Jinofer Kawasji Bhujwala vs The State Of Gujarat

REPORTABLE

IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 460 OF 2020 (@ Special Leave Petition (Crl.) No.1616 of 2020)

Jinofer Kawasji Bhujwala ... Appellant

Versus

State of Gujarat ... Respondent

ORDER

V. Ramasubramanian.J

1. Leave granted.

2. Aggrieved by the dismissal of his bail application by the Signature Not Verified

High Court of Gujarat at Ahmedabad, a person who is cited as Digitally signed by MEENAKSHI KOHLI Date: 2020.06.19 16:20:02 IST Reason:

A-1 in the First Information Report in Crime No.I-I/5/2019 dated

26.06.2019 for alleged offences under Sections 406, 409, 420,

465, 468, 471 and 120B of the Indian Penal Code and Section 2 13(1)(d) of the Prevention of Corruption Act, 1988, has come

up with the above appeal.

3. We have heard Mr. Harish Salve and Mr. Siddhartha

Dave, learned Senior Counsel appearing for the appellant; Mr.

Tushar Mehta, learned Solicitor General appearing for the State

of Gujarat and Mr. Mukul Rohatgi, learned Senior Counsel

appearing for Gujarat Maritime Board.

4. Pursuant to an invitation to offer floated in November-

2006 and the assessment of the proposals received from

interested parties, a company by name Aatash Norcontrol

Limited (for short “ANL”), was issued with a Letter of Intent on

26.02.2007 for the construction and development of Vessels

Traffic and Port Management System (hereinafter referred to

as “VTPMS”) in the Gulf of Khambhat, on Build Own Operate

and Transfer (BOOT) basis. It was followed by a Concession

Agreement dated 30.09.2007 entered into between the

Gujarat Maritime Board, ANL and the Government of Gujarat.

5. As per the Concession Agreement, Aatash Norcontrol

Limited is obliged to install Key Radar Stations at 7 places in

the Gulf of Cambay and repeater Radar Stations at 2 places,

with the master control being set up at Dumas. The object of 3

setting up the Radar Stations is to monitor the vessels

entering the Gulf of Khambhat and to ensure Coastal and

National Security.

6. VTPMS for the Gulf of Khambhat became operational in

August, 2010 after a completion certificate was issued by the

Gujarat Maritime Board. But in 2018 disputes arose regarding

the capital cost incurred by ANL. An expert committee was

appointed under Clause 18 of the agreement and they

submitted a report indicating a particular amount as the capital

cost.

7. But Gujarat Maritime Board claimed, on the basis of a

preliminary inspection report of the Principal Accountant

General that ANL made an extra income of Rs. 134.38 crores

during the financial years 2015-16 and 2017-18 and that the

said amount should be paid by ANL.

8. ANL moved the commercial court at Ahmedabad under

section 9 of the Arbitration and Conciliation Act, 1996, as there

was a threat of termination of the Concession Agreement. The

disputes were also referred to arbitration. Before the Arbitral

Tribunal constituted on 01.03.2019, both parties (ANL and 4

Gujarat Maritime Board) moved applications under section 17

of the Arbitration and Conciliation Act.

9. However, on 01.05.2019, the Gujarat Maritime Board

lodged a complaint with the CID Crime, Gandhi Nagar Zone,

alleging that ANL was guilty of (1) inflation of cost (2) non

execution of certain works (3) creation of shell companies and

carrying out work through them (4) siphoning and round

tripping of funds through those companies (5) not carrying out

construction on the lands allotted for Master Control Room (6)

raising of false bills and forged invoices (7) managing the issue

of completion certificate through the then Superintending

Engineer and Chief Nautical Officer of the board and (8)

entering into a conspiracy with each other to exceed the

expenditure of the project upto Rs. 100 crores and committing

criminal breach of trust.

10. On the basis of the above complaint, a FIR bearing no. I-

I/5/2019 was registered on 26.6.2019 against eight named

accused, for alleged offences under sections 406, 409, 420,

465, 468, 471 and 120B of IPC and section 13(1)(d) of the

Prevention of Corruption Act. The appellant herein and his son 5

and daughter were cited as A-1, A-2 and A-3 respectively, as

they happen to be the Directors of the Companies.

11. On 27.6.2019, the appellant and his son were arrested.

After being in police custody under orders of court, the

appellant was sent to judicial custody on 2.7.2019. Ever since

then, the appellant is in judicial custody. His bail application

was first rejected by the Sessions Court on 6.7.2019. Though

the appellant moved the High Court, he withdrew the

application on 6.8.2019 with liberty to move a fresh application

after the filing of the charge sheet. But, it is relevant to note

that the two officers of the Maritime Board who were also

implicated, were granted bail by the High Court.

12. A charge sheet was filed by the Investigating Officer on

21.9.2019, as against the appellant and the others. However,

no charge sheet was filed against the Officers of the Maritime

Board, as orders of sanction from the Government were awaited

at that time.

13. In view of the filing of the charge sheet, the appellant

moved a bail application before the Sessions Court but the

same was rejected on 3.10.2019. Therefore, the appellant

moved the High Court of Gujarat, which, by the order impugned 6

in the appeal, dated 09-12-2019, dismissed the application.

