Jharkhand High Court
Gokul Agarwal vs Central Bureau Of Investigation ... on 11 February, 2014
Author: R.R.Prasad
Bench: R.R.Prasad
In the High Court of Jharkhand at Ranchi
Cr.Rev.No.1199 of 2013
Gokul Agarwal..............................................................Petitioner
VERSUS
Central Bureau of Investigation through S.P,Ranchi.... Opp.Party
CORAM: HON'BLE MR. JUSTICE R.R.PRASAD
For the Petitioner : M/s.Indrajit Sinha and N.K.Pasari
For the C. B. I : M/s. M.Khan and Niranjan Kumar
06/ 11.02.14. Heard learned counsel appearing for the petitioner and learned counsel appearing for the C.B.I. This application is directed against the order dated 13.12.2013 passed by the Special Judge, C.B.I, Ranchi in R.C. No.11(A) of 2009(R) whereby and whereunder the prayer for discharge of the petitioner from the case was rejected.
The facts leading to filing of this case are that on the direction given by this Court in W.P.(PIL) No.803 of 2009, a preliminary enquiry was made on the matter relating to large scale irregularities and embezzlement of crores of rupees by the Engineers of the Road Construction Department as well as contractors and other persons in the matter of procurement of Bitumen for construction of road wherein it was found that the then Executive Engineers, Road Division, Road Construction Department, Hazaribagh, Shyam Sunder Singh, Birendra Kumar and Sone Lal during the period 2002-07 entered into a criminal conspiracy with M/s. Classic Coal Construction Pvt. Ltd. Whereupon on submission of false/bogus invoices by M/s. Classic Coal Construction Pvt. Ltd. Showing procurement of bitumen from Government Company for the execution of work awarded to him, payments were made.
It was further found that the contractors were required to procure Bitumen from the Public Sector Undertakings like Indian Oil Corporation, Bharat Petroleum corporation Limited etc. and before using Bitumen, contractors were required to submit invoices for procurement of Bitumen, a certificate regarding quality of Bitumen procured but the contractors without procuring Bitumen from the Government Company submitted false invoices pertaining to procurement of Bitumen and thereby took payment of Rs.17,69,517/- on the basis of false certification by the engineers. On such allegations, a case was required as R.C. No.11(A) of 2009- R on 16.9.2009.
In course of investigation, it was found that M/s. Classic Coal Construction Pvt. Ltd. to whom the work had been awarded had gone in connivance with the petitioner, Director of M/s.Bharat Vanigya Eastern Pvt. Ltd, Kolkata, who had formed a cartel whereby the Directors of M/s. Vanigya Eastern Pvt. Ltd. supported M/s. Classic Coal Construction Pvt. Ltd. in getting tenders in favour of M/s. Classic Coal Construction Pvt. Ltd. in pursuance of criminal conspiracy hatched amongst themselves.
After investigation, when the charge sheet was submitted, the court took cognizance of the offences punishable under Sections 420, 467, 471 read with Section 120(B) of the Indian Penal Code and also under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act against the petitioner and other accused persons.
Subsequently, an application was filed under Section 227 of the Code of Criminal Procedure for discharging the petitioner from accusation. That prayer was rejected, vide order dated 13.12.2013.
Being aggrieved with that order, this application has been filed.
Mr.Sinha, learned counsel appearing for the petitioner submits that this petitioner, who is one of the Directors of M/s. Bharat Vanigya Eastern Private Limited, Kolkata, has been made accused in a case along with other accused persons simply on the accusation that the petitioner had formed a cartel with the other Company, namely, M/s. Classic coal Construction Private Limited to whom the contract was awarded. It has been alleged that M/s. Classic Coal Construction Private Limited had quoted the rates at the scheduled rate, whereas the Company of this petitioner had quoted the rates above the scheduled rates and that apart there appears to be absolutely no allegation against the petitioner in a case which has been lodged for commission of the offence punishable under Section 120B read with Sections 420, 467, 468, 471 of the Indian Penal Code and also under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act and thereby, it can be said that there has been absolutely no material to proceed with the trial. Furthermore, the Company has not been made accused and in absence of the Company, the petitioner, being the Director of the Company, cannot be prosecuted, but all these facts have never been taken into account by the trial court while dealing with the matter relating to discharge and, thereby, the Court committed illegality in refusing to discharge the petitioner from the case.
