Bangalore District Court
) Mr. C. Prasad vs State By Cbi/Acb/Bengaluru on 8 February, 2017
IN THE COURT OF THE XXI ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AND PRINCIPAL SPECIAL
JUDGE FOR CBI CASES, BENGALURU (CCH-4)
Dated this the 8th day of February 2017.
Present: Sri. R.B. DHARMAGOUDAR,
B.Sc., LL.B., (Spl.)
XXI Additional City Civil and Sessions Judge,
And Prl. Special Judge for CBI Cases, Bengaluru
Crl. Appeal No. 589/2015
Appellants 1) Mr. C. PRASAD
Aged about 45 years
S/o Late V. Chandrashekar
2) Mrs. ANITA PRASAD
Aged about 40 years
W/o C. Prasad
Both residing at No.2618,
Sector-I, 27th Main,
HSR Layout,
Bengaluru-560 102.
3) M/s. Live Ads (India) Pvt. Ltd.,
No.2618, Sector-I, HSR Layout,
Bengaluru-560 102. Represented
by its Directors C. Prasad &
Mrs. Anita Prasad.
(By Sri. H.M. Muralidhar, Advocate)
Vs.
Respondent State by CBI/ACB/Bengaluru
(By Public Prosecutor)
2 Crl. Appeal. No.589/2015 J
JUDGMENT
Being aggrieved by the judgment and order dated 27.3.2015 passed by XVII Addl. Chief Metropolitan Magistrate (Special Court for CBI Cases), Bengaluru in CC No. 21056/2012, the appellants No.1 to 3 have preferred this appeal challenging the order of conviction for the offences punishable u/s 120-B, r/w 420, 465, 467, 471 of IPC and Sec.132, 135, 135(A) of Customs Act, 1962 and Sec.7(1)(a)(ii) of Essential Commodities Act, 1955 r/w Sec.25(1) & (2) of Fertilizer Control Order, 1985 and sentence of imprisonment and fine imposed upon the appellants No.1 and 2.
2. The prosecution case, which gave rise to the present appeal, briefly stated are as under:-
(i) The Police Inspector, CBI/ACB, Bengaluru filed charge sheet against the accused No.1 to 5 for the offences punishable u/s 120-B, r/w 420, 465, 467, 471 of IPC and Sec.132, 135, 135(A) of Customs 3 Crl. Appeal. No.589/2015 J Act, 1962 and Sec.7(1)(a)(ii) of Essential Commodities Act, 1955 r/w Sec.25(1) & (2) of Fertilizer Control Order, 1985. It is alleged in the case of prosecution that the accused No.1 and 2 being Directors of M/s. Live Ads India Private Ltd., and Sri. Gautham Jangada (A3) and Sri. Rajesh Kumar Bhandary (A4) have entered into criminal conspiracy to cheat the Govt. of India in the matter of exporting muriate of potash without refunding the subsidy granted by the Govt. of India which is a restricted item for export. It is further alleged that accused No.1 carried the export of muriate of potash in the garb of industrial salt from ICD, Bengaluru from July 2008 to July 2009 and accused No.3 and 4 have supplied muriate of potash to accused No.1 and received amount from accused No.5 company through their account and also by opening accounts in the names of their 4 Crl. Appeal. No.589/2015 J workers and in the names of persons working for them.
(ii) It is further alleged that muriate of potash which is also called as Potassium Chloride is an imported product. As per Govt. of India Notification No. 30(RE-2003)/2002-2007 dated 28.1.2004, the export of muriate of potash is restricted and export is permitted under licence. As per Sec. 7(1)(a)(ii) of 1955 r/w Sec. 25(1)(ii) of Fertilizer Control Order, 2005 no person shall, except with the prior permission of the Central Government, sell or use the fertilizer for the purpose other than fertilization of the soils and increasing productivity of crops. It is further alleged that on 16.7.2009, Accused No.1 Director of M/s. Live Ads India Pvt., Ltd., submitted shipping bills through his Clearing House Agents M/s. Chakiat Agencies for export of consignment of 550 MTs of muriate of potash in the garb of industrial salt by false declaration and tried to 5 Crl. Appeal. No.589/2015 J export fraudulently and dishonestly to Malaysia. Random samples from 3 containers had been drawn in the presence of representative of Chakiat Agencies, the Custom House Agents of M/s. Live Ads India (P) Ltd., on 21.8.2009 and the samples were sent to the Deputy Director of Agriculture, for testing and the samples were found to be muriate of potash after the samples were tested at the Fertilizer Control Laboratory of Agriculture Department of Govt. of Karnataka, Bengaluru. The Deputy Director of Agriculture in his three reports dated 1.9.2009 has mentioned that the sample is muriate of potash and sample is according to specification. Thus, it is contended that the accused have entered into a criminal conspiracy to cheat the Govt. of India in the matter of exporting of muriate of potash without refunding the subsidy granted by the Government of India by falsely declaring the same as industrial salt, thereby 6 Crl. Appeal. No.589/2015 J caused wrongful loss to the Govt. Of India to the tune of Rs.26.8 crores and corresponding wrongful gain to themselves. Thus the accused No.1 to 5 are alleged to have committed the above said offences.
