Bangalore District Court
State By Cbi/Acb vs Dr. R.B. Saha on 9 November, 2015
IN THE COURT OF XXI ADDL. CITY CIVIL AND SESSIONS
JUDGE AND PRINCIPAL SPECIAL JUDGE FOR CBI CASES,
BENGALURU (CCH-4).
Spl. C.C. No.29/2005
DATED THIS THE 9TH DAY OF NOVEMBER, 2015
PRESENT : Sri. Bheemanagouda K. Naik,
B.Com., LL.B., (Spl.)
XXI Addl. City Civil and Sessions Judge and
Prl. Special Judge for CBI Cases, Bengaluru.
Complainant: State by CBI/ACB, Bengaluru
(By Special Public Prosecutor)
V/s
Accused: 1. Dr. R.B. Saha
S/o late Shri. K.P. Saha,
Chief Marketing Manager,
State Trading Corporation of India,
Kolkata,
R/o 2-A, Mandevilla Gardens,
Joy Jayanthi Park, Flat No.8-P,
KOLKATA-19, West Bengal.
2. Shri. K.C. Santhosh
S/o Shri Chandra Gowda,
Managing Director,
M/s. Kaycee Coffee and Spices Exports
Pvt. Ltd., Bengaluru.
R/o No.59, Kerodi Village,
Sakaleshpura Taluk, Hassan District.
3. Shri. Manjunath Davanagere
S/o Sri. D. Laxman, Chairman,
M/s. Kaycee Coffee and Spices Exports
Pvt. Ltd., Bengaluru.
R/o No.757, 15th Main, IInd Stage,
2 Spl.C.C.29/05 J
Banashankari, Bengaluru-17.
(By Sri. MRC Manohar, Advocate for A1,
Sri. AS Roopesh Advocate for A2,
Sri. R. Hemantha Raju, Advocate for A3)
JUDGMENT
The Deputy Superintendent of Police, CBI/ACB Bengaluru has filed a charge sheet against the above accused No.1 to 3 for the offences punishable under Sec. 120B, 420 of IPC and Sec. 13(2) r/w 13(1) (d) of Prevention of Corruption Act, 1988.
2. The brief facts of the prosecution case are that: -
(a) The accused No.1 Dr. R.B. Saha was the Branch Manager of State Trading Corporation of India Ltd., Bengaluru Branch for the period from March, 1996 to July, 2002. During his tenure by criminal conspiracy with accused No.2 and 3, he entered into two back to back export contracts No.P-6651 & P-6652 on 24.03.2000 with M/s. Kaycee Coffee and Spices Export Pvt. Ltd., Bengaluru represented by Accused No.2 and 3, who are the Managing Director and Chairman of the said company for the export of 25 Foreign Container Load (FCLs) (450 metric tons) of Indian Arabica Cherry Clean Coffee to M/s Coffee America,
3 Spl.C.C.29/05 J United States of America, New York. In the said export contract, State Trading Corporation of India was termed as the "seller", and M/s. Kaycee Coffee and Spices Exports Pvt. Ltd., was the "shipper".
(b) On 23.3.2000, Sri. N. Jeyakumar, the then Branch Manager of State Trading Corporation of India Ltd., New York, USA had sent a fax message to the State Trading Corporation of India, Chennai, Bengaluru and Cochin Branches, regarding a trade enquiry for export of 40 FCLs (720 metric tones) of Indian Arabica Cherry Bulk Clean Coffee to the USA, to the buyer M/s. Coffee America of New York.
(c) In pursuance of the fax message dated 23.3.2000 of Shri N. Jeyakumar, STC, New York, Chennai Branch conveyed confirmation for the export of 15 FCLs, and STC Bengaluru Branch conveyed confirmation for the export of 25 FCLs of coffee. Whereas, STC, Chennai Branch arranged for the export of the coffee, through established coffee exporters, arranged by an accredited broker in the field. In respect of STC, Bengaluru, Accused No.1, being the Branch Manager and Head of Coffee Division in the branch, awarded the export of coffee 4 Spl.C.C.29/05 J contract to M/s Kaycee Coffee & Spices Exports Pvt. Ltd., directly, without calling for any tenders and without looking for any other well established exporters in the field having market credibility.
(d) In pursuance of the trade enquiry dated 23.3.2000, Accused No.1 had directly contacted the Shipper and on 24.3.2000, had entered into two back to back contracts with the Shipper, for the export of 25 FCLs of Indian Arabica Cherry Bulk Clean Coffee, to the U.S.A.
(e) Accused No.1 Dr. R.B. Saha, during the period from February, 1999 to March, 2000 had awarded 53 Coffee Export contracts to M/s. Kaycee Coffee and Spices Exports (P) Ltd., out of 175 contracts entered into by the State Trading Corporation of India, Bengaluru Branch. Out of the 53 contracts, 26 contracts had either been washed out or had some claims preferred by the buyers on the seller.
(f) Accused No.1 Dr. R.B. Saha had allowed M/s. Kaycee Coffee and Spices Exports Pvt. Ltd., to do coffee export, on behalf of a number of other exporters also with whom the company was having tie-up arrangements. By such tie-up arrangements, Accused No.1 Dr. R.B. Saha, 5 Spl.C.C.29/05 J not only managed to award export contracts but also helped M/s. Kaycee Coffee and Spices (Pvt.) Ltd., Bengaluru, in not suffering any loss of face in the market, in case any claims were preferred by the buyers on account of quality deviations.
(g) The samples drawn from the first consignment, which were exported by Accused No.2 & 3 was found to be not conforming with the stipulated quality, sub-standard and even then, Accused No.1 Dr. R.B. Saha had allowed the Shipper who are Accused No.2 & 3 to export the first consignment.
(h) Accused No.1 Dr. R.B. Saha had allowed Accused No.2 & 3 to export the subsequent consignments of coffee even without drawing samples especially when the sample drawn from the first consignment was found to be sub- standard in quality, due to which the buyer M/s Coffee America had rejected the subsequent consignments. Accused No.1 Dr. R.B. Saha failed to take required steps and measures to ensure the export of coffee, which was in conformity with the prescribed standards.
(i) Accused No.1 Dr. R.B. Saha had received two fax messages from STC, Frankfurt Branch, Germany on 6 Spl.C.C.29/05 J 23.3.2000, regarding the rejection of the coffee exported by M/s. Kaycee Coffee Spices Exports Pvt. Ltd., to France. Accused No.1 Dr. R.B. Saha despite being warned by his Deputy Marketing Manager, regarding the performance of this exporter preferred to sign the agreements, P-6651 & P-6652 with Accused No.2 and 3 on 24.3.2000.
(j) Accused No.1 Dr. R.B. Saha on 3.3.2000, sent a proposal to the Corporate Office, State Trading Corporation of India Ltd., New Delhi, seeking the approval of the competent authority, for entering into direct export tie-up arrangements with M/s. Kaycee Coffee and Spices Exports Pvt. Ltd., for extending financial assistance to the exporter. Though the competent authority at the Corporate Office sought from Accused No.1 Dr. R.B. Saha, certain clarifications regarding the credit worthiness and export performance of M/s. Kaycee Coffee and Spices Exports Pvt. Ltd., Bengaluru, for considering his proposal, Accused No.1 Dr. R.B. Saha did not respond to the queries of the Corporate Office due to which the said proposal was not acted upon.
(k) Accused No.1 Dr. R.B. Saha while selecting M/s. Kaycee Coffee and Spices Exports Pvt. Bengaluru, for 7 Spl.C.C.29/05 J awarding the biggest coffee export order ever secured by STC, Bengaluru Branch, had violated the instructions contained in STC, Corporate Office, Circular dt. 19.8.1999, by not insisting the exporter to furnish any Performance Bank Guarantee. Accused No.1 Dr. R.B. Saha had also not taken into consideration the various parameters stipulated while selecting an export associate as laid down in the STC Corporate Office Circular No.105 dt. 28.1.1994. Further, Accused No.1 Dr. R.B. Saha had extended favour to M/s. Kaycee Coffee and Spices Exports Pvt. Ltd., represented by Accused No.2 & 3 by sending a proposal to the Corporate Office of State Trading Corporation of India Ltd., New Delhi, on 3.3.2000, for entering into a direct export tie-up with the Shipper i.e., Accused No.2 & 3 and had also recommended for extending financial assistance to them, whereas, the Shipper did not qualify for the same. Accused No.1 tried to show official favour to Accused No.2 & 3.
(l) Accused No.1 Dr. R.B. Saha was well aware that M/s. Kaycee Coffee and Spices Exports Pvt. Ltd., represented by Accused No.2 & 3 did not adhere to the various parameters as laid down in Circular No.105 dt.
8 Spl.C.C.29/05 J 28.1.1994 of the Corporate Office of STC Ltd., and had signed export contracts P-6651 and P-6652 with M/s. Kaycee Coffee and Spices Exports Pvt. Ltd., on 24.3.2000 in furtherance of conspiracy and with dishonest and fraudulent intention.
(m) The Coffee exported by Accused No.2 & 3 who are Managing Director and Chairman respectively of M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., was rejected by the American buyer, being sub-standard in quality and the buyer accordingly, initiated arbitration proceedings against the State Trading Corporation of India being the "seller" in the exports contracts.
(n) The sub-standard coffee exported by M/s Kaycee Coffee & Spices Exports Pvt., Ltd., in the month of June, 2000 was rejected by the buyer M/s. Coffee America of the U.S.A. who initiated arbitration proceedings against the State Trading Corporation of India for breach of contract, as the State Trading Corporation was the "seller" in the export contracts and had penalized the Corporation for an amount of US $ 2,65,000, which includes the invoice price of the Coffee exported and freight charges towards the settlement of the arbitration. The State Trading 9 Spl.C.C.29/05 J Corporation of India paid the said amount to the buyer, settled the claim and thereby, suffered financial losses, whereas, M/s. Kaycee Coffee and Spices Exports Pvt. Ltd., represented by Accused No.2 & 3, had already received the export proceeds from the buyer.
(o) The Accused No.1 Dr. R.B. Saha, after entering into the exports contract with the shipper i.e., Accused No.2 and 3 being the Managing Director and the Chairman of M/s. Kaycee Coffee and Spices Exports Pvt. Ltd., by violating the laid down guidelines, in furtherance of conspiracy, did not ensure that the exporters exported the stipulated quality of coffee. As a result, M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., represented by accused No.2 and 3 could get away by exporting sub-standard quality of coffee and the exports proceeds thereof were received by them promptly from the buyer. The buyer rejected the coffee and arbitration proceedings were initiated against STC., being the seller in contracts entered into with them. Accused No.1 Dr. R.B. Saha did not safeguard the interests of STC., and had favoured the exporter M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., represented by Accused No.2 and 3 by allowing them to 10 Spl.C.C.29/05 J export sub-standard coffee for which STC., was penalized by the buyer.
(p) Accused No.2 and 3 were the Managing Director and the Chairman of M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., during the relevant time and they dishonestly and fraudulently, in pursuance of the criminal conspiracy hatched among themselves, with Accused No.1 Dr. R.B. Saha had exported sub-standard coffee, in breach of the terms and conditions of the export contracts and had thereby, cheated the State Trading Corporation of India, Government of India to the tune of US $ 2,65,000 (Rs.1.25 Crores) and thereby, a great irreparable loss was caused to the reputation of State Trading Corporation of India and other Indian Exporters in Overseas markets.
(q) The accused No.1 Dr. R.B. Saha, as a public servant had showed undue official favours to the accused No.2 and 3, who are Managing Director and Chairman respectively of M/s. Kay Cee Coffee and Spice Exports Pvt. Ltd., in helping them to export sub-standard coffee to the buyer, by entering into two back-to-back contracts No.P- 6651 & P-6652 dtd. 24.03.2000 acting as 'seller', instead of as an intermediary, by violating all laid down guidelines 11 Spl.C.C.29/05 J of the Corporation and thereby he had committed criminal mis-conduct as a public servant.
(r) Sri. A.P. Singh, the then Superintendent of Police, CBI, ACB, Bengaluru on the basis of reliable information received in respect of criminal conspiracy of accused No.1 to 3, causing financial loss to the tune of Rs.1.25 crore to the State Trading Corporation of India, a Govt. of India undertaking registered a case in RC 22(A)/2003 CBI, Bengaluru on 26.9.2003 under Section 120B, 420 IPC and Sec. 13(2) r/w 13(1)(d) of Prevention of Corruption Act, 1988 and submitted FIR to the court and entrusted the investigation of the case to Sri. Y. Hari Kumar who was Inspector of Police, CBI, and he took up investigation in the matter.
(s) During the investigation, he collected the relevant documents pertaining to the contracts of this case from STC, examined the witnesses and recorded their statements. Then he concluded the investigation and filed a charge sheet against the accused No.1 to 3 before the court.
3. After filing the charge sheet, looking to the material forthcoming against the accused No.1 to 3, cognizance has 12 Spl.C.C.29/05 J been taken against all accused. Then in response to the service of summons, the accused No.1 and 3 appeared before the court and they were enlarged on bail and necessary police papers have been furnished to them. The presence of accused No.2 was not secured, therefore, the case against him came to be split up and separate case in Spl.C.C.No.73/2006 came to be registered.
4. The learned counsel for Accused No.1 submitted No Objections for framing the charge against accused No.1 and learned counsel for Accused No.3 did not address any arguments before framing charge. Therefore, the court proceeded to frame charge against accused No.1 and 3.
5. Thereafter the charge against the accused No.1 and 3 was framed, contents of the charge were read over and explained to them in the language known to them and both of them pleaded not guilty and claimed to be tried.
6. Thereafter accused No.2 approached the Hon'ble High Court in Criminal Petition No.5478/2009 and as per the order passed by the Hon'ble High Court dated 30.10.2009, he appeared before this court, he was enlarged on bail and necessary police papers have been furnished to him.
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7. Then the charge against accused No.2 has been framed, after hearing the arguments before charge and explained the contents of the charge in the language known to him and he pleaded not guilty and claims to be tried. Thereafter, the case registered against accused No.2 has been merged with this case by the order dated 19.1.2010.
8. Then the prosecution has examined in all 23 witnesses as PWs.1 to 23, got exhibited Ex.P1 to P97 and closed its side. Then the statement of the accused No.1 to 3 as required under Section 313 of Cr.P.C., has been recorded, after explaining the incriminating circumstances appearing against them in the evidence of prosecution witnesses and they have denied all the incriminating circumstances appearing against them.
9. The Accused No.1 to 3 have not entered the defence evidence on their behalf but during the evidence of prosecution witnesses, they have got exhibited Ex.D1 to D48 in support of their defence.
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10. Then I have heard the detail arguments advanced by learned Special Public Prosecutor for CBI and the learned defence counsel for the Accused No.1 to 3.
11. The Learned Special Public Prosecutor submitted his synopsis and citations. The learned defence counsel for accused No.1 submitted his detail notes of arguments on two occasion and learned counsel for accused No.2 and 3 also submitted detail notes of arguments and citations.
12. The points that would arise for my consideration are: -
1) Whether the prosecution proves beyond all reasonable doubt that the accused No.1 being a public servant and accused No.2 and 3 being the Managing Director and Chairman of M/s.
Kaycee Coffee & Spices Exports Pvt. Ltd., entered into a criminal conspiracy in respect of two back to back contracts P-6651 & 6652 entered on 24.3.2000 for the export of 25 Foreign Container Load (FCLs) (450 metric tons) of Indian Arabic Cherry bulk clean coffee to M/s. Coffee America, New York, United States of America, and thereby committed an offence?
2) Whether the prosecution further proves beyond all reasonable doubt that the accused No.1 to 3 during the relevant time, in furtherance of their criminal conspiracy, dishonestly and fraudulently exported sub-standard coffee, in breach of the terms and conditions of the export contracts and thereby cheated the State Trading Corporation of India, to the tune of US $ 2,65,000 (Rs.1.25 Crores) and also harmed to the reputation of State Trading Corporation 15 Spl.C.C.29/05 J of India and other Indian Exporters in Overseas Markets and thereby committed an offence?
3) Whether the prosecution further proves beyond all reasonable doubt that accused No.1 being a public servant while discharging his duty as a Branch Manager of STC, Bengaluru, by corrupt or illegal means, by abusing his position as a public servant, shown official favour to accused No.2 and 3 in respect of contract No.6651 & 6652 and obtained for himself or for any other person, any valuable thing or pecuniary advantage without any public interest and thereby committed an offence of criminal misconduct?
4) What order?
13. My findings on the above points are as follows:
POINT NO.1: Partly in the affirmative against accused No.2 and 3, POINT NO.2: Partly in the affirmative against accused No.2 and 3, POINT NO.3: In the negative, POINT NO.4: As per final order, for the following REASONS
14. POINT No.1 & 2: - Both these points have been taken up together for consideration and discussion to avoid the repetition of facts and evidence.
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15. The main allegations of prosecution forthcoming against accused No.1 to 3 are: -
(a) Accused No.1 being the Branch Manager, STC., Bengaluru, a public servant and accused No.2 and 3 being the Managing Director and Chairman of M/s.
Kaycee Coffee & Spices Exports Pvt., Ltd., have entered into a criminal conspiracy in respect of contract No.6651 and 6652 for supply of coffee to M/s. Coffee America, New York, USA.
(b) In furtherance of criminal conspiracy, accused No.2 and 3 supplied sub-standard quality of coffee to the buyer and received the payment and cheated the STC., Bengaluru, a Govt. of India undertaking.
(c) The accused No.1 being a public servant has committed criminal misconduct.
16. Looking to the defence of the accused No.1 to 3, it is an admitted fact that accused No.1 Dr. R.B. Saha was the Branch Manager of State Trading Corporation of India Ltd., Bengaluru Branch for the period from March 1996 to July 2002. It is further admitted that M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru is a private limited 17 Spl.C.C.29/05 J company registered under the Companies Act, represented by its Managing Director the accused No.2 and Chairman Accused No.3. It is further admitted that M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., was registered with Coffee Board, Bengaluru as dealers/ FSQ Exporters and allotted Registration No. 568 and Export Code No.699 on 4.12.1997 for export of coffee to Overseas Buyers. It is further admitted that Sri. N. Jeyakumar (PW.16) who was the Branch Manager, State Trading Corporation of India Ltd., New York, on 23.3.2000 had sent a fax message to State Trading Corporation of India, Chennai, Bengaluru and Cochin branches regarding a trade enquiry for supply of 40 FCLs (720 metric tons) of Indian Arabica Cherry Bulk clean coffee to USA, to the buyer M/s. Coffee America of New York. It is further admitted that pursuant to the said offer contained in the fax message, STC, Bengaluru Branch made enquiry with M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., and after their acceptance of proposal to supply, conveyed the acceptance of proposal for export of 25 FCLs of coffee and after confirmation of buyer, the STC, Bengaluru awarded the export contract to Accused No.2 and 3 of M/s. Kaycee 18 Spl.C.C.29/05 J Coffee & Spices Exports Pvt. Ltd., Bengaluru. It is further admitted that STC, Bengaluru entered into two back to back export contracts P-6651 & P-6652 on 24.3.2000 one with M/s. Coffee America, USA and another with M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru of accused No.2 and 3 for the export of 25 Foreign Container Load of Indian Arabica Cherry clean Coffee to M/s. Coffee America, New York of United States of America and in the said export contract, State Trading Corporation of India was named as "seller" and M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru was the "shipper" represented by accused No.2 and 3.
17. In support of its case, the prosecution has relied upon the oral and documentary evidence. In this regard, firstly the prosecution has adduced and relied upon the evidence of PW.1 Sri. N.K. Subramanya, Head Clerk in Coffee Board, Bengaluru. In his evidence, PW.1 has deposed that they have been maintaining the records regarding data of the exporters, their performance in exports and the complaints received against exporters. The exporter is required to make an application for registration for export of coffee with the coffee board, along with the application 19 Spl.C.C.29/05 J he is required to submit import and export code allotted by the respective foreign trade department, photograph and the photograph of any authorized person to carry on business and such photographs are required to be attested by the bankers of the applicant and applicant has to sign the application and attest the signature of authorized person and Coffee Board is competent to register the applications of exporters and after the registration, the exporter is required to make separate application seeking permission as and when he proposes to export coffee and in the application, the applicant is required to mention the name of the notified purchaser and the quality, type and grade proposed to be exported and the coffee board would issue export permit and certificate of origin. On issue of such permit and certificate, the exporter has to submit proof of export of coffee against the permit issued by the coffee board. At the time of export, the customs department would put their office seal in token of export of coffee in the permit as well as in the certificate issued by the coffee board mentioning the date of export. He has further stated that if any complaint is received against the exporter regarding 20 Spl.C.C.29/05 J any malpractice or defect in the quality of coffee, the exporter is informed about the complaint and after receiving the reply from the exporter, the copy of the reply would be sent to the complainant. Thereafter, the coffee board would make sincere attempt to bring about amicable settlement between the complainant and the exporter and in case of failure of settlement, the parties would normally approach the arbitrator. If the allegations in the complaint are found to be true, the board has right to cancel the registration of the exporter. The coffee export data consists of name of the notified importer and exporter, the quality of coffee exported, the type and grade of coffee, the value of the coffee exported and the name of the country to which it was exported and the port. The coffee board at Bengaluru being a Central office has full details of coffee production all over the country, type and grade of coffee and such details are maintained in their office for the purpose of statistics and requisite information. The coffee board also maintains the list of exporters registered with it and their track record and such details are computerized 21and are readily available 21 Spl.C.C.29/05 J for a period of 5 years and the board can also retrieve records of more than 5 years in case of exigency.
