Delhi District Court
Rc 8(E)/2010EouVii, Dated ... vs M/S Reliance Polycrete Ltd. & Ors. on 27 September, 2011
RC 8(E)/2010EOUVII, Dated 23.09.2010 CBI V/s M/s Reliance Polycrete Ltd. & Ors.
IN THE COURT OF VINOD YADAV: CHIEF METROPOLITAN MAGISTRATE: DELHI
RC 8(E)/2010EOUVII, Dated 23.09.2010
U/s 120 B IPC r/w 406/409/420 IPC
CBI V/s M/s Reliance Polycrete Ltd. & Ors.
27.09.2011
Present: Shri V.K Ohja, Ld.PP for CBI alongwith IO, Addl. SP Desh
Deepak in person.
Accused Homi Rajvansh in police custody alongwith counsels
Shri Mohit Mathur and Shri Aman Sarin, Advocates.
Accused S.K Jain, CMD, M/s Reliance Polycrete Ltd. in police
custody alongwith counsels Shri Rohit Priyaranjan and Shri
Akshay Anand, Advocates.
Accused Daulat Singh, Authorised Representative of M/s ITM
Impex Pvt. Ltd. in police custody alongwith counsels Shri R.C
Chopra and Shri M.K Sharma, Advocates.
O R D E R:
This order shall dispose off an application of CBI seeking five days' police custody remand of all the aforesaid three accused persons and three bail applications filed on behalf of all the accused persons. I have heard arguments on all the applications at length from 2.45 PM till 4.30 PM and perused the investigation file produced before me in Court. PC Remand Appln. of 3 Accd. Persons ("Dismissed") (Date of Order: 27.09.2011) Page 1 of 14 RC 8(E)/2010EOUVII, Dated 23.09.2010 CBI V/s M/s Reliance Polycrete Ltd. & Ors.
2. The facts of the case in brief required for the purpose of disposal of all the aforesaid applications are that a case being FIR No.478/2007 was registered in PS Sriniwaspuri, the investigation whereof was lateron transferred to Economic Offences Wing (EOW), Crime Branch of Delhi Police and subsequently the same was transferred to CBI by the orders of Lieutenant Governor of Delhi vide his Excellency Order dated 23.06.2010 and as such, the present Regular Case (RC) was registered by CBI on 23.09.2010 U/s 406/420/468/471 IPC r/w Section 120 B IPC. The complainant in the matter is National Agriculture Cooperative Marketing Federation of India Limited (in short "NAFED") and accused Homi Rajvansh, an officer of Indian Revenue Services (IRS), at the relevant time was its Additional Managing Director (on deputation). In the complaint lodged by NAFED in PS Sriniwaspuri, it was alleged that on 31.02.2005, an Agreement was entered into between complainant and M/s Reliance Polycrete Pvt. Ltd. (hereinafter referred to as "Reliance") for export of iron ore fines. The said iron ore fines were to be arranged by Reliance and were to be exported to China. However, despite receiving payment as per the Agreement, Reliance did not export the iron ore fines. Five Letter of Credits (in short "L.Cs") were opened on the basis of forged and fabricated documents, out of which three L.Cs were opened in favour of NAFED and two in favour of Reliance. The Bangalore Branch of NAFED was supplied false information about the availability of stock at different places in Karnataka and Goa and transportation of the material at the port at Mangalore. During the course of investigation by PC Remand Appln. of 3 Accd. Persons ("Dismissed") (Date of Order: 27.09.2011) Page 2 of 14 RC 8(E)/2010EOUVII, Dated 23.09.2010 CBI V/s M/s Reliance Polycrete Ltd. & Ors. EOW, Delhi Police, statement of accused Homi Rajvansh was recorded as a witness.
3. The CBI after taking over investigation from EOW, Delhi Police recorded statements of some more witnesses on the strength of which it is being argued that accused Homi Rajvansh signed Memorandum of Understanding (MoU) with Reliance without the approval of the Managing Director of complainant/NAFED. He released the payment to Reliance without verifying the documents with regard to Proforma Invoice, Invoices, experience and the market value of the securities. It is also argued that it also came to notice of complainant that Reliance forwarded the amount to third accused namely ITM Impex Pvt. Limited, without the delivery of the entire iron ore fines. It is argued by the learned PP for CBI that the fraudulent proceeds (running into almost Rs.18.00 Crores) were shared by the aforesaid three accused persons and the same are required to be traced, for which five days' CBI/police custody remand of all the aforesaid accused persons would be necessary.
