IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr.Appeal No.437 of 2000. Judgment reserved on: 31.3.2008 Date of decision: 9.5.2008 State of H.P. …….Appellant Vs. Dr. C.L. Malhotra & Ors. …. Respondents Coram The Hon’ble Mr. Justice Kuldip Singh, Judge. Whether approved for reporting?1 No For the Appellant : Mr. A.K. Bansal, Addl. Advocate General. For the Respondents : Mr. B.K. Malhotra, Advocate, for respondent No.1. Mr. N.K. Sood, Advocate, for respondents No.2 & 3. Mr. Anand Sharma, Advocate, for respondents No. 4 to 8. Kuldip Singh, Judge. The State has come in appeal against the judgment Dated 2.8.1999 passed by learned Special Judge, Shimla in S. Tr. No.19-S/7 of 1997/96 acquitting the respondents under Sections 120- B IPC, read with Section 13(2) of the Prevention of Corruption Act, Section 22 of the H.P. Prevention of Specific Corrupt Practices Act, 1983, Section 420 IPC, Section 13(2) read with Section 13(1)(d) of Whether the reporters of the local papers may be allowed to see the Judgment?Yes …2… the Prevention of Corruption Act and Section 22 of the H.P. Prevention of Specific Corrupt Practices Act, 1983. 2. The prosecution case in brief is that in the year 1989 the Government through Controller of Stores, Himachal Pradesh invited tenders for supply of Allopathic Drug Kits. Many suppliers/manufacturers of medicines responded to the notice inviting tenders. The tenders submitted by M/s. Rennice Drug House, Solan and M/s Panacea Drug and Pharmaceuticals Pvt. Ltd. Jasur, were accepted. They were awarded the contract to supply the kits at the rates mentioned in the formal letters and documents of rate contract. The respondents No.4 and 8 were alleged to be the partners of M/s. Rennice Drug House, Solan. The kits were to be purchased through the Director of Health Services. As per conditions of rate contract, a team of experts would inspect the kits on behalf of the Government before the despatch of consignments of kits. Accordingly a team consisting of respondent No.2, a doctor who was posted as Deputy Director Health Services and respondent No.3 who was working as Assistant Drug Controller at the relevant time was constituted. The respondent No.1 in his capacity as Director Health Services, had approached the Government for administrative sanction for the purchase of Allopathic kits amounting to Rs.76,83,673/- from the aforesaid two firms. The Government gave the sanction vide letter dated 16.12.1989. The respondent No.1 placed first supply order on 28.12.1989 and the second supply order on 19.3.1990 each for supplying 350 kits to M/s. Rennice Drug House, Solan. M/s. Rennice …3… Drug House, Solan were to supply the kits to Chief Medical Officer, Shimla who was to distribute the kits to various Health Centres in District Shimla. It has been alleged that each kit was to contain 29 medicines and other medical items like bandages, cotton, wool etc. The medicines and medical items of the kits were manufactured by M/s. Hindustan Trust Private Limited, New Delhi, M/s. Indus Pharma Private Limited, New Delhi, M/s Krishan Chand and sons, Delhi and supplied to M/s. Rennice Drug House, Solan. Respondent No.5 is the Managing Director of M/s. Hindustan Trust Private Limited, New Delhi, respondent No.6 is the Managing Director of M/s. Indus Pharma Private Limited, New Delhi and respondent No.7 is the Managing Direcotr of M/s. Krishan Chand and sons, Delhi. 3. M/s. Rennice Drug House, Solan prepared the kits at its premises. Respondents No.2 and 3 had carried out the inspection of the kits on 17.3.1990 for which order was placed on 28.12.1989. It has been alleged that they submitted their report to respondent No.1 on the same day. Thereafter M/s. Rennice Drug House, Solan supplied 350 kits to Chief Medical Officer, Shimla. The consignment was received on 14.3.1990 by the Chief Medical Officer, Shimla. The prosecution case is that this consignment was not accompanied by any certificate of analysis and as per rate contract each consignment of kits was required to be accompanied by certificate of analysis. The respondent No.1 released the payment of 350 kits supplied by M/s. Rennice Drug House, Solan despite the fact that conditions of rate contract that each consignment should be accompanied by certificate …4… of analysis was not complied with. It has also been alleged that 90% of the payment was released and rest of the payment was to be released after getting random samples analysed from the Government Analyst. But 100% payment was released on 20.3.1990, even before the random sampling. 