Union Of India & Ors vs Ramesh Gandhi

Reportable

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1356 OF 2004

Union of India & Ors. ........ Appellants

Versus

Ramesh Gandhi ......... Respondent

J U D G E M E N T

Chelameswar, J.

1. This appeal arises out of a judgment of the High Court of

Calcutta dated 23rd November, 2001 in Writ Petition No. 352/2001.

The appellants herein were the respondents in the above-mentioned

Writ Petition.

2. An FIR came to be registered on 15th November, 2000 in the

Delhi Special Police Establishment, Ranchi Branch in Crime No. RC

13(A)/2000 (R) under Section 120B read with Section 420 IPC and

Section 13(2) read with Section 13(1)(d) of the Prevention of

Corruption Act, 1988 against nine accused of whom the first

2

accused was the Coal Controller at the relevant point of time. The

next five accused were the officers of Central Coalfields Limited

(hereinafter `CCL'. for short), which is a subsidiary of Coal India

Limited (hereinafter `CIL', for short). Accused No.9 is a Private

Limited Company (hereinafter `private company', for short) and

accused Nos. 7 and 8 are the members of the said private company.

3. The sole respondent, Mr. Ramesh Gandhi, is one of the

members of the above-mentioned private company and shown to be

the seventh accused in the above-mentioned FIR. He filed writ

petition No. 352/2001 on the file of the Calcutta High Court praying

that the above-mentioned FIR be quashed. By the judgment under

appeal, the Calcutta High Court allowed the writ petition quashing

the FIR.

4. The substance of the accusation in the FIR is that all the

accused entered into a criminal conspiracy to confer an illegal and

unjust benefit on the above-mentioned private company. In the

process, the accused, "intentionally and dishonestly" suppressed

certain relevant and crucial facts (in the various cases filed before

the Calcutta High Court and also this Court to which the accused

were parties), which resulted in orders being passed both by this

Court as well as by the High Court favourable to the private

company.

3

5. FIR reads as follows:

"DELHI SPECIAL POLICE ESTABLISHMENT, RANCHI

BRANCH

FIRST INFORMATION REPORT

Crime No.RC 13(A)/2000(R), Date and time of Report :

15.11.2000 at 1700 Hrs.

Place of occurrence with State : Calcutta (West Bengal), Ranchi

(Jharkhand)

Date and time of occurrence : 1990-91 to 2000

Name of complainant or informant with address : Through Source

Offence : U/s. 120B r/w 420 IPC and Sec. 13(2) r/w 13(1)(d) of PC

Act, 1988.

Name and address of the accused : (1) Shri P.N. Tiwary, the then

Coal Controller, Calcutta (retd.)

(2) Shri R.P. Srivastava, the then G.M. Sales, CCL, Ranchi (retd.)

(3) Shri S.K. Srivastava, G.M. (Sales), CCL, Ranchi

(4) Shri B. Akla, CMD, CCL, Ranchi

(5) Shri K.M. Singh, the then G.M., Argada Area, CCL

(6) Shri Sudarshan Singh, the then Area Sales Officer Argada

Area, CCL, presently Superintending Engineer (E&M), N.K. Area,

CCL

(7) Shri Ramesh Gandhi, Prop. M/s. Continental Transport

Constn. Corpn., (CTCC), Dhanbad (Pvt).

(8) Shri Mahesh Gandhi of M/s. CTCC, Dhanbad (Pvt.)

(9) M/s. Continental Transport Construction Corpn. (CTCC),

Dhanbad (Pvt.)

Action taken : Regular case registered and investigation taken up.

Investigation Officer: Shri A. Prasad, DSP, CBI, SPE, Ranchi

4

INFORMATION

A reliable information has been received to the effect that Shri

P.N. Tiwary, the then Coal Controller (since retd.), Calcutta, Shri

R.P. Srivastava, the then G.M.(Sales), CCL, Ranchi (since retd.),

Shri S.K. Srivastava, the then GM.(Sales), CCL, Ranchi, Shri B.

Akla, the then Chief of Marketing, Coal India Limited, Calcutta,

Director (Technical) and (Projects and Planning), CCL and

presently Chairman-cum-Managing Director, Central Coalfields

Ltd. (CCL), Ranchi, Shri K.M. Singh, the then G.M., Argada Area,

CCL, Shri Sudarshan Singh, the then Area Sales Officer, Argada

Area, CCL (presently Superintending Engineer (E&M), N.K. Area,

CCL, Shri Ramesh Gandhi of M/s. Continental Transport

Construction Corpn., Dhanbad and Shri Mahesh Gandhi of M/s.

Continental Transport Construction Corpn., Dhanbad entered into

a criminal conspiracy among themselves and in furtherance of the

said conspiracy the accused public servants abused their respective

official positions, in as much as that they helped the private firm

namely M/s. CTCC by way of illegally and unauthorisedly

transferring different grades of coal/slurry to the private firm

(CTCC) and also by way of intentionally and dishonestly

suppressing relevant facts before the Hon'ble Courts and thereby

helped M/s.CTCC in getting favourable orders for release of steam

coal which was meant to be supplied only to the actual users and

not to the traders like M/s. CTCC. As a result of the aforesaid

overt acts of the accused public servants as mentioned above, M/s.

CTCC, illegally obtained the supply of the Steam Coal at a cheaper

rate applicable to the actual users, even after the lapse of the period

stipulated by the Hon'ble Supreme Court, causing wrongful loss to

the tune of Rs.90,00,000/- approximately to the CCL.

It has been alleged that Coal India Limited (CIL), Calcutta vide

NIT (Notice Inviting Tender) dated 9/15-1-91 offered sale of

existing stock of following categories of coal under "BULK SALE

SCHEME" on as is where is basis.

(i) Slurry

(ii) Dirty Slurry

(iii) Middlings

(iv) Rejects

It was also stipulated vide item no.23 of the terms and

conditions of the NIT that in case of failure on the part of the buyer

to lift 90% of the quantity within 90 days of allocation, security

deposit and the Bank Guarantee would be liable to be forfeited by

the Company.

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In response to the aforesaid NIT, M/s. CTCC, offered to

buy following quantity/quality of coal at the prescribed rate. M/s.

CTCC was allotted the entire quantity w.e.f. 25.7.91 which was to

be lifted within 90 days after depositing the cost in advance.

Name of Product Quantity offered Price

by M/s. CTCC

Slurry Grade `D' 179000 MT Rs.37756/- per MT

Dirty Slurry Grade `F' 45000 MT Rs.238.50 per MT

Middlings Grade `F' 90000 M T Rs.238.50 per MT

Rejects 50000 MT Rs. 178.00 per MT

It is further alleged that M/s. CTCC deposited the cost

only for 1500 MTs of Middlings Grade `F' and 13276 MT of

Slurry Grade `D' against the offered quantity as mentioned in the

foregoing para. M/s. CTCC had lifted this quantity of 1500 MT

only and was thus to be penalised by way of forfeiture of

security/invoking of Bank Guarantee as per terms and conditions

of the NIT. However, the concerned accused public servants in

pursuance to a criminal conspiracy, had shown favours to M/s.

CTCC by not taking action subsequently as above.

