Delhi District Court
Cbi vs . C.K. Ramakrishnan (A-1) And Others on 9 July, 2018
IN THE COURT OF MANOJ JAIN
SPECIAL JUDGE (PC ACT) (CBI)-04: CENTRAL DISTRICT
TIS HAZARI COURTS: DELHI
CNR No.
CBI Vs. C.K. Ramakrishnan (A-1) and Others
INDEX OF CONTENTS OF JUDGMENT
Sr. No. Heading Page number
1 Prosecution Story 4
2 Cognizance and Charges 13
3 Witnesses for Prosecution 16
4 Defence of Accused 22
5 Rival Contentions 32
6 Initiation of Evaluation of Evidence 60
7 Manner of Import of Urea 62
8 Testimony of NFL officials 70
9 Seeds of Conspiracy 99
10 First Contract 111
11 Second Contract dated 09.11.1995 118
12 Remittance of Money from India 130
13 Lloyd's Insurance Policy 138
14 Applicability of Force Majeure 143
15 Whether M/s Karsan were Manufacturer of Urea 149
16 Distribution of Money 157
17 Role and Involvement of A-8 178
18 Role and Involvement of A-6 and A-7 195
19 Relevance of Testimony of Alleged Accomplices 215
20 Conclusion 220
Digitally signed
MANOJ by MANOJ JAIN
Date:
JAIN 2018.07.09
15:22:21 +0530
CNR No. DLCT01-000024-1998 page 1 of 251
IN THE COURT OF MANOJ JAIN
SPECIAL JUDGE (PC ACT) (CBI)-04: CENTRAL DISTRICT
TIS HAZARI COURTS: DELHI
CNR No. DLCT01-000024-1998
CC No. 532219/16
RC 3(A)/96-ACU-I
U/s 120-B/409/420/201 IPC
& u/s 13 (2) r/w 13 (1) (c) & (d) PC Act
CBI Versus 1 C.K. Ramakrishnan (A-1)
Ex-Managing Director,
National Fertilizers Ltd, New Delhi.
Resident of L-109, Sector-11,
Noida, UP.
2 Dilbagh Singh Kanwar (A-2)
Ex-Executive Director,
Marketing & Personnel &
Administration,
National Fertilizers Ltd, New Delhi.
Resident of C-9/9778, Vasant Kunj,
New Delhi.
3 M. Sambasiva Rao (A-3)
Son of Sh. M. Rajaiah,
Resident of 1159, Venkatagiri,
Hyderabad-29
P/A - Y.V. Palam, District
4 Tuncay Alankus (A-4)
Chairman & CEO,
M/s Karsan Ltd. Cevre Solak,
No. 8/6 A-Block, 06680,
Kavaklidere, Ankara, Turkey.
5 Cihan Karanci (A-5)
Vice President,
M/s Karsan Ltd., Cevre Solak,
No. 8/6 A-Block, 06680,
Kavaklidere, Ankara, Turkey.
CNR No. DLCT01-000024-1998 page 2 of 251
6 B. Sanjeeva Rao (A-6)
Son of Sh. B. Lakshmikant Rao,
Resident of K.L.N. Enclave,
Ameerpet, Hyderabad.
Director, M/s Madicon,
Marketing Private Limited,
74, Nagarjuna Hills, Punjagutta,
Hyderabad-82.
7 Prakash Chandra Yadav(A-7)
Son of Sh. Ram Lakhan Singh Yadav,
The then Minister of Chemicals &
Fertilizers, Govt. of India,
Resident of 105, Panchmadhi,
Kausambhi, District Ghaziabad, UP.
P/A- In the house of Sh. Ram Lakhan
Singh Yadav, P&T Colony, Moh -
Kidwai Puri, Patna Bihar.
8 D. Mallesham Goud (A-8)
Son of Sh. D. Narsimha,
R/o H. No. 2-2-647/77-G,
Durga Bhai Deshmukh Colony,
Hyderabad.
9 Agnaldo Ernesto Pinto
Son of Mr. Ernesto Pinto,
Director, Brasil Trading Ltd., London,
Resident of 54, Snakes Lane,
Woodford Green, Essex,
United Kingdom.
(Since deceased)
Date of Institution :07.01.1998
Date of conclusion of Final Arguments :08.06.2018
Date of Judgment :09.07.2018
CNR No. DLCT01-000024-1998 page 3 of 251
Memo of Appearance:
Sh. V.N. Ojha, learned Special Public Prosecutor for CBI
Sh. Kamal Nain, learned defence counsel for A-1
Sh. Pramod Jalan, learned defence counsel for A-2
Sh. Ajay Digpaul learned defence counsel for A-3
Sh. D.B. Goswami, learned defence counsel for A-4
Sh. M. Alam, learned defence counsel for A-5
Sh. Satish Tamta, learned Sr. Counsel with Sh. Puneet Kumar Rai & Sh. Neeraj
Kumar Shah, learned defence counsel for A-6
Sh. Pavan Narang, learned defence counsel for A-7
Sh. Vivek Sood, learned Sr. Counsel with Sh. Ganesan Subbian, learned defence
counsel for A-8
JUDGMENT
PROSECUTION STORY 1.0 When conspiracy in question was unearthed almost two decades back, it created ripples and sensation across the Nation. And rightly so, as the amount involved was mammoth Rs. 133 Crores. The scam was branded as 'Urea Scam' as despite making colossal advance payment of entire said amount, National Fertilizers Ltd. did not get even a grain in bargain.
1.1 National Fertilizers Ltd. (hereinafter referred to as NFL), a Public Sector Undertaking of the Government of India was made a co-canalizing agency for import of urea on behalf of Department of Fertilizers, Govt. of India in October 1994.
1.2. The Board of NFL approved procedure of floating global tenders for import of Urea. As per such procedure, bidders were required to give Earnest Money Deposit (EMD) in accordance with the tender condition. Manufacturers of urea were exempted from submitting any such EMD. Successful bidder was required to give performance guarantee bond equivalent to 2% of the total value of the contract as well as 'proof of stock' duly attested by Prime Bank/Chamber of Commerce of the CNR No. DLCT01-000024-1998 page 4 of 251 country concerned. It also envisaged that such successful bidder was to get payment by way of Letter of Credit (LoC) thereby safeguarding the interest of the buyer as well as of the seller. More importantly, since there was a provision of tender, it implied that there was embargo in entertaining any direct offer or entering into any contract with any such person/agency directly.
1.3 At the relevant time, C.K. Ramakrishnan (A-1) was posted as Managing Director of NFL and Dilbagh Singh Kanwar (A-2) was its Executive Director (Marketing & Personnel Administration). They had dominion over the funds of NFL.
1.4. M/s Karsan Danismanlik Turizm Sanayi Ticaret Limited STI (herein after referred to as "M/s Karsan") was a Turkish company. Accused Tuncay Alankus (A-4) was its President/CEO and accused Cihan Karanci (A-5) its Vice-President.
1.5 M/s Karsan was being represented by M. Sambasiva Rao (A-3) in India as its Indian agent. A-3 was director of M/s Sai Krishna Impex Pvt. Ltd., Hyderabad of which Sh. D. Mallesham Goud (A-8) was also a partner.
1.6 A-3 was a close confident of B. Sanjeeva Rao (A-6) who was relative of Sh. P. V. Narsimha Rao, the then Hon'ble Prime Minister of India. Sh. Ram Lakhan Yadav was Hon'ble Minister of Chemicals & Fertilizers, Govt. of India during those days. Sh. Prakash Chand Yadav (A-7) is his son. A-7, himself, was also a public servant, being Member of Legislative Council (MLC) of Bihar at the relevant time. They both i.e. A-6 and A-7 were alleged to be instrumental in providing the desired connections needed to win contract of urea besides being beneficiaries.
1.7. Sh. A. E. Pinto (A-9) of 'Brasil Trading Ltd' was close associate of A-3, A-4, A-5 in particular. Besides being a co-conspirator, he, too, was part beneficiary of CNR No. DLCT01-000024-1998 page 5 of 251 the defrauded money.
1.8 A-3, A-6 and A-8 deliberated as to how the public servants could be persuaded to win contracts on behalf of foreign bidders with sole motive of getting illegal kickbacks and commission and to achieve such objective, all three of them came to Delhi from Hyderabad and met A-1 in mid-1995.
1.9 A-3 did get some import orders of urea. He was awarded contracts by NFL for import of urea on behalf of M/s. Amartek International, USA, M/s. Intertrade, Denmark and M/s. Bulsigma, Bulgaria in respect of tenders-urea 3, urea-4 and urea- 5, respectively. However, he could not supply any urea to NFL against such orders. A-3 had also submitted a tender on behalf of Surpass Builders (PVT) Ltd. (managed and controlled by Nuthi Srimanarayan) in respect of the tender urea-4.
1.10 A-9 was asked by A-3 to bring certain documents relating to one offer given by M/s. Karsan for supply of 200000 MT of urea. A-9 accordingly visited New Delhi in July 1995 and met A-3 and then they both contacted A-1 and A-2. They all discussed about the offer of M/s Karsan for supply of 2 Lacs MT of urea @ US$ 190 per MT on CIF basis.
1.11 On 27th July 1995, a contract bearing No. KARUREA-097/1995 for the supply of 200000 MT urea was executed by A-2 on behalf of the NFL in favour of KARSAN. Such contract was signed surreptitiously without informing Board of NFL and in flagrant violation of rules and procedure of import of urea by NFL. No urea was, however, sent under such contract either. All the relevant papers pertaining to such contract were, allegedly, dishonestly removed by A-1 and A-2 from the records of NFL.
CNR No. DLCT01-000024-1998 page 6 of 251 1.12 Matter related to import of urea was further deliberated by the Board of
the NFL at its meeting on September 18, 1995 wherein it was recorded that such cases need not be put upto the Board and may be processed as in the case of other purchases. Board never meant that the conditions of import had been relaxed or could be diluted by anyone without the approval of the Board but A-1 and A-2 grabbed the opportunity with both hands and took the same as a handle to dilute the conditions while holding further negotiations with M/s. Karsan.
1.13 Since some of the terms and conditions of the first contract dated 27.7.1995 regarding payment by Blocked Fund method and furnishing of performance guarantee bond were unfavourable to the common design of the conspirators, a new contract was prepared. A-4 wanted disbursement of entire remittance of US$ 38 million in the seller's account as 100% cash pre-payment against mere 'corporate letter of undertaking' and a 'promissory note'. He intimated NFL that M/s Karsan would not submit any sort of bank guarantee either. Such proposal was initiated by A-4 and A-5 through A-3 and A-9. A-6 and A-7 were also in loop all along.
1.14 Such proposal was dishonestly approved by A-1 and A-2 and they agreed to send the entire payment of US$ 38 million as 100% cash pre-payment without insisting for letter of Credit or any bank guarantee and without ensuring prior delivery. They felt satisfied with simple insurance policy which did not even cover the risk related to non-performance.
1.15 These relaxations were astounding and stunning as NFL promised to remit 100% cash pre-payment of the total contract value to M/s Karsan without even ensuring for arrival of urea in India or having any substantial guarantee in case of any CNR No. DLCT01-000024-1998 page 7 of 251 failure on the part of supplier. These diluted conditions were, obviously, hurtful and disadvantageous to NFL and, of course, suited conspirators, particularly, A-4 and A-5 who were simply interested in swindling the money without sending any urea as such.
1.16 Such proposal was placed on record of NFL on 31.10.1995 and was processed with undue haste. A-6 and A-7 were involved to ensure that such deal is sealed. As per terms of the contract, 1% of the contract value was to be remitted to the account of M/s Karsan Ltd. towards insurance premium and such amount was remitted abroad as per directions of A-1 without even formal execution of the contract. As per the Exchange Control Manual, 1993, any advance payment beyond US$ 5000 was required to be backed/supported by bank guarantee issued by International Bank of repute situated outside India and goods were to be imported within three months from the date of such advance but there was calculated non-adherence to such prerequisite as well.
1.17 Seller submitted a maritime transport risk cover dated 6.11.1995 which did not cover the risk of non-performance at all but despite that it was accepted without any murmur.
1.18 On 9.11.1995, M/s. Karsan was awarded formal contract for import of 2 lac MT urea @ US$ 190 per MT which was far lower than the prevalent international market benchmark of US$ 240 to 245. At the time of signing such contract, A-4 represented that he was manufacturer as well as merchant/trader of urea and recital to that effect was also put on the contract document. No document was placed on record or insisted by NFL officials to ascertain the credibility of Karsan.
1.19 On 10.11.1995, State Bank of India wrote to the Reserve Bank of India (RBI) intimating about remittance of 1% of the advance payment. The letter further CNR No. DLCT01-000024-1998 page 8 of 251 sought approval of the RBI for remitting the balance 99% of the advance on the basis of the insurance cover to be provided by the NFL. Such letter was received by the Reserve Bank of India on 14.11.1995. However, without waiting for any response from RBI, balance 99% of the advance amounting to 37.62 million US dollars was also remitted to the Karsan's bank on 14.11.1995 itself. A-1 and A-2, in terms of conspiracy, prevailed upon the Chief Manager, State Bank of India, South Extension branch, New Delhi to remit the said amount in foreign exchange in contravention of the Exchange Control Manual.
1.20 Remittance of 37.62 million US$ was made to Pamuk Bank, Ankara, Turkey on 14.11.1995. NFL, however, received a fax message from A-4 requesting to divert the said amount to the Karsan's account No. 1051467 of the Indo-Suez Bank, Geneva (Switzerland). On 15.11.1995, the said money of 37.62 million US dollars was remitted to the Banque Indosuez, Geneva (Switzerland). Said bank made enquiries from the NHK Marine London to find out whether the insurance cover note dated 6.11.1995 covered the risk of non-performance and non-delivery as mentioned in the contract. On finding that the said insurance cover did not cover the risk of non- performance and non-delivery, the said bank declined to accept the remittance and returned the money to the concerned branch of the State Bank of India. On 22.11.1995, A-4 opened three accounts in the Pictet Bank at Geneva. Account No. 91923 was opened in the Corporate name of M/s. Karsan and the accounts No. 91924 and 91925 were opened in the name of Cihan Karanci (A-5) and Tuncay Alankus (A-4) respectively and on 23.11.1995, A-4 addressed a letter to NFL requesting for diversion of the said money to the Pictet Bank, Geneva citing demand of unreasonable commission by Indo-Suez Bank. A-3 also sent a letter to A-2 for the said purpose as he was in constant touch with A-4 and A-5. Eventually, on 28.11.1995, the said money (99% of the advance amounting to 37.62 million US dollars) landed in Pictet Bank, Geneva and receipt thereof was confirmed by the bank CNR No. DLCT01-000024-1998 page 9 of 251 vide its letter dated 29.11.1995. A1 and A-2 informed A-3 and A-6 about the receipt of the said money by the Pictet Bank, Geneva.
1.21 Entire deal was thus clinched with unholy haste and in violation of the established procedure.
1.22 Immediately on receipt of said money, A-4 made several transactions/remittances to different accounts as per the following details: -
(i) US$ 28.10 million to his personal account No. 91925 (A-4) with Pictet Bank, Geneva, Switzerland.
(ii) US$ 1.10 million to the account No. 91924 of Cihan Karanci(A-5) with Pictet Bank, Geneva, Switzerland.
(iii) US$ 4.00 million to the account of M/s Edible Food Stuff Trading, Dubai.
(Eventually shared by A-3, A-6 and A-8).
(iv) US$ 2.00 million to the account of M/s Malyn Holdings Ltd., USA.
(v) US$ 342,000 to the account of Sh. P. Papaghikas in Greece. (towards insurance cover note).
(vi) US$ 200,000 to the account of Sh. M. Sambasiva Rao (A-3) as his commission @1 US$ per MT of urea.
1.23 Said sum of 4 million US dollars, remitted to the account of M/s. Edible Food Stuff Trading, Dubai was brought to India through hawala channels and out of the said amount, A-3 paid Rs. 70 lacs to A-6 and Rs. 60 lacs to A-8. A-8 also issued a cheque of Rs. 12 lacs and two more cheques of Rs. 10 lacs each from the account of Marg Leasing and Finance (Pvt.) Ltd, Hyderabad in favour of (i) Madicon Marketing (Pvt.) Ltd, Hyderabad, (ii) S.R.R. Finance and Investment (Pvt.) Ltd, Hyderabad, (iii) Sai Bharat Finance (Pvt.) Ltd, Hyderabad, respectively, which were owned/controlled CNR No. DLCT01-000024-1998 page 10 of 251 by A-6 and his family members. Thus, the accused B. Sanjeeva Rao (A-6) got share of Rs. 1.02 crores out to the defrauded amount.
1.24 A-9 also got his share of US$ 1.20 million and such amount was credited in his account of Brasil Trading Ltd. with Barclay Bank Plc, London.
1.25 A-7 had also actively participated in the conspiracy. A-2, whose retirement was at hand, expecting that his service tenure would be extended, kept A-7 informed about the day-to-day development with respect to the deal in question. A-3 also kept on apprising A-7 about progress either personally or on telephone. A-7 directed A-2 to get US$ 2 lac remitted through A-3 to account No. 464411 of M/s. Pennycairn Holdings with Rea Brothers of New York, the details of which were provided to A-3 by A-2. Eventually, A-7 also got share of US$ 2 lac out of the defrauded amount.
1.26 Thus, the entire amount was dishonestly misappropriated and not a single grain of urea was sent to NFL. A-4 and A-5 had falsely promised to dispatch two ship- loads of 25000 MT urea each immediately on receipt of money but they did not send any urea to NFL. They falsely represented themselves to be manufacturer of urea and submitted insurance cover note of NHK Marine claiming that it covered risk of non-performance and non-delivery as well whereas such cover note covered the risk of marine perils only. M/s Karsan blamed delivery delays on account of harsh winter in CIS countries but their intention was simply to pocket the entire money without intending to dispatch even a grain of urea. Thus, in terms of the aforesaid conspiracy hatched by all accused persons, NFL was cheated of US$ 38 million i.e. about Rs. 133 Crores, as per the then foreign exchange conversion rate.
1.27 After registration of FIR and after making initial investigation, A-1, A-2 and A-3 were arrested on 01.06.1996. M/s Karsan, in order to depict that their intention CNR No. DLCT01-000024-1998 page 11 of 251 was bonafide, dispatched 9,000 MT urea which was rejected as it did not, even otherwise, conform to the standard prescribed under the contract. A-8 made a confessional statement under Section 40 of the Foreign Exchange Regulation Act (FERA) about the alleged criminal conspiracy and receipt of illegal kickbacks from M/s. Karsan through Hawala channels and its disbursement among the conspirators.
1.28 A-4 and A-5 were extradited from Switzerland to India.
1.29 A-9 was also detained in London and was extradited later. He, however, died during the pendency of the matter and, therefore, proceedings stood abated against him vide order dated 17.10.2010.
1.30 It will also be worthwhile to mention that as per investigating agency, initially the investigation was also directed against several other persons but since no evidence could surface against them, names of such officials, i.e. Deepak Lal (since deceased), P.K. Kataria (PW-36), Anil Kumar Sharma (PW-38), Arun Goel, Kulbhushan, A. K. Maitra (PW-37) and J.K. Narang were put in column no. 2 and they were rather cited as witnesses for prosecution.
1.31 No sanction of prosecution of A-2 was sought as he had already retired by the time charge sheet was submitted before the court. No sanction for prosecution of A-7 was obtained as he was no longer a public servant. However, sanction for prosecution of A-1 was obtained under Section 197 Cr.P.C. and it is in these circumstances that all the accused persons have been charge sheeted.
CNR No. DLCT01-000024-1998 page 12 of 251
COGNIZANCE & CHARGES
2.0 Curiously, the charge-sheet was submitted by CBI before the court of the
then learned Chief Metropolitan Magistrate, Delhi where it was entertained for the first time on 26.12.1997. Learned Chief Metropolitan Magistrate noticing that offence under Section 13 (1) (c), 13 (1) (d) punishable under Section 13 (2) Prevention of Corruption Act were also disclosed in the charge-sheet, directed the matter to be placed before the learned Special Judge.
2.1 It was taken up for consideration by the court of learned Special Judge on 07.01.1998 and cognizance was taken.
2.2 Copies were supplied and arguments on charge were heard. By that time, A-9 A.E. Pinto had not been extradited from London.
2.3 Order on charge was pronounced on 17.11.1998. Following charges were directed to be framed: -
Accused Penal Section
A-1 Sec 120-B IPC r/w Sec 409 IPC in alternate Sec 420 IPC
Sec 409 IPC in alternate Sec 420 IPC
Sec120B r/w Sec 13 (1) (c) punishable under Sec 13 (2) PC Act Sec120B r/w Sec 13 (1) (d) punishable under Sec 13 (2) PC Act Sec 13 (1) (c) punishable under Sec 13 (2) PC Act Sec 13 (1) (d) punishable under Sec 13 (2) PC Act A-2 Sec 120-B IPC r/w Sec 409 IPC in alternate Sec 420 IPC Sec 409 IPC in alternate Sec 420 IPC Sec120B r/w Sec 13 (1) (c) punishable under Sec 13 (2) PC Act CNR No. DLCT01-000024-1998 page 13 of 251 Sec120B r/w Sec 13 (1) (d) punishable under Sec 13 (2) PC Act Sec 13 (1) (c) punishable under Sec 13 (2) PC Act Sec 13 (1) (d) punishable under Sec 13 (2) PC Act A-3 Sec 120-B IPC r/w Sec 409 IPC in alternate Sec 420 IPC A-4 Sec 120-B IPC r/w Sec 409 IPC in alternate Sec 420 IPC Sec 409 IPC in alternate Sec 420 IPC, A-5 Sec 120-B IPC r/w Sec 409 IPC in alternate Sec 420 IPC Sec 409 IPC in alternate Sec 420 IPC A-6 Sec 120-B IPC r/w Sec 409 IPC in alternate Sec 420 IPC A-7 Sec 120-B IPC r/w Sec 409 IPC in alternate Sec 420 IPC Sec 13 (2) r/w Sec 13 (1) (d) PC Act A-8 Sec 120-B IPC r/w Sec 409 IPC in alternate Sec 420 IPC 2.4 Charges were framed on 01.12.1998 to which all the aforesaid eight accused persons pleaded not guilty and claimed trial. Reference be also made to order of same date whereby it was also clarified that A-7 had been charged u/s 13(1)
(d) of PC Act instead of 13(1)(c) PC Act.
2.5 Prosecution was directed to lead evidence.
2.6 By the time, prosecution had examined around thirty witnesses, the investigating agency was able to extradite A-9 A.E. Pinto. He appeared before the Court and copies of documents were directed to be supplied to him vide order dated 06.09.2000. Simultaneously, CBI also moved an application dated 31.08.2000 seeking joint trial of A-9 A.E. Pinto along with remaining eight accused persons.
2.7 Such application dated 31.08.2000 of CBI for clubbing of the cases was allowed vide order dated 30.09.2000. This was done to avoid any delay and also to avoid overlapping of the proceedings.
CNR No. DLCT01-000024-1998 page 14 of 251 2.8 After ensuring that all the documents had been duly supplied to A-9 also
and after necessary scrutiny about the aforesaid aspect, arguments on charge qua A- 9 were also heard. Vide order dated 11.02.2002, A-9 was also ordered to be charged for offences under Section 120B IPC r/w Section 409 IPC or in alternate under Section 420 IPC. Charges were framed same day. A-9 also pleaded not guilty and claimed trial.
2.9 It was also ordered by the learned Special Judge that all the witnesses, who have already been examined, be called again for examination in the presence of A-9.
2.10 It would also be important to mention about order dated 31.08.2002 whereby the then learned Special Judge disposed of various applications filed by the accused persons under different provisions of law. A-4 & A-5 had prayed that this Court may invoke its power under Section 319 Cr.P.C. and may proceed against some other official of NFL, State Bank of India and also against M/s Lloyds Insurance Company and their agents. They also prayed for separation of their trial. Both such application did not find favour with the court. It was observed by the then Ld. Special Judge that officials of NFL, whom said two accused wanted to be summoned under Section 319 Cr.P.C., have already explained that they had put note under the instructions of A-1 & A-2 and their such stand could not be ignored as they were their subordinates. Similarly, qua SBI officials, it was observed that they though had made deviation from the regulation but it was under pressure of higher authorities and in their anxiety to keep eminent customer in good humour and moreover, the crucial ingredients of conspiracy i.e. having knowledge and intention were not present. As regards officials of M/s Lloyds Insurance Company, it was also observed that there was no fact on the basis of which official of M/s NHK Marine or M/s Mediterranean Insurance or M/s Lloyds Insurance Company could be presumed to be part of any CNR No. DLCT01-000024-1998 page 15 of 251 conspiracy. A-9 had also contended that charges framed by the Court were not in consonance with the terms of extradition and were rather in violation of the express provisions of Section 21 of Extradition Act. It was held that charge framed against him did not constitute any departure from or improvement upon the charge suggested by the Learned Magistrate in UK and, therefore, there was no violation or breach of Section 21 of Extradition Act. His application was also accordingly rejected.
2.11 It will also be worthwhile to mention here that during pendency of the matter, prosecution had been directed to arrange an interpreter so that court proceedings including evidence being recorded in English are duly interpreted to A-4 in Turkish. CBI advertised a notice in this regard and one Sh. Mohd. Ali Beg responded to such advertisement and various order-sheets would indicate that he appeared before the Court from time to time and provided due assistance to the concerned accused. Moreover, A-5, who knew Turkish and English both, also helped his co-accused in interpreting the proceedings to him from time to time.
WITNESSES FOR PROSECUTION 3.0 Prosecution, to substantiate its allegations, examined ninety-five witnesses.
3.1 Such witnesses can be categorized as under: -
Witnesses from National Fertilizers Limited PW3 Sh. Laxmi Shankar Accounts Officer, National Fertilizers Ltd.
PW12 Sh. O.P. Dobriyal Administrative Officer, National Fertilizers Ltd. Corporate
CNR No. DLCT01-000024-1998 page 16 of 251
Office, Noida.
PW13 Sh. Deepak Chandan Accounts Officer, National Fertilizers Ltd. Corporate Office,
Noida.
PW36 Sh. P.K. Kataria Assistant Manager (Finance & Accounts), National Fertilizers
Ltd.
PW37 Sh. A.K. Maitra Company Secretary, Headquarters, National Fertilizers Limited.
PW38 Sh. Anil Kumar Sharma Addl. Manager (Marketing), National Fertilizers Limited
PW39 Sh. Sahib Singh Sr. Private Secretary to accused C.S. Ramakrishnan
PW40 Sh. Narender Kr. Gupta Executive Director (Marketing), National Fertilizers Limited PW43 Sh. Raj Kumar Assistant Personal Manager, Marketing Department, National Fertilizers Limited Witnesses related to banks PW27 Sh. Sunil Sachdeva Manager, International Banking Division, SBI PW28 Sh. K. Vikram DGM, SBI, Hyderabad PW30 Sh. K.L. Batra Chief Manager, C&I Branch, SBI, New Delhi PW31 Sh. S.D. Malhotra AGM, SBI, New Delhi PW41 Sh. R.J.S. Randhawa Dy. Manager, International Banking Division, SBI PW48 Sh. P.N. Prasad Manager (Credit), SBI Main Branch, Hyderabad PW49 Sh. A.G. Sridhar Chief Manager, Tangaguta Branch, SBI, Hyderabad PW50 Sh. A. Satheesh Hegde Sr. Branch Manager, Vijaya Bank, Secundrabad PW51 Sh. M.S. Amarnath Assistant Manager, Vijaya Bank, Secundrabad PW55 Sh. S.V. Ramagopacharyulu Branch Manager, Khamman Branch, Bank of Baroda PW63 Sh. Ravi Damodar Senior Manager, Bank of Baroda, MG Road Branch, Secundrabad PW64 Sh. M.L. Narsimham Sr. Manager, Masab Tank Branch of Bank of Baroda, Hyderabad PW66 Sh. B. Earnest Benjamin Dy. Manager, Central Bank of India, Khairatabad Branch, CNR No. DLCT01-000024-1998 page 17 of 251 Hyderabad PW67 Smt. G. Indira Manager, Andhra Bank, Himayat Nagar Branch, Hyderabad PW70 Sh. R. Nanjappa General Manager, Exchange Control Department, RBI, New Delhi PW74 Sh. M. Nageshwar Manager (Accounts), State Bank of Hyderabad, Punjagutta Branch, Hyderabad PW76 Sh. Shantanu Mukherjee Manager, Hyderabad Branch, ANZ Grindlays Banks PW78 Sh. G.S. Khairon Sr. Manager, Punjab & Sind Bank, MG Road, Secundrabad, Andhra Pradesh PW93 Sh. Jayant Dwarkanath Manager Operations, ANZ Grindlays Bank, Hyderabad Witnesses related to different hotels PW1 Sh. Sher Singh Yadav Telephone Supervisor, Hotel Janpath, New Delhi PW2 Sh. Ramesh Kumar Telephone Operator, Hotel Janpath, New Delhi PW4 Sh. C.B. Lal General Manager, Ashok Hotel, Agra, UP PW5 Sh. Vijay Bharat Receptionist, Hotel Janpath, New Delhi PW6 Sh. S.K. Sehgal Front Office Assistant, Hotel Janpath, New Delhi PW32 Sh. V.S. Gusai Assistant Manager, Hotel Hansa Plaza, New Delhi PW33 Sh. Surender Kumar Assistant Steward, Hotel Hansa Plaza, New Delhi PW35 Sh. Lalit Mohan Gupta Finance Manager (Operations), Hotel Le Meridian, New Delhi PW17 Sh. M.A. Siddqui Duty Manager, Ambassador Hotel, New Delhi PW42 Sh. Awshani Kumar Manager, Hotel Asian International, Janpath Lane, New Delhi CNR No. DLCT01-000024-1998 page 18 of 251 Witnesses from Telephone Department PW22 Ms. Shashi Anand Sr. P.A. to GM, MTNL (North), New Delhi PW69 Sh. A. Munishekhar Vigilance Officer, Hyderabad Telephones PW54 Sh. M.S. Bhagvanulu Commercial Officer, Hyderabad Telephones PW75 Sh. R.S. Madhacharya S.D.E. (Vigilance), Telephone District, Hyderabad Witnesses related to Ministry/Department of Fertilizers PW20 Sh. Shiv Pratap Singh Tomar Section Officer, Department of Fertilizers, Shastri Bhawan, New Delhi PW21 Sh. Narinder Pal Singh Section Officer, Department of Fertilizers, Shastri Bhawan, New Delhi PW45 Sh. Saurabh Chandra Director, Department of Fertilizers, Ministry of Chemical & Fertilizers CBI Officials PW77 Sh. G. Gopal Inspector, ACU, CBI, New Delhi PW82 Sh. R.N. Azad Addl. SP, CBI, New Delhi PW84 Sh. Bhagat Ram Inspector, SIG, CBI, New Delhi PW90 Sh. Sheikh Qumar Ali Inspector, CBI, ACB, New Delhi PW91 Sh. N.K. Mukherjee Addl. SP, CBI, Bank Fraud Cell, Mumbai PW92 Sh. Narendra Pal Singh Inspector General of Police, West Zone, Coimbatore, Tamilnadu PW94 Sh. M.S. Bisht Dy. SP, CBI, Special Unit, Mumbai PW95 Sh. B.N.P. Azad SP, CBI, ACU-III Branch, New Delhi/Investigating Officer CNR No. DLCT01-000024-1998 page 19 of 251 Other witnesses PW7 Sh. Anil Bhardwaj Partner, VNB International, Bhikaji Cama Place, New Delhi PW8 Sh. Suraj Modi D. General Manager, MMTC, Lodhi Road, New Delhi PW9 Sh. R.K. Sharma Chief Marketing Manager, STC, New Delhi PW10 Sh. V.P. Pancholi Sr. Manager (Commercial), Pyrites Phosphates & Chemical Ltd., Noida PW11 Sh. Kundan Sinha General Manager (Traffic), Rail India Technical Economic Services Ltd. New Delhi PW14 Sh. Bhanwar Lal Jain Partner M/s Srinidhi Construction PW15 Sh. Ajay Kumar Reddy Partner M/s Srinidhi Construction PW16 Sh. K. Chandra Shekhar Partner M/s Srinidhi Construction Reddy PW18 Sh. S.Z. Rehman Liaison Officer, M/s Transfert Middle East (Dubai), Delhi PW19 Sh. Rajesh Sondhi Proprietor, M/s Lucky Exports PW25 Sh. Sudhir Kumar Sale of land to M/s Sai Krishna Impex PW26 Sh. Suresh K. Shah Sale of land to M/s Sai Krishna Impex PW34 Sh. Vikram Srivastava Participated in Urea Tender -6 PW52 Sh. Uma Reddy Chartered Accountant, M/s Uma Reddy & Associates PW56 Sh. Satya Narayan Assistant Manager, M/s Birla Global Finance Ltd.
PW59 Sh. V. Shreekant AGM, M/s Madicon Marketing Pvt. Ltd.
PW60 Sh. T. Radha Krishna Assistant Manager M/s Trade Wings Ltd. Hyderabad PW62 Sh. U.V. Raghavulu Accountant, M/s Neuland Laboratories Ltd.
PW73 Sh. Maheedhar Kumar Partner of M/s Sai Rama Traders PW79 Sh. I.R. Shekhar Director, M/s Mars Therapeutics & Chemical Ltd.
Secundrabad
PW80 Sh. P. Jagapathi Partner, M/s Bashaiah & Sons
CNR No. DLCT01-000024-1998 page 20 of 251
PW46 Sh. Vasudev Gobind Paryani For proving remittance through hawala/illegal channel PW47 Sh. Rajinder Kr. Babani For proving remittance through hawala/illegal channel PW53 Sh. Dharmesh Yadav For proving remittance through hawala/illegal channel PW57 Sh. J. Venketshwar Witness to search conducted at Sai Krishna Impex PW65 Sh. Srimanarayan Nuthi Owner of Surpass Builder who participated in Urea Tender PW68 Sh. A. Satyanarayan Purchase of land in Nampalli PW71 Dr. K. Japathi To show connection with Sai Sree Financer Other officials witnesses PW23 Sh. Ravi Kumar Assistant Inspector General Firms, Office of Commissioner & Inspector General, Registration & Stamps, Hyderabad PW24 Sh. P. Pandu Ranga Rao Sub Registrar (Internal Audit), Nalgonda, Andhra Pradesh PW29 Sh. Sachida Prasad Secretary, Bihar Legislative Assembly PW44 Sh. Satish Chandra Addl. Private Secretary to Sh. Ram Lakhan Singh Yadav the then Union Minister of Chemical & Fertilizers PW58 Sh. M.R.A. Ansari Section Officer, RTA Central Office, Hyderabad PW61 N.V.S. Murthy Commercial Officer, Working Lines (North), HTD, Hyderabad PW72 Sh. Vinay Kr. Gupta The then learned Metropolitan Magistrate who recorded proceedings u/s 164 Cr.P.C.
PW81 Sh. Vijay Bhaskar Assistant Manager Registrar of Companies, Andhra Pradesh PW83 Sh. Arjunudu Assistant Inspector General, Office of Inspector General of Registration & Stamps, Hyderabad PW88 Sh. M.C. Reddy Assistant Enforcement Officer, Directorate of Enforcement, Hyderabad PW89 Sh. K.C. Abraham Enforcement Officer, Delhi Zone, Directorate of Enforcement CNR No. DLCT01-000024-1998 page 21 of 251 Witnesses from foreign countries PW85 Sh. R. Sloss Detective Sergeant, Fraud Square, Metropolitan Police who conducted search in the premises of A-9 in UK on 15.10.1997 PW86 Sh. Nick Akhrust Official (Fraud Officer) from Barclays Bank where A-9 Pinto was having an account in the name of Brasil Trading Ltd. in which A-9 had received 4 lac US$ on 08.12.1995 from Pictet Bank PW87 Sh. I.M. Edward Bancroft Official from Rea Brothers (Isle of Man Ltd) DEFENCE OF ACCUSED
4.0 In their statements recorded under Section 313 Cr.P.C. all the accused pleaded innocence and claimed that they had been falsely implicated.
4.1 A-1 C.K. Ramakrishnan claimed that the notes of various units/divisions used to be prepared and finalized and signed by respective Executive Directors/General Managers of such units who used to be invited to 'Board Meetings' and used to give direct clarifications to the Board with respect to such agenda items.
4.2 He denied having received any call from co-accused B. Sanjeeva Rao and denied meeting his co-accused B. Sanjeeva Rao in NFL in May 1995.
4.3 He did admit that he had given his approval in principle to the proposal of M/s Karsan on 1.11.95 supplementing that he perceived condition precedent as contained in the proposal and the notes recommending the proposal, i.e. receipt of first class Lloyd Insurance policy covering the risk of non-performance and non-
CNR No. DLCT01-000024-1998 page 22 of 251 delivery to be the sufficient safeguard to secure the interest of the company. He claimed that thereafter said file was never put up before him. He also claimed that first contract of July 1995 was never brought to his notice at all. He also claimed that he was never involved with the process of releasing of payment and even the release of payment of 1% had been cleared by Executive Director (Marketing) without his approval. He claimed that he never had any occasion to go through the papers and to satisfy himself about the 'insurance cover'. He approved the proposal under the bonafide belief that Marketing Division must have obtained the insurance policy covering the risk of non-performance as well as non-delivery. He supplemented that the procedure prescribed by the government for import of urea gave liberty to channelizing agency to enter into 'long term contract' on competitive prices. He claimed that such 'long term contract' was an alternative to the tender system and the Board resolution dated 18.9.1995 gave Managing Director full power to enter into such contract without prior approval of the Board and, therefore, there was no objection from the Board on said aspect and in the subsequent Board meeting dated 04.01.1996, even the ex-post facto approval was given by the Board. Thus, all in all, he claimed that he made all possible efforts to protect the interest of NFL and acted in bonafide manner. He also desired to lead evidence in defence.
4.4 A-2 D.S. Kanwar claimed that overall control and domain of funds of NFL rested with Managing Director who also acted as Director (Finance). He did praise Managing Director C.K. Ramakrishnan saying that he was a thorough honest person who rarely interfered in the work of others. He admitted about the procedure of import as approved by the Board of Directors in meeting dated 7.11.1993 (Ex. PW37/DT-3) as well as in the subsequent meeting dated 22.11.1994. He claimed that responses of tender no. 1 & 2 were not encouraging because NFL and MMTC were simultaneously making purchase of urea in the international market and MMTC offered better prices and grabbed export surplus of the urea in the international CNR No. DLCT01-000024-1998 page 23 of 251 market. According to him, MMTC had done the same as it faced threat from NFL of losing its entire business of urea import.
4.5 He pleaded his ignorance about the visit of his co-accused Sambasiva Rao and B. Sanjeeva Rao in the office of A-1. He claimed that bids used to be received directly in the Marketing Division and neither he entertained such bids directly nor received any call in this regard from anyone. He, however, claimed that he had received message from Managing Director that one Sambasiva Rao would be visiting the Marketing Division with a view to participate in the tender enquiry being closed on that day of May 1995 but he was never apprised or suggested by A-1 that Sambasiva Rao was visiting at the behest of PMO. He claimed that he met Sambasiva Rao briefly in his office that evening but it was only after the tender result had been announced in the open session in the Committee Room. When he was confronted with the copy of first contract dated 27.7.1995, he claimed that it was not bearing his signatures and he also pleaded his ignorance about the recovery of the same either from the house of A.E. Pinto or from the file of Sai Krishna Impex recovered from the house of Sh. Satya A. Narain. Surprisingly, till the time of ascertainment of charges, he maintained that such first contract was actually executed though adding that it was at instance of A-1.
4.6 As regards second contract with M/s Karsan, he admitted that it was signed on 9.11.1995 but claimed that such proposal was already in the full knowledge of Managing Director C.K. Ramakrishnan who was convinced that good arrangement had been made for supply of urea to NFL on 'long term basis'. He also claimed that legal opinion had been sought which clarified that the contract and insurance cover were in order and perfectly securing the interest of NFL and thereafter only the contract was signed by him on 9.11.1995. About approval from RBI for remittance of funds abroad, he claimed that such aspect was required to be dealt with by the CNR No. DLCT01-000024-1998 page 24 of 251 Corporate Finance people and not by him.
4.7 A-3 Sh. M. Sambasiva Rao did admit that he and his co-accused D. Mallesham Goud (A-8) were Directors in M/s Sai Krishna Impex. According to him, since he was having sufficient experience in chemicals and fertilizers, he started his own business. His company was able to secure offers from foreign suppliers like USA, South Africa and Middle East. According to him, his firm M/s Sai Krishna Impex started participating in various tenders floated by M/s NFL and letters of intents were awarded in favour of their foreign suppliers purely on merits as they were found to be the lowest bidders. He denied knowing about Delhi-visit of his co-accused A-6 Sh. B. Sanjeeva Rao on 24.04.1995. He also pleaded ignorance that A-6 had made a call to A-1 C.K. Ramakrishnan in his office. He admitted that he stayed at Ambassador Hotel, New Delhi but supplemented that he stayed alone. About the computer printout containing details of telephonic calls made from Ambassador Hotel, he claimed that it was a fabricated document. He denied visiting NFL in May 1995 along with B. Sanjeeva Rao and introducing accused B. Sanjeeva Rao as relative of Prime Minister. He also claimed that he never visited the chamber of A-2 Sh. D.S. Kanwar. He stated that he had submitted the bid like the other bidders and since he was the lowest bidder, letter of intent was issued to M/s Amartek. Since M/s Amartek could not supply urea due to fluctuations in price of urea, PG Bond was forfeited due to which he suffered losses. He submitted one subsequent bid on behalf of M/s Sai Krishna Impex which was accepted but still the urea could not be supplied. He denied that he got effected any recovery from the residence of Sh. A. Satya Narain on 09.06.1996.
4.8 He, however, admitted that he knew about the first contract wherein mode of payment was different i.e. through 'Blocked Fund Method' and not 'Cash Prepayment'. He denied that he had ever sent letter (Mark P38/21) dated 18.07.1995 CNR No. DLCT01-000024-1998 page 25 of 251 to his co-accused Cihan Karanci (A-5) requesting him to show the price as 200 US$ per metric tonne. He also denied calling the then Fertilizer Minister. He stated that in June/July 1995, NFL was scouting for immediate quantity of urea on 'long term contract basis' and A.E. Pinto of M/s Brasil Trading, London approached their firm and gave offer for immediate supply of 2 lac metric tonnes of urea from a Turkish company whose name was later disclosed as Ms. Karsan Ltd. Said Mr. Pinto offered the mode of payment in two ways i.e. (i) 100% cash pre-payment for the total contract value and (ii) payment through 'Blocked Fund Method'. As per 'Blocked Fund Method', payment was to be made by the buyer only after receipt of urea. He accordingly sent fax copies of such proposal to NFL authorities and NFL opted for 'Blocked Fund Method'. NFL, after satisfying itself with the terms of contract, signed the contract with M/s Karsan by resorting to 'Blocked Fund Method @ 190 US$ per M.T. CIF. Such contract was cancelled by M/s Karsan due to non-procurement of financial instrument as decided by Karsan's bankers. NFL again started negotiating with Karsan directly to finalize supply contract of urea and Karsan informed that they could supply urea against 100% cash pre-payment only of the entire contract value. They also offered counter-guarantee by way of first class Lloyds Insurance Policy which covered non- delivery besides marine and war risks. After exchange of lot of correspondence between NFL and M/s Karsan, second contract was signed and at that time executives of M/s Karsan Ltd. had also flown in and negotiated with NFL officials directly.
4.9 He admitted that he had received commission from M/s Karsan as agency commission. He claimed that as an Indian agent, his role was limited to the extent of getting the parties entering into an agreement by signing the contract and his role as Indian agent ceased then and there itself. He claimed that he could not be implicated and blamed for the things occurring after 09.11.195. He also desired to lead evidence in defence.
CNR No. DLCT01-000024-1998 page 26 of 251 4.10 A-6 Sh. B. Sanjeeva Rao also pleaded innocence. He claimed that
neither he nor his company had any business or financial dealings with NFL and he did not know about the hierarchy in NFL or appointment of NFL as canalizing agency. He denied that he along with his co-accused A-3 M. Sambasiva Rao had come to Delhi from Hyderabad by flight on 24.04.1995. He denied having made any call to A-1 C.K. Ramakrishnan and supplemented that the computerized print-out relied by the prosecution was a false and fabricated document. He did admit that he stayed in Ambassador Hotel but denied the call details. He denied that he had gone to the office of MD of NFL in May 1995 where he was introduced as relative of Sh. P.V. Narsimha Rao, the then Prime Minister of India. He pleaded his ignorance about the recovery effected from the house of his co-accused A.E. Pinto. He pleaded his ignorance about the terms of the contract in question as well as about the release of payment by NFL in favour of M/s Karsan.
4.11 He did admit that he was Director of M/s Madicon Marketing Pvt. Ltd. As regards cheque issued by M/s Marg Leasing & Finance Ltd. of which his co-accused D. Mallesham Goud (A-8) was Director and the deposit of cheque in the account of M/s Madicon Marketing, he claimed that his company had taken a loan from M/s Marg Leasing which was repaid with interest. He denied having any concern with M/s SRR Finance & Investment Ltd. though not denying the fact that his wife was its Director. He pleaded ignorance about having any interest or knowledge about the transactions related to the bank account of M/s SRR Finance. When it was asked that his brother Sh. Boppa Raju Rajeshwar Rao was a Director of M/s Sai Bharat Finance Ltd. and a cheque of Rs. 10 lacs was issued by his co-accused D Mallesham Goud on 27.03.1996 in favour of said company, he claimed that it was matter of record. He denied that he and his co-accused M. Sambasiva Rao had gone for trial of one Montego Saloon Diesel car which was agreed to be purchased by him for Rs. 5 lacs.
CNR No. DLCT01-000024-1998 page 27 of 251 He also desired to lead evidence in defence. 4.12 Accused Prakash Chander Yadav (A-7) admitted that he was the Member
of Legislative Council of Bihar from 30.09.1991 to 29.09.1997 and that his father was Union Minister of Chemical & Fertilizer in the year 1994 & 1995. He used to stay at the residence of his father in Delhi whenever he used to come to Delhi. He, however, pleaded his ignorance about various telephonic calls made from the residence of his father. He pleaded his ignorance about procedure of import of urea adopted by NFL. As regards calls made by his co-accused M. Sambasiva Rao to the landline number of his father on 18.05.1995, he claimed that he was at Patna at that time. He pleaded his ignorance about the contract in question as well as about the recovery of documents from the house of Sh. A. Satya Narain and from the house of his co- accused A.E. Pinto.
4.13 He denied having any knowledge about the proposal of M/s Karsan and the remittance of money in the account of M/s Karsan.
4.14 He also denied knowing anything about the transaction/transfer of money in the account of M/s Edible Food Stuff Trading Company, M/s Rea Brothers and M/s Pennycairn Holdings Ltd. He claimed that he neither knew Mr. Harsh Sethi nor had any relation with Pennycairn. He denied that he had received any commission. He also desired to lead evidence in defence.
4.15 A-8 Sh. D. Mallesham Goud claimed that he was not involved in the day- to-day working of firm M/s Amartek and M/s Sai Krishna Impex. He did admit that he and his co-accused M. Sambasiva Rao were Directors of Ms/ Sai Krishna Impex but claimed that he himself was not taking any decision on behalf of M/s Sai Krishna Impex. He thus pleaded his ignorance about the bids submitted on behalf of M/s CNR No. DLCT01-000024-1998 page 28 of 251 Amartek and M/s Sai Krishna Impex. He admitted that there was a contract between NFL and Karsan but supplemented that he was not aware about the details of the contract. He denied that he and his co-accused M. Sambasiva Rao had ever met Sh. Rajinder Babani and about remittance of any money in the account of M/s Edible Foot Stuff Trading Company. He did admit that he was Director in M/s Marg Leasing & Finance Ltd. and also admitted that a cheque was issued from account of said company in favour of M/s Madicon Marketing Private Limited. He also admitted that his co-accused B. Sanjeeva Rao was Director in M/s Madicon Marketing Pvt. Ltd. He, however, supplemented that cheque was towards a loan transaction. He admitted issuance of one cheque from the account of his company M/s Marg Leasing & Finance Ltd. in favour of M/s SRR Finance & Investment Pvt. Ltd. of which Ms. Madhvilita (wife of B. Sanjeeva Rao) was a Director supplementing that it was also towards the loan transaction which was later repaid with interest. Qua cheque in favour of M/s Sai Bharat Finance Ltd in which Sh. Boppa Raju Rajeshwar Rao (brother of B. Sanjeeva Rao) was a Director, while admitting its issuance, he added that it, too, was a loan transaction which was repaid with interest. He claimed that Karsan always wanted to send the urea but because of certain unavoidable circumstances like weather condition, there was delay in sending the urea and since after the registration of FIR, bank accounts were freezed, they were not able to honour the contract. He claimed that FIR had been registered on the basis of incorrect facts. He also supplemented that he had never made any voluntary statement under Section 40 of FERA and that he was compelled to write as per the dictates of Enforcement Officer. He claimed to have retracted those statements at the earliest opportunity. He claimed that he rather informed all the correct facts to CBI and he was always shown as witness but when charge-sheet was filed, he was arraigned as an accused. He also desired to lead evidence in defence.
CNR No. DLCT01-000024-1998 page 29 of 251 4.16 A-4 Tuncay Alankus claimed that it was a false case and that a
'commercial transaction' had been given a colour of 'criminal transaction' without any basis. He though pleaded his ignorance about the internal matters of NFL but categorically admitted that the first contract was signed between Karsan and NFL on 27.07.1995 whereby they agreed to supply urea to NFL on 'Blocked Funds Method'. NFL was under obligation to release the payment through 'funding instrument' but such instrument did not come from NFL and, therefore, Karsan had to suffer tremendous financial and physical losses. Karsan, instead of filing any criminal litigation against NFL for its such failure, decided to find out an amicable way to sort out the problem. NFL then promised that a fresh contract would be signed. Thus, after collapse of first contract, Karsan entered into a 'second contract' with NFL on 09.11.1995. He admitted his signatures on such contract. He did admit that he along with Cihan Karanci had come to India for signing the contract. He also explained about the marine insurance cover note claiming that he had brought the original of the same but its copy had already been sent to NFL and they had already examined the same and were satisfied about the type of insurance offered by Karsan.
4.17 He admitted that Karsan was never a manufacturer of urea supplementing that they were only co-producer/supplier.
4.18 He claimed that for the coverage of non-delivery risk, Karsan had paid insurance premium of 380000 US$. NFL had transferred US$ 380000 to Pamuk Bank, Ankara Branch on 02.11.1995 but such amount was never credited in the account of Karsan and thus a tort was committed against the Karsan and its executives. He claimed that had Karsan been allowed to perform the contract entirely, it would have paid marine risk premium for each and every shipment separately as no company would ever pay the insurance premium for marine transport risk before a shipment is effected. He also claimed that NFL & Karsan had agreed upon shipment CNR No. DLCT01-000024-1998 page 30 of 251 schedule on 24.04.1996 and despite that a criminal inquiry was opened by CBI on 02.05.1996. He claimed that after the change in administration in NFL, even the new administration accepted the validity of the contract and kept on insisting him to send the urea shipment to India. According to him, Karsan had invested over 50 million US$ for production and shipment of urea through barter and through his personal resources and Karsan had even dispatched 9000 metric tonnes of urea to India but such ship was seized at the port and shipment was not discharged by NFL and, therefore, after the release of the ship, urea on board had to be sold to China. He, therefore, had to divert the other three shipments of 25000 metric tonnes each to other countries in view of such previous illegal seizure of the shipment. He also claimed that the case was politically motivated.
4.19 It was also asked from him by the Court during the recording of his statement under Section 313 Cr.P.C. as to why two ships, as promised by Karsan in the contract on 09.11.1995, did not arrive in India and he replied that at the time of signing of the contract on 09.11.1995, NFL had promised that payment would be effected swiftly within a couple of days but there was delay of around 40 days and in order to avoid any financial loss, which could be from demurrage and to prevent the decay of the material, urea was diverted to other clients. He also claimed that in the month of December 1995, force majeure conditions came into play because of severe winter in CIS countries which made it impossible to move the cargo by rail to the loading port.
4.20 As far as A-5 Cihan Karanci is concerned, he, almost to all the questions, replied in one line by claiming that he adopted the answers given by his co-accused Tuncay Alankus. He, however, also claimed that he was chairman in his own company M/s Karanci Corporation of which Karsan was one of the clients. He claimed that Mr. Tuncay Alankus trusted him and authorized him to sign as 'Vice CNR No. DLCT01-000024-1998 page 31 of 251 President' on some correspondence of Karsan which they had with their international clients. He also supplemented that he did not have any knowledge or authorization of Karsan's bank accounts or its financial or internal affairs. He claimed that he was not a partner in the said company. He also claimed that his extradition was illegal and that he had committed no fraud. He also desired to lead evidence in defence claiming that Mr. Tuncay Alankus would lead the evidence and he would assist him.
