Delhi District Court
Cbi vs . M/S Eastern Mineral Trading Agency, ... on 25 July, 2022
IN THE COURT OF SH. SANJAY BANSAL:
SPECIAL JUDGE (PC ACT) (CBI) (COAL BLOCK CASES)-02:
ROUSE AVENUE DISTRICT COURTS: NEW DELHI.
Clor. No. 02/2021
CNR No. DLCT110000022021
RC No. 220 2015 E 0013
Branch: CBI/EO-II/New Delhi
CBI Vs. M/s Eastern Mineral Trading Agency, Kolkata & Ors.
ORDER
25.07.2022
1. The present case pertains to allocation of six coal blocks i.e. Tara (East), Tara (West), Gangaramchak, Barjora, Gangaramchak Bhadulia and Pachwara (North) through Government Dispensation Route ("GDR").
2. The First Information Report ("FIR") in the present case was registered on the basis of written complaint of Sh. Himanshu Bahuguna, DSP, CBI, EO-II, New Delhi.
3. The allegations as per the FIR are as follows:
3.1 A preliminary enquiry PE 5/2012 was registered on 28.09.2012 pertaining to allocation of coal blocks to Central and State PSUs. It was opined in the PE registration report that there were irregularities in the allocation of coal blocks, awarding of contract for development of mines and formation of Joint Venture Govt. Companies during the period 1993 onwards. Ministry of Coal ("MoC"), Govt. of India during 1995 to 2005 allocated the above noted six coal blocks to PSUs of West Bengal Government. Enquiry in respect of the Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 1 of 23 above mentioned six coal blocks revealed that M/s Eastern Mineral Trading Agency, ("EMTA") Kolkata, moved a proposal before the Chairman, West Bengal State Electricity Board ("WBSEB") requesting that EMTA may be given opportunity of coal mining in joint venture to get coal at cheaper rates. The Govt. of West Bengal agreed to the same and a JV Agreement between WBSEB & EMTA was signed on 28.04.1995. Later on, West Bengal Power Distribution Company Ltd. (WBPDCL) was also made a member of the said joint venture and a new JV Agreement dated 17.01.1996 was executed amongst WBSEB, WBPDCL & M/s EMTA, which superseded the previous Joint Venture Agreement dated 28.04.1995. Subsequently, a JV company in the name of M/s Bengal EMTA Coal Mines Ltd. ("BECML") was incorporated on 01.02.1996.
As per the JV Agreement dated 17.01.1996, the WBSEB was to buy entire coal of acceptable grade from the mines at the prevailing notified price of CIL less 19.5% per MT. Two coal blocks namely Tara (East) & Tara (West) were allocated to WBSEB and WBPDCL respectively and in light of the joint venture agreement dated 17.01.1996. The joint venture company M/s BECML was appointed as Mine Developer cum Operator (MDO). Further, M/s BECML allowed EMTA to undertake coal mining in the said two coal blocks.
3.2 As per the FIR, enquiry further revealed that on request of JV company i.e. M/s BECML, the Govt. of WB appointed it as Mine Developer-cum- Operator ("MDO") for all the four coal blocks subsequently allocated to WBPDCL, without any tender process. In this regard, a JV Agreement dated 05.09.2005 was executed by WBPDCL, DPL & BECML, according to which coal from the subsequent allocated four coal blocks was to be made available to WBPDCL/DPL on discount of 21% from the notified price of CIL. In respect of these four coal blocks also, BECML allowed EMTA to undertake coal mining.
Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 2 of 23 Enquiry also revealed that Comptroller Auditor General (CAG) had conducted audit of WBPDCL for the year ending March, 2013 and submitted a report in the year 2014, wherein it had been pointed out that EMTA was selected as a JV partner by nomination basis, whereas as per the guidelines of Ministry of Finance and GFR, the formation of such JV must follow the formal tendering process and such work can be awarded through open tendering process only. It has also been observed that mining contract was awarded to EMTA, a JV partner and the mining contract price was linked to CIL price, instead of actual cost of mining, which caused a huge profit to M/s EMTA and increased the cost of coal to WBPDCL.
4. On these allegations, the FIR was registered U/s 120-B r/w S. 420 IPC and U/s 13(2) r/w 13(1)(d) of the PC Act, 1988 against unknown officials of WBPDCL (earstwhile WBSEB), M/s EMTA, unkown officials of JV Co. BECML, and other unknown persons. Investigation was initiated.