18. Further, he has deposed that M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru was registered in Coffee Board on 4.12.1997 based on application dated 27.11.1997 and were allotted registration No.568 and exporter code 699 and the registration details are furnished to the company by registered post dated 4.12.1997 and the letter is Ex.P1 and as per Ex.P1, one Sri. K.C. Santosh and Sri. D. Manjunatha were authorized to transact business on behalf of the company. The coffee board also issued permit card as per Ex.P2 and the specimen signatures of K.C. Santosh and D. Manjunath are Ex.P2(a) and P2(b) and signature of Deputy Director of Coffee Board Ex.P2(c). In the course of investigation by CBI, he furnished the details of the export of coffee during the period from 1.4.1999 to 31.3.2000 as per Ex.P3 and entry pertaining to M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru is Ex.P3(a). There were series of complaints against the accused No.2 and 3 alleging that they exported items other than the declared one for getting permission. In that regard, State Trading 22 Spl.C.C.29/05 J Corporation approached the Coffee Board with the complaint against accused No.2 and 3. On the basis of the complaint, the board intimated the same to accused No.2 and 3 and as there was no proper response from them, the board was constrained to cancel the registration during 2000. Accordingly, they cancelled the registration of accused No.2 and 3 in the year 2000.
19. Secondly, the prosecution has adduced and relied upon the evidence of PW.2 Sri. Vijaya Kuradagi, Chief Manager, STC, Bengaluru. He has deposed that the State Trading Corporation is a public sector undertaking under the control of Ministry of Commerce, Govt. of India, established in the year 1956. Initially, the corporation was doing the work of imports and exports with East European countries. Subsequently after decanalization, the corporation has become regular trading company in view of relaxation of imports and exports business. The corporation is a facilitator between the buyer and seller. The corporate office is situated in New Delhi and it has branches all over India and mostly in the capital cities of the States.
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20. He has further stated that the corporation used to have its officers in foreign countries like USA, Germany, Australia, Singapore etc., and now the branches in foreign countries are closed. The role of foreign branches was to identify the business potential in respective countries and send those respective potential to branches in India. The branches in India in turn used to contact associates of State Trading Corporation who could supply the offer of purchase. Once the deal was finalized, the corporation entered into agreement with the supplier in India in the standard format which is normally called as back to back contract. Back to back contract would indicate incorporation of terms and conditions stipulated by foreign buyer in the contract entered by corporation with the supplier of India and for the service rendered by the corporation, charges are collected in the form of trade margin or service charges from the supplier in India. The corporation was having two types of contracts, they are (i) back to back contract, (ii) direct contract. In back to back contract, the responsibility of supply of goods to be exported is on the part of supplier in India and in that contract, the role of the corporation is to act like a 24 Spl.C.C.29/05 J commission agent and in direct contract corporation will be directly dealing with foreign buyer and procure materials and take the responsibility of exporting the goods to the foreign buyer and the corporation would generally delegate its powers in respect of the duties.
21. Then he has deposed that all the branches of the corporation in the State are headed by Branch Managers and there are about 6 to 7 officers of various designations below Branch Manager in each branch and those officers are designated as Chief Manager, Deputy Manager, Asst. Manager and they look after marketing, finance and personnel sections and they report their work to the Branch Manager and the cadre of Branch Manager is equivalent to Deputy General Manager or General Manager of the Head Office. The branch office in Bengaluru was established in the year 1976 and Bengaluru Branch was headed by Branch Manager and below him, there were Asst. Manager, Deputy Manager and Manager working at the relevant time. Coffee was one of the items which STC was exporting and there was no import of coffee by STC. Accused No.1 was the Branch Manager of Bengaluru Branch in the year 1998 and 25 Spl.C.C.29/05 J Bengaluru Branch was having jurisdiction over entire Karnataka and coffee export was mainly done by Bengaluru, Chennai and Cochin branches and the branches were maintaining the list of exporters of coffee and the list was updated every year and selection of exporters was being made by assessing their performance and the coffee exporters have to get their names duly registered and required to obtain necessary permit for the purpose of export of coffee.
22. Then he has deposed about the documents Ex.P4 to P26. STC, Bengaluru filed a civil suit against M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru in O.S.No. 15412/2001 before City Civil Court, Bengaluru for recovery of Rs.1,25,54,348/-, as they had paid compensation to Coffee America and the legal proceeding was instituted because of the fraud committed by accused No.1 to 3.
23. Thirdly, the prosecution has adduced and relied upon the evidence of PW.3 Sri. P.B. Malde, Manager (Marketing), STC, Mumbai who was working as Asst. Manager, STC, Bengaluru from March 1998 to July 2001. He has deposed that accused No.1 was working as Branch Manager as well 26 Spl.C.C.29/05 J as Head of Coffee Division, STC, Bengaluru and below him PW.2, himself, Smt. Shyamala and Sri. Sudarshan were working as Asst. Managers. On 18.4.2000, accused No.1 called him, instructed him to visit internal container depot at Whitefield, Bengaluru for the purpose of taking samples from the containers that were being shipped by M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru. M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru exported the coffee on behalf of STC, Bengaluru. Accused No.1 further instructed Sri. Jayaramulu to assist him since he was not conversant with the area and the local language. On behalf of M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru one company by name Rosemount Shipping Lines was the authorized Clearing and Handling Agent as per the records submitted by M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru. On the morning of 19.4.2000 at about 11.30 A.M., himself and Sri. Jayaramulu went to Whitefield at about 2 P.M. and visited the Rosemount Office and the employee of the said company took them to the container which was about to shipped in respect of the contract between STC and the foreign buyer. On their visit, they noticed only one 27 Spl.C.C.29/05 J container was ready for export as against the 5 containers agreed to be shipped and he informed the concerned company about the purpose of his visit. The coffee bags were identified by C & HA Employee in their presence and accordingly he took 2 KG of samples from 15 bags by using the poker and then returned to their office at 7 P.M. and gave the samples to accused No.1 and informed accused No.1 that only one container was available as against 5 containers that were agreed to be shipped. On next day, on 20.4.2000, as per the instructions of accused No.1, himself and Smt. Shyamala Sharma took the samples drawn by him to the Coffee Board for analysis as Sri.Sudarshan incharge of transactions was on tour, accused No.1 instructed him to take samples from the container and later he came to know that the buyer noticed some defects in the coffee already exported and accepted the consignment with some deduction in price.
24. Fourthly, the prosecution has adduced and relied upon the evidence of PW.4 Sri. S. Dharmaraj, who was working as Asst. Surveyor Grade-II in M/s. J.B. Boda & Co., Pvt., Ltd., Bengaluru. He has deposed that their company was a designated to survey work of shipment of cargo through 28 Spl.C.C.29/05 J shipping lines. Their company was the main customer of Aspinwal and & Co., Pvt. Ltd., the steamer agent for M/s. Mearsk lines. On behalf of Aspinwal, their company deputed him and his colleague Badarinath to conduct survey of the export of coffee by M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru to America. Shipping agent for that export was Rosemount Shipping Lines. The containers in which goods are loaded are identified by the Rosemount Shipper and as a surveyor their duty was to unload the coffee from the lorry and they load in the container by the labours. During the stuffing process, they, concern surveyor representatives of Rosemount Shipping Lines were present and after loading the cargo, the container will be locked with one time locker which was put by Rosemount Shipping Lines and Shipping Bills would reflect the number of locks used and the number of containers. The coffee would be loaded in the container heightwise and breadthwise and 7 bags are loaded at the heightwise and 5 bags are loaded breadthwise and one row contains 35 bags and each container can accommodate 8 rows in the said manner and 280 bags can be stuffed and the container can also accommodate 29 Spl.C.C.29/05 J additional 20 bags near the door and in all the container can accommodate total number of 300 bags. As Surveyor, they are not responsible to ensure quality and indemnification of the container and the description of container is also reflected in the shipping bill and their survey report is based on the shipping bill. The quality of the coffee has to be checked by the customs and Rosemount Shippings. The quality and quantity of coffee is tallied with shipping bills and packing list, after the completion of survey them, they would prepare survey report and such survey report is forwarded to Aspinwal along with their bill and their survey report is signed by their Principal Surveyor who would also sign the payment bill. Then he has deposed that Ex.P27 is their survey report and as per Ex.P27 exporter is M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru and importer is Coffee America, USA and the brand name of coffee exported was Indian Arabica Cherry Clean Bulk. In the said container, 300 gunny bags weighing 18210 Kgs., were stuffed and Ex.P27 contains the round seal of their office. Ex.P28 is their company survey report dated 22.4.2000 and as per Ex.P28, exporter is M/s. Kaycee Coffee & Spices Exports 30 Spl.C.C.29/05 J Pvt. Ltd., Bengaluru and importer is Coffee America, USA. The brand name of coffee exported was Indian Arabica Cherry Clean Bulk and in the said container 300 gunny bags weighing 18210 Kgs., were stuffed.
25. Then he has deposed that Ex.P29 is their company survey report dated 20.4.2000 and as per Ex.P29 stuffing was commenced on 19.4.2000 at 12.30 hours and completed on 19.4.2000 at 13.25 hours and sealing was completed at 15.05 hours and as per Ex.P29 exporter was M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru and importer was Coffee America, USA, the brand name of coffee exported was Indian Arabica Cherry Clean Bulk and in the said container 300 gunny bags weighing 18210 Kgs., were stuffed.
26. Then he has deposed that Ex.P30 & 31 are their company survey reports dated 20.4.2000, Ex.P32 to 36 are their company survey reports dated 2.5.2000, Ex.P37 to 41 are their company survey reports dated 19.5.2000, Ex.P42 to 46 are their company survey reports dated 8.6.2000 and Ex.P47 to 51 are their company survey reports dated 10.6.2000 and as per those reports the exporter is M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru and 31 Spl.C.C.29/05 J importer is Coffee America and in each container 300 gunny bags weighing 18210 Kgs., were stuffed.
27. Fifthly, the prosecution has adduced and relied upon the evidence of PW.5 Sri. M. Sudarshan, Deputy Manager, STC, who was working as Asst. Manager in STC, Bengaluru Branch from 1999 to 2001. He has deposed that during the year 2000 March, he was asked to look after the coffee export in addition to his regular duties and prior to that, the coffee export division was handled by 3 other Managers. On 23.3.2000, there was an enquiry from their branch at New York regarding 25 FCLs of Arabica Cherry Coffee. During that period, accused No.1 was the Branch Manager at Bengaluru and he asked him to contact three parties out of which one was M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru and accused No.1 spoke to them over phone in his presence and instructed him to get the offer from M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru and forward the same to New York Branch. Thereafter accused No.1 informed him stating that contract has been done with M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru for 25 Full Container Loads (FCLs) and each container was having the 32 Spl.C.C.29/05 J capacity of 18.1 metric tons. Further he has deposed that Ex.P9 and P10 are two back to back contracts entered into between accused No.1 and M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru and accused No.1 has signed on it. He went to the office of M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru and obtained the signature of Managing Director Sri. Manjunath, Davanagere (A3). Further, he has deposed that Ex.P5 is a fax message sent by him to STC, New York, Ex.P6 is the confirmation received from STC, New York, Ex.P7 is the fax message sent by him to STC, New York and Ex.P8 is the fax message sent by accused No.1 to M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru. Ex.P11 is the fax message sent by accused No.1 to the Director, STC, New Delhi. Then he has deposed that Ex.P54 and 55 are fax message and Ex.P56 and 57 are the circulars and Ex.P58 is the STC Trading Manual.
28. Sixthly, the prosecution has adduced and relied upon the evidence of PW.6 Sri. N.V. Badarinath, Private Surveyor, Bengaluru. He has deposed that from 1993 to 2007, he worked as Asst. Surveyor in M/s. J.B. Boda & Co., Pvt., Ltd., and the business of their company to supervise the 33 Spl.C.C.29/05 J number of packages in the container exported and there is a inland container depot at Whitefield, Bengaluru, wherein their company was having a small room and they used to inspect the container stuffing in the ICD Premises. Further, he has deposed that in the year 2000, when the coffee was exported to New York, their company supervised the number of packages in the container on behalf of shipping line. Their company submitted survey reports as per Ex.P27 to P51.
29. Seventhly, the prosecution has adduced and relied upon the evidence of PW.7 Sri. Arun K.G. who was working in M/s. Metcalf and Hodkinson Pvt. Ltd., Bengaluru from 1998 to 2003. He has deposed that their company was doing survey work of consignment, their supervisor Mr. Shaju was issuing work order copy and then they were going to container and records the container number, vehicle number and number of packages loaded in the container and after doing the survey, they used to write in the stuffing report.
30. Eighthly, the prosecution has adduced and relied upon the evidence of PW.8 Sri. Shaju V.J. who was working in M/s. Metcalf & Hodkinsons Pvt. Ltd., Bengaluru from 1991 to 34 Spl.C.C.29/05 J 2003. He has deposed that their company was doing survey work of consignment, he was issuing work order copy and then they were going to container and records the container number, vehicle number and number of packages loaded in the container and after doing the survey, they used to write in the stuffing report.
31. Ninthly, the prosecution has adduced and relied upon the evidence of PW.9 Sri. Ashok who was working in M/s. Metcalf & Hodkinsons Pvt. Ltd., from 1998 to 2003. He has deposed that their company was doing survey work of consignment, he was issuing work order copy and then they were going to the container and records the container number, vehicle number and number of packages loaded in the container and after doing the survey, they used to write in the stuffing report.
32. Tenthly, the prosecution has adduced and relied upon the evidence of PW.10 Sri. M.B. Somanna, who was working as Superintendent of Customs in Inland Container Depot, Whitefield, Bengaluru from 2001 to 2003 in Export Examination Center. He has deposed that whatever the pre-shipping bills coming to ICD for export, he was scrutinizing them and checking the consignment for the 35 Spl.C.C.29/05 J purpose of export. Their custom department randomly check 5% of consignment to know the commodity and they will go to the container and make random checking of 5% of the goods to see whether they tally with the declaration made by the parties. The shipping bill and bills of lading will be submitted to their department, after receiving them he used to entrust the checking work to their Inspectors working under him and there were three Inspectors working under him to conduct the checking and their Inspectors after inspection note the same in the shipping bill in the particular column. Ex.D30, Ex.P59 to 62 are the 5 shipping bills.
33. Eleventhly, the prosecution has adduced and relied upon the evidence of PW.11 Sri. Ravishankar.R. Manager, Rosemount Shipping India Pvt. Ltd., Bengaluru. He has deposed that since 17 years he is working in Rosemount Shipping India Pvt. Ltd., Bengaluru joined as Asst. Manager and then became Manager in the said company. For export of goods, invoice, packing list and GR Form were coming to their office and based on those documents they used to prepare bill of lading and GR Form and further based on the above documents in their office 36 Spl.C.C.29/05 J shipping bill will be prepared and thereafter the documents would be submitted to the Customs Office for their clearance and they issue shipping bill No. and the matter would be verified by the Superintendent of Custom. Thereafter, Customs Officers would go and inspect the consignment as per their procedure. Ex.P52 and 53 are the GR Form, Ex.D30, Ex.P59 to 62 are the 5 shipping bills and Ex.P63 to 67 are the bill of lading.
34. Further, he has deposed that after getting those documents cleared from the custom and send two copies of shipping bills to shipping line and he will submit one copy to the container, Corporation of India for movement of containers for export and one copy will be sent to their office for record. After inspection by the custom, after completion of loading, the shipping line will put one time lock to the container and the lock No. would be mentioned in the shipping bill and bill of lading and once the lock is put, it cannot be re-opened and it can only be cut and opened at the final destination. They acted as custom house agents for M/s. Kaycee Coffee in 2000 involved in this case. There was no complaint from either by M/s.
37 Spl.C.C.29/05 J Kaycee Coffee or from anybody for tampering of lock in the subject matter involved in this case.
35. Twelfthly, the prosecution has adduced and relied upon the evidence of PW.12 Sri. N. Surendra, Senior Supervisor in Container Corporation of India Ltd., Bengaluru, who was working as Senior Executive during 2000. He has deposed that their corporation has got a yard in Whitefield and they are providing the service of transporting the containers from ICD Whitefield to Exporting Courts at Chennai, Mumbai and Cochin and they also provide service for import. M/s. Metcalf & Hadkinsons were survey contractors who used to take service of their corporation.
36. Thirteenthly, the prosecution has adduced and relied upon the evidence of PW.13 Sri. Y.L. Lingappa, Executive (Operation) M/s. Rosemount, Bengaluru who was working as Assistant earlier in the said company. He has deposed that for export of goods, invoice, packing list and GR form were coming to their office and based on those documents, they used to prepare bill of lading and GR form. Further, based on the above documents in their office shipping bill will be prepared and thereafter the 38 Spl.C.C.29/05 J documents would be submitted to the Customs Office for their clearance and they issue Shipping Bill No. and the matter would be verified by the Superintendent of Customs and then the Custom Officers would go and inspect the consignment as per their procedure. Ex.P52, 53 are the GR Forms, Ex.P59 to P62 and Ex.D30 are the shipping bills and Ex.P63 to 67 are also bills. After getting those documents cleared from the customs they send two copies of shipping bills to shipping line and he will submit one copy to the Container Corporation of India for movement of containers for export and one copy will be sent to their office for record. After inspection by the custom, after completion of loading, the shipping line will put to one time lock to the container. The lock number would be mentioned in the shipping bill and bill of lading and once the lock is put, it cannot be reopened and it can only be cut and opened at the final destination. They acted as Custom House Agent for M/s. Kaycee Coffee in 2000 involved in this case. There was no complaint from either by M/s. Kaycee Coffee or from anybody for tampering of lock in the subject matter involved in this case.
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37. Fourteenthly, the prosecution has adduced and relied upon the evidence of PW.14 Sri. P. Kumar, Retired Chief General Manager, STC, Corporate Office, New Delhi. He has deposed that he worked as Chief General Manager in STC, Corporate Office, New Delhi from 1995 to 2003. As per the delegation of powers of STC, during 2000, the Branch Manager was given power to export coffee worth Rs. Three (3) Crores as a single contract. If the Branch Manager wanted to export coffee more than Rs. Three crores in a single contract, he had to seek the contract approval from the Corporate Office, New Delhi. The branch was given power to select the shippers. Ex.P68 is the copy of the norms for non-canalized trade and whenever they received message from BM, STC, New York, they passed on the message to STC, Bengaluru and Ex.P11 was issued from STC, Bengaluru to Central Office. After receiving the goods at New York, the buyer raised objection for the quality and BM, STC, New York visited the warehouse of the buyer and personally informed them about the bad quality of exported coffee. The buyer did not accept the goods supplied and demanded for return of full funds already paid by him and for damages. He also 40 Spl.C.C.29/05 J issued notice and informed to go to arbitration proceedings. Their corporate office, STC, New York realized that there is no merit in their favour to fight against the buyer before the Arbitrator and accordingly they entered into a settlement with the buyer and agreed to repay the entire amount paid by him. Accordingly, STC, Bengaluru has paid US $ 2,65,000. Ex.P69 is the Settlement Agreement between STC, Bengaluru and M/s. Coffee America Limited and the same has been signed by accused No.1 on behalf of STC, Bengaluru. They advised their branch, Bengaluru to recover the funds from the shipper and also advised in the event of not paying the amount to lodge a FIR. Accordingly, FIR was lodged in the matter.
38. Fifteenthly, the prosecution has adduced and relied upon the evidence of PW.15 Ms. Rita Kunur, Retired Director of STC, New Delhi. She has deposed that she served in STC from 1972 to 2001 and served as a Director from 1995 November to 2001, June. She know about contract No. 6651 and 6652 vide Ex.P9 and P10 between STC and STC, New York. In that connection, she had received a fax letter Ex.P22 from their Branch Manager, STC, New York 41 Spl.C.C.29/05 J on 24.3.2000 and by the said letter, she was requested to communicate to STC, Bengaluru to ensure timely shipment and proper quality by M/s. Kaycee Coffee & Spices Export Pvt. Ltd., Bengaluru. Based on that she marked the same to the Chief General Manager, STC, New Delhi to take up to the Branch Manager and ensure proper pre-shipment inspection and he spoke to STC, Bengaluru and informed her that the Branch Manager, STC, Bengaluru formed a drill to that effect.