4. PW-15 Daler Singh, Drugs Controller who was at the relevant time posted as Drugs Inspector, District Shimla took random samples of medicines and other medical items from four kits on 24.3.1990 and sent the samples to Government Analyst, who vide reports of different dates between 15.5.1990 to 13.4.1991, opined that 9 samples out of 29 samples did not conform to the prescribed standards. The respondent No.1 was apprised of the results of analysis of samples taken by PW-15 but he did not take any steps for replacement of the kits or to recover their value from the supplier. On 14.3.1990 Chief Medical Officer, Shimla informed respondent No.1 that the kits were not accompanied by any certificates of analysis. The respondent No.1 despite this released the entire amount of bill submitted by M/s. Rennice Drug House, Solan. 5. In pursuance of supply order dated 19.3.1990 the second consignment of kits was also ready for supply. On 4.5.1990 respondents No.2,3 visited the premises of M/s. Rennice Drug House, Solan for inspection. They submitted the report to respondent No.1. M/s. Rennice Drug House, Solan on 7.5.1990 despatched the consignment to Chief Medical Officer, Shimla. The respondent No.1 released 100% payment of the bill to M/s. Rennice Drug House, …5… Solan on 12.5.1990. It has been alleged that the second consignment was also not accompanied by any certificates of analysis and the kits were supplied without certificates of analysis. It has been alleged that respondent No.1 in these circumstances should not have released the payments. It was also brought to his notice that earlier kits supplied were sub-standard and therefore without verifying the quality of the medicines of the second consignment, the respondent No.1 ought not to have released the payment of second consignment, he rather ought to have recouped the cost of sub- standard kits of first consignment from the second consignment. PW-15 on 20.6.1990 took random samples from 4 kits of the second consignment and those samples were sent to Government Analyst for analysis. It has been alleged that during investigation of the case some samples were taken on 9.7.1990 by Dy. Superintendent of Police (Vigilance) and those samples were also sent to Government Analyst for analysis. Out of the samples taken by PW-15 Drugs Inspector on 20.6.1990 and Dy. Superintendent of Police ( Vigilance) on 9.7.1990, the samples of 7 items were found to be sub-standard. 6. It has been alleged that the total value of the sub- standard kits supplied on 14.3.1990 and 7.5.1990 was Rs.2,37,341/- ( approximately). The respondents No.1 to 3 have caused loss to the State Exchequer to the tune of Rs.2,37,341/- ( approximately). It has been alleged that all the respondents have conspired to make un- lawful monetary gains by supplying sub-standard kits. …6… 7. The case was got registered with the Dy. Superintendent of Police ( Vigilance) Anti Corruption Zone, Shimla and on completion of investigation and obtaining prior sanction, a report under Section 173 of the Code of Criminal Procedure was presented in the Court. The respondents were charged and tried for having committed offences under various provisions referred above. The prosecution examined 16 witnesses and proved on record many documents. The statements of respondents were recorded under Section 313 Cr.P.C.. They denied the case of the prosecution. Learned Special Judge acquitted the respondents on 2.8.1999, hence this appeal. 8. I have heard Mr.A.K. Bansal, learned Addl. Advocate General for the appellant and Mr.B.K. Malhotra, Mr. N.K. Sood and Mr. Anand Sharna, learned counsel representing the respective respondents and gone through the record. Mr. A.K. Bansal, learned Addl. Advocate General has submitted that learned Special Judge has erred in acquitting the respondents, he has not properly appreciated the material on record. The learned Addl. Advocate General has reiterated the points formulated by learned Special Judge and circumstances relied by the prosecution in the Court below for proving the charge against the respondents. The supply of sub- standard kits was in violation of supply order and rate contract documents. The respondents over looked the essential conditions of the supply order and rate contract and obtained monetary gains in conspiracy with each other at the cost of the state. The payment was released to the supplier without verification of the quality of the kits. …7… The random samples of the kits on analysis were found to be sub- standard by Government Analyst. The complicity for the commission of offence is apparent. The State has been put to loss for Rs.2,37,341/- ( approximately) and in addition to this sub-standard medicines and medical material was supplied which was to be used by the public ultimately. Per contra learned counsel representing the respondents have submitted that learned Special Judge has thoroughly gone deep into the matter. He has analysed the evidence on record. On facts no violation of supply orders and rate contract documents has been established. The Govt. Analyst reports have not been linked with the kits supplied by the supplier. The respondents No.1 to 3 acted prudently and in accordance with the office procedure. The respondent No.1 even on the basis of news paper report acted swiftly. The respondent No.1 did not release the payment to the supplier, payment was released by some other officer who was not made an accused. It has been submitted that on law the case is covered by judgment State of H.P. vs. Dr. C.L. Malhotra 2002(1) SLC 280. 