Jharkhand High Court
The Court On Its Own Motion vs . on 9 July, 2018
Author: Aparesh Kumar Singh
Bench: Aparesh Kumar Singh, Anil Kumar Choudhary
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (PIL) No. 3503 of 2014
---
The Court on its Own Motion Versus.
1. The Union of India through its Secretary, Ministry of Road Transport And Highways, New Delhi
2. Secretary, Ministry of Environment and Forest, New Delhi
3. National Highways Authority of India represented by its Chairman
4. State of Jharkhand through Principal Secretary, Road Construction Department, Govt. of Jharkhand
5. Principal Secretary, Department of Forest and Environment, Govt. of Jharkhand
6. M/s Ranchi Expressway Limited
7. Canara Bank, Prima Corporate Branch, Secunderabad, Telangana
8. Ministry of Corporate Affairs through its Secretary, Govt. of India
9. The Serious Fraud Investigation Office through its Director under the Ministry of Corporate Affairs, Govt. of India
10. Central Bureau of Investigation through its Director
--- --- Respondents With W.P.(PIL) No. 2470 of 2015
--
The Court on its Own Motion Versus The State of Jharkhand & others
---
CORAM:The Hon'ble Mr. Justice Aparesh Kumar Singh The Hon'ble Mr. Justice Anil Kumar Choudhary
---
For the Resp - State: Mr. Rajeev Ranjan Mishra, GP-II For the Resp - UOI: M/s Rajiv Sinha, ASGI, Niraj Kumar, JC to ASGI For the Res -NHAI:M/s Anil Kr.Sinha, Sr. Advocate, Sweety Topno, Advocate For the Resp No. 6: M/sAbhay Pratap Singh, Sr. Advocate Anoop Kr. Mehta, Advocate For the Resp-Bank: M/s Jai Prakash, Sr. Advocate, P.A.S.Pati, Advocate
---
56/ 09.07.2018 Heard learned Senior Counsel for the NHAI, lead bank (Canara Bank), The Respondent No. 6 - Concessionaire, State Government and learned ASGI representing the Union of India on the SFIO Report. Serious Fraud Investigation Office was directed by order dated 14.11.2017 to inquire and ascertain whether the present matter involves serious case of fraud which requires to be investigated. SFIO conducted the inquiry and submitted a report in a sealed cover before this Court which was produced by the learned ASGI.
2. The background in which the direction was issued upon the SFIO to inquire into the matter, needs to be referred to hereinafter:
The instant Public Interest Litigation was initiated suo-motu by order dated 14.07.2014 on the basis of newspaper report alleging large scale cutting of trees indiscriminately for the purpose of road construction at various places.2
Several orders were passed one after the other. Sometime during the course of proceedings, issue relating to delay in four-laning of Ranchi-Jamshedpur National Highway (NH-33) was also taken up. The agency Ranchi Expressways Ltd. was impleaded as party Respondent. Inspection was also carried out by the court appointed Pleader Commissioner in respect of repair work done on the NH-33. This court took note of the delay in construction of the NH-33 on Ranchi-Jamshedpur stretch by the order dated 08.06.2017. The Respondent agency was required to indicate as to the time period within which, construction of the road is likely to be completed. Affidavit to that effect were filed on 28.06.2017 and 30.06.2017. The agency gave timeline of May 2018 within which, stretch of 88.029 km were to be completed. Through its affidavit dated 30.06.2017 the Respondent Agency also gave their status of finance. It was stated therein that the Agency has invested 408.14 crores and received financial assistance from Financial Institutions to the tune of Rs. 919.73 crores as loan.
3. When the matter was taken up on 25.07.2017, the Court took note that this work was under Design, Build, Finance, Operate and Transfer (DBFOT) annuity basis under NHDP Phase-III. In essence, it meant that the Agency has to arrange finances for execution of work. The cost of execution of the project was to be realized through annuity. As per the agreement, stipulated date of completion was 04.06.2015. The construction period was 912 days. This court found the affidavit of 28.6.2017 and 30.6.2017 perfunctory in the sense that it did not provide the details of the entire work to be executed as were deliberated on the earlier date 10.07.2017such as, (i) the work Schedule Programme / Revised Work Programe to ensure execution of the work by May 2018; (ii) the extent of progress of work as on that date and the latest work programme; (iii) Bar chart showing progress of the work as per the work programme; (iv) areas in which there are difficulties in the execution of project in view of the awaited forest clearance, land related issues i.e., acquisition of land / removal of encroachment; any change in the scope of work midway etc. It was also taken note of that 44% of the work had been executed by the agency till July 2017. It was observed that the NHAI and the Agency had to give clear cut milestones in order to ensure that entire four-laning of NH-33 is completed within a stipulated period of time. The court further took note of the fact that NH-33 is one of the commercial lifeline of the State. About 7000 vehicles on an average ply on this road every day and night including heavy vehicles and very heavy vehicles. It also took judicial note of the fact that large number of accidents leading to fatal or near fatal injuries take place almost on regular basis in this stretch of the 3 National Highway. Therefore, there was a larger humane aspect of the matter as well. The construction of NH-33 four-lane Highway at the earliest would ensure much greater communication and also bring up the area in terms of development index.
4. Based on these observations, NHAI and agency were directed to come out with clear milestones in respect of the execution of work in the areas which do not suffer from any encumbrance giving specific milestone to be achieved by the last date of each month so that the entire work is executed in a time bound manner. Court also expressed that it would monitor the progress of the work and make the Agency and/or the NHAI accountable for the delay in meeting the milestones. The Agency thereafter projected to complete the work of 128 km out of 163.5 km of the total work by June 2019. Having given anxious consideration to the milestones and the work programme, Court did not approve the same as it was lacking in necessary details. For example, it did not show that as per the monthly milestones, which section of the road is going to be completed up to which stage. The agency was granted time to come out with revised work programme. It was also made clear that proceedings of the instant writ petition in no way shall mean that the execution of the work would be either slowed or neglected on the part of the agency or NHAI in the meantime.
5. Thereafter, the revised work progamme was submitted by the agency through its supplementary counter affidavit dated 8.8.2017 stating that the work on the available work front of 128Km would be completed by June, 2018. The work programme contained the details of package wise work hedged with 3 conditions, one relating to availability of quarry mining; second relating to assurance of financial assistance by NHAI by showing physical progress of 50% of the planned work and the third being the force majeure events such as unprecedented weather condition.
