Delhi District Court
Cbi vs . Kuldeep Sood & Ors. on 21 December, 2021
IN THE COURT OF SH. PAWAN KUMAR, ACMM-2-CUM-ACJ,
ROUSE AVENUE COURTS, CENTRAL DISTRICT, NEW DELHI
CBI Vs. Kuldeep Sood & Ors.
Case No. : CBI/85/2019
RC No : 6/83-CIU(E)I
U/s : 120 B, 120 B r/w Section 420, 468, 471,
and Section 420 & 471 IPC
Name of Branch : EO-II, CBI, New Delhi
JUDGMENT
a) Unique Case ID No. : DLCT12-000323-2019
b) The date of commission of the
offence : December 1981 to January 1982
c) Name of the Complainant : Sh. N.D. Agnihotri, Deputy Chief
Controller of Imports and Exports, Office
of JCCIE, New Delhi
d) Name, parentage & address
of accused : Arun Sood, S/o Late Sh. Kuldeep Sood,
R/o D-7/1-C, Vasant Vihar, New Delhi.
e) Offences complained of : 468, 471 IPC r/w Section 120B IPC
f) The plea of the accused persons: Pleaded Not Guilty
g) Final Judgment : Acquitted
h) Date of institution of case : 09.07.1986
i) Date of final arguments : 13.12.2021
j) Date of Judgment : 21.12.2021
In the present case, the charge sheet was filed against the accused Kuldeep Sood and Arun Sood. During the trial, the accused Kuldeep Sood (hereinafter to be referred as the accused no. 1) had expired and proceedings qua him were abated vide order dated 06.11.2017. At present, the accused Arun Sood (hereinafter to be referred as the accused no. 2) is facing the trial for the commission of offences under Section 420,468,471 r/w Section 120B IPC and Section 120B IPC.
This case was registered on the basis of a letter written by Sh. N.D. Agnihotri, Deputy Chief controller of Imports and Exports of Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 1 of 30 the office of Joint Chief Controller of Imports and Exports (CLA), New Delhi. The relevant facts against the accused in brief are that M/s Kay Films Pvt. Ltd submitted three applications in the complainant's office claiming cash assistance against their export of hand knitted woolen carpets of the value of Rs. 1,08,07,002/-. The accused no. 1 was the Managing Director of the company and the accused no. 2 was the Director of the company at the relevant time. Accused no. 2 is the son of the accused no. 1. It was claimed in the applications moved by the accused that this export was made by the company on 04.12.1981 to M/s S.A. International, Houston, USA on outright sale basis. The department had paid the cash assistance of Rs. 21,42,735/- to M/s Kay Films Pvt. Ltd. vide three cheques. The claim assistance was cleared on the basis of export documents i.e. customs authenticated shipping bills, bank attested invoices, bank certificate in the prescribed form, which prima facie indicated that goods were exported on outright sale basis.
The department initiated the enquiry when the accused submitted other application dated 07.02.1983 for the cash assistance of Rs. 12,99,864.52/- on the basis of the export of hand knitted woolen carpets on outright sale basis of the value of Rs. 65,29,587.60/- In the course of enquiry with the Federal Bank, Connaught Circus, Punjab National Bank, Chandni Chowk and Oriental Bank of commerce, Nehru Place regarding the realization of foreign exchange against their export, it was found that foreign exchange amounting to Rs. 81.25 lakh was outstanding to be realized against the total amount of Rs. 1,08,07,002/-. Further, the sum of Rs. 26,82,489/- which was realized on the account of exports purported to have been made by the firm was in the nature of remittance from abroad i.e. West Germany and not from Houston, where the goods were exported.
Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 2 of 30 As per the government scheme, the exporter was entitled for cash incentive after the shipment of exported goods was on outright sales basis. In the outright sales, the title and possession of the goods are transferred on the consideration of payment of fixed unit price, on the basis of which total value of good is locked out. In the case exports on consignment sale, the exporter were entitled for cash incentive only after the receipt of the foreign exchange in lieu of exported goods. In the consignment sale, the goods were supplied by the seller to an agent who agrees to sell these goods at the best available price. In this case, the ownership of the goods does not pass on the agent abroad.
In nutshell, the case of the prosecution is that the accused no. 1 and 2 being the Managing Director and Director of M/s Kay Films Pvt. Ltd. respectively conspired together to cheat the office of Joint CCIE by fraudulently claiming the cash assistance by inflated price of exported goods. As per the charge sheet, the accused prepared two set of invoices, one for claiming the cash assistance and the other for the release of goods in the foreign country. It is alleged that the accused person had in fact exported the cheap 'darries' in the place of hand knitted woolen carpets and claimed that they had exported the woolen carpets. Further, they realized the cash assistance by claiming that they had made the exports on outright sales basis rather it was made on the consignment basis.
In furtherance of the conspiracy, the accused got the cash assistance in the year 1982 by falsely showing the export of 'darries' as hand knitted woolen carpets to M/s S.A. International, Houston, Texas, USA of the value of Rs. 1,08,07,002/- by inflating the invoice by 100 times.
As per the charge sheet, the accused Arun Sood dishonestly and fraudulently prepared the export order number SA/82-83 dated Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 3 of 30 04.03.1982 purported to have been issued by M/s S.A. International for the import of hand made carpets of the value of Rs. 4 crore and he signed the said import order in the assume name of J. Tin, Import Manager of S.A. International. It is further revealed during investigation that the accused no.1 and 2 in furtherance of the conspiracy had prepared two set of invoices. Accused no. 1 had signed the invoices of the export of the carpets and the accused no. 2 had signed the second set of invoices which were of the export of 'darries' and the value of the second set of invoices was 100 times less than the first set of invoices.
Accused no.1 had fraudulently and dishonestly signed the bank certificate of export declaring the export on outright sale basis fully knowing that the export was made on consignment basis. On the basis of the false documents and bank certificates, accused no. 1 had filed the application for cash compensation.
