Central Bureau of Investigation (CBI) Vs DOMCO Pvt. Ltd. (District and Sessions Judge cum Special Judge PC Act CBI, Rouse Avenue)
1. Chargesheet: – A-1 company had given applications dated NIL to Ministry of Coal (hereinafter referred as MoC) and Ministry of Steel (hereinafter referred as MoS) for captive coking block mentioning that the company planned to erect a pig iron plant of two lakh tonnes per annum capacity near Kuliadih Railway Station on Tata Nagar-Badampahar Branch line of South-Eastern Railway – Rairangpur, District Mayurbhanj, Orissa and therefore, the company requires a captive coking coal block of 30 million tonnes (MT) reserves to produce two lakh tonnes of pig iron annually. The company proposed to mine the coal in Lalgarh Block of West Bokaro coalfield having reserves of 30-35 MT to meet their need for 30 years by opencast as well as by underground methods either simultaneously or in phases, depending upon detailed geology. Therefore, the company requested to allot the Lalgarh Block of West Bokaro Coalfield, District Hazaribagh, Bihar for captive use.
2. The application of the company was put up in MoS on 02.08.2000 and Sh. A.C.R. Das, the then Deputy Industrial Advisor, vide letter dated 23.11.2000 called upon the company to furnish actual status of implementation of project and steps taken towards setting up of plant.
3. This letter of MoS was replied on 12.12.2000 by A-2, MD of A-1 company who dishonestly furnished the following false information: –
“(i) So far, 142 acres of land have been acquired/allotted to the company. However, on the said date, the said land was in the name of another company namely M/s Orissa Oil Industries Limited.
(ii) With regard to Means of Financing, Debt and Equity and Financial Tie-Up, it was mentioned that arrangements for promoters’ contribution of 26% of 30 crores Equity have been made whereas at that time, as per balance sheets of the company submitted in the office of Registrar of Companies (RoC), the net worth of A-1 company as on 31.03.2000 was Rs. 1,16,58,379/- and the net worth of A-1 company as on 31.03.2001 was Rs. 1,61,59,801/-.”
4. After examining the said letter of A-1 company, MoS, vide its letter dated 15.01.2001 called upon the company to furnish additional information including documentary evidence of allotment of land.
5. A-2, MD of A-1 company, vide letter dated 05.02.2001, dishonestly submitted false information to MoS mentioning that plant will be located on private land near Rairangpur measuring 142 acres and enclosed schedule of land and map with the said letter. However, this land was never acquired/allotted to A-1 company and was in the name of M/s Orissa Oil Industries Ltd.
6. Further, it is alleged that A-2 MD of A-1 company conspired with Sukhdeo Prasad (originally A-5 in the chargesheet), Manager of M/s Orissa Oil Industries Limited and got purportedly signed MoU dated 11.10.2000 for selling aforesaid 142 acres of land of M/s Orissa Oil Industries Limited situated at Rairangpur, Orissa. As per MoU, Sukhdeo Prasad (originally A-5 in the chargesheet), was the General Power of Attorney (GPA) of M/s Orissa Oil Industries Limited for selling the land in question. Without knowledge of Directors of M/s Orissa Oil Industries Limited, Sukhdeo Prasad (originally A-5 in the chargesheet), provided copies of land documents which were submitted with MoS and MoC for securing coal block.
7. There was no precedence of physical inspection of the information given by the applicant companies and therefore, relying on the false information, dishonestly given by A-2, MD of A-1 company, MoS recommended vide OM dated 18.04.2001, allocation of Lalgarh coking coal block in favour of A-1 company. It was mentioned in the OM that the company has furnished details regarding effective steps taken, financial strength etc.
8. The charge-sheet mentions that, if the company had not provided false information to MoS, no recommendation to MoC would have been possible in its favour.
9. MoC, vide letters dated 11.08.2000 and 16.10.2002 called upon the company to furnish information including mobilization of funds, project’s cost, financial tie up, economic viability and project profile.
10. In response to the said letter of MoC, A-2, MD of A-1 company, vide letter dated 07.11.2002 provided certain documents including Auditor’s Certificate issued by A-5, Proprietor, Chartered Accountants M/s M. Kumar & Associates and a document signed by A-2, MD of A-1 company showing the net worth of company as on 31.10.2002 as Rs. 19.42 crore. However, as per balance sheets of the company submitted to RoC, the net worth of company as on 31.03.2002 was Rs. 2,46,68,615/- and the net worth of A-1 company as on 31.03.2003 was Rs. 2,39,72,811/-. Therefore, A-2, MD of A-1 company connived with A-5, who was the company’s Auditor prior to that period and after allocation of coal block in favour of company and submitted false documents showing inflated net worth of the company.
11. As per charge-sheet, A-3 one of the Directors of the company attended 19th Screening Committee meeting along with A-5, CA and they signed the attendance sheet as Director and “Sr. Engineer” of the company respectively. They dishonestly intimated Screening Committee that the company has already acquired 150 acres of land for their pig iron plant at Rairangpur, whereas the said land was never acquired/purchased or allotted in favour of A-1 company and was in the name of M/s Orissa Oil Industries Limited. The Screening Committee specifically noted in minutes of the meeting that the party has intimated that 150 acres of land for their pig iron plant at Rairangpur is already acquired. During the 19th Screening Committee meeting held on 26.05.2003, Lalgarh (North) Block was identified for prospecting in favour of A-1 company for meeting coal requirement for setting up a new pig iron plant at Rairangpur, District Mayurbhanj, Orissa. It was also decided that if the prospecting results show open cast mining, then the block cannot be allocated for mining as requirement of 0.5 MTPA was less than 1MTPA provided in the guidelines for captive mining block.
12. The decision of the Screening Committee that it has been decided to identify Lalgarh (North) Block was informed to A-1 company by MoC vide letter dated 25.07.2003. The company was also called upon to provide certain information, including balance sheets of the last three years along with latest Auditor’s report. A-1, A-4 (another Director of company) and A-6, Proprietor CA M/s Sanjay Khandelwal and Company connived with each other and furnished balance sheet of the years ending 31.03.2000, 31.03.2001 and 31.03.2002 with inflated figures, certified by A-4 and audited by A-6 to MoC vide letter dated 16.08.2003 written by A-2.
13. MoC vide letters dated 24.11.2003 and 27.05.2004 called upon A-1 company to furnish write up on the status of the project w.r.t. land, clearance, equipments, financing (Financial Closures) etc and expansion programme of the company, if any. A-2 in response sent letter dated 23.07.2004 and submitted that “We having (sic) 200 acres of land” and submitted documents of land in Oriya language which were in the name of M/s Orissa Oil Industries Limited.
14. After carrying out prospecting, Central Mine Planning and Design Institute Limited (CMPDIL) informed MoC, that it may not be possible to operate open-cast mine of 1MT capacity with these reserves.
15. During the 27th Screening Committee meeting, it was informed to the Committee that guidelines pertaining to minimum production from open cast mine (1MT) and underground mine (0.25 MT) have been done away with and it is the geology and geography of the block, which will determine the mine capacity among the mines including in captive list. These minutes were approved by Sh. P.C. Parekh, the then Secretary (Coal) on 25.03.2005 and were confirmed on 15.04.2005 during 28th meeting of Screening Committee.
16. Vide letter dated 08.07.2005, MoC informed A-1 company that the Central Government has decided to allocate the Lalgarh (North) Coal Block to meet the requirements of their proposed pig iron plant at Rairangpur in the District Mayurbhanj, Orissa.