5. It has been stated that during investigation various correspondence was made with (i) DoP & Non-conventional Energy Sources (DoP & NES), (ii) Department of Finance [both of the Govt. of WB] (iii) West Bengal Power Development Coporation Ltd. (WBPDCL) and (iv) West Bengal State Electriciy Distribution Company Ltd. (WBSEDCL) requesting them to provide necessary documents for the purpose of investigation. However, certain necessary documents could not be provided by them to CBI and told that the same were untraceable. This matter was also brought to the notice of the Hon'ble Supreme Court of India during one of the hearings of WP (Crl.) No. 120/2012 and notice was accordingly issued to the Chief Secretary of the Govt. Of WB.
6. The Chief Secy. filed a reply dated 09/01/2018 and gave details of Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 3 of 23 documents/information provided by the above said authorities to CBI but it was silent regarding the documents/information sought regarding the missing documents. A status note was thus filed before the Hon'ble Supreme Court and the Hon'ble Apex Court directed the government of West Bengal to verify the position. An assurance was given of full cooperation by the state government. However many documents were still not provided as the same remained untraceable. Some of them are as follows:
a. The files in which the application for Tara (East) coal block to Ministry of Coal, was processed by WBSEB; (required from WBSEB/WBSEDCL);
b. The files relating to WBSEB, in which the proposal of M/s EMTA to form a JV with WBSEB was processed; (required from WBSEB/WBSEDCL);
c. The files in which the applications for coal blocks namely Tara (West), Barjora, Gangaramchak, Gangaramchak Bhadulia and Pachwara (North) were processed by WBPDCL; (required from WBPDCL);
d. The file in which formation of JV with M/s EMTA in respect of mining of the above mentioned coal blocks was processed at WBPDCL; (required from WBPDCL);
e. File No.C-VI/5S-53/95 of DoP & NES, Govt. of WB, as found mentioned at notesheet page No.36 of this department file No.C- VI/5S-10/2004 (R.F.C-VI/5S-02/94); (required from DoP, Govt. of WB);
f. The file containing the offer submitted by M/s Birla Technical Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 4 of 23 Services (BTS) to run captive coal mines for WBSEB under joint venture with WBSEB; (required from DoP, Govt. of WB) ;
g. The file having No.5S-6/94 of DoP, in which it was ordered that above said file containing BTS's offer to be put up with DOP file No.C-VI/5S-10/2004 (R.F.C -VI/5S-02/94). (required from DoP, Govt. of WB)
7. Further Ministry of Coal (MoC), Govt. of India also could not provide File No.13011/6/95-CPA/CA related to allocation of Tara (East) and Tara (West) coal blocks to WBSEB and WBPDCL respectively and formation of JV as these were also untraceable. Further in many of the files/documents thus far provided, various documents were only photocopies and originals were not available. Even the original of JV agreement dated 28/04/1995 between WBSEB and EMTA was missing.
8. In such circumstances, the investigation was finalised on the basis of available documents and information and examination of officers who had worked at the relevant time. It was stated that in the absence of crucial documents and also the fact that matter being too old, examination of officers yielded no results.
9. The gist of investigation is as follows:
9.1 In West Bengal, power generation activity under the Department of Power ("DoP"), Govt. of WB was being carried out by West Bengal State Electriciy Board (WBSEB), West Bengal Power Development Corporation Ltd.
(WBPDCL) and Durgapur Projects Ltd. (DPL). WBSEB was having two power plants i.e. (i) Bandel Thermal Power Station (BTPS) and (ii) Santaldih Thermal Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 5 of 23 Power Station (STPSG). Similarly, WBPDCL was having Kolaghat Thermal Power Station (KTPS). All these three power plants were having coal linkages from Coal India Ltd. (CIL) and its subsidiaries.
9.2 WBSEB was constituted as per provisions of the Electricity Supply Act, 1948 with effect from 01/05/1955 as a statutory body. DPL was incorporated on 06/09/1961 whereas WBPDCL was incorporated in 1985.
9.3 The two power generating stations BTPS and STPS were handed over to WBPDCL on 28/06/2001 by the DoP, Govt. of WB.
9.4 Vide notification dated 25/01/2007, DoP and NES restructured WBSEB into two successor entities i.e. West Bengal State Electricity Distribution Company Limited (WBSEDCL) and West Bengal State Electricity Transmission Company Limited (WBSETCL). WBSEDCL was incorporated on 16/02/2007.
