Crl. Misc. No.M-11236 of 2010 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Crl. Misc. No.M-11236 of 2010 Date of Decision: 09.12.2010 M/s Hemkunt Rice Mills, Goniana Mandi, Goniana, District Bathinda through its proprietor Dalip Singh ....Petitioner Versus Central Bureau of Investigation Anti Corruption Branch, Sector 30, Chandigarh. ...Respondent Crl. Misc. No.M-14464 of 2010 M/s Punjab Rice and General Mills ...Petitioner vs. Central Bureau of Investigation ...Respondent Crl. Misc. No.M-20889 of 2010 Pawan Kumar & others ...Petitioners vs. Central Bureau of Investigation ...Respondent CORAM : Hon'ble Ms. Justice Nirmaljit Kaur Present:- Mr. R.S. Rai, Sr. Advocate with Mr. Gautam Dutt, Advocate Mr. C.S. Bakshi, Advocate for the petitioner. Mr. S.S. Sandhu, Standing Counsel for C.B.I. ***** 1. Whether Reporters of Local Newspapers may be allowed to see the judgment ? 2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest ? ** Crl. Misc. No.M-11236 of 2010 2 NIRMALJIT KAUR, J. Vide this common order, Crl. Misc. Nos.M-11236, 14464 of 2010 and Crl. Misc. No.M-20889 of 2009 shall stand disposed of as the FIR and the question involved in all these cases is same. However, the facts are being derived from Crl. Misc. No.M-11236 of 2010. The facts, in short, are that the petitioner-firms, herein, entered into an agreement with the government agency i.e. The Food Corporation of India (here-in-after referred to as “FCI”) for the year 2004-05, whereby, the petitioner agreed to mill paddy as desired by the FCI. The Government of India issued uniform specifications regarding paddy, rice and coarse grains for the procurement for central pool during the Kharif Marketing Season 2004-05 vide letter dated 31.08.2004. The policy, which is popularly known as Custom Milling Policy 2004-05 regulates the terms and conditions. The said policy lays down the procedure of allotment of Rice mills. The scheme under this policy specifically highlights the role of Food Corporation of India in procurement and allotment of paddy to the Rice millers. A rice miller is under obligation to enter into an Agreement with the District Food & Supplies Controller/District Manager, who acts on behalf of the Government. During the year 2004-05, the paddy allotted by FCI was duly milled by the petitioner firm. The paddy duly milled by the petitioner- firm was accepted by the FCI and the FCI issued acceptance note on the receipt of the Rice regarding quality of rice and weight check memo regarding quantity of Rice and the same was stored in the godowns of the Punjab State Warehousing Corporation. Thereafter, the CBI conducted Joint Surprise Checks along with FCI officials at FCI Centres, Jalalabad, Goniana and Mansa in September 2005 and samples were taken randomly in the presence of independent witnesses as per the prescribed FCI procedure. These samples were got examined from the Director, Central Crl. Misc. No.M-11236 of 2010 3 Grain Analysis Laboratory, ICAR, Krishi Bhawan, New Delhi. The analyses report of CGAL in respect of the samples revealed that 9 samples out of 11 samples seized from Guniana centre were below PFA standards and not fit for human consumption. The remaining two samples were also not conforming to specifications and were found BRL. Out of 8 samples seized from Mansa centre, all of them were not conforming to specifications and were found BRL. Out of 26 samples seized from Jalalabad centre, 15 were below PFA standards and not fit for human consumption while the remaining 11 samples were found not conforming to specifications and BRL. Accordingly, a regular case was registered in CBI ACB Chandigarh on the allegation that during Kharif season of 2004-05 sub- standard consignments have been accepted by FCI officials in Punjab Region (Goniana, Mansa and Jalalabad) from various rice millers and shown as `A' grade rice and payments made for the same. Rice consignments sent to some states had been rejected/accepted as sub- standard causing huge financial loss to FCI. In the FIR, 17 FCI officials and 45 rice mills were named as accused and case was registered under Section 120-B IPC read with Section 420 IPC, Section 13(2) read with Section 13(1)(d) of PC Act and Section 16 of Prevention of Food Adulteration Act, 1954. Accordingly, the present petitions have been filed by various private millers, against whom, the said FIR was registered by the CBI. Learned counsel for the petitioner, while praying for quashing of the FIR, contended that ; (a)The Prevention of Food Adulteration Act, 1954 cannot be made applicable as (i) the entire foundation of the investigation agency is upon the results of the samples analyzed by CGAL, Crl. Misc. No.M-11236 of 2010 4 ICAR Laboratory and New Delhi. It has