17. After securing coal block for prospecting in 19th Screening Committee meeting, A-2 entered into an agreement dated 27.03.2004 which was executed between A-2, Smt. Rita Prakash wife of A-2, Shri Ram Chander Prakash father of A-1 (Binay Prakash Group) and M/s Electrosteels Casting Limited and A-1 company.
18. As per Clause 1 of Article I of the Agreement, the “Issued and the Paid-up Capital” of A-1 company was to be raised to Rs. 60,00,000/-initially consisting of 60,000 shares of Rs. 100/- each. Since Binay Prakash Group already had Issued and Paid-up Capital of Rs. 28,17,500/-, therefore, they had to subscribe Rs. 1,82,500/- in furtherance of this Clause. A-1 company vide Share Certificate dated 15.04.2004 issued 30,000 shares of Rs. 100/- each, amounting to Rs. 30,00,000/- in the name of M/s Electrosteel Castings Ltd.
19. As per Clause 3 (a) (i) of Article 1 of the Agreement, Binay Prakash Group had to subscribe 40,000 shares of Rs. 100/- each for cash at par of M/s Domco Pvt. Ltd. In furtherance of the same, Binay Prakash Group, vide A-1 company’s Board Resolution dated 20.07.2005 was allotted 20,000 equity shares of Rs. 100/- each to A-2 (HUF) and 20,000 equity shares of Rs. 100/- each to Shri Ram Chandra Prasad.
20. In furtherance of Clause 3 (a) (ii) (iii) (iv) of Article 1 of the Agreement, Binay Prakash Group sold its 20,000 shares of Rs. 100/-each to M/s Electrosteel Castings Ltd. @ Rs. 7700/- per share aggregating an amount of Rs. 15,40,00,000/- to hold the 50% equity in A1 company. Accordingly, M/s Electrosteel Castings Ltd. paid Rs. 7,00,00,000/- to Binay Prakash Group vide six different cheques which were credited in the respective accounts of A-2, Smt. Rita Prakash (wife of A-2), Sh. Ram Chandra Prasad, father of A-2 – [Binay Prakash Group], in consideration of purchase of the shares from these persons. The balance of Rs. 8,40,00,000/- was to be paid by M/s Electrosteel Castings Ltd. to M/s Domco Pvt. Ltd.
21. As per Clause 4 and 5 of Article 1 of the Agreement, Binay Prakash Group had to subscribe 2,00,000 shares of Rs. 100/- each aggregating: Rs. 2,00,00,000 and simultaneously, M/s Electrosteel Casting Ltd., had to subscribe 2,00,000 shares of Rs. 100/- each @ premium of Rs. 2265/- per share aggregating Rs. 47,30,00,000, as and when required by A-1 company, Binay Prakash Group and M/s Electrosteel Castings Ltd., so that the equality in shareholding is maintained at all times.
22. It is also mentioned in the agreement that A-1 company was granted permission from MoC for prospecting of Lalgarh (North) Coal Block and after the exploration done by Central Mine Planning & Design Institute Ltd. (CMPDIL), the allotment was to be made by the MoC. In order to supply coal to the Pig Iron Plant of M/s Electrosteel Casting Ltd. at Khardah, West Bengal and Associate Company of M/s Electrosteel Castings Ltd. i.e., M/s Lanco Industries Ltd. having Pig Iron Plant at Kalahasti, Andhra Pradesh, if permitted under the Govt. of India rules, any modification is required in the Memorandum and Articles of Association of A-1 company, the same shall be done accordingly.
23. It is alleged that from the very beginning, A-2 had a dishonest intention to cheat, therefore, he conspired with A-3, A-4, Sukhdeo Prasad (originally A-5 in the chargesheet), A-5 C.A. and A-6 C.A. and submitted false information/documents to the MoS and MoC. After securing Coal block, through deceit, during the 19th Screening Committee meeting, he entered into an agreement and obtained Rs. 7,00,00,000 through such agreement by selling shares on premium. It is a fact that if he had not secured/ got the allocation of the coal block, he would not have been able to sell its shares at a premium to M/s Electrosteel Castings Ltd. Therefore, by way of cheating, he gained pecuniary undue benefit of Rs 7,00,00,000.
24. It is further mentioned in the charge-sheet that investigation has revealed that the sixth meeting of the Inter-Ministerial Group (IMG) was held on 12.09.2012 under the Chairmanship of Additional Secretary (Coal) to undertake periodic review of the development of allocated coal/lignite blocks for information and necessary action. The IMG noted that there was no progress for mining the coal block since its allocation on 08.07.2005 and even mining plan has not been approved so far as initially the company presented two different mining plans by two different persons both claiming to be the Managing Directors of the company. The company had yet to submit the clarifications called for by the Ministry. The IMG noted that due to dispute within the allocated company, there has been an inordinate delay in development of the block and there was no progress in development of End Use Plant-EUP. The CA certificate has not been submitted for investment made by allocatee. In view of the above, the IMG recommended that the coal block may be de-allocated with full forfeiture of the Bank Guarantee. Finally, MoC issued a de-allocation letter dated 22.11.2012 to A-1 company.
25. Thus, it was alleged in the chargesheet that the accused persons namely A-2, A-3, A-4, A-5 Sukhdev Prasad (who was later on discharged), A-6 and A-7, have committed offences punishable u/s 120-B r/w 420 IPC and substantive offences thereof. Further, A-1 company M/s DOMCO Pvt. Ltd. erstwhile M/s DOMCO Smokeless Fuels Pvt Ltd, through its Director, A-2 has committed the offence u/s 420 IPC.
26. ORDER ON CHARGE: Vide order dated 25.01.2017, detailed order on charge was passed directing framing of charge for the offence punishable under section 120-B IPC and for the offence under section 120-B/420 IPC against A-1 company, A-2 (Managing Director), A3 (Director), A-4 (Director), A-5 (CA) and A-6 (CA). Charge under section 420 IPC, the substantive offence, was also framed against A-1 company, A-2, A-3, A-4, A-5 and A-6.
27. So far as Sukhdeo Prasad (originally A-5 in the chargesheet) is concerned, he was discharged as no offence was prima facie found made against him.
28. After passing the detailed order on charge, so far as formal charge under section 120-B IPC against all the six accused is concerned, it was recorded that during the year 2000 to 2005 at Jharkhand, Bihar, Orissa, West Bengal, Delhi and other places, the accused entered into a criminal conspiracy to cheat MoC and MoS, Government of India so as to procure allocation of a captive Coal Block [Lalgarh (North) Coal Block] situated in District, Hazaribagh, Bihar (now Jharkhand) in favour of A-1 company by making false submissions about land and financial preparedness and in order to earn undue benefits by selling the company to M/s. Electrosteel Casting Ltd. subsequent to allocation of coal block. To make charge clearer to the accused, it was also recorded that further particulars of the charge are recorded in detail in order on charge dated 25.01.2017 and also in the charges framed separately.
29. So far as charge under section 120-B read with 420 IPC is concerned, it was recorded that all the accused did various acts of cheating as described in detail in the substantive charges framed separately and as also discussed in detail in order on charge dated 25.01.2017.
30. Charge under section 420 IPC was framed against each accused individually.
31. Charge under section 420 IPC was framed against A-1 company and A-2 on six counts of cheating which are common/identical to both the said accused.
32. 1st, that during the year 2000, in furtherance of common object of criminal conspiracy, vide letter dated 12.12.2000, false information was given to MoS about acquisitions/allotment of 142 acres of land whereas no such land existed at that time in the name of A-1 company.
