Delhi District Court
C.B.I. vs . 1. M/S. Punjab Phosphate Pvt. Ltd. on 29 February, 2012
IN THE COURT OF SPECIAL JUDGE (PC ACT), CBI,
SAKET COURTS, NEW DELHI
Presiding Officer : Sh. Dinesh Kumar Sharma, Addl. Sessions Judge
CC No.26/11
Unique Case ID No. 02401R0074522001
C.B.I. Vs. 1. M/s. Punjab Phosphate Pvt. Ltd.
Azad Road, Chhaeratah,
Amritsar, Punjab (earlier known as
M/s. Punjab Fertilizer & Pesticides
Industries)
2. Prem Kumar Parmar (Expired)
S/o Late Sh. Sohan Lal Parmar
Managing Director of M/s. Punjab
Phosphate Pvt. Ltd.
R/o 6A, Pocket B, DDA Flats,
Vikas Puri Extension, New Delhi.
3. Lalit Kumar Parmar (60 years)
S/o Late Sh. Sohan Lal Parmar
Director of M/s. Punjab Phosphate
Pvt. Ltd.
R/o H.No. 8134, Bahadur Nagar,
Outside Sultanwind Gate, Gali No.1,
Amritsar, Punjab.
4. Surinder Singh (PO)
S/o Sh. Santa Singh
Driver of Sh. P.K. Parmar (A2)
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 1 of 146
5. Ranveer Seth (80 years)
S/o Late Dr. Santharam Seth,
Retd. Technical Officer, O/O General
Manager, DIC, Amritsar, Punjab
R/o 45, Model Town, Gali No.3,
Amritsar, Punjab.
6. Daulat Singh (74 years)
S/o Sh. Bawa Singh
the then Jr. Industrial Promotion
Officer, DIC Amritsar, Punjab
R/o 435A, Rani Ka Bagh, Amritsar.
Permanent R/o Village Kokalpur,
Teh. Batala, District Gurdaspur, Punjab
7. R.C. Nirmal ( 59 years)
S/o Sh. Jee Sukh Ram
the then Asstt. Manager (Industries)
DIC, Amirtsar.
R/o 109, Sector 29, Faridabad,
Haryana.
8. Pratap Narayan (77 years)
S/o Late Sh. Avadhi Narayan
the then Executive Director, FICC,
R/o C47, Friends Colony (East),
New Delhi - 65.
9. Anil Sood (Expired)
S/o Late Sh. DL Sood
the then Jr. Accounts Officer, FICC,
R/o C327, Sarojini Nagar, New Delhi
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 2 of 146
10. S.D. Raj (Expired)
S/o Sh. Ram Lal Chawla
the then Accounts Officer, FICC.
11. Mahender Singh Sandhu (81 years)
S/o Late Sardar Dalip Singh
the then Accounts Officer, FICC,
R/o A216/2, Ashok Vihar, Phase I,
Delhi52.
12. Vinod Chandra (64 years)
S/o Sh. Rama Shankar,
the then Jr. Accounts Officer, FICC,
R/o 180, Thather Wara, Meerut, U.P.
13. Y.R. Khattar (76 years)
S/o Late Sh. C.R. Khattar
the then Accounts Officer, FICC,
R/o MD50, Vishakha Enclave,
Pitampura, New Delhi.
14. S.C. Singla (Expired)
S/o Sh. Kishan Swaroop,
the then Accounts Officer, FICC,
R/o 2, Vasudha Enclave, Pitampura,
New Delhi.
15. Rajesh Kumar Bhambi (59 years)
S/o Late Sh. C.L. Sharma,
the then Jr. Accounts Officer, FICC,
R/o 292, MS Enclave, Dhakoli,
Zirakpur, Distt. Mohali, Punjab
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 3 of 146
16. Ram Singh (71 years)
S/o Late Sh. Hargyan Singh,
the then Accounts Officer, FICC,
R/o A9, Kirpal Apartments,
IP Extension, Patparganj, Delhi.
17. Prem Singh (69 years)
S/o Sh. Prabhu Ram
the then Jt. Director (F&A), FICC,
R/o H. No. 1220, Sector 43B,
Chandigarh, Punjab.
18. Pritam Singh (80 years)
S/o Late Sh. Dayal Singh,
the then Dy. Secretary, Ministry of
Agriculture, Govt. of Punjab, Chd.
R/o 1739, Phase - III, B2, Mohali,
Punjab.
19. Sant Kumar Sharda (61 years)
S/o Sh. Krishan Chand Sharda
the then Officer, PNB, Amritsar.
R/o 46/A, Prabhat Avenue, Amritsar,
Punjab.
20. Gurjeet Singh Sachdeva (69 years)
S/o Late Sh. Sardar Sohan Singh,
the then Manager, PNB, Amritsar,
R/o 584A, Pratap Nagar, GT Road,
Amritsar, Punjab.
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 4 of 146
21. Smt. Savita Parmar (Expired)
W/o Sh. P.K. Parmar (A2)
R/o 6A, Pocket B, DDA (SPS),
Vikaspuri Extn., New Delhi.
22. M/s. Punjab Fertilizer & Pesticides
Industries,
Amritsar, Punjab.
23. Anup Kumar Arora (Expired)
Proprietor of M/s Pawan Electronics,
Near Chitra Talki, Amritsar,
Punjab.
RC No. : 11/88SIU(VIII)
u/Ss : 120B IPC r/w S.420, 467, 468 and 471 IPC and
Section 5(2) r/w Section 5(1)(d) of PC Act, 1947
Date of Institution : 30/12/94
Received by transfer on : 30/9/2011
Arguments Concluded on : 18/2/2012
Date of Decision : 22/2/2012
Appearances:
Sh. DK Singh, Ld. PP for CBI.
Sh. Alok Bachawat, Ld. Counsel for A1 M/s Punjab Phosphate Pvt. Ltd., A3
Lalit Parmar and A17 Prem Singh.
Sh. SK Sood, Ld. Counsel for A5 Ranveer Seth, A11 MS Sandhu, A18
Pritam Singh.
Sh. Rajesh Harnal, Ld. Counsel for A6 Daulat Singh and A19 Sant Kumar
Sarda.
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 5 of 146
Ms. Kamlesh Shambharwal, Ld. Counsel for A7 RC Nirmal.
Sh. Satish Tamta, Ld. Counsel for A8 Pratap Narayan.
Sh. Vikas Arora, Ld. Counsel for A12 Vinod Chandra.
Sh. RK Sharma, Ld. Counsel for A13 YR Khattar and A15 RK Bhambi.
Sh. VP Kaushik, Ld. Legal Aid Counsel for A16 Ram Singh.
Sh. PK Sharma and Sh. Neeraj Shrotriya, Ld. Counsels for A20 GS
Sachdeva.
JUDGMENT
This case is a classic example of total failure of governance, and the fact that where multiple agencies are involved, mischievous and fraudulent people take benefit of it and plunder the public exchequer. The hard earned money of the tax payers was fraudulently taken away by the white collar criminals in the form of subsidy. The history of the case goes back to 1979 when M/s Punjab Fertilizer and Pesticides Industries, Amritsar a partnership concern came into existence for purported manufacture of Single Super Phosphate. M/s Punjab Fertilizer & Pesticide Industry (partnership firm) changed it's constitution to M/s Punjab Phosphate Pvt. Ltd (company) in June 1983 and got subsidy on bogus bills till March 1987 amounting to Rs. 3,33, 45, 282/. The fulcrum of the entire scam P.K. Parmar died during the trial. CBI registered the case on 1988 and during investigation collected tons of documents. Thousands of documents were filed alongwith the chargesheet. The chargesheet in this case was filed on 30/12/94. It took around 13 years for CBI to comply with mandatory CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 6 of 146 provision of supply of copies u/S 207 Cr.PC. This court received the case by transfer on 30/9/2011 and charges were framed on 21/10/2011. CBI had cited 175 witnesses. After framing of charge this Court decided to hold the trial o day to day basis and CBI was asked to file the schedule of witnesses. Prosecution expressed their willingness to examine only 63 witnesses. After continuous monitoring of the status of witnesses the trial started from 2nd January 2012. The court in consultation with the prosecution and defence, fixed the date for summoning all the witnesses so as to ensure that this case being involved senior citizens and old one, reaches to its logical end. CBI examined only 43 witnesses till 31/1/2012 and thereafter, statement of accused persons were recorded from 02/02/2012 to 08/02/2012 and final arguments were heard from 09/02/2012 to 18/02/2012. It is very difficult to understand that what was the rational of citing so many witnesses and filing of load of documents, when they were not to be examined and proved. CBI took satisfaction in proving mostly the seizure memo of the documents. There is another distinct feature of this case. The youngest accused RC Nirmal is now 59 years of age and oldest accused MS Sandhu is about 81 years of age. Five accused persons died during the trial and the average age of the surviving accused persons is about 75 years.
FACTS OF THE CASE 1.0 M/s. Punjab Fertilizer and Pesticides Industries was established CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 7 of 146 as partnership firm on 29.08.79 vide partnership deed dtd. 29.07.79 consisting of Sh. P.K. Parmar (A2 - since died), Smt. Sawinder Kaur, Smt. Kamlesh, Smt. Rajwant Kaur and Smt. Inderjeet Kaur as partners. The partnership firm took a small shed on rent within the factory premises of M/s. Hindustan Embroidery Mills Pvt. Ltd., Azad Road, Chharatah, Amritsar on monthly rent of Rs.800/ per month w.e.f. 01.02.80, through Sh. P.K. Parmar from Sh. Manmohan Singh of M/s. Gurdial Singh Uppal and Sons. M/s. Punjab Fertilizer and Pesticides Industry was registered under District Industry Centre (DIC), Amritsar vide registration No.16/01/00524 dated 30.08.79 for manufacture of Single Super Phosphate (SSP). The registration was confirmed vide registration No.16/01/09990 dated 10.07.80. Subsequently, the partnership was converted into Private Limited and was rechristened as M/s. Punjab Phosphate Pvt. Ltd., Amritsar, vide Certificate of Incorporation dtd 9.6.83. In the new Avtar, Accused P.K. Parmar (since died) donned himself as Managing Director and Lalit Kumar Parmar (A3), P.K. Verma, Smt. Veena W/o Sh. Ajit Kumar, Smt. Sawinder Kaur Gill W/o Sh. SS Gill and Smt. Inder Bala Luthra were the remaining Directors of the company. Sh. Surender Khanna was appointed as Chartered Accountant of the company. M/s. Punjab Phosphate Pvt. Ltd., Amritsar was registered with Registrar of Companies, Jallandhar vide registration No. 5470 of 1983 wef 09.06.83. Subsequently, Smt. Sawinder Kaur Gill, Smt. Veena and Smt. Indu Bala Luthra resigned from Directorship wef 21.06.83. M/s. Punjab Phosphate Pvt. Ltd. was left with only three Directors namely, A2 PK Parmar, A3 Lalit CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 8 of 146 Parmar and Prem Kumar Verma.
FICC came into existence by virtue of a resolution No. 166(24)/77FD(A) dated 01.11.1977 of Ministry of Chemical and Fertilizer, Govt. of India. The object behind constitution of this body was to administer and to evolve the system of retention price for fertilizer. There was complete control of the Govt. of India on fertilizer manufacturing and marketing so as to benefit the farmers with an object to enhance the agricultural production. The purpose was also to protect the fertilizer manufacturers. FICC was entrusted with the job of fixation of exfactory prices and payment of subsidy wef 01.04.80. Since March 1976, there was a fixed subsidy of Rs.1,250/ per ton, on SSP fertilizer dispatched by the factories. Govt. of India. Ministry of Petroleum, Chemical & Fertilizer, Deptt of Chemical & Fertilizer vide order No.4(27)/80FDAI dated 29.09.80 laid down the procedure for submission of subsidy bills and procedure for inspection by the FICC, New Delhi. Subsequently, vide circular No.4/13/82FDAI dated 05.08.82, Deptt. Of Chemical and Fertilizer further laid down the procedure for provisional payment of subsidy to SSP manufacturing unit. In the regional conference, held twice on a year for Rabi and Kharif crop, the allocation of SSP used to be determined by the Ministry on the basis of input received from State Governments in which the unit is located and the allocation so made were conveyed to FICC and other related departments including SSP manufacturing unit by the Ministry of Agriculture.
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 9 of 146
As per Fertilizer (Control) order, 1957 issued under Essential Commodities Act, 1955, the fertilizer dealers, whether manufacturer or dealer, were required to obtain Dealer Registration Certificate (DRC). The issuance authority of DRC was designated as Chief Agricultural Officer of the respective district. In the present case, on an application being moved by A2 PK Parmar dated 10.08.79, Chief Agricultural Officer, Amritsar issued DRC No.89 dated 04.10.79 in favour of M/s. Punjab Fertilizer & Pesticides Industry, Amritsar. A2 PK Parmar vide his subsequent application dated 01.02.84 requested Chief Agricultural Officer, Amritsar for fresh DRC in favour of M/s. Punjab Phosphate Pvt. Ltd. However, the request was not accepted on account of deficiency in the documents.
The facts of the case can be segregated primarily into two parts. The bills submitted by M/s Punjab Fertilizer & Pesticide Industry from December 1980 to May 1983 and thereafter, bills submitted by M/s Punjab Phosphate Pvt. Ltd., till March 1987. This category has arisen out of different procedure laid down by order dtd. 29/9/80 No. 4(27)/80FDA.I, Govt of India, Ministry of Petroleum & Fertilizers, Department of Chemical & Fertilizers, for companies and the firms.
1.1 Allegedly, the accused persons in conspiracy with each other submitted bogus bills claiming subsidy and on such bogus bills, subsidy was released to the accused persons and accused persons parked this ill gotten money with the help of bank officials. For the purpose of convenience the CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 10 of 146 accused persons can be divided into following categories:
Category No. of Duration of the participation
accused
M/s. Punjab Fertilizer & A1 Entire Case
Pesticides Industry A2
and M/s. Punjab Phosphate Pvt. A3
Ltd. A4
District Industry Centre A5 December 1980 to June 1983
A6
A7
FICC A8 A8 - Dec. 80 to Oct. 82
to A9 to A17 Dec. 80 to March 87
A17
Punjab Government A18 Dec. 80 to Oct. 83
Bank Officers A19 1985 Onwards
A20
Introducer A23
The role of the accused persons as alleged in the chargesheet can be summed up as follows :
S. Name of the accused Role of the accused No.
1 M/s Punjab Phosphate Allegedly, M/s Punjab Phosphate Pvt. Ltd., a Pvt. Ltd. (A1) company incorporated under Companies Act on 9/6/83 cheated the Govt. of India by procuring subsidy on bogus bills and also forged and fabricated the documents for this purpose.
2 PK Parmar (A2) Sh. P. K. Parmar was the King Pin. He initially floated the partnership concerned then converted the same into Pvt. Ltd. Company.
He submitted bogus subsidy bills duly signed CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 11 of 146 by the Chartered Accountant and certified by Sh. R. C. Nirmal, Daulat Singh and Ranvir Seth, who were the officials of District Industry Centre. These bills were for the period between August 1979 to June 1983 and the subsequent bills were submitted by Sh. P.K. Parmar certified by Sh. Surender Khanna, Chartered Accountant and these bogus subsidy bills were cleared by the officials of FICC in conspiracy with the other accused persons.
3 Lalit Kumar Parmar He was brother of A2 PK Parmar and was one of (A3) the active partners of the accused firm. He had floated a firm M/s Lalit Enterprises for showing fraudulent sale of SSP fertilizers. He also fabricated documents showing sale of fertilizer and transportation through fictitious transport companies. During search incriminating documents were recovered from him. He had also received draft for subsidy from FICC, New Delhi.
5 Ranveer Seth (A5) He was public servant in the capacity of a technical officer, DIC, Amritsar during the impugned period. He forwarded subsidy claims of M/s Punjab Fertilizer and Pesticide Industries knowing fully well that they were prepared on the strength of bogus documents and certified by Daulat Singh and RC Nirmal. He was made to retire from his services by the DIC. Thereafter he joined accused PK Parmar's firm at Bahadurgarh, Haryana as his paid servant.
6. Daulat Singh (A6) He unauthorizedly verified the bills regarding subsidy claims which were never submitted to his office. A document D96 letter of GM, DIC indicates that no verification was directed to be carried out by him.
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 12 of 146
7. RC Nirmal (A7) He instead of getting adhered to the rules and regulations of DIC as he was deputed for this purpose without being asked by GM, DIC certified and countersigned the subsidy claims in question. In furtherance of this conspiracy with PK Parmar (A2) he had issued technical report mentioning false facts and figures as were presented to him by accused PK Parmar (A2).
8. Pratap Narayan (A8) He being Executive Director of FICC, RK Puram, N. Delhi knew fully well that authority for verification of subsidy bills were of Agriculture Department of respective states.
He entertained claims of subsidy bills for
the year December, 1980 to July, 1981
containing verification done unauthorisedly by
office of DIC and allowed payment of
subsidy on the basis of that verification. PK
Parmar personally brought the bogus subsidy
claims under a forwarding letter of Pritam
Singh (A18), Dy. Secy. Department of
Agriculture, Govt. of Punjab, Chandigarh and
delivered it to Pratap Narayan (A8) on 29/10/82
and on the same day the cheque was issued
and sent to State Bank of Patiala for draft.
Thereafter, draft was handed over to PK Parmar
(A2).
11. MS Sandhu (A11) He submitted false inspection report of the unit in
lieu of cheque of Rs.5,000/ given to him by PK
Parmar (A2) which he got credit in his own
account in SBI, Amritsar.
12. Vinod Chandra (A12) He being Jr. Accounts Officer processed a large number of false subsidy claims and recommended for payment.
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 13 of 146
13. YR Khattar (A13) He processed a large number of false CCS claims, inspected the unit alongwith Vinod Chandra (A12) and submitted the false report favourable to the accused firm.
15. Rajesh Kumar Besides processing of subsidy claims Bhambi (A15) recommending for payments, he inspected the unit alongwith Sh. Ram Singh (A16) and submitted false report.
16. Ram Singh (A16) He worked as Accounts Officer from April, 1986 to April, 1989 in FICC, RK Puram, New Delhi.
Besides processing of subsidy claims, he had inspected the unit and submitted false report favourable to the accused firm.
17. Prem Singh (A17) He worked as JD (F&A) and Director (P&A) between 1/1/86 to 31/5/91 in FICC, RK Puram, New Delhi. He fraudulently submitted inspection report in 1986 that the unit was existing, manufacturing, making counter sales of SSP fertilizer, despatching SSP fertilizer outside.
18. Pritam Singh (A18) He was Dy. Secy., Ministry of Agriculture, Govt.
of Punjab, Chandigarh during 198283. The initial subsidy claim for the months of December 1980 to July 1981 was objected by the CAO, Amritsar as they had reports that the unit was not manufacturing and not selling any fertilizer.
Allegedly, Pritam Singh (A18) came to the rescue of accused PK Parmar (A2) and his so called fertilizer firm. Pritam Singh (A18) started harassing the CAO, Amritsar who had been informing the actual position to the Directorate of Agriculture by initiating enquiries against him.
Pritam Singh forwarded the subsidy claim verified unauthorizedly by officers of DIC, Amritsar. PK Parmar (A2) had brought these subsidy claims personally to Pritam Singh (A18) and he had CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 14 of 146 personally collected the forwarding letter addressed to the ED, FICC, RK Puram, Delhi asking them to clear the subsidy bills. Pritam Sigh (A18) had endorsed a copy of forwarding letter to the accused firm but no copy was endorsed to the GM, DIC, Amritsar on whose behalf the verification had been conducted by the unauthorized officers. The idea behind this was that no information about the verification done by the unauthorized officers fraudulently should reach the GM, DIC, Amritsar. Pritam Singh (A18) had been making correspondence regularly with accused PK Parmar (A2) greeting each other and enquiring about each others welfare.
19. SK Sarda (A19) He filled in the account opening forms in the name of M/s Vijay Trading Co. and BK Enterprises and also filled in the deposit slips which were signed by accused PK Parmar (A2) in assumed name of Vijay Kumar and Anil Mathur. He introduced opening of current account in the name of MPSMN Corporation in Batala Road Branch of PNB. These accounts had been fraudulently opened for showing bogus payments for sale of SSP Fertilizer and also for purchase of rock phosphate.
20. GS Sachdeva (A20) He was Branch Manager in PNB, Katra Ahuluwalia, Amritsar. He fraudulently verified the account opening form in the name of M/s. BK Enterprises and Vijay Trading Co.
2.0 Charge u/S 120B IPC r/w S. 420, 467, 468, 471 IPC and under Sec. 5(2) r/w Sec. 5(1)(d) of PC Act, 1947 was framed against all accused A1 to A17. Separate charge u/S 420 IPC and 5(2) r/w 5(1) (d) of PC Act, 1947 CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 15 of 146 was framed against accused A5 to A20 and separate charge u/Ss 420, 467, 468, 471 IPC was framed against A1, A3 and A22. Accused persons pleaded not guilty and claimed trial.
3.0 CBI examined 43 witnesses in support of its case. Witnesses produced by the CBI can broadly be divided into following categories :
a) Sanction - PW1 AS Syali (A15 RK Bhambi), PW2 Ravi Kathpalia (A13 YR Khattar, A16 Ram Singh, A9 Anil Sood (since died)), PW3 Sarat Chandra (SC Singhla (since died)), PW4 S.K. Gupta (A19 SK Sarda, A20 GS Sachdeva), PW7 AC Patnaik (A17 Prem Singh), PW14 Ms. Radha A. Nanjnath (A12 Vinod Chandra) and PW43 SK Awasthi (A7 RC Nirmal).
b) Search, seizure and raid - PW5 KK Kaul, PW8 NP Singh, PW20 HS Gakkar, PW21 Inderjeet Seth, PW22 PK Dass, PW24 PK Juneja, PW26 Manjeet Singh Dingra, PW29 Swami Sharan, PW30 RP Singh, PW31 P.L. Handa, PW35 Darshan Singh.
c) Inspection report dated 18.09.86 - PW6 Ajmer Singh and PW15 Pritam Singh.
d) Sadhna Enterprises - PW12 Swaran Singh, PW32 SD Sharma, PW33 SD Anand and PW34 Anil Dhar
e) M/s. Punjab Fertilizer & Pesticides Industries / M/s. Punjab Phosphate Pvt. Ltd. PW10 Vijay Kumar, PW16 Gurmeet Singh CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 16 of 146 (PSEB), PW9 Updesh Kapoor, PW19 Garib Das, PW27 Malvinder Singh, PW17 Dalip Kumar, PW18 Som Nath Chatterjee.
f) Functioning of FICC - PW11 Sri Prakash.
g) BK Enterprises - PW13 Anil Mathur
h) Fictitious accounts PW23 RK Kochhar, PW25 Avinash Pahwa, PW28 Sarabjit Singh Bajaj, PW36 RK Minocha, PW39 Kanwaljeet Handa.
i) GEQD - PW42 MC Joshi.
j) Investigation Officers - PW37 S.K. Chaudhary, PW38 Javed Siraz, PW40 DSP D.K. Chaudhary, PW41 Harshem Sher Singh (Part IO) CBI made an attempt to prove that M/.s Punjab Fertilizer & Pesticides Industries which was later on converted into a company namely M/s. Punjab Phosphate Pvt. Ltd. did not manufacture the SSP and on the basis of forged documents, the subsidy bills were prepared and government officials and FICC officials in conspiracy with each other got released the subsidy in the sum of around Rs. 3,33,45,282/ and illegally parked that money with the aid of bank officials in the fictitious accounts.
The evidence produced by the prosecution is briefly discussed as under: CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 17 of 146 3.1 Sanction 3.1.1 PW1 AS Syali accorded the sanction for prosecution against RK Bhambi vide sanction order Ex.PW1/A dtd 29/10/94. Sh. AS Syali stated that on receipt of a report and after satisfying himself he accorded sanction for prosecution of RK Bhambi. In the cross examination, the witness was not able to tell that what exact material he perused before grant of sanction. He also admitted that he (read PW1 AS Syali) did not examine the chargesheet, the documents filed alongwith it and the statement of witnesses before the grant of sanction. The witness was also not able to recall the documents which were examined by him to satisfy that bill No. 47, 49 and 50 were actually processed by accused RK Bhambi. It is pertinent to mention here that the witness stated that he was not aware if accused RK Bhambi had processed the bills as per rules and regulations. The sanction order Ex.PW1/A is running into 44 paras and 13 pages, however, the role of the accused has been detailed in para 28 whereby all the bills pertaining to M/s Punjab Phosphate Pvt. Ltd. were processed.
3.1.2 PW2 Sh. Ravi Kathpalia had accorded the sanction of prosecution against accused YR Khattar, Ram Singh and Anil Sood vide sanction order Ex.PW2/A, Ex.PW2/B and Ex.PW2/C. Sh. Ravi Kathpalia was posted as Controller General of Accounts, at the relevant time and was competent authority to grant sanction for Pay & Accounts Officer, Govt. of CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 18 of 146 India. PW2 Ravi Kathpalia stated that he saw the entire report and after having satisfying himself accorded sanction for prosecution against the accused persons. In the cross examination, this witness was not able to recall that what exact material he perused before granting sanction. However, he admitted that he (read Ravi Kathpalia) did not examine the chargesheet, the documents filed along with it and the statement of witnesses before grant of sanction. The witness also admittedly did not examine any document to satisfy himself that bills at Sr. No. 32 to 40 in the sanction order were actually processed by accused YR Khattar. It is pertinent to mention here that the prosecution has also filed Annexure A alongwith the chargehseet in which the details of the subsidy bills of M/s Punjab Fertilizer & Pesticides Industry and Punjab Phosphate Pvt. Ltd have been detailed alongwith the name of the officials who processed the same. The bare perusal of this shows some contradictions as to the officers who have processed the bill. The sanction order of the above said accused persons is running into 16 pages detailing the entire conspiracy.
3.1.3 PW3 Sh. Sarat Chandra Mahalik had granted sanction for prosecution of SC Singhla (since died) vide sanction order Ex.PW3/A. Since the person against whom the sanction has been granted and proved has already died, this witness is inconsequential.
