Delhi District Court
Cbi vs . Mohinder Singh Sahni Page No. 1 Of 37 on 24 September, 2015
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In the Court of Sh. Gurdeep Singh
Special Judge (PC Act): CBI-05: Patiala House Courts:
New Delhi
Closure Report No. 03/15
Unique ID No. 02403R0054752010
Central Bureau of Investigation
Vs.
1. Mohinder Singh Sahni
S/o Sardar Amrik Singh
R/o D-5/17, Vasant Vihar, New Delhi
2. Maj. Sarabjeet Singh (Retd.)
S/o Late Sh. Gopal Singh
R/o 12/302, Heritage City, M.G. Road
Gurgaon, Haryana
3. M/s K.B.P. Design Bureau
Cheglovskaya Zaseka St. 300001
Tula, Russia
Date of filing of closure report: 18.02.2010
Date of order : 24.09.2015
ORDER
24.09.2015
1. Vide this order, I shall decide regarding the acceptance of the closure report or otherwise. The facts leading to the filing of the closure report are that:
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2. The case was registered against Sh. M.S. Sahni, a private person, Maj. (Retd.) S.J. Singh and unknown officials of Ministry of Defence and Army Headquarters for the following lapses, acts of omission and commission on their part:
(i) That during 1998-2000, Major (Retd) S.J. Singh and Sh.
M.S. Sahni, a private person and defence middlemen, entered into criminal conspiracy with each other and with unknown officials of Ministry of Defence (MoD) and Army Headquarters (AHQ) and with M/s K.B.P. Design Bureau, Tula Russia and induced the Ministry of Defence to purchase 1000 Nos. of Terminally Guided Munitions (Krasnopol) and 10 Laser Designators worth Rs.151 crores approx. from M/s K.B.P. Design Bureau, Tula Russia, despite its failure in five tests out of six.
(ii) That unknown officials of MoD repeatedly violated Defence Procurement Procedure-1992 (DPP) in purchase of Krasnopol PGMs by entering into an agreement dated 24.12.1998 for trial before publication of GSQR, issuance of Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 2 of 37 :: 3 ::
RFP. It was also alleged that the unknown officials of MoD entered into an agreement dated 25.06.1999 with M/s K.B.P. Tula for conducting further trials of the PGMs before the approval of Cabinet Committee on Security (CCS) to enter into Conditional Contract. It has been further alleged that MoD again signed a Conditional Contract dated 30.08.1999 with M/s K.B.P. Tula against the spirit of DPP-1992.
(iii) That unknown officials of MoD caused trials of the PGMs, which were not in consonance with the technical specifications and trial were confined to stationary tanks only. It has also been alleged that the accused public servants, with malafide intention, prepared and accepted false report to the effect that the PGMs were effective against the moving targets also.
(iv) That contrary to the laid down procedure, the Price Negotiation Committee (PNC) was formed before the approval of CCS and before acceptance of trial evaluation report.
(v) That a clause 20% advance payment in the Contract was inserted on the basis of discussions between the DCOAS Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 3 of 37 :: 4 ::
(Deputy Chief of Army Staff) and M/s K.B.P. Design Bureau Tula, Russia whereas as per DPP-1992, noone other than the PNC could negotiate the price.
(vi) That instead of supplying 1000 rounds of K-155 Krasnopol shells, the vendor M/s K.B.P. Design Bureau, Tula, Russia supplied only 50% K-155 projectiles and 50% K-155-03 projectiles, which was contrary to the terms of the contract.
3. Investigation has established that during the period of procurement, Defence Procurement Procedure, 1992 (DPP-1992) was required to be followed for the acquisition of various arms and ammunition. The DPP-1992 was issued in April 1992 and was applicable to all cases of acquisition beyond Rs.10 crores. The present investigation pertains to acquisition of Terminally Guided Munitions (TGM) involving the cost of approximately Rs.150 crores. As such DPP-1992 was applicable in the instant case.