39. Sixteenthly, the prosecution has adduced and relied upon the evidence of PW.16 Sri. N. Jeyakumar, Chief General Manager, STC, New Delhi. He has deposed that he served as Branch Manager, STC, New York from November 1995 to May 2002. He received the enquiry from the buyer in March 2000. Ex.P5 to P8 and 70 are the fax messages. Ex.P16 is the message sent by accused No.1 to M/s. Kaycee Coffee & Spices Export Pvt. Ltd., Bengaluru to maintain the quality of coffee. Ex.P63 is the first consignment dated 24.4.2000, Ex.P64 is the second consignment dated 6.5.2000, Ex.P65 is the another consignment dated 31.5.2000, Ex.P66 is the consignment dated 10.6.2000 and Ex.P67 is the consignment dated 42 Spl.C.C.29/05 J 8.6.2000 and normally 3 to 4 weeks time will be required to reach consignment from Cochin to New York. After receiving the first consignment buyer at New York informed him stating that the quality of coffee is not of the quality specified by him. Then he conveyed the same to STC, Bengaluru and in turn STC, Bengaluru conveyed the same to M/s. Kaycee Coffee & Spices Export Pvt. Ltd., Bengaluru. Ex.P71 is the shipment instrument relating to Contract No.6651 and Ex.P72 is the shipment instrument relating to contract No.6652 and Ex.P73 and 74 are two FOB contracts signed between STC, Bengaluru and Coffee America for shipment which are pertaining to contract No.6651 and 6652. Ex.P13 is the price fixing confirmation message sent by Coffee America to STC, Bengaluru. The buyer Coffee America informed the STC, New York about the poor quality of coffee supplied to them and they would go to arbitration for the loss incurred by them. The matter was taken to STC, New Delhi, STC, Bengaluru and with their consent, they decided to go for settlement outside the arbitration. Accordingly, there was settlement and agreement was signed between STC, Bengaluru and Coffee America as per Ex.P69. As per the settlement, the 43 Spl.C.C.29/05 J Govt. of India agreed to pay US $ 2,65,000 to the buyer Coffee America on or before 30.11.2000. Accordingly, after obtaining the permission from Reserve Bank of India, the STC, Bengaluru made the payment directly to Coffee America.
40. Seventeenthly, the prosecution has adduced and relied upon the evidence of PW.17 Sri. G.D. Pushparaj, Retired Joint General Manager of Finance & Accounts, STC, Bengaluru. He has deposed that he worked as Finance Manager in STC, Bengaluru from 1987 to 2006. Thereafter, he became Branch Manager, STC, Bengaluru. He knows about two contracts No.6651 and 6652. As allowed in the letter of credit, after shipment M/s. Kaycee Coffee & Spices Export Pvt. Ltd., Bengaluru negotiated the shipping documents and obtained the payment from Syndicate Bank, Bengaluru Branch. Since the coffee supplied by the shipper was of inferior quality, the buyer made the claim on STC, Bengaluru for the payment. Immediately, when they received the complaint from the foreign buyer, called the shipper and enquired as to why they have supplied inferior quality of coffee to the buyer. Since the main contract was between the STC, Bengaluru 44 Spl.C.C.29/05 J and the buyer, the settlement was to be settled immediately and accordingly the settlement was arrived at US $ 2,65,000 and they had to obtain permission from the RBI, Bengaluru and send the remittance to foreign buyer. After the permission was given by the RBI, Bengaluru through their permit, they remitted US $ 2,65,000 to the US Buyer and the said payment was equivalent to Rs.1.25 Crores approximately.
41. Eighteenthly, the prosecution has adduced and relied upon the evidence of PW.18 Dr. K. Basavaraj, Head of Coffee Quality, Coffee Board, Bengaluru. He has deposed that since 23 years, he has been working in Coffee Board, Bengaluru. He is Coffee Quality Expert and analyzing the quality of coffee and certifying the quality of coffee for domestic market and export market. Ex.P17 to 21 are the reports given by him after analyzing physical coffee quality parameters for moisture contained, defects, grade specifications and presence and absence of foreign matters. Ex.P17 to 21 are issued for physical standard and moisture contents. As per Ex.P17, the sample contains 25.9% of triage as against the tolerance of 18%. It is not conforms to the standard. The Ex.P18 is the final 45 Spl.C.C.29/05 J result of 3 samples are mentioned and they are not identical to the control sample and not conformed to the standard. As per Ex.P19 and 20, the sample analysed are admixtures of Arabica Coffee and Robusta Coffee and it is a serious quality deviation. As per Ex.P20, there is 29% of blacks by weight and 10.9% of bids by weight. As per Ex.P21, the sample does not conform to the standard. Ex.P75 is one more quality evaluation report issued by him and as per Ex.P75, the sample contains 27.5% of husk and extraneous matters and this is a serious deviation from the standard quality. All samples analysed by him in this case were sent by STC, Bengaluru in a sealed pack and those sealed packs are opened in the presence of him and STC Officers and Scientists of the Quality Lab.
42. Ninteenthly, the prosecution has adduced and relied upon the evidence of PW.19 Sri. Y. Hari Kumar, Addl. Superintendent of Police, CBI, Special Crime, Trivendram. He has deposed regarding the entire investigation done by him in this case. Further, he has deposed that he collected the records and recorded the statements of witnesses.
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43. Twentiethly, the prosecution has adduced and relied upon the evidence of PW.20 Sri. Abraham Oommen, Chief Marketing Officer. He has deposed that he was working as Branch Manager in M/s. Aspinwal & CO., Ltd., Airport Road, Bengaluru from 1995 to 2005. M/s. Aspinwal & Co., Ltd., was an agent for Maersk Shipping Line and he was enquired by CBI Officer about some containers. He has produced bills of lading and other documents as per Ex.P63 to 67 and they have been issued on behalf of M/s. Aspinwal & Co., Ltd. Those documents have been issued after the Custom Authority given permission for exporting the consignment. Custom authority have put one time lock to the container before loading. The container was inspected by the Supervisor, Excise Authority and then it was locked and it was checked at the destination point and found intact. At the destination point, the consignee refused to accept the consignment and the consignment was deposited in the warehouse and they claimed demurrage charges from the consignee.
44. Twenty firstly, the prosecution has adduced and relied upon the evidence of PW.21 Sri. Surendranath Rajguru, Retired Chief General Manager (Law), STC, New Delhi. He 47 Spl.C.C.29/05 J has deposed that he was working as Chief Legal Advisor (Law) in State Trading Corporate Office, New Delhi from 1999 to 2005. During August 2000, their General Manager instructed him to go to Bengaluru office to take steps for the recovery of the damages claimed by the buyer in this case. After reaching Bengaluru, he contacted their panel advocate, discussed about the problems, who advised him to file a criminal complaint against M/s. Kaycee Coffee. In the meanwhile, the Managing Director and other officers of M/s. Kaycee Coffee, came forward to negotiate for settlement, but they did not settle the claim. Their Branch Manager filed a complaint before the police. Initially, the foreign buyer claimed damages of US $ 4,12,000 and after negotiation, they agreed for damages of US $ 2,65,000. If the matter was contested before Arbitrator in USA, the cost would have been much more high. Therefore, the efforts were made to settle the matter outside the arbitration.
45. Twenty Secondly, the prosecution has adduced and relied upon the evidence of PW.22 Sri. Srikanteshwara S., Branch Manager, STC, Bengaluru. He has deposed that Ex.P91 is the copy of the approval letter received from 48 Spl.C.C.29/05 J Head Office for making payment. Ex.P92 is the copy of permission accorded by Reserve Bank of India for making payment. Ex.P93 is the copy of the letter to State Bank of India, Overseas Branch, Bengaluru requesting for issue of Demand Draft for payment to the buyer in this case. Ex.P94 is the copy of the demand draft sent to the buyer and Ex.P95 is the copy of bank advise and Ex.P96 is the copy of conformation of receipt and Ex.P97 is the copy of letter of buyer admitting the settlement and withdrawal of the case.
46. Twenty Thirdly, the prosecution has adduced and relied upon the evidence of PW.23 Dr. Arvind Pandalai, retired Chairman & Managing Director, STC, New Delhi. He has deposed that from 2003 to 2008, he functioned as Chairman & Managing Director, State Trading Corporation of India Ltd., (Sanctioning Authority), New Delhi. Accused No.1 was their Branch Manager at Bengaluru STC during the relevant period. He was the appointing and removing authority of accused No.1. CBI sought sanction to prosecute accused No.1 and sent the material to their Vigilance Department. Their Vigilance Department after examining the matter placed the file before him and he 49 Spl.C.C.29/05 J has gone through the papers and taken his own view in the matter and passed the sanction order as per Ex.P77.
47. Now, coming to the documentary evidence of prosecution, Ex.P1 is the letter of Coffee Board, registering M/s. Kay Cee Coffee and Spices Exports Pvt. Ltd., as a registered dealers /FSQ Exporters allotted the registration No. 568 and Export Code No.699. It is clearly admitted by the accused that M/s. Kay Cee Coffee and Spices Exports Pvt. Ltd., submitted their application dated 27.11.1997 to the Coffee Board and the Coffee Board has registered and allotted registration number and Export Code on 4.12.1997. In Ex.P1 it is mentioned that accused No.2 and 3 are authorised to represent M/s. Kay Cee Coffee and Spices Exports Pvt. Ltd.
48. Ex.P2 is the registered permit for export of FSQ Coffees in the name of M/s. Kay Cee Coffee and Spices Exports Pvt. Ltd., in which the name and signatures of authorised representatives of the dealer along with their photographs are appearing in the said document. The contents of Ex.P2 are clearly admitted.
49. Ex. P3 is the statement maintained by the Coffee Board, Bengaluru, showing the export of coffee during 1.4.1999 to 50 Spl.C.C.29/05 J 31.3.2000 by the coffee exporters. At Sl. No.30, the name of M/s. Kay Cee Coffee and Spices Exports Pvt. Ltd., is forthcoming. During the above period, the said company exported 1494.6 metric tons of coffee to various countries having the value of 832.8 lakhs. It is clearly admitted about the export of coffee made by M/s. Kay Cee Coffee and Spices Exports Pvt. Ltd., during the above period.
50. Ex.P4 is the fax message received from Branch Manager, STC, New York on 23.3.2000 conveying the offer of the buyer for purchase of Indian Arabica Cherry bulk clean coffee 45 FCL. Ex.P5 is the fax message from STC, Bengaluru to STC, New York conveying the message on 24.3.2000. Ex.P6 is the fax message from STC, New York to Mr. Bill Fritsch/Mr. Sean Starke confirming the acceptance of proposal stating that the orders against subject to approval of sample basis and payment Letter of Credit at sight was accepted.
51. Ex.P7 is the fax message dated 25.3.2000 from STC, Bengaluru to STC, New York accepting the proposal for showing the STC, Bengaluru as a Seller and M/s. Kaycee Coffee as a Shipper. It was further informed that purchase 51 Spl.C.C.29/05 J contract to be sent immediately so as to enable them to organise shipment in time on 25.3.2000.
52. Ex.P8 is the fax message dated 25.3.2000 of accused No.1 to M/s. Kay Cee Coffee and Spices Exports Pvt. Ltd., requesting to send the samples of 500 grams to send the same to the buyers for their evaluation.
53. Ex.P9 and P10 are the contracts between STC., Bengaluru and M/s. Kay Cee Coffee and Spices Exports Pvt. Ltd., represented by accused No.2 and 3 in respect of contract P6651 and 6652 dated 24.3.2000. The said contracts have been signed by accused No.1 as Branch Manager, STC., Bengaluru and Accused No.3 as Authorised Signatory of M/s. Kay Cee Coffee and Spices Exports Pvt. Ltd. In the said contracts, it is mentioned that order against subject to approval of sample by buyer. It is further mentioned that "Contract between the buyer and STC forms an integral part of this contract and you shall be responsible for the due fulfilment of the obligation set out thereunder. In case of default of any nature, whatsoever, you will be fully responsible for the consequential damages, penalties etc., and STC will not have obligation or liability whatsoever in 52 Spl.C.C.29/05 J this respect." The contents of Ex.P9 and P10 are clearly admitted by all the accused.
54. Ex.P11 is the fax message dated 3.3.2000 of accused No.1 to Ms. Rita Kunur, Director (Marketing), STC of India Ltd., New Delhi in respect of Direct Coffee Exports under DOP. Ex.P12 and 13 are the fax messages of buyer Coffee America dated 30.5.2000 fixing the price of the export coffee, which are not disputed by any of the accused.
55. Ex.P14 is the letter of accused No.1 to M/s. Kay Cee Coffee, Bengaluru dated 4.4.2000 and the same is admitted by all the accused. In Ex.P14 it is mentioned in respect of contract No.6651 and 6652 that:
SINCE, SAMPLE HAS BEEN APPROVED, PL ENSURE BEFORE SHIPMENT THAT THE QUALITY OF THE COFFEE IS EXACTLY THE SAME AS THAT OF THE SAMPLE SENT TO THE BYR FOR APPROVAL.
THE STOCK (ENTIRE 15 FCLS) SHOULD BE MADE READY BY 15TH APRL, 2000 FOR SHIPMENT.
AN INTIMATION TO BE GIVEN TO STC, BENGALURU ABOUT THE READINESS OF THE STOCK FOR SHIPMENT BEFORE STUFFING AN OFFICIAL FROM STC, BENGALURU, WOULD VISIT ICD, BENGALURU, TO DRAW COMPOSITE LOT SAMPLE FROM THE LOTS: 500 GMS EACH, 3 SUCH SAMPLES".
Further it is mentioned that 53 Spl.C.C.29/05 J "ABV MEASURES BY STC., BENGALURU IS JUST TO HELP YOU TO MAINTAIN THE QUALITY OF THE COFFEE. HOWEVER, YOU WILL BE TOTALLY RESPONSIBLE FOR ANY CLAIM IN R/O THE QUALITY OF THE COFFEE, ARISING OUT OF THE ABV SAID CONTRACTS.
56. Ex.P15 is the Export Journal pertaining to 1997-98 in respect of export of coffee by the exporters maintained in the STC., Branch, Bengaluru. Ex.P16 is the fax message from accused No.1 to M/s. Kay Cee, Bengaluru on 25.4.2000, wherein it is mentioned that the sample drawn from the first load of shipment (5 FCLS) from ICD, Bengaluru by representatives of STC, against the ABV referred contract, has been sent to Coffee Board for Lab Analysis. It is further mentioned that:
"FIXING THE COFFEE BOARD ANALYTICAL
REPORT FOR YR INFMN.
WE ARE VERY MUCH SHOCKED TO SEE THE
REPORT RECEIVED FROM COFFEE BOARD IN R/O THE QUALITY OF THE COFFEE DESPATCHED BY YOU TO 'COFFEE AMERICA" AGAINST THE ABV MENTIONED CONTRACT.
IN ALL RESPECTS, THE COFFEE IS FAR BELOW THE AVERAGE. PL NOTE THAT WE HOLD YOU TOTALLY RESPONSIBLE FOR ANY CLAIM ARISING OUT OF THE ABV MENTIONED CONTRACT DUE TO THIS POOR QUALITY OF COFFEE DESPTACHED BY YOU.
WE SUGGEST YOU TO KINDLY ENSURE THE PROPER QUALITY OF COFFEE BEFORE DESPATCHING THE BALANCE 10 FCLS. PL LET US 54 Spl.C.C.29/05 J KNOW THE READINESS OF THE COFFEE ENABLE US TO DRAW THE SAMPLE FOR LAB TESTING BY COFFEE BOARD.
WE FEEL THIS IS A VERY UNETHICAL /UNPROFESSIONAL WAY OF HANDLING COFFEE FOR EXPORT. KINDLY TAKE APPROPRIATE ACTION TO CORRECT THE DEFECTS SINCE YOU ARE TOTALLY LIABLE FOR MAINTAINING THE QUALITY OF THE COFFEE".
57. Ex.P17 is the Quality Evaluation Report dated 20.4.2000 issued by Deputy Director, Quality Control, Coffee Board, Bengaluru. It is pertinent to note the observations of Quality Analyser. He has reported as follows: -
"Physical Quality Rating: Below average FEED BACK REPORT:
1. The sample contains 10.9% of moisture as against the prescribed limit of 10.5% for Arabica Cherry Coffee.
2. The sample is ungraded and ungarbled.
3. The sample does not conforms to Arabica Cherry bulk and garbling standards prescribed by the board as it contains 25.9% triage as against the tolerance of 18%.
4. The sample contains 0.1% of cherry husk.
5. The physical quality rating of the sample is below average.
58. Ex. P18 is the letter of Deputy Director, Quality Control, Coffee Board, Bengaluru dated 21.9.2000 to STC, Bengaluru. The contents of the letter reads as follows: -
55 Spl.C.C.29/05 J " The 3 (three) sealed coffee samples weighing 1 (one) Kg. each received from M/s.
H&M Warehousing of Jacksonville, INC, 2101 West 33rd Street, Jacksonville, Florida - 32209- 0028 and 1(one) Control Sample of Arabica Cherry Bulk which was sent to buyer for approval were handed over to the Quality Control Division, Coffee Board, Bengaluru by Mrs. Shyamala Sharma, Asst. Manager (Mktg) and Shri P.B. Malde, Asst. Manager (Marketing) of State Trading Corporation of India, Bengaluru.
The sealed samples are opened before the above representatives of STC and also in presence of the Deputy Director (QC) and the Asst. Coffee Marketing Officer (QC) besides the other scientific staff of this Division. The samples were analyzed and the evaluation reports are enclosed herewith.
The samples were analyzed against the Control Sample of Arabica Cherry Bulk. The 3(three) samples received were not identified to the Control Sample and are identified as Robusta Cherry Bulk (B/L No.1341), Robusta Cherry Bulk (B/L No.1344) and mix of Arabica and Robusta Cherry Bulk (B/L No.1325).
The detailed 4(four) evaluation reports are enclosed herewith."
59. Ex. P19 to 21 are the Quality Evaluation Reports. It is pertinent to note the contents of Ex.P19 which reads as follows: -
"Physical Quality Rating: Very Poor Quality Found to contain Robusta Cherry Bulk coffees FEED BACK REPORT:
56 Spl.C.C.29/05 J
6. The sample contains 11.8% of moisture.
7. The sample contains 6.6% of Robusta Cherry PB by weight.
8. The sample contains 8.0% of brokens/triage by weight.
9. The sample contains 12.9% of Robusta Cherry 'Blacks' and 4.7% of Robusta Cherry 'Bits' by weight.
10. The sample contains 1.3% of Robusta cherry Insect Damages Beans by weight.
11. The sample contains 22.7% of husk and extraneous matter.
REMARKS:
1. Mixing of Arabica and Robusta coffees and mixing of extraneous matter as against clean garbled coffee and trading Robusta as Arabica coffee is a serious quality deviation.
2. Certified that the sample given by the State Trading Corporation has been evaluated for quality analysis. The Coffee Board, Bengaluru cannot be held responsible for any quality claims, as the analysis is specific to the sample provided to this Division."
60. It is pertinent to note the contents of Ex.P20 which reads as follows: -
"Physical Quality Rating: Very Poor Quality Admixture of Arabica Cherry and Robusta Cherry coffees.
FEED BACK REPORT:
1. The sample contains 12.2% of moisture.
2. The sample contains 7.4% of Robusta Cherry PB coffee by weight.
57 Spl.C.C.29/05 J
3. The sample contains 13.1% of Triage by weight which is mainly brokens and fragments.
4. The sample contains 29.5% of Blacks by weight and 10.9% of Bits by weight.
5. The sample contains 13.3% of husk and extraneous matter.
REMARKS:
1. Mixing of Arabica and Robusta coffees and mixing of extraneous matter as against clean garbled coffee and trading Robusta as Arabica coffee is a serious quality deviation.
2. Certified that the sample given by the State Trading Corporation has been evaluated for quality analysis. The Coffee Board, Bengaluru cannot be held responsible for any quality claims, as the analysis is specific to the sample provided to this Division.
61. It is pertinent to note the contents of Ex.P21 which reads as follows: -
"Physical Quality Rating: Fair Average Plus FEED BACK REPORT:
1. The sample contains 11.8% of moisture as against the prescribed limit of 10.5% for Arabica Cherry Bulk coffees.
2. The sample contains 19.9% of PB by weight as against the minimum requirement of 8% by weight for Arabica Cherry Bulk coffees.
3. The sample contains 2.3% of Triage by weight as against the tolerance of 18% by weight for Arabica Cherry Bulk coffees.
4. The sample does not contain any B/B/B as against the tolerance of 16% by weight for Arabica Cherry Bulk coffees.
5. The coffee is clean garbled without any extraneous matter.
58 Spl.C.C.29/05 J
62. Ex.P22 is the fax message dated 24.3.2000 from B.M. STC., New York to the Director, STC, New Delhi. It is pertinent to note the contents of Ex.P22 at para No.1 which reads as follows: -
"It is imperative to activate a team consisting good suppliers/consultants after having discussions with them to eversince the past/existing minor problems and issues for mutual benefit since current set up / concept is not going to be successful. If we look back, we can make out that mistake is partly on our part also E.g.: not collecting Service Charges as and when buyer releases the payment, organising samples very late in turn conveying approval of pre shipment sample to shippers at the eleventh hour, (though contracts are booked as per shippers' choice that too with reasonable lead time) as a result of which last minute packing, more moisture content ultimately quality problem, absence of visit to check quality of coffee before shipment at least to create an impression that STC is monitoring the shipment, our diff. branches contacting same shippers, placing repeat orders on the shippers who put STC in trouble, sometimes on same defaulted shipper operating in different name etc., M/s.
Alpha plantations (many poor quality shipments, weight shortage claim), M/s. Kaycee Coffee (problem with STC, Chennai, switching over to another STC's branch), M/s. Chola (earlier known as Kuriakose whose cargo-5 FCLs got rejected by FDA) are among such shippers. Have already sounded Dr. Saha, BM, Bengaluru about their poor performances and hope he would be extra careful for timely / quality shipments. Further, needless to mention, above shows we are not serious in increasing our supply base and yet to come out of the limited suppliers/small circle that was formed long time back.
59 Spl.C.C.29/05 J
63. Ex.P23 is the fax message dated 30.9.2000 from STC, Bengaluru to STC, New Delhi, wherein it is mentioned about the action taken against M/s. Kay Cee Coffee & Spices Exports Pvt. Ltd.