been specifically mentioned that under Rule 3 of the Prevention of Food Adulteration Rules, 1955, the Laboratory which shall carry out the functions entrusted to it by the Food and Adulteration Act in respect of Punjab is the Central Food Laboratory, Mysore. Since the samples have not been examined from the laboratory as provided by the PFA Act and as prescribed under the PFA Rules, the results of the laboratory on the strength of which the petitioners and others have been booked is totally malafide, wrong and inadvisable. Once the PFA Rules provide for a specific laboratory, the testing had to be got conducted only from that laboratory. Therefore, the proceedings against the petitioner are totally vitiated. The applicability, of Section 16/19 of the PFA Act, 1954, cannot be made applicable since the samples drawn were not tested by the laboratory prescribed under the Act and the Rules. (ii) as per Section 11 of the Prevention of Food Adulteration Act, 1954, only a Food Inspector is to take sample of food for analysis. Thereafter, it is mandatory for him to firstly give notice in writing of his intention to analyze the food item. The same, too, was not done. (iii) The Food Inspector is to make 3 samples and take the samples in the presence of the person from whom the samples have been taken. In the present case, this mandatory procedure as laid down in the Prevention of Food Adulteration Rules, 1955 has not been followed. (iv) as per Section 20 of the PFA Act, 1954, no prosecution for an offence under this Act shall be Crl. Misc. No.M-11236 of 2010 5 instituted except by or with the written consent of the Central Government or the State Government. In the present case, no such authorization has been taken by the CBI. Thus, the Prevention of Food Adulteration Act, 1954 cannot be made applicable on account of total violation of Sections 9, 10, 11, 16 and 20 of the said Act. (v) Reliance has been placed on the judgment of Hon'ble the Apex Court rendered in the case titled as A.K. Roy & another vs. State of Punjab & others reported as AIR 1986 SC 2160 to contend that where no written consent was sought by the Central or the State Government for prosecuting the accused, the prosecution was illegal and therefore liable to be quashed. In the case of Yamuna Saha & others vs. The State of Bihar reported as 1992 Crl. L.J. 2311, it has been held that Section 20 is mandatory in nature and the prosecution instituted by the police without the requisite authorization as envisaged under Section 20 is sufficient to quash the proceedings in a case. Reliance has further been placed on the judgment in the case titled as Chaturbhuj vs. The State of Madhya Pradesh reported as 1991(0) MPLJ 42 to state that where there is no authority or sanction as required under Section 20 of the Act, the prosecution cannot be sustained. Similarly, reliance has also been placed on the judgment of Hon'ble the Apex Court rendered in the case titled as Municipal Corporation of Delhi vs. Ghisa Ram reported as AIR 1967 SC 970, wherein, it has been held that where a statute enables the accused Crl. Misc. No.M-11236 of 2010 6 to get a sample tested and if he is deprived of that valuable statutory right, the prosecution is bad. A similar view has also been taken in the case titled as State of Haryana vs. Unique Farmaid Pvt. Ltd. reported as 1994(4) RCR (Criminal) 540. (b) Moreover, the samples of rice were drawn from 29.09.2005 to 01.10.2005. Admittedly, the rice was not in the custody of the petitioner since he had delivered his last consignment as back as on 09.08.2005. Therefore, for a period of more than 1½ months, the stocks were lying in PSWC Godowns. Moreover, vide letter dated 11.08.2005, the Assistant Manager (Quality Control), Goniana has issued a certificate to the effect that he had inspected the rice in question which had been stored in the PSWC godowns in Goniana and after checking the entire stocks had found the stocks to be in normal position and the moisture was also within the limit. It is noteworthy that document is not disputed since Sh. V.K. Shrivastav, the author of this letter has not been arrayed as an accused by the CBI. (c) The Food Corporation of India issued acceptance notes and weight check memos against the delivery of all consignments. The Food Corporation of India did not raise at the time of delivery any issue regarding the delivery of sub-standard rice with the petitioner. Facts conclusively establish that the FCI did not complain about the quality of rice of the petitioner either on the date of last consignment in the Kharif Marketing Season 2004-05 or within a reasonable time Crl. Misc. No.M-11236 of 2010 7 thereafter. (d) no offence under Section 420 IPC can be made out. The