4. As per DPP-1992, the first and foremost requirement of the acquisition procedure is drawing up of Service Futuristic Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 4 of 37 :: 5 ::
Requirements (SFR) by User Service Directorate. The SFR needs to be evaluated by DRDO (Defence Research & Development Organization) and DPP&S (Department of Defence Production & Supply) and reduced the Services Equipment Policy Statement (SEPS). Based on SFR, Project Studies, SEPS and Preliminary feasibility studies and state of technology available in the country, the decision to "make or buy" was required to be taken by Department of Defence with the approval of the concerned Minister The list of sources, thus identified are, thereafter, submitted to DOD for taking final view before going ahead with the Trials and Evaluation of the weapon system/ equipment. As far as practical, the short listed manufacturers of the selected equipment are asked to send one unit (more, if necessary) of the equipment/ weapon system to India for Trials/ Evaluation on a "no-cost-no- commitment" basis. The Trials are thereafter, conducted by the User in all types of environment/ terrain, involving representatives of the Director General of Quality Assurance (DGQA)/ Defence Research and Development Organization (DRDO), and a detailed Trial/ Evaluation Report is drawn up by Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 5 of 37 :: 6 ::
the Expert Committee constituted by the Service HQ concerned followed by assessment and acceptance of trial evaluation report from the Service HQ, forwarding of RFP (Request for Proposal), constitution of Price Negotiation Committee (PNC) for commercial negotiation normally under the Chairmanship of Joint Secretary concerned, finalization of contract and Post Contract Monitoring.
5. CBI conducted thorough investigation on all the aspects on the basis of which the regular case was registered and came to the conclusion that with regard to role of middleman in financial transaction, no evidence was found, no receipt of money with regard to bill could be detected in the accounts of known firms of M.S. Sahni/ Maj. S.J. Singh (retired). Further, it is stated that in the absence of some files pertaining to paper evaluation, no conclusion about paper evaluation could be drawn. Similarly, the files/ supporting papers on whose basis the make or buy decision has been made are not available. It is also concluded that the defence procurement procedure 1992 is vague on various aspects especially the provision with Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 6 of 37 :: 7 ::
respect to deviations from the procedure, which has been incorporated in general manner. It is stated that it is merely mentioned that procedure may be adopted subject to approval of competent authority. Lack of clarity and transparency in DPP-1992 also served the purpose of unscrupulous persons, who moulded the process as per vested interest in the garb of deviation etc.
6. Further, decision making procedure in Army Headquarter is not very clear. Clear cut responsibility of various officers could not be pin-pointed. Further, it is stated that the entire file pertaining Krasnopol from its processing till delivery of consignment could not be accessed. File pertaining to paper evaluation of comparable leading to selection of Krasnopol was not made available, as they were destroyed by officers. The absence of those files became a major constraint in arriving at definite conclusion in the case. The irregularities in the procurement has been summarised as follows:-
(i) DPP-1992 was not followed, no quality requirements were finalized.
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(ii) No supporting records for paper evaluation, supposed to be carried out by AHQ are available. No proper basis for selecting Krasnopol in place of other similar ammunitions has been mentioned in the available records.
(iii) During trials, the Kransopol ammunition was not tested on some of the required characteristics mentioned in RFP.
(iv) As per the available files, immediately after make or buy decision, (which was made without any supporting feasibility study), instead of looking for all available sources, there was a visit by KBP, Tula delegation and it was agreed that procurement of Krasnopol would be examined.
(v) The initial trials of February and March 1999 were conducted without any published benchmarks in terms of quality requirements.
(vi) Krasnopol was not tested against moving target. The capability was mentioned in the trial reports only on the basis of literature provided by supplier.
(vii) Requirement of kill probably of 0.8 of weapon system, as per RFP, could not be achieved.
(viii) Many other requirements of RFP were not tested. Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 8 of 37
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(ix) Instead of 1000 K-155 projectiles, 500 K-155-03 and 500 K-155 projectiles were received without approval.
7. It is stated that CBI has forwarded the result of investigation to Ministry of Defence for further necessary corrective action against the personnel of Ministry of Defence as well as Army Headquarter instrumental in Krasnopol deal. It is prayed that proceedings may be dropped and the closure report may be accepted.
8. The report of CBI is self contradictory, as on the one hand, it points out various irregularities and on the other hand, request the Court to accept the closure report. However, let us examine the investigation in reference to the allegations.