3. After filing charge sheet, the learned Magistrate took cognizance of the offences against accused and summons to accused No.1 to 5. Upon service of summons accused No.1 to 4 appeared before the learned Magistrate and they were enlarged on bail, and copies of the charge sheet were supplied to them. Thereafter learned Magistrate heard before the charge and on the discharge applications filed by accused No.2 and 3 u/s 227 Cr.P.C. By dismissing the applications filed u/s 227 Cr.P.C., the learned Magistrate framed charge against accused No.1 to 5 and thereafter proceeded to record evidence of the prosecution witnesses. The prosecution in all examined 55 witnesses as PWs. 1to 55 and got marked documents at 7 Crl. Appeal. No.589/2015 J Ex.P.1 to P559. After recording the statements of accused u/s 313 Cr.P.C., the accused No.1 got himself examined as DW-1 and got marked documents at Ex.D1 and D2. The evidence was closed. After hearing the arguments and on appreciation of oral and documentary evidence adduced by the prosecution and defence, the learned Magistrate framed 5 points for consideration and answered Point No.1 and 2 in the affirmative and point No.3 to 5 in the negative and convicted accused No.1, 2 and 5 for the offences punishable u/s 120-B, r/w 420, 465, 467, 471 of IPC and Sec.132, 135, 135(A) of Customs Act, 1962 and Sec.7(1)(a)(ii) of Essential Commodities Act, 1955 r/w Sec.25(1) & (2) of Fertilizer Controller Order, 1985 and acquitted accused No.3 and 4 of all the offences leveled against them and inflicted substantive sentence and imposed fine against accused No.1 and 2 for the above said offences and also passed sentence in default of payment of fine.
8 Crl. Appeal. No.589/2015 J
4. Being aggrieved by the judgment of conviction and sentence passed against them, the appellants have filed this appeal on the following grounds.
(i) The impugned judgment is unjust and illegal without application of mind, perverse and therefore the same is liable to be set aside.
(ii) The learned Magistrate has not appreciated the fact that the appellants were not engaged in export of Muriate of potash and that therefore there was no mis-declaration of the consignment sought to be exported. None of the witnesses have deposed supporting the allegation made against the appellants. Similarly, none of the documents produced and marked on behalf of prosecution supports the alleged case made out against the appellants.
(iii) The reliance placed upon the letter of the Director of Agriculture and the Laboratory's Report to arrive at 9 Crl. Appeal. No.589/2015 J a conclusion that the appellants have committed crime, by the learned magistrate, is one without application of mind. Further contended that the report is not a gospel truth. The Laboratory which has given the said report has not produced the material tested and also the analysis of data. Mere production of the report and its acceptance thereon to convict the appellants is erroneous.
(iv) Deposition of the witnesses and the documents relied upon by the prosecution are totally irrelevant.
The agriculture department report and the
documents produced and marked by the
prosecution being irrelevant, its acceptance thereon to record conviction requires interference by this court.
(v) The learned magistrate has committed a grave error in recording conviction adopting the principles of preponderance of probabilities; the said principal has no place in criminal law. On close perusal of 10 Crl. Appeal. No.589/2015 J the impugned judgment, it is clear that prosecution has not proved its case beyond all reasonable doubts and the learned magistrate recorded acquittal of accused No.3 and 4 for the reasons that the prosecution records does not contain towards which transactions, the amounts were paid, it was required of him to acquit the appellants also.
(vi) The learned magistrate has passed the impugned order with the preconceived mind of convicting the appellants. Therefore, the impugned order is perverse and illegal and it is liable to be set aside. Therefore, prays to allow the appeal, set aside the impugned judgment of conviction and sentence imposed on the appellants.
5. Upon service of notice of appeal, the learned Special Public Prosecutor put in appearance. The records are secured from the trial court. Thereafter the 11 Crl. Appeal. No.589/2015 J arguments of the learned advocate for appellants and the learned Special Public Prosecutor was heard.
6. After considering the arguments advanced by the learned advocate for appellants and learned Special Public Prosecutor and taking into consideration grounds of appeal, the oral and documentary evidence adduced by the prosecution before the trial court and the judgment passed by the trial court, the following points are raised for my consideration: -
1) Whether prosecution proves beyond all reasonable doubts that accused No.1 fraudulently and dishonestly tried to export 550 MTs of muriate of potash under the garb of industrial salt, under shipping bills No.2240092, 2240093 and 2240095 dated 16.7.2009, by falsely declaring it as a industrial salt in violation of Sec.7(1)(a)(ii) of Essential Commodities Act, 1955 r/w Sec.
25(1)(ii) of Fertilizer Control Order, 1985 and 12 Crl. Appeal. No.589/2015 J Sec. 132, 135 and 135(A) of Customs Act, 1962?
2) Whether the prosecution further proves beyond all reasonable doubts that accused No.1, 2 and 5 have entered into a criminal conspiracy to cheat the Govt. of India in the matter of exporting of muriate of potash in the garb of industrial salt and exported muriate of potash from July 2008 to July 2009 without refunding the subsidy granted by Govt. of India, by falsely declaring the same as industrial salt and thereby caused wrongful loss to the Govt. of India to the tune of Rs.26.8 crores and corresponding wrongful gain to themselves and thereby committed offence punishable u/s 120B r/w 420 IPC?
3) Whether the judgment of conviction and sentence passed by the trial court is not sustainable under law and on facts and it is liable to be set aside?
4) What order?