9.5 The Coal Mines (Nationalisation) Act, 1973 ("CMN Act") was amended with effect from 09/06/1993 allowing private sector participation in captive coal mining for generation of power, for washing of coal obtained from a mine or other end uses, for production of iron and production of steel.
9.6 A DO letter dated 28/06/1994 was issued by Central Electiriciy Authority ("CEA") to Chairman, WBSEB vide which a base paper on private sector participation in power sector was sent for consideration and views. The power department of government of West Bengal sent a copy of this letter to CIL through its letter dated 19/12/1995.
9.7 WBSEDCL which represented WBSEB during investigation could not provide any file regarding processing of proposal of EMTA.
9.8 However as per the file of DoP, Govt. of WB, EMTA had approached Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 6 of 23 Secretary (Power), Govt. of WB on 14/03/1994 with a proposal to operate captive coal mines for state's power utilities in view of the amendment of the CMN Act. EMTA vide letter dated 09/08/1994 submitted this proposal to the Chairman, WBSEB and copies to the then Chief Minister as well as Secretary (Power).
9.9 A meeting was held on 30/08/1994 in this regard. Idea of forming JV was put up by EMTA with WBSEB. After various deliberations, visits etc. the proposal was approved by the then Minister of Power S.K. Sen, government of WB on 15/09/1994.
9.10 In pursuance of the approval of the proposal, the Chairman WBSEB requested Secretary, Ministry of Power and Secretary Ministry of Coal, both of government of India to allocate coal blocks to it for captive mining. The request was considered by the 6th screening committee meeting held on 20/01/1995 and 7th screening committee meeting held on 06/06/1995 and allocation of Tara (East) coal block was recommended in favour of WBSEB. Letter dated 14/07/1995 was sent to WBSEB in this regard.
9.11 The proposal of EMTA was considered by WBSEB on 29/10/1994 and it was approved. A joint venture in the form of a public limited company was decided to be formed vide agreement dated 28/04/1995.
9.12 On 21/07/1995, WBPDCL wrote to WBSEB seeking a copy of joint venture agreement as EMTA had approached it too to explore the possibility of having own captive coal mine. WBSEB got the joint venture agreement re- examined by the power department. The Minister of Power, Govt. Of WB sought permission from Ministry of Coal, Govt. Of India regarding the JV. The said permission was granted vide letter dt. 02/01/1996.
Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 7 of 23 9.13 WBPDCL applied to Ministry of Coal, Govt. Of India for allotment of coal mine vide letter dt. 16/08/1995. The matter was considered in the 9th screening Committee meeting and Tara (West) coal block was allocated to it on 26.02.1996.
9.14 A letter dt. 01.09.1995 was sent by DoP, Govt. Of WB to Minister of State for Coal requesting permission to WBSEB to start mining operation in the allotted coal block in JV followed by a letter 04/10/1995 from the then Chief Minister of WB. A letter dt. 31.10.1995 was also written by DoP, Govt. Of WB to the Law Minister, Govt. Of India for their opinion. In response to this letter, the Attorney General of India gave his opinion dt. 27.11.1995 regarding interpretation of provisions of CMN Act and opined that it would be appropriate to accede to Govt. of WB's request.
9.15 Further correspondence was made in this regard by Director, MoC asking Govt. of WB to take some steps regarding formation of JV. A compliance report was sent by Govt. of WB vide letter dt. 15.01.1996. It was also informed that a JV company by the name of "Bengal EMTA Coal Mines Ltd." ("BECML") had been formed between WBSEB, WBPDCL and EMTA. File of notings regarding joining of WBPDCL in the JV is missing.
9.16 In supersession of earlier JV Agreement dt. 28.04.1995, a new JV Agreement was executed on 17.01.1996 between WBSEB, WBPDCL and EMTA.
9.17 The Coal Purchase Agreement for procurement of coal by WBPDCL and WBSEB, to be raised by M/s BECML from Tara (East) and Tara (West) coal mines, was approved in the 59th meeting of the Board of Directors of WBPDCL, held on 22.03.1997.
Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 8 of 23 9.18 That in 496th board meeting of WBSEB held on 12.04.1997 & 17.05.1997 the Board deliberated that M/s. EMTA Coal Mine Ltd. would supply coal to BTPS & STPS at a price which would be 19.5% less than the prevailing basic price of Coal India Ltd. and accorded its approval to the draft coal purchase agreement for procurement of the entire coal to be raised by M/s Bengal EMTA Coal Mines Limited (M/s BECML) from Tara (East) and Tara (West) blocks, by WBSEB and WBPDCL.