It is the case of the prosecution qua accused no. 2 that he establish M/s S.A. International and made Mr. Mark Blechman as its proprietor and got cleared the exported goods from US and got the same sold through auction. Accused no. 2 alleged to have signed the trust receipt dated 18.03.1982 in the assumed name of J. Tin. It is also alleged that the accused no. 2 had signed the power of attorney showing himself as partner of M/s S.A. International and authorized M/s Bansoceanic shipping company for clearing the goods from US customs on behalf of S.A. International. The accused no. 2 also signed in the assumed name of J. Tin as buyer.
On the basis of the aforesaid facts and evidence collected during investigation, the charge sheet was filed against both the accused for the commission of offences under Section 120B r/w section 420 and substantive offence of 420, 471 IPC.
Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 4 of 30 On filing of the charge sheet, the court took the cognizance and summoned both the accused to face the trial. In the compliance of Section 207 Cr.P.C, the copy of charge sheet and relied upon documents were supplied to both the accused.
The court has framed charge against the accused no. 2 for the commission of offences under Section 120B IPC r/w Section 420, 468,471 IPC and the offences under section 420,468,471 IPC.
In order to prove the case against the accused, the prosecution has examined 36 witnesses.
PW23 Sh. M.L Sharma, is the Handwriting expert and deposed that he received the documents of this case from S.P, CBI, CIU (E) on 28.12.1985. After examination and comparison of questioned signature with the relevant specimen and admitted signatures, the witness gave the opinion and reason vide Ex.PW23/E and Ex.PW23/F. PW4 Sh. N.D. Agnihotri was posted as Assistant Chief Controller of export and import and on his letter, the present case was registered. He deposed that file no. SPS CNT/24079/82-83, regarding grant of cash assistance on export of hand knitted woolen carpets was received in his office on 15.01.1982. This case was put up to him to implement the order passed by Deputy Chief Controller, Export and Import. The file is Ex. PW4/A. Notice dated 02.07.1982 given in pursuance to the letter dated 02.07.1982 was sent to the Assistant Collector, Bombay for confirmation of genuineness of the shipping bills. The witness had processed the file of the cash assistance of the accused and after confirming the genuineness of the export, the cash assistance was released in favor of the accused.
PW5 L.K. Batra was posted as Assistant Chief Controller of Export and Import in the office of Joint Chief controller of Export and Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 5 of 30 Import, New Delhi. He deposed that, in cases of outright sale or export, payment is received immediately after the shipment of the consignment. The export on consignment basis is the one which is purely subject to the acceptance by the foreign buyer and payment is not made immediately after shipment. In such cases, the realization of foreign proceeds is dependent on the final acceptance of the consignment by the foreign buyer. The witness examined the file no. SPS CNT/23295/81-82/CLA in favor of M/s Kay Films Pvt. Ltd for the grant of cash assistance amounting to Rs.7,03,603/-. The witness was part of the process in this file and identified the signatures on certain notings. The witness wrote a letter to Asstt. Collector of customs, Mumbai Ex.PW5/A3, regarding confirmation of genuineness of shipping bills no.2669 dated 04.12.1981 for the export of hand knitted woolen carpet by M/s Kay Films Pvt Ltd. The witness has also seen the file no. SPS CNT/24079/82-83 and SPS CLA/1467/81-82 of M/s Kay Films Pvt. Ltd and identified signatures of Sh.N.S Srivastava on certain letters and correspondences made by him.
PW-6, Sh. Girdhari Lal, was posted in the office of Joint Chief Controller of Export and Import, New Delhi and used to type the cheque after approval of the file. He identified the signatures on the cheques sheet Ex.PW4/A, Ex.PW4/B and Ex.PW6/A. The cheques were related to M/s Kay Films Pvt. Ltd.
PW-7, Sh. G.P Chakravorty, was posted in the office of Joint Chief Controller, Import and Export, New Delhi as LDC and was dealing with the cases of Additional licenses. He deposed that he dealt with the file no. Addl./LIC/363/AM-83/EP-VI/CLA for additional license pertaining to M/s Kay Films Pvt. Ltd. The witness scrutinized the documents and the application and found certain discrepancies to be complied by the applicant. The witness send letter to the applicant to Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 6 of 30 remove the discrepancies. Since no reply was received from the applicant in response to the letter written by the department, therefore, the case was closed under intimation to the parties.
PW-2, Ram Nath Dheer, deposed that he was posted as EFO in the Indian Airlines Cargo at Palam Airport. He was on the duty to supervise whether the shipment after examination has been uplifted to the client or not. As per the procedure, the shipping bills was produced by clearing agent to the Superintendent who marked the same to Inspector for examination. After examination, the shipment was to be uplifted. On 04/12/1981, the shipping bill no. 2670 filed by M/s National Clearing and Forwarding agent on behalf of M/s Kay Films Pvt. Ltd. was marked to Mr. R.C. Diwan, Inspector, Custom by the Superintendent. The witness identified the signature of the Superintendent M.L. Kapoor on the shipping bill Ex.PW2/A. After examination of the shipment by R.C. Diwan, the witness supervise the shipment to the flight on 11.12.1981. Similarly, the shipping bill numbers 2669, presented by National Caring and Forwarding Agent regarding export of hand knitted woolen carpet was marked to R.C. Diwan by the Superintendent M.L. Kapoor. The shipping bills is Ex. PW2/B and identified signature of Superintendent on the reverse of the bill. After examination of the shipment, the goods were uplifted to the flight under the supervision of the witness.
PW24 Sh. Satbir Singh deposed that he had joined M/s National Clearing and Forwarding Agent and his duty was to clear the shipping documents from Customs at Airport. The witness was shown the shipping bill no. 2669, 2670 and 2671 and stated that the shipping bills bears his signature. He handed over the shipping bills to R.M. Khanna and thereafter, 10% of shipment was checked by the custom department in his presence.
Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 7 of 30 PW25 Sh. Jeevan Mehrotra deposed that in the year 1980 he was working as custom clearance sub agent. The witness was introduced to Mr. Sood owner of M/s Kay Films Pvt. Ltd. and his two samples shipment were to be sent to Houston, USA. The witness handed over the shipment to National Clearing and Forwarding Agency for whom he was acting as sub agents for custom clearance. The shipments were handed over to the airline after custom clearance. Mr. Sood gave him two cheques for their service charge and both the cheques got dishonored. Thereafter, the payment of Rs. 60,000/- was made by bank drafts. The said cheques are Ex.PW25/A and Ex. PW25/B. The witness identified his signatures on the letter of M/s Kay Films Pvt. Ltd. dated 30.06.1981 regarding bill number 1146 dated 17.02.1981 and bill no. 1147 dated 18.02.1981 addressed to M/s Air and Sea Carriers. The letter is Ex. PW25/C. The witness booked the air way bill Ex. PW25/D. The witness also verified the shipping bills of National Clearing and forwarding agents Ex. PW25/E and PW25/G and stated that by way of these bills, custom clearance of shipment was procured. The witness identified the way bill Ex. PW25/F by which the shipment was put in transit to Houston, USA.
PW35 Sh. Sarwan Singh, is a retired official of Central Excise and Customs Department. His duty was to check the goods which were to be exported. On being shown the shipping bill numbers 2669 and 2671, he failed to identify the signatures on both the bills.
PW14 Mohd. Aslam and PW15 Sh. Adhi deposed that they used to weave durries and then sell it to M/s R.B. industries, Mirzapur in the year 1981.
PW18 Sh. Bharat Kumar Aggarwal deposed that he was proprietor of M/s Premier Carpets which was founded in the year 1976 Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 8 of 30 and it used to sell, purchase and manufacture the woolen carpets and durries. He had supplied carpets/durries to M/s Transworld International, New Delhi. The witness had received demand draft bearing no. 005483, 005482, 005481 all dated 16.08.1982 Ex.PW18/A, Ex.PW18/B and Ex.PW18/C respectively against the supply of durries and carpets. The witness also identified the invoices along with the packing list of durries and carpets and the same are Ex.PW18/E to Ex.PW18/J. The document D239 is the record of the witness's firm Ex.PW18/K. It contains entries regarding transactions with M/s Transworld International. Ex.PW18/L is the cash book of the firm. As per PW18/L, the witness had received total Rs. 75000/- in cash in three transactions of Rs. 25000/- each. The document Ex. Pw18/K and PW18/L shows the entries regarding the transactions and corresponding payments with the firm of the witness.
PW22 P.C. Mehra, deposed that he knew P.C. Maheshwari who was doing the business of selling durries in association with one Sh. Chel Bihari. In the year 1981, Chel Bihari visited his house and dumped some durries in his house. Chel Bihari informed the witness that he will sell these durries to one Mr. Sood. The durries remained lied at his house for fifteen days.
PW24 Sh. Pramod Kumar, deposed that he was doing the business of durries and carpets in the name and style of M/s Kumar Carpets. After the family settlement, the firm is being run by his wife Smt. Indra Barnwal. The brother of the witness namely Vinod Kumar used to help in handling the accounts of the firm. The witness identified certain invoices prepared by his brother and signed by him in the name of M/s House Beautiful, 115, Yashwant Place, Chanakyapuri and the same are Ex.PW24/A and Ex.PW24/B. The witness further identified the signatures of his father on the agreement Ex.PW23/D1. The witness also Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 9 of 30 identified the signature of his father on letter dated 08.01.1882 written by his father to Mr. Sood at the aforesaid address. The letter is Ex.PW24/D. The witness further identified the signature of his father on letter dated 24.02.1882 written by his father through M/s Transworld International to Mr. Sood at the aforesaid address. The letter is Ex.PW24/E. The witness also identified the purchase slip of his firm prepared by his younger brother in his own handwriting. The same is Ex.PW24/F. The witness identified the signature of his father on the seizure memo Ex.PW24/G. The witness identified the handwriting of his brother on the cash book of the firm prepared by him.
PW1 Sh. Jai Narain Dass, deposed that in the year 1984, he was posted as Eir inward, Incharge Delhi. As per the procedure of the department, the concerned person will approach the delivery clerk with the railway receipt and the clerk after making the entry in the delivery book and the railway receipt deliver the consignment to him. The witness handed over nine railway receipts to the CBI which were seized by seizure memo Ex.PW1/A. The railway receipts are Ex.PW1/A1 to PW1/A9.
PW16 Sh. Uma Shankar Mishra, deposed that in the year 1981, he was posted as Head Parcel Clerk at Mirzapur Railway Station. He issued railway receipts to the person who book the goods to other stations. The witness identified the railway receipts Ex. PW1/A1 to Ex. PW1/A8 which were issued from Mirzapur Railway Station. As per the railway receipts, the destination of parcels were Delhi.
PW3 Baldev Raj Sharma, deposed that in the year 1982, he was posted as Accountant Officer in the Oriental Bank of Commerce, Greater Kailash, Part -II. After going through the file i.e. EC/A-7/AM- 82/CONT-cell/CLA, Ex. PW3/A. It was stated that a letter dated Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 10 of 30 21.03.1982 was issued by the bank to the Joint Chief Controller of Export and Import regarding registration of the contract of M/s Kay Films Pvt. Ltd for supply of carpets to the tune of Rs. 4 crore. The contract was registered under reference no. 880 dated 31.03.1982. The letter Ex. PW3/A1 was attached with documents which was signed by Arun Sood, Directors M/s Kay Films Pvt. Ltd. and the documents were attested by the witness. The witness also identified the letter dated 26.03.1982 issued by the bank to the Joint Chief Controller regarding the registration of the contract for supply of carpets, which was registered under reference no. 881 dated 31.03.1982. The documents attached with the letters were attested by the witness. In the file Ex. PW3/A, the letter Ex. PW3/A2, letter Ex. PW3/A3 were issued by M/s S.A. International to M/s Kay Films Pvt. Ltd. regarding registration of the contract and the contract was registered with the bank vide reference number 880 and 881.
PW10 Sh. Ravi Shankar Behl, deposed that he was working as an officer in the Oriental Bank of Commerce, Nehru Place Branch from October 1982 to January 1990. The bank received the export documents from OBC, Greater Kailash for the collection of bill amounting to Rs.35,96,310/- drawn on S.A. International under FOBC Number NP/RS/FOBC/81/5 dated 28.12.1981. The bank sent the bills for collection to the Western Bank, 5433, Houston Texas under the forwarding schedules Ex. PW10/1 and PW10/2. The bills were returned with the remark that they shall remit the proceeds and settle the bills of collection directly with the drawer. The letter is Ex. PW10/3. The witness handed over the documents vide seizure memo Ex. PW10/4.