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 19 of 146 3.1.4 PW4 Sh. SK Gupta proved the sanction order granted against SK Sarda and GS Sachdeva as Ex.PW4/A and Ex.PW4/B. The witness stated that he went through all the documents and after having satisfied himself granted the sanction. It is pertinent to mention here that in the cross examination PW4 SK Gupta admitted that at the relevant time i.e. from 23.02.85 to 12.10.86, Sh. SK Sarda was Technical Field Officer, Small Scale Industries Section, PNB, Amritsar and his job was to assist the SSI units, process their applications for their technical and financial viability and put up their case for grant of loan before the Senior officers for sanction. The one of the function of the accused was to be in the field to inspect the SSI unit. PW4 SK Gupta in the cross examination stated that the relevant fact is that Mr. SK Sarda himself filled up the bank account opening form and also verified the fictitious signatures of the Proprietors of the Firms and facilitated the opening of bank account. However, this fact has not been proved by the prosecution. The prosecution has not led any oral or documentary evidence in respect of this fact. It is also interesting to note that the sanctioning authority admitted in the cross examination that alongwith the communication, a draft sanction is also sent by the CBI and in the draft sanction order, some blanks are left unfilled to fill in the name of the employee, in respect of whom the sanction is sought. PW4 Sh. SK Gupta admitted that the the communication in the draft sanction was forwarded to him by the Law Deptt., around 23 days before 19.03.1994, when the sanction CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 20 of 146 was accorded, and on the receipt of communication and draft sanction, he went through all the documents and discussed with Law Officer. The sanctioning authority admitted in the cross examination that the sanction was granted by him only on the basis of letter sent by CBI, draft sanction order and discussion with the fellow officers. In the cross examination on behalf of A20 GS Sachdeva, the witness stated that before grant of sanction, he verified the designation of Sh. GS Sachdeva from his service book. However, it is matter of record that the prosecution has not led any evidence on record, oral or documentary to prove that accused GS Sachdeva was working as Asst. Manager, Punjab National Bank at the relevant time. The sanctioning authority in his cross examination has stated he verified the signatures of GS Sachdeva from his service book. However, the service book or any other service record of the accused has not been produced before the Court. In the cross examination PW4 SK Gupta admitted that he cannot show any document on the basis of which he reached to the conclusion that A20 GS Sachdeva or A19 SK Sarda had obtained the pecuniary advantage and misused their official positions. It also came in the cross examination of PW4 SK Gupta that the bank did not initiate any disciplinary enquiry in respect of this case against against Mr. SK Sarda and Sh. GS Sachdeva. 3.1.5 PW7 Sh. Arun Chand Patnaik, the then Addl. Controller General, Defence Accounts, New Delhi accorded the sanction for prosecution of Prem Singh vide sanction order dtd. 01.02.1995, Ex.PW7/A. CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 21 of 146 The witness stated that he vaguely remember that he accorded the sanction merely on the basis of CBI report placed before him after satisfying himself and also obtained sanction of the competent authority in the Ministry of Defence or the President of India. It is pertinent to mention here that in the present case, the sanction was accorded after around 28 months. The witness did not make any comment that the CBI had applied for sanction in November' 1992 and sanction was accorded after 28 months in February' 1995.
3.1.6 PW14 Ms. Radha A. Nanjanath proved the sanction order Ex.PW14/A for prosecution against Vinod Chandra in the capacity of Controller of Defence Accounts, Meerut. It is interesting to note that in the cross examination PW14 Radha A. Nanjanath stated that generally, while putting the papers for grant of sanction, the gist of the case along with other details are placed before us (read sanctioning authority) and the sanctioning authority after going through the same grant the approval. It is pertinent to mention here that the sanction order Ex.PW14/A ran into 21 pages and same 44 paras and the witness admitted that first 20 pages were not prepared under her dictation and the same were prepared by her office only on the basis of CBI report. The witness also admitted that she did not receive any document at the time of grant of sanction to indicate that Mr. Vinod Chandra had obtained any pecuniary advantage for self and for others by way of corrupt means by otherwise abusing their official positions. She also admitted to CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 22 of 146 have not been shown any document to indicate that Sh. Vinod Chandra had given any false inspection report at the time of grant of sanction. She also admittedly had not gone through the bills and vouchers as mentioned in para 24 of the sanction order, Ex.PW14/A and accepted the same as stated by CBI in their report. It is interesting to note that in the sanction order Ex.PW14/A, admittedly, it has not been mentioned that for which offence / offences, the sanction for prosecution has been granted.
3.1.7 PW43 Sh. SK Awasthi granted the sanction for prosecution against accused RC Nirmal and proved the sanction order as Ex.PW43/A. In the cross examination the witness admitted that the witness received the file for sanction on 21/12/93. It is matter of record that sanction was granted on 21/12/93 itself. The witness was not able to recall the specific documents which he had perused before grant of sanction. He only submitted that he perused all the documents placed before him.
3.2 Search, Seizure and Raid 3.2.1 PW5 KK Kaul proved the seizure memo dated 06.12.88 as Ex.PW5/A regarding search at the office of M/s. Punjab Phosphate Pvt. Ltd. on 06.12.88. On the same day, certain rubber stamp from the office of M/s. Punjab Phosphate Pvt. Ltd. were also recovered and their impressions, Ex.PW5/B were taken.
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 23 of 146 3.2.2 PW8 N.P. Singh proved the seizure of documents from FICC on 12.02.91 and proved the seizure memo as Ex.PW8/A and 14 registers seized vide this seizure memo were proved as Ex.PW8/A1 to A14. In the cross examination, witness admitted that his signatures does not appear on Ex.PW8/A. 3.2.3 PW20 HS Gakhar proved the seizure memo Ex.PW20/A regarding the seizure of cheques, vouchers, withdrawal forms and other documents relating to M/s. Punjab Phosphate Pvt. Ltd. from State Bank of Bikaner and Jaipur, Lawrence Road, Amritsar. The documents, withdrawal forms, credit vouchers and statement of account seized vide this memo were also identified by witness as Ex.PW20/B to Ex.PW20/E. 3.2.4 PW21 Inderjeet Seth proved the seizure of documents from District Industry Centre (DIC) Amritsar on 03.03.09 relating to M/s. Punjab Phosphate Pvt. Ltd. vide seizure memo Ex.PW21/A and file seized vide this memo was identified as Ex.PW21/B (containing 15 pages). 3.2.5 PW22 PK Dass had joined the raid with CBI on 06.12.88 at the residence of A2 PK Parmar at Vikas Puri. He proved the seizure memo Ex.PW22/A of the documents seized during this raid. Certain stamps were CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 24 of 146 also recovered and paper Ex.PW22/B was proved as an impression of those stamps.
3.2.6 PW24 PK Juneja proved the receipt memo Ex.PW24/A vide which certain documents from Katra Ahluwalia Branch of PNB was seized by the CBI on 27.12.89. He also proved the receipt memo Ex.PW24/B vide which the documents were seized by CBI on 20.01.1990. 3.2.7 PW26 Manjit Singh Dhingra who was posted as Asstt. Manager, Central Bank of India, Prince Road, Amritsar at the relevant time, had joined the raid with CBI on 06.12.88 and proved the seizure memo as Ex.PW26/A. 3.2.8 PW29 Swami Sharan had merely handed over the documents to CBI which were seized vide seizure memo Ex.PW29/46. He also identified the 45 drafts which were handed over vide receipt memo as Ex.PW29/1 to 45.
3.2.9 PW30 RP Singh proved the receipt memo Ex.PW30/A vide which three cheques Ex.PW30/B to Ex.PW30/D were seized from the office of FICC. He also proved the seizure memo Ex.PW30/E vide which the documents Ex.PW30/F1 to F37 were seized on 16.02.1990. CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 25 of 146 3.2.10 PW31 PL Handa merely proved the receipt memo dated 16.02.90 as Ex.PW31/A vide which the drafts Ex.PW31/B1 to B5 were seized.
3.3 Fictitious Accounts 3.3.1 PW23 RK Kochhar proved the seizure memo Ex.PW23/A vide which documents related to a firm namely M/s. Shiva Ploy Fabric Company having current Account No.1753 were seized. He further deposed that on that day a self cheque was drawn by one Sh. Baldev Raj, Proprietor of M/s. Shiva Ploy Fabric Company in the sum of Rs.3,50,000/ and this cheque was presented by Surender Singh and on the basis of this cheque, drafts were prepared in the name of A2 PK Parmar, Kishan Chand, Savita Parmar, Chetan, Monika Parmar and Madhulika. Witness identified his signatures on transfer voucher Ex.PW23/C and application for preparation of draft as Ex.PW23/D. The drafts so prepared were drawn on PNB, Faridabad Branch. 3.3.2 PW25 Avinash Pahwa remained Sr. Manager at PNB, Katra Ahluwalia Branch from February 1986 to February 1988. During his time, accused Sant Kumar Sharda was posted in Katra Ahluwalia Branch as SSI Officer. Witness stated that accused Sant Kumar Sharda had been doing field work including processing of loan applications particularly pertaining to SSI CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 26 of 146 units. Witness stated that during his tenure, PK Parmar never opened any account in his branch. The witness (read PW25) accepted to have receive a confidential report / letter dated 13.10.87, Ex.PW25/A from Rajinder Nagar Branch, New Delhi. In pursuance to this letter, a confidential report dated 28.10.87, Ex.PW25/B was sent to Manager, PNB, New Rajinder Nagar. PW25 expressed his ignorance to the fact that whether A2 PK Parmar was maintaining any current A/c in the name of M/s. BK Enterprises and M/s. Vijay Trading Company. In the cross examination, this witness (read PW25) admitted that during his tenure, accused Sant Kumar Sharda had never been Manager, Asstt. Manager, Accountant, Incharge of current Account Section or an authorized officer to open or attest the signatures of the person opening the current account. He also admitted that job profile of SSI officer is not concerned with Account Opening in any manner.
3.3.3 PW28 Sarabjit Singh Bajaj the then Branch Manager of State Bank of Bikaner and Jaipur, Lawrence Road, Amritsar proved the handing over memo dated 16.02.89, Ex.PW28/A. Vide this handing over memo, Account Opening Form of current account of M/s. Punjab Phosphate Pvt. Ltd. , M/s. Lalit Enterprises and Account opening form of saving Bank Account in the joint name of i) Chetan Parmar & Bhola Verma, ii) Bhola Verma & Prem Kumar, iii) Madhulika Parmar & PK Parmar, iv) Prem Kumar Parmar & Savita Parmar, v) Monika Parmar & Rubika Parmar and
vi) Savita Parmar & Chetan Parmar were handed over. The account opening CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 27 of 146 forms were identified as Ex.PW28/B to Ex.PW28/I. On 24.01.90, Sh. Sarabjit Singh Bajaj (read PW28) handed over the documents relating to account of Sadhna Enterprise and certain individuals namely Prem Kumar, Savita Parmar, Bhola Verma and others to CBI and same were seized vide memo Ex.PW28/J. In the cross examination, the witness stated that accounts as mentioned in letter, Ex.PW28/A were not opened during his tenure except the current account of Lalit Enterprises.
3.3.4 PW35 Darshan Singh the then Clerk in the office of Chief Agricultural Officer, Gurdaspur remained inconsequential as he failed to recall the proceedings except that the CBI had seized certain documents. 3.3.5 PW36 Ram Krishan Manocha was posted as an Officer in State Bank of Bikaner and Jaipur, Lawrence Road, Amritsar from 1983 to 1988. Sh. Ram Krishan Manocha was referred to PK Parmar by one Sh. Ajit Kumar Sehdev, as a big Industrialist and an influential man in Amritsar. On being referred, the witness (read PW36) met PK Parmar in Amritsar. Those were the days when , there used to be tough competition amongst the banks for deposit. Witness who was banker, contacted and requested PK Parmar for giving some deposits, in pursuant to which PK Parmar opened a current account and 34 saving bank accounts in the name of the members of his family. The witness was on visiting terms with accused PK Parmar. Witness CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 28 of 146 (read PW36) filled up the saving bank account opening form in the name of Chetan Parmar, Bhola Verma, Prem Kumar, Madhulika Parmar & PK Parmar, Prem Kumar Parmar & Savita Parmar, Monika Parmar & Rubika Parmar, Parmar Savita and Chetan Parmar, Ex.PW28/D to Ex.PW28/I and also signed the same as an introducer. He identified the signatures of PK Parmar on the deposit slips and other documents.
PW36 Ram Krishan Manocha identified the current account opening form, Ex.PW28/K of M/s. Sadhna Enterprises. PW36 identified the deposit slips vide which the amount was deposited in the account of M/s. Sadhna Enterprises on different dates. He also admitted to have cleared the credit slips written and signed by PK Parmar. PW36 also proved that PK Parmar as Proprietor of M/s. Sadhna Enterprises issued 31 cheques, Ex.PW28/K drawn on State Bank of Bikaner and Jaipur in favour of different parties. PW36 also proved that PK Parmar was Managing Director of M/s. Punjab Phosphate Pvt. Ltd. as per record and interestingly, this account was opened at the introduction of PK Parmar, himself in the capacity of Proprietor of M/s. Sadhna Enterprises and this was verified by this witness i.e. PW36 Ram Krishan Manocha vide his initial appearing at point B on Ex.PW28/B. It is pertinent to mention here that on the same day, PK Parmar had deposited a demand draft of Rs.45,35,353/ drawn on State Bank of Patiala, Mukherjee Marg, Amritsar vide payin slip, Ex.PW20/D and this amount was credited in the account of M/s. Punjab Phosphate Pvt. Ltd. In the same account, certain deposits were made on different dates and later on, CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 29 of 146 the amounts were withdrawn from this account vide 25 cheques, proved as Ex.PW20/B collectively. PW36 also proved the account opening form No. 1156, Ex.PW28/C vide which current account was opened in the name of M/s. Lalit Enterprises on 25.08.87 having been introduced by one Sh. Trilok Chand partner of M/s. Auto House. PW36 Ram Krishan Manocha stated that the accounts were deposited on different dates in the account of M/s. Lalit Enterprises and same were withdrawn by Lalit Kumar on different dates by cheque.
3.3.6 PW39 Kanwaljit Handa was posted in State Bank of India, Amritsar from the year 1979 to 1984 as Field Officer. In that capacity, he attested the specimen signatures on the specimen signatures Card of account No.15168, Ex.PW39/A of M/s Punjab Phosphate Pvt. Ltd 3.4 Investigation Officers 3.4.1 PW37 Sarvesh Kumar Chaudhary was part IO. He was deputed to conduct the searches at 3550, Gali No.1, Bahadur Nagar, Amritsar, Punjab on 06.12.88 at the residence of A2 PK Parmar and he proved the search cum seizure memo as Ex.PW26/A. 3.4.2 PW38 Javed Siraj remained associated with IO in investigation of this case. The search warrant of accused Lalit Kumar Parmar was CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 30 of 146 entrusted to him pursuant to which PW38 conducted search of the house of Lalit Parmar on 06.12.88. Sh. Javed Siraj (read PW38) stated that initially it was told that A3 Lalit Parmar was not available. However, during search A3 Lalit Kumar was found hiding in one of the bathroom and thereafter, he participated in the search proceedings. The accused was duly identified by the witness. He (read PW38) stated that during the search large number of documents were recovered and same were seized as per search list, Ex.PW38/A. PW38 handed over all the documents to main IO DK Chaudhary (PW40). PW38 also proved the seizure memo, Ex.PW38/B vide which the documents relating to Gramin Vikas Bank were seized. In the cross examination, witness stated that his job was confined only to conduct the search.
3.4.3 PW40 D.K. Chaudhary is Investigation Officer (IO). He made a detailed statement. IO stated that on oath that the present case was registered on the basis of source information and immediately after receiving the copy of FIR, the verification of suspected premises was conducted and searches were conducted at various places and documents were recovered. IO stated that this case was relating to claim of subsidy on manufacture and sale of single super phosphate (SSP) fertilizers, by the accused company i.e. Punjab Phosphate Fertilizer Ltd., which was earlier a partnership concern based at Charhata, Amritsar, Punjab. This claim was submitted to Fertilizer Industries Coordination Committee (FICC) and cheques so issued by FICC CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 31 of 146 on account of subsidy bills, were received by the accused company. The accused company did not manufacture even a single bag of fertilizer, rather they preferred claims on the basis of bogus documents showing manufacture and sale of fertilizers. IO stated that M/s Punjab Fertilizers (partnership concern) became a private limited company known as Punjab Phosphate Pvt. Ltd., in the year 1983 vide certificate of incorporation No. 5470 of 1983 dated 9/6/1983. In the company there were initially 5 Directors. However, later on 2 Directors resigned after sometime of the formation of the company and only three Directors remained i.e. PK Parmar himself as Managing Director, LK Parmar as Director and Prem Kumar Verma as another Director.
PW40 further deposed that fertilizers were controlled items and this was one of the essential commodities as per fertilizer control orders, issued by the Govt. of India. Govt. of India used to give subsidy on single super phosphate fertilizers as per allocation. Chief Agricultural Officer was authorized to certify regarding manufacture and sale of fertilizer on the basis of their certificates. IO stated that in the present case, Chief Agricultural Officers did not renew the dealers registration certificate in 1983 or 84 onwards. The subsidy bills submitted to FICC were certified by District Industries Centre and Chartered Accountant fraudulently. Chief Agricultural Officer continuously wrote to FICC that the unit was not manufacturing any fertilizer nor selling even a single bag of such fertilizer and their claims were bogus. However, FICC processed such bogus applications and released the CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 32 of 146 subsidy . The officials of FICC also submitted false inspection report. IO also stated that M/s. BK Enterprises did not supply any rock phosphate to the company whereas, PK Parmar opened current account in the name of BK Enterprises in assumed name and he also opened another account in the name of M/s Vijay Sales in PNB Katra Ahluwalia, Amritsar. The bank officials were involved as they allowed PK Parmar to open the account knowing fully well that he was not the person in whose name the accounts were being opened. IO DK Chaudhary proved the seizure memo, receipt memo and all the documents seized during the course of investigation. In respect of process of bills, IO stated that subsidy bills duly certified by the Chartered Accountant along with supportive documents were to be submitted to FICC. FICC officers were required to scrutinize the documents to see if those were supported by the requisite documents and certificate issued by the Chief Agriculture Officer and other inspecting officers had certified the same. The calculation of subsidy amount was being done as per the guidelines issued from time to time by the respective ministries of Govt. of India and on the basis of this calculation FICC use to issue the cheques of subsidy. It is pertinent to mention here that IO admitted that order dated 29.09.1980, Ex.PW40/DA is the relevant rules and procedures. However, he voluntarily stated that besides this there are other guidelines also.
The perusal of Ex.PW40/DA made it clear that it is not mentioned that only Chief Agriculture Officer would be authorized to certify the bills. IO was duly confronted with the letter dated 28.08.80 from CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 33 of 146 Chief Agriculture Officer to Director of Agriculture, Punjab, Ex.PW40/DC and Mark 15/DA and an undated letter from Assistant Project Officer, IADP, Amtrisar to the Chief Agricultural Officer, Amritsar, Ex.PW40/DD earlier marked as Ex.PW15/DB.
In the cross examination on behalf of A5 Ranveer Seth, IO stated that Chartered Accountant had fraudulently certified the bills. He also stated that name and address of the Chartered Accountant must be available on the record as the same was collected during the investigation.
During the cross examination on behalf of RC Nirmal (A7) witness was confronted with letter dated 27.09.82 from Director of Agriculture, Punjab, ex.PW40/DG wherein DIC was authorized to certify the bills. IO failed to recall if he came across the noting/report of JDA (Admn.) namely Sh. Gursewak Singh Shekhu i.e marked PW40/DH on the basis of which, Ex.PW40/DG was written.
In the cross examination on behalf of A16 Ram Singh IO was not able to recall any personal communication between accused Ram Singh and PK Parmar or others. IO was not able to recall to have collected any evidence regarding demand, acceptance or obtaining any illegal gratification by Accused Ram Singh.
In the cross examination on behalf of A3 Lalit Parmar, IO admitted that the subsidy was claimed only upto March 1987. IO admitted that as per letter dated 17.11.87, the accused company shifted its factory to Bahadur Garh. IO was not able to recall if he had collected any evidence CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 34 of 146 during the investigation that Lalit Kumar Parmar was working as a MES contractor. However, he (read IO PW40) admitted that record of Lalit Enterprises was seized by him during the course of investigation, which includes invoice book, cheque book and sales tax receipts as per these documents accused LK Parmar was MES contractor.
3.4.4 PW41 Harshem Sher Singh was deputed by IO DSP DK Chaudhary. He seized the file No.16101/09999/PMT/tiny dated 10/1/1980 from the office of DIC vide receipt memo Ex.PW21/A on 31.03.1989. The file has been identified as Ex.PW21/B. Witness also collected the record from State Bank of Bikaner and Jaipur vide receipt memo Ex.PW20/A. PW41 also deposed that on 27.04.79 locker No.439 was operated in the presence of A2 PK Parmar and others and proved the memo as Ex.PW41/A. 3.5 GEQD 3.5.1 PW42 MC Joshi proved the GEQD report as Ex.PW42/A. He deposed on behalf of Sh. ML Sharma. Witness stated that Sh. ML Sharma is not keeping well and is unable to travel. In the cross examination, witness admitted that he had not worked with ML Sharma at any point of time. 3.6 Non Manufacturing of SSP 3.6.1 PW16 Gurmeet Singh was posted as UDC in Punjab State CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 35 of 146 Electricity Board in the year 1982. He stated that M/s. Punjab Fertilizer and Pesticides Industry had applied for reconnection of electricity on 01.12.82. However, the witness did not state that when initially the electricity connection was allotted to the company. PW16 stated that on 02.06.86, the company applied for extension of existing load and the extension of load was duly approved vide communication dated 29.07.86 and demand notice was issued on 31.01.87. Witness stated that as per the test report on the record, SDO concerned had visited the premises repeatedly and every time the premises was found locked. Sh. Gurmeet Singh proved the file collectively Ex.PW16/A containing 41 pages, containing all the documents pertaining to M/s. Punjab Fertilizer and Pesticides Industry. It is pertinent to mention here that the witness proved the Electricity Consumption Chart (Ex.PW16/B) of M/s. Punjab Fertilizer and Pesticides Industry as follows :
Period Consumption
May 84 to December 84 Nil
January 85 to December 85 152 units
January 86 to December 86 7 units (meter was changed
having been found dead)
January 87 to December 87 647 units (consumption was only
in first three months and
thereafter meter did not show
any reading & the premises was
found locked.)
In the cross examination, witness admitted that he cannot say that when the electricity connection was granted for the first time to M/s CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 36 of 146 Punjab Fertilizer and Pesticides Industry.
3.7 Supply of Raw Material 3.7.1 PW17 Dileep Kumar Saxena, the then Mining Engineer in Rajasthan State Mineral Development Corporation (RSMDC) was posted as Statutory Manager of Kanpur Rock Phosphate Mine, Near Udaipur, Rajasthan from July 1986 to July 1990. He sent a communication dated 08.01.1989, Ex.PW17/A in response to a query of CBI vide letter dated 06.01.1989 regarding supply of rock phosphate to M/s. Punjab Fertilizer and Pesticides Industry, Chharata, Amritsar. Vide this letter, RSMDC had informed that from 1979 to 1987, RSMDC had not supplied any material to M/s. Punjab Fertilizer and Pesticides Industry, Chharata and M/s. Punjab Phosphate Pvt. Ltd., Amritsar. The letter is Ex.PW17/A which bears his signatures at point A. In the cross examination, the witness had admitted that during his employment with RSMDC, he was posted at Udaipur. He also admitted that RSMDC has mines other than Udaipur also. Witness (read PW17) stated that possibly the reply was sent on behalf of all the units located in Udaipur Region.
3.7.2 PW18 Som Nath Chatterjee had been associated with Rajasthan State Mines and Minerals (RSMM) Ltd. since 1974 till his CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 37 of 146 retirement and was in Managerial position at the relevant time. PW18 deposed that RSMM Ltd. had supplied rock phosphate to M/s. Punjab Fertilizer & Pesticides Industries and M/s. Punjab Phosphate Pvt. Ltd. in small quantity. Sh. Som Nath Chatterjee (read PW18) specifically stated that as per record RSMM Ltd. had supplied total 72.560 MT of rock phosphate powder of the chips to M/s. Punjab Fertilizer and Pesticides Industry and M/s.Punjab Phosphate Pvt. Ltd. through 6 invoices Ex.PW18/A to Ex.PW18/F. The combined material delivery statement, Ex.PW18/Q was also proved. It is pertinent to mention here that the witness (PW18) specifically stated that RSMM Ltd. was the only establishment which at the relevant time used to supply the category of rock phosphate meant for production of SSP (wrongly typed as rock phosphate). The witness stated that though rock phosphate was used to be controlled by the Govt. of India. However, the private party also could have procured and sold the rock phosphate without permission of the government as there used to be the system of handling agents also and these handling agents sometime used to sell this material in grey market.
3.8 Inspection report dated 18.09.86 3.8.1 Case of the prosecution is that A17 Prem Singh had submitted a false and frivolous report in conspiracy with accused persons. PW6 Ajmer Singh and PW15 Pritam Singh were admittedly the member of the inspection team headed by A17 Prem Singh.
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 38 of 146 3.8.2 PW6 Ajmer Singh in his testimony deposed on oath that he was posted as Chief Inspector Fertilizer, Dte. Of Agriculture, Punjab from June 85 to October 88. He deposed that in around August 86, in a Zonal Conference held in Delhi on agriculture inputs, Director, Agriculture, Punjab had stated that no allocation be made in favour of M/s. Punjab Phosphate Pvt. Ltd. regarding supply of SSP fertilizers as it was not producing fertilizer. Pursuant to this, Govt. of India passed an order regarding the joint inspection of Punjab Phosphate by constituting a team of senior officers of Ministry of Agriculture, Govt. of India, one officer from Dte. Of Agriculture, Punjab and the concerned Chief Agriculture Officer. The said joint inspection team was directed to be headed by Joint Director, FICC, New Delhi. Witness stated that inspection of Punjab Phosphate was conducted on 18.09.86. He was also directed to be part of joint inspecting team by Director, Agriculture. Pursuant to this direction, he (read PW6) reached Amritsar on 17.09.86 and met Sh. Gurdev Singh, the then Chief Agriculture Officer, Amritsar and thereafter, witness along with him (Gurdev Singh) met other officers of the joint inspection team at Guest House. It was decided that inspection team would visit Punjab Phosphate on 18.09.86 at 10 am for inspection. The team consisted of A17 Prem Singh, Sardar Gurdev Singh, PW6 Ajmer Singh and Enforcement staff. Witness stated that when they reached there, 45 labourers were working there. A17 Prem Singh called the Incharge and talked to him and at that time, no CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 39 of 146 manufacturing activity was taking place in Punjab Phosphate premises relating to manufacturing of fertilizer SSP. PW6 specifically stated that they found that no production activity was taking place there. However, the witness was not able to recall all the facts and as it was 25 years old incident. PW6 specifically stated that A17 Prem Singh did not prepare any report on the spot and told that he would prepare the report and submit it in Delhi office. Later on, the copy of the report was forwarded to the office of PW6. He i.e. PW6 proved the report as Ex.PW6/A (running into 4 pages) and also identified the signatures of A17 Prem Singh at point A. Sh. Ajmer Singh (PW6) specifically stated that the conclusion arrived at by A17 Prem Singh was not approved by their (PW6's) office. He also stated the report prepared by A17 Prem Singh, Ex.PW6/A is not correct or in confirmity with the joint inspection conducted on 18.09.86. In the cross examination on behalf of MS Sandhu (A11), Vinod Chandra (A12), Prem Singh (A17), Pritam Singh (A18) and Lalit Parmar (A3), witness admitted that he does not have any written order with him vide which he was deputed for the inspection. It is pertinent to mention here that witness had already retired around 7 years back. He stated that he might have stayed in Punjab Phosphate unit for around 23 hours and asked from the persons present there about the production of fertilizer and they told to the members of the inspection team that no production takes place in Punjab Phosphate Pvt. Ltd. Witness admitted that he did not ask any name and particular of those persons nor did he know or identify them. Witness stated that the representative of the factory met them CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 40 of 146 in the premises of the factory. He (PW6) stated that he did not find any material lying in the unit of Punjab Phosphate. It was admitted by the witness that he did not prepare any separate report as the team was headed by A17 Prem Singh and being head of the team, he (A17) only prepared the report. Witness also admitted that he did not submit any separate report regarding this inspection to his office. After the receipt of the report of A17 Prem Singh, the Legal Assistant of his office wrote a report indicating his (PW6's) view and then the same was placed before his Director through Joint Director and then the report was sent to Delhi. Admittedly, this report has never been produced by the prosecution. Witness denied the suggestion that production activities were going on in Punjab Phosphate unit at the time of inspection. He also denied the suggestion that fertilizer was being produced through pit system (manual). Witness also denied the suggestion that A17 Prem Singh has submitted true and correct report.