6. When the matter was taken up on 09.08.2017, the court observed that the revised work programme was a substantial improvement from their previous one. The real intent to execute the work, as per the work programme, would however be only affirmed if related issues such as, availability of finance, deployment of plant and machinery, etc. are also firmly committed on the part of the Agency together with the aid of the lenders to the satisfaction of NHAI. The agency was directed to resolve all related issues with the NHAI with the support of the Financial Institutions /Senior lenders, etc. Senior lender Canara Bank and other Financial Institutions were asked to cooperate in the exercise to be held under Member (Project), NHAI.
47. When the matter was taken up on 22.08.2017, the Member (Project), NHAI Mr. Anand Kumar Singh addressed the Court on various aspects of the execution of the project, as per the proposed revised work programme furnished by the agency. Deliberation were also made under his chairmanship with the Concessionaire, Independent Engineers and Senior Lender on 14.08.2017 to resolve the issues. The Court was informed that balance fund remaining to be disbursed out of the estimated / committed value available, as per the finance close, is much more, but the Concessionaire and the lenders have indicated their commitment to infuse equity and disbursement of debt up to April 2018 of the sum of Rs. 232.20 crores. It was submitted that as per the infusion of equity and disbursement committed by them, funds would be sufficient for construction up to January 2018, as per the given programme. Further availability of funds requirement is to be ensured by senior lenders and Concessionaire both taking into account the progress of the work during this period. Senior lenders were also asked to explain as to why disbursement of fund earlier was much more than the physical progress shown. The Concessionaire also indicated that there is no hindrance in executing the work, as per the proposed work programme. The agency was committed to achieve monthly milestones, as per the proposed work programme. Other incidental issues were also taken note of. On the basis of the commitment of the agency and NHAI, the court was made to believe that the execution of work on128.8 kms of the available work front on NH-33, could kick start. NHAI was asked to submit a monthly report as to the progress of the work in terms of the work programme and the monthly milestones achieved by the agency. It was also made clear that the agency should leave no stone unturned to ensure that not only monthly milestones are achieved, but they exceed the target also.
8. When the matter was taken up on 20.09.2017, affidavit of NHAI showed that only 0.26% physical progress against the target of 0.45% in the month of August 2017 had been achieved. The overall Physical Progress up to 14.09.2017 was 45.40% and in the first and second week of September 2017, progress is 0.06% and 0.05% respectively. It was also indicated that only Rs.1.458 crore (approximate) has been capitalized by the Concessionaire against the target of Rs.10.965 Cr. (proportionately) on the Project Highway in the month of September 2017. Minutes of meeting held by Member (Project), NHAI dated 13.09.2017 enclosed as Annexure-B to their affidavit, were also taken note of. It gave a picture that for the period June to August, 2017 around 10 crores equity had been infused by them against total sanction of Rs.32.96 5 crores whereas Rs. 26.13 crores had been adjusted by the Senior Lenders in Interest during construction (IDC) and Rs.6.83 crores was made available to the project. Minutes also noted that due to unqualified mobilization and material advance(Rs.286.2+71.55 crores) given to the project, Rs.35 crores per year avoidable liability on account of IDC was loaded which is unnecessary burden on the project. The bankers had also apprised the NHAI about three options i.e.
(i). 70 crores debt without IDC (ii). 70 crores debt and 30 crores IDC. (iii). Re- structuring of debt equity ratio. The Bank also had discussed that to reach 50% progress, the consortium member have earlier funded such type of NHAI project without IDC and without equity to save the project. It was also noted in the Minutes that withdrawal from Escrow Bank account like mobilization and material advances of Rs.286.2 crores and Rs.71.55 crores respectively were disbursed to EPC without any Bank Guarantee. Such withdrawals have caused Rs.200 crores unwarranted IDC over the last five years putting the project in stress which has further slowed down. All these advances were yet not fully recovered and were avoidable also. They were in violation of Date of Commencement of Commercial Operation(DCCO).The progress of the work for the month of August and September 2017 were furnished by way of a chart which find place at para-8 of the said order.
9. This court after taking detailed note of the stand of the respective parties, was constrained to observe that the Agency has not shown any serious intent in honouring the commitment made before this Court. The Agency has not infused any fund on its part beyond its share of commitment, as per the agreement with the lenders till date. The background facts relating to financial assistance of about Rs.919.73 crores against the actual expenditure of Rs.408.14 crores and achievement of only about 44% of the work till July 2017 were again specifically taken note of. The court further observed that the agency was expected to infuse its fund beyond10 crores of its share to achieve desired progress awaiting the release of funds from the Senior Lender. However, the agency had fallen short of its commitment. In such circumstances, agency was directed to disclose the entire assets of the Company including that of its Directors/C.M.D. on affidavit before the next date. The lead banker Canara Bank was also impleaded as a party.
10. The matter was taken up on 1.11.2017. The lead bank (Canara Bank), appeared and filed supplementary affidavit, stating that M/s Ranchi Expressways Ltd. is a Special Purpose Vehicle (SPV) Company incorporated for the execution of the work relating to Ranchi - Mahulia Section of NH- 33 6 by the NHAI and work was, as per Design, Build, Finance, Operate and Transfer (DBFOT) and annuity basis. From the affidavit of the Respondent agency, the court found that it had failed to disclose the facts in relation to it incorporation and Principal Holding Company behind it. It was again directed to disclose the entire assets of the Principal Holding Company and its promoters, Directors, Managing Director, their assets and security. From the status report furnished by the NHAI on the progress of the work, it was found that financial / physical progress achieved up to 25.10.2017, as reported by the Independent Engineers, was 45.75%. Shortfall in the month of August, September and October 2017 in terms of physical progress showed that it had fallen way behind, for example, in the month of October 2017, the shortfall was Rs. 29.908 against achievement of Rs. 2.577 crore and target of Rs. 32.485 crore. After taking detailed note of the stand of the respective parties and the status report, this Court was again constrained to observe that project had not been executed with any seriousness within the time stipulated, nor progress of the work more than two and half years thereafter inspired confidence in the ability of the Agency to execute the work. Precious time of the Court had been consumed while monitoring the progress of the work recognizing its public importance. Different stakeholders involved in the execution of the work, had not shown their commitment. The manner in which work was being executed by the Agency and supervision by the NHAI and advances that have been given by the lending bank without commensurate physical progress created an impression that there is something seriously amiss in the execution of such a large public project involving Rs. 1654 crore. Court felt that the matter is required to be inquired by a specialized agency. Accordingly, Ministry of Corporate Affairs through its Secretary, Government of India, Serious Fraud Investigation Office through its Director under the Ministry of Corporate Affairs, Government of India and Ministry of Surface Transport and Highways through its Secretary, Government of India were impleaded as party Respondents in this case. Learned ASGI undertook to obtain instruction from the newly added parties in that regard. The Court also made it clear that the order should in no way intend to mean that execution of the work be retarded or put in abeyance.