33. 2nd, in furtherance of the aforesaid common object of criminal conspiracy, vide letter dated 12.12.2000, false information was given to MoS about financial preparedness.
34. 3rd, vide letter dated 05.02.2001, copies of land ownership documents of M/s Orissa Oils Industries Ltd were submitted to MoS and vide letter dated 23.07.2004, again copies of land ownership documents of M/s Orissa Oils Industries Ltd were submitted to the MoC whereas A-1 company was not the owner of the said land.
35. 4th, in furtherance of aforesaid common object of the criminal conspiracy, letter dated 07.11.2002 was submitted to MoC, Government of India, about financial status of the company by attaching Auditor’s Certificate issued by A-5, C.A. claiming the net worth of the company Rs. 19.42 crores whereas as per the balance sheets of the company, the net worth of the company was Rs. 2,46,68,615 as on 31.03.2002 and Rs. 2,39,72,811 as on 31.03.2003.
36. 5th, in furtherance of aforesaid common object of criminal conspiracy, vide letter dated 16.08.2003, copies of false balance sheets were submitted for the year ended on 31.03.2000, 31.03.2001 and 31.03.2002 showing inflated figures, which were certified by A-4, Director and were audited by A-6, proprietor and CA of M/s Sanjay Khandelwal to MoC, Government of India.
37. The 6th instance of cheating is that in furtherance of aforesaid common object of criminal conspiracy, vide agreement dated 27.03.2004, A-1 company sold the shareholding to M/s. Electrosteel Castings Ltd at a premium of part payment of Rs. 7 crores.
38. The charge against A-3 under section 420 IPC is that on 26.05.2003, he had attended the 19th Screening Committee meeting, MoC, Government of India and made a false claim that A-1 company has acquired 150 acres of land and thereby induced the committee to recommend allotment of a captive coal block in favour of A-1 company and thereby cheated MoC, Government of India.
39. Charge against A-4 under section 420 IPC is that he had certified copies of false balance sheets of the company for the years ended on 31.03.2000, 31.03.2001 and 31.03.2002 showing inflated figures and vide letter dated 16.08.2003, these false balance sheets were submitted by A-2 to MoC to procure allocation of a captive coal block in favour of A-1 company.
40. Charge against A-5 is that he issued and provided false Auditor’s Certificate showing the net worth of A-1 company as Rs. 19.42 crores whereas as per balance sheet of the company, the net-worth of the company was Rs.2,46,68,615 as on 31.03.2002 and Rs.2,39,72,811 as on 31.03.2003 and this false Auditor’s certificate was submitted by A-2 vide letter dated 07.11.2002 to the MoC regarding financial status of the company and thereby cheated MoC to allot a coal block in favour of A-1 company.
41. The 2nd count of cheating charged against A-5 is that he had attended the 19th Screening Committee meeting, MoC, Government of India representing himself as a Senior Engineer of A-1 company and made a false claim on behalf of company A-1 company that the company has acquired 150 acres of land and thereby induced the said Screening Committee to recommend allotment of a captive coal block in favour of A1 company believing the said representation to be true qua advanced status of/stage of preparedness.
42. Charge against A-6 under section 420 IPC is that he had signed and issued false balance sheets for the year ended on 31.03.2000, 31.03.2001 and 31.03.2002 showing inflated figures and vide letter dated 16.08.2003, these false balance sheets were used and submitted by A-1 company and A-2 to MoC, Government of India in order to procure allocation of a captive Coal Block in favour of A-1 company.
43. A perusal of the detailed order on charge shows that in response to the arguments of the accused, it was made clear to them that so far as their submission that information given to MoS or to MoC about the availability of land with the company was on account of some miscommunication or was without any guilty intention or whether it had the effect of deceiving or inducing MoS or MoC or not, can be better appreciated during the course of trial only.
44. It was also made clear to the accused that it will be open for them during trial to show whether the net worth of the company at the relevant time was Rs. 20 crores.
45. It was also made clear to the accused that it will be open for them during trial to show that the minutes of the Screening Committee were not properly recorded.
46. It was also left to the accused persons to explain during trial the contradiction in the information supplied in the main application and in the bar charts.
47. Admission/ Denial: – Several documents were admitted by the accused as per section 294 of CrPC and reference to them shall be made in this judgement wherever relevant.
48. Prosecution Evidence: – Prosecution examined 23 witnesses to prove its case against the accused. Six witnesses tendered their affidavits under section 296 of CrPC. Testimony of witnesses shall be referred in the judgment wherever relevant. It is noted here that PW 1 Sunil Kumar Pandey and PW 2 A.C.R. Das are from MoS. Evidence of PW 2 A.C.R. Das is important as he had dealt with all the correspondence of A-1 Company for allocation of Coal Block. PW 8 R.S. Negi and PW 23 Prem Raj Kuar are from MoC and are important witnesses as they had dealt with all the correspondence of A-1 company in MoC and were present during the 19th Screening Committee Meeting. PW 3 Abhimanyu Panda, PW 4 Pijush Kanti Dass, PW 5 Arun Kumar Mahopatra, PW 6 Kirtan Behari Ojha and PW 7 Binod Mishra are official witnesses who have been examined to prove ownership of land in the name of M/s Orissa Oil Industries Ltd. PW 15 Nikhil Chand has provided English translation of land documents which were submitted by A-1 company under signatures of A-2 with MoS and MoC. PW 19 Anil Sharma is from CFSL, handwriting expert. PW 14 Pankaj Lath, PW 16 Gautam Sherbet, PW 17 Umang Kejriwal, PW 18 Rakesh Kumar and PW 20 Arun Garodia have been examined to prove the agreement and transaction of transfer of shares of A-1 company in favour of M/s Electrosteel Casting Ltd. PW 10 Ramakant Choudhury has been examined to prove signatures and handwriting of A-3. PW 11 Sukhendu Sinha has been examined to prove signatures of A-6. PW 13 Nandlal Prasad has been examined to prove signatures of A-2 and A-5. PW 9 Abhishek Kumar Bijeta has been examined to prove signatures of Sukhdeo Prasad (originally A-5 in the chargesheet), who was discharged vide order stated 25.01.2017. PW 12 Syed Md. Ather Mikail has produced balance sheets submitted by A-1 company with ROC. PW 21 Dr Raj Singh has examined various balance sheets which were submitted with ROC and MoC and has given his opinion about net worth of the company on the basis of these balance sheets. PW 22 is the Investigating Officer Rakesh Ahuja who has deposed about the investigation conducted by him leading to the filing of chargesheet.
49. Statement under section 313 CrPC: – On completion of prosecution evidence, statements of all the accused persons under section 313 of CrPC were recorded and the response given by them shall be referred while discussing the points for determination.
50. Defence Evidence: On behalf of A-1 company, eight witnesses were examined in defence, primarily to show the steps taken by the company to set up End Use Project. However, it was candidly submitted on behalf of A-1 company and its directors that since these investments were made subsequent to the allocation of coal mine in their favour therefore, they are not much relevant.
51. Points for determination: – A perusal of records and arguments addressed shows that in this case there are following points for determination:
(i) Whether the Administrative Ministry, in this case MoS, while considering “Soundness of Proposal” of an applicant company for allocation of coal block for coal mining could consider availability of land and financial net-worth of the said company before recommending allocation of coal block in its favour to the MoC?
(ii) Whether A-1 company vide its letter dated 12.12.2000 Exhibit PW-2/B-4, D-41, page 48 submitted false information to MoS about acquisition/allotment of 142 acres of land whereas no such land existed in the name of A-1 company on that date?