4.21 Seven witnesses were examined in defence.
4.22 A-1 himself entered witness box as DW-1 but for a limited purpose. He merely tendered nine documents in evidence.
4.23 DW-2 Sh. Akhilesh Biharilal was examined by A-7 to prove the record of his attendance in Bihar legislative Council during 1995-1996.
4.24 DW-3 Sh. Askarbekov Marat and DW4 Shirzad Yakhayev have been examined by A-4 to show bonafide on the part of M/s Karsan. A-4 himself also entered witness box as DW-7.
4.25 DW-6 Sh. R.K. Tiwari has been examined by A-2 for proving certain record pertaining to Enforcement Directorate.
RIVAL CONTENTIONS 5.0 Sh. V.N. Ojha, learned SPP has vehemently stated that prosecution has been able to prove its case beyond shadow of any doubt.
CNR No. DLCT01-000024-1998 page 32 of 251 5.1 According to him, NFL had been authorized by Government of India to
procure urea. It came up with exhaustive terms and conditions about process of import of such Urea. Such process was duly approved by the Board which contained number of stipulations meant for protecting and safeguarding the interest if NFL. This included insistence of bank guarantee and release of payment after obtaining the urea. Various global tenders were floated and A-3, sensing that NFL was in dire need of urea, roped in foreign suppliers and projected them as manufacturer and met A-1 and A-2 and then a conspiracy was hatched using influence of A-6 and A-7. In terms of such conspiracy, contract was executed by relaxing conditions of import. No approval of Board of Directors of NFL was sought and contract was entered into in absolute deviation from the prescribed parameters. So much so, a new clause of hundred percent prepayment was introduced in the contract without any bank guarantee and the entire payment of 38 million dollar was made with undue haste. Marine policy was agreed to be taken as counter guarantee which did not cover risk of non-performance. Moreover, a direct proposal coming from M/s Karsan was entertained and one percent of the contract amount was released even before the signing of the contract.
5.2 Reference has been made to various visits and telephone calls which, according to Sh. Ojha, is a clear pointer towards the involvement of all accused and, in particular of A-3, A-6 & A-7. He has added that telephone details clearly decode the conspiracy and CDR produced on record is admissible in evidence. A-7, a public servant, misused his office as public servant and was also part of conspiracy. A-6 was a close relative of the then Prime Minister of India and he used his such influence. They both were beneficiaries as well and received substantial money from such illegal deal. A-8 was also integral part of conspiracy. He was the one who spent on hotel and air expenses and also received his share in the deal later on. Moreover, his statement u/s 40 FERA clinches the issue in favour of prosecution.
CNR No. DLCT01-000024-1998 page 33 of 251 5.3 It has also been argued by Sh. Ojha that despite pocketing huge amount
of 38 million dollars, no urea was sent by M/s Karsan who attempted to take shelter behind lame defence that the supply could not be made due to inclement weather condition and Chechnya war. He has argued that first contract was executed in July 1995 and its very existence was made to disappear from the record of NFL and the Board was, all along, kept in dark about any such contract. Copy of such first contract was subsequently recovered from the house search of accused A.E. Pinto. It has thus been argued that all the accused were hand in glove and had conspired to cheat and misappropriate the entire amount of 38.0 million US$. It has also been asserted that there was no requirement of obtaining any sanction under PC Act for retired Public Servants. He has also contended that offence u/s 409 IPC was proved as there was clear criminal misappropriation.
5.4 All such contentions have been refuted by defence. Their such contentions are more or less in synchronization with their stand under section 313 Cr.P.C. Nonetheless, it will be appropriate to reiterate here as well.
5.5 Sh. Kamal Nain, learned defence counsel for A-1 has contended that A-1 made all the possible efforts to protect the interest of NFL. He had full powers and, therefore, there was no requirement of placing the matter before the Board. In this regard, he has referred to deposition of PW36 Sh. P.K. Kataria and PW37 Sh. Arun Kumar Maitra. Even though he was having unfettered powers, he approved the proposal "in principle" only subject to the condition that Marketing Division would obtain insurance policy covering risk of non-performance as well as of non-delivery. It has also been contended that subsequent legal opinion solicited from the eminent jurists also confirmed that there was no illegality or deviation from any norm. Sh. Nain has stressed that if two views are possible then the view favouring the accused CNR No. DLCT01-000024-1998 page 34 of 251 should be adopted in a criminal trial and since Managing Director felt that he was competent to entertain the proposal in question and approved the same and Board felt otherwise, legal opinion was sought which eventually went in favour of A-1 and, therefore, also no illegality could be inferred on the part of A-1. It has also been stressed that there is neither any element to suggest any mens rea on the part of A-1 nor anything to show that he had obtained any pecuniary advantage. On the contrary, the aspect related to contract in question was duly brought to the notice of the Board and Board took note of the same and thereby there was "ex post facto approval" by the board. According to him, the role of A-1 ended on 01.11.1995 and as on 01.11.1995, he was never part of any conspiracy and he merely believed the documents placed before him by the Marketing Division and approved the proposal in principle after asking Marketing Division to obtain necessary insurance. It has been contended that no sanction u/s 19 of PC Act was obtained and sanction u/s 197 Cr.P.C. is also from an authority which is not competent to accord such sanction.
5.6 Sh. Pramod Jalan has defended A-2. He has argued that A-2 had acted in the most bonafide manner and was never part of any conspiracy and did not, even as per the case of prosecution, obtain any pecuniary advantage of any kind whatsoever. He was having no dominion over the funds. About first agreement of July 1995, it has been claimed that there was never any "formal execution" of any such contract and the alleged signatures of A-2 appearing on photocopy of such contract have been disowned. Sh. Jalan has argued that prosecution has tried to project as if A-2 was interested in obliging his bosses so that he gets an extension as he was on the verge of superannuation. However, neither any evidence to that effect has been led nor A-2 had ever been given any such extension which also suggests that A-2 has been made accused on flimsy grounds. Sh. Jalan has contended that market related to import of urea was very volatile and the prices were fluctuating between 160 US$ & 250 US$ per metric tonne. Since MMTC was not able to procure CNR No. DLCT01-000024-1998 page 35 of 251 urea, NFL was given such task and was made co-canalizing agent and it was under
pressure to import urea without any delay. His other contentions can be enumerated as under: -
(I) No procedure was prescribed for import of urea and NFL was free to devise its own method/procedure and such procedure was not arbitrary or inappropriate as on previous occasions also, one such stand- alone agreement was executed with another supplier of Pakistan.
(ii) All the concerned departments i.e. Marketing, Finance, Corporate, Legal and Secretarial were involved and nobody pointed out any illegality or infirmity with respect to the payment clause or guarantee clause. Clause regarding hundred percent advance payment was duly safeguarded by 'first class Lloyd Insurance' which covered non-performance as well as non-delivery. Subsequent legal opinions, sought from jurists, also confirmed the same.
(iii) Contract would not have been extended and further time to M/s Karsan would not have been given by NFL if the contract was illegal. Rather, on the same contract, NFL had itself invoked arbitration which indicates that such contract was not illegal.
(iv) It hardly matters whether M/s Karsan had requested for remittance of the payment in his bank account of Switzerland. Being supplier, he could have chosen any bank of his desire and merely because such bank was situated in Switzerland, no illegality can be presumed.
(v) There is nothing to attract Section 409 IPC as there was no deviation either from the terms of contract or from the law.
(vi) Assuming without admitting, it can be, at best, said to be a case of "lack of prudence" with no criminality.
CNR No. DLCT01-000024-1998 page 36 of 251
(vii) As regards approval from RBI, it was not for A-2 to seek any
such prior approval. Moreover, when it was learnt that it was required, concerned officials of NFL immediately contacted RBI and SBI. SBI officials even informed NFL that such approval could give also be given ex post facto and, therefore, no illegality can be said to be there in the payment process.
(viii) As regards first contract, the proposal had come from Karsan but no contract was formally executed as bank could not provide the required funding instrument.
(ix) The allegations regarding destruction of evidence is false as even otherwise A-2 had no motive to destruct any such record.
(x) The alleged copy of first contract is not admissible in evidence and first contract has not been proved by the prosecution in any manner whatsoever.
(xi) Successor of A-2 had prepared exhaustive note (Ex.
PW37/D2) (Part of D-8) which clearly indicates that second contract was valid and, therefore, only the time was extended for supply of urea.
(xii) By entering into the second contract on 09.11.1995, NFL had rather saved public exchequer as the offer of Karsan was found to be very lucrative.
(xiii) On previous occasions also, stand-alone contract on long term basis was given to M/s Ferrico and, therefore, no illegality can be found by entering another contract of similar nature with Karsan.
5.7 Sh. Ajay Digpaul had defended A-3. He does admit that A-3 was agent for Karsan but it has been supplemented that he was never part of any conspiracy CNR No. DLCT01-000024-1998 page 37 of 251 5.8 His broad arguments can be enumerated as under: -
(i) The role of A-3 was very limited and he only arranged a platform where the parties to the contract could meet and negotiate about the terms. The moment the contract was signed, his role came to an end. Merely because he was to get commission as an agent would not mean that he was part of any conspiracy.
(ii) The needle of suspicion was revolving amongst many other persons who were given back door exoneration.
(iii) Prosecution had even sought NBWs against Sh. Babani and Sh. Dharmesh Yadav but for the reason best known to CBI, they were never arrested and rather cited as witnesses while bypassing the provision contained in Section 306 Cr.P.C.
(iv) First contract was executed in July 1995 but it could not be acted upon by NFL as requisite instrument could not be arranged.
(v) Statement made by A-8 under Section 40 of FERA cannot be pressed into service in the present criminal proceedings. Moreover, such statement is hit by the provision of Indian Evidence Act as any such alleged confessional statement, made to a police officer, is not admissible in evidence.
(vi) No element of criminal conspiracy surfaced during the entire trial and, therefore, no question with respect to conspiracy was put to the accused when his statement under Section 313 Cr.P.C. was recorded.
(vii) Electronic evidence, on which prosecution has relied upon, is inadmissible for want of mandatory certificate under Section 65B Indian Evidence Act. Even if at the time of alleged commission of offence, such provision did not exist in the statute book, since the trial had CNR No. DLCT01-000024-1998 page 38 of 251 started much later, such procedure should have been followed by the prosecution and such certificate should have been obtained by the prosecution/investigating agency.
(viii) Charge has not been framed appropriately and though the learned prosecutor had conceded that charge under Section 420 IPC may not be framed, the Court framed the charge under Section 409 IPC and alternate charge under Section 420 IPC also which has caused serious prejudice to the accused and, therefore, charges should be altered as accused is not clear as to which charge is required to defend.
Application to that effect has also been submitted separately.
5.9 Sh. Digpaul has also asserted that when IO Sh. Azad entered into witness box, several court questions were put to him and his answers clearly indicate that the investigation was tainted.
5.10 According to Learned defence counsels for A-4 and A-5, M/s Karsan Ltd. was registered with Ankara Chamber of Commerce and was having diversified business interest including dealing in agricultural product i.e. urea and had invested considerable money in CIS urea market as a co-producer and had appointed its agents worldwide. They claimed that first contract dated 27.07.1995 (Ex. PW38/A) was executed by accused Ankara on "Blocked Fund Method" which protected the interest of the buyer as well as seller. However, the terms of the contract were flouted by NFL and, therefore, M/s Karsan had to terminate the contract and had threatened NFL to initiate recovery proceedings against NFL. However, since NFL did not want to go into litigation, it initiated discussions and agreed to sign a fresh contract. When such discussions materialized, M/s Karsan told NFL very clearly that it would supply only if the advance payment is made to which NFL agreed. Thus, contract dated (Ex. PW36/H) was signed in Ankara on 30.10.1995 and same was finally executed on CNR No. DLCT01-000024-1998 page 39 of 251 09.11.1995 when it was signed by NFL officials. They claimed that all the terms & conditions of the contract were made very clear to NFL and NFL failed to perform their part of contractual obligation and did not make the payment as per the stipulated terms which resulted in delay in supply of urea. They claimed that there was unprecedented severe winter condition in CIS countries from where the urea was to be shifted and such fact was also brought to the knowledge of NFL and, therefore, the delay in this regard was adequately covered under Force Majeure Clause. According to them, contract period was given extension by NFL and M/s Karsan agreed to ship the urea as per the revised shipping schedule but NFL rejected the shipment on the pretext that it was not as per the contractual specification. They claimed that CBI wanted to frustrate the contract on false and frivolous grounds and made it impossible for Karsan to fulfill the contractual obligations. They were arrested and extradited to India on 30.10.1997. They stressed that entire dispute was commercial in nature which was given criminal colour for the reasons best known to the CBI.
5.11 Contentions of Sh. Goswami, learned defence counsel for A-4 can be further summarized as under: -
(i) It was a civil contract which has been given a criminal angle by CBI.
(ii) There is nothing to indicate any dishonest intention on the part of A-4 & A-5 at the time when they entered into the contract or even at any subsequent stage. They were rather, all along, interested in completing the contractual obligations and because of the attitude of NFL, the contract eventually got frustrated.
(iii) There is nothing to show any element of entrustment.
Amount was given as consideration towards the contract and, therefore, Section 409 IPC also does not stand attracted.
CNR No. DLCT01-000024-1998 page 40 of 251
(iv) The insurance policy in question covered non-performance
and non-delivery both and the cover note was duly submitted in the office of NFL before execution of the contract and CBI cannot, without any basis, claim that insurance note was not serving the requisite purpose. He also tried to distinguish between two terms i.e. insurance of contract and insurance of commodity supplementing that for the purpose of insurance of contract, the premium was paid and the cover note was issued and the insurance of commodity was to come into play at the time of shipment.
(v) It cannot be said that NFL was cheated because NFL is not an entity which has mind of its own.
(vi) M/s Karsan never projected itself as manufacturer and its claim, all along, was that it was a co-producer/supplier and, therefore, there was never any misrepresentation of any kind.
(vii) There is nothing on record which may reveal commission of offence under Section 409 IPC and even if it is assumed, though not admitted, that there is any ingredient related to said penal section, in view of specific conditions on which accused persons had been extradited from Switzerland, they cannot be held liable for offence under Section 409 IPC.
5.12 Sh. Goswami has, relying upon the conditions given in the extradition order and in particularly appearing in Para-7D (Page-12), contended that A-4 & A-5 cannot be prosecuted and punished under Section 409 IPC as under the Swiss Law, the concept of civil servant akin to public servant did not exist at all.
5.13 Sh. M. Alam, learned defence counsel for A-5 has, additionally, asserted that a false case has been made out and there was never any dishonest intention on CNR No. DLCT01-000024-1998 page 41 of 251 the part of A-5. According to him, it was due to the cold war of Chechnya and inclement weather condition that the shipment was not possible and, therefore, Force Majeure Clause came into play automatically. According to him, IO did not deliberately investigate all such aspects. He has also added that M/s Karsan was, as per record maintained by Chamber of Commerce of Ankara, into tourism and trade. According to him, trade is a wide word which incorporates many things including trade in urea. He has also contended that the investigating agency should have rather collected such documents from the Chamber of Commerce so that even the Court could see as to what had been mentioned there. According to him, non-investigation of complainant Dr. Chhattra Sal Singh has also caused serious prejudice to the defence.
5.14 It will be important to mention that A-4 also wanted the Court to give him hearing.
5.15 Since he did not know English or Hindi, he made request for addressing arguments to the court through his co-accused A-5 Cihan Karanci. Such request was acceded to and A-4 defended himself by asserting that it was a civil transaction which was entered into with bonafide intention. According to him, insurance documents were in order and were minutely scrutinized by NFL office before the execution of the contract and after NFL accorded its satisfaction by directly communicating with the insurance people, it entered into the contract. It was rather the duty of NFL to have obtained the policy directly from the concerned insurer. He also contended that NFL should rather join hand with him for suing insurance agency which should have indemnified the losses suffered by them. He also claimed that his extradition was on specific conditions and the Court should adhere to such conditions. He has also highlighted that he remained in jail for around eight years whereas his accused, who are alleged to be the co-conspirators, remained behind the bars for few days only. He CNR No. DLCT01-000024-1998 page 42 of 251 claimed that he never misused the bail and rather reported to police station every week, punctually and regularly. According to him, despite having arbitration award in its favour, NFL had not chosen to bring the same to India for execution and rather a criminal case was fastened which was not permissible since the transaction in question was purely civil in nature. He claimed that he came to India and met NFL officials only on 08.11.1995 and left on 11.11.1995 and there was no occasion for him to have conspired with anyone. He claimed that he did not even know Mr. Pinto and learnt about demand of urea through bulletin of Chamber of Commerce, Paris, France. According to him, CBI did not investigate the matter properly and rather suppressed various documents including the extradition order. According to him, even while seeking extradition, facts were suppressed and twisted. He claimed that he was a co-producer in the field of urea and was having good experience in such field and was supplying the urea to various other buyers and NFL is responsible for frustrating the contract for the reasons already elaborated by his counsel. He claimed that he had to incur heavy expenditures as one shipment was detained at Bhav Nagar Port for three months like a prisoner and neither cargo was unloaded nor ship was permitted to leave the port. According to him, NFL was required to make requisite arrangements for arranging warehouse at designated port as the supply was on CIF basis and, therefore, the duty of M/s Karsan came to an end the moment the shipment had arrived at the designated port in India. He claimed that he had made various arrangements for supply of urea and drew attention of the Court to number of such documents to show his bonafide. He also claimed that the inclement weather did not permit him to send the urea at any earlier point of time and the reason in this regard was beyond his control. He claimed that shipping schedule was revised and he had made requisite arrangements to ensure that urea was supplied as per such revised schedule but for totally inexplicable reasons, the contract was terminated by NFL on 06.10.1996. He, however, also claimed that he learnt so many things in the last twenty-years in India and also trust the Indians for showing warmth to him. He CNR No. DLCT01-000024-1998 page 43 of 251 claimed that he expected justice from the Court as it was nothing but a civil transaction and there was no element of any conspiracy, cheating and misappropriation.
5.16 Sh. Satish Tamta, Ld. defence counsel for A-6 has contended that prosecution has miserably failed to prove its case against A-6. He is curious to learn from CBI as to what act was done by A-6 illegally or by illegal means. He contends that there is nothing on record suggesting A-6 to be part of any conspiracy. According to him, invitation of tender by global bids cannot be said to be an illegal act. Moreover, there was no entrustment of any sort to A-6 and, therefore, charge u/s 409 IPC was totally misconceived.
5.17 As regards Section 420 IPC, Sh. Tamta has contended that neither A-6 induced anyone nor there is any evidence to that effect. According to him, CBI, for totally unexplained reasons, withheld search related documents and accused himself had to move an application before the court asking CBI to admit or deny such seizure memo dated 10.06.1996. Sh. Tamta has contended that A-6 was never a beneficiary in any manner whatsoever and CBI had dragged him in the present matter only due to the fact that he was close relative of the then Prime Minister of India. He has also extensively referred to the testimony of PW39 Sahib Singh, PW40 Narender Kr. Gupta, PW47 Rajinder Babani, PW56 Sh. Satyanarain and PW59 V. Shrikant and also of IO B.N.P. Azad in order to show that there was no direct or inferential circumstance showing complicity of A-6 in the matter and that there was nothing to brand him as a co-conspirator.
5.18 As regards alleged visits to NFL office, it has been claimed that since A-6 was having other business interest, even if he had gone to the office of NFL in relation to such other supplies (other than Urea), he cannot be assumed as an accused. He CNR No. DLCT01-000024-1998 page 44 of 251 has also supplemented that alleged statement made by A-8 to the Enforcement Directorate has neither been proved nor can be looked into.
5.19 Moreover, such statement was retracted by A-8 by sending a telegram and, therefore, such statement has no credibility. He has argued that there were genuine loan transactions between his firm and firm of A-3 and CBI has unjustifiably projected as if such transaction was a bogus one or was a camouflage.
5.20 Sh. Pavan Narang, learned defence counsel has contended that A-7 has been falsely and has no role, of any kind whatsoever, to play. A-7 was a public servant in his own individual capacity and he never abused or misused his such office of Member of Legislative Council of Bihar and, therefore, even otherwise charge under Section 13 (2) P. C. Act is totally misconceived. He has argued that even if he had any telephonic conversation with any NFL official or had met any such official would not mean that he was part of any conspiracy.
5.21 According to him, there is no material on record which may indicate that A-7 was ever present in NFL office during the time when alleged first contract or second contract was executed. A-7 always used to remain in Bihar as he was representative of Legislative Council of Bihar and used to stay in Delhi at the residence of his father only whenever he happened to come to Delhi. His such stray stay would not make him a criminal. It has been claimed that CBI, for totally unexplained reasons did not try to catch hold of Sh. Harsh Sethi and merely on the basis of some hearsay evidence, A-7 cannot be assumed to be a beneficiary. It has also been contended that there were arrest warrants against Dharmesh Yadav, Rajinder Kumar Babani and Vasudev Paryani and they were eventually pressurized and their statements under Section 164 Cr.P.C. were got recorded and they were cited as prosecution witnesses despite the fact that there was no order recalling of CNR No. DLCT01-000024-1998 page 45 of 251 their warrants. According to Sh. Narang, the statements of such witnesses, who are simply alleged to be accomplices, do not have any substantive value even otherwise. He has also added that their versions are contradictory and unreliable as well.
5.22 Sh. Narang has also claimed that prosecution cannot make use of alleged statement of A-8 made u/s 40 FERA. It has been argued that A-7 cannot be branded as beneficiary on the basis of incomplete and inadmissible material. There is no money trail reaching him and he has been claimed beneficiary on the basis of hearsay material. The alleged chain of conspiracy is incomplete and does not suggest any involvement of A-7. It has also been contended that sanction u/s 197 Cr.P.C. was also not sought qua him which was mandatory. No travel details were collected to show the complicity of A-7 and the CDR does not prove the case in any manner whatsoever.
5.23 Sh. Vivek Sood, Ld. Senior Advocate has defended A-8. According to him, there is nothing on record which may suggest complicity of A-8. Sh. Sood has contended that even as per the prosecution's own case, the agent was Sh. M. Sambasiva Rao in his individual capacity who allegedly received commission in his personal account and merely because Sh. M. Sambasiva Rao and A-8 Sh. D. M. Gaud were partners in Sai Krishna Impex would not, ipso facto, mean that A-8 was also a co-conspirator. There is no evidence of meeting of minds. He never talked to any NFL official or for that matter to A-4 and A-5. He is not beneficiary in any sense whatsoever. Even if it is assumed that he had come to Delhi and stayed in Ambassador Hotel with his co-accused, such fact would not make him a co- conspirator.
5.24 As regards statement made by him under Section 40 FERA, Sh. Sood has contended that it has not been proved in the desired manner and moreover there CNR No. DLCT01-000024-1998 page 46 of 251 is doubt with respect to the authenticity of English translated version. Moreover, such statement is not self-serving and cannot be used as substantive piece of evidence particularly when it was retracted immediately by A-8. He has also made elaborate reference to the testimony of various prosecution witnesses including PW-17, PW-19, PW-27, PW-36, PW-38, PW-42, PW-46, PW-47, PW-53, PW-73, PW-88, PW-89, PW-92 and PW-95.
5.25 Written submissions have also been filed by prosecution and accused persons.
5.26 Both the sides have placed reliance upon huge number of precedents as per the following chart: -
Precedents relied upon by Prosecution Sl. No. Title of the case Purpose of reliance 1 Sadhupati Nageswara Rao Vs. State of Andhra Applicability of sec 409 IPC Pradesh 2012 Crl. L.J. 4317 SC 2 B. Parameswaran Vs. State 1999 Cri. L.J. 2059 AP Applicability of sec 13(1)(d) of PC Act 3 R. Gopalakrishnan Vs. The State 2002 Cri. L.J. 47 Abuse of position by Public Servant 4 Surinder Bansal Vs. State of Punjab 2006 Cr.L.J. Non-requirement of sanction 1329 P&H u/s 19 PC and u/s 197 Cr.P.C.
for a retired servant 5 Shafhi Mohammad Vs. The State of Himachal Sec 65B Evidence Act Pradesh (2018)2SCC801 6 State of Madhya Pradesh & Ors. Vs. Shri Ram Procedural delay and Singh 2000 Cri. L.J. 1401SC technicalities of law should not be permitted to defeat the object to be achieved 7 State of NCT of Delhi Vs. Shiv Charan Bansal Telephonic call is a relevant CNR No. DLCT01-000024-1998 page 47 of 251 2009(3) JCC 2202 fact 8 State Vs. Navjot Singh Sidhu 2005 Cri. L.J. 3950 Criminal Conspiracy (SC) 9 Shivanarayan Laxminarayan Joshi & Ors. Vs. State Criminal Conspiracy of Maharashtra & Ors. AIR 1980 SC 439 10 Tuncay Alankus & Anr. Vs. Union of India 2002 (2) Criminal Conspiracy CCC HC 275 11 Mustafikhan Vs. State of Maharashtra (2007) 1 Applicability of sec 409 IPC SCC 623 12 Laxman Ganpati Khot & Ors. Vs. Anusuyabai & Photo cannot be proved Anr. AIR 1976 Bombay 264 without negative 13 State of Himachal Pradesh Vs. Jai Lal & Ors. 1999 Expert must prove his skill and Cri. L.J. 4294 knowledge on the subject involved 14 Gajendra Singh Vs. State of UP AIR 1975 SC 1703 Non-production of best evidence by defence would discredit defence story 15 State of Kerala Vs. Padmanabhan Nair AIR 1999 Applicability of sec 409 IPC SC 2405 and sec120B IPC 16 B. Saha & Ors. Vs. M.S. Kochar 1979 Cri. L.J. Sanction not required for sec 1367 409 IPC and sec120B IPC 17 Dr. M. Manuneethi Cholan Vs. State 2017 Cri. L.J. Sanction not required u/s 197 1370 Madras Cr.P.C. in a case of illegal gratification 18 State of Karnataka Vs. S. Kannaiah M. Sanyasi Sanction not required u/s 197 2017 Cri. L.J. 1849 Karnataka Cr.P.C. in a case of illegal gratification 19 Padhey Sharma & Ors. Vs. CBI 2007 (2) JCC 1481 Applicability of sec 13(1)(d) of Delhi PC Act 20 Dhaneshwar Narain Saxena Vs. The Delhi Misconduct need not be with Administration AIR 1962 SC 195 his own official duty 21 Dalpat Singh & Anr. Vs. State of Rajasthan AIR Misconduct need not be with CNR No. DLCT01-000024-1998 page 48 of 251 1969 SC 17 his own official duty 22 P.V. Narsimha Vs. State (CBI/SPE) etc. 1998 Sanction for MP/MLA/MLC not Cri.L.J. 2930 required 23 K.T. Subramanian Chettiar & Ors. Vs. The Deputy Admission made under FERA Director, Enforcement Directorate, Madras & Anr. is admissible 1987 Cri. L.J. 483 Madras 24 Naresh J. Sukhawani Vs. Union of India AIR 1996 Statement made to Custom SC 522 official is substantive evidence 25 K.T.M.S. Mohd. Vs. UOI (1992) 3 SCC 178 Admission made under FERA is admissible 26 State of NCT of Delhi Vs. Shiv Charan Bansal Telephonic call is a relevant 2009(3) JCC 2202 fact Precedents relied upon by Learned defence counsel for A-1 Sl. No. Title of the case Purpose of reliance 1 C. Chenga Readdy & ors. Vs. State of A.P. [(1996) Mere violation of codal/ 10 SCC 193] procedural norms does not constitute offence under P.C. Act when mens rea is not present.
2 State of Madhya Pradesh Vs. Sheetla Sahai & ors. Error of judgment is not [(2009) 3 SCC (Crl.) 901] criminal misconduct. 3 Vinod Chandra Semwal Vs. Special Police If delegate did not act in terms Establishment, Ujjain [(2015) 8 SCC 383] of delegation of powers, the delegator cannot be held responsible. 4 C. K. Jaffer Sharief Vs. State (Through CBI) Mens rea/ dishonest intention [(2013) 1 SCC 205] is gist of offence u/s 13(1)(d) PC Act. 5 L. Chandraih Vs. State of A. P. & anr. [(2003) 12 Mere Negligence does not SCCC 670] constitute offence under P.C. Act. 6 Radha Pisharassaiar Amma Vs. State of Kerala Mens rea/ dishonest intention [2007 (13) SCC 410] is to be shown for offence u/s CNR No. DLCT01-000024-1998 page 49 of 251 409IPC and offence u/s 13(1) (d) PC Act. 7 Anil Kumar Bose Vs State of Bihar [(1974) 4 SCC Mere Negligence or error of 616] judgment would not constitute offence of cheating or offence under PC Act. 8 Vijay Kumar Paliwal Vs. The State of MP (Crl. Mere carelessness or
Appeal No. 1956/2002 decided by Hon'ble High negligence would not amount Court of Madhya Pradesh to criminality.
9 Major S.K. Kale Vs. State of Maharashtra (1977) 2 Mens rea/ dishonest intention
SCC 394 is to be shown for offence
under PC Act.
10 Sudhdeo Jha Uipal Vs. The State of Bihar AIR Dishonest intention is to be
1957 SC 466 proved for offence under PC
Act and reasonable
explanation given by accused
should be considered as
burden of proof never shifts
upon accused.
11 Sri Rabindra Kumr Dey Vs. State of Orissa [(1976) Admission made by PWs can
4 SCC 233] be relied as plausible
explanation of accused.
12 Balu Sonba Shinde Vs. State of Maharashtra Accused can take advantage
[2002(7) SCC 543] of admission made by PWs
and of favourable portion of
testimonies of PWs.
13 Meena Vs State of Maharashtra [2000(5) SCC 21] Accused can take advantage
of hostile evidence of PWs.
14 Ramsewak Vs. State of M. P. [2004(11) SCC 259] Accused should get benefit
when prosecution witnesses
dislodge the case of
prosecution and yet not re-
examined nor declared hostile
by prosecution.
15 Surender Singh Vs. State (NCT of Delhi) Burden is on prosecution to
prove its case.
CNR No. DLCT01-000024-1998 page 50 of 251
[2014 (146) DRJ 37
16 Assoo Vs. State of Madhya Pradesh [(2011) 14 Accused should be given
SCC 448] benefit when prosecution
witnesses dislodge the case of
prosecution and yet not re-
examined nor declared hostile
by prosecution.
17 Ramesh Vs. State [2014(1) JCC 416] Recovery as per Ex PW91/A1
is planted.
18 Bikal Bhanot Vs. State (NCT of Delhi) [2013(8) AD Recovery is planted and
(Delhi) 178 doubtful.
19 Prem Pal Vs State [2010 CrLJ 4786] Recovery is planted and
doubtful.
20 Ram Kishore Vs State [1990 RLR 154] Recovery is planted and
doubtful.
21 Abdulla Mohd. Pagarkar Vs. State [ (1980) 3 SCC Suspicion is not sufficient for
110] conviction.
22 State of Uttar Pradesh Vs. Ram Balak [(2008) 15 Chain of circumstantial
SCC 551] evidence needs to be proved
fully.
23 Vinay D. Nagar Vs. State of Rajasthan [(2008) 5 Circumstantial evidence.
SCC 597]
24 Inspector of Police, Tamil Nadu Vs. Bala Prasanna Circumstantial evidence.
[ (2008) 11 SCC 645
25 Arun Bhanudas Pawar Vs. State of Maharastra Circumstantial evidence.
[(2008) 11 SCC 232]
26 Varun Chaudhary Vs. State of Rajasthan [ (2011) Circumstantial evidence.
12 SCC 545]
27 Sharad Birdhichand Sarda Vs. State of Circumstantial evidence.
Maharashtra [(1984) 4 SCC 116]
28 Kali Ram Vs State of H. P. [(1973) 2 SCC 808 Burden of proof and
CNR No. DLCT01-000024-1998 page 51 of 251
circumstantial evidence.
29 Sattatiya @ Satish Rajanna Kartalla Vs. State of Circumstantial evidence.
Maharashtra [ (2008) 3 SCC 210]
30 Sampath Kumar Vs. Inspector of Police, Krishnagiri Circumstantial evidence.
[(2012) 4 SCC 124]
31 Dalip Ram Vs. State (NCT of Delhi) [(2007(5) AD Circumstantial evidence.
(Delhi )645]
32 Rampal Pithwa Rahidas Vs. State of Maharashtra Evidentiary value of evidence
[1994 Supp(2) SCC 73 of an accomplice.
33 Sarwan Singh Vs State of Punjab [1957 SCR 953] Evidentiary value of evidence
of an accomplice.
34 Bhiva Dhoulu Patil Vs. State of Maharashtra [AIR Evidentiary value of evidence
1963 SCC 599] of an accomplice.
35 Adambhai Sulemanbhai Ajmeri Vs State of Gujarat Evidentiary value of evidence
[(2014) SCC 716] of an accomplice.
36 Thimmareddy & Ors. Vs. State of Karnataka Appreciation of testimony of a
[(2014) 13 SCC 408] witness whose version seems
doubtful.
37 Liyakat Hussain Vs. State [2008 (154) DLT 730] Appreciation of testimony of a
witness whose version seems
doubtful.
38 State of Haryana Vs. Ram Singh [(2002) 2 SCC Value of testimony of
436] interested witness.
39 Gurdeep Singh Vs. State of Punjab [(2011) 12 Appreciation of testimony of a
SCC 408 witness who resiles from
previous statement.
40 Shingara Singh Vs. State of Haryana [ (2003) 12 Appreciation of evidence of a
SCC 758] witness who makes
inconsistent statements.
41 State of Karnataka Vs. L. Muniswamy [(1977) 2 Conspiracy cannot be proved
SCC 699 through few bits here and few
bits there.
CNR No. DLCT01-000024-1998 page 52 of 251
42 P.K. Narayanan Vs. State of Kerala [(1995) 1 SCC Manner of proving criminal
142 conspiracy.
43 Suraj Mal Vs. The State [Delhi Administration] Two inconsistent statements of
[(1979) 4 SCC 725] witness make his testimony
unreliable and unworthy of
credence.
44 State of Punjab Vs. Gurmail Singh [1989 (1) JT SC Prosecution must stand on its
1 own legs and can drive no
advantage from weakness of
the defence.
45 Daulat Ram Vs. Stae of Punjab [(1997) 10 SCC Prosecution must stand on its
236] own legs and can drive no
advantage from weakness of
the defence.
46 Bansidhar Mohanty Vs. State of Orissa [AIR 1955 Defence is not required to fill
SC 585] up lacuna in the evidence
adduced by prosecution.
47 Devesh Kumar Vs. State [2010 (5) AD (Delhi) 626] Sec 65-B Indian Evidence Act.
48 Dr. S.L. Goswami Vs. State of Madhya Pradesh Standard of proof on accused
[(1972) 3 SCC 22] is not as rigorous as on state.
49 Rang Bhadur Singh & ors Vs. State of U.P. [(2000) Appreciation of evidence when
3 SCC 454] a material witnesses is not
examined.
50 P. L. Tatwal Vs. State of Madhya Pradesh [(2014) Sanction of prosecution.
11 SCC 431]
51 State of Karnataka Vs. Ameerjan [ (2007) 11 SCC Sanction of prosecution.
273]
52 Mohd. Iqbal Ahmed Vs. Sate of Andhra Pradesh Sanction of prosecution.
[(1979) 4 SCC 172]
Precedents relied upon by Learned defence counsel for A-2 Sl. Title of the case Purpose of reliance 1 S.P. Bhatnagar Vs. State of Maharashtra (1979) 1 Non-proving of criminal SCC 535 misconduct and circumstantial CNR No. DLCT01-000024-1998 page 53 of 251 evidence.
2 State Through Superintendent of Police, CBI Vs. Circumstantial evidence.
Nalini (1999) 5 SCC 253 3 Prakash Singh Badal & Anr. Vs. State of Punjab & Sanction for prosecution.
Ors. (2007) 1 SCC 1 4 N.K. Ganguly Vs. CBI (2016) 2 SCC 143 Sanction for prosecution.
5 Shree Kantiaah Ramayya Munipalli Vs. State of Common intention Bombay (1955) 1 SCR 1177 6 Amrik Singh Vs. State of Pepsu (1955) 1 SCR Sanction for prosecution.
13027 Amal Kumar Jha Vs. State of Chhattishgarh (2016) Sanction for prosecution.
4 Scale 378 Precedents relied upon by Learned defence counsel for A-3 Sl. No. Title of the case Purpose of reliance 1 Anant Prakash Sinha @ Anant Sinha Vs. State of Prejudice due to alternative Haryana & Anr. (2016) 6 SCC 105 charges.
2 Vadivel Vs. Packialakshmi 1996 Cri.L.J. 300 Prejudice due to alternative Madras charges. 3 Anvar P.V. Vs. P.K. Basheer AIR 2015 SC 180 Sec 65B of Evidence Act 4 Shafhi Mohammad Vs. The State of Himachal Sec 65B of Evidence Act Pradesh SLP (Crl.) No. 2302 of 2017 5 ICICI Bank Ltd. Vs. Kamini Sharma & Ors. RFA Sec 65B of Evidence Act 297/2015 (DOD: 31.01.2018) Delhi high Court 6 Ankur Chawla Vs. Central Bureau of Investigation & Sec 65B of Evidence Act Ors. Crl. M. C. No. 2455/12 Delhi High Court 7 Paras Jain & Ors. Vs. State of Rajasthan 2016 (2) Sec 65B of Evidence Act RLW 945 (Raj) 8 Tofan Singh Vs. State of Tamil Nadu (2013)16 SCC Statement made before 31 Enforcement Directorate by co-accused is hit by Sec. 25 of Evidence Act. 9 KTMS Mohd. & Anr. Vs. Union of India AIR 1992 Statement made before SC1831 Enforcement Directorate by CNR No. DLCT01-000024-1998 page 54 of 251 co-accused is hit by Sec. 25 of Evidence Act. 10 M/s Thermax Ltd. & Ors. Vs. K.M. Johny & Ors. Crl. Commercial/civil transaction Appeal No. 1868/2011 Supreme Court given a criminal color 11 State of Uttar Pradesh Vs. Singhara Singh & Ors. Compliance of Sec. 306 AIR 1964 SC 358 Cr.P.C. is obligatory for turning accused to witness 12 Sitaram Sao @ Mungeri Vs. State of Jharkhand Value of statement of AIR 2008 SC 391 approver.
Precedents relied upon by Learned defence counsels for A-4 & A-5 Sl. No. Title of the case Purpose of reliance 1 Anant Prakash Sinha Vs. State of Haryana & anr. Defective Charge [(2016) 6 SCC 105 2 Vadivel Vs. Packialakshmi [1996 Crl. L.J. 300 Mad Distinction between cheating and entrustment 3 Anvar P.V. Vs. P. K. Basheer [(2014) 10 SCC 473] Section 65-B of I.E. Act 4 Shafhi Mohammad Vs. The State of Himachal Section 65-B of I.E. Act Pradesh (2018 )2 SCC501 5 ICICI Bank Ltd. Vs. Kamini Sharma & ors. [RFA Section 65-B of I.E. Act No. 297/2015 DHC DOD 31.1.2018 6 Ankur Chawla Vs. CBI [Crl. M.C. No.2455/12 DHC Section 65-B of I.E. Act DOD 20.11.2014] 7 Paras Jain & ors. Vs. State of Rajasthan [2016(2) Section 65-B of I.E. Act RLW 945(Raj)] 8 Tofan Singh Vs. State of Tamil Nadu [Crl. Appeal Statement before Enforcement No. 152 of 2013 SC DOD 8.10.2013] Directorate is hit by Section 25 of I.E. Act 9 K. T. M. S. Mohd. & anr. Vs. UOI [AIR 1992 SC 31] Value of statement made u/s 40 FERA
10. M/s Thermax Ltd. & ors. Vs. K. M. Johny & ors. Commercial/civil transaction [(2011) 13 SCC 412] given a criminal flavour CNR No. DLCT01-000024-1998 page 55 of 251
11. State of Uttar Pradesh Vs. Singhara Singh & ors. Compliance of Sec. 306 [AIR 1964 SC 358] Cr.P.C. is obligatory for turning accused to witnesses.
12. Sitaram Sao @ Mungeri Vs. State of Jharkhand Evidentiary value of statement [(2007) 12 SCC 630] of accomplice 13 Hari Prasad Chamaria Vs. Bishun Kumar Surekha Dishonest intention & Others 1973 SCC (Crl) 1082 14 Jaswantrai Manilal Vs. State of Bombay 1956 Cri. Applicability of sec 409 IPC L.J. 1116 15 Mahadeo Prasad Vs. State of West Bengal 1954 Distinction between cheating Cri. L.J. 1806 (SC) and civil transaction 16 Shanmugam & Anr. Vs. State 2013 SCC OnLine Appreciation of evidence SC 830 17 Narayana Kurup Vs. Valsala 2005 Cri. L.J. 3266 Autre fois acquit embodied Kerala under Section 300 of Cr.P.C.
18Shanti Kumar Panda Vs. Shakuntala Devi (2004) 1 SCC Decision of civil court is 438 binding upon criminal court.
Precedents relied upon by Ld. Counsel for A-6 Sl. No. Title of the case Purpose of reliance
1. Kehar Singh & ors. vs. State (Delhi Administration) Criminal conspiracy [1988 (3) SCC 609]
2. Statev. Nalini & Ors.[1999 (5) SCC 253] Criminal conspiracy
3. Yogesh @ Sachin Vs. State of Maharashtra [2008 Criminal conspiracy (10) SCC 394] 4 Bhagwan Swarup Vs. State Air 1965 SC682 Criminal conspiracy 5 M Mohd. Ismail Vs. Special Director (ED) (2007) 8 Confession by co-accused SCC 254 6 Bhuboni Vs. The King AIR 1949 PC257 Confession by co-accused 7 Kashmira Singh Vs. State of MP AIR 1952 SC 159 Confession by co-accused 8 Hari Charan Kurmi Vs. State of Bihar AIR 1964 SC Confession by co-accused 1184 CNR No. DLCT01-000024-1998 page 56 of 251 9 UOI Vs.Bal Mukund (2009)12 SC 161 Confession by co-accused 10 K.I. Pavunnivs Vs Collector of Customs 1985(5) Confession by co-accused ECR 1757 Tri Chennai 11 Anvar P.V. Vs. P.K. Basheer AIR 2015 SC 180 Sec 65B of Evidence Act 12 Shafhi Mohammad Vs. The State of Himachal Sec 65B of Evidence Act Pradesh (2018 )2 SCC501 13 Sonu@ Amar vs State of Haryana (2017) 8 SCC Sec 65B of Evidence Act 570 Precedents relied upon by Learned defence counsel for A-7 Sl. No. Title of the case Purpose of reliance 1 Sharad Birdhichand Sharda Vs. State of Circumstantial evidence Maharashtra (1984) 4 SCC 166 2 Kali Ram Vs. State of Himachal Pradesh (1973) 2 Circumstantial evidence SCC 808 3 Hanumant Vs. State of MP 1952 SCR 1091 Circumstantial evidence 4 C. Chenga Reddy Vs. State of A.P. (1996) 10 SCC Circumstantial evidence 193 5 Leo Roy Frey Vs. Superintendent District Jail AIR Section 120B Criminal 1958 SC 119 Conspiracy 6 Subramanian Swamy Vs. A. Raja (2012) 9 SCC Section 120B Criminal 257 Conspiracy 7 Wolfgang Reim & Ors. Vs. V. State & Anr. 2012 Section 120B Criminal SCC Online Del. 3341 Conspiracy 8 State of Kerala Vs. P. Sugathan & Anr. (2000) 8 Section 120B Criminal SCC 203 Conspiracy 9 K.R. Purushothaman Vs. State of Kerala (2005) 12 Section 120B Criminal SCC 631 Conspiracy 10 V.C. Shukla Vs. State (Delhi Administration) (1980) Section 120B Criminal 2 SCC 665 Conspiracy 11 L.K. Advani Vs. CBI 1997 (41) DRJ 274 Section 120B Criminal CNR No. DLCT01-000024-1998 page 57 of 251 Conspiracy 12 CBI Vs. V.C. Shukla (1998) 3 SCC 410 Section 120B Criminal Conspiracy 13 Natwarlal Sakarlal Mody Vs. State of Bombay Section 120B Criminal (1963) 65 Bom LR 660 Conspiracy 14 Esher Singh Vs. State of A.P> (2004) 11 SCC 585 Section 120B Criminal Conspiracy 15 Fiirozuddin Basheeruddin & Ors. Vs. State of Section 120B Criminal Kerala (2001) 7 SCC 596 Conspiracy 16 State of Maharashtra & ors. Vs. Som Nath Thapa & Section 120B Criminal Ors. (1996) 4 SCC 659 Conspiracy 17 L. Chandraiah Vs. State 2003 (12) SCC 670 Mens Rea 18 R. Balakrishna Pillai Vs. (2000) 7 SCC 129 Mens Rea 19 Radha Pisharassiar Amma Vs. State of Kerala Mens Rea (2007) 13 SCC 410 20 Matajog Dobey Vs. H.C. Bhari 1955 (2) SCR 925 Sanction u/s 197 Cr.P.C.
21 State of Madhya Pradesh Vs. Sheetla Sahai & ors. Sanction u/s 197 Cr.P.C.
2009 (8) SCC 617 22 Prof. N.K. Ganguly Vs. CBI 2016 (2) SCC 143 Sanction u/s 197 Cr.P.C.
23 A. Subair Vs. State of Kerala 2009 (6) SCC 587 Section 13 (1) (d) PC Act Misconduct 24 B. Jayaraj Vs. State of A.P. (2014) 13 SCC 55 Section 13 (1) (d) PC Act Misconduct 25 P. Satyanarayana Murthy Vs. District Inspector of Section 13 (1) (d) PC Act Police, State of A.P. & Anr. (2015) 10 SCC 152 Misconduct 26 N. Sunkanna Vs. State of A.P. (2016) 1 SCC 713 Section 13 (1) (d) PC Act Misconduct 27 C.K. Damodaran Nair Vs. Govt. of India 1997 (9) Pecuniary advantage SCC 477 28 A. Sivaprakash Vs. State of Kerala 2016 SCC Pecuniary advantage CNR No. DLCT01-000024-1998 page 58 of 251 Online SC 482 29 Bipin Shantilal Panchal Vs. State of Gujarat (2001) Merely exhibiting of document 3 SCC 1 does not prove the document 30 Rakesh Mohindra Vs. Anita Beri (2015) Scale (12) Merely exhibiting of document 412 does not prove the document 31 Ramji Dayawala & Sons Pvt. Ltd. Vs. Invest Import Merely exhibiting of document 1981 AIR 2085 SC does not prove the document 32 Sarwan Singh Vs. State of Punjab AIR 1957 SC Prosecution Story 637 33 Narender Singh & Anr. Vs. State of MP 2004 (10) Prosecution Story SCC 699 34 Bhagirath Vs. State of MP 1976 (1) SCC 20 Reconstruction of prosecution case 35 Ravindra Kumar Dey Vs. State of Orissa 1977 AIR Adverse Inference 170 SC 36 S. Ram Yadav Vs. CBI & Ors. (2013) 137 DRJ 131 Sec 420 IPC - cheating or dishonestly inducing delivery of property 37 Sudheo Jha Uppal Vs. State of Bihar AIR 1957 SC Sec 420 IPC - cheating or 466 dishonestly inducing delivery of property 38 Hira Lal Mundra Vs. Asok Kumar Raikal 1973 SCC Sec 420 IPC - cheating or Online Ori 86 dishonestly inducing delivery of property 39 K.T.M.S. Mohd. Vs. UOI (1992) 3 SCC 178 Relevancy of statement u/s 40 FERA 40 Abid Malik Vs. UOI 2009 (110) DRJ 244 Relevancy of statement u/s 40 FERA 41 Sunderlal Kanhaiyalal Bhatija Vs. State of Relevancy of statement u/s 40 Maharashtra (2010) 4 SCC 414 FERA 42 K. Hashim Vs. State of T.N. (2005) 1 SCC 237 Value of statement of Accomplice CNR No. DLCT01-000024-1998 page 59 of 251 43 Kashmira Singh Vs. State of M.P. AIR 1952 SC 159 Value of statement of Accomplice Precedents relied upon by Learned defence counsels for A-8 Sl. No. Title of the case Purpose of reliance 1 K.R. Purushothaman Vs. State of Kerala [2005(12) Criminal conspiracy SCC 631] 2 Baldev Singh Vs. State of Punjab [2009(6) SCC Criminal conspiracy 564] 3 State (Government of NCT of Delhi) Vs. Nitin Criminal conspiracy Gunwant Shah [2016(1) SCC 472] 4 Noor Aga Vs. State of Punjab (2008) 16SCC 417 Relevancy of statement u/s 40 FERA when retracted.
INITIATION OF EVALUATION OF EVIDENCE 6.0 Its time to take a deep plunge into the voluminous record and assess and weigh up the oral and documentary evidence led by both the sides.
6.1 I am conscious of the fact that arbitration was also invoked by NFL which it won. Merely because, there was a contract between the parties, it cannot be said that criminal court has no jurisdiction at all. Since NFL was keen to recover the amount in question, it had to invoke the same and, therefore, it should not be misunderstood by defence that lodging of FIR or invoking of criminal jurisdiction was bad or unwarranted. A wrong may give rise to civil as well as criminal action. In Syed Askari Hadi Ali Augustine Imam v. State (Delhi Admn.), (2009) 5 SCC 528, Hon'ble Apex Court has held that Indisputably, in a given case, a civil proceeding as also a criminal proceeding may proceed simultaneously. The Supreme Court further held that it was well settled that ordinarily a criminal proceeding will have primacy over the civil proceeding. Precedence to a criminal proceeding is given having regard CNR No. DLCT01-000024-1998 page 60 of 251 to the fact that disposal of a civil proceeding ordinarily takes a long time and in the interest of justice, the former should be disposed of as expeditiously as possible. Reference be also made to M.S. Sheriff v. State of Madras, AIR 1954 SC 397.
6.2 Thus, there cannot be any doubt or dispute that any aggrieved can maintain a civil and criminal proceeding at the same time. Same should stand true for arbitration matter as well. Both proceedings, thus, can run parallel. Of course, the facts in both such proceedings may overlap, but the standard of proof in a criminal case vis-a-vis a civil, is undeniably different. Whereas in a criminal case the prosecution is bound to prove the commission of the offence on the part of the accused beyond any reasonable doubt, in a civil suit 'preponderance of probability' would serve the purpose. In Irisuns Chemical Industry v. Rajesh Agarwal & Ors., [1999] 8 SCC 686 dealing with the effect of existence of arbitration clause in the agreement on criminal prosecution on the ground that civil proceedings are also maintainable, Apex Court held that merely because an act has a civil profile is not enough to stop action on the criminal side. It further held that a provision made in the agreement for referring the disputes to arbitration is not an effective substitute for a criminal prosecution when the disputed act constitutes a criminal offence.
6.3 In the present case, the first and foremost thing to evaluate would be whether there existed any prescribed mode of import of urea or not. If yes, whether it was followed or not. If not followed, whether the deviation intended or not. It also needs to be seen whether A-1 and A-2 had acted in good faith or acted as co- conspirators.
6.4 Another important aspect would be to see the experience and credibility of M/s Karsan in the field of urea. Whether they were manufacturer or a co-producer or a mere supplier? Whether they had any potential to take such a huge order or CNR No. DLCT01-000024-1998 page 61 of 251 whether they portrayed a rosy picture before NFL to usurp the money with no intention to supply anything at all.
6.5 Role of their Indian agent M/s Sai Krishna Impex is also to be gone into.
6.6 And lastly but most importantly, whether the deal was sealed through out- of-the-way efforts made by A-6 and A-7. Undoubtedly, they were in a very commanding positions. One was nephew of the then Hon'ble Prime Minister of India and the other was son of the then Hon'ble Union Minister for Chemicals and Fertilizer who was, actually speaking, the in-charge of NFL as well. Interference of A-6 and A-7, whether by personal visit or telephonic calls, is to be assessed comprehensively and minutely.
6.7 As per CBI, all such conspirators had distributed the money amongst them and it is also to be seen whether such aspect has been proved by CBI in the desired manner or not.
6.8 I propose to deliberate all such things under different heads.
6.9 The discussion would be sort of common for A-1 to A-5 while I would also deal distinctively about the role and involvement of the rest of the accused.
MANNER OF IMPORT OF UREA 7.0 There does not seem to any dispute that the Government of India had authorized NFL to import urea by making it a canalizing agency.
CNR No. DLCT01-000024-1998 page 62 of 251 7.1 Reference in this regard be made to letter Ex. PW37/A2 (D-55 Page-148)
of Sh. K.K. Jaiswal, Joint Secretary, Ministry of Chemical & Fertilizers. As per such letter dated 25.10.1994, A-1 was informed that in view of difficulties experienced by MMTC in arranging import of requisite quantity of urea, NFL had been authorized to import 2 lac tonnes of urea in India till 31.12.1994. In order to ensure that the entry of new importing agency does not lead to any undesirable competition with MMTC, it was also decided that import by NFL would be subject to the condition that material of CIS/Gulf origin will not be procured from the traditional suppliers of MMTC who offered CIS/Gulf material to MMTC during 1993-94. Pursuant to such authorization, NFL initiated process of procurement.