3.8.3 PW15 Pritam Singh, another member of the inspecting team stated that he was posted as a Technical Inspector in the year 1986 in the office of Chief Agriculture Officer, Amritsar. PW15 stated that in connection with joint inspection, he met Sh. Gurdev Singh Brar, Chief Agriculture Officer, Sh. Ajmer Singh (PW6), Chief Inspector and A17 Prem Singh, Joint Director. Pritam Singh met other members of the inspection team at the Guest House and it was decided that on the next date the inspection would be conducted. PW15 Pritam Singh specifically stated that he was part of the the CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 41 of 146 joint inspection team and the inspection was arranged under the instructions of Director Agriculture, Chandigarh to ascertain whether any manufacturing activity is actually taking place or not. In the morning hours, the inspection team visited the premises of M/s. Punjab Phosphate Pvt. Ltd. where they saw that though the factory was existing but no manufacturing activity was taking place. Only some bags and some sand was lying. Prem Singh, Joint Director was the head of the team. Since it was a joint inspection, the report should have been prepared by all the members on the spot and should have been signed by all, but A17 Prem Singh stated that he would prepare the report and therefore, no inspection report was prepared at the spot. Later on Pritam Singh came to know that A17 Prem Singh had submitted the report that fertilizer was being manufactured in the unit but the report was never shown to other members of the team nor their signatures were obtained on it. Witness after going through the report Ex.PW6/A stated that it is not a correct report as per the spot inspection. Witness also proved the seizure memo Ex.PW15/A vide which he had handed over the files pertaining to M/s. Punjab Fertilizer & Pesticide Industry and M/s. Punjab Phosphate Pvt. Ltd. Files were collectively identified as Ex.PW15/A1 to A3.
In the cross examination on behalf of defence, witness admitted that he was not given any written order nor he submitted any report in his office regarding the inspection. Witness denied the suggestion that report, Ex.PW6/A is the correct report in accordance with the spot inspection. Pritam Singh stated that when inspecting team reached on the spot, the CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 42 of 146 factory was open and around 57 persons were present in the factory. He did not ask the name and address of the those persons nor did he collect any document from the factory during the inspection. PW15 stated that he was directed by Chief Agriculture Officer to accompany the team and to show the record of their office (Chief Agriculture Office) to Joint Director. 3.9 M/s Punjab Fertilizer & Pesticide Industry & M/s Punjab Phosphate Pvt. Ltd.
3.9.1 PW10 Vijay Kumar has been heavily relied upon by the CBI. He was working under late PK Parmar (A2) at his office at Aram Bagh, Amritsar as an office boy in the year 1985. Sh. Vijay Kumar used to do all miscellaneous work like brining water and tea, depositing money in the bank and some clerical work also. He used to work for M/s. Punjab Phosphate Pvt. Ltd. Witness stated that he does not know if any fertilizer was being produced in the unit of M/s. Punjab Phosphate Pvt. Ltd. Witness was sent once or twice at base unit in Chheratha and he only saw some material lying there but was not having knowledge that whether any production activity was carried out in that factory or not.
3.9.2 PW11 Shri Prakash was Joint Director (Inputs) at the relevant time. He primarily deposed about the procedure regarding grant of subsidy and the background of inspection conducted by A17 Prem Singh on 18.09.86. CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 43 of 146 The testimony of PW11 is important to understand the procedure for the grant of subsidy. It would be advantageous to reproduce the relevant extracts of his testimony:
"Single super phosphate (SSP) fertilizer is a low nutrient fertilizer containing 16% of phosphate. At that particular time, there were about 6070 fertilizer units manufacturing SSP. The main raw material for SSP is rock phosphate mixed with sulphuric acid. The ingenious supply of rock phosphate was not adequate and it was also imported to meet the requirement of manufacturing of SSP. At that particular time, Rajasthan State Mineral Development Cooperation used to supply rock phosphate. In addition to, rock phosphate was also supplied from Madhya Pradesh and some part in UP by the State owned agencies but in a very small quantity.... The rock phosphate was mined only by Govt. agencies as far as I remember. I recall that Uttar Pradesh State Mineral Development Cooperation used to mine very small quantity of rock phosphate. In Uttar Pradesh the mining of rock phosphate was used to be done in Bundel Khand Area and in Madhya Pradesh, it was in Malwa region and may be in Megh Nagar. The rock phosphate used to be imported by MMTC. MMTC used to supply rock phosphate to all the fertilizer units which required rock phosphate, the fertilizer units producing Di Amonium Phosphate (DAP) fertilizer and other complex fertilizers. As far as I remember, the rock phosphate was used to be supply by MMTC to FACT and RCF (Rashtriya Chemical Fertilizer).
The fertilizer was used to be distributed as per supply plan made by Deptt. Of Agriculture, Ministry of Agriculture. The supply plan was prepared twice in a year separately for Rabi and Kharif seasons, before the start of such seasons. The requirement of States was used to be assessed in a conference attended by Ministry of Agriculture, Deptt. Of Fertilizer, State Govts. and FICC. Such conferences used to be held twice in a CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 44 of 146 year. The selling price of the fertilizer was used to be fixed by Deptt. Of Agriculture. The purchase of rock phosphate was between fertilizer manufacturing unit and the supplying agencies namely MMTC and RSMML...... when FICC started receiving the complaints, some instructions were issued that rock phosphate be bought directly from Govt. Agencies and no middleman should be involved. The SSP units situated in North India i.e. Haryana, Punjab and Delhi, were used to procure rock phosphate from RSMDC, Rajasthan..... We had a suspicion that time that there could be some suppliers other than main sources i.e. RSMDC and MMTC, from which some SSP units would have bought rock phosphate or waste of rock phosphate. The waste of rock phosphate used to be certainly inferior to that of main product supply of RSMDC and MMTC. To curb this, some instructions / circulars were issued. I have seen the circular No. FICC/FNA/SSP/CIR/87 dated 11.09.87 and circular No. FICC/FNA/SSP/CIR/87/626 dated 28.10.87 and the same are Ex.PW11/A and Ex.PW11/B. The circulars were issued under the signatures of Sh. Prem Singh, the then Joint Director (Finance & Accounts)."
In respect of the need for joint inspection, in the year 1986 in the capacity of Joint Director (Inputs) in FICC, he (PW11) attended a Zonal Conference for Northern Zone for Rabi 198687 held on 21.08.86. In this Zonal Conference there was a complaint of Director of Agriculture, Punjab that M/s. Punjab Phosphate Pvt. Ltd. , Amritsar is not producing any fertilizer and the unit is non existent. Pursuant to this complaint, it was decided in the Zonal Conference that for Rabi 8687 no allocation for SSP should be made in favour of M/s. Punjab Phosphate Pvt. Ltd. and a thorough investigation be made in this regard. PW11 stated that there was a system of CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 45 of 146 regular and casual inspection by the Finance and Accounts Department of FICC of fertilizer units so as to assess the manufacturing for the purpose of grant of subsidy by the FICC. He (PW11) recorded a note (Ex.PW11/C) in this regard and requested Joint Director (F&A) to conduct the inspection of M/s. Punjab Phosphate Ltd. jointly with State Govt. and to submit the report to Executive Director, FICC. In pursuant to the note Ex.PW11/C, A17 Prem Singh submitted a note (Ex.PW11/D) dated 26.08.86, to Executive Director which contained the details of subsidy paid to M/s. Punjab Phosphate Pvt. Ltd., Amritsar from 198182 onwards upto July 1986 and also mentioned about earlier two inspections. A17 Prem Singh suggested for association of Director Agriculture, Punjab for inspection of the unit and this was duly approved by Executive Director. PW11 Shri Prakash submitted that only after receiving confirmation from Director Agricultural, Punjab, inspection dates were fixed as 17.09.86 and 18.09.86 and the inspection was conducted on 18.09.86 and inspection report, Ex.PW6/A was submitted by A17 Prem Singh under his signatures to Executive Director. Executive Director after seeing the report suggested that Joint Secretary (Agriculture cum Controller of Fertilizer) and Director Agriculture, Punjab be informed accordingly. A17 Prem Singh vide letter dated 24.09.86, (Ex.PW11/F) informed Joint Secretary (Agriculture cum Controller of Fertilizer) that allegation against the company were not correct. Copy of this letter was also endorsed to Director Agriculture, Punjab. PW11 Shri Prakash stated that inspection teams are supposed to look into the entire operation of the unit and are also CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 46 of 146 supposed to see all the records of said unit and they are also supposed to see that how much material has been received, how that has been consumed and how much fertilizer has finally been dispatched. In case some discrepancy is found in the inspection report like if the inspection report is found to be indicating that certain amount of fertilizer has been dispatched but actually it was not found dispatched then action used to be taken against the unit and the subsidy granted used to be recovered. Witness also proved the seizure memo Ex.PW11/G vide which the documents were seized.
In the cross examination on behalf of accused MS Sandhu (A11), Vinod Chandra (A12), Pritam Singh (A18) and Prem Singh (A17), witness stated that the instructions contained in Letter No. FICC/F&A/Inspection/84/890 dated 05.12.83, Ex.PW11/DA are in regard to a particular inspection and are not general instruction. Witness admitted that an inspecting officer conduct the inspection only as per the instructions, however, the inspection of record would include the checking of record relating to receipt of raw material, manufacturing of fertilizer and dispatch of the fertilizer. Similarly, the witness expressed his ignorance about the instructions mentioned in Ex.PW11/DB saying that it did not involve his area of operation.
In the cross examination on behalf of accused YR Khattar and RK Bhambi, witness stated that there were adequate written instructions to the inspecting teams but he was not able to recall specifically any such circulars. However, witness stated that since he was at No.2 in FICC at the CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 47 of 146 relevant time, he was generally aware about the expectation from the inspecting team. It is pertinent to mention here that witness stated that he does not believe that there would not be any instructions for the inspecting team to not to look into the manufacturing activity in fertilizer unit. Witness was not able to tell that who conducted the inspection of M/s. Punjab Phosphate Pvt. Ltd. of the year 198485 and 198586. Witness (read PW11) stated voluntarily that in his opinion, the inspecting team should not only look into the records but also see that how the manufacturing has been done and what raw materials have been used and also to look into the physical infrastructure available at the fertilizer unit in order to reduce that whatever fertilizer has been stated to have been manufactured has been done accordingly.
In the cross examination on behalf of A8 Pratap Narain, witness denied the suggestion that role of FICC was confined to of an Accounting Office to settle the subsidy claim made by fertilizer units. PW11 voluntarily stated that FICC was an attached office of Deptt. Of Fertilizers and its work involved the fixation of retention price of all the fertilizer units for which subsidy were to be paid. In addition to, fixation of retention price, FICC also used to settle the subsidy claims. However, witness admitted that FICC had no field set up to verify the supply of fertilizer by the concerned unit. Witness voluntarily stated that they have set of Accounts Officer who were required to visit fertilizer units to look into their records and audit the same. PW11 Shri Prakash stated that Joint Director or Director (Finance and CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 48 of 146 Accounts) used to settle the subsidy bills in the FICC. It is pertinent to mention here that in respect of A8 Pratap Narain witness admitted that as a public servant in the capacity of as Head of Deptt., one is duty bound to receive all the communications given to him and he stated that on the basis of his experience, he can say that the term "process" means that it should be dealt in the office as per procedure. Witness stated that he does not think if by any stretch of imagination "process" would mean payment. 3.9.3 PW27 Malvinder Singh the then Environmental Engineer in the Regional Office, Jalandhar headed by Punjab Pollution Board proved that M/s. Punjab Phosphate Ltd. had never taken any clearance from the Punjab Pollution Board and proved his letter as Ex.PW27/A. In the cross examination, the witness specifically stated that till the time he had written letter dated 22.03.90, Ex.PW27/A M/s. Punjab Phosphate Pvt. Ltd. had not taken any permission from the Pollution Board for manufacturing SSP fertilizer.
3.10 Sadhna Enterprises 3.10.1 Case of the prosecution is that the accused had falsely shown to have received raw material of SSP from M/s. Sadhna Enterprises and A2 PK Parmar, Managing Director of M/s Punjab Phosphate Pvt. Ltd., also opened a fictitious account in the name of M/s. Sadhna Enterprises in Amritsar for CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 49 of 146 channelizing the ill gotten money. In respect of this aspect of fact, prosecution examined PW12 Swaran Singh, PW32 SD Sharma, PW33 SD Anand and PW34 Anil Dhar.
3.10.2 PW32 SD Sharma had floated M/s. Sadhna Enterprises (India) Pvt. Ltd. in the year 1974. He remained the Chairman of this company till 1990. The company M/s. Sadhna Enterprises (India) Pvt. Ltd. was pioneer in Rock Phosphate which is a base material for manufacturing of Super Phosphate and had a grinding unit at Meghnagar, Distt. Jhabua, Madhya Pradesh. Witness (read PW32 SD Sharma) stated that in the year 1984, one Mr. Parmar from M/s. Punjab Phosphate Pvt. Ltd. contacted the company (read M/s. Sadhna Enterprises (India) Pvt. Ltd.) for supply of small quantity of rock phosphate and pursuant to the order placed by Punjab Phosphate Pvt. Ltd., the company (read M/s. Sadhna Enterprises (India) Pvt. Ltd.) supplied following quantity of rock phosphate powder to M/s. Punjab Phosphate Pvt. Ltd. :
Rock phosphate powder Bill No. & Date Price Ex.PW32/B 18.13 MT UP01 dated 01.08.86 Rs.15,773.10 ps. Ex.PW32/C 52.483 MT UP01 dated 17.11.85 Rs.44,551.71 ps Ex.PW32/D - 15.237 MT 60 dated 03.10.84 Rs.7,447.84 ps.
PW32 SD Sharma stated that M/s. Sadhna Enterprises (India) Pvt. Ltd. never opened any bank account in Amritsar nor they had any CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 50 of 146 banking transaction there. All the banking transaction of the company M/s. Sadhna Enterprises (India) Pvt. Ltd. were in Delhi. Witness (read PW32) stated that M/s. Sadhna Enterprises (India) Pvt. Ltd. never worked as a Proprietorship concern though it started as a partnership firm. Witness after seeing cheques No.25544, 25554, 25559, 25549, 25564, 25582, 25584 and 25596, Ex.PW32/E1 to E9, all payable to Sadhna Enterprises denied his signatures at point Q1437, Q1429, Q1433, Q1435, Q1431, Q1448 and Q1439. PW32 stated that Sh. Anil Mathur had also been their Manager and on seeing the signatures of Sh. Anil Mathur on E8 at Q1442 and E7 at Q1446 stated that these signatures does not seem to be of Sh. Anil Mathur. PW32 stated that the company never authorized Mr. Parmar to open an account or use their name at Amritsar or elsewhere.
3.10.3 PW33 SD Anand was one of the Director in M/s. Sadhna Enterprises (India) Pvt. Ltd. He stated that M/s. Sadhna Enterprises (India) Pvt. Ltd. started its operation as a partnership firm and later on, it was converted into Pvt. Ltd. however, it never operated as a proprietary firm. Witness stated that the bills D6 collectively Ex.PW33/A were printed in the name of Sadhna Enterprises, Proprietorship firm and it does not pertain to M/s. Sadhna Enterprises (India) Pvt. Ltd. PW33 SD Anand stated that their bills used to be signed by Accounts Officer / Director as reflected in the bill Ex.PW32/B to Ex.PW32/D. CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 51 of 146 3.10.4 PW12 Swaran Singh had joined M/s. Sadhna Enterprises (India) Pvt. Ltd. in the year 1981 as Manager. He deposed regarding the operation of M/s. Sadhna Enterprises (India) Pvt. Ltd. He (read PW12) used to operate from Meghnagar office. He stated that the goods were used to supply only after the instructions conveyed to him from the Head office and had no direct communication with the buyer. He stated that during his tenure only two supplies were made to M/s. Punjab Phosphate Pvt. Ltd. and M/s. Sadhna Enterprises (India) Pvt. Ltd. did not supply any quantity of rock phosphate to M/s. Punjab Fertilizer and Pesticide Industry. Witness identified bill No.60 dated 03.10.84, Ex.PW12/A and bill No.74 dated 16.11.84, Ex.PW12/B. Vide bill No.60 dated 03.10.84, Ex.PW12/A 15.237 metric tone of rock phosphate in 300 bags was sent to M/s. Punjab Phosphate Pvt. Ltd. from Meghnagar to Amritsar vide truck No. PJM 6175 through New Baghi Roadways for the total value of Rs.7,447.84 ps and vide bill No.74 dated 16.11.84, Ex.PW12/B, 48.5 metric tone of rock phosphate was sent to M/s. Punjab Phosphate Pvt. Ltd. from Meghnagar to Chheratha by railway vide RR No.806879 and 806880 dated 16.11.84 through Wagon number SR - 30062 and NR 620800. PW12 proved the sale / purchase register containing 37 pages, Ex.PW12/C which was seized vide memo Ex.PW12/D. 3.10.5 PW34 Anil Dhar had also worked for M/s. Sadhna Enterprises (India) Pvt. Ltd. in the year 1978 as Manager and rose to the position of CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 52 of 146 Director. He also deposed regarding the operations of M/s. Sadhna Enterprises (India) Pvt. Ltd. Witness proved the seizure of file No.766 relating to M/s. Punjab Phosphate Pvt. Ltd., Ex.PW34/A vide receipt memo Ex.PW32/A. PW34 specifically stated that M/s. Sadhna Enterprises (India) Pvt. Ltd. did not have any bank account at any point in Amritsar and their company never deposited any amount in State Bank of Bikaner and Jaipur nor any payment was made to M/s. BK Enterprises or to M/s. Vijay Trading Co. He (read PW34) also stated that their company i.e. M/s. Sadhna Enterprises (India) Pvt. Ltd. never authorized Mr. PK Parmar to operate their bank account or open an account in the name of their company. In the cross examination, witness specifically stated that as per record, M/s. Sadhna Enterprises (India) Pvt. Ltd. never made any supply to M/s. Punjab Fertilizer & Pesticides Industry.
3.10.6 PW9 Updesh Kapoor deposed that at no point of time her property was let out to "M/s. Shadder Acid and Chemicals". It is pertinent to mention here that M/s Shadder Acid and Chemicals is allegedly a fictitious firm floated to manipulate the records.
3.10.7 PW19 Garib Dass stated on oath that he let out a shop to M/s. Lalit Enterprises somewhere in the year 1984 at a monthly rent of Rs.125 per month. Witness stated that his shop was never opened till the same was CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 53 of 146 vacated in around 34 months. After the shop was vacated, the landlord i.e. witness (read PW19) opened it but did not find any furniture or paper in the same. In the cross examination on behalf of A3 Lalit Kumar Parmar, witness stated that he had never seen any goods incoming or outgoing from the said shop.
3.11 B.K. Enterprises 3.11.1 Sh. Anil Mathur, partner of M/s BK Enterprises 4, Jain Boarding, Dhan Mandi, Udaipur, Rajasthan appeared as PW13 and deposed on oath that Mrs. Shashi Hinger and Mrs. Pushplata Hinger were also partner with him in the said business. Sh. Balwant Kumar Hinger used to look after the office work and overall work of the firm was used to be handled by him (read PW13 Anil Mathur). PW13 Anil Mathur was handling the Meghnagar office. PW13 Anil Mathur specifically stated that M/s BK Enterprises was duly registered with the Rajasthan Sales Tax and Central Sales Tax. The witness (read Anil Mathur) stated that he does not have any concern with the firm M/s. B.K. Enterprise. Sh. Anil Mathur stated that they used to collect particulars of buyer of rock phosphate from the State Mining Corporation and then used to supply rock phosphate to the manufacturing unit of Single Super Phosphate (SSP). There was no ban of selling rock phosphate directly to SSP manufacturer by private parties. However, M/s BK Enterprises did not have any sale transaction with M/s. Punjab Fertilizer and Pesticides CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 54 of 146 Industry and M/s. Punjab Phosphate (Pvt.) Ltd., at any point of time. M/s BK Enterprises had only sent sample of rock phosphate to M/s. Punjab Fertilizer and Pesticides Industry alongwith the letter Ex.PW13/A. M/s Punjab Fertilizer & Pesticides Industry had also written a letter dated 29.12.80 Ex.PW13/B to M/s BK Enterprises calling for the price of rock phosphate, in response to which M/s BK Enterprises sent a letter dtd 06.01.81 Ex.PW13/C and thereafter, no communication took place between the two. PW13 Sh. Anil Mathur stated that his firm (read M/s BK Enterprises) had never any account in Amritsar nor he had any account in Amritsar at any point of time. Sh. Anil Mathur being the Managing partner of the firm used to maintain his account in UCO Bank, Udaipur and State Bank of India and Bank of Baroda at Meghnagar. The witness stated to have never received any payment through cheque from M/s. Punjab Fertilizer and Pesticides Industry or M/s. Punjab Phosphate Pvt. Ltd. Sh. Anil Mathur specifically stated that no person by the name of Bal Krishan had ever worked in their firm. The witness after seeing the cheques Ex.PW13/D1 to D94 specifically stated that none of these cheques bears his signature nor did his firm receive any payment through the cheques Ex.PW13/E1 to E18 from M/s. Punjab Fertilizer and Pesticides Industry and M/s. Punjab Phosphate. The witness specifically stated that the purported signatures of Anil Mathur on the above said cheques are the forged signatures.
It also came in the testimony of PW13 Anil Mathur that M/s. B.K. Enterprises had never any office in Amritsar nor his firm had opened CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 55 of 146 any account in Punjab National Bank, Katra Ahluwalia, Amritsar at any point of time. The witness also denied his signatures on Account Opening Form, Specimen Signatures Card of Current Account No.5734 which are Ex.PW13/F and Ex.PW13/G. It also came in his testimony of PW13 Anil Mathur that his firm was a partnership firm and it has never been a Proprietorship firm. Sh. Anil Mathur by seeing the cheques No.801701 to 801725, Ex.PW13/H1 to H25, drawn on Punjab National Bank, Katra Ahluwalia, Amritsar stated that these cheques have never been issued by him and the signatures on the said cheques are forged signatures. He also stated that his firm had never deposited any amount vide deposit slips Ex.PW13/H26. In the cross examination, the witness stated that in the account opening form, the address of M/s BK Enterprises is Batala Road, Amritsar and this is not his firm and it may be some other firm. Arguments on behalf of CBI 4.0 Sh. DK Singh, Ld. PP for CBI has opened his arguments by submitting that prosecution has unfolded the case of the prosecution and on the basis of material on record it has successfully proved its case against the accused persons. Ld. PP has submitted that sanction has been duly proved on record and the aspect of criminal conspiracy has also been sufficiently proved beyond reasonable doubt by the prosecution witnesses. M/s Punjab Fertilizer and Pesticides Industries was started as a firm and lateron M/s CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 56 of 146 Punjab Phosphates Pvt. Ltd came into existence as a company. M/s Punjab Phosphates Pvt. Ltd had never manufactured any Single Super Phosphate (SSP) and there is credible and cogent evidence on the record regarding the same. Accused Lalit Parmar, one of the Director of the company, has played an active role in the conspiracy. Since it has been proved on record that firm / company did not manufacture SSP, any act done by the accused persons towards the fact to show that manufacturing was being done, is an act in furtherance of the conspiracy. This case revolves around the claim of subsidy based on bogus bills and any act on the part of any of the accused persons to show that fertilizer was being manufactured is an act towards conspiracy. The DIC officers (A5 to A7) have also wrongly forwarded the bill in conspiracy with the accused persons.
Ld. PP has submitted that Memorandum and Article of Association clearly indicates that A3 Lalit Parmar was one of the Directors. Ld. PP submits that Memorandum and Article of Association is a public document and per se it should be read in evidence being public document. A3 Lalit Parmar has never challenged his position as a Director since the inception, and at this stage it does not lie in the mouth of the accused that he was not a Director or the fact that being a Director of the company came into his knowledge at the time of raid. Accused has maintained a studded silence throughout the trial and therefore, this defence taken by the accused is an after thought and a false defence. Ld. PP has submitted that even this false defence can be taken as a circumstance against the accused persons. Ld. PP CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 57 of 146 has argued that no defence has been put on the part of the company and the defence has not been able to bring any material on the record to show that Punjab Phosphate Pvt. Ltd. has manufactured any SSP during the period in question. The company M/s Punjab Phosphate Pvt. Ltd. has perpetual existence and therefore, u/S 305 Cr.PC company has a liability as prescribed under the law.
In respect of the property seized during the investigation, Ld. PP has submitted that substantial portion of those property are still with the CBI and this Court is the custodian of this property and the property which was procured from the ill gotten money is required to be seized.
In respect to the magnitude of the fraud, Ld. PP has submitted that it was a case of high magnitude of fraud keeping in view the value of money at that time. Accused persons defrauded the government for an amount of more than Rs. 3 crores. Keeping into account the circumstances prevalent at the time, the amount of fraud was very high. It has been submitted that the act of the accused persons is speaking loud and clear that they have been party to the conspiracy and they have been party in deceiving the government. Ld. PP has submitted that investigation officer in his statement has given the complete outline of the fraud committed by the accused persons.