However, the High Court gave liberty to the appellant to file a

fresh application before the Trial Court if the trial could not

commence within a period of six months. Incidentally, this

period of six months has now expired and the trial has not

commenced as yet.

14. Before proceeding further, it is to be noted that on

7.8.2019, the Arbitral Tribunal passed orders on the applications

under section 17 of the Arbitration Act (1) granting a stay of the

termination notice (2) directing ANL to deposit the entire

amount generated out of the VTPMS project in an escrow

account and to file a monthly report regarding the details of

deposits so made (3) permitting ANL to withdraw 25% of the

gross amount so deposited, to meet the overheads and to run

the project (4) permitting the State Police Personnel deputed at

the project site to continue without any interference with the

day to day functioning of the project except overseeing safety

aspects (5) permitting the Maritime Board to depute a

competent person to supervise and monitor the functioning of

the project (6) directing ANL not to encumber or dispose of the

plant and machinery and other valuable items and (7) directing 7

ANL to pay Rs. 16,43,44,227/- to the Maritime Board payable

for the month of July, 2019.

15. As a result of the aforesaid interim measures ordered by

the Arbitral Tribunal, ANL continues to operate the project under

the Concession Agreement and the financial interests of the

Maritime Board stand protected by those directions.

16. In the background of the above facts, it is contended by

the learned Senior Counsel appearing for the appellant (1) that

a cloak of criminality has been given to a dispute of purely civil

nature (2) that the economic interests of the Board stand

protected by the interim measures granted by the Arbitral

Tribunal (3) that the appellant is a senior citizen having medical

complications and (4) that since the charge sheet has been filed

and the trial has not commenced, the continued incarceration

of the appellant is unjustified.

17. The prayer for bail is opposed by the State and the

Maritime Board, on the ground inter alia (1) that the very object

of the Concession Agreement was to establish Radar Stations to

monitor and identify infiltration by non-State vessels involved in

anti-national activities (2) that what is on hand is not just a civil

dispute but a huge financial scam (3) that the appellant is the 8

brain behind such a scam involving round tripping of funds

through a maze of shell companies (4) that the matter involves

national security, which now stands threatened by the activities

of the appellant and the companies managed by him (5) that

the appellant has already started influencing the witnesses, by

sending gifts to the senior officers of the Maritime Board (6)

that under his pressure, two Chartered Accountants who had

earlier given statements, retracted (7) that even before the

report of the Forensic Sciences Laboratory could reach the

Investigating Officer, the appellant exhibited knowledge of its

contents, thereby showing his influence and power (8) that one

of the co accused is absconding and (9) that since many

witnesses for the prosecution are either the former or present

employees of the appellant or retired Government Officials,

they are vulnerable and hence the appellant’s request for bail

should be rejected.

18. We have carefully considered the pleadings, the

documents, the written notes of submissions and the issues

involved.

9

19. At the outset, we should point out that the impugned

order of the High Court is dated 9.12.2019. The operative

portion of the order of the High Court is extracted as follows:

“ In view of the aforesaid discussion, I am not inclined to exercise the discretion in favour of the present applicant. Application is, therefore, dismissed. However, liberty is reserved to the applicant to file fresh application before the concerned trial Court if the trial is not commenced within a period of six months”.

20. Obviously, the period of six months within which the High

Court hoped the trial to commence, has expired as on date. The

appellant, who is admittedly 62 years of age has already spent

nearly a year in judicial custody. A period of nine months has

passed from the date of filing of the charge sheet. Though the

learned Solicitor General contended that the sanction to

prosecute has already been issued as against Government

Officials, the fact remains that charges have not been framed

and the trial has not commenced as yet.

21. The arguments revolving around the potential threat to

national security, cannot be sustained, for two reasons. The

first reason is that the project became operational in August- 10

2010 and the disputes between the parties started only in 2018

and that too with regard to financial matters. The second

reason is that by virtue of the interim measures of protection

granted by the Arbitral Tribunal (comprising of a former Judge of

this court, a former Judge of the High court and a Senior

Advocate) in terms of section 17 of the Arbitration and

Conciliation Act, 1996, the termination of the Concession

Agreement stands stayed. Therefore, the Company of which

the appellant is the head, continues to operate the VTPMS

Project. In any case, the Arbitral Tribunal has not merely

protected the economic interests of the State, but also

permitted the State Police to be there at the project site. The

Tribunal has also allowed the Maritime Board to depute a

competent person, familiar with the project in question, to

supervise and monitor the functioning of the project. Therefore,

we cannot accept this contention blind fold.

22. Though much is said about the tempering of witnesses, it

is seen from the material on record that the prosecution rests

mainly on documents. In any case, the prosecution is not

remedyless, if a person enlarged on bail, indulges in certain

activities.

11

23. Therefore, we are of the view that the appellant is

entitled to bail. Hence, the appeal is allowed and the appellant

is directed to be released on bail, subject to such terms and

conditions as the Sessions Court may deem fit and appropriate

in the facts and circumstances of the case, including a

condition for the surrender of the passport, which shall be

subject to orders passed by the Trial Court from time to time.

..…..…………....................J. (Ashok Bhushan)

..…..…………....................J. (M.R. Shah)

...…..………......................J. (V. Ramasubramanian)

JUNE 19, 2020 NEW DELHI