Learned counsel appearing for the petitioner by referring to the statements made in paragraphs 10 and 11(b) of the counter affidavit submits that during investigation, it was found that M/s. Bharat Vanigya Eastern Private Limited, Kolkata, to which this petitioner is one of the Directors acted as dummy bidder for supporting M/s. Classic Coal Construction Pvt. Ltd. to have have award in favour of M/s. Classic Coal Construction Pvt. Ltd. According to C.B.I, the acts of connivance get evident from the fact that tender papers and bank draft had been purchased from Central Bank of India, Ranchi Branch where M/s. Classic Coal Construction Pvt. Ltd. had its account. One Sakil Ahmad had submitted an application for purchasing the demand draft for both the companies. The said Sakil Ahmad was an employee of M/s. Bharat Vanhjya Eastern Private Limited, Kolkata. In both the applications, in place of applicant M/s. Classic coal Construction Pvt. Ltd., 3A, Vatika Apartment, Line Tank Road, Ranchi was written. Thus, it has been alleged that this is a clear indicative of the fact that M/s. Bharat Vanigya Eastern Private Limited, Kolkata was a dummy bidder, who did support M/s. Classic Coal Construction Pvt. Ltd. to have have award in his favour. It also got transpired during investigation that M/s. Bharat Vanigya Eastern Private Limited, Kolkata used to operate from the office of M/s. Classic Coal Construction Pvt. Ltd.
Thus, the stand which has been taken by the C.B.I is that the petitioner being Director of M/s. Bharat Vanijya Eastern Private Limited, Kolkata had formed a cartel with M/s. Classic Coal Construction Pvt. Ltd. In other words, according to the case of the C.B.I, M/s. Bharat Vanigya Eastern Private Limited, Kolkata acted as dummy bidder for facilitating M/s. Classic Coal Construction Pvt. Ltd. to have tender in his favour.
In such situation, one needs to understand the meaning of cartel. The cartel has been defined in Section 2(c) of the Competition Act, 2002 which reads as under:
2.c) "Cartel" includes an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services;
The Hon'ble Supreme Court had occasion to deal with the matter relating to cartel in a case of Union of India and others vs. Hindustan Development Corporation and others [(1993) 3 SCC 499].
The cartel has been defined in the Competition Act,2002. Their Lordships after having regard of the meaning of cartel as has been given in Webster Comprehensive Dictionary, Chambers' English Dictionary, Black's Law Dictionary as well as Dictionary of Modern Legal Usage by Bryan A.Garner did come to conclusion which is as follows:
" The cartel therefore is an association of producers who by agreement among themselves attempt to control production, sale and prices of the product to obtain a monopoly in any particular industry or commodity. Analysing the object of formation of a cartel in other words, it amounts to an unfair trade practice which is not in the public interest. The intention to acquire monopoly power an be spelt out from formation of such a cartel by some of the producers. However, the determination whether such agreement unreasonably restrains the trade depends on the nature of the agreement and on the surrounding circumstances that give rise to an inference that the parties intended to restrain the trade and monopolise the same."
Here, though it is the case of the prosecution that the company of the petitioner had formed cartel but it never happens to be the case of the C.B.I that there was any kind of agreement in between M/s.Bharat Vanigya Eastern Private Limited, Kolkata and M/s. Classic Coal Construction Pvt. Ltd. to stop other bidder from participating so that they may acquire monopoly in the field. Therefore, the C.B.I may not be correct in levelling the accusation against the petitioner that the petitioner's company had formed cartel.
However, it does have a little impact on the case as the other stand which the C.B.I has taken is that the petitioner acted as dummy bidder and thereby petitioner's company facilitated M/s. Classic Coal Construction Pvt. Ltd. to have a tender in his faour but it is not the case of the C.B.I that the company did any act towards the commission of offence either of forgery or cheating. Simply for the reason that petitioner's company happens to be a dummy bidder, the petitioner's company cannot be said to have committed any offence of cheating or forgery in absence of any acts forming necessary ingredients for constituting offence of cheating.
The other limb of the argument of the counsel appearing for the petitioner is that it was the company, who had participated in the bid. In spite of that the petitioner, who happens tobe Director of the company has been made accused, in absence of any specific allegation showing commission of offence of cheating or forgery or offence under the Prevention of Corruption Act.
However, learned counsel appearing for the C.B.I submits that this petitioner has not been made accused in the capacity of Director of M/s. Bharat Vanigya Eastern Private Limited, Kolkata, rather he seems to have made an accused in his personal capacity and thereby the plea which has been taken on behalf of the petitioner is of without any substance.
With reference to the submission advanced on behalf of the parties, I may refer to the charge sheet wherein paragraphs no.1.3 and 1.4 have been disclosed as under:
1.3 Investigation further disclosed that even at the time of submission of the tender, the contractor M/s. Classic Coal Construction Pvt.