(iii) Whether A-6 had prepared balance sheets of Company which were submitted with MoC vide company’s letter dated 16.08.2003, Exhibit PW-8/N-19, D-43, page 100-155?
(iv) Whether the balance sheets of the company audited by A-5 and submitted with ROC, Exhibit PW-12/B, D-20, page 1-13 (Exhibit P-2), Exhibit PW-12/C, D-21, page 114 (Exhibit P-3), Exhibit PW-12/D, D-22, page 1-15 (Exhibit P-4) or the balance sheets prepared by A-6 and submitted with MoC by the company vide its letter dated 16.08.2003 Exhibit PW-8/N-19, D-43, page 100-155 and certified by A-4 for the year ending 31.03.2000, 31.03.2001 and 31.03.2002 show correct state of financial affairs of A-1 company?
(v) Whether A-1 company vide letter dated 12.12.2000 Exhibit PW-2/B-4, D-41, page 48 submitted false information to MoS about Debt/Equity Ratio stating that the promoters share is 26% of Rs.30 crores i.e., Rs.7.8 crores?
(vi) Whether the net-worth of A-1 company as on 31.03.2002 was Rs. 19.42 crores or it was Rs. 2,46,68,615 and whether the net worth of the company, as on 31.03.2003, was Rs. 2,39,72,811?
(vii) Whether Auditor’s certificate was provided to MoC by the company alongwith its letter dated 07.11.2002, Exhibit PW-8/N-13, D- 43, page 57?
(viii) Whether the Auditor’s Certificate dated 12.11.2002, Exhibit PW-8/N-13, D- 43, page 57 was given by A-5, CA?
(ix) Whether A-1 company vide letter dated 07.11.2002, Exhibit PW-8/N-13, D- 43, page 56-89 submitted false information to MoC about it’s financial net worth?
(x) Whether A-5 had attended the 19th Screening Committee meeting along with A-3 and represented himself as Senior Engineer of A-1 company and whether A-3 /A-5 /or both of them made a false claim in the meeting that the company has acquired 150 acres of land?
(xi) Whether charges framed against the accused persons are proved during trial?
52. Discussion of the evidence and arguments addressed for deciding the points for determination: Before discussing the points for determination, the very 1st argument addressed on behalf of A-1 Company, A-2, A-3 and A-4, is required to be dealt which is that proving a document does not prove the facts recorded in the document. The argument is that the contents of a document are different from the truth of what the document states. The truth of its contents can be proved by one who has personal knowledge of the matter recorded. Reliance is placed on Om Prakash Berlia and others versus Union of India, AIR1983 Bombay 1 which was followed in Srichand P.Hinduja versus State through CBI, 121 (2005) DLT1. Thus, merely proving of note sheets by the prosecution witnesses from MoS and MoC would only prove the contents of note sheets i.e., what was written in the note sheets. But it does not prove facts noted in those note sheets. To prove those facts, the person who is witness of the fact has to appear as a witness in the court and depose on oath.
53. On the other hand, submission on behalf of prosecution is that all the documents have been duly exhibited without any objection from the accused. There was neither any objection to the admissibility of the documents nor objection about mode of proof. Once document is exhibited in evidence without any objection from the other side, then it stands proved. Reference is made to section 74 of the Evidence Act as per which the documents forming the acts, or records of the acts of official bodies are public documents. Reliance is also placed on section 114 (e) of the Evidence Act which provides that the court may presume that judicial and official acts have been regularly performed. Therefore, the submission is that a presumption of correctness is attached to the files of MoC and MoS being public documents. The accused have not proved anything to the contrary and the presumption of correctness of the files of MoC and MoS has not been rebutted by the accused during trial.
54. Reliance is placed by CBI on the judgment of the Hon’ble Supreme Court of India in “R.V.E. Venkatachala Gounder Vs. Arulmigu Viswesaraswami and V.P. Temple and Anr.” AIR 2003 SC 4548 where it is held that: –
“Ordinarily an objection to the admissibility of evidence should be taken when it is tendered and not subsequently. The objections as to admissibility of documents in evidence may be classified into two classes: – (i) an objection that the document which is sought to be proved is itself inadmissible in evidence; and (ii) where the objection does not dispute the admissibility of the document in evidence but is directed towards the mode of proof alleging the same to be irregular or insufficient. In the first case, merely because a document has been marked as ‘an exhibit’, an objection as to its admissibility is not excluded and is available to be raised even at a later stage or even in appeal or revision. In the latter case, the objection should be taken before the evidence is tendered and once the document has been admitted in evidence and marked as an exhibit, the objection that it should not have been admitted in evidence or that the mode adopted for proving the document is irregular cannot be allowed to be raised at any stage subsequent to the marking of the document as an exhibit. The later proposition is a rule of fair play. The crucial test is whether an objection, if taken at the appropriate point of time, would have enabled the party tendering the evidence to cure the defect and resort to such mode of proof as would be regular. The omission to object becomes fatal because by his failure the party entitled to object allows the party tendering the evidence to act on an assumption that the opposite party is not serious about the mode of proof. On the other hand, a prompt objection does not prejudice the party tendering the evidence, for two reasons; firstly, it enables the Court to apply its mind and pronounce its decision on the question of admissibility then and there; and secondly, in the event of finding of the Court on the mode of proof sought to be adopted going against the party tendering the evidence, the opportunity of seeking indulgence of the Court for permitting a regular mode or method of proof and thereby removing the objection raised by the opposite party, is available to the party leading the evidence. Such practice and procedure are fair to both the parties. Out of the two types of objections, referred to hereinabove in the latter case, failure to raise a prompt and timely objection amounts to waiver of the necessity for insisting on formal proof of a document, the document itself which is sought to be proved being admissible in evidence. In the first case, acquiescence would be no bar to raising the objection in superior Court”.
55. On behalf of CBI, reliance is also placed in this regard on P.C. Purushothama Reddiar Versus S. Perumal, 1972 (1) SCC 57 where it is held that: –
“Once a document is properly admitted, the contents of the document are also admitted in evidence though those contents may not be conclusive evidence”.
56. Reliance is also placed on behalf of CBI on several judgements of different Hon’ble High Courts but the same are not being reproduced to avoid repetition of proposition of law already noted in the two judgements of the Hon’ble Supreme Court noted above.
57. It is also submitted on behalf of CBI that PW-2 Shri A.C.R. Das who was the Deputy Industrial Adviser in MoS, PW 8 Shri R.S. Negi had worked in various capacities in MoC in Coal Linkage Distribution Section and PW-23 Prem Raj Kuar who was also posted in MoC as Section Officer in Coal Allocation Section in the year 2003 and had attended the 19th Screening Committee Meeting had dealt with the documents at one stage or the other which were exhibited during their examination and therefore they were competent to exhibit these documents and they were not strangers to the documents.
58. The submissions of learned counsel for the accused as well as the learned DLA of CBI have been considered.
59. The learned counsel for the accused has placed reliance on the judgement in the case of Om Prakash Berlia (supra) to submit that truth of the contents of a document cannot be proved merely by producing the document for the inspection of the court. Likewise, the proof of signatures of a document does not automatically result in the proof of its contents. Proving the signatures or handwriting in a document proves the genuineness of the document. Where the party propounding the document relies on the truth or accuracy, the witness tendering the document must ordinarily be the author of the document.
60. However, as submitted by Shri Sanjay Kumar learned DLA of CBI, under section 114 (e) of Evidence Act, documents prepared by public servants in the ordinary course of their public duties have a presumption of correctness of the truth of their contents attached to them, and they do not require the public servant who prepared the document to be called as a witness to have the document read in evidence. Reliance can be placed on Harpal Singh versus State of HP (1981) 1 SCC 560. The note sheets have been prepared by public servants in the ordinary course of their public duties and therefore carry a presumption of the correctness of the truth of their contents.