7. My findings on the above points are as follows: 13 Crl. Appeal. No.589/2015 J
Point No.1 : In the negative Point No.2 : In the negative Point No.3 : In the affirmative Point No.4 : As per final Order For the following:
REASONS
8. POINT NOs.1 TO 3: The case made out by the prosecution is that M/s. Live Ads India Pvt. Ltd., did not possess requisite license for import/export of muriate of potash. That on 16.7.2009, accused No.1 being Director of M/s. Live Ads India Pvt. Ltd., submitted shipping bills dated 16.7.2009 with Invoices and Packing Lists through his Clearing House Agent M/s. Chakiat Agencies for export of consignment of 750 MT of Muriate of Potash in the garb of industrial salt to Malaysia and handed over only 550 MT of consignment of muriate of potash under the garb of industrial salt by false declaration, packed in 11000 bags of 50 Kgs., each in 22 containers. 14 Crl. Appeal. No.589/2015 J
9. Sri. G. Ramaswamy, Agricultural Officer of K.R. Pura, Govt. of Karnataka had drawn random samples from 3 containers in the presence of representative of Chakiat Agencies, Clearing House Agent of M/s. Live Ads India Pvt. Ltd., on 21.8.2009 and sent the same to the Deputy Director of Agriculture, Fertilizer Control Laboratory, Bengaluru for testing the sample. The samples were tested at the Fertilizer Control Laboratory of Agriculture Department of Govt. of Karnataka, Bengaluru and the Deputy Director of Agriculture in three reports dated 1.9.2009 has mentioned that sample is muriate of potash and the sample is according to specifications. Thus, it is contended by the prosecution that the accused No.5 fraudulently and dishonestly tried to export 550 MTs of muriate of potash under the garb of industrial salt and thereby violated the Sec.7(1)(a)(ii) of Essential Commodities of Act, 1955 r/w Sec. 25(1) & (2) of Fertilizer Control Order, 1985.
15 Crl. Appeal. No.589/2015 J
10. Further case made out by the prosecution is that accused No.1 carried the export of muriate of potash in the garb of industrial salt from ICD, Bengaluru from July 2008 to July 2009 and further contended that accused No.1 procured muriate of potash from Koppal, Raichur, Sindhanoor from accused No.3 and 4, and re- packed in Warehouse at Bommasandra, Electronic City and exported from ICD as industrial salt, without refunding the subsidy granted by the Govt. of India thereby caused wrongful loss to the Govt. of India to the tune of Rs.26.8 crores and corresponding wrongful gain to himself and other accused.
11. The learned Magistrate upon appreciating the evidence adduced by prosecution in respect of the alleged conspiracy between accused No.1 and other accused for export of muriate of potash under the garb of industrial salt by procuring it from accused No.3 and 4 from Sindhanoor, Koppal and Raichur has given a finding that 16 Crl. Appeal. No.589/2015 J "There is no iota of evidence available on record to show that accused No.3 doing a fertilizer business as well as he supplied MOP to accused No.5." Further, held that "The Investigating Officer is not able to trace out the registered fertilizer dealer in the various places as stated in the charge sheet as well as he is not able to collect any material documents to show that accused No.3 has purchased restricted item and supplied to accused No.5 company". Thus, held that "prosecution was not able to prove the guilt of the accused No.3 beyond all reasonable doubts."
12. So, also the learned Magistrate while appreciating the evidence of witnesses, to give finding on Point No.5, has held as under: -
"there is no scrap of paper by the prosecution to show that this accused (means accused No.4) actively participated in the alleged crime as well as he has supplied muriate of potash to accused No.1. Further held that it is not possible to hold that this accused person (Accused No.4) has supplied muriate of potash to accused No.5 and gained as stated by the prosecution".
Further held that "the evidence and documents available on record are not proved the guilt of the accused beyond all reasonable doubts".
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13. The learned Magistrate on appreciating the evidence on record has answered Point No.4 and 5 in the negative by holding that the prosecution has failed to prove the alleged conspiracy of accused No.1 with accused No.3 and 4 and also failed to prove that in furtherance of the alleged conspiracy accused No.1 has procured muriate of potash from accused No.3 and 4.
14. The prosecution has not preferred any appeal against the findings on point No.4 and 5 given by the learned Magistrate. Thus, the findings of the learned Magistrate on the points No.4 and 5 to the effect that prosecution has failed to prove the alleged conspiracy between accused No.1, 3, 4 and 5 and further finding of the learned Magistrate that the prosecution failed to prove the procuring of muriate of potash from accused No.3 and 4 and further finding of the learned Magistrate that prosecution failed to prove that accused No.3 and 4 have supplied muriate of potash to accused No.5 have 18 Crl. Appeal. No.589/2015 J become final. Thus this court, while deciding this appeal, cannot venture into find out the alleged conspiracy between accused No.1 to 5. The only point that requires to be considered by me in this appeal is, whether prosecution is able to prove beyond all reasonable doubts, that accused No.1 exported on earlier occasions and attempted to export on 16.7.2009, muriate of potash in the garb of industrial salt through accused No.5 company to Malaysia without refunding the subsidy amount.
15. In order to answer this point, it is necessary to find out, whether the item which was exported from July 2008 to July 2009 and attempted to export on 16.7.2009 to Malaysia by accused No.1 through accused No.5 company was in fact muriate of potash and not an industrial salt as declared by accused No.1.
16. In order to prove that the item which was exported from July 2008 to July 2009 and attempted to 19 Crl. Appeal. No.589/2015 J export on 16.7.2009 to Malaysia by accused No.1 through accused No.5 company was in fact muriate of potash, by making a false declaration that it is an industrial salt, the prosecution examined PW.2 to PW.15, PW.19, PW.53 and PW.55 and got documents marked at Ex.P24 to P50, Ex.P.63 to P106, Ex.P.134 to P136, Ex.P.142 to P144 which are relevant for the points raised for consideration in this appeal.
17. Now, I would like to appreciate the oral and documentary evidence adduced by the prosecution to find out whether the accused No.1 exported muriate of potash in the garb of industrial salt from ICD, Bengaluru from July 2008 to July 2009 and attempted to export 550 MTs of consignment of muriate of potash under the garb of industrial salt by false declaration vide three shipping bills No.2240095, 2240092 and 2240093 dated 16.7.2009.