4. Per contra, counsels for all the accused persons have argued that the transaction in the matter took place in terms of the Agreement between the parties, the securities were furnished to NAFED in terms of the Agreement, which interalia had an Arbitration Clause when dispute arose between the parties in respect of agreement. The arbitration proceedings PC Remand Appln. of 3 Accd. Persons ("Dismissed") (Date of Order: 27.09.2011) Page 3 of 14 RC 8(E)/2010EOUVII, Dated 23.09.2010 CBI V/s M/s Reliance Polycrete Ltd. & Ors. stood invoked by Reliance and admittedly Reliance has already filed its claim against the complainant NAFED for a sum of Rs.33.00 Crores, for which Arbitral Tribunal headed by Hon'ble Ms.Justice Usha Mehra (Retd.) is already seized of the matter. Admittedly, Reliance has further filed a Civil Suit, which is pending before the Hon'ble High Court of Delhi, wherein lien of a property worth Rs.24.00 Crores has already been created in favour of complainant. It is further argued that the accused persons have been arrested in the matter at the behest of some of the senior officers of complainant. All the three accused persons have filed their separate bail applications. I will take up their bail applications one by one in juxtaposition with police custody remand application of CBI.
5. Bail application of accused Homi Rajvansh:
Against this accused, CBI registered six cases of similar nature, all pertaining to the time when he was lying posted as Additional Managing Director of the complainant; out of which one case was registered in Mumbai in which he was granted anticipatory bail by the learned Special Judge, Greater Mumbai. In other three cases, he was granted anticipatory bail by Delhi Courts and in one case he was granted regular bail by learned ACMM, Saket District Court, when CBI had sought his two days' police custody remand for the alleged recovery of Rs.80.00 Crores. This accused has placed on record the copies of orders passed in all the aforesaid cases. I have perused all the said orders.
PC Remand Appln. of 3 Accd. Persons ("Dismissed") (Date of Order: 27.09.2011) Page 4 of 14 RC 8(E)/2010EOUVII, Dated 23.09.2010 CBI V/s M/s Reliance Polycrete Ltd. & Ors.
6. The learned counsel for this accused on instructions has argued that accused has been cooperating with the investigating agency ever since the investigation stood transferred to CBI and on account of this reason the CBI did not deem it appropriate to arrest him in the matter. On the other hand, the CBI made it clear before me that it is almost dying to arrest this accused for being subjected to custodial interrogation. Whether the custodial interrogation of this accused is liable to be granted or he has succeeded in making out a case for grant of bail is to be considered in presenti. According to me, CBI has not been able to point out anything which would require custodial interrogation of this accused and on the contrary this accused has succeeded in establishing the grounds for grant of bail. The reasons for the same are as under.
7. This accused belongs to Indian Revenue Services (IRS). He was on deputation to NAFED as its Additional Managing Director at the relevant time. As of now, the objects of NAFED going by their bye laws (Chapter II) are interalia to promote and develop marketing, processing and storage of agricultural, non agricultural and non traditional items. Reading the bye laws as a whole with specific reference to Clauses XIX, XX and XXI should make it clear that NAFED lends duly secured loan to their associates. In order to achieve these objectives, NAFED enters into what is called Tie Up arrangements in domestic as well as international trade. The perusal of draft annual report of NAFED for the year 20042006 is apposite. PC Remand Appln. of 3 Accd. Persons ("Dismissed") (Date of Order: 27.09.2011) Page 5 of 14 RC 8(E)/2010EOUVII, Dated 23.09.2010 CBI V/s M/s Reliance Polycrete Ltd. & Ors.
"The business on tie up basis has helped NAFED to optimally utilize the contacts of private enterpreneurs and also their expertise in the business of nonagricultural nature. NAFED has succeeded to a great extent to meet out the emerging challenge in the changed economic scenario in the country. A detailed report of various agricultural and nonagricultural items handled in commercial account during the year 20042005 is given as under."
