of 25.02.99 04.03.99
GM (F) A2 of GM (F) of A3
06.04.98 of 18.08.98 of 27.02.99 05.03.99
D (F) GM (F); A3; of A3 of A2
AGM (M)
14.04.98 of 24.08.98 of 01.03.99 31.03.99
A1 Marketing of A2 of A3
Manager;
AGM (M);
A3;
20.04.98 of 24.09.98 of 03.03.99
GM (M) DGM (F) of A1
21.04.98 of 30.09.98 of 03.03.99
GM (M) A3; A2; of A2 &
DGM (F) A3
22.04.98 of 07.10.98 of 10 &
A2 A2 11.03.99
of DGM
(F)
23.04.98 of 30.10.98 of 17.03.99
A1 D (F); A3 of A2
30.04.98 of
D (F)
04.05.98 of
A1
04.05.98 of
A2 & A3
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05.05.98 of
GM (M);
M (M)
05.05.98 of
GM (M)
12.05.98 of
GM (M)
15.05.98 of
A3; GM (F)
& A2
108.The interesting part of the case is that in the marketing policy referred by A2 & A3, it was provided that EC & GC rods were normally to be sold to actual users only and no discount/credit was applicable against these items. However, such policies were totally ignored while including EC & GC rods and while including ingots in minutes of meeting dated 07.01.99. Further more, once again as it happened in the past as well, A2 went on to add term EC in the minutes of meeting dated 07.01.99 i.e. Ex. PW14/20 (two documents were given same exhibit mark) subsequently. As per testimony of PW14, letters 'EC' were not there in this minute, when it was signed by him. He further testified that there was no request from M/s AMPL regarding EC ingots and EC rods, nor was there any such proposal by BALCO during that meeting. This situation can be connected with the concluding notes written by A2 in the file on 17.03.99. Vide this note A2 had given final approval to aforesaid minute and had given direction to issue credit notes as per minute dated 07.01.99. He had concluded this note and had signed, but thereafter, he again included one additional line i.e. "to include EC Page 127 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 ingots + EC rods also in this deal". Thereafter, he again signed the note. Thus, it is well apparent that the idea of including EC ingot and EC rod came to the mind of A2 subsequently and on the basis of the same, such addition was done in the minutes dated 07.01.99 as well. Addition was done with black pen and A2 had signed with black pen as well. The circumstances of this case and the established motive of A2 to favour M/s AMPL at any cost, make it much easy to believe that this addition was done by A2 and none else, because no one else had any interest to do so.
109.Favoritism for M/s AMPL had its reflection in different transactions also. Two parallel proceedings had taken place for liquidation of old and non-moving stocks and bids were invited for this purposes separately. M/s AMPL did participate in the bidding process for lifting extrusions from Korba as well as unit of BBU. M/s AMPL had given second best rate. M/s Rakhi Agency had given the best rate. A2 recommended to sell complete quantity of 418 tonnes to M/s AMPL. Director (F)/PW18 recommended for auction but such proposal was resisted by A2. Matter went upto A1, who again authorised A2 vide his note dated 17.02.99 to take a final decision and as it had been practice, A2 ignoring advices of finance department, vide his note dated 25.02.99 directed to supply all quantity to M/s AMPL. He also directed to grant cash discount of Rs. 5000 PMT on entire 418 MT, additional credit facility of 15 days over and above MOU entered with the party, all benefits/facilities available to consignment agents + MOU agreement facilities and to allow differential amount in packing alloy charges. Thus, as per his Page 128 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 intentions, A2 had been acting to extend all extra benefits to M/s AMPL with both hands. He was adamant to help M/s AMPL to meet quantity target as per MOU and for such reasons this extrusion was also to be counted to achieve the target of MOU and the party was given further additional discount, despite the fact that even under MOU, this party was already given additional discount as compared to other customers. Thus, it was totally discount bonanza for M/s AMPL, for doing something which they were otherwise under contractual duty to do i.e. to lift a particular quantity of product in order to avail additional discount under MOU dated 01.06.98.