9.19 That in pursuance of the above said approval of the boards of WBSEB and WBPDCL, a Coal Purchase Agreement was executed among WBPDCL, WBSEB and BECML on 23.05.1997, having main features as mentioned below:
i. Price of coal shall be 19.5% less than the prevailing basic price of CIL of respective areas/grades on the date of supply, as notified by the Govt. of India from time to time;
ii. Joint sampling and analysis shall be conducted at the power station end and it shall determine the quality of coal supplied;
iii. All the coal wagons loaded with coal shall be weighed at the weigh bridges of the power plants of the purchaser to determine actual weight of coal received;
9.20 That after handing over of power stations i.e. Bandel Thermal Power Station (BTPS) and Santaldih Thermal Power Station (STPS) by the WBSEB to WBPDCL on 01.07.2001, the Principal Secretary, DoP, Govt. of WB vide their letter dated 10.09.2001, requested Ministry of Coal, to grant approval for restructuring of M/s Bengal EMTA Coal Mines Limited (JVC), making Durgapur Projects Limited (DPL) one of the partners in the joint venture in Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 9 of 23 place of WBSEB. It was proposed that the 14% of the equity held by the WBSEB was to be transferred to the DPL. The Ministry of Coal vide their letter dated 12.02.2002 accorded its approval for the said restructuring of M/s Bengal EMTA Coal Mines Limited (M/s BECML), whereby it was decided that DPL jointly with WBPDCL shall hold at all times at least 26% of the equity of shares having voting rights in M/s BECML.
9.21 That on 19.04.2002, Supplementary Agreement to the original JV agreement of 17th January 1996 was executed by which DPL became a constituent of the JV Company in place of WBSEB.
9.22 That on 20.01.2003, Shri K. K. Bagchi, Principal Secretary, Deptt. of Power, Govt. of WB, issued a letter addressed to the Secretary, Ministry of Coal, Govt. of India, requesting expedition of allocation of Gangaramchak, Bhadulia and Barjore coal blocks, in favour of WBPDCL. The letter states that it has been decided that the said coal blocks will be operated by M/s BECML, who is already operating Tara (East) and Tara (West) coal blocks for WBPDCL and DPL.
9.23 That WBPDCL was further allocated Gangaramchak, Barjore and Gangaramchak Bhadulia coal blocks by the Ministry of Coal, Govt. of India, vide letter dated 23.06.2003.
9.24 That on 03.07.2003, it was informed by DoP, Govt. of WB to the MD, BECML that the new coal blocks Gangaramchak, Barjore, Gangaramchak Bhadulia and Pachwara (North), will be operated by the same JV Company, i.e. M/s BECML, as and when these coal mines are allotted to WBPDCL.
9.25 That on 07.11.2003, the WBPDCL requested MoC to publish Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 10 of 23 notification in terms of item (4) of sub clause (iii) of clause (a) of sub section (3) of section 3 of Coal Mining (Nationalization) Act, 1973 and to grant mining lease of said three coal blocks in favour of M/s BECML.
9.26 That on 16.07.2004, Ministry of Coal issued notification in terms of item (4) of sub clause (iii) of clause (a) of sub section (3) of section 3 of Coal Mining (Nationalization) Act, 1973, specifying as an end use the supply of coal from the coal mines Gangaramchak, Barjore and Gangaramchak Bhadulia by M/s BECML, on an exclusive basis to the power plants of WBPDCL for generation of thermal power, subject to the condition that WBPDCL and DPL hold at least 26% of voting equity share capital of BECML.
9.27 That in the 98th meeting of the Board of Directors of WBPDCL, held on 27.07.2004, the board approved the draft Joint Venture Agreement and the draft Coal Purchase Agreement, proposed to be executed among WBPDCL, DPL and EMTA, to give effect of inclusion of the names of the additionally allocated coal blocks i.e. Gangaramchak, Barjore and Gangaramchak Bhadulia.
9.28 That WBPDCL was allocated Pachwara (North) coal block by the Ministry of Coal, Govt. of India, vide allotment letter dated 26.04.2005.
9.29 That the MoC, Govt. of India vide Notification dated 23.06.2005, specified end use of coal mined from Pachwara (North) by M/s BECML on exclusive basis to the power plants of WBPDCL.
9.30 That in the 104th meeting of the Board of Directors of WBPDCL, held on 07.05.2005, it was deliberated that in view of allotment of Pachwara (North) coal block to WBPDCL, a fresh/revised agreement needs to be entered into among WBPDCL, DPL and M/s EMTA, as early as possible.
Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 11 of 23 9.31 That on 05.09.2005, a Joint Venture Agreement was signed among WBPDCL, DPL and M/s EMTA, for operations of captive coal mines including recently allocated coal blocks i.e. Gangaramchak, Barjore, Gangaramchak Bhadulia and Pachwara (North). As per this agreement, the base price of entire coal mined from Gangaramchak, Barjore, Gangaramchak Bhadulia and Pachwara (North) coal blocks shall be calculated by reducing the prevailing base price of CIL of respective grades by 21%, while the same for Tara (East) & Tara (West) shall be calculated by reducing the prevailing base price of CIL of respective grades by 19.5%.
9.32 That on 07.12.2011, a detailed note was initiated by the CMD, WBPDCL, wherein he discussed various issues involved in the pricing mechanism for the coal being raised from the coal blocks allocated to WBSEB and WBPDCL and proposed following conditions for finalization of price mechanism for raising of coal from the four coal blocks namely Gangaramchak, Barjore, Gangaramchak Bhadulia and Pachwara (North):
a. De-linking of price revision from CIL price notification and base the sale price of coal on actual cost of production with a reasonable return on investment (ROI). The price escalation formula may be based on the price index (inflation rate) as published by Reserve Bank of India on yearly basis.
b. Initial base price may be fixed based on present base price on CIL with 25% discount and subsequent price increase based on RBI price index c. It was also proposed that the basic price will be lower of (I) and (II) as may be computed above.
Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 12 of 23 9.33 In the 147th meeting of the Board of Directors of WBPDCL, held on 23.03.2012, the board discussed the issue of review of price mechanism under the coal purchase agreement with M/s BECML and decided to appoint a well known consultant having adequate experience in similar job to arrive at the cost of raising coal.
9.34 That in the 150th meeting of the Board of Directors of WBPDCL, held on 28.09.2012, selection of M/s a'XYKno Capital Services Limited, Nagpur, as the consultant for determination of cost of raising coal from Gangaramchak, Barjore, Gangaramchak Bhadulia and Pachwara (North) coal mines, was taken note of. In 2013, M/s a'XYKno Capital Services Limited, Nagpur submitted a report wherein they opined that the basis of determining the transfer price of coal produced from mines operated by M/s BECML should be strictly based on the cost of production of coal. This opinion was in line to the Gazette Notification No.D.L.-33004/99 dated 27.12.12, in respect of pricing of coal to be produced & supplied from Non-CIL Captive coal blocks, issued by the Govt. of India, wherein it has been directed that the allocate company shall ensure that the criteria of bidding for engagement of Mine Developer cum Operator (MDO) is not linked to the notified price of CIL. However, this notification was issued by MoC, Govt. of India, on 27.12.2012 and prior to this there was no debarment for the same.
9.35 That in the 159th meeting of the Board of Directors of WBPDCL, held on 26.04.2014, the Board discussed in details the report submitted by M/s a'XYKno Capital Services Limited, response of M/s BECML with regard to the report and reply of M/s a'XYKno Capital Services Limited, to the comments of Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 13 of 23 M/s BECML. The Board also indicated that WBPDCL is not in favour to deviate from the price determined by the consultant and decided that a draft Fuel Supply Agreement is to be prepared by the Consultant.
9.36 That in the 161st meeting of the Board of Directors of WBPDCL, held on 26.07.2014, it was inter-alia decided to adopt the recommendation of the above named Consultant and to refer the matter to Govt. of WB for taking final decision.
9.37 That on 28.01.2015, final decision from the Govt. of WB was received regarding acceptance of transfer price for raising coal from Gangaramchak, Barjore, Gangaramchak Bhadulia and Pachwara (North) coal mines with respective date of effect, as finally recommended by Board of Directors of WBPDCL. Later, in the 164th meeting of the Board of Directors of WBPDCL held on 02.03.2015, the board discussed the pricing issue in detail and approved the final price as proposed by the board and concurred by the Govt. of WB.
9.38 That by the judgment dated 25.08.2014 and order dated 24.09.2014, the Hon'ble Supreme Court of India, cancelled number of coal blocks including above named six coal blocks.