11. Progress of work remained abysmal, even as per the status report filed by NHAI in its affidavit dated 10.11.2017 and taken note of in our order dated 14.11.2017. NHAI indicated that overall physical progress achieved up to 07.11.2017 is 45.98% but for first week of November 2017 is 0.00%. Chart 7 containing the details of the monthly target versus achievement were also taken note of under para-3 of the said order. For the month of October specifically, there was a shortfall of Rs. 34.452 crore as against the target of Rs. 40.281 crore and in the month of November 2017, against the target of Rs. 12.463 crore, achievement was Zero. The lead bank through its counter affidavit sought to convey that loan had been advanced by consortium of 15 banks/ Financial Institutions named therein, of which State Bank of Travancore had opted out of the consortium. The total limit sanctioned by various lenders was Rs.1191.60 Crores. The common loan agreement was entered into between the parties on 31.10.2011. A sponsor support agreement with Madhucon Projects Limited and Madhucon Infra Limited as sponsors was also executed on 31.10.2011. The Escrow agreement and substitution agreement were entered on 28.2.2012. The amended common loan agreement was again executed on 27.6.2015. Due to opting out of State Bank of Travancore, the limit of loan was lowered down to Rs. 1151.60 Crores. The Respondent bank had extended the terms of completion of project to 01.04.2018. Other details relating to incorporation of Special Purpose Vehicle, Ranchi Expressway Ltd. on 29.03.2011, certificate of commencement of business on 07.04.2011 and Memorandum of Association as well as the Articles of association revealing the details of the subscribers were also given in the affidavit. At the time of its incorporation, subscribers were Madhucon Projects Limited, Madhucon Infra Limited, Nama Seethaiah, Nama Krishnajah, Kamna Srinivasa Rao, Nama Prithvi Teja and Mallampati Madhu having a total share of 50,000/-. Madhucon Infra Limited is a 100% subsidiary of Madhucon Projects Limited. The Respondent Bank also gave details of security obtained as against the credit facility granted to the Ranchi Expressway Ltd.
12. Apart from that, details of Agreement, Personal Guarantee, Immovable and Movable, Collateral Security through pledge of shares were mentioned. The9thannual report of the Madhucon Toll Highways Limited indicated its net worth as Rs. 355,14,84,867.00 as on 31.3.2017. The lead Bank tried to explain the advances on account of mobilization and material advances, as per the stipulation contained in Engineering Procurement & Construction (EPC) Contract. The interest during construction (IDC) was also levied in view of clause 2.8.1 read with clause 2 of the common loan agreement. It was contended that the Bank had never agreed to waive the said IDC as submitted by the Company. Learned counsel for the Respondent Bank sought to dispel the impression created in that respect on the previous date. Joint Lender meetings 8 had been held on four dates between 16.9.2017 to 10.11.2017. The bank also stated that the Company could not infuse the equity funds and lenders could not release the funds towards project. The matter of options of funding through restructuring of debt equity ratio was discussed. However, in terms of the present regulatory guidelines, the restructured advance was to be classified as Non-Performing Assets and could impact the future funding affecting the project progress. In that view, lenders have opted not to restructure the debt equity ratio and advised the Company to explore other options. The follow up action plan, as arrived at in the meeting held on 10.11.2017 of the joint lenders were also indicated. This court took note of the fact that the lenders had released Rs. 27,500,000.00 on 10.11.2017. As per the bi-monthly progress report for August and September 2017, the total fund available as on 30.9.2017 was 1384.20 Crores which included debt component of Rs. 963.42 Crores out of which 826.82 Crores was spent towards project. Further Rs. 361.28 crores was adjusted towards IDC. Learned counsel representing the Bank defended their action for advancing the amount of loan to that extent on the plea that they were made after certification of the actual physical progress by the Engineers and the Chartered Accountants.
13. This Court on the other hand found that despite the orders dated 20.9.2017 and 01.11.2017, Concessionaire had failed to disclose the entire assets of the Principal Holding Company, its Promoters, Directors, Managing Director and security that have been created while entering into the agreement with the lead bank. It was also found that there was breach of undertaking given on affidavit on the part of the Agency before this Court on its revised work programme and monthly milestone to be achieved for completion of the work on 128.8. Km of the available work front of NH-33 by July, 2018. The progress report for the months of September, October and till that date showed abysmal progress of work or rather no progress. In these circumstances, notices were issued to the Managing Director Mr. K.Srinivasa Rao to explain as to why proceedings for contempt be not initiated against him. These facts indicated a sorry state of affairs in the matter of execution of a very important public project in the State towards which, huge amount of public money were advanced by the Banks without commensurate progress of work.
14. From the conspectus of facts and circumstances, it appeared that against an outlay of Rs. 1654 crores approximately for the execution of such a large project, the manner in which huge advances have been made by the lending bank without any commensurate progress of work over a period of about five 9 years since it commenced in December 2012, was an area of serious concern. The Court vide order dated 14.11.2017 therefore came to an opinion that an inquiry is required to be made to ascertain whether it is a case of serious fraud. However, it refrained from expressing any opinion at that stage whether it was a case of serious fraud of misuse and misappropriation of public money by the Agency or any other body or individuals with the aid of the authorities of Lender Bank and NHAI? It was to be enquired whether there had been a deliberate failure on the part of the authorities and the lender Banks in discharge of their public duties with an intention to favour the Agency? The court also took note of the indecisiveness of NHAI given the state of affairs that had been prevailing. Their indecisiveness was at the peril of the public at large who continued to suffer while the project remained languishing. 1088 accidents had been reported during the period 01.01.2011 to 01.01.2017 where 587 persons had died and 896 persons had been injured in this stretch of NH-33. Many of it, could be attributable to the pathetic conditions of the road and the works and diversions on it. In this background, this court directed the Director, Serious Fraud Investigation Office (SFIO) to inquire into the matter to ascertain whether it involves a serious case of fraud which requires to be investigated. On 05.02.2018 learned ASGI submitted that the report of SFIO has been furnished in a sealed cover. However, in view of recusal of one of Members of the Bench, the matter was directed to be placed before the appropriate Bench.
15. Thereafter, the matter has been assigned to the present Bench and. Progress of work for the period February, March and up to 25.04.2018 was 0.41%, 0.54% and 0.03% as per chart furnished by NHAI on affidavit and taken note of in the order dated 25.04.2018. NHAI however informed that execution of the work has achieved 50% progress. As such, in principle, it had decided to infuse funds under One Time Fund Infusion Scheme (OTFIS) to the tune of Rs. 223 crores which would be released only after the bank enters into a tripartite agreement and issues a No Objection Certificate.