9. As regards the allegation that despite failure in five tests out of the six, the unknown officials of MoD, Army Headquarter and with KBP Design Bureau, Tula induced MoD to purchase 1000 numbers of terminally guided ammunition krasnopol, aAs per the investigation and documents, the Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 9 of 37 :: 10 ::
missile was tested thrice during February/ March 1999, October 1999 and November 1999. During February/ March 1999 trials at Pokharan Field Firing Ranges (Plains), all 3 rounds fired were hit. 2 rounds which were fired at Mountainous terrain of Kargil at Kurbathang Field Firing Ranges were not hit. The trial team recommended that Krasnopol 155mm PGM ammunition system and LDR are suitable for introduction into service with mechanized and Infantry formations in plans, for use against tanks, infantry combat vehicles (ICVs) and bunkers. It did not consider the ammunition suitable for high altitude areas and suggested fresh trials to be carried out. It also observed that suitability of this ammunition for hills and valley needs to be ascertained. The trial team also suggested detailed analysis to be carried out in the aspects of terminal ballistics and EMI/ EMC.
10. During October, 1999 trials at Kurbathang Field Firing Ranges, out of 4 PGMs fired, 2 were hit and 2 were not hit. The trial did not consider Krasnopol 155mm PGM ammunition system to be suitable for use in mountains. Introduction of this Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 10 of 37 :: 11 ::
ammunition with formations in mountains/ high altitude areas was not recommended. The provisional firing tables complied could not demonstrate successful results. The trial team further observed the ammunition to be suitable for introduction into service with mechanized formations/ formations in plains.
11. During November 1999, trials at Mahe Field Firing Ranges (Eastern Ladakh), only 1 round was fired which was a perfect hit. The trial team recommended its introduction into service for deployment in plains as well as at high altitude areas at approx. 4500 m. 01 round with booster was kept reserved for high angle firing as soon as firing tables are made available.
12. It is pertinent to mention that the missile was not proving to be effective at high altitude areas due to the absence of validated range tables. It was clearly mentioned by the Russians after failure of the missile at high altitude areas during basic trials in February/ March 1999 that they had not expected hostility at such high altitudes and as such were not Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 11 of 37 :: 12 ::
prepared for the range tables for high altitude areas.
13. During the final trial firing at Mahe Field Firing Ranges (Eastern Ladakh) in November 1999, the single round proved to be perfect hit. It was only after this that the Krasnopol ammunition system was recommended for introduction into plains as well as high altitude areas.
14. Therefore, certain modifications were carried out in the missile system and come up with provisional firing range tables for the confirmatory trials in October 1999. The missile showed better results due to the availability of provisional range tables and 2 out of 4 missiles hit the target. Out of the 2 not hits, 1 was due to designation by an Indian Trainee Officer and the PGM did not hit the target due to its homing head not functioning and another not hit was for the reason that the trajectory was too steep at the target end of this projectile to function. It was observed by the Russians that ratio of difference is height : BT distance should not be greater than 0.055.
15. The trial reports indicate that three changes/ Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 12 of 37 :: 13 ::
improvements viz/ replacement of Charge White (M4A2) by Russian Charges,modification to Booster Charge and change in point of burning of Sustainer Motor, were carried out in 155 mm Krasnopol PGM since initial trials in February/ March 1999. After carrying out these changes/ improvements/ modifications, final trials were conducted in November 1999 where the only fired was a perfect hit The unavailability of firing range tables was the reason for firing only a single round during these trials and it was specifically mentioned by the trial team that 01 PGM (with booster) remaining unused should be trial evaluated by firing in high angle as soon as firing tables are made available.
16. Investigation has also revealed that even after every one in the chain was satisfied with the performance of the PGM, Chief of Army Staff to a detailed analysis carried out by the Northern Command on the employability of the same in mountainous and high altitude terrain, within design limitations of this ammunition as revealed during trial evaluation. This analysis confirmed its employability in such Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 13 of 37 :: 14 ::
terrain to a large extent and also that if the entire Northern theater is considered. This figure was expected to go further up as more impromptu high value targets may come up in hot war scenario.
17. As regards the allegation that before publication of GSQR and issuance of RFP entering into the agreement dated 24.12.1998 for trial, violated Defence Procurement Procedure 1992 and further entered into agreement dated 25.06.1999 before approval of Cabinet Committee on Security (CCS), as per the investigation and documents, the manner in which the procurement was made had the due approval of competent authority as well as the Cabinet Committee on Security. In view of the urgent operational requirement, it was proposed by the AHQ that (1) Team of M/s KBP Design Bureau, Tula be invited for PNC immediately, (b) a contract for supply of 1000 rounds of Krasnopol and associated equipment be signed earliest (c) no cash transaction to take place till the Krasnopol Projectile has been proved in trials in HAA Range Tables for the projectile for FH 778 within 90 days of signing the contract. (e) Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 14 of 37 :: 15 ::
the operation of contract be subjected to successful trial evaluation of Krasnopol after HAA Range Tables have been validated.