9. The learned Addl. Advocate General has submitted that prosecution has proved the charge of conspiracy against the respondents for causing wrongful loss to the Government. He has also submitted even indendent of conspiracy it has been proved that respondents have caused wrongful loss to the Government and proved circumstances on record point out that respondents had acted in a particular manner for wrongful gains at the cost of State …8… exchequer. It has been submitted that as per rate contract Ex.PE/2 supply of the kits was to be made within two months of the receipt of supply order. In the present case first supply order Ex.PD/5 was placed on 28.12.1989 and the first consignment of the kits was despatched on 14.3.1990. It has been argued that the supplier supplied the kits two months after the receipt of supply order and has thus violated rate contract Ex.PE/2, the kits were accepted even though the supply was made after two months. According to him this proves the conspiracy of the respondents. The payment of first consignment was made to the supplier vide Ex.PB/1. The supplier was not to gain anything for delaying the supply, in fact the supplier would have got the payment long time back had he supplied the kits early. This circumstance does not prove the conspiracy of respondents for committing the offence as submitted by learned Addl. Advocate General. 10. It has been next contended that inspection team favoured the supply of the kits by clearing the consignment of the kits without carrying out inspection with the result that some sub-standard kits were got supplied to the Govt. In support of this contention it has been submitted by learned Addl. Advocate General that the inspection team did not carry out thorough inspection nor did take samples from any of the kits for laboratory tests. The team just completed the paper work and cleared the consignment for despatch. The perusal of terms and conditions mentioned in Ex.PE/2 would show that the inspection team was required to carry out visual …9… inspection before the dispatch of the consignment. There was no requirement in the rate contract that the inspection team would take samples of medicines from the consignment. The visual inspection and taking out the samples for analysis are entirely different. The quality of medicines and other medical items could not be verified from visual inspection. The purpose of visual inspection possibly was for checking expiry date or whether the packing was apparently not damaged along with the certificate of analysis which was required to be supplied by the manufacturer along with the medicines. Therefore, respondents No.2 and 3 members of the inspection team cannot be blamed for this purpose. The random samples were allegedly taken out by PW-15 from the kits for analysis. The learned Special Judge has recorded a specific finding that prosecution has not been able to link the Govt. Analyst report with the samples which were allegedly taken from the kits supplied by M/s. Rennice Drug House, Solan to the Chief Medical Officer, Shimla. PW-15 in his statement has not stated that he had taken the samples from kits which were supplied by M/s. Rennice Drug House, Solan. The prosecution has alleged that some samples were also taken during investigation by Dy. Superintendent of Police ( Vigilance) on 9.7.1990 and those samples were got analysed from Govt. Analyst. PW-16 V.S.Machhan has stated that he was posted as Dy. Superintendent of Police, Anti Corruption Zone in the year 1990 but he has not stated that he had taken any sample from the kits supplied by M/s. Rennice Drug House, Solan or he got analysed any sample …10… from Govt. Analyst. Therefore, the analysis of samples taken during investigation has also not been connected with the kits supplied by M/s. Rennice Drug House, Solan in pursuance of two supply orders. The entire case has been projected in the appeal on the premise that sub-standard kits were supplied in pursuance of supply order by the supplier in conspiracy with respondents for monetary gains which was shared by the respondents, but on facts it has not been proved that the kits were sub-standard. It has not been proved that inspection team favoured the supplier for clearing the consignment without carrying out inspection and some of the kits were found sub-standard on analysis. 