110.In another tender process for lifting extrusion, rolled products and foils from godown and for lifting foils and rolled products from BBU, M/s AMPL did not participate at all initially. Different bidders gave their quotes in respect of products at different godowns and BBU and their charts were also prepared accordingly in the office note i.e. Ex. PW6/6. File went ahead upto A2. PW20 had given note that except for offer for Pondicheery godown, other offers gave very low net realisation which were even much lower to scrap value. Thereafter, once again marketing department approached M/s AMPL only, which offered to lift 172 tonnes with better offer of price. Director (F)/PW18 raised objections to the proposal of A2 to supply all material to M/s AMPL on the grounds of violation of CVC guidelines. A1 vide his note dated 26.03.99 asked A2 to seek clarification from Director (V) regarding CVC directions and also asked him to give clarification sought by Director (F)/PW18. However, as per his usual practice, A1 once again concluded his Page 129 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 note by authorising A2 to take a decision as per best possible option for BALCO and remitted the file to him. As already observed by me herein above, such authorisation by A1 was not legal. A2 did not seek any clarification from Director (V) and he simply noted that matter was being discussed with D (V). He was in haste to go ahead with the deal and accordingly, he approved this supply vide his note dated 26.03.99 to M/s AMPL except for Pondicherry and Ahmadabad godowns.
111.The question is that why marketing department headed by A2 could not bargain with those customers, who had participated in the tender process. There is not even a whisper in the office notes about any such talk if held with those bidders. Thus, it is amply clear that A2 had only one object that is to favour M/s AMPL in the name of poor market condition, falling LME level, etc.
112.To summarise the additional benefits being given to M/s AMPL, following is the chart of the relevant developments and discounts.
MARKETING POLICY 1998-99
Primary product Semi fabricated product
1) Alloy wire rod - Above 65 T PM, 1) Rolled products -
CD of Rs. 2400/PT Above 2400 T, discount
at 4%
2) EC & CG ingots 2)Extrusions- Above
300 T, discount at 4 %
3) EC/CG rods (normally to be sold 3) Foils - Above 72 T,
to actual users and no discount/credit discount at 3%
to be applicable)
Page 130 of 137 (Pulastya Pramachala)
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MOU dated 01.06.98 with M/s AMPL
Additional discount of Rs. 1500 PMT 15 days credit i.e. Rs.
on alloy rods, in addition to aforesaid 750 PMT on rolled
facilities. products, foils and
extrusions, in addition to aforesaid facilities.
Minutes of meeting dated 07.01.99.
Discount in addition to aforesaid Additional discount discount, by way of set off of sales for quantity above tax i.e. Rs. 1900 PMT. 8000 T in 3 slabs.
Additional items included to meet quantity targets by adding EC/CG rod and EC/LP/BCP ingots.
Additional quantity discount by way of price correction applicable to other customers w.ef. 01.01.99 to 31.03.99 For 150 MT discount of Rs. 2500 150-300 MT discount of Rs. 3000 Above 300 MT discount of Rs. 3500.
113.The aforesaid chart would show as to how one after another discounts were being bestowed upon M/s AMPL, though, no other customer were given such discounts. For other customers, there had been different slabs of discounts and M/s AMPL was made an Page 131 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 exception in the name of bulk lifter. Such exercise undertaken by A2 & A3 and aided by A1 did have financial implications for the company in the form of additional discounts being given to M/s AMPL. PW18 had given financial implications of such additional discounts given to M/s AMPL without any dispute over the calculations made by him from the side of defence. At this stage, it is appropriate to mention that subsequently i.e. after 31.03.1999, on the basis of communication made by Director (F)/PW18 credit notes in consequences to approval given to additional discounts vide minutes of meeting dated 07.01.99, were stopped and were not extended to M/s AMPL. However, M/s AMPL had supplied complete description of material lifted by them and the discounts availed by them during 98-99, which was proved by IO as Ex. PW22/2 onwards. Correctness of these documents and the figure mentioned in the documents were not challenged by the denfece. Those documents show that discounts were otherwise were given to M/s AMPL.