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18. In the first instance, I would like to appreciate the evidence of prosecution witnesses in respect of the alleged attempt made by the accused No.1 to export 550 MT of muriate of potash under the garb of industrial salt vide three shipping bills No.2240095, 2240092 and 2240093 dated 16.7.2009.
19. PW.8 Sri. K.T. Pakshi Raju, who was working as Superintendent of Customs in Headquarters, Bengaluru from 2009 to 2010 has deposed in his evidence that on 14.9.2009, Hari Babu, Superintendent of Customs had instructed him to conduct seizure of goods from ICD, Whitefield. Accordingly he went to ICD, Bengaluru with witness Thimmarayagowda and Chandrahasa and CW-10 and they have seized two containers containing MOP of 1000 bags of 50 Kgs., each and prepared mahazar as per Ex.P62. Further deposed that the said container is pertaining to shipping bill No.2240093 dated 16.7.2009 and belongs to Accused No.5. PW.8 admitted in his 21 Crl. Appeal. No.589/2015 J cross-examination that he has not seized the container in presence of accused No.1 and further admitted that he is not aware whether Customs Department has allowed to export the seized container on furnishing the Bank Guarantee. He further admitted that he is not a party to the mahazar conducted at the time of taking samples for testing.
20. PW.19 Sri. Venkatanarayana Hari Babu, Superintendent of Customs, HPU, Bengaluru has deposed in his evidence that as per the direction of Additional Commissioner, Customs, on 17.9.2009 he conducted search at the premises of ICD, Bengaluru and seized fertilizer containers belonging to Live Ads and others and prepared mahazars Ex.P.108 to 109. In his cross-examination PW.19 admitted that only after ensuring that the items are permissible for export, they will allow the exporters to put it in the containers. Further admitted that the test report submitted by the 22 Crl. Appeal. No.589/2015 J exporters will be verified by the Customs Department before allowing export. He further admitted in his cross- examination by accused No.4 whenever any container is to be examined, first OTL No. has to be recorded and then after examination again it has to be locked and then new OTL No. has to be given. Further admitted that in Ex.P.106, no OTL No. has been mentioned with regard to breaking and closing of containers. Further admitted that he has not made any reference to Agricultural Department for having not mentioned the OTL No. in token of breaking the containers and taking samples.
21. PW.19 further admitted that as per the documents, the weight of consignment seized under Ex.P.108 and 109 pertaining to shipping Bill No.2240092 and 2240095 on 17.9.2009 were 250 MTs each. Further admitted that the similarly weight of container seized under Ex.P.62 dated 14.9.2009 of Shipping Bill No. 2240093 was 50 MTs. Thus, from the admission of 23 Crl. Appeal. No.589/2015 J PW.19 that in Ex.P.106 no OTL No. has been mentioned with regard to breaking and closing of containers and in the absence of any statement in the evidence of PW.4 regarding noting down of first OTL No. before opening the container for taking out samples and assigning a new OTL No. after taking out the samples from the container, goes to create a serious doubt in my mind whether the said containers have been opened at all by PW.14 for drawing samples.
22. PW.19 volunteered that he do not know about Ex.P.62 and he has not instructed PW.8 to conduct the seizure of goods from ICD, Whitefield. Whereas, PW.8 has deposed in his evidence that on 14.9.2009 Hari Babu, Superintendent of Customs (PW.19) has instructed him to conduct of seizure of goods from ICD, Whitefield accordingly he went to ICD, Whitefield, Bengaluru and seized two containers containing MOP of 1000 bags of 50 24 Crl. Appeal. No.589/2015 J Kg., each pertaining to shipping bill No.2240093 under mahazar Ex.P.62.
23. Thus there is a contradiction in the evidence of PW.19 and PW.8 regarding seizure of two containers pertaining to shipping bill No. 2240093. Therefore, there arises doubt in my mind as to whether PW.8 had any authority to seize the said two containers pertaining to shipping bill No. 2240093 as per mahazar marked at Ex.P.62.
24. The prosecution examined Agricultural Officer as PW.14 to prove that he has drawn samples from the containers kept in ICD, Bengaluru. PW.14 deposed in his evidence that in the year 2009 he received a letter from Deputy Director of Agriculture, Bengaluru to obtain samples from ICD, Whitefield, Bengaluru. Accordingly he went to ICD, Whitefield, Bengaluru and he took 8 samples from the containers in the presence of staff of Agency and Officers of Customs and prepared mahazar 25 Crl. Appeal. No.589/2015 J as per Ex.P.106 and prepared Form-J and Form-K marked at Ex.P.103, 103(c), 104, 104(c), 105 and 105(c) respectively. PW.14 denied that he has not followed the procedure prescribed in FCO while drawing samples. However, admitted that if the fertilizer is not packed as per procedure prescribed in FCO, the report varies. Though deposed in his evidence that the material which was sent to the lab for testing was packed as per FCO but no evidence is available on record to show that the sample was drawn from the containers in the manner prescribed in Schedule-II (Part-A), the procedure for drawal of samples of fertilizers. He further admitted in his cross-examination by the advocate for accused No.4 that he has not mentioned which method he has adopted in drawing the samples in the panchanama. Thus, neither panchanama marked at Ex.P.106 nor the oral evidence of PW.14 reveal that procedure as laid in Schedule-II (Part-A) has been followed while drawing samples from the containers.