7.2 For the purpose of import of such urea, terms & conditions were chalked out and were placed before the Board of NFL for consideration. Those were deliberated by the Board in its meeting dated 07.11.1994 vide Item No. 192.16 and the procedure of import of urea was approved vide Resolution Ex. PW36/DT-3 (page 2 of D-56). These were also adequately incorporated in the "notice inviting tenders"
(NIT). The important conditions were full disclosure of commission payable to the agent in India, inspection before shipment, performance guarantee bond, offer on C& F Basis (cost and freight basis). It was also stipulated that the payment would be made through an irrevocable divisible commercial LC and that LC should be established for the full value of shipment in favour of the seller on receipt of performance guarantee bond and shall be payable for hundred percent of the net invoice value on safe arrival of vessel at discharge port against presentation of following documents:-
(i) Negotiable copies of bill of lading.
(ii) Copy of certified commercial invoice
(iii) Certificate of origin.
(iv) Inspection certificate showing analysis and weight
furnished by seller and certified by buyers' inspecting agency.
CNR No. DLCT01-000024-1998 page 63 of 251
(v) Certificate from the seller that the material supplied is correct
as to quantity, rate, total value and that the payment is due in accordance with the terms of the contract at the time of presentation.
7.3 After finalizing the process of procurement, NFL had come up with six tenders as per following details: -
1) Urea Tender No. 1 for 2 lacs MT (closing date 07.11.1994)
2) Urea Tender No. 2 for 1 lac MT (closing date 07.02.1995)
3) Urea Tender No. 3 for 2 lacs MT (closing date 17.05.1995)
4) Urea Tender No. 4 for 1 lac MT (closing date 21.06.1995)
5) Urea Tender No. 5 for 1.5 lacs MT (closing date 11.09.1995)
6) Urea Tender No. 6 for 2.5 lacs MT (closing date 26.10.1995) 7.4 Based on the bids received pursuant to first tender, the purchase order for two lacs of metric tonnes of urea was placed on M/s Pal Refinery India Limited, Secundrabad on 12.11.1994 at net price of US$ 154.84 per MT. However, such successful bidder expressed its inability to supply the same. The Tender Committee also felt that the bidders were insisting on payment against "LC at Sight" for which reference to the Board was considered necessary and accordingly, matter was placed before the Board of Directors. In its meeting dated 22.11.1994 vide Agenda NO.
193.5, the Board considered the matter and desired that the terms & conditions of import of urea by MMTC may be studied with a view to incorporate any such term in NFL contract also, to the extent necessary. It, however, also made clear that the performance guarantee should be obtained from all the parties before opening of letter of credit and also agreed with the payment term as against "LC at Sight". Extracts of such Minutes have been proved as Ex. PW36/DT-4 (D-56 pages 3 & 4).
CNR No. DLCT01-000024-1998 page 64 of 251 7.5 Second global tender was floated by NFL in January 1995.
Recommendations of Tender Committee were proposed to be placed before the Board and in agenda note, it was mentioned by D.S. Kanwar (A-2) that since urea supply position in international market continued to be "tight" and suppliers were faced with better price options elsewhere, Board may approve the proposal of Tender Committee to contract a total quantity of 7 lacs metric tonnes of urea. Matter was taken up by the Board of Directors of NFL in its meeting dated 10.02.1995 vide Agenda No. 195.18. It approved the procurement for 3 lacs tonnes of urea only. It, however, also added that placement of order should be based on capability to perform the contract. Extracts of the Minutes have been proved as Ex. PW36/DT-5.
7.6 Another Board note was put up before the Board Meeting on 19.05.1995. As per Board Note prepared by A-2 which has been proved as Ex. PW37/A16, it was apprised that some of the private traders, who had quoted very low price, may not be ultimately in a position to perform, thereby forcing NFL to go in for another global tender and since reputed fertilizer manufacturers/ trading houses had expressed willingness to supply the urea upto maximum price of 207 US$ per metric tonne, Board was requested to consider the same and to authorize marketing division to contract at negotiated price against the available offer within the price 207 US$ per metric tonne. Such Board Note was deliberated upon and as per the extracts of Resolution (Ex. PW36/DT-8 Page 11 of D-56), Board approved the proposal but with the condition that rigorous verification of backing from the manufacturer be undertaken.
7.7 It will be worthwhile to mention that as per the recommendation of Tender Committee the Letters of Intent (LoI) used to be placed before the Board for consideration and approval and order for import of urea used to be made after obtaining clearance from Board.
CNR No. DLCT01-000024-1998 page 65 of 251 7.8 Next Board meeting took place on 18.09.1995. There was no specific agenda regarding import of urea. Minutes also do not reflect that any deliberation regarding any contract with M/s Karsan was ever brought to the notice of Board, much less discussed. However, residuary Item No. 203.26 has reference to import of urea. Resolution, in this regard, has been proved as Ex. PW37/A-21 (page 28 of D-55 as well as Ex. PW36/DT-9 of D-56). It reads as under:
Item No. 203.26: Any other matter with the permission of the Chair.
M.D. informed the Board that in the past, proposal for placement of LOIs for urea import were being put up to the Board for approval. This was done in view of the fact that in the absence of specific Budget provision for this item in the approved budget this was beyond the powers of MD/ED (Mktg.). The Board discussed this issue at length and decided that these cases need not be put up to the Board and may be processed as in the case of other purchases as per the prescribed procedure despite the fact that Budget provision has not been made. Suitable provision could be made in the revised Budget.
7.9 It is quite evident that though the Board had merely resolved that there was no requirement of putting proposal for placements of Letter of intent (LoI) for urea import before it for approval. It never gave any power to Managing Director to act contrary to the established practice. The procedure for urea was already in place and if Managing Director wanted any deviation from the established procedure, he had not been, either specifically or impliedly, authorized to dilute or change any term or condition of the procedure or to evolve his own procedure.
7.10 It is also important to mention here that NFL was inviting global bids and as per the recommendation of Tender Committee and after evaluation of the documents submitted by the bidders, the award used to be given. Even if NFL, as CNR No. DLCT01-000024-1998 page 66 of 251 alleged by defence, was not able to import requisite quantity of urea, it should not have ventured into material relaxation or significant dilution of any term to the detriment of its own interests.
7.11 This is precisely what has happened in the case in hand.
7.12 I would come to the alleged first contract dated 27.07.1995 and second contract dated 09.11.1995 little later but fact remains that when the Board held its next meeting on 04.01.1996, the Board was again kept in dark and was never apprised about any contract between 'NFL' and 'M/s Karsan'. As per the extracts of 207th meeting of Board of NFL held on 04.01.1996, the matter related to import of urea was taken up and the Board found that upto 31.12.1995, NFL had been successful in ensuring the import of 1,36,000 metric tonnes of Urea. Since the authorization to import urea was of upto 2 lac metric tonnes, which was later on enhanced as well, naturally, till 31.12.1995, quite a substantial quantity had been imported and, therefore, NFL had no reason to feel embarrassed or red-faced because of not achieving the ultimate target.
7.13 It is not very clear as to why NFL advertised requirement and placed orders much beyond its authorization. There was no point in placing order beyond such overall outer limit. It seems that A-2 had given some explanation to the Board in this regard. According to him, urea market was highly fluctuating and since the main suppliers were not in a position to perform the contract, the letters of intent were required to be issued in excess of authorization because, even otherwise, they were getting small quantity and not the entire quantity. Though, the Board considered the aforesaid aspect, it also observed that the contracting in excess of the authorization by Government of India should be done more carefully so that interest of the organization as well as the country are better served. A-2 assured the Board that CNR No. DLCT01-000024-1998 page 67 of 251 there would not be any legal complication on account of LoI being much in excess of allocation and the Board may rather decide within the allocation. After detailed deliberation, the Board decided to procure the material by permitting to place the order upon Interore (1 lac metric tonne), Turnu (20000 metric tonnes), Pakchina (12000 metric tonnes) and Ivon-Ivanov (50000 metric tonnes). The price range was between 232 US$ per MT to 245 US$ per MT. Fact remains that the Board was never apprised about the order of 2 lac metric tonnes upon M/s Karsan in such meeting dated 04.01.1996 despite the fact that the second contract had already been executed on 09.11.1995. Minutes are contained in D-56. Interestingly, the Board note had reference about such contract with M/s Karsan but as per PW37 Mr. Maitra, such board note was not circulated in advance and there was no real discussion about such contract. Therefore, the final minutes did not contain any reference about the same. I have seen MoM Ex PW37/C3. There is indistinct reference in the last in the handwriting of A-1 to the effect that the Board also noted the other details put up to Board for information. This is too vague to make any sense. It rather indicates that A-1 did not muster enough of courage to share the development with the Board despite the fact that he himself was heading the same. Quite possibly, if the Board had been properly apprised about the aforesaid contract dated 09.11.1995, it might have dealt with the matter more comprehensively and might not have even placed further orders of urea. Defence has, relying upon Ex PW36/DS1, contended that NFL had been duly empowered to import 5 lac MT urea. Even if, NFL had been authorized to import said quantity, the procurement should have been as per the established procedure and with absolute transparency while keeping the interest of NFL being the supreme-most.
CNR No. DLCT01-000024-1998 page 68 of 251
7.14 There are few more important meetings which took place subsequently
and these are as under: -
S. No. Board Meeting Date Exhibit Number of
Minutes of Meeting
1 27.03.1996 PW36/DT-10
2 02.05.1996 PW37/E
3 17.05.1996 PW37/F
4 15.06.1996 PW37/DL-5
5 22.06.1996 PW37/DK
6 16.08.1996 PW36/DT-18
7 06.09.1996 PW37/K-1
7.15 I propose to briefly discuss about said Board meetings in later part of my
judgment.
7.16 Fact remains that NFL had devised its own procedure of import of urea
which was duly approved by the Board. The Government of India had initially authorized NFL to import 2 lacs metric tonnes of urea and by 31.12.1995, it had already imported 1.36 lacs metric tonnes of urea. As per the established procedure, the global bids used to be floated and on the basis of responses so received, the award used to be given to the successful bidder. As per the prevalent procedure, NFL always safeguarded its interest by insisting for payment by opening of letter of credit so that the payment is released only after ensuring the receipt of urea. There was never any provision of "hundred percent advance payment". There was also no provision of entertaining any "direct offer" even if it was based on idea of having any "long term contract" with any particular party.
CNR No. DLCT01-000024-1998 page 69 of 251 7.17 There was apparent rationale behind the terms of established process of
import. Global tender was to ensure complete transparency and payment by LC was to ensure delivery. As already noted above, the stress was to give preference to manufacturers. It would have evidently ensured timely delivery and removed any middle-man, thereby reducing the financial burden as well. Disclosure of commission, if any and obtainment of performance bond were also important aspects.
7.18 Deviation from such established procedure, without taking permission of the Board was neither justifiable nor lawful particularly when stakes were so high. I could have understood any relaxation or deviation made by any individual for the interest and benefit of NFL. Here, whereas, the situation looked completely opposite.
Overwhelming dilution of conditions were mind-boggling and were detriment to the interest of NFL. These would become clear when I take up the unfolding of conspiracy in chronological manner.
7.19 However, before that, let me see as to what NFL officials to offer in witness box.
TESTIMONY OF NFL OFFICIALS 8.0 Testimony of PW 36 Mr. Kataria, PW37 Mr. Maitra, PW38 Mr. Anil Sharma and PW39 Sahib Singh seems very crucial in particular.
8.1 PW-36 Sh. P.K. Kataria was earlier posted in Corporate Office of NFL in August 1991 where he was reporting directly to A-1 who was Director (Finance) and officiating Managing Director as well. He got transferred to Marketing Division in Nov. 1992, where he worked under A-2. His testimony, however, essentially relates to events related to second contract. It is so because there is no record in NFL about the CNR No. DLCT01-000024-1998 page 70 of 251 first contract at all.
8.2 In his deposition, he made reference about the incident dated 1.11.1995 when he was called by Sh. Deepak Lal, Manager (Finance) (since deceased) who told him that A-1 had handed over a proposal in relation to import of urea to him which was to be processed very urgently and to be taken up same day itself. He was also told that terms and conditions of the proposal have already been negotiated and settled by A-1 and A-2 who wanted them to push through the proposal and need not create any hurdle. Sh. Deepak Lal also told him that as per the instructions of Sh. C.K. Ramakrishnan (A-1) they were required to project M/s Karsan as a reputed international firm.
8.3 Such proposal Ex PW36/A was in the handwriting of Sh. Arun Goel, the then Area Manager. It was endorsed by Sh. Anil Kumar Sharma (PW38), who was Group Manager (Marketing). The proposal was approved by A-2 with the note to the effect that "MD may also kindly approve". Such note has been proved as Ex. PW36/B. Sh. Kataria identified the signatures of Sh. D. S. Kanwar (A-2) as well as the endorsement made by A-1 which was to the effect that 'Manager (F&A) may please examine'. On that basis, he prepared note Ex. PW36/E. He also pointed out in the note that by making 100% cash prepayment, NFL would be put to loss of interest and suggested that there should be some adequate protection for such loss. He also claimed that he never came across any such incident whereby 100% advance payment had been made by NFL to any supplier. Note was submitted by him before Sh. Deepak Lal who suggested that the matter of protection of interest may be taken up separately by Marketing Division with the Government of India but in the meantime, the proposal in question may be approved. Such note was approved by Managing Director (A-1) vide endorsement Ex. PW 36/E-2 and the matter was marked to A-2 who further marked the same for quick necessary action to Sh. Anil CNR No. DLCT01-000024-1998 page 71 of 251 Kumar Sharma. All such noting and endorsements have been duly proved by prosecution.
8.4 PW-36 Sh. Kataria further deposed that A-3 was also present in the chamber of A-1 on that day who represented himself as an Indian Agent of M/s Karsan. Sh. Kataria deposed that A-1 instructed him to take further action and to arrange remittance of 1% of the contract amount that day itself. Sh. Kataria returned to his chamber and called for Assistant Accounts Officer for preparation of documents for such remittance. Such papers were signed in the cabin of A-2 and were handed over to Sh. Subhash Chand, Assistant Manager (Finance) for further action. Letter was prepared for all concerned including the bank for such remittance. However, since it was already 6.00 PM, Sh. Subhash Chand kept the letter with himself as the bank would not have honoured such instructions at such late hour. When A-2 learnt about the same later, he expressed his annoyance as to why such remittance could not be made on 01.11.1995 itself. Necessary action was taken by Sh. Subhash Chand next day. Sh. Subhash Chand also brought letter Ex. PW 27/E of Sh. Sunil Sachdeva, Manager (International Banking Division), SBI confirming remittance in favour of M/s Karsan but also asking to obtain requisite approval for remittance from RBI. Accordingly, Sh. Kataria wrote a letter to SBI informing that such approval would be submitted as soon as obtained from RBI. Such letter has been proved as Ex. PW 27/F. It was also mentioned in such letter that the insurance cover to be furnished by the supplier was going to cover the non-supply of urea. Telex regarding confirming of remittance of US$ 3.80 Million has been proved as Ex. PW 27/C. 8.5 In his further deposition Sh. Kataria claimed that on 8.11.1995, he was called by Sh. Kanwar (A-2) in his chamber and was told that Mr. Tuncay Alankus and Cihan Karanci of M/s Karsan were expected to arrive anytime in the evening and to keep the documents ready. Though Sh. Kataria requested him to ask the Executive CNR No. DLCT01-000024-1998 page 72 of 251 Division to arrange for the documents but Mr. Kanwar expressed his annoyance claiming that he did not believe in such bureaucratic approach. A note was, accordingly, prepared by Sh. Kataria on behalf of Sh. Anil Kumar Sharma, who was reportedly assigned another job. However, he also obtained signatures of Sh. Sharma on such note (Ex. PW 36/D-1) which was marked to Company Secretary Sh. A.K. Maitra. Sh. Maitra told Sh. Kataria and Sh. Narang (Assistant Area Manager) that he was already aware about the urgency of the matter as Sh. C. K. Ramakrishnan, before leaving for Syria, had instructed him to clear the papers immediately. Sh. Kulbhushan, Sr. Law Officer was called for giving his views on the contract who suggested that a clause be inserted to deal with the question of delay in supply also. His such note (PW 36/G-3) was endorsed by Sh. A.K. Maitra and was forwarded to Sh. Deepak Lal. Sh. Deepak Lal recorded his views in the note which are Ex. PW 36/G-4.
8.6 Next morning, i.e. on 9.11.1995 Sh. Kanwar was informed by Sh. Kataria that the entire job had been done, Sh. Kanwar called him for personal discussion in his chamber and he went there and was told that Sh. Tuncay Alankus and Cihan Karanci would be arriving for signing ceremony and instructed him to remain present. He deposed that he attended such signing ceremony in the chamber of A-2 where Deepak Lal, Anil Kumar Sharma, M. Sambasiva Rao, Tuncay Alankus and Cihan Karanci were present. He also deposed that before signing of the contract, there was discussion regarding performance guarantee as they were apprehensive about the security provided by M/s Karsan. Both the representatives of Karsan showed them "cover note" of Mediterranean Insurance Ltd. which they had brought and assured that it would adequately secure the performance of the contract and risk of non- performance and non-delivery. They both, i.e. A-4 and A-5 also claimed themselves to be the manufacturer of urea and also claimed that word "non-performance" did not exist in their dictionary. They also claimed that two shipments carrying 25000 MT CNR No. DLCT01-000024-1998 page 73 of 251 were already on high seas and as soon as balance payment of 99% was released, the ships would be diverted to NFL. This was seconded by A-3 who claimed that he was also taking care of the interest of NFL and Govt. of India. Such statements were also seconded by A-2. It will also be interesting to mention here that Sh. Kataria also claimed that one remark of Tuncay Alankus, as translated into English by Cihan Karanci, indicated that he (Mr. Kataria) was behaving like a bureaucrat and creating hurdle claiming further that contract was being signed for the betterment of NFL and they wanted a long-term contract.
8.7 Thereafter, the contract was signed. Such contract has been proved as Ex. PW 36/H and Sh. Kataria has identified signatures of Sh. D. S. Kanwar and Tuncay Alankus on such contract. In his further deposition, PW-36 Mr. Kataria claimed that on 10.11.1995, Sh. J.K. Narang came to his chamber and brought a note (Ex. PW 36/K) duly approved by A-2 whereby he was instructed to put a draft letter seeking approval of RBI for remittance already made as well for the remittance which was to be made. He, accordingly, prepared letter Ex. PW 36/K-1 which was signed by Sh. Deepak Lal and then he along with Sh. Anil Kumar Sharma went to the office of RBI along with letter for obtaining approval of remittance. They were told that such application should not have been brought directly and should have been routed through their banker i.e. SBI and, accordingly, they returned to do the needful.
8.8 On 16.11.1995 Sh. Kataria learnt from Sh. Deepak Lal that balance amount of 99% amounting to US$ 37.63 Million had been remitted in favour of M/s Karsan without any approval of RBI. Then, he along with Sunil Sachdeva, Manager (IBD) SBI went to RBI to obtain ex-post facto approval of such remittance. They met Mrs. Mukhija, DGM, Exchange Control Division who stated that guidelines were already contained in "Exchange Control Manual" and the concerned bank should take up appropriate decision keeping the same in mind.
CNR No. DLCT01-000024-1998 page 74 of 251 8.9 He also made reference about receiving of a note on 23.11.1995
indicating that bank of Indo Suez, Geneva, Switzerland was not crediting the remitted amount to the account of M/s Karsan and, therefore, M/s Karsan were facing difficulty and he was asked to approach SBI to help them out. Such note has been proved as Ex. PW 36/L and, accordingly, letter Ex. PW 36/L-1 was written to SBI by Sh. Kataria. He deposed that on 24.11.1995, another note was received from International Marketing Wing of NFL wherein it was mentioned that M/s Karsan had made a request for change in the bank and wanted remittance to Pictet Bank, Geneva, Switzerland, as their previous banker had already returned the money. Such note Ex. PW 36/M was approved by Sh. D. S. Kanwar. Sh. Kanwar also orally instructed Sh. Kataria to take action on top priority basis and, accordingly, Sh. Kataria prepared letter Ex. PW 27/U which was signed by him as well as Sh. Deepak Lal.
8.10 Sh. Kataria also mentioned in his deposition that on 11.03.1996, he received a note which was to the effect that 1% of the contract amount, which had though been remitted already but had not been credited to the account of M/s Karsan, be also transferred to Pictet Bank, Geneva. Such note has been proved as Ex. PW 36/N. Accordingly, Sh. Kataria prepared letter Ex. PW 36/N-1 requesting SBI to do the needful. However, bank did not take any action despite constant follow up.
8.11 In August 1996, he (Kataria) received a memorandum from ED (Vigilance) for charge of dereliction of duty. PW-36 Kataria claimed that he never learnt about any contract dated 27.7.1995 between NFL and M/s Karsan. During deposition, he was shown photo copy of such contract dated 27.7.1995 (Mark P-36/A) and he identified signature of Sh. D.S. Kanwar therein at point 'A' on all pages and also of Sh. Tuncay Alankus. He also made reference to various other documents/letters bearing signature of Sh. D.S. Kanwar and of Sh. Deepak Lal. He also claimed that as CNR No. DLCT01-000024-1998 page 75 of 251 per approved procedure, payment used to be made to suppliers, generally, through letter of credit.
8.12 I have seen the cross-examination of PW36 Sh. Kataria which is quite exhaustive. As far as A-1 is concerned, the cross-examination was primarily targeting the fact that the approval had been granted on the basis of "note" in which there was a reference about insurance policy. Sh. Kataria did admit that he had wrongly mentioned in the note Ex. PW36/G2 that the documents had been perused by him and were found as per the terms agreed to in the proposal. He candidly admitted that his note was wrong to that extent i.e. as regards the non-availability of insurance policy. He also admitted that such original insurance policy was never provided by M/s Karsan even later on. He also admitted that as per the procedure, the remaining 99% of the total contract value was to be sent to the seller only after receiving of original insurance policy. He also admitted that when note Ex. PW36/M was prepared, it was not marked to MD i.e. A-1 at any stage and that it was approved by A-2 only. He also admitted that the party making remittance could also recall the money before it was actually paid to the payee but supplemented that such amount was never recalled by the NFL despite the fact the original insurance policy had not been received. He also admitted that no such note regarding recalling of 99% of the amount was ever submitted before the MD. He also claimed that MD was having full powers to purchase revenue items for trading purpose and the approval of the Board was not required for the same. He claimed that it was wrong to suggest that he had not gone to the chamber of Managing Director (MD) on 01.11.1995 or that MD (A-1) had not given any oral instructions to him on 01.11.1995. When Sh. Kataria was cross-examined by learned defence counsel for A-2, he admitted that MD had been given unfettered powers to approve the contract for import of urea. He deposed that MD had given oral instructions on 01.11.1995 for remittance of 1% of total contract value forthwith. He also claimed that there could not have been contract for import of CNR No. DLCT01-000024-1998 page 76 of 251 urea without the approval of Managing Director. He also claimed that he had heard that Sh. C.K. Ramakrishnan (A-1) had recommended grant of extension to A-2 praising him for his contribution and dynamism.
8.13 Sh. Harjinder Singh, learned defence counsel had cross-examined Sh. Kataria at length on behalf of A-5. During such cross-examination, Sh. Kataria deposed that he could not say whether price of urea had taken a rise as a result of undesirable competition in the market. He reiterated that he met A-4 & A-5 for the first time on 09.11.1995 though he knew about them even prior to 01.11.1995. He pleaded ignorance whether Sh. Ramakrishnan had been approached through Sambasiva Rao, Dr. Musa and Mr. Pinto to have steady relationship with NFL for a long-term contract. He is not aware whether agreement related to "first contract" was brought to India by Mr. Pinto. He did admit that Sambasiva Rao had faxed a message to Mediterranean Insurance Ltd. from the fax machine installed in the room of A-2 on 09.11.1995 itself for verification and authenticity of the insurance policy and they all were satisfied after the reply was received through fax from Mediterranean Insurance Ltd. He, however, claimed that in such fax reply, no mention was there with respect to non-performance of the contract and it was limited to non-delivery only. Such fax message has been proved as Ex. PW36/H3. He failed to comment whether urea could not be supplied as a result of deterioration in the weather condition and due to delay in receipt of the amount. He pleaded his ignorance whether copy of contract dated 27.07.1995 was recovered by CBI from the house of A-1. He also does not know whether NFL had lodged FIR to the effect that a fire had broken out in their office in October 1996 though admitted that such fire had, in fact, broken out.
8.14 It was suggested to him that documents related to contract dated 27.07.1995 were made to disappear from NFL office and he labeled such suggestion CNR No. DLCT01-000024-1998 page 77 of 251 as incorrect. He claimed that he was not aware whether M/s Karsan had demanded back compensation from NFL on account of failure to provide funding instrument in relation to first contract. He claimed that it was true that whatever he had done in this matter was on the instructions of the superior officers.
8.15 A-4 Tuncay Alankus also cross-examined Mr. Kataria at length in which he claimed that it was possible that the letter Ex. PW27/DX2 was written by Sh. Subhash Chander on the instructions of Sh. D.S. Kanwar. He reiterated that at the time of signing of second contract, they had doubt about the adequacy of the counter-guarantee but they were asked to keep mum by A-2. He claimed that administratively Mr. Kanwar was his superior. He also admitted that 1% of the contract amount was never paid to M/s Karsan but further claimed that he could not say whether it amounted to violation of the contract or not. According to him, urea was imported from Romania and few other countries also during 1995-1996. He denied that the payment was made to M/s Ferrico in advance and then the cargo was received. He claimed that when he pointed out that the words "non- performance" were not there in the contract, his such suggestion was ignored by Mr. Kanwar and Mr. Deepak Lal. He did admit that A-4 & A-5 did not offer any gratification or any other benefit to him to facilitate the transaction in question. He also claimed that neither P.C. Yadav (A-7) nor his father offered any gratification or intimidation in relation to transaction in question. Pursuant to the Court Question, he claimed that if the insurance cover note had been adequate, then there would have been no fault with the transaction. He was cross-examined by other accused persons also and he denied that he was making a false statement under the pressure of CBI.
CNR No. DLCT01-000024-1998 page 78 of 251 8.16 Let me now refer to the testimony of PW38 Sh. Anil Kumar Sharma. 8.17 He has though deposed on the same lines but has also highlighted
certain other vital aspects. He was posted as Additional Manager (Marketing) at Delhi from 1994 to 1996 and was looking after the sale of products of NFL and had been given duty of looking after the imports also. According to him, he had no exposure in managing import but A-2 assured him that he would guide him. He was shown model tender document of MMTC and was asked to incorporate suitable amendments as per the requirement of NFL and then advertisements were published in newspapers and bids were called. He deposed that a Tender Committee was formed and tenders used to be opened in the presence of bidders and comparative statement used to be prepared and placed before the Committee. He deposed that NFL was appointed canalizing agency in 1994 for import of urea and the successful bidder was required to furnish performance guarantee for an amount equivalent to two percent of the contract value and after obtaining such performance guarantee, a letter of credit used to be established with the bank. EMD used to be returned after furnishing performance guarantee bond. He also supplemented that manufacturers were exempted from depositing EMD. He specifically deposed that there was no system of permitting hundred percent cash pre-payment and no system of contract on single offer basis though added that such contracts of single offer were given to PIC, Kuwait and some other parties. According to him, the commission for agent used to be @ of 1 US$ or 2 US$ per metric tonne and Managing Director was the final authority to approve the contract.
8.18 He deposed that prior to September 1995, all the tender documents used to be put up before the Board for approval but later on, such practice was given up. He then made reference about six tenders which were published and invited by NFL for import of urea. He claimed that no urea was received with respect to Tender Urea CNR No. DLCT01-000024-1998 page 79 of 251 No. 1, Tender Urea No. 2 and Tender Urea No. 3.
8.19 In May 1995, M/s Sai Krishna Impex submitted a quotation for supply of urea and Sh. M. Sambasiva Rao was representative of said firm. He used to come their office quite often. He deposed that in May 1995, on the day of tender, he was called by A-2 and told him that a message had been received from A-1 that A-3 would be coming to the office and A-2 instructed him (PW38) to send someone downstairs to receive A-3 while claiming that A-3 was coming from PM Office. He then sent PS of Mr. Kanwar to receive Mr. Rao. Later on, when he went to the office of Sh. Kanwar (A-2), A-3 was already sitting there and was introduced to him by A-2. A-3 then submitted a tender/bid (Ex. PW38/A) on behalf of M/s Amartek of USA. Later on, they learnt that one Mr. V. Murthy was the proprietor of M/s Amartek. Letter of intent was issued. However, M/s Amartek did not supply any urea and accordingly a note was prepared recommending the forfeiture of performance guarantee bond of M/s Amartek. Such note (Ex. PW38/A4) was bearing signature of Sh. Arun Goel at point A and of Sh. Anil Kumar Sharma (PW38) at point B. It was, however, not approved by A-2 who rather ordered that forfeiture of PG Bond may be kept in abeyance as the party had produced sufficient evidence to convince that they were in a position to perform. Such noting of Sh. Kanwar (A-2) has been proved as Ex. PW38/A5. Another note (Ex. PW38/A-6) was prepared regarding the same I.e. forfeiture of bond later in April 1996 as well. It was also put up before A-1 as ED (Marketing) was on tour and even A-1 did not immediately approve the note and made endorsement that marketing wing may see. Such endorsement of A-1 has been proved as Ex. PW38/A7. It was later only that such PG Bond was eventually ordered to be encashed and the note was approved on 25.04.1996 by Sh. N.K. Gupta, ED (Marketing).
CNR No. DLCT01-000024-1998 page 80 of 251 8.20 PW38 Sh. Anil Kumar Sharma further deposed that Urea Tender No. 4
was published in June 1996. A-3 submitted quotation (Ex. PW38/B) and his bid was accepted. A-3 had submitted another bid on behalf of M/s Surpass Builder Pvt. Ltd. (Ex. PW38/B1) and such bid was also accepted but urea was not supplied against either of the aforesaid two bids.
8.21 As regards, the crucial first contract, allegedly executed on 27.07.1995, PW38 Anil Kumar Sharma deposed that he had no knowledge as he along with three other officials had been sent abroad for training on around 28 July 1995 and returned on 06.09.1995.
8.22 As regards, Urea Tender No. 5, which was issued in September 1995, A-3, again, submitted two bids. One was on behalf of M/s Karsan and other was on behalf of M/s Bulsigma Ltd., Bulgaria (Ex. PW38/D1). Both these bids were bearing signatures of A-3 at point A. Bid submitted by M/s Karsan was rejected because A-3 claimed himself to be representing the buyer as well as the supplier. However, his other bid was accepted. At that time, A-2 was abroad and, therefore, such proposals were placed before the Managing Director for approval before issuance of letter of intent but A1 told him that there were two quotations submitted by A-3 and asked as to what had happened to the other proposal. He told A-1 that the other proposal had been rejected on technical ground. A-1, however, commented that as to why the order for supply of two lacs metric tonnes only was being given to Rao and he should be given order for whole of the quantity as the price quoted by him was very low. He, however, told A-1 that they should not take any risk as A-3 had earlier also failed to perform. As per the direction of A-1, PW38 Sh. Anil Kr. Sharma prepared a draft letter of intent for all the successful bidders. Sh. Kanwar (A-2) returned from abroad in the middle of September 1995 and he was apprised about whatever had happened in his absence. He also made reference about the discussion that the "blocked fund CNR No. DLCT01-000024-1998 page 81 of 251 method" would not be feasible in India and accordingly, A-2 instructed him to send a message to M/s Karsan informing that Indian banks did not issue such type of funding instruments. Such message has been proved as Ex. PW37/DD.
8.23 On 31.10.1995 at about 5.30PM/6.00 PM, Sh. Kanwar called him in his chamber and when he went there, he saw A-3 sitting in his office. He was handed over a draft proposal of M/s Karsan. A-2 told him (PW38 Sh. Anil Kr. Sharma) that NFL had been reprimanded by the Government of India for not making procurement of urea and also that Mr. Rao had come with a very good arrangement and two ships were already there on high seas which would be diverted to India. A-2 also told him that entire payment was to be made in advance against insurance policy.
8.24 When PW38 Sh. Anil Kr. Sharma asked as to what was the security for payment, A-2 told that A-3 had furnished performance guarantee bond for US$ 4 lacs for the earlier tenders and such amount could be treated as guarantee against such proposal. A-3 also endorsed the same. He was accordingly directed to prepare a note. He then came out of the chamber of A-2 and asked Mr. Arun Goel to prepare a note. Such note (Ex. PW36/A) was prepared by Sh. Arun Goel and PW38 Sh. Anil Kumar Sharma made endorsement (Ex. PW38/E) and A-2 approved the same vide Ex. PW36/B and sent the same to A-1 for approval. Such proposal was approved by A-1 on 01.11.1995 vide endorsement Ex. PW36/E. Accordingly, Sh. Kanwar marked the same to him (PW38 Anil Kr. Sharma) for quick necessary action.
8.25 He has also deposed about the preparation of note (Ex. PW 36/DB) for release of US$ 3,80,000. He claimed that a 'counter guarantee' for said amount was given by A-3. Such counter guarantee has been proved as Ex. PW 38/E-1. He made reference about the various correspondence in relation to remittance of such amount of US$ 3,80,000 as well as balance amount i.e. 99% of the contract value. He CNR No. DLCT01-000024-1998 page 82 of 251 claimed that A-2 had written a letter to Indian Ambassador in Turkey recommending grant of visa to A-4 and A-5 so that they could come to Delhi for singing the contract.
8.26 He made reference about the development which took place on 8.11.1995 and 9.11.1995.
8.27 As regards 9.11.1995, he claimed that he was introduced to A-3, A-4 and A-5 and there were discussions about long-term contract and most of the talking was done by A-5 who claimed that they were manufacturer of urea and could supply 10 lacs MT of urea every year. There was discussion about insurance policy also and Sh. Deepak Lal and Sh. P. K. Kataria had seen insurance papers and were questioning whether it covered both 'non-delivery' and 'non-performance' or not. A-4 and A-5, however, claimed that it covered the both. A-3 also confirmed that insurance was covering non-delivery and non-performance both. PW-38 Sh. Sharma also corroborated Mr. Kataria by claiming that Cihan Karanci had translated the utterances of Mr. Alankus which indicated that Mr. Kataria was raising too many questions. He deposed that a fax message was sent and a reply was received for having clarification on said aspect. His deposition indicates that A-4 and A-5 had claimed that two shipments were ready and would be diverted to India. Accordingly, contract (Ex. PW 36/H) was signed on 9.11.1995. He identified signature of Sh. D. S. Kanwar and Tuncay Alankus as well as of Cihan Karanci on various documents. He also revealed that cover note of insurance (Ex. PW 36/H-2) was brought by A-4 and A-5. He deposed about the various correspondence relating to remittance of amount to the banker of M/s Karsan. It will, be however, important to mention right here that his deposition does indicate that initial amount of 1% had been wrongly remitted to by NFL to another bank i.e. Pamuk Bank.
CNR No. DLCT01-000024-1998 page 83 of 251 8.28 PW-38 Anil Kumar Sharma categorically deposed that on the basis of one
message (Ex. PW 38/J) received from SBI conveying that money had been remitted to Pamuk Bank, he had been called in the chamber of A-2 where A-3 was also sitting and when he (PW-38) checked the record, he noticed that the money was to be sent to Banque Indo Suez, Geneva but Mr. Subhash Chand had, by mistake, written that the money he remitted to Pamuk Bank. Thus, there was fault on the part of NFL official and they had apparently remitted the money to a wrong bank contrary to the instructions of A-4 and A-5. He then made reference about various fax messages and their replies. He deposed that one letter dated 23.11.1995 (Ex. PW 38/L-5) was received from M/s Karsan wherein they complained that Banque Indo Suez was demanding unacceptable commission. Such letter was bearing signatures of A-4 and A-5 and, accordingly, communication was sent to SBI to remit the amount to Pictet Bank, Geneva. Correspondence in this regard has also been proved by PW-38 Anil Kumar Sharma.
8.29 PW-38 Anil Kumar Sharma also deposed that A-2 and Deepak Lal had visited Ankara, Turkey in December, 1995 to ascertain the position of the shipments and also to bring original insurance policy which they had not received from Karsan till then. They both returned from Ankara and told him that shipments were being arranged and that there was some delay. As regards insurance cover, they claimed that it was being sent by DHL Courier. They, however, gave him fax copy of the insurance cover. A-2 did not reveal as to from which port, the shipments would be coming. He also did not reveal about the details of the manufacturing unit or particulars of the shipments claiming that those were confidential details and Karsan would disclose the same after the shipments only.
8.30 On 9.1.1996, A-2 submitted note (Ex. PW 36/DN) based on said 'Ankara visit' mentioning therein that the total material would be delivered by M/s Karsan on or CNR No. DLCT01-000024-1998 page 84 of 251 before 30.4.1996. He also referred about one fax message received on 10.1.1996 from Karsan conveying that because of negative environmental conditions, the first shipment would arrive in India within February 1996. Such fax message has been proved as Ex. PW 38/L-17. He also made reference about another fax message sent under the signatures of A-5 conveying that the original policy would be sent to NFL as soon as it was received. Such fax message has been proved as Ex. PW 38/L-21. He made reference about the various further correspondence which indicate that Karsan were still making some efforts to send two shipments but they also wanted remittance of 1 % of the contract value, i.e. first installment of US$ 3,80,000/-.
8.31 He deposed that he had written letter Ex. PW 36/DO on 12.2.1996 asking Karsan to send details as to from where the shipments were being arranged and their schedule. A reply was received but M/s Karsan did not mention about the schedule of shipment or about the place from where shipment was to take place. Such letter has been proved as Ex. PW 38/L-25. He also referred to one subsequent fax message from M/s Karsan who while conveying that the work was being done at a very fast speed also supplemented that the ports in CIS countries had frozen. He wrote another letter to M/s Karsan asking about the details about the manufacturing units and port of loading. Office copy of such letter is Ex. PW 38/L-24 and the fax message received from M/s Karsan is Ex. PW 38/L-30 whereby they claimed that they had reserved 82,500 MT urea for NFL and had made programme for additional quantity of 18,500 MT. They, however, did not furnish the required details and vaguely claimed that 1,00,000 MT urea was under preparation. A-2 had retired by then and Sh. N.K. Gupta had taken over his position and he also conveyed to M/s Karsan that a team of NFL officers was proposing to visit the production/stocking site immediately.
8.32 Letter of Mr. N.K. Gupta has been proved as Ex. PW 36/DR-2 and in response, M/s Karsan sent three-page fax message dated 28.2.1996 which has been CNR No. DLCT01-000024-1998 page 85 of 251 proved as Ex. PW 38/L-32. In such reply, M/s Karsan expressed its inability to declare concrete port coordinates due to extreme commercial confidentiality. Such message was bearing signature of A-3. As per one subsequent letter dated 26.2.1996 (Ex. PW38/L-34), M/s Karsan again informed that they were waiting for melting of river. He also made reference to another letter Ex. PW 38/L-37 which was received from M/s Karsan on 23.3.1996 whereby A-4 had informed that the weather had become convenient and that they were making preparation for transportation and that shipment would be released by April/May, 1996, further undertaking to send the confirmed shipment schedule to NFL within few days. He also made reference about the subsequent correspondence but it is evident from the same that no concrete details were furnished by M/s Karsan. He identified signatures of A-3 and A-5 on various documents/fax messages/letters.
8.33 He categorically deposed that M/s Karsan had neither supplied any urea nor returned any money. M/s Karsan also did not supply first class Lloyds Insurance Policy securing 100% cash prepayment and they also did not disclose the names of joint ventures/co-producers of urea.
8.34 He also deposed that A-1 did not make any effort to get back the money when Karsan failed to supply urea.
8.35 He also revealed that A-3 used to refer about one "Boss" saying that said Boss was following-up the matter and when A-2 asked about such Boss, A-3 took name of B. Sanjeeva Rao (A-6 herein). He also deposed that A-3 used to say that A-6 was related to the then Prime Minister. As regards A-7 P. C. Yadav, PW-38 Anil Kumar Sharma deposed that Sh. Ram Lakhan Singh Yadav, was Union Minister for Chemicals & Fertilizers at that time and his son Prakash Chand Yadav (A-7) used to make telephonic calls to NFL. Once or twice, he had also seen him visiting the office CNR No. DLCT01-000024-1998 page 86 of 251 of NFL. He also claimed that he himself had also received telephonic calls from A-7 when A-2 was not in the office.
8.36 PW38 Sh. Anil Kumar Sharma admitted in his cross-examination that there were no guidelines prohibiting 100% pre-payment. He admitted that in relation to previous tenders, urea could not be supplied but was not able to comment whether such failure was on account of fluctuation in the price of urea due to unhealthy competition introduced by MMTC. He also pleaded his ignorance about agreement dated 27.07.1995. He claimed that it was wrong that contract in question was given to M/s Karsan on merits. He also denied that M. Sambasiva Rao (A-3) had not made any reference to Mr. B. Sanjeeva Rao and did not claim him as "Boss" or about his connection with the then PM.
8.37 When Mr. Anil Kumar Sharma was cross-examined by A-2 D.S. Kanwar, he categorically claimed that there was no procedure to award the contract without tender. He also admitted that M. Sambasiva Rao and B. Sanjeeva Rao were interested in the contract of M/s Karsan and they both were men of MD. He also claimed that MD wanted to oblige them. He also claimed that MD was managing the progress all the time from 30.10.1995 till 23.06.1996. It was suggested to him by A-2 that A-1 had demanded file of M/s Karsan from him in the second week of March 1996 and such file was containing contract dated 27.07.1995. This clearly suggests that A-2 has no reservation or suspicion about the fact that there was a contract between M/s Karsan and NFL which was executed on 27.07.1995 and that even A-2 knew that such contract was in the file of NFL. He reiterated in his cross- examination conducted on behalf of A-5 that M. Sambasiva Rao (A-3) was given special treatment in NFL. It was suggested to him that opinion of J.B. Dadachanji was received on 07.11.1995 but he brushed aside such suggestion as incorrect. Learned defence counsel also confronted said witness with his previous statements CNR No. DLCT01-000024-1998 page 87 of 251 Ex. PW38/DA1 to DA11 in order to show that there were improvements in his testimony. To me, these improvements are not of any real significance and, therefore, no advantage can be dug out by the defence. He did admit that since December 1995, M/s Karsan had been informing that they were not able to perform the contract due to extreme cold and bad weather condition in CIS countries. He though claimed that policy in question was covering risk of non-performance and non-delivery but volunteered that said aspect was to be looked after by the Finance Department. In his further cross-examination, he also admitted that he had told CBI that the contract was in the knowledge of Sh. D.K. Sikri, Joint Secretary who was also Director, NFL Board. He, however, claimed that he did not initiate any note after the signing ceremony was over about the controversy related to insurance policy. He denied that he had made a false statement in the Court in order to conceal his own involvement and to save his skin.
8.38 PW-37 A.K. Maitra joined NFL on 1.7.1994 as Company Secretary and was reporting to A-1. As Company Secretary, he used to deal with the matters related to Board Meetings, Share Holder's Meeting and Parliament Questions etc. He deposed that Sh. C.K. Ramakrishnan (A-1), K.K. Jaiswal, K. S. Bhatia and Mrs. S. Bhargava were the members of Board of NFL and such directors used to elect a chairman in every meeting. Sh. C.K. Ramakrishnan (A-1) used to preside over such meetings. He claimed that NFL was made a co-canalizing agency for import of urea in October, 1994 and procedure of its import was approved in Board meeting dated 7.11.1994. He then elaborated about the procedure of procurement while highlighting that the payment was only to be made against letter of credit as well as on furnishing proof of stock, duly attested by Prime Bank or Chamber of Commerce. He claimed that there was no provision of making 100% cash prepayment nor there was provision to entertain any single offer. He then made reference about various agendas, notes of Board Meetings as well Minute Book containing minutes of various meetings. All such CNR No. DLCT01-000024-1998 page 88 of 251 Board Meeting, Agendas have been proved by him. He also deposed that in Board Meeting dated 18.9.1995, it was decided to dispense with the earlier practice of putting proposal for urea import before the Board for approval and it was rather decided that such cases may be processed as in the case of other purchases as per the prescribed procedure. He also made reference to such minutes (Ex. PW37/20). He deposed that prior to said resolution, the proposal of import of urea used to be put before the Board for approval while supplementing that no change in the procedure of import had been made in the meeting dated 18.9.2005.
8.39 He deposed that on 1.11.1995, A-2 put proposal for import of urea from Karsan which was approved by A-1. The proposal had a provision for 100% advance payment to Karsan and insurance cover against non-performance and non-delivery. On 3.11.1995, he received a call from A-1 who informed that NFL was going to enter into a contract with Karsan for import of urea and also told him that M/s Karsan was 'internationally reputed firm' and that there was limited time at his disposal and the matter was to be taken up on top priority. He also told him that he had approved the contract and sending papers to him, merely as a formality. He informed that he was leaving for Syria and in his absence, the file would come to him (PW-37) and that he should not create any hurdle in clearing the same.
8.40 On 8.11.1995, Sh. P.K. Kataria and Sh. J.K. Narang came to him along with copy of contract, copy of proforma invoice and note sheet. When he saw the same, he was not satisfied with the payment terms and guarantee clause and, therefore, he suggested that the matter be referred to legal consultant J. B. Dadachandji & Company. He was informed by P.K. Kataria that A-2 did not want any change to be made in the terms of the contract and that A-1 and A-2 had already claimed that the payment was fully secured by Lloyd's Insurance. He discussed the matter with Sh. Deepak Lal and told him that they should not sign the contract and to CNR No. DLCT01-000024-1998 page 89 of 251 refer the matter to legal consultant. Sh. Deepak Lal was of the view that there was no need to refer the matter to lawyer as A-1 had already told him that he had approved the contract. PW-37 Sh. A.K. Maitra, accordingly, examined the contract as well as guarantee clause which stipulated guarantee for non-delivery and non-performance. He also expected that prior approval of RBI would be required before making any payment to Karsan but since A-1 already approved the contract, he vetted the proposal and put his signature at point 'X' on Ex. PW 36/DB.
8.41 He deposed that when he had perused the terms of the contract, he noticed deviations from the established procedure. There was no provision for obtaining EMD and performance guarantee bond and rather there was a provision for 100% cash pre-payment in violation of established procedure. He called his assistant Kulbhushan who was senior law officer who also noticed such deviations. He deposed that such contract, which had though been signed on 9.11.1995, was brought to the notice of Board only on 4.1.1996 and in such meeting dated 4.1.1996, there was only a casual reference to the contract with Karsan and there was no deliberation and, therefore, when the draft minutes were prepared, he did not make any mention of such contract. Such draft was to be approved by A-1 and he (A-1) in order to cover up, put a note in his own hand at the bottom of the draft to the effect "The Board also noted the other details put up to the Board for information".
8.42 As per PW37 Sh. Maitra, by that time A-1 had realized that there was no chance of getting any urea from M/s Karsan. PW-37 Sh. Maitra also made reference about the news which appeared in the press on 22.3.1996 regarding 'urea scam' and regarding conveying of emergency meeting on 27.3.1996. Agenda of such meeting has been proved as Ex. PW 36/DS-6. He attended such meeting also but when the matter of urea scam was taken up for discussion, he (PW-37) was asked to sit out. Later on, when the minutes were seen by him, he learnt that Board had observed that CNR No. DLCT01-000024-1998 page 90 of 251 the contract with Karsan had been executed without their prior approval and that there was deviation from standard practice of inviting global tender, payment against letter of credit etc. According to him, A-1 expressed his views in the meeting justifying such deviation on the basis of delegation of powers to him.
8.43 PW-37 Sh. Maitra also made reference about the subsequent Board Meeting dated 17.5.1996. In his deposition, he categorically claimed that he had no knowledge of any contract dated 27.7.1995 between NFL and Karsan. He claimed that no such contract was marked to him for examination either by A-1 or by A-2. He was shown several other documents on which he identified signatures of A-1 as well as of A-2.
8.44 PW37 Sh. A.K. Maitra admitted in his cross-examination that original insurance policy was not received either before the signing of the contract or even before the payment of 99% of the contract value. He admitted that he did not mention in his note Ex. PW36/G3 that the original insurance cover note had not been received. He also claimed in his cross-examination that the contract had already been approved by MD which was a deviation from the standard practice as ordinarily a draft used to be placed before him (PW37 A.K. Maitra) and he used to place the same before MD for approval. He also claimed that Board Meeting held on 27.03.1996 was presided over by A-1 but he is not aware whether Minutes in relation to said meeting were drafted by Mr. D.K. Sikri himself. He did admit that since insurance policy was not received, it was obvious that the requirement of the conditions as approved by MD were not satisfied. He also admitted that he failed to mention such in the note endorsed by him. He also claimed in his cross-examination that he was accused in a complaint case under FERA which also related to urea transaction in question but also volunteered that Sh. C.K. Ramakrishnan (A-1) had himself submitted before the FERA Court that he had been asked by Prime Minister CNR No. DLCT01-000024-1998 page 91 of 251 Office to implement the contract else he would have to face the consequences. I need to mention right here that no such thing was claimed by A-1 before this Court at any stage including when his statement under Section 313 Cr.P.C. was recorded. PW37 Sh. A.K. Maitra also claimed that contract dated 09.11.1995 was executed at the instance of MD who justified the execution of the contract before the government as well as before the media. He also admitted that NFL had gone to International Chamber of Commerce for arbitration where award was passed in favour of NFL and against M/s Karsan. He pleaded his ignorance whether due to any scarcity of urea, government had permitted NFL to make spot purchase. He claimed that his house was also raided by CBI. He does not remember as to how many times he was called by CBI in relation to the investigation of the present matter. He claimed that CBI had recorded his statement but he does not know whether it was as a witness or as an accused. He denied that he had entered into the conspiracy with anyone in relation to the urea scam. He did admit that FIR had been registered on the basis of report of Dr. Chhattra Sal Singh. He also claimed that he himself was also suspended on 20.05.1996. He denied that legal opinion was taken from Sh. J.B. Dadachanji and Sh. Duggar on 08.11.1995. He rather volunteered that such opinion was taken in March 1996.
8.45 When it was put to him that NFL Board in its meeting dated 04.01.1996 did not make any objection regarding 100% cash pre-payment, he answered that it was due to the fact that there was only a casual discussion about the deal. He deposed that he had seen the contract on 08.11.1995 only and before that he had no occasion to see the same. He also claimed that he had told Enforcement Officer also that he had noticed several deviations from the established procedure and that EMD had not been taken and the provision of 100% cash pre-payment was in violation of established procedure. He pleaded his ignorance whether M/s Karsan had actually made arrangements in CIS countries for procurement of urea but supply CNR No. DLCT01-000024-1998 page 92 of 251 became impossible because of heavy snow fall or because of the fact that rivers were frozen. He did admit that contract in question was commercial in nature but I must add that such thing would not mean that there would never be a criminal angle in any such commercial transaction. He claimed that the contract in question was extended and it expired on 4 th or 6th October 1996. As regards report Ex. PW36/DR- 24, he claimed that it had been signed by Sh. N.K. Gupta but it was at the instance of Sh. C.K. Ramakrishnan (A-1) who had dictated the same. Therefore, he had also admitted that Sh. Gupta should have verified the facts before signing said report and thus he acted against the interest of NFL. He also claimed that Sh. Kulbhushan, Sr. Law Officer examined the contract and noticed that it did not contain any provision regarding late delivery and damages. He also claimed that liquidation clause was also added in the contract. He pleaded ignorance whether M/s Karsan tried their best to supply the urea but it was prevented on political ground. When cover note was seen by him for the first time on 26.03.1996, he found the same to be a marine cargo policy. He claimed that since later he was verbally instructed not to deal with Karsans matter, there was no occasion for him to have written to the insurance company. He also did not make any phone call to Lloyds to enquire about nature of policy. He denied that he was in collusion with Lloyds and other insurance company. He denied that he had exerted influence on the Board Directors not to file law suit against insurance company.
8.46 PW-40 Sh. Narender Kumar Gupta succeeded A-2 as ED (Marketing) (Personnel & Administration) on 22.2.1996. Naturally, by that time, the contract in question had already been executed. PW-40 Sh. Gupta deposed that he made efforts to bring 'contracted material' to India and sent letter to Karsan to find out as to where the urea had been stored and from where it was to be shipped so that pre-dispatch inspection could be carried out. He made reference to letters written by him in this regard.
CNR No. DLCT01-000024-1998 page 93 of 251 8.47 On 3.4.1996, he along with M. Prabhakar of Vigilance Department had
gone to Ankara and met Mr. Karanci (A-5) in the office of Karsan. Accused A. E. Pinto (A-9) was also sitting in the office. When asked as to where the urea had been stored, Mr. Karanci (A-5) expressed his inability to give any such details saying that Mr. Alankus (A-4) was away to CIS countries to make arrangement for dispatch of urea and also claiming that he could not give any location of the stock as the same was confidential information. He also made reference about one letter dated 8.4.1996 received from Alankus which he had purportedly sent from Moscow. Such letter was given to them while they were in Ankara. As per such letter, Mr. Alankus (A-4) had expressed his annoyance about their visit to Ankara in his absence. PW-40 Sh. Gupta also deposed that they were in constant touch with Indian Embassy and also met legal representatives of Ankara Chamber of Commerce and Department of Trade. They meet officials from Department of Trade on 9.4.1996 and also met Secretary General of Chamber of Commerce, Ankara who confirmed that as per the notification, Karsan was registered with Chamber of Commerce for 'Tourism and Trade'. Holdings of their firm were provided which indicated that such holdings were meager. They asked about the trade activities of Karsan and whether they had got any references. They were apprised about two references but none was from the field of urea or fertilizers.