114.As per calculation, on account of additional discount at the rate of Rs. 1500 PMT on alloy wire rods, ingots and CG rods, as well as on account of set off of sales tax on these items, M/s AMPL was given benefit of Rs. 121.11 lacs
115.Similarly as per calculations, on account of 15 days credit i.e. Rs. 750 PMT given in addition to other discounts on supply of rolled products, extrusions and foils, M/s AMPL was given benefit of Rs. 80,21,250/- (10059 tonnes of rolled products + 636 MT of extrusions X Rs. 750). I have not taken into consideration the Page 132 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 calculations mentioned by PW18 on account of additional discounts @ of Rs. 4000 PMT on the basis of agreement dated 07.01.99, because such benefits were subsequently stopped. Thus, on account of favoritism shown by A2 & A3 with aid of A1 in favour of M/s AMPL, BALCO had to part with amount of Rs. 2,01,32,250/- to M/s AMPL towards additional discounts. Thus, it is well established on the record that accused A1, A2 & A3 abused their respective official positions and also acted against public interest, so as to extend undue financial/pecuniary benefits to M/s AMPL.
116.Now, the question is that was it so done by aforesaid public officials, without any involvement of directors of M/s AMPL i.e. A4 & A5. Defence counsels have referred to number of case laws on the point of criminal conspiracy and circumstantial evidence. I have carefully gone through the same. It is borne out from the legal principles explained in those cases itself that in most of the cases, the conspiracies are proved by the circumstantial evidence, as the conspiracy is seldom an open affair. The existence of conspiracy and its objects are usually deduced from the circumstances of the case and the conduct of the accused involved in the conspiracy. The only precaution the court is expected to maintain is that each and every incriminating circumstance must be clearly established and they should form a chain of events from which the only irresistible conclusion about the guilt of the accused can be safely drawn and no other hypothesis against the guilt is possible.
117.In the present case, I have already explained the open favoritism shown by A2 & A3 towards M/s AMPL and their respective actions Page 133 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 against the norms of BALCO. I have also explained as to how A1 aided A2 & A3 in achieving their illegal designs to extend extra pecuniary benefits even at the cost of flouting the norms of BALCO. It is not merely a case of knowledge for A1, rather, he facilitated extending such illegal additional discounts to M/s AMPL by ignoring the reservations shown by Director (F)/PW18 and other officials from finance department. He went on to illegally authorise A2 to take a decision, though A2 was not empowered to take such decisions even on the basis of delegation by A1, especially when there was no concurrence from Director (F)/PW18. It was in fact duty of A1 to refer the matters to Board of Directors citing two different opinion expressed by D (C) & D (F), so that a final decision could be taken by Board of Directors. Therefore, I am of the opinion that the facts established on the record by way of official notes, unmistakenly point out towards involvement of A1, A2 & A3 in the conspiracy to extend undue pecuniary advantage to M/s AMPL.
118.As far as role of A4 & A5 is concerned, undisputedly both of them were Directors of M/s AMPL at the relevant time and had been running affairs of the same. They had been pursuing interest of their company, so as to get additional benefits in monetary terms/discounts. Execution of MOU dated 01.06.98 or subsequent agreement dated 07.01.99 could not have taken place, unless they would have persuaded A2 & A3 to get such undue benefits. By no stretch of logical imagination, one can think that A2 & A3 had been favouring M/s AMPL without such demand and inclination on the Page 134 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 part of A4 & A5. Thus, the established factum of extending undue pecuniary advantage to M/s AMPL ignoring all the norms of BALCO, do point out towards A4 & A5 as being party to this conspiracy to get such advantage. Therefore, I find that all accused A1 to A5 were involved in this criminal conspiracy, wherein monetary loss was caused to BALCO and corresponding gain was extended to M/s AMPL in illegal and dishonest manner.