26 Crl. Appeal. No.589/2015 J
25. On perusal of the evidence of PW.14, it becomes clear that he has not followed the procedure for drawal of samples of fertilizers as shown in Schedule-II of Fertilizer (Control) Order, 1985. The procedure prescribed for sampling from bagged material can be found in Schedule-II (Part-A) at Sl. No.2. The prosecution has not adduced evidence to show that the procedures laid down in Schedule-II (Part-A) has been followed while drawing samples from the containers pertaining to shipping bill No. 2240092, 2240093, 2240095 dated 16.7.2009.
26. To find out the effect of irregularity in taking samples, I would like to rely on Sri. Sarjoo Prasad's, the Essential Commodities Act with Central Control Orders published by Law Publishers (India) Pvt., Ltd., IX Edition, at page No.130 wherein the Author relying on the principles laid down by Punjab & Haryana High Court in various decisions, commented as under: -
"Irregularities in taking samples - Effect of - In the under-noted case [Hardeo Singh v. State of 27 Crl. Appeal. No.589/2015 J Punjab, 1990 (1) E.F.R. 206 at p. 207 (P & H)], it was held that no plausible explanation has been put forth on behalf of the State as to why the procedure adopted for taking the sample or, the manner in which the sample was actually taken, does not find specific mention in impugned First Information Report. The lacuna in the prosecution case cannot be filled by giving details at a later stage. Since the aforesaid mandatory legal formalities were not observed or adhered to in the instant case, the impugned First Information Report and the consequent proceedings taken there under, including framing of charge-sheet against the petitioners are liable to be quashed."
27. Thus, the above commentary makes it clear that if there is irregularity in taking samples, the impugned First Information Report and the consequent proceedings taken there under, including the framing of charge-sheet are liable to be quashed. It is not elicited from the mouth of PW.14 the procedure and method adopted by him for drawing samples. Absolutely, there is no evidence on record to prove that samples were drawn as per the procedure laid down in Schedule-II (Part-A) FCO, 1985. Thus, in view of the above principle laid down by the Punjab & Haryana High Court found in the above 28 Crl. Appeal. No.589/2015 J commentary, I am of the opinion that the irregularity committed by PW.14 in drawing samples has cut the case of the prosecution at its roots. The learned Magistrate while appreciating the evidence of PW.14 has not taken into consideration, the above legal position. Thus, the learned Magistrate has committed serious error in accepting the evidence of PW.14 only on the say of PW.14 that he has drawn samples as per FCO, without there being any material to show that he has followed the procedure prescribed under FCO, 1985.
28. PW.15 Smt. M.R. Suma, Deputy Director of Agriculture deposed in her evidence that her duties as a DDA was to supervise and do the analysis of fertilizer. She further deposed that they will do the analysis of the samples received from Fertilizer Inspector (Agriculture Officer). PW.15 further deposed that PW.14 had sent the samples along with K & J forms with a request to analyse the industrial salt suspected as MOP. She further 29 Crl. Appeal. No.589/2015 J deposed that after taking the samples she had given code numbers to the samples and she allotted sample No.870 to Hemalatha and sample No.871 and 874 to Kiran Kumar T.P. She further deposed that in her presence, both of them analysed the samples and given the result with code numbers. After receiving the results from analysts, she decoded the same, prepared L-Form. After preparing L-Form, PW.14 personally came and received the reports. She identified the reports marked at Ex.P.134, 135 and 136 issued by her and further deposed that the samples analysed by their Analysts shows Potassium Chloride. All the tests conducted by them disclose the positive result that the samples are Potassium Chloride.
29. PW.15 admitted in her cross-examination that reports Ex.P.134 to 136 does not disclose the procedure of analysis to arrive at the result. She further admitted that she can produce analyst report given by analysts. 30 Crl. Appeal. No.589/2015 J She further deposed that CBI has not asked to produce the analyst report. As per the procedure prescribed for drawing samples at Schedule-II (Part-A) of FCO, 1985, out of the three samples collected one sample so sealed shall be sent to the incharge of the laboratory notified by the State Govt. under Clause 29 or Central Fertilizer Quality Control & Training Institute, for analysis and another sample shall be given to the manufacturer or importer or dealer or the purchaser as the case may be. The third sample shall be sent by the Inspector to his next higher authority for keeping in safe custody. Whereas, PW.15 in her evidence deposes that they have not supposed to keep the samples after analysis, in this case also they have not kept the samples. Thus, the evidence of PW.15 is against the procedure prescribed in Schedule-II (Part-A) of FCO, 1985.
30. Admittedly, PW.15 is not the person who conducted analysis of the samples. Though, she deposed 31 Crl. Appeal. No.589/2015 J in her evidence that in her presence the analysts analysed the samples but she has not deposed the method adopted for analyzing the samples. Schedule-II (Part-B) of FCO, 1985, provides methods of analysis of fertilizers. For determination of Potassium, Sodium Tetraphenylboron method has to be adopted. Absolutely, there is no evidence on record to show that what method has been adopted by PW.15 or analysts to whom the samples were allotted for analyzing the chemical composition of the samples. Thus, in the absence of evidence to prove that the above method has been adopted to determine the Potassium in the sample, it is not possible to place reliance on the evidence of PW.15 and her reports marked at Ex.P.134, 135 and 136.