In furtherance of the conspiracy, M/s. CTCC requested

the CIL in April 1993 to transfer the remaining quantity of 88500

MT of Middlings Grade `F' to Dirty Slurry Grade `F' and the same

was approved on 28.5.93 in complete violation of terms and

conditions of the NIT.

Accused Ramesh Gandhi of M/s. CTCC in accordance

with Shri P.N. Tiwary, the then Coal Controller, Calcutta and the

accused officials of the CCL/CIL submitted a representation to

accused Shri P.N. Tiwary requesting transfer of the left over

quantity of 165724 MT of Slurry Grade `D' to Dirty Slurry Grade

`F'. Shri P.N. Tiwari, in his capacity as Coal Controller, was

supposed to allow the transfer of grade of coal after following due

procedure, but he, in utter violation of the terms and condition of

the NIT, approved the same and intimated to the CMD, CCL,

Ranchi, accordingly.

It is further alleged that the Coal India Limited, Calcutta

floated another NIT under "LIBERALISED SALES SCHEME II

(LSS-II)", with same terms and conditions as of Bulk Sale

Scheme, and M/s. CTCC offered to purchase, under this scheme,

following quantities of coal from the collieries mentioned against

each.

6

Grade of Coal Quantity lifted Colliery

(i) Steam Coal Grade `B' 1.35 Lakhs MT Urimari

(ii) Steam Coal Washery Grade 1.75 Lakhs MT Jarangdih

`D'

It is further alleged that M/s. CTCC was allotted 32,000

MT of Steam Coal Grade `B' from URIMARI Colliery and 5750

MT of Washery Grade `D' Coal from Jarangdih Colliery vide letter

dated 7.4.93 and 21.4.93 respectively of Coal India Limited,

Calcutta. As against the aforesaid allotted quantity M/s.CTCC

deposited the amount equal only to the value of 3000 MT each and

lifted the same from the respective sources.

In pursuance of criminal conspiracy M/s. CTCC further

requested the then General Manager, Argada Area, CCL, Shri

K.M. Singh, vide letter dated 7.4.94 to allot Steam Coal from

Sirka, Religara and Giddi `C' Collieries (All high demand

collieries), in lieu of left over quantity of Slurry Grade `D' (165724

MT), Middlings Grade `F' (88500 MT) and Dirty Slurry Grade'F'

(45000 MT) of the previous scheme, i.e. Bulk Sale Scheme.

Steam Coal of the aforesaid three sources namely Sirka,

Religara and Giddi `C' was to be allotted, as per the policy of the

CIL/CCL, exclusively to the industrial consumers (Actual users)

and not to the traders like M/s. CTCC at all, during the relevant

period. Also, the rate of Steam Coal applicable to the industrial

Consumers (Actual users) was approximately Rs.200/- per MT less

than the rate fixed for the traders and M/s. CTCC being the traders,

was not authorised to get the Steam Coal at the rate which was

applicable to the industrial consumers (actual users).

Following the receipt of letter dated 7.4.94 of M/s.

CTCC, accused Shri K.M. Singh, the then General Manager,

Argada Area, CCL, in pursuance to the criminal conspiracy falsely

intimated the Sales and Marketing Divisions of CCL, Ranchi, on

8.4.94 to the effect that Argada Area was having a huge stock of

Steam Coal and that he was ready to supply the same to M/s.

CTCC.

It is further alleged that accused Shri K.M. Singh, the

then General Manager, Argada Area, CCL also was not competent

to entertain such a matter as it was the concern of General Manager

(Sales and Marketing), CCL, Ranchi.

Simultaneously, accused Ramesh Gandhi of M/s. CTCC

approached accused P.N. Tiwary, the then Coal Controller, as well,

on the same issue, who in turn, in criminal conspiracy with M/s.

7

CTCC and accused public servants wrote a letter dated 12.4.94 to

the CMD, CCL, Ranchi, inter alia, directing him to accede to the

request of M/s. CTCC, without ascertaining from the CCL, Ranchi,

the stock position and the past conduct of M/s. CTCC of not

remitting the cost of entire offered quantity of coal in question

against both the aforesaid schemes namely `Bulk Sale' and `LSS-II'

within the stipulated period as prescribed and also the fact that M/s.

CTCC was not authorised to get the Steam Coal which was meant

for Industrial Units (Actual Users).

Even before the aforesaid letter dated 12.4.94 of accused

P.N. Tiwary, was received in the office of the CMD, CCL, Ranchi,

accused Ramesh Gandhi of M/s. CTCC moved to the Hon'ble High

Court, Calcutta by suppressing the relevant facts of the matter and

secured an order dated 18.4.94 vide which CMD, CCL, Ranchi was

directed to comply with the directions of the Coal Controller issued

vide letter dated 12.4.94. The accused public servants of CIL/CCL

also did not place the correct facts before the Hon'ble High Court,

Calcutta in the matter.

It is further alleged that it was obligatory on the part of

accused R.P. Shrivastava, the then General Manager (Sales), CCL,

Ranchi, and Shri Akla, the then Chief of Marketing, CIL, Calcutta to

safeguard the interest of the company by way of approaching the

Coal Controller to modify his order issued vide letter dated 12.4.94

according to the terms and conditions of the NITs in question and

also to recommend to move the Division Bench of Hon'ble High

Court Calcutta for modification of the order dated 18.4.94 on

following points.

(i) M/s. CTCC did not fulfil the terms and conditions of

NITs in question and thus the penalty was to be imposed on them;

(ii) Steam Coal of the aforesaid collieries was not meant for

traders like M/s. CTCC.

(iii) Traders, if allotted Steam Coal, were to pay @

Rs.200/- approximately (per MT) more than the rate allowed to the

Industrial Consumers (Actual users).

However, they, in pursuance to the criminal conspiracy,

simply recommended challenging the authority of the Coal

Controller for issuing direction vide letter dated 12.4.94, in the

Hon'ble High Court, Calcutta since the Coal Controller was

authorised to issue such letters, the Hon'ble High Court, Calcutta

vide order dated 6.4.95 dismissed the Revision Petition filed by the

CIL with direction to implement the order dated 12.4.94 of the Coal

Controller.

8

M/s. CTCC, however, did not deposit the value of the

Coal to be lifted again, on some pretext or the other as they were not

in a position to sale such a huge quantity of coal at monopolistic

price, those days, since the buyers were getting coal directly from

the Coal India Limited and other sources. Also neither the accused

Shri B. Akla, the then Chief of Marketing CIL nor Shri R.P.

Shrivastava, the then General Manager (Sales and Marketing), CCL,

Ranchi asked M/s. CTCC to deposit the coal value and to lift the

coal.

Two SLPs vide no. 2004 and 2005 of 1997 were,

however, filed in the Hon'ble Supreme Court after a lapse of more

than two years by the CIL./CCL challenging the order dated 6.4.95

of the Division Bench of the Hon'ble High Court, Calcutta.

At this stage also, the actual facts relating to the failure

on the part of M/s. CTCC in lifting the coal after depositing the coal

value in advance within the stipulated period as per terms and

conditions of the NITs, were not brought to the notice of the Hon'ble

Supreme Court and simply the authority of the Coal Controller was

challenged.

The Hon'ble Supreme Court after hearing both the

accused parties, dismissed both the SLPs on 18.3.97 with an

observation that the Coal Controller had got the jurisdiction to pass

such orders.