Ld. PP for CBI has submitted that section 3 of the Commercial Documents Evidence Act, 1989 provides presumption as to the genuineness CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 58 of 146 of documents. Section 3 of this Act reads as under :
"3. Presumption as to genuineness of documents - For the purpose of the Indian Evidence Act, 1872, and notwithstanding anything contained therein, a Court
(a) shall presume, within the meaning of that Act, in relation to documents included in Part I of the Schedule, and
(b) may presume, within the meaning of that Act, in relation to documents included in Part II of the Schedule, that any document purporting to be a document included in Part I or Part II of the Schedule, as the case may be, and to have been duly made by or under the appropriate authority, was so made and that the statements contained therein are accurate.
Entry 23 of part I of The Schedule of the Commercial Documents Evidence Act, 1989 reads as under :
"23. Copy, certified by the Registrar of Companies, of the memorandum or the articles of association of a company, filed under the Indian Companies Act, 1913.
Besides this, Ld. PP for CBI has relied upon Section 35 of the Companies Act 1956, which reads as under :
"35. Conclusiveness of Certificate of Incorporation - A certificate of registration given by the Registrar in respect of any association shall be conclusive evidence that all the requirements of this Act have been complied with in respect of the registration and matters incidental thereto and that the association is a company authorized to be registered and duly registered under this Act."CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 59 of 146
Sh. D.K. Singh, Ld. PP has argued that CBI has duly placed and proved on record the Memorandum and Article of Association as well as certificate of Incorporation which clearly finds mention of A3 Lalit Kumar Parmar as Director of M/s. Punjab Phosphate Pvt. Ltd. It has been submitted that in view of the Commercial Documents Evidence Act and Section 35 of the Companies Act, nothing more is required to be proved in respect of the status of the accused in the company and legal entity of M/s Punjab Phosphate Pvt. Ltd. (A1).
In respect of sanction order, Ld. PP has argued that the prosecution has examined PW1, PW2, PW3, PW4, PW7, PW14 and PW43 in order to prove the sanction. It has been submitted that PW1 A.S. Syali proved the sanction in respect of accused RK Bhambi ; PW2 Ravi Kathpalia proved the sanction in respect of accused Y.R. Khattar ; PW3 Sarat Chandra proved the sanction in respect of accused S.C. Singla (since deceased) ; PW4 S.K. Gupta proved the sanction in respect of accused G.S. Sachdeva ; PW7 AC Patnaik proved the sanction in respect of A17 Prem Singh ; PW14 Ms. Radha A. Nanjnath proved the sanction in respect of accused Vinod Chandra and PW43 Sh. SK Awasthi proved the sanction in respect of accused RC Nirmal. The accused persons have challenged the sanction primarily on three grounds :
1. firstly, the sanction has been granted mechanically and without any application of mind ;CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 60 of 146
2. secondly, A17 Prem Singh has challenged the sanction on the ground that sanction was granted after expiry of 3 months in violation of Vineet Narain's case ; and
3. some of the accused persons have challenged that the sanction under section 197 Cr.P.C. should have also been obtained, and in the absence of such sanction, the cognizance could not have been taken against them.
Ld. PP has argued that all these arguments are without any basis. The accused persons have not raised any plea of prejudice, miscarriage of justice or failure of justice during the trial. No such plea was taken herein before i.e. during the stage of enquiry or trial. Since it has not been challenged earlier, it has got Cloak of Immunity and therefore, same cannot be challenged at this stage. Ld. PP has read the Statement of Object and Reasons of PC Act, 1988 and submitted that the accused persons have lost their right to agitate about the validity of the sanction in absence of any such plea having not been taken before. In respect of sanction having been granted after 3 months, Ld. PP for CBI submitted that it is only directory and not mandatory and therefore, merely on this ground sanction cannot be vitiated.
In respect of Section 197 Cr.P.C., CBI has argued that it has been conclusively held in Prakash Singh Badal Vs. CBI, 1997 SCC 1 that in case, the charge sheet has been filed for the offence of criminal conspiracy CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 61 of 146 r/w cheating, sanction u/S.197 Cr.P.C. is not required.
Ld. PP has submitted that in respect of A3 Lalit Kumar Parmar, prosecution has led cogent and creditworthy evidence which is sufficient in nature to held the accused guilty. The Memorandum and Article of Association clearly prove that accused was Director of M/s. Punjab Phosphate Pvt. Ltd. Accused himself has admitted that he was partner of M/s. Lalit Enterprises and accused was found on 06.12.1988 at the time when the raid was conducted at his place by PW38 Javed Siraj. Ld. PP has also attracted the attention of this court towards the conduct of the accused Lalit Parmar (A3) whereby he initially tried to conceal himself but later on found hiding in the bathroom during the search. Sh. DK Singh, Ld. PP for CBI submitted that since the prosecution has specifically proved on record that the company M/s. Punjab Phosphate Pvt. Ltd. had never manufactured any Single Super Phosphate (SSP) and have claimed subsidy on the basis of bogus bills, the accused, who was Director of the company is also held to be criminally liable for the same.
In respect of A17 Prem Singh, Ld. PP has argued that the relevant witnesses are PW6 Ajmer Singh and PW15 Pritam Singh. Both PW6 Ajmer Singh and PW15 Pritam Singh had accompanied A17 Prem Singh during the surprise inspection conducted on 18.09.86 at the premises of M/s. Punjab Fertilizer and Pesticides Industry / M/s. Punjab Phosphate Pvt. Ltd. A17 Prem Singh in pursuance to the inspection had submitted a report, Ex.PW6/A. As per report, Ex.PW6/A it is an admitted fact that PW6 CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 62 of 146 Ajmer Singh and PW15 Pritam Singh were the members of such inspection team. PW6 and PW15 have made categorical statements on oath that no manufacturing activity was going on in that premises, whereas, report Ex.PW6/A submitted by A17 Prem Singh gave affirmative report that all the allegations against M/s. Punjab Phosphate Pvt. Ltd. are incorrect and manufacturing activity was taking place. Ld. PP would argue that this report itself shows that A17 Prem Singh was in conspiracy with the company M/s. Punjab Phosphate Pvt. Ltd., A2 P.K. Parmar, A3 Lalit Kumar Parmar and A23 Savita Parmar.
Sh. D.K. Singh, Ld. PP submitted that the nature of transaction in the present case are reflective of criminal conspiracy. Ld. PP attracted the attention of the court towards the answer given by A17 Prem Singh in his statement u/S.313 Cr.P.C., where in reply to Q.3 regarding the evidence of non production of any SSP by M/s. Punjab Phosphate Pvt. Ltd., accused Prem Singh simply stated that he does not know anything. Ld. PP submitted that in respect of A17 Prem Singh, CBI by way of testimony of PW6 Ajmer Singh, PW15 Pritam Singh and PW7 AC Patnaik has sufficiently proved its case against the accused.
Ld. PP further continued his arguments and placed on record the evidence of PW8, PW24 and PW21 as the witnesses who have produced the documents. In respect of the fact that the accused persons had opened the fictitious accounts in the name of M/s. Sadhna Enterprises. Ld. PP has also placed on record testimony of PW32 and PW33. In respect of bank officials, CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 63 of 146 Ld. PP has submitted that the relevant evidence is of PW36 and PW39. Sh. D.K. Singh, Ld. PP argued that PW16 Sh. Gurmeet Singh in his evidence on oath has specifically stated that there was no electricity consumption at particular period. Similarly, PW26 has deposed that M/s. Punjab Phosphate Pvt. Ltd. had not obtained any certificate from Pollution Control Board and therefore, this also indicates that no production was being carried out. In respect of procedure being followed by FICC, Ld. PP has relied upon two circulars No.4(27)/80FDA.I dated 29.09.80, Ex.PW40/DA and No.4/13/82 FDA.I dated 05.08.82. Ld. PP has also relied upon letter dated 05.12.83 vide which accused MS Sandhu and Vinod Chandra were appointed to inspect M/s. Punjab Phosphate Pvt. Ltd. Ld. PP has also submitted that the report Ex.PW6/A indicates presence of A3 Lalit Kumar Parmar which signifies his active involvement in the offence.
Sh. D.K. Singh, Ld. PP has heavily relied upon the testimony of PW10 Vijay Kumar. Vijay Kumar was employee of M/s. Punjab Phosphate Pvt. Ltd. He has expressed his ignorance about the manufacturing activity in the company. Ld. PP submitted that the testimony of this witness, who is totally independent by his tone and tenor, indicates that no production activity was being carried out. In respect of other accused persons, Ld. PP has submitted that being in conspiracy, evidence against other accused persons may also be read. Ld. PP concluded his arguments by submitting that CBI has successfully proved its case against the accused persons beyond reasonable doubt and therefore, accused persons are liable to be convicted. CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 64 of 146 ARGUMENTS ON BEHALF OF DEFENCE Arguments on behalf of company M/s. Punjab Phosphates Pvt. Ltd. (A1) and on behalf of accused Lalit Kumar Parmar (A3) 4.1 Sh. Alok Bachawat, Ld. Counsel for accused Lalit Parmar (A3) has submitted that prosecution has miserably failed to prove its case against the accused. Against his client (Lalit Parmar) the charge of conspiracy has not been proved as there is no evidence, cogent or creditworthy, to connect the accused with the other accused persons. In respect of charge head 2 to 4 regarding fabrication of documents, fictitious transport companies and dishonest and fraudulent use of inspection sales report, the prosecution has not led any evidence to this effect, therefore, these charges directly falls to the ground. Sh. Alok Bachawat, Ld. Counsel has argued that he had been taking the defence since beginning that his client Lalit Parmar was an MES contractor and he had no concern with M/s Punjab Fertilizer & Pesticides Industry and M/s Punjab Phosphate Pvt. Ltd. Sh. Lalit Parmar, an MES contractor, had floated a firm namely M/s Lalit Enterprises and from this firm he was doing his business. This fact has been admitted by PW40 DK Chaudhary in his cross examination wherein he admitted that he had seized record of M/s Lalit Enterprises during the course of investigation which included invoice book, cheque book and sales tax receipts. All these records have been collectively marked as Mark X. IO stated that as per these documents accused Lalit Parmar was MES contractor and he (read IO) went CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 65 of 146 to Tibri office, Gurdaspur, MES office to make enquiries. Sh. Alok Bachawat, Ld. Counsel further argued that accused has primarily been charged in the capacity of Director of M/s Punjab Phosphate and in order to prove this fact, the prosecution has relied upon the Memorandum & Article of Association placed on record by them. Sh. Alok Bachawat, Ld. Counsel would argue that the prosecution has not proved this Memorandum & Article of Association at all in accordance with the provisional law. This document i.e., Memorandum & Article of Association were required to be proved like any other document and CBI merely by saying that since Lalit Kumar Parmar has been shown as one of the Director in Memorandum & Article of Association, it cannot be conclusively held that he was Director of the firm. The case of the CBI is that main accused PK Parmar had forged number of documents and therefore, the possibility of signature of Lalit Parmar also being forged on the Memorandum & Article of Association cannot be ruled out. CBI has not proved on record the opinion of Govt. Examiner's Questioned Document, so as to prove by way of positive evidence that the signature on Memorandum & Article of Association are of Lalit Kumar Parmar and not of anybody else. Sh. Alok Bachawat, Ld. Counsel would further argue that even if for the sake of arguments, it may be taken that Lalit Kumar Parmar was Director in M/s Punjab Phosphate Pvt. Ltd., he cannot be held guilty for the act of the company. The company has a distinct and separate legal entity and the Directors cannot be held liable for the act and conduct of the company. The concept of vicarious liability is foreign to the CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 66 of 146 criminal jurisprudence and therefore, in any case for the act of the company, accused Lalit Kumar Parmar cannot be held liable. In support of his contention, Ld. counsel cited B. Jagdeesh & Ors. Vs. The Dy. Supdt. Of Thermax Police, Cri. A. No. 6419 of 2007 decided on 12.04.2011 and M/s. Ltd. and Ors. Vs. K.M. Johny & Ors, JT 2011 (11) SC 241, (para 20 & 21) Sh. Alok Bachawat, Ld. Counsel would further argue that the prosecution has examined only 4 witnesses concerning A3 Lalit Parmar and those are PW10 Vijay Kumar, PW36 RK Manocha, PW38 Javed Siraj (part IO) and PW40 DSP DK Chaudhary.
PW10 Vijay Kumar in his testimony has specifically stated that Lalit Kumar Parmar had not been working in the office of PK Parmar. PW36 RK Manocha in his testimony has stated that account of M/s. Lalit Enterprises was opened on 25.08.87. Ld. Counsel would pause here for a moment and attracted the attention of the court that M/s. Punjab Phosphate Pvt. Ltd. had claimed the subsidy till March 1987 and therefore, since this account was opened in August 1987, it cannot be related to the conspiracy amongst the accused persons. This fact of evidence having been after the conspiracy had already come to an end and cannot be taken into account by the court. The withdrawals in the account of M/s. Lalit Enterprises made vide slips Ex.PW20/B are of very small amount and are concerning only the business of M/s. Lalit Enterprises. PW38 Javed Siraj has only submitted to the extent that when the raid was conducted, accused Lalit Parmar was found CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 67 of 146 hiding in the bathroom. Ld. Counsel would not dispute the factum of raid in the house of Lalit Parmar. However, he states that raid was conducted illegally and though he (read Lalit Parmar) was not at all there, but even if as per the case of prosecution, if a person has been found hiding in the bathroom during the course of raid, the ipso facto, it would not make him guilty of the offence. PW40 DK Chaudhary, IO has also admitted in his cross examination that he had seized the documents regarding M/s. Lalit Enterprises and Lalit Parmar was working as MES Contractor. Ld. Counsel submits that the prosecution has not proved the documents in accordance with the law. Only receipt memo and seizure memo has been proved. It has been submitted that merely marking of documents would not make document capable of being considered for the purpose of judgment. He submits that neither the documents were exhibited nor they were marked and therefore, they cannot be taken as evidence. In support of his contention, Ld. Counsel cited Sanjiv Baidya Vs. State of Arunachal Pradesh, Cri. A. No. 04(AP)2008 decided on 20.05.2010. Ld. Counsel concluded his arguments for Lalit Parmar saying that prosecution has miserably failed to prove its case against the accused.
Sh. Alok Bachwat, Ld. Counsel on behalf of accused company argued that the prosecution is heavily relying upon the testimony of PW16 Gurmeet Singh through whose testimony, the prosecution has sought to prove that the electricity consumption in M/s. Punjab Phosphate CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 68 of 146 Pvt. Ltd. was very low which indicates that M/s. Punjab Phosphate Pvt. Ltd. was not manufacturing and selling that quantity of SSP which is shown in the subsidy bills submitted to FICC. Ld. Counsel pointed out that even as per this testimony, CBI has not been able to prove that what was the status of electricity consumption during December 1980 to July 81 and secondly, the statement of PW16 regarding the premises having been found locked is on the dates 28.07.87, 30.07.87 and 15.09.87. Sh. Alok Bachwat, Ld. Counsel would further argue that as per the case of prosecution, the last subsidy bill was of March 1987 and thereafter, no subsidy has been claimed by M/s. Punjab Phosphate Pvt. Ltd. from FICC. Ld. Counsel would further argue that the prosecution has not brought any material on the record to prove that what procedure was adopted by the company or the firm for the manufacturing of fertilizer and the only source of energy for M/s. Punjab Fertilizer and Pesticides Industry and M/s. Punjab Phosphate Pvt. Ltd. was electricity supply. Even in the inspection report prepared by Ram Singh, Accounts Officer along with Rakesh Bhambi, Junior Accounts Officer dated 19.03.87, it has specifically been mentioned by the persons inspecting the unit that the firm i.e. M/s. Punjab Phosphate Pvt. Ltd. had been using electricity and diesel generator as and when electricity connection was not available. Sh. Alok Bachawat, Ld. Counsel would argue that the prosecution has malafidely not proved its report only to cover up this aspect. It was for the prosecution to prove that how much electricity consumption is required for the manufacturing of SSP and since they have not proved, only on the CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 69 of 146 basis of testimony of PW16, it cannot be concluded that M/s. Punjab Phosphate Pvt. Ltd. was not manufacturing any fertilizer.
Sh. Alok Bachawat, Ld. Counsel would further argue that the CBI has conducted half hearted investigation in this case. In fact, the case was started with much fanfare with the allegation that M/s. Punjab Fertilizer & Pesticides Industry and M/s. Punjab Phosphate Pvt. Ltd. was not manufacturing or selling any fertilizer but the prosecution has not placed any material on the record to prove this fact. It was for the prosecution to prove that the company had not bought any raw material in the form of rock phosphate or Sulphuric acid from any company and the record regarding sale and purchase, was forged and fabricated. The entire record was seized by CBI and the onus was on them to prove the same. Ld. Counsel further argued that the accused persons have been charged for the offence on the basis of report of A17 Prem Singh dated 20.09.86, Ex.PW6/A, the bogus subsidy bills of M/s. Punjab Fertilizer & Pesticide Industry and M/s. Punjab Phosphate Pvt. Ltd. from the period December 1980 to March 1987 were cleared. Ld. Counsel submits that the subsidy bills only upto March 1987 were submitted and same were cleared by FICC. No bills after March 1987 was submitted. As per the procedure brought on the record by the prosecution itself, every year there used to be two Zonal Conferences in which the ECA allocation used to be made. These allocations were to be the base of manufacturing / sale of fertilizer by the manufacturing unit of SSP. The prosecution has not led any material on the record to suggest that after CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 70 of 146 report dated 20.09.86 any ECA allocation was made believing the report Ex.PW6/A and the bills were cleared on the basis of that report. Arguments on behalf of accused Ranveer Seth (A5) 4.2 Sh. SK Sood, Ld. Counsel for accused Ranveer Seth argued that accused Ranveer Seth has been charged that while working as Technical Officer, DIC, he illegally forwarded the bogus subsidy claims of the accused firm from December 1980 to July 1981 in pursuance to the criminal conspiracy. Sh. SK Sood, Ld. Counsel has submitted that accused Ranveer Seth was merely following the orders of his superiors. Prosecution has not brought any evidence to connect the accused with the offence. There is no evidence that he had any connection or meeting of mind with the accused PK Parmar and therefore, he is entitled to be acquitted. Sh. SK Sood, Ld. Counsel has submitted that no sanction for prosecution under PC Act or Cr.PC has been filed by the prosecution against the accused and therefore, cognizance taken against accused Ranveer Seth is void ab initio.
In support of his contention, Ld. Counsel has cited S. Arul Raja Vs. State of Tamil Nadu, Crl. Appeal No. 14941495 of 2009 decided on 30/7/2010.
Arguments on behalf of accused Daulat Singh (A6) 4.3 Sh. Rajesh Harnal, Ld. Counsel for accused Daulat Singh CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 71 of 146 argued that as per chargesheet accused Daulat Singh while working as Industrial Promotion Officer, DIC, Amritsar had falsely verified bogus subsidy claims of accused firm upto the period when the constitution of the said firm was changed to M/s Punjab Phosphate Pvt. Ltd. Ld. Counsel has submitted that the role of the accused was confined only in regard to the subsidy bill for the period December 1980 to July 1981. It has been submitted that this is not the case of the CBI that accused Daulat Singh had signed the said subsidy bills purporting to be some other person. The only allegation is that accused Daulat Singh was not authorised to certify / forward those bills and he in conspiracy with other accused persons unauthorizedly certified / forwarded these bills. Ld. Counsel submitted that if we go through the definition of Sec. 463 IPC forgery alongwith 464 IPC making a false document, the said subsidy bills cannot be held to have been a forged document. It has been argued that there is no forgery in the present case and once the charge of forgery fails, the accused also cannot be held liable for the offence of cheating. It has further been argued that infact these persons could have been joined as a witness by the CBI, but the CBI with malafide intention implicated the accused persons falsely and filed the chargesheet with tons of documents and number of witnesses. Sh. Rajesh Harnal, Ld. Counsel would further argue that in the present case no sanction was taken by the prosecution against accused Daulat Singh whereas he was in the service at the time of filing of the chargesheet and therefore, no cognizance could have been taken against the accused. Ld. Counsel has submitted that CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 72 of 146 even as per the letter written by Director of Agriculture, Punjab to the Financial Commissioner, Punjab dtd. 27/9/82, wherein it has inter alia been mentioned that the Govt of India entrusted the work of verification of bill to the Industries Deptt. Punjab and the General Manager, District Industries verified the bills and forwarded the same to FICC. Sh. Rajesh Harnal, Ld. Counsel has argued that Daulat Singh being an official of District Industry Center had merely made an endorsement on the subsidy bills of M/s Punjab Fertilizer & Pesticides Industry for the period December 1980 - July 1981 and October, November and December 1981, on the basis of the record. The bills were placed before him after having been duly signed by the partner of the firm and duly certified by Sh. Surender Khanna, Chartered Accountant. Daulat Singh had verified these bills on the basis of record in June 1982 after having been satisfied himself and having found the bills in accordance with the circular dtd. 29/9/80 Ex.PW40/DA. Ld. Counsel has further invited the attention of this court towards the letter dtd. 28/8/80 of Chief Agricultural Officer and another letter of Assistant Project Officer dtd 20/12/81. The perusal of both these letters would indicate that M/s Punjab Fertilizer & Pesticides Industry was manufacturing the SSP. As far as the authority of DIC to verify the bills is concerned, in the letter dtd 27/9/82 written by Director of Agriculture, Punjab to Financial Commissioner Ex.PW40/DG, it has inter alia been mentioned that the Govt of India entrusted this work to the Industry Deptt., Punjab. Ld. Counsel submits that infact there were some controversy regarding the conduct of Chief Agricultural Offier on account of CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 73 of 146 which DIC was authorised to certify / forward the bills in confirmity of the procedure laid down in letter dtd. 29/9/80 Ex.PW40/DA. Sh. Rajesh Harnal, Ld. Counsel submitted that even the bills which have been stated to have been forwarded by the accused Daulat Singh has not been proved by the prosecution. It has also been submitted that the Dealer Registration Certificate was very much in existence on the date when accused Daulat Singh had made the endorsement on the bills.
Arguments on behalf of accused RC Nirmal (A7) 4.4 Ms. Kamlesh Shambharwal, Ld. Counsel for accused RC Nirmal has argued in detail to impress upon the point that prosecution has miserably failed to prove its case against her client A7 RC Nirmal. It has been submitted that as per para 10 of the charge sheet, the accused was chargesheeted on the allegation that while working as Asstt. Manager, District Industry Centre, Amritsar, he also countersigned and certified the bogus subsidy bills and also issued fraudulently technical report in respect of accused company to enable the said company i.e. M/s. Punjab Phosphate Pvt. Ltd. to obtain loan from PNB, Katra Ahluwalia Branch, Amritsar. Ld. Counsel submitted that prosecution has not produced any evidence that the bills on which the accused had countersigned were bogus or prepared in a fraudulent manner. It is pertinent to mention here that the counter signatures on the bills has not been disputed. However, the point which has been put CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 74 of 146 forth is that the prosecution has not led any evidence to show that the bills for the period December 80 to July 81 being submitted by M/s. Punjab Fertilizer & Pesticides Industry were bogus or fraudulent. Ld. Counsel has submitted that her client has merely signed as a forwarding person on the bills submitted by the partner of the above said firm and having been duly certified by Chartered Accountant Sh. Surender Khanna. Sh. Surender Khanna has not been made an accused nor has he been examined as a witness by the CBI. Ld. Counsel has taken her arguments further and has relied upon a letter No.2917/10221 dated 08.08.80 written by Chief Agricultural Officer to the Director of Agriculture, Punjab, Chandigarh whereby the Chief Agricultural Officer, Amritsar has confirmed that the manufacturing concern i.e. M/s. Punjab Fertilizer & Pesticides Industry is actually in production. Ld. Counsel has further relied upon the letter written by Sh. Jagtar Singh Cheema, Assistant Project Officer, Amritsar to the Chief Agriculture Officer wherein Sh. Jagtar Singh Cheema has written that he (Jagtar Singh Cheema) checked the record of M/s. Punjab Fertilizer & Pesticides Industry and found correct as per the instructions contained vide letter No.4(27)/80FDAI from Ministry of Petroleum, Chemicals & Fertilizer, Govt. of India. Ms. Shambharwal, Ld. Counsel has further read the report of A17 Prem Singh, Ex.PW6/A and relied upon the documents and attracted the attention of the court towards the documents filed along with said report. Ld. Counsel has submitted that there are several communications written from higher authorities to the Director of CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 75 of 146 Agriculture Punjab, Financial Commissioner, Govt. of Punjab, Chandigarh, whereby it has been impressed upon that the company was actually in production. Ms. Shambharwal, Ld. counsel submitted that technical report dated 05.02.86 for which the accused has been chargesheeted has not been proved by the prosecution and therefore, the prosecution has fallen flat on this score also. Ld. Counsel has also submitted that prosecution has also not led any evidence to show that in pursuance to the technical report submitted by the accused, the firm has been able to take any loan from any bank.
In regard to the sanction, Ld. Counsel has pointed out that PW43 SK Awasthi has been examined by the prosecution. The sanction Ex.PW43/A has been proved by this witness. Ld. Counsel has submitted that in the cross examination, the witness admitted that the draft of the sanction was placed before him on 21.12.93 and as per record, the sanction was also granted on 21.12.93. It has been submitted that sanction order is running into 16 pages and it is quite impossible that the sanctioning authority has gone through the entire record before granting sanction. It has been submitted that this per se proves that the sanction has been granted mechanically and without any application of mind. In support of her contention, Ld. Counsel has cited L. Chandraiah Vs. State of A.P. and Anr., AIR 2004 SC 252 ; Nepal Singh Rawal Vs. CBI, 2011 (4) CC Cases (HC) 41 ; Bhagwan Swaroop Lal Bishan Lal and Ors. Vs. The State of Maharashtra, AIR 1965 SC 682 and State of UP Vs. Sukhbasi and Ors. AIR 1985 SC 1224. CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 76 of 146
The arguments have been concluded by saying that there is no evidence of abuse of office, misconduct or having any illegal gratification being received by accused RC Nirmal.