61. Moreover, the prosecution witnesses PW 2, PW 8 and PW 23 had sufficient personal knowledge and familiarity with the note sheets/ documents for deposing the truth of their contents.
62. Furthermore, the note sheets were exhibited during recording of evidence without any demur and therefore cannot be now challenged by any party at the end of trial / during final arguments.
63. Therefore, this court finds no infirmity in referring and relying upon the note sheets and other documents which were duly exhibited at the time of recording of evidence.
64. The 1st point for determination is “Whether the Administrative Ministry, in this case MoS, while considering soundness of proposal of an applicant company for allocation of coal block for coal mining could consider availability of land and financial net-worth of the said company before recommending allocation of coal block in its favour to MoC?
65. Argument of the accused is that in the 14th Screening Committee meeting held on 18th and 19th June 1999 (Exhibit PW-8/J-1 colly, D-10, Page 133-134), it was decided that the Administrative Ministry shall assess the soundness of the proposals in consultation with State Governments before sending their comments/recommendations to the Screening Committee for consideration of allotment of captive mining block. Only in the cases of companies allotted coal blocks, Administrative Ministry in consultation with State Governments as well as using their own agencies had to assess the progress of the implementation of End Use Plants (EUP) and send a report to the Screening Committee for further action. MoS had sent the recommendation (Ex.PW-2/B-7, D-43, page 41-42) in favour of A-1 company to MoC on 18.04.2001 when the guidelines decided in 14th Screening Committee meeting were in force and MoS had to see soundness of proposal only. These guidelines were changed in the 18th Screening Committee Meeting held on 05.05.2003 (Exhibit PW-8/R-7, D-48, page 161) when it was decided that the Administrative Ministry shall appraise the projects from the point of view of the genuineness of the applicant, techno-economic viability of the project and the state of preparedness/progress in the project while indicating the quantity and quality of coal requirement of the project and recommending allocation of captive block to the applicant company. No criteria regarding minimum financial net-worth of the company or ownership of the land were laid down in these guidelines. So far as processing of the application of the company in MoS is concerned, it is submitted that till the recommendations of MoS dated 18.04.2001, the role of MoS, according to 14th Screening Committee guidelines was to assess soundness of the proposal in consultation with State Government. Assessing the progress made in the implementation of End Use Project was required only where coal block was already allocated.
66. According to the accused, it is an important distinction that needs to be kept in mind while appreciating the processing of application of A-1 company in MoS. In fresh cases like in the case of A-1 company, actual steps taken by the company were not to be considered by MoS. There were no minimum requirements for eligibility for allocation of coal block in terms of preparedness such as acquisition of land or financial strength. Therefore, there was no reason or motive for the accused company to misrepresent to MoS for its recommendation.
67. On behalf of CBI, it is submitted that ‘soundness of the proposal’ includes financial preparedness, availability of land and all other preparations. It is further submitted that there is no explanation from A-1 to A-4 as to why they submitted false information about land and finance to the Ministry of Steel as well as Ministry of Coal if these were not relevant considerations for recommendation in favour of A-1 company.
68. Rival submissions have been considered.
69. The 14th Screening Committee in its meeting held on 18th and 19th June 1999, Ex.PW-8/J-1, D-10, Page 133-134, added the following general guidelines: –
(i) The Administrative Ministries will assess the soundness of the proposals, in consultation with the State Governments, before sending their comments/recommendations to the Screening Committee for consideration of allotment of captive mining block.
(ii) the Administrative Ministries should consult a State Government as well as use their own agencies for assessing the progress of the implementation of End Use Plants for which blocks have already been allotted by the Screening Committee and send a report to the Screening Committee for further action.
70. During the 18th Screening Committee meeting held on 05.05.2003, Ex. PW-8/R-7, D-48, page 161-162 following general guidelines/ground rules were decided: –
(i) …
(ii) The Administrative Ministries were requested to appraise the projects from the point of view of the genuineness of the applicant, techno-economic viability of the project and the state of preparedness/progress in the project while indicating the quantity and quality of coal requirement of the project and recommending allocation of captive block to the applicant…
(iii)…
71. PW2 Shri A.C.R. Das was the Deputy Industrial Advisor in MoS from the year 2000 onwards and had dealt with the file of A-1 company, Ex. PW 1/B, D-41. Letter of A-1 company dated 14.10.2000, Ex.PW-2/B-2, D-41, page 3-4 was dealt with by this witness at note sheet page 3, D-41 and he had recommended: –
“(1) We have to ask the company to apply to Secretary, Ministry of Coal for mining block.
(2) For our recommendation, if any, we need to know the actual status of implementation or steps taken on specific areas. Please put up a draft. Take the areas from the format for linkage.”
72. Thereafter, PW2, as per letter dated 23.11.2000, D-41 page 37, Ex. PW2/B-3, called upon A-1 company to furnish actual status of implementation of the project and steps taken towards setting up of the plant to MoS for taking further necessary action in the matter in the format enclosed therewith.
73. It shows that PW-2 in his wisdom, to assess the soundness of proposal of A-1 company, wanted to know the actual status of implementation of project and steps taken on specific areas as provided for in the format for linkage.
74. What was implicit in the guidelines of 14th Screening Committee meeting was made explicit in the guidelines of 18th Screening Committee meeting. Since, the 18th Screening Committee meeting felt it necessary to make it explicit, which was otherwise implicit, it can be safely concluded that the query of MoS regarding actual status of implementation or steps taken on specific areas was to assess the soundness of proposal.
75. The query regarding availability of land and the query with regard to Means of Financing, Debt, Equity and Financial Tie-up go to the root of soundness of proposal to set up pig iron plant by the company and therefore could have been asked for by any reasonable person, from the applicant company, for assessing the soundness of proposal of the company.
76. Letter dated 23.11.2000 was replied by A-1 company vide letter dated 12.12.2000 along with its annexures, D-41, page 47-53, Ex. PW2/B-4 colly.
77. Contrary to the stand now being taken by the company, at that time, the company never responded to MoS that the company is not allotted any coal block so far and the information called for is not applicable to the applicant company. It never referred to the guidelines laid down in the 14th Screening Committee meeting to convey/advice MoS that the information called for is not required at this stage.
78. On the contrary, the response of the company with regard to land, in Serial No. 3 of the Format for Application for Coal and Iron Ore Linkages for Proposed Pig Iron/Steel Making Units (EF-BOF)/EOF Route and Coke Oven was:
“Land,
i) Total How Much Required-Total 200 Acre in final phase.
ii) Acquired/Allotted so far -142 Acres.
iii) Present Status of Balance Land Required-Will require after 3 years of expansion, available in adjoining area and
iv) Present Status of Development of the site-200m. From Rairangpur station, 10 houses, 5 large Dia. Dug wells and water tank. Partially covered by boundary wall. Large covered spaces for various shops.”
79. The response of the company with regard to Means of Financing, Indicate Debt, Equity and Financial Tie-Up, at Serial No.10 of the format was:
“Phase-1
Debt to Equity Ratio -2:1 All Rupee component,
Equity-Rs. 30.00 crores,
Debt-Rupees 60.00 crores.
Arrangements for promoter’s contribution of 26% of equity made. Other equity finances being arranged through financial institutions. Applications for rating by institutions under way. Since the investment is totally in rupee component in 1st phase, the Indian institutions are being approached.”