64. Ex.P24 is the letter of Arbitration, Administrator to STC, New York dated 28.8.2000 which reads as follows: -
"We enclose a Statement for Arbitration (Form A-1) filed with this Association by Coffee America (USA) Corporation against you. Under the rules of this Association you must return the reply to the Statement for Arbitration in triplicate to our office not more than five business days after receipt. To that end, we enclose several copies of our Answer (Form B-1) and ask that you complete three copies have them notarised and returned to us as quickly as possible."
65. Ex.P25 is the fax message dated 14.8.2000 from the buyer to STC, New York in respect of Contract No.6651 which reads as follows: -
"As I already mentioned, we have filed arbitration papers against STCI on Friday August 11, 2000. We are however, amenable to try and find an amicable solution to this problem. The following offer being submitted to STCI is for settlement negotiation only and shall not be permitted to be used or otherwise disclosed in any legal) proceeding.
We would offer this coffee back to you in store Jacksonville at USD. 50/lb. This would work out 60 Spl.C.C.29/05 J to USD. 99,210.00. Payment to be made by TT by Friday August 18, 2000. Obviously, the payment would be net after working out a final statement of account on pending matters. We will not withdraw arbitration papers until final payment is affected.
66. Ex.P26 is the statement of claim and demand for technical arbitration in respect of Contract P-06651 wherein, Para- 17 to 20 of the claim statement reads as follows: -
17. On or about August 6, 2000, Claimant received a shipment of fifteen hundred (1,500) bags of coffee from the Respondents pursuant to the contract and as evidenced in the Statement of Account. (Exhibit 5).
18. The terms of the contract required the quality of the coffee to be "Indian Arabica Cherry clean bulk." The word clean in the description of the coffee contained in the contract refers to Indian Coffee which includes "no black, bits of brokens". The coffee received is grossly deficient in quality and bears no resemblance to either the quality described in the contract or the pre-shipment sample approved. The majority of the product received consists of dried parchment, pod husks, black beans, broken beans, tiny fragment of beans (bits), coffee dust and robusta beans.
19. It is obvious that the product received is easily associated with sweepings and debris from the cleaning process.
20. The coffee is unusable in its current state and has little or no value. In addition, the coffee presents a fire hazard due to the nature of the defects."
61 Spl.C.C.29/05 J
67. Ex.P27 to P51 are the container stuffing survey reports from 22.4.2000 to 10.6.2000 issued by J.B. Boda Surveyors Pvt. Ltd., Bengaluru.
68. Ex.P52 is the shipping bill GR Form dated 1.6.2000. Ex.P53 is the commercial invoice dated 2.6.2000 in respect of Contract P6652. Ex.P54 is the fax message dated 21.3.2000 from STC, New Delhi to STC, Bengaluru in respect of direct coffee exports. Ex.P55 is the fax message dated 29.3.2000 from STC., Corporate Office, New Delhi to STC., Bengaluru.
69. Ex.P56 is the Circular No.173 dated 27.7.2000 issued by STC, New Delhi. This circular was subsequent to the finalisation of Contract No.6651 and 6652. Ex.P57 is the Circular dated 19.8.1999 issued by the STC., New Delhi to follow the norms for non-canalised trade.
70. Ex.P58 is the extract of STC Trading Manual. Ex.P59 to 62 are the Shipping Bills for Export of coffee issued by Rosemount Shipping India Pvt. Ltd. Ex.P63 to 67 are the Bill of Lading issued by Maersk Sealand to M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Ex.P68 is the norms for non-canalysed Trade dated 19.7.2000 issued by STC., New Delhi.
62 Spl.C.C.29/05 J
71. Ex.P69 is the Settlement Agreement between Coffee America (USA) Corporation, STC, New York and STC, Bengaluru. This Settlement Agreement has been signed by accused No.1 as a Branch Manager on behalf of STC, Bengaluru. In the Settlement Agreement, it is mentioned as follows: -
"WHEREAS, with respect to contract P-06651, Coffee America received a shipment of 1500 bags of coffee on or about August 6, 2000; and with respect to contract P-06652, Coffee America received a shipment of 3000 bags of coffee on or about August 18,2000; and WHEREAS, the coffee delivered was non- conforming and wholly inconsistent with the terms of the Contracts; and"
In para-4 of the Settlement Agreement, it is mentioned about payment of the settled amount which reads as follows: -
"4. Payment. STC Bengaluru agrees to remit the sum of two hundred sixty five thousand United States dollars (U.S. $265,000.00) to the order of Coffee America on or before November 30, 2000. Coffee America and STC Bengaluru acknowledge and understand that said payment must be cleared by the Reserve Bank of India. STC Bengaluru agrees to use every effort to expedite said clearance prior to November 30, 2000. In the event STC Bengaluru cannot contain said clearance by November 30, 2000, then the time period to obtain clearance from the Reserve Bank of India shall be extended to December 15, 2000. Said amount shall be paid by certified check or bank check drawn on a United States of Banking institution or may be 63 Spl.C.C.29/05 J made by a wire transfer to an account designated by Coffee America."
72. Ex.P70 is the fax message dated 3.4.2000 send from Coffee America to STC, New York. Ex.P71 is the fax message dated 31.3.2000 of Coffee America to STC, New York in respect of Contract No.6651. Ex.P72 is the fax message dated 17.4.2000 from Coffee America to STC, New York in respect of contract No.6652. Ex.P73 and 74 are the two EOE contract between the STC, Bengaluru and M/s. Coffee America in respect of contract No.6651 and 6652.
73. Ex.P75 is Quality Evaluation Report dated 21.9.2000 issued by the Deputy Director (Quality Control), Coffee Board, Bengaluru. In Ex.P75, the opinion, feedback report and remarks are mentioned as follows: -
"Physical Quality Rating: Very Poor Quality FEED BACK REPORT:
1. The sample contains 12.0% of moisture.
2. The sample contains 9.5% of Robusta Cherry PB by weight.
3. The sample contains 12.0% of Triage by weight.
4. The sample contains 5.5% of Blacks/Browns by weight and 1.5% of Bits by weight.
5. The sample contains 12.2% of faded/discoloured bleached/balded beans.
6. The sample contains 0.3% of Insect Damaged Beans.
64 Spl.C.C.29/05 J
7. The sample contains 27.5% of husk and extraneous matter.
REMARKS:
1. The sample contains only Robusta and extraneous matter. Admixturing of Arabica and Robusta or trading Arabica as Robusta is a serious quality deviation.
74. Ex. P76 is the FIR submitted by the CBI by registering a criminal case against accused No.1 to 3 and others in RC No.22(A)/2003 for the offences punishable u/s 120B r/w Sec. 420 IPC and Sec. 13(2) r/w 13(1)(d) of PC Act, 1988.
75. Ex.P77 is the sanction order dated 14.2.2005 to prosecute accused No.1. Ex.P78 is the letter dated 24.2.2005 of Chief Vigilance Officer to the CBI. Ex.P79 is the Notification issued by the Govt. of Karnataka dated 2.9.2003 according consent for investigation of this case by the CBI. Ex.P80 is the Notification issued by the Govt. of India dated 26.9.2003 extending the powers and jurisdiction of the members of the Delhi Special Police Establishment to the whole of State of Karnataka for investigation of offences against accused No.1 to 3 by the CBI. Ex.P81 is the statement showing the contracts entered by STC, Bengaluru with M/s. KayCee Coffee for European Buyers for the year 1999-2000. Ex.P82 is the Certificate of Incorporation pertaining to M/s. KayCee 65 Spl.C.C.29/05 J Coffee & Spices Exports Pvt. Ltd., issued by the Registrar of Companies dated 11.11.1997. Ex.P83 is the statement of account in respect of current account No.1865, pertaining to M/s. Kaycee Coffee & Spices Pvt. Ltd., in Syndicate Bank, Basaveshwara Road, Bengaluru. Ex.P84 to 87 are the commercial invoices dated 2.5.2000, 2.6.2000 and 12.6.2000 in respect of Contract No.6651 and 6652. Ex.P87 to 89 are the copies of bills purchased by Syndicate Bank in respect coffee exported by M/s. Kaycee Coffee. Ex.P90 is the letter dated 1.10.2004 of Chief Manager, Syndicate Bank, Millers Road Branch, Bengaluru to CBI. Ex.91 is the Fax Message dated 15.12.2000 regarding approval from Head Office for making payment to the buyer. Ex.P92 is the true copy of the permission accorded by the RBI to make payment. Ex.P93 is the true copy of the letter to SBI, Overseas Branch, Bengaluru for issue of DD. Ex.P94 is the true copy of Demand Draft for US$ 2,65,000 dated 15.12.2000. Ex.P95 is the true copy of bank advice dated 15.12.2000. Ex.P96 is the true copy of fax message regarding the confirmation of receipt of amount for US$ 2,65,000 from M/s. Coffee America dated 21.12.2000. Ex.P97 is the true 66 Spl.C.C.29/05 J copy of fax letter dated 20.12.2000 from M/s. Coffee America to STC., New York admitting the settlement and withdrawal of arbitration case.
76. Looking to the documentary evidence relied upon by the accused No.1, Ex.D1 is the attested copy of the Fax Message dated 12.12.2000 from STC, New Delhi to STC., Bengaluru and other branches communicating the guidelines in respect of export of coffee as per the minutes of Board meeting held on 7.12.2000 which reads as follows: -
"Board advised that in order to avoid such losses in future, he Corporation should consider acting only as intermediary/facilitator. CMD informed Board that necessary guidelines for safeguarding the interest of the Corporation have already been issued by him vide Circular dated 19th August, 1999."
77. Ex. D2 is the attested copy of letter dated 2.3.2000 issued by the Syndicate Bank, Miller Road Branch, Bengaluru to STC., Bengaluru about the credit worthiness of M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru. Ex.D3 is the attested copy of Circular No.173 dated 27.7.2000. Ex.D4 is the copy of the FIR in Crime No.343/2000 of Cubbon Park Police Station, Bengaluru. Ex.D5 is the copy of the complaint lodged by accused No.1 67 Spl.C.C.29/05 J and his Finance Manager on 26.8.2000. Ex.D6 is the attested copy of verification of assets of M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru by Private Eye (P) Ltd., dated 14.7.2001. Ex.D7 is the certified copy of the order on I.A.No.1 and 2 passed in O.S.No.15412/01 dated 1.8.2003. Ex.D8 is the attested copy of Appraisal Report. Ex.D9 is the attested copy of self-appraisal report of PW.5 Sri. M. Sudarshan. Ex.D10 is the attested copy of office order No. 46/98-99 dated 11.1.1999. Ex.D11 is the attested copy of office order No.58/98-99 dated 4.3.1999. Ex.D12 is the office order No.30/2000-01 dated 21.7.2000.
78. Ex.D13 is the attested copy of final notice dated 9.8.2000. Ex.D14 is the attested copy of note for consideration of the board put up by Ms. Rita Kunur, Director, STC., New Delhi dated 30.9.2000 regarding settlement of quality claims arising out of supply of coffee by export by M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru. Ex.D15 is the contracts concluded by M/s. Kaycee & Group of Companies during 1999-2000 and 2000-2001 with STC., Bengaluru. Ex.D16 is the copy of the office note. Ex.D17 is the attested copy of fax message dated 14.7.2000 from STC., Bengaluru to STC., New York. Ex.D18 is the 68 Spl.C.C.29/05 J attested copy of letter dated 11.7.2000 from M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru to STC., Bengaluru. Ex.D19 is the copy of the letter dated 22.8.2000 written by accused No.1 to the General Manager, Zonal Office, Syndicate Bank. Ex.D20 is the letter written by accused No.1 on 24.8.2000 to the Chief Commissioner of Customs. Ex.D21 is the attested copy of Status Report dated 11.9.2000. Ex.D22 is the attested copy of covering letter dated 11.9.2000 from STC., Bengaluru to STC., New Delhi. Ex.D23 is the Branch Opinion on entire issue. Ex.D24 is the Circular No.105 dated 28.1.1994 wherein it is mentioned with regard to selection of supplier/ associates which reads as follows:
"While making such selection of associates suppliers, it shall not be necessary to invite any tenders of competitive offers, etc., and the selection will be solely based on Commercial judgement of the operating division. However, the Division will take the following factors as applicable to the supplier, into account while making such selection.
Financial soundness/Credit worthiness Capabilities (Past/Present) Reputation in the market including past dealings, if any, with the Corporation Quality."
79. Ex.D25 is the statement showing shipper-wise contracts during 1999-2000. Ex.D26 is the original complaint lodged 69 Spl.C.C.29/05 J by accused No.1 and his Finance Manager to the Inspector of Police, Cubbon Park Police Station on 26.8.2000. Ex.D27 is the FIR submitted by Cubbon Park Police Station to the court after registering a criminal case against M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru, accused No.2 and 3 and others.
80. Ex.D28 is the certified copy of the plaint in O.S.No. 15412/2001 on the file of City Civil Court, Bengaluru. Ex.D29 is the certified copy of the judgment and decree passed by the IV Addl. City Civil & Sessions Judge, Mayo Hall Unit, Bengaluru (CCH-21) on 4.1.2010. Ex.D30 is the shipping bill dated 8.4.2000. Ex.D31 is the Copy of GR Form. Ex.D32 is the Circular No.105. Ex.D33 is the fax message dated 28.3.2000 from STC, Bengaluru to STC, New York. Ex.D34 is the fax message dated 20.4.2000 from STC, Bengaluru to M/s. Kaycee Coffee. Ex.D35 is the fax message from STC, Bengaluru to M/s. Kaycee Coffee on 25.4.2000. Ex.D36 is the fax message from STC, Bengaluru to STC, New York dated 1.1.2000. Ex.D37 is the copy of standard quotation proposal. Ex.D38 is the fax message dated 22.3.2000 from STC, Bengaluru to STC, New York. Ex.D39 is the fax dated 19.5.2000 from STC, 70 Spl.C.C.29/05 J Bengaluru to M/s. Kaycee Coffee & Spice Exports Pvt. Ltd. Ex.D40 is the fax message dated 24.5.2000 from STC, Bengaluru to STC, New York. Ex.D41 is the letter of accused No.1 to STC, New York dated 4.7.2000. Ex.D42 is the fax message dated 23.5.2000 from STC, Bengaluru to STC, New York. Ex.D43 is the letter dated 15.4.2000 from accused No.1 to M/s. Kaycee Coffee. Ex.D44 is the copy of the Arbitration Proceedings. Ex.D45 is the fax message dated 14.7.2000 from accused No.1 to STC, New York. Ex.D46 is the fax message dated 23.10.2000 from STCL, Bengaluru to STC., New York for disposal of stock in New York. Ex.D47 is the letter dated 19.1.2001 from accused No.1 to STC., New Delhi seeking permission to file a civil suit against M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Ex.D48 is the copy of the Airway bill dated 28.3.2000 for sending the coffee sample.
81. Bearing in mind, the above admitted facts, now I will proceed to consider the allegations of the prosecution against accused No.1 to 3.
82. A) AWARDING OF CONTRACT WITHOUT INVITING TENDER AND WITHOUT LOOKING FOR ANY OTHER 71 Spl.C.C.29/05 J WELL ESTABLISHED EXPORTERS IN THE COFFEE FIELD:
83. It is alleged that accused No.1 awarded the export contract to M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru represented by accused No.2 and 3 directly without calling for any tenders and without looking for any other well established exporters having market credibility and helped M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru in not suffering any loss of face in the market in case any claims were prepared by the buyers on account of quality deviations.
84. It is admitted that the contract for export of 25 FCLs Indian Arabica Cherry clean bulk coffee beans bearing Contract No. 6651 and 6652 were awarded to M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru from STC., Bengaluru. It is further admitted that PW.16 N. Jeya Kumar, Branch Manager, STC, New York sent a proposal of Coffee America for supply of coffee on 23.3.2000 as per Ex.P4.
85. As per the evidence, contract was concluded on 24.3.2000 between STC., Bengaluru and M/s. Coffee America through STC, New York and contract between STC, Bengaluru and
72 Spl.C.C.29/05 J M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., termed as back to back contract. Accordingly, the contracts have been executed for due performance in between the respective parties.
86. It is further admitted that M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., was in the export field since 1997. PW.1 N.K. Subramanya has deposed about the registration of M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., and permission to export of coffee and allotment of registration number and Export Code as per Ex.P1 and P2. It is also admitted about the export of Coffee during 1.4.1999 to 31.3.2000 by the various exporters as per Ex.P3 maintained in the Coffee Board, Bengaluru. As per Ex.P3, M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., was 30th in the rank of exporter of coffee to overseas buyers. It is forthcoming from Ex.P3 that the said company exported 1494.6 metric tons coffee having the value of 832.8 lakhs.
87. It is pertinent to note the evidence of PW.5 M. Sudarshan who was working as Asst. Manager in STC., Bengaluru. He has deposed that during the year 2000 March, he was looking after the coffee export in addition to his regular duties. Then he has deposed that prior to that the coffee 73 Spl.C.C.29/05 J export division was handled by three other Managers. Then he has deposed that on 23.3.2000 there was an enquiry from their branch at New York regarding export of 25 FCLS of Arabica Cherry coffee and accused No.1 was the Branch Manager at Bengaluru and he asked him to contact three parties out of which one was M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., and accused No.1 spoke to them over phone in his presence and instructed him to get the offer from M/s. Kaycee Coffee and forward the same to New York. Then he has deposed that accordingly he has sent the fax message to STC, New York and contract was concluded. Then he has deposed that Ex.P9 and P10 are the contracts entered into between accused No.1 and M/s. Kaycee Coffee.
88. As per the evidence of PW.5, accused No.1 was a Branch Manager and head of STC, Bengaluru. PW.5 was working in STC., Bengaluru and looking after coffee division during March 2000 and he attended the proposal which was received from PW.16 from STC., New York.
89. It is deposed by PW.1 that the Coffee Board maintained data regarding the significant exporters in terms of exports and track record of exporters. The data contains the 74 Spl.C.C.29/05 J quantity of coffee exported by M/s. Kaycee Coffee & Spices Exports Pvt. Ltd. Export Summary extract of Coffee Board as per Ex.P3 confirmed that M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., made export of quantity of 1494.6 metric tons valued at Rs.832.8 lakhs. M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., ranked 30th among 169 registered exporters and doing fairly good business.
90. Further, he has deposed that STC., Bengaluru used to get list of exporters from Market Solutions Coffee Board, Bengaluru. List was updated every year. The selection of exporters was being made by assessing their performance. STC would use to kept their performance appraisal either from market or Coffee Board being regulatory body.
91. PW.2 Vijaya Kuradagi has deposed about the establishment of STC and Branch at Bengaluru. Then he has deposed that STC., had branches in USA, Germany, Australia, Singapore etc., and those foreign branches have been closed. The role of foreign branches was to identify the business potential in respective countries and sent those respective potential to branches in India. The branches in India in turn used to contact associates of STC, who could supply the offer of purchase. Once the 75 Spl.C.C.29/05 J deal was finalised, the corporation entered into agreement with the supplier in India in the standard format which is normally called as back to back contract. Back to back contract would indicate incorporation of terms and conditions stipulated by foreign buyer in the contract entered by corporation with the supplier of India and for the service rendered by the corporation, charges are collected in the form of trade margin or service charges from the supplier in India.
92. Then he has deposed that the corporation was having two types of contracts. They are (i) back to back contracts (ii) direct contract. In back to back contract, the responsibility of supply of goods to be exported is on the part of the supplier in India. In this contract the role of the corporation is to act like a commission agent. In direct contract, corporation will be directly dealing with the foreign buyer and procure the materials and take the responsibility of exporting the goods to the foreign buyer. The corporation would generally delegate its powers in respect of the duties.
93. In his cross-examination, he has admitted the registration and export business of M/s. Kaycee Coffee & Spices 76 Spl.C.C.29/05 J Exports Pvt. Ltd. Then he has admitted the note put up for consideration of the board at STC, New Delhi by PW.15 as per Ex.D14.
94. It is pertinent to note the evidence of PW.2 and the contents of Ex.D14 wherein the track record of suppliers is mentioned at Para No.3 which reads as follows: -
"3. Track record of suppliers: STC Bengaluru concluded 36 contracts with M/s. Kaycee for 1912 MT (106 FCLs), valued at Rs.12 crore during 25.6.99 to 24.3.00. STC was intermediary in 26 contracts and seller in 10 contracts (Annexure-II). Except the last 2 contracts 6651 and 6652, no major quality problems were observed. However, in 2 contracts namely with M/s. Containaf B.V. and M/s. Socadec S.A., where STC was intermediary, some quality claims were raised by the buyers. M/s. Socadec S.A., has raised a claim against Kaycee in arbitration where STC has no liability. The status in respect of M/s. Containaf B.V. is not known and here also, there is no liability on STC. Even after shipment of 15 FCLs under the contracts in dispute, M/s. Kaycee shipped 1 FCL of Robusta Parchment AB to M/s. Gabesco, Italy and one container to M/s. Tardivet. No claim has been received. The serious problem of quality emerged only in contract 6651 and 6652. STC Chennai had also placed orders for 33 FCLs on Kaycee during 1998-99 and 1999-2000 and with the exception of minor quality/weight/ delayed shipments, no major problems were faced."