8. Now, for effective functioning NAFED has a Board of Directors which can have not more than twenty one members with provision of co option of two more and also a government nominee so to say. One Chairman and two ViceChairmen would be drawn from the Board of Directors. It may only be noted here as a relevant fact that the membership of the government nominee would be dependent upon the sponsoring government's pleasure.
9. The Board is empowered to constitute committees, to with executive, business and others and also the subcommittees. The Board can competently delegate its powers to executive committee, business committee and subcommittee and also to the members thereof, Chairman / Vice Chairman or to the Managing Director or other Officer of NAFED. The composition, functions, powers and duties of these committees are set out in the bye laws (Clauses 32, 33 etc). The composition of a business committee is a Chairman, ViceChairman, four Directors and a Managing Director. It is charged with the duties and of course powers to lay down the general policy about the over all business of the federation and to keep an effective tab on the performance of the duties. This they do inter alia by meetings which are held atleast once in a quarter.
PC Remand Appln. of 3 Accd. Persons ("Dismissed") (Date of Order: 27.09.2011) Page 6 of 14 RC 8(E)/2010EOUVII, Dated 23.09.2010 CBI V/s M/s Reliance Polycrete Ltd. & Ors.
10. This accused it would be recalled had been on deputation to NAFED and he came to be designated as Additional Managing Director. NAFED had successful negotiations with Reliance Polycrete for a contract to export iron ore fines to China. This accused signed the MoU on behalf of NAFED because exofficio he was the head of Finance & Accounts and the Division Head of tieup business in NAFED.
11. The upshot of the above discussion ironically could be found in an affidavit in reply filed by this accused himself for and on behalf of NAFED, in a public interest litigation before the Hon'ble High Court of Delhi. In "Writ Petition Civil No.21151 of 2005 Public Interest Petition (Vikas Jain V/s UoI & Anr.)", in paragraph 4(ii) it was mentioned that the management of NAFED was vested in Board of Directors and then the details of the manner of their election and composition etc. which has been dwelt upon in foregoing have been set out. Significantly, it was averred that the government nominee like the applicant was just one cog in the wheel without any veto power. That affidavit was filed in January' 2006.
12. Thus, there are several factual components flowing from several sources and then converging upon a point that the institution of NAFED was not such as to be run by one government nominee and further that the Managing Director was not only in decision making but he actually stood by steadfastly and defended the deal in question and was irked considerably by PC Remand Appln. of 3 Accd. Persons ("Dismissed") (Date of Order: 27.09.2011) Page 7 of 14 RC 8(E)/2010EOUVII, Dated 23.09.2010 CBI V/s M/s Reliance Polycrete Ltd. & Ors. Swarn Group of Industries' conduct, but was not at all ill disposed to the applicant.
13. It is argued by the learned counsel for this accused that the facts which have been discussed above would clearly show that the applicant did not act all by himself. After all if NAFED is an organisation some human being has got to sign the documents which function was performed by the applicant. But the fact that all others including the Managing Director were very much in the loop, so to say, and all that mattered stood by the applicant is clearly established by the above referred documents.
14. It needs to be noted quite clearly that in dealing with the goings on in a large commercial organisation, the things at the contemporary period may not be what they appear in the hindsight. In the absence of compelling material one should be slow in rushing into attributing criminal intent. At the time the events happen the guiding and driving force is to produce commercially prudent result. Such is the dynamics of the current commercial world. Therefore, unless the deviation from rules was so bizzare as to point to presence of questionable intent and every failed result need not necessarily be a pointer to criminality. Here, what pray could the applicant do if Swarup Group of Industries went ahead and converted and diverted funds. PC Remand Appln. of 3 Accd. Persons ("Dismissed") (Date of Order: 27.09.2011) Page 8 of 14 RC 8(E)/2010EOUVII, Dated 23.09.2010 CBI V/s M/s Reliance Polycrete Ltd. & Ors.
15. In "D.K Basu V/s State of West Bengal (1997) 1 SCC 416" in approvingly referring to "Joginder Kumar V/s State of Uttar Pradesh (1994) 4 SCC 260", lays down that the arrest could not be made just because it is lawful for the investigator to do. It must, I think follow that the arrest could be made for good reasons and not just because law confers powers to do so. The manner of exercise of powers is as important as the existence of the power itself. In "D.K Basu" (supra), the Hon'ble Supreme Court quite poignantly observed:
"This court in Joginder Kumar V/s State of UP (to which one of us namely Anand J. was a party) considered the dynamics of misuse of police power of arrest and opined....."