16. The lead bank thereafter filed an affidavit which has been taken note of in the order dated 17.05.2018. It indicated that NOC was given on 03.05.2018. All the 13 banks have issued their NOC and Consent to Sign tripartite agreement was forwarded to NHAI on 14.05.2018. However, Letter of Approval was hedged with three conditions, a. No additional funding by the existing lenders (as the account is NPA with all the lenders).
10b. NHAI agreeing to fund the balance cost over and above the OTIF of Rs. 223.85 crore for completion of the project.
c. Details of litigants including the litigations are to be furnished in the tripartite agreement.
17. As per the chart furnished at para-24 of the affidavit, expenditure incurred on the project, as on 31.03.2018, was in total Rs. 1512.17 crore which include equity, unsecured loan, term loan and insurance claim receipt with its application towards (i) Expenditure on Tangible and Intangible Assets, (ii) Expenditure on Asset under development, (iii) Capital Advance (EPC Contractor) and (iv) Net fund utilized in operating activities.
18. On 14.06.2018, learned ASGI produced the report of SFIO in a sealed cover. The Report was opened in the court and perused by us. Report were in two sets along with Annexures and two compact discs. It was again kept in a sealed cover. Since the report raised serious issues, we considered it proper to allow the parties through their authorized representative and their counsels to inspect it by making a request before the Learned Registrar General. Inspection was made thereafter by the NHAI, Respondent No. 6 Concessionaire and the Lead Bank. The parties have been heard today on the SFIO report.
19. Learned Senior Counsel representing the Concessionaire has expressed serious reservation on the findings of SFIO on the conduct of the Concessionaire. Learned counsel has strenuously tried to convey that the charges of 'Round Tripping' against the Concessionaire in respect of material and mobilization advances amounting to Rs. 100 Crore is not proper. Findings do not indicate that these advances have been illegally misappropriated by the Concessionaire. The other finding relates to the shareholding of one of the promoters in MELTEC. It opines that there was conflict of interest which could have been the reason for biased reporting by the Independent Engineers. The report also mentions that against allocation of Rs. 11.19 crore towards repair and maintenance under the Agreement, a sum of Rs. 98 crore were expended. Learned Senior counsel has endeavoured to explain that there is no allegation of fraud on the part of Concessionaire in execution of the project. The SFIO has completely failed to take into account that there were several other issues which were not within the control of the Concessionaire such as, forest clearance, acquisition of land, removal of encroachment, etc. which resulted in delay in execution of project for which it cannot be made responsible. These were 11 dependent upon other stakeholders whose responsibility cannot be brushed away. As per the dictionary meaning of 'Round Tripping', such a charge would not lie upon the Concessionaire. Learned counsel has also taken serious objection to the stand of NHAI, conveyed through the Member (Project) on the question of infusion of One Time Fund of Rs. 223 Crore after desired progress of 50% is achieved. NHAI has throughout the execution of the work never treated the past conduct of the Concessionaire as any disability and rather supported it. The present approach of the NHAI to defer the decision of OTFIS on the grounds of the past conduct of the Contractor and also report of SFIO, was wholly improper. Learned Senior Counsel has however also requested for copy of the SFIO report with Annexures to enable the Concessionaire to offer a more comprehensive response.
20. Learned Senior counsel for the Bank Mr. Jai Prakash has defended the stand of the lead bank and consortium of banks. According to them, advances were released against proportionate progress of the work supported by the Independent Engineers and the Chartered Accountants report. The actual progress of work was more or less same as certified by both NHAI and the Independent Engineers. There was hardly any difference in the achievement of work. Therefore, Bank alone cannot be made liable for delay in execution of the work. Learned counsel has again tried to explain that release of mobilization and material advance were as per the terms of EPC and intended to assist the Concessionaire for start of work from the date of commencement. Learned counsel has however not been able to get over the findings of SFIO, so far as lack of due diligence is concerned on the charges of Round Tripping; flouting of provisions of Escrow Agreement and Common Loan Agreement with respect to closure of all the Non-Escrow Bank accounts after the establishment of Escrow account with the lead banker Canara Bank. The Concessionaire was required to transfer all the credits standing in the Non-Escrow accounts of Ranchi Expressways Ltd. to the Escrow account after 03.01.2012:He has also not been able to countenance the finding that Ranchi Expressways Ltd. opened new accounts which were used to infuse the subordinate debt and equity contribution of sponsors/promoters in clear violation of Escrow Agreement and Common Loan Agreement: The SFIO report also states that absence of such Sub Escrow accounts gave leverage to Madhucon Projects Ltd. to cause intermixing of funds of this project with those of other 12 projects. Learned counsel for the Bank has also not been able to explain the findings relating to appointment of shareholders of Ranchi Expressways Ltd. as Director in LIE. It left no doubt that there was a conflict of interest as LIE in such circumstances was not an independent entity. Learned counsel for the Bank however submits that all the banks have now declared the assets of the Concessionaire as NPA.
21. Learned Senior counsel for the NHAI Mr. Anil Kumar Sinha submits that a report prepared by the officials of NHAI after inspection of SFIO report has been placed before the Board of Director, NHAI. The Board is scheduled to meet on 19.07.2018. As such, any comments thereupon could only be made, as per the decision of the Board of NHAI. A prayer for exemption from personal appearance of Member (Project) Mr. Anand Kumar Singh has also been made through I.A. No. 5758/2018.
22. Learned counsel for the State Mr. Rajiv Ranjan Mishra, GP-II submits that the State Government on its part, has exercised due diligence in providing assistance to the project whether it is in the nature of land acquisition, removal of encroachment or facilitation of the process of forest clearance. However, issues relating to forest clearance are dependent upon the sanction of MoEF&CC, Government of India.
23. We have considered the submissions of the parties at length in the light of the entire background of the case noted hereinabove. The chronology of facts and circumstances and the reasons for which this Court directed an inquiry by the Serious Fraud Investigation Office, have been narrated in the preceding paragraphs. The project under DBFOT annuity basis under NDFS Phase-III executed on 31.10.2011 was scheduled to be completed by 04.06.2015 within the construction period of 912 days. By July 2017 only 44% of the work stood completed i.e. after more than 25 months of the scheduled date of completion. After much exercise, a revised work programme was submitted by the agency as approved by the NHAI, as per which, the work on the available work front of 128 kms was to be completed by July 2018.However, the progress report furnished almost every month thereafter showed abysmal progress. As per the stand of the lead bank, the total expenditure incurred on the project as on 31.03.2018, is Rs. 1512.17 Crore as against the original estimate of Rs. 1654 crore. Physical progress of the work was nowhere commensurate with the total infusion of fund. This created an impression that there was something 13 seriously amiss in the matter which was required to be inquired through a specialized agency.