On receipt of the orders of the Hon'ble Supreme Court, it

was rightly commented upon by an officer of Sales and Marketing

Department of the CCL, Ranchi on 5.4.97 to the effect that merely

challenging authority of the Coal Controller had not served any

purpose. He opined that all the relevant points regarding failure on

the part of M/s. CTCC should be raised by preferring an appeal

against the impugned order. Accused Shri B. Akla by that time had

joined as Director (Projects and Planning) CCL, Ranchi and had

perused the aforesaid noting on 5.4.97 itself, but he had returned the

file on 16.4.97 without any comment with an advice to discuss the

matter with the Panel Advocate of CCL/CIL.

On 22.4.98, a modification petition was filed in the

Hon'ble Supreme Court on behalf of CCL/CIL, mentioning therein

the difficulties in implementing the orders dated 12.4.94 fo the Coal

Controller, Calcutta. In this petition also, there was no mention

about the facts that M/s. CTCC had not deposited the value of the

entire quantity of coal and had not lifted the same within the

stipulated period. The fact that Steam Coal of the collieries in

question was meant specially for the industrial units/Actual users and

if sold to the traders was to be costlier by Rs.200/- per MT

approximately was also not mentioned in the said modification

petition.

9

M/s. CTCC also filed a contempt petition simultaneously

in the Hon'ble Supreme Court against the then CMD, CCL, Ranchi

and others in the matter. Hearing of both the petitions was fixed on

9.5.97 and the Hon'ble Supreme Court issued a show cause notice to

the concerned officers of CCL. Hearing on the modification petition

as mentioned above could not be taken up.

As per the commitment of the CCL, the Hon'ble Supreme

Court vide its order dated 14.7.97, directed the CCL to complete the

supply of the entire quantity of coal allotted to M/s. CTCC within 20

months positively at the rate of 10,000 MT per month and at the

modified price fixed by the CIL w.e.f. 1.4.97.

On receipt of the aforesaid order, the Dealing Officer of

the Sales and Marketing Division of CCL, Ranchi, initiated a

proposal suggesting that penalty as per terms and conditions of NIT

of "Bulk Sale" and "LSS-II" Schemes should be decided in case

M/s. CTCC to notify truck wise allotment on a weekly basis, to

ensure timely placement of trucks by the party and to maintain a

record to assess the quantity lifted by them within a particular period

of time.

It was also decided/recommended during a meeting held

jointly by the Director (Finance), CCL, Ranchi, C.G.M., Argada

Area, CCL, Sales Officer, Argada Area, CCL, CGM (Sales and

Marketing Division), CCL, Ranchi etc. to impose a penalty on M/s.

CTCC in case failed to lift 10,000 MT of coal per month as per the

orders of the Hon'ble Supreme Court. When this note, duly

recommended by the Committee was put up to the accused Shri B.

Akla, the then director (Technical) and (Projects and Planning),

CCL, Ranchi, he observed in favour of the party to the effect that the

party shall have to be made to forego the unlifted quantity after "the

stipulated period, and it will in itself, be sufficient and

recovery/penalising for unlifted quantity may not be required".

This observation of accused Shri B. Akla, which was not

in accordance with the recommendation of General Manager (Sales)

and the Committee members, including the Director (Finance) shows

that he was promoting the interests of M/s. CTCC rather than that of

CCL, Ranchi.

Thereafter, on 20.9.97, a meeting was held which was

attended to by Shri B. Akla, Director (Technical) and (P&P), Shri

A.K. Mitra, Director (Finance), R.R. Menon, G.M.(Sales and

Marketing), CCL and Ramesh Gandhi of M/s. CTCC and it was

mutually agreed upon that M/s. CTCC would submit a Bank

Guarantee at the rate of Rs.30/- per MT for the unlifted quantity of

coal, which could not be lifted due to the failure on the part of M/s.

CTCC and to allow twenty months time for lifting the entire quantity

10

as per the direction of the Hon'ble Supreme Court. This period was

to be calculated from the actual date of commencement of lifting or

1st November, 1997, whichever was earlier. It was also specified

that M/s. CTCC would pay @ Rs.896/- per MT for the Steam Coal

Grade `B' at the notified rate w.e.f. 1.4.97.

As per the aforesaid decision M/s. CTCC was to lift the

entire quantity of coal by June 1999, but against 2.8 lakh MT of

Steam Coal, M/s. CTCC lifted only about 30000 MT of coal from

the aforesaid three collieries upto June 1999 and thus the remaininig

quantity of 2.5 lakhs MT of coal was not to be allowed to be lifted

by M/s. CTCC. However, in violation of the Supreme Court's order

M/s. CTCC was allowed by Shri R.P. Shrivastava, the then General

Manager (Sales), CCL, Ranchi to lift another 15000 MT of Steam

Coal between June 1999 to October 1999. As per the direction of

Hon'ble Supreme Court, the lifting of Coal was to commence from

November 1997 but it was delayed by M/s. CTCC in connivance

with the officers of CCL, on one pretext or the other upto March

1998, till the peak season started. This was obviously with a view to

avoid the lean season.

It is also alleged that Shri Sudarshan Singh the then Area

Sales Officer, Argada Area, CCL, was made the nodal officer

responsible for regulating supplies of coal to M/s. CTCC and its

reconciliation but he intentionally did not make any reconciliation

and did not adhere to the norms of NIT/direction of the Hon'ble

Supreme Cort. Shri Sudarshan Singh also went to the extent of

issuing a letter/certificate favouring the party mentioning therein that

due to the non-availability of Coal in the Area, the supplies could not

be made to M/s. CTCC. This was done with a view to helping the

party in the matter of lifting coal even after the expiry of the

stipulated period of 20 months.

After the expiry of 20 months, accused Shri S.K.

Shrivastava the then General Manager (Sales), CCL, Ranchi and Shri

Mahesh Gandhi of M/s. CTCC entered into an unwarranted

agreement (MOU) on 23.3.2000, vide which M./s. CTCC would be

allowed to lift coal according to its own will as no time frame was

fixed for lifting the same. M/s. CTCC was also given a chance for

lifting coal from Bokaro, Barkakana, Sayal and Dhuri Area, in

addition to the aforesaid areas was in high demand and was fetching

the highest premium. In the MOU, no provision was kept for

imposing any penalty for failure on the part of M/s. CTCC in lifting

of Coal. This was done with a view of allow M/s. CTCC to lift coal

during premium months.

The rate at which M/s. CTCC allowed to lift the coal was

applicable to the industrial consumers/actual users and not to the

traders like M/s. CTCC. The rate applicable to the trader was

Rs.200/- (approximately per MT) more.

11

After the expiry of stipulated period of 20 months, M/s.

CTCC was allowed by the accused public servants of CCL to lift

extra quantity of 45000 MT of steam coal, at the rate applicable to

the actual users and thereby CCL Ranchi was put to a wrongful loss

to the tune of Rs.90 lakhs (Rs. Ninty Lakhs) approximately.