8.48 Sh. Gupta then informed A-1 telephonically that there was no purpose of staying over at Ankara. However, A-1 insisted him to stay claiming that he himself would also come to Ankara. On 17.4.1996, A-1 visited Ankara. Sh. Alankus also arrived in Ankara and on 23.4.1996, they had meeting with Alankus. In such meeting, A-5 and A-9 were also present. During such meeting, A-4 stated that he was upset with the manner in which Government of India had behaved and the manner in which press has reported about the deal. A-1 asked him to give schedule of dispatch of urea CNR No. DLCT01-000024-1998 page 94 of 251 but A-4 was not at all prepared to give any schedule. When he was assured that balance 1% would be shortly paid, A-4 told that the schedule of the dispatch would be given next day.
8.49 PW-40 Sh. Gupta left Ankara on 24.4.1996 and on his return to India, he apprised Secretary (Fertilizer) about what had transpired in Ankara and report in writing was also furnished by him. A-1 also returned to India later on and he brought schedule of dispatch (Ex. PW 38/L-41) along with letter (Ex. PW 40/A) and Press Note (Ex. PW 40/A-1). Karsan, however, did not adhere to the aforesaid schedule (Ex. PW 38/L-41) and did not give any information regarding the place of manufacturing, place of storage of the material or the port from where they intended to ship the material. He also deposed that M/s Karsan had sent one consignment but did not furnish information regarding the port of loading and, therefore, no pre- dispatch inspection could be carried out. He also deposed that the same was not accepted because laboratory reported that the material was not upto the specifications.
8.50 PW-40 Sh. Gupta deposed that he received letter dated 20.5.1996 (Ex. PW 36/DT-22) from A-1 whereby he asked him to send the relevant papers leading to the singing of the contract dated 27.07.1995. It was unusual letter as in the ordinary course, a superior would never write to his next subordinate to seek any such information. However, when the record was checked up, there was no such file or paper and, accordingly, he sent reply to A-1. As per his specific deposition, when he remained in Ankara from 3.4.1996 to 24.4.1996, he was able to gather impression that Karsan was in no mood to send urea and was not inclined to return the money either. He further deposed that he had not seen any insurance policy covering non- performance and non-delivery. He also claimed that their guidelines never provided for 100% cash pre-payment. He also made reference to meeting dated 22.3.1996 CNR No. DLCT01-000024-1998 page 95 of 251 which was also attended by A-2. After this meeting, a note was prepared by A-1 which was signed by him as well. Such note has been proved as Ex. PW 36/DR-24 (Page 20-23 of D-5).
8.51 In his cross-examination, PW40 Sh. N.K. Gupta denied that note Ex. PW36/DR-24 was not dictated by A-1 Sh. C.K. Ramakrishnan or that it was prepared by him (PW40 N.K. Gupta). He denied that he had been tutored by prosecution and, therefore, deposing falsely before the Court. He claimed that when he went to Ankara Chamber of Commerce, he was given gazette notification Ex. PW40/DD1. He denied that such document was fabricated one. He admitted that they had not sent anyone to collect shipping documents from the Captain of the ship when 9000 MT urea had arrived in India. He, however, claimed that M/s Karsan had sent them copies of shipping documents along with a copy of SGS report and they had forwarded the report to the government laboratory, Faridabad and then government laboratory reported that urea sent by M/s Karsan was not as per specification contained in the contract. He admitted that no sample as such was drawn by Indian laboratory or NFL for the purpose of analysis. He claimed that there was variance with respect to the nitrogen contents as well as regarding size and colour of the granules.
8.52 He deposed that when he met A-4 & A-5 in Ankara, they told him that by that time, they had been making efforts to collect material and ship the same but in view of the response of Indian Government and NFL, they had slowed down their activity and had no plans for shipment. He also admitted that he told them that NFL had no intention to cancel the contract and rather it was interested in supply of the material volunteering that entire such talking was done by Sh. C.K. Ramakrishnan in such meeting in Ankara. It was also put to him by A-4 that Indian team had a discussion with him in Ankara and accepted his explanation that the supply had been CNR No. DLCT01-000024-1998 page 96 of 251 delayed due to bad weather condition beyond the control of M/s Karsan and, therefore, the contract period was extended and PW40 Sh. N.K. Sharma answered that it was not explicit acceptance that it could be inferred and implied. He also deposed that contract was terminated after the extended schedule date was also over.
8.53 PW-39 Sahib Singh was posted as Senior Private Secretary with A-1 at the relevant time. He deposed that in the beginning of 1995, a telephonic call was received from Prime Minister's Office for A-1 and he transferred the call to A-1. He further claimed that in May, 1995, A-6 came to their office along with A-3 and he informed his MD, i.e. C.K. Ramakrishnan (A-1) about their arrival. A-6 first went to the chamber of A-1 and 5-6 minutes later, A-3 was also called in his chamber by A-1. They stayed there for 10-15 minutes. PW-39 Sahib Singh also claimed that A-6 had come to see MD later on also on 2-3 occasions and similarly A-3 also visited to see MD twice or thrice. On 31.10.1995 or 1.11.1995, A-3 had come to see MD in relation to supply of urea by Karsan to NFL. He also deposed that at that time, Sh. P. V. Narasimha Rao was Prime Minister of India and A-3 introduced A-6 to him as relative of Prime Minister.
8.54 As regard A-7 Sh. Prakash Chand Yadav, he deposed that Sh. Ram Lakhan Singh Yadav was Minister of Chemicals & Fertilizers in 1995-96 and NFL was under the control of Department of Fertilizers. Telephonic calls were received in NFL from the office of such Ministry as well as from his son Sh. Prakash Chand Yadav. Though, he could not give telephone number from where such calls used to emanate but he deposed that Sh. Prakash Chand Yadav used to call frequently. He then mentioned about the telephone number installed in the office of MD/NFL as well as at the residence of A-1 and about their bills and payments. He claimed that such bills were also verified by him as well as by Sh. V. T. S. Narayanan who used to work as CNR No. DLCT01-000024-1998 page 97 of 251 Senior Private Secretary in his absence. He also claimed that A-3 also disclosed that he was from Prime Minister's office. He also deposed that on one or two occasion, A- 3 used office telephone of A-1. As regards 9.11.1995, he deposed that A-4 and A-5 had also come to the office of A-1 but A-1 was not present in the office and then they had used telephone of MD for making call to Ankara, for which they did not make any payment either.
8.55 PW39 Sh. Sahib Singh, in his cross-examination, claimed that he was very much in the office on 09.11.1995. He also deposed that accused Tuncay Alankus and Cihan Karanci had come to their office and he allowed them to sit in the chamber of MD and also connected calls for them. According to him, they had made two calls to Ankara. He also admitted that visitor register was kept in reception but volunteered that it was not being maintained properly and denied that no person could enter inside the NFL premises without making any entry in such register. He claimed that it was wrong to suggest that A-3 Sambasiva Rao never introduced A-6 B. Sanjeeva Rao as relative of Prime Minister.
8.56 I have also seen deposition of PW-3 Laxman Shankar who has primarily deposed about the proposal prepared by Sh. V.N. Singh regarding delegation of financial powers. PW-12 S.P. Dobriyal was working in Personnel Department of NFL and was custodial of the personal files of NFL officials and deposed about the personal files of A-1 and A-2 and proved the same as Ex. PW12/A and PW12/B respectively. PW-13 Deepak Chandan was posted in accounts section of Corporate Office of NFL. He deposed that during Nov. 1995, NFL had bank account in SBI South Extension Part-I, New Delhi. He was shown letter dated 1.11.1995 written by Sh. P.K. Kataria addressed to AGM of such branch of SBI whereby the bank was authorised to release payment of US$ 3,80,000 as 1% advance in favour of Karsan Ltd. He admitted his signature at point 'B' on such letter as well as identified the CNR No. DLCT01-000024-1998 page 98 of 251 signatures of Sh. Kataria on the same. He claimed that he had signed such letter in routine and was not aware that he had exceeded his limit. He claimed that his individual power at the relevant time was Rs. 2500/- and if any such letter was to be signed jointly, the power was upto Rs. One Crore. In cross-examination, he also claimed that Sh. Deepak Lal, in view of his designation, was authorized to sign the documents along with officer of the designation of Assistant Manager for payment of upto Rs. three crores. He claimed that Sh. Kataria was working as Additional Manager at the relevant time. He, however, did admit that by signing aforesaid letter, he did exceed his limit. He also admitted that then Additional Manager (F&A) independently could have authorized the bank for remittance of US$ 3,80,000.
8.57 PW-43 Raj Kumar was working as Personal Secretary to A-2 who deposed about the official phones provided at the residence of A-2 as well as about his personal phones. He verified the telephone bills regarding such official telephone number of A-2 installed at his residence. These numbers were 6431710 and 6472556. A-2 had two telephones in his office which were having telephones number 6412417 and 6429307. He also deposed that A-3 used to be given better treatment vis a vis other visitors. He also deposed that Prakash Chand Yadav (A-7) also used to give telephone calls to A-2 and sometimes, he used to call upto 3-4 times a day.
SEEDS OF CONSPIRACY 9.0 After having a look over the process of import of urea and deposition of NFL officials, it is now required to be determined as to how the accused persons came into picture and conspired together to dupe NFL.
9.1 Criminal conspiracy is defined under Section 120A of IPC. As per the bare definition, when two or more persons agree to do or cause to be done an illegal CNR No. DLCT01-000024-1998 page 99 of 251 act or an act which is not an illegal by illegal means, such an agreement is designated as a 'criminal conspiracy'. Thus, the essential element would be agreement between the two or more persons, objective of which is to commit an illegal act or an act by illegal means. Generally, under criminal law, both mens rea (guilty mind or intention) and actus reus (guilty act) should be present for constituting an offence. However, the unique feature of the offence of conspiracy is that mere agreement, in itself, also amounts to commission of an offence. Prosecution is, therefore, essentially required to disclose the meeting of minds between two or more persons for committing an illegal act or an act by illegal means. It is aptly said that criminal conspiracy is formulated in privacy and, therefore, direct evidence is usually hard to access. Therefore, on most of the occasions, prosecution relies upon circumstantial evidence for proving such conspiracy. It is, therefore, more often than not, inferred from bunch of circumstances. Of course, inference should be clear and not a wild one. Right here, I would also like to remind myself about Section 10 of Indian Evidence Act 1872 which prescribes that anything said or done by a conspirator is a relevant fact against his fellow co-conspirators.
9.2 As per the charges framed against the accused persons, the conspiracy had been hatched during the period between 1995-1996 at Hyderabad, Delhi and other places. Prosecution has heavily relied upon the confessional statement made by A-8 under Section 40 of Foreign Exchange Regulation Act (FERA). I would discuss the evidentiary value of such statement in later part of my judgment but fact remains that in such statement, A-8 D. Mallesham Goud did admit that in February/March 1995, a meeting was arranged in the office of M/s Madicon Marketing Pvt. Ltd. in the chamber of Sh. B. Sanjeeva Rao (A-6). Such meeting was attended by him as well as by A-3, A-6 and Sh. Anand Mohan and in such meeting, it was decided that the "commission" in relation to import of urea would be shared between A-3 & A-8 and "secret commission" would go to A-6 and his group. In such meeting, it CNR No. DLCT01-000024-1998 page 100 of 251 was also decided that contract would be secured in the name of their concern M/s Sai Krishna Impex and paper work would be done by A-3 and the finance would be arranged by A-8. It was also decided that A-6 would use his influence to obtain such contract in favour of M/s Sai Krishna Impex. A-8 had also claimed in his such statement under Section 40 of FERA that even before such meeting, A-6 and Sh. Anand Mohan had detailed discussion regarding their work and role in the project. Mr. Anand happened to be son of Sh. Krishna Murthy, OSD to the then Hon'ble PM of India. Initially, his complicity was also under scanner but eventually, he was given clean chit as CBI did not charge-sheet him.
9.3 A-3 was, admittedly, working in the field of urea and pesticides. He roped in A-6 who was having good clout amongst the top circle and it was thus decided that order of urea import would be obtained using his contacts and the commission would be accordingly divided/distributed. Undoubtedly, meeting for discussing modalities about proposed urea order would not be illegal per se but if in the meeting, it is also discussed as to how the senior officers would be influenced for winning such contract and how the "secret commission" would be shared, then though the agreement might be for obtaining government order but the objective was to procure the order by deploying illegal and corrupt means and then dividing the money amongst themselves. The idea was to win order by using influence and not on merits. Such agreement is thus squarely covered under the definition of criminal conspiracy as provided under Section 120-A IPC.
9.4 A-6 B. Sanjeeva Rao from his telephone no. 390333 of Hyderabad, which was in the name of M/s Madicon Marketing, had made telephone calls to A-1 on various dates. Detail in this regard is appearing in D-138A which has been proved as Ex. PW75/B1. Such statement, containing description of various STD calls, goes on indicate that telephone calls were made from telephone no. 390333 of M/s Madicon CNR No. DLCT01-000024-1998 page 101 of 251 Marketing Pvt. Ltd. to A-1 on his telephone no. 011-4361252 on 04.04.1995, 02.05.1996 & 15.05.1995.
9.5 These calls become somewhat important. Third urea tender had been published in May 1995 and as already noticed above, last date of submission of the bid was 17.05.1995. In relation to such bid, A-3, A-6 & A-8 came and stayed in Delhi. A-3 & A-8 stayed in Ambassador Hotel from 14.05.1995 to 20.05.1995. Registration Card Ex. PW17/D (D-92) shows the names of the guests as M.S.S. Rao and D.M. Goud and it bears signatures of A-3 as well. A-3 had checked in on 14.05.1995 and A- 8 had checked in a day later. Bill Ex. PW17/E is in relation to the various services provided to said visitors by the hotel in relation to their such stay. There are international calls on number 0044171700 during their such stay. Such number is stated to be of A-9 A.E. Pinto of London. These details also indicate that visitors i.e. Sh. Rao and Sh. Goud had also made calls on number 3711404 which is attributed to A-7 Sh. P.C. Yadav. Such call is dated 18.05.1995. Same day, there is another call to 6471333 which is stated to be of A-1.
9.6 Of course, nobody except the caller and recipient would know as to what the conversation during such calls was but it is not difficult to imagine that it must have been in the context of urea order. A-4 Sh. Sanjeeva Rao had also checked in same hotel on 16.05.1995 and remained there till 18.05.1995. Registration Card has been proved as Ex. PW17/A (D-93). Bill (Ex. PW17/B) would indicate that he had also made call to A1 at his office telephone no. 4361225 on 16.05.1995 & 17.05.1995 as well as at his residence telephone no. 6493963.
9.7 I have already discussed the deposition of PW39 Sh. Sahib Singh who categorically claimed that in May 1995, A-6 & A-3 had come to their office of NFL and A-3 had introduced A-6 as relative of the then Prime Minister. PW38 Sh. Anil Kumar CNR No. DLCT01-000024-1998 page 102 of 251 Sharma has also deposed that in May 1995, on the day of tender, A-3 had come to their office and he was told by A-2 that A-3 was coming from PM office.
9.8 Thus, it all started with a meeting in which A-3, A-6 and A-8 had participated. The objective was to win contract by using influence. A-6 was the best man for influencing anyone. Being close relative of Hon'ble PM of India, he was a potentially big asset. His association with A-7 was like icing on the cake. He was son of fertilizer Minister of India who was having complete grip over NFL. A-9 had been contacted already so that they could show on papers that there was a foreign supplier interested in supplying urea. A-1 and A-2 were also kept in loop. Thus, A-1, A-2, A-3, A-6, A-7, A-8 and A-9 seem to be in search of a foreigner who could play the desired role to achieve the ultimate goal. A-3 & A-6 visited NFL on 17.05.1995 where A-6 had been introduced as a relative of Prime Minister. Such fact clearly goes on to show that idea was to win the contract/order by using influence of PMO and not on merits. Extra courtesy was shown as A-3 was directed to be received properly. He was not treated like any other bidder but was given VIP treatment. A red carpet was rolled out for him. So much so, the tender forms were provided to him in the office of NFL so as to enable him to fill the same and submit the same then and there. Such tender document Ex. PW38/A (Part of D-11) clearly indicates that bid was submitted by M/s Sai Krishna Impex for 50,000 metric tonnes of urea @ 201 US$ per MT. It bears signatures of A-3. Such bid was submitted by M/s Sai Krishna Impex on behalf of M/s Amartek Corporation. Such bid was accepted and M/s Amartek was given order Ex. PW38/A-1 (part of D-14) to supply 1,00,000 metric tonnes of urea.
9.9 Fact remains that A-3 could not supply any urea under such contract. A-3 has not been able to divulge as to why he could not supply the same. Naturally, as per the terms of the bid document, the payment could have been made only after the supply of urea and since no reason has been assigned by A-3, it has to be assumed CNR No. DLCT01-000024-1998 page 103 of 251 that he was in no position to supply any urea and, perhaps, his only interest was to get the money and to misappropriate the same.
9.10 More importantly, if any such bidder fails to supply the urea, performance guarantee bond should have been forfeited forthwith. Here, the situation is just the opposite. A note in this regard was prepared and was placed before A-2 but for the totally inexplicable reasons, he did not approve such note and did not take any step for the purpose of forfeiting the bond. He rather chose to keep the same in abeyance. This clearly indicates guilty mind of A-2 and shows that he was having some sort of tacit understanding with A-3 and others as well. Any prudent man holding such responsible official capacity would not have chosen to act to the detriment of the interest of his employer. There is no reason whatsoever, even remotely explained, behind such non-judicious decision of A-2. I have seen note Ex. PW38/A-4 (D-14). Performance guarantee bond was of 1,00,500 US$ and since party had failed to perform the contract, it was proposed, vide noting Ex. PW38/A5, that such bond may be forfeited. A-2, instead of approving, mentioned thereon that there was "sufficient evidence" that such party was in a position to perform the contract and moreover, the rate offered by such party was quite attractive and, therefore, they would like to give one opportunity to him to perform and, therefore, the forfeiture action was kept in abeyance. Nobody knows as to what made A-2 believe that such party, represented through A-3, was in a position to perform. Despite the fact that tender was given, A-3 was not able to supply even a grain and, therefore, there was no other option with A-2 but to have forfeited the bond, which was, even otherwise, not of a small amount. His non-action in this regard speaks volume of his being hand-in-glove with A-3.
9.11 I have already noticed above that when A-3, A-6 & A-8 were staying in Ambassador Hotel, Delhi, a call was made to London and Mr. A.E. Pinto (A-9) was contacted. Though Mr. Pinto is no more, it is worthwhile to mention here that his CNR No. DLCT01-000024-1998 page 104 of 251 house was searched and various documents were seized during such house search and these documents were eventually forwarded to India. All such documents are contained in D-203. Such search was carried out in the house of A-9 Mr. A.E. Pinto situated at Essex, North England by Detective Sergeant Roy Sloss on 15.10.1997 in the presence of Sh. N.P. Singh and at that time, wife of Mr. Pinto was also present.
9.12 It will be important to mention that Sh. Roy Sloss was examined through video-conferencing and transcription of the deposition was prepared later on and was placed on record. In such transcription of the deposition, Sh. Sloss has been referred as PW85 (a). He deposed that in 1997, he was working at the Fraud Squad of the Metropolitan Police and his position was Detective Sergeant. He claimed that he executed search warrants on 15.10.1997 and went to the home address of Mr. Pinto situated in North London. He also narrated as to who accompanied him during such search operation. When the door of the Mr. Pintoo was knocked at, it was opened by Mrs. Pintoo and he showed her his police identification. He also introduced other officers including Indian Inspector and then procedure for executing the search warrants was explained to her. She agreed to the house search and accordingly house was searched and the papers, which were found to be relevant, were placed in a bag and was sealed. Details of those items were recorded in Premises Search Book. He claimed that number of documents were seized and put in bags and these were eventually taken to Serious Fraud Office for examination. When he was shown relevant documents contained in green folder, he identified the same. These are D- 203, D-182 & D-183. This witness was cross-examined at length but there is nothing in such cross-examination which may suggest that either the search was not conducted or that any document had been planted. When the witness was cross- examined on behalf of AE Pinto, he claimed that at the time of search, Mr. Pinto was in prison. He also claimed that Mrs. Pinto remained throughout helpful during such search operation. It has been wildly claimed by the defence that documents CNR No. DLCT01-000024-1998 page 105 of 251 contained in folder D-203 were not part of the seized documents. However, deposition of Mr. Sloss seems convincing every inch and there is not reason whatsoever to disbelieve his version or to discard the search and the documents recovered during such search.
9.13 During such search, one letter Mark P65/D1 (D-203, Page-69) was also recovered. By virtue of such letter, Mr. Pinto had informed one Mr. A. Mousa that he was in possession of a big order from a person, who was man of "Prime Minister" and vide such letter dated 05.07.1995, he made enquiries from Mr. Mousa about the procedure of such deal and price etc. When such letter was put to Mr. A.E. Pinto under Section 313 Cr.P.C., he admitted that he had written such letter to Sh. Mousa. Mr. Pinto also admitted that he came in contact of A-3 after 25 th & 26th May 1995 as is evident from his answer given in response to Question No. 20. It marked the entrance of M/s Karsan on the stage. It thus becomes apparent that when A-3 was unable to supply the urea, he tried to come in contact of some foreigner who could be projected as supplier who could help them in achieving their objective and accordingly, Mr. Pinto was contacted. Mr. Pinto then made enquiries from Mr. A. Mousa vide his said letter dated 05.07.1995 and that is how, A-4 and A-5 came in forefront.
9.14 In the meanwhile, urea tender no. 4 had been floated in June 1995. Two bids were submitted by A-3 on behalf of M/s Sai Krishna Impex. One was on behalf of Inter Trade International of Denmark and the other was on behalf of M/s Surpass Builder but fact remains that, again, A-3 was unable to supply any urea despite fetching said two orders. During such period also, there was regular contact amongst the accused (s). A-6 had made telephone calls from his telephone no. 390333 to A-1 on 06.06.1995 & 21.06.1995 on his telephone no. 4361252. Details in this regard are found in official record of "Hyderabad Telephones" which has been proved as Ex.
CNR No. DLCT01-000024-1998 page 106 of 251 PW75/B1 (D-138A). 9.15 A-3 had also made telephone calls when he was staying at Hotel Asian as
is evident from Ex. PW42/E4 (D-101). A-3 was also simultaneously in touch with A-7 Sh. P.C. Yadav and had made calls to him on 06.06.1995 & 09.06.1995 as per CDR Ex. PW42/E2 (D-99). Such call was made to telephone number 3711404 installed at the residence of father of A-7. Though A-3 was able to win the orders from NFL in relation to tender urea no. 4 as well but since he had no experience or expertise in supply of such huge quantity, he failed to honour both such orders. Again, as per the established norms, the performance guarantee bonds, which were to the tune of two per cent of the total amount, should have been forfeited but for the reason best known to A-2, no action was taken and rather these bonds were returned. Reference in this regard be made to the statement of PW38 Sh. Anil Kumar Sharma.
9.16 I have seen testimony of PW32 Sh. Ashwani Kumar, who was posted as Manager in Hotel Asian International, Janpath Lane as Manager. He has proved the record showing stay of A-3 in their hotel on various dates. He has also deposed that on one or two occasions, he had seen D. Mallesham Goud in their hotel. He also deposed that Mr. A.E. Pinto used to call Sh. M. Sambasiva Rao (A-3) from London on telephone and Mr. Pinto had also come to their hotel on one occasion. He also correctly identified Mr. Pinto during his deposition. He claimed that Mr. Pinto had come to their hotel and had gone to the room of M. Sambasiva Rao as he wanted to meet him. According to him, if any guest during his such stay used to make any call, then such call used to be connected directly with telephone of such guest. He deposed that he had given printouts of all such calls made by A-3 which were seized by CBI vide seizure memo Ex. PW42/D. These printouts have been proved as Ex. PW42/E1 to E17. There are international calls made to telephone no. 004411004395 on 03.06.1995, 05.06.1995 and 06.06.1995 to name a few.
CNR No. DLCT01-000024-1998 page 107 of 251 9.17 I have already made reference to letter of Mr. Pinto (A-9) addressed to Mr.
Mousa. It is evident that Mr. Mousa then tried to contact Mr. Cihan Karanci (A-5) as Mr. Karanci wrote a letter to Mr. Mousa same day. Such letter dated 5.7.1995 has been proved as Mark P-38/13 (D-203 Page 65). In such letter Mr. Karanci while claiming that two lacs MT of Urea quota was available until the end of 1995, supplemented that there was no problem of paying commission whether the same was high or low. Mr. Karanci also claimed therein that they were able to transfer any amount of commission to any country in the world freely. He also referred that it will be, however, easier and safer to follow the blocked fund method. Instead of knowing about the requirements related to deal, the prime thrust was on transmission of commission. This also indicates that M/s Karsan had mere intention to usurp and the money share instead of supplying anything.
9.18 Though the discussion was taking place in July, 1995, it is quite evident that NFL had some idea about requirement related to proposed "blocked fund method" as is evident from the letter of SBI dated 19.4.1995. In such letter Ex. PW 95/DP 24 (D-203 Page 44), the bank had certified that the Cash Credit Limit for Rs. 217.48 crores (for non-peak season) and Rs. 154.53 Crores (for peak season) has been sanctioned in favour of NFL which was having excellent solvency record and was also enjoying Letter of Credit Limit of Rs. 115 Crores for import of urea. Such certificate had been issued at the request of NFL only. It clearly indicates that NFL was trying to assess, well in advance, whether such type of certification by their bank would serve the requirement in relation to blocked fund method or not.
9.19 Moreover, said letter dated 5.7.1995 of Mr. Karanci, which is admitted by Mr. Pinto, clearly goes on to show that there was agreement regarding payment of commission. One letter dated 16.7.1995 was also recovered during the house search CNR No. DLCT01-000024-1998 page 108 of 251 of Mr. Pinto. Such letter has been proved as Mark P-85/1 (D-203 Page 41) and as per such letter, modalities regarding payment of commission was given some shape. Mr. Pinto was to get commission at the rate of 15 US$ per MT and M. Sambasiva Rao was to get 25 US$ per MT. Though such letter has been denied by Mr. Pinto but it is quite evident that such denial is for the sole purpose of running away from the criminality emanating therefrom. There was no reason or occasion for anyone to have planted any such letter upon the accused.
9.20 Right here, it would be appropriate to discuss about one letter of A-3 which he sent to M/s Karsan on 18.7.1995. It has been proved as Ex. PW 36/DT-13 (D-203 Page 38 to 40). In such letter, Sh. Rao claimed that he had a "very detailed and lengthy discussion" with the "top executives of NLF and Ministry" and convinced them all. He also claimed that he had got parliamentary clearance for block fund for import of 2 lac MT urea. Further contents of such letter would indicate that though initial proposal from M/s Karsan was to deliver urea by "blocked fund method" but they seem to have changed their mind as Mr. Rao (A-3) is found clearly commenting in such letter that any deviation from blocked fund method would create a "big scandal"
which would spoil his name and their names. He made request to supply urea only through blocked fund method. He also assured that he would make them (Karsan) regular seller of urea to NFL and MMTC, supplementing that it was a commitment from "top man mouth in India". In such letter, he also made reference to Mr. Pinto and Mr. Mousa. He also claimed if the deal was agreeable then, he would organize fund confirmation from SBI. In such letter, he gave Delhi Fax Number as 3323077 and Room No. 544. Such correspondence was done by A-3 on the letter head of Surpass Builders Pvt. Ltd.
9.21 Mr. Karsan replied said letter on 18.7.1995. As per reply Ex. PW 36/DT-14 (D-203 Page 35), it was claimed that they would be able to accommodate Mr. Rao in CNR No. DLCT01-000024-1998 page 109 of 251 relation to Urea for India by late October only. Simultaneously, one Urea Product Certification was also procured by M/s Karsan. Such document has been proved as Ex. PW 95/DP-26 (D-203 Page 28). It is important to mention that in such letter M/s Karsan claimed itself to be ready, willing and able to supply urea as a co- producer/supplier. It nowhere claimed itself to be the manufacturer.
9.22 NFL was also in loop as A-2 Mr. Kanwar had sent a letter to M/s Karsan on 21.7.1995. Such letter is Ex. PW 36/DT-11 (D-203 Page 16). Mr. Kanwar, referring to the communication dated 18.7.1995 which was addressed to Mr. Rao on behalf of M/s Surpass Builders Pvt. Ltd., claimed that the proposal given by Karsan was attractive and was under active consideration of NFL management and made request to rush original documents relevant to the proposal for necessary verification so that they could proceed with the matter for issuance of LOI and establishing financial instruments as per the requirement of the contract.
9.23 It is also quite evident that A-3 also sent invite to Mr. Pinto to come to India. Such letter of Mr. Rao has been proved as Ex. PW 38/N-4 (D-203 Page 113 to
115). Such letter was also on the letter head of Surpass Builders Pvt. Ltd. A-9 did arrive in Delhi and stayed in Hotel Hans Plaza. Reference made to documents contained in D-86 & D-87. A-9 also does not dispute that he had come to India and had met A-3. He claimed that he prepared synopsis of terms and conditions which they wanted NFL to comply with. He also admits the bills pertaining to his such hotel stay.
9.24 Thus, all the players had entered the scene and it was being evaluated as to how the money is extracted from NFL on the pretext of supply of urea.
CNR No. DLCT01-000024-1998 page 110 of 251
FIRST CONTRACT
10.0 Thus, the things were now taking some shape for execution of alleged
'first contract' dated 27.7.1995 between NFL and M/s Karsan. A-2 has made the execution thereof little mysterious. Till ascertainment of charges, he seems to have no qualm that he had signed the same, albeit, as per direction of A-1. Later, during the trial, he took somersault and denied its execution and his signatures thereon. His such changed stance is too unconvincing to hold good.
10.1 I would reiterate that the manner of sharing commission had already been decided. 15 US$ per MT was to go to A-9 and 20 US$ per MT was to go to A-3. Such letter of dated 27.7.1995 written by Mr. Tuncay Alankus (A-4) to Sh. Rao (A-3) has been proved as Mark P38/10 (D-203 Page-1) and even Mr. Pinto (A-9) had admitted such letter.
10.2 Some sort of agreement had also been executed between M/s Karsan and Brasil Trading Ltd. of A-9 A.E. Pinto same day. It has also been admitted by Mr. Pinto to be correct. This seems to have been executed to show that the amount, which Mr. Pinto was to get eventually, was legal and lawful amount entitled by him under some contractual obligation though apparently it was nothing but a sort of reward for winning contract for M/s Karsan by influencing public servants and other top brass of country. After all, A-9 was the one who brought them to the stage.
10.3 A draft of such contract was prepared. It was between NFL (buyer) and M/s Karsan (seller). Copy of one such draft was recovered from the house search of A-9. It has been proved as Ex. PW95/DP27 (D-203 Page 5-9). Transaction code of such contract is given as KARUREA 097/1995. Surprisingly, it was mentioned in the contract that NFL was represented by A.E. Pinto (A-9). It contained various clauses CNR No. DLCT01-000024-1998 page 111 of 251 regarding the purpose of contract, quality, quantity, packing, delivery, shipment documents, payment, guarantee etc. As regards the payment, the total contract value was 38 million US$ and such amount was required to be placed in a 'special account' of buyer's bank by the buyer and letter of confirmation was to be designed and transferred to the seller's bank stating that the funds had been placed to the account of buyer's bank which be released to seller's order at the end of the transaction. The contract was for 2 lac metric tonnes CIS originated urea on CIF basis and urea was to be dispatched between 13-16 weeks. It was signed by A-5 as representative of seller and by A-9 as representative of buyer. Such draft has been admitted as correct by A-9. In fact, A-3, A-4, A-5 & A-8 also admit the same.
10.4 Such draft was sent to NFL for signatures of concerned official of NFL. Copy of such document is also found to be there in D-9. Such file was recovered during investigation at the instance of A-3. On 09.06.1996, A-3 had taken CBI official PW94 M.S. Bisht to the residence of his relative Sh. A. Satyanarayana situated in Secundrabad from where one folder Ex. PW94/A (containing 159 pages) was seized vide memo Ex. PW68/C. It doubly confirms that A-3 was in the thick of things in relation to such first contract right from the beginning.
10.5 Such first contract was eventually signed by D.S. Kanwar (A-2) on behalf of NFL. Copy of such contract (Ex. PW38/C as well as Mark P36/1) is found contained in D-5. It contains impression of signature of D.S. Kanwar (A-2) at points A. 10.6 It is indeed curious as why no such record about first contract is not there in NFL. It is quite puzzling and surprising and demonstrates that some back-door process was going on. Said contract came to knowledge of NFL later on when M/s Karsan had referred about the same in its subsequent letter dated 26.02.1996.
CNR No. DLCT01-000024-1998 page 112 of 251 10.7 A-2 seems to be in somewhat dilemma. He is not clear whether any such
contract was executed or not. When his statement under Section 313 Cr.P.C. was recorded, he denied his signatures thereon. In his examination under Section 313 Cr.P.C., A-2 declared that so called copy of contract dated 27.07.1995 did not bear his signatures. It was also put to him that A-3 had made a call to him on 27.07.1995 at his residential landline number 6431710 to which he claimed that A-3 might have made him a call but he did not remember.
10.8 It is quite evident that A-2 is trying to hoodwink the court with respect to execution of first contract. If at all, there was no such contract of 27.07.1995, would he bother to explain as to why he made correspondence with the bank in relation to a formality directly connected with said contract. I am persuaded to refer to one letter Ex. PW36/DS12 (D-70 Page-2). Such letter dated 16.08.1995 has been sent by NFL to Chief Manager, State Bank of India. It is signed by none other than D.S. Kanwar (A-2). He admits his signatures on such letter also. Such letter clearly indicates that A-2 very well knew about the aforesaid contract as in said letter, he apprised State Bank of India that NFL had placed a Letter of Intent of 2 lac metric tonnes of urea on CIF basis with M/s SBR Trust, Germany for and on behalf of M/s Karsan Limited. He requested SBI to arrange for one 'fund confirmation letter' as desired by the supplier on the prescribed format. I would also like to refer to one letter dated 02.09.1995 sent to NFL by SBI. It has been proved as Ex. PW30/DB1 (part of D-72). In such letter, SBI Official had confirmed that NFL was its valued customer and the account was good for commitment of 38 million US$. More importantly, in subject matter, project was described as KARUREA 097/1995. It thus clearly indicates that there was an agreement between M/s Karsan and NFL on 27.07.1995. Sh. Pinto and Sh. Alankus did not sign said agreement in India but they sent the signed copy to NFL, India where eventually it must have been signed by A-2 on behalf of NFL. As per requirement shown by M/s Karsan, bank was requested by NFL to issue a letter.
CNR No. DLCT01-000024-1998 page 113 of 251 Correspondence between NFL and the bank clearly suggests that there was an execution of contract between NFL and M/s Karsan on 27.07.1995.
10.9 It is indeed not clear as to why and how such contract stood vanished from the records of NFL. There can be two possibilities. Either the entire activity was being carried out in a very discreet manner or someone removed such contract from the records of NFL with some ulterior motive. Perhaps, the very existence of such contract would have fumed the Board which was kept in dark about the same and, therefore, it was removed from the record.
10.10 A-3, being Indian agent on behalf of M/s Karsan, was updating them. He sent letter to M/s SBR Trust on 28.08.1995 attaching therewith original LoI for 2 lac metric tonnes of urea, bank confirmation letter, copy of NFL letter advising SBI to earmark 38 million US$ and to get the funds free to discharge financial obligations towards contract no. KARUREA 097/1995 at any given point of time. Such letter has been proved as Mark P38/17 (Page-110 of D-9). Copy of said letter was sent to M/s Karsan. Another letter i.e. Mark P38/18 (Page-111 of D-9) was sent by A-3 to M/s Karsan informing Mr. Karanci about said development. A-3 also forwarded to him copy of duly signed and sealed contract by Executive Director of NFL. In such letter, he also claimed that he was sending a photocopy as original was deposited with NFL. He claimed that all the commitments of said contract had been fulfilled.
10.11 Thus, as per the requirement expressed by M/s Karsan, confirmation regarding allocation of funds was obtained and the first contract was executed. It now needs to be seen as to why such contract was not adhered to. According to NFL, there was no such contract whereas according to M/s Karsan, contract could not be enforced as NFL failed to provide requisite funding instrument.
CNR No. DLCT01-000024-1998 page 114 of 251 10.12 It is not tough to fathom as to what M/s Karsan actually wanted from NFL.
They wanted money without supplying urea. It was a big contract. They were to get 38 million US$ which was huge money. NFL's Bank had already confirmed about the availability of funds as sought. M/s Karsan must have started feeling that as per the terms of the contract, funds would be released only after the supply was made and, therefore, they wanted some excuse to retreat and thus started falsely asserting that NFL had not provided them with the requisite funding instrument. As per Ex. PW31/DB-1 (Page-2 of D-73), M/s SBR Trust had written a letter to SBI in relation to said first contract asking them to change the funding documents and to give the same in a new format. Such format is also found contained in D-203. Perhaps, it was not possible for SBI to have issued any such instrument in the new format. It is quite obvious to me that M/s Karsan fully knew that it will not be possible for Indian bank to arrange for any such instrument and, therefore, they created a novel way to wriggle out of first contract, thereby cleverly shifting the burden on to NFL. It clearly suggests that they were primarily interested in getting the advance payment and had no intention to deliver the urea. If at all they were keen in sending any urea then, immediately after the execution of first contract whereby they had been given a huge contract of 2 lac metric tonnes of urea along with a confirmation letter from SBI regarding allocation of funds, they would have certainly moved forward and initiated desired steps to fulfill the contractual obligations. They should have grabbed the deal with 'both hands' but since their prime interest was to 'lay hands upon the money' and since they did not seem to be in any position to supply the urea at all, they did not take any step for the due performance of said contract and rather started professing that it got frustrated on account of non-arranging of funding instrument by NFL.
10.13 In the meanwhile, Urea Tender No. 5 was also out. Conditions were very appropriately laid out in tender document pertaining to Tender No. 5 and the payment was by way of "Letter of Credit" (LC). Reference be made to the bid document CNR No. DLCT01-000024-1998 page 115 of 251 contained in D-10.
10.14 Surprisingly, A-1 & A-2 have not bothered to explain as to why they were simultaneously entertaining a "direct offer" from a third party when they were regularly publishing global tenders. Moreover, such third party i.e. M/s Karsan was a stranger to them. They never had any dealing with such foreign supplier in the past. They did not try to ascertain its credentials. They did not ask them about their past performance and work experience. They did not bother to see their financial capability either. They did not attempt to verify from other agencies like MMTC etc. whether such supplier had any reputation or potential to fulfill the contract. M/s Karsan had not sent its profile or any covering letter along with the draft of first contract. No enquiry of any nature whatsoever was made by A-1 & A-2 and Letter of Intent was issued with extreme haste. They did not even insist for such foreign supplier to come to India and to have a word with them. They received a signed copy of contract from foreign, quite possibly, through A-3 and acted upon the same without even a bit of reluctance and hesitation. The amount was mammoth as the contract was for supply of 2 lac metric tonnes of urea and it was expected that before grant of any such contract, NFL officials must have at least seen the credentials of supplier whose offer was, even otherwise, being considered in an unusual and exceptional manner.
10.15 The manner in which a direct offer, coming from a stranger, was entertained is bound to raise eyebrows.
10.16 It is also quite evident that the sole interest of A-3 was to get the money. Despite having won many orders in the past, he was in no position to supply any urea. He, eventually, came in contact of M/s Karsan and became their Indian agent.
10.17 A-3 submitted two bids in response to Urea Tender No. 5.
CNR No. DLCT01-000024-1998 page 116 of 251 10.18 One such bid was on behalf of M/s Karsan as well. It is contained in D- 12 and has been proved as Ex. PW38/D. In such bid also, the amount was
mentioned as 190 US$ per metric tonne. Since the manufacturer was relieved of filing of any EMD, A-3, with manifest ulterior objective, mentioned M/s Karsan as manufacturer in such price bid. A copy of contract was also submitted along with the bid in which NFL was shown represented by Sambasiva Rao which was obviously erroneous. Such bid was submitted on 11.09.1995 which happened to be the closing date for Tender No. 5. It was received in NFL in a closed envelope. Copy of enclosed contract (Ex. PW38/DD), surprisingly, talked about "blocked fund method" only and for the payment term also, the same terms were reiterated which were there in the first contract. In case, the bid was pursuant to the tender enquiry, the bidder was required to follow the terms & conditions mentioned in the bid and was not required to come with his own set of terms & conditions. Such bid was rejected by NFL for altogether different reason i.e. for showing A. Sambasiva Rao as representative of buyer and seller both. A-1 and A-2 did not even bother to see that M/s Karsan had come with its own payment terms and, therefore, even otherwise, such bid was liable to be rejected.
10.19 A-3 had submitted another bid on behalf of M/s Bulsigma Limited, Bulgaria and the rate was quoted as 195 US$ per metric tonne. M/s Bulsigma was shown as co-producer and urea. Even though such bid had been accepted, no urea could be supplied by A-3 under that order either.
10.20 Tender Committee had gone through all such bids and prepared a note. 57 bids were received in response to Tender No. 5. 45 bids were not considered and after considering the remaining bids, one bid of M/s Bulsigma, inter alia, was recommended for giving orders. Minutes of Meeting of Tender Committee, which are CNR No. DLCT01-000024-1998 page 117 of 251 duly signed by Sh. P.K. Kataria, Sh. Anil Kumar Sharma, Sh. Deepak Lal and Sh. S.S. Sood, are found contained in D-24 though these have not been proved by anyone. Fact, however, remains that it is admitted fact that A-3 had participated in said tender process and had submitted said two bids on behalf of M/s Karsan as well as on behalf of M/s Bulsigma. A-3 himself had admitted the same, in response to Q. No. 96 put under Section 313 Cr.P.C. I have already noticed about the deposition of Sh. Anil Kumar Sharma and when he apprised A-1 that the bid of A-3 submitted on behalf of M/s Karsan had been rejected on technical ground, A-1 exclaimed that the price quoted by A-3 was the lowest and, therefore, order for the entire quota should have been placed upon him. This also shows the complicity and involvement of A-1 who too was making wholehearted effort to ensure that the award eventually goes to M/s Karsan even though in the bid document, M/s Karsan had come with its own terms of payment which were in direct contrast with the terms specified in the tender document.
10.21 Be that as it may, first contract did not evoke any interest in the seller as they realized that the payment term did not suit them at all. They backed out of the same in astute manner. They have falsely asserted that they were planning to file a case against NFL for not adhering to the first contract. If at all, they wanted so, there was no one to stop or prevent them. A-1 and A-2 have also misled the court by pleading ignorance and denial about first contract. They were in touch with SBI for managing necessary funding instrument and also issued LOI. They did not take Board in confidence and in such a peculiar backdrop, missing of record cannot be taken nonchalantly.
SECOND CONTRACT DATED 09.11.1995 11.0 Stage was now getting set for execution of another contract.
CNR No. DLCT01-000024-1998 page 118 of 251 11.1 A-1 & A-2 on behalf of NFL and A-4 & A-5 on behalf of M/s Karsan
through its Indian Agent were more than eager to ensure that agreement is executed. Though the first contract could not be implemented because of the demand of funding instrument in a particular format, M/s Karsan were still found insisting for the same. Correspondence in this regard continued even in October 1995. Reference be made to letter Ex. PW38/N16 (D-203 Page-111) signed by A-4 & A-5 in which they claimed that the transaction related to first contract would stand cancelled if the funding instrument was not sent that day itself. PW38 Sh. Anil Kumar Sharma sent reply Ex. PW37/DD (D-203 Page-121) on 17.10.1995 informing M/s Karsan that Indian banks did not issue such type of funding instrument. NFL also demanded Performance guarantee and insisted for opening of Letter of Credit. Naturally, these terms were not acceptable to A-4 & A-5 and they sent another letter to NFL same day. It has been proved as Ex. PW38/N18 (D-203, Page-120). They had no reason to get miffed as they wanted funding instrument in a particular format which was not apparently possible for Indian banks to give. One letter Ex. PW38/N17 (D-203, Page-112) was sent by A-5 on behalf of M/s Karsan to Mr. Pinto (A-9) on 18.10.1995. A-9 has admitted such letter. In such letter, Mr. Karanci claimed that only recourse available was to transfer 38 million US$ to their bank. They also claimed that there was no question of giving any bank guarantee of any kind. They volunteered to submit only a corporate letter of undertaking and corporate promissory note as collateral. It was also mentioned in such letter that if such proposal was accepted then they would consider the same else transaction may be excluded. This clearly reveals the intention on the part of A-4 & A-5. They wanted the deal to be materialized in such manner that they get the entire payment well in advance without there being any security of any kind, much less of substantial nature. They point- blank refused to give any bank guarantee.
CNR No. DLCT01-000024-1998 page 119 of 251 11.2 Undoubtedly, A-3 also, initially, expressed his astonishment about such
insistence and sent letter Ex. PW38/N6 (D-203, Page-117) on 18.10.1995 to Mr. Pinto (A-9) through fax from office of A-2. In such letter, he claimed that he wondered whether anyone in the world would give that kind of money of 38 million US$ against a simple undertaking and asked him and M/s Karsan to think over the matter. He also mentioned therein that he was not able to understand the intention of Mr. Karanci who wanted millions of US$ without any guarantee or risk and wanted to play with others' money. He also sent another fax-letter to Mr. Karanci which has been proved as Ex. Pw38/N5 (D-203, Page-118). In said letter, he told Mr. Karanci that NFL was ready to transfer 38 million US$ in the account of their company but with the condition that such amount would be released only after clearance from NFL on satisfactory receipt of 2 lac metric tonnes of urea.
11.3 However, A-4 & A-5 did not want any condition to be attached and they were interested in having the entire payment in advance without giving any guarantee or collateral security. It is not understandable as to why A-1 & A-2 chose to accept such blatantly unreasonable terms put forwarded by A-4 & A-5. Either they both were under huge pressure of someone from the top or they were in connivance with such foreign suppliers in terms of a well-planned conspiracy. A-1 & A-2 never ever claimed before the Court that they were working under any pressure. Unfortunately, during the entire trial, they kept on defending the contract instead of saying that they realized later only that the terms were unreasonable or that they had been cheated or befooled by such foreign supplier..
11.4 NFL sent letter as Ex. PW36/DR21 to M/s Karsan on 26.10.1995. It is signed by Sh. Anil Kumar Sharma on behalf of NFL. Such letter is very important because it indicated that NFL had no qualm to the unreasonable terms put forwarded by M/s Karsan. Such letter reads as under:
CNR No. DLCT01-000024-1998 page 120 of 251 Kindly refer to your offer through Mr. S.S. Rao for execution of 200000 M.T. Urea.
We have analysed the whole situation and came to a conclusion to go ahead with advance money transfer to your account against Lloyds First Class Insurance Policy as per the text submitted by you.
The 1% of the contract towards insurance premium will be transferred latest by Tuesday i.e. 31.10.1995 to your account for arranging the insurance policy and the balance as per the procedure. Meanwhile you are requested to rush your all papers pertaining to the fresh contract through Mr. S.R. Rao urgently.
11.5 Before that, M/s Karsan had already intimated A-9 the banking details for transfer of such premium and they wanted the amount to be transferred to their account no. 2380865819 which they were having with Pamuk Bank, Ankara, Turkey. They also provided details about swift code etc. Such letter Ex. PW38/N20 has though been denied by A-9 having received from accused Cihan Karanci but it is obvious that such denial has no truth in it. There is, even otherwise, no reason to disbelieve such exchange of letters recovered from the house search of A-9.
11.6 Be that as it may, for totally inexplicable reasons, it was decided by NFL that a contract would be executed and it also agreed to send the entire payment well- in-advance against a mere First-Class Lloyds' Insurance Policy covering transportation risks alone.
11.7 A-1 & A-2 have not bothered to explain as to why they agreed to such irrational and arbitrary terms. They did not claim before the Court that they had, in the past, also seen and entertained any such type of insurance policy which very clearly guaranteed non-delivery as well as non-performance. They did not try to check CNR No. DLCT01-000024-1998 page 121 of 251 antecedents or credentials of M/s Karsan. M/s Karsan also did not submit any document to show their potential and capability to execute such a huge order. They did not provide NFL with any certificate showing themselves to be the manufacturer. A co-producer/supplier cannot be equated with manufacturer. A-4 & A-5 had dishonest intention right from the inception. They claimed themselves to be the manufacturer through their Indian agent. They also wanted the entire money in advance. So much so, even for the payment of insurance premium of one percent of the total amount, they wanted the payment to be made by NFL in the first instance. This was unusual and unheard of. In such type of matters, payment should have been released only after ensuring that the urea was duly received in India. There should have been appropriate performance guarantee and NFL should have also seen and examined the documents of any such supplier to whom it was making such a huge remittance. For totally strange and weird reasons, A-1 & A-2 decided to go ahead with the contract on the terms imposed by A-4 & A-5. Undoubtedly, A-3 was earlier little bit perplexed but when he learnt that NFL officials had agreed to payment terms of 100 percent advance payment, he kept himself associated with the transaction in question and chose to continue to represent them as their Indian agent. Same is evident from the letter Ex. PW38/24 (Page-20 of D-4) by which A-5 informed NFL that M/s Sai Krishna Impex, Hyderabad was their authorized representative and Indian agent with special authority to M. Sambasiva Rao on their behalf for day-to-day transaction in India.
11.8 M. Sambasiva Rao's earlier letter clearly indicated that M/s Karsan were interested in usurping millions and millions and thus he very well knew that they were in no position to supply the urea. Sh. Sambasiva Rao had, in the past, submitted performance guarantee worth 4 lac US$ which was not forfeited by A-1 A-2. Such performance guarantee was requested to be used by A-3 in relation to the proposed agreement between NFL and M/s Karsan and letter dated 31.10.1995 {Ex. PW38/E1 CNR No. DLCT01-000024-1998 page 122 of 251 (Page-12 of D-6)} was accordingly sent by A-3 to A-2.
11.9 On 30.10.1995, A-5, on behalf of M/s Karsan, sent a letter to NFL which has been proved as Ex. PW38/DH1 (Page-9 of D-4). Along with such letter, he sent original copy of contract and Performa invoice claiming that necessary documents were also ready for delivery on reception of one percent insurance premium. It was also mentioned that balance amount equivalent to 37,62,000 US$ be transferred by NFL after receiving the original copy of insurance policy. It was also claimed that they were making every effort to initiate the first shipment as quickly as possible noting urgency of the matter and claimed that total supply of 2 lac metric tonnes would be finalized within three months after the reception of the funds. The contract was signed by Mr. Alankus on behalf of M/s Karsan and it contained condition that entire payment would be made by transfer of 100 percent cash pre-payment of the total contract value to the sellers' bank account.
11.10 A-9 was also in the loop as is evident from letter Ex. PW38/N24 (D-203, Page-141) whereby an invitation was sent to Mr. Pinto (A-9) by A-5 to come to Turkey. A-8 also knew everything and kept on providing all the logistics and was spending the money on travel and stay. A-6 and A-7 were also chipping in regularly to ensure that the deal was clinched and sealed and did necessary talking on phone. A- 7, being son of Fertilizer Minister did not come in forefront for obvious reasons but it becomes clear from testimony brought on record that A-1 and A-2 met him at the residence of his father. Such meeting must have been in the context of said contract only.
11.11 The aforesaid proposal received from M/s Karsan was taken up by NFL with unusual haste. I have discussed the testimony of NFL officials already and I have seen the original noting dated 31.10.1995 which is contained at pages no. 46 & CNR No. DLCT01-000024-1998 page 123 of 251 47 of D-4. Sh. Arun Goel proposed, by virtue of said noting, that proposal of M/s Karsan may be approved. It also mentioned that US$ 380000 was to be sent to Pamuk Bank against one percent insurance premium which was on seller's account and the balance amount of US$ 37620000 was to be remitted after receiving the policy from Lloyds. It was also mentioned in the note, albeit wrongly, that the latest enquiry no. 6 had already been closed on 26.10.1995 and the price of M/s Karsan at rate of 190 US$ per metric tonne was very attractive. Such noting was eventually approved. It merely talked about loss of interest by making advance payment. It was proposed in the note that request would be made to Government of India for protecting the same. Rate offered by M/s Karsan was reiterated as very attractive and low and the proposal was finally approved by A-1.