(emphasis supplied)
16. At this stage, let me deal with the complaints made by this accused even before the registration of first information report in this case. There, he recorded inter alia as to how he had fallen on the left side of the Chairman and how the Chairman was trying to cause harm to him. The first one was addressed to Central Registrar Agriculture and Cooperatives on 28.04.2006. A copy thereof is Exhibit L to the present application. The long and short of it is all that was taking shape there in NAFED. It was mentioned more than once that Managing Director was very much aware of the situation such as it obtained on the front of tie up arrangements. A reference to the Chairman was also there and the fact as to how a heated exchange took place between Managing Director and the Chairman in the meeting of 07.03.2006. The applicant was in fact irked by the rejection of his PC Remand Appln. of 3 Accd. Persons ("Dismissed") (Date of Order: 27.09.2011) Page 9 of 14 RC 8(E)/2010EOUVII, Dated 23.09.2010 CBI V/s M/s Reliance Polycrete Ltd. & Ors. move for repatriation. The said missive infact was basically occasioned by the refusal of NAFED to repatriate him. That indeed would give to the said letter more mportance for my present purpose, because there was no immediate threat of the applicant getting embroiled with CBI at that point of time and to recall the first information report itself is dated 21.09.2006. And then this accused in fact went ahead and filed a Writ Petition No.9137 of 2006 before the Hon'ble High Court of Delhi on 22.05.2006, seeking quashing of an office memo issued by the Managing Director o 04.04.2006 and further to revert him back to his parent cadre.
17. Before adverting to the second complaint which came to be made to the Director of CBI, I may briefly refer to the inhouse response dated 03.04.2006 of this accused, whereby he had his say placed on record to Managing Director's letter of 30.01.2006. There it was clearly mentioned that the tie up arrangements started in 1999. At the behest of the Chairman in the year 2003, the first nonagro tie up came to be effected for which the then Managing Director was over ruled. He then referred to the statement of Managing Director in the television programme. In a longish paragraph on page two the applicant clearly stated as to how the Chairman was slowly turning heat on him.
18. Turning to another aspect of the matter the CBI works under the guidelines contained in CBI Crime Manual. Chapter IX deals with Arrests PC Remand Appln. of 3 Accd. Persons ("Dismissed") (Date of Order: 27.09.2011) Page 10 of 14 RC 8(E)/2010EOUVII, Dated 23.09.2010 CBI V/s M/s Reliance Polycrete Ltd. & Ors. searches and seizures. Rule 4/263 lays down quite clearly that public servants should be placed under arrest only when it becomes necessary in the interest of investigation or to satisfy the requirement of law. That aspect is covered by the above discussion. Another factor is to ensure that the public servant did not run away. That is not even ritualistically suggested here. The said rule enjoins upon the District Superintendent of Police and / or Investigating Officer to effect arrest with utmost care and caution. In fact when the application was being argued, I was wondering as to the legal efficacy of such a manual because I thought it was only for guidance of CBI people and nothing more. But reading "Vineet Narain V/s UoI (1998) 1 SCC 226 (270)", it becomes clear that by reason or the mandate therein contained the CBI manual being based on the statutory provisions of Cr.P.C, adherence thereto was imperative. That is the ratio and therefore, the fact that on facts before the Hon'ble Supreme Court the guidelines emanated because of CBI's shyness to nab high and mighty will not detract from the principles of law enunciated by Vineet Narain (supra). Therefore, the above discussion must have made it clear that the provisions of Rule 4/263 of CBI Manual have not been followed by CBI here. This court will be failing in its judicial duties if despite the exposition in Vineet Narain (Supra) it were to ignore the manual guidelines. This court will give effect to the said provision quite simply because it is the mandate of the Hon'ble Apex Court. The effect of the ignorance to the said manual provision by the investigator will have its practical fall out on this matter.