31. Ex.P.103 to 105, reveal that samples were drawn from containers bearing No. OOLU 2894396, OOLU 1745280 and OOLU 1065580. On perusal of mahazar Ex.P.62, the sample drawn from container bearing OOLU 1745280 pertains to shipping bill 32 Crl. Appeal. No.589/2015 J No.2240093 dated 16.7.2009 and on perusal of mahazars marked at Ex.P.108 and 109 they reveal that the samples drawn from containers bearing No. OOLU 2894396 and OOLU 1065580 pertains to shipping bills No. 2240092 and No.2240095 dated 16.7.2009 respectively, belonging to M/s. Live Ads Pvt., Ltd. Ex.P.134, 135 and 136 are the analysis report pertaining to the fertilizers samples shown in Form-J marked at Ex.P.103, 104 and 105. While appreciating the evidence of PW.14 and 15, it is held that there is no evidence to show that the samples were drawn according to the procedure prescribed in Schedule-II (Part-A) of FCO, 1985 and that there is no evidence to show that Sodium Tetraphenylboron method has been adopted to determine the Potassium in the fertilizer sample subject to analysis. I am of the opinion that the learned Magistrate has accepted the evidence of PW.14 and PW.15 without properly assessing whether the evidence of PW.14 and 15 are legally admissible in the absence of evidence to prove 33 Crl. Appeal. No.589/2015 J the procedure adopted for drawing samples and method adopted to determine the presence of Potassium in the samples subjected for analysis. Therefore, the learned Magistrate has committed serious error in placing reliance on the evidence of PW.14 and 15 to arrive at a conclusion that prosecution was able to prove that the consignment attempted to be exported by Accused No.1 under shipping bill No. 2240092, 2240093 and 2240095 dated 16.7.2009 was a Muriate of Potash in the garb of industrial salt. Thus, the finding of the trial court is not founded on the legal and admissible evidence as such the finding of the trial court on this point is liable to be set aside.
32. Now, I would like to appreciate the oral and documentary evidence adduced by the prosecution to find out whether the accused No.1, 2 and 5 in furtherance of their criminal conspiracy to cheat the Govt. of India, exported muriate of potash in the garb of 34 Crl. Appeal. No.589/2015 J industrial salt from ICD, Bengaluru from July 2008 to July 2009 without refunding the subsidy amount and thereby caused wrongful loss to the tune of Rs.26.8 crores.
33. In order to prove that the item which was exported on earlier occasions by accused No.1 through accused No.5 company was in fact muriate of potash, by making a false declaration that it is an industrial salt, the prosecution examined PW.2 to PW.13, PW.19, PW.53 and PW.55 and got documents marked at Ex.P24 to P50, Ex.P.63 to P106, which are relevant for the points raised for consideration in this appeal.
34. In order to prove that accused No.1, 2 and 5 in furtherance of their criminal conspiracy to cheat the Govt. of India in the matter of export of muriate of potash under the garb of industrial salt during the period from July 2008 to July 2009 without refunding the subsidy amount to the Govt. of India and without requisite 35 Crl. Appeal. No.589/2015 J permit, cheated the Govt. of India and thereby caused wrongful loss to the tune of Rs.26.8 crores and corresponding gain to themselves, prosecution has produced the shipping bills marked at Ex.P.63 to 102 and also produced Bengaluru Test House Report marked at Ex.P.27 to 42 and Bengaluru Test House Invoices at Ex.P.43 to 50.
35. Thus, the prosecution has to establish the link between the Test House Report marked Ex.P.27 to P42 and the shipping bills marked at Ex.P.63 to P102 to prove its case. In order to establish the link between the Test House Report marked at Ex.P.27 to P42 it is necessary to prove that they are pertaining to the samples drawn from the consignment which were exported under shipping bills marked at Ex.P.63 to P102 so as to come to the conclusion that the material exported under shipping bills marked at Ex.P.63 to 102 was muriate of potash in the garb of industrial salt. 36 Crl. Appeal. No.589/2015 J
36. In order to prove this fact, the prosecution has examined PW.2 to 13, PW.19, PW.53 and 55. Therefore, I would like to appreciate the evidence of these witnesses and also appreciate the judgment of the learned Magistrate to find out whether it is justifiable.
37. None of the above witnesses examined by the prosecution have deposed in their evidence that the Bengaluru Test House Reports marked at Ex.P.27 to P42 are in respect of samples drawn from the consignment which were exported under shipping bills marked at Ex.P.63 to P102. However, the prosecution produced the Test Report of Geological & Metrological Laboratory marked at Ex.P.24 pertaining to shipping Bill No.2226550 marked at Ex.P.27. Except this test report marked at Ex.P.24 pertaining shipping Bill No. 2226550 dated 2.4.2009 absolutely there are no test reports pertaining to other shipping bills marked at Ex.P.63 to P76 and P78 to P102.
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38. In order to prove Ex.P.24, prosecution examined PW.2 and 3. PW.2 deposed in his evidence that Customs Officer, Bengaluru sent the samples for chemical analysis and he has conducted analysis and submitted the report marked at Ex.P.24. According to his observation, the samples sent by Customs was found to be Potassium Chloride. However, PW.2 admitted in his cross- examination that the documents produced by him do not speak about the samples sent for testing was in the required standard. He further pleads ignorance by deposing that he do not know whether the samples drawn and sent for testing was packed as per required standard. He further admitted in his cross-examination that on going through Ex.P.24, it is not possible to say what are the tests conducted to arrive at the result. Further admitted that the method as well as the procedure adopted by him is not mentioned in the report. Further admitted that he has not conducted the test to 38 Crl. Appeal. No.589/2015 J find out nature and composition of the samples sent by the Customs Department but his Chemists conducted the test. Further admitted that he has no personal knowledge about the procedure followed in getting the test report. Further admitted that solubility test was not conducted to arrive at the conclusion. Thus, from the above admission of PW.2 it is evident that he was not aware whether the samples sent for the analysis was drawn in accordance with the procedure prescribed in Schedule-II (Part-A) of FCO, 1985. So, also the admission of PW.2 goes to prove that he is not aware of the method adopted to arrive at a result. Thus, in the absence of evidence to prove the procedure adopted for drawing samples and the method adopted for determination of Potassium in the samples, the Test Report marked at Ex.P.24 cannot be relied upon to hold that the material exported under shipping bill No. 2226550 was muriate of potash. The learned magistrate without appreciating the 39 Crl. Appeal. No.589/2015 J evidence of PW.2 in the light of above admissions blindly accepted Ex.P.24 as true which is unjustifiable.