11.12 Curiously, A-1 & A-2 were merely bothered about loss of interest. They were least concerned about the incomprehensible condition of the supplier of insisting upon 100 percent advance payment. They were also satisfied with the proposed insurance guarantee, original of which was never received. They also agreed to release one percent of the payment without even formal execution of the contract. The proposal was taken up hastily and an unusual decision was taken to release 380000 US$ without even ensuring that the contract was signed by both the parties. When the 'first contract' was executed, Mr. Alankus had sent copy of the contract from Turkey which was bearing his signatures. He did not himself come to India in relation to first contract. But in context of the second contract, A-2 wrote letter Ex. PW38/F (Page-51 of D-4) to Indian Embassy, Ankara, Turkey on 03.11.1995 requesting them to grant visa to Mr. Alankus and Mr. Karanci.
11.13 Such remittance of US$ 380000 was in gross violation of Foreign Exchange Control Manual as for any amount of advance remittance exceeding 5000 US$, a guarantee was required to be taken from international bank of repute situated CNR No. DLCT01-000024-1998 page 124 of 251 outside India and NFL officials, despite knowing fully well about such stringent condition, chose to remit the amount of US$ 380000 in favour of M/s Karsan to its designated bank i.e. Pamuk Bank. SBI also did not choose to raise any real and substantial objection and rather asked NFL to obtain waiver of such condition from RBI as a special case. If SBI was little extra cautious and vigilant, the present critical situation could have been averted. Not only it helped NFL in sending the amount, it also told them ways and means to wriggle out of the aforesaid condition by telling them to obtain a waiver from RBI as a special case. I would deal with the testimony of concerned bank officials in the later part of my judgment on said aspect but fact remains that no stone was left unturned in ensuring that such one percent amount US$ 380000 is transmitted to Pamuk Bank as expeditiously as possible. Such amount was remitted on 02.11.1995. Of course, eventually M/s Karsan could not actually use said amount of US$ 380000 as it was received back by SBI but fact remains that NFL had done its part of the job as if it was acting as a representative of M/s Karsan and ensured that amount was remitted to the designated bank sooner than later.
11.14 A-4 & A-5 came to India and as per the testimony of NFL officials, which I have already discussed in the earlier part of my judgment, the second contract was executed on 09.11.1995.
11.15 Such second contract dated 09.11.1995 has been proved as Ex. PW36/H (Page-89 of D-4). It was signed on 09.11.1995 by A-2 on behalf of NFL. It had already been signed by accused Tuncay Alankus in Turkey on 30.10.1995.
11.16 As per the conditions mentioned in the contract, the seller was required to submit, inter alia, original certificate of origin of urea issued by Chamber of Commerce. The inspection at the time of loading, if desired by NFL, was to be CNR No. DLCT01-000024-1998 page 125 of 251 conducted on seller's account at the port of loading itself. The specification of urea and its quality were given in Article-2 of the contract and as per the contract, the seller was to supply 2 lac metric tonnes CIS originated urea with the condition that each shipment would not be less than of 25,000 metric tonnes and the entire urea would be delivered within five months after receiving the entire funds by the seller.
11.17 Articles 7, 8, 9 & 13 of said contract read as under:
ARTICLE 7: INSURANCE PREMIUM The insurance premium is 1% of the total contract value of US$ 38,000,000 which corresponds to US$ 380,000. The buyer will first issue this premium as cash in advance to the account of Seller in Ankara via bank T/T. The Seller will immediately arrange the original insurance policy and send it to the buyer by courier service.
As the insurance premium is on Seller's account, the Buyer will deduct his pre-payment of US$ 380,00 from the total contract value of US$ 38,000,000 and will transfer the remaining US$ 37,620,000 to Seller's account by bank T/T after reception of the original insurance policy.
ARTICLE 8: PAYMENT The payment will be made by the transfer of 100% cash pre- payment of the total contract value to Seller's bank account for 200,000 MT of Urea 46 Fertilizer which corresponds to US$ 37,620,000 (190 x 200,000 MT minus US$ 380,000 for insurance premium) by bank T/T. The Seller will advice the name of the bank and the account number to the Buyer for the transfer of US$ 37,620,000 immediately after reception of th 1% insurance premium of US$ 380,000.
CNR No. DLCT01-000024-1998 page 126 of 251
ARTICLE 9: GUARANTEE
The seller counter guarantee the 100% cash pre-payment of the buyer by a first class Lloyds insurance policy which covers the risk of Seller's Non-Delivery and Non-Performance by paying 1% premium (US$ 380,000) according to the procedure indicated in article 7 of this contract.
ARTICLE 13: FORCE MAJEURE Neither party of this contract shall be responsible for breach of the contract caused by the act of GOD, insurrection, or civil order, war or military operations, national, international or local emergency or revolution, inconvenient weather conditions, and local government decisions.
11.18 I would like to mention here that Urea Tender No. 6 was still very much alive and, therefore, noting to that effect, as prepared at the time of execution of second contract, was wrong. As per such last tender enquiry, i.e. Urea Tender no. 6, NFL had desired to purchase urea from manufacturer directly or from their representative specifically authorised to bid in this regard or from such Trading House as were approved by the manufacturer. As regards tender no. 6, if noting available in file D-24 is to be believed, 65 bids were received by the tender committee and after detailed deliberation and keeping in mind the fact that only those bids were to be entertained which were by the manufacturer or by the party backed by the manufacturer, the placement of letter of intent was restricted. Accordingly, a communication was made with those bidders who had quoted the material at a maximum rate of 225 US$ per metric tonne and they were asked to furnish performance guarantee bond and proof of stock and such time was finally extended upto 27.11.1995. Since no party could meet the requirement stipulated in the letter of communication tender enquiry was decided to be closed. Thus, for all practical purposes, the tender enquiry remained alive till 27.11.1995.
CNR No. DLCT01-000024-1998 page 127 of 251 11.19 It will be also important to mention that in response to tender enquiry no.
6, bid was received from Nimaco (Ex. PW 34/A-1) (part of D-18). Original of such bid has been proved as Ex. PW 95/DP 29 wherein the price is found quoted as 203 US$ and Nimaco had also agreed to conventional payment method of letter of credit.
Nimaco was represented by same Karsan Group as is evident from the letter of M/s Karsan dated 20.9.1995 which has been proved as Ex. PW 34/A-5 (part of D-18) wherein Karsan claimed themselves to be the seller and introduced Nimaco as their business partner and authorised representative claiming further that Nimaco had full authority and responsibility for marketing the product of Karsan including Urea 46 Fertilizer. M/s Karsan also certified that they were ready, willing and able to supply Urea as a co-producer/supplier. Said bid of Karsan through M/s Nimaco Ltd. was received in NFL though Sir J.P. Srivastava & Associates vide letter dated 25.10.1995 quoting the price as 205 US$ on C&F Basis. It was also mentioned therein that the offer would remain valid till 31.10.1995.
11.20 Reference be also made to the testimony of PW34 Sh. Vikram Srivastava. According to him, said firm M/s J.P. Srivastava & Associates was his sister concern which was trading in fertilizers, chemicals and pesticides in the region of Madhya Pradesh. He deposed that for importing urea, Nimaco (located in Geneva, Switzerland) claimed themselves to be principal mandate holder for a company called Karsans. They were asked by Nimaco to participate in tender and accordingly submitted the bid @ 205 US$ per metric tonne for 2.5 lacs metric tonnes. They asked Nimaco to obtain guarantee of 2 per cent from M/s Karsan but no such PG bond was submitted. They requested NFL to extend the time for submission of PG bond but Nimaco did not procure the same. Though they were informed that it was because of cold climatic condition in CIS countries but he felt that the actual reason was of not having adequate stocks. He proved his bid as Ex. PW34/A. In his cross-
CNR No. DLCT01-000024-1998 page 128 of 251 examination, he claimed that he did not recollect any direct conversation between his company and M/s Karsan. He also deposed that certificate of production supplied by Nimaco was taken at its face-value which indicated that Karsan was co-producer of urea but they did not verify the authenticity of such certificate. He claimed that he did not believe the representation of Nimaco about bad weather condition in CIS countries. He deposed that since Nimaco could not furnish PG bond, it was presumed that they did not have the stocks. He also claimed that they would have got 5 per cent commission if the deal was through. Thus M/s Karsan had participated in Tender No. 6 claiming itself to be a urea producer but it did not give any performance guarantee (PG).
11.21 It would thus become very clear that the urea Tender No. 6 remained alive till 27.11.1995. It is, therefore, very puzzling and confusing as to why when the tender process was alive and final call had not been taken, NFL decided to consider a direct proposal coming from M/s Karsan. This is certainly going to raise eyebrows.
11.22 Moreover, such direct offer was having awkward payment terms, which were, naturally, detrimental to the interest of NFL. Still, these were accepted by A-1 and A-2 without any murmur. They did not even insist for original insurance policy and were satisfied with a mere cover note. I have seen such cover note dated 06.11.1995 which has been proved as Ex. PW36/H2 (Page-78-79 of D-4). Such cover note is not conveying the terms clearly as it contained a footnote to the effect that such cover note was subject to the terms & condition of the policy to be issued later.
11.23 A-4 and A-5 have cried hoarse that it is a case of breach of contract. They have strenuously asserted that contract stood frustrated due to severe winter condition which attracted force majeure clause. They also claimed that the insurance CNR No. DLCT01-000024-1998 page 129 of 251 policy in question was comprehensive policy and not simply a marine policy. All these issues had been duly raised during the arbitration proceedings and were decided in favour of NFL. Nonetheless since all such aspects have been argued at length by both the sides, I would like to deal with the same but not before commenting that the very entering into such contract, having lop-sided and inequitable terms, was per se criminal in nature. A direct proposal was entertained, more so, when, parallelly, global bids were also being evaluated. The hasty manner in which the proposal was considered and the contract was executed clearly suggests the criminality on the part of contracting parties and viewed from that angle, it is not actually necessary for a criminal court to assess whether it was a case of breach of contract or not.
11.24 Before touching said aspects, I would like to mention right here that even the balance amount of 37.62 million US$ was also transmitted to supplier, again with undue haste and without complying with the condition of Exchange Control Manual and without seeking any approval or waiver from RBI.
REMITTANCE OF MONEY FROM INDIA 12.0 The amount was remitted twice in relation to second contract. On first occasion, a sum of US$ 3.80 lacs [1% of the contract value] was remitted to Pamuk Bank and on the second occasion balance amount of US$ 37.63 million [99% of the contract value) was sent. I have seen the documents contained in D-57 and D-64 to D-66.
12.1 Let me see the testimony of the concerned officials of SBI and from RBI. Two officials have graced the witness box from SBI and one from RBI.
CNR No. DLCT01-000024-1998 page 130 of 251 12.2 PW-27 Sunil Sachdeva is a crucial witness. Undoubtedly, he has been
labelled as the tainted witness by defence as he was also made accused in a complaint related to FERA violation but that by itself would not mean that his testimony is liable to be expunged altogether. He was, during the relevant period, posted in international banking division (IDB) of SBI, NDSE Part-I, New Delhi branch. NFL was maintaining account no. 65001 in their branch. Certified copy of statement of account has been proved as Ex. PW 27/A (D-60 Page 1 to 15).
12.3 PW-27 Sunil Sachdeva deposed that on 2.11.1995, Sh. Subhash Chand (NFL official) came to their branch with letter Ex. PW 13/A (D-57 Page 5) whereby SBI had been requested to remit US$ 3.80 lacs to M/s Karsan Ltd. by TT. He enquired from Sh. Subhash Chander about the banking coordinates of the beneficiary and then asked his Assistant Manager Sh. Sabharwal to process the same. Sh. Sabharwal, however, pointed out that the conditions laid down in manual for advance remittance was to be complied with, which included that if the amount in question exceeded US$ 5000, a bank guarantee from a reputed bank located outside of India was to be sought. The other condition was to have a copy of the contract and that such party, i.e. NFL should furnish a declaration that such goods would be imported within a period of three months from the date of remittance. Sh. Subhash Chander, Assistant Manager, NFL, who was asked to comply with all such conditions, rather told that such remittance was to be made that day itself as it was part of contract. He also claimed that Managing Director of NFL had desired to make remittance immediately. Sh. Subhash Chander then went to Assistant General Manager Sh. S.D. Malhotra where the matter was discussed who also initially declined to make any remittance. However, the same afternoon, Sh. Malhotra called him (PW-27 Sunil Sachdeva) to his room. Sh. Subhash Chander was already sitting there and Sh. Malhotra told them that remittance could be made as a "special case"
as NFL has undertaken to produce a bank guarantee shortly. He told that he had CNR No. DLCT01-000024-1998 page 131 of 251 talked to the Administrative Secretary to DGM who had told him that remittance could be made keeping in mind the status of NFL. Accordingly, a draft telex message Ex. PW27/B (D-57 Page 2) was prepared and transmitted to Pamuk Bank. Another message was sent to New York Branch of SBI and the amount was debited from the account of NFL. Sh. Sabharwal prepared letter Ex. PW27/E (D-57 P-7) mentioning therein that the remittance of US$ 3.80 lacs had been made as a "special case" and NFL was asked to obtain bank guarantee or in alternate to obtain a waiver of such condition from RBI as a special case. Such letter was handed over to Sh. Subhash Chander who, later on, brought undertaking as per said discussion. Such undertaking has been proved as Ex. PW27/F (D-57 Page-8). Fact, however, remains that the transmission of money should not have, at all, been done in violation of said manual.
12.4 PW-27 Sunil Sachdeva further deposed that on 10.11.1995, Sh. P.K. Kataria and Sh. Subhash Chander came to their branch claiming that their "top management" wanted the balance US$ 37.62 million also to be remitted. They were told about the same formalities and documentation. They claimed that they had all the documents including copy of contract, invoice and Lloyds' insurance policy. PW27 Sunil Sachdeva told them that such policy would not work as bank guarantee was required and when asked as to what the solution was, they were advised that they must get permission from RBI for the previous remittance as well as for the remittance to be made. They came later along with a letter Ex. PW27/K (D-57 Page
86) which was addressed to The Deputy Controller, Exchange Control Division, RBI which was accordingly forwarded to RBI with its annexures.
12.5 PW-27 Sunil Sachdeva has further deposed that, in between, being on leave, he did not come to the bank and on 16.11.1995 he was called from his house and he reported to the bank as per telephone message from Sh. Malhotra and when CNR No. DLCT01-000024-1998 page 132 of 251 he went to his cabin, Sh. Kataria and Sh. Sachdeva were already sitting there. Then, he learnt from Sh. Malhotra that US$ 37.62 million had already been remitted on 14.11.1995 without any clearance from RBI. His further deposition indicates that he also went to RBI where he met Mrs. Mukhija, DGM, Exchange Control Division who was then told about said two remittances having been made against insurance policy instead of bank guarantee. Mrs. Makhija told them if insurance policy was in accordance with the spirit of manual, then such remittance could be made in the changed environment. She then took them to Mr. Nanjappa, GM (ECD), who also concurred with her opinion.
12.6 His further deposition indicates that they learnt, later on, that Pamuk Bank had cancelled the earlier remittance of US$ 3.80 lacs without assigning any reason and M/s Karsan Ltd. also did not make any enquiry from their branch in this regard. He also deposed about the second remittance of US$ 37.62 million, first to Pamuk Bank and then to Banque Indosuez, Geneva Switzerland for credit of M/s Karsan. Sh. Kataria and Deepak Lal had come to their branch in this regard. He deposed that later their bank was requested to call back the funds of 37.2 million US$ and to release the same to M/s Karsan's account no. 91923 with Pictet Bank, Geneva. He also deposed that he was told by his AGM Sh. S.D. Malhotra on 25.11.1995 that Banque Indosuez, Geneva Switzerland was creating some conditions for acceptance of fund and, therefore, fund was to be redirected to Pictet bank. He referred to various telex messages in this regard and deposed that such amount of US$ 37.62 million must have been credited in the account of Karsan with Pictet Bank Geneva on 29.11.1995 itself.
12.7 I have seen his cross-examination very carefully. Undoubtedly, there are certain improvements in his deposition as pointed out by Sh. Kawal Nain, Ld. counsel for A-1 but fact remains that such improvements would not make the CNR No. DLCT01-000024-1998 page 133 of 251 testimony of Sh. Sachdeva untrustworthy. It becomes very much evident that it was only at the instance of top brass of NFL that both the aforesaid remittances had been made. NFL tried to project that it was a Govt. of India Undertaking and, therefore, it was required to be treated as a "special case" and thus without taking RBI into confidence, the remittances were made in gross violation of Foreign Exchange Control Manual.
12.8 Moreover, the manner in which NFL officers went to SBI and kept convincing SBI officials clearly indicate that NFL officers including A-1 and A-2 were more anxious than M/s Karsan in relation to the transmission of money.
12.9 It was looking as if NFL, and not A-3, was an agent of M/s Karsan.
12.10 Nobody from M/s Karsan ever thought even of going to any bank, be it SBI or RBI, in context of transmission of the funds. Such act on the part of NFL seems to be actuated with some malice. A-1 and A-2 were at the helm of the affairs of NFL and they cannot be permitted to say that they did not know about any such condition or that it was for SBI to have followed the same. It is quite clear that due to their interference and involvement in the matter, remittance was eventually made on both the occasions.
12.11 I have also seen the testimony of PW-30 Sh. K.L. Batra. He referred about the events which took place on 14.11.1995, when the question had arisen regarding the remittance of balance amount of US$ 37.62 million. He was also of the view that without sanction of RBI, such remittance was not possible. He was also told that previously also, a sum of US$ 3.80 lacs was remitted. He also noticed that there was shortfall in the account of NFL. He talked to his senior and then he was told that he could go ahead for remittance of US$ 37.62 million. Accordingly, after CNR No. DLCT01-000024-1998 page 134 of 251 talking to Sh. Sri Kumar, bank officer, he incorporated remark regarding overdrawing of the account and processed the matter. He also deposed about such remittance of US$ 37.62 million, first to Pamuk Bank and then to Banque Indosuez, Geneva Switzerland. Undoubtedly, he was placed under suspension due to irregularities pertaining to such remittance but that by itself would not exonerate the accused persons. Quite evidently, even the bank officials had been influenced and won over, therefore, they were cooperating and permitted the remittances in violation of Foreign Exchange Control Manual.
12.12 Right here, I would like to refer to the deposition of PW-70 R. Nanjappa, RBI official. He reiterated that if the advances exceeded US$ 5000, the bank guarantee was to be obtained from a bank of repute situated outside the country and it was also to be insured that such import was made within 3 months of the remittance. According to him, insurance policy was not a substitute of a bank guarantee. He deposed that on 16.11.1995 Mrs. Makhija came to him along with officials of SBI and NFL. NFL officials told that they were having a permission from ministry and an import licence for urea and they wanted to make advance remittance of the entire amount and they were not having any bank guarantee and rather submitted insurance policy from Lloyds. He also deposed that he was never apprised that one remittance had already been made earlier. He told them that RBI would send a reply in writing. He passed order Ex. PW 70/B (D-65) on note Ex. PW 70/A (D-65) mentioning therein that the choice between 'bank guarantee' and 'insurance policy' was a matter of policy and that they should obtain ruling on such aspect from Central Office. Accordingly, letter Ex. PW 70/C (D-66) was sent to SBI.
12.13 Fact, however, remains that NFL officials were hellbent in insuring that the remittance was made without any fuss. A-1 and A-2 always wanted to ensure that the remittance was quick and they also devised one way or the other to CNR No. DLCT01-000024-1998 page 135 of 251 overcome the stringent conditions mentioned in the manual. They undertook to submit requisite documents later. They also tried to influence officials of SBI claiming that NFL was to be treated as a special case as it was a government undertaking and was having import licence from Ministry. They seem to be in touch with senior officers of SBI and RBI. SBI officials also rendered full assistance to them as they themselves suggested way-out as to how such remittance could be made without meeting those requirements. Though the first remittance was made without any concurrence from RBI, the interesting aspect is that the second remittance was also made without even waiting for any reply from RBI.
12.14 It is also quite clear that M/s Karsan were so overwhelmed on receiving the balance amount of US$ 37.62 million that they did not even properly check-up whether the amount under the first remittance was available for use or not. Such first remittance was cancelled by Pamuk Bank and the amount was returned which came to the knowledge of M/s Karsan's very late.
12.15 About second remittance of US$ 37.62 million, though the amount was not required to be remitted to Pamuk bank, yet the NFL officials tried to help M/s Karsan out of the way. They were instrumental in ensuring that such remittance is recalled and the amount is sent to Banque Indosuez, Geneva, Switzerland. Interestingly, even such bank was not satisfied about the credentials of M/s Karsan for having that big money in their account. Said bank of Geneva started making enquiries about the transaction in question from A-4 and A-5 and also from SBI and the concerned insurance policy underwriter. NFL was, however, least disturbed and sent clarification to Banque Indosuez, Geneva Switzerland that the funds transferred to their bank through SBI related to urea contract coming from State, i.e. NFL and requested them to act according to instructions. Said bank sought a clarification whether the amount to be received in their bank was at the full disposal of the CNR No. DLCT01-000024-1998 page 136 of 251 beneficiary in the name of specific contract in which their bank was not involved or restricted to any particular point under their control. It can be found in letter Ex. PW38/L (D-4 Page 125). A-2 sent a reply Ex. PW36/DL (D-4 Page 126) confirming that the funds were placed at the disposal of the beneficiary in full in tune with Article- 8 of the contract. Said Bank was still not satisfied as it claimed that it was not aware of the contract as is apparent from their letter Ex. PW38/L-1 (D-4 Page 128). NFL kept on convincing Banque Indosuez, Geneva Switzerland that the amount was at the full disposal of the beneficiary. Reference be made to documents contained in D-
170. I have also seen reply Ex. PW95/E-1 given by Banque Indosuez Geneva Switzerland.
12.16 Various documents were received from Pictet Bank, Geneva and Banque Indosuez, Geneva, Switzerland through Embassy of India. These were sent along with certificate of authentication issued by Swiss General Prosecutor and these documents would also indicate that Banque Indosuez Geneva Switzerland had doubt about the authenticity of the deal and, therefore, it did not proceed to even opening of the account and rather put the amount in "waiting account" known as "miscellaneous customers/clientele"
12.17 It is ironical to see that the Indian banks had shown undue haste and kept aside all the rules and regulations while remitting the aforesaid amount but a foreign bank, which otherwise had nothing at stake, wanted to be doubly sure about the nature of the contract and the credibility of the beneficiary and kept on sending letters to all concerned. If such approach had been displayed or portrayed by the Indian Banks, who knows that the story would have been altogether different today. Be that as it may, since Banque Indosuez, Geneva Switzerland was sending query after query, M/s Karsan came with another false stand. It claimed that said bank was demanding unacceptable commission and, therefore, they wanted to transfer the CNR No. DLCT01-000024-1998 page 137 of 251 money to Pictet Bank, Geneva. Reference be made to letter Ex. PW38/L-5 (D-4 Page 141) dated 23.11.1995 signed by A-4 and A-5 and also the banking details of the Pictet Bank to which they wanted the amount to go.
12.18 A-1 and A-2, again, obliged M/s Karsan and took prompt and swift action and ensured that such amount of US$ 37.62 million was received by M/s Karsan in their newly opened account No. 91923 with Pictet Bank.
LLOYD'S INSURANCE POLICY 13.0 Much has been argued from the side of A-4 & A-5 about such insurance policy. During the course of final arguments also, it was contended by both of them that there was a insurance policy which clearly indemnified NFL and instead of invoking such guarantee, a criminal action has been initiated against them which was neither appropriate nor maintainable. They both have claimed that NFL should rather work in conjunction with them in order to recover any loss instead of fighting with them.
13.1 Their such contention is nothing but a bundle of lies. As per second contract, the seller i.e. M/s Karsan was required to give a counter guarantee towards 100% cash pre-payment by way of First Class Lloyds Insurance Policy which was to indemnify seller's non-performance and non-delivery. It was the duty of the seller, as per Article-7, to arrange such original policy and to send the same to buyer (NFL) by courier service. Fact, however, remains that no such original policy has seen the light of the day even till date.
13.2 One cover note, in original, was submitted by M/s Karsan. Such cover note dated 06.11.1995 (Ex. PW36/H2) (D-4, Page-78-79) is, in fact, a marine cargo CNR No. DLCT01-000024-1998 page 138 of 251 cover which talks about the voyage from CIS ports to Indian ports and was subject to the terms & conditions of the policy which was to be issued later. Undoubtedly, it was showing that it covered the entire quantity of 2 lac metric tonnes to be shifted from CIS ports to Indian ports but such policy, evidently, did not cover the non- performance of the contract on the part of M/s Karsan.
13.3 Such cover note also talks about instituted Cargo Clauses (A). Conditions mentioned therein clearly specified the duration of the insurance cover as is obvious from bare reading of Clause-8. If such clause is examined, it would clearly designate that insurance was for the "period of transit" which commenced from the time when goods leave the warehouse or the place of storage as specified and continued during the ordinary course of transit which terminated with the delivery of consignment. It thus clearly depicted that it was a mere marine policy which covered risk incurred during the transportation. Once the goods were handed over as cargo to the concerned transporting agency, the policy would come into play automatically but not before that. Undoubtedly, once the goods were handed over to the transporting agency, on the strength of any such insurance cover, if such agency failed to deliver the goods then such agency would have become liable to pay for. It was in that context that the transporting agency could have been hauled up for non-delivery and non-performance. However, non-performance on the part of seller i.e. M/s Karsan was not covered under such policy by any stretch of imagination. Even the letter sent by P. Papaghikas, Managing Director, M/s Mediterranean Insurance Limited dated 09.11.1995, which has been proved as Ex. PW36/H3 (Page-77 of D-4), the policy in question was to cover all marine risks including non-delivery and war risks. It nowhere covered any risk related to non-performance on the part of seller. Payment had been made to P. Papaghikas of 342000 US$ on 23.11.1995 but as already noticed above, policy, in original, never came to India. Cover note cannot be equated with the policy as detailed conditions could have been found in the policy only. It is CNR No. DLCT01-000024-1998 page 139 of 251 not clear as to why A-1 & A-2 did not insist for any such policy before releasing the 99% amount. They felt happy and satisfied with the cover note which was not covering the risk on account of any non-performance on the part of the seller.
13.4 Thus, the marine policy would have come into play only once the goods were handed over to a transporting agency and it was for the period of transportation and was good for the period of transit only. The insurance agency could not have been hauled up if the goods were never delivered to them for transportation. Thus, there was a clear conspiracy and in terms of such conspiracy only, A-1 & A-2 accepted the cover note and permitted the remittance of 99% of the payment as well.
13.5 I have also seen letter of commitment given by A-4 & A-5. Such letter dated 11.11.1995 has been proved as Ex. PW36/DR-8 (Page-99 of D-4). As per such letter, A-4 & A-5 had undertaken that they would submit original copy of Lloyds certificate to NFL at least seven days before the departure of each & every shipment separately. They also confirmed that the original cover note covered non-delivery and marine transportation in a combined manner. It did not talk about non-performance on their part at all. Such clearly visible aspect was overlooked deliberately by A-1 & A-2 as they were hand in gloves with such seller.
13.6 It will be also useful to mention that A-5 had written letter dated 26.01.1996 to NFL which is proved as Ex. PW36/DR-4 (Page 277 of D-4). Along with said letter, he had sent explanation letter given by Sh. P. Papaghikas on behalf of M/s Mediterranean Insurance Ltd. regarding the cover note in question. Such explanation letter has been proved as Ex. PW36/DR-3. Even as per such letter, M/s Mediterranean Insurance Ltd. had merely confirmed that the policy in question was risk marine policy which included non-delivery and war risk. Such letter, nowhere, either explained or confirmed that policy was also taking care of non-performance on CNR No. DLCT01-000024-1998 page 140 of 251 the part of seller. Rather, the use of words "marine policy" would itself suggest that it was in relation to transportation through sea and would have come into play only when merchandise had been handed over for transportation and not before.
13.7 It will be important to mention that PW85 (a) Mr. Roy Sloss, Detective Sergeant had examined Chairman of M/s NHK International Limited and had collected various documents. He recorded statement of Mr. Alfred C Kingsnorth (Mark P95/45) and also of Mr. Neil Stevens, Associate Director of M/s NHK International Limited (Ex. PW95/DP51) and their statements would also clearly indicate that cover note was meant for marine perils only. Thus, it stands amply proved that the cover note was meant for non-delivery only where the goods, in first place, had been handed over to the transporting agency. Non-performance, if any, could have also been in context of marine peril only and not otherwise and, therefore, to fall further in jugglery of words would be sheer waste of time. There is also a fax message from M/s NHK Marine to Papaghikas in which it was clarified that the cover note in question covered marine peril only. One more letter dated 06.11.1995 from Mr. Neil Stevens to Mr. Papaghikas (Mark P95/54) also goes on to indicate that cover note was "not including failure to perform by the seller". Such thing was reiterated by Mr. Neil Stevens vide his fax dated 02.11.1995 to Mr. Papaghikas. Such fax has been proved as Mark P95/56. Undoubtedly, said two officials of M/s NHK International Limited have not graced the witness box. Fact, however, remains that even if I exclude the aforesaid statements of Mr. Alfred C Kingsnorth and Mr. Neil Stevens, the material brought on record by the prosecution suggest only one irresistible conclusion i.e. the cover note in question is confined to the marine peril i.e. risks related to transportation. By inference, if M/s Karsan were not able to hand over any goods for transportation, such cover note was nothing but a piece of waste paper.
CNR No. DLCT01-000024-1998 page 141 of 251 13.8 It is also not made clear by A-1 & A-2 as to what stopped them from
taking a legal opinion before entering into the contract. Taking subsequent opinion, after remittance of the entire amount, was of no avail as the money was already gone.
13.9 It will be, however, still interesting to see the legal opinion sought in terms of deliberations during the subsequent Board Meetings.
13.19 The opinion was sought from J.B. Dadachanji and from Sh. S.M. Dugar. Sh. J.B. Dadachanji, vide his letter Ex. PW37/P4 (Page-35 of D-5), claimed that he had examined the marine insurance policy, cover note and letter dated 09.11.1995 addressed on behalf of M/s Mediterranean Insurance Limited and was of the view that entire amount of 38 million US$ was fully secured by the insurance, both for non- delivery as well as for non-performance. It thus opined that such policy adequately protected the purchaser against all risks.
13.11 Sh. J.B. Dadachanji also, vide subsequent opinion dated 04.04.1996 (Ex. PW37/DG) (Page-40-41 of D-5) reiterated that insurance cover was as good as bank guarantee as it covered non-performance as well as non-delivery holding that Lloyds Insurance was a global company and nobody could doubt the choice of such insurance company. He also opined that there was no breach of any procedure and Managing Director was justified in awarding the contract.
13.12 Legal opinion given by Dr. S.M. Dugar has been proved as Ex. PW37/DF (Pages- 43 to 52 of D-5) and as per legal opinion also, the act of making advance payment was opined as appropriate and justified holding that Managing Director did not contravene or exceed the delegation made in his favour by the Board. It was also observed that there was no stipulation which precluded 100% advance payment.
CNR No. DLCT01-000024-1998 page 142 of 251 According to such opinion, MD was fully competent to place order in view of the delegation of power in terms of Board Meeting dated 10.09.1995 which was even ratified and confirmed by the Board in its subsequent meeting dated 04.01.1996.
13.13 These legal opinions have no binding effect at all. These were sought by A-1 later. He chaired subsequent Board Meetings and in order to garner support to his injudicious decision from a neutral corner, he devised a novel way and gave directions to obtain legal opinion primarily to save his own skin. If he was actually bothered and alive to the concern of NFL, he would have taken the same before approving the note. Of course, the opinion is coming from legal stalwarts but that by itself would not make it binding or would compel the court to condone the criminality on the part of A-1 and A-2. These opinions were sought based on handful of documents and, therefore, defence cannot drive home any advantage out of those.
APPLICABILITY OF FORCE MAJEURE 14.0 M/s Karsan had sent a draft to NFL and the level of involvement and ea- gerness on the part of A-1 and A-2 can be gauged from the fact they did not even change a word therein. They were hell-bent in inking the same as early as possible.
14.1 A Force Majeure clause (French for "superior force") is a provision that allows a party to suspend or terminate the performance of its obligations when certain circumstances beyond their control arise, making performance commercially impracticable or impossible or even illegal. The list of events to be included is a matter of negotiation between the parties. A typical list of force majeure events would include war, riots, fire, tsunami, flood, hurricane, typhoon, earthquake, lightning, explosion, strikes, lockouts, slowdowns, prolonged shortage of energy supplies, and acts of state or governmental action prohibiting or impeding any party from performing CNR No. DLCT01-000024-1998 page 143 of 251 its respective obligations under the contract. Thus, these besides including natural calamities also take in its ambit various situations which make the performance of contract virtually impossible.
14.2 Here, there was no negotiation and interestingly, M/s Karsan simply wanted 'inconvenient weather conditions' to be made part of such clause and A-1 and A-2 did not even bother to see the terms. Inconvenient weather condition is a very loose term which cannot be defined. It would be a lawyer's delight as it leaves huge scope for debate in a legal battle.
14.3 Be that as it may, the contract was inked in November 1995 and the winter had almost set in. Despite knowing the weather condition, A-1 and A-2 wanted their pound of flesh and therefore, came up with condition of pre-payment. As per the conspiracy, everything was agreed to without any murmur.
14.4 There is nothing to show that M/s Karsan had any ship ready with urea. They professed so but there was not an iota of truth in their such assertion. Even though money had been transferred or was in the process of being transferred, they did not send any such alleged shipment to India. It shows that their intention was dishonest right from the very beginning.
14.5 A-4 and A-5 have deliberately misrepresented that their two shiploads of urea were already floating in the high-sea and would be diverted to India. Despite pocketing the money within three weeks of the execution of the contract, no such ship was ever diverted. It also indicates that they simply wanted the money with no intention of supplying any urea. M/s Karsan were not ready and willing to supply any urea and, therefore, did not take any step for its procurement for roughly 4-5 months and, therefore, they cannot be heard making complaints about bad weather during CNR No. DLCT01-000024-1998 page 144 of 251 the same period when they were virtually sleeping or making merry.
14.6 I have seen number of letters received on behalf of M/s Karsan whereby they kept on taking shelter behind the inclement winter conditions. The court is cognizant of the fact that the urea in question was supposed to be of CIS origin and, therefore, M/s Karsan must be fully aware that weather conditions would not be that conducive during the relevant period. Despite knowing such fact fully well, they entered into contract with undue haste and also insisted for 100% advance payment. If their intention was genuine, they could have easily apprised NFL officials that they would not be in a position to supply any urea during the winter season and, therefore, they should not have even ventured into inking of any such contract then and there. Moreover, in order to show that the winter of 1995 was exceptionally bad, defence should have placed on record a comparative chart of the weather condition in CIS region for a continuous block of 4 to 5 years to assess its contention in right perspective. Additionality, it should have placed a certificate to that effect from Chamber of Commerce of concerned country to substantiate its claim regarding applicability of force majeure 14.7 To make the things worse from defence perspective, during the same very period, i.e. November 95 till January 96, urea had been received from CIS countries to India by NFL as well as various other canalizing agencies and, therefore, the defence contention, being completely made up, is liable to fall flat.
14.8 Let me see the evidence of related witnesses in this regard.
14.9 PW-9 S.K. Sharma of State Trading Corporation of India (STC) was looking after urea division in STC during the relevant period. He deposed that CIS countries had supplied urea to STC in November 95, December 96 and January 96.
CNR No. DLCT01-000024-1998 page 145 of 251 Based on such receipt of urea, he had prepared a chart and handed over the same to CBI. Such chart has been proved as Ex. PW9/A (Part of D-204) and its covering letter as Ex. PW9/B (Part of D-204). Sh. R.K. Sharma had also sent the copies of relevant invoices and bills of lading as well as certificate of origin issued by the concerned Chamber of Commerce and Industry of such country. These details would clearly indicate that urea was shipped from CIS region i.e. Ukraine and Romania during November 95 till January 96.
14.10 PW-10 Sh. V.P. Pancholi of Pyrites, Phosphates and Chemicals Limited (PPCL) has also deposed that urea was imported by PPCL during November 95, December 95, January 96, February 96 and March 96 from CIS and adjoining countries and details in this regard were furnished to CBI. He has proved letter Ex.PW10/A (Part of D-205). Such letter also indicates that urea was transported from Ukraine, Croatia and Romania. The date of shipments are mentioned as 8.11.95, 24.11.95, 9.12.95, 31.12.95, 4.3.96 and in only one case, when the urea was shipped from Croatia on 31.12.95, supplier had expressed difficulty due to bad weather and in no other case, any supplier reported any difficulty in transportation. He also produced on record various bills of lading at the request of the defence and defence cannot wriggle out of these documents which have unimpeachable value being part of official record of other government agency. It has been baldly suggested to him that such documents did not relate with the concerned contract but fact remains that there is no reason whatsoever to disbelieve all such documents.
14.11 PW-8 Sh. Suraj Modi of Metals and Minerals Trading Corporation of India (MMTC) was posted in urea division and deposed that MMTC had imported urea from CIS country during 95-96 and such details have been proved as Ex. PW8/A (Part of D-204) which he forwarded to CBI vide his covering letter Ex. PW8/B (Part of D-204). Such chart/details also clearly indicate that urea was shipped from CIS CNR No. DLCT01-000024-1998 page 146 of 251 region during the relevant period. Shipment date of supplier from FERICO is shown as 3.11.95 which arrived in India on 18.11.95. One another supplier loaded urea on the ship which started sailing on 10.11.1995 from Ukraine and reached India on 27.11.95. There are details of various other supplies which indicate that urea of CIS origin from Romania, Ukraine, Belarus were received in India through ships on 18.12.95, 29.12.95, 4.1.96, 9.1.96 and 14.1.96. Bill of lading were also produced by the said witness at the insistence of defence.
14.12 There is no reason to disbelieve the original record of such three co- canalizing agencies, i.e. STC, PPCL and MMTC. If they could receive urea from CIS region during the same period, then it does not lie in the mouth of M/s Karsan to say that winter was very harsh and that they were not able to ship urea because the local transportation had gone haywire because of freezing of water.
14.13 I have seen the cross-examination of all the aforesaid three witnesses, i.e. PW-8 Sh. Modi, PW-9 Sh. Sharma and PW-10 Pancholi and I have not been able to find out anything significant in their cross-examination which may even remotely suggest that their deposition was false or documents produced by them were manufactured.
14.14 Not only these companies, even NFL itself had received urea during the same winter period from CIS origin from various other suppliers. Mark P-95/D-3 would clearly depict that urea was loaded in Romania, Ukraine, Russia, Belarus during the same period and was dispatched from the respective ports of those countries and was duly received in NFL and, therefore, defence cannot be permitted to say that due to harsh winter condition, it had become impossible for them to supply any urea.
CNR No. DLCT01-000024-1998 page 147 of 251 14.15 Defence also cannot dig out any advantage from report dated 22.03.1996
prepared by Sh. N.K. Gupta which has been proved as Ex. PW36/DR-24. It has amply come on record that Sh. Gupta had merely signed the report and it was actually dictated by A-1. Thus, the contents of such report are required to be attributed to A-1 alone. In such report, it is mentioned that weather condition was severe and unfavourable for the performance of the contract. There is also justification about taking of insurance policy. It has also been supplemented in such report that such contract was giving a massive advantage of 40-50 US$ per metric tonne. Evidently, it was A-1 alone who wanted all these things to come on record in order to save his own skin and, therefore, such report would not, by itself, mean anything substantial and would not substantiate the plea of severe winter particularly in view of my foregoing discussion.
14.16 I also cannot loss sight of the tour report submitted by PW40 Sh. N.K. Gupta which has been proved as Ex. PW40/DA-1 (page 123 of DD01). In such report, Sh. N.K. Gupta had categorically stated that M/s Karsan was a 'small trading house' which was not having much activities in Indian continent. It was also mentioned that M/s Karsan was quite unknown even in Ankara as well as in Turkey. In his detailed tour report Ex. PW40/DA (Page119-122 of DD1), he categorically claimed that when he had asked Mr. Karanci in Turkey about the profile of their company, he claimed that it could not be shown. This is, naturally, an unusual answer. Since M/s Karsan had already entered into contract with NFL, it should have expressed its no reservation in sharing its profile. No immediate dispatch schedule was also provided to Sh. Gupta by M/s Karsan and, therefore, he left Ankara empty- handed. However, A-1 along with Addl. Manager, NFL chose to stay back. During such meeting, M/s Karsan never shared anything with respect to inclement weather. They rather claimed that their payment with respect to 1% of the contract value towards insurance was still due and that they were not mobilizing the material as they CNR No. DLCT01-000024-1998 page 148 of 251 felt that NFL may cancel the contract. It was also claimed that material which had been mobilized by them by then had been caked up and hence unfit for dispatch. They did not show their sites where any such material was stored or had caked up during the storage and, therefore, it is quite evident that M/s Karsan merely attempted to take shelter behind the aforesaid majeure clause in order to wriggle out of their liability. They had no experience in the field of urea and there were strong, compelling and actual doubts regarding their credibility to supply which also stands reflected in Non-Paper Ex. PW40/DD (Page 114-115 of DD01).
14.17 It thus becomes obvious that M/s Karsan were not justified in raising the plea with respect to applicability of force majeure.
WHETHER M/S KARSAN WERE MANUFACTURER OF UREA 15.0 All along, M/s Karsan projected itself to be the manufacturer of urea. However, the evidence on record establishes to the contrary. Their own documents claim them to be co-producer/supplier. Co-producer is a vague term and discloses nothing concrete at all, at least in the context of the present case. They have not bothered to disclose as to with whom they were associated as co-producer. They have not bothered to apprise about their sites. They have not bothered to explain as to with whom they had any such alleged collaboration.
15.1 If PW40 Sh. N. K. Gupta is to be believed then when he went to Turkey and enquired about M/s Karsan, he learnt that it was merely registered as a concern dealing in Tourism. Thus, even in the Chamber of Commerce in Ankara, there was no record to show that M/s Karsan were dealing in urea. Moreover, despite being asked many a times, A-4 and A-5 did not disclose the name of their any manufacturing unit. They held back the information claiming that it was confidential in nature. Despite CNR No. DLCT01-000024-1998 page 149 of 251 pocketing the whopping amount of 38 million US$, they took shelter behind the confidentiality clause to pull the wool over the eyes of everyone. Such aspect did not stand attracted even otherwise, because as per the terms of the contract, once the payment had been released. M/s Karsan had no business to hold back any such information. On the contrary, it should have rather taken NFL officials gleefully to their alleged manufacturing sites instead of claiming that the information could not be shared. They also did not show the place where any such urea had been allegedly stocked.
15.2 It will be important to mention that A-4 Tuncay Alankus entered into witness box as DW-7 and he also examined Sh. Askarbekov Marat (DW-3) as his defence witness. I have carefully gone through their testimony and there is nothing significant in their deposition which may suggest that M/s Karsan were the manufacture of urea.
15.3 DW-7 i.e. accused Tuncay Alankus entered into witness box on 27.2.2015 for the first time and deposed about the execution of first contract and second contract. He also claimed that reason behind entering into second contract was that the mode of payment was different from the first contract and NFL was not able to provide requisite funding instrument. He also claimed that he had prepared one lac ton of urea at Salavat Neft, Russia and had hired four ships but since he did not receive the funding instrument, being named by him as FONLAMA, he could not send urea to India and had to divert the same to a Chinese company as he had already loaded urea in the ships. Surprisingly, he does not know the name of such Chinese company to whom the ships were diverted. He claimed that when he threatened NFL that he had incurred losses on account of failure on the part of NFL and that he would go for litigation, the second contract was executed. In such testimony, he then deposed about Lloyds Insurance and made reference to various CNR No. DLCT01-000024-1998 page 150 of 251 documents. He claimed that he entered into contract with several companies for purchase of urea in Russia. He made reference to Taniko company. Fact remains that even as per his assertion, such agreement took place in February 95. He claimed that he written various letters to NFL to enquire proper port where material could be off-loaded in India but NFL did not reply and, therefore, there was delay and during that time, there was heavy snowfall in Russia. He also claimed that rail transportation also took a blow because of such weather condition. He also made reference to another contract which he had with Wassos, Russia. He deposed that in the meantime, he started a joint venture manufacturing unit with Salavetneft, Russia. He entered into agreement with the said company and urea to be manufactured by Salavetneft was to be transported to India.
15.4 He claimed that he had spent around 32 million US$. He also claimed that he spent a sum of 22.80 million US$ on procuring raw material and spent 4 lacs US$ for arranging railway transportation from Salavat City to St. Petersburg seaport in Russia. He spent another 3 lacs US$ for storing and loading purpose which was paid to seaport authorities. He spent another sum of 6 lacs US$ for transporting first ship to private shipping company and such first shipment was fixed for 30.5.1996 and the second was scheduled for 15.6.1996. He had to pay demurrage charges to the port authorities due to delay caused in shipment. He also made reference about two more shipments. He deposed that he had paid 28.90 million US$ to Consultant Industries for procuring raw material for urea in Kazakhstan. He also made reference of payment made to Taniko Shipping Company in Estonia. He claimed that he had sent the schedule (Ex. PW38/41) of supply of urea to NFL and the first shipment was fixed for 15.6.1996 but in the meanwhile NFL had asked CBI to investigate the matter and his all assets were also eventually seized by CBI. He claimed that his bank accounts were also seized despite the fact that he had completed half of the preparation of transportation of urea to NFL. He deposed that since his accounts CNR No. DLCT01-000024-1998 page 151 of 251 were frozen, he was totally shattered and, therefore, three other ships, on which urea had already been loaded, could not be sent to India because destination port was not apprised by NFL and even those ships were diverted to some other company in China.
15.5 He also claimed that when his one shipment reached Bombay Port, he himself got sample checked from one Laboratory in Mumbai and quality was found as per the specification. Such report has been proved as Ex. DW 5/A. He claimed that he had been implicated despite the fact that the transaction was purely civil in nature. He also claimed false implication because of political consideration as officials of CBI had asked him to make allegations against the then Prime Minister of India if he wanted his release. He then made reference to various other civil proceedings initiated by NFL. He also claimed that his extradition was sought on the basis of wrong and incorrect facts.
15.6 In his entire examination-in-chief, he nowhere made even a whisper about his being in the field of urea already or having a good experience in the field of urea. He nowhere claimed that he was having any past experience. He did not reveal the places where he was having his alleged manufacturing unit. At least at such fag end of the case, the alleged confidentiality clause was not going to come in his way and his revelation would have rather helped him. He has not given the details of his banks from where he was able to arrange for such huge money for the alleged procurement of raw material and transportation. He had received huge sum of 38 million US$ from NFL which he diverted to his personal account and various other accounts. He has not cared to disclose in which other banks, he was having accounts. He could have also placed on record statements of such bank accounts in order to show that even when he had entered into contract, he had sufficient money with him to purchase urea or to honour the contract in question. Interestingly, in his CNR No. DLCT01-000024-1998 page 152 of 251 entire examination-in-chief, he did not mention a single word as to why he had transferred 4 million US$ to the account of M/s Edible Food Stuff Company, Dubai. Since he had taken a plea that it was on account of some transaction related to edible stuff and not on account of any commission, he should have made a clear and specific reference about the same but nothing of that sort was whispered by him.
15.7 In his cross-examination, he claimed that he visited Kazakhstan and Russia on various occasions from December 95 to April 96. He used to visit these countries by Air and from Airport, he used to take private car. He did admit that his company M/s Karsan Consultancy Tourism Industry Ltd. was registered with Chamber of Commerce in Turkey and he and his brother were founder members of the said company. He also admitted that Sh. Cihan Karanci was made Vice president of the said company. He has not been able to provide with the details of the ships which he allegedly diverted to China.
15.8 Moreover, as per the contract, each shipment was supposed to be at least of 25000 metric tonnes of size and even if he had, later on, sent 9000 metric tons in a single shipment, it was not going to make any difference because as per the terms of the contract, NFL was fully justified in rejecting such shipment of smaller size. Moreover, when such urea was allegedly inspected at the time of loading, the specifications were not in conformity with the contract. NFL had duly warned M/s Karsan that SGS Inspection report [Ex. PW40/DD5 (DD-01)] indicated that urea was not of desired specification and thus it amounted to breach. In such a situation, NFL was justified in not accepting such delivery which was even otherwise highly belated and of a very less quantity. Moreover. As already noticed above, material was loaded despite the fact that NFL had sent various letters showing its inclination to inspect the urea before being loaded. There was deliberate attempt on the part of seller to neither disclose the port of loading nor permitting any inspection. It is indeed curious CNR No. DLCT01-000024-1998 page 153 of 251 as to how such urea, on local inspection in India vide report Ex DW5/A (DD-02), which was got carried out at the instance of A-4 only, showed different specifications. This suggests that the report was managed. The colour, with the passage of time and due to chemical reaction, might turn yellow from white but not vice-versa certainly. Be that as it may, since NFL officials were not allowed inspection of such shipment prior to loading and since the shipment was not of the requisite size, M/s Karsan cannot be permitted to blame NFL for not accepting urea.
15.9 I have seen the testimony of DW-3 Sh. Askarbekov Marat. His deposition is, more or less, on the same lines. He was working in a transportation company and he met Tuncay Alankus (A-4) in 1993 only. His testimony does not indicate that M/s Karsan was having any experience in the field of urea or that they were having any manufacturing unit. It is also not understandable as to why M/s Karsan did not choose to examine any official or employee of their own company. After all, if M/s Karsan Company is to be believed, it was a big concern having potential to deal with the big order in question and, thus, logically, it would be having good number of employees at all levels. As already noted above, A-4 has not placed on record any document relating to his past experience, his bank statement, his bank balance. He has not bothered to disclose about the details of his office, its area, its location. No other document has been shown which may indicate that he had, prior to the contract in question, supplied urea of similar kind and volume to other countries.
15.10 DW-3 Sh. Marat made reference to various photographs in order to show as if M/s Karsan had been able to arrange urea. Such photographs showing large bags purported to be in the last stage of production and ready for transportation through train/ships do not take us anywhere at all. He made reference to stocks of urea lying in St. Petersburg Harbour and deposed that he had taken such photographs in the month of May/June, 1996. He also made reference to the contract CNR No. DLCT01-000024-1998 page 154 of 251 which M/s Karsan had entered into with other companies for procurement of urea but fact remains that his testimony does not go on to show that M/s Karsan were manufacturer. He made reference to one VCD. Actually, the photographs, which have been placed on record, are still-shots from video footage contained in such VCD. In his cross-examination, he could not answer some of the questions in the proper manner and his answers were found to be vague and lacking in material particulars. He claimed that urea was brought to Talinn Harbour in the month of December, 1995 but he does not remember from where and also about its quantity. He also does not know whether such urea was shipped to India or not. He does not know as to what payment was made to Chirchik plant. If he is to be believed then transportation charges from Salavat factory to St. Petersburg Harbour was 24 or 25 US$ per metric ton and the handling of cargo at Talinn port was 25 US$ per ton and shipping charges from St. Petersburg to India was 37 or 38 US$ per metric ton. He also claimed that ex-factory price of urea was in the range of 150-160 US$ per metric ton. In such a situation, no prudent person would enter into a contract at the rate of 190 US$ per metric ton because if the procurement price and transportation by train to port, handling charges of cargo, shipping charges to India are calculated as per deposition of Sh. Askarbekov Marat (DW-3), then the effective price would be well above 220-230 US$ PMT. Interestingly, this does not even take care of sharing of enormous commission @ 55 US$ per MT. Thus, even for mere break-even, the procurement price of urea should have been somewhere around or even below 100 US$ per MT to pay for all such things including commission. Procuring urea at such ridiculously low price would have been completely unrealistic.
15.11 Testimony of DW-4 Shirzad Yakhayev is also of no available to defence. He was working in a bank where M/s Karsan had opened one account and he claimed that as far as he remembered, Karsan were dealing in carbamide, i.e. urea in 1995-96. His testimony does not seem of any real importance at all. He did not CNR No. DLCT01-000024-1998 page 155 of 251 prove bank document in the desired manner either.
15.12 Defence has asserted that urea could not be delivered due to Chechnya war but as already noticed, that urea of CIS origin was received by NFL as well as other canalizing agencies during the same period and, therefore, it cannot be believed that existence of any such war had caused any adverse impact over transportation of urea.
15.13 Moreover, as per the terms of the contract, the urea was supposed to be of CIS origin and supplier was also required to send a certificate of the Chamber of Commerce & Industry of such country of origin. A-4 and A-5 are merely relying upon certification given by Chamber of Commerce of Turkey which does not advance their contention in any manner whatsoever. At least, qua the alleged shipment of 9000 metric ton, it should have shown certification given by Chamber of Commerce of the concerned country of CIS from where such urea was procured and shipped.
15.14 Moreover, entering into contract with other urea-producers for procuring urea of non-CIS origin i.e. urea of Australia etc. was not going to meet the requirement of contract in question from any angle whatsoever. Agreement dated 29.02.1996 (Mark P-38/ D-14) (DD-03) between Karsan and Tenikop, as relied upon by defence, is of no avail as it talks about urea of South American or Australian origin which was of no use for the purpose of contract in question. Similarly, Agreement dated 27.03.1996 (Mark P-38/D-15) (DD-03) between Karsan and Wassos talks about urea of South American or Australian origin. Even if there were some late awakenings and some contracts were there with Wassos and Tenikop, it would not mean anything as these were mere eyewash and in reality also, no urea came to India through those alleged contracts. Act of NFL in succumbing to giving a new shipment schedule would not mean that all the criminal acts stood condoned CNR No. DLCT01-000024-1998 page 156 of 251 automatically. The idea was to have the urea, even if belatedly.
