Delhi District Court
In Re vs Vijay Kumar Kataria & Ors on 30 April, 2011
1
IN THE COURT OF SH. DHARMESH SHARMA
SPECIAL JUDGE03 CBI NEW DELHI
CC No.36/2011
RC No.1 (A)/2007
In re:
STATE (CBI)
VS
VIJAY KUMAR KATARIA & ORS.
30.04.2011
APPEARANCES:
Mr. A.K.Mishra, Ld.Sr.PP for CBI.
Mr. Ashok Bhalla Advocate for A5
Mr. R.K.Handoo, Advocate for remaining accused
ORDER ON CHARGE
Heard on the point of charge and perused the record.
1.The case of the State (CBI) brought out in the charge sheet is that the case was registered on the allegations that during August, 2004 to December, 2005 one Shri Rakesh Mohan while functioning as Chief Executive Officer of Delhi Jal Board (DJB) conspired with accused Vijay Kumar Kataria (A1) Managing Director of M/s. Kaveri Infrastructure (P) Ltd. (KIPL) (A4) and others to cheat DJB in awarding the contract of Trenchless Renovation of Water Rising Mains through Spray Epoxy Resin and Rapid Setting polymeric Lining System (for short referred to as 'TRW Works') to A4 at an exorbitant amount of Rs.35.84 crores CBI vs. Vijay Kr. Kataria & Ors. Page No.1/14 2 and as a quid pro quo A1 purchased some property in USA as illegal consideration to Rakesh Mohan through his soninlaw.
2. The charge sheet reveals that Letters Rogatory have been sent to USA, UK and New Zealand reports are still awaited. The State (CBI) now has arraigned 5 accused for trial on the allegations that investigation revealed that in the year 200405 DJB floated prequalification NIT (Notice Inviting Tender) for TRW Works on 19.11.2004 which besides technical provided for financial parameters from the bidding firms interalia providing for the scoring pattern for fulfilling such parameters; that in specific as regards financial parameters, the annual turn over and 'solvency certificate' were accorded top priority and minimum marks to be scored for qualification was fixed at 70 % of 200 marks i.e. 140 marks; that the prequalification NIT stipulated that a 'solvency certificate' of Rs.40 crores be submitted by the bidding firms from their bankers and the date of its issue should not be earlier than 01.04.2004.
3. The case of the State (CBI) is that investigation has brought out that A4 furnished a 'solvency certificate' dated 22.09.2004 of Rs.200 crores issued by A5, the then Branch Manager of Chandan Hola Branch of Punjab National Bank which formed an integral part of prebidding documents; that the said 'solvency certificate' dated 22.09.2004 was considered by the Evaluation Committee of CBI vs. Vijay Kr. Kataria & Ors. Page No.2/14 3 the DJB that decided to get the 'solvency certificate' verified and accordingly vide letter dated 31.01.2005 signed by Shri Rajiv Lal, the then Member (Finance) the same was sent for verification to Chandan Hola Branch of Punjab National Bank, to ascertain the basis of such certificate and the same was dealt again by A5 who verified it giving information regarding the track record of A4 company vide verification letter dated 03.02.2005 misleading DJB of its financial soundness of A4.
4. The case of the State (CBI) is that the 'solvency certificate' dated 22.09.2004 as well as verification letter dated 03.02.2005 were false and fabricated by A5 in criminal conspiracy with A1 besides A2 and A3 directors of A4; that during the investigation, it came forth that for issuance of 'solvency certificate'' exceeding Rs.150 lakhs not only permission of Zonal head was required, but also subjected to levying of processing fee of Rs.12,000/ and such procedure was bye passed by A5 so much so that the 'solvency certificate'' was not issued as per the prescribed format.
5. The investigation further gathered the facts that the audited balance sheet of A4 for the financial years 200001 to 200304 indicated that the annual turn over of the A4 company was hardly around 7.5 crores and there was no foundation for issuing 'solvency certificate' of Rs.200 crores. It is also the case of the State CBI vs. Vijay Kr. Kataria & Ors. Page No.3/14 4 (CBI) that no documents were found in the branch concerned regarding issuance of the 'solvency certificate'. Thus on the basis of the false and fabricated 'solvency certificate' , the same being an integral part of the financial bid by A5, 80 marks were scored in the assessment. In regard to the criminal conspiracy, it is brought out in the charge sheet that 'solvency certificate' was authenticated by A3 the then Director of A4; that during the evaluation of the bid A2 represented the A4 and the entire process of evaluation was in pursuance of their criminal conspiracy for awarding the tender with the Consortium Head by A4. In the light of the said investigation, the charge sheet have been filed against the accused persons for having committed an offence under Section 120B r/w 420 IPC and 13(1)(d) r/w 13(2) of the PC Act.