11. It has been submitted on behalf of the State that kits were to be accompanied by certificate of analysis as per rate contract but the kits which were supplied to the Chief Medical Officer, Shimla had no such certificate and despite that respondent No.1 released the payment of the kits amounting to Rs.8,33,112/-. PW-3 Dr. Ram Murti was the medical officer ( Health) incharge of the store at the relevant time when the kits were received. In his statement he has no where stated that the kits were not accompanied by any certificate of analysis. On the contrary he has deposed that he had written a letter to Chief Medical Officer, Shimla with the recommendation that the bill of M/s. Rennice Drug House, Solan be forwarded to Director ( Health Services), Shimla for making the payment. The conduct of PW-3 for recommending the payment of the bills establishes that he did not find any defect in the consignment as per rate contract including the …11… supply of copies of analysis report. In view of statement of PW-3 it can not be said that the consignment was not accompanied by certificate of analysis and payment was released to the supplier in absence of requisite certificate of analysis. 12. It has been next contended that respondent No.1 did not take any action against the supplier M/s. Rennice Drug House, Solan even when he came to know that sub-standard kits were supplied by the said firm. The connected submission on behalf of the appellant is that respondent No.1 did not take any step to recover the cost of sub-standard kits from M/s. Rennice Drug House, Solan. The learned Special Judge in para-29 of the judgment has noticed that a news item appeared on 9.6.1990 in the Indian Express regarding some hanky panky for supplying medical kits. This observation of learned Special Judge has not been disputed on behalf of the appellant. It has come in evidence that respondent No.1 vide letter dated 11.6.1990 Ex.DA apprised the Controller of Stores that he had asked the concerned Drugs Inspector to send the copies of analysis reports to him which would be forwarded to the Controller of Stores as and when the same were received from the concerned Drugs Inspector. The respondent No.1 also directed the Superintendent of the concerned branch not to release the payment of the kits to M/s. Rennice Drug House, Solan and another firm mentioned in Ex.DA. The conduct of respondent No.1 is thus clear that the moment he came to know through the news paper regarding some irregularities in the supply of the kits, he took immediate action at his end. It has …12… also come in the statement of PW-2 Jai Singh Cashier that payment to M/s. Rennice Drug House, Solan was not released by respondent No.1, rather it was released by Dr. Nirmal Sachdeva, Drawing and Disbursing Officer. Dr. Nirmal Sachdeva was not made an accused in the case. In these circumstances concerned Superintendent of the branch and Dr Nirmal Sachdeva should have withheld the payment against the supply of the kits to M/s. Rennice Drug House, Solan. The prosecution has failed to prove that in fact the payment of kits was released by respondent No.1 or he was having the actual knowledge of release of payment made by Dr. Nirmal Sachdeva. There is nothing on record to show that payment of second consignment of kits was made to M/s. Rennice Drug House, Solan under the orders of respondent No.1. PW-2 Jai Singh Cashier has stated that respondent No.1 was not concerned with the release of payment to the suppliers of kits. Therefore, the prosecution has failed to establish conspiracy of respondent No.1 and other respondents for releasing the payment of kits to M/s. Rennice Drug House, Solan. 13. It has been urged that without waiting the result of the random samples the entire payment was released to the firm. This proves the conspiracy of the respondents to give wrongful gain to the firm at the cost of State exchequer. As per rate contract Ex.PE/2 Schedule A, 90% payment was to be made against dispatched documents and inspection note. The balance 10% payment was to be made within 30 days from the date of receipt of the material in good condition to the satisfaction of the consignee. In the rate …13… contract there was no condition that the balance 10% amount was to be released only after the receipt of report of random samples conforming the prescribed standard of kits as contended by the prosecution. The delivery in good condition means that apparently the goods were properly packed and not damaged, therefore, this does not proves the conspiracy of the respondents as submitted on behalf of the appellant