39. The prosecution examined PW.3 to prove Ex.P.24. PW.3 deposed that he has conducted chemical composition of the samples received from the Customs Office and issued Ex.P.24 and he has opined that the sample falls in the category of potassium chloride. PW.3 admitted in his cross-examination that they will not take much care on the standard of packing before subjecting the sample to test. Further admitted that there is no sample packing specification test before subjecting the samples to test. However, admitted in his cross- examination that the chemical composition in the given sample varies if it is not properly packed as per standard norms. The very next moment, he pleads ignorance by stating that he do not know when materials are exposed to atmosphere the chemical composition in the material would vary. Further admitted that it is not possible to 40 Crl. Appeal. No.589/2015 J say what are the foolproof test methods adopted while giving the observation as per Ex.P.24. He pleads ignorance as to when the Customs Department have referred the samples for test. The FCO 1985 provides that sample of fertilizers required to be sent for chemical analysis within one week from the date of drawing samples and that report has to be submitted within 30 days from the date of receipt of samples. The test report marked at Ex.P.24 do not reveal the date when the sample was drawn. Thus, on appreciation of the oral evidence of PW.3 and the documentary evidence marked at Ex.P.24, it is evident that the procedure laid down in the Food Control Order, 1985 for drawing samples and also the method to be adopted for testing samples has not been adhered to. Thus, in view of the principle laid down in the ruling referred above, it can be held that Ex.P.24 cannot be relied upon to hold that prosecution has established that the sample subjected for test was found to be Potassium Chloride. Thus, the learned 41 Crl. Appeal. No.589/2015 J Magistrate while appreciating the evidence of PW.3 has lost the sight of the fact that the samples which are subjected to test to find out the chemical composition required to be drawn as per the standard procedure and require to adopt the method prescribed for determination of Potassium, in FCO, 1985. Thus the learned Magistrate has committed a serious error in placing reliance on the evidence of PW.3.
40. While appreciating the evidence PW.4 the learned Magistrate has held that Ex.P.27 to P42 are the analysis report and Ex.P.43 to P50 are the bills for payment of fees for the analysis of the samples. Further held that accused No.5 company has given requisition, as well as produced samples for testing. The test was conducted by PW.4 and issued report clearly mentioning the samples sent by A5 is the Potassium Chloride and it is not disputed by A5. However the learned Magistrate seems to have not considered the admissions given by 42 Crl. Appeal. No.589/2015 J PW.4 in the cross-examination wherein he has clearly admitted that he has not conducted the sample test but he has put the signature as a Chief Analyst. He further admitted that he do not have personal knowledge about the test conducted by their Chemist. Further admitted that one has to verify the entries in the Lab Note Book to say whether the entries made in the test report are correct or not. Further admitted that in the absence of Coding Book, it is not possible to say whether this report relates to samples received. Thus, on appreciating the evidence of PW.4, it becomes clear that he has not personally analysed the samples and he do not have personal knowledge about the test conducted by the Chemist. Thus, in the absence of evidence of Chemist who analysed the samples as per Ex.P.27 to P42, the said reports cannot be said to have been proved by adducing the legal and admissible evidence. Thus, the learned Magistrate has committed error in placing reliance on 43 Crl. Appeal. No.589/2015 J Ex.P.27 to P42 to held that samples which were subjected to analyse found to be Potassium Chloride.
41. The learned Magistrate has come to the conclusion that the consignments exported under shipping bill No. Ex.P.63 to P102 was Muriate of Potash on the basis of reports marked at Ex.P.30, 32 and 34 to P42 on the ground that the documents marked through PW4 at Ex.P30, 32 and 34 to P42 are the own documents of A5 and these documents clearly reveal that the material which was exported is the Potassium Chloride. This finding of the learned Magistrate has no basis. Absolutely, there is no evidence to prove that the test reports marked at Ex.P.30, 32 and 34 to P42 are in respect of the samples drawn from the consignment exported under a shipping Bills marked at Ex.P.63 to P102. In the absence of connecting evidence to prove that Ex.P.30, 32 and 34 to P42 test reports are pertaining to the consignments exported under shipping bills 44 Crl. Appeal. No.589/2015 J marked at Ex.P.63 to P102, it is not possible to hold that exported material was muriate of potash since neither Ex.P.30 to P42 reveal that the test report is in respect of consignments exported under shipping bill marked at Ex.P.63 to P102 nor the shipping bills marked at Ex.P.63 to P102 reveal that Ex.P.30, 32 and 34 to P42 are in respect of the consignment under Export. Therefore, the finding of the trial court that the material exported under shipping bills marked Ex.P.63 to P102 was proved to be muriate of potash on the basis of test report marked at Ex.P.30, 32 and 34 to P42 is unfounded, baseless and liable to be set aside.
42. On appreciating the evidence of PW.5 to 13, nothing is found in their evidence to establish nexus between the test reports marked at Ex.P.30, 32 and 34 to P42 and the materials exported under shipping bill marked at Ex.P.63 to P102.