95. As per the evidence, STC, Bengaluru verified financial soundness/credit worthiness of M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., from their banker, Syndicate 77 Spl.C.C.29/05 J Bank, Miller Road, Bengaluru and their transaction report and experience as to Kaycee Coffee dealings were found satisfactory in coffee trade. Ex.D2 is the Information Report and PW.2 has admitted the same. The track report of M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., with STC, Bengaluru confirmed that M/s. Kaycee Coffee concluded 36 contracts quantity 1912 metric tons valued at Rs.12 crores during 25.6.1999 to 24.3.2000. Out of those contracts 26 contracts of intermediary and 10 contracts were of seller contract as per Ex.D14 and D15.
96. As per the evidence during 1999-2000 M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., was a major and established exporter of coffee to foreign buyers through STC., Bengaluru and identified Kaycee Coffee as a good associate supplier. PW.2 has admitted this fact in his cross-examination. It is evident from the evidence that M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., was having a curing unit at Hassan. The installed capacity of curing unit of M/s. Kaycee Coffee was 9000 metric ton per annum. PW.2 has admitted it in his cross-examination. As per the evidence, M/s. Kaycee Coffee owned coffee estate 78 Spl.C.C.29/05 J and they were processing raw coffee in their curing unit and they were direct manufacturers.
97. That Circular No.105 dated 28.1.1994 prescribed several norms for non-canalised trade as per Ex.D24. In Ex.D24 norms were prescribed for selection of suppliers/ associates. Looking to the contents of Ex.D24 referred above, it is clear that while making selection of associates/ suppliers, it shall not be necessary to invite any tenders of competitive offers etc., and the selection will be solely based on commercial judgment of the operating division. In respect of contract No.6651 and 6652 all the norms were followed.
98. BAC Note dated 3.3.2000 as per Ex.P11(a) identified M/s. Kaycee Coffee as a good associate based on their performance and a proven record in coffee export through STC, Bengaluru at that time. BAC, consists of Billing Manager PW.2, Finance Manager PW.17 and Branch Manager to do direct export of coffee. This proposal was not accepted by the Corporate Office. This Ex.P11 is nothing to do with Ex.P9 and P10 which are back to back contract. Further, PW.2 Billing Manager confirmed that at the relevant time about 15 to 20 suppliers were working 79 Spl.C.C.29/05 J with STC, Bengaluru during 1999-2000. M/s. Kaycee Coffee were major and established coffee exports to STC, Bengaluru. PW.2 dealt with M/s. Kaycee Coffee in his capacity as a Deputy Manager, STC., Bengaluru. PW.2 has entrusted several contracts to M/s. Kaycee Coffee for European Buyers. It is forthcoming from the evidence of PW.2 that at relevant time as a Billing Manager identified M/s. Kaycee Coffee as a good associate exporter.
99. Further, in his cross-examination PW.2 has admitted that the coffee trade is a gentlemen's trade and contracts are made over phone and subsequently they are formalised by documentation. Further, he has admitted that in case of coffee trade, the goods are valued for very short time and the contract in many cases would be finalised within 10 to 15 minutes and there is no procedure of floating tenders for export of coffee and by and which M/s. Kaycee Coffee executed the contracts to the satisfaction of STC and buyer. Further, he has admitted that to his knowledge, STC, Bengaluru has not taken any hasty decision in awarding contracts bearing No.6651 and 6652 to M/s. Kaycee Coffee & Spices Exports Pvt. Ltd.
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100. Looking to the evidence of PW.17 G.D. Pushparaj who was working as Finance Manager in STC, Bengaluru has deposed about the Contract No.6651 and 6652. Further, he has deposed about the rejection of coffee by the buyer and settlement. In his cross-examination he has admitted that there was no procedure or practice to float tenders in coffee trade during 2000. Further, he has admitted that under accused No.1 four Managers i.e., one Deputy Manager (Marketing) and three Asst. Managers (Marketing) were working in coffee division. He has also admitted the Board Advisory Committee in respect of export of coffee in STC, Bengaluru. Further, he has admitted that while selecting the exporter, they will see their reputation in the market, performance and then select. Then he has admitted that prior to this contract, M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., exported Rs.25 crores of coffee through STC, Bengaluru. Further he has admitted that their Branch Advisory Committee selected the name of accused No.2. Further, he has admitted that based on their selection contract was awarded to accused No.2.
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101. As per the evidence of PW.17, it is proved that accused No.1 was the Branch Manager and head of coffee division during the relevant period, under him one Deputy Manager and three Asst. Managers were working in the coffee division. Further, there was a Branch Advisory Committee to select the exporter. In the present case, the Branch Advisory Committee has selected accused No.2 and on the basis of their selection contract was awarded to M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru represented by accused No.2 and 3.
102. It is urged by accused No.2 that in case of export of coffee seeds, quality of the coffee is directly and proportionately based on (a) quantity of the coffee to be supplied, (b) distance involved and (c) urgency involved. Coffee seeds are not manufactured, whereas it is naturally grown. M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., is not the manufacturer of coffee seeds whereas they are exporters of coffee seeds after curing the same. A successful coffee exporter is one whose performance is assessed not only based on the quantum of coffee supplied over a period of time but also based on the concluded contract. The dispute with regard to the quality is rampant, existing and no 82 Spl.C.C.29/05 J exporter is an exception to the same but the question is how best an Exporter satisfies his buyer either by replacing or by compensating to an extent of disputed quality? Generally, disputed quality would be around 20%. The name of the Kaycee Coffee was in news during the year 1998-2000 because M/s. Kaycee Coffee has exported more than Rs.100 crores Coffee Seeds to various other countries under the Direct Private Contracts and nearly Rs.83 Crores of Coffee Seeds through State Trading Corporation of India. The Contracts done through STC were to the satisfaction of STC and hence, decent number of Contracts were allotted to M/s. Kaycee Coffee by STC Cochin, STC Chennai and STC Bangalore.
103. Considering the above contention of accused No.2 and 3, they have admitted about the dispute of quality of coffee in 20% of cases. Out of those cases, the present case and dispute regarding quality has also covered.
104. In the present case, looking to the urgency of the supplier and the time required for concluding the contract was very minimum. As stated by PW.17 there was a Branch Advisory Committee for the coffee division in STC., Bangalore for selection of supplier/exporter. PW.17 has 83 Spl.C.C.29/05 J clearly admitted that in the present case, in respect of present contracts Branch Advisory Committee selected accused No.2 for supply of coffee to America. As seen from the evidence of PW.2, 5 and 17, it is clear that it is not the individual decision of Branch Manager alone to select the supplier of coffee. PW.2 who was the Asst. Manager was dealing with coffee division along with other officers were responsible. When the Branch Advisory Committee has taken decision to select the accused No.2 for supply of coffee. There is no substance in the allegations that the norms prescribed for selecting the suppliers were not followed by accused No.1.
105. Pursuant to the Branch Advisory Committee Selection, the selection of M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., who was having credibility, capacity to export the quantity of coffee offered was selected by the STC, Bengaluru. No doubt, accused No.1 as a Branch Manager and head of coffee division has signed the contracts on behalf of STC, Bengaluru with Coffee America which cannot be said that he had alone taken decision and responsible for the selection of the supplier.
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106. When the norms says that there was no necessity of inviting the tenders and selection of suppliers should be based on commercial judgment, there is no truth in the allegations of the prosecution regarding this matter. Further, STC, Bengaluru looking to the business of M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., and the export done by them and their financial condition, credibility in the market they were selected in the present contract to supply the coffee to Coffee America as per the sample approved by the buyer.
107. Though the prosecution has examined 5 witnesses from STC, Bengaluru, 4 witnesses from STC., Corporate Office, New Delhi and one witness from STC., New York, none of them have deposed that it was required to call for the tenders in respect of present contracts and to ascertain the credibility of the supplier. Therefore, absolutely no evidence is forthcoming before the court to prove this allegation against the accused No.1.
B) PERFORMANCE BANK GUARANTEE FROM THE ACCUSED NO.2 & 3
108. Secondly, it is alleged by the prosecution that accused No.1 has not taken performance bank guarantee from the 85 Spl.C.C.29/05 J accused No.2 and 3. PWs.2, 3, 5, 14 to 17 and 21 to 23 have nowhere deposed that in the present contracts accused No.1 was required to insist or take bank guarantee from accused No.2 and 3 for due performance of the contract by them. Admittedly, there are no circulars which mandate as on the date of the transactions produced by the prosecution proving that the accused No.1 was required to take performance bank guarantee from accused No.2 and 3. Admittedly there were 169 contracts executed by STC, Bengaluru and in none of those contracts, the said performance bank guarantee has been obtained or insisted.
109. It is relevant to note that PW.2 in his cross-examination has admitted that STC, Bengaluru had done about 26 contracts with European countries and those contracts were handled by him and in those contracts they have not taken performance bank guarantee in coffee trade from exporter. Further, he has admitted that from 12.12.2000 getting of bank guarantee of Rs. 5 lakhs and EMD of Rs. 2 lakhs from new exporters to STC was introduced by the Corporate Office. Further, he has admitted that M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., exported huge 86 Spl.C.C.29/05 J quantity of coffee to foreign buyers earlier in the year 2000. Then he has admitted that STC, Bengaluru has already done a business to the tune of Rs.20 to 25 crores during the year with associate. Therefore, the prosecution has failed to prove that in any of the earlier contracts in which the performance bank guarantee were taken. Therefore, there is no merit in the allegation of the prosecution against accused No.1 that he has failed to obtain performance bank guarantee from accused No.2 and 3 in respect of the present contracts.
C) INCLUSION OF SELLER CLAUSE IN THE
AGREEMENT:
110. Thirdly, it is alleged by the prosecution that accused No.1 in order to help the accused No.2 and 3 included the STC, Bengaluru as seller clause in the agreement. It is evident from the oral and documentary evidence of the prosecution that Coffee America specifically insisted that in the agreement STC, Bengaluru should be the seller. As per the offer and acceptance conditions finalised in between the parties STC, Bengaluru has been named as seller in the contract. None of the witnesses of the STC, Bengaluru, STC Corporate office, New Delhi have deposed 87 Spl.C.C.29/05 J that naming of STC, Bengaluru as a seller in contract was not proper and it was the individual decision of accused No.1, contrary to the norms prescribed under the circulars.
111. The accused No.1 as a Branch Manager acted as per the norms and signed contracts with Coffee America and M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., and termed as back to back contract. As stated earlier, it is not the individual decision of accused No.1, it was the decision of the Branch Advisory Committee. As per Ex.14 out of 36 contracts with M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., 10 are in terms of seller. The incorporation of the word 'seller' in back to back contracts making STC has as seller is not foreign to coffee transaction and such terms have been accepted even earlier, knowing fully well the liability of STC in case of breach.
112. Even PW.16 has admitted that in respect of American buyers through STC they insist STC as the seller for the transaction. Ex. D14 and Ex.D16 support the say of PW.16. Therefore, the said contention of incorporation of STC as seller is not disputed by any of the witnesses. Hence, there is no merit in the contention of the prosecution regarding this allegation.
88 Spl.C.C.29/05 J D) PRIOR APPROVAL OF COMPETENT AUTHORITY:
113. Fourthly, it is alleged by the prosecution that the accused No.1 has not obtained the prior approval of competent authority for entering into these back to back contracts with M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., for extending financial assistance to the exporter. In this regard, the prosecution has relied upon the contents of Ex.P11. On perusal of Ex.P11 it is in respect of direct contract and not in respect of back to back contract. It has nothing to do with back to back contract which was prevailing in the coffee business. None of the witnesses examined by the prosecution have deposed that the accused No.1 as a Branch Manager was required to obtain the approval of Corporate Office before entering into contract with M/s. Kaycee Coffee & Spices Exports Pvt. Ltd.
114. It is also alleged by the prosecution that since the payment to the shipper was cash against document, the permission of the corporate office was necessary. In their evidence, PWs.2, 3, 5, 14 to 17 and 21 to 23 have not deposed that the prior permission of corporate office was required in making payment in these contracts. PW.14 Kumar, Chief General Manager speaks about the delegation of power
89 Spl.C.C.29/05 J wherein the accused No.1 was empowered to enter into contract for export of coffee worth Rs. 3 Crores as a single contract and for more than the said amount, he was required to obtain the approval from the Corporate Office. He also mentions about the bad quality report from the New York buyer and ultimate settlement and payment of amount.
115. PW.15 Ms. Rita Kunur, Former Director, STC, New Delhi speaks about the fax message Ex.P22 from STC, New York, wherein she was requested to communicate to STC, Bengaluru to ensure prompt shipment and proper quality by M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., as such she had marked the same to PW.14 for communication to accused No.1 and accordingly that was so done.
116. As per the delegation of powers with effect from 1.3.1995 issued from the Corporate Office, accused No.1 was having power to enter into contract for coffee export to the extent of Rs. 3 Crores for single contract. Therefore, there is no merit in the allegation that in respect of the present contract accused No.1 was required to obtain prior approval from the Corporate Office for payment of the amount to the shipper.
90 Spl.C.C.29/05 J E) PRE-SHIPMENT INSPECTION OF COFFEE:
117. Fifthly, it is alleged by the prosecution that accused No.1 being a public servant has not conducted pre-shipment inspection of the coffee. None of the prosecution witnesses have deposed that accused No.1 was required to conduct pre-shipment quality inspection. It is mentioned in Ex.D14 that in the coffee trade there is no tracks of pre-
shipment inspection by independent surveyors as most of the trade is conducted on self-certification and on mutual trust and they have between buyer and the seller. The pre-shipment inspection of independent surveyor is undertaken only in case where it is specifically stipulated on the contract and the cost of the same is inbuilt in price. However, in the indemnity clause in back to back contract with shipper STC's interest is protected. Notwithstanding this, STC, Bengaluru regularly notified party for maintaining the quality and shipment schedule. Therefore, this allegation is not substantiated by the prosecution against accused No.1.
F) REJECTION OF COFFEE BY THE BUYER:
118. Sixthly, it is the allegation of the prosecution that due to serious quality deficiencies observed in the third load of 5
91 Spl.C.C.29/05 J FCLs under contract 6651 and of 10 FCLs under contract 6652 buyer rejected those 15 containers vide their messages of 4.8.2000 and 18.8.2000. It is further alleged that buyer informed that the goods shipped were full of dust, husk, blacks and bids and did not at all resemble with the quality contracted and the beans were unusable by them and have no commercial value.
119. The accused No.1 has admitted this allegation and alleged against the accused No.2 and 3 for the quality deficiency in those 15 FCLs. In this regard, it is pertinent to note the evidence of PW.16 N. Jeya Kumar who was Branch Manager, STC, New York. He has deposed that he received the enquiry from the New York buyer in March 2000 and Ex.P5 is the aceptance by STC, Bengaluru to supply 30 containers of coffee and Ex.P6 is the confirmation by the New York buyer and Ex.P7 is the fax message from Bengaluru to New York, on the same day, confirming of 25 containers to the said buyer. Then he has deposed that after receiving the first consignment buyer at New York informed him stating that the quality of the coffee is not of the quality specified by him. Then he has conveyed the same to STC, Bengaluru and in turn STC, 92 Spl.C.C.29/05 J Bengaluru conveyed the same to M/s. Kaycee Coffee & Spices Exports Pvt. Ltd. Then he has deposed about the rejection of shipment by the Coffee America intimation to him and claim for damages through arbitration. In the cross-examination of learned counsel for accused No.2 he has admitted that accused No.2 in all sent 5 consignment each 5 containers relating to contract No. 6651 and 6652 to the buyer. Further, he has admitted that there was initial dispute between the buyer and the shipper in respect of consignment of contract No.6652. Further, he has admitted that against the contract No.6652, the buyer had agreed to retain 22% of the value and release remaining 78% of the value because it was letter of credit payment terms. He has further deposed that initially there was dispute in respect of contract No.6651 and the same was resolved. Further, he has admitted that when the dispute arose between the shipper and the buyer about the quality of the coffee supplied, he acted on the instructions of his superiors, STS, USA to value the quality but because of poor quality they did not agree to evaluate.
120. Secondly, looking to the evidence of PW.3 P.B. Malde has deposed that as per the instructions of accused No.1 on 93 Spl.C.C.29/05 J 19.4.2000 himself and Jayaramulu went to White Field around 2 PM and draw the sample from the first consignment and returned to the office. Further, he has deposed on 20.4.2000 as per the instructions of accused No.1 himself and Smt. Shyamala Sharma took the sample drawn by them to Coffee Board for analysis.
121. The learned counsel for accused No.2 seriously doubted the evidence of PW.3. Considering the entire evidence of PW.3 he was working as Asst. Manager in STC, Bengaluru. He has acted as per the instructions of accused No.1 who was a Branch Manager. Looking to his consistent evidence deposed before the court, there are no reasons to doubt about his evidence or to discard his evidence. Whatever he has done on 19.4.2000 and 20.4.2000 has been deposed by him. Therefore, his evidence is supporting the case of the prosecution that on 19.4.2000 he went to ICD, White Field, draw the sample from the first consignment and on 20.4.2000 he went to Coffee Board and gave the sample for analysis. His evidence is supported from the evidence of the other witnesses.
122. PW.4 has deposed about the survey work done by him as an Asst. Surveyor of M/s. J.B. Boda & Company.
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123. PW.5 M. Sudarshan has deposed about the offer and acceptance for the contract and how the contract was concluded. PW.6 N.V. Badarinath has deposed about the survey conducted by him at ICD, White Field. P.W.7 Aruna K.G. has also deposed about the survey work for consignment. PW.8 Saju V.J. has deposed about the survey work of consignment done by M/s. Metcalf & Hudkinsons Pvt. Ltd., Bengaluru. PW.9 Ashok has deposed about the survey work of consignment done by him on behalf of M/s. Metcalf & Hudkinsons Pvt. Ltd. PW.10 Sri. M.B. Somanna who was Superintendent of Custom has deposed about the checking of consignment for the purpose of export. PW.11 Ravi Shankar has deposed about the preparation of bill of lading and GR Form. PW.12 N. Surendra has deposed that they have provided the service of transporting the containers from ICD, White Field for exporting purpose at Chennai, Mumbai and Cochin. PW.13 has deposed about the preparation of bill of lading and GR form.
124. PW.14 has deposed that after receiving the goods at New York, the buyer raised objections for the quality and Branch Manager, STC, New York visited the warehouse as 95 Spl.C.C.29/05 J the buyer had personally informed them about the bad quality of the exported coffee. Then he has deposed that the foreign buyer did not accept the goods supplied and demanded for return of full funds already paid by him and for the damages. He has further deposed that he also issued notice and informed to go to arbitration proceedings. Then he has deposed that their Corporate Office realised that there is no merit in their favour to fight against the buyer before arbitrator and accordingly they entered into settlement with the buyer and agreed to repay the entire amount paid by him.
125. PW.16 has deposed about the receipt of Ex.P22 and communication and the same to STC, Bengaluru. PW.17 has deposed about the rejection of coffee by the Coffee America and Settlement and payment of amount. PW.20 has deposed about the production of Ex.P63 to 67 before the CBI. Then he has deposed about the procedure for loading the container, lock and checking at the destination point. PW.21 has deposed about the action taken against accused No.2 and 3. PW.22 has deposed about the settlement and payment of the amount to the buyer.
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126. It is pertinent to note the contents of Ex.P24 letter dated 28.8.2000 by Arbitration Administrator to STC, New York along with the statement of claim and payment for technical arbitration. In the said record, Ex.D44 has been got marked by the accused No.1.
127. Para No.17 to 20 of the said claim statement reads as follows: -
17. On or about August 6, 2000, Claimant received a shipment of fifteen hundred (1,500) bags of coffee from the Respondents pursuant to the contract and as evidenced in the Statement of Account. (Exhibit 5).
18. The terms of the contract required the quality of the coffee to be "Indian Arabica Cherry clean bulk." The word clean in the description of the coffee contained in the contract refers to Indian Coffee which includes "no black, bits of brokens". The coffee received is grossly deficient in quality and bears no resemblance to either the quality described in the contract or the pre-shipment sample approved. The majority of the product received consists of dried parchment, pod husks, black beans, broken beans, tiny fragment of beans (bits), coffee dust and robusta beans.
19. It is obvious that the product received is easily associated with sweepings and debris from the cleaning process.
20. The coffee is unusable in its current state and has little or no value. In addition, the coffee presents a fire hazard due to the nature of the defects."
This claim statement is pertaining to contract 6652.
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128. Ex.P26 is the statement of claim and payment for Technical Arbitration in respect of Contract No.6651. Para No.17 to 20 of the said document reads as follows: -
17. On or about August 6, 2000, Claimant received a shipment of fifteen hundred (1,500) bags of coffee from the Respondents pursuant to the contract and as evidenced in the Statement of Account. (Exhibit 5).
18. The terms of the contract required the quality of the coffee to be "Indian Arabica Cherry clean bulk." The word clean in the description of the coffee contained in the contract refers to Indian Coffee which includes "no black, bits of brokens". The coffee received is grossly deficient in quality and bears no resemblance to either the quality described in the contract or the pre-shipment sample approved. The majority of the product received consists of dried parchment, pod husks, black beans, broken beans, tiny fragment of beans (bits), coffee dust and robusta beans.
19. It is obvious that the product received is easily associated with sweepings and debris from the cleaning process.
20. The coffee is unusable in its current state and has little or no value. In addition, the coffee presents a fire hazard due to the nature of the defects."