15.15 Thus, M/s Karsan deliberated misrepresented itself to be manufacturer of urea. It had no experience in the field of urea and had no potential to fulfill such a big order. They only wanted to usurp the money making false representations. Else, on receiving the huge remittance of 37.62 million US$, they would not have diverted a sum of approximately 35.91 million US$ in a day, for purposes other than for buying urea. They did not use such money for procuring urea except for making of a paltry payment towards marine-insurance.
DISTRIBUTION OF MONEY 16.0 The advance payment was huge.
16.1 38 million US$ was not a small amount by any stretch of imagination.
16.2 Any manufacturer or for that matter a producer, on receiving such a huge and prestigious order, would, naturally, after reserving his margin and profit, ensure that the rest of the amount is immediately utilized in procuring the urea and arranging for its appropriate transportation to the concerned destination through appropriate channel. Here, nothing of that sort was contemplated at all. Rather, much prior to execution of contract, there was deliberation as to how the money would be divided. It was also thought as to how the good part of such money would be brought to India through secret channels so that such money reaches those who were instrumental in clinching the deal.
16.3 Of course, the hawala chain may look broken at places and rightly so.
This is the beauty of hawala channel. (pun intended) CNR No. DLCT01-000024-1998 page 157 of 251 16.4 The money is generally, in such like situation, transferred to safe havens
abroad. These foreign banks, particularly in Switzerland, have their own confidentiality clauses and it becomes impossible for any investigating agency to extract complete information from such banks. Moreover, lack of clear international reciprocal agreement between the countries make the job of investigating agency much harsher. The clever and cunnings would then either withdraw the amount in cash from such account or would make further transfers, again to another foreign bank to an account of a complete stranger and so on making it virtually impossible to reach the trail. Cash Withdrawal also generally re-surfaces in India through accounts of unsuspecting persons who again deal in cash leaving little or no chance to any investigating agency to interweave the minutest of the links.
16.5 Nonetheless, CBI did a commendable job. It tried to contact number of banks situated outside India and with the help of oral evidence of few crucial witnesses, it has tried to prove the trail.
16.6 Let me see the evidence of all such witnesses whom defence has labelled as accomplices.
16.7 PW-46 Sh. Vasudev Gobind Pariyani had started trading concern in Dubai under the name and style of Edible Food Stuff Trading Company in June, 1994. He knew Rajinder Babani (PW-47), his childhood friend who used to do business in Hyderabad. Rajinder Babani told him that his liquor business was not doing well and his employees B.S. Lagoo and Dharmesh Yadav were looking for job and requested him to adjust them in Dubai. Accordingly, he appointed B.S. Lagoo as accountant in his office and they both joined him in Dubai between Feb. 1995 and June 1995. He further deposed that in Oct/Nov. 1995, he received a telephonic call from Rajinder CNR No. DLCT01-000024-1998 page 158 of 251 Babani who enquired whether he could receive US dollars in the account of his firm since there was no restriction in this regard in Dubai. He confirmed the same and gave details of his bank account to him. Sh. Babani also told him that US dollars would be credited in his such bank account and he would also get one call from one Sambasiva Rao. Such Sambasiva Rao also talked to him on phone and told him that some money in US dollars would be coming in his account and asked him to wait for further instructions. He also claimed that Rajinder Babani had also told him that third person, i.e. Sambasiva Rao, Gaud and Raja Bali would be coming to Dubai in connection with such money. On 3.11.1995, a huge sum of US$ 4 Million was received but the name of beneficiary was shown as B.S. Lagoo instead of firm. Necessary amendments followed and he received said amount in his said bank account of Edible Food Stuff Trading Company. He also received a fax communication (Ex. PW46/A) from Sh. Babani that the amount of US$ 3,25,000 be transferred to a company M/s Key Quinone Organics. Since the amount of US$ 4 Million was huge, he transferred the same to his personal account no. 4197178. He has proved the statement of his personal bank account as well as of the firm account as Mark P-46/11 and P-46/12 respectively. Feeling uncomfortable with such huge amount in his personal account, he suggested Mr. Babani that he would transfer the said amount to joint account. Mr. Dharmesh Yadav and B.S. Lagoo were asked to open a joint account and thereafter said amount was transferred to such newly opened joint account. He received another call from Mr. Babani to the effect that US$ 2 lac be transferred to Rea Brothers. As per instructions received from Sambasiva Rao, he prepared a note and handed over to Dharmesh Yadav to transfer the aforesaid money to Rea Brothers and confirmed the same to Mr. Babani. Later on, he was also apprised by Mr. Babani that he had received a note from Sambasiva Rao who wanted to arrange for an agreement between his firm and Turkish Company showing that the said amount of US$ 4 Million has been received as advance by his firm for supply of Food Stuff. Mr. Babani also told him that there were instructions for CNR No. DLCT01-000024-1998 page 159 of 251 Dharmesh Yadav to transfer an amount of Rs. 2 Crores to Sambasiva Rao for some land deal in Hyderabad. He also made reference about his statement which he had made before the court during the investigation and proved the same as Ex. PW46/A. 16.8 In his cross-examination, he denied that he had concocted a false story in collusion with CBI. He did admit that he was granted immunity but denied that CBI exerted any pressure upon him. He claimed that Sh. Dharmesh Yadav and B.S. Lagoo left his employment in December, 1996. He denied that he was involved in any hawala transaction though he did admit that it was mistake on his part to have sent US$ 3,75,000 through a hawala dealer. He claimed that he had transferred the amount to his personal account as he did not think it proper to keep such amount in the account of a partnership firm. According to him, his such firm was having three partners including one Sh. Rajesh. He denied the suggestion that he had committed offence by transferring the amount without obtaining consent of his partner. In his further cross-examination conducted by A-4, he claimed that amount of US$ 4 Million had come from Switzerland and remitter was some Mr. Tuncay. He then referred about his giving of statement before Enforcement Directorate. He claimed that he had no dealing with M/s Karsan of Turkey but strangely enough another question put by Cihan Karanci showed to the contrary. Such question and corresponding answer are extracted as under: -
Q: I put it to you that this amount of four million dollar which was remitted by Karsan to the account of Edible foodstuff Trading Company for the purchase of goods like sugar etc. to get urea in exchange for the same.
Ans. It is absolutely incorrect.
CNR No. DLCT01-000024-1998 page 160 of 251 16.9 PW47 Sh. Rajinder Kumar Babani has corroborated the version of PW46
Vasudev Gobind Pariyani. He deposed that Sh. Pariyani wanted some reliable person from India to look after his business in Dubai. Since Sh. B.S. Lagoo as well as Sh. Dharmesh Yadav were rendered jobless after the enforcement of liquor prohibition policy, he sent them Dubai and they both joined Mr. Pariyani. Mr. Babani knew Mr. Anil Aggarwal and Mr. Mallesham Goud (A-8) and in July 1995, A-8 came to his shop with his partner Sambasiva Rao (A-3). Thereafter, in October 1995 or in the beginning of November 1995, A-3 & A-8 came to his shop with some persons and wanted to talk to him in private and then he was asked by A-3 whether he could help him in bringing some money from abroad to which he answered in affirmative. A-3 claimed that whole labour had been done by him and A-8 and, therefore, they did not want to give full share to their sleeping partners. Mr. Babani then had a word with Mr. Pariyani who confirmed that Dubai was a free port and there was no restriction of foreign exchange and any amount of foreign exchange could be brought to Dubai. Accordingly, account numbers were shared with Sh. Pariyani.
16.10 He also claimed that initial remittance of money was in the name of Sh.
Lagoo. He made reference to the utterances of Sambasiva Rao (A-3) who remarked that five million US$ was to be remitted and why there was remittance of four million US$. He deposed that A-3 had made calls to Delhi as well as to London and when he made call to London, he addressed the person at the other end as "Daddy". When he (PW47) asked from A-3 as to who was this Daddy, A-3 told that it was a friend whose name was Pinto. He deposed that on 30.11.1995, A-3 came to his office and told him that he urgently needed one million US$ for payment to the government officials in Delhi. He also claimed that he was busy in distribution of invitation cards for the wedding of grand-daughter of Mr. P.V. Narsimha Rao. PW47 Mr. Babani made reference to Sh. Anil Aggarwal who was in liquor business and who had become a big man by that time. When Sh. Anil Aggarwal visited his shop on CNR No. DLCT01-000024-1998 page 161 of 251 03.12.1995, he told Anil Aggarwal that A-3 & A-8 were having money in Dubai and wanted to bring the same to Hyderabad and asked whether he could help him in this regard. After assuring that the money had been duly credited in the account of M/s Edible Food Stuff Trading Company, Anil Aggarwal met him and informed him that he could bring US$ 3,25,000 in the account of his company M/s Key Quinone Organics as he had official permission for said purpose. Anil Aggarwal also gave account number of his company.
16.11 A-3 asked PW47 Mr. Babani to act with haste as he urgently required one million US$. On 07.12.1995, Mr. Pariyani transferred 3,25,000 US$ to the account of M/s Key Quinone Organics. Anil Aggarwal then gave bank account number of one Dubai based company M/s Sembi Jewellers for transfer of five million US$. Later, Anil Aggarwal claimed that he could not take more money for the time being. PW47 Mr. Babani then contacted one Vijay Chhabariya who showed desire to bring the money from Dubai to Hyderabad. On the night of 08.12.1995 & 09.12.1995, Vijay Chhabariya came to him (PW47) with cash amount of Rs. 25 lacs which was taken to the house of A-3 and the amount was given to his cousin as A-3 was not present in the house at that time. Next day, another sum of Rs. 20 lacs was taken to the house of A-3 who received the same but warned that in future, no cash be brought to his house and also that no one else should come to his house along with him. On 09.12.1995, Vijay Chhabariya gave account number of three persons for the transfer of money. These were of Hema Krishna Swami in USA (for transfer of 50000 US$), Ramesh in Dubai (for transfer of 70000 US$) and M/s Mikura Impex, Hong Kong (for transfer of 100000 US$).
16.12 PW47 Mr. Babani also deposed that Anil Aggarwal sent Rs. 65 lacs in four cartons. A-3, A-8 and their two companions were waiting in his office for such cash on 12.12.1995 or 13.12.1995 and then they took such cash amount to a house where CNR No. DLCT01-000024-1998 page 162 of 251 that cash amount was delivered. Later on, he learnt that such house belonged to OSD in Prime Minister Office. He told that A-3 used to come regularly to his shop to collect the cash. Anil Aggarwal sent another bearer cheque of Rs. 40 lacs through his employee on 17.12.1995 or 18.12.1995 and he & Mr. Mallesham Goud (A-8) went to bank for encashment. He deposed that A-3 had given him the account number of Rea Brothers in USA and told that two million US$ was to be transferred from Dubai to said account and such details were accordingly provided by him to Mr. Pariyani in Dubai. He deposed that such amount was eventually transferred to the account of Rea Brothers by Dharmesh Kumar Yadav. He also referred about his visit dated 23.12.1995 to Dubai and also deposed about meeting Dharmesh Yadav, B.S. Lagoo as well as Sh. D.S. Kanwar (A-2) and Mr. Deepak Lal. He learnt from A-3 that D.S. Kanwar was from NFL and that he (A-3) was supplying urea to NFL. A-3 also told him that an amount of 4 million US$, which had been received in Dubai, was commission for the deal and such money was to be shared with all the officials and politicians. About remittance of two million US$ in the account of Rea Brothers, he sought confirmation from Dharmesh Yadav and requested him to fax a copy of the telex advice and after such fax advice was received, A-3 handed over such telex advice to A-2 saying "P.C. Yadav ke moohan par marna. Uska moohan band ho jayega". This fact he had also reiterated in his previous statement made to CBI which has been proved as Ex PW47/ DB3.
16.13 PW47 Mr. Babani then asked A-3 as to who this P.C. Yadav was and then he learnt that he was son of Ram Lakhan Singh Yadav, the Union Minister for Chemicals & Fertilizers. A-3 also told that he had so far received the order of two lac metric tonnes urea but he was about to get order of 11 lacs metric tonnes more. In January 1996, A-3 desired money but also supplemented that money should be given to him and A-8 only and not to any other person. A-3 asked in February 1996 whether money could be shown as given in NRI account and then PW47 Mr. Babani spoke to CNR No. DLCT01-000024-1998 page 163 of 251 Dharmesh Yadav because he was in Dubai for one year. Then Dharmesh Yadav came to Secundrabad along with two drafts of Rs. 50 lacs each and one draft of Rs. 10,000/- for opening NRI account in Bank of Baroda, Secundrabad and Mr. Babani assisted him in opening such NRI account. All these drafts were deposited in such account and cheque book was also obtained. Dharmesh Yadav signed all the cheques and handed over the signed cheque book to Sambasiva Rao (A-3) and subsequently money was transferred from the bank in Dubai to the account of Dharmesh Yadav in Secundrabad and such remitted amount was Rs. 70 lacs, Rs. 30 lacs and Rs. 60 lacs. He deposed that during his further discussion with A-3, he was informed by A-3 that he had given Rs. 50 lacs to Rajab Ali, Rs. 30 lacs to Mr. M. Kumar, Rs. 60 lacs to A-8 and Rs. 70 lacs to one Sanjeeva Rao. PW47 Mr. Babani also deposed that A-3 had obtained four drafts of Rs. 4 lacs or so from him in relation to purchase of one property with the help of Mr. Prabhakar son of Mr. P.V. Narsimha Rao. He deposed that Anil Aggarwal had given him the account number of pharmaceutical company in Bombay for transfer of US$ 90000 and one Mr. Gosala, his friend had also given number of his account in London for transfer of UK Pounds equivalent to 46000 US$.
16.14 It was only on 03.06.1996 that PW47 Mr. Babani learnt that A-3 had been arrested. Later on, he received a call from A-3 in October 1996 who told that it was all political and asked him not to worry. He asked him to arrange some documents showing that money had been received for supply of goods by M/s Edible Food Stuff Trading Company. PW47 Mr. Babani suggested A-3 to send fax message to that effect. Such fax was sent and copy of such fax message has been proved as Ex. PW47/A. Such fax was containing message in the handwriting of A-3. Such message was then shared with Mr. Pariyani, Dharmesh Yadav and B.S. Lagoo and then they all decided that they would not participate in the matter anymore and would rather co- operate with the governmental agencies. Copy of such fax message was seized by CNR No. DLCT01-000024-1998 page 164 of 251 CBI vide memo Ex. PW47/B. He also deposed that he made statement before the Court of Sh. Vinay Kumar Gupta, the then learned Metropolitan Magistrate, Delhi on 25.11.1997 and proved the same as Ex. PW47/C. A-3 has baldly denied and disowned such fax but there is no substance in his denial. It clearly shows that A-3 wanted to attach certain legality with the remittances made to Dubai to escape from clutches of law. He did not even hesitate a bit in asking for preparation of ante-dated documents to show some kind of deal between M/s Karsan and M/s Edible Food Stuff Trading Company. His cross is exhaustive but fact remains that his testimony could not be impeached. M/s Karsans, through A-4 and A-5, have also not bothered to place on record any document to show that before sending such huge money of 4 million US$, they had entered into any contract with any such concern. Moreover, Mr. Lagoo was simply an employee and unknown commodity to them and it is not comprehensible as to why they would send such a big amount in the name of any such individual. Very clearly, said amount was towards 'secret commission' which was to be shared in equally secret manner.
16.15 Right here, it would be worthwhile to refer to the testimony of PW53 Dharmesh Yadav.
16.16 His initial deposition is in synchronization with the case of CBI. He did claim that he left for Dubai and joined Mr. Pariyani. He also referred about Sh. B.S. Lagoo. He also deposed that an amount of four million US$ was received in Dubai in Standard Chartered Bank on 30.11.1995 in the name of B.S. Lagoo which was, otherwise, to come in the name of M/s Edible Food Stuff Trading. On receiving the amount, B.S. Lagoo got perturbed and protested and asked Mr. Babani as to why he was being implicated and why money had been remitted in his name. He also deposed that later, funds were transferred in the name of M/s Edible Food Stuff Trading. Then they went to the bank on receiving the message of bank manager who CNR No. DLCT01-000024-1998 page 165 of 251 asked whether such amount belonged to mafia or whether it was on account of drugs or ammunition claiming that if it was on account of drugs or ammunition, they could be sent to jail for life. Since his further deposition was not in league with the case of prosecution, learned SPP sought permission to cross-examine him. Permission was granted to him and thereafter, Sh. Dharmesh Yadav was exhaustively grilled by learned prosecutor.
16.17 During such cross-examination, he did not say anything material qua A-3 and P.C. Yadav and denied that he had made any such statement implicating them when he was examined by CBI and when IO had recorded his statement. He was confronted with relevant portions in this regard but denied having made any such statement to the IO. He, however, admitted that 3,25,000 US$ were remitted to the account of M/s Key Quinone Organics. He also admitted that he and Mr. Lagoo had opened two joint accounts. He also proved' statement of account' of such bank accounts. He also admitted about remittance of amount from Dubai to the account of Sembi Jewellers, Hema Krishna Swami and Mikura Impex, Hong Kong. He also deposed about remittance of 2 lac US$ in the account of Rea Brothers on the basis of handwritten note of Mr. Pariyani. He also claimed that he noted such details in his own handwriting and proved the same as Mark P53/10. He did admit that a telephonic call was received from A-3 on 26.12.1995 but denied that he was informed on phone by A-3 that he wanted him to bring some cash for making purchases. He also denied that he was asked to bring a fax advice showing remittance money to the account of Rea Brothers. He denied that such remittance advice was sought for by A- 3 and that such amount was meant for P.C. Yadav. He denied having made any such statement to the CBI. He denied that he was suppressing the facts as he had been approached by P.C. Yadav. He, however, claimed that he used to send money as per the instructions of Sh. Babani. He also admitted that NRI account was opened by him in Bank of Baroda, Secundrabad though supplementing that it was at the instance of CNR No. DLCT01-000024-1998 page 166 of 251 Sh. Babani and not at the instance of A-3. He admitted that when such account was opened, he had deposited the drafts which he had brought from Bank of Baroda, Dubai. He admitted that he had signed ten leaves of cheque book issued to him by Bank of Baroda Hyderabad Branch but denied that he had handed over such signed cheque book to A-3 volunteering that he had given the same to Sh. Babani. In his initial such cross-examination, he did not implicate A-3 though he made reference about various withdrawals from bank accounts.
16.18 He referred about the opening another NRI account in Hyderabad with Branch of Bank of India and depositing a sum of Rs. 25 lacs in such NRI account. He denied that he was paid sum of Rs. 12 lacs by A-3 supplementing that he had been paid a sum of Rs. 3 lacs only by Rajinder Babani. He denied that he was avoiding mentioning the name of A-3 in order to save him. He denied that A-3 had sent a fax in his own handwriting for creating documents to show that there was a business transaction with M/s Edible Food Stuff Trading Company. He denied that he had visited the house of A-3 or that four million US$ was remitted for A-3 and not for supply of food stuff.
16.19 However, when he was confronted with his statement which he made under Section 164 Cr.P.C., he fully corroborated the case of prosecution. Such statement was admitted by him as Ex. PW53/Q. He claimed that he had made such statement before the learned Magistrate without any fear and that his such statement was a voluntary statement. He claimed that after his statement was typed, it was given to him and he read the same and signed after ascertaining its correctness. Thereafter, in later part of his deposition, he admitted various facts which he had earlier denied or disowned. He also admitted that he had given the blank signed cheques to A-3. He also admitted that a sum of Rs. 1.6 crores was transferred and that he had received commission of Rs. 12 lacs. He also admitted about providing of CNR No. DLCT01-000024-1998 page 167 of 251 copy of bank advice showing transfer of 2 lac US$ meant for SH. P.C. Yadav (A-3) He claimed that he had been receiving anonymous calls at Hyderabad and had been asked not to come to Delhi for making statement and, therefore, he had not mentioned the name of A-3 in his earlier deposition which he had made before the Court on 07.07.2003 and 09.07.2003. He volunteered that he was not under any pressure and had not been pressurized by anyone else. His later deposition is, thus, in synchronization with the case of CBI.
16.20 After, A-4 received 37.62 million US$ in his Pictet Bank, he made following transactions: -
i US$ 28.10 million to his personal account No. 91925 (A-4) with Pictet Bank, Geneva, Switzerland.
ii US$ 1.10 million to the account No. 91924 of Cihan Karanci (A-5) with Pictet Bank, Geneva, Switzerland.
iii US$ 4.00 million to the account of M/s Edible Food Stuff Trading, Dubai. (Eventually shared by A-3, A-6 and A-8). iv US$ 2.00 million to the account of M/s Malyn Holdings Ltd., USA.
v US$ 342,000 to the account of Sh. P. Papaghikas in Greece.
(towards insurance cover note).
vi US$ 200,000 to the account of Sh. M. Sambasiva Rao (A-3) as his commission @1 US$ per MT of urea.
16.21 Interestingly, he had instructed his bank to effect transfers even before he had received the amount from NFL. Reference be made to documents contained in D-177. It is also obvious and admitted fact that said amount of 4 million US$ was sent to Dubai by M/s Karsan through Pictet Bank. Such fact is not disputed. This was towards money meant for officials and politicians. Though, A-4 and A-5 have denied the same and want the court to believe that it was towards some deal which they had with M/s Edible Food Stuff Trading but the fax sent by A-3 belies the same totally.
CNR No. DLCT01-000024-1998 page 168 of 251 16.22 Such amount was credited in the account of M/s Edible Foodstuff Pvt. Ltd.
of PW46 Sh. Pariyani. He transferred a sum of 3,25,000 US$ to M/s Key Quinone Organics which eventually reached India through Sh. Anil Aggarwal who is reportedly absconding. Balance amount was transferred by Sh. Pariyani to his personal account no. 4197178. Reference be made to statements of account Mark P-46/11 & P-46/12.
Feeling uncomfortable, he transferred that amount to a newly opened joint account of Dharmesh Yadav and B.S. Lagoo. Dharmesh Yadav and Bhalchandra Sadashiv Lagoo opened a joint Account No. 02 4235835 01 with Standard Chartered Bank, Dubai and the statement of account of said bank has also been proved. These are contained in D-140 and such statement & other relevant record pertaining to such bank account have been proved as Mark P-53/1 to Mark P-53/17.
16.23 It is also evident that Dharmesh Yadav had opened Account No. 000.02.20.22.341 with ABN Amro Bank, Dubai and substantial amount was transferred to said bank and there are number of huge cash withdrawals from said bank. Such statement of account has been proved by Sh. Dharmesh Yadav as Mark P-53/18.
16.24 Various documents contained in D-140 would indicate the following transfers from the account of Dharmesh Yadav: -
S. No. Amount/Currency Date Name of beneficiary Exhibit Number customer 1 5,00,000 US$ 09.12.1995 Sembi Jeweler Telex Transfer Advice Mark P-53/6 2 50,000 US$ 10.12.1995 Hema Krishnaswamy Telex Transfer Advice Mark P-53/9 3 10,000 US$ 23.12.1995 Mikura Impex Telex Transfer Advice Mark P-53/16 4 2,00,000 US$ 23.12.1995 Rea Brothers (IOM) Telex Transfer Advice Mark P-53/12 Ltd. (Beneficiary CNR No. DLCT01-000024-1998 page 169 of 251 customer: Pennycairn Holdings) 5 30,000£ 29.02.1996 Miss Maxine Mantle Telex Transfer Advice Mark P-53/17 16.25 As would be evident from the aforesaid statements particularly of ABN Amro Bank, Dubai, huge substantial amounts were by way of cash withdrawals. Such amount was brought to India as well. It is proved that Sh. Dharmesh Yadav had deposited cash amount in Bank of Baroda, Dubai and got issued two demand drafts of Rs. 50 lacs each and one demand draft of Rs. 10,000/-. He obtained these demand drafts on 24.02.1996. He then got issued one Transfer Telex Advice of Rs. 30 lacs on 13.04.1996 and of Rs. 60 lacs on 22.04.1996. There is one more Telex Advice dated 28.02.1996 whereby a sum of Rs. 70 lacs was transferred from Bank of Baroda, Dubai Branch.
16.26 It will be important to mention that the entire said amount was eventually deposited in NRE Account No. 14307, Bank of Baroda Secundrabad Main Branch.
Such account was of Dharmesh Kumar Yadav and relevant record is found contained in D-142. It includes account opening form (Ex. PW53/E), deposit of drafts (Ex. PW53/B, Ex. PW53/C & Ex. PW53/D). Statements of account has been proved as Ex. PW63/J1, Ex. PW63/J2 & Ex. PW63/J3 (part of D-142). PW 53 Dharmesh had also opened another account with Bank of India, Hyderabad in which he had allegedly deposited a sum of Rs. 25 lacs. He had brought gold from Dubai, paid customs and then converted gold in INR and such amount was deposited in said account. He signed blank cheques and gave those to A-3 in similar manner.
16.27 Some such cheques, issued from Bank of Baroda Branch of Secundrabad, have been produced on record and proved. These are as under:
CNR No. DLCT01-000024-1998 page 170 of 251
S. No. Favouring Date Amount Exhibit/Mark Number
1 Ms. Padmasree 27.02.1996 50 lacs Ex. PW53/N6
2 M. Sambasiva Rao 27.02.1996 50 lacs Ex. PW53/N7
3 M. Sambasiva Rao 29.02.1996 70 lacs Ex. PW53/N4
4 M/s Neuland Laboratories 15.04.1996 30 lacs Ex. PW53/N5
Ltd.
5 T. Ajay Reddy 22.04.1996 15 lacs Ex. PW53/N1
6 Bhawar Lal Jain 22.04.1996 15 lacs Ex. PW53/N2
7 Smt. Jyoti Reddy 22.04.1996 15 lacs Ex. PW53/N3
16.28 It is quite evident that the worth of one dollar at the relevant time was
around Rs. 35/- and, therefore, the amount of 4 million would translate into Rs. 13 crores.
16.29 However, as per the afore-referred details, CBI had trail of following amount:-
S. No. Amount/Currency Towards Total conversion value in INR (1 US$ is equal to 35 INR) (1 UKP is equal to 50 INR) 1 3,25,000 US$ M/s Key Quinone Organics 1,13,75,000 2 5,00,000 US$ Sembi Jewellers, 1,75,00,000 3 50,000 US$ Hema Krishna Swami 17,50,000 4 2,00,000 US$ Rea Brothers 70,00,000 5 10,000 US$ Mikura Impex, Hong Kong. 3,50,000 CNR No. DLCT01-000024-1998 page 171 of 251 6 20,000 US$ Local Spending in Dubai when 7,00,000 A-2 was also there 2 30,000 £ Miss Maxine Mantle 15,00,000 3 2,60,10,000 INR Money deposited in BOB, 2,60,10,000 Secundrabad Total 6,61,85,000 16.30 I could not find any record related to Bank of India, Hyderabad alleged to have been opened by Sh. Dharmesh Yadav.
16.31 Fact remains that, out of the amount of 4 million US$ sent to Dubai by A-
4, CBI could locate partial money-trail. Of course, it can also be safely imagined that Mr. Babani, Mr. Pariyani, Mr. Dharmesh and Mr. Lagoo must have also received substantial money for providing assistance in bringing money to India through Hawala channels. Mr. Lagoo was not produced before the Court during the trial but fact remains that testimony of said three witnesses looks trustworthy and they have corroborated one another as well.
16.32 I now propose to see the extent of involvement of A-6, A-7 and A-8. It is also to be weighed up whether they all got pecuniary advantage in terms of conspiracy or not.
16.33 However before that, let me see the details regarding telephonic calls and hotel-stay. These are important from CBI angle as Sh. Ojha has contended that these would show that A-6 and A-7 were keeping continuous tab over day-to-day development and were also pulling the strings. These details are as under: -
CNR No. DLCT01-000024-1998 page 172 of 251
TELEPHONE DETAILS
(Following numbers have been attributed to accused persons) A-1 C. K. Ramakrishnan (MD of NFL) Telephone Number Place of Installation Exhibit No./Document No. 6493963 Residence of A-1 Ex. PW 39/A-1 to A-6 (D-179) 6493644 Residence of A-1 Ex. PW 39/B-1 to B-7 (D-179) 4363170 Office of A-1 Ex. PW 39/D-1 to D-9 (D-179) 4361252 Office of A-1 Ex. PW 39/C-1 to C-7 (D-179).
A-2 D.S. Kanwar (ED (M) of NFL) Telephone Number Place of Installation Exhibit No./Document No. 6472556 Residence of A-2 Ex. PW 43/A-1 to A-12 (D-21) 6431710 Residence of A-2 Ex. PW 43/B-1 to B-6 (D-21) 6412417 Office of A-2 Ex. PW 43/C-1 to C-9 (D-21) 6429307 Office of A-2 Ex.PW 43/D-1 to D-4 (D-21)
A-3 M. S. Rao (Indian Agent M/s Sai Krishna Impex, Hyderabad) Telephone Number Place of Installation Exhibit No./Document No. 040-3322476 Premises of A-3 situated (Applications) at Begumpet 040-6661186 Ex. PW 54/D to Ex PW 54/D-4 (D-123) 040-2359999 M/s Sai Krishna Impex, Ex. PW 38/L-8 Hyderabad (D-4/ Page 156) (As reflected from Letter 040-234726 Head) CNR No. DLCT01-000024-1998 page 173 of 251 A-4 Tuncay Alankus & A-5 Cihan Karanci, M/s Karsan Ltd.
Telephone Number Place of Installation Exhibit No./Document No. 00903124687081 Ankara, Turkey Ex. PW 38/N-19 (D-203/P-124 00903124687082 Ankara, Turkey Ex. PW 38/N-18 (D-203/P-120 A-6 B. Sanjeeva Rao (M/s Madicon Marketing, Hyderabad) Telephone Number Place of Installation Exhibit No./Document No. 3321666, 390333, Madicon Marketing Applications for installation 3742042, 222042 Hyderabad Ex. PW 54/C (D-124) Application for installation Ex. PW 54/A (D-121) Ex. PW 54/B (D-119) A-7 P.C. Yadav (son of Sh. Ram Lakhan Singh Yadav, Minister of Chemical & Fertilizers) Telephone Number Place of Installation Exhibit No./Document No. 3711404 Delhi residence of Father Ex. PW 21/A to E (D-180) of A-7 3716145 Delhi residence of Father of A-7 3718235 Delhi residence of Father of A-7 3321877 Delhi residence of Father of A-7 3384196 Delhi office of Father of CNR No. DLCT01-000024-1998 page 174 of 251 A-7 3384317 Delhi office of Father of A-7 3384302 Delhi office of Father of A-7 0612 -226374 Patna A-9 A. E. Pinto of M/s Brasil Trading Company Telephone Number Place of Installation Exhibit No./Document No. 0044-171-7000-4395 Other Telephones Telephone No. Place of Installation Exhibit No./Document No. 040-229697 M/s Surpass Builders of Ex. PW 36/DT-13 (D-181) Hyderabad /PW-65 (As reflected from Letter Head) 040-244342 M/s Surpass Builders of Ex. PW 69/B (D-181) Hyderabad /PW-65 040-841814 Rajinder Kumar Babani of Ex. PW 75/B-2 (D-138 B) Hyderabad (PW-47) 011- 4632600 Ambassador Hotel, New Ex PW 17/ E (D-92) Delhi 011-690391 Asian International Ex PW 42/ E-1 to E13 (D-98) Hotel, New Delhi CNR No. DLCT01-000024-1998 page 175 of 251 Particulars of witnesses who proved various calls/stay at hotels Name of the Witness from For proving Ex. Number/D-No. witnesses PW 1 Sh. Sher Hotel Janpath Stay of A-4 and A-5 Ex. PW1/A - Ex.
Singh in such Hotel on PW1/C
New Delhi
8.11.1995 and
PW-2 Sh. Ramesh Ex. PW3/A - Ex.
regarding making
Kumar PW3/C
calls from such
PW-4 Sh. O. B. Lal Hotel Room No. Ex. PW4/A - Ex.
301 to Turkey on PW4/E
PW-5 Sh. Vijay
Bharat telephone numbers Ex. PW6/A
903124687081 &
PW-6 Sh. S. K. Ex. X-I (Copy of
903122304078
Sehgal Credit Card
PW-32 Sh. V. S. Hotel Hans Plaza, Food bill dated Mark PW 33/I
Gusain New Delhi 15.7.1995 in
relation to A-9 A. E.
PW-33 Sh.
Pinto
Surender Kumar
PW-35 Sh. Lalit Hotel Le Meridians, Stay of A-6 B. Ex. PW35/A - Ex.
Mohan Gupta New Delhi Sanjeeva Rao in PW35/F
Room No. 717 and
A-8 from 1.10.94 to
12.10.94.
PW-17 Sh. M.A. Hotel Ambassador, Stay of A-6 B. Ex. PW 17/B
Siddiqui New Delhi Sanjeev Rao from
Ex. PW 17/E (D-92)
14.5.95 to 20.5.95
& its CDR
PW-22 Ms. Shashi MTNL Provided CDR of Ex. PW 22/A-1 to A-
Anand telephone numbers 25, Ex. PW 22/B-1
3717404, 3716145 to B-4, Ex. PW
and 3321377 of A-722/D-1 to D-10, Ex.
PW 22/E-1 to E-5
Telephone numbers
and Ex. PW 22/F-1
4361252, 6493963,
CNR No. DLCT01-000024-1998 page 176 of 251
6493733 of A-6 respectively
PW 42 Sh. Hotel Asian Frequent visits of A- Ex. PW 42/E to E-
Ashwani Kumar International, 3 to said Hotel and 17.
Janpath Lane, New
A-8 also used to
Delhi
accompany him
once or twice.
A-9 also used to call
A-3 from London
and had also come
to their Hotel on one
occasion.
Regarding stay of
A-3 between Jan 95
upto December 95
on different dates.
Stay of A-8 from
26.12.95 to
29.12.95
Printouts of calls
PW-54 Sh. M.S. Commercial officer, Telephone no. Ex. PW54/A to Ex.
Bhagvanula Hyderabad 390333 and PW54/A5
Telephones 3742042 at
Ex. PW54/B to Ex.
Madicon Marketing
PW54/B5
Pvt. Ltd. 0f (A-6)
and shifting of Ex. PW54/C to Ex.
phones. PW54/C8
Shifting of Ex. PW54/D to Ex.
Telephone No. PW54/D3
3322476 of A-3
Sambashiva Rao
PW-69 A. Vigilance Officer, Printouts regrading Ex. PW69/A & Ex.
Munishekhar Hyderabad STD calls made PW69/B
Telephones. from telephone No.
244342 (Ex. PW
CNR No. DLCT01-000024-1998 page 177 of 251
69/B)
PW75 R.S. Hyderbad Printout of CDR of Ex. PW75/A to Ex.
Madhacharya Telephones telephone no. PW75/C
390333 and 841814
16.34 Of course, the call details would, at best, indicate that some conversation
took place during such calls. It still needs to be seen as to who talked to whom and in what context. Since, these numbers were not under surveillance, all such things would have to be inferred from the attendant circumstances only.
16.35 Let me now see the individual role of A-8, A-6 and A-7.
ROLE & INVOLVEMENT OF A-8 17.0 There is no dispute that M/s Sai Krishna Impex Pvt. Ltd. is a company duly registered with the Registrar of Companies, Andhra Pradesh and M. Sambasiva Rao (A-3) and D. Mallesham Goud (A-8) are its Directors from the date of incorporation besides two others. Its certificate of incorporation has been proved as Ex. PW81/C (D-125).
17.1 A-8 does not dispute the aforesaid fact at all. His claim is that he had no role or involvement in the day-to-day affairs of said company and it was Sh. M. Sambasiva Rao (A-3), the other Director who used to take all the decisions.
17.2 Sh. Ojha has also very fairly admitted that A-8 never directly interacted with any NFL official including A-1 & A-2. He also never directly encountered A-4 & A- 5 but at the same time, according to Sh. Ojha, A-8 was in the thick of the things right from the inception. He came with his co-accused from Hyderabad to Delhi and stayed with them in Delhi during which period, the other co-accused were contacted.
CNR No. DLCT01-000024-1998 page 178 of 251 According to Sh. Ojha, the entire initial expenditure related to hotel bookings and air- tickets etc. had been incurred by A-8 and he knew very well that his share would be there in the misappropriated/cheated money and, therefore, he cannot run away from his liability on the pretext that he had neither met any NFL official nor signed any document.
17.3 Undoubtedly, though M/s Karsan had appointed M/s Sai Krishna Impex as its Indian agent but 'special authority' in this regard was given to M. Sambasiva Rao (A-3). Reference be made to Ex. PW38/L42 (D-4 page 323). As per said letter dated 30.10.1995, Cihan Karanci (A-5) had informed NFL that M/s Sai Krishna Impex would be their authorized representative as their Indian agent but special authority had been bestowed upon M. Sambasiva Rao (A-3) for day-to-day transaction in India. Thus, though a company had been nominated as an Indian agent, M/s Karsan had clearly indicated that actual authority vested with M. Sambasiva Rao (A-3).
17.4 Testimony of PW17 Sh. M. Siddiqui would indicate that A-8 had come to Ambassador Hotel, New Delhi on 14.05.1995. He was accompanied by his co- accused M. Sambasiva Rao (A-3) and stayed in the hotel upto 30.05.1995. PW17 Sh. M. Siddiqui has also proved registration card as Ex. PW17/D which bears signatures of M. Sambasiva Rao (A-3) at point A and of A-8 D. Mallesham Goud at point B. He has also deposed about making of calls by said visitors during their stay and making of payment. Such fact does not seem to be disputed by A-8 as there is no cross-examination of said witness at all and thus it becomes evident that way back in May 1995, A-8 had checked in said hotel with his co-accused M. Sambasiva Rao (A-3). It is also important to mention that as per the testimony of PW17 M. Siddiqui, even B. Sanjeeva Rao (A-6) had stayed in the same hotel during the intervening period i.e. 16.05.1995 to 18.05.1995. It shows that A-8 was in touch with his co-
accused during the initial period as well. Undoubtedly, coming to Delhi from CNR No. DLCT01-000024-1998 page 179 of 251
Hyderabad and staying in a hotel with co-accused may not constitute any offence in itself but it can certainly be taken as a circumstance showing his association with his co-accused and meeting them in private. Such circumstance, naturally speaking, can gain some momentum when read in conjunction with certain other circumstances.
17.5 Testimony of PW42 Sh. Ashwani Kumar would also indicate that A-8 had stayed in Asian International Hotel, Janpath Lane, New Delhi from 20.12.1995 to 29.12.1995. Registration entry has been proved as Ex. PW42/C1. It is also important to highlight here that A-3 used to frequently stay at said hotel. According to Sh. Ashwani Kumar, A.E. Pinto (A-9) used to call A-3 M. Sambasiva Rao from London on telephone and Mr. Pinto even visited their hotel on one occasion. He identified A-9 Pinto at the time of his deposition as well. There is no reason to disbelieve the record of the hotel which it was maintaining in normal course of their business. Moreover, accused has not elaborated as to why any such record would be fabricated by the hotel particularly when said hotel officials have no animosity with any of the accused. On the other hand, they were rather getting good business from them as such accused used to stay in their hotel very frequently.
17.6 According to Sh. Sood, learned Sr. Counsel for A-8, no document was ever executed by A-8 under his signatures and he never met any NFL official or any official of M/s Karsan. He was not present in NFL at the time of the execution of the alleged contract on 09.11.1995 and, therefore, he cannot be said to be a co- conspirator. It has also been argued that the conspiracy came to an end with the money landing in the bank account of M/s Karsan and, therefore, anything said or done thereafter has no relevance or significance.
17.7 I, however, do not find much substance in such contention.
CNR No. DLCT01-000024-1998 page 180 of 251 17.8 Idea behind the conspiracy was to dupe NFL and then to pocket
whopping sum running in hundreds of crores. The seeds had been sown but the chain would have been complete, as rightly said by Sh. Ojha, only when the controversy is tracked right from 'root to the fruit'. I also do feel that conspiracy remained alive till all the perpetrators got their share as that was the final objective of such conspiracy.
17.9 Sh. Ojha has contended that A-8 had made voluntary statement before the Enforcement Officer in which he admitted his own involvement and gave the details about the manner in which the money was to be shared and these vital facts cannot be left out or ignored.
17.10 I have already made elaborate reference to the testimony of PW46 Sh. Vasudev Gobind Paryani, PW47 Sh. Rajender Kr. Babani and PW53 Sh. Dharmesh Yadav.
17.11 PW47 Sh. Babani has categorically claimed that he knew A-8 who was also in the liquor business and in November 95, A-8 had come to his shop with his partner M. Sambasiva Rao (A-3) and two other persons and they wanted to talk with him in private and then A-8 introduced the other two persons i.e. M. Kumar and Rajab Ali to Sh. Babani and then A. Sambasiva Rao (A-3) asked from Mr. Babani whether he could help in bringing some money from abroad. A. Sambasiva Rao (A-3) also told that whole labour had been done by him (A-3) and A-8 and that they did not want to give full share to their sleeping partners. This also confirms the involvement of A-8, who, right from the very beginning, knew that the money was required to be brought to India through some illegal channels.
CNR No. DLCT01-000024-1998 page 181 of 251 17.12 I would also like to make reference to the testimony of PW 47 Sh. Babani
again. In his deposition dated 29.5.2003, when he talked about the way Rs. 65 lacs had been sent by Sh. Anil Aggarwal in four cartons and when said amount was eventually handed over to one Sh. Anand Mohan, he also supplemented that around 17/18th December, Anil Aggarwal sent a bearer cheque through his employee Sh. Naidu and Sh. Mallesham Goud was waiting at his shop (shop of Sh. Babani) and then they all went to the concerned bank. The cheque, however, exceeded the arrangements. They were expecting some money from Bombay which had not arrived. A-8 also claimed that he needed a draft of Rs. 3,50,000/- urgently for a company in Nagpur. He along with A-8 and Mr. Naidu went to the office of Sh. Anil Aggarwal who gave call to the manager of the bank and requested him to give the draft as well. Accordingly, A-8 went to the bank and collected Rs. 40 lacs and also got such draft.
17.13 I am mindful of the fact that neither Sh. Anil Aggarwal nor said Sh. Naidu have entered the witness box. According to Sh. Ojha, they could not be traced out during the investigation but bank documents would go on to corroborate said facts. My attention has been drawn towards the said cheque of Rs. 40 lacs which has been proved as Ex. PW 78/B (Part of D-162). It is a bearer cheque and in the name of Mr. Naidu and as per deposition of Sh. Babani, it becomes evident that at the time of presentation and encashment of the said cheque Sh. Mallesham Goud was accompanying Mr. Naidu and he seems to have received the amount under the aforesaid cheque. Statement of account of Punjab & Sind Bank with M. G. Road Branch, Secundrabad with respect to account held by M/s Kumar Metallurgical Corporation Ltd., S.D. Road, Secundrabad has been proved as Ex. PW 78/A which also reflects that a sum of Rs. 40 lacs was debited on 21.12.1995. Said statement of account also indicates whopping credit of Rs. 6,49,93,800/- on 22.12.1995 in said account. Importantly, there is one more debit entry which shows that Rs.
CNR No. DLCT01-000024-1998 page 182 of 251 1,00,00,000/- was debited on 27.12.95 to the account of M/s Sri Sai Krishna Steel which suggests that said account was being used for payment to the alleged beneficiaries in a very discreet and illegal manner. Undoubtedly, had Sh. Anil Kumar Aggarwal and Sh. Naidu been traced, they would have provided further clarity in the matter but there is no reason to disbelieve or discard the version of Sh. Babani. Said bank record also shows as to how the money was being brought to India in dubious ways. Moreover, A-8 has also not thrown any light or explained about said entries.
17.14 I have also seen the testimony of PW-78 G. S. Kairon, the concerned officer from Punjab & Sind Bank, M. G. Road, Secundrabad, who has proved the relevant documents pertaining to said account. He claimed that Sh. Anil Aggarwal was director of said account-holder company. I have also seen the testimony of PW- 73 Sh. Maheeder Kumar. He also referred about A-3 and A-8 claiming further that A-8 was an excise contractor. After prohibition policy was imposed in Andhra Pradesh, Sh. Mallesham Goud (A-8) offered to start business in the name and style of M/s Sai Krishna Agro Chemicals and floated two companies M/s Sai Krishna Impex and Sai Krishna Chemicals. He also knew A.E. Pinto and had talked to him on telephone which fact he revealed in his cross-examination. Undoubtedly, his further cross- examination persuaded Sh. Ojha to make request to the court to cross-examine him on behalf of prosecution as well but fact remains that his testimony does reveal close association between him and A-3 Sambasiva Rao and A-8 Mallesham Goud.
17.15 Sh. Sood has contended that the deposition of aforesaid three witnesses, namely, PW46 Sh. Vasudev Gobind Paryani, PW47 Sh. Rajender Kr. Babani and PW53 Sh. Dharmesh Yadav is required to be read with extra caution because they also seem to be wrong-doers but for the reasons best known to CBI, they were made witnesses and were given some sort of back door exoneration. I would deal with the aforesaid aspect little later but fact remains that their testimony is to be received with CNR No. DLCT01-000024-1998 page 183 of 251 extra caution and, therefore, defence should not feel prejudiced on the aforesaid account.
17.16 Undoubtedly, it is also surfacing on record that a sum of Rs. 65 lacs was taken from Sh. Anil Aggarwal and then it was delivered to Anand Mohan. Merely because Sh. Anil Aggarwal did not enter into witness box, it cannot be assumed that the aforesaid development of delivery of Rs. 65 lacs to Sh. Anand Mohan did not take place at all. At the time of such delivery, A-8 also accompanied PW47 Mr. Babani and such fact also indicates towards the complicity of A-8.
17.17 Let me now come to the most critical and somewhat decisive aspect regarding making of confessional statement by A-8 under Section 40 of Foreign Exchange Regulation Act, 1973 (hereinafter referred as FERA).
17.18 As per said section, any Gazetted Officer of Enforcement has power to summon any person whom he considers necessary either to give evidence or to produce the document during the course of any investigation or proceeding under FERA. Any such summoned person is also bound to state the truth upon any subject respecting the investigation. As per Section 40(4) of FERA, such proceedings are deemed to be "judicial proceedings" within the meaning of Section 193 and 228 of IPC.
17.19 A-8 had made statements under Section 40 of FERA on two different dates. First statement was made by him on 6.8.1996 and the second on 27.8.1996.
17.20 Let me see the testimony of relevant witnesses on said aspect.
CNR No. DLCT01-000024-1998 page 184 of 251 17.21 PW-89 Sh. K.C. Abraham was posted as Enforcement Officer in Delhi
Zonal office of Directorate of Enforcement. According to him, Urea Scam case was pending investigation with them in context of FERA violation and he was investigating the same. He visited Hyderabad in August 1996 and issued summons to Sh. D. Mallesham Goud (A-8) requiring him to appear before him on 6.8.1996 for making statement under Section 40 of FERA. According to him, Sh. Goud appeared before him on 6.8.1996 and he put certain questions to him and felt difficulty in communication because of language barrier. Therefore, he requested Chief Enforcement Officer to give some assistance to him. Such Chief Enforcement Officer asked Sh. M.C. Reddy (PW-88) to help, him in recording of such statement. Mr. Reddy was well conversant with Telugu and with his help Sh. Abraham recorded statement of A-8. Importantly, A-8 wrote down the statement "in his own hand" and signed the same in the presence of said two officers of Enforcement. PW-89 Abraham has deposed that on 27.8.1996 also, he recorded statement of A-8 in the presence of Sh. Reddy and on both the occasions, A-8 had made statements voluntarily and there was no pressure on him.
17.22 PW-88 Sh. M.C. Reddy has also supported the version of Sh. Abraham. He also deposed that Sh. Goud had written down his statement in Telugu in his presence and there was no pressure on Mr. Goud. Sh. Reddy also deposed that he had translated the said statements into English.
17.23 It will be worthwhile to mention here that such original statements were part of CC No. 153/02 pending in the court of Sh. A. Shankar Narayana, learned Special Judge for Economic Offences, Hyderabad and vide letter Ex. PW 88/A dated 12.12.2003 (part of D-201), Ld. Special Judge had sent the original statements, certified copies as well as English Translated copies to this court with request to verify the certified copies with the original statements and then to return the original CNR No. DLCT01-000024-1998 page 185 of 251 statements while retaining the certified copies. Accordingly, the sealed envelope containing such statements was opened on 15.12.2003 when Sh. M. C. Reddy was in the witness box and the certified copies of the said two statements (made in Telugu) were given number as Mark P-88/1 and Mark P-88/2 and English translated copies were marked as Mark P-88/3 and P-88/4. Since these statements coming directly from the court of Sh. A. Shankar Narayana, Ld. Special Judge, Hyderabad were compared with the originals, the genuineness of the document as such cannot be and should not be disputed by any one.
17.24 The crucial aspects, in context of said statement, would, however, be as under:-
a. Extent of use of such statements in the present proceedings. b. Voluntariness of such statements.
c. Impact of retraction.
d. Evidentiary value of such statement against A-8 as well as against his co-accused.
17.25 Before touching said aspects, let me first see as to what has been mentioned in such statements.
17.26 In first statement dated 6.8.1996, A-8 claimed that he had been explained that his statement could be used against him or anyone else and having understood the same, he was giving the true account. He then gave brief backdrop about himself and about the companies in which he was Director. He admitted that he was doing business under the name and Style of M/s Marg Leasing & Finance Ltd. He claimed that he was director in M/s Sai Krishna Impex as well. He was then asked about Sh.
M. Sambasiva Rao and he replied that he came into his contact through one Maheeder Kumar. He also claimed that in the middle of 1995 M/s Sai Krishna Impex got appointed as an Indian Agent of M/s Karsan of Turkey for supply of Urea and agreement for supply of 2 Lac MT Urea was executed between M/s Karsan and CNR No. DLCT01-000024-1998 page 186 of 251 National Fertilizers Limited. It was then specifically asked from him as to what was the profit for him, Sh. M. Sambasiva Rao and others, if any in such deal. Such question and corresponding reply is as under: -
"Q.) In the above said urea deal what was the profit for you, Shri Sambasiva Rao and others if any?
Ans." As per the agreement M/s Sai Krishna Impex has to receive $2,00,000/- from Karsan as agency commission. However, there is no written agreement to that effect. In the beginning of 1996, the above said commission of $ 2,00,000/- was credited in the Bank account of Shri Sambasiva Rao. Apart from the above commission, another commission of 8% to 10% was to be received secretly for paying the same to some big-wings such as Shri P. V. Prabhakar Rao, B. Sanjeeva Rao, Prakash Yadav, Anand Mohan and officials of National Fertilizers Ltd. etc. who had helped in clinching the above deal.
In March, 1996, Shri Sambasiva Rao told me that most of the aforesaid secret commission was received and paid to the aforesaid big-wigs. Part of the said secret commission was paid to Shri Prakash Chand Yadav in the form of $ 2,00,000/- abroad. Further Shri Sambasiva Rao told me that approx. 5 or 6 crores rupees was received through hawala arranged through Rajinder Babani of Sona Electronics and the same was paid to Shri P. V. Prabhakar Rao, B. Sanjeeva Rao and Anand Mohan.
From the above said secret commission of Rs. 5 or 6 crores received through Rajender Babani. Shri Sambhasiva Rao gave me Rs. 40,00,000/- in cash during January/February, 1996. However, immediately Shri Sambasiva Rao took 3 chques from me for Rs. 10,00,000/-, Rs. 10,00,000/- & Rs. 12,00,000/- (Total Rs. 32,00,000) in favour of 3 companies which belong to Shri Sanjeeva Rao, Prabhakar Rao and their family members. I issued the above 3 cheques from my company M/s Marg Leasing & Finance Ltd.
Thereafter, in the last week of May, 1996, I came to know through Shri Krishna, Auditor of Shri Sanjeeva Rao that CBI has started investigation in the Urea deal. Sometime during the same week Shri Sanjeeva Rao sent me a cheque of Rs. 10,00,000/- through my younger brother Ashok. On 01.06.96 CBI searched my house. After that I was attending CBI, Hyderabad Office daily. During that time they sent two more cheques for Rs. 10,00,000/- and Rs. 12,00,000/- through my younger brother. My brother deposited the above said cheques in the bank account of M/s CNR No. DLCT01-000024-1998 page 187 of 251 Marg Leasing Finance Ltd. with Vijaya Bank, M. G. Road, Secunderabad."
17.27 His second statement was recorded on 27.8.1996 and two questions were put to him. It would be appropriate to extract the said question and the corresponding answers which read as under:-
"Q.) In your statement dated 06.08.96, you had stated that in National Fertilizers Ltd. Urea deal a secret commission of 8% to 10% was to be received in addition to official commission of $2,00,000/-. You had further started that out of aforesaid secret commission approx. Rs. 5 or 6 crores was received through Rajendra Babani. Regarding the above said Secret Commission Please clearly state what was decided for distribution of the said Secret Commission.