80. Office Memorandum dated 18.04.2001 from MoS to MoC recommending the allocation of mining block for development by A-1 company for captive use, Ex. PW2/B-7, D-43, page 41-42 also lays emphasis in para 2 (c) to the fact that “Debt to Equity Ratio is 2:1, in phase 1, equity is Rs. 30 crores and Debt are Rs. 60 crores. Arrangements for promoter’s contribution of 26% of equity already made. Other equity finances being arranged through financial institutions”.
81. The recommendation letter also mentions in para 2 (f) that out of proposed land requirement of 200 acres, total land of 142 acres has already been acquired.
82. It shows that financial net worth of the company and availability of land were integral parts of the process to assess the soundness of proposal and that is why they were quoted in the recommendation letter referred above.
83. The extracts of the minutes of the 19th meeting of the Screening Committee held on 26.05.2003, Ex.PW-8/N-17, D-43, Page 94 also record that “150 acres land for their pig iron plant at Raipur has already been acquired”. The fact that the Screening Committee also felt it necessary to record this fact in its minutes shows that the same was relevant for assessing of “Soundness of Project” of the applicant company.
84. During cross-examination of PW-2 Sh. A.C.R. Das on behalf of A-6 recorded on 21.08.2017, page 22 of 25, PW-2 denied a suggestion that information sought by MoS from the company regarding land and financial tie-up was not pre-requisite condition for making recommendation by MoS to MoC for allocation of a coal block in favour of the company.
85. This also shows that information regarding land and financial tie-up was also part of assessment of soundness of proposal of the company. The witness made it clear when he deposed that the purpose of seeking said information was to examine the seriousness of the applicant company in pursuing with its proposal.
86. A suggestion was given to PW-2 during his cross-examination on behalf of A-1 to A-4 recorded on 05.02.2018, page 8 of 27, that availability of land with the applicant company was not a prerequisite condition for applying to MoS for its recommendation to MoC for allotment of a coal block. The witness clearly replied: –
“A company is at liberty to submit any application to MoS for its recommendation but it is for MoS to see whether the application of the company can be recommended or not. However, before recommending a company to MoC for allotment of a coal block, it is seen as to whether the company has taken some minimum steps or not and the said steps do include availability of land with the company. As per practice, in the absence of availability of land with the company its application is not recommended by MoS to MoC.”
87. PW2 further made it clear by deposing that:
“As far as I know, there were no guidelines which prescribed that availability of land with the applicant company was necessary before its application could be recommended by MoS but it was a regular practice being followed in MoS that application of any company was recommended to MoC for allotment of a coal block only if the company was already having any land with it.”
88. No suggestion was given to this witness that name of some other company was recommended by MoS for allocation of coal block without making any enquiry about availability of land and net worth of the said company.
89. PW2 further deposed (on 05.02.2018, page 9 of 27) that:
“We had written to the company to submit various information to show their seriousness in the project and the said information included land also beside other requirement for the project including money”.
90. He also deposed (on 05.02.2018, page 15 of 27) that for recommendation by MoS, what was required was that the company must have taken sufficient steps towards establishing the End Use Project.
91. PW 8 also deposed during cross-examination on behalf of A1 to A-4 (09.07.2018, page 6 of 8) that soundness of proposal and preparedness of the applicant company included land and financial strength etc.
92. PW-22 IO also deposed during his cross-examination on behalf of A-1 to A-4 (23.08.2018, page 6 of 18) that in the guidelines laid down in 14th Screening Committee meeting, the words “net-worth, turnover or profit” are not mentioned but volunteered that soundness of proposal can be assessed only by considering all the aspects such as capability of the applicant company to establish the said project, financial capacity and other aspects of preparedness.
93. It also came on record in the cross examination of PW-22 IO (23.08.2018, page 11 of 18) that as per Ashwani Kapoor, representative of MoS in the Screening Committee meeting, those facts were incorporated in the record notes/minutes of the Screening Committee which actually happened or were said during the meeting and which were relevant to the issue of allocation of coal blocks. It is already noted that it is recorded in the minutes of the 19th Screening Committee meeting that A-1 company has already acquired 150 acres land for their pig iron plant and the committee definitely would not have considered the allocation of Lalgarh (North) Block if on behalf of A-1 company it had not been informed to the committee about acquisition of land for its plant.
94. As a result, it is held that it was reasonable and justifiable and rather essential for MoS, while assessing the soundness of proposal of A-1 company before recommendation to MoC for allocation of coal block, to find out availability of land and financial net-worth of the applicant company.
95. Therefore, the first point for determination is answered holding that availability of land and financial net worth of an applicant company were part of process of assessing soundness of company for recommendation by MoS to MoC for allocation of coal block in favour of such a company.
96. The 2nd point for determination is “Whether A-1 company vide its letter dated 12.12.2000, Ex. PW-2/B-4, D-41, page 48 submitted false information to MoS about acquisitions/allotment of 142 acres of land whereas no such land existed in the name of the said company on that date?”
97. The case of the prosecution is that A-1 company had given applications dated NIL to MoS and MoC for captive coking coal block, Ex. PW-2/B-1, D-41, page 1-2 and Exhibit PW-8/N-1, D-43, page 23 respectively.
98. The application of the company was put up in MoS on 02.08.2000 and Sh. A.C.R. Das, the then Deputy Industrial Advisor, vide letter dated 23.11.2000, Ex. PW2/B-3, D-41, page 37 called upon the company to furnish actual status of implementation of project and steps taken towards setting up of plant to MoS.
99. The letter was replied on 12.12.2000, Ex. PW2/B-4 D-41, page 48 by A-2, MD of A-1 company submitting that so far, 142 acres of land has been acquired/allotted to the company whereas the said land was in the name of M/s Orissa Oil Industries Limited on the said date.
100. During arguments, it is not the case of A-1 to A-4 that A-1 company possessed 142 acres of land as on 12.12.2000.
101. Arguments on behalf of accused so long as Sukhdeo Prasad (earlier A-5 in the chargesheet) was one of the co-accused before his discharge vide order dated 25.01.2017 were that Sukhdeo Prasad was the General Manager of M/s Orissa Oil industries Ltd. and while entering into MoU dated 11.10.2000 with A-2, Managing Director of A-1 company, he had claimed himself to be a GPA of M/s Orissa Oil Industries Ltd. In the MoU, only willingness of M/s Orissa Oil Industries Ltd to negotiate sale of said land was mentioned and the said claim did not confer any rights upon A-1 company as even the sale consideration was not yet discussed or decided much less exchanged. It was their case that the MoU was not submitted before any authority for any purpose whatsoever during the entire process of allocation of coal block (Page 22 of 66 of the detailed order on charge dated 25.01.2017).
102. Now, during final arguments, it is submitted that the company filled up the Format for Coal Linkage as sent by MoS along with its above-mentioned letter dated 23.11.2000 and in reply, the company also informed MoS that in case there was any query after going through the format, they would be more than willing to clarify the same.
103. The accused have referred to MOU dated 11.10.2000, Exhibit P-25, D-61, executed between A-1 company and M/s. Orissa Oil Industries Ltd and have submitted that the same was executed even before letter dated 23.11.2000, Exhibit PW-2/B-3, D-41, page 37 was issued by MoS seeking information about actual status of implementation and steps taken towards setting up of plant. In this background, A-1 to A4 have submitted that in the prescribed Format, in Column No. 3 (ii), Exhibit PW-2/B-4 (Colly), page 48, the company provided the information under the heading Land-Acquired/Allotted, against which the company had written “142 acres”. It is submitted that this information was given without any dishonest intention on the basis of MOU entered into between the company and M/s. Orissa Oil Industries Ltd.