The aforesaid acts of commissions and omissions on the

part of S/Shri P.N. Tiwary, the then Coal Controller, Calcutta

(retired), R.P. Shrivastava, the then General Manager (Sales), CCL,

Ranchi (retd.), S.K. Srivastava, G.M. (Sales) CCL, Ranchi, B. Akla,

CMD, CCL, Ranchi, K.M. Singh, the then G.M. Argada Area, CCL,

Sudarshan Singh, the then Area Sales Officer, Argada Area,

presently superintending engineer (E&M), NK Area, CCL, Ramesh

Gandhi of M/s. Continental Transport Construction Corporation

(CTCC) Dhanbad (Pvt.) reveal that the public servants and the

private persons alongwith their firm, as mentioned above, entered

into a criminal conspiracy and in pursuance of the same violated the

terms and conditions of the NITs issued in respect of sale of coal

under "Bulk Sale" and "LSS-II" Schemes, wilfully suppressed

relevant facts before the Hon'ble High Court, Calcutta and Hon'ble

Supreme Court of India and subsequently in violation of Hon'ble

Supreme Court's order allowed the private party namely M/s. CTCC

to lift an additional quantity of 45000 MT of coal at the rate

applicable to the industrial consumers/actual users and thereby

caused huge wrongful loss to the tune of Rs.90 lakhs approximately

to the CCL, Ranchi and corresponding wrongful gain to the private

party and themselves. Shri P.N. Tiwary, the then Coal Controller,

Calcutta also connived with the private party and accused public

servants by fraudulently and dishonestly issuing directions to the

CMD, CCL, Ranchi in favour of the private party.

This prima facie disclose the commission of offences u/s.

120(B) r/w 420 IPC and Sec. 13(2) r/w sec. 13(1)(d) of P.C. Act,

1988.

This R.C. is therefore registered and investigation is

taken up.

Sd/- 15.11.2000

[A. PRASAD]

Dy. Supt. Of Police,

CBI/SPE/Ranchi,

Investigating Officer

Dated 15.11.2000"

12

6. According to the FIR, the various acts and omissions narrated

therein of the accused caused a huge wrongful loss of

approximately rupees ninety lakhs to the CCL and a corresponding

wrongful gain to the private company.

7. This case has a long and chequered history. It all started with

two advertisements issued by CIL in January, 1991 and September,

1991 published in the `Statesman' newspaper inviting offers for

purchase of various grades of coal under two schemes propounded

by it named as `Bulk Sale Scheme' and `Liberalised Sale Scheme-II'.

[It is unfortunate that copies of the above advertisements are not

placed on record]

8. What transpired subsequently is described in detail by this

Court in judgment dated 18th March, 1997 in Civil Appeal Nos.2004-

2005/1997 reported in (1997) 9 SCC 258. Both Coal India Ltd. and

the private company were parties to the above-mentioned appeals.

In paras 5 to 7, this Court recorded as follows:

"5. In Civil Appeal arising out of Special Leave Petition No.

25983 of 1995 we are concerned with the sale of coal under the

Liberalised Sales Scheme-II (for short 'LSS-II) framed by CIL in

August 1992 in pursuance of Notifications dated July 24, 1967 and

June 4, 1992. In September 1992 CIL published an advertisement

in the 'Statesmen' inviting offers for purchase in respect of coal

offered for sale under LSS-II. In the said advertisement the

quantity and quality of coal that was being offered in the various

collieries belonging to the subsidiaries of CIL were specified.

13

Among the collieries mentioned in the advertisement were Urimari

and Jarangdih collieries of CCL. In respect of Urimari Colliery

1.35 lac tonnes of Grade-B Steam Coal was offered and in respect

of Jarangdih Colliery 1.75 lac tonnes of Grade W-III Steam Coal

was offered. In response to the said advertisement M/s. Continental

Transport and Construction Corporation, respondent No. 1 in both

the appeals (hereinafter referred to as 'the petitioners'), sent a letter

dated September 16, 1992 to the General Manager (Sales), CCL,

offering to purchase 1.35 lac tonnes of Grade-B Steam Coal from

Urimari Colliery and 1.75 lac tonnes of Grade W-III Steam Coal

from Jarangdih Colliery. By allotment letter dated April 7, 1993,

CCL allotted to the petitioners 32,400 MT Grade-B Steam Coal

from Urimari Colliery in Sayal area in response to the offer made

by the petitioners on September 16, 1992. By another allotment

letter dated April 20/21, 1993, CCL allotted to the petitioners

50,750 MT Grade W-III Steam Coal from Jarangdih Colliery. The

validity of the said allotments was up to March 31, 1994, but the

period of the said allotments was extended. The case of the

petitioners is that Steam Coal at Urimari and Jarangdih Collieries

was not matching to the declared Grade-B and W-III respectively

and was of lower grades. Sirka Colliery falling in Argada area also

belongs to CCL. The petitioners, having come to know that

sufficient stocks of Grade-B Steam Coal was available for disposal

at Sirka Colliery, wrote a letter dated April 7, 1994 to the General

Manager (Argada area) of CCL, wherein it was mentioned that

32,400 MT of Grade-B Steam Coal from Urimari Colliery and

50,750 MT of Grade W-III Steam Coal from Jarangdih Colliery

was allotted to them vide allotment letters dated April 7, 1993 and

April 20/21, 1993 respectively and that on account of non-

availability of Grade-B Steam Coal at Urimari Colliery and Grade

W-III grade steam coal at Jarangdih Colliery it would not be

possible for them to lift the required quantity of coal. In the said

letter it was also stated that the petitioners had learnt that Sirka

Colliery had huge stocks of Grade-B Steam Coal to the tune of

4.16 lakh MT and that he (General Manger) was willing to accept

the diversion of orders of other areas booked under LSS-II to the

tune of 2.00 lakhs MT in addition to other pending commitments

and orders/proposed deliveries to others including the petitioners.

By the said letter the petitioners expressed their willingness to

accept equivalent quantities of Grade-B Steam Coal from Sirka

Colliery in case the General Manager was willing to accept the

transfer of allotment for Steam Coal of Urimari and Jarangdih

Collieries. The General Manager was requested to accept the

proposal of the petitioners at his level and intimate to the General

Manager (Sales)/CCL Headquarters for obtaining the formal

approval in this regard. After receiving the said letter the General

Manager (A), Sirka, sent a communication dated April 8, 1994 to

the General Manager (S&M), CCL, wherein he enclosed a copy of

the aforementioned letter of the petitioners dated April 7, 1994

and, after referring to his wireless message dated April 1, 1994, he

14

stated that in view of the stock position of 4.16 lakhs MT of coal at

Sirka Colliery it has been confirmed that in order to liquidate

stocks such orders of steam coal, if diverted from other areas,

could be accepted. On April 9, 1994 the petitioners submitted a

representation to the Coal Controller for transfer of allotments of

steam coal from Urimari and Jarangdih Collieries allotted by

CCL/Headquarters under LSS-II from these collieries to Sirka

Colliery of Argada area. In the said representation the petitioners

mentioned that quality of coal being produced at Urimari Colliery

was equivalent to Grade-D coal and at Jarangdih Colliery also the

quality of coal being produced was equivalent to Grade W-IV. It

was stated that at Sirka Colliery of Argada area there were huge

stocks of Grade-B Steam Coal to the tune of 4.10 lakhs MT and it

was pointed out that the General Manager (Argada area) of CCL,

in his letter dated April 8, 1994, had recommended the request of

the petitioners for diversion of allotments to Sirka Colliery for

favourable consideration and approval of the General Manager

(Sales)/CCL. A copy of the said letter of the General Manager,

Argada Area, Sirka dated April 8, 1994 was also submitted along

with the representation. By the said representation the petitioners

requested the Coal Controller to issue a direction to the coal

company for transfer of allotments of Steam Coal from Urimari

and Jarangdih Collieries to Sirka Colliery for release of equivalent

quantity of Steam Coal from Sirka Colliery. On the said

representation the Coal Controller, on April 12, 1994, sent a

communication to the Chairman-cum-Managing Director, CCL,

Ranchi referring to the letter dated April 7, 1994 submitted by the

petitioners to the General Manager, Argada area as well as the

letter dated April 8, 1994 from the General Manager, Argada

addressed to the General Manager (Sales)/CCL wherein he had

recommended for acceptance of the transfer in order to liquidate

huge stocks of coal at Sirka Colliery. In the said letter the Coal

Controller has stated :