6. Ld. Defence counsel have vehemently urged that the entire investigation in this case has been biased, actuated with malafide intention and unfair to rope in all the accused persons besides a poor public servant like A5 in order to save the skin of the main culprit Rakesh Mohan against whom nothing has been unearth so far deliberately by the CBI despite more than sufficient time at their disposal. Ld.Defence counsel have vehemently urged that the so called 'solvency certificate' dated 22.09.2004 was not a 'solvency certificate' at all; that it was merely an assertion by the CBI vs. Vijay Kr. Kataria & Ors. Page No.4/14 5 branch manager who bonafidely issued the certificate in favour of his clients/customers having regard to its good financial track record. Mr. Handoo vehemently urged that the certificate was merely an assertion on behalf of the bank that if the need arises A4 company could be lend loan upto Rs.200 crores. Mr. Handoo pointed out that the certificate was in any case issued prior to the opening of prequalification NIT dated 19.11.2004; that alongwith the bid, a performance guarantee in the sum of Rs.57 lakhs dated 10.06.2005 was also submitted and further after the acceptance of award of the TRW Works and irrevocable bank guarantee in the sum of Rs.1,80,00,000/( which was extended to Rs.2,36,00,000/ dated 20.06.2006) was submitted by the same bank, which decision was taken by the top brass/officials of the bank concerned and it could not be that there was any dispute about financial worthiness of the company concerned; that it was not the fault of A5 if the DJB considered the impugned certificate as a 'solvency certificate' ; that the impugned letter dated 22.09.2004 merely reflected about the intention of the bank to lend credit in case any worth while project is shown by A4. Ld.defence counsel also urged that assuming for the sake of convenience that A5 committed any forgery, there is no evidence that the tender was accepted on the basis of certificate alone and in any case the irregularity committed by A5 was cured or condoned by the top CBI vs. Vijay Kr. Kataria & Ors. Page No.5/14 6 officials of the bank. It was then urged that the specific act or omission on the part of A1 to A3 in the entire episode have not been brought out clearly and the entire allegations are reckless without any foundation. Lastly, it is urged that the sanction order dated 06.07.2010 whereby permission was accorded to launch prosecution against A5 is non est in law in as much as the sanction came by in a corrigendum note dated 28.07.2010 without application of mind.
7. In support of their submissions, ld.defence counsel have relied upon the following case laws :
1. 1990 Cri LJ 1207 State. v. N.S.Giani
2. (2007) 6 SCC 42 Sujoy Sen. v. State of WB
3. 1972 Cri.LJ 849 UOI .v. Major JC Khanna
4. JT 2002 (4) SCC 348 Subhash Parbat Sonvane. v.
State.
5. 2006 (2) Crimes 221 (SC Ram Biraji Devi .v. Umesh Kr.
6. JT 2001 (2) SC 588 Alpic Finance Ltd. v. P.Sadasivan
7. JT 2001 (9) SC 151 SW Palanitkar v. State of Bihar
8. 1997 JCC 45 Surinder Kumar v. State
9. 2006 (2) JCC 650 R. Natrajan. v. State
10. JT 2007 (II) SC 183 State of Karnataka. v. Ameer Jan.
11. 2010 (13) Scale 245 State of H.P. v. Nishant Sareen
12. JT 2009 (7) 385 SVL Murthy. v. State represented by CBI.
8. Well, there are several pronouncements by the Apex Courts CBI vs. Vijay Kr. Kataria & Ors. Page No.6/14 7 as well as various High Courts on the scope of consideration of the material produced by the prosecution at the time of framing of charge. Without much ado and in order to avoid unnecessary lengthy academic discussion, it would be suffice to refer to the most repeated observations by their lordships in the case of Union of India v. Prafulla Kumar, 1979 CRI. L. J. 154, that laid down the following principles of law:
(1) That the Judge while considering the question of framing the charges under Section 227 of the Code has the undoubted power to sift and weigh the evidence for the limited purpose of findingout whether or not a prima facie case against the accused has been made out;
(2) Where the materials placed before the Court disclose grave suspicion against the accused which has not been properly explained the Court will be fully justified in framing a charge and proceeding with the trial.
(3) The test to determine a prima facie case would naturally depend upon the facts of each case and it is difficult to lay down a rule of universal application. By and large however if two views are equally possible and the Judge is satisfied that the evidence produced before him while giving rise to some suspicion but not grave suspicion against the accused, he will be fully within his right to discharge the accused.