Arguments on behalf of accused Pratap Narayan (A8) 4.5 Sh. Satish Tamta, Ld. Counsel for accused Pratap Narayan has argued that prosecution had started the prosecution of this case with much fanfare. Around 40,000 documents were supplied to each of the accused and out of this voluminous record, there is only one letter dated 28/10/82, written by Dy. Secretary, Punjab Government to FICC, wherein his client A8 Pratap Narayan had initially alleged to have written "please discuss" and then struck "discuss" and wrote "please process". Ld. Counsel submits that this is the only document which the CBI is relying upon to connect his client with the other accused persons. In the chargesheet, CBI has detailed the role of A8 Pratap Narayan as that he (read Pratap Narayan) while working as Executive Director, FICC, RK Puram, had fraudulently ordered for processing of bogus subsidy claims for the month of December, 1980 to July, 1981 inspite of the fact that the verification regarding genuineness of claims had not been done by authorised officers. Ld. Counsel submitted that CBI further alleged that Chief Agricultural Officer, Amritsar had regularly been informing FICC, RK Puram that the accused firm was not manufacturing and selling any SSP fertilizer and had submitted bogus claims CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 77 of 146 for obtaining subsidy. Allegedly, A2 PK Parmar had personally handed over letter dtd. 28/10/82 containing bogus verification to Pratap Narayan (A8) and on the same day the letter was processed and subsidy was released. Ld. Counsel would submit that in the entire trial, the prosecution has not brought even an iota of evidence to discredit the letter dated 28/10/82 Ex.PW40/DF written by A18 Pritam Singh to Dy. Director, FICC on which allegedly A8 Pratap Narayan had made an endorsement on the basis of which he is said to be in conspiracy with other accused persons. Ld. Counsel would further submit that A8 Pratap Narayan is only concerned with the alleged bogus subsidy bill submitted by M/s Punjab Fertilizer & Pesticides Industry to FICC for the period December 1980 to July 1981. The main contention of the prosecution is that these bills should have been forwarded by Chief Agricultural Officer and FICC processed this bill knowing fully that the bills have been forwarded by the DIC and not the Chief Agricultural Officer. Sh. Satish Tamta, Ld. Counsel further argued that the procedure of processing of bill has been mentioned in two office memorandums / circulars dtd. 29/9/80 Ex/PW40/DA and another memorandum dtd 5/8/82 and in both of these office memorandums / circulars the condition laid down is that the subsidy bills have to be forwarded / certified by the State Government. Prosecution has not placed any document on the record which can specify that it was only Chief Agricultural Officer who has to certify the bills. In absence of any such document, the FICC officers cannot be imputed with the knowledge CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 78 of 146 that the bills had to be certified by the Chief Agricultural Officer and not by the DIC. Rather FICC officials acted bonafidely by making a reference to the Chief Secretary, Govt. of Punjab vide their communication dtd. 3/7/82 and reminder dtd 21/9/82 whereby the Chief Secretary Punjab was requested to reconcile the contradictory statement. The last limb of the argument of the Ld. Counsel is that prosecution has failed to obtain the sanction u/S 197 Cr.PC and therefore, the prosecution launched against this accused is void ab initio. Sh. Satish Tamta, Ld. Counsel would argue that alleged act done by the accused is within discharge of the official duty and therefore, sanction u/S 197 Cr.PC was prerequisite for taking cognizance. In support of his contention, Ld. Counsel has relied upon State of HP Vs. MP Gupta (2004) 2 SCC 349, Raghunath Anant Govilkar Vs. State of Maharashtra (2008) 11 SCC 289 and State of Punjab Vs. Sohan Singh (2009) 6 SCC 444. Ld. Counsel concluded his arguments by saying that the prosecution has failed to prove its case against the accused.
Arguments on behalf of accused MS Sandhu (A11) 4.6 Sh. SK Sood, Ld. Counsel for accused MS Sandhu has submitted that his client has been chargesheeted by the prosecution alleging that accused MS Sandhu was working as Junior Accounts Officer, FICC during April 1981 to May 1985 and during this period he accompanied accused Vinod Chandra and made inspection of the unit during December CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 79 of 146 1983 and submitted a false report.
Ld. Counsel has read the letter dated 05.12.83 vide which Joint Director (F&A) has deputed accused MS Sandhu and Vinod Chandra for inspection of the unit. Said letter is reproduce hereunder :
"Fertilizer Industry Coordination Committee (Ministry of Petroleum, Chemicals & Fertilizers) 8th Floor, Sewa Bhawan, R.K. Puram, New Delhi - 110 066.
No. FICC/F&A/Inspection/84/890 the, 5th December, 1983 M/s. Punjab Phosphate (P) Ltd.
Opp. Church, O/s Ram Bagh Gate, A M R I T S A R. Sub : Inspection of records for the year 198283.
Sir, An inspection of records of your unit is proposed to be conducted from 26.12.83 to 28.12.83 in order to verify the correctness of the Single Super Phosphate Subsidy paid during the year 198283. Inspection party consisting of Shri M.S. Sandhu, Accounts Officer and Shri Vinod Chandra, Jr. Accounts Officer will be visiting your office during the above said period.
You are requested to make available the various records and render such other assistance as may be necessary to the party in the discharge of the official duties.
Yours faithfully, Sd/ (D. SWARUP) JOINT DIRECTOR (F&A)"CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 80 of 146
Ld. Counsel submitted that the perusal of the above said letter would apparently indicate that the officials were appointed only to inspect the record of the unit and in pursuant to the same, they inspected the record and report was submitted by MS Sandhu regarding the inspection of the record which was duly placed before Director (F&A). There is no evidence of conspiracy between his client and the remaining accused persons.
Sh. SK Sood, Ld. Counsel argued that sanction for prosecution has not been obtained for prosecution of the accused. Arguments on behalf of accused Vinod Chandra (A12) 4.7 Sh. Vikas Arora, Ld. Counsel for accused Vinod Chandra has submitted that his client has been chargesheeted by the prosecution primarily on the allegation that accused in the capacity of Junior Accounts Officer in FICC fraudulently passed the bogus subsidy bills of M/s. Punjab Fertilizer & Pesticides Industry and M/s. Punjab Phosphate Pvt. Ltd. during the period 198485. Ld. Counsel submitted that the prosecution has not placed any evidence oral or documentary to show that accused has misused or abused his official position or he was in the know how that the bills being processed by him are forged or fabricated. Ld. Counsel has submitted that another allegation against his client is that he (Vinod Chandra) along with MS Sandhu had gone for inspection for the year 198283 of M/s. Punjab Phosphate Pvt. Ltd. Ld. Counsel has submitted that his client Vinod CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 81 of 146 Chandra was directed by D. Swaroop the then JD (F&A) vide communication dated 05.12.83 for inspection of records of M/s. Punjab Phosphate Pvt. Ltd. along with Sh. MS Sandhu. It has further been submitted that Sh. MS Sandhu submitted 5 line report to the Director, F&A, FICC and in the said report, there is no mention that his client (read Vinod Chandra) had accompanied Sh. MS Sandhu for the inspection of record of M/s. Punjab Phosphate Pvt. Ltd. for the year 198283.
Sh. Vikas Arora, Ld. Counsel has pointed out that the prosecution has filed the charge sheet against A8 Pratap Narain, A17 Prem Singh, Vinod Chandra, YR Khattar, Ram Singh, RK Bhambi, MS Sandhu and Anil Sood (since expired). Ld. Counsel submits that during this period total 68 bills submitted by M/s. Punjab Fertilizer & Pesticide Industry and M/s. Punjab Phosphate Pvt. Ltd. were processed by the various officers in FICC. However, CBI filed the charge sheet only against those persons who allegedly had conducted the inspection of the above said companies, besides processing the bills. Ld. Counsel submitted that as per record, there were 22 persons who had processed the bills and out of these persons, some of the persons namely MP Goglani, DS Negi, DC Dabral, K. Narayan and Satya Prakash were recommended for major penalty and even Govt. of India, Ministry of Petroleum, Chemical & Fertilizer vide order No.1193/Vig. Dated 06.12.96 inter alia held that there is no case for initiating major penalty proceedings against the above said officials. Besides this, Ministry of DoPT also vide its letter dated 06.12.96 disagreed with the recommendations of CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 82 of 146 CVC for initiation of regular departmental action for penalty against MP Goglani. It is submitted that therefore, the CBI has primarily chargesheeted MS Sandhu, Vinod Chandra, Anil Sood, YR Khattar, RK Bhambi and Ram Singh on the allegation that they submitted false inspection report.
Sh. Vikas Arora, Ld. Counsel has relied upon the order dated 29.09.80, Ex.PW40/DA which only speaks about the inspection of the record. The instructions of this letter has been followed in another letter dated 05.08.82.
Ld. Counsel has submitted that even as per letter dated 05.12.83, Ex.PW11/DA the inspecting officers were only directed to make inspection of the record and there were no specific directions to conduct the physical inspection of the factory. Sh. Vikas Arora, Ld. counsel has also assailed the sanction granted by PW14 Ms. Radha A. Nanjnath. Ld. Counsel has taken this court through the testimony of this witness so as to buttress his point that sanction has been granted mechanically and without any application of mind. Arguments on behalf of accused YR Khattar (A13) and RK Bhambi (A15).
4.8 Sh. RK Sharma, Ld. Counsel for accused YR Khattar and RK Bhambi has argued vehemently that prosecution has miserably failed to prove its case against the accused persons named herein above. The first attack on the prosecution by the defence was through the sanction order. The CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 83 of 146 Ld. Counsel has taken this court through the testimony of PW2 Ravi Kathpalia and sanction order Ex.PW2/A vide which the sanction was granted by Sh. Ravi Kathpalia, the then competent authority for prosecution against YR Khattar. Ld. Counsel has also challenged the sanction granted by PW1 AS Sayali for prosecution against RK Bhambi vide sanction order Ex.PW1/A. Ld. Counsel submitted that the sanction has been granted by the officials mechanically without any application of mind. It has been submitted that the sanctioning authority PW2 Ravi Kathpalia has admitted in the cross examination that he did not examine the chargesheet and the documents filed alongwith it and the statement of witnesses before grant of sanction. PW2 Ravi Kathpalia also admitted in the cross examination that he did not examine any document to satisfy that bills at Sr. No.32 were actually processed by accused YR Khattar. In support of his contention Ld. Counsel has relied upon State of Karnataka Vs. Ameerjan, (2007) 11 SCC 273 ; Mansukhlal Vithaldas Chauhan Vs. State of Gujarat, (1997) 7 SCC 622 ; State Vs. Ravinder Singh, 1995 Cri.L.J. 3428 and P.K. Pradhan Vs. State of Sikkim through CBI, 2001 (2) CC Cases SC 260.
Ld. Counsel has submitted that if the sanction order is read along with Annexure A filed by the prosecution along with charge sheet, there are inherent contradictions. It has been submitted that there were around 22 officers who had processed the bills of M/s. Punjab Fertilizer & Pesticides Industry / M/s. Punjab Phosphate Pvt. Ltd. However, out of these CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 84 of 146 22 persons only YR Khattar, RK Bhambi, Ram Singh, MS Sandhu, Vinod Chandra and Anil Sood (since expired) were chargesheeted. The other officers who had processed the bills were not even chargesheeted and prosecution had adopted the policy of pick and choose while chargesheeting the accused.
In respect of the inspection, Ld. Counsel has relied upon letter dated 24.01.1985 and letter dated 18.02.87 vide which accused YR Khattar, Anil Sood (since expired), Ram Singh and RK Bhambi were deputed for the inspection of record for the year 198384, 198485 and 198586. Ld. Counsel has submitted that perusal of these letters would indicate that above said officials were directed only for the inspection of record of M/s. Punjab Phosphate Pvt. Ltd.
Ld. Counsel submitted that the accused persons were never directed to inspect the factory and the manufacturing activity and this fact has been admitted by PW2 Ravi Kathpalia in the cross examination wherein he admitted that Junior Accounts Officer / Accounts Officer are not supposed to see the production activity at the factory. Ld. Counsel has assailed the statement of PW11 Shri Prakash who was Director (Inputs), FICC to submit that the duty of the Accounts officer and Junior Accounts Officer was only to inspect the record of the unit and not to see the manufacturing activity. Ld. Counsel has further emphasized his point that these officials merely acted in discharge of their official duty. Prosecution has not even produced the bills which have allegedly been fraudulently CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 85 of 146 passed by the accused persons. The prosecution has also not even proved the report allegedly given by the accused persons for the year 198384, 198485 and 198586. In absence of these documents, the prosecution has lost its right to seek conviction against the accused persons. Ld. Counsel has also submitted that the prosecution has not brought any material on the record to prove that the accused persons have violated any rules, norms or administrative instructions of their department for carrying inspection of the unit. It has been submitted that accused RK Bhambi has never been signatory to any report and therefore, in any case, he is not liable for any action. Arguments on behalf of accused Ram Singh (A16) 4.9 Sh. VP Kaushik, Ld. Legal Aid Counsel for A16 Ram Singh submitted that Ram Singh has acted in accordance with the rules and procedures and no illegality has been committed by him. In respect of the inspection for the year 198485 & 198586 on 25.02.87 and 26.02.87 along with A15 R.K. Bhambi, Junior Accounts Officer, the accused had merely given the report on the basis of record submitted by M/s. Punjab Phosphate Pvt. Ltd. Accused has submitted that he had never mentioned in his report that production / manufacturing activity was taking place in M/s. Punjab Phosphate Pvt. Ltd. Infact in the factory, the fertilizer was used to be manufactured through pit system and no machines were being installed. However, when he visited the factory, all the pits were lying vacant and some CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 86 of 146 finished / unfinished goods were lying there. He submitted that his report was duly processed by Joint Director (F&A) i.e. A17 Prem Singh at that time. It has been submitted that there is no material on the record against accused Ram Singh and therefore, he is liable to be acquitted. Arguments on behalf of A17 Prem Singh 4.10 Sh. Alok Bachawat, Ld. Counsel for accused A17 Prem Singh would argue that inspection on 18.09.86 was conducted pursuant to the complaint received in Zonal Conference held in August 1986 from the office of Chief Agriculture Officer. Ld. Counsel would submit that during Zonal Conference for Northern Zone for Rabi 198687, Director (Agriculture), Punjab mentioned that no allocation be made in favour of M/s. Punjab Phosphate regarding supply of SSP fertilizers as Punjab Phosphate was not producing this fertilizer and the unit is non existent. Pursuant to this, PW11 Shri Prakash vide his note dated 21.07.86, Ex.PW11/C ordered that no ECA allocation for M/s. Punjab Phosphate Pvt. Ltd. be made for Rabi 198687 unless the issue regarding the manufacture of SSP is decided. It was further decided that the inspection conducted by the inspecting party of F&A division of FICC, Joint Director (F&A), who was A18 Prem Singh at the relevant time, was directed to put up the inspection report to Executive Director. The noting was marked to A17 Prem Singh who in his note himself suggested that the Director (Agriculture), Dte. Of Punjab may be asked to CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 87 of 146 give the tentative dates for inspection so as to associate their department for inspection. Ld. Counsel submits that had there been any malafide intention on the part of A17 Prem Singh, he would not have associated the officers from Directorate of Agriculture for the inspection of unit. As per PW11 Shri Prakash, the inspection was to be conducted by the inspecting party, F&A division and A17 Prem Singh would have conveniently deputed the officials of FICC for conducting the inspection. Sh. Alok Bachawat, Ld. Counsel would further argue that record is speaking that A17 Prem Singh sent the communication to the Director Agriculture for associating him in the inspection. PW6 Ajmer Singh and PW15 Pritam Singh is stated to have deposed falsely as they were from the office of Chief Agriculture Office and since they had earlier been chasing M/s. Punjab Fertilizer & Pesticides Industries / M/s. Punjab Phosphate Pvt. Ltd. on flimsy ground, they falsely assailed the report. Ld. Counsel has taken this court through the testimony of PW6 and PW15 to buttress his point that had it been false report, they would have given desenting note to their department. Both the witnesses have admitted that no desenting report was given in their department. Ld. Counsel has also submitted that PW6 in his testimony stated that report of A17 Prem Singh, Ex.PW6/A was not approved. However, the prosecution has not placed any material on record to suggest that report Ex.PW6/A was not approved. A17 Prem Singh in person has also submitted that he being the head of the team was supposed to prepare the report. It has been a practise that the head of the team prepares the report and the other associate CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 88 of 146 members are not supposed to put the signatures on the same. Even otherwise, he was supposed to submit the report to his Executive Director and therefore, there was no question of getting the signatures of PW6 and PW15 on the same. The report was not to be submitted to the State Government on which the signatures of these persons were required. PW6 and PW15 were not cooperating during the inspection also and moreover, there was no infrastructure in Amritsar and therefore, the report was prepared only after coming to Delhi. Ld. Counsel has also pointed out that PW6 in his testimony has submitted that after the receipt of the report Ex.PW6/A, the report was processed through Legal Department and the desenting view of this witness was brought on the record and report was duly sent to Delhi. However, such report has not seen the light of the day and has not been produced. Neither these persons have been examined. A17 Prem Singh has stated that the sanction has been accorded mechanically without any application of mind.
Arguments on behalf of accused Pritam Singh (A18) 4.11 Sh. SK Sood, Ld. Counsel for accused Pritam Singh has argued that as per chargesheet accused Pritam Singh while working as Dy. Secretary, Ministry of Agriculture, Govt. of Punjab was instrumental in getting the bogus subsidy claims of the accused firm from December 1980 to July 1981 and forwarded the same to the Executive Director, FICC asking CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 89 of 146 him to clear the bills. The allegation of the CBI is that A18 Pritam Singh was not authorized to make this communication and he made this communication in conspiracy with the remaining accused persons. Sh. S.K. Sood, Ld. Counsel submitted that the accused has been chargesheeted only on the basis of communication dated 28.10.82 bearing No.819GOI Agri.II(10)82/16044. However, the prosecution has not brought any material to show that accused was not authorized to write this letter. Accused has already been retired after being promoted as IAS officer. Accused is presently 81 years of age. The prosecution has not bring any material on the record. It has also been pointed out that initially the accused was examined as a witness by the prosecution as LW128 by PW38 Javed Siraj. However, while filing the chargesheet, he was made an accused as A18 by the prosecution with malafide intention. Ld. Counsel submits that there is no material on the record to convict the accused. Sh. SK Sood, Ld. Counsel has also argued that accused Pritam Singh had acted on the directions of his seniors and communication dated 28.10.82 was also written as per the direction of his seniors. Sh. Sood, Ld. Counsel would further attract the attention of this court upon Govt. of India, Ministry of Chemicals and Fertilizers letter dated 06.12.96 No. 1/1/93Vig. whereby the proceedings against Sh. MP Guwalani, DS Negi, DC Dabral, K. Narayanan and Satya Prakash were dropped. It has been submitted that perusal of this letter would indicate that pick and choose policy has been adopted in this case. Some of the persons who were equally placed were let off whereas, other persons who CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 90 of 146 had no role have been implicated by the CBI. It has also been submitted that there is no evidence of conspiracy.
Arguments on behalf of Accused Sant Kumar Sharda (A19) 4.12 Sh. Rajesh Harnal, Ld. Counsel for accused Sant Kumar Sharda has argued that accused has been chargesheeted that while working as an officer, PNB, Amritsar fraudulently verified for opening current accounts in the names of M/s. BK Enterprises and M/s. Vijay Trading Co. , wherein A2 PK Parmar had signed in an assumed name as Anil Mathur and Vijay Kumar, respectively for the said accounts. Ld. Counsel submits that his client is alleged to have filled the account opening form of the said accounts and also introduced a large number of FD accounts in Shetriya Gramin Vikas Bank, Meham belonging to A2 PK Parmar and his family members. He is also alleged to have opened the account of M/s. Shiva Ply Fabric Company in PNB, Meham Mandi Branch, Amritsar. Ld. Counsel has submitted that prosecution has not brought any material on record to support these charges against his client. Ld. Counsel further submitted that there is no evidence of agreement of criminal conspiracy.
Ld. Counsel has submitted that the prosecution has not brought any material on the record to show that accused was working as either Manager, Asstt. Manager, Accountant or an authorized person to open the account. It has come in the testimony of prosecution witnesses that at the CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 91 of 146 relevant time i.e. from 23.02.85 to 12.10.86, accused SK Sarda was Technical Field Officer, Small Scale Industries Section, PNB, Amritsar and his job was to assist the SSI units, process their applications for their technical and financial viability and put up their case for grant of loan before the Senior officers for sanction. Accused had no authority to open the account. It was for the prosecution to prove positive material on the record so as to prove their charge that accused in conspiracy with coaccused got opened the fictitious accounts of accused PK Parmar for the alleged illegal parking of ill gotten money. Ld. Counsel has submitted that his client has never opened any account and the attention of the court has also been drawn towards the document proved as Ex.PW24/DC where the specimen signatures of accused are appearing at page 1578 at point A. Sh. Rajesh Harnal, Ld. Counsel would argue that even though the prosecution has not proved on record the documents on which allegedly accused put his signatures for opening of account but still if the signatures appearing on the document is compared with the authorised signatures of the accused appearing in Ex.PW24/DC, it is apparent that the signatures are not at all similar to each other. Ld. Counsel would further argue that there is no evidence on the record that any of the accused persons had at any point of time signed on the bank documents for opening of the accounts in the presence of accused. Ld. Counsel submitted that PW24 PK Juneja had specifically admitted in the cross examination that at the relevant time Sh. AN Pahwa and Sh. SK Marwah were the concerned officers. Both of these witnesses have even not CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 92 of 146 been examined by the prosecution. Ld. Counsel submitted that the prosecution has miserably failed to prove any material on the record against his client.
The sanction has also been assailed by the Ld. Counsel for accused on the ground that the same has been granted by the sanctioning authority without any application of mind. Ld. Counsel submits that even perusal of the sanction order, Ex.PW4/A indicates that it is a photostat copy and the name of the accused has been filled up in the blank with a different typewriter. Ld. Counsel argued that the sanction has been granted without any application of mind and accused has suffered a lot on account of this non application of mind. Ld. Counsel would argue that the witness has admitted in the cross examination that CBI has sent only a draft sanction and a request for granting the sanction and he granted the sanction only on the basis of letter sent by CBI.
Ld. Counsel has placed reliance upon Ravichandran Vs. State by Dy. Superintendent of Police, Madras, AIR 2010 SC 1922, Saju Vs. State of Kerala, AIR 2001 SC 175, Guru Bipin Singh Vs. Chongtham Manihar Singh, AIR 1997 SC 1448, Central Bureau of Investigation Vs. VC Shukla, AIR 1998 SC 1406, State of MP Vs. Sheetla Sahai, AIR 2009 SC (supp) 1744, State of Karnataka Vs. Ameer Jan, AIR 2008 SC 108, State of Punjab Vs. VK Khanna, AIR 2001 SC 343.
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 93 of 146 Arguments on behalf of accused GS Sachdeva (A20) 4.13 Sh. PK Sharma Ld. Counsel for accused GS Sachdeva has argued that the chargesheet against his client was filed alleging therein that accused GS Sachdeva was working as Manager, Punjab National Bank during 1983 to November'85 and he was instrumental in opening of bank accounts by PK Parmar in the name of M/s BK Enterprises and M/s Vijay Trading Company. GS Sachdeva was also chargesheeted for passing the vouchers relating to the transfer of amounts from one account to another i.e., BK Enterprises, Vijay Trading Company to the account of M/s Punjab Phosphate & vice versa. Ld. Counsel has submitted that prosecution has not led any evidence to substantiate the charge against the accused. It has also been pointed out that rather charge framed against his client is not in confirmity with the chargesheet filed against him. Ld. Counsel has pointed out that there are three witnesses which concern to his client - PW4 SK Gupta, sanctioning authority, PW24 P.K. Juneja from whom the records were seized and PW40 Dy.SP DK Chaudhary. In respect of sanction, it has been argued that the sanction has been accorded without any application of mind and the same has been accorded in a mechanical manner by cryptic order. The perusal of the sanction order indicates that most of the contents of the sanction order does not pertain to the accused and only the name of the accused has been filled up on the last page of the sanctioning order. Ld. CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 94 of 146 Counsel has pointed out that there are 03 material dates in this case i.e., allegedly the date of opening of account i.e., 7/6/85 for which accused has been chargesheeted, the FIR was lodged on 11/11/88 and the sanction was granted on 19/3/94. Ld. Counsel has submitted that prosecution has not led any evidence oral or documentary to the effect that GS Sachdeva ever remained posted in Katra Ahluwalia branch and rather in the sanction order, accused is shown to have been posted at Patti branch. Ld. Counsel has assailed the sanction order and has challenged it to be void ab initio. In support of his contention, Ld. Counsel has cited State of Karnataka Vs. Ameerjan, (2007) 11 SCC 273 and Mansukhlal Vithaldas Chauhan Vs. State of Gujarat, (1997) 7 SCC 622. Ld. Counsel has also taken this court through the testimony of IO. In the cross examination, IO has admitted that he has not collected any document to the effect that GS Sachdeva was working as Branch Manager of Katra Ahluwalia branch at the relevant time. It has been submitted that prosecution has miserably failed to prove its case against the accused.
Rebuttal on behalf of CBI.
4.14 In rebuttal, Sh. DK Singh, Ld. PP for CBI, has submitted that in the present case, the company M/s Punjab Fertilizer & Pesticides Industry and M/s Punjab Phosphate in conspiracy with the remaining accused persons had cheated the Govt. of India for a huge sum of Rs. 3 crores. The direct CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 95 of 146 evidence in such cases is difficult to get and the circumstances so proved, indicate the conspiracy amongst the accused persons. In respect of the company and its constitution, Ld. PP has reemphasized that Memorandum & Article of Association are the cogent documents to prove that Sh. LK Parmar was the Director of the company. In respect of the property seized during the investigation, Ld. PP has submitted that power conferred under Criminal Law Ordinance Act, 1944 be invoked. He has moved an application for confiscation of the entire property seized during the investigation in exercise of the power u/S 5(vi) PC Act, 1988 and Criminal Law Ordinance Act, 1944 r/w Sec. 452 Cr.PC.
It is pertinent to note that all the accused persons have made a positive statement that they do not claim the property which was seized during the course of investigation.