119.BALCO as juristic person was apparently deceived by accused persons to part with additional amount in the name of discount being given to M/s AMPL, though, but for illegal actions of A1, A2 & A3, such amount would not have been extended to M/s AMPL. In order to commit such cheating A2 & A3 did manipulate the office note dated 02.06.98 by altering its date and by applying white fluid, so as to cause an impression that such note was prepared on 01.06.98 immediately after executing MOUs dated 01.06.98. A2 also manipulated MOM dated 07.01.99, so as to include the term 'EC', though it was not so recorded originally in the minutes, when it was signed by all the participants. This was also another instance of making a false document for the purpose of creating an impression that this was originally so agreed during the meeting held on 07.01.99.
120.On behalf of A3, arguments were raised against the sanction accorded by PW19 Sh. Arvind Pande, on the grounds that there was no due application of mind. I have already reproduced the relevant observations given in the case law cited by ld. defence counsel and there is no dispute to the legal proposition that the Page 135 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 sanctioning authority must apply its independent mind to the records of the case in order to take a decision. However, there is no merit in the argument that A3 should have been given an opportunity of hearing before according the sanction. There is no such legal mandate at all. PW19 in his testimony before the court deposed that he had carefully examined FIR, statement of witness as recorded by CBI and copies of documents collected by CBI. He further deposed that he had applied his mind and there was sufficient evidence against A3 to accord sanction for his prosecution. He was asked in cross-examination, if he checked records of A3 available in SAIL before according sanction. However, it was not required for him to check other records pertaining to A3, as PW19 was supposed to confine himself to the materials related to this case, which were so produced before him. Similarly, antecedents of A3 was not required to be looked into. It is worth to be seen that this gentleman had accorded sanction on 15.07.02 and he was being cross-examined on 24.10.16 and thereafter on 17.05.17. There was huge gap of time between according sanction and testifying before the court. Therefore, he could not remember very minute facts as to which officer had received the file from CBI to accord sanction or which official had checked the documents or who had briefed him about this file. Exoneration of A3 by CVC could not be in itself a factor to refuse to accord sanction as PW19 was to take his decision independently. Therefore, such arguments of A3 are not impressive. The sanction order Ex. PW19/A deals in detail with the facts/allegations in this case and therefore, there is no Page 136 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi CBI/31/2016 reason for me to say that PW19 did not apply his independent mind over materials of this case. The sanction order also records that PW19 had gone through the materials i.e. copy of FIR, statements of witnesses and copies of documents collected by CBI. For want of any other evidence to challenge aforesaid facts, I must treat this sanction order as credible one. Therefore, I do not find any infirmity with the sanction accorded to prosecute A3 in this case.
121.In view of my foregoing discussions, observations and findings, I find A1, A2, A3, A4 & A5 guilty for offence u/s 120B IPC read with Section 420 IPC & Section 13(2) r/w 13 (1) (d) of Prevention of Corruption Act 1988.
122.I also find A1, A2 & A3 guilty for offence punishable u/s 13(2) read with Section 13 (1) (d) of Prevention of Corruption Act 1988.
123.I also find A2 & A3 guilty for offence punishable u/s 471 IPC. I also find A4 & A5 guilty for offence punishable u/s 420 IPC. All of them are accordingly convicted.
Announced in the open court (PULASTYA PRAMACHALA) today on 01.02.2019 Spl. Judge (PC Act) CBI, East (This order contains 137 pages) Karkardooma Courts, Delhi Digitally signed by PULASTYA PRAMACHALA PULASTYA Location: Court PRAMACHALA No.3, Karkardooma Courts, Delhi Date: 2019.02.01 16:01:08 +0530 Page 137 of 137 (Pulastya Pramachala) Special Judge (PC Act) CBI, East District Karkardooma Courts, Delhi