(4) That in exercising his jurisdiction under Section 227 of the Code the Judge which under the present Code is a senior and experienced Court cannot act merely as a PostOffice or a mouthpiece of the prosecution, but has to consider the broad probabilities of the case, the total effect of the evidence and the documents produced before the Court, any basic infirmities appearing in the case and so on. This however does not mean that the Judge should make a roving enquiry into the pros and cons of the matter and weigh the evidence as if he was conducting a trial.
9. Further, in the case of Yogesh @ Sachin Jagdish Joshi v. State of Maharashtra, 2008 CRI. L. J. 3872, there lordships of the Apex Court reiterated that the words "not sufficient ground for CBI vs. Vijay Kr. Kataria & Ors. Page No.7/14 8 proceeding against the accused" in S.227 postulates exercise of judicial mind by Judge and at this stage, he is not required to see as to whether trial will end in conviction or not. In the light of the proposition of law at the back of our mind, adverting to the facts in dispute, it would be expedient to first reproduce the impugned letter dated 22.09.2004 in toto, which is on the bank letter pad and prima facie issued and signed by A5: " Date: 22.09.2004 To Whom It May Concern This is to certify that M/s kaveri Infrastructure (P) Ltd. Carrying out their business from 8 years is one of our valued customers.
We can confirm that they have maintained their accounts with us in a very satisfactory manner, and have no outstanding liabilities. Based on their performance, and their credit worthiness, we have no hesitation in stating that the Bank, if need so arises would be able to extend substantial credit to them for their purpose in case they so apply, subject to the rules applicable, up to 200 crores per year.
For Punjab National Bank Sd/ Manager B/0 Chandan Hola, New Delhi."
10. Much mileage is sought to be drawn from the fact that it was not a 'solvency certificate' since it was not issued in the prescribed format. I am afraid the very fact that the said letter was not issued in the prescribed format and that its issuance was not preceded either by requisite scrutiny or ignoring the necessary financial safeguards besides having been issued by A5 CBI vs. Vijay Kr. Kataria & Ors. Page No.8/14 9 without levying the service charges in violation of the terms of the "Loans and Advances" Circular No.84 and 134 (D13) would invite an inference that A5 abused or misused his official position. It is not the forum but the substance that matters and suffice to state that bare reading of the ' certificate' would show that it creates an impact about the 'credit worthiness' of the client concerned i.e., A4 demonstrating an open and unequivocal assertion to advance loan up to Rs.200 crores . Now it is elementary that in commercial business an assertion or portrayal of such nature would imply that the client concerned is having annual turn over or assets portfolio which must be almost twice or thrice of the amount in question, if not more. The said letter visavis verification letter dated 03.02.2005 by A5 creates more than reasonable impact about the financial worthiness or solvency of A4.
11. At the cost of repetition , the investigation by the State (CBI) relying on the relevant accounts viz. the profit and loss accounts and balance sheets of the preceding years, prima facie reveal that such was not the case. The very fact that no record of processing of such letters have been found in the bank concerned also prima facie indicates that the 'certificate' was fabricated, procured with a fraudulent or dishonest intention and thereby used to commit cheating and induce DJB to award the contract.
CBI vs. Vijay Kr. Kataria & Ors. Page No.9/14 10
12. A plea was taken that it cannot be said that the impugned certificate alone weighed in the mind of Evaluation Committee of the DJB in awarding the contract to A4 and it was that three firms were short list for prequalified by DJB on 22.12.2004 and the other two firms withdrew their bids or did not come forward to reduce the rates quoted in their bids. There is more to it than to meed the eyes. Prima facie, it appears that the other two firms M/s.C.M.Contracting Ltd., New Zealand and M/s. Waterflow Group PLC, UK were not serious contenders. Investigation reveals that the said companies were in some way or the other connected with A4 as front companies or otherwise. Moreover, the investigation further reveals that the scope of the contract was widened and the rates agreed with A4 were unrealistic and on a very high side as comparable labour costs in foreign countries that were considered while negotiating the rates were much higher as comparable to the rates prevailed in India. (as reflected in D1 which is the FIR).