18. The CCS Note inter-alia containing the proposed procedure duly approved by the Rakhsa Mantri and Vitta Mantri was finally approved by the CCS on 12.07.1999 and a Conditional Contract dated 30.08.1999 was entered into with M/s KBP Tula Design Bureau.
19. Where it may become necessary for given reasons to resort to a specific deviation from the prescribed procedures, telescoping of the procedures set out in Part-I may be sometimes considered prudent. A recommendation regarding need for such deviation may be taken provided there is unanimity of view in favour of making such a deviation in public interest. All such recommendations shall require to be scrutinized and approved by the Additional Secretary concerned. In case involving in outlay of Rs.20 crore and more, deviations from the given procedure will require to be endorsed by Financial Adviser (Defence Services) and the Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 15 of 37 :: 16 ::
administrative Secretary and approval of Minister secured.
20. Investigation with regard to the preparation of GSQR has revealed that the General Staff Equipment Policy Committee (GSEPC) had approved the GSQR No. 76 on 155mm Medium Gun Precision Guided Munition (Shell) on 02.12.1998. This was approved by the MoD on 18.05.1999 and was issued on 09.06.1999. As such the GSQR No. 769 existed on 24.12.1998 when an agreement for conducting trials on "No Cost No Commitment" basis was signed between the MoD (AHQ) and M/s KBP Design Bureau, Tula, Russia. However, the confirmatory as well as final trials conducted in October 1999 and November 1999 respectively, were conducted only after issuance of GSQR as well as RFP. RFP was issued on
25.06.1999 only, that is, well after the issuance of GSQR on 09.06.1999.
21. As regards the agreement dated 25.06.1999 for conducting trials at HAA, it has revealed that these proposed trials were linked to the signing of Conditional Contract, the proposal for which was under consideration. During the period Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 16 of 37 :: 17 ::
when the correspondence was going on between AHQ and MoD for the said exercise, an agreement for conducting trials (in HAA) linked to singing of Conditional Contract was propsed by AHP. This agreement was proposed to enable the supplier to start the paper work so that within two weeks of signing of Conditional Contract, the equipment could be flown in for trial. It was mentioned by the DCOAS (P&S) that it does not bind the MoD on purchase. Thereafter, approval for signing the agreement was given by the Defence Secretary and the agreement dated 25.06.1999 was signed by Sh. L.M. Mehta, the then JS (O) on behalf of the Customer. The execution of this agreement was also subject to signing of Conditional Contract. The trials during October and November 1999 were conducted after signing of Conditional Contract and on the basis of this agreement dated 25.06.1999.
22. As regards irregularities, if any, in signing these agreements, it can be said that the agreement dated 24.12.1998 had nothing irregular in it as it was for conducting trials on "No Cost No Commitment" basis which was agreed to Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 17 of 37 :: 18 ::
"in principle" during the 5th Session of Indo-Russian Group on Military and Technical Co-operation. The GSQR which was the basis of the trials conducted in furtherance of the said agreement had been approved by the GSEPC on 02.12.1998 itself. Its promulgation on 09.06.1999 was a mere formality only. The MoD had issued the relevant certificates for import of the equipment for trial purposes.
23. As regards the agreement dated 25.06.1999 it can be said that it should have been signed after the CCS had approved the proposal dated 02.08.1999 to enter into a Conditional Contract with the vendor. But this irregularity stands diluted by the fact that it was supposed to come into effect only after the approval of CCS and was meant to enable the vendor to bring the equipment in India for trials. It did not have any negative implication on the ultimate procurement of the missile rather it expedited the whole process.