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43. PW.5 deposed that when they received lab test report they came to know that item exported by exporter through their agency was MOP and not industrial salt. But there is nothing in the evidence of PW.5 to establish a nexus between the test house report marked at Ex.P.30, 32, 34 to 42 and the material exported under shipping bills marked at Ex.P.63 to P102. The further admission of PW.5 that even after the test report Customs Department has allowed A1 to export the Cargo cuts the case of the prosecution at its roots.
44. PW.6 in his cross-examination admitted that it is the duty of the Customs Department to ensure, before allowing to export the goods, whether it is permissible or not. Further admitted that in this case exports are permitted unabatedly. The fact that Customs Department allowed to export the goods warrants an inference that the goods exported under shipping bill Ex.P.63 to P102 were not restricted item. 46 Crl. Appeal. No.589/2015 J
45. PW.7 deposed that accused No.5 has sent the materials to their laboratory for testing the Potassium Chloride contents, their laboratory analysed the materials and that he has supervised the test done by the subordinate officers. He further deposed that Ex.P.32 to P42 are the reports submitted by them. However, PW.7 in his cross-examination admitted that he do not know the process followed by lab to arrive at the report. Further admitted that he cannot speak about the correctness or authenticity of the report. He further admitted that he do not know the difference between the industrial salt and fertilizer salt. He pleads ignorance by stating that he do know the packing specification of the samples sent for testing. He further pleads ignorance by stating that he do not know if the packing specifications of the samples are not correct then the report varies. The admissions of PW.7 goes to prove that he cannot speak about correctness or authenticity of the report. When PW.7 is unable to speak about correctness or 47 Crl. Appeal. No.589/2015 J authenticity of the report marked at Ex.P.30, 32 to P42 then no reliance can be placed on the said reports to hold that Potassium Chloride was found in the samples.
46. PW.9 admitted in his cross-examination that when the Customs Department suspects they can draw samples and send for testing. He further admitted that the Customs Department has checked the materials which was declared by the exporter to export the Cargo. PW.10 admitted in his cross-examination that when once the Cargo is permitted to be stuffed into the container it goes without saying that it is not a restricted commodity. PW.53 the Superintendent of Customs ICD, Bengaluru admitted in his evidence that they have allowed the export without insisting the test report. The test report is not must for all exports. Thus, the test reports marked at Ex.P.30, 32, 34 to P42 cannot be said to be the test reports pertaining to the consignment exported under shipping bill Ex.P.63 to P102, since furnishing of a test 48 Crl. Appeal. No.589/2015 J report along with the shipping bill was not a mandatory. PW.53 further admitted that after test reports also the export was allowed in 2009. Therefore, it can be inferred the consignment exported under Ex.P.63 to P102 cannot be said to be a restricted item. Therefore, a legitimate inference can be drawn that the material exported under Ex.P.63 to P102 was not restricted item.
47. The learned Magistrate has committed serious error in placing burden on accused stating that he should have sent the samples to any other testing department to ascertain the real composition of the samples. So also learned Magistrate has committed a serious error in placing burden on the accused by stating that the accused was not able to furnish any documents or evidence to show that the material which was exported by them is the industrial salt. It is the prosecution who requires to prove that the accused attempted to export muriate of potash under the garb of industrial salt. 49 Crl. Appeal. No.589/2015 J Thus, the very approach of the learned magistrate placing burden on the accused is defective which lead the learned Magistrate to fall into serious error. Therefore, the findings of the learned Magistrate are not justifiable under law and on facts. Thus, on careful re-appreciation of evidence of PW.2 to 15, 19, 53 and 55 and the relevant documents referred above, I am of the opinion that the prosecution has failed to prove that the accused No.1 has attempted to export the muriate of potash under the garb of industrial salt under shipping bills No.2240092, 2240093, 2240095 dated 16.7.2009 and further failed to prove that accused No.1, 2 and 5 have entered into a criminal conspiracy to cheat the Govt. of India and in furtherance of the said criminal conspiracy have exported muriate of potash under the garb of industrial salt from the month of July 2008 to July 2009 without reimbursing the subsidy amount to the Govt. of India and thereby caused wrongful loss to the Govt. of India to the extent of rs.26.8 crores and wrongful gain for 50 Crl. Appeal. No.589/2015 J themselves. Hence, I answer Point No.1 and 2 in the negative and Point No.3 in the affirmative.
48. POINT No.4: In view of my findings on Points 1 to 3, I proceed to pass the following:
ORDER The appeal filed by appellants/accused No.1, 2 and 5 u/s 374 Cr.P.C., is hereby allowed.
Consequently the judgment of conviction and sentence passed by XVII ACMM, Bengaluru dated 27.3.2015 in CC No.21056/2012 is hereby set aside.
Acting u/s 248(1) Cr.P.C., accused No.1, 2 and 5 are acquitted of the offences punishable u/s 120-B, r/w 420, 465, 467, 471 of IPC and Sec.132, 135, 135(A) of Customs Act, 1962 and Sec.7(1)(a)(ii) of Essential Commodities Act, 1955 r/w Sec.25(1) & (2) of Fertilizer Control Order, 1985.51 Crl. Appeal. No.589/2015 J
Send the records to the trial court with a copy of this judgment.
(Dictated to the Judgment Writer directly on the computer, corrected, print out taken by him and then pronounced by me in open Court this the 8th day of February, 2017) (R.B. DHARMAGOUDAR) XXI Addl. City Civil and Sessions Judge, and Prl. Special Judge for CBI Cases, Bengaluru.