stocks of rice which have been allegedly found to be sub-standard have been sold by FCI in public auction at a price much higher to the one which were to be sold earlier in time. No financial loss therefore has occurred to FCI. Therefore, Section 420 IPC is not made out at all. Moreover, there was no deception by the petitioner to FCI since the stocks have been found to be of good quality till its delivery to FCI and even subsequent to its storage. Further, the stocks kept lying in PSWC godowns for more than one and a half month where for the first time, it has been found that there was some anomaly in the quality of rice. (e) It was further submitted that the CBI has patently discriminated against the petitioner. M/s Bansal Rice Mills, Goniana and M/s Mahashakti Rice Mills, Goniana were similarly placed. However, they were allowed to replace their rice stocks as per the agreement and no charge sheet has been submitted against them. This is totally arbitrary illegal and discriminatory. The CBI and FCI cannot treat the petitioners and others differently. Moreover, in other cases, CBI has taken a strange stand that in cases where the rice millers were accused of supplying of BRL rice, only recommendation of getting them blacklisted were made and they were not tried for offences under Sections 420 and 120-B IPC, Prevention of Corruption Act etc. It was further submitted by learned counsel for Crl. Misc. No.M-11236 of 2010 8 the petitioner-firm M/s Hemkunt Rice Mill that their firm has been discriminated in as much as the other millers who had replaced the rice were conveniently left out and no challan has been filed against them, whereas, the petitioner has been victimized. (f) Learned senior counsel-Mr. R.S. Rai for the petitioner in Crl. Misc. No.M-14464 of 2010 titled as M/s Punjab Rice and General Mills, however, distinguished his case from others by submitting that as per clause 9 of the agreement with FCI also, if the stock supplied by any firm is found to be not as per specification then the said firm is bound to replace the said rice. The petitioner's firm has replaced the entire rice which was not found to be as per specifications and thereby has committed no offence. It was a civil liability, having violated the contract and even for that, the FCI has been indemnified. The petitioner's firm has fulfilled even contractual liability and thus not liable to be prosecuted. (g) It was lastly contended that in cases, where the relationship of the parties is governed by the terms and conditions of an agreement, the matter becomes of purely a civil nature and no criminal action can be taken in such a matter and reliance was placed on the judgment of Kailash Verma vs. Punjab State Civil Supplies Corporation reported as 2005(1) RCR (Criminal) SC 727, to substantiate the said argument, as well as, on the judgment of Bal Kishan Das vs. P.C. Nayar reported as 1991 Supp(2) SCC 412, Crl. Misc. No.M-11236 of 2010 9 wherein, it has been held that no criminal offence is made out when the relationship of parties is governed by an agreement. Reply has been filed by the CBI. Learned counsel for the CBI submitted that it was not only a case under the Prevention of Food Adulteration Act (PFA Act) but also under the other sections of IPC including criminal conspiracy and cheating and relevant sections of Prevention of Corruption Act including abuse of official position. The said sections of PC Act and the IPC form the main body of the offences committed by the accused government officials in connivance with the private rice millers and the CBI being the Central Investigation Agency was fully competent and within its powers to investigate the offence committed by government officials. It was further submitted that the accused petitioner's firm entered into a criminal conspiracy with the accused FCI officials which resulted into the acceptance of poor quality rice during Kharif Marketing Season 2004-05 by FCI and, accordingly, CBI had filed chargesheet in case RC 1(A)/2006/ACBCHG for the offences of criminal conspiracy, cheating, misuse/abuse of official position and adulteration of rice. CBI has collected ample evidence to establish the involvement of petitioner and other accused as detailed in the chargesheet. As the offences committed by the petitioner are grave criminal acts, hence the averments regarding the civil nature of the matter are baseless. Further, the acceptance of the substandard rice from the petitioner's rice mill showing the same to be of uniform specifications was done by the FCI officials in furtherance of the criminal conspiracy with the petitioner. The rice supplied by the petitioner's rice mill was beyond PFA limit and was unfit for human consumption. The job of the