The marathon exercise of trial came to an end with the lengthy arguments advanced by the Ld. Defence counsels. Before embarking upon the conclusion part, I must record appreciation for Ld. Defence counsels, who ably assisted this Court in concluding the trial in one Session on day to day basis. However, the only regret is that the facts alleged by the prosecution were very serious in nature but the time span consumed, for whatever reason, took away the air out of it. The facts lost it's strength and vitality and on account of it's age had become so weak by this time that it could prove it's case only against company and A3 Lalit Kumar Parmar. CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 96 of 146 5.0 This was a case primarily based upon documents and circumstantial evidence. The time span of the offence was extending to around 07 years. The prosecution had it's limitation in proving the case on account of considerable period been elapsed. However, the Court is bound with the settled legal proposition that the prosecution is required to prove it's case against the accused beyond reasonable doubt. In order to conclude the guilt of the accused, the court is required to judge the evidence by the yardsticks of probabilities, its intrinsic worth and the animus of witnesses. The court is required to appreciate the evidence of the witnesses minutely, carefully and analysing the same. It would be impracticable to expect the prosecution to prove their case with a caste iron perfection in all respects and it is obligatory for the courts to analyse, sift and assess the evidence on record with particular reference to its trustworthiness and truthfulness. The court has to undertake dispassionate approach in adopting an objective and reasonable appreciation of the same, without being obsessed by an air of total suspicion of the case of the prosecution. This court has a duty to undertake a complete and comprehensive appreciation of all vital features of the case and the entire evidence with reference to the broad and reasonable probabilities of the case. It has to be kept in mind in this case that this was a case where Late PK Parmar along with A3 Lalit Kumar Parmar and some other persons formed a partnership firm and later on converted the same into a company. All the records were in his possession. It has been brought on CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 97 of 146 record by the prosecution that he had been opening fictitious accounts in the bank. The court has also to keep one thing in mind that prosecution has also several limitations that actually trial took place after around 30 years of incident starting from the year 1980 when the first bill of subsidy was submitted. Whoever being the responsible for the delay, but the fact of the matter is that the witness were not available. Most of the witnesses were untraceable, some of them have expired and for remaining witnesses, they were faced with the human limitation of memory and comprehension. Therefore, in this case, the court is required to see the evidence with a practical approach and dispassionately and with a pragmatic view to find out the actual culprits. Whatever the material is available on the record, the court is required to scrupulously examine and consider all the material on record and relevant evidence. It has been held repeatedly that criminal trial is not a fairy tale wherein one is free to give flight to one's imagination and fantasy. The accused has to be given benefit for the reasonable doubt but at the same time the court must not reject the evidence of the prosecution as false, untrustworthy or unreliable on fanciful grounds or on conjectures and surmises. The benefit of doubt to which accused is entitled is reasonable doubt. The doubt which rational thinking men would reasonably, honestly and conscientiously entertain and not the doubt of timid mind which flights shy or is afraid of the logical consequences. The concept of benefit of doubt cannot be stretched to the extent that the evidence produced by the prosecution must be so strong as to exclude even a remote possibility that the CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 98 of 146 accused could not have committed the offence. The prosecution is not required to meet any and every hypothesis put forward by the accused. Proof beyond reasonable doubt is a guideline not a fetish. Vague hunches cannot take the place of judicial evaluation. The effort of the criminal trial should not be prowl and to find out imaginative doubts.
6.0 Before proceeding further, it would be pertinent to note here that prosecution mostly proved the seizure / search memo of the documents. Indian Evidence Act, 1872 provides specific procedure for the proof of documents.
Proof of Document:
6.1 Chapter V of Part II of the Indian Evidence Act, 1872, deals with the provisions relating to proof of documentary evidence. Section 61 Indian Evidence Act provides that the contents of documents may be proved by primary or secondary evidence. Sec. 62 Indian Evidence Act provides that primary document means the document itself produced for the inspection of the Court. Sec. 63 Indian Evidence Act defines secondary evidence. Sec. 64 Evidence Act specifically defines that the documents must be proved by primary evidence. Sec. 65 Evidence Act defines that secondary evidence relating to documents may be given. Sec. 65(a) and 65(b) are the special evidence as the evidence relating to electronic record. The perusal of the above said provisions make it clear that in the course of trial, the CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 99 of 146 document can only be proved in any of the above said mode. It is a settled proposition that mere marking of exhibits is not sufficient, if the document is not proved in accordance with the provision of Indian Evidence Act.
Reference can be made to Sait Tarajee Khimchand & Ors. Vs. Yelamarti Satyam, AIR 1971 SC 1865. It is pertinent to mention here that the documents upon which reliance is sought to be placed by the prosecution must be proved on the record as per the provision of Indian Evidence Act. The document filed alongwith the chargesheet do not prove themselves. Such documents are required to be proved by the prosecution in a legal manner. If documents are not proved by witnesses it amounts to serious procedural infirmity in the proceedings. The document can be looked into only if the same has been proved by the party, relying upon the same in accordance with the law. However, if a document has been filed by the prosecution and the prosecution has failed to prove the same, the accused can take advantage of these documents against the prosecution even though the documents were not proved by the prosecution. The legal proposition is that every document is required to be proved by primary evidence unless secondary evidence becomes admissible for any of the reason mentioned in Sec. 65 Indian Evidence Act. The document not so proved cannot be looked into by the Court for the purpose of arriving on a conclusion. I consider that in the present case, the documents does not stand proved by proving the search / seizure memo.
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 100 of 146 FINDINGS 7.0 M/s Punjab Phosphate Pvt. Ltd. (A1) In the good old days, business used to be carried out by the individuals and joint families. The concept of the company came to this country after East India Company came and the country was ruled by the British. Earlier, the general belief was that corporations cannot be held criminally liable. When the persons and most of the companies started growing, initially, the Court extended corporate criminal liability from public nuisance to all offences that did not require criminal intent. However, US Supreme Court in New York Central and Hudson River Railroad Company v. United States, 53 Lawyers Edn. 613 in the year 1990 held that a corporation is liable for crimes of intent. It was inter alia held that where the crime consists in purposely doing the things prohibited by statute, there is no reason why Corporations may not be held responsible for and charged with the knowledge and purposes of their agents, acting within the authority conferred upon them. It is pertinent to mention here that if the company / corporation are excluded many offences might go unpunished. Infact, it is the company / corporation which derives benefit from transaction and since the company / corporation can only act through its agents and officers, it (read company / corporation) should be held punishable because of the knowledge and intention of its agents to whom it has entrusted authority to act in the subjectmatter. The knowledge and purpose of the agents acting under the CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 101 of 146 authorities of the company may well be attributed to the said company / corporation. The law developed with the proposition that in the modern times, the majority of business transactions are conducted through such statutory bodies, and if such bodies are given immunity from punishment on account of old and exploded doctrine that a Corporation cannot commit a crime, it would literally mean taking away the effect of correcting the abuse.
General rule is that a Corporation may be criminally liable for the acts of an officer or agent, assumed to be done by such officers / agent while exercising the powers conferred upon him / her. In the criminal law, even for a crime which require mensrea, the criminal intent of its agent may be imputed so as to render the company / corporation liable. In Director of Public Prosecutions v. Kent and Sussex Contractors Ltd. (1944) 1 All ER 119 wherein the respondents were a limited company and an officer thereof were charged with offences under the Defence (General) Regulations for intention to deceive. Accused persons allegedly produced documents and furnished information for the purposes of the Motor Fuel Rationing Order which were false in material particulars. The returns were signed by the transport manager of the company. The respondents contended that the offences charged required for their commission an act of will or state of mind which a body corporate could not have. It was held that a body corporate is a "person" to whom, amongst the various attributes it may have, there should be imputed the attribute of a mind capable of knowing and forming an CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 102 of 146 intention indeed it is much too late in the day to suggest the contrary. The mere fact that a company cannot be sent to jail or made to undergo imprisonment cannot lead to an inference that it should not be prosecuted at all. In the event of its conviction, an appropriate fine can be imposed upon it as prescribed u/ Ss. 276C and 277 of the Act. Reference can be made to Assistant Commr., AssessmentII v. M/s. Velliappa Textiles Ltd, AIR 2004 SC 86.
Indian 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. Vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. There has to be specific material on the record to burden the Director / Managing Director with the liability. Reference can be made to Maksud Saiyed Vs. State of Gujarat & Ors., 2008 (2) SCC (Crl.)
692. Ld. counsel has contended that the company himself is a distinct person and cannot have requisite mens rea for committing offence of criminal conspiracy as required u/S.120B IPC. This question recently came up for discussion before the Hon'ble High Court in W.P. No.65/2010 & Crl. M. A. No.581/2010 in Morgan Tectronics Ltd. Vs. CBI wherein, it was inter alia held as under :
"No doubt, the company is a juristic person but the company has its own personality and it acts through its Board of Directors.CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 103 of 146
Action of Board of Directors is considered the action of the company. If Board of Directors, in order to benefit the company, does something then such an act is to be considered as the act of the company. If the argument that a company can have no guilty mind is accepted, then the next logical thing is that a company can have no mind at all. If the argument of the counsel is accepted, the very existence of the companies will have to be negated. Board of Directors of a company is considered its mind and acting arms. Where for the benefit of company Board of Directors decides to create false documents, falsify the balance sheet ; it is an act of the company as well, as a legal person, apart from the act of individuals involved in the act. For every act, whether civil or criminal thought and action, both are necessary. If company can enter into contracts & perform other legal obligations ; it can also be party to criminal acts. Several Laws hold companies responsible for offences committed by it through its Board of Directors. If the company can have a right to do things through its Board of Directors, it can have necessary mens rea also through its Board of Directors."
In this case, the judgment in Assistant Commissioner Vs. Velliappa Textiles Ltd., 2003 (11) SCC 405 was followed. In this case, it was held by the Apex Court that it was permissible to prosecute a company for the offences that require mens rea or knowledge as an essential element for the reason that the acts and state of mind of the officer or agent of a company, who functions as the directing mind and will of the body corporate and controls its functions, shall, in law, be considered to be the acts and state of mind of the company.
7.1 Case of the CBI is that M/s. Punjab Fertilizer & Pesticides Industry and M/s. Punjab Phosphate Pvt. Ltd. had submitted bogus bills for CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 104 of 146 the claim of subsidy. CBI has placed positive evidence on the record to show that the company did not manufacture / sell the quantity of fertilizer, on which the subsidy was claimed from FICC. The prosecution could only prove the positive evidence and cannot be expected to prove the negative evidence. The plea of the company is that CBI has not been able to prove that there has been no production by M/s. Punjab Fertilizer & Pesticides Industry and M/s. Punjab Phosphate Pvt. Ltd. and therefore, a doubt has arisen in the story of prosecution, benefit of which must go to the accused. 7.2 The relevant witnesses related to the company are PW16 Gurmeet Singh, PW17 Dileep Kumar Saxena and PW27 Malvinder Singh, PW36 Ram Krishan Manocha.
7.2.1 In the present case, the evidence of PW16 Gurmeet Singh has specifically proved on record, the electricity consumption by M/s. Punjab Fertilizer & Pesticides Industry and M/s. Punjab Phosphate Pvt. Ltd. If we peruse the testimony of PW16 Gurmeet Singh, it is clear that the electricity consumption of M/s. Punjab Fertilizer & Pesticides Industry during the period from May 1984 to December 1987 was only 890 units. 7.2.2 PW17 Sh. Dileep Kumar Saxena also in his testimony has specifically stated that RSMDC had not supplied any rock phosphate to M/s. Punjab Fertilizer & Pesticides Industry and M/s. Punjab Phosphate Pvt. Ltd. CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 105 of 146 from the year 1979 to 1987. PW11 Shri Prakash deposed that during that period, RSMDC used to supply rock phosphate and in addition to it, rock phosphate was also supplied from Madhya Pradesh and some part in UP by the State owned agencies but in a very small quantity. Therefore, the main suppliers of rock phosphate was RSMDC. As per Annexure A filed by the CBI along with chargesheet, the company had claimed subsidy on the sale / manufacturing of around 72,000 MT of SSP. For manufacturing this huge quantity of SSP, rock phosphate which is the main raw material for SSP, must have been acquired in a large quantity. In the cross examination, the defence has not challenged this document. If the defence had bought the material from other sources, it must have been put to the witness, which was in the special knowledge of defence and onus was shifted upon them to prove the same.
7.2.3 If we peruse the Banker's cheque proved on record, it would indicate that company M/s. Punjab Phosphate Pvt. Ltd. through PK Parmar its Managing Director, had been withdrawing heavy some of money through self cheques. It has come on the record that the money so withdrawn had come as subsidy from FICC and therefore, the account of the company i.e. M/s. Punjab Phosphate Pvt. Ltd. was being enriched on account of the fraudulent transaction. It is noteworthy that accused PK Parmar as Director of M/s. Punjab Phosphate Pvt. Ltd. issued a cheque bearing No. AY 57654 dated 25.05.87 in the sum of Rs.541/ and made an endorsement to issue a CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 106 of 146 demand draft payable at Shimla in favour of Chief Executive Engineer, Shimla Development Authority, Khalini, Shimla. Thus, the company had been buying property from ill gotten money. It seems that the company through its Managing Director, who was working as the mind of the company had been plundering the money received through subsidy. 7.2.4 It is pertinent to note that it has come in the testimony of PW27 Malvinder Singh, Enforcement Engineer that M/s. Punjab Phosphate did not obtain any permission from Punjab Pollution Control Board for manufacturing of SSP fertilizer.
7.2.5 As per account opening form, Ex.PW28/B, account of M/s. Punjab Phosphate Pvt. Ltd. was opened on 01.05.87 and this account was introduced by A2 PK Parmar himself as Proprietor of Sadhna Enterprises. The account of Sadhna Enterprises was opened in the year 1985. The deposit slips Ex.PW28/K collectively would indicate that this account was single handedly managed by accused PK Parmar himself in favour of other firms. PK Parmar had withdrawn some money in cash also from this account through self cheque. It is interesting to note that from account of Sadhna Enterprises, cheque No.517889 dated 13.12.85 was issued in the name of BK Enterprises and one cheque No.517894 for a sum of Rs.4,50,000/ dated 17.03.86 was issued in favour of M/s. Punjab Phosphate Pvt. Ltd. CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 107 of 146 7.2.6 It is pertinent to mention here that PW36 Ram Krishan Manocha specifically stated on oath that PK Parmar declared himself to be the proprietor of M/s. Sadhna Enterprises. This witness also verified his signatures on specimen signature card, Ex.PW28/K and also identified the signatures of PK Parmar at point B. If we peruse the testimony of PW36 Ram Krishan Manocha, it apparently clear that M/s. Punjab Phosphate Pvt. Ltd. through its King Pin, PK Parmar had been manipulating the record and playing the fraud. Sh. PK Parmar himself opened the account showing himself to be the proprietor of M/s. Sadhna Enterprises. It is pertinent to mention here that PW32 SD Sharma, PW33 SD Anand and PW34 Anil Dhar have specifically stated that M/s. Sadhna Enterprises was initially a partnership concern and later on became a company under the Chairmanship of of PW32 SD Sharma and had never been a proprietorship concern and they had never authorized PK Parmar or M/s. Punjab Phosphate Pvt. Ltd. to open an account in Amritsar. A2 PK Parmar opened the account in the name of M/s. Punjab Phosphate Pvt. Ltd. showing himself to be the Managing Director of this company and at the same time also opened an account as Proprietor of M/s. Sadhna Enterprises. It is also pertinent to mention here that the current account of M/s. Punjab Phosphate Pvt. Ltd. has been opened at the introduction of PK Parmar himself in the capacity of Proprietor of M/s. Sadhna Enterprises. The unfortunate aspect in this case is that CBI had named certain persons as the accused who could have been witnesses and in their capacity as a witness CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 108 of 146 could have prove the conspiracy, whereas, on the other hand, named certain persons as a witness who were apparently a party to the conspiracy along with accused PK Parmar. The one example of such is PW36 Ram Krishan Manocha. The tone and tenure of testimony of this witness apparently indicates that he had been Cahoot with accused PK Parmar. He allowed PK Parmar to open the account in different names. The testimony of PW36 Ram Krishan Manocha has also indicated that the subsidy cheque of Rs. 45,35,353/ was deposited in the account of M/s. Punjab Phosphates Pvt. Ltd. and later on this amount was withdrawn and deposited in the different account. Thus, apparently, the company M/s. Punjab Phosphates Pvt. Ltd. through its Managing Director, PK Parmar had been defrauding the government and illegally channelizing the money. It is noteworthy that PW36 Ram Krishan Manocha stated that PK Parmar was considered to be a big Industrialist and rich man and at the relevant time, all the banks were behind him to get the deposits.
7.3 In the present case, M/s. Punjab Phosphate Pvt. Ltd. submitted bogus subsidy bills to FICC to obtain benefit on the basis of the records and used the bank officials to park the huge amount of money and therefore, M/s. Punjab Phosphate Pvt. Ltd. cannot escape from the liability of being having mens rea. Sh. PK Parmar, who was the kingpin of the entire crime was certainly in the conspiracy with certain persons, may be unknown and not brought for the trial, before this court, in order to cheat the Govt. of India. CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 109 of 146 The act of PK Parmar by opening various fictitious accounts in different names has unavoidably enriched the company i.e. M/s. Punjab Phosphate Pvt. Ltd.
If we peruse the details of subsidy claims, preferred and obtained by M/s. Punjab Fertilizer & Pesticides Industry & M/s. Punjab Phosphate Pvt. Ltd. from December 1980 to March 1987, it would indicate that the subsidy has been claimed for around 72000 MT of SSP. It is pertinent to mention here that the prosecution witnesses have consistently been saying that the supply of rock phosphate which was the main component of SSP, used to be supplied from State Agency only. The contention of the defence that some private parties also used to supply the rock phosphate has also come in the testimony of prosecution witnesses but it has also come in the testimony of these witnesses that the supply of rock phosphate from private parties was in very small quantity. The main suppliers of the rock phosphate was continued to be State Agency. 7.4 If we peruse the testimony of PW12 Swaran Singh, an official of M/s. Sadhna Enterprises (India) Pvt. Ltd., it has come in his testimony that M/s. Sadhna Enterprises (India) Pvt. Ltd. has supplied 300 bags of rock phosphate in October 1984 and 48.5 MT of rock phosphate in November 1984. It is pertinent to mention here that this rock phosphate was supplied only to M/s. Punjab Phosphate Pvt. Ltd. and it specifically came in the testimony of PW12 that M/s. Sadhna Enterprises (India) Pvt. Ltd. has never CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 110 of 146 supplied any rock phosphate to M/s. Punjab Fertilizer & Pesticides Industry. Thus, this supply of rock phosphate was after June 1983 when the partnership firm was converted into a company.
PW17 Dilip Kumar Saxena an employee of Rajasthan State Mineral Development Corporation (RSMDC) specifically stated that RSMDC had not supplied any material to M/s. Punjab Phosphate Pvt. Ltd. or to M/s. Punjab Fertilizer & Pesticides Industry. RSMDC had informed that from 1979 to 1987, RSMDC had not supplied any material to M/s. Punjab Fertilizer and Pesticides Industry, Chharata and M/s. Punjab Phosphate Pvt. Ltd., Amritsar vide letter Ex.PW17/A. Similarly, PW13 Anil Mathur from M/s. BK Enterprises has also specifically stated that no rock phosphate was supplied to M/s. Punjab Fertilizer & Pesticides Industry or M/s. Punjab Phosphate Pvt. Ltd. The testimony of this witness would also indicate that the company M/s. Punjab Phosphate Pvt. Ltd. had been transacting with the purported account of M/s. BK Enterprises and cheques were being deposited and withdrawn in the said account under the forged signatures. However, M/s BK Enterprises did not have any sale transaction with M/s. Punjab Fertilizer and Pesticides Industry and M/s. Punjab Phosphate (Pvt.) Ltd., at any point of time. PW13 Sh. Anil Mathur stated that his firm (read M/s BK Enterprises) had never any account in Amritsar nor he had any account in Amritsar at any point of time. The witness stated to have never received any payment through cheque from M/s. Punjab Fertilizer and Pesticides Industry or M/s. Punjab Phosphate Pvt. Ltd. CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 111 of 146
In view of the above, RSMM had supplied rock phosphate to M/s. Punjab Phosphate Pvt. Ltd. in April 1980, April 1981 or May 1981 and M/s. Sadhna Enterprises had supplied rock phosphate in October 1984 and November 1984. There is no other proof of supply of rock phosphate to M/s. Punjab Fertilizer & Pesticides Industry or M/s. Punjab Phosphate Pvt. Ltd. except the above said supply.
7.5 The unfortunate aspect of this case is that PK Parmar who pulled the wool over the entire system is no more before this court to receive the judgment but the material on the record is speaking in volume that he being the Managing Director of the company was in conspiracy with number of persons to defraud the Government exchequer. PW13 Anil Mathur after seeing the cheques Ex.PW13/D1 to D94 specifically stated that none of these cheques bears his signature nor did his firm receive any payment through the cheques Ex.PW13/E1 to E18 from M/s. Punjab Fertilizer and Pesticides Industry and M/s. Punjab Phosphate. The cheques Ex.PW13/D1 to D94 and Ex.PW13/E1 to E18, in favour of M/s. BK Enterprises have been issued under the seal of company i.e. M/s. Punjab Phosphate Pvt. Ltd. and the amount so deposited have then been disbursed either to Vijay Trading Co. or have been withdrawn in cash.
It is also worth to note that RSMM Ltd. had supplied only 72.560 MT of rock phosphate powder or chip to M/s. Punjab Fertilizer & Pesticides Industry or M/s. Punjab Phosphate Pvt. Ltd. through 6 invoices. CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 112 of 146 Thus, there is a huge difference between the input and output. Similarly, M/s. Sadhna Enterprises (India) Pvt. Ltd. had also in total supplied around 8590 MT of rock phosphate to the company.
7.6 There cannot be any doubt to the proposition that in the criminal case, prosecution is duty bound to prove its case against the accused beyond reasonable doubt. The prosecution cannot take benefit of the weakness of the defence. The onus always remain on the prosecution and in no occasion, it can shift upon the accused. However, the concept of proving the case beyond reasonable doubt, is required to be seen with a pragmatic view. The prosecution can only be expected to prove the case only beyond reasonable doubt and not the each and every doubt i.e. whimsical or fanciful to the accused. The prosecution has proved that the rock phosphate was used to be supplied only through State agency and only as an exception some private parties used to supply the same. However, it does not mean that it is proved that M/s. Punjab Phosphate Pvt. Ltd. had been buying rock phosphate from the private parties. Had it been so, this fact was in the special knowledge of the defence and they could have produced some material before the court in this regard.
The prosecution has successfully proved that accused persons had fraudulently opened the false accounts in the name of BK Enterprises and M/s. Sadhna Enterprises.
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 113 of 146 7.7 PW40 DK Chaudhary (IO) has specifically stated that M/s. Punjab Fertilizer & Pesticides Industry and M/s. Punjab Phosphate Pvt. Ltd. had submitted bogus bills and on the basis of those bills, subsidy was claimed by the firm / company. The accused company has not taken any consistent defence. The defence has been taking contradictory defence. The company tried to create a hole in the story of prosecution that there used to be private parties for the trading of rock phosphate besides the Govt. agencies and secondly that some quantity of rock phosphate admitted to have been sold by Sadhna Enterprises (India) Pvt. Ltd. and RSMM Ltd. However, in the cross examination, the IO who made a consistent statement on oath, the defence did not put anything that the accused company had purchased rock phosphate from other sources. The company did not put any specific suggestion to the effect that rock phosphate was being produced from specific private traders. The stand of the prosecution has been consistent that the subsidy bills were bogus. The accused has not specifically contradicted this plea. Merely the suggestions have been put. It is a settled proposition that mere suggestions have no evidentiary value. IO repeatedly stated in the evidence that nothing was being manufactured. The accused company during the entire evidence did not produce any document like Electricity Bill, Generator Set Expenses, Transportation, Salary bill, Sale & Purchase register, Sales Tax and Income Tax record, to prove that manufacturing was taking place. Accused company had just tried to put mud in wilderness.
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 114 of 146
It is pertinent to mention here that A3 Lalit Kumar Parmar had signed the charge for the company. Sh. LK Parmar has not challenged the order of charge or his representation before any Superior Court. However, all the witnesses were duly cross examined with all vigour and company had all the opportunities to cross examine the witnesses on behalf of company. The company had all opportunities under the law to contradict the case of prosecution but it seems that the company had pulled the wool over the entire system and they also tried to mislead this court also.
I am of the considered opinion that in view of the discussion made herein above company is liable to be convicted for the offence u/S 420 IPC.
8.0 A3 LALIT KUMAR PARMAR 8.1 Ld. PP has submitted that in respect of A3 Lalit Kumar Parmar, CBI has led cogent and creditworthy evidence which is sufficient in nature to held the accused guilty. The Memorandum and Article of Association clearly prove that accused was Director of M/s. Punjab Phosphate Pvt. Ltd. Accused himself has admitted that he was partner of M/s. Lalit Enterprises and accused was found on 06.12.1988 at the time when the raid was conducted at his place by PW38 Javed Siraj. Ld. PP has also attracted the attention of this court towards the conduct of the accused Lalit Parmar (A3) whereby he initially tried to conceal himself but later on found hiding in the bathroom during the raid at his residence. Sh. DK Singh, Ld. PP for CBI submitted CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 115 of 146 that since the prosecution has specifically proved on record that the company M/s. Punjab Phosphate Pvt. Ltd. had never manufactured any Single Super Phosphate (SSP) and have claimed subsidy on the basis of bogus bills, the accused, who was Director of the company is also to be held criminally liable for the same.
PW10 Vijay Kumar deposed on oath that he was an employee of M/s. Punjab Phosphate Pvt. Ltd. and used to do the office works. In a specific question, the witness (read PW10) stated that he does not know if any fertilizer was being produced in the unit of M/s. Punjab Phosphate Pvt. Ltd. at Cherratah. Witness stated that though he saw some material lying there but he does not know if any manufacturing activity was going there or not. It is pertinent to mention here that an employee of M/s. Punjab Phosphate Pvt. Ltd. himself when came in the witness box could not say in specific term that M/s. Punjab Phosphate Pvt. Ltd. was manufacturing the fertilizer. Ld. Defence counsel for A3 Lalit Parmar wanted that testimony of this witness be read so as to exclude A3 Lalit Kumar Parmar as the witness has specifically stated that Lalit Kumar Parmar was not working in the office of A2 PK Parmar. It may be reminded that the duty of the court is to separate the grain from chaff. It is not necessary that the entire testimony should be accepted or rejected. The court is required to see that upto what extent the testimony of a witness can be accepted.
8.2 A3 Lalit Kumar Parmar had been active player of the company. CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 116 of 146 This is apparently signified from the report of A17 Prem Singh. It is pertinent to mention here that this report has repeatedly been read by the Ld. defence counsels. The perusal of this report would indicate that A3 Lalit Parmar was present at the time of inspection. It is pertinent to mention that it was a surprise inspection. Presence of LK Parmar at the manufacturing unit indicates his involvement in the day to day functioning of the accused company. It has also come on the record that there was a firm in the name of Lalit Enterprises. The transaction which took place in the said firm was in the special knowledge of the accused. The plea of A3 Lalit Kumar Parmar is that Lalit Enterprises had no connection with M/s. Punjab Phosphate Pvt. Ltd. and he was an independent MES contractor. The defence of being MES contractor has simply been put to prosecution witnesses but the accused did not put any cogent and creditworthy material on the record to prove that he was exclusively pursuing the business of MES Contractor. There can be a possibility that an individual had been pursuing more than one business at some time. The transaction which took place in the Lalit Enterprises was in the special knowledge of only A3 Lalit Parmar. Lalit Parmar could have come clean by placing material on the record regarding the transactions in the firm Lalit Enterprises.
8.3 PW19 Garib Dass has also specifically stated that his shop was taken on rent by Lalit Enterprises, but no business took place there. This fact shows that the firm was being created fraudulently only to put mud in the CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 117 of 146 eyes of system. It seems that it was all calculated fraud played with a cool mind. In such type of cases, where fraud has been played, the documents are in the possession of such people and it is very difficult to find out the direct evidence of their specific role. The court has to take tits and bits from here and there to complete the chain. The court cannot expect the prosecution in such like cases to prove the case like cast iron and perfection.
