Karnataka High Court
K Mahesh Kumar @ Karapudi Mahesh Kumar vs State Of Karnataka By on 16 October, 2020
Author: John Michael Cunha
Bench: John Michael Cunha
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 16TH DAY OF OCTOBER, 2020
BEFORE
THE HON'BLE MR. JUSTICE JOHN MICHAEL CUNHA
WRIT PETITION No.22510/2018(GM-RES)
BETWEEN:
K. Mahesh Kumar @ Karapudi Mahesh Kumar
S/o. K. Nagaraj,
Aged about 40 years,
Residing at J.P. Nagar
Ward No.20
Opp.Kattananjappa School,
Hospet - 583201.
...Petitioner
(By Sri. Hashmath Pasha, Senior Advocate)
AND:
State of Karnataka by:
CBI/ACB/Bengaluru
Ganganagar, Bengaluru -560032.
...Respondent
(By Sri. P. Prasanna Kumar, Special Public Prosecutor)
****
This Writ Petition is filed under Articles 226 and 227
of the Constitution of India and under Section 482 of the
Code of Criminal Procedure, praying to issue a writ of
certiorari or any other appropriate writ or direction and
quash the charge sheet in Special C.C.No.53/2014 pending
on the file of the LXXXI Additional City Civil and Sessions
Judge and Special Court, Bengaluru City (CCH 82) for the
offence punishable under Section 120-B read with Sections
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409 and 420 of I.P.C. and under Section 13(2) read with
Section 13 (1)(c) and (d) of the Prevention of Corruption
Act as per Annexure F as an abuse of process of law, and
etc.
This Writ Petition having been heard through
Physical Hearing/Video Conferencing and reserved for
orders on 14-10-2020, coming on for pronouncement this
day, the Court made the following:
ORDER
The petitioner in this case is accused No.3 in Special C.C.No.53/2014 on the file of the learned XXXII Additional City Civil and Sessions Judge and Special Judge for CBI Cases at Bangalore (CCH 34). He has filed this writ petition under Articles 226 and 227 of the Constitution of India, seeking to quash the above proceedings registered for the offences punishable under Section 120B read with Sections 409 and 420 of the Indian Penal Code, 1860, and Section 13(2) read with Section 13(1)(c) and (d) of the Prevention of Corruption Act, 1988.
2. The contention of the petitioner is that, he is sought to be prosecuted for the alleged offences in his individual capacity whereas the material produced by the 3 Investigating Agency on the face of it reveals that the entire transaction was entered into by the firm of which the petitioner was a nominal partner. The documents produced by the Investigating Agency do not disclose any personal involvement of the petitioner in the alleged transaction.
3.1 Learned Senior Counsel appearing for the petitioner has placed heavy reliance on Annexure H, namely, the contract entered into between M/s. Sri. Lakshmi Venkateshwara Minerals (Accused No.2) and M/s. Shree Mallikarjun Shipping Private Limited @ M/s.SMSPL (Accused No.4) and would submit that, this contract was entered into and executed between Accused No.2 and Accused No.4 and that the petitioner was not a signatory to the said contract. Further, he would submit that as per the said contract, the sale and delivery of the properties, i.e. iron ore fines was to be completed by 25-03-2010.
3.2 Referring to the said document (Annexure H), learned Senior Counsel has pointed out that the contract 4 was entered into on 20-02-2010 which was on "F.O.R." basis and as per the terms of this contract, the delivery period was on or before 25-03-2010. In view of Section 20 of the Sale of Goods Act, 1930, where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the price or the time of delivery of the goods, or both, is postponed.
3.3 Placing reliance on this provision, learned Senior Counsel for the petitioner has emphasized that, as on the date of completion of the contract, the ownership in the property has passed on to accused No.4. Under the said circumstances, there is no basis for the respondent to proceed against the petitioner for the alleged supply or loading of the iron ore.