Having noted the entire circumstances and facts of the case and the

availability of steam coal at Sirka you are advised to forthwith give

effect to the transfer of these allotments of steam coal from

Urimari/Jarangdih collieries to Sirka Colliery for delivery of

equivalent quantity of steam coal Grade B to the party as requested

for by them and recommended by the concerned area, at the

earliest.

6. Civil Appeal arising out of S.L.P. (Civil) No. 26366 of 1995

relates to sale of washery products on the basis of the Notification

dated July 24, 1967, before amendment introduced therein by

Notification dated June 4, 1992. On January 17, 1991 and

advertisement was published in the 'Statesman' inviting offers for

bulk purchase of rejects, Middlings, Slurry and Dirty Slurry in

various washeries of CCL including the Gidi Washery. In response

to the said advertisement, the petitioners, on March 2, 1991,

15

submitted offers for purchase of 1,79,000 MT Slurry, 90,000 MT

Middlings and 90,000 MT Dirty Slurry. By letters dated May

11/14, 1991 CIL accepted the offer of the petitioners and agreed to

supply to the petitioners 1,79,000 MT Slurry Grade-D, 90,000 MT

Middlings Grade-F and 45,000 MT Dirty Slurry Grade-F from

Gidi Washery. Subsequently by letter dated May 28, 1992 CCL

approved the transfer of 88,500 MT of Grade-F Middlings allotted

to the petitioners to equivalent quantity of Grade-F Dirty Slurry to

be delivered from Gidi Washery. By letter dated September 18,

1993, the General Manager (Argada area) of CCL refused to

accede to the request of the petitioners to allow delivery of Grade-

D also with Grade-F Dirty Slurry and reiterated that in order to

avoid possible malpractices of lifting of Slurry against orders of

Dirty Slurry, lifting of both the products concurrently was not

possible. On September 20, 1993, the petitioners submitted a

representation to the Coal Controller requesting him to direct CCL

to transfer their allotment of 1,65,724 MT of Slurry Grade-D to

equivalent quantity of Dirty slurry Grade-F which was abundantly

available at the Gidi Washery. On January 31, 1994 the Coal

Controller gave a direction to the Chairman-cum-Managing

Director, CCL, Ranchi, to transfer 1,65,724 MT of Grade-D Slurry

to equivalent quantity of Grade-F Slurry in Gidi Washery. Since

the direction of the Coal Controller was not implemented by CCL,

the petitioners moved the Calcutta High Court by filing a Writ

Petition and the High Court, by order dated February 10, 1994,

directed the appellants to act in terms of Coal Controller's letter

dated January 31, 1994. Thereupon by letter dated February 28,

1994, CCL confirmed the transfer of 1,65,724 MT of Grade-D

Slurry to Grade-F Slurry of Gidi Washery. The case of the

petitioners is that with effect from April 1, 1994, CCL changed the

grade of Dirty Slurry of Gidi Washery from Grade-F to Grade-E

for the year 1994-95 and increased its price by about Rs. 85 per

MT. The petitioners submitted a representation to the Coal

Controller on April 2, 1994 in that regard. On April 7, 1994, the

petitioners wrote a letter to the General Manager (Argada area) of

CCL, wherein they stated that in view of the difficulties mentioned

in the said letter, it would not be possible for them to lift the Dirty

Slurry allotted to them from Gidi Washery and they sought transfer

of their allotments of Dirty Slurry to Steam Coal from Sirka/Gidi-

C/Religara collieries. By his letter dated April 8, 1994 addressed to

the General Manager (S&M), CCL, the General Manager (Argada

area), forwarded the said letter of the petitioners for favourable

consideration. On April 9, 1994 the petitioners submitted a

representation to the Coal Controller requesting him to transfer of

then-allotted quantity of Dirty Slurry remaining to be booked and

lifted against allotment and the entire quantity of recent allotment

of 1,65,724 MT of Dirty Slurry for release of equivalent quantity

of Steam Coal by road from Sirka/Gidi-C/Religara collieries. The

Coal Controller, sent a communication dated April 12, 1994 to the

Chairman-cum-Managing Director, CCL, wherein, after taking

16

note of the representation dated April 7, 1994 submitted by the

petitioners to the General Manager (Argada area) and the letter

from the General Manager, Argada area to the General Manager

(Sales)/CCL dated April 8, 1994, he stated :

Having noted the entire circumstances and facts and the

availability of the coal at Sirka/Religara/Gidi-C desired to be lifted

by the party, you are advised to forthwith effect to the transfer of

allotments of Dirty Slurry and in the party letter dated 2.4.94 and

9.4.94 for release of equivalent quantity of steam coal from

Sirka/Religara/Gidi-C collieries as requested for by them and

recommended by the concerned area, at the earliest.

7. Since the directions contained in both the communications of the

Coal Controller dated April 12, 1994 addressed to the Chairman-

cum-Managing Director of CCL were not being implemented by

CCL, the petitioners on April 18, 1994, filed two Writ Petitions

(Matters Nos. 940-941 of 1994) in the Calcutta High Court. Both

the Writ Petitions were disposed of by a learned single Judge

(Mitra J.) by order dated April 18, 1994 whereby the Chairman-

cum-Managing Director of CCL was directed to act in terms of the

communications dated April 12, 1994 sent by the Coal Controller

within a fortnight from the date. This order was passed by the

learned single Judge without issuing notice to the appellants and by

directing that a copy of the Writ Petition be served upon Mrs. A.

Quraishi, Advocate as she generally appears on behalf of the

Chairman-cum-Managing Director of CCL and the Chairman-cum-

Managing Director of CCL 'was directed to regularise her

appointment in the matter. The said order of the learned single

Judge was, however, set aside in appeal by the Division Bench of

the High Court by order June 6, 1994 and the matter was remitted

for reconsideration on merits. Thereafter, the matter was

considered by Samaresh Banerjee J. who, after issuing notice to the

parties, by his judgment dated April 6, 1995, allowed both the Writ

Petitions filed by the petitioners and directed the appellants herein,

who were respondents in the Writ Petitions, to implement the

orders of the Coal Controller dated April 12, 1994 forthwith.

Letters Patent Appeals filed by the appellants against the said

judgment of the learned single Judge have been dismissed by the

Division Bench of the High Court (K.C. Agarwal CJ. and Tarun

Chatterjee J.) by the impugned judgment dated October 31, 1995.