24. Thus, it can be summarised that the procedure adopted for procurement of 155 mm Krasnopol PGM was not strictly as per the procedure for normal procurement, enumerated in Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 18 of 37 :: 19 ::
DPP-1992. But, paras-15.1/ 15.2 of DPP-1992 provides for telescoping of procedures, in certain situations for acquisition, permitting deviations, considering prudence or in public interest. DPP-1992 refers to normal peacetime situations and there is no specific mention of procedures for war or war like situations such as the situation in Kargil. However, when telescoping of procedures as laid down in DPP can be applied in certain peacetime conditions, adoptions of the same in the context of Kargil conflict is well withing the frame work of the DPP and very much in public interest, a critical aspect to be kept in view. By doing so, activities are expeditiously and in parallel completed to get the equipment/ systems well in time.
25. Conditional contract was signed on 30.08.1999 whereas the CCS approved the signing of the same on 12.07.1999 itself and the MoD was intimated about the said approval on 16.07.1999. Thereafter, the allegation that additional contract was signed before the CCS approved the same is contrary to the fact.
26. As regards the preparation and acceptance of false Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 19 of 37 :: 20 ::
report that the PGM were effective against moving targets, the trials were conducted on the basis of trial questionnaire which were issued by the Weapons and Equipment Directorate. Scrutiny of all the 3 trials reports indicates that the aim of all the trials was to assess the suitability of 155 mm Krasnopol PGM for use against pin-point targets, primarily bunkers and tanks in plains, high altitude areas and at ranges beyond 8 kms at altitudes of 400 m and above. As such trials were conducted against static/ stationary targets only as was desired by the AHQ. Examination of trial team leader also revealed that the trial team was not asked to conduct trials against moving targets.
27. Absence of facilities for conducting trials against moving targets was the reason for not putting such question in the trial questionnaire. Enquiries were made with AHQ about the existence of such facilities in India. The AHQ confirmed in the writing that such facilities neither existed during 1999 nor do they exist even today. It is pertinent to mention that the DGQA and DRDO in their comments on the basic trials recommended Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 20 of 37 :: 21 ::
that efficacy of the missile system should be tested against moving targets also. But during investigation, Dr. Prahlada, Distinguished Scientist, Chief Controller R & D (Services Interaction). Defence Research and Development Organization stated that as on date, the country does not have facility dedicated to test and trial evaluate any artillery ammunition against moving target. He further clarified that if required, an unmanned moving target can be designated and developed but, it is difficult to say as to how much time this development will take. This fact has been corroborated by the DRDO in writing also. The DGQA has also confirmed in writing that facilities to trial evaluate artillery ammunition against moving targets were neither available nor are available in any of DGQA proof ranges. However, both these agencies added that the vendor should have been asked to establish the performance of Krasnopol ammunition against moving targets.
28. The examination of trial team members including the representative of DRDO and DGQA confirmed that during trials, this technical literature was made available to the Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 21 of 37 :: 22 ::
members of the trial team. The OIC trial, during his examination, stated that the recommendation with respect to wind speed, apex angle and speed were based on the stated parameters of ammunition by the Development Agency (DA) in their literature.
29. After completion of trials, the trial reports were circulated to various formations of Indian Army and all of them recommended its introduction into service. After obtaining their comments, the trial reports along with the comments of the said formations were anlayzed by the Weapons and Equipments Directorate in the form of General Staff Evaluation Report (GSER). This issue of trial against moving targets was also discussed. It was categorically mentioned in the GSER that the DRDO had recommended the missile's trial evaluation against moving targets. It was further mentioned that though desirable, it was not possible to fire live ammunition on a moving target, without risk to loss of life. The GSER contained that the Development Agency had confirmed in writing that the warhead is effective against moving targets up to a speed Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 22 of 37 :: 23 ::
of 36 km/ hr. In this regard, it was concluded that in the absence of facilities to fire a live warhead against moving targets in the Army, the AHQ/ MoD had to rest content with the written assurance given by the Development Agency in this regard.
30. It can, therefore, be concluded that facilities to trial evaluate the artillery ammunition against moving targets neither existed during 1999 nor are existing even today, as has been confirmed by the AHQ, DGQA and DRDO as well. Moreover, this mention of efficacy against targets moving at a maximum speed of 36 km/hr on the basis of literature and without actual evaluation did not form the sole qualification for its procurement rather it was an 'add on'. Thus, no malafide can be attributed to the mention of the fact regarding efficacy against moving targets in the trial report when this is based on the literature as well as the claims made in the Technical Proposal.