3.4 Further, referring to the final report submitted before the Court, learned Senior Counsel pointed out that in column 11 thereof, the firm is stated to be represented 5 by one Sri.K. Sadashiva, Managing Partner, who had personally executed the agreement and has signed all the relevant papers and therefore, on this score also, the prosecution of the petitioner is illegal and cannot be sustained under law and on facts of the case.
3.5 The next contention urged by the learned Senior Counsel for the petitioner is that, the learned Special Judge has taken cognizance of the alleged offence punishable under Section 409 of IPC even though the material on record does not indicate that the seized properties were entrusted to the care and custody of the petitioner. As such, the ingredients of Section 409 of the IPC are not attracted insofar as the petitioner is concerned.
3.6 Further, even with regard to the charges under Sections 120B and 420 are concerned, accused No.1 being a public servant cannot enter into any conspiracy with a private person. Even otherwise, there is no material to substantiate the allegations that the petitioner had in fact entered into any conspiracy, either 6 with accused No.1 or any other accused. Therefore, even the charges under Sections 420 and 120B cannot stand against the petitioner.
3.7 Further, he would submit that in the charge sheet, except making bald allegations against the petitioner, the respondent has not adverted to any specific act constituting the alleged offences. There is no provision under law to fasten the liability of the firm against the partner. In terms of the above contract, the delivery has been completed much before the seizure of the alleged iron ore. Seizure was effected on 26-03-2010, whereas the contract evidenced in Annexure H was completed by 20-02-2010. As such, there was no cause of action for the respondent to proceed against the petitioner. Learned Special Judge failed to advert to any of these legal and factual contentions which has resulted in failure of justice and therefore, the learned Senior Counsel has sought to quash the entire proceedings pending on the file of the learned XXXII Additional City Civil and Sessions Judge and 7 Special Judge for CBI Cases at Bangalore (CCH 34), insofar as the petitioner is concerned.
3.8 In support of the above submissions, learned Senior Counsel has placed reliance on the following decisions:-
(i)Standard Chartered Bank and others Vs. Directorate of Enforcement and others [(2005) 4 Supreme Court Cases 530];
(ii)Sunil Bharti Mittal Vs. Central Bureau of Investigation [(2015) 4 Supreme Court Cases 609];
(iii) Sham Sunder and others Vs. State of Haryana [(1989 4 Supreme Court Cases 630)];
(iv) G. Sagar Suri and another Vs. State of U.P. and others [(2000) 2 Supreme Court Cases 636];
(v) Pepsi Foods Ltd. And another Vs. Special Judicial Magistrate and others [(1998) 5 Supreme Court Cases 749];
(vi) S.W. Palanitkar and others Vs. State of Bihar and another [(2002) 1 Supreme Court Cases 241];
(vii) Leo Ray Frey Vs. Superintendent, District Jail, Amritsar [AIR 1958 Supreme Court 119].
4.1 The above submissions are countered by the learned Special Public Prosecutor for the respondent by 8 placing reliance on the documents produced along with the charge sheet. Referring to Document Nos.127 and 128, namely, the Sale Invoices dated 30-03-2010 and 03-05- 2010, learned Special Public Prosecutor has pointed out that the said Sale Invoices were drawn in favour of accused No.4 - M/s. Shree Mallikarjun Shipping Private Limited and the place of loading and unloading was shown at Bellikere which indicates that the alleged material was proposed to be unloaded only on 30-03-2010 and 03-05- 2010, much after the seizure by the property.
4.2 In order to show that the alleged seizure was within the knowledge of the petitioner, learned Special Public Prosecutor has referred to the copy of the writ petition in W.P.No.15756/2010 filed by Sri. Lakshmi Venkateshwara Minerals, of which the petitioner is one of the partners and has drawn my attention to the relevant prayer made therein which reads as under:
"For the reasons stated above, the petitioner most humbly prays that this Hon'ble Court, pending disposal of this petition, be pleased to direct the respondents to release 48,000 MT of 9 iron ores belonging to the petitioner and marked as No.7, 22 and 24 in the petitioner's plot, seized by the 2nd respondent and kept in the custody of the 3rd respondent, at Bilekere Port, as per seizure report vide Annexure K to this petition, by accepting an Indemnity Bond of the petitioner, towards the value of the said 48,000 MT, in the interest of justice and equity."