104. It is submitted by the accused that there was no other column which could have permitted the company to mention about the arrangement made by the company with M/s. Orissa Oil Industries Ltd in relation to the land.
105. To show there was no dishonest intention, accused have referred to Column No. 17 of the same format where at serial No. iv, D41, page 50 the company has stated that the “Land is being negotiated and Rs. 1.5 crores have been committed towards advance for land”. It is submitted that the very fact that the amount of land was being negotiated and Rs. 1.5 crores was committed towards advance would leave no manner of doubt that the land has not been acquired as A-1 company was still negotiating for land. It is further submitted that had MoS carefully and thoroughly read the document especially column No. 17, they would not have confused the information given in Column No. 2. MoS misread the document without seeking any clarification from DOMCO when it had offered to do so.
106. Therefore, a comparison of the stand taken by the accused at the time of arguments on charge and at the time of final arguments shows that there is vacillation in their stand.
107. At one stage, the accused submitted that the MOU did not confer any rights on A-1 company as even the sale consideration was not yet decided much less exchanged and was not submitted before any authority and at later stage, the argument of the accused is by relying on same MOU for justifying their mentioning in the Performa that the company has acquired/allotted 142 acres of land.
108. Further, the accused have made two-fold submissions for stating that company has acquired/allotted 142 acres land.
109. The 1st is that there was no other column in the Performa which could have permitted the company to mention about the arrangement made by the company with M/s. Orissa Oil Industries Ltd in relation to the land.
110. This submission is rejected because the company had not merely sent the Performa to MoS but there was a covering letter i.e., letter dated 12.12.2000 enclosing the Performa and no such explanation with regard to MOU was given in the said letter. Had there been any truth in the submissions of the accused, the company would have made it abundantly clear in the letter dated 12.12.2000 that they have only entered into a MOU as per which M/s. Orissa Oil industries Ltd has merely shown its willingness to negotiate sale of the land in favour of A-1 company.
111. The second submission in this regard is that in column No. 17 of the same Form, at serial No. iv, the company has stated that the land is being negotiated and Rs. 1.5 crores have been committed towards advance for land.
112. According to arguments of CBI, reading of the letter dated 12.12.2000 Ex.PW-2/B-6, D-41 Page 47-53 clearly reveals that in column No.3 of the format application, it has been mentioned that the land required is 200 Acres, Acquired/Allotted so far, 142 Acres. In column No 17, the amount mentioned was for the remaining land besides already acquired Land.
113. A perusal of cross examination of PW-2 (page 25 of 27 recorded on 05.02.2018) on behalf of A-1 to A-4 shows that the witness was questioned with reference to letter dated 05.02.2001 Exhibit PW2/B-6, D-41, page 57-83 (where also it was stated that “Rs. 1.5 crores, being negotiated for land as advance”), and the response of the witness was that it cannot be inferred from the aforesaid information that the company has not yet purchased the land or has merely paid an advance amount.
114. This response of the witness coupled with the fact that in the letter dated 12.12.2000 nothing was mentioned to show that the company is yet to acquire 142 acres of land, shows that A-1 company vide letter dated 12.12.2000 had submitted false information to MoS about acquisitions/allotment of 142 acres of land whereas no such land existed in the name of A-1 company on that date.
115. Second point for determination is therefore decided accordingly.
116. The 3 rd point for determination is “Whether A-6 had prepared balance sheets of Company which were submitted with MoC vide company’s letter dated 16.08.2003, Exhibit PW-8/N-19, D-43, page 100155?”
117. The submission of A-6 is that the balance sheets were photocopies and hence denied by him under Section 294 Cr.P.C. and prosecution has not proved beyond reasonable doubt that the photocopies of balance sheets submitted by the company are the exact replica as original.
118. However, A-6 has also submitted in his written submissions, page 10 of 22, that the Director’s Report endorses the balance sheet. If the figures mentioned in the Director’s Report which is just appended before the “Balance Sheets of A-6” are scrutinized, it is in line with photocopy of “Balance Sheets of A-6”, it can be safely said that Balance Sheet was correct as it was in line with the Director’s Report which is based on books of account.
119. Therefore, in the written arguments A-6 himself is owning the Balance Sheets.
120. As per PW-8 Shri Rajinder Singh Negi, MoC vide letter dated 25.07.2003, Exhibit PW 8/N-17, D-43, Page 95, had asked the company to furnish further information regarding implementation schedule of their pig iron plant, coal mine development project and proposed washery beside copy of registration certificate, details about the balance sheet for the last three years and other details along with latest Auditor’s Report and detailed plans about use of middlings etc. The company, as per its letter dated 16.08.2003, Exhibit PW 8/N-19, (D-43), Page 100-155 submitted various information as were asked for i.e., bar chart for the schedule of implementation of pig iron plant, coal mine, coal washery with the details of use of washery products, registration certificate of the company duly authenticated and the balance sheets for the last three years. He deposed that the balance sheets of the company were issued under the signatures of A-6, Chartered Accountant.
121. When the balance sheets were exhibited, there was no objection raised on behalf of A-6.
122. However, during cross examination on behalf of A-6, PW-8 admitted that he has stated in his examination in chief that the balance sheets received with letter dated 16.08.2003 are signed by A-6 only because his name is mentioned below the signatures otherwise, he was not acquainted with the handwriting and signatures of A-6 and he has never met A-6.
123. PW-11 Shri Sukhendu Sinha was the Accounts Clerk in the Chartered Accountants firm of A-6 at Kolkata since 2013 and therefore was in a position to identify the signatures A-6. He has identified signatures of A-6 and seal of Sanjay Khandelwal and Company on the enclosed Balance Sheets.
124. During his cross-examination on behalf of A-6, no suggestion was given to the witness that the Auditor’s report and the enclosed Balance Sheets do not bear the signatures of A-6 or the seal of Sanjay Khandelwal and Company.
125. Moreover, when the incriminating evidence of PW-11 was put to A-6 under section 313 CrPC, A-6 had responded that: –
“It is pertinent to mention though the witness PW-11 Sukhendu Sinha has identified the signatures but the witness did not say that it was this balance sheet which was signed by A-6 as the balance sheet which was shown to the witness was of prior to his joining and the balance sheet was not original but photocopy. The original balance sheet is also not available before the court.”
126. Therefore, A-6 has admitted his signatures on the Balance Sheets.
127. The handwriting expert PW-19 Shri Arun Kumar has also given the opinion in his report Exhibit PW-19/A ( part of D-138, Exhibit P-15 ) that the handwriting evidence points to the writer of the specimen signatures marked S-81 to S-90 attributed to A-6 being the person responsible for writing the reproduced questioned signatures marked Q163, Q-167, Q-171, Q-181, Q-182, Q-187, Q-188, Q-191, Q-200, Q-206, Q-207, Q-210 and Q-219. According to the prosecution, these questioned signatures of A-6 are available on Auditor’s report and the Balance Sheets signed by A-6.
128. During cross examination of this witness on behalf of A-6, a question was put to PW-19: –
“Will there be any difference in analysing any given specimen signatures (in original obtained with ball pen or ink pen) with photocopy of a questioned signature?”
129. The response of the witness was that: –
“No. Vol. If sufficient individual characteristic features are found similar in the questioned signature even though only photocopy vis-à-vis the specimen signatures even if obtained with an ink pen or ball pen then also opinion can be given after analysing the two with each other.”