31. As regards the Price Negotiation Commission (PNC) was formed before approval of CCS and before acceptance of trial Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 23 of 37 :: 24 ::
evaluation report, DPP 1992 provides for telescoping of procedures and deviations under the circumstances which are in public interest. Moreover, the procurement arising out of Kargil War was necessitated due to urgency of requirement in view of Kargil War was, undoubtedly, in national / public interest.
32. In the procedure spelt out in DPP in para 17.1, it is envisaged that PNC should be constituted after Trial/Evaluation report is received and based on the acceptability of the report. The logic behind this is that once an equipment is technically accepted, prices should be negotiated.
33. Krasnopol was identified as an urgent operational requirement for use with Bofors Units and as a much more destructive, precise and effective weapon system to be used in the context of Kargil Conflict and also seen as a more effective substitute for HE ammunition. Army HQ stressed the urgency of procurement of this at the earliest for the Kargil Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 24 of 37 :: 25 ::
Sector.
34. Since the requirement of the Indian Army in the HAA, was a special requirement, which M/s. KBP Tula had not catered for in terms of validation of Range tables etc., they had insisted on signing a contract. A contract would imply Price Negotiations. Since, the system had been proved only in desert and low mountain heights, and requirement was urgent in HAA, which was yet to be proved, a Conditional Contract subject to successful completion was insisted upon by the Development Agency to conduct trials further.
35. As such, in view of the situation along the LOC and the Kargil War, a truncated procedure for procurement was proposed by the AHQ. This case was processed not on the basis of the detailed steps prescribed in the DPP-1992 but by telescoping the procedure for which approval of RM, as is required under the 1992 procedures, was taken. The note for CCS, inter-alia, seeking the approval for adopting telescoped procedure was approved by the CCS on 12.07.1999.
36. The Finance Ministry, while according their approval to Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 25 of 37 :: 26 ::
the CCS Note, had stated that the prices be fully justified and conducting negotiations to the minimum. Therefore, the position was that the Ministry had sought approval of CCS to enter into a Conditional Contract with the manufactures and this contract was to be effectuated only after successful completion of trial i.e. the Conditional Contract was to be precede successful trials and it was only after the GS Evaluation that it would be possible to know of the trials proved successful. The Conditional Contract obviously would be signed only when the prices are first finalized. Otherwise, the question of entering into any Conditional Contract did not arise, which means that in this case the PNC necessarily had to precede the final trials and so also the General Staff Evaluation Report.
37. In this case the PNC was constituted on 06.07.1999 and deliberated on 07.07.1999, 10.07.1999, 19.07.1999, 26.07.1999, 30.07.1999, 31.07.1999 and 04.08.1999. This saved a good amount of time once the GS Evaluation was accepted and orders could be immediately placed. Finalizing the price part of the Contract in the PNC (subject to successful Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 26 of 37 :: 27 ::
trials) had also enabled awarding chance of price being quoted higher if PNC were held at a later date. It also enabled earlier supply of the ammunition, immediately after placement of order.
38. Moreover, timing of PNC subject to successful trial evaluation becomes more irrelevant in a single vendor situation where the customer has no other bidder to negotiate with. Today or tomorrow, the single vendor is the only option available with the customer. In this case, there was every likelihood of enhanced prices being quoted had the PNC taken place in March 2000 because the prices which were quoted by M/s KBP Tula and negotiated by PNC happened in July-August 1999 i.e. before a good distance of 9 months.
39. As such, holding of PNC before GS Evaluation had the due approval of competent authority and had no adverse bearing on the ultimate deal. The constitution of PNC before GS Valuation was the result of conditional contract insisted upon by the vendor for conduction of trials in Higher Altitudes. Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 27 of 37
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40. As regards the Clause of 20% advance payment in the contract without the authority of PNC, the CCS note dated 01.07.1999 duly approved by the CCS on 12.07.1999 contained the provision for payment of advance not exceeding 20% of total cost, as arrived at during price negotiation.
However, the RFP dated 25.06.1999 clearly indicated that there would be no advance payment.
41. Issue regarding payment of advance to M/s KBP Tula did not come up for discussion in any of the 07 PNC meetings held on 07.07.1999, 10.07.1999, 19.07.1999, 26.07.1999, 30.07.1999, 31.07.1999 and 04.08.1999. When the final prices had been arrived at on 04.08.1999, M/s KBP Tula was asked to submit a draft contract.