4.3 Referring to the said relief, learned Special Public Prosecutor has pointed out that, the said prayer clearly indicates that, as on the date of filing the said writ petition, i.e. on 10-05-2010, the involved property was in the custody of the third respondent therein, namely, the Port Conservator and that it was still lying in Bilekere Port and therefore, the contention urged by the petitioner that he was not aware of the alleged transportation of the seized iron ore fines, does not hold any water.
4.4 In this regard, learned Special Public Prosecutor referred to the authorization letter executed by the petitioner as a Managing Partner of the said Lakshmi Venkateshwara Minerals, which is annexed to the writ petition No.15756/2010 filed by the firm M/s. Lakshmi 10 Venkateshwara Minerals, which is dated 07-05-2010. It reads as under:-
Lakshmi Venkateshwara Minerals, Bellary Road Circle, Hospet, 583 201, Bellary Dist.
Authorization Letter Date: 07.05.10 With the reference to the above subject, I, Mr. K. Mahesh Kumar, Managing Partner of M/S. SRI LAKSHMI VENKATESHWARA MINERALS, BELLARY ROAD, HOSPET, Authorize to Mr. Javed, to signature the legal documents of ceased (seized sic!) cargo at bellikeri port, in the High Court of Karnataka, Bangalore. Hence, we request you to kindly do the needful. Thanking You Sir, Your's faithfully, For SRI LAKSHMI VENKATESHWARA MINERALS Sd-
K. Mahesh Managing Partner 4.5 In the light of the above documents, it is submitted by the learned Special Public Prosecutor that the contention taken by the petitioner that he was not the Managing Partner of the firm and that he was totally unaware of the transactions entered into by the firm, is patently false.11
4.6 Further, relying on Sections 4 and 25 of the Indian Partnership Act, 1932, learned Special Public Prosecutor would submit that every partner is liable jointly with all the other partners and also severally, for all acts of the firm done while he is a partner. Therefore, the contention of the petitioner that the charges framed against him are baseless and did not render him liable to answer the said charges, cannot be accepted.
4.7 In this regard, the learned Special Public Prosecutor also pointed out that the plea set up by the petitioner that the contract entered into by the firm was concluded much earlier to the date of seizure cannot be accepted for the reason that the delivery was effected much after the date of seizure and that the payment thereof was received by the firm only on 07-04-2010 as reflected in Document No.131, produced along with the charge sheet. Thus, he prayed for dismissal of the writ petition.12
5. Considered the submissions and perused the records.
The documents discussed above, which admittedly are part of the charge sheet records, prima facie disclose the involvement of the petitioner in the alleged offence. Therefore, I am not inclined to accept the argument of learned Senior Counsel for petitioner that the petitioner has been implicated in the alleged offences without any legal basis and that the material relied on by the prosecution is not sufficient to constitute the ingredients of the above offences so as to frame charges against the petitioner.
6.1 Insofar as the legal contention urged by learned Senior Counsel for petitioner, there can be no dispute with regard to the proposition of law as laid down in para 7 of the judgment in Sham Sunder and others Vs. State of Haryana, [(1989 4 Supreme Court Cases 630), wherein it is held that, 13 "7. From explanation to Section 10 it will be seen that the company includes a firm and other association of persons. Section 10 provides that the person shall be deemed to be guilty of contravention of an order made under Section 3 if he was in charge of and was responsible to the firm for the conduct of the business of the firm. What is of importance to note is, that the person who was entrusted with the business of the firm and was responsible to the firm for the conduct of the business, could alone be prosecuted for the offence complained of.