Hence these appeals. "

It can be seen from the above-extract that the private company

entered into two contracts with CIL pursuant to two Notice Inviting

Tenders (NITs). Subsequently, the private company sought

17

variation of the original terms of the contracts in so far as they

relate to the quality of coal and also the collieries from which the

coal could be secured. The same was directed to be given by the

Coal Controller (one of the accused) by his communications dated

12.04.1994. Complaining that the CIL and its officers were not

honouring the directions given by the Coal Controller, the private

company approached the Calcutta High Court by filing two writ

petitions, i.e. W.P. Nos. 940 and 941 of 1994. The brief history of

the said writ petitions is taken note of by this Court in para 7 of the

judgment dated 18th March, 1997, extracted above. Eventually,

both the writ petitions were allowed by the judgment of the Calcutta

High Court dated 6th April, 1995 and the same was confirmed by the

Division Bench in Letters Patent Appeals by a judgment dated 31st

October, 1995. Aggrieved by the same, CIL approached this Court

by the above-mentioned Civil Appeal Nos. 2004-2005 of 1997.

Both the appeals were dismissed.

9. The matter did not end there. Complaining that the Coal

India Ltd. and its officers failed to comply with the judgment of this

Court dated 18th March, 1997 in the above-mentioned Civil Appeal

Nos. 2004-2005 of 1997, the private company filed contempt

petitions Nos. 261-262 of 1997. The said contempt petitions were

disposed of by an order dated 14th July, 1997 by this Court. The

operative portion of the said order is as follows:-

18

"We, however, find that in the contempt petitions the prayer of

the applicants is that they may be supplied coal at the notified price

fixed by the Coal India Ltd. and made effective for sale of coal with

effect from April 1, 1997. Having regard to the said prayer made by

the applicants themselves in the contempt petitions, we consider it

just and appropriate in the interest of justice to direct that the

supplies of the coal that are to be made by the respondents as per the

directions of the Coal Controller during the period of next 20 months

shall be made at Rs.896/- per metric tonne, the notified price fixed

by the Coal India Ltd. with effect from April 1, 1977. It is made

clear that the respondents are not restricted to supply coal at the rate

of 10000 metric tonne per month and that if there is availability of

larger quantity of coal the respondents can supply quantity in excess

of 10000 metric tonne per month so as to reduce the period of 20

months for the supply but in no event the said period shall be

extended. Since the supplies are to be made at the rate of 10000

metric tonne per month, it will be permissible for the applicants to

furnish rotating bank guarantee for 10000 metric tonne of coal per

month. It is also made clear that the price at which the supply of

coal is to be made as directed above, shall be for the entire quantity

of coal to be supplied by the respondents and there shall be no

variation in the said price. The contempt petitions as well as the

interlocutory applications Nos.5-6 are disposed of accordingly."

10. Subsequently, it appears that CIL did, in fact, supply coal to

the private company allegedly not only in compliance with the

directions of this Court in its order dated 14th March but also in

excess of the legal obligations imposed by the orders of this Court.

11. It is in the above-mentioned background, the FIR, which is

the subject matter of the dispute in the instant appeal, came to be

registered on 15th November 2000.

12. The crux of the FIR is that though the supplies by the Coal

India Ltd. are pursuant to the directions issued by the Calcutta High

Court confirmed and reinforced by the judgment dated 18.3.97 and

19

order dated 14.7.97 of this Court referred to above, such directions

from the courts are consequences of the failure on the part of the

various accused (mentioned in the FIR) to bring the relevant and

crucial facts which in law disentitle the private company from

getting any relief either from this Court or from the Calcutta High

Court. According to the FIR, the private company failed to comply

with the twin obligations arising under the two contracts referred to

earlier, i.e. lifting of the coal contracted to be purchased by it in

accordance with the schedule agreed upon and making the payment

of money towards the sale price of the coal in terms of the schedule

of the payment agreed upon. The substance of the FIR is that the

failure to bring the above mentioned crucial facts to the notice of

the Courts (both the Calcutta High Court and this Court), is

deliberate and due to a conspiracy between all the accused of

which the respondent is one.

13. By the judgment under appeal, the said FIR was quashed.

The only reason given is that the supply of coal to the private

company had been made in terms of a decision given by the

Calcutta High Court as approved by this Court at a price fixed by

this Court. Therefore, no Magistrate can examine the allegation that

such a supply of coal resulted in an unjust pecuniary advantage to

the private company. The operative portion of the judgment reads

as under:

20

"It was contended that the object of the First Information Report

and the investigation thereon was to unearth criminal misconduct

conducted by the accused public servants to obtain for CTCC

wrongful pecuniary advantage by corrupt or illegal means or by

abusing their position as public servants or while holding office as

public servants and accordingly offences said to have been

committed includes those mentioned in Section 13(2) read with

Section 13(1)(d) of the Prevention of Corruption Act, 1988. The

alleged wrongful pecuniary advantage is obtaining of supply of coal

at a less price. As aforesaid supply of coal had been obtained in

terms of a decision given by this Court and approved by the Supreme

Court and at the price fixed by the Supreme Corut, no magistrate,

therefore, in the circumstances can decide that any unjust pecuniary

advantage was made available to CTCC by any of the accused public

servants.

For the reasons aforesaid I quash the First Information Report

impugned in this writ petition, all investigations made pursuant to

the said First Information Report and restrain Central Bureau of

Investigation from carrying on any further investigation on the basis

of the said First Information Report."

14. Hence, this appeal.

15. Learned Additional Solicitor General, Shri P.P. Malhotra,

appearing for the appellant very vehemently submitted that: the

only issue considered and decided by the Calcutta High Court and

confirmed by this Court was whether the Coal Controller had the

necessary legal authority to direct (by his two letters dated

12.4.1994) the variation of the terms of the two contracts entered

into by the private company and this Court did find that the Coal

Controller had the requisite legal authority to direct such variation.

The mere existence of authority in the Coal Controller to order

21

variation in the terms of the contracts does not by itself mean that

the authority had been exercised legally and validly. The Coal

Controller failed to take note of the fact that the private company

had already committed a breach of its contractual obligations to

CIL. Having regard to the breach of the contract committed by the

private company, the Coal Controller should not have exercised his

authority in favour of such a defaulting purchaser. In other words,

the Coal Controller did not take all the relevant factors before

exercising his authority to grant variation in the terms of the

contracts between the private company and the Coal India Ltd.

Shri Malhotra further submitted that even in the legal proceedings

before the Calcutta High Court and this Court, these factors were

not brought to the notice of the Courts by any one of the accused.

It is argued that if only the fact that the private company had

already defaulted in its obligations arising out of the two contracts

entered into by it with the CIL had been brought to the notice of the

Courts, Courts would not have intervened in favour of the private

company. The gravamen of the charge in the FIR in issue is that

the failure to bring such crucial facts, which were most crucial for

adjudicating the rights and obligations of the private company and

CIL, to the notice of the Courts is the consequence of a criminal

conspiracy by all the accused to enable the private company to

derive an unjust and illegal benefit at the cost of CIL. Shri

Malhotra, therefore, submitted that the judgment under appeal

22

clearly failed to consider this aspect and, therefore, unsustainable in

law.