9.39 As regards applicability of West Bengal Financial Rules (WBFRs) in selection of JV partner, the Deptt. of Finance, Govt. of WB (DoF) which had issued these rules, clarified that these rules primarily describe the financial powers of authorities subordinate to the Government of West Bengal and the procedure to the followed by them in matters related with funds in discharging their functions. As per them, the statutory undertakings/statutory authorities/state PSUs like WBSEB and WBPDCL, are not within the meaning of 'subordinate authority', as mentioned in Section 2 of the WBFRs and are Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 14 of 23 governed under separate Acts/Statue. Referring findings of CAG report, the Deptt. of Finance, Govt. of WB (DOF) states that the financial norms laid down in WBFR were not applicable stricto sensu to the State PSUs.
9.40 That WBPDCL, WBSEDCL (for WBSEB) and DPL, all have categorically denied applicability of WBFRs on them and their claim has also been endorsed by the Deptt. of Power, Govt. of WB. The WBSEDCL in support of their claim that WBFRs were not applicable to WBSEB, has also referred a case of Bihar State Electricity Board Vs. Gaya Cotton Jute Mills Limited, wherein on 26.04.1978, it was held by the Hon'ble High Court of Bihar that "the Board being a statutory authority can by no stretch of imagination be held either an agent of the State Government or department of the Government."
9.41 Considering the allegations of the FIR, wherein the 'Report of Comptroller and Auditor General of India on Public Sector Undertakings of Govt. of WB for the year ended March 2013' has been referred as regards selection of EMTA on nomination basis instead of adopting tender process, in violation of guidelines of Ministry of Finance & Central Vigilance Commission (CVC) and linking of mining contract prices with CIL prices instead of actual cost of mining process, which allegedly caused undue benefit to EMTA, investigation was taken up with office of Accountant General, West Bengal (hereinafter referred to as AG). These allegations have been discussed in para 4.1, 4.1.1, and 4.1.3.1 of Chapter-IV of the abovesaid CAG report. Accordingly, the office of Accountant General, West Bengal, Kolkata, was requested by the CBI to provide a list of documents along with their copies referred by them while finalizing the abovesaid paras of their report. In reply, they provided certified copies of the relevant pages of the abovesaid CAG report and a list of documents referred by them in finalization of relevant paras. However, they did Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 15 of 23 not provide any document stating that the guidelines/rules/provisions/orders, etc. cited/referred against the abovesaid observations are in the public domain and applicability of the same may be ascertained from the respective authorities issuing these orders.
10. The Investigating Officer concluded as follows:
10.1 That the documents which have been considered/taken into account in the above said report of CAG, as regards alleged selection of M/s EMTA as joint venture partner on nomination basis, mainly include, the guidelines issued by Ministry of Finance vide No. 24(24) PF-II/2009 dated 21.07.2009, Govt. of WB, Finance Department, Amendments in Rule 47 of WBFRs vide C.S. No.106 issued on 19.11.2004 and CVC Circular No.15/5/06 dated 09.05.2006.
Apparently, these documents are not found applicable in the matter, due to the fact that same have been issued much later i.e. in 2004, 2006 and 2009, whereas the said joint venture was formed in 1995-96, vide agreements dated 28.04.1995 followed by agreements dated 17.01.1996 and 05.09.2005.
10.2 The above referred CVC Circular No.15/5/06 dated 09.05.2006 speaks about the works awarded to PSUs on nomination basis by the Govt. of India/PSUs, however, it mentions that .............if sometimes award of contract on nomination basis by the PSUs become inevitable, the Commission strongly feels that the following points should be strictly observed:
i. All works awarded on nomination basis should be brought to the notice of the Board of the respective PSUs for scrutiny and vetting post facto.
ii. The reports relating to such awards will be submitted to the Board every quarter.
Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 16 of 23 iii. The audit committee may be required to check at least 10% of such cases.
10.3 The CVC while reviewing its circular dated 09.05.2006 further clarified through its circular dated 19.05.2010 that ....."Commission is of the view that the Board of the PSU is not required to scrutinize or post facto vet the actions of the operational managers and their decisions to award work on nomination basis."
And made amendment stating as under:-
"All works awarded on nomination basis should be brought to the notice of the Board of the respective PSUs for information."
10.4 That in addition to the above mentioned CVC circular, the following CVC Circulars/ Office Memorandums also found to be relevant to the issue:
i. OM No 06-03-02-CTE-34 dated 20.10.2003 ii. Office Order No. 23/7/07 dated 05.07.2007 iii. Circular No. 06/07/18 dated 11.07.2018 iv. Circular vide F. No. 105(5)/2018-Vigilance dated 08.10.2018 10.5 Through these circulars, the CVC has reiterated the need of transparency, discouraging the practice of award of work on nomination basis and emphasizing need of a proper tendering process, however, in inevitable situation, the board has been considered appropriate authority for award of such works on nomination basis under explained circumstances. No circular on this issue could be found in existence during the year 1995-1996.