Ltd. and the second bidder M/s. Sidhartha Construction, Hazaribagh connived with each other. They, with dishonest and fraudulent intention, formed a cartel to get the tender awarded in favour of M/s. Classic Coal Construction Pvt. Ltd. Bank Draft of Rs.10,000/- each for obtaining Tender documents for both the bidders were purchased by M/s. Classic Coal Construction Pvt. Ltd. Further disclosed that the said fact has been recorded in connection with the work relating to Patratu Saunda D Road to M/s. Classic Coal Construction Pvt. Ltd. For other work with respect to Gola-Charu Road, it has been recorded in other charge sheet as hereunder:
Widening & Strengthening work of Gola-Muri Road from) to 14.2 Kms. (Work Agreement No.02F2 of 2002-03).
1.4 Investigation further disclosed that even at the time of submission of tender, the contractor M/s. Classic Coal Construction Pvt. Ltd. and the second bidder M/s. Bharat Vinijya Eastern Private Limited, Kolkata connived with each other. They with the intention formed a cartel to get the tender awarded in favour of M/s. Classic Coal Construction Pvt. Ltd. Bank Draft of Rs.10,000/- for obtaining tender document for both the papers were purchased by M/s. Classic Coal Construction Pvt. Ltd. Along with tender, M/s. Bharat Vinijya Eastern Private Limited, Kolkata submitted post office time deposit as earnest money deposit worth Rs.12,50,000/- vide no.330125064 which was purchased on 24.5.2004 from Hindpiri Post Office, Ranchi in the name of Dilip Kumar Singh, C/o M/s. Bharat Vinijya Eastern Pvt. Ltd. Govind Tower, Harihar Singh Road,Ranchi, who is one of the Directors of M/s. Classic Coal Construction Pvt. Ltd.. The said post office time deposit was also shown in the books of M/s. Classic Coal Construction Pvt.
Ltd. which is in evident that the amount of Rs.12,50,000/- was invested on behalf of M/s. Bharat Vinijya Eastern Pvt. Ltd. by M/s. Classic Coal Construction Pvt.Ltd. but with the support of M/s. Bharat Vinijya Eastern Pvt. Ltd. got the tender.
From the reading of the aforesaid paragraph, it is evident that whatever act was done, it was done by the company, namely, M/s. Bharat Vanigya Eastern Pvt. Ltd. and not by the petitioner being the Director in its individual capacity.
Thus, the question does arise as to whether the petitioner can be prosecuted on principal of vicarious liability for the commission of offence allegedly committed by the company.
To answer this question, I need not to go too far away as the issue has already been decided by the Hon'ble Supreme Court.
In this regard, I may refer to a decision rendered in a case of S.K.Alagh vs.State of U.P and others [(2008) 5 SCC 662] wherein it has been held hereunder:
" As admittedly, drafts were drawn in the name of the Company, even if the appellant was its Managing Director, he cannot be said to have committed an offence under Section 406 of the Penal code. If and when a statute contemplates creation of such a legal fiction, it provides specifically therefor. In absence of any provision laid down under the statute, a Director of a company or an employee cannot be held to be vicariously liable for any offence committed by the Company itself.
Further one may take notice of a decision rendered in a case of Maksud Saiyed vs. State of Gujarat and others [(2008) 5 SCC 668] it has been observed as follows:
" Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. The Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company when the accused is the Company. The learned Magistrate failed to pose unto himself the correct question viz., as to whether the complaint petition even if given face value and taken to be correct in its entirely, would lead to the conclusion that the respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Managing Director and the Director would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability."
Thus, it has categorically been held that the Managing Director or the Director can be held vicariously liable for commission of the offence committed by the Company under any statute if that statute provides provides for that. Even ion that case where statute contemplates prosecution of the Managing Director or the Director on account of principle of vicarious liability, it is obligatory on the part of the complainant to make requisitie allegations which would attract the provisions constituting vicarious liability.
It be noted that save and except the provision specifically providing thereof does not contemplate vicarious liability on the pat of the party, if is not charged directly for commission of an offence.
I have already indicated above that no specific allegation is there against the petitioner, being the Director of the company, to have done anything so as to attract the offence under Section 420 or forgery or even an offence under the Prevention of Corruption Act and thereby the petitioner is not liable to be prosecuted.
The court while deciding the matter relating to discharge did not go into all these aspects of the matter and thereby it committed illegality in rejecting the application for discharge.
Accordingly, the order dated 13.12.2013 passed by the court below is hereby quashed.
In the result, this application stands allowed. Consequently, the petitioner is discharged from the accusation.
(R.R.Prasad J.) ND/