8. Counsel for the State, however, relied upon the legal liability of partners and he argued that it would be for the accused partners to prove that the offence was committed without their knowledge or in spite of exercising due diligence on their part. He relied upon the proviso to sub-section (1) of Section 10. It is true that under the Indian Partnership Act, 1932, a 'firm' or 'partnership' is not a legal entity but is merely an association of persons(who have) agreed to carry on business. It is only a collective name for individuals, carrying on business in partnership. The essential characteristic of a firm is that each partner is a representative of other partners. Each of the partners is an agent as well as a principal. He is an agent insofar as he can bind the other partners by his acts within the scope of the partnership agreement. He is a principal to the extent that he is bound by acts of other partners. In fact every partner is liable for an act of the firm. Section 2(a) of the Partnership Act defines as "act of a firm" to mean any act or omission by all the partners, or by any partner or agent of the firm which gives rise to a right enforceable by or against the firm." 14
6.2 Further in Standard Chartered Bank and others Vs. Directorate of Enforcement and others, (2005) 4 Supreme Court Cases 530, para 31, the Hon'ble Apex Court has observed that:
"31. As the company cannot be sentenced to imprisonment, the court cannot impose that punishment, but when imprisonment and fine is the prescribed punishment the court can impose the punishment of fine which could be enforced against the company. Such a discretion is to be read into the section so far as the juristic person is concerned. Of course, the court cannot exercise the same discretion as regards a natural person. Then the court would not be passing the sentence in accordance with law. As regards company, the court can always impose a sentence of fine and the sentence of imprisonment can be ignored as it is impossible to be carried out in respect of a company. This appears to be the intention of the legislature and we find no difficulty in construing the statue in such a way. We do not think that there is a blanket immunity for any company from any prosecution for serious offences merely because the prosecution would ultimately entail a sentence of mandatory imprisonment. The corporate bodies, such as a firm or company undertake a series of activities that affect the life, liberty and property of the citizens. Large-scale financial irregularities are done by various corporations. The corporate vehicle now occupies such a large portion of the industrial, commercial and sociological sectors that amenability of the corporation to a criminal law is essential to have a peaceful society with stable economy."15
6.3 On this point, learned counsel for petitioner has placed reliance in the case of Sunil Bharti Mittal Vs. Central Bureau of Investigation, (2015) 4 Supreme Court Cases 609], in para 45.7, which reads as under:-
"... 17. The Penal Code, 1860 save and except in some matters does not contemplate any vicarious liability on the part of a person. Commission of an offence by raising a legal fiction or by creating a vicarious liability in terms of the provisions of a statute must be expressly stated. The Managing Director or the Directors of the Company, thus, cannot be said to have committed an offence only because they are holders of offices. The learned Additional Chief Metropolitan Magistrate, therefore, in our opinion, was not correct in issuing summons without taking into consideration this aspect of the matter. The Managing Director and the Directors of the Company should not have been summoned only because some allegations were made against the Company."
7. But in the instant case, the allegations made in the charge sheet clearly go to show that in addition to the Firm, petitioner No.1 is implicated in the alleged offences in his individual capacity as is evident from the allegations found in the charge sheet which are extracted herebelow:-
"9. M/s. Sri Lakshmi Venkateshwara Minerals (A-2) received the sales proceeds from M/s. SMSPL (A-4) which were credited in its account 16 No.618010200003681 with Axis Bank Ltd. College Road, Hospet as per the following details:
Date of payment Amount (Rs.)
23.02.2010 10,00,00,000.00
18.03.2010 05,00,00,000.00
07.04.2010 08,00,00,000.00
M/s. Shree Mallikarjun Shipping Pvt. Ltd. has not made full payment of the billed amount due to weight and grade differences.
10. M/s. SMSPL (A-4) also purchased 1251.99 MT of iron ore from M/s. Sri Lakshmi Venkateshwara Minerals (A-2) and sold to M/s. Dream Logistics Company on 07.04.2010 and gave a loan of 27300 MTs of iron ore to M/s. ILC Industries Ltd. on 27.04.2010.