10.6 That, on being specifically asked, it has been replied by the office of Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 17 of 23 AG that the applicability of the WBFRs to WBSEB and WBPDCL in the matter, is derived from the provisions of Rule 2 of the WBFR, which says that it describes primarily the financial power of different authorities subordinate to the Govt. of WB and the procedure prescribed by the Governor which should be followed by them in the securing and spending of the funds necessary for the discharge of the functions entrusted to them......... However, no justification to this effect has been given.
10.7 That on the basis of reply of the office of AG that the abovesaid CAG report was presented to the West Bengal Legislative Assembly on 10.07.2014 and is under purview of the State Committee on Public Undertakings (COPU), the authorities of COPU were approached to ascertain final action on this CAG report. The authorities of COPU informed that para 4.1 of the above said CAG report was short listed, but was not examined by the Committee and hence no report on this para has been placed before the House. It has further been replied by them that only two paras of this CAG report i.e. para No.4.7 & 4.8 were examined by the COPU and placed before the House, however, these paras are related to different issues.
10.8 That in light of above discussed CVC circulars, it can be said that there was no illegality in selection of JV partner on nomination basis; however it could have been appropriate to ensure a better transparency. However, in the instant case, the applicability of these circulars is not significant as the selection of M/s EMTA was carried out during year 1995-96, when no such CVC circular found in existence.
10.9 That prior to allocation of these six coal blocks to WBSEB/WBPDCL in 1995-96 and thereafter, the coal for thermal power stations under their control Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 18 of 23 was being procured from ECL and other subsidiaries of CIL, at the prevailing notified prices of CIL. The explanation of WBSEB and WBPDCL towards the adopted pricing mechanism, wherein the coal purchase rate was decided to be 19.5 % less to the notified price of CIL to the respective grade, is to encounter the problems of grade slippage, short receipt of coal at the thermal power stations and irregular supply of coal, which were their regular and major concerns. Besides, mining by WBSEB/WBPDCL by its own was requiring appropriate experience with huge investment, for which the WBSEB and WBPDCL were lacking. As regard award of work of mining by the JV Company M/s BEMCL to M/s EMTA, it has been claimed by WBSEB/WBPDCL that it was an intended & integral part of this joint venture arrangement.
10.10 That the documents which have been considered/taken into account in the above said report of CAG, as regards alleged linking sale price of coal extracted from captive mines with Coal India Limited (CIL) sale price instead of actual cost of mining mainly, as mentioned in para 4.1.3.1 of the said CAG report, which mainly include (i) the information submitted by the agency to Ministry of Finance, Govt. of India in November 2010 for abatement in taxable value on mining service (ii) the Report on salient cost elements in open cast coal mining projects (Central Institute of Mining & Fuel Research) dated November 2010. Ref No. ECL/MOF/Revenue/2010/387 dated 13.11.2010 Sub.
Representation for grant of abatement in taxable value on mining services and 13th Annual Report and Accounts 2008-09 BECML (iii) 13 th Annual Report & Accounts 2008-09 Bengal EMTA Coal Mines Ltd. (iv) 'Para 5.17 (page 65) of the report i.e. The Expert committee on Road map for coal sector Reforms' dated December, 2005 (v) JV agreements dated 17.01.1996 & 19.04.2002 and Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 19 of 23 the agreement between BECML & EMTA dated 14.03.1997.
10.11 That the observation in the above said CAG report that 'In 2008-09, the mining cost of coal was Rs.427.82 per tonne in open cast mines' was reportedly based on the information submitted by M/s EMTA to Ministry of Finance, Govt. of India, in November 2010 for abatement in taxable value on mining service, which was prepared by M/s P.M. & Associates, Asansol. As per the reports of M/s P.M. & Associates, Asansol, prepared on the basis of the financial records made available to them by M/s EMTA, the cost of mining of coal in open cast mines for the year 2007-08 was Rs.340.33, for the year 2008-09 it was Rs.427.82 and for the year 2009-10 it was Rs.462.42 per tonne. However, M/s EMTA has a different explanation as regards cost of mining claiming that the cost reflected here is not the total cost and the same is quite high, but such an explanation of M/s EMTA was not found convincing to M/s P.M. & Associates, Asansol.