PW12 Sh. J.K. Katyal deposed that around 1981 to 1982, he was posted at OBC, Nehru Place. The witness produced various Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 11 of 30 documents vide production memo Ex.PW12/1. PW12 is the witness of various letters and communications made on behalf of the bank and identified the same. The letter dated 19.11.1982 (D-40) was written by OBC, Nehru Place to the exporter. The document D-42 Ex.PW12/3 dated 14.02.1983 is related to the extension of time limit for realization of export process. The letter (D-43) is addressed to RBI and the same is Ex. PW12/4. The witness identified the signature of S.C. Malhotra on the bill of exchange drawn by exporter on Western Bank, Houston, USA in favor of the drawee. The bill of exchange is Ex.PW12/5. The copy of letter (D-
45) dated 05.01.1982 is Ex.PW12/6 and it was addressed to RBI regarding the permission for further extension for realization of export proceeds till 18.06.1983. Letter dated 05.10.1982 (D-57) was addressed to RBI by OBC, Nehru Place seeking the approval of realization of export proceeds up to 31.12.1982 and the same is Ex. PW12/8. The original inward remittance certificate dated 13.04.1982 issued by OBC, Nehru Place and the same is Ex. PW12/9. The statement with the details of the export made by M/s Kay Films Pvt. Ltd. is Ex. PW12/10.
PW13 Sh. Satinder, deposed that he was posted as officer in OBC, GK-II from 1981 to 1984. The witness produced certain documents vide production memo Ex. PW13/1. The witness identified the pay in slips (D-17 to D-22) in favour of M/s Kay Films Pvt. Ltd. and the same are Ex. PW13/3 to PW13/8. Vide these pay in slips / credit vouchers, the amount have been credited in the account of M/s Kay Films Pvt. Ltd. The witness had written letter dated 05.08.1982 to Syndicate Bank regarding remittance of 20,000 dollar against the foreign bill of Rs. 35,96,310/- and the letter is Ex.PW13/9. The account opening form having current account number 692 in the name of M/s Kay Films Pvt. Ltd is Ex.PW13/11. The statement of account of this current account from Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 12 of 30 10.11.1981 to 01.01.1982 is Ex. PW13/13.
PW26 Sh. Ramesh Chandra, deposed regarding the current account of M/s Kay Films Pvt. Ltd. and its statement of account is already Ex. PW13/13.
PW27 H.G. Wadhwa deposed that while working as Sub Accountant in central bank of India Gole Market Branch, he handed over the original demand draft purchase application dated 16.10.1982 for Rs. 60,000/- in favour of M/s Premiere Carpets to CBI. The receipt memo is Ex. PW27/A. The demand draft application form dated 16.10.1982 is Ex. PW27/B. PW28 Neelam Ohri deposed that as per the statement of account Ex. PW13/13, the amount of Rs. 7,03,603/- were credited in the current account no. 692 vide credit slip Ex. PW13/5.
PW29 Arun Kumar Srivastav deposed that he was working as Officer at Bank of Baroda, Mirzapur Branch from 1979 to 1985. The witness identified various demand drafts issued by Bank of Baroda, Chanakyapuri in favour of M/s Premier Carpets, M/s Sanjay Carpets, M/s Kumar Carpets, M/s R.B. Industries for varied amounts and the same are Ex. PW29/A to PW29/D respectively.
PW31 Sh. Suresh Kumar Pathrela deposed that he was posted in OBC, Nehru Place as Manager Foreign Exchange and identified his signature on letter dated 19.01.1985 Ex. PW31/A. PW32 Sh. Rajesh Kumar Singh deposed that he was accountant in Bank of Baroda, Mirzapur Branch and identified his signature on the demand drafts number A013491, A011994, A013490 and the same are Ex.PW32/A (colly). The drafts were sent to Bank of Baroda for clearing and the payment was made accordingly.
PW33 Sh. L.R Chandrashekhar deposed that he was the Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 13 of 30 witness of seizure memo Ex.PW33/A as he handed over certain documents to the CBI official. The witness put his initials on document D-399, 400, 402 and the same are Ex.PW33/B. The witness identified the signature of Mr. Ramaswamy on the aforesaid document.
PW34 Sh. S.V. Taneja identified signatures of Mr. Satinder Pasricha on copy of letter dated 18.09.1992 and the same is marked PW34/A. PW-11 Nand Lal Midha deposed that in case any person wants to collect their foreign bill, he has to submit the bill deposit form, bill of exchange, bill of lading, invoice, packing list, GR-I form. M/s Kay Films Pvt. Ltd submitted their bills dated 04.01.1981 for collection of Rs.36,61,570/- drawn on M/s S.A International Houston, Texas. The bill is Ex.PW11/1. Along with the bill, the firm has submitted the certificate of export Ex.PW11/2, exchange control form Ex.PW11/C, bill of exchange Ex.PW11/4, airway bill Ex.PW11/5. The aforesaid documents were sent for collection by the bank and received a reply dated 27.01.1982 in which it was informed that they shall remit the proceed and settle the bills of collection directly with the drawer. The letter is Ex.PW11/6. Vide letter dated 15.02.1982, M/s Kay Films Pvt. Ltd informed that the proceeds of the bill in question will be received through normal banking channels. The said letter is Ex.PW11/7. The bank sent a letter dated 08.03.1982 to M/s Kay Films Pvt. Ltd in which it was informed that M/s Kay Films had agreed to send a trust receipt from foreign buyer but the bank had not received the same. The letter is Ex.PW11/8. M/s Kay Films sent letter dated 22.03.1982 Ex.PW11/9. Further, vide letter dated 31.03.1982, the aforesaid firms submitted the photocopy of the trust receipts. The letter and receipts are Ex.PW11/10 and Ex.PW11/11 respectively. Vide letter dated 19.07.1982 Ex.PW11/12, Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 14 of 30 the bank had received payment of Rs. 3,28,117/-. M/s Kay Films submitted application dated 14.06.1982 and performa application Ex.PW11/13 and Ex.PW11/14 for extension of period of limitation. Further, vide letter dated 04.08.1982 Ex.PW11/16, Punjab National Bank received payment of foreign inward remittance of Rs.1,87,184.10/-. The firm requested for extension of time for realization of export proceeds vide letter Ex.PW11/17. M/s Kay Films sent a letter dated 24.05.1982 Ex.PW11/18 to M/s S.A International to inform that extension of time may not be possible. The bank sent a letter Ex.PW11/19 to M/s Kay Films for furnishing the information for onward transmission to RBI. The firm further submitted letter dated 18.12.1982 Ex.PW11/20 for grant of period of realization. M/s S.A International wrote a letter dated 15.10.1982 Ex.PW11/21 that the market is not favorable and so they are not able to make full payment. M/s Kay Films vide their application Ex.PW11/22 and PW11/23 applied for extension of realization of export proceeds. In the performa application, the firm informed that they had exported material on consignment basis whereas the bank deals only in cases of outright sale basis. The witness handed over the aforesaid documents to the IO vide production memo Ex.PW11/24.