11. At the end of the season (31.05.2010), M/s. Sri Lakshmi Venkateshwara Minerals (A-
2) had no balance of iron ore left in its plot in M/s. SMSPL land in Belekeri port.
12. After the seizure and during the process of sale of the iron ore, Sri.K. Mahesh Kumar (A-3), Managing partner of M/s. Sri. Lakshmi Venkateshwara Minerals (A-2) got a Writ Petition filed in the High Court of Karnataka. On his authorization, Zaved Sheik Katagi, an employee of M/s. Sri. Lakshmi Venkateshwara Minerals(A-2) filed the writ petition No.15756/2010 (GM-FOR) dated 10.05.2010 seeking direction to the respondent forest and port officials to release of the seized iron ore. M/s. Sri. Lakshmi Venkateshwara Minerals (A-2) informed the High Court that it had procured a Purchase Order for selling 73040 MT of iron ores to M/s. ILC Industries Ltd., Hospet on FOB basis and raised invoice No.127 for having sold the iron ore. It requested the Hon'ble High Court to issue order for release of the 48000 MT of iron ore, seized by the Range Forest Officer, Ankola (2nd respondent) and marked as heap Nos.7, 22 and 24 17 in its plot in Belekeri Port. M/s. Sri. Lakshmi Venkateshwara Minerals (A-2) further offered to submit indemnity bond towards the value of 48000 MT of the seized iron ore for release of the seized cargo.
13. As per records of the stevedore, M/s. Shree Mallikarjun Shipping Pvt.Ltd.(A-4), the seized iron ore marked as Nos.7 and 22 were in the name of M/s. Sri Lakshmi Venkateshwara Minerals (A-2) while the heap No.24 belonged to M/s. Sri. Ganesh Minerals. It is found that the seized quantity (6603 MT) of iron ore seized in heap no.24 has not been removed, while the iron ore seized in heap Nos.7 and 22 have been sold and exported from Belekeri port by M/s. Sri. Lakshmi Venkateshwara Minerals (A-2) and M/s. Shree Mallikarjun Shipping Pvt. Ltd.
(A-4), although there was no court order for the same. M/s. Sri. Lakshmi Venkateshwara Minerals (A-2) misled the Hon'ble High Court in believing that the seized iron ore was still lying in Belekeri port, whereas, M/s. Sri. Lakshmi Venkateshwara Minerals (A-2) had already sold the iron ore and raised invoice on M/s. SMSPL (A-4) even before filing the said writ petition. Sri. K. Mahesh Kumar (A-3), later took the file back from his advocate and the writ petition was dismissed for non- prosecution on 03.11.2010.
14. M/s. SMSPL (A-4) submitted indemnity bonds and a legal undertakings in respect of the iron ore cargo purchased from different traders, including M/s. Sri. Lakshmi Venkateshwara Minerals (A-2) and loaded in vessels MV Rainbow, MV Mandarin Harvest, MV Columbia and MV Riva Wind. In these indemnity bonds and the legal undertakings M/s. SMSPL (A-4) has wrongly declared that it has not violated any law in loading the cargo in the said vessels, whereas it loaded the seized cargo in collusion with Sri. Mahesh Biliye, Port Conservator (A-1) in violation of the court order of JMFC, Ankola for retention of the seized cargo. M/s.SMSPL (A-4) issued letter dated 25.05.2010 to the Port 18 Conservator, Belekeri requesting for issuing port clearance for vessel MV Columbia, wrongly mentioning that the cargo of iron ore was not marked/not seized by the forest department. M/s. SMSPL (A-4) issued similar letter dated 14.04.2010, 05.05.2010 and 03.06.2010 to the Port Conservator, Belekeri requesting for issuing port clearance and mentioning the cargo loaded in vessels, M.V. CS Rainbow, M.V. Mandarin Harvest, M.V. Riva Wind were not marked / not seized by the forest department."
8. In view of the above allegations, the contentions urged on behalf of the petitioner that learned Special Judge has proceeded to frame the charges without any basis and without looking into the material on record cannot be accepted.