42. It was decided by the MoD to obtain comments of AHQ in writing before re-submitting the case to FA(DS), Defence Secretary and RM in respect of payment of advance and the matter was referred to ADGWE through AS(O). It was then clarified by the ADGWE vide his note dated 18.08.1999 that in Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 28 of 37 :: 29 ::
view of the deadlock in the price negotiations, as a last resort, it was recommended to the DCOAS by the ADGWE to agree to give an advance of 20% since this had been indicated in the approved CCS Note, to enable some price reduction. It was also confirmed by the ADGWE that the meeting between DCOAS (P&S) and the DG, KBP did not form part of the price negotiations but since the problem was referred to DCOAS (P&S) by MOD, every possible effort was made to browbeat the vendor on price and during the process, the offer of 20% advance payment was made.
43. Therefore, the clause relating to 20% advance was inserted after due discussions with the PNC members and recommendations of Additional Secretary (Ordnance), Additional (FA), FA(DS) and Defence Secretary and approval of the then Raksha Mantri. The insertion of 20% advance has been accorded due approval by the RM, but its genesis outside the purview of PNC doesn't appear proper. The inclusion of 20% advance clause didn't cause any impact financially it didn't form the part of final contract. This 20% advance clause was finally deleted through an amendment dated 27.03.2000 Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 29 of 37 :: 30 ::
while making the Contract effective. Therefore, the insertion had no adverse impact on the final deal and did not erode authority, whatsoever, of the PNC.
44. As regards the irregularity in purchase of 50% K-155 Projectile and 50% K-155-03 Projectiles against contracted supply of K-155 Krasnopol, scrutiny of trial report revealed that Krasnopol PGMs were trial fired both 'with' and 'without booster'. During the Feb-March 1999 trials, 08 rounds of 155 mm Krasnopol PGM were supplied. Though, it is not mentioned whether they were with booster or without booster but it has also been mentioned that the indication 'B+' means 'with booster' and is only applicable while firing PGMs.
45. The trial report for the trials conducted during October, 1999 reflects that (a) 06 155 mm Krasnopol PGMs without booster and (b) 02 155mm Krasnopol PGMs with booster supplied for trials. However, only 04 155mm Krasnopol PGMs without booster were used for these trials and the targets were between 06 to 0 kms. Remaining 04 unused PGMs (02 with booster and 02 without booster) were returned to the Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 30 of 37 :: 31 ::
Russians.
46. The trial report for the trials conducted during November, 1999 reflects that 02 155mm Krasnopol PGMs with booster were supplied for trials. However, only 01 155mm Krasnopol PGM could be used for the trial at a target which was at a distance of approx. 18 kms and remaining PGM was kept as reserve for high angle being after obtaining validated firing range tables.
47. The Appendix 'A' of the November 1999 trial report reflects that "Krasnopol PGMs can be fired 'without booster up to approximately 15 kms range. They need to be fired 'with' booster beyond this. Certain modifications to the booster charges were also made. It was stated that it is easier to 'insert' these charges than to 'remove' them. Accordingly, separate projectiles, 'with' and 'without booster' will be supplied. However, additional boosters will be supplied, which could be inserted, if required."
48. For trial firing at distances below 15 kms. PGMs without booster were used and PGMs with booster were used for trials Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 31 of 37 :: 32 ::
firing beyond the distance of 15 kms. It is clear that the nomenclature K-155 for projectiles with booster and K-155-03 for projectiles without booster was never used either in the trial reports or in further correspondences between the vendor and the AHQ or MoD. Though, the terminology of a projectile with booster and a projectile without booster was regularly used in the trial reports and by the vendor. The Russians had reported that in terms of agreement dated 25.06.1999, they had completed the October-November 1999 trials with two types of projectiles i.e. without a booster for firing ranges upto 15 kms and with a booster for firing ranges beyond 15 kms (pages 49 to 59 of Vol-II).
49. The receipt of dual ammunition was objected to by the audit team. Against this observation, it was clarified by the Weapons and Equipment Directorate that "(a) It is correct that as per contract. Qty 1000 rounds of K-155 ammunition were to be supplied. (b) It was proposed by User and WE Directorate to procure Qty 500 rounds of K-15 ammunition and Qty 500 rounds of K-155.03 ammunition which is with booster. Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 32 of 37
:: 33 ::
However, the above amendment to contract could not be incorporated. The vendor has supplied two types of ammunition i.e. with and without booster as mentioned above at no additional cost. There is no loss to exchequer on this account and it means User's requirement".