129. Ex.P69 is the Settlement Agreement between Coffee America and STC, Bengaluru on 31.10.2000. In Ex.P69, it is mentioned as follows: -
"WHEREAS, with respect to contract P-06651, Coffee America received a shipment of 1500 98 Spl.C.C.29/05 J bags of coffee on or about August 6, 2000; and with respect to contract P-06652, Coffee America received a shipment of 3000 bags of coffee on or about August 18,2000; and WHEREAS, the coffee delivered was non- conforming and wholly inconsistent with the terms of the Contracts; and"
It is also mentioned about the payment in para-4 as follows: -
"4. Payment. STC Bengaluru agrees to remit the sum of two hundred sixty five thousand United States dollars (U.S. $265,000.00) to the order of Coffee America on or before November 30, 2000. Coffee America and STC Bengaluru acknowledge and understand that said payment must be cleared by the Reserve Bank of India. STC Bengaluru agrees to use every effort to expedite said clearance prior to November 30, 2000. In the event STC Bengaluru cannot contain said clearance by November 30, 2000, then the time period to obtain clearance from the Reserve Bank of India shall be extended to December 15, 2000. Said amount shall be paid by certified check or bank check drawn on a United States of Banking institution or may be made by a wire transfer to an account designated by Coffee America."
This agreement has been signed by accused No.1 on behalf of STC, Bengaluru and President of Coffee America.
130. As per Ex.D13, accused No.1 wrote a letter to M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., on 9.8.2000 intimating the low quality of coffee and to show positive response for settlement.
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131. Ex.D14 is the note for consideration of the board put up by pw.15 Ms. Rita Kunur, the Director, STC, New Delhi.
In para No.5 it is mentioned as follows: -
"5. Rejection of cargo by M/s. Coffee America: Due to serious quality deficiencies observed in the third lot of 5 FCLs under contract 6651 and all 10 FCLs under contract 6652, buyer rejected these 15 containers vide their messages of 4.8.00 and 18.8.00. Buyer informed that the goods shipped were full of dust, husk, blacks and bits and did not at all resemble with the quality contracted and the beans were unusable by them and have no commercial value. It may be mentioned here that the suppliers committed a fraud in connivance with various agencies. The eagle eyes of Customs, Port authorities, C & F agents, Shipping line etc. also could not detect this fraud."
132. Ex. D23 is the Branch opinion of entire issue wherein at para No.1, it is mentioned as follows: -
"The Branch is strongly of the opinion that it is a total and massive fraud committed by the shipper and not a quality complaint. The shipper has not only cheated STC but also cheated other buyers with whom they have had direct contracts. The shipper, M/s. Kay Cee Coffee managed to ship the coffee by escaping eagle eyes of various agencies viz customs, shipping lines, surveyors and C & F Agent."
133. Ex.P23 has been signed by accused No.1. PW.2, 5 and other officers. Ex.D34 is the letter of accused No.1 to M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., on 20.4.2000. It 100 Spl.C.C.29/05 J is pertinent to note the contents of Ex.D34 which reads as follows: -
"CONTRACT WITH COFFEE AMERICA, USA, FOR 15 FCLS OF AR CHY CLEAN BULK - DUE FOR SHIPMENT WITHIN 30TH OF THIS MONTH.
THANKS FOR ORGANISING SHIPMENT OF 5 FCLS OF AR CHY CLEAN BULK YESTERDAY. REPRESENTATIVE OF COFFEE DIVISION VISITED ICD, BENGALURU AND DRAWN THE SAMPLE FROM THE LOTS. THE FIRST HAND OBSERVATIONS ARE AS UNDER:
• THERE ARE LOTS OF BLACKS IN THE COFFEE WHICH PROVE THAT THIS IS NOT CLEAN BULK. THERE SHOULD BE 0% OF BLACKS.
• THERE ARE FOREIGN MATERIAL INCLUDING COFFEE HUSK AND BLEACHED BEANS.
• THERE IS HIGH PERCENTAGE OF TRIAGE.
HV SENT THE SAMPLE TO COFFEE BOARD FOR LAB ANALYSIS. SHALL REVERT BACK TO YOU.
HV DRAWN THE ATTENTION OF BOTH OF YOU AND IMPRESSED UPON THE NEED FOR MAINTAINING THE QUALITY OF THE COFFEE. VIEW THIS, RQST PL ENSURE THE QUALITY OF THE BALANCE 10 FCLS 10 FCLS WHICH ARE BEING PROCESSED NOW TO MAINTAIN THE QUALITY WITH A SPECIAL REFERENCE TO THE OBSERVATIONS MADE ABV."
Ex.D35 is the letter of PW.2 to STC, New York.
134. As seen from the evidence of the prosecution, Coffee America rejected 5 FCLs under Contract 6651 and all 10 101 Spl.C.C.29/05 J FCLs under Contract 6652 vide their messages on 4.8.2000 and 18.8.2000.
135. It is the contention of accused No.2 and 3 that there is no mahazar for rejection of coffee by the buyer and no witnesses have been examined by the prosecution from the Coffee America to prove that they have rejected the coffee. Admittedly, there was a contract between the STC, Bengaluru and Coffee America through STC, New York and so also there was a contract between STC., Bengaluru, M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., when the coffee was exported how one can predict that it was of low quality and not as per the sample approved by the buyer. It is only after receiving the coffee at a destination point, the buyer examined the quality of the coffee and found that it was not in accordance with the sample approved by him, therefore he rejected the same.
136. When the export of coffee was based on the contract, it was not required to prepare the mahazar at the time of rejection of coffee. When the coffee was rejected, there was no criminal case registered either by the police or by the CBI to investigate into the matter. When the accused No.2 and 3 did not come forward for effective settlement, 102 Spl.C.C.29/05 J then only the complaint came to be lodged before the police by accused No.1 and his Finance Manager. Thereafter, STC., Bengaluru settled the matter with Coffee America and paid the amount to it. Therefore, there is no merit in the contention of accused No.2 and 3 that the mahazar was not prepared at the destination point for rejection of coffee by the buyer.
137. It is further contended by the accused No.2 and 3 that the buyer had not informed them directly about rejection of coffee and not made any correspondence with them. Therefore, the rejection of coffee by the buyer was not within their knowledge.
138. When the back to back contract was between the Coffee America, STC, Bengaluru and STC., Bengaluru and accused No.2 and 3 the contention of accused No.2 and 3 that the Coffee America has not informed them about the dispute of quality of coffee has no merit.
139. When the coffee was received at Jacksonville, Florida, the buyer on verifying the quality of the coffee rejected it. It is not proper on the part of the accused No.2 and 3 to say that the prosecution has not examined the witness from America to prove the rejection of coffee. The prosecution 103 Spl.C.C.29/05 J has placed ample evidence to prove that the Buyer Coffee America looking to the serious quality deficiencies rejected the coffee. Therefore, the evidence brought before the court is sufficient to prove that the Buyer Coffee America rejected the 15 FCLs coffee exported by M/s. Kaycee Coffee & Spices Exports Pvt. Ltd.
G) QUALITY OF COFFEE EXPORTED:
140. It is alleged by the prosecution that from the first consignment there was defect in the quality and buyer raised objections and accepted the first consignment subject to reduction in price and M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., consigned the remaining consignment without knowledge of STC, Bengaluru and the quality of coffee was not in accordance with sample approved by the buyer and ultimately the buyer rejected the coffee.
141. The accused No.1 has clearly admitted the case of the prosecution. Accused No.2 and 3 have seriously disputed the quality of the coffee and the analysis reports. As seen from the evidence of PW.3 P.B. Malde, it is proved that as per the instructions of accused No.1 on 19.4.2000 along with Jayaramulu went to ICD, White Field and draw the
104 Spl.C.C.29/05 J sample of the coffee and on next day he had taken the coffee sample to coffee analysist for analysis and to know the quality of the coffee. As stated earlier, there are no reason to disbelieve the evidence of PW.3 who was in the cadre of Asst. Manager in STC, Bengaluru and working in the coffee division.
142. Apart from the evidence of PW.3, the prosecution has mainly relied upon the evidence of PW.18 Dr. K. Basavaraj, Head of Coffee Quality, Coffee Board, Bengaluru. He has deposed that since 23 years he has been working in Coffee Board, Bengaluru and presently he is Head of Coffee Quality and he is coffee quality expert and analysing the quality of the coffee and certifying quality of coffee for domestic market and export market. Then he has deposed that Ex.P17 to P21 are the reports given by him after analysing the physical coffee quality parameters for moisture contents, defects, grade specifications and presence and absence of foreign matters. Then he has deposed that Ex.P17 to P21 are issued for physical standard and moister contents. Then he has deposed that Ex.P75 is one more quality evaluation report issued by him after analysing the sample of coffee. Further, he has 105 Spl.C.C.29/05 J deposed that all the samples analysed by him in this case were sent by STC., Bengaluru in a sealed pack and those sealed packs were opened in his presence, STC Officers and Scientists of Quality Lab and samples were analysed and deviations were noticed and the same are mentioned in his reports.
143. Accused No.1 has not disputed the evidence of PW.18 and the reports given by him. Accused No.2 and 3 have disputed the reports but they are not able to substantiate to disbelieve the evidence of PW.18 and the reports given by him as per Ex.P17 to P21 and P75.
144. As seen from the entire evidence of PW.18, he is working in the coffee board since 23 years and he is an expert in analysing the Quality of Coffee. Looking to his experience, there are no reasons to discard or disbelieve his evidence. When he is an officer of the Coffee Board, analysed the samples of coffee and given his report without any sufficient reason, his evidence and reports cannot be disbelieved. Therefore, the evidence of PW.18 is fully supporting the case of the prosecution and proves that he has analysed the quality of coffee and given his reports as 106 Spl.C.C.29/05 J per Ex.P17 to 21 and Ex.P75. His evidence is also proving the contents of Ex.P17 to 21 and P75.
145. Now coming to the coffee Quality Evaluation Reports Ex.P17 to 21 and P75, it is proved that from time to time the samples were analysed by PW.18 and the quality of coffee exported was of inferior quality and not as per the sample approved by the buyer at USA. On perusal of Ex.P17, it is mentioned that the physical quality rating of the sample was below average. Why the quality of the coffee was below average has been mentioned in Ex.P17. Therefore, Ex.P17 dated 20.4.2000 proves that even from the first container, the quality exported was below average. Ex.P18 is the letter of PW.18 to STC., Bengaluru dated 21.9.2000. It is pertinent to note the contents of Ex.P18 which reads as follows: -
" The 3 (three) sealed coffee samples weighing 1 (one) Kg. each received from M/s. H&M Warehousing of Jacksonville, INC, 2101 West 33rd Street, Jacksonville, Florida - 32209- 0028 and 1(one) Control Sample of Arabica Cherry Bulk which was sent to buyer for approval were handed over to the Quality Control Division, Coffee Board, Bengaluru by Mrs. Shyamala Sharma, Asst. Manager (Mktg) and Shri P.B. Malde, Asst. Manager (Marketing) of State Trading Corporation of India, Bengaluru.
107 Spl.C.C.29/05 J The sealed samples are opened before the above representatives of STC and also in presence of the Deputy Director (QC) and the Asst. Coffee Marketing Officer (QC) besides the order scientific staff of this Division. The samples were analyzed and the evaluation reports are enclosed herewith.
The samples were analyzed against the Control Sample of Arabica Cherry Bulk. The 3(three) samples received were not identified to the Control Sample and are identified as Robusta Cherry Bulk (B/L No.1341), Robusta Cherry Bulk (B/L No.1344) and mix of Arabica and Robusta Cherry Bulk (B/L No.1325).
The detailed 4(four) evaluation reports are enclosed herewith."
146. Ex.P18 is pertaining to analysis of coffee sample in respect of Contract No.P6651 and P6652. It is mentioned that three sealed coffee samples weighing 1 Kg., each were received from M/s. H & M Warehousing at Jacksonville, Florida and one control sample of Arabica Cherry Bulk which was sent to buyer for approval were send to Coffee Board for analysis. Ex.P19 is the Quality Evaluation Report dated 18.9.2000 in respect of contract No.6652. In Ex.P19, it is mentioned that analysis of the sample received from M/s. H & M Warehousing at Jacksonville, Florida was analysed. In this report, it is opined that physical quality of coffee "Very Poor Quality found to contain Robusta Cherry Bulk coffees".
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147. Ex.P20 is the Quality Evaluation Report dated 18.9.2000 pertaining to a Contract No.6651. In this report, it is mentioned that analysis of the sample received from M/s. H & M Warehousing, Jacksonville, Florida was analysed. The physical quality of the coffee is mentioned as "Very Poor Quality Admixture of Arabica Cherry and Robusta Cherry coffees".
148. Ex.P21 is the Quality Evaluation Report dated 18.9.2000.
In this report, it is mentioned that analysis of the control sample retained by M/s. State Trading Corporation of India Ltd., Bengaluru. In this report, the physical quality of coffee is mentioned as "Fair Average Plus".
149. Ex.P75 is another Quality Evaluation Report dated 18.9.2000 pertaining to Contract No.6652. In this report, it is mentioned that analysis of the sample received from H & M Warehousing at Jacksonville, Florida was analysed. In this report, physical quality of coffee is mentioned as Very Poor Quality.
150. The evidence of the prosecution proves that how the quality of coffee was sub-standard in respect of coffee exported by M/s. Kaycee Coffee & Spices Exports Pvt. Ltd. When Coffee America insisted the STC, Bengaluru as a 109 Spl.C.C.29/05 J seller and entered into a contract for supply of coffee how the Coffee America can have a correspondence with M/s. Kaycee Coffee & Spices Exports Pvt. Ltd. Though the contract was back to back, the buyer will only make the seller as responsible for the quality. There are several correspondences between the Coffee America and STC., Bengaluru and STC., New York to show that the quality of coffee was not as per the sample approved by the buyer.
151. PW.16 N. Jeya Kumar who was at New York has consistently deposed how the quality of coffee was of inferior quality. Then he has deposed that the buyer rejected the consignment and told to go to arbitration and to recover the amount and damages. PW.16 who was working at STC., New York visited the Warehousing, saw the material and his evidence is an acceptable evidence by the court. He was the Branch Manager, STC., New York working for the STC., and there are no reason to disbelieve his evidence in the matter.
152. PW.17 GD Pushparaj has also deposed about the rejection of coffee, quality deficiency and settlement of matter. Even the officers from Corporate Office have deposed about the rejection of coffee by the buyer due to inferior 110 Spl.C.C.29/05 J quality of coffee. Therefore, the evidence of the prosecution is acceptable and proving the rejection of coffee by the buyer coffee America as the coffee supplied in respect of 15 FCLs was of sub-standard and intimated the same to the concerned.
H) SETTLEMENT OF CLAIM & PAYMENT OF AMOUNT:
153. It is alleged by the prosecution that the Coffee America went to Arbitration, if the matter was contested by STC., before Arbitration damages and cost would have been much more, therefore the matter was settled amicably outside the arbitration and STC., Bengaluru has paid the compensation to the buyer. The Accused No.1 has clearly admitted the case of the prosecution for initiation of Arbitration proceedings by the buyer, settlement and payment of the amount by the STC by obtaining the approval from the Corporate Office. Accused No.2 and 3 have disputed the allegations made by the prosecution.
154. Regarding this aspect, PW.2 Vijaya Kuradagi has deposed that as per Ex.P23 accused No.1 sent a fax message dated 30.9.2000 to Dr. S.M. Diwan, the then Chairman/Managing Director, STC., New Delhi about on going issues of coffee exporters and about the problem faced with contract
111 Spl.C.C.29/05 J related to M/s. Kaycee Coffee & Spices Exports Pvt. Ltd. Then he has deposed that as per Ex.P24 Green Coffee Association, New York addressed a letter to STC., New York on 28.8.2000 intimating initiating arbitration proceedings and damages because of inferior quality coffee. Then he has deposed that Ex.P25 is the fax message from Coffee America to STC, New York dated 14.8.2000 stating that the matter would be settled out of arbitration in case of amount of US$ 99,200 is paid to them. Then he has deposed that the original arbitration notice issued by Convey & Convey Attorney for claimant is Ex.P26.
155. Then considering the evidence of PW.14 P. Kumar has deposed that the buyer did not accept the goods supplied and demanded for return of full fund already paid by him and for damages. The buyer issued notice and informed to go to Arbitration Proceedings. Their corporate office realised that there is no merit in their favour to fight against the buyer before arbitrator and accordingly they entered into a settlement with buyer and agreed to repay the entire amount paid by him. Accordingly STC., Bengaluru has paid US$ 2,65,000 (Rs.1.25 Crores) to 112 Spl.C.C.29/05 J buyer M/s. Coffee America and Ex.69 is the settlement agreement. On perusal of Ex.69 it is a settlement agreement between Coffee America and STC., Bengaluru and STC., Bengaluru agreed to pay a sum of US$2,65,000.
156. Then considering the evidence of PW.16 N. Jeya Kumar, he has deposed that, he has actually settled the matter with the permission of Corporate office. He has deposed that the Buyer Coffee America informed the STC., New York about the inferior quality of coffee supplied to them and they would go to arbitration for the loss incurred by them. The matter was taken to STC., New Delhi, STC, Bengaluru and with their consent they decided to go for settlement outside the arbitration and accordingly there was settlement and agreement was signed between STC., Bengaluru and Coffee America as per Ex.P69. As per the settlement, the Govt. of India agreed to pay US$ 2,65,000 to the Buyer Coffee America on or before 30.11.2000. Accordingly, after obtaining permission from the Reserve Bank of India, STC., Bengaluru made the payment directly to Coffee America.
157. Looking to the evidence of PW.17 G.D. Pushparaj has deposed that M/s. Kaycee Coffee & Spices Exports Pvt.
113 Spl.C.C.29/05 J Ltd., negotiated shipping documents and obtained payment from Syndicate Bank pertaining to Contract No.6651 and 6652 as allowed in the letter of credit after shipment. Since the coffee supplied by the shipper was of inferior quality, the buyer made the claim from STC., Bengaluru for the payment. Immediately after receiving the complaint from the foreign buyer they called the shipper and enquired as to why they have supplied the inferior quality of coffee to the buyer. Since the main contract was between STC Bengaluru and the buyer, the settlement was to be settled immediately and accordingly the settlement was arrived for payment of US$ 2,65,000. Then STC had obtained the permission from RBI and paid the amount to the buyer.
158. Looking to the evidence of PW.21 who was Chief Legal Advisor in STC, Corporate Office, New Delhi has deposed about the filing of complaint before the police, damages claimed by the buyer and the settlement of damages for US$2,65,000.
159. Lastly, looking to the evidence of PW.22, he has deposed that they received letter from the Head Office for making the payment as per Ex.P91. Then they obtained 114 Spl.C.C.29/05 J permission from Reserve Bank of India for making payment as per Ex.P92. Then they submitted letter to State Bank of India, Overseas Branch, Bengaluru requesting for issuing of Demand Draft for payment to the buyer as per Ex.P93. Then they obtained Demand Draft as per Ex.P94 and bank advise sent to the buyer is Ex.P95. Then they received confirmation receipt of amount from the buyer as per Ex.P96 and letter of the buyer admitting the settlement and withdrawal of arbitration case as per Ex.P97.
160. In the present case, the above witnesses have consistently deposed about the buyer issuing notice, approaching for arbitration, decision of STC., to settle the matter outside the arbitration, settlement and payment of amount to the buyer by the STC, Bengaluru. Since the STC is a Govt. of India undertaking, the amount has been paid by the Govt. of India. On behalf of the Govt. of India, the Reserve Bank of India has accorded permission. As per the permission, the DD was obtained and sent to the buyer. The buyer acknowledged the receipt of the amount and withdraw the arbitration proceedings initiated by him against STC., 115 Spl.C.C.29/05 J Bengaluru. As a result of the settlement, the Govt. of India had incurred loss of Rs.1.25 Crores (US$2,65,000).
161. It is the main contention of accused No.2 and 3 that the settlement was arrived behind their back, without making them as a party to the said settlement. It is pertinent to note that the witnesses have deposed that the primary contract for supply of coffee was between STC., Bengaluru and Coffee America. When the primary contract was between the STC., Bengaluru and Coffee America, the question of buyer issuing notice, intimating and making M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., as a party to the arbitration proceeding and settlement does not arise. It was STC., which was mainly concerned as a seller clause in the agreement, for due performance of contract as per the agreement.
162. Therefore, the STC., struggled to arrive to a settlement within the time and paid the damages to the buyer as per the settlement Ex.P69. The STC., Bengaluru has from time to time called upon and intimated M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., about the inferior quality of coffee supplied and buyer has gone to arbitration and to come forward for positive settlement.
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163. The accused No.2 and 3 who are the Managing Director and Chairman of M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., have not come forward and not shown any inclination to go for settlement. Looking to the evidence forthcoming before the court there is no justification on the part of the accused No.2 and 3 to contend that the settlement was behind their back. Hence, the STC., has taken proper timely decision to settle the matter outside the arbitration, paid the amount to the buyer, who accepted the amount and withdrawn the arbitration proceedings. If the STC., contested the arbitration proceedings instituted by the buyer, the amount liable to be paid by the STC., would have been much more. Due to timely settlement, the reasonable amount has been paid to the buyer by the STC., Bengaluru.