9. The argument of learned counsel for petitioner that the contract entered into between M/s.Sri Lakshmi Venkateshwara Minerals (accused No.2), of which petitioner is one of the partners, and M/s.Shree Mallikarjuna Shipping Pvt. Ltd., (accused No.4) (Annexure- 'H') was concluded much before the seizure of the property is totally misplaced. I have carefully examined this document. It does not disclose any concluded contract 19 between the petitioner and accused No.4 eventhough time for performance was fixed on 25.03.2010 as contended by learned Senior Counsel for petitioner. Undisputedly, the seizure was reported to the learned Magistrate on 20.3.2010 and on the same day, learned Magistrate permitted the Conservator of Ports to retain custody of the said properties. The document Nos.127 and 128 produced by the Investigating Agency clearly indicate that the sale invoices were drawn on 30.3.2010 and 03.05.2010 in favour of accused No.4 much after the seizure of the involved iron ore. In these documents, it is clearly stated that the proposed material was to be unloaded only on 30.03.2010 and 03.05.2010. That apart in W.P.No.15756/2010 filed by M/s.Sri Lakshmi Venkateshwara Minerals of which petitioner herein is one of the partners, a specific prayer was made by the petitioner for a direction to the respondent to release 48,000 MT belonging to the petitioner and marked as Nos.7, 22 and 24 in the petitioner's plot, seized by the 2nd respondent and are kept in the custody of the 3rd 20 respondent, at Bilekere Port. In the light of the specific averment made in the writ petition that the property covered under the above agreement was belonging to the petitioner as on the date of filing the said writ petition i.e., 10.05.2010, the argument of learned Senior Counsel for the petitioner that the property in the goods had passed to accused No.4 by virtue of section 20 of the Sale of Goods Act, 1930 much earlier to the seizure of the property falls to the ground. That apart, in the above writ petition, the petitioner has unequivocally admitted that the involved property was in the custody of accused No.1 and the same was subjected to the seizure report. In the wake of these documents, the contention urged by learned Senior Counsel for petitioner cannot be accepted to any extent.
10. Section 20 of the Sale of Goods Act, 1930, no doubt, provides that, where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time 21 of payment of the price or the time of delivery of the goods, or both, is postponed". In the instant case, no such unconditional concluded contract has been produced by the petitioner which could dislodge the prima facie case made out by the prosecution. On the other hand, the documents brought on record clearly establish that the sale had taken place only after the seizure of the iron ore. Under the said circumstances, even if it is assumed that the ownership of the alleged goods had passed to accused No.4, yet, deferred performance of the terms of this contract having been frustrated and unlawful by virtue of section 56 of the Contract Act due to the intervening events discussed above, the legal contention urged by the petitioner does not any way render the impugned order bad in law. On the other hand, in view of the prima facie material produced by the prosecution to show the involvement of the petitioner and the other accused in the transportation, sale or export of the seized cargo render them liable for prosecution for the above offences, as such, I do not find any substance in the contentions urged by learned counsel 22 for petitioner in this regard. Consequently, I do not find any merit in the petition so as to interfere in the impugned order.
11. The above material, in my view, clearly attract the ingredients of the offences under sections 120-B and 420 of IPC. The contention of the petitioner with regard to the applicability of section 409 of IPC is concerned, the material on record indicate that the said charge is primarily framed against accused No.1 namely the Conservator of Ports and the petitioner herein is implicated in the said offences with the aid of section 120-B of IPC. Therefore, even this contention also does not merit any acceptance.
12. On scrutiny of the impugned order, I find that the learned Special Judge has considered all the above material and by following the established legal principles applicable to the facts of the case, has proceeded to frame the charge against the petitioner for the above offences. I do not find any error or infirmity in the said order warranting interference under Articles 226 and 227 of the Constitution of India.
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13. Consequently, the petition being devoid of merits is liable to be dismissed and is accordingly dismissed.
Sd/-
JUDGE BMV*/Bss