13. Any how while one may have no misgivings about fulfilling the technical parameters by A4 in as much as it was a new kind of project being undertaken in Delhi, there is no doubt that in the requirements of the financial parameters, the 'solvency certificate' carried 80 marks out of 200 and the minimum requirement was to score 70 % and A4 did score 140 marks in the ultimate analysis. CBI vs. Vijay Kr. Kataria & Ors. Page No.10/14 11 The impugned letter dated 22.09.2004 was the foundation of the financial parameters coupled with the fact that it was verified and exemplified vide letter dated 3.02.2005 by A5 and it is but reasonable to prima facie assume at this stage that it must have weighed in the mind of the evaluation committee to consider the bid favourably in favour of A4. .
14. A plea was taken that the act of A5 was more or less in the nature of gross negligence and it cannot be said thatit was actuated with criminal intent. Reference to decision in UOI v. J.S.Khanna (supra)was made, which is clearly distinguishable because in that case the accused was a military officer who had made local purchases for military purposes during emergency. Though the procedure adopted was not strictly in accordance with the rules prescribed, it was held that it was not a case of abuse of official power but a case of irregularity less to speak of gross negligence and not done with a guilty mind. Reliance on decision in State. v. N.S.Giani (supra) also has no bearings on this matter as it was a case where the Govt. servant had distributed quotas/licences for procurement of iron steel and certain irregularities were committed much less than intention to act dishonestly. In the present case, the issuance of certificate by no stretch of imagination can be said to be a case of gross negligence or mere irregularity. There was no foundation for issuance of CBI vs. Vijay Kr. Kataria & Ors. Page No.11/14 12 such certificate and its manifest that the same was issued by A5, who was a public servant, to obtain for other accused persons a valuable thing or pecuniary advantage within the meaning of Section 13(1)(d) of PC Act.
15. The case of Subhash Parbat Sonvane. v. State (supra) has no bearing in this case as it was a case of acceptance of bribe by the public servant. Suffice to state that the other referred cases have no bearing too in the present one.
16. In regard to the challenge to the sanction order besides its corrigendum dated 28.07.2010 much was argued that it was without application of mind and nothing has been brought forth as to how the sanctioning authority realized its mistake or at whose instance the corrigendum was issued. In this reference was made to decision in State of Himachal Pradesh. v. Nishant Sareen (supra). The case is distinguishable in as much as it was observed by their Lord Ships "that it is not permissible for the sanctioning authority to review or reconsider the matter on the same material again". Perusal of sanction order dated 06.07.2010 prima facie reflect application of mind and there was human error or mistake in not indicating/incorporating the relevant provisions of the Prevention of Corruption Act and by way of corrigendum the sanction was also accorded in terms of Section 19 of the Prevention of Corruption Act later vide order dated CBI vs. Vijay Kr. Kataria & Ors. Page No.12/14 13 28.07.2010. At this stage prima facie I do not see if the omission in the main sanction order about the provisions of law has occasioned or resulted in failure of justice or any prejudice to the accused A5 and the irregularity, if any ,could be tested during the trial.
17. Lastly, coming to the role of each of the accused who are private parties, it cannot denied that they were the beneficiaries of the award of contract by the DJB. The evidence on criminal conspiracy is rarely direct and can be inferred from the surrounding circumstances and conduct of the accused persons. The entire background and circumstance reflected in the charge sheet bring out the role of the accused persons and at this stage prima facie it appears that the accused persons committed the offences in execution of their common design even if such offences were ultimately committed by some of them, without the participation of others. The charge sheet clearly brings out that the socalled 'solvency certificate' was procured by A1, authenticated by A3 and A2 had represented the company A4 during the entire negotiation process of the Evaluation Committee of the DJB. Prima facie in doing so each one projected a financial soundness of A4 based on the certificate fully knowing that it was not true but a fabrication.
18. In view of the said discussion , I find that there is a prima CBI vs. Vijay Kr. Kataria & Ors. Page No.13/14 14 facie case to frame charge against all the accused persons under Section 120B IPC r/w Sections 420,468 and 471 IPC r/w Section 13 (1) (d) r/w 13(2) of the PC Act, 1988.
19. Further, I find prima facie case to frame substantive charges u/s. 420 and 471 IPC against A1 to A4 and u/s 13 (1)(d) r/w Section 13(2) of PC Act, 1988 against A5.
20. Before parting with this order, I have no hesitation to point out that State (CBI) has some explaining to do in this case. The SP concerned is hereby directed to submit a status report regarding the progress of investigation as against Rakesh Mohan, the then Chief Executive Officer of the Delhi Jal Board within a month from today.
ANNOUNCED IN OPEN COURT (DHARMESH SHARMA)
TODAY: ON 30.04.2011 SPECIAL JUDGE 03 CBI
NEW DELHI.
CBI vs. Vijay Kr. Kataria & Ors. Page No.14/14