PC Remand Appln. of 3 Accd. Persons ("Dismissed") (Date of Order: 27.09.2011) Page 11 of 14 RC 8(E)/2010EOUVII, Dated 23.09.2010 CBI V/s M/s Reliance Polycrete Ltd. & Ors.
19. It is further argued that this accused is presently posted as Income Tax Commissioner, Agra, UP and there is no chance of his absconding or fleeing away from justice, particularly when the transaction involved in the case is pertaining to the year 2005. He is presently not posted in NAFED, therefore, there is no likelihood that he would tamper with the evidence. The IO has admitted before the Court that no Notice U/s 160 Cr.P.c was sent to this accused and he came and joined investigation on a mere telephonic call itself. It is also admitted position that passport of this accused is already lying with CBI.
20. I have given my thoughtful consideration to the rival arguments on the police custody remand application of this accused as also the bail application. The entire evidence in the matter is documentary and this accused was not the recipient of the alleged amount. He was also not the person who had sanctioned the amount to the Reliance. Admittedly, CBI has already raided his premises several times in the past, but nothing incriminating against him has so far been found.
21. Considering the aforesaid position, grant of police custody remand of this accused is not made out and he is entitled to bail. This accused is accordingly ordered to be released on bail on his furnishing of S/B and P/B in the sum of Rs.50,000/ each. However, he is directed to cooperate with the Investigating Officer in investigation of the case.
PC Remand Appln. of 3 Accd. Persons ("Dismissed") (Date of Order: 27.09.2011) Page 12 of 14 RC 8(E)/2010EOUVII, Dated 23.09.2010 CBI V/s M/s Reliance Polycrete Ltd. & Ors.
22. Bail application of accused S.K Jain, CMD, Reliance Polycrete Limited:
Admittedly, this is the only case against this accused. The CBI has already interrogated his family members in the matter and there is no complaint that they did not join investigation. It is also admitted position that yesterday also this accused was called by the IO on telephone, pursuant to which he readily joined investigation. It is again admitted position that this accused has already invoked arbitration against the complainant and has also filed a civil suit against the complainant, which are subjudice. It is very vehemently argued by the learned counsel for this accused that after the agreement between the complainant and this accused, he contacted accused ITM Impex Pvt. Ltd., for procuring independent iron ore fines for which payments were released to him. The material was also exported and the same on account of defects was returned, the payment made by this accused to ITM Impex Pvt. Ltd. was received back by him. It is impressed upon that the complainant is secured on account of creation of lien of the immovable property of worth Rs.24.00 Crores by this accused and as such, there are no chances of this accused running from justice. In this view of the matter, no ground for grant of police custody remand of this accused is made out. He is also ordered to be admitted on bail on his furnishing of of S/B and P/B in the sum of Rs.50,000/ each. However, he is directed to cooperate with the Investigating Officer in investigation of the case.
PC Remand Appln. of 3 Accd. Persons ("Dismissed") (Date of Order: 27.09.2011) Page 13 of 14 RC 8(E)/2010EOUVII, Dated 23.09.2010 CBI V/s M/s Reliance Polycrete Ltd. & Ors.
23. Bail application of accused Daulat Singh Chauhan, Authorised Representative of M/s ITM Impex Pvt. Ltd.:
As per the bail application, this accused was the Commission Agent of Reliance and had no privity of contract of any sort with the complainant / NAFED. This accused has placed on record copy of independent agreement which he had with Reliance. The said agreement is of the date prior to the agreement between the complainant and Reliance. It is further argued that this accused has already returned the amount to accused Reliance which he had received from it after the material supplied to Reliance by it was found to be substandard. In this view of the matter, here again the CBI has not been able to show any ground for sending this accused to police custody remand. This accused, who is presently stated to be posted as Executive Director of ITM College, Jhansi Road, Gwalior is also admitted to bail on his furnishing of S/B and P/B in the sum of Rs.50,000/ each. However, he is directed to cooperate with the Investigating Officer in investigation of the case.
24. All the aforesaid applications stand disposed off accordingly.
25. It is hereby clarified that anything stated herein above shall not be construed as expression of opinion on the merits of the case.
26. Dasti.
(Vinod Yadav) CMM/Delhi 27.09.2011 PC Remand Appln. of 3 Accd. Persons ("Dismissed") (Date of Order: 27.09.2011) Page 14 of 14