I) REGARDING CIVIL SUIT:
164. It is an admitted fact that STC., Bengaluru represented by accused No.1 as a Branch Manager instituted O.S. No. 15412/2001 before the City Civil Court, Bengaluru against M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., and accused No.2 and 3 for recovery of Rs.1,25,63,048/- along with future interest. In the said suit, defendants 1 to 3 117 Spl.C.C.29/05 J appeared before the court through their learned counsel. After the trial, the said suit came to be decreed on 4.1.2010. It is pertinent to note the reasons recorded by the court in the judgment. The court has come to the conclusion that the coffee supplied by M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., was of inferior quality and STC., Bengaluru is entitled for recovery of the amount paid by it to the buyer. PW.2, 14 and 21 have deposed about the institution of the suit and decreeing of the suit against M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., and present accused No.2 and 3. It is admitted that the Execution Proceedings for execution of decree passed in the said suit is still pending.
J) REGARDING SANCTION:
165. PW.23 Dr. Aravinda Pandalai who was Chairman & Managing Director, STC., New Delhi has deposed in his evidence stating that he was the appointing and removing authority of accused No.1 who was serving as Branch Manager, STC., Bengaluru. Further, he has deposed that CBI sought sanction to prosecute accused No.1 and sent the material to their Vigilance and their Vigilance Department after examining the matter placed the file 118 Spl.C.C.29/05 J before him and he had gone through the papers and taken his own view in the matter. Then he has deposed that he has issued sanction order as per Ex.P77.
166. Nothing has been elicited from his mouth in his cross-
examination to disbelieve his evidence. It is not disputed that he being the Chairman & Managing Director of STC., Corporate Office, New Delhi was appointing and removing authority of accused No.1. As per his evidence by applying his mind he has accorded sanction as per Ex.P77.
167. The learned Special Public Prosecutor has relied upon a decision reported in 2002 SCC (Cri) 564 in the case of Shivendra Kumar vs. State of Maharashtra, wherein it has been held as follows: -
"In a case where it is seen that a sanction order has been passed by an authority who is competent under the law to represent the State Government, the burden is heavy on the party who challenges the authority of such order to show that the authority competent to pass the order of sanction is somebody else and not the officer who has passed the sanction order in question."
Therefore, the sanction order Ex.P77 is valid in the eye of law.
119 Spl.C.C.29/05 J K) MAINTAINABILITY OF FIR REGISTERED:
168. It is the contention of the accused No.2 and 3 that there cannot be two FIR against them and the present FIR registered by the CBI is not maintainable against them.
169. It is an admitted fact that on 26.8.2000 accused No.1 along with PW.17 lodged a joint written complaint to the Inspector of Police, Cubbon Park Police Station, Bengaluru as per Ex.D26. Ex.D26 is the original complaint lodged by the accused No.1 and PW.17. It is further admitted that on the basis of the complaint, police registered a case in Crime No.343/2000 against M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., accused No.2 and 3 and others for the offences punishable u/s 406, 420 r/w 120-B IPC and took up investigation in the matter. It is further admitted that thereafter CBI registered a case on the source of information on 26.9.2003 against the present accused No.1 to 3 and others and submitted FIR as per Ex.P76. It is further admitted that after the investigation of the case by the CBI, it has submitted final report against accused No.1 to 3 for the offences punishable u/s 120B r/w 420 IPC and Sec. 13(2) r/w Sec. 13(1)(d) of Prevention of Corruption Act, 1988.
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170. It is the defence of accused No.2 and 3 that FIR registered by CBI as per Ex.P76 is not maintainable. It is the contention of the prosecution that the first FIR and FIR registered by the CBI were for different offences and such FIR cannot be said as not maintainable. It is an admitted fact that on 26.8.2000, on the complaint lodged by accused No.1 along with his Finance Manager a criminal case came to be registered by Cubbon Park Police, Bengaluru in Crime No.343/2000 for the offences punishable u/s 406, 420 r/w Sec. 120-B of IPC., and investigation was undertaken. It is further admitted that on the source of information, CBI registered a case in RC No. 22(A)/2003 on 26.9.2003 and investigated the matter. The CBI registered a case against accused No.1 who was a Branch Manager and Head of Coffee Division, STC., Bangalore, a public servant and accused No.2 and 3 who are the Managing Director and Chairman of M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., for the offences punishable u/s 120B, 420 of IPC and Sec. 13(2) r/w sec. 13(1)(d) of PC Act, 1988. It is further admitted that when the CBI registered a case, the Cubbon Park Police have not submitted final report before the concerned court.
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171. It is deposed by the Investigating Officer in the present case that after registering a criminal case, he has collected the records from the Cubbon Park Police.
172. The learned counsel for accused No.2 and 3 relied upon the principles of the judgment rendered by the Hon'ble Supreme Court in Upkar Singh vs. Ved Prakash and others dated 10.9.2004 in Appeal (Crl.) 411/2002 wherein it has been held as follows: -
"The registration of the said crime came to be challenged before the High Court by way of a Writ Petition and learned Single Judge of the High Court directed the case to be re- investigated by CBI. But in a writ appeal the Division Bench of the High Court quashed the FIR in Crime No.268 of 1997 as against the Additional Superintendent of Police but it directed a fresh investigation by the State Police headed by one of the three Senior Officers named in the judgment in stead of fresh investigation by CBI as directed by way of different appeals before this Hon'ble Court in the case of T.T. Antony (supra) and connected cases. In this factual background this Hon'ble Court, as stated above, came to the conclusion that a subsequent FIR on the same set of facts is not in conformity with the scheme of the Code for the reasons stated therein."
173. Then the learned counsel for accused No2. and 3 relied upon the principles of the judgment rendered by the Hon'ble Supreme Court in T.T. Antony vs. State of Kerala and others dated 12.7.2001 in Appeal (Crl.) 122 Spl.C.C.29/05 J 689 of 2001 wherein the Hon'ble Supreme Court held as follows: -
"For the aforementioned reasons, the registration of the second FIR under Section 154 of Cr.P.C., on the basis of the letter of the Director General of Police as Crime No.268/97 of Kuthuparamba Police Station is not valid and consequently the investigation made pursuant thereto is of no legal consequence, they are accordingly quashed. We hasten to add that this does not preclude the investigating agency from seeking leave of the Court in Crime No.353/94 and Crime No.354/94"
174. In TT Anthony case referred above, the Hon'ble Supreme Court held that "The course adopted in this case, namely the registration of the information as the 2nd FIR in regard to the same incident and making a fresh investigation is not permissible under the scheme of the provisions of the Cr.P.C., therefore the investigation undertaken and the report thereof cannot but be invalid".
175. In Upkar Singh case referred above, the Hon'ble Supreme Court has considered the principles laid down in Kari Choudhary (2002 (1) SCC Page 714) wherein it was held that when there are rival versions in respect of the same episode, they would normally take the shape of two different FIR and investigation can be carried on under both of them by the same Investigating Agency. Even that 123 Spl.C.C.29/05 J apart, the report submitted to the court styling it as FIR No.208/1998 need be considered as information submitted to the court regarding the new discovery made by the police during investigation that persons not named in FIR No.135 are the real culprits.
176. In the present case, the allegations made in the complaint of accused No.1 and his Finance Manager were against accused No.2 and 3 and others. Subsequently, CBI registered a case against the accused No.1 who filed a complaint before State Police in Cubbon Park Police Station, Bangalore and accused No.2 and 3 who are the Managing Director and Chairman of M/s. Kaycee Coffee & Spices Exports Pvt. Ltd. The Cubbon Park Police registered a case for offences under Sections 406, 420 r/w Sec. 120- B of IPC. The CBI registered a case against the public servant Accused No.1 and two others for the offences punishable u/s 120B, r/w 420 IPC and Sec. 13(2) r/w 13(1)(d) of PC Act.
177. Admittedly, Cubbon Park Police have no power to investigate for the offences under Prevention of Corruption Act. The CBI is competent to investigate the offences under the Prevention of Corruption Act. When the CBI 124 Spl.C.C.29/05 J registered a case against the public servant, accused No.1 and two others for the offences under IPC and the Prevention of Corruption Act, it cannot be said that the FIR registered by the CBI is not maintainable.
178. I have gone through the facts and principles in the decisions rendered by the Hon'ble Supreme Court and relied upon by the learned counsel for accused No.2 and 3, the facts of that case were entirely different and in that context, the Hon'ble Supreme Court held that the 2nd FIR is not maintainable. The principles laid down in the above decisions cannot be applied to the facts of the present case and investigation done by the CBI.
179. It is pertinent to note that as per Ex.P79, the Govt. of Karnataka in pursuance of the provisions contained in Sec.6 of the Delhi Special Police Establishment Act, 1946 r/w sec. 21 of the General Clauses Act, 1897 accorded consent to the extension of powers and jurisdiction to the members of the Delhi Special Police Establishment for registration of the case and investigation of the present case by the CBI against accused No.1 and others. Thereafter, as per Ex.P80, in exercise of the powers under sub section (1) of Sec. 5 r/w Sec. 6 of the Delhi Special 125 Spl.C.C.29/05 J Police Establishment Act, 1946 the Govt. of India has issued notification authorising the CBI and conferring the powers and jurisdiction of Members of the Delhi Special Police Establishment to the whole of State of Karnataka for investigation of the present case.
180. Based on the authority and powers as per Ex.P79 and 80, the CBI investigated the matter and placed the charge sheet before this court against accused No.1 to 3. Therefore, there is no merit in the contention of accused No.2 and 3 that the FIR registered by the CBI is not maintainable.
L) CRIMINAL CONSPIRACY:
181. Based on the above aspects, now I will proceed to consider the alleged offences by the prosecution one after the other. In this regard, firstly I will consider the allegations of criminal conspiracy alleged against the accused No.1 to
3.
182. In his evidence, PW-1 has deposed that there were series of complaints against accused No.2 and 3 alleging that they have exported items other than the declared ones for getting permission. In that regard, STC., approached the coffee board with the complaint against accused No.2 and 126 Spl.C.C.29/05 J
3. On the basis of the complaint, the coffee board intimated the same to accused No.2 and 3 and as there were no proper response from them, the board was constrained to cancel their Registration with the coffee board during 2000.
183. PW.2 has deposed about the correspondence between STC., Bengaluru and M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., from time to time. PW.4 has deposed about the survey work conducted by them. PW.5 has deposed about the contract. PW.6, 7, 8, 9, 10, 11, 12 and PW.13 have deposed about their respective survey and locking of the container. When the container was properly put to one time lock and opened at destination there was no chance for anyone to intermediate with the container and bags containing the coffee exported by accused No.2 and 3. When the STC., Bengaluru came to know that the first consignment coffee was not as per the sample approved by the buyer immediately brought it to the notice of M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru as per Ex.P14. Further, a request was made to maintain the quality of the coffee to be exported as per the sample approved by the buyer. Further, informed to give 127 Spl.C.C.29/05 J intimation to the STC., Bengaluru about the readiness of the stock for shipment before stuffing. Further, it was informed that an official from STC., Bengaluru would visit ICD, White Field, Bengaluru to draw the composite lot sample from the bags.
184. The evidence of the witnesses relied upon by the prosecution and the documents prove that the dispute arose for the quality of the coffee from the first consignment itself in respect of both contracts. The buyer accepted the first consignment by reducing the price of the coffee to some extent. The witnesses have deposed that the accused No.2 and 3 sent subsequent consignments without intimating them inspite of their specific instructions to intimate them. There is no evidence forthcoming to show that accused No.2 and 3 informed the STC., Bengaluru for further consignment and to depute an official to draw the sample.
185. Ex.P16 proves that immediately after receiving the quality analysis report from the Coffee Board, the same was informed to M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., Bengaluru. In Ex.D14, it is mentioned that the suppliers committed a fraud in connivance with various agencies. It 128 Spl.C.C.29/05 J is further mentioned that the eagle eyes of Customs, Port Authorities, C & F Agents, Shipping Lines etc., also could not detect this fraud. In Ex.D15, it is mentioned that massive fraud has been committed by a shipper for the last 5 FCLs in respect of Contract No.6651 and 10 FCLs in respect of Contract No.6652. Ex.D17 to 20 shows the efforts made by accused No.1. In Ex.D23, it is mentioned that the shipper has committed a total and massive fraud in the contract.
186. The accused No.1 being a public servant has made all possible efforts to safeguard the interest of STC. Looking to the contracts, business of M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., the STC., Bengaluru awarded the contract to M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., for Contract No.6651 and 6652 hoping that they were capable to supply the quantity required and as per the quality approved by the buyer. None of the witnesses examined by the prosecution have deposed before the court anything against the accused No.1. None of the witnesses have deposed that accused No.1 has shown any favour or colluded with accused No.2& 3 who are Managing Director and Chairman of M/s. Kaycee Coffee & Spices 129 Spl.C.C.29/05 J Exports Pvt. Ltd., in respect of contract No.6651 and 6652. Absolutely, no evidence to establish that the accused No.1 has conspired with accused No.2 and 3 in respect of the present transaction.
187. It was the duty casted on the accused No.2 and 3 to perform the contract by supplying good quality coffee as per the sample approved by the buyer. Though, they have been awarded a bulk contract for supply of coffee to the buyer since the date of back to back contract they are not diligent and involved in doing the illegal acts. The witnesses have deposed the manner in which accused No.2 and 3 have failed to supply the coffee as per the sample approved by the buyer and supplied inferior quality coffee from the first consignment till the last one. The accused No.2 and 3 hatched a plan to supply inferior quality of coffee to the buyer taking undue advantage of the back to back contract and naming them as shipper in the said contract. When accused No.2 and 3 are the Managing Director and Chairman of M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., they were doing the business on behalf of the said company and looking after all the affairs of the said company. Therefore, the evidence proves their 130 Spl.C.C.29/05 J meeting of mind for each and every decision and action taken by them for supply of coffee as per the contract. When the accused No.2 and 3 have hatched conspiracy with their meeting of mind secretly in such situations, it is difficult to get the direct evidence to establish their criminal conspiracy. Under such circumstances the criminal conspiracy can be proved by placing circumstantial evidence. Based on the circumstantial evidence placed before the court an agreement in between accused No.2 and 3 to do an illegal act can be very well inferred. So also, a presumption can be drawn from the facts of the present case, how accused No.2 and 3 made up their mind to supply an inferior quality of coffee to an overseas buyer i.e., Coffee America by their illegal act. Therefore, the facts, evidence and circumstances are sufficient to prove the ingredients of the offence of criminal conspiracy against accused No.2 and 3.
M) CHEATING:
188. Secondly, I will consider the allegation of the cheating against accused No.1 to 3. There is no evidence forthcoming before the court that accused No.1 acted fraudulently and dishonestly in the transaction. The
131 Spl.C.C.29/05 J prosecution has examined the officers from STC., Bengaluru, officers from STC., New Delhi and Branch Manager of STC., New York and none of them have whispered that in the transaction accused No.1 has acted fraudulently and dishonestly. The evidence placed before the court proves that though the contract was awarded to accused No.2 and 3, the accused No.1 was struggling for the due performance of contract by the accused No.2 and 3 and for supply of coffee as per the sample approved by the buyer to protect the reputation of STC., in the eye of American buyer. At each and every stage, he has acted diligently and taken proper decision. He has acted as per the directions of Corporate Office, followed the norms prescribed for back to back contract and nothing malafide can be attributed to him in the present contracts. When he came to know that coffee supplied for the first consignment was not in accordance with the sample approved by the buyer, he has taken all steps to maintain the quality of coffee for further consignment by intimating accused No.2 and 3.
189. PW.15 Ms. Rita Kunur who was Director, STC., New Delhi has admitted that, the accused No.1 who was the Branch 132 Spl.C.C.29/05 J Manager, STC., Bengaluru had punctually obeyed the instructions issued by her from time to time. The Director of STC., New Delhi has not made any remarks against the decisions taken by accused No.1 in the present contract. Looking to the attitude of the accused No.2 and 3, the officers of STC., including the accused No.1 have made all efforts to save the reputation of STC., who was in seller term in the contract. Nothing is forthcoming against accused No.1 to show his involvement, fraudulent and dishonest intention and causing loss to STC., by his acts.
190. The prosecution has established that even in the first consignment there was dispute for the quality of coffee. The evidence further proves that even in the first consignment, the quality of coffee supplied by the accused No.2 and 3 was not satisfactory one. Inspite of it, the buyer accepted the supply of coffee by making deduction in the price. The same was brought to the notice of accused No.2 and 3 and requested them to maintain the quality in the future consignments. Accused No.2 and 3 did not follow the instructions of accused No.1. They have straight away supplied future consignments to the buyer even without bringing to the knowledge of STC., Bengaluru 133 Spl.C.C.29/05 J and allowing the STC., to make inspection and to draw the samples. The analysis reports prove that an inferior quality of coffee was supplied by the accused No.2 and 3 to Coffee America. When the Coffee America rejected the consignment, STC., had no other go except to settle the matter and accordingly settled the matter outside the arbitration and paid the amount to the buyer. By the act of accused No.2 and 3, STC., Bengaluru which is a Govt. of India undertaking suffered loss of Rs.1.25 crores during 2000. As per the evidence of the witnesses, it is proved that the accused No.2 and 3 did not respond promptly for settlement, did not come forward to pay the amount to the buyer and they disappeared from their place of business.
191. Looking to the evidence of the prosecution, it is proved that accused No.2 and 3 by their fraudulent and dishonest intention supplied inferior quality of coffee to the American buyer and received the payment from the buyer. By supplying inferior quality of coffee accused No.2 and 3 received the payment from time to time from the buyer knowing fully well that their act was dishonest and fraudulent one.
134 Spl.C.C.29/05 J
192. It is deposed by the witnesses that due to the act of accused No.2 and 3 STC., had lost its reputation in American Market. STC., Bengaluru hoping and trusting accused No.2 and 3 entrusted bulk supply of coffee to them. Accused No.2 and 3 instead of supplying coffee as per the sample approved by the buyer supplied inferior quality of coffee and their act certainly lowered the reputation of the STC., in the eyes of international market.
193. It has come in the evidence of the witnesses that due to the act of Accused No.2 and 3 STC., lost their coffee export business and ultimately they wind up their coffee business at US Market.
194. Section 415 of IPC defines cheating which reads as follows: -
"415. Cheating: - Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he was not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to cheat.
Explanation: - A dishonest concealment of facts is a deception within the meaning of this section."
135 Spl.C.C.29/05 J
195. Section 420 of IPC reads as follows: -
"420. Cheating and dishonestly inducing delivery of property: - Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine."
For Section 420, it is necessary that accused should not only cheat but he must induce to deliver any property as well.
196. The learned counsel for the accused No.2 and 3 vehemently argued that there is a damage clause in the agreement. Therefore, the matter is of civil in nature and it will not constitute an offence u/s 420 IPC. He further argued that to constitute an offence of cheating there must be a fraudulent and dishonest intention at the inception of the contract.
197. In support of his arguments, the learned counsel for accused No.2 and 3 placed reliance on the principles of judgment rendered by Hon'ble Supreme Court of India in Criminal Appeal No. 1868/2011 wherein the Hon'ble Supreme Court held that: -
136 Spl.C.C.29/05 J "complaint itself is inherently improbable contains the flavour of civil nature".
In the said decision in para-11, the Hon'ble Supreme Court has referred to the principles laid down in Madhavrao Jiwajirao Scindia & Ors., vs. Sambhajirao Chandrojirao Angre & Ors. (1998) 1 SCC 692, "this Court, after pointing out the grounds on which the criminal proceedings be quashed under Section 482 of the Code at preliminary stage by the High Court highlighted that a case of breach of trust is both a civil wrong and a criminal offence. While elaborating the same, this Court further held that there would be certain situations where it would predominantly be a civil wrong and may or may not amount to criminal offence. Based on the materials in that case, the court concluded that the case is one of that type where, if at all, the facts may constitute a civil wrong and the ingredients of the criminal offences are wanting.
Further, the Hon'ble Supreme Court of India referred to the principles of decisions in Nagawwa vs. Veeranna Shivalingappa Koujalagi, (1976) 3 SCC 736 and State of Haryana vs. Bahajan Lal, 1992 Supp (1) SCC 335, this Court concluded thus:
"7. In a few cases, the question arose whether a criminal prosecution could be permitted when the dispute between the parties is of predominantly civil nature and the appropriate remedy would be a civil suit. In one case reported in Madhavrao Jiwajirao Scindia vs. Sambhajirao Chandrojirao Angre this Court held that if the allegations in the complaint are both of a civil wrong and a criminal offence, there 137 Spl.C.C.29/05 J would be certain situations where it would predominantly be a civil wrong and may or may not amount to a criminal offence. That was a case relating to a trust. There were three trustees including the settler. A large house constituted part of the trust property. The respondent and the complainant were acting as Secretary and Manager of possession of a tenant. The tenant vacated the building and the allegation in the complaint was that two officers of the Trust, in conspiracy with one of the trustees and his wife, created documents showing tenancy in respect of that house in favour of the wife of the trustee. Another trustee filed a criminal complaint alleging that there was commission of the offence under Sections 406, 467 read with Sections 34 and 120-B of the Indian Penal Code. The accused persons challenged the proceedings before the High Court under Section 482 of the Code of Criminal Procedure and the High Court quashed the proceedings in respect of two of the accused persons. It was under those circumstances that this Court observed: (SCC Head note) "Though a case of breach of trust may be both a civil wrong and a criminal offence but there would be certain situations where it would predominantly be a civil wrong and may or may not amount to a criminal offence. The present case is one of that type where, if at all, the facts may constitute a civil wrong and the ingredients of the criminal offences are wanting. Having regard to the relevant documents including the trust deed as also the correspondence following the creation of the tenancy, the submissions advanced on behalf of the parties, the natural relationship between the settler and the trustee as mother and son and the fall out in their relationship and the fact that the wife of the co-trustee was no more interested in the tenancy, it must be held that the criminal case should not be continued."