10.12 That the State PSUs had stake holding of 26% in the JV Company and any profit accrued by the JV Company was also to be distributed in the ratio of 26:74%, however, this aspect has not been dealt in the CAG report. Further, substantial investment in establishing mining and transport infrastructure made by M/s EMTA has also not been accounted for in the CAG report. Besides, as per the information provided by the WBPDCL, it is not correct to say that M/s EMTA earned a huge profit throughout, as there were losses also in certain financial years.
10.13 That investigation as regards selection of M/s EMTA on nomination basis finally revealed that formation of JV for mining of coal blocks allocated to WBSEB and WBPDCL was approved by their respective Boards, wherein Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 20 of 23 Secretary, (Power) and Secretary (Finance) were the members. Moreover, this decision was in the knowledge of Deptt. of Power and Deptt. of Finance, Govt. of WB as well as Ministry of Coal, Govt. of India and no evidence could be surfaced to indicate involvement of these organizations in any criminal conspiracy for the purpose.
10.14 That none of the guidelines/circulars/rules except WBFRs governing the issue of selection of JV partner on nomination basis were operative during the relevant period i.e. 1995-96, however, as per Deptt. of Finance, Govt. of WB, who had issued the WBFRs, these rules were not applicable to WBSEB or WBPDCL.
10.15 From the above mentioned facts and circumstances, it is concluded that during the course of investigation, no evidence could be gathered to prove prima-facie commission of offence u/s 120 B r/w 420 IPC r/w 13(2) r/w 13(1)
(d) of the PC Act, 1988 against officials of West Bengal Power Development Corporation Ltd, West Bengal State Electricity Board, M/s Eastern Mineral Trading Agency, M/s Bengal EMTA Coal Mines Ltd, its directors, unknown public servant(s) or any other person(s).
11. Hence, this Closure Report has been filed.
OPINION OF THE COURT
12. I have heard Sh. V.K. Sharma, Ld. ALA for CBI. I have gone through the closure report as well as the relevant documents including case diaries.
13. Sh. V.K. Sharma, Ld. ALA has also acknowledged the handicaps during investigation and has submitted that the closure report may be accepted. He also pointed out that there were no guidelines applicable to allocation of coal Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 21 of 23 blocks through Govt. Dispensation Route (GDR) when the allocations were made.
14. The complainant of this case Sh. Himanshu Bahuguna, Dy. SP, EO-II, CBI was also called by notice. His statement has also been recorded and he has left it to the court to decide it on merits of the case.
15. The investigation has been concluded on the basis of the available records/documents. Various important documents could not be obtained by the Investigating Officer despite his best efforts. The documents are missing. This has been a genuine handicap in the investigation.
16. From the available record/documents, it cannot be ascertained that there was any criminality in allocation of coal blocks and/or their mining. Further, it cannot be ascertained that there was any foul play in formation of JV company namely BECML. As already mentioned in the beginning, this case pertains to allocation of coal blocks through GDR some of which were allotted way back in 1995. There appears to be no chance of getting the relevant documents. The recording of statements of various officials has also not yielded any results.
17. The allocation of coal blocks to PSUs of WB Govt. by MoC, Govt. India has already been cancelled by the Hon'ble Supreme Court vide its judgment dt. 24.09.2014 [(2014) 9 SCC 614]. The manner of processing the request of PSUs of WB Govt. is not ascertainable as relevant documents are not available. From the documents that are available, responsibility for any offence for allocating the coal blocks cannot be fixed. Further, the irregularities regarding aspect of mining the coal mines or price of the coal is somewhat secondary issue. It does not help in solving the main issue i.e. criminality in Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 22 of 23 allocation of coal blocks. Even otherwise, documents qua that aspect are also not completely available. As far as observations regarding selection of JV partner in the CAG Report are concerned, it has been rightly noted by the IO that the guidelines/circulars/rules taken note of by CAG were not applicable during the relevant period as the same were issued much later and thus no fault can be found in the said exercise.
18. This court concurs with the conclusion of the Investigating Officer.
19. In view of the above discussion, the closure report is hereby accepted. File be consigned to Record Room.
Digitally
signed by
SANJAY
SANJAY BANSAL
Announced in the Open Court BANSAL Date:
2022.07.27
on this 25th day of July, 2022 14:49:37
+0530
(Sanjay Bansal)
Special Judge, (PC Act)
(CBI), (Coal Block Cases)-02
Rouse Avenue District Courts
New Delhi.
Closure No. 02/2021 CBI Vs. M/s EMTA, Kolkata & Ors. Page No. 23 of 23