Primarily, the evidence against A3 Lalit Kumar Parmar are as follows :
a) As per Memorandum and Article of Association, he (A3 Lalit Kumar Parmar) was one of the Director of M/s. Punjab Phosphate Pvt. Ltd. It is pertinent to mention here that the company was incorporated with 5 Directors. However, only after 12 days, 2 female Directors resigned and company continued with 3 Directors namely PK Parmar, Lalit Kumar Parmar and P.K. Verma.
b) At the time of inspection dated 18.09.86, A3 Lalit Kumar Parmar was found present in the factory. Though in the report, he has been mentioned as Sales Manager but the fact of the matter is that accused LK Parmar was associated with the business of M/s. Punjab Phosphate Pvt. Ltd. at Cherratah, Amritsar.
c) A firm namely M/s. Lalit Enterprises was found functional. The allegation of the CBI is that this firm was also used as a front to channelize the ill gotten money.
d) A raid was conducted at the residence of A3 Lalit Kumar Parmar CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 118 of 146 wherein he initially tried to conceal himself and then was found hiding in the one of the bathroom of his house.
e) The premises was taken on rent in the name of M/s. Lalit Enterprises at Pathankot and that premises remained vacant and activity took place.
8.4 I consider that in view of Commercial Book Evidence Act and Section 35 of Companies Act, the prosecution has successfully proved on record that accused LK Parmar was one of the Directors of M/s Punjab Phosphate Pvt. Ltd. It is too late of the accused to have pleaded that he (LK Parmar) did not know at all that he was being named as Director in the company or his signatures might have been forged by the deceased brother PK Parmar.
8.5 It is pertinent to mention here that during search conducted by PW38 Javed Siraj at the residence of Lalit Kumar Parmar one purchase register of M/s. Punjab Phosphate Pvt. Ltd. was duly seized vide memo Ex.PW38/A and in the cross examination, the recovery of this document has not been challenged by the accused. One file containing loose sheets having blank bills of different firms and letter pad etc. were also recovered during the same search list. It is also pertinent to mention here that number of cheque books of different accounts were also recovered from the residence of A3 Lalit Parmar. During the search proceedings, seal of M/s. Punjab CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 119 of 146 Phosphate Pvt. Ltd. was also recovered. It shows the connection between accused Lalit Kumar Parmar and M/s. Punjab Phosphate Pvt. Ltd.
It is pertinent to mention here that on perusal of the record there are ample number of documents to show that M/s. Punjab Phosphate Pvt. Ltd. has not manufactured any SSP but the irony is that these documents have not been proved in accordance with law. The perusal of the record has also indicated that M/s Punjab Fertilizer & Pesticides Industry and M/s Punjab Phosphate Pvt. Ltd. have manipulated the things in such a manner that entire system seems to have been hijacked. But the irony is that since these documents have not been proved in accordance with law, the Court cannot take help of the same to reach to any conclusion. Had the trial been taken at an early stage, certainly the fate of this case would have been altogether different. It is also pertinent to mention here that PW40 DK Chaudhary (IO) has specifically stated that M/s. Punjab Phosphate Pvt. Ltd. shown to have procured the rock phosphate in major quantity from BK Enterprises. However, BK Enterprises had never supplied any rock phosphate. Another raw material i.e. sulphuric acid was also shown to have been supplied from M/s. Sehdev and this firm was also found to be a false firm.
IO reiterated that there was no supply of raw material nor sale of SSP fertilizer and claims of subsidy preferred by the accused company showing manufacturing and sale of SSP fertilizer were bogus. In the cross examination on behalf of A3 Lalit Kumar Parmar and Company, there was CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 120 of 146 not even a suggestion that bills submitted by the company were the correct bills. Interestingly, A3 Lalit Kumar Parmar put a suggestion that his signatures on the Memorandum and Articles of Association were forged.
The minute analysis of the proved documents on record and appreciation of evidence of the witnesses examined by the prosecution unerringly indicated that accused LK Parmar had been an active player on the conspiracy hatched by Late Sh. PK Parmar with other person. Even at the cost of brevity, it may reiterated that in such like fraud case, where multiple agencies and number of persons are involved, it is very difficult to get direct and specific evidence. The Court in such like case may not be over obsessed with the theory of benefit of doubt. No doubt, the accused is entitled for the reasonable doubt and prosecution is required to prove it's own case, but at the same time court may not be a dormant arbiter and trial may not be only battle of wits or a game of chess. The quest of the court should be to reach to truth and impart justice within the parameters of Law. I am of the considered opinion that LK Parmar on the basis of material on record is liable to be held guilty u/S 120B IPC r/w 420 IPC.
9.0 A5 RANVEER SETH, A6 DAULAT SINGH AND A7 RC NIRMAL 9.1 Primarily the charge against these accused persons were that they in conspiracy with the company forwarded the subsidy bills of M/s. Punjab Fertilizer & Pesticides Industry from the period December 1980 to CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 121 of 146 December 1982 knowing fully well that the bills so submitted were incorrect.
The case of the prosecution is that no manufacturing or sale was done by M/s. Punjab Fertilizer & Pesticides Industry during this period and therefore, the bills of subsidy were forged and fabricated. However, I consider that the prosecution has not been able to prove its case against these accused persons for the following reasons :
i. As per letter No.4(27)/80FDA.I dated 29.09.80, Ex.PW40/DA, it has only been mentioned that the bills from the companies shall continued to submit through State Govt. concern and bills are to be certified by the State Govt. in addition to the Chartered Accountant in case of the companies. Thus, there is no specific indication that the bills have to be forwarded by Chief Agriculture Officer ;
ii. The prosecution has not brought any material on the record to suggest that only Chief Agriculture Officer was the competent officer to certify or forward the subsidy bill ; and iii. There is a letter dated 08.08.1980, Ex.PW40/DC (earlier mark 15/DA) from Chief Agriculture Officer to Director of Agriculture and an undated letter from Assistant Project Officer, IADP, Amtrisar to the Chief Agricultural Officer, Amritsar, Ex.PW40/DD (earlier mark 15/DB). In the letter dated 08.08.1980, Chief Agriculture Officer, Amritsar has informed the Director of Agriculture Punjab, Chandigarh that M/s. Punjab Fertilizer & Pesticides Industry is actually in production and firm has manufactured 19 Tones of SSP and 16 Tones CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 122 of 146 are under production. Similarly, Sh. Jagtar Singh Cheema in his letter has also confirmed that record of M/s. Punjab Fertilizer & Pesticides Industry were found correct as per the instructions contained vide letter dated 29.09.1980.
iv. In the letter dated 27.09.1982 from Director of Agriculture Punjab to Financial Commissioner, Punjab Chandigarh, Ex.PW40/DG, it has been mentioned that after Chief Agriculture Officer did not certify / forward the bill, the Govt. of India entrusted this work to the Industries Department Punjab.
9.2 It is pertinent to mention here that IO admitted that there is no evidence on record regarding the acceptance or obtaining or demand on part of accused persons relating to this case. In the cross examination, IO was not able to tell if there is any document/evidence showing nexus between accused Ranveer Seth and accused P.K. Parmar.
In the present case, the prosecution has not been able to prove sufficient evidence to convict the accused. Hence, accused Ranveer Seth, Daulat Singh and RC Nirma, are acquitted for the lack of evidence. 10.0 A8 PRATAP NARAYAN 10.1 A8 Pratap Narayan, Executive Director of FICC has been prosecuted for the allegation that he had fraudulently ordered for processing CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 123 of 146 of bogus subsidy claims for the month of December, 1980 to July, 1981 inspite of the fact that the verification regarding genuineness of claims had not been done by authorised officers on 28.10.82 without proper verification of the record. The prosecution has not brought any mateiral on record to prove it's case against the accused. For better understanding, the charge of conspiracy cannot be accepted merely at the asking of the prosecution. There has to be some evidence regarding dishonest intention or malafide on the part of accused to be part of the criminal conspiracy. Rather FICC officials made a reference to the Chief Secretary, Govt. of Punjab in view of the contradictory stand taken by Chief Agricultural Officer, Amritsar and DIC, Amritsar vide their communication dtd. 3/7/82 and reminder dtd 21/9/82 whereby the Chief Secretary Punjab was requested to reconcile the contradictory statement. Letter dtd 3/7/82 is reproduced as below:
FERTILIZER INDUSTRY COORDINATION COMMITTEE (MINISTRY OF PETROLEUM, CHEMICALS & FERTILIZERS) No. 4/39/80-81/A/cs Subsidy/SSP/343 8th Floor, Sewa Bhavan, RK Puram, New Delhi - 110066.
3rd July, 1982 To The Chief Secretary, Government of Punjab, Secretariat, Chandigarh.
Sub.: M/s. Punjab Fertilizers and Pesticides Industries - Payment of subsidy to.
Sir, M/s. Punjab Fertilizers and Pesticides Industries, a small scale industry located at Amritsar, was established to produce Single Super Phosphate. Under an existing scheme of the Govt of India, M/s.CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 124 of 146
Punjab Fertilizers and Pesticides Industries are eligible to receive subsidy on the quantity of SSP despatched from the factory. One of the conditions of payment of subsidy is that the quantity of SSP removed from the factory for direct sale as fertilizer is to be verified by an authorised offier of the State Government concerned.
2. M/s. Punjab Fertilizers and Pesticides Industries have submitted subsidy claims for the period December'80 to July'81 in respect of quantities of SSP moved out of the factory during this period. The claims were, however, not verified on behalf of the State Govt. as required under the extant instructions of the Govt. of India and were, therefore, not admitted.
3. This office as well as the Ministry of Agriculture, Govt. of India, there upon took up the matter with the Director of Agriculture and the Financial Commissioner, Govt. of Punjab. We have been informed by the Director of Agriculture in his memo No. 2935/18-22/I dated 11/6/82 that "on the basis of the information made available to him by other Chief Agriculture Officers and investigation carried out by him, the Chief Agriculture Officer, Amritsar, has reported that this firm has not manufactured any Super Phosphate and has submitted false bills just to claim subsidy from the Govt. of India."
4. It is, however, seen from the documents submitted by the firm to this office that the Assistant Project Officer, Deptt. Of Agriculture, Amritsar, had checked the records of M/s Punjab Fertilizers and found them correct. It is also observed that the Director of Agriculture in his letter No. 23418/18-336-A dated 26/5/81 and No. 2999/18-336-A dated March'81, addressed to M/s Punjab Fertilizers had made some observations regarding shortfall in production / supply of fertilizers under ECA allocation. Moreover, the Chief Agriculture Officer, Amritsar, had intimated the Director of Agriculture in his letter No. 2788 dt. 28/8/80 that "the manufacturing concern is actually in production." It is, therefore, surprising to note that the Director of Agriculture has informed us vide his letter quoted in para 3 above that the unit has not manufactured any SSP.
5. The subsidy claims of the firm for the period Dec., 80 to July ' 81 have now been received in this office duly verified by the Senior General Manager, District Industry Centre, Amritsar. In view, however, of the contradictory statements made by the Agriculture Department on the on hand and by the Industries Department on the other, this office is unable to admit the subsidy claims of the firm.
Consequently, the unit has ceased production since August, 1981 due to financial constraints.
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 125 of 146
6. It is, therefore, requested that you may kindly have the contradictory statements of Deptt. Of Agriculture & Industries department reconciled and let us know whether quantities shown by the firm as having been moved out of the factory for direct sale as fertilizers are correct so that the subsidy claims of M/s Punjab Fertilizers could be further examined by us.
Yours faithfully, Sd/-
( D. Swarup ) Joint Director (F&A) Ld. PP has argued that A8 Pratap Narayan is liable to be convicted for his overt act for making an endorsement on letter, wherein he directed his subordinate to process the immediately. It has also been argued that the accused who was in dominating position ensured the release of subsidy on the same day and therefore, this overt act is sufficient to convict the accused. I consider that this proposition being put by Ld. PP cannot be accepted.
10.2 Law on the conspiracy is very well settled. It is correct that in the case of conspiracy, it is very difficult to get the direct evidence from the prosecution. The prosecution is required to prove the offence of conspiracy by way of indirect evidence or by proving the various circumstances which would lead to prove the conspiracy amongst the accused persons. However, even as per section 10 of the Indian Evidence Act (IEA), in order to prove an act of accused as conspiracy, the prosecution is required to prove on record prima facie conspiracy between the accused persons. The act and conduct of CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 126 of 146 the accused persons under Section 10 of IEA is admissible only during the period when the conspiracy started between the accused persons and it came to an end. The act and conduct of accused persons for this interregnum period is covered u/S.10 of IEA.
10.3 It is pertinent to mention here that in the cross examination on behalf of A8 Pratap Narain, IO admitted that FICC had only one office located at R.K. Puram, New Delhi and therefore, FICC was dependent upon the State for the submissions of subsidy bill claimed by the claimant. He also admitted that Industries Department which issued the SSI registration is part of State Government. IO was not able to recall of any instruction/guidelines before the October 1982, which had made it mandatory for certification by Chief Agricultural Officer, Amritsar.
In the present case, the prosecution has not led even an iota of evidence on the record to prove that A8 Pratap Narayan was in conspiracy with other accused persons. I consider that there is no alternative but to acquit the accused. Hence, A8 Pratap Narayan is entitled to be acquitted.
11.0 FICC OFFICIALS - A9 TO A17 11.1 CBI chargesheeted A9 to A17, who were FICC officials at the relevant time on the allegation that these accused persons gave false CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 127 of 146 inspection report of M/s. Punjab Fertilizer & Pesticides Industry and also released the subsidy on the basis of bogus bills. Out of these accused persons, A9 Anil Sood, A10 SD Raj, A14 SC Singhla died during the course of trial. A11 MS Sandhu, A12 Vinod Chandra had conducted the inspection of the company for the period 198283. A13 YR Khattar had also conducted the inspection along with A9 Anil Sood in March 1985 for the year 198384. Similarly, A15 RK Bhambi had conducted the inspection along with A16 Ram Singh for the year 198485 and 198586. The biggest challenge was placed before A17 Prem Singh as he allegedly conducted the inspection on 18.09.86 along with PW6 Ajmer Singh and PW15 Pritam Singh. The allegation is that A17 Prem Singh gave a false and frivolous inspection report.
It is pertinent to mention here that process for submission of bills and payment of subsidy bills has been laid down in circulars dated 29.09.80 and 05.08.82 issued by Ministry of Petroleum, Chemicals & Fertilizers and inspection on behalf of FICC is also mentioned in the same circulars. The process laid down in the circular dated 29.09.80 would indicate that there were two separate process of the bills submitted by the company and other than company. The bills to be submitted by the companies were to be signed by the Statutory auditor and in case of other than company, the certificate had to be signed by the Chartered Accountant, to be appointed by the firm and in addition to the certification to be CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 128 of 146 forwarded by the State Govt. Letter dtd. 29.9.80 and 5.8.82 are reproduced herein below:
No. 4(27)/80-FDA.I Government of India Ministry of Petroleum, Chemicals & Fertilizers Department of Chemical & Fertilizers .........
New Delhi, the 29th September 1980.
To, All manufactures of Single Super Phosphate.
(As per list attached)
Subject: Withdrawl of Excise Duty on Single Super
Phosphate w.e.f. 07.06.1980 and revision of
procedure.
Sir,
Consequent upon the abolition of central excise
duty on Single Super Phosphate w.e.f. 07.06.1980 it has become necessary to revise the existing procedure for the payment of subsidy. It has, therefore, been decided that, in modification of the Ministry of Agriculture and Irrigation Letter no. 10-1/76- FA(G) dated 04.11.1977, the following revised procedure will govern the payment of subsidy to the manufacturers of single super phosphate :-
(i) The bill for the payment of subsidy shall be submitted in duplicate in the revised proforma at Annexure I on a monthly basis. The amount payable shall be calculated on the basis of the quantities moved out of the factory for sale for agricultural purposes and also on the quantities used within the factory or supplied outside the factory to the mixing units for production of N.P.K./NP mixture fertilizers used for agricultural purposes.
(ii) The bills shall be supported by RT-12 Form, in duplicate, duly signed by the Excise Officer Incharge so long as the existing procedure of the submission of RT-12 Form to the Central Excise Department in respect of Single Super Phosphate continues to be operative even after this item has been exempted form the levy of Excise Duty w.e.f. 7.6.1980. True copies of the RT-12 Form duly attested by the Central CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 129 of 146 Excise Officer Incharge would also be accepted during this period. The existing procedure of submission of certificate from the Central Excise Officer Incharge followed by RT-12 Form within a period of 3 months from the date of submission of the bill shall also continue to be followed during this period.
(iii) After the discontinuance of the obligation of submission of RT-12 Form tp the Central Excise Department under the orders issued by the Government of India, Ministry of Finance (Department of Revenue), the monthly bills shall be supported by the details in Annexure II, in duplicate.
(iv) Bills for subsidy on SSP should also be
supported by :-
(a) a distribution statement in the proforma at Annexure III-
A, in the case of companies registered under the Companies Act, 1956 and in the proforma at Annexure III-B in the case of other companies; and
(b) where necessary a certificate of certificates in the proforma at Annexure IV and V. In the case of Companies registered under the Companies Act, 1956, the above certificate(s) will be signed by their Statutory Auditors. In the case of other Companies these certificates will be signed by the Chartered Accountants, to be appointed by such Companies, in addition to the certification by the State Government as at present. The bills from these companies shall continue to be submitted through the State Government concerned.
(v) The monthly details shall be further supplemented by annual certificates from the Statutory Auditors/Chartered Accountants and State Government to be sent to the Fertilizer Industry Co-ordination Committee with the bill for the month of March each year in the proforma at Annexure VI, authenticating total production, dispatches and closing balance etc. of each product during the year ending 31st March.
(vi) In the case of claimants registered under the Companies Act, 1956 the bills and supporting documents shall be signed by the Chief Executive or the Head of the Finance Wing of the Company. In the case of other claimants the bills and supporting document, shall be signed by the Proprietor/Partner of the firm. The specimen signatures of the persons authorised to sign the bills would accordingly be required to be sent to the Fertilizer Industry Coordination CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 130 of 146 Committee, either before the submission of the bills or alongwith the first bill to be submitted under the revised procedure. Similarly, the company shall also furnish the name of their Statutory Auditors/Chartered Accountants and the name and specimen signatures of the auditors will sign the certificates, duly attested by them.
(vii) The bills shall continue to be forwarded to
Executive Director, Fertilizer Industry Co-ordination
Committee, Sethi Bhawan, 7, Rajendra Place, New Delhi -
110008.
(viii) A detailed check of the payments made under this scheme and that of all records maintained by the fertilizer units in respect of production/dispatches and closing balance for each product together with their supporting documents and such other records as may be required by the inspection parties would be exercised by inspection parties, to be deputed for the purpose from the Fertilizer Industry Coordination Committee or any other authority under the Government, at periodical intervals. In this connection, the following records, which are at present being maintained by the fertilizers units for excise purposes etc., should continue to be maintained and kept ready for checking by the Inspection Parties :-
(a) Daily stock register in Form RG-1 showing for each day, the opening balance, production, quantity despatched and closing balance, separately for each product.
(b) Daily reports of production and stock of each product duly authenticated by Manager (Production).
(c) Despatch/stock transfer advices serially numbered and signed by Manager (Sales).
(d) Despatch instructions issued from Headquarters or other controlling agency.
(e) Gate passes, bearing printed serial numbers together with a Register of gate passes issued showing number and date of the gate pass issued each day and the quantities moved out of the factory on the basis of that gate pass. (i.e. the daily recapitulation statements as at present).
(f) Register of despatches giving full particulars of gate pass no., date, despatch/stock transfer advice no. and date pf the letter containing despatch instructions, against each entry in the register.
2. The above procedure is subject to review.
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 131 of 146
3. This issues with the concurrence of the Finance Division, (Department of Chemicals & Fertilizers) vide their U.O. No. 3763-Fin(C&F)/80 dated 27th September, 1980.
Yours faithfully, (M. Singh) Desk Officer Copy forwarded to :-
1. Accountant General, Commerce, Works & Miscellaneous, Indraprastha Estate, New Delhi.
2. Controller of Accounts, Deptt. Of Chemicals & Fertilizers, New Delhi.
3. Pay & Accounts, Deptt. Of Chemicals & Fertilizers, New Delhi.
4. Executive Director, Fertilizer Association of India, near Jawaharlal Nehru University, New Delhi.
5. Deptt. Of Agricultural (K. Shankar, Director (F7A), Connaught Place, New Delhi.
6. Deptt. Of Agriculture (Shri R. Narayanan, Deputy Secretary), Krishi Bhavan, New Delhi.
7. Executive Director, Fertilizer Industry Coordination Committee, 7, Sethi Bhawan, Rajendra Place, New Delhi. (20 copies)
8. Finance Division.
(M. Singh) Desk Officer ********* No. 4/13/82FDAI Government of Indian Ministry of Petroleum, Chemicals & Fertilizers Deptt. of Chemicals & Fertilizers . . . . .
New Delhi, the 5th August, 1982 To All manufacturers of Single Super Phosphate.
(As per list attached).
Sub.: Provisional payment of subsidy to Single Super Phosphate CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 132 of 146 manufacturing units.
. . . .. . . .. . . . . .
Sir, Consequent upon issue of Government of India, Ministry of Agriculture, Deptt. Of Agriculture & Cooperation, telegram No. 19/82F.A. (GP) dated 22nd May, 1982 fixing a uniform retail price of Single Super Phosphate with effect from 23rd May, 1982, it has become necessary to replace the scheme for payment of uniform flat subsidy of Rs.1,250/ per MT of P2O5 by a scheme for payment of differential rate of subsidy based on the exfactory price worked out separately for each manufacturing unit.
2. The data required for this purpose is separately being collected by the Fertilizer Industry Coordination Committee.
3. Since the consumer price has been revised from 23/5/82, the rate and the procedure for payment of subsidy which was in vogue in accordance with this Ministry's letter No. 4(27)/80FDA.I dtd 29/9/80 will be applicable upto 22/5/82. Accordingly, you are requested to submit your bill for the period 1st to 22nd May, 1982 as per the procedure prevalent before 23/5/82.
4. For the period from 23/5/82, the payment of subsidy will be based on the exfactory price to be worked out for your unit for which action is separately in hand. Since this is likely to take some time, the Government have, taking into account the liquidity problems of the manufacturing units, decided to make payment of subsidy to youir unit at the rate of Rs. * per tonne of SSP containing a minimum of 16% S.P 2O5 despatched from the period 23.5.82 onwards purely on a provisional basis subject to the following conditions : i. The bill will be preferred monthly as hitherto in the proforma attached as Annexure - I to this letter.
ii. The payment is purely provisional till the exfactory price is determined for your unit and notified by the Government and is subject to adjustment from the bills preferred on the basis of exfactory prices so notified. If after the prices are notified it is found that the provisional payment made at the rates cited above is in CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 133 of 146 excess of the amount payable to you in accordance with the final notified prices, the excess amount is required to be refunded to Government within 15 days from the date of the prices are notified. In case the payment is not made within 15 days, interest at the rate of 2 ½ % above the ruling bank rate for working capital loans will be recovered from you on the amount so received in excess from the 16th day of the notification of the final prices. However, the FICC would be free to adjust this amount from any of the pending bills if any.
5. Procedure regarding admission of annexures II, III A/IIIB as the case may be and annexure VI prescribed in this office letter No. 4(27)/80FDA.I dated 29/9/80 shall remain unchanged. As far as annexures IV & V are concerned, these have been suitably modified and enclosed as annexure IV & IVB and VA & VB respectively. These annexures may be furnished duly completed alongwith the bill depending upon, the status of the manufacturing firm / purchasing firm. Instructions regarding maintenance of various records namely Gate Pass, Daily Stock Register, Daily reports of production etc. etc. for verification by the inspection team of FICC details in para.(viii) of this Ministry's letter dated 29/9/80 referred to above shall also remain unchanged.
6. This issues with the concurrence of the Finance Division (Deptt. of Chemical & Fertilizers) vide their U.O. No. 2689/Fin.I/C&F dated 4/8/82.
Yours faithfully, (M. SINGH) DESK OFFICER * as per list attached.
11.2 It is quite surprising that in the present case, Chartered Accountant Sh. Surender Khanna who had certified all the bills have not been brought before this court. The prosecution has maintained total silence CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 134 of 146 over this fact that why this Chartered Accountant, who had certified the subsidy bills has not been made an accused. Even this person was not examined as a witness by the CBI. I consider that Chartered Accountant who certified the bills was a very material witness. He was the main link in the entire story and his absence is proving to be detrimental to the case of the prosecution.
11.3 The contention of the prosecution, in respect of the bills upto December 1983, before M/s. Punjab Fertilizer & Pesticides Industry was converted into a company i.e. on 09.06.83, is that these bills were not forwarded by Chief Agriculture Officer as required under procedure and were falsely certified and verified by District Industry Centre. However, in respect of the bills submitted after June 1983 when M/s. Punjab Phosphate Pvt. Ltd. came into existence, this is not the case of the prosecution that the procedure has not been followed in any manner. It is worth to mention here that the system of the inspection to be carried out by FICC also takes birth from circular dated 29.09.80, Ex.PW40/DA. If we peruse the circular dated 29.09.80, it unerringly mentions that all records maintained by the fertilizer units in respect of production/dispatches and closing balance for each product together with their supporting documents and such other records as may be required by the inspection parties would be inspected by inspection parties, to be deputed for the purpose from the Fertilizer Industry Coordination Committee or any other authority under the Government, at CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 135 of 146 periodical intervals.
However, even if we go to the extent presuming that if a person is going for inspection of record, he is required to conduct the physical inspection also. It is pertinent to mention that in inspections in the present case were carried out at later stage. Therefore, these inspection reports were required to be the report of what had already taken place. The letter / orders issued for the inspection from FICC also indicates that only inspection of the records were to be conducted. It is interesting to note that the prosecution has not proved any inspection report except the inspection conducted by A17 Prem Singh. If the prosecution wanted to challenge the inspection reports submitted for the year 198283, 198384, 198485 and 198586, these inspection reports were required to be proved by the prosecution in accordance with the provisions of IEA. Without proving these reports, the prosecution cannot expect from this court to give a finding on the same. As far as the fact of process of bills is concerned, it is on the record that there were many officials other than the persons who have not been charged, and have processed the bills. In this regard, a letter of DoPT dated 06.12.96 is worth mentioning, whereby it was held that after the bills for the period December 1980 to July 1981 were submitted to FICC, contradictory reports from Chief Agriculture Officer and District Industry Centre, were taken up with the chief Secretary to the Government of Punjab to reconcile the same and therefore, the matter was referred to Punjab Govt. and a response was received from A18 Pritam Singh whereby FICC was CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 136 of 146 asked to release the subsidy bills. In this order dated 06.12.96 passed by Sh. SK Ray dated 15.12.96, it was observed as under :
" Confidential
No.1/1/93 - Vig.