Ans.) In, 1995, somewhere in February/March, a meeting was arranged in the office of M/s Medicon Marketing Pvt. Ltd. in the chamber of Shri Sanjeeva Rao. This meeting was attended by S/Shri Sanjeeva Rao, Anand Mohan, Sambasiva Rao, and myself. In this meeting it was decided that official commission of $ 2,00,000/- of this deal will be distributed between Sambasiva Rao & myself and the entire Secret Commission will go to Sanjeeva Rao and his group, i.e. Prabhakar Rao, Anand Mohan etc. In this meeting, it was also agreed that this contract will be secured in the name of our concern M/s Sai Krishna Impex and all the paperwork will be done by Shri Sambasiva Rao and finance for this work will be arranged by myself and Shri Sanjeeva Rao will use his influence through senior officers to arrange this contract in favour of M/s Sai Krishna Impex. Even before this meeting Shri Anand Mohan & Sanjeeva Rao had detailed discussions regarding their work and role in this project. Shri Anand Mohan told us before the main meeting that Shri Sanjeeva Rao had agreed to arranged this contract.
Q.) Please state how Rajendra Babani was brought into this deal for transfer Secret Commission of this said deal.
Ans.) Somewhere in June/July, 1995, Sambasiva Rao told me that Sanjeeva Rao has informed him that very shortly the contract of 2,00,000 M T urea will be awarded to M/s Sai Krishna Impex, and will have to make arrangement for transfer of Secret Commission of this dea, so that there names will not come in light at all. I know Shri Rajender Babani who, like me, was dealing in liquor there. After prohibition he switched over to export-import business through some of his friends in Dubai. A meeting of CNR No. DLCT01-000024-1998 page 188 of 251 S/Shri Rajender Babani, Sambhasiva Rao and myself was arranged in the shop of Rajender Babani, i.e. M/s Sona Electronics, Secundarabad. In this meeting it was explained to Rajender Babani that we want to transfer an amount of approx $ 4 million from abroad secretly and we needed his help in the matter. After some discussion, he said that he will arrange transfer of the said amount India through one M/s Edible Food Stuff of Dubai. If the above said amount if first transferred to the account of the said Company in Dubai. We agreed to this and informed Sanjeeva Rao accordingly."
17.28 It has been vehemently contended by defence that such statement cannot be used in the present criminal proceedings. Reliance in this regard has been placed upon K.T.M.S. Mohd. & Anr. Vs. Union of India [AIR 1972 SC 1831]. In that case, the appellants were interrogated by the Enforcement Officer under Section 40 FERA. The Income Tax Officer also initiated proceedings against the appellant on the basis of such statements. It was in that context that the issue of admissibility of such statement was raised before the Hon'ble Apex Court. It was contended by the appellants that such statements recorded in FERA could not be made use of for prosecuting them under Income Tax Act. The Hon'ble Apex Court allowed the appeal while holding that the proceedings under FERA and Income Tax Act were entirely different and dissimilar and, therefore, significance of statement made under FERA so as to bring them within the meaning of judicial proceedings must be examined only qua the provisions of FERA but not with reference to the provisions of any other alien Act such as Income Tax Act etc. Ld. defence counsel has claimed that such specific observation of Apex Court would clearly prevent CBI from making any use of such statement. I, however, do not agree with the aforesaid contention made by the Ld. defence counsel. Hon'ble Apex Court seems very specific in holding that these statements cannot be used in context of alien Act like Income Tax etc. It implies that any statement made before any such authority - be it under FERA Act, Customs Act, NDPS Act, Income Tax Act cannot be used by any such other agency. However, such statement can safely be used in relation to any proceedings initiated under principal Act like Indian Penal Code and Prevention of Corruption Act.
CNR No. DLCT01-000024-1998 page 189 of 251 17.29 Undoubtedly, the voluntariness of such statement is sine-qua-non. If such
statements are obtained by exercise of inducement, threat, coercion or by any unjustifiable means, then such statements should be rejected brevi manu. In K.T.M.S. Mohd (supra), it has also been clearly highlighted that merely because a statement had been retracted, it could not be said that it had been made involuntary or by way of inducement and it was for the maker of the statement, who alleged any such inducement etc., to establish the same. According to Ld. defence counsels, statement was retracted immediately on 23.10.1996. No such record has been produced before this court much less assigning reason behind the alleged retraction.
17.30 Accused D. Mallesham Goud also did not think it appropriate to enter into witness box in his own defence to, at least, state on oath that such statement had been obtained by exercising any improper mean. His mere assertion would not serve the requisite purpose. Moreover, there is evident hiatus between the making of the statements and alleged retraction. First statement was made on 6.8.1996. There was gap of around three weeks between the first statement and the second statement. Instead of retracting his first statement, A-8 rather made another statement on 27.8.1996 and eventually, allegedly, retracted the same two months later. It seems to be a lame defence which cannot be given any significance. No advantage can be fetched from Abid Malik (supra) wherein it has been rightly observed that retracted confession alone cannot be made basis of conviction. Here, the aspect and reason behind alleged retraction has not been brought on record in the desired manner by A- 8 and moreover, the outcome of the case is not going to be solely on the basis of such confessional statement.
17.31 I would also like to refer one judgment of Hon'ble High Court of Delhi cited as S.K. Jain Vs. M.G. Attri, (Date of Judgment 02.05.2012 in Crl. RP 518/2007), in CNR No. DLCT01-000024-1998 page 190 of 251 which it has been held that any statement recorded by an officer of Directorate of Enforcement under Section 40 FERA which is self-inculpatory and also inculpates the others is duly admissible under Section 30 of Indian Evidence Act. It is also observed therein that the evidentiary value that could be attached to such statement qua the other co-accused was only that it could be taken into consideration to lend assurance as held by Constitutional Bench in Hari Charan Kurmi Vs. State of Bihar [1964 AIR SC 1184]. It was thus observed that in context of a co-accused, such statement could not be treated as a substantive evidence and could be pressed into service when the court was inclined to accept other evidence and felt the necessity of seeking for an assurance in support of its conclusion deducible from the said evidence.
17.32 Defence cannot dig out any benefit from Noor Aga v. State of Punjab, (2008) 16 SCC 417. In that case, situation was different and it was observed that when a Customs Officer exercises his power under NDPS Act, he is not exercising his power as an officer to check smuggling of goods and he rather acts for detection of a crime and bringing an accused to book. Section 53 of NDPS Act empowers the Customs Officers with the powers of the Station House Officers. An officer invested with the power of a police officer by reason of a special statute in terms of sub- section (2) of Section 53 would, thus, be deemed to be police officer and for the said purpose, section 25 of Evidence Act shall be applicable. No such situation exists herein as FERA officials were not acting as CBI sleuths at the time of recording of statements. I have also seen Sunderlal Bhatija (supra). It was a case under Terrorist and Disruptive Activities Act (TADA) under which the accused had made a confessional statement. He was tried merely for IPC offences as charges under TADA had been dropped and, in that context, it was observed that prosecution could not rely upon such confessional statement as he was not being tried under TADA. Moreover, confessional statement u/s 15 of TADA is made to a police officer only and CNR No. DLCT01-000024-1998 page 191 of 251 is admissible in relation to trial for offence under TADA only. No such embargo is there under FERA. Reliance on Tofan Singh (supra) is also misplaced as said case was also essentially dealing with another proposition and Apex Court observed that the matter needed to be referred to a larger Bench for re-consideration of the issue as to whether the officer investigating the matter under NDPS Act would qualify as police officer or not. Here we are concerned with FERA whereas.
17.33 Thus, the confessional statement made by any person under Section 40 of FERA can be used against its maker. I need not to reiterate that such statement is recorded by Gazetted Officer of the Enforcement Department and, therefore, such statement has much more sanctity than a statement recorded under sec 161 Cr.P.C Such officer acts in a quasi-judicial capacity and cannot be equated, strictly speaking, with a police officer. However, it needs to be fully ascertained whether statement has been made voluntarily or not. It also needs to be assured that such statement, has been made by maker without any element of threat or coercion. Once the voluntariness is established, such statement can be used against its maker. If such statement is retracted by maker then the reason behind such retraction is to be seen and it is also to be found out whether retraction was immediate or not. Reason of retraction is also to be evaluated. Mere retraction would not mean that the evidentiary value of such statement stands evaporated altogether. Such confessional statement can be used as a corroborative piece of evidence qua co-accused of any such maker and such piece can be used in conjunction with other admissible evidence.
17.34 It is clear from the aforesaid recorded confessional statements of A-8 that he had been paid Rs. 40 lacs in cash during January-February 1996. He also claimed that thereafter Sambasiva Rao took three cheques from him in favour of three companies and he issued such three cheques from his company M/s Marg Leasing and Finance Ltd. Such fact stands proved in view of the bank record produced before CNR No. DLCT01-000024-1998 page 192 of 251 the court and is in synchronization with the said version of A-8 and, therefore, I do not have any reason to disbelieve the aforesaid statement made by A-8 to a Gazetted Officer.
17.35 Certificate of incorporation of said company M/s Marg Leasing and Finance Ltd. has been proved as Ex. PW 81/D (D-129) and A-8 is found to be its director from the date of its incorporation as per Form No. 32 which is Ex. PW 81/D-
1. The aspect related to issuance of three cheques from M/s Marg Leasing and Finance Ltd. also stands proved. Details of such three cheques are as under: -
Sl. No. Issue in favour of Dated Amount
1. SRR Finance & Investment Pvt. Ltd. 22.2.1996 10,00,000/-
2. Sai Bharat Finance Pvt. Ltd. 23.3.1996 10,00,000/-
3. Madicon Marketing (P) Ltd. 11.4.1996 12,00,000/-
17.36 SRR Finance & Investment Pvt. Ltd. is a company in which B. Madhavi
Latha (wife of B. Sanjeeva Rao, A-6) is one of the directors from the date of inception. Its certificate of incorporation has been proved as Ex. PW 81/E (D-128) and Form No. 32 as Ex. PW 81/E-1.
17.37 Similarly, Sai Bharat Finance Pvt. Ltd. is also a duly registered company. Certificate of incorporation has been proved as Ex. PW 81/A (D-126) and its two directors are Bopparaju Jyothirmayee Rajeshwar and Bopparaju Rajeshwar Rao (brother of A-6) and Form No. 32 of said company has been proved as Ex. PW 81/A- 1 (D-126).
CNR No. DLCT01-000024-1998 page 193 of 251 17.38 In Madicon Marketing Private Limited, B. Sanjeeva Rao (A-6) himself is
one of director from the date of its inception. Its certificate of incorporation is Ex. PW 81/F (D-13) and Form No. 32 is Ex. PW 81/F-1.
17.39 A-8 did admit that he had issued all the aforesaid three cheques but he supplemented that the same was towards loan which was also eventually returned with interest by the borrowers.
17.40 I have seen the record related to Vijaya Bank contained in D-161. This story of loan seems to have been made up one. It has no legs to stand upon. There is no documentary proof to show any such transaction prior to the issuance of cheques. Return, after the registration of FIR, is a defence-move to substantiate its loan story which fails to convince the court about the legitimacy of any such transaction. Based merely on bald verbal assertion that the aforesaid three cheques had been issued in view of any loan request, the defence cannot assume that its onus stands discharged. No document related to request of loan has been placed on record. Moreover, neither A-8 nor A-6 entered into witness box to substantiate or prove any such loan transaction. It is quite evident that when FIR had been registered, fearing that they may not be exposed, A-6 seems to have returned the amount to somehow portray that these were loan transactions.
17.41 Moreover, if at all there was any such loan, there was nothing to prevent A-8 in mentioning so when he made statement under Section 40 of FERA. Thus, it was only after the investigation had been initiated by CBI, it was planned that said money be returned to befool the investigating agency. This also indicates the guilty mind of A-8.
CNR No. DLCT01-000024-1998 page 194 of 251
ROLE & INVOLVEMENT OF A-6 AND A-7
18.0 Let me now deal more specifically with the role and level of involvement
of A-6 and A-7.
18.1 They both were holding influential positions because of their respective
relatives.
18.2 To be a close relative of Prime Minister is not a small thing at all and the
very presence of any such person in government office of NFL and telephonic conversation is certainly going to make a lot of difference in relation to materialization of any deal or contract. Similarly, being son of Fertilizer Minister, A-7 had evident influence in NFL. A-1 and A-2 also seemed to be under his awe. His mere making a call was going to have a strong impact upon them, which seems to have happened in the case in hand as well.
18.3 People must be responsible for their own actions and people around them cannot be held responsible for those actions they did not commit. This can easily be inferred as one of the meanings given to phrase 'Caesar's Wife Must Be Above Suspicion'. It is quite possible that such persons, in the present case the then Hon'ble Prime Minister himself and the then Hon'ble Fertilizer Minister, might not even be knowing that their such relatives were trying to take undue advantage of their such official positions and, in the process maligning their respective image. I am commenting so because there is nothing before me which may even remotely connect them with the present manner or hint that they knew anything about such proposed contract. Precisely therefore, they were never under the radar of CBI. During the trial also, nothing cropped up which may suggest so. Undoubtedly, son of the then Hon'ble Prime Minister was under scanner but he too was not charge-
CNR No. DLCT01-000024-1998 page 195 of 251 sheeted. Nothing surfaced against him during the trial either.
18.4 However, it is not comprehensible as to why Mr. Anand Mohan, son of OSD of the then Hon'ble Prime Minister was left out. He was alleged to be recipient of Rs. 65 lacs. Either he galloped the same himself or perhaps his house was simply used as hide-out for keeping the money by A-6. In any eventuality, he should have been examined thoroughly by CBI, at least as a witness. Nothing of that sort was contemplated. CBI should have probed said aspect little deeper. It is, unfortunately, too late now to go for any such thing.
18.5 I would now deal with the allegations qua A6 and A-7. First, I would take up the matter related to A-7.
18.6 Sh. Pavan Narang, Ld. defence counsel has contended that prosecution has not been able to bring on record any material which may even remotely suggest the complicity of A-7. According to him, he has been implicated because of some fanciful reasons.
18.7 Sh. Ojha, Ld. Special PP has refuted the same and according to him, there are numerous circumstances which portray him a clear co-conspirator. He banks on following circumstances: -
1) A-7 used to frequently visit NFL office in order to influence NFL officials and also to monitor the development with respect to the contract in question.
2) He used to make frequent calls and used to receive calls from his co-
accused which also imply that he was keeping track of the matter.
3) He had allured A-2 that he would be rewarded with extension after his superannuation.
4) He was beneficiary of the misappropriated money as a huge sum of CNR No. DLCT01-000024-1998 page 196 of 251 US$ 2 lacs eventually reached his account which was his booty with respect to the deal in question.
18.8 Let me see all these aspects. Fact, though remains that the aspect related to allurement of extension has not been proved in any manner. Moreover, A-2 retired on the stipulated date. Neither he himself sought for any extension nor A-7 ever recommended the same.
18.9 It is not in dispute that Sh. Ram Lakhan Yadav was union Minister for Chemicals & Fertilizers at the relevant time and was having official residential accommodation in New Delhi. There is no disagreement with respect to the factum of installation of telephones at his residence. These official landline numbers were provided by the Department of Fertilizers. These included 3711404, 3716145 and 3321877. Three more landline numbers were provided to Hon'ble Minister in his residential office which were 3384302, 3384317 and 3384196.
18.10 A-7 was, admittedly, Member of Legislative Council (MLC) from Bihar State from 30.9.1991 to 29.9.1997. This is also evident from the testimony of PW-29 Sachida Prasad (official from Legislative Council of Bihar). Sh. Narang also does not dispute that A-7 used to stay at the aforesaid residence at New Delhi supplementing that it was only whenever he used to visit Delhi from Bihar.
18.11 About installation of telephone numbers, calls details record pertaining to said numbers, reference be made to the testimony of PW-21 Narender Pal Singh, official of Department of Fertilizers and PW-22 Ms. Shashi Anand, official from MTNL. Relevant documents are contained in D-180 and D-181.
18.12 However, defence wants prosecution to show that it was A-7 and A-7 alone who had indulged in conversation during the alleged calls. According to CNR No. DLCT01-000024-1998 page 197 of 251 defence, there were multiple occupants in said house where EPBAX had been installed and CBI has not been able to demonstrate that it was A-7 only who received or made all such calls. It has been agitated that there is no evidence to show that on all such alleged dates, A-7 was very much in Delhi and, therefore, CBI cannot be permitted to dig out any advantage out of any such CDR. About visit to NFL also, Sh. Narang has stated that there is nothing on record which may even remotely signify that Sh. Yadav ever visited NFL in relation to said deal or made any call to any official in relation to said deal.
18.13 Let me now recapitulate the testimony of NFL officials on said aspect regarding the visit and calls.
18.14 PW-36 P. K. Kataria did not refer about A-7 in his entire examination-in- chief. In his cross-examination dated 21.11.2002, he claimed that he had heard that C. K. Ramakrishnan (A-1) had recommended grant of extension to Sh. D.S. Kanwar (A-2) praising his contribution and dynamism. In cross-examination dated 13.12.2002 Sh. P.K. Kataria claimed that neither P.C. Yadav nor his father offered any gratification or intimidated him in any manner to facilitate the transaction in question. Sh. Narang has stated that it was positive assertion and the prosecution did not take any exception to the same as it never requested for his re-examination and, therefore, prosecution cannot wriggle out from the aforesaid positive assertion coming from a prime witness. Sh. Narang has also claimed that PW-36 cannot be relied upon because he along with many others including A-1, A-2, A-3, A-6 and A-7 and Sh. Anil Sharma had been summoned as accused in a criminal complaint filed by Directorate of Enforcement.
18.15 PW-37 Sh. A.K. Maitra also did not utter anything with respect to the role and involvement of A-7 in his entire examination-in-chief and precisely for the said CNR No. DLCT01-000024-1998 page 198 of 251 reason there is no cross-examination on behalf of A-7.
18.16 PW-38 Sh. Anil Kumar Sharma has, however, something substantial to offer in this regard. In his examination-in-chief dated 27.1.2003, he deposed that Sh. Ram Lakhan Yadav, Union Minister for Chemicals & Fertilizers and his son P. C. Yadav (A-7) used to make telephone calls to NFL. He deposed that once or twice, he saw him visiting the office of NFL supplementing that when D. S. Kanwar (A-2) did not use to be in his office, he received calls from A-7 who was found making enquiry about some dealer. He also claimed that such calls were received during the same period when the transaction in question had taken place. Sh. Narang has contended that Sh. Anil Sharma has made vague statement which does not take case of the prosecution anywhere. According to him, even if A-7 had made some calls and even if, he had made some enquiry about some dealer, it would not attract any criminality. Moreover, according to him, Sh. Anil Sharma never revealed such facts when he was examined by CBI during investigation. In this regard, he has drawn my attention towards his deposition dated 30.1.2003 wherein Sh. Anil Kumar Sharma admitted that the fact regarding calls made by A-7 and his visits to NFL office were not mentioned by him in his statement Ex. PW 38/DA-1 to DA-11. He also claimed that he never overheard any telephonic conversation between A-1 and A-7. He also claimed that A- 7 never talked to him about any such transaction. Right here, I would hasten to add that every omission cannot be automatically construed as contradiction. Only that omission which renders the statement totally irreconcilable would have shades of contradiction. Any inadvertent omission would not mean much, therefore.
18.17 PW-39 Sahib Singh, in his deposition dated 3.3.2003, claimed that telephone calls used to be received in NFL office from the office of Ministry of Chemicals & Fertilizers and also from his son P.C. Yadav. He claimed that Sh. P.C. Yadav used to make frequent calls to NFL office. In his cross-examination he did CNR No. DLCT01-000024-1998 page 199 of 251 admit that he never overheard any such conversation between A-1 and A-7 and did not know what used to be the topic of those calls.
18.18 PW-43 Raj Kumar, NFL official has deposed that P. C. Yadav used to make telephone calls to D. S. Kanwar and on some occasions there used to be 3-4 calls a day. In his cross-examination Sh. Raj Kumar admitted that he never overheard such conversation and he also admitted that he never revealed such facts to CBI supplementing that CBI did not ask any such thing from him.
18.19 PW-44 Satish Chandra was important witness in context of involvement of A-7.
18.20 Unfortunately, he did not support the case of prosecution and was declared hostile. He was posted as Additional Secretary to Sh. Ram Lakhan Yadav, the then union Minister for Chemicals & Fertilizers. He deposed that whenever P.C. Yadav used to come to Delhi, he used to stay with his father. He also admitted that D.S. Kanwar used to visit the residence of Hon'ble Minister but he does not know whether issue related to extension of his service was under consideration. Since he did not come up with the complete facts, prosecution after seeking permission of the court, grilled him and in such cross-examination also, he did not support the case of prosecution and denied that any particular envelope had been given by A-7 to him for delivering the same to A-2. He rather claimed that he had told CBI that as a routine A-7 used to give envelopes and he used to hand over the same to other officers as per instructions. He also supplemented and volunteered that A-7 was Member of Legislative Council and, therefore, he had been receiving representation from his constituency and the Minister had asked him to help people and, therefore, such envelopes used to be passed on to NFL officials. He denied that any paper regarding advise related to remittance of US$ 2 lacs from Dubai to Rea Brothers was given by CNR No. DLCT01-000024-1998 page 200 of 251 A-2 which was further given by him to A-7 on which A-7 became happy. He, however, categorically admitted that A-1 and A-2 used to visit residential office of Minister and used to meet his son but he could not say with any degree of certainty that the purpose of such visit was seeking extension of service of A-2 who was going to retire in January 1996.
18.21 However, factum of A-7 meeting A-1 and A-2 at the residence of Hon'ble Minister is an important facet. It was for A-7 to divulge as to why they used to come to him during those days only when such deal was being processed. His bald denial may not look to be sufficient. PW-44 Satish Chandra did deny that he was won over by A-7 and his father and, therefore, deposing falsely. His deposition would reveal that he was under some stress during those days as he was called by CBI for 9-10 days for long hours. I can understand his dilemma. Quite possibly, he is stuck between devil and the deep sea.
18.22 I have already made reference to the testimony of PW53 Sh. Dharmesh Yadav, PW47 Sh. Rajender Kr. Babani and PW46 Vasudev Gobind Paryani in detail. PW46 Sh. Paryani was running a concern in Dubai under the name and style of M/s Edible Foodstuff Trading Company and he testified that there was huge remittance of 4 million US$ in his account on 30.11.1995. He made reference about the various transfers of different sum of money to different persons. He categorically claimed that he had received a call from Sh. Rajender Babani to the effect that an amount of 200000 US$ was to be transferred to Rea Brothers as per the instructions of Sambasiva Rao (A-3). He accordingly made a note on a piece of paper and handed over such piece of paper to Sh. Dharmesh Kumar Yadav who carried out the orders and transferred the money to Rea Brothers. Sh. Babani confirmed from Sh. Dharmesh telephonically whether the amount had been transferred or not who replied in affirmative.
CNR No. DLCT01-000024-1998 page 201 of 251 18.23 PW47 Sh. Rajender Babani has also deposed that on 23.12.1995, he
was in Dubai and amount of 200000 US$ was transferred to Rea Brothers by Sh. Dharmesh Kumar Yadav. During that time, Sh. Dharmesh Kumar Yadav and Sh. B.S. Lagoo were also in Dubai. Sh. Sambasiva Rao (A-3) had also come there and was staying in Novatel Hotel, Dubai with two government officers. He (Mr. Babani) then also talked to A-3 on phone and met them in the evening. He was introduced to Sh. D.S. Kanwar (A-2) and Sh. Deepak Lal (since deceased) and he also introduced Sh. Dharmesh Kumar Yadav and Sh. B.S. Lagoo to them. Later same evening, Sh. M. Sambasiva Rao (A-3) told Mr. Babani that Sh. D.S. Kanwar (A-2) was from NFL and was supplying urea to NFL and also revealed that said amount of 4 million US$ which had been received in Dubai was commission for the deal which was to be shared with officers and politicians. Mr. Babani told Sh. M. Sambasiva Rao (A-3) that such amount had already been remitted to the account of Rea Brothers in USA. A-3 then asked for a bank advice. He accordingly made a call to Sh. Dharmesh Kumar Yadav requesting him to fax copy of telex advice.
18.24 A fax copy was accordingly received in the hotel and receptionist gave the same to them in an envelope and then A-3 handed over the such envelope containing telex advice to A-2 claiming in Hindi "P.C. Yadav ke moohan par marna. Uska moohan band ho jayega". When Mr. Babani asked A-3 as to who P.C. Yadav was, he got reply that he was son of Sh. Ram Lakhan Yadav, the Union Minister of Chemical & Fertilizers. He also deposed that when later on Sh. Dharmesh Yadav and Sh. B.S. Lagoo enquired from him as to what was the urgency of remittance of 200000 US$, he told them that such matter related to son of a minister.
18.25 Thus, it becomes quite obvious that such amount of 200000 US$, which was eventually transmitted to the account of Rea Brothers was, in reality, meant for CNR No. DLCT01-000024-1998 page 202 of 251 Sh. P.C. Yadav.
18.26 Sh. Narang has asserted that there is nothing on record to connect A-7 with Rea Brothers. He states that no such fact has been proved on record. He also states that court cannot rely upon hearsay evidence to hold A-7 guilty. Undoubtedly, hearsay evidence cannot be relied upon but a fact which is relevant under Evidence Act can always be considered.
18.27 The account in question was in Isle of Man. It is a self-governing British Crown dependency in the Irish Sea between the islands of Great Britain and Ireland. The head of state is Queen Elizabeth II.
18.28 PW 87 Ian Michael Edward Bancroft remained associated with Rea Brothers, Isle of Man. Close Brothers Group acquired the same in 1999. PW87 Mr. Bancroft happens to be a crucial bank official for proving the relevant documents related to Rea Brothers. He deposed that Rea Brothers (Isle of Man Ltd.), which was later named a Close Bank (Isle of Man Ltd.), was providing banking services since 1976 and he had been in that bank as Finance Director and later on became Senior Executive Director and Managing Director. He deposed that Rea Brothers had opened an account in the name of Pennycairn Holdings Ltd. which was introduced to them by Abchurch Corporate Services. He also made reference to letter Ex. PW87/A whereby Abchurch Corporate Services had requested Rea Brothers to open such account in the name of Pennycairn Holdings Ltd. It is also important to mention that in such request letter, name of the beneficial owner has been mentioned as Mr. Harsh Sethi. Copy of certificate of incorporation of Pennycairn Holdings Ltd. has been proved as Ex. PW87/C. It's Article of Associations has also been referred by Sh. Bancroft and specimen signatures mandate reflects Mr. Harsh Sethi as authorized person to operate such account. Address of Mr. Harsh Sethi is of London.
CNR No. DLCT01-000024-1998 page 203 of 251 18.29 It will be also important to mention that Sh. Bancroft had sent the entire
bank record along with relevant certificate authenticating the correctness of the same. He claimed that such account was given number as 464411 and on 27.12.1995, a sum of 200000 US$ was received in said account from one Mr. Dharmesh Kumar Yadav. Computerized statement of account has been proved as Ex. PW87/G and certificate as Ex. PW87/H. He claimed that the instructions had been received from Bank of New York whereby Rea Brothers had instructed for the aforesaid transfer of 200000 US$ in the account of Pennycairn Holdings Ltd. Such advice has been proved by him as Ex. PW87/K1. He also deposed that he had conversation with Mr. Harsh Sethi who told him that such payment was a commission from the sale of fertilizer. He also deposed that in relation to his such conversation and meeting, he had prepared a note. Such note has been proved by him as Ex. PW87/M in which he mentioned that Mr. Harsh Sethi had told that he knew the client as Prakash Chandra and that the transaction involved a commission on account of sale of fertilizer. In such note, Mr. Bancroft had also mentioned that Pennycairn was though beneficially owned by Mr. Harsh Sethi but in essence, it served the purpose of a client's account in those transactions which were held in trust or escrow. He also deposed that when the account of Pennycairn Holding Ltd. was opened, the purpose had been described by them as Investment Holding Company and it was supposed to be a client's account. Naturally, if the assertion of CBI is to be assessed in the backdrop of the testimony of Mr. Bancroft, account no. 464411 had been opened by Pennycairn Holding with Rea Brothers and though Mr. Harsh Sethi was its owner on paper, the actual user/client was none other than Sh. Prakash Chandra Yadav (A-7).
18.30 Sh. Narang has contended that testimony of Mr. Bancroft does not take the case of CBI anywhere, not even near suspicion. He has contended that CBI, for CNR No. DLCT01-000024-1998 page 204 of 251 its own fanciful reasons, did not attempt to reach Mr. Harsh Sethi and in the absence of the version of Mr. Harsh Sethi, no reliance can be placed on the testimony of Mr. Bancroft whose version is nothing but a mere hearsay.
18.31 Undoubtedly, Mr. Harsh Sethi should have been contacted and interrogated by CBI but as already noticed above, he was in London and perhaps CBI failed to lay its hands upon him. Nonetheless, the information which Mr. Bancroft received from Mr. Harsh Sethi, though may look hearsay, has to be read in conjunction with several other factors and circumstances.
18.32 I have already made reference to the statement made by A-8 under Section 40 of FERA which also clearly corroborates the aforesaid transaction. I also cannot be oblivious of various calls which were being made by A-7 to his co-accused i.e. A-1 & A-2 in particular. Moreover, A-7 had also met A-1 & A-2 at the residence of his father. A-7 has not bothered to explain as to in what context he had met them at his residence. Undoubtedly, he was also an MLC but there is no material on record that for the purpose of redressal of any grievance of his area, he had called A-1 & A-2 at the residence of his father and had discussed any such matter with them. There are only bald assertions which do not have any real significance.
18.33 There is one more important aspect of the matter. When A-1 Sh. C.K. Ramakrishnan was on CBI remand, he led the CBI team to his residence which resulted in recovery of copy of advice whereby said amount of 200000 US$ was directed to be transmitted to the account of Pennycairn Holdings Ltd. Such copy of advice (Ex. PW91/A1) (Part of D-202) was recovered from the house of A-1 on 14.06.1996 by PW91 Sh. N.K. Mukherjee, DSY/CBI and it was seized vide memo Ex. PW91/A. Such advice clearly indicates that a sum of 20000 US$ was transmitted to the account of Pennycairn Holdings Ltd. as per the instructions of Sh. Dharmesh CNR No. DLCT01-000024-1998 page 205 of 251 Kumar Yadav. Though such recovery has been disputed and it has been claimed that it is a planted document, I do not find any substance in such contention. Testimony of PW91 Sh. N.K. Mukherjee lends full assurance to the aforesaid important aspect. Sh. Mukherjee revealed in his cross-examination that such seizure memo was signed by two witnesses including wife of Sh. C.K. Ramakrishnan (A-1). Her signatures are there on the seizure list (memo) as well as on the recovered document and accused has not bothered to explain as to how her signatures are appearing there if the document was planted one. It has been baldly claimed that such signatures were obtained later but a mere suggestion to that effect would not dislodge or impeach the recovery. His wife never ever registered any protest anywhere regarding obtaining of her signature in the alleged wrong manner.
18.34 I have also seen the deposition of investigating officer i.e. PW95 Sh. B.N.P. Azad. After his examination-in-chief was, several pertinent court questions were put to him and these court questions and answers are extracted as under: -
Q You have stated that an amount of UD Dollar 2 lakhs had been remitted from Dubai to the account of M/s Pennycairn Holdings with Rea Brothers for accused Prakash Chand Yadav, did you make any investigation regarding the constitution of Pennycairn Holdings?
Ans. Result of investigation was received from Isle of Mann and it was reported that one Harsh Sethi was the beneficial owner of Pennycairn Holdings.
Q Did you collect any evidence of any connection
between Prakash Chand Yadav and Pennycairn Holdings?
Ans. Result of investigation which I received from Ian
Bancroft has stated that he met Mr. Sethi in London which Sh. Harsh Sethi told him that money i.e. 2 lakh dollar remitted in the account of Pennycairn Holding was for Prakash Chand Yadav and on his return from London, he recorded a note in bank records the copy of which was sent along with his statement which was received by us in response to LR sent to Isle of Mann.
CNR No. DLCT01-000024-1998 page 206 of 251
Q Do you know where this amount of US dollar 2 lakh
had ultimately gone?
Ans. From the account of Pennycairn Holding with Rea
Brothers the money had gone to HSBC Pvt. Bank, Jersey, A/c NMI Limited.
Q Was any investigation made at Jersey regarding the
account of NMI Limited?
Ans. As far as I remember an Interpol reference was sent to
Jersey and no reply was received.
Q Do you know where Jersey is situated?
Ans. I have no idea.
Q Did you make inquiry from HSBC regarding the
location of Jersey?
Ans. No.
Q Did Rajender Babani tell you that Anil Aggarwal had
sent an amount of Rs. 65 lakhs in four cartons and those four cartons had been taken in his car to a house in West Marred Pallvy, Sikanderabad, which belonged to Anand Mohan s/o Krishna Murthy, an officer of special duty in P.M.?
Ans. Yes. R.K. Babani had made a statement like that.
Q Did you make any investigation in this regard?
Ans. I had interrogated Anand Mohan but he denied.
Q Is it correct that Anand Mohan's father Krishna Murthy
was OSD in PMO?
Ans. It is correct.
Q Did you interrogate Krishna Murthy?
Ans. No.
Q Why you did not interrogate Krishna Murthy?
Ans. In the statement of Sambassiva Rao, Mallesham Goud
the name of A.V.R. Krishna Murthy having taken part in the transaction had not emerged. However, they have named Anand Mohan having worked with them.
CNR No. DLCT01-000024-1998 page 207 of 251
Q What was the status of Anand Mohan?
Ans. He was a small business man.
Q Did you obtain a search warrant for search of house of
Anand Mohan?
Ans. I do not remember whether the house of Anand Mohan
was searched.
Q Did Rajender Babani tell you that Sambasiva Rao had
come to him and told him that money was to be given to some
officers in Delhi?
Ans. It is correct.
Q A.V. Krishna Murthy was a Government Officer in Delhi
and occupying an important position and yet you did not think proper to interrogate him, why?
Ans. I did not get proper lead as to which government
servant payments could have been made.
Q Is it correct that Mr. K.C. Abraham of the Directorate of
Enforcement had discussion with you regarding FERA violations relating to this transaction?
Ans. Once or twice he may have discussed.
Q Did Mr. K.C. Abraham tell you that summons had been
issued by the Directorate of Enforcement to Mr. Prabhakar Rao s/o Mr. P.V. Narsimha Rao to make inquiry about the transaction involving Karsans and that Mr. Prabhakar Rao had not complied with the summons?
Ans. It did not come to my knowledge.
Q Are you aware that Prabhakar Rao is being prosecuted
by the Directorate for non-compliance of summons?
Ans. I came to know from Newspapers reports.
Q Did you interrogate Prabhakar Rao?
Ans. Yes.
18.35 Undoubtedly, there is no tangible and fool-proof linking evidence showing
connection between Pennycairn and A-7 P.C. Yadav. Such connection has to be, therefore, unearthed and deciphered on the basis of oral evidence and logical CNR No. DLCT01-000024-1998 page 208 of 251 inference. It is true that thereafter such amount was transferred to NMI Limited and despite the efforts made by CBI, CBI could not ascertain as to who was owner of account of NMI Limited but that itself would not mean that A-7 was neither a co- conspirator nor a beneficiary. Statement made by A-8 under Section 40 of FERA and the various calls made by A-7 to his other co-accused, his taking regular updates from A-1 & A-2 and the fact that he met A-1 & A-2 at the residence of his father go on to show that A-7 was having direct relation with the account of M/s Pennycairn Holdings Ltd. Recovery of telex advice (Ex. PW91/A1) from the residence of A-1 also confirms the involvement of A-7.
18.36 Sh. Narang has contended that mere fact that A-7 was staying at the residence of his father, whenever he used to visit Delhi, would not signify anything substantial. He has also claimed that use of telephone or the factum of making calls as alleged by CBI does not stand proved as there was EPBAX system installed at the residence of his father and there is nothing to show that any such call was either received or attended to by A-7 himself. It has also been claimed that there is no confirmation regarding the identity of Mr. Bancroft as no question in this regard was put to him when he was examined through video-conferencing and, therefore, testimony of Mr. Bancroft is liable to expunged from the record altogether. Sh. Narang has also claimed that CBI did not produce any evidence in the form of any flight/train reservation to show that A-7 was in Delhi on the dates, the calls were allegedly made by his co-accused at the residence of his father situated at Pandit Pant Marg, New Delhi. It has also been claimed that no investigation was made from his father or for that matter from the other staff officials posted at the residence of his father in relation to such calls. It has also been claimed that the attendance record of A-7 at Legislative Council of Bihar i.e. Ex. DW2/A-1 & A-2 would show that on some such alleged dates of receiving of calls, A-7 was rather attending the Legislative Council in Bihar. It has also been claimed that chain is totally broken and incomplete CNR No. DLCT01-000024-1998 page 209 of 251 and, therefore, the involvement of A-7 does not stand proved at all.
18.37 I have carefully considered all the aforesaid contentions and seen the entire record very carefully. I am, however, of the view that once the factum of making of calls was duly established and proved by CBI, onus was rather on defence to show that such calls were not in context of the contract in question. A-7 did not enter into witness box. He also did not examine his father and, therefore, merely on the basis of bald averments, it cannot be assumed that A-7 had no connection with all such calls. His making calls to A-3 very frequently and also meeting A-1 and A-2 at the residence of his father during the relevant and contemporary period speaks volume of his complicity.
18.38 As borne out from call details, it is quite noticeable that A-7 entered into scene in and around May 1995 when A-3 started getting orders. However, despite winning many orders, could not fulfill even a one. Since, the material did not come, there was no question of release of any payment from NFL.
18.39 Let me take note of few important calls.
18.40 Ex PW7/E (D-92) would reflect that call was made from Ambassador Hotel by A-3 ostensibly to A-7 on number 3711404. It was during the period when Tender No.3 had been under consideration. The later during Tender No.4 also, A-3 made call to him from Hotel Asian International, New Delhi on same number. Reference be made to Ex PW42/E (D-99). Reference be also made to Ex PW42/E-1 to E-17. It also looks that A-7 was able to influence NFL as A-3 got orders from NFL. Of course, there is no call during the period when first contract was executed but then the payment terms were quite typical and, therefore, there was no question of arranging any funding instrument and, therefore, such contract fell apart. Regarding CNR No. DLCT01-000024-1998 page 210 of 251 second contract, A-7 was again in loop. On 30.10.1995, two calls of substantial duration emanated from the premises of A-7. These were made to A-3 to his Hyderabad number. Reference be made to Ex PW22/A-9. It was an important date as noting for awarding such second contract was prepared with utmost haste during that time only. Even on 01.11.1995, A-3 made call to A-7 as is evident from Ex PW42/E-14 (D-111) and I will not call it as a sheer coincidence that same day only, A-1 had approved the noting which come through A-2 and the contract was decided to be given by NFL. A-3 was Indian agent for M/s Karsans and he was exploiting all the contacts and pulling the strings and the award was given without even insisting for physical presence of supplier in India. Finally, when contract was signed on 09.11.1995, A-7 again got call from A-3 from Asian Hotel as is clear from PW42/E-15 (D-112). This also cannot be sidelined as a mere coincidence. A-3 kept on updating A-7 on 14.11.1995, 15.11.1995 by making calls as can be seen from PW42/E-16 (D-
113). The date when the money was credited in the account of A-4 in Pictet Bank, A- 7 had made a call to A-3 at his Hyderabad number. Such call dated 29.11.1995 is found mentioned in Ex PW22/A-17(D-180). All these calls clearly indicate the deep involvement of A-7. Thus, A-7, all along, was in continuous touch with A-3 as well as meeting A-1 and A-2. When A-7 and A-3 were questioned about such calls, A-3 branded CDRs as fabricated documents and A-7 merely pleaded his ignorance. These answers will not mean that they have been successfully rebut the evidence.
18.41 Moreover, his co-accused Sh. Mallesham Goud (A-8) has also raised a clear-cut accusing finger towards him during his statement under Section 40 of FERA which has full evidentiary value. Testimony of PW46 Vasudev Gobind Paryani, PW47 Sh. Rajender Kr. Babani and PW53 Sh. Dharmesh Kumar Yadav also suggests complicity of Sh. P.C. Yadav (A-7). Recovery of copy of telex advice from the residence of A-1 is also a very important facet of the case which goes against A-7. It's too late for defence to raise any grievance regarding identity of Mr. Bancroft. No CNR No. DLCT01-000024-1998 page 211 of 251 question or suggestion was put to him by defence challenging his such status. Moreover, Mr. Bancroft had been examined through video-conferencing and it is unimaginable that during such video-conferencing a wrong person would be asked to depose.
18.42 In view of the aforesaid facts and circumstances, even if CBI failed to contact Mr. Harsh Sethi, it would not mean anything at all. Moreover, in such type of matters, recovery of money or the money trail is merely one of the circumstances, not the sole governing circumstance. Though PW44 Sh. Satish Chandra did not support the prosecution case wholeheartedly but he did make it clear that A-7 had met A-1 and A-2. Fact remains that even accused P.C. Yadav admitted in his statement under Section 313 Cr.P.C. that he had given one envelope to Sh. Satish Chandra for transmission to A-2 though supplementing that it was related to policies and schemes for the welfare of people of his own constituency in Bihar. His such supplementary assertion is nothing but a lie. The envelope which he had given to Sh. Satish Chandra was containing the details of the account of Pennycairn Holdings to which said sum of 200000 US$ was to be transmitted as his share in the deal. It really does not matter whether the advice given in envelope by A-7 and the confirmation advice meant in said regard (as obtained from Dubai) were produced in originals or not. What mattered most was the bank details provided by A-7 whereby he wanted money to be transferred to his such account.
18.43 It is a case of circumstantial evidence and money was routed through hawala channel or through banks situated outside India and in such cases, it cannot be expected that prosecution would always come with hundred percent precision showing complete documentary proof regarding the transfer of money. In such type of dubious transactions, it is invariably impossible to reach the trail located in safe havens abroad.
CNR No. DLCT01-000024-1998 page 212 of 251 18.44 As regards involvement of A-6 Sh. B. Sanjeeva Rao, two factors remain
in common. He was also in conversation with his co-accused and was also named by A-8 in his statement under Section 40 of FERA. In addition, A-6 had also visited the office of NFL where he was given VIP treatment and was duly received and brought to the room of Managing Director/Executive Director. Finally, he also received substantial sum of money of Rs. 1.02 crores.
18.45 As regards calls, he was in touch with A-1 as he made calls to him in April and May 1995 as is evident from Ex PW75/B-1 (D-138-A). These have already been discussed earlier. He also stayed in Hotel Ambassador, Delhi from where also calls were made. In May. 1995, he along with A-3 visited NFL and met A-1 and A-2. In June, July, September 1995 also, A-6 made calls to A-1 as is clear from Ex PW75/B-1 (D-138A). A-1 also made calls to him in July 1995. Reference be made to Ex PW22/D-1(D-179). Moreover, A-3 was regularly updating his co-accused including A-6 about the development. It will be also important to note here that A-6 had made call to M/s Karsans as well as to A-1 on 04.01.1996 as is evident from said Ex PW75/B-1. A-I had also made calls to A-6 in March 1996 also. These calls show the close connection amongst all accused.
18.46 As regards the visits made by A-6 to NFL, it has been claimed by defence that since he was in sugar business and was having Mannia Sugar Mills, he used to visit NFL office in this regard. Defence has also relied upon the testimony of PW68 Sh. A. Satyanarain. However, no document has been placed on record by A-6 that in relation to his such sugar business, he was required to visit NFL.
18.47 I have carefully gone through the testimony of PW68 Sh. A. Satyanarain and though he did claim that he was providing consultancy services to Mannia Sugar CNR No. DLCT01-000024-1998 page 213 of 251 Limited of A-6 but he nowhere claimed that Sh. Sanjeeva Rao (A-6) himself also visited NFL in relation to his such business. He rather claimed that he (PW68 Sh. A. Satyanarain) was providing consultancy services to them. Even in his cross- examination, he never claimed that A-6 ever used to go to NFL office. Fact remains that A-6 himself admitted that he used to go to NFL and used to meet accused and other officials for setting up the Farmer Service Centre.
18.48 I have seen the testimony of relevant NFL officials i.e. PW36 Sh. P.K. Kataria, PW37 Sh. A.K. Maitra, PW38 Sh. Anil Kumar Sharma and PW40 Sh. Sahib Singh and no suggestion was put to them that A-6 used to visit NFL in relation to his business of sugar only. There is no cross-examination of PW36 Sh. P.K. Kataria and PW37 Sh. A.K. Maitra by A-6. On the contrary, when PW39 Sh. Sahib Singh was cross-examined by A-6, it was rather suggested to him that Sh. B. Sanjeeva Rao (A-
6) had never come to their NFL office. Thus, A-6 himself looks to be somewhat confused. On one hand, he says that he used to visit NFL in relation to his sugar business and tries to justify his visit to NFL and on the other hand, he is also found giving suggestion to the effect that he never paid any such visit to NFL.
18.49 He also seems to be beneficiary of the money. Documents proved on record by CBI also go on to show that M/s Marg Leasing & Finance Pvt. Ltd. had issued three cheques worth Rs. 32 lacs in all. Details of all these cheques have already been discussed by me in the earlier part of my judgment while dealing with the involvement of A-8. A-8 had admitted that he had issued all such three cheques though attempted to justify the issuance of cheques claiming that it was on account of loan which was eventually returned by the borrowers.
18.50 One such borrowers company is M/s SRR Finance & Investment Pvt. Ltd. in which wife of A-6 is one of the Directors. The other borrower company is M/s CNR No. DLCT01-000024-1998 page 214 of 251 Sai Bharath Finance Pvt. Ltd. Which has two Directors including brother of A-8 and the third company i.e. M/s Madicon Marketing Pvt. Ltd. which received a sum of Rs. 12 lacs is owned by A-6 himself. Transaction cheques were issued by M/s Marg Leasing & Finance Pvt. Ltd. during the period of February-April 1996 and it was only after the instant FIR had been registered that A-6 paid back to portray as if he had not received any advantage either directly or through his relatives and that it was mere loan which was repaid. Reliance upon the version of PW59 V. Shreekant is misplaced for two reasons. Firstly, he is close relative of A-6 and seems interested in ensuring release of A-6. Secondly, he told about the loan transaction for the first time before the court. If he actually knew anything of that sort, he should have stated so to CBI during the investigation stage itself.
18.51 Such subsequent act of issuing cheques after registration of FIR is feeble attempt to project as if there was a loan transaction. Moreover, if at all there was any such loan transaction, A-6 should have produced documents in this regard and should have also examined his wife and brother to prove the alleged loan repayment. Nothing of that sort has been contemplated or done. The effect of non-production or not adducing the best evidence, is viewed by courts as material suppression which leads to an adverse inference under Section 114(g) of the Evidence Act.
RELEVANCE OF TESTIMONY OF ALLEGED ACCOMPLICES 19.0 In connection with worth of testimony of approver, two sections of Indian Evidence Act are very important. These are as under: -
"133. Accomplice: - An accomplice shall be a competent witness against an accused person; and a conviction is not illegal merely because it proceeds upon the uncorroborated testimony of an accomplice."
CNR No. DLCT01-000024-1998 page 215 of 251 Illustration (b) to Section 114 "(b) The Court may presume that an accomplice is unworthy of credit, unless he is corroborated in material particulars."
19.1 Dealing with the scope and ambit of the above-noted two provisions, Apex Court, in Bhiva Doulu Patil v. State of Maharashtra, AIR 1963 SC 599 (supra) held that both the sections were part of one subject and have to be considered together. It further held: -
"The combined effect of Sections 133 and Illustration (b) to Section 114, may be stated as follows:
According to the former, which is a Rule of law, an accomplice is competent to give evidence and according to the latter, which is a Rule of practice it is almost always unsafe to convict upon his testimony alone. Therefore, though the conviction of an accused on the testimony of an accomplice cannot be said to be illegal yet the courts will, as a matter of practice, not accept the evidence of such a witness without corroboration in material particulars."
19.2 Thus, an accomplice is undoubtedly a competent witness under the Indian Evidence Act. When investigating agency is unable to crack any mystery, such provision related to "tender of pardon" is generally resorted to bring home the guilt of any such perpetrator. There can be, however, no doubt that the very fact that any such accomplice, who is also willing to reveal the truth, has participated in the commission of the offence introduces a sort of blemish in his evidence and courts are hesitant to act on such evidence unless it is corroborated in material particulars by other independent evidence. To that extent, defence is justified in placing reliance upon K. Hashim (supra).
CNR No. DLCT01-000024-1998 page 216 of 251 19.3 It would not be, however, appropriate to expect that such independent
corroboration should cover the whole of the prosecution story or even all the material particulars. If such a view is adopted it would render the evidence of the accomplice wholly superfluous and somewhat unwarranted. Why, in such a situation, prosecuting agency would require any approver? On the other hand, it would also not be safe to act upon such evidence merely because it is corroborated in minor particulars or incidental details because, in such a case, corroboration does not afford the necessary assurance that the main story disclosed by the approver can be reasonably and safely accepted as true. But it must never be forgotten that before the court reaches the stage of considering the question of corroboration and its adequacy or otherwise, the first initial and essential question to consider is whether even as an accomplice, the approver is a reliable witness or not. If the answer to this question is against the approver then there is an end of the matter, and no question as to whether his evidence is corroborated or not falls to be considered. In other words, the appreciation of an approver's evidence has to satisfy a double test. His evidence must show that he is a reliable witness and that is a test which is common to all witnesses. If this test is satisfied the second test which still remains to be applied is that the approver's evidence must receive sufficient corroboration. Reference in this regard be made to Sarwan Singh vs. State of Punjab AIR 1957 SC 637 (supra).
19.4 In Saravanabhavan and Govindaswamy v. State of Madras, AIR 1966 SC 1273, it has been observed that the antecedents of the approver do not really make him "either a better or worse witness" but his evidence can only be accepted on its own merit and with sufficient corroboration. Reference be also made to Narayan Chetanram Chaudhary v. State of Maharashtra (2000) 8 SCC 457 wherein it has been held that for corroborative evidence, the court must look at the broad spectrum of the approver's version and then find out whether there is other evidence to corroborate and lend assurance to that version. The nature and extent of CNR No. DLCT01-000024-1998 page 217 of 251 such corroboration may depend upon the facts of different cases.
19.5 Such corroboration need not be in the form of ocular testimony of witnesses and may even be in the form of circumstantial evidence. Corroborative evidence, however, must be independent and not vague or unreliable.
19.6 Three material prosecutions witness i.e. Mr. Dharmesh, Mr. Babani and Mr. Pariyani assisted in hawala transactions and were instrumental in bringing the money to India through illegitimate channels.
19.7 Mr. Dharmesh Yadav and Mr. Lagoo seems to have been sent to Dubai so that they can open accounts where such ill-gotten money is transmitted and eventually brought back to India. They permitted themselves to be played in the hands of accused but they cannot be branded as co-conspirators. Their role was limited. They were to assist in bringing money to India through illegal means. They were least concerned as to how the scam originated and who its perpetrators were. Though they were under the CBI scanner, they were never arrested as accused and never charge-sheeted. The question is if any such person is made witness without formal tender of pardon, what would be the evidentiary value of his testimony. Here comes the two terms i.e. approver and accomplice. These look quite overlapping and interchangeable ones. Importantly, said two sections use word 'accomplice' and not 'approver'.
19.8 Any person given immunity under sec 306 or sec 307 Cr.P.C. is an approver. He gets official immunity though at the same time, he is under legal obligation to make complete disclosure during trial or else be ready to be relegated to the status of accused. Any other partner in crime, who has not been given any such legal immunity and also not sent up to face trial attains the status of mere CNR No. DLCT01-000024-1998 page 218 of 251 accomplice. His status is shade less than that of approver as he is not under any legal obligation or bound by any condition to make disclosure during trial.
19.9 The essential objective of a pardon is that the fear of prosecution being removed, a person, though privy to the offence, may freely testify and make a full disclosure of the events about the crime. The tender of pardon is quid pro quo. The tender of pardon not having been sought or given would not make such person a formal approver. He also, certainly, is not a person against whom the State has entered nolle prosequi. However, such person cannot be said to be incompetent to stand as a witness. He may still be regarded a competent witness though his legal status would be that of an accomplice only. He also is required to meet the twin tests of reliability and corroboration. Thus, the evidence of an accomplice does not differ from the evidence of any other witness except that his evidence is looked upon with additional caution.
19.10 There cannot be any scope of debate about the judgments cited at the bar by the defence. Legal position is precisely the same as already noted above.
19.11 In Abdul Sattar vs Union Territory, Chandigarh AIR 1986 SC 1438, it was held that law was fairly well settled that on the uncorroborated testimony of the approver, it would be risky to base the conviction. It was also held that if such testimony does not seem convincing then, there is no requirement of seeking corroboration even. In Balwant Kaur vs Union Territory Of Chandigarh 1988 AIR 139 (supra) it has been observed that the corroboration has to be of two kinds; first belonging to the area of reassurance of the credit of the approver himself as a trustworthy witness; and the second- which arises for conclusion after the court is satisfied about the creditability of the approver-as to the corroboration in material particulars not only of the commission of the crime but also of the complicity of other CNR No. DLCT01-000024-1998 page 219 of 251 accused-person in the crime. If on the first area the court is not satisfied, the second does not arise. However, the two areas of corroboration are not two separate, water- tight compartments. The evidence as a whole will have to be examined to reach conclusions on both aspects. Propositions as laid down in Adambhai Sulemanbhai Ajmeri & Ors. (supra) is not disputed at all.