rice miller is not complete just by the issuance of acceptance notes. There is procedure for further checking by the senior FCI officials. Even in the agreement between the Crl. Misc. No.M-11236 of 2010 10 Rice Miller and FCI, it is clearly mentioned in clause G(i) that the entire quantity of rice of all varieties delivered by the agent to the FCI shall conform to the uniform specification laid down by the Government of India. In reply to the fact that Sh. V.K. Srivastva was not charge sheeted, the CBI replied that the certificate issued by Sh. V.K. Srivastva does not speak clearly about the damaged percentage of the rice. The samples, in question, were obtained during a joint surprise check by a team of CBI and FCI Officials in the presence of Independent Witnesses taking all the necessary precautions and following the procedure of sampling as per the prescribed procedure of FCI. The samples of the rice were obtained by the CBI within a short period of two months and no change with regard to the percentage of damaged rice is possible within such a short period. Moreover, in between this period of two months the District Manager, FCI, Bathinda had also conducted checking of the rice and found the same to be beyond acceptable limit. While letting off the PSWC officials, learned counsel for the CBI submitted that as regard the role of PSWC officials, they had only stored the rice in their premises and the responsibility of ensuring the quality of the rice was of the FCI officials. Learned counsel for the parties have been heard at length. There appears to be some merit in the argument raised by learned counsel for the petitioner that no offence under the Prevention of Food Adulteration Act, 1954 is made out as there is total non-compliance with the provisions of the said Act. There is violation of both Sections 20, as well as, Section 11 of the PFA Act, in as much as, the said sample was not taken as per the mandatory procedure prescribed under the same. As per the Sections 9, 10 and 11 of the PFA Act, the samples of rice were to be drawn by the Food Inspector, the same was, admittedly, not done in the present case. As per Section 11(c) of the Act, one sample was to be sent for analysis to the public analyst, the same was also, admittedly, not done. Crl. Misc. No.M-11236 of 2010 11 Further, as per Section 20 of the PFA Act, 1954, prosecution for such an offence cannot be instituted except by or with the written consent of the State or the Central Government. In the present case, no such authorization was taken by the CBI. It is also not denied that the said samples have not been examined by the Laboratory as provided by the Prevention of Food Adulteration Act, 1954. In accordance with Rule 3 of the Prevention of Food Adulteration Rules, 1955, the competent laboratory to carry out the functions entrusted to it by the Act for the State of Punjab and Chandigarh, is the Central Food Laboratory, Mysore. However, the charges, in this case, have yet to be framed. Therefore, the petitioner, in any case, would always be at liberty to raise all the pleas before the Court at the time of framing the said charges. As stated by the CBI, the primary concern, in the present case, is with respect to Section 420 of the IPC, as well as, Section 13(2) read with Section 13(1)(d) of the PC Act. [The] Delhi Special Police Establishment Act, 1946 makes provision for the constitution of a special police force, which in the present case, is the Central Bureau of Investigation. The amendment made by the Act 26 of 1952 which was enacted is as follows :- [a] Substituted in long title and preamble for the words “for the State of Delhi for the investigation of certain offences committed in connection with matters concerning Departments of the Central Government” by the Delhi Special Police Establishment (Amendment) Act, 1952 (26 of 1952), S.2 (6-3-1952).” The objects and reasons behind the said amendment are stated as follows :- “ OBJECTS AND REASONS 1952 – The objects and reasons for the amendments made by Act 26 of 1952 are stated as Crl. Misc. No.M-11236 of 2010 12 follows :- The Delhi Special Establishment is a Central Police Force constituted under the Delhi Special Police Establishment Act to investigate offences of bribery and corruption committed by officers or others in departments of Central Government. It does not confer any power to deal with cases concerning - (a) corporation and other bodies set up and financed by the Government of India; and (b) departments of the administrations in centrally administered States.” It is evident from Annexure D-2 placed on record by the Central Bureau of Investigation that an information was received at the CBI, ACB, Chandigarh that during the Kharif