16. On the other hand, Shri Gopal Subramanium, learned senior

counsel appearing for the respondent submitted that the judgment

under appeal does not call for any interference as the conclusion

arrived at by the judgment under appeal is a logical corollary to the

earlier judgment in Civil Appeal Nos. 2004-2005 of 1997 and order

in Contempt Petitions Nos. 261-262 of 1997 of this Court.

17. From the tenor of the impugned FIR, we understand the

charge against the accused to be as follows:

(a) The private company committed breach of contractual

obligations arising under the two contracts entered into by it with

CIL.

(b) The officers of the CIL and CCL(shown accused in the FIR) are

obliged in law (as per the terms of the contract) to take penal

action against the private company for such breach of the

contractual obligations.

(c) The above-mentioned officers/accused failed to take any such

penal action.

23

(d) On the other hand, when the private company approached the

courts seeking the enforcement of the directions of Coal Controller,

all the accused deliberately suppressed the fact that private

company had committed a breach of its contractual obligations,

thereby enabling the private company to obtain favourable order.

(e) The suppression of the crucial fact that the private company

committed breach of its contractual obligations was deliberate and

intentional on the part of all the accused.

(f) Such suppression is a consequence of a criminal conspiracy

between all the accused to enable the private company to secure an

illegal monetary gain by manipulating the judicial process.

18. We have meticulously examined the judgment of this Court

dated 18.3.1997. The entire controversy in the said judgment

revolved only around the authority of the Coal Controller to issue

the various directions such as were given by him on 12.04.1994. On

an examination of the relevant provisions of law, this Court no

doubt held that the Coal Controller was legally competent to issue

the said directions. That the private company had already

committed breach of contractual obligations arising under the two

24

contracts was not at issue. There is no discussion in that regard in

the said judgment.

19. Whether the private company failed to comply with the legal

obligations arising out of the contracts entered into by it with the

Coal India or its subsidiaries, depends on the proof of the facts

allegedly constituting the acts or omissions amounting to the breach

of the contracts on the part of the private company. To arrive at

any conclusion on the above question, it requires a detailed

examination of the relevant material. The fact that the supplies of

coal were made to the private company pursuant to the orders of

the Calcutta High Court and confirmed by this Court by itself does

not rule out the possibility of a crime having been committed. It is

well known that decisions are rendered by courts on the basis of the

facts pleaded before them and the issues arising out of those

pleaded facts. As we have already pointed out, the only issue

projected on the basis of the facts placed before Calcutta High Court

and this Court is the competence of the Coal Controller to give

directions which in substance amounted to variation of the terms of

the contracts to which the private company and Coal India Ltd. are

parties. This court in Civil Appeal Nos.2004-2005 of 1997 declared

that the Coal Controller had the requisite legal authority to give

such directions but did not examine any other issue.

25

20. The exact terms and conditions subject to which the CIL

accepted the offer of private company are not available on record in

the instant case. But it appears from the FIR (which is the subject

matter of dispute) that the private company is required to lift the

entire quantity of coal it agreed to purchase within a period of 90

days from the date of allotment. It also appears from the FIR, that

the private company is obliged to make the payments of the price in

a specified manner and schedule and also make a security deposit,

the exact nature of which is not mentioned either in FIR or in the

petition or in the judgment under appeal. We are, therefore, to

make a conjuncture that deposit of money is some kind of a

guarantee for the performance of the contract on the part of the

private company.

21. Coming to the judgment under appeal, as it is already noticed

that the High Court quashed the FIR only on the ground that the

supply of coal had been obtained in terms of a decision given by the

Calcutta High Court and approved by this Court and for the said

reason no magistrate can, therefore, decide whether any unjust

pecuniary advantage was made available to the private company.

For coming to such a conclusion, the learned Judge made an

`elaborate examination' of the Indian legal system. But, in our

opinion, the entire enquiry proceeded on a wrong premise that no

26

examination, as to how a judgment of a superior Court came into

existence, is permissible in the system of law which we follow.

22. This Court on more than one occasion held that fraud vitiates

everything including judicial acts. In S.P. Chengal Varaya Naidu

(Dead) By Lrs. Vs. Jagannath (Dead) By Lrs. & Ors., (1994) 1 SCC

1, this Court observed as follows in para 1:-

1. "Fraud-avoids all judicial acts, ecclesiastical or temporal"

observed Chief Justice Edward Coke of England about three

centuries ago. It is the settled proposition of law that a judgment or

decree obtained by playing fraud on the court is a nullity and honest

in the eyes of law. Such a judgment/decree - by the first court or by

the highest court - has to be treated as a nullity by every court,

whether superior or inferior. It can be challenged in any court even

in collateral proceedings."

23. Again in A.V. Papayya Sastry and Ors.

Vs. Government of A.P. and Ors., AIR 2007 SC 1546, this Court

reviewed the law on this position and reiterated the principle. In

paras 38 and 39 it was held as follows:

38. The matter can be looked at from a different angle as well.

Suppose, a case is decided by a competent Court of Law after hearing

the parties and an order is passed in favour of the applicant/plaintiff

which is upheld by all the courts including the final Court. Let us also

think of a case where this Court does not dismiss Special Leave

Petition but after granting leave decides the appeal finally by recording

reasons. Such order can truly be said to be a judgment to which Article

141 of the Constitution applies. Likewise, the doctrine of merger also

gets attracted. All orders passed by the courts/authorities below,

therefore, merge in the judgment of this Court and after such

judgment, it is not open to any party to the judgment to approach

any court or authority to review, recall or reconsider the order.

27

39. The above principle, however, is subject to exception of

fraud. Once it is established that the order was obtained by a

successful party by practising or playing fraud, it is vitiated. Such

order cannot be held legal, valid or in consonance with law. It is non-

existent and non est and cannot be allowed to stand. This is the

fundamental principle of law and needs no further elaboration.

Therefore, it has been said that a judgment, decree or order obtained

by fraud has to be treated as nullity, whether by the court of first

instance or by the final court. And it has to be treated as nonest by

every Court, superior or inferior.

[emphasis supplied]

If a judgment obtained by playing fraud on the Court is a nullity and

is to be treated as non est by every Court superior or inferior, it

would be strange logic to hear that an enquiry into the question

whether a judgment was secured by playing fraud on the Court by

not disclosing the necessary facts relevant for the adjudication of

the controversy before the Court is impermissible. From the above

judgments, it is clear that such an examination is permissible. Such

a principle is required to be applied with greater emphasis in the

realm of public law jurisdiction as the mischief resulting from such

fraud has larger dimension affecting the larger public interest.

Therefore, the conclusion reached by the judgment under appeal

that no Court can examine the correctness of the contents of the

impugned FIR, is unsustainable and without any basis in law. The

very complaint in the FIR is that the judgment of the Calcutta High

Court, as affirmed by this Court, is a consequence of a deliberate

and dishonest suppression of the relevant facts necessary for

28

adjudicating the rights and obligations of the parties to the said

litigation

24. Coming to the question as to what amounts for securing a

judgment by playing fraud in the Court- In Chengal Varaya Naidu

(supra), this Court categorically held that the non-disclosure of all

the necessary facts tantamounts to playing fraud on the Courts. At

para 6 of the said judgment, it was held as follows:

"..............If he withholds a vital document in order to gain

advantage on the other side then he would he guilty of playing fraud

on the court as well as on the opposite party."