PW19 Sh. Harbans Lal Khurana deposed that document D-128 were sent to foreign bank, Texas vide schedule dated 08.01.1982 under bank reference FOBC-71140N/82 for Rs.36,61,570/- on sight basis. The documents are Ex.PW19/A. The foreign bank returned the documents stating that they were unable to collect from the drawee. The drawee informed the bank "that they shall remit the proceeds and settle the bills on collection directly with the drawer". The PNB sent a letter dated 11.02.1982 under the aforesaid reference to M/s Kay Films Mark PW19/B. The copy of letter mark PW19/B was sent to the Joint Chief Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 15 of 30 Controller, Import & Export and Reserve Bank of India.
PW30 Sh. Ramesh Kumar Malhotra deposed that during 1981 to 1983, he was working as staff officer Grade-A in Export IV Section, Exchange Control Department, in Reserve Bank of India, New Delhi. His duty was to follow up the outstanding export proceeds by the defaulter exporter. As per the procedure, the exporter used to furnish the export documents along with the export form with the concerned bank and they were required to give undertaking that the export proceeds will be received within 3 to 6 months from the date of shipment. In cases, export proceeds are not realized within six months, the export proceeds were to be mentioned and reported by the banker in outstanding export statements to RBI. After receiving the report from the bank, the RBI used to issue a letter to the defaulter exporter to realize the export proceeds within the stipulated period. When the export proceeds are not realized within the stipulated period, the exporter could seek extension of time. Failing to do so, the RBI put the exporter in the cautioned list and refer the case to enforcement director. On perusal of the RBI file pertaining to Kay Films Pvt. Ltd (D-177) Ex.PW30/A, the witness stated that the letter bearing no. 4113 dated 26.07.1982 Ex.PW30/B was addressed to Kay Films by the RBI regarding non realization of export proceeds. The letter dated 17.08.1982 Ex.PW23/B was written by Kay Films Pvt. Ltd to RBI. The memorandum dated 09.10.1982 Ex.PW30/C was sent to Kay Films Pvt Ltd as a reminder for non realization of export proceeds. The letter dated 22.12.1982 Ex.PW30/D was sent by RBI to the manager, Federal bank, New Delhi regarding the outstanding export proceeds of the company. The letter dated 22.12.1982 and 03.02.1982 were addressed to Manager, Oriental Bank of Commerce regarding outstanding export proceeds of M/s Kay Films Pvt Ltd and the letters are Ex.PW30/E and Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 16 of 30 Ex.PW30/F respectively. The witness identified his signature on the reminder letters to the company Ex.PW30/G and Ex.PW30/H. The witness also identified the letter dated 09.10.1982 written to Kay Films Pvt. Ltd and the letter dated 02.03.1983 and the same are Ex.PW30/H and Ex.PW30/K. PW-9 Sh.Jai Narain Sharma, deposed that in the capacity of Staff Officer, Grade - I in export division in RBI, he was looking after the work of export promotion. In reference to letter dated 19.03.1982 from OBC, Nehru Place Ex.PW9/1, he forwarded the application of M/s Kay Films Ex.PW9/2 for permission to extend the period of realization of export proceeds. On the request, the period for realization was extended up to 18.03.1982. Vide communication Ex.PW9/3, the extension was granted on the request by M/s Kay Films vide the application Ex.PW9/4.
PW-20 Ms. Deepali Panth Joshi, deposed that she was posted as Exchange control officer in RBI. The witness made the noting on the document D-177 and put the file to the Asstt. Controller for extension of time. The noting is Ex.PW20/A. The noting on the back side of letter dated 22.01.1983 was put up to Asstt. Controller through the witness and the same is Ex.PW20/B. PW-17 Sh.D.D Babbar deposed that he had handed over the documents listed in the receipt memo dated 28.11.1984 to the officer of CBI. The receipt memo is Ex.PW17/A. The documents handed over by the witness are Ex.PW17/B, Ex.PW17/C and Ex.PW17/D. PW-21 Sh. Karamchand deposed that during investigation, on 23.06.1980, he received certain documents from Asstt. Manager, Federal bank Ltd., Cannaught Circus vide memo Ex.PW21/A. Further, the witness received the statement of accounts of Kay Films from the Federal Bank vide receipt memo Ex.PW21/B. The witness also received Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 17 of 30 various documents from PNB, K.G Marg, Delhi vide receipt memo Ex.PW21/C. Further, on 05.07.1983, the witness received documents from Manager of Overseas Branch of PNB vide receipt memo Ex.PW21/D. After receiving the documents, the witness handed over the same to the IO.
PW-8 Sh. Ram Kishan, is a witness of search conducted at the office premises of M/s Kay Films Pvt Ltd., Yashwant Place, New Delhi. The witness signed the search list Ex.PW8/1 and the recovered documents Ex.PW8/2 to Ex.PW8/16.