19.12 It is thus quite evident that the said two provisions seem essentially meant for those witnesses who might have, unwillingly or under some force and compulsion, aided the main perpetrators and who are not eventually made accused by the concerned investigating agency and, therefore, there was no occasion for tender of pardon for them.
19.13 Be that as it may, even otherwise, accused is also required to show and demonstrate as to what prejudice had been caused on account of not going through the provisions of tender of pardon. Nothing of that sort has been projected here. Accused(s) merely want to wriggle out of clutches of law by taking hyper-technical approach.
19.14 Thus, I have no hesitation in attaching full importance to the testimony of all these alleged accomplices.
CONCLUSION 20.0 Needless to say that each case has its own peculiarity and factual matrix of any two cases would never be comparable and, therefore, precedents cannot be applied mechanically. In UNION OF INDIA & ANR. VS. ARULMOZHI INIARASU & ORS (2011) 9 SCR page 12, it has been very aptly observed as under: -
CNR No. DLCT01-000024-1998 page 220 of 251 "Before examining the first limb of the question, formulated above, it would be instructive to note, as a preface, the well settled principle of law in the matter of applying precedents that the Court should not place reliance on decisions without discussing as to how the fact situation of the case before it fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of Statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Disposal of cases by blindly placing reliance on a decision is not proper because one additional or different fact may make a world of difference between conclusions in two cases. (Ref.: Bharat Petroleum Corpn. Ltd. & Anr. Vs. N.R.Vairamani & Anr; Sarva Shramik Sanghatana (KV), Mumbai Vs. State of Maharashtra & Ors. and Bhuwalka Steel Industries Limited Vs. Bombay Iron & Steel Labour Board & Anr.)"
20.1 Number of judgments has been cited before me by all the sides. There can, certainly, be no debate or qualm with respect to the settled principles of law as such. However, each case has its own unique and unusual factual matrix and, therefore, precedents cannot be robotically applied as one small change in situation would make hell lot of difference.
20.2 There cannot be any straight jacket formula to assess and decipher criminal conspiracy. As the cliché goes, a conspiracy is hatched in secrecy and it may be difficult to adduce direct evidence of the same. The prosecution will often rely upon circumstantial evidence. The conspiracy can be, undoubtedly, proved by direct or circumstantial evidence. It is, however, essential that the offence of conspiracy presupposes some kind of agreement. It may not be an express one. The evidence as to transmission of thoughts sharing the unlawful design may be sufficient. A conspiracy is a continuing offence and continues to subsist and committed wherever one of the conspirators does an act or series of acts. So long as its performance CNR No. DLCT01-000024-1998 page 221 of 251 continues, it is a continuing offence till it is executed or rescinded or frustrated by choice or necessity. A crime is complete as soon as the agreement is made, but it is not a thing of the moment. It does not end with the making of the agreement. It will continue so long as there are two or more parties to it intending to carry into effect the design. There may be division of performances in the chain of actions but the crucial thing would be that all such acts are done with one object to achieve the real end of which every collaborator must be aware and in which each one of them is interested. Thus there must be unity of object or purpose though there may be plurality of means.The eventual objective, herein, was to get the money and, therefore, the conspiracy continued till all the players got their share. Many earlier pronouncements were discussed in Nalini's case (supra), where it has been succinctly observed as under: -
Some of the broad principles governing the law of conspiracy may be summarized though, as the name implies, a summary cannot be exhaustive of the principles.
1. Under Section 120-A IPC offence of criminal conspiracy is committed when two or more persons agree to do or cause to be done an illegal act or legal act by illegal means. When it is a legal act by illegal means overt act is necessary. Offence of criminal conspiracy is an exception to the general law where intent alone does not constitute crime. It is intention to commit crime and joining hands with persons having the same intention. Not only the intention but there has to be agreement to carry out the object of the intention, which is an offence. The question for consideration in a case is did all the accused have the intention and did they agree that the crime be committed. It would not be enough for the offence of conspiracy when some of the accused merely entertained a wish, howsoever horrendous it may be, that offence be committed.
2. Acts subsequent to the achieving of the object of conspiracy may tend to prove that a particular accused was party to the conspiracy. Once the object of conspiracy has been achieved, any subsequent act, which may be unlawful, would not make the accused a part of the conspiracy like giving shelter to an absconder.
3. Conspiracy is hatched in private or in secrecy. It is rarely possible to establish a conspiracy by direct evidence. Usually, both the existence of the conspiracy and its objects have to be inferred from the circumstances and the conduct of the accused.
4. Conspirators may for example, be enrolled in a chain - A enrolling B, Benrolling C, and so on;
and all will be members of a single conspiracy if they so intend and agree, even though each member knows only the person who enrolled him and the person whom he enrols. There may be a kind of umbrella-spoke enrolment, where a single person at the centre does the enrolling and all the other members are unknown to each other, though they know that there are to be CNR No. DLCT01-000024-1998 page 222 of 251 other members. These are theories and in practice it may be difficult to tell which conspiracy in a particular case falls into which category. It may however, even overlap. But then there has to be present mutual interest. Persons may be members of single conspiracy even though each is ignorant of the identity of many others who may have diverse roles to play. It is not a part of the crime of conspiracy that all the conspirators need to agree to play the same or an active role.
5. When two or more persons agree to commit a crime of conspiracy, then regardless of making or considering any plans for its commission, and despite the fact that no step is taken by any such person to carry out their common purpose, a crime is committed by each and every one who joins in the agreement. There has thus to be two conspirators and there may be more than that. To prove the charge of conspiracy it is not necessary that intended crime was committed or not. If committed it may further help prosecution to prove the charge of conspiracy.
6. It is not necessary that all conspirators should agree to the common purpose at the same time.
They may join with other conspirators at any time before the consummation of the intended objective, and all are equally responsible. What part each conspirator is to play may not be known to everyone or the fact as to when a conspirator joined the conspiracy and when he left.
7. A charge of conspiracy may prejudice the accused because it forces them into a joint trial and the court may consider the entire mass of evidence against every accused. Prosecution has to produce evidence not only to show that each of the accused has knowledge of the object of conspiracy but also of the agreement. In the charge of conspiracy the court has to guard itself against the danger of unfairness to the accused. Introduction of evidence against some may result in the conviction of all, which is to be avoided. By means of evidence in conspiracy, which is otherwise inadmissible in the trial of any other substantive offence prosecution tries to implicate the accused not only in the conspiracy itself but also in the substantive crime of the alleged conspirators. There is always difficulty in tracing the precise contribution of each member of the conspiracy but then there has to be cogent and convincing evidence against each one of the accused charged with the offence of conspiracy. As observed by Judge Learned Hand "this distinction is important today when many prosecutors seek to sweep within the dragnet of conspiracy all those who have been associated in any degree whatever with the main offenders".
8. As stated above it is the unlawful agreement and not its accomplishment, which is the gist or essence of the crime of conspiracy. Offence of criminal conspiracy is complete even though there is no agreement as to the means by which the purpose is to be accomplished. It is the unlawful agreement which is the gravamen of the crime of conspiracy. The unlawful agreement which amounts to a conspiracy need not be formal or express,but may be inherent in and inferred from the circumstances, especially declarations, acts and conduct of the conspirators. The agreement need not be entered into by all the parties to it at the same time but may be reached by successive actions evidencing their joining of the conspiracy.
9. It has been said that a criminal conspiracy is a partnership in crime, and that there is in each conspiracy a joint or mutual agency for the prosecution of a common plan. Thus, if two or more persons enter into a conspiracy, any act done by any of them pursuant to the agreement is, in contemplation of law, the act of each of them and they are jointly responsible therefor. This means that everything said, written or done by any of the conspirators in execution or CNR No. DLCT01-000024-1998 page 223 of 251 furtherance of the common purpose is deemed to have been said, done or written by each of them. And this joint responsibility extends not only to what is done by any of the conspirators pursuant to the original agreement but also to collateral acts incidental to and growing out of the original purpose. A conspirator is not responsible, however, for acts done by a co- conspirator after termination of the conspiracy. The joinder of a conspiracy by a new member does not create a new conspiracy nor does it change the status of the other conspirators, and the mere fact that conspirators individually or in groups perform different tasks to a common end does not split up a conspiracy into several different conspiracies.
10. A man may join a conspiracy by word or by deed. However, criminal responsibility for a conspiracy requires more than a merely passive attitude towards an existing conspiracy. One who commits an overt act with knowledge of the conspiracy is guilty. And one who tacitly consents to the object of a conspiracy and goes along with other conspirators, actually standing by while the others put the conspiracy into effect, is guilty though he intends to take no active part in the crime.
20.3 Thus, the element of conspiracy has to be fathomed on the basis of broad spectrum of the case after deep analysis of the testimony led during the trial and documents proved, of course, after due application of logical inferences wherever required.
20.4 I have seen the testimony of PW95 Sh. B.N.P. Azad. Investigation was entrusted to him after the registration of FIR Ex. PW92/A. He recorded statements of witnesses and collected various documents and scrutinized those and also interrogated the accused persons. He made reference about recording of statements of witnesses made to him as well as under Section 164 Cr.P.C. He deposed that he had made request to CBI Director, pursuant to which the Director, CBI had sent a letter to Indian Ambassador at Berne, Switzerland to request the Swiss authorities to freeze the amount available in the bank accounts of M/s Karsan. He also deposed that Indian Ambassador sent copies of all such documents related to bank account of Pictet Bank and Banque Indosuez Bank of accused persons. He claimed that since copies were not duly certified or authenticated by the concerned bank, he sent those back and later such certificate of authentication was received from Swiss Federal General Prosecutor through forwarding letter Ex. PW95/D. Such certificate of CNR No. DLCT01-000024-1998 page 224 of 251 authentication has been proved as Mark P95/2 and its English translation as Mark P- 95/3.
20.5 PW95 Sh. B.N.P. Azad also made reference about remittance which had been made from account no. 91923 of M/s Karsan with Pictet Bank after receiving 37.62 million US$. He deposed that he had requested the Court for issuance of Letter of Rogatory (LRs) to various countries which were issued by the Court from time to time. Such LRs were sent to Turkey, UAE, Greece, UK. He deposed that LRs sent to UAE and Greece were not executed. He also made reference about the house search of A.E. Pinto (A-9) regarding collection of record from Barclays Bank also about recording of statements of witnesses including Nick Alchurst and A.K. Kingsnorth. He deposed that LRs were sent to Isle of Mann and Switzerland and made reference about the documents received from there. He deposed that LRs were also sent to USA in relation to the account of M/s Malyn Holdings and the reply received indicated that the beneficiary was Sh. Vepuri Murthy and his wife Lakshmi Murthy. LR was also sent to Monaco. He deposed about issuance of Red Corner Notice for the arrest of those persons who were not available in India. He also made reference to request for extradition of A-4, A-5 & A-9 and about their respective extradition. He also made reference about interrogation of PW53 Sh. Dharmesh Yadav, PW47 Sh. Rajender Kr. Babani, PW46 Vasudev Gobind Paryani and Sh. B.S. Lagoo. He also deposed that no document or noting recorded of the alleged first contract could be found in the record of NFL though the document dated 27.07.1995 was purportedly bearing signatures of Sh. D.S. Kanwar (A-2) and when he interrogated D.S. Kanwar about such first contract, Sh. D.S. Kanwar (A-2) disclosed that he had signed the document when it was brought by A-3. However, he (A-2) supplemented that he had signed the same at the behest of A-1.
CNR No. DLCT01-000024-1998 page 225 of 251 20.6 I have also seen his cross-examination which is very exhaustive and
lengthy. He claimed that no criminal proceedings had been initiated against Mr. Vepuri Murthy on the ground that he did not find any sufficient evidence against him. Fact remains that investigating officer is a mere collector of evidence and he is not expected to prove the case all by himself on the strength of documents so collected. His job is to ensure that the investigation remains on the right track and he does reach the relevant witnesses and collects all the relevant documents. All such relevant record and documents, naturally, are to be proved by the concerned witnesses only. I do not find anything his cross-examination which may indicate that Sh. Azad had acted with any malafide or charge-sheeted anyone without any material. Fact though remains that he should have thoroughly investigated the role of Sh. Anand Mohan as well as of Sh. Vepuri Murthy in order to fully ensure as to why these persons had received the money.
20.7 As regards making of Sh. Babani, Sh. Paryani and Sh. Dharmesh Kr. Yadav as prosecution witnesses and getting their statements recorded under Section 164 Cr.P.C. despite the fact that there were warrants against them, it is always the prerogative of the investigating agency to determine as to who should be made accused and who should be cited as witnesses. However, investigating agency is not the final authority. When charge-sheet is eventually placed before the Court, the Court minutely goes through the same even at the stage of taking cognizance and Court can always summon anyone who seems to be involved but has been left out by such agency. Even at the stage of charge, such exercise can be repeated. Moreover, powers given to the Court under Section 319 Cr.P.C. are vast and unfettered enough to summon anyone as accused at any stage and, therefore, even if investigating agency had chosen to treat anyone as a witness, it would not have deterred the Court to summon him as an accused instead.
CNR No. DLCT01-000024-1998 page 226 of 251 20.8 I have already discussed the testimony of Sh. Babani, Sh. Paryani and
Sh. Dharmesh Yadav and they were not part of any conspiracy though they assisted the accused persons in bringing the money to India through illegal channels. They were thus merely used for the said purpose and, therefore, investigating agency had chosen them to cite as witnesses in order to prove the conspiracy in question. They were nowhere in the picture at the time of the inking of contract and, therefore, no fault can be found in the approach of the investigating agency. I also do not find any material on record which may persuade me to summon anyone else as an accused.
20.9 Undoubtedly, it would have been better if office and residences of Sh. P.C. Yadav had also been searched and his bank accounts had also been assessed. Undoubtedly, Sh. Azad did claim in his cross-examination that he did not find any evidence showing direct or indirect connection with M/s Edible Foodstuff and M/s Pennycairn Holdings but my foregoing discussion clearly indicts him. It would also have been better if Sh. Ram Lakhan Yadav, father of Sh. P.C. Yadav had also been contacted during investigation though I can imagine that even if he had been contacted, he would not have said anything against his own son. I can understand the precarious position of the investigating officer as at times, it becomes difficult to quiz a person holding such a high position.
20.10 Investigating officer did not meet Mr. Nick Alchurst and Mr. A.C. Kingsnorth and he did not seek any interview of Mr. Neil Stevens and A.C. Kingsnorth. Fact remains that he had received all such statements in execution of letter rogatory. Merely because the names of Sh. B. Sanjeeva Rao, Sh. P.C. Yadav and Sh. D. Mallesham Goud did not figure in the initial complaint of Dr. Chhattra Sal Singh and Mr. Jaiswal, it would not mean that they could not have been charge- sheeted. Though SBI officials and RBI officials seemed to be negligent and acted with undue haste that, by itself, would not mean and indicate that they were also part CNR No. DLCT01-000024-1998 page 227 of 251 of any conspiracy. PW36 Mr. Kataria, as per the instructions of A-1 & A-2, seems to have misrepresented them and, therefore, SBI officials started feeling that the policy in question was serving the requisite purpose.
20.11 Prosecution and even the adjudication has to be in full conformity with the terms of extradition. Due care in this regard had been taken by the then learned Special Judge at the time of ascertainment of charges. I would also like to make special mention about Sh. A.K. Garg, the then learned Special Judge, CBI who took charge of the trial in unyielding and persistent manner and recorded such voluminous and exhaustive evidence in a splendid manner. He had also put a number of court questions to several witnesses which demonstrated that he had full command over the trial and had marshaled the facts. In such a situation, it would have been certainly better if the eventual decision had also been penned by him. For some reasons, the matter lingered on and got transferred from one court to the other and eventually landed before this Court when the case was already at concluding stage.
20.12 It is noticed that accused Tuncay Alankus, who otherwise does not know English, had cross-examined various witnesses at length. He took help of interpreter as well as of his co-accused Cihan Karanci. During final arguments also, A-4 sought permission to address oral arguments and he was given full indulgence by the Court. It was noticed by the Court that there was 'prefect tuning' between A-4 & A-5 and the translation was done by A-5 with utmost ease. If only such tuning and great team- work had been shown and applied by them on the right side of the law, the things would have been certainly different today. Cross-examination conducted by A-4 was though extensive but it cannot be said that questions put by him were totally irrelevant. Fact, however, remains that even the comprehensive cross-examination of various witnesses by A-4 & A-5 could not substantiate their defence version in any manner whatsoever. There is nothing before me to suggest that it was case of mere CNR No. DLCT01-000024-1998 page 228 of 251 civil transaction or mere breach, with no criminality involved.
20.13 Dishonest intention on the part of A-4 & A-5 and the existence of conspiracy amongst all the accused is writ large.
20.14 Philosophy of 'error of judgment' and 'lack of prudence' as propounded by A-1 and A-2 does not stand attracted herein at all.
20.15 Error of judgment would come into play when a person reaches crossroads where there is no directional signage, no route map, no means to take assistance from anywhere and there are paths more than one which are untrodden and untouched and he, on the basis of his inner voice or past experience or some instinct, chooses the one. If eventually, such chosen path is found to be the wrong one, he cannot be said to be careless or reckless. Here, both these gentlemen were taking steps fully mindful of the eventual outcome. They allowed the things to happen in a particular manner. They entered into contract knowing fully well as to what would be the consequences. They deliberately chose the path which caused colossal loss to Nation and it is now too late for them to say that it was a case of mere error of judgment.
20.16 A-2 had no business to recommend the proposal and A-1 had no reason to approve the proposal in principle. A-1 cannot be heard saying that his job was over and it was for the others to see whether the formalities were carried out properly or not. He should not have okayed the proposal having obnoxious clause of 100% advance payment. He should have seen the insurance policy. Of course, Mr. Kataria should not have mentioned factually incorrect thing in the noting but as Head of NFL and final approving authority, A-1 should have himself also seen all the documents instead of relying blindly on noting and then professing that he was misled. It is CNR No. DLCT01-000024-1998 page 229 of 251 surprising as to why he chose to leave for Syria in haste putting 133 crores at stake. He should have insisted for execution of contract prior to ordering release of 1% of contract amount. He has not bothered to explain as to why he did not attempt to check the credentials and past experience of a seller with whom NFL was dealing for the first time. He was happy with the draft of contract sent from abroad and did not make any change therein. He does not say that he was working under the awe of PMO and Minister of Fertilizer or his son. That being so, his all escape routes are closed. His hasty initial actions and subsequent inaction speak volumes of his complicity. The Board had merely permitted him to not put the LOI before the Board. It never authorized him to carry out wholesale changes in the import process. There is no ex-post facto approval from Board either. Later Board meetings would reveal that Board had also noted serious irregularity on his part. Merely because, the Board, of which he himself was the Chairman, had asked him to take legal opinion would not mean that he was to be exonerated or that there was existence of two views. If he was actually vigilant and concerned about the interest of NFL, he should have obtained such opinion before ordering release of payment. Moreover, such subsequent legal opinion does not come to the rescue of A-1or A-2 even if it comes from eminent jurists. The facts, led during the trial, clearly suggest the criminality and dishonest intention on the part of A-1 as well.
20.17 A-1 seems to have passed buck to A-2 and A-2 has also responded by doing the similar thing. They both are attacking each other. Fact remains that they both are to be blamed equally. They cannot be permitted to say that their subordinates had prepared the notings and, therefore, they are not accountable. These subordinates acted as per their dictates only and, therefore, they cannot be labelled as accomplices. They all were, very obviously, used by A-1 and A-2 and CBI did the right thing by citing them as witnesses. A-1 and A-2 both influenced upon and prevailed over SBI and RBI officials. They simply wanted the money to go out of India CNR No. DLCT01-000024-1998 page 230 of 251 as quickly as possible. Though there is no charge of destruction of evidence but the manner in which record pertaining to first contract vanished is bound to raise eyebrows and the complicity of A-1 and A-2 on said aspect cannot be fully ruled out. A-2 is found blowing hot and cold. On one hand, he says that the first contract was executed with the acquiesce of A-1 and on the other, he disowns his signature on such contract.
20.18 It cannot be said that A-1 and A-2 were acting in good faith. Good faith is defined in Section 52 of I.P.C. It states that nothing is said to be done or believed in 'good faith' which is done or believed without the due care and attention. Thus, the key words are due care and attention. These are clearly lacking here. A-1 and A-2 both acted hastily and recklessly. Their conduct persuades me to believe that they were least bothered about the interest of their employer. They inked agreement with mind-boggling unilateral terms which demonstrates utter disregard to settled norms. They threw all the possible precautions and caution to the winds. Therefore, they cannot seek any solace from C. Chenga Readdy & ors. Vs. State of A.P (supra) and C. K. Jaffer Sharief Vs. State (supra).
20.19 Let me now make reference to some subsequent Board Meetings of NFL.
20.20 As per Minutes of Emergent Meeting of Board held on 27.03.1996 (Ex. PW36/DT-10) (Part of D-56), matter related to import of urea was taken up. Issue of contract awarded to M/s Karsan Ltd. was discussed in detail. The Board took serious note about the hurry in which the contract was entered into with M/s Karsan Ltd. without due diligence particularly when the party had no record of supply of urea to India in the past. It felt that it was incumbent on NFL to make searching enquiries into the status of the seller more when it was negotiated on a single tender basis in which variance was made from the established procedure of earnest money deposit, CNR No. DLCT01-000024-1998 page 231 of 251 performance guarantee bond, payment through letter of credit. Such Minutes reflect that MD (A-1) had explained to the Board that he had relied upon the oral opinion given by ED (Marketing) regarding the party but the Board was not satisfied and resolved that an inquiry should be instituted in the matter without any delay. Board also asked MD to visit M/s Lloyds Insurance Company, London and M/s Mediterranean Insurance Ltd. to collect full details of the policy and to obtain the written opinion of the insurance company as well as their underwriters. MD was also asked to obtain legal opinion from Solicitors.
20.21 The Board also categorically noted that MD (A-1) had been given power with respect to placement of LOIs for urea import and it did not cover the present case in which there was deviation from the standard procedure which also involved release of 100% advance payment. Since there was divergence of opinion with respect to the delegation of powers, the Board resolved that independent legal opinion be taken from reputed solicitors. It also resolved that a team be deputed to Turkey and CIS countries to assess the veracity of the reasons given by M/s Karsan Ltd. regarding non-supply of urea and such team was also to take all possible help from Indian Embassy or investigative agency, if required.
20.22 Minutes of Meeting of NFL Board held on 02.05.1996 have been proved as Ex. PW37/E (part of D-56). Inquiry had been conducted by ED (Vigilance) and a report was submitted which was discussed by the Board. As per report also, the deal was executed in an extreme hurry and without taking any legal opinion on the documentation as well as regarding the terms of the contract. It was also noted that interest of NFL had not been duly secured and, therefore, major penalty proceedings were recommended to be initiated against Sh. Deepak Lal, Sh. P.K. Kataria, Sh. Anil Sharma, Sh. A.K. Maitra, Sh. Kulbhushan, Sh. Arun Goel and Sh. J.K. Narang. Since Sh. D.S. Kanwar (A-2) had already retired, report suggested forfeiture of his gratuity.
CNR No. DLCT01-000024-1998 page 232 of 251 It was recommended by the Board that all such seven NFL officers may be suspended immediately and no post-retirement benefits be released to A-2 until the completion of inquiry by CBI. Board also expressed its dismay and anguish over the unabashed confidence exuded by A-2 that 'party shall perform' when he knew fully well that deal had been made without ascertaining the antecedents of the seller. The Board also took note of the fact that CBI inquiry had already been ordered by Government of India. The Board also noticed that MD i.e. A-1 should not have signed on the recommendation of his juniors and should have applied himself to various aspects of the deal and should have seen the credentials of the party as well as the terms of the contract. The Board also noticed that though the MD was to leave for Syria but he should not have shown any hurry and put the proposal on hold till he returned and then he should have satisfied himself about all the commercial and legal aspects of the deal. The Board also discussed the opinion given by legal experts i.e. M/s J.B. Dadachanji & Co. and Dr. S.M. Dugar. Board noticed that urea was to be imported at internationally competitive price irrespective of the fact whether it was through tender or through long term supply contract. It also noticed that long term contract did not envisage or allow compromising terms of payment and release of entire amount as 100% advance and, therefore, explanation given by MD was found to be product of his own imagination and was not acceptable and it held that MD had exercised the power beyond what had been delegated to him. Board also noticed that MD had changed his stand. The revised shipping schedule given by M/s Karsan was also taken up in said meeting in which MD expressed his optimism that the party was likely to perform. The Board felt that since commercial interest of NFL was uppermost and was required to be protected at any cost, no action may be taken which may jeopardize the deal in any way. Board also asked NFL till 31.05.1996 to ascertain whether party had any intention to perform or not.
CNR No. DLCT01-000024-1998 page 233 of 251 20.23 Next meeting took place on 17.05.1996. Minutes of Meeting have been proved as Ex. PW37/F (Part of D-56). The Board approved the proposal to start arbitration proceedings. Next meeting took place on 15.06.1996 and Minutes of Meeting have been proved as Ex. PW37/DL-5. Next meeting was convened on 22.06.1996 and as per the Minutes Ex. PW37/DK, it was resolved that matter be referred to Government for opinion and advice from legal department. I have also seen subsequent Minutes of Meeting dated 16.08.1996 (Ex. PW36/DT-18) and dated 06.09.1996 (Ex. PW37/K1). As per Ex. PW37/K1, opinion of Sh. Soli Sorabji was taken telephonically on 30.08.1996 in which he proposed that NFL should not procure the material from M/s Karsan Ltd. and advised to send a letter to them to the effect that such purported dispatch was in breach of the contract. However, Board resolved that NFL should accept the material without prejudice to its rights and its claim in arbitration and should issue a notice to M/s Karsan for termination of contract in case the entire supply was not made on or before 04.10.1996.
20.24 Thus, it becomes clear that even the Board was of the opinion that A-1 & A-2 had not acted with due diligence. Undoubtedly, they recommended departmental action against seven other officials but it becomes clear that these officials were merely puppets in the hands of A-1 & A-2 as they all were in no position to dictate terms. They rather simply carried out the orders given by A-1 & A-2 and prepared notings and met SBI and RBI officials as per the dictates of A-1 and A-2 and, therefore, it appears to me that CBI did the right thing by citing them as prosecution witnesses.
20.25 Curiously, within one week of second contract, there was another contract with M/s Turnu. It has been proved as Ex PW7/E (D-46). The payment terms were by way of LC. Thus, there was no contract either before or after wherein NFL had released 100 % payment in advance. Exception was carved out for M/s Karsan CNR No. DLCT01-000024-1998 page 234 of 251 only.
20.26 It is also not a case falling within the four walls of negligence. It is rather a clear-cut case of cheating laced with utter dishonest intention right from the inception. A deliberate act cannot be labelled as negligent act. I also do not find any admission from any witness of prosecution of such a nature as could earn defence any exoneration. Testimony of NFL officials, who graced the witness box, clearly suggests the criminality on the part of A-1 and A-2 both. Search dated 14.06.1996 cannot be impeached merely because seizing officer gave different time of search in his evidence. Witness is not a computer but a human. He cannot be expected to recall such timings with hundred percent exactitude.
20.27 There are no gaps, much less vital ones. Receiving no pecuniary advantage and not knowing about the RBI circulars are too trivial points to be given any worth. When someone puts at stake a staggering amount of Rs. 138 crores, one is expected to know about all such things and, therefore, they cannot be permitted to plead ignorance. It cannot be said to be case of mere suspicion. The involvement of A-1 and A-2 is writ large. If they had put their feet down and had not approved the proposal, they would not have been in soup today. A-1 and A-2 were acting as per conspiracy. Their actions were shrouded with mystery, suspicion, great haste and they were completely reckless. They turned blind eyes to all the papers. They did not even bother themselves to go through the terms which were heavily favouring the other side. They did not realize the importance of counter guarantee and deliberately and consciously permitted the seller to provide a mere marine policy. Seller also delightedly passed off the same as comprehensive policy.
20.28 The sanction contemplated in Section 19 of the P.C. Act is mandatory if the accused-public servant continues to be a public servant when the Court takes CNR No. DLCT01-000024-1998 page 235 of 251 cognizance of the offence. But if he ceases to be public servant by that time, the Court can take cognizance of the offence without such sanction. The protection provided under Section 19 of the P.C. Act is not available in case of a retired public servant whereas as per Section 197 of the Code, it is mandatory to obtain sanction for prosecution of a public servant, serving or retired for the alleged offence if the same was committed by him while acting or purporting to act in the discharge of his official duty. The necessity for previous sanction under Section 197 of the Code is made applicable to a retired public servant by using the words "when any person who is or was a public servant". No such language has been used in Section 19 of the P.C. Act. Thus, keeping in view the language of Section 19 of the P.C. Act, no previous sanction is necessary for prosecution of a public servant for the offence alleged to have been committed under the P.C. Act, if such a public servant ceases to be public servant at the time of taking cognizance by the Court.
20.29 A-7 cannot be permitted to raise any grievance on said aspect of sanction. In P.V. Narasimha Rao v. State (CBI/SPE), (1998) 4 SCC 626 it has been observed that merely because there is no authority which is competent to remove a public servant and to grant sanction for his prosecution under Section 19, it cannot be said that a Member of Parliament is outside the purview of the 1988 Act. It added that in the absence of requirement of previous sanction for initiating proceedings in a court of law against a Member of Parliament in respect of an offence mentioned in Section 19(1) of the 1988 Act, the possibility of a Member of Parliament being subjected to criminal prosecution on the basis of malicious or frivolous allegations made by interested persons cannot be excluded. It was hoped that Parliament will provide for an adequate safeguard in that regard by making suitable amendment in the 1988 Act and till such safeguard was provided, the prosecuting agency, before filing a charge-sheet in respect of an offence punishable under Sections 7, 10, 11, 13 and 15 of the 1988 Act against a Member of Parliament in a criminal court, would CNR No. DLCT01-000024-1998 page 236 of 251 obtain the permission of the Chairman of the Rajya Sabha/Speaker of the Lok Sabha, as the case may be. Such observations are in context of sec 19 of Prevention of Corruption Act. It comes into play when such public servant is found holding same office even at the stage of cognizance. Here, at the time of filing of charge-sheet i.e. on 26.12.1997, A-7 was no longer a public servant and, therefore, there was no requirement of seeking any sanction u/s 19 of PC Act from the Hon'ble Speaker. Moreover, judgment in P.V. Narasimha Rao (supra) is of 17.04.1998 and the charge- sheet in the present case had been submitted already and, therefore, defence cannot dig out any advantage from said judgment, even otherwise.
20.30 Since A-1 and A-2 had already retired and A-7 was no longer a public servant, the court was competent enough to take the cognizance without sanction u/s 19 of PC Act. CBI obtained sanction u/s 197 Cr.P.C. qua A-1 alone but to me, it was not required at all.
20.31 I need not remind myself that such accused have also been charged for committing criminal conspiracy. In Harihar Prasad v. State of Bihar (1972) 3 SCC 89, it has been clearly observed that as far as the offence of criminal conspiracy punishable under section 120-B was concerned, it could not be said to be of the nature mentioned in Section 197 of the Code of Criminal Procedure. It was thus held that it was not part of the duty of a public servant, while discharging his official duties, to enter into a criminal conspiracy or to indulge in criminal misconduct and, therefore, want of sanction under Section 197 of the Code of Criminal Procedure was no bar to prosecution. B. Saha & Ors. Vs. M.S. Kochar (supra) also states so. Reference be also made to Prakash Singh Badal case (supra) wherein it has been held that for offences like cheating under Section 420 or for that matter offences relatable to Sections 467,468, 471 and 120B sanction was not required as by no stretch of imagination, by their very nature, these could be regarded as having been committed CNR No. DLCT01-000024-1998 page 237 of 251 by any public servant while acting or purporting to act in discharge of official duty. In such cases, official status only provides an opportunity for commission of the offence. Said precedent was merely discussed in Prof. N.K. Ganguly (supra) and was not overruled. It merely added that it was for the trial Court to examine the allegations contained in the final report for deciding whether previous sanction was required to be obtained from the appropriate government before taking cognizance or not. The facts of the present case do not show any such thing which might have compelled this court to have asked CBI to seek any such sanction.
20.32 The office of a Member of Parliament provides anyone with the greatest form of rendering public service, the interest of Nation being the paramount consideration. He is required to show utmost integrity and probity in all his actions since he is accountable directly to people of India for the same. He is protector of public interest and public money. Sanction or no sanction, he has to show that he acted with utmost good faith. He should not indulge in any corrupt practice and should not conspire for swindling of public money. To quote from United States v. Brewster 408 U.S. 501, taking a bribe is, obviously, no part of the legislative process or function; it is not a legislative act. It is not, by any conceivable interpretation, an act performed as a part of or even incidental to the role of a legislator. It is not an "act resulting from the nature, and in the execution, of the office." Nor is it a "thing said or done by him, as a representative, in the exercise of the functions of that office.
20.33 I would also add right here that observations appearing in Surinder Kumar Bansal (supra) would also come to the rescue of CBI in context of said aspect of sanction. Defence has relied upon Amal Kumar Jha vs State Of Chhattisgarh & Anr (supra) but in that case, a person had died while under the treatment of a doctor of a government hospital and the concerned accused was in- charge of the Primary Health Centre and he failed to provide Government jeep for CNR No. DLCT01-000024-1998 page 238 of 251 shifting the patient and, eventually, he was sent to face trial for offence u/s 304A IPC without sanction u/s 197 Cr.P.C. and it was in that context that it was held that his alleged act of omission in supplying vehicle was directly connected with his official act, making requirement of sanction mandatory.
20.34 Moreover, mere omission, error or irregularity in the matter of according sanction would not affect the validity of the proceeding unless such error, omission or irregularity results in failure of justice. Reference in this regard be also made to decision of Apex Court in the case of State of Bihar & Ors. Vs. Rajmangal Ram [Criminal Appeal No. 709-710 of 2010 (DOD: 31.03.2014)]. Here, there is nothing to show or prove that there was any failure of justice or serious prejudice to the accused because of the alleged improper sanction or for that matter due to absence of sanction.
20.35 A-7 cannot be heard complaining that he did not abuse the office which he was holding at the relevant time. He was admittedly a public servant and was conspiring with other public servants. The way, they all conspired together is clearly suggestive of fact that he had abused his position as a public servant. In Dhaneshwar Narain Saxena (supra), it has been rightly observed that It is not necessary to show that the public servant must do something in connection with his own duty and thereby only should obtain any valuable thing or pecuniary advantage.
20.36 A-3 had also his own role to play. He was the one who master-minded the entire plot and searched for a foreigner who could toe his line without any hassle. He found suitable allies in A-4 and A-5. As an Indian agent for M/s Karsan, he did not do anything except for usurping and burping the money. Besides pocketing the so called legitimate commission of 2 lac US$, he had set his eyes on the balance amount as well. He very well knew about the credentials of M/s Karsan and still CNR No. DLCT01-000024-1998 page 239 of 251 chose to continue as an agent for them for his own personal gains. He was also an integral part of the conspiracy. A-8 also played his role with perfection and eventually spilled the beans too. A-6 and A-7 used their influence and ensured that the deal was sealed. They also got their share. The utterances of accused, after the start of conspiracy, have also relevance as per sec 10 of Evidence Act. A3 had given a confirmation proof to A-2 showing that money had been transferred to the account as desired by A-7 and told him to throw the same on the face of A-7 so that his mouth is shut up. (P.C. Yadav ke moohan par marna. Uska moohan band ho jayega). It is well-nigh settled that Section 10 of the Evidence Act is founded on the principle of law of agency by rendering the statement or act of one conspirator binding on the other if it was said during subsistence of the common intention as between the conspirators. As long as the object of conspiracy is not achieved, the criminal conspiracy continues to exist giving invitation to invocation of sec 10 of the Evidence Act. Sharing the money was the prime objective of the conspiracy. As long as all the conspirators had not received the same, anything said by anyone of them was surly going to bind the others.
20.37 Number of judgments have been cited on the aspect of electronic evidence. This again is a feeble attempt on the part of defence which holds no ground. Such calls were not put under any surveillance at any point of time. Wherever possible, CBI collected CDR and placed the same on record. The concept of electronic evidence would arise only when the data is managed on system alone. Certificate u/s 65B Evidence Act is given to vouch for its authenticity and to confirm that the data produced before the court was unaltered. Here the call record has been brought to show that there used to be calls amongst the accused. Moreover, the requirement of such certificate would arise only after a provision has been incorporated in the statute, not before. Admittedly during the time such calls were made and such record was collected, there was no such provision of mandatory CNR No. DLCT01-000024-1998 page 240 of 251 requirement of such certificate u/s 65B of Indian Evidence Act. It entered statute only in the year 2000 and, therefore, viewed from that angle, defence cannot be heard of saying that CBI should have followed the same in anticipation.
20.38 There cannot be any doubt that any document is required to be proved in accordance with law and principles contained under Evidence Act. Court should not get bogged down by the mere marking given to any document which is essentially for identification of the same. A document, which is otherwise admissible in evidence but merely marked and not exhibited can still be read in evidence and vice-versa. Defence is justified in relying upon Bipin Shantilal Panchal (supra). Here, I have not been able to find out any fault with the exhibition of documents. Number of documents, including fax messages and copies of letters, were admitted by accused persons during trial and at the time of recording of statements u/s 313 Cr.P.C. Letters, which were received by NFL during official course of business, were produced during the trial and referred by many NFL officials and these have full evidentiary value as well. Many documents were received in response to LRs issued by the court and defence cannot be permitted to impeach their credibility either. Relevant bank documents- be it from India or abroad- have also been duly proved. These are either originals or accompanied by certificate of authentication. Fact remains that the all- important and crucial documents have been proved in accordance with law while also keeping in mind the stance of various accused and, therefore, even if some documents are excluded from the scope of consideration, it will not make much difference to the eventual outcome.
20.39 In S.P.S.Rathore Vs. State of Haryana (2017) 5SCC 817, with regard to admissibility of former statements under Section 157 of the Evidence Act, the Apex Court said the said section envisages two categories of statements of witnesses, which can be used for corroboration. First is the statement made by a witness to any CNR No. DLCT01-000024-1998 page 241 of 251 person at or about the time when the incident took place. The second is the statement made by him to any authority legally competent to investigate the matter. Such statements gain admissibility, no matter that it was made long after the incident. It also added that to make a person an authority legally competent to investigate, it is not necessary that he should be having authority which flows from a statute. It is sufficient that such person was authorised legally by the state government to investigate the matter. Here, the statements made by some such witnesses like PW 53 Dharmesh Yadav, PW 46 Sh. Paryani, and PW 47 Sh. Babani - whether before Consulate at Dubai or before Learned Magistrate u/s 164 Cr.P.C.- have therefore, full evidentiary value and can be certainly used for corroboration. I would rather add here that applying same analogy, even the statement made by A-8 under sec 40 FERA has also great bearing.
20.40 There are alternate charges qua offence u/s 409 IPC and sec 420 IPC. This was, evidently, for the benefit of accused so that he can defend himself in more effective manner.
20.41 As per Sh. Ojha, sec 409 IPC is attracted whereas, though defence claim none. At the same time, perhaps feeling that sec 420 IPC invites milder sentence, the prime thrust of A-4 and A-5 is to the effect that, if any offence stands revealed, it will be Sec 420 IPC. Moreover, it has been vehemently contended that there was no entrustment, much less as a merchant.
20.42 I am conscious of the charges framed and sentence provided thereunder. Naturally, accused cannot be convicted under both the said offences, the charges being in alternate. It thus needs to be seen whether it happens to be case of cheating or criminal breach of trust. Of course, my foregoing discussion would show the existence of dishonest intention which is crucial common ingredient.
CNR No. DLCT01-000024-1998 page 242 of 251 20.43 Sec 415 IPC defines cheating as under: -
Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat.
20.44 Criminal breach of trust is defined as under: -
Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits "criminal breach of trust".
20.45 Sec 409 IPC is aggravated form of said offence. It attracts harsher sentence as the person who gets the entrustment is holding the same because of his such special or unique status. He, because of such status, has higher degree of accountability and, therefore, the sentence is rigorous. It reads as under: -
Whoever, being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.
20.46 In criminal breach of trust, the accused comes into possession of the property or acquires dominion over the property honestly and bona fide and develops dishonest intention later and having developed such dishonest intention, he CNR No. DLCT01-000024-1998 page 243 of 251 dishonestly misappropriates or converts to his own use the property. Thus, in criminal breach of trust, the intention of the accused cannot be dishonest or mala fide at the time when he comes into possession of the property. Contrary to what happens in criminal breach of trust‟, the intention of the accused, in a case of cheating, is dishonest from the very commencement of the transaction. There is, actually speaking, no consent by the person or a body or association, who is intentionally induced by such deception and is forced to deliver the property as a result of deception 20.47 In short, thus, while in criminal breach of trust, the accused comes into possession of the property without dishonest intention and develops dishonest intention subsequently, the offence of cheating is one, wherein the accused has dishonest intention from the very commencement of the transaction. What logically follows is that if a person is accused to have committed an offence, under Section 406 IPC, in relation to a transaction, he cannot, in one and the same breath, be said to have committed the offence, under Section 420 IPC, in relation to the same transaction.
20.48 In Hridaya Ranjan Prasad Verma & Ors. v. State of Bihar & Anr, [2000] 4 SCC 168, Apex Court observed that the distinction between mere breach of contract and the offence of cheating is a fine one which depended upon the intention of the accused at the time of inducement adding further that for holding a person guilty of cheating, it was necessary to show that he had fraudulent or dishonest intention at the time of making the promise.
20.49 In Vadivel vs Packialakshmi 1996 CriLJ 300 Madras, it has been aptly observed that criminal breach of trust and cheating, though, generally involves dishonest intention, but, both are mutually exclusive and different in the basic CNR No. DLCT01-000024-1998 page 244 of 251 concept, in the context that criminal breach of trust is voluntary and cheating is purely on the basis of inducement with dishonest intention. Therefore, both the offences are totally distinct, different in nature and accordingly, mutually exclusive with each other.
20.50 That is precisely why such charges have been framed in alternate in the present case.
20.51 Here, I have no hesitation in holding that it is a case of cheating. The dishonest intention was in existence much prior to entering of a contract. The entire premise of the execution of contract was based on usurping the money. Since, the person handing over money was also hand-in-glove, there was a conspiracy as well.
20.52 Moreover, in the present case, M/s Karsans had been entrusted with money, merely as a consideration. They were required to purchase urea with the help of said money. They were, as per the terms of contract, not required to return the same very money. Entrustment presupposes a temporary custody. The seller had not obtained money as a banker. A-4 and A-5 claimed themselves to be merchants. They did not receive any merchandise which they were required to deliver as per contract.
They were to purchase urea with the help of money and were to deliver the urea. Thus, viewed from said angle also, since they were not required to return the same very money, it cannot be said to be case of criminal breach of trust. Here, I would also like to refer to the illustration (g) attached to sec 415 IPC which reads as under: -
A intentionally deceives Z into a belief that A means to deliver to Z a certain quantity of indigo plant which he does not intend to deliver, and thereby dishonestly induces Z to advance money upon the faith of such delivery. A cheats; but if A, at the time of obtaining the money, intends to deliver the indigo plant, and afterwards breaks his contract and does not deliver it, he does not cheat, but is liable only to a civil action for breach of contract.
CNR No. DLCT01-000024-1998 page 245 of 251 20.53 Thus, it is clearly a case of cheating and not of criminal breach of trust or
mere civil wrong. Reliance upon Sadhupati Nageswara Rao (supra) by Sh. Ojha is somewhat misplaced as in that case, the entrustment was of rice, a commodity which was eventually misappropriated and, therefore, it was held as case falling u/s 409 IPC instead of sec 420 IPC. However, as far as offences under PC Act are concerned, it becomes evident that offences u/s 13 (1) (c) and 13 (1) (d) both stand made out because the concerned public servants, with a dishonest intention, allowed misappropriation of the funds by others.
20.54 I also do not find any error in framing of charges. Such order was eventually upheld in revision as well. It cannot be heard that framing of alternate charges, which is expressly permissible in law, would cause any prejudice to accused. It rather gives him better opportunity to defend both such charges. The application moved by A-3 in this regard is thus devoid of any substance and stands disposed of as dismissed.
20.55 "Winter Is Coming" happened to be the motto of House Stark of Westeros in Game of Thrones, the biggest grosser TV serial of UK. It was also caption of its first episode of first season. Such phrase has been used by A-4 and A-5 incessantly after inking the contract. It actually meant, in the serial, that the difficult times were coming ahead and thereby alerted everyone to be constantly vigilant. Such meaning is all fours in the present context as well. This could not be decoded by NFL albeit due to the fact that those who were to act as its protectors joined hands with the so-
called usurpers. A-4 and A-5 acted as 'master-illusionist' and created a web of deception right from inception but they could not have been successful in their evil designs if they had not got the matching support from their Indian Partners. Accused, especially A-4 and A-5, need not be foretellers to know as to what is coming and what destiny has in store for them. A Turkish proverb, Ruzgar eken firtina CNR No. DLCT01-000024-1998 page 246 of 251 bicer, means one who sows wind will reap whirlwind. It fits in aptly herein for both of them too.
20.56 No criminal case would ever be fool-proof. There cannot be a prosecution case with a cast iron perfection in all respects. The court is required to weigh up and assess the entire admissible material on record and then to adjudicate. The witness may deviate here or there, He may exaggerate or improve upon. He may look under stress or fear even. No witness would ever recap the matter with absolute precision. Thus, the court should ignore minor variations and should concentrate to find out whether the deposition is of pristine quality or not and whether it has a ring of truth or not. Every case, in the final analysis, would have to depend upon its own facts. Although the benefit of reasonable doubt should be given to the accused, the courts should not, at the same time, reject evidence which is ex facie trustworthy. Prosecution is only to establish its case beyond 'all reasonable doubt' and not 'all doubts' and the rule regarding the benefit of doubt does not warrant acquittal of the accused by resorting to surmises, conjectures or fanciful considerations. It has been very aptly remarked by Hon'ble Mr. Justice V.R. Krishna Iyer in Shivaji Sahebrao Bobade & Anr. Vs. State of Maharashtra, (1973) 2 SCC 793 that only reasonable doubts belong to the accused, otherwise any practical system of justice will break down and lose credibility with the community.
20.57 Non-examination of some witnesses including Sh. Lagoo and Dr. Chhattra Sal Singh would not cause any adverse impact. After all, it is the quality which matters, not the quantity.
20.58 There was nothing bad if Sh. Ojha had gone to Dubai during the investigation stage. Even if he meets any witness during routine investigation, it will not make any difference as long as such witness does not make complaint that he CNR No. DLCT01-000024-1998 page 247 of 251 was tutored or coerced. Defence also, on most of the occasions, examines its witnesses after having interaction with them and, therefore, it has no reason to feel agitated. Our justice delivery system is adversarial in nature but there is a slow but sure drift. The prosecutor as well as judge are now required to play more pro-active role. Their job is not merely to ensure that the evidence gets recorded. Any trial is a quest for truth and, therefore, no fault can be found even if Sh. Ojha had gone to Dubai.
20.59 Right here, I would like to place on record my deep-most complements for him. He proved himself to be one-man army, much like Charge of Light-Brigade, and courageously faced canons form battery of lawyers from the opposite without feeling unnerved and frightened. He had marshalled the facts ruthlessly, if I may say so and kept replying all the queries in his unique and unparallel style. CBI, keeping in mind the magnitude of the case, should have given him much more arsenal instead of providing him with mere one official. Since the record was voluminous, Mr. Ojha acceded to the request of this court and got the file scanned and book-marked which proved to be very effective and advantageous, not only for the court but also for the defence as it became very easy, during the arguments, to refer to and access any document. He also deserves a special mention for another reason. When the entire record had gone to High court on one previous occasion, several important parts of case-record went missing and were not received back. This court was accordingly asked by High Court to reconstruct the missing record. Sh. Ojha rendered immeasurable assistance on that score as well. He was maintaining complete record in a very meticulous manner and it was he who had provided most such copies of deposition etc. for enabling flawless reconstruction. It is, therefore, unfortunate that some accused have shown the audacity of questioning his integrity. He displayed extreme devotion, zeal and enthusiasm to the case and his such level of involvement cannot be confused with any sort of bias and vindictiveness. To put simply, he was CNR No. DLCT01-000024-1998 page 248 of 251 doing his job in the most befitting manner. Entire CBI team is also required to be complimented for the hard work they put in.
20.60 I would also like to mention right here that all the learned defence counsels were also equally well-prepared and ably assisted the court and also accommodated with the dates despite the fact that the matter was fixed for final arguments for quite a long continuous stretch.
20.61 The trial took place as per the terms of extradition and, therefore, such extradited accused have no reason to raise any grievance and prejudice. Of course, there was delay in completion of trial but prosecution solely cannot be blamed for the same.
20.62 I am mindful of the order dated 10.03.2017. NFL had moved an application for release of attachment of the funds lying in Monaco to it. It was ordered that a letter of request be sent to competent authority, Government of Monaco to remit the entire amount lying seized in all the accounts in SBS Monaco in favour of District & Sessions Judge (HQs), Tis Hazari Courts, Delhi. I have also seen order passed by Sh. V.B. Gupta, the then learned Special Judge (PC Act) (CBI) (as His Lordship was then), Delhi on 16.11.2000 whereby it was directed that amount of 380000 US$ which was lying in sundry account of SBI be put in fixed deposit account. This amount was towards the initial remittance of 1% of contract value which the concerned banker of M/s Karsan had returned to SBI.
20.63 Such amount should go back to NFL. Accordingly, it is directed that entire said amount as well as the aforesaid amount lying in Monaco along with interest accrued till date be released to NFL. Such order would, however, be subject to outcome of appeal, if any.
CNR No. DLCT01-000024-1998 page 249 of 251 20.64 An application under Section 4 of Criminal Law (Amendment) Ordinance
Act, 1944 read with Section 5(6) of PC Act was also moved praying therein that the money found in possession of A-4 and A-5 on their arrival at IGI Airport, after their ex - tradition, may be attached and vide order dated 11.6.2001, such amount was di - rected to be attached till further orders/till final outcome of the trial. Such amount is as under:
A-4 Tuncay Alankus: 10301 US$
20000 Turkish Lira
1738.40 Swiss Franc
A-5 Cihan Karanci: 620000 Turkish Lira
621.65 Swiss Franc
20.65 Though A-4 and A-5 had asserted that they were carrying the same to
meet their day-to-day expenditure, fact remains that such foreign currency is of no use to them as long as they are in India. Such order of attachment is also accordingly made absolute.
20.66 In view of my foregoing discussion, I hereby hold all the accused guilty and convict them as under: -
Accused Penal Sections for which found guilty Sh. C.K. Ramakrishnan (A-1) Sec 120-B IPC r/w Sec 420 IPC and u/s 13 (1) (c) and 13 (1) (d) punishable under Sec 13 (2) PC Act Substantive offences u/s 420 IPC and u/s 13 (1) (c) and 13 (1) (d) punishable under Sec 13 (2) PC Act Sh. Dilbagh Singh Kanwar (A-2) Sec 120-B IPC r/w Sec 420 IPC and u/s 13 (1) (c) and 13 (1) (d) punishable under Sec 13 (2) PC Act Substantive offences u/s 420 IPC and u/s 13 (1) (c) and 13 (1) (d) punishable under Sec 13 (2) PC Act Sh. M. Sambasiva Rao (A-3) Sec 120-B IPC r/w Sec 420 IPC CNR No. DLCT01-000024-1998 page 250 of 251 Sh. Tuncay Alankus (A-4) Sec 120-B IPC r/w Sec 420 IPC Substantive offence u/s 420 IPC Sh. Cihan Karanci (A-5) Sec 120-B IPC r/w Sec 420 IPC Substantive offence u/s 420 IPC Sh. B. Sanjeeva Rao (A-6) Sec 120-B IPC r/w Sec 420 IPC Sh. Prakash Chandra Yadav(A-7) Sec 120-B IPC r/w Sec 420 IPC Substantive offence Sec 13 (1) (d) PC Act punishable under Sec 13 (2) PC Act Sh. D. Mallesham Goud (A-8) Sec 120-B IPC r/w Sec 420 IPC 20.67 A copy of this judgment be provided to each of the accused as well
as to Sh. Ojha so that they can go through the same and prepare themselves for addressing arguments on sentence.
20.68 A copy of this judgment be also sent to Swiss Authorities by CBI through appropriate channel for their information after the pronouncement of order on sentence along with copy of such order.
Announced in the open Court On this 9th day of July 2018 (MANOJ JAIN) Special Judge (PC Act) (CBI)-04 Central Distt: Tis Hazari Courts: Delhi CNR No. DLCT01-000024-1998 page 251 of 251