138 Spl.C.C.29/05 J 10 ...... The injury alleged may form the basis of civil claim and may also constitute the ingredients of some crime punishable under criminal law. When there is dispute between the parties arising out of a transaction involving passing of valuable properties between them, the aggrieved person may have a right to sue for damages or compensation and at the same time, law permits the victim to proceed against the wrongdoer for having committed an offence of criminal breach of trust or cheating. Here the main offence alleged by the appellant is that the respondents committed the offence under Section 420 IPC and the case of the appellant is that the respondents have cheated him and thereby dishonestly induced him to deliver property. To deceive is to induce a man to believe that a thing is true which is false and which the person practising the deceit knows or believes to be false. It must also be shown that there was fraud or dishonest inducement on the part of the respondents and thereby the respondents parted with the property. It is trite law and common sense that an honest man entering into a contract is deemed to represent that he accepted the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily evade the debt by deception.
198. I have gone through the facts and principles laid down in the above decisions rendered by the Hon'ble Supreme Court. The facts of that case were entirely different. The facts and allegations of the present case are entirely different. The present transaction and acts of accused No.2 and 3 cannot be termed as a civil in nature. By agreeing to supply the coffee accused No.2 and 3 have supplied the inferior quality of coffee and received the amount from the buyer and caused loss of Rs.1.25 Crores to the Govt. of 139 Spl.C.C.29/05 J India. Therefore, the allegations of the present case constitute not only a civil wrong but also an offence under criminal law. The evidence of the prosecution proves that since the date of contract and supply of first consignment the accused No.2 and 3 had fraudulent and dishonest intention. The evidence further proves that they continued the said intention till the last consignment to the foreign buyer. They have done the supply of inferior quality of coffee from the beginning till the end with fraudulent and dishonest intention. Therefore, the act of accused No.2 and 3 amounts to deceiving the STC., Bengaluru and the ingredients of Sec. 415 of IPC are well established in the present case. Further, the accused No.2 and 3 by their cheating have obtained the amount from the foreign buyer and caused loss to STC., Bengaluru and their act attracts of the ingredients of Section 420 IPC. Hence, I answer Point No.1 and 2 partly in the affirmative against accused No.2 and 3 only.
199. POINT NO.3: -
N) CRIMINAL MISCONDUCT:
200. Thirdly, it is alleged by the prosecution that accused No.1 being a public servant has committed criminal misconduct.
140 Spl.C.C.29/05 J There is no evidence of the prosecution forthcoming to prove that the accused No.1 being a public servant by corrupt or illegal means, by abusing his position as a public servant obtained any valuable thing or pecuniary advantage for himself or for any other person or shown any official favour to accused No.2 and 3. None of the witnesses have deposed that in the present transaction accused No.1 has acted against the norms and shown any official favour to M/s. Kaycee Coffee & Spices Exports Pvt. Ltd., represented by accused No.2 and 3. Therefore, no evidence is forthcoming to prove that accused No.1 has committed criminal misconduct. Therefore, the prosecution has utterly failed to prove the allegations of criminal misconduct against accused No.1. Hence, I answer Point No.3 in the negative.
201. POINT No.4: - The prosecution has established beyond all reasonable doubt that accused No.2 and 3 have entered into a criminal conspiracy and in furtherance of their criminal conspiracy cheated the STC., Bengaluru, a Govt., of India undertaking in respect of contract No. 6651 and 6652. The act of accused No.2 and 3 amounts to an offence u/s 120B and 420 of IPC. Hence, the accused No.2 141 Spl.C.C.29/05 J and 3 are found guilty for the offence u/s 120B and 420 of IPC. Hence, I proceed to pass the following ORDER Acting under Section 235(1) of Cr.P.C., Accused No.1 Dr. R.B. Saha is hereby acquitted for the offence punishable u/s 120-B r/w 420 IPC and Sec. 13(2) r/w sec. 13(1)(d) of Prevention of Corruption Act, 1988.
Acting under Section 235(2) of Cr.P.C., Accused No.2 K.C. Santosh and Accused No.3 Manjunath Davanagere are convicted for the offences punishable u/s 120-B and 420 of IPC.
To hear regarding sentence of accused No.2 and 3. (Dictated to the Judgment Writer, transcribed by him, revised by me personally and incorporated additional paragraphs directly on computer, corrected and then pronounced by me in the Open Court on this the 9th day of November 2015) (BHEEMANAGOUDA K. NAIK) XXI Addl.City Civil and Sessions Judge And Prl. Special Judge for CBI Cases, Bengaluru City.
ORDER REGARDING SENTENCE Heard learned Special Public Prosecutor for CBI, learned counsel for accused No.2 and 3 and accused No.2 and 3 regarding the sentence.
142 Spl.C.C.29/05 J The learned Special Public Prosecutor for CBI submitted that looking to the gravity of the offences, a maximum sentence may be ordered against accused No.2 and 3.
The learned counsel for accused No.2 submitted that accused No.2 is a young man, has got two small children, unemployed wife and old age sick mother and lost his father and only earning member in the family and lenient view may be taken in imposing the sentence.
Accused No.2 personally submitted that due to the case they have suffered and made all efforts to settle the matter but STC., did not come forward. Therefore, to take lenient view in the matter.
The learned counsel for accused No.3 submitted that accused No.3 is aged 57 years, got mother aged 80 years, his wife and unmarried daughter aged 22 years and his wife is suffering from illhealth and he is the main earning member in the family and to show sympathy and take lenient view.
Accused No.3 personally submitted that he is suffering from family problems and to take lenient view while imposing sentence.
Looking to the submission made by the accused No.2 and 3 respectively, their learned counsel and the present conditions 143 Spl.C.C.29/05 J of accused No.2 and 3 and their family problems, it is proper to take some lenient view in imposing the sentence. Hence, I proceed to pass the following ORDER For the offence u/s 120B of IPC Accused No.2 K.C. Santosh and Accused No.3 Manjunath Davanagere shall undergo Rigorous Imprisonment for 3 (three) years each and shall pay a fine of Rs.2,50,000/- (Rs. Two Lakhs Fifty Thousand only) each and in default of payment of fine to undergo Simple Imprisonment for 9 (Nine) months each.
Further for the offence u/s 420 of IPC Accused No.2 K.C. Santosh and Accused No.3 Manjunath Davanagere shall undergo Rigorous Imprisonment for 3 (three) years each and shall pay a fine of Rs.2,50,000/- (Rs. Two Lakhs Fifty Thousand only) each and in default of payment of fine to undergo Simple Imprisonment for 9 (Nine) months each.
Both sentences shall run concurrently. Acting u/s 428 Cr.P.C., the days spent by accused No.2 and 3 in judicial custody during investigation and trial of this case is given set off towards the imprisonment ordered.
The bail bond of accused No.1 to 3 shall stand cancelled.
144 Spl.C.C.29/05 J Free copy of judgment is supplied to the accused No.2 and 3 in the open court.
(Dictated to the Judgment Writer, transcribed by him, corrected and then pronounced by me in the Open Court on this the 9th day of November 2015) (BHEEMANAGOUDA K. NAIK) XXI Addl.City Civil and Sessions Judge And Prl. Special Judge for CBI Cases, Bengaluru City.
ANNEXURE LIST OF WITNESSES EXAMINED FOR THE PROSECUTION:
PW-1: N.K. Subramanya PW-2: Vijaya Kuradagi PW-3: P.B. Malde PW-4: S. Dharmaraj PW-5: M. Sudarshan PW-6: N.V. Badrinath PW-7: Arun K.G. PW-8: Shaju V.J PW-9: Ashok PW-10: M.B. Somanna PW-11: Ravi Shankar R PW-12: N. Surendra PW-13: Y.L. Lingappa PW-14: P. Kumar PW-15: Ms. Rita Kunur PW-16: N. Jeya Kumar PW-17: G.D. Pushparaj PW-18: Dr. K. Basavaraj PW-19: Y. Hari Kumar PW-20: Abraham Oommen PW-21: Surendranath Rajguru PW-22: Srikanteshwara S. PW-23: Dr. Arvind Pandalai 145 Spl.C.C.29/05 J LIST OF WITNESS EXAMINED FOR DEFENCE:
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LIST OF DOCUMENTS EXHIBITED FOR THE PROSECUTION:
Ex.P.1: Letter dated 4.12.1997 Ex.P1(a): Signature of Sri. Bheemaiah Ex.P.2: Registration Permit Card No.568 Ex.P2(a): Signature of A2 Ex.P2(b): Signature of A3 Ex.P2(c): Signature of Sri. Bheemaiah Ex.P.3: Certified Statement of Export of Coffee from 1.4.1999 to 31.3.2000 Ex.P3(a): Relevant entry Ex.P.4: Xerox copy of Fax Message dt. 23.3.2000 Ex.P.5: Fax Message dated 24.3.2000 Ex.P.5(a): Signature of Sri. M.K. Sudarshan Ex.P.6: Xerox copy of Confirmation letter Ex.P.7: Fax Message dt. 25.3.2000 Ex.P.7(a): Signature of Sri. M.K. Sudarshan Ex.P.8: Fax Message dated 25.3.2000 Ex.P8(a): Signature of A.1 Ex.P.9: Back to Back Contract Ex.P.9(a): Signature of A1 Ex.P.9(b): Signature of Authorised Signatory Ex.P.10: Letter dated 24.3.2000 Ex.P.10(a): Signature of A1 Ex.P.10(b): Signature of Authorised Signatory Ex.P.11: Letter dated 3.3.2000 Ex.P.11(a): Relevant portion Ex.P.12: Letter dated 30.5.2000 Ex.P.13: Letter dated 13.6.2000 Ex.P.14: Fax Message dated 4.1.2000 Ex.P.14(a): Signature of the A1 Ex.P.14(b): Signature of PW.2 Ex.P.15: Xerox copy of Export Journal Ex.P.16: Fax Message dated 25.4.2000 Ex.P.16(a): Signature of A1 Ex.P.17: Quality Evaluation Repoort dt. 25.4.2000 given by Coffee Board Ex.P.18: Letter dated 21.9.2000 Ex.P.18(a): Signature of Deputy Director 146 Spl.C.C.29/05 J Ex.P.19 & 20: Analysis Report Ex.P.21: Quality Analysis Report dt. 21.9.2000 Ex.P.21(a): Signature of Dy. Director Ex.P.22: Certified copy of Fax Message Ex.P.23: Certified copy of Fax Message dt. 30.9.2000 Ex.P.24: Certified copy of Letter dt. 28.8.2000 Ex.P.25: Certified copy of Fax Message dt. 14.8.2000 Ex.P.26: Arbitration Notice of Conway & Conway Ex.P.27 to 31: Computerised copy of Survey Report dated 22.4.2000 Ex.P.32 & 33: Computerised copy of Survey Report dated 2.5.2000 Ex.P34: Computerised copy of Survey Report dated 31.5.2000 Ex.P35 & 36: Computerised copy of Survey Report dated 2.5.2000 Ex.P37 to 41:Computerised copy of Survey Report dated 19.5.2000 Ex.P42 to 46: Computerised copy of Survey Report dated 8.6.2000 Ex.P47 to 50: Computerised copy of Survey Report dated 10.6.2000 Ex.P51: Computerised copy of Survey Report dated 9.6.2000 Ex.P52: Shipping Bill G.R. Form dt. 1.6.2000 Ex.P53: Invoice dt. 2.6.2000 Ex.P.54: Copy of the Fax Message dated 21.3.2000 Ex.P.55: Copy of Fax Message dated 29.3.2000 sent by Ashok Chawla Ex.P.56: Circular No. 173 issued from S.T.C. New Delhi Ex.P.57: Circular dated 19.8.1999 issued by STC New Delhi Ex.P.58: Copy of Extract of STC Trading Manual Ex.P.59 to 62: Shipping Bills (4 Nos.) Ex.P.63 to 67: Bills of Lading (5 Nos.) Ex.P.68: Copy of delegation of powers (Norms for Non-canalised Trade) Ex.P.69: Final Settlement Agreement between M/s. Coffee America & STC Bengaluru (9 sheets) Ex.P.69(a): Signature of A1 Ex.P.70: Copy of the Fax Message dated 3.4.2000 sent from M/s. Coffee America Ex.P.71: Copy of Fax Message dt. 31.3.2000 of M/s. Coffee America regarding shipment instructions in respect of Contract No. 6651 (3 sheets) 147 Spl.C.C.29/05 J Ex.P.72: Copy of Fax dated 17.4.2000 Ex.P.73 & 74: Two E.O.E. contracts between STC, Bengaluru and M/s. Coffee America (2 sheets each) Ex.P.75: Quality Evaluation Report No. Q.C.D/2000/602 DT.
21.9.2000 Ex.P.75(a): Signature of PW.18 Ex.P.76: Original F.I.R. RC22(A)/03 (10 sheets) Ex.P.76(a): Signature of the then SP, CBI/ACB/BLR.
Ex.P.77: Original sanction order dated 14.2.2005 (4 sheets) Ex.P.78: Covering letter dt. 24.2.2005 of C.V.O., STC, New Delhi to CBI, Bengaluru (1 sheet) Ex.P.79: Copy of Notification dt. 2.9.2003 of Govt. of Karnataka u/s 6 of DSE Act (1 sheet) Ex.P.80: Copy of Notification dt. 26.9.2003 issued by Govt. of India u/s 5 of DSPE Act, (1 sheet) Ex.P.81: CC of Statement of contracts between M/s Kaycee Coffee & S.T.C., Bengaluru (2 sheets) Ex.P.82: Copy of Certificate of Incorporation in respect of M/s.
Kaycee Coffee Ex.P.83: CC of statement of account of Syndicate Bank in respect of C.A.No.1865 (4 sheets) Ex.P.84: CC of Commercial Invoice No.41 dt. 25.5.2000 Ex.P.85: CC of Commercial Invoice No.47 dt. 2.6.2000 Ex.P.86: CC of Commercial Invoice No.48 dt. 12.6.2000 Ex.P.87 to 89: Copies of Bills purchased by Syndicate Bank in respect of Coffee exported by M/s. Kaycee Coffee (3 sheets) Ex.P.90: Letter dated 01.10.2004 of Chief Manager, Syndicate Bank, Millers Road Branch, Bengaluru (2 sheets) Ex.P.91: True copy of the Fax Message dated 15.12.2000 regarding approval from H.O., S.T.C., for making payment (1 sheet) Ex.P.92: True copy of the permission according by the RBI to make payment (1 sheet) Ex.P.93: True copy of the letter to SBI, Overseas Branch, Bengaluru for issuance of D.D. (1 sheet) Ex.P.94: True copy of DD for US$2,65,000 (1 Sheet) Ex.P.95: True copy of bank advise for US$2,65,000 (1 Sheet) Ex.P.96: True copy of the confirmation of receipt of amount for US$2,65,000 (1 Sheet) from M/s. Coffee America Ex.P.97: True copy of the Fax letter from M/s. Coffee America 148 Spl.C.C.29/05 J admitting the settlement and withdrawal of Arbitration LIST OF DOCUMENTS EXHIBITED FOR THE DEFENCE:
Ex.D-1: Attested copy of Facsimile Transmittal sheet Ex.D-2: Attested copy of Letter dated 2.3.2000 Ex.D-3: Attested copy of Circular No.173 dated 27.7.2000 Ex.D-4: Xerox copy of F.I.R.
Ex.D-5: Xerox copy of the complaint Ex.D-6: Attested copy of Report of Private Agency Ex.D-7: Attested copy of order on I.As in O.S.15412/01 Ex.D-8: Attested copy of Appraisal Report of PW.2 Ex.D-9: Attested copy of Self Appraisal Report of Sri. Sudarshan Ex.D-10: Attested copy of Office Order dated 11.1.1999. Ex.D-11: Attested copy of Office Order dated 4.3.1999. Ex.D-12: Attested copy of Office Order dated 21.7.2000. Ex.D-13: Attested copy of Final Notice dated 9.8.2000. Ex.D-14: Attested copy of Note for consideration of the Bond Ex.D-15: Attested copy of Extract of Contracts concluded by Kaycee and Co., Ex.D-16: Office copy of the Office Note Ex.D-16(a): Signature of PW.2 Ex.D-17: Attested copy of the Fax Message Ex.D-18: Attested copy of the letter dt. 11.7.2000 Ex.D-19: Xerox copy of the letter dt. 22.8.2000 of A1 Ex.D-20: Attested copy of the Letter dated 24.8.2000 Ex.D-21: Attested copy of Status Report Ex.D-22: Attested copy of Covering Letter Ex.D-23: Attested copy of Branch Opinion Ex.D-24: Attested copy of Circular dt. 28.1.1994 (3 sheets) Ex.D-25: Attested copy of Statement shipperwise contracts for 1999-2000 Ex.D-26: Original complaint in Cr. No.343/2000 Ex.D-27: Original F.I.R. in Cr. No.343/2000 Ex.D-28: CC of the plaint in O.S.15412/2001 Ex.D-29: CC of the Judgment and Decree in O.S.15412/2001 Ex.D-30: Shipping Bill No.04554 Ex.D-31: Copy of G.R. Form Ex.D-32: S.T.C. Circular No.105 dt. 28.1.94 (3 sheets) Ex.D-33: Fax Message from S.T.C. Bengaluru to S.T.C. New York (1 sheet) produced by the accused) Ex.D-34: Copy of Fax Message dt. 20/04/000 from S.T.C.
149 Spl.C.C.29/05 J Bengaluru to M/s. Kaycee Coffee.
Ex.D-35: Copy of Fax dated 25.4.2000 from S.T.C. Bengaluru to M/s. Kaycee Coffee Ex.D-36: Copy of Fax dated 01/05/2000 written by PW.5 to S.T.C. New York Ex.D-37: Copy of Standard quotation proposal Ex.D-38: Copy of fax dated 22.3.2000 written by PW.5 to S.T.C. New York Ex.D-39: Copy of Fax dt: 19.5.2000 written by PW.5 to M/s. Kaycee Coffee 2 sheets.
Ex.D-40: Copy of fax dt. 24.5.2000 signed by PW.5 to S.T.C. New York Ex.D-41: Copy of the letter addressed to S.T.C. New York written by A1 - 2 sheets Ex.D-42: Letter dt. 23.5.2000 addressed to S.T.C., New York written by Finance Manager, S.T.C. Bengaluru (copy) Ex.D-43: Copy of the letter dt. 15.4.2000 written by A1 to M/s Kaycee Coffee Ex.D-44: Copy of the arbitration proceedings (marked in Ex.P24 only) Ex.D-45: Copy of the fax dt: 14.7.2000 from A1 to PW.16 -
1 sheet Ex.D-46: Fax copy of the office Note dt. 23.10.2000 for disposal of Stock in New York - 2 sheet (produced by the defence) Ex.D-47: Letter dt: 19.1.2001 seeking permission to file a civil suit addressed to Corporate Office, New Delhi - 3 sheets (produced by defence) Ex.D-48: Copy of the airway bill dt. 28.3.2000 for sending coffee sample - 1 sheet (produced by defence) LIST OF MATERAIL OBJECTS MARKED FOR PROSECUTION:
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(Bheemanagouda K. Naik) XXI Addl.City Civil and Sessions Judge And Prl. Special Judge for CBI Cases, Bengaluru City.
150 Spl.C.C.29/05 J Judgment pronounced in open court, vide separate detailed order.
Acting under Section 235(1) of Cr.P.C., Accused No.1 Dr. R.B. Saha is hereby acquitted for the offence punishable u/s 120-B r/w 420 IPC and Sec. 13(2) r/w sec.
13(1)(d) of Prevention of Corruption Act, 1988. Acting under Section 235(2) of Cr.P.C., Accused No.2 K.C. Santosh and Accused No.3 Manjunath Davanagere are convicted for the offences punishable u/s 120-B and 420 of IPC. To hear regarding sentence of accused No.2 and 3. (Bheemanagouda K. Naik)
XXI Addl.City Civil and Sessions Judge, and Prl. Special Judge for CBI Cases, Bengaluru.
Order pronounced in open court, vide separate detailed order.
For the offence u/s 120B of IPC Accused No.2 K.C. Santosh and Accused No.3 Manjunath Davanagere shall undergo Rigorous Imprisonment for 3 (three) years each and shall pay a fine of Rs.2,50,000/- (Rs. Two Lakhs Fifty Thousand only) each and in default of payment of fine to undergo Simple Imprisonment for 9 (Nine) months each.
151 Spl.C.C.29/05 J Further for the offence u/s 420 of IPC Accused No.2 K.C. Santosh and Accused No.3 Manjunath Davanagere shall undergo Rigorous Imprisonment for 3 (three) years each and shall pay a fine of Rs.2,50,000/- (Rs.
Two Lakhs Fifty Thousand only) each and in default of payment of fine to undergo Simple Imprisonment for 9 (Nine) months each.
Both sentences shall run concurrently.
Acting u/s 428 Cr.P.C., the days spent by accused No.2 and 3 in judicial custody during investigation and trial of this case is given set off towards the imprisonment ordered.
The bail bond of accused No.1 to 3 shall stand cancelled.
Free copy of judgment is supplied to the accused No.2 and 3 in the open court.
(Bheemanagouda K. Naik) XXI Addl.City Civil and Sessions Judge, and Prl. Special Judge for CBI Cases, Bengaluru.