24. Consequent thereto, SFIO submitted its report in sealed cover. SFIO has examined the matter in terms of the express condition of the Common Loan Agreement, Concession Agreement and other agreements entered into with the Concessionaire and the lead bank such as (a) Loan Agreement, (b) Escrow Agreement, (c) Supplementary Escrow Agreement. SFIO also took into account the Lenders' Independent Engineer (LIO) report and Bank Statement of Escrow account of Ranchi Expressways Ltd. Information and documents were called for from NHAI, Bank as well as Concessionaire which have been detailed in the report. SFIO has dealt with the matter under different heads and rendered its findings on each of them as under:
Financing of the project of four laning of Ranchi-Jamshedpur Highways -
Findings therein are extracted herein below:
8.3 Considering the facts of the matter and the clarification offered by the Ranchi Expressways Ltd. the following findings/observations are arrived at:
Madhucon Projects Ltd. received an amount of Rs.55 Crore from Barasat Krishnagar Expressways Ltd. (another Special purpose vehicle of Madhucon Group) on 02.01.2012.
Out of the above said Rs. 55 Crore, an amount of Rs. 50 Crore was transferred to Madhucon Infra Ltd. by Madhucon Projects Ltd. on 03.01.2012. Madhucon Infra Ltd. infused the same amount as subordinate debt into Ranchi Expressways Ltd., which in turn transferred this amount to Madhucon Projects Ltd. as Material and Mobilisation Advances. The whole exercise was carried out on the same day.
Further, the above fund which was meant for being used by Madhucon Projects Ltd. for mobilization of resources to the project was again transferred to Madhucon Infra Ltd. on the same day i.e. 03.01.2012. Madhucon Infra Ltd. is only an investment company having nothing to do with the execution of the Ranchi Jamshedpur Project. This amount of Rs.50 Crore on the very same day was again transferred by Madhucon Infra Ltd. to Madhucon Toll Highways Ltd., which in turn transferred this amount as equity in the form of share capital to Ranchi Expressways Ltd. This amount was transferred by Ranchi Expressways Ltd. on the same day in the form of Material and Mobilisation advance to Madhucon Projects Ltd. Thus, an amount of Rs. 50 Crore was round tripped by Madhucon Projects Limited and shown as capital contribution of 100 Crore (Rs.50Crore as equity from Madhucon Toll Highways Ltd. and Rs.50 Crore as subordinate debt from Madhucon Infra Ltd.) in Ranchi Expressways Ltd. for the purpose of fulfilling the pre- conditions of the loan agreement for release of initial drawdown by the bank.
These round tripping exercises led to the scenario, where as per the bank accounts of Madhucon Projects Ltd. and Ranchi Expressways Ltd. the material and mobilisation advance amounting to Rs. 100 14 Crore was provided to Madhucon Projects Ltd., but in reality an amount of Rs. 50 Crore was not available.
The essence of the PPP model of infrastructure development is that the private player shall also contribute funds towards the project in addition to the funds brought in by the public sector bank or other government authorities. In this case sponsors/ promoter of Ranchi Expressways Ltd. failed to bring in the requisite equity in the form of share capital or subordinate debt.
Further, as per the Common loan agreement Ranchi Expressways Ltd. had to infuse Rs.115.85 Crore before initial drawdown from the consortium. However, Ranchi Expressways Ltd. made an initial drawdown of Rs.17.56 Crore from the lead banker Canara Bank on 08/02/2012 inspite of the fact that Ranchi Expressways Ltd. had shown a contribution of Rs.100.25 Crore only in the Escrow Account through the above round-tripping exercise.
Entities/ Persons Responsible 8.4. The following entities and persons are responsible for the deviations:
Ranchi Expressways Ltd. and its officers in default. Madhucon Projects Ltd. and its officers in default. Madhucon Infra Ltd. and its officers in default Madhucon Toll Highways Ltd. and its officers in default. Consortium banks lead by Canana Bank and its officials.
Diversion of Mobilisation and Material Advance of Rs.22 Crore Findings/Observations
9.2 After analysing the above said documents the findings/ observations are as under:
Out of Rs.30 Crore as explained above an amount of Rs.22 Crore was diverted to Madhucon Infra Ltd. by Madhucon Projects Ltd. Entities/Persons Responsible 9.3 The following entities and persons are responsible for the deviations:
Ranchi Expressways Ltd. and its officers in default. Madhucon Projects Ltd. and its officers in default. Madhucon Infra Ltd. and its officers in default. Consortium banks lead by Canara Bank and its officials.
Maintenance (repair & rehabilitation of highway) cost Observations/ Findings
10.4 The Ranchi Expressways Ltd. was mandated to spent only Rs.11.19 Crore on maintenance (repair & rehabilitation of highway) out of the project cost of EPC amounting to Rs.1431 Crore.
10.5 As per the reply submitted by Lenders' Independent Engineer Rs.98 Crore was not part of the EPC Cost (as claimed by Mr. K. Shriniwasa Rao in his affidavit submitted before the Hon'ble High Court) shown as spent towards maintenance (repair & rehabilitation of highway) by Madhucon Project Ltd. over and above the budgeted figure of Rs.11.19 Crore. Rs. 11.19 crore was already drawn for the purpose. Thus, this amount of Rs.98 Crore shown as spent for the purpose of completion of the Project was not spent for the purpose of the project.
15Entities / Persons Responsible 10.6 The following entities and persons are responsible for the deviations:
Ranchi Expressways Ltd. and its officers in default. Madhucon Projects Ltd. and its officers in default.
Material and Mobilisation advances to EPC contractor Madhucon Project Ltd.
Observations/ Findings
11.3 It was observed that an amount of Rs.72 Crore (Rs.50 Crore + Rs.22 Crore) as explained in para 8 and 9 supra had round tripped and diverted from the Amount of mobilisation and material advances.
11.4 As regards, the balance amount of Rs.94.01 Crore (Rs.166.01Crore - Rs. 72 Crore), it could not be ascertained whether the same has been utilised for the Ranchi Jamshedpur Project even though Ranchi Expressways Ltd. in its letter dated 08/01/2018 has claimed that entire amount of materials and mobilisation advance has been used towards mobilisation machinery, setting up camp offices, quarries, materials and manpower etc. Entities / Persons Responsible 11.5 The following entities and persons are responsible for deviations:
Ranchi Expressways Ltd. and its officers in default. Madhucon Projects Ltd. and its officers in default.