25. The allegation in the FIR is that the various accused

deliberately withheld/suppressed the fact that the private company,

by the time it approached the Calcutta High Court in writ petition

Nos.940 and 941 of 1994, had already committed breach of its

obligations arising of the contracts from out of which the entire

litigation arose. A fact which is greatly relevant in deciding the

entitlement of the private company to seek various reliefs such as

the ones sought by it before the Calcutta High Court. It is further

specific allegation in the FIR such a non-disclosure/suppression of

the crucial fact was wilful and deliberate pursuant to a conspiracy

between all the accused to secure an illegal and wrongful monetary

gain to the private company. Therefore, in our opinion the

Judgment under appeal cannot be sustained.

29

26. Coming to the question of the scope of the jurisdiction to

quash an FIR, either in the exercise of statutory jurisdiction under

Section 482 of Cr.P.C. or under Article 226 of the Constitution of

India, the law is well settled and this Court in a catena of decisions

laid down clear principles and indicated parameters which justify the

quashing of an FIR. We do not propose to catalogue all the cases

where the issue was examined but notice only two of them and

indicate the consistent principles laid down by this Court in this

regard.

27. In R.P. Kapur Vs. State of Punjab, AIR 1960 SC 866, this

Court at para 6 held:

".................It is well-established that the inherent jurisdiction

of the High Court can be exercised to quash proceedings in a

proper case either to prevent the abuse of the process of any

court or otherwise to secure the ends of justice. Ordinarily

criminal proceedings instituted against an accused person must

be tried under the provisions of the Code, and the High Court

would be reluctant to interfere with the said proceedings at an

interlocutory stage. It is not possible, desirable or expedient to

lay down any inflexible rule which would govern the exercise of

this inherent jurisdiction. However, we may indicate some

categories of cases where the inherent jurisdiction can and should

be exercised for quashing the proceedings. There may be cases

where it may be possible for the High Court to take the view that

the institution or continuance of criminal proceedings against an

accused person may amount to the abuse of the process of the

court or that the quashing of the impugned proceedings would

secure the ends of justice. If the criminal proceeding in question

is in respect of an offence alleged to have been committed by an

accused person and it manifestly appears that there is a legal bar

against the institution or continuance of the said proceeding the

High Court would be justified in quashing the proceeding on that

ground. Absence of the requisite sanction may, for instance,

furnish cases under this category. Cases may also arise where the

allegations in the First Information Report or the complaint, even

if they are taken at their face value and accepted in their entirety,

30

do not constitute the offence alleged; in such cases no question of

appreciating evidence arises; it is a matter merely of looking at

the complaint or the First Information Report to decide whether

the offence alleged is disclosed or not. In such cases it would be

legitimate for the High Court to hold that it would be manifestly

unjust to allow the process of the criminal court to be issued

against the accused person. A third category of cases in which

the inherent jurisdiction of the High Court can be successfully

invoked may also arise. In cases falling under this category the

allegations made against the accused person do constitute an

offence alleged but there is either no legal evidence adduced in

support of the case or evidence adduced clearly or manifestly

fails to prove the charge. In dealing with this class of cases it is

important to bear in mind the distinction between a case where

there is no legal evidence or where there is evidence which is

manifestly and clearly inconsistent with the accusation made and

cases where there is legal evidence which on its appreciation

may or may not support the accusation in question. In exercising

its jurisdiction under s. 561-A the High Court would not embark

upon an enquiry as to whether the evidence in question is reliable

or not. That is the function of the trial magistrate, and ordinarily

it would not be open to any party to invoke the High Court's

inherent jurisdiction and contend that on a reasonable

appreciation of the evidence the accusation made against the

accused would not be sustained. Broadly stated that is the nature

and scope of the inherent jurisdiction of the High Court under s.

561-A in the matter of quashing criminal proceedings,

...................."

28. In State of Haryana and others Vs. Ch. Bhajan Lal and others

AIR 1992 SC 604, this Court after reviewing large number of cases

on the question of the quashing the FIR held at paras 108 and 109

as follows:

"108.In the backdrop of the interpretation of the various relevant

provisions of the Code under Chapter XIV and of the principles of

law enunciated by this Court in a series of decisions relating to the

exercise of the extra-ordinary power under Article 226 or the

inherent powers Under Section 482 of the Code which we have

extracted and reproduced above, we give the following categories of

cases by way of illustration wherein such power could be exercised

either to prevent abuse of the process of any Court or otherwise to

secure the ends of justice, though it may not be possible to lay down

any precise, clearly defined and sufficiently channelised and

31

inflexible guidelines or rigid formulae and to give an exhaustive list

of myriad kinds of cases wherein such power should be exercised.

1. Where the allegations made in the First Information Report or the

complaint, even if they are taken at their face value and accepted in

their entirety do not prima-facie constitute any offence or make out a

case against the accused.

2. Where the allegations in the First Information Report and other

materials, if any, accompanying the F.I.R. do not disclose a

cognizable offence, justifying an investigation by police officers

Under Section 156(1) of the Code except under an order of a

Magistrate within the purview of Section 155(2) of the Code.

3. Where the uncontroverted allegations made in the FIR or

complaint and the evidence collected in support of the same do not

disclose the commission of any offence and make out a case against

the accused.

4. Where, the allegations in the F.I.R. do not constitute a cognizable

offence but constitute only a non-cognizable offence, no

investigation is permitted by a police officer without an order of a

Magistrate as contemplated Under Section 155(2) of the Code.

5. Where the allegations made in the FIR or complaint are so absurd

and inherently improbable on the basis of which no prudent person

can ever reach a just conclusion that there is sufficient ground for

proceeding against the accused.

6. Where there is an express legal bar engrafted in any of the

provisions of the Code or the concerned Act (under which a criminal

proceeding is instituted) to the institution and continuance of the

proceedings and/or where there is a specific provision in the Code or

the concerned Act, providing efficacious redress for the grievance of

the aggrieved party.

7. Where a criminal proceeding is manifestly attended with mala fide

and/or where the proceeding is maliciously instituted with an ulterior

motive for wreaking vengeance on the accused and with a view to

spite him due to private and personal grudge.

109. We also give a note of caution to the effect that the power of

quashing a criminal proceeding should be exercised very sparingly

and with circumspection and that too in the rarest of rare cases; that

the Court will not be justified in embarking upon an enquiry as to the

reliability or genuineness or otherwise of the allegations made in the

F.I.R. or the complaint and that the extraordinary or inherent powers

do not confer an arbitrary jurisdiction on the Court to act according

to its whim or caprice."

32

29. Tested from the point of view of the law laid down in the

above mentioned judgments, the impugned FIR does not merit

interference, as it is not a case of even the respondent (writ

petitioners) that the FIR is required to be quashed on any one of

the grounds legally recognised by this Court to be sufficient ground

for quashing an FIR.

30. For all the above reasons, we are of the opinion that the

judgment under appeal cannot be sustained and the same is

required to be set aside and we, accordingly, set aside the same.

The appeal stands allowed.

.......................................J.

( P. Sathasivam )

..........................................J.

( J. Chelameswar )

New Delhi;

Dated: 14th November, 2011.