50. To sum up, as discussed above, the defence procurement procedure 1992 is the procedure laid down for peace time procurement and PW-26 Sh. Sudhir Dutta, the then Additional Secretary, Defence categorically stated that the telescoping of the procedure can be done if the situation so demands. Tests were done in February/ March 1999, which were successful in the plain, but failed in the high altitude.
51. Thereafter, Operation Vijay in the Kargil happened from 01.05.1999 to 31.10.1999. The subsequent trials were conducted in October/ November 1999. The trial report confirmed that the same was perfect-hit and the trial was successful. The trial was conducted in the field by the experts and there was unanimity. Therefore, the telescoping of the procedure in the war situation is fully justified. Surprisingly, Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 33 of 37 :: 34 ::
there is allegation that the same was not tested against the moving bodies. The country do not have the expertise/ facilities to conduct such trials even today, so they could not have tested same against moving body.
52. PW-42 Dr. Prahlada, Distinguished Scientist categorically stated that country does not have facility for test and trial evaluate any artillery ammunition against moving target.
When, he was examined in year 2008, he stated that possibility of technique to be used for tested against moving target will take two years in the development.
53. PW-26 Sh. Sudhir Dutta, the then Additional Defence Secretary has categorically stated that there was Kargil war from 01.05.1999 to 31.10.1999. Even if the war continued till 31.10.1999, the possibility of wider conflict was felt and it was not a peace time acquisition, but for meeting the requirement for an on going war and for meeting requirement for impending wider conflict.
54. PW-37 Brig. A.K. Ahuja stated that after failure in earlier Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 34 of 37 :: 35 ::
trial, certain improvements in the ammunition was made and this round was hit. He also stated that the trials were carried out against static pin-point targets, that is, bunker and tankers in deserts and only against bunkers/ hard targets in mountains in the manner, as the tanks cannot be used in high altitudes. The requirement of trial against moving was also not included in the trial questionnaire and the trial was finally successful after Russia carried out improvement in the Missile that were tested in February, 1999.
55. PW-39 Sh. S.P. Tripathi also stated that the note was received from Army Headquarter on 26.05.1999 whereby, it was recorded "the procurement of Krasnopol is an urgent requirement for Drass-kargil sector and may be progressed in most expeditious manner". The note was prepared on 16.06.1999 and was approved by Defence Secretary on 17.06.1999 and by the then Raksha Mantri, Sh. George Fernandes on 19.06.1999.
56. The conclusion arrived at by CBI also does not appear to be justified as most of the irregularities pointed out by them Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 35 of 37 :: 36 ::
are explained and justified in view of war situation and impending possibility of wider conflict. The national security is of the highest importance and the procedures can be given go-by with proper justification and at the higher level of functionaries. When life of the soldier, who are fighting battle is at stake, the highest priority should be to provide them with the best of ammunitions and also to keep the defence preparedness at the appropriate level. Pointing fingers on the defence deal whenever it takes place not only demoralises the forces, but also brings in lethargy at the bureaucratic level, which likes to avoid getting embroiled in such procurement.
57. Every life of a soldier is precious to the nation and every drop blood spilled has its cost. The defence of the country, securing its frontier is of paramount importance. The defence forces must have an edge over its opponent in terms of the equipment, weapons and other necessary logistics. There must not be any delay in any procurement, as the delay may not only result in our forces loosing advantage over the other,but also tends to bring in frustration in the forces. The Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 36 of 37 :: 37 ::
functionaries at the highest level must be trusted; their decision must be respected. This is the only way by which the morale of the forces can be kept at high. In the democratic polity, the discussion and questioning is part of its process. The question may be asked, but unless the gross violation and irregularity is found, the decision making authority should not be looked at with suspicion. Closure report is accordingly accepted.
58. Original documents be returned to IO so that he can return the same to office/ department from where he had collected the same.
File be consigned to record room.
Announced in the open Court on (GURDEEP SINGH) 24th day of September, 2015 Special Judge (PC Act): CBI-05 New Delhi : 24.09.2015 Closure Report No. 03/15 CBI Vs. Mohinder Singh Sahni Page No. 37 of 37