Amount of Equity/subordinate debt not routed through Escrow Account
12. As per the Escrow agreement and Supplementary Escrow agreement dated 31/10/2011, Ranchi Expressways Ltd. shall deposit all monies received in relation to the project from any source, including the lenders, NHAI or subordinated debt or equity in the Escrow account.
12.1 Further, an amount of Rs. 38,00,000/- was also contributed by way of subordinate debt by Madhucon Infra Ltd., Madhucon Toll Highway Ltd. and Madhucon Projects Ltd. on various occasions. The same was not routed through Escrow account of Ranchi Expressways Ltd. This amount was infused by sponsors/promoters in the denomination ranging from thousands to less than ten lakhs on a single occasion.
12.2. The infusion by Madhucon Projects Ltd. in Ranchi Expressways Ltd. by way of subordinate debt was also by way of book entries. Although the books of accounts of Ranchi Expressways Ltd. reflects contributions from Madhucon Projects Ltd. yet no actual contributions have been made to the Ranchi Expressways Ltd.
12.3 As per the supplementary Escrow Agreement dated 31/10/2011, the clause 4.1 mandate as under:
"The escrow bank shall establish the escrow account in the name of the borrower at its Prime Corporate Branch at TSR Complex, S P Road, Secunderabad- 500003, in the State of Andhra Pradesh, India having account No. 2657201009130. It is the understanding and agreement of the parties hereto that, except as may be expressly provided otherwise herein, all accounts and the sub-16
accounts now or in the future maintained hereunder shall be located only in the aforesaid branch for the entire duration of the escrow agreement. In order to facilitate the day-to-day operations of the borrower, the escrow bank shall, subject to the provisions of the escrow agreement, open such of the sub-accounts as permitted by the Lenders' Agent. The borrower shall, immediately on opening of the escrow account, close all other accounts which the borrower may have in any bank and forthwith transfer all balances held by it in such accounts to the escrow account. On and from the date of this agreement, until the final settlement date, all financial transactions including deposits, transfers and withdrawal of funds received by the borrower shall be only from the escrow accounts."
Observations/ Findings 12.6 The Ranchi Expressways Ltd. flouted the provisions of escrow agreement and common loan agreement with respect to closure of all the non-escrow banks accounts after the establishment of escrow account with the lead banker Canara Bank.
12.7 The Ranchi Expressways Ltd. was duty bound to transfer all the credits standing in the non-escrow accounts of Ranchi Expressways Ltd. to the escrow account after 03/01/2012 but no such credit was transferred to the escrow account.
12.8. In addition to the above flouting of provisions of escrow and common loan agreement, Ranchi Expressways Ltd. opened new accounts with various banks inspite of having an operational escrow account with lead banker. All such accounts were used to infuse the subordinate debt and equity contribution of sponsors/promoters in clear violation of escrow agreement and common loan agreement.
12.9 The above said violations resulted in laxity of control of lead bank over the inflows and outflows of the funds from the escrow account. This defeated the purpose of escrow mechanism. Entities / Persons Responsible 12.10 The following entities and persons are responsible for deviations:
Ranchi Expressways Ltd. and its officers in default. Madhucon Projects Ltd. and its officers in default. Madhucon Infra Ltd. and its officers in default. Madhucon Toll Highways Ltd. and its officers in default.
Consortium banks lead by Canara Bank and its officials.
Promoter's contribution in violation of limit (subordinate debt/ equity proportion) prescribed in common loan agreement.
Observations/ Findings
13.2 The provisions of Common loan agreement with respect to equity and subordinate debt in Ranchi Expressways Ltd. have not been adhered to in letter and spirit as is evident from the facts explained in the preceding para.
13.3 The above proportion was required to be maintained by Ranchi Expressways Ltd. but while the Equity portion was deficient by Rs.101.25 Crore from the minimum prescribed limit and the subordinate debt portion increased by Rs.72.27 Crore beyond the permissible limit.
17Entities / Persons Responsible 13.4 The following entities and persons are responsible for deviations:
Ranchi Expressways Ltd. and its officers in default. Madhucon Projects Ltd. and its officers in default. Madhucon Infra Ltd. and its officers in default. Madhucon Toll Highways Ltd. and its officers in default.
Non opening of sub accounts of Escrow Account as per the requirement of escrow agreement.
Observations/ Findings
14.3 The provisions of clauses 4.2 and 4.3 of the escrow agreement dated 31/10/2011 were clearly aimed at better control and monitoring over the financial activities of the concessionaire Ranchi Expressways Ltd. as well as of EPC contractor Madhucon Projects Ltd.
14.4. Further, by way of these sub escrow accounts the lead banker is responsible for the proper and efficient utilisation of public money by EPC contractor towards the physical progress of the project of Ranchi Jamshedpur Highway. But, the absence of such sub escrow accounts gave leverage to the Madhucon Projects Ltd. to inter mixing of funds of this project with those of other projects undertaken by it.
Entities / Persons Responsible 14.5 The following entities and persons are responsible for deviations:
Ranchi Expressways Ltd. and its officers in default. Consortium banks led by Canara Bank and its officials.
Curing of Escrow default beyond the permissible time limit Observations/Findings
15.4 As explained above the clause 6.1 of schedule S of the Concession Agreement gives only time of 5 (five) business days to cure any Escrow Default but in the present case Ranchi Expressways Ltd. cured the default not within the permissible time period but well beyond it even when the Escrow Default was brought to the notice of Ranchi Expressways Ltd. by NHAI vide its letter dated 15/07/2014. Still Ranchi Expressways Ltd. cured the Escrow default on 13/09/2014, 15/09/2014 and 16/10/2014. Thus, it is apparent that Ranchi Expressways Ltd. flouted the Provision of clause 6.1 with impunity as even all the defects brought to its notice were not cured in a single day.
15.5 Any amount credited in to escrow account is governed by the Provisions of clause 6.1.12 of the Common Loan Agreement and the restriction applies to even the amount brought in to cure the Escrow default.
Entities / Persons Responsible 15.6 The following entities and persons are responsible for deviations:
Ranchi Expressways Ltd. and its officers in default. Madhucon Infra Ltd. and its officers in default.18
Madhucon Toll Highways Ltd. and its officers in default.
Consortium banks lead by Canara Bank and its officials.