PW23 Sh.M.L Sharma, is the Handwriting expert and deposed that he received the documents of this case from S.P, CBI, CIU (E) on 28.12.1985. After examination and comparison of questioned signature with the relevant specimen and admitted signatures, the witness gave the opinion and reason vide Ex.PW23/E and Ex.PW23/F. PW 36 J. N. Prasad deposed that investigation of this case was entrusted to him on 09.05.1986 by Sh. Diwakar Prasad, Superintendent of Police. The FIR is Ex. PW36/1. The witness collected the documents from the office of Deputy Chief Controller, Export and Import. On the search warrant issued by the court, the witness conducted the search in the office M/s Kay Films Pvt. Ltd. and seized the documents. The other premise i.e. the residence of the accused Kuldeep Sood was searched by Sh. Harbans Singh on the endorsement made by the witness. During the investigation, the witness collected the documents vide various receipts memo Ex. PW36/1, PW36/2, PW36/3, PW36/4, PW36/6, PW36/7, PW36/8. The search list dated 19.11.1983 pertaining to the office premise of the accused is Ex. PW8/1. The witness identified the signature of Sh. P.C. Srivastava on the letter dated 09.11.1984 pertaining to the part investigation in West Germany to be conducted by A.D. Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 18 of 30 Interpoll. The letter is marked PW36/2. The witness identified his signature on the letter Ex.PW36/9 which was sent to the Manager, Pakistan International Airlines for production of certain documents. The witness collected the documents from S.K. Wadhwa, Deputy Manager, Mackinnon Mackenzie & Company Ltd.. The receipt memo is Ex. PW36/10.
On conclusion the prosecution evidence, the accused was examined under Section 313 Cr. PC and all the incriminating facts were put to him for explanation. The accused replied that he had resigned as Director of the company on 03.12.1981. He further explained that he had not signed any of the application seeking cash assistance or the shipping documents as well as other documents filed with the shipment. All the documents were signed/executed by Mr. Kuldeep Sood who was the Managing Director of M/s Kay Films Pvt. Ltd. In the reply, the accused referred two orders of Delhi High Court pertaining to the same matter and transactions wherein it was held that the accused was not In charge or responsible for the conduct of the affairs of the company.
In the defence evidence, the accused submitted the certified copies of the documents as follows -
I. Criminal Misc.(M)No.1059-89 titled as "Kuldeep Sood & Arun Sood v. Sh.Najib Shah, Asstt. Director, Enforcement Directorate and Anr."
II. Arun Sood v. P.K Roy, Enforcement Officer, Enforcement Directorate Crl. Misc. No. 2155/2000 III. Certified copy of Form no.32 of the Company's Act, 1956 regarding Kay Films Pvt. Ltd pertaining to the resignation of Arun Sood on 03.12.1981.
The aforementioned certified copies are Ex.DX, DY and DZ Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 19 of 30 respectively.
Ld. APP argued that the accused was a Director of the company and the company had availed cash assistance on the basis of the export of hand knitted woolen carpets by making false claim of sale on outright basis. The company had exported durries instead of carpets and also the export was on the consignment basis. It is argument of the prosecution that the accused had cheated the government by taking the cash assistance on the basis of fake and forged documents.
Ld. defence counsel argued that the applications for cash assistance were moved by the company and signed by the accused no. 1 and the accused no. 2 had no role in the said act as he had already resigned as Director of the company. It is further argued that the accused was not the Director of the company at the relevant time and he had not signed any documents alleged to be used for the commission of crime.
The prosecution case qua accused in brief is that he was the Director of the company M/s Kay Films Pvt. Ltd. and his father i.e. accused no. 1 was the Managing Director of the company. The company submitted three applications in the office of Joint Controller Export and Import for claiming cash assistance against the export of hand knitted woolen carpets of C&F value of Rs. 1,08,07,002/- purported to have been made on the basis of outright sale basis to M/s S.A. International, Houston Texas. The cash assistance of Rs. 21,42,735/- was paid to the company through three cheques dated 01.01.1982, 13.01.1982 and 21.01.1982. The payment was made on the basis of the export documents viz. Customs authenticated shipping bills, bank attested invoices, bank certificates in the prescribed form.
Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 20 of 30 The allegations/charge against the accused in brief is that the accused no. 1 being the Managing Director of the company entered into the conspiracy with accused no. 2 with the object to cheat the office of Joint Controller Export and Import by fraudulently claiming the cash assistance by inflating price of the exported goods by preparing two sets of invoices i.e. one for claiming the cash assistance and the other for release of goods in the foreign countries. The allegations against the accused are three folds:-
(i) The accused had exported durries instead of hand knitted woolen carpets and made the claim of export of carpets for claiming the cash assistance.
(ii) The accused had claimed that the export was made on outright sale basis but it was on the consignment basis.
(iii)The accused no. 2 established M/s S.A. International Houston and got cleared the exported goods from US and got the same to be sold through auction. It is alleged that the accused had signed the trust receipt dated 18.03.1982 in the assumed name of J. Tin and also signed the power of attorney claiming himself as partner of S.A. International authorizing M/s Bansoceanic Shipping Company for clearing the goods from US customs on behalf of M/s S.A. International. The accused no. 2 alleged to have signed in the name of J. Tin as buyer and wrote letters on behalf of S.A. International which were submitted in the banks in India for getting extension for realization of foreign exchange.
Before taking the allegations/charges one by one, there are certain admitted as well as established facts to be brought on record. It is admitted that three applications under consideration in this case for cash assistance were moved by the accused no. 1 in the capacity of the Managing Director of the company. It is also established by the evidence Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 21 of 30 on record that in the applications for cash assistance, it was claimed that the company had exported hand knitted woolen carpets on outright sale basis. There is no denial to the fact that cash assistance on the basis of three applications was credited in the account of the company.
The first aspect of the charge is that the accused had exported durries and not the woolen carpets. The accused no. 1 being the Managing Director of the company submitted the applications in the prescribed format in Form No.(III) and furnished the details and submitted the documents like Bank attested invoices, bank certificates and shipping bills authenticated by the custom.