130. No suggestion was given challenging the report given by this witness during cross-examination.
131. When this incriminating evidence was put to A-6 in question No. 324 under section 313 CrPC, the response of A-6 was that: –
“Yes, opinion of PW-19 Anil Sharma qua specimen signatures/writings was given. It is pertinent to mention that the witness accepted to the fact that the document i.e., the balance sheet was photocopy document and did not depose anything about the figures mentioned in the balance sheet.”
132. Therefore, according to handwriting expert PW-19 also the balance sheets given to MoC by A-1 certified by A-4 are signed by A-6, Exhibit PW-8/N-19, D-43, page 100-155.
133. On the basis of evidence of PW-11 and PW-19 and the response to the incriminating evidence of these two prosecution witnesses given by A-6, it is proved that the balance sheets submitted with MoC vide letter dated 16.08.2003 were signed by A-6.
134. On behalf of CBI, reliance is also placed on the judgment of the Hon’ble Supreme Court of India in “R.V.E. Venkatachala Gounder Vs. Arulmigu Viswesaraswami and V.P. Temple and Anr.” AIR 2003 SC 4548 where it is held that where the objection does not dispute the admissibility of the document in evidence but is directed towards the mode of proof alleging the same to be irregular or insufficient, the objection should be taken before the evidence is tendered and once the document has been admitted in evidence and marked as an exhibit, the objection that it should not have been admitted in evidence or that the mode adopted for proving the document is irregular cannot be allowed to be raised at any stage subsequent to the marking of the document as an exhibit. Reliance is also placed in this regard on P.C. Purushothama Reddiar Versus S. Perumal,1972 (1) SCC 57.
135. Therefore, this 3rd point of determination is decided holding that the balance sheets submitted along with letter dated 16.08.2003 to MoC were signed by A-6 (Exhibit PW-8/N-19, D-43, page 100-155).
136. The 4th point for determination is “Whether the balance sheets of the company audited by A-5 and submitted with ROC, Exhibit PW-12/B, D-20, page 1-13 (Exhibit P-2), Exhibit PW-12/C, D-21, page 1-14(Exhibit P-3), Exhibit PW-12/D, D-22, page 1-15 (Exhibit P-4) or the balance sheets prepared by A-6 and submitted with MoC by the company vide its letter dated 16.08.2003 Exhibit PW-8/N-19, D-43, page 100-155 and certified by A-4 for the year ending 31.03.2000, 31.03.2001 and 31.03.2002 show correct state of financial affairs of A-1 company?”
137. PW-12 Syed Md. Athar Mikail was Asstt. Registrar of Companies-cum-Asstt. Official Liquidator, High Court of Patna in the year 2015. Letter dated 10.07.2015 addressed by this witness to the IO of this case was exhibited as Exhibit PW 12/A (D-19). Along with this letter, he had provided certified copies of documents pertaining to A-1 company. Directors Report for the year ending 31.03.2000 recording that M/s. M. Kumar and Associates, Chartered Accountants, Auditors of the company retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment, Auditor’s Report to the shareholders of A-1 company given by M. Kumar and Associates, Chartered Accountants, through proprietor A-5 certifying that they have audited the balance sheet of A-1 company as at 31.03.2000 and profit and loss account for the year ended on that date and have found that the balance sheet and profit and loss account are in agreement with the books of accounts and the audited balance sheet as at 31.03.2000 are part of D-20, Exhibit PW-12/B.
138. Similar Director’s report mentioning that the Auditors M/s. M. Kumar and Associates have offered themselves for reappointment, Auditor’s Certificate and the balance sheet for the year ended 31st March 2001 are part of D-21, Exhibit PW-12/C.
139. The Directors report mentioning that the Auditors M/s. M. Kumar and Associates have offered themselves for reappointment, Auditor’s Certificate and the balance sheet for the year ended 31st March 2002 are part of D-22, Exhibit PW-12/D.
140. All these documents were filed by A-1 company with ROC in compliance of statutory requirements i.e., provisions of Companies Act, 1956.
141. Under Section 210 of the Act, at every annual general meeting of a company, the Board of directors have to lay before the company a balance sheet and a profit and loss account for that period. Balance sheet is not defined in the Act. But a format of the balance sheet is provided for in Schedule VI of the Companies Act.
142. In the event of failure to comply with the provisions, the same are punishable under Section 210(5) of the Act.
143. Section 220 of the Companies Act,1956 provides that after the balance sheet and the profit and loss account have been laid before a company at an annual general meeting, these shall be filed with the Registrar within 30 days from the date on which the balance sheet and the profit and loss account were so laid. Default in complying with the provision of this section results in punishment as provided under section 162 of the Act.
144. Section 224 of the Act provides for appointment of Auditors.
145. The auditors of the company are appointed at its annual general meeting. An auditor appointed at one Annual General Meeting holds office from the conclusion of that meeting until the conclusion of the next Annual General Meeting. Unless he is a retiring Auditor, he should be informed of his appointment within 7 days and he should inform the Registrar within 30 days whether he has accepted the appointment or not.
146. The mere fact that Auditor’s certificate given by A-5 and balance sheet of the company audited by A-5 were submitted in the office of ROC would show that A-5 was company’s Auditor that is why he provided Auditor’s certificate and attested balance sheets of A-1 company before their submission to RoC.
147. It also shows that A-6 was nowhere in picture so far as compliance with provisions of Companies Act is concerned.
148. When PW 12 Syed Md. Athar Mikail Asst Registrar of Companies-cum-Asst Official Liquidator, High Court of Patna was in the witness box, no suggestion was given on behalf of A-6 that A-6 was the Auditor of A-1 company.
149. Therefore, A-1 company while complying with the statutory provisions of the Companies Act 1956 only acknowledged A-5 as it’s Auditor. A-6 was nowhere in picture vis-à-vis submissions in the office of ROC in terms of various provisions of Companies Act 1956 noted above.
150. It shows Auditor’s certificate given by A-6 certifying balance sheets of A-1 company, Exhibit PW-8/N-19, D-43, page 100-155 submitted with MoC is worthless.
151. The submission of A-6 that the Investigating Officer should have seized and examined books of accounts of the company for the relevant years to ascertain whether the balance sheets audited by A-5 were correct or the balance sheets audited by A-6 were correct pales into insignificance when the records of ROC are examined where the name of A-6 is conspicuous by his absence as Auditor of the company.
152. So far as the company and its directors are concerned, considering their predicament, where they are confronted with two balance sheets, one filed by A-1 company in the office of ROC and other filed by A-2 in the MoC, they have chosen to disown none.
153. In response to Question No. 352 under section 313 CrPC, the response of the Accused No.1 and 2 is that filings in ROC were made by the CA who prepared the balance sheets as per his professional expertise and the accused had no role in the same other than accepting his professional opinion.
154. In response to question No. 357, the response of the Accused No.1 and 2 is that the balance sheets submitted with MoC were prepared by professional CA and reflected the correct net-worth as per his professional opinion and accused had no role in the same other than accepting his professional opinion.
155. The hands wash approach neither helps the company nor it’s Directors nor A-6.
156. It is unbelievable that the directors of the company accepted two different sets of balance sheets prepared by two different Chartered Accountants showing huge disparity in the figures of profit and loss only because those balance sheets showed different professional opinions of the CAs in which the directors of the company had no role other than accepting those professionals’ opinions meekly.
157. In this regard, following table shows glaring differences in the figures in the balance sheets prepared by A-5 and A-6 which make it unbelievable that the directors of the company accepted different balance sheets just by accepting the professional competence of the two CAs: –