Conflict of interest of Lenders Independent Engineer (LIE) Observations/ Findings
16.4 The facts explained in the preceding Para 16 leaves no doubt that there is a conflict of interest as LIE is not an independent entity and the Report submitted by it with respect to the physical progress cannot be termed as independent in real terms, as one of the Shareholder of Ranchi Expressways Ltd. was a director in Meltech Infrastructure Engineering Ltd. (LIE) up to 31.12.2015.
16.5 Further, the promoter of the borrower group has advanced substantial amount as loans and advances to LIE hence the influence of the borrower over the LIE cannot be ruled out. 16.6 Also, the directors and shareholders of Ranchi Expressways Ltd. have made substantial investment by way of shares in LIE and possibility of having control over the affairs of the company Meltech Infrastructure Engineering Ltd. cannot ruled out again indicating towards the fact that reports submitted by LIE may be not out of the purview of bias and prejudice towards the borrower group.
16.7 The following entities and persons are responsible for deviations:
Ranchi Expressways Ltd. and its officers in default. Consortium banks led by Canara Bank and its officials. Meltech Infrastructure Engineering Ltd. (Lenders' Independent Engineers) and its directors.
25. Upon consideration of the facts, scrutiny of the documents relied upon, cost of project, means of finance, etc. SFIO has summarized its findings at para-17, which is quoted hereunder:
Summary of Findings/Conclusions:
17. The summary of findings of inquiry conducted into the financing of the project and its implementation by Ranchi Expressways Ltd. are as under:-
a. The round tripping exercises led to the scenario, whereas as per the bank accounts of Madhucon Projects Ltd. and Ranchi Expressways Ltd., the material and mobilization advance amounting to Rs.100 Crore was provided to Madhucon Projects Ltd. But out of this Rs.50 Crore was given as subordinate debt to Madhucon Infra Limited and was not available in execution of Ranchi Jamshedpur Highway Project.
b. Madhucon Projects Ltd. transferred Rs.30 Crore to Madhucon Infra Ltd. which in turn transferred this amount as subordinate debt to Ranchi Expressways Ltd., which were further used for providing material and mobilization advances to Madhucon Projects Ltd. Out of this Rs.30 Crore an amount of Rs.22 Crore was diverted to Madhucon Infra Ltd.
c. An amount of Rs.98 Crore claimed to be spent on the head of Maintenance (repair & rehabilitation of highway), as 19 equity infusion by Madhucon Projects Ltd. was not utilised for the actual purpose of the Project.
d. The impact of round tripping exercise and diversion carried out by Ranchi Expressways Ltd. and Madhucon Projects Ltd. to the tune of Rs.72 Crore was not available as Mobilisation and Material advances. Prima facie, it appears that the balance amount of Rs.94.01 Crore [Rs. 166.01 Crore-Rs.72 Crore) cannot be ascertained, whether the same was utilised for this project.
e. The Ranchi Expressways Ltd. flouted the provisions of escrow agreement and common loan agreement with respect to closure of all the non-escrow banks accounts after the establishment of escrow account with the lead banker Canara Bank and to transfer all the credits standing in the non-escrow accounts of Ranchi Expressways Ltd. to the escrow account after 03/01/2012. But no such credit was transferred to the escrow account. In addition, Ranchi Expressways Ltd. opened new accounts with various banks which were used to infuse the subordinate debt and equity contribution of sponsors/promoters in clear violation of escrow agreement and common loan agreement. f. The absence of sub escrow accounts gave leverage to the Madhucon Projects Ltd. to inter mixing of funds of this project with other projects.
g. The proportion of equity and subordinate debt was required to be maintained by Ranchi Expressways Ltd. But the subordinate debt portion increased by Rs.72.27 Crore beyond the permissible limit, while the Equity portion was deficient by Rs.101.25 Crore from the minimum prescribed limit.
h. NHAI vide letter dated 15.07.2014 brought the Escrow Default (i.e. not depositing equity and subordinate debt amounts in the Escrow Account) to the notice of Ranchi Expressways Ltd. Further, as per the Escrow Agreement the Escrow Default should be cured within 5 (five) business days from the date of issuance of letter by the Authority i.e. NHAI or the Lenders' Representative. Ranchi Expressways Ltd. cured the Escrow default after 60 days on 13/09/2014, 15/09/2014 and 16/10/2014. Further, the amount credited in to escrow account though governed by the Provisions of 6.1.12 of the Common Loan Agreement, the same was not followed by Ranchi Expressways Ltd. in respect of the amount brought to cure the Escrow default.
i. The Ranchi Expressways Ltd. was having a considerable influence over the LIE as investment in shares of LIE, loans & advances to LIE by the promoters of Ranchi Expressways Ltd. and group companies. Appointment of shareholders of Ranchi Expressways Ltd. as Director in LIE leaves no doubt that there is a conflict of interest as LIE is not an independent entity.
j. The veracity of expenditure claimed by Madhucon Project Ltd. through RA Bills has not been verified. In view of the conflict of interest between Meltech Infrastructure Engineering Ltd. (LIE) and Madhucon Group, the possibility of diversion of funds from this project in the guise of RA Bills can not be ruled out.
k. The affidavit filed by Mr. Srinivasa Rao Kamma, regarding appropriation of Rs.98 Crore as Existing road maintenance over and above Rs.11.19 Crore was not stating the true facts and misled the Hon'ble High Court. As per the Common Loan Agreement, the budgeted figure under this head was Rs.11.19 Crore. LIE in its reply clearly stated that while 20 arriving at the financial progress figure of Rs.824.21 Crore, the amount of 11.19 Crore only have been considered. l. An amount of Rs. 166.01 Crore which should be available with Madhucon Projects Ltd. as mobilization and materials advance has actually appears to be diverted for other than the purpose specified in the EPC cost. The total amount, including the above, which was not made available for the purpose of the project/diverted is as per details given in table below:
(Rs. In Crore) Sl. Description Amount No. involved 1 Round tripping exercise in equity/ sub- 50.00 ordinate debt Infusion 2 Diversion of Mobilisation and Material 22.00 Advance