Government of India
Ministry of Chemicals & Fertilizers
Department of Fertilizers
Shastri Bhawan, New Delhi
Dated 6th December, 1996
OFFICE MEMORANDUM
Subject : RC No.11/88SIUVIII against Shri Deen Dayal,
Under Secretary, Deptt. Of Agriculture &
Cooperation and other officers / officials of different departments who were on deputation to FICC under Department of Fertilizers The undersigned is directed to refer to the CVC's O.M. No.X C&F3 dated 22.4.94 reiterating its advice for initiation of major penalty proceedings against the following in the above referred case :
i) Shri M.P. Guwalani
Accounts Officer
Ministry of Water Resources
The then Junior Accounts Officer, FICC
ii) Shri D.S. Negi
Assistant
Ministry of Parliamentary Affairs
The then Junior Accounts Officer, FICC
iii) Shri D.C. Dabral
Senior Section Officer,
Dte. Of Accounts, Cabinet Sectt.
The then JAO, FICC
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 137 of 146
iv) Shri K. Narayanan
Accounts Officer
Office of the CGDA
The then Accounts Officer, FICC
v) Shri Satya Prakash
AAO, Office of the Controller of Accounts
Lok Nayak Bhawan,
The then JAO, FICC
2. The advice of the Commission has been examined. The above named officers processed the subsidy claims submitted by M/s. Punjab Phosphates Pvt. Ltd. as per the performa prescribed by this Ministry. The subsidy claim in respect of the unit was received for the first time by the office of the FICC for the period from December 1980 - July 1981. The claim was countersigned by an officer of the District Industries Centre. Instructions of this Department did not specify the authority of the State Government which should countersign such claims. However, since an adverse report was received by the Chief Agricultural Officer, the office of the FICC took up with the chief Secretary to the Government of Punjab to reconcile the two contradictory reports. In response Shri Pritam Singh, Dy. Secretary to the Govt. of Punjab sent a reply recommending release of the subsidy payment to the unit. The letter from Shri Pritam Singh reads as under :
"I am directed to refer to your letter No. 4/39/92/83/ACS/subsidy/SSP/1670 dated 21.9.1982, on the subject cited above and to request you to release the subsidy bills of M/s. Punjab Fertilizer & Pesticides Industries, Ram Bagh Gate, Amritsar, for the period from December 1980 to July 1981, which have duly been verified by the officers of Industries Department of the State Government under intimation to this Department."
3. For other periods, in the absence of any adverse report, office of the FICC passed the claims based on the certification made by the officers of the District Industries Centre.
4. Since the recommendation contained any Shri Pritam Singh's letter was clear and unambiguous, there was no reason for FICC officials CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 138 of 146 to have any doubt about the recommendation contained in the said letter. Since these officers had processed the claims as per procedure, it is difficult to find fault with them.
5. In view of the above, this Department holds the view that there is no case for initiating major penalty proceedings against the five officials referred above. The concerned departments are accordingly being advised to drop the proceedings against these officials.
Sd/ (S.K. RAY) DIRECTOR (VIG.) TEL : 3381395 Secretary Central Vigilance Commission Bikaner House, Pandara Road, New Delhi."
11.4 The prosecution during the course of trial has not brought any material on the record to show that there was any adverse report with the FICC officials which could make them to know that the bills so submitted were the bogus bills. It would not be out of place to mention here that in this case A2 PK Parmar, who is no more, had been manufacturing the record in such a manner that the bogus subsidy bills were submitted by the company. The prosecution has not led any cogent and creditworthy evidence to prove the conspiracy amongst the accused persons. The accused persons A9 to A16 cannot be imputed the knowledge of bogus bills in absence of any substantive evidence on the record to this effect.
11.5 The defence has challenged the sanction granted against the CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 139 of 146 accused persons. Ld. Defence counsels have consistently argued that the sanction granted against the accused persons has been granted mechanically without any application of mind. Ld. PP has defended the sanction saying that the sanctioning authority have duly proved the sanctions against the accused persons and there is nothing on record to suggest that any miscarriage of justice or failure of justice has taken place in this case on account of sanction. The law regarding sanction is very well settled.
In Basdeo Agarwal V. Emperor, AIR 1945 FC 16, it was inter alia held that sanction under the Act is not intended to be, nor is an automatic formality and it is essential that the provisions in regard to sanction should be observed with complete strictness. It is a settled preposition that the grant of sanction is not an idle formality or an acrimonious exercise. It is a solemn and sacrosanct act. The sanction lifts the bar for prosecution. Infact the sanction is a protection to Government servant against frivolous prosecution. The sanctioning order must ex facie disclose that the sanctioning authority has considered the evidence and other material placed before it.
In the present case, I have perused the sanction granted by the sanctioning authority. It is interesting to note that infact all the sanctions are almost verbittum running into 44 pages. There is difference of number of pages possibly on account of change of the size of font and space. It has rightly been held that sanction is not an ideal formality and it is a solemn act and the sanctioning authority is required to apply the mind before grant of sanction. It is also pertinent to recall the cross examination of the CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 140 of 146 sanctioning authorities , wherein, they have admitted that either they do not recall that what documents were perused by them before grant of sanction or they stated that they have gone through the CBI record filed by them. The plea of the CBI that there has not been any miscarriage of justice or failure of justice, on the part of this irregularity, cannot be accepted. The question is that, had the sanctioning authority gone through the entire record, they might have reached to a different conclusion. I consider that the sanction granted in the present case is mechanical and without any application of mind.
IO also admitted that he did not come across any material during investigation which could indicate that accused YR Khattar and RK Bhambi have forged any document.
In the cross examination on behalf of accused A16 Ram Singh, IO was not able to recall to have collected any evidence regarding demand, acceptance or obtaining any illegal gratification by Accused Ram Singh.
I consider that A11 to A16 are also entitled to to be acquitted on account of insufficient evidence.
11.6 The case of A17 Prem Singh stands on different footings. A17 Prem Singh went for inspection of unit along with PW6 Ajmer Singh and PW15 Pritam Singh. Both the witnesses have specifically stated that inspection report Ex.PW6/A submitted by Prem Singh is not correct report. A17 Prem Singh has submitted that in fact PW6 Ajmer Singh and PW15 CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 141 of 146 Pritam Singh were representative of Chief Agricultural Officer and they have been representing against the company and therefore, they have made a false and frivolous statement. A17 Prem Singh has heavily relied upon the notings of PW 11 Shri Prakash dated 21.08.86 and his noting made on 26.08.86. A17 Prem Singh has contended that it was only a thorough inspection as directed by PW11 Shri Prakash and he i.e. A17 Prem Singh had suggested to join the official from Agriculture office. Even PW11 Shri Prakash in his testimony deposed that A17 Prem Singh had suggested for association of Director Agriculture, Punjab for the inspection of the unit and Prem Singh even informed Director Agriculture through telegram, when contact could not be established on telephone, and the inspection dates were fixed only after confirmation from Director Agriculture, Punjab.
The plea of the accused is that PW6 Ajmer Singh and PW15 Pritam Singh have made false statement against him. However, I do not see any reason to interfere that these witnesses would make a false statement but at the same time, it has come on the record that PW6 Ajmer Singh and PW15 Pritam Singh did not file any desenting report after the inspection. It was admitted by the witness (read PW6 Ajmer Singh) that he did not prepare any separate report as the team was headed by A17 Prem Singh and being head of the team, he (A17) only prepared the report. PW6 also admitted that he did not submit any separate report regarding this inspection to his office. PW15 Pritam Singh admitted in his testimony that he was not given any written order nor he submitted any report in his office regarding the CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 142 of 146 inspection. It is also pertinent to mention here that PW15 Pritam Singh in his testimony has submitted that a report was prepared in his office and same was sent to Delhi but no such report has been placed on the record. It also cannot be forgotten that A17 Prem Singh submitted this report to his Executive Director and thereafter, in pursuant to the directions, also sent further intimation to the concerned Agriculture Officer.
If we peruse the entire evidence, the role of A17 Prem Singh seems to be doubtful. However, at the same time evidence led by the prosecution is not strong enough to record the conviction of the accused. A doubt has been created in the mind of the court on account of the fact that it was the accused himself who had suggested to join all the members of the team from Agriculture Department, and PW6 Ajmer Singh and PW15 Pritam Singh did not submit any dessenting report despite having come to know of the report of A17 Prem Singh. I consider that the evidence produced against A17 Prem Singh is not sufficient. Therefore, A17 Prem Singh is entitled for benefit of doubt. A17 Prem Singh is acquitted having been extended benefit of doubt.
12.0 A18 PRITAM SINGH 12.1 A18 Pritam Singh was prosecuted by the prosecution on the ground that he wrote a letter dated 28.10.82 in conspiracy with accused persons. However, not even an iota of evidence has been produced against CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 143 of 146 this accused. There is no material on the record to suggest any conspiracy. Hence, A18 Pritam Singh is also entitled to be acquitted. 13.0 A19 SANT KUMAR SHARDA AND A20 GS SACHDEVA 13.1 PW4 SK Gupta admitted that at the relevant time i.e. from 23.02.85 to 12.10.86, Sh. SK Sarda was Technical Field Officer, Small Scale Industries Section, PNB, Amritsar and his job was to assist the SSI units, process their applications for their technical and financial viability and put up their case for grant of loan before the Senior officers for sanction. The one of the function of the accused was to be in the field to inspect the SSI unit. PW4 SK Gupta in the cross examination stated that the relevant facts is that Mr. SK Sarda himself filled up the bank account opening form and also verified the fictitious signatures of the Proprietors of the Firms and facilitated the opening of bank account. However, this fact has not been proved by the prosecution. The prosecution has not led any oral or documentary evidence in respect of this fact.
It is pertinent to mention here that PW25 Avinash Pahwa in his cross examination on behalf of accused Sant Kumar Sharda admitted that during his (PW25's) tenure, accused Sant Kumar Sharda had never been Manager, Asstt. Manager, Accountant, Incharge of current Account Section or an authorized officer to open or attest the signatures of the person opening the current account. He also admitted that job profile of SSI officer is not CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 144 of 146 concerned with Account Opening in any manner.
13.2 In the cross examination on behalf of A20 GS Sachdeva, PW4 SK Gupta stated that before grant of sanction, he verified the designation of Sh. GS Sachdeva from his service book. However, it is matter of record that the prosecution has not led any evidence on record, oral or documentary to prove that accused GS Sachdeva was working as Asst. Manager, Punjab National Bank at the relevant time. However, the service book or any other service record of the accused has not been produced before the Court. In the cross examination PW4 SK Gupta admitted that he cannot show any document on the basis of which he reached to the conclusion that A20 GS Sachdeva or A19 SK Sarda had obtained the pecuniary advantage and misused their official positions. It also came in the cross examination of PW4 SK Gupta that the bank did not initiate any disciplinary enquiry in respect of this case against against Mr. SK Sarda and Sh. GS Sachdeva.
Against these accused persons also, there is no material to suggest that they are in conspiracy with accused persons. The prosecution has not brought on record any material to connect these accused persons with the offence. Hence, I consider that A19 Sant Kumar Sharda and A20 GS Sachdeva are also entitled to be acquitted.
14.0 In view of the above findings, A1 M/s. Punjab Phosphate Pvt. CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 145 of 146 Ltd. is convicted for the offence u/S. 420 IPC and A3 Lalit Kumar Parmar is convicted for the offence u/S.120B IPC and Sec. 120B r/w S. 420 IPC. However, A1 M/s Punjab Phosphate Pvt. Ltd. and A3 Lalit Parmar are acquitted for the offence u/S 467, 468, 471 IPC.
A5 Ranveer Seth, A6 Daulat Singh, A7 RC Nirmal, A8 Pratap Narayan, A11 MS Sandhu, A12 Vinod Chandra, A13 YR Khattar, A15 RK Bhambi, A16 Ram Singh, A18 Pritam Singh, A19 Sant Kumar Sharda and A20 GS Sachdeva are acquitted for the offence u/S. 120B IPC r/w S.420, 467, 468 and 471 IPC and u/S.5(2) r/w S.5(1)(d) of PC Act, 1947. A17 Prem Singh is acquitted on benefit of doubt for the offence u/S.120B IPC r/w S.420, 467, 468 and 471 IPC and u/S.5(2) r/w S. 5(1)(d) of PC Act, 1947. Accused persons are on bail. Their bail bonds are canceled. Sureties discharged. Original documents, if any, on record be returned to the sureties / accused against proper acknowledgment.
Announced in Open Court (Dinesh Kumar Sharma)
on 22.02.2012 Spl. Judge (PC Act) : CBI
Saket Courts : New Delhi.
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 146 of 146
IN THE COURT OF SPECIAL JUDGE (PC ACT), CBI,
SAKET COURTS, NEW DELHI
Presiding Officer : Dinesh Kumar Sharma, Addl. Sessions Judge CC No.26/11 Unique Case ID No. 02401R0074522001 C.B.I. Vs. 1. M/s. Punjab Phosphate Pvt. Ltd.
Azad Road, Chhaeratah, Amritsar, Punjab (earlier known as M/s. Punjab Fertilizer & Pesticides Industries)
2. Lalit Kumar Parmar (60 years) S/o Late Sh. Sohan Lal Parmar Director of M/s. Punjab Phosphate Pvt. Ltd.
R/o H.No. 8134, Bahadur Nagar, Outside Sultanwind Gate, Gali No.1, Amritsar, Punjab.
RC No. : 11/88SIU(VIII) u/Ss : 120B IPC and 120B IPC r/w S.420 IPC Judgment delivered on : 22.02.2012 Order on Sentence : 29.02.2012 CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 147 of 146 ORDER ON SENTENCE Present: Sh. DK Singh, Ld. PP for CBI.
Convict Lalit Kumar Parmar is present with Sh. Alok Bachawat, Ld. Counsel.
M/s Punjab Phosphate Pvt. Ltd. (A1) through Sh. Alok Bachawat, Adv.
M/s Punjab Phosphate Pvt. Ltd. has been convicted for the offence u/S 420 IPC and convict Lalit Kumar Parmar has been convicted for the offence u/s 120B IPC and Sec. 120B IPC r/w 420 IPC.
1.0 Sh. DK Singh, Ld. PP for CBI submits that the property seized during the course of investigation be confiscated under Criminal Law Amendment Ordinance, 1944. Sh. DK Singh, Ld. PP for CBI moved an application for seizure of property. Under the old PC Act, the Special Judge did not have the power of the District Judge as prescribed under the Criminal Law Amendment Ordinance, 1944. However, in the new Prevention of Corruption Act, as amended in 1988, the Special Judge has been conferred all the powers and functions exercisable by the District Judge under the Criminal Law Amendment Ordinance, 1944 (order 38 of 1944). In the present case, M/s Punjab Phosphate Pvt. Ltd., by fraudulent means defalcated and embezzled huge government money in the tune of Rs. CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 148 of 146 3,33,45,282/ and therefore, besides, confiscation of property seized during investigation, the company be also burdened with heavy fine. Ld. PP has submitted that convict LK Parmar be also awarded maximum punishment. Ld. PP submits that the corruption in this country is spreading like cancer and it is affecting the common man the most. It has been submitted that whenever an instance of corruption takes place, that common man weeps in silence and his cry is not heard by anybody.
Ld. PP has placed on record the extract of a speech by Her Excellency President of India, Ms. Pratibha Patil in Conference of Governors on 29/10/2011, which is quoted as under:
"There is also heightened expectations among our citizens from the Indian polity.
Corruption stalls developments; undermines social progress; undercuts confidence in the fairness of public administration; impedes good governance; erodes the rule of law; distorts competitive conditions; dampens investments; and, above all, hurts the common man.
If corruption has to be rooted out, the remedy lies in a multipronged strategy combing preventive and punitive interventions; including simpler rules, transparent process; judicious exercise of discretion; prompt delivery systems; better public awareness, public accountability and discharge of responsibilities with utmost rectitude."
Ld. PP submits that taking cue from the speech of Her Excellency, President of India, this court may award maximum punishment to the company and convict Lalit Kumar Parmar.
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 149 of 146 2.0 Sh. Alok Bachawat, Ld. Counsel submits that he does not want to argue for the company. Ld. Counsel submitted that earlier he had argued during the trial so as to satisfy the court that there was no conspiracy and since now that M/s Punjab Phosphate Pvt. Ltd., has been held guilty for the offence of cheating, he would not like to submit anything on its behalf. Ld. Counsel submits that company has a separate legal entity and the appropriate sentence may be awarded.
3.0 Sh. Alok Bachawat, Ld. Counsel has argued vehemently that Criminal Law Amendment Ordinance, 1944 is not applicable in the present set of facts. The CBI has not initiated the proceedings as required under the Criminal Law Amendment Ordinance, 1944 and therefore, this court cannot pass any order to confiscate under the Criminal Law Amendment Ordinance, 1944. The proceedings have yet not been terminated as required under the Criminal Law Amendment Ordinance, 1944. Prosecution has not led any material on the record which could indicate that the property seized during the investigation is related to the subsidy received by the company. During investigation an application for release of properties seized u/S 102 Cr.PC was moved on behalf of the accused persons. This application was dismissed by the then Ld. CMM and this order of dismissal was upheld by the Sessions Court and then the Hon'ble High Court. However, in the SLP filed before the Hon'ble Supreme Court by Late Sh. PK Parmar, Hon'ble Supreme Court did CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 150 of 146 not express any opinion on the question of law and left it open for the petitioners to press the case before the Trial Court.
On behalf of convict Lalit Parmar, Sh. Alok Bachawat, Ld. Counsel has argued that convict Lalit Parmar has not at all been beneficiary, even for a single penny. The accused is already around 59 years of age. He has two sons. One of them is living separately and the other younger one aged 26 years is a heart patient and is dependent upon him. Sh. Amandeep Parmar has recently undergone heart surgery also. The convict is the sole bread earner of the family. He has an aged mother of 94 years of age. Besides being old aged, Smt. Prakashwati mother of the convict is suffering from mental ailment. Ld. Counsel would argue that convict has already faced the trial for around 25 years. He is not a previous convict and therefore lenient view may be taken. Ld. Counsel has also submitted that the convict may be released on probation of good conduct.
4.0 The Criminal Law Amendment Ordinance, 1944 was enacted to protect money embezzled from the Government and and recovery of the same so that the Government need not file a separate suit for realization of the money lost. The object behind the ordinance was to restore the property of the State which had been fraudulently taken away by white collar criminals. The Criminal Law Amendment Ordinance, 1944 was enacted in exercise of the power u/S 72 of Govt. of India Act, 1935. The object was to prevent the concealment of money or other property procured by means of CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 151 of 146 certain offences punishable under the Indian Penal Code. Consequent upon the Prevention of Corruption Act, 1988 (49 of 1988), Sec. 5(6) empowered the Special Judge to exercise all the powers and functions exercisable by a District Judge under the Criminal Law Amendment Ordinance, 1944, to attach property as provided under the Ordinance, while trying an offence under PC Act. It is pertinent to mention here that the legislature has conferred the power upon the Special Judge only during the trial and not pre trial and post trial stage. Schedule 1 of the Criminal Law Amendemnt Ordinance, 1944, specifically mentions the offence in connection with which property is likely to be attached. Any conspiracy to commit or any attempt to commit or any abetment of any of the offences specified in the schedule also comes within the ambit of Criminal Law Amendment Ordinance, 1944. It is pertinent to mention here that the Prevention of Corruption Act, 1988 aims at consolidating the law for prevention of corruption in public life.
The validity of Criminal Law Ordinance Act, 1944 came up for consideration in Dr. VK Rajan Vs. State of Kerala, 2008 Cri.L.J. 909. In this case, the Division bench of Kerala High Court held that ordinance is valid and applicable throughout India. In Daya Nand Prasad Kashyap Vs. State of Bihar, 2008 Cri.L.J. 3354 it was alleged that property was acquired by the accused by fraudulently withdrawing Govt. money on the basis of fake documents. Investigation conducted by the CBI disclosed that accused in conspiracy with coaccused persons defrauded Govt. exchequer and acquired CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 152 of 146 huge movable and immovable properties and assets in his name and in the names of his wife and daughter who were not earning members. It was held by the Division Bench of the Jharkhand High Court that the onus would lie on the accused to satisfy the court that property sought to be attached was acquired by money drawn from lawful sources.
In dealing with the corruption cases, the court has to deal such situations with a pragmatic view. It may not be possible for the CBI to prove by direct evidence that the property seized were actually acquired from the ill gotten money. However, the accused is always in position to produce the documents that the properties, seized from his possession, were procured or obtained through lawful sources.
In Benoy Krishna Ghosh Vs. State of Bihar, 1984 Cri.L.J. 1220 the Division Bench of Patna High Court (Ranchi Bench) inter alia held that out of the properties attached and belonging to the accused, the property valued at the amount of embezzlement together with the cost of attachment is to be forfeited first. Out of the residue, property valued at the amount of fine is to be forfeited. If any property is still left, the same has to be released from attachment. It was also held that if the total amount of fine cannot be so recovered, then only the same may be recovered under the general law.
In Suraj Kumari Vs. State of Bihar, 1969 Cri.L.J. 230, Patna High Court speaking through Division Bench, inter alia held that it is not necessary to establish on behalf of the State that the property is procured by CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 153 of 146 means of the offence, but the real question for determination by the court is whether the property is that of the accused. Where a person were charged with defalcation of Government fund and his house was sought to be attached u/S.3 of the Ordinance for the realization of the money defalcated, the date of the construction of the house was immaterial in order to establish whether it was built out of the defalcated money. It was sufficient to prove that the house was that of the accused. Similarly, in N.K. Banerji Vs. Sate of Bihar, 1969 Cri.L.J. 1178, Patna High Court speaking through the Division Bench inter alia held that the main purpose of the Ordinance was to provide for preventing the disposal or concealment of money or other property procured by means of certain offences punishable under the IPC. It was further held that the ordinance does not apply only to the properties acquired out of the defalcated money. The other properties of accused equivalent to value can also be attached. The apex court in State of West Bengal Vs. S.K. Ghosh, 1963 SC 255 speaking through Constitution Bench, inter alia held that forfeiture provided under ordinance in case of offences which involve the embezzlement etc. of government money or property is really a speedier method of realizing government money or property as compared to a suit which the Government could bring for realising the money or property and is not punishment or penalty within the meaning of Article 20(1) of Constitution of India. It was held that provision for forfeiture under the ordinance has nothing to do with the infliction of any penalty on any person CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 154 of 146 for an offence.
In G.L. Salwan Vs. UOI, 1960 Cri.L.J. 984 our own High Court speaking through Division Bench held that The Criminal Law Amendment Ordinance Act, 1944 provides for preventing the disposal or concealment of money or other property procured by means of certain offences, where the money or property in question which has been embezzled, stolen or obtained by false pretence is Government money or property. The object is to freeze money or property improperly obtained by a Government servant in his official capacity or money or property belonging to the Government regarding which an offence is alleged to have been committed so that in the conclusion of the case, in the event of the conviction of the accused, the money or property is available for immediate restoration to the Government. The Ordinance does not in anyway contravene provisions of Article 14 of the Constitution of India.
5.0 The Criminal Law Amendment Ordinance, 1944 is squarely applicable in the facts of the present case. The Court is required to read the object and purpose of the ordinance and the duty of the Court is to interpret the law in such a manner, which fulfills not only the purpose of the legislature but the expectations of the judicial system also. It has been held by the superior courts that it is not necessary for the prosecution to prove that the property seized has been procured from the embezzled money and the defalcation of the money. If accused has been found in possession of the CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 155 of 146 money and it has been proved that embezzlement has been done, the property seized from the accused be confiscated under the Criminal Law Amendment Ordinance, 1944.
In respect of the corruption cases and the cases involving public money, the Hon'ble Supreme Court has held time and again that awarding of light sentence in white collar crimes amounts to impropriety and soft sentencing has been held gross injustice. Sentencing in the criminal cases is meant to protect the society by deterring potential offenders as also by preventing the guilty party from repeating the offence. The lenient sentence in such cases will only frustrate the cause of justice. The corruption is causing maximum danger to the society of this country.
CBI has rightly placed the reliance upon the speech delivered by Her Excellency President of India, in which the entire system has been called upon to fight the menace of corruption.
6.0 I consider that in the present facts and circumstances, as far as the company is concerned, that does not deserve any leniency. I have gone through the orders passed during investigation on the application u/S 102 Cr.PC of the Hon'ble High Court dtd 28/2/92. Perusal of this order indicates that even the properties were being held as benami by Late Sh. PK Parmar. It may be reiterated that as I have held in my detailed judgment that in the present case Late Sh. PK Parmar was the fulcrum of the entire crime and the entire conspiracy revolved around him. He was the master mind and the CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 156 of 146 company through this person as well as in the conspiracy of the present convict Lalit Kumar Parmar procured subsidy on the bogus bills to the tune of Rs. 3,33,45,282/ from the year 1980 to 1987. During the period 1980 to 1987, a sum of Rs. 3,33,45,282/ was a huge amount. This amount basically belonged to the common man and tax payers of the country which was procured in a dishonest and malafide manner. I consider that taking into account, the entire facts and circumstances of the case, a fine of Rs. 5 crores is imposed upon M/s Punjab Phosphate Pvt. Ltd and this fine be realized as per law from the property confiscated during the investigation under the Criminal Law Amendment Ordinance, 1944. 6.1 Now coming to the convict Lalit Kumar Parmar. Even at the cost of repetition it may be stated that convict Lalit Kumar Parmar was also an active conspirator. He had been with accused Late PK Parmar during the entire conspiracy but I consider that the main beneficiary in this case was Late Sh. PK Parmar. I consider that in the entire facts and circumstances, convict Lalit Kumar Parmar is awarded Rigorous Imprisonment for 2 years and fine of Rs.10,000/ in default SI for 3 months u/S 120B IPC and RI for 2 years and fine of Rs.10,000/ in default SI for 3 months u/S 420 IPC.
Both the sentences shall run concurrently.
Benefit of Sec. 428 Cr.PC be given to the convict.
CBI Vs. M/s. Punjab Phosphate & Ors. CC No. 26/11 Page 157 of 146 7.0 In terms of Sec. 389 Cr.PC, convict Lalit Kumar Parmar is directed to furnish a bail bond in the sum of Rs.25,000/ which shall be valid upto 29/3/2012 or till filing of the appeal before the Hon'ble High Court, which ever is earlier.
Bail bond furnished.
8.0 File be consigned to RR.
Announced in Open Court (Dinesh Kumar Sharma)
on 29.02.2012 Spl. Judge (PC Act) : CBI
Saket Courts : New Delhi.
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