season 2004-2005, sub- standard rice consignments have been accepted by the FCI officials in Punjab region from various rice millers while releasing payments as prescribed for higher quality rice. The FCI officials from the rank of Technical Assistants to Senior Regional Manager, Punjab Region reportedly connived with various private rice millers and accepted poor quality of rice at the cost of `A' grade rice. In many recipient states these rice consignments were rejected/were accepted as sub-standard rice resulting in huge financial loss to FCI. In order to ascertain the veracity of information, a joint surprise checking in association with FCI officials was conducted at the godowns of FCI Centre, Guniana on 01.10.2005. FCI Centre Mansa on 30.9.2005 and FCI Centre, Jalalabad on 29.9.2005 in association with Senior FCI officials of Chandigarh. During the course of said joint surprise checking, 18, 8 and 26 rice samples of Raw Rice Grade “A” and Parboiled were taken from FCI Centres Guniana, Mansa and Jalalabad respectively as per the prescribed FCI procedure in the presence of independent witnesses. Samples were taken randomly to be true representatives of rice stock available in the FCI Crl. Misc. No.M-11236 of 2010 13 godowns. The rice samples taken from the above mentioned FCI godowns along with photocopies of the concerned joint surprise check memos were sent to the Director, Central Grain Analysis Laboratory, ICAR, Krishi Bhawan, New Delhi vide letter No.DPCHG2005/9175/Misc./ACB/CHG dated 04.10.2005 for analysis in order to ascertain whether samples conform to the prescribed specifications as laid down by FCI for rice during the kharif crop season 2004-05 and also requested to report if samples are beyond the specifications as prescribed in Prevention of Food Adulteration Act, 1954. The analysis report of CGAL in respect of the samples revealed that 9 samples out of 11 samples seized from Guniana centre were below PFA standards and not fit for human consumption. The remaining two samples were also not confirming to specifications and were found BRL. Out of 8 samples seized from Mansa center all of them were not conforming to specifications and were found BRL. Out of 26 samples seized from Jalalabad center, 15 were below PFA standards and not fit for human consumption while the remaining 11 samples were found not confirming to specifications and BRL. The FCI officials in these centers connived with each other and private rice millers and accepted poor quality rice and caused huge loss to public exchequer. Accordingly, the FIR was registered. The CBI justified that the said exercise was undertaken by the CBI as per the instructions regarding inspection, sampling and analysis procedure to be followed in acceptance of rice stocks issued by Ministry of Food, Consumer Affairs and Public Distribution and FCI, Headquarters. The relevant instructions dated 28.09.2004 for the Kharif Marketing Season 2004-05 laid down as under :- 1. The rice stocks shall be accepted/purchased as per the Crl. Misc. No.M-11236 of 2010 14 laid down specifications of Government of India for Kharif Marketing Season, 2004-2005 circulated vide this Office letter of even No. dated 02.09.04. 2. The method of sampling is to be followed as per BIS method for sampling of food grains as instructed vide this office letter No.QC/2(1)/2002/Vol.I dated 13.11.2002. 3. The samples will be drawn in triplicate and jointly sealed with the representative of millers or State Government as the case may be. Out of these three samples one sample will be analysed at FCI depot/FCI notified acceptance point for acceptance/rejection and the second sample will be kept under proper custody at the depot for future reference. The third sample will be handed over to the representative of miller or the State Government as the case may be. 4. to 17 xxx xxx xxx 18. The extent of surprise checks at the level of DM (QC), District Manager JM (QC), Manager (QC) of Zone and SRM as prescribed above shall be apart from surprise checks conducted by District/Regional/Zonal/Headquarters squads. Copies of the report of the squads will be submitted to Hqrs invariably.” The instructions prescribed that the rice stock shall be accepted as per specifications laid by Govt. of India for Kharif Marketing Season 2004-05 and BIS method of sampling be followed. The instructions provided hat samples shall be drawn in triplicate (one for analysis at acceptance point, second sample to be kept in under proper custody at the depot for the future reference and third sample to be handed over to the representative of the miller or State Government). The instruction also provided for packaging, marking and storage of rice accepted. The guidelines provided that