3. Amount claimed to be spent on 98.00 Maintenance.
4 Utilisation of material and mobilization 94.01 advance given to Madhucon Projects Ltd. which could not be ascertained.
Total 264.01
26. Perusal of the inquiry report shows that there was a Round Tripping Exercise where, as per the bank accounts of Madhucon Projects Ltd. and Ranchi Expressways Ltd., material and mobilization advance amounting to Rs.100 Crore was provided to Madhucon Project Ltd. But out of this Rs.50 Crore was given as subordinate debt to the Madhucon Infra Ltd. and not available in the execution of the Ranchi- Jamshedpur Highway Project. Madhucon Projects Ltd. transferred 30 Crore to Madhucon Infra Ltd., which in turn transferred this amount as subordinate debt to Ranchi Expressways Ltd. These were further used for providing material and mobilization advance to Madhucon Project Ltd. Out of these Rs. 30 Crore, an amount of Rs. 22 Crore was diverted to Madhucon Infra Ltd. The impact of round tripping and diversion carried out by Ranchi Expressways Ltd. and Madhucon Projects Ltd. to the tune of Rs.72 Crore was that it was not available as mobilization and material advances. Prima facie, it appeared that the balance amount of Rs.94.01 Crore (Rs.166.01 Crore-Rs.72 Crore) could not be ascertained, whether the same was utilized for this project. Ranchi Expressways Ltd. flouted the provisions of escrow agreement and common loan agreement with respect to closure of all the non-escrow banks accounts and to transfer all the credits standing in the non-escrow accounts of Ranchi Expressways Ltd. to the escrow account after 03.01.2012. But no credit was transferred to the escrow account. In addition, Ranchi Expressways Ltd. opened new accounts with 21 various banks which were used to infuse the subordinate debt and equity contribution of sponsors/promoters in clear violation of escrow agreement and common loan agreement. The absence of sub escrow accounts gave leverage to the Madhucon Projects Ltd. to inter mixing of funds of this project with other projects. The Ranchi Expressways Ltd. was having a considerable influence over the LIE as investment in shares of LIE, loans and advances to LIE were made by the promoters of Ranchi Expressways Ltd. and group companies. The SFIO also opined that appointment of shareholders of Ranchi Expressways Ltd. as Director of LIE left no doubt that there is a conflict of interest as LIE is not an independent entity. An amount of Rs.166.01 Crore which should have been available with Madhucon Projects Ltd. as mobilization and materials advance, appeared to be diverted for other than the purpose specified in the EPC. The total amount, including the above, which was not made available for the purpose of the project / diverted amounted to Rs.264.01 Crore, as per the chart furnished by SFIO, referred to above.
27. In the light of the observations and findings of SFIO, explanation furnished by the learned Senior Counsel representing the Concessionaire and the Bank do not merit acceptance. The parties were given sufficient time to inspect the report. They were further granted time to prepare and offer their response thereupon vide order dated 28.06.2018 at their request.
No other party i.e. Bank, NHAI, etc. have asked for copies of the report at this stage. Therefore, we do not find it proper to allow the prayer of the learned Senior Counsel for the Respondent No. 6 Concessionaire to obtain copies of the SFIO report at this stage.
28. In the facts of the present case, public money expended through the public sector bank and Financial Institutions prima facie appears to have been diverted to other individuals, entities and Companies. The aforesaid facts and circumstances and findings recorded by the SFIO therefore, leads to the conclusion that the matter is required to be investigated by an independent agency as it relates to expenditure of public money through the banks and Financial Institutions involving agency / individuals / entities / Companies having inter-State ramification. The Report points to illegal diversion of advances for the purposes other than EPC; flouting of the terms and conditions of agreement; misstatement of the Concessionaire; non-compliance of Banking norms by the Lead Bank and the Consortium of Banks; serious doubt on the independence 22 and reliability of the Independent Engineers (LIE) due to conflict of interest. These may amount to fraudulent acts of criminal nature. The State Government is also one of the stakeholders in the project. As such, it needs to be investigated through a specialized agency like the Central Bureau of Investigation. We however make it clear that nothing said in this order shall be taken as a final opinion of the Court as to the complicity of those who may be investigated, questioned or interrogated in relation to the instant matter.
29. The power of the High Court under Article 226 of the Constitution of India to direct investigation by C.B.I in exceptional situations when it becomes necessary to provide credibility to and instill confidence in the investigations or where the incident may have national and international ramifications or where such an order may be necessary for doing complete justice and enforcing the fundamental rights, on being satisfied that the material discloses a prima facie case calling for investigation by the C.B.I has been settled by a Constitution Bench of the Apex Court in the case of State of West Bengal and others Vrs. Committee For Protection of Democratic Rights , West Bengal and others reported in (2010) 3 SCC 571. The opinion of the Hon'ble Apex Court contained at para 68 to 70 is being relied upon. In the case of Subrata Chattoraj Vrs. Union of India and others reported in (2014) 8 SCC 768, the Apex Court while dealing with the issue of Chit Fund Scam affecting large number of depositors had also relied upon the ratio rendered by the Apex Court in the case of Committee For Protection of Democratic Rights (supra). The Apex Court was of the opinion that Writ Court can issue appropriate writ, direction and order to protect the fundamental rights of citizens. CBI investigation can be directed where it is necessary to discover the truth or to meet the ends of justice or to examine complex issues or where the case involves national or international ramification or where people holding high position of power and influence or political clout are involved.
30. The Apex Court in the facts of the said case at para 25 also observed that such investigation would also reveal whether there was possible connivance of those who were charged with the duty of preventing the scams of such nature in breach of the law. Therefore, it needs to be closely examined and effectively dealt with. Investigation into the larger conspiracy angle would thus, inevitably bring such statutory 23 regulators also under close scrutiny. An effective and independent investigation was required to examine the role of different bodies including the regulatory bodies.
In the case of Pooja Pal Vrs. Union of India & others [(2016) 3 SCC 135, a prayer for investigation by the CBI was made by the widow of a sitting MLA of Uttar Pradesh Assembly. The Apex Court dealt with the precedents rendered including in the case of Committee For Protection of Democratic Rights(supra) and observed at para 91 that discovery, investigation and establishment of truth are the main purposes of the courts of justice and indeed are raison d'etre for their existence. It further observed that quest for truth is a mandate of justice and that the preeminence of truth is the guiding star in a judicial process forming the foundation of justice.
31. We therefore direct the Central Bureau of Investigation through its Director to be impleaded as a Respondent. Registry to ensure addition of Central Bureau of Investigation through its Director as Respondent No. 10. Learned ASGI who also represents the CBI, is required to seek instruction from the CBI on this issue. Learned counsel for the CBI along with its authorized representative may in the meantime, if required, inspect the SFIO report in the manner directed by our order dated 14.06.2018.
32. As prayed for by the learned counsel for the CBI, let the matter appear on 25.07.2018 at 3.45 pm as unfixed case.
33. Prayer for personal appearance of Member (Project) Mr. Anand Kumar Singh for the present is dispensed with. However, he should remain present on the next date.
34. Let the SFIO report be kept in a sealed cover in the custody of learned Registrar General.
35. Let a copy of the order be handed over to the learned ASGI.
(Aparesh Kumar Singh, J) (Anil Kumar Choudhary, J) Ranjeet/AKT.