The prosecution has examined many witnesses from the custom department. PW24 was the clerk of M/s National Clearing and Forwarding Agency and his duty was to get the shipping documents cleared from the custom department. He deposed that he had signed the shipping bills 2669, 2670, 2671 Ex. PW2/B, PW2/A and PW23/B2 respectively. The witness handed over the bills to R.M. Khanna and 10% of shipment was checked by the custom department.
PW2 explained the procedure of the custom department and deposed that the shipping bills were produced by the clearing agent to the Superintendent who had to mark the same to Inspector for examination. After examination, the shipment was to be uplifted. He deposed that the procedure was followed in this case that the shipping bill 2669 and 2670 both dated 04.12.1981 were marked to Mr. R.C. Diwan, Inspector Custom. Mr. R.C. Diwan examined the goods and thereafter, PW2 supervise the shipment of the goods to the flight on 11.12.1981.
The witnesses from the office of Chief Controller of Export and Import deposed that letters were written to the office of the Custom Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 22 of 30 Department, Mumbai to verify the authenticity and genuineness of the shipping bills and the same was confirmed by the concerned department and only thereafter, the application for cash assistance was cleared. The prosecution had examined many witnesses to the fact that the company of the accused was purchasing durries from various manufacturer at Mirzapur. There are witnesses to the fact that the company of the accused was involved in sale and purchase of durries as well as carpets. Since the witnesses of the custom department and office of the Chief Controller of Export and Import established that the shipment pertaining to this case were containing woolen carpets therefore, the witnesses to the fact of selling durries to the company of the accused are of no relevance. Considering the testimony of witnesses, the prosecution failed to establish that the accused had exported durries and not the woolen carpets.
Further, the allegations against the accused is that they claimed the cash assistance by making the false claims of the export to S.A. International on outright sale basis. It is alleged that the export was made on the consignment basis. The charge sheet as well as the testimony of PW5 explained the difference between export on outright sale basis and consignment basis. For the sake of explanation, the part of the charge sheet is reproduced as follows:
Investigation has revealed that the exporter is entitled for cash incentive after the shipment of goods in cash of sale on outright sale basis only. The outright sale in which both the title and possession of goods are transferred on consideration of payment of fixed unit price on the basis of which total value of goods is worked out. In cash of export on consignment sale, the exporter entitled for cash incentive only after receipt of the foreign exchange in lieu of exported Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 23 of 30 goods. In consignment sale, the goods are supplied by the seller to an agent outside, who agrees to sell these goods at the best price available. Here the ownership of the goods does not pass on to the agent abroad."
Further, PW5 explained that outright sale for export is one for which payment is received immediately after the shipment of the consignment. The export on consignment basis is the one which is purely subject to the acceptance by the foreign buyer and payment is not made immediately after shipment. In respect to the consignment sale, the payment are received only after the export consignment has been accepted by the foreign buyer. In such cases, the realization of the foreign receipts is subject to the final acceptance of the consignment by the foreign buyer.
As per the charge sheet, the office of Joint Chief Controller of Import and Export made the enquiry regarding the cash assistance claimed by the accused from the Federal Bank, Cannought Circus, Punjab National Bank, Chandni Chowk and Oriental Bank of Commerce, Nehru Place regarding the realization of foreign exchange against their export and it was found that foreign exchange amounting to Rs. 81.25 lakh was outstanding to be realized against the total sum of Rs. 1,08,07,002/-. It is further revealed that the amount of Rs. 26,82,489/- was realized in the nature of remittance from abroad i.e. from West Germany and not from Houston/Texas where the goods were exported.
PW10 who was Officer in the OBC, Nehru Place deposed that the bank received the export documents from OBC, Greater Kailash branch for the collection of bill amounting Rs. 35,96,310/- drawn on S.A. International, Houston. The bills were sent for collection to the Western Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 24 of 30 Bank Houston. The collection bills were returned with the remark that they shall remit the proceed and settled the bills of collection directly with the drawer. PW12 was also working in OBC, Nehru Place and before that letter dated 19.11.1982 (D-4) was addressed to the exporter by Nehru Place Branch and the letter dated 14.02.1983 (Ex PW12/3) was regarding the extension of time limit for realization of export proceeds. There are various correspondence between banks and RBI and the letters send by the accused exporter for the extension of time for realization of proceeds of exports.
PW11 deposed that the firm (company) vide their application Ex. PW11/22 and PW11/23 applied for extension of realization of export proceeds. PW11 deposed that in the performa applications sent by the accused no. 1 on behalf of the company, it was mentioned that they had exported material on consignment basis whereas the bank deals only in cases of outright sale basis. PW19 was working in the PNB, Chandni Chowk Branch and deposed that the foreign bank, Texas Commerce Bank, Houstan returned the documents stating that they were unable to collect the bill from the drawee. Drawee informed the bank "that they shall remit the proceeds and settle the bills on collection directly with the drawer."
The witnesses from RBI Bank i.e. PW-30 deposed that he was on duty to follow up of outstanding export proceeds by the defaulter exporters. As per the procedure, for non realization of export proceeds, the exporters were required to furnish the export documents along with the export form with the concerned bank. The exporters were required to give an undertaking that export proceeds would be received within three / six months from the date of shipment. On non realization of the export proceeds the banker was required to mention the same in outstanding Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 25 of 30 export statements in their report to RBI. The witness deposed as to the correspondence between the company of the accused and RBI regarding the non realization of export proceeds.
From the testimony of the bank witnesses and the officials of RBI, it is clear that out of the export proceeds of Rs. 1,08,07,002/-, only sum of Rs.26,82,489/- was realized in the form of remittance and that too from West Germany and not from Houston, Texas. Furthermore, it is admitted by the accused no. 1 in his performa applications submitted on behalf of the company that the export was made on consignment basis. On perusal of the record and the testimony of the witnesses, it is found that export in this case was made on the consignment basis and not on the outright sale basis.
The main defence of the accused no.2 is that he had resigned as a Director of M/s Kay Films Pvt. Ltd on 03.12.1981. At the relevant point of time, when the offence was committed, he was not concerned with the affairs of the company. In order to substantiate his claim, he submitted the certified copy of Form no. 32 of the Company's Act regarding Kay Films Pvt. Ltd. As per the certified copy, the accused Arun Sood had resigned on 03.12.1981 and new Director was appointed in his place. The new Director namely Mr. Jose Devasia was not joined in the investigation of this case and he was neither arrayed as an accused or included in the list of witnesses.
The accused further submitted the certified copy of criminal miscellaneous (M)No.1059/89. It is submitted that the vide said petition, the proceedings before the Special court dealing with the matter of E.D was challenged u/s 482 Cr. P.C. The enforcement directorate had filed the complaint against the company and both the accused u/s 56 of Foreign Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 26 of 30 Exchange Regulation Act, 1973. In the said proceedings, the High Court of Delhi had quashed the proceedings qua accused no. 2 with the observation that:-
"Mere fact that as a Director of the Company, he could be having knowledge of the affairs of the company which he derives from the books of account of the company or what is revealed during the meetings of the Board of Directors of the Company, no inference could be drawn that he was in charge of an responsible for the conduct of the business of the said company. So, taking the allegations made in the complaint and the evidence being relied upon in support of the complaint as correct ex facie, an irresponsible conclusion can be reached that no conviction of the petitioner no. 2 can be obtained for any vicarious criminal liability for the offence committed by the Company as from the material being relied upon and the facts mentioned in the complaint would not be enough to hold that this petitioner was in charge of and responsible for the conduct of the business of the company at the time the offence was committed by the Company."
It is submitted that the aforesaid complaint by the Enforcement Directorate was based on the export made by the accused in this case.
I agree with the submissions made by the defence that the accused no.2 can not be held liable vicariously for the act of the Managing Director of the company, merely for the reason that he was the Director of the company. In a criminal case, there is no concept of vicarious liability except in certain special facts and circumstances under the provision of Section 34 and 120-B IPC.
The prosecution has argued that the accused no. 2 had signed Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 27 of 30 certain documents i.e. D-11 as Director of M/s Kay Films Pvt. Ltd. These documents pertains to the transaction which led to the enquiry by the office of Joint Chief Controller Import and Export and cash assistance could not be released. These documents has nothing to do with the offence alleged to be committed by the accused in the case in hand. There is no evidence to establish the role of the accused no. 2 in the whole transaction which resulted into the release of cash assistance in favour of the company. Here, it is relevant to point out that company was not arrayed as an accused in this case. Furthermore, in the charge, there are no allegation of attempt to commit cheating with the office of Joint Chief Controller Import and Export by moving the application dated 07.02.1983 for claiming cash assistance. No charge has been framed for attempt to commit any offence. In these circumstances, the accused had no opportunity to defend himself for the charge of attempt to commit the offence.
The third set of allegations against the accused no.2 are that he established M/s S.A. International Houston and made Mr. Mark Blechman as its proprietor and get cleared the exported goods from U.S Customs and got the same sold through auction. In order to prove this allegation, the prosecution has not examined even a single witness. There is no evidence at all regarding this fact.
It is further alleged that accused no.2 has signed the trust receipt dated 18.03.1982 in the assumed name of J. Tin, Import Manager, S.A International. It is also the case of the prosecution that the accused no. 2 had signed the power of attorney showing himself as partner of M/s S.A International and authorized a shipping company namely M/s Bensoceanic for clearing the goods on behalf of M/s S.A International from U.S Customs. The allegations could have been proved by the Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 28 of 30 opinion of the handwriting expert. There is no such opinion regarding the said documents. There is no iota of evidence to the fact that the accused no. 2 has acted as alleged in the charge sheet. The investigation was conducted at Houston as well as in West Germany but there is no evidence or witness to substantiate or prove the facts as alleged was examined during the trial.
The Supreme Court held in the case of 'State of Maharashtra v. Somnath Thapa' (1996) Crl.L.J.2448 in this case, it was held that "to establish a charge of conspiracy knowledge about indulgence in either an illegal act or a legal act by illegal means is necessary. In some cases, intent of unlawful use being made of the goods or services in question may be inferred from the knowledge itself. This apart, the prosecution has not established that a particular unlawful use was intended, so long as the goods or service in question could not be put to any lawful use. Finally, when the ultimate offence consists of a chain of actions, it would not be necessary for the prosecution to establish, to bring home the charge of conspiracy, that each of the conspirators had the knowledge of what the collaborator would do so, so long as it is known that the collaborator would put the goods or service to an unlawful use."
The conspiracy is hatched in private or in secrecy. It is rarely possible to establish the conspiracy by direct evidence. Usually, both the existence of the conspiracy and its object have to be inferred from the circumstances and the conduct of the accused. A conspiracy consists not merely in the intention of the two or more, but in the agreement of two or more, to do an unlawful act or to do a lawful act by unlawful means. In order to attract the provision of conspiracy, it is necessary to establish that two or more person agreed to commit an unlawful act or lawful act by unlawful means. The agreement can be proved either by direct evidence or by the conduct of the accused. In the present case, there is no evidence to establish that the accused was privy to the commission of the offence. Case No. CBI-85/2019 CBI vs. Arun Sood Page No. 29 of 30 There is not even evidence to the fact that he had a knowledge of this unlawful act.
The cardinal principle of criminal law cannot be forgotten that the prosecution has to prove the case against accused beyond reasonable doubt. The standard of proof is not preponderance of probabilities but proof beyond reasonable doubt. It is well settled legal proposition that the any benefit of doubt goes in favour of the accused.
Considering the aforesaid discussions, the court is of the view that the prosecution has miserably failed to establish that the accused was involved in the commission of the offence as alleged/charged with. So, keeping in view the above discussion and materials available on record, I am of the considered view that charges against the accused under Section 120 B, 120 B r/w Section 420, 468, 471, and Section 420 & 471 IPC are not proved by the prosecution beyond reasonable doubt. Hence, accused Arun Sood is acquitted for the commission of offences above said.
Announced in the open Court (PAWAN KUMAR)
ON 21.12.2021 ACMM-2-CUM-ACJ
ROUSE AVENUE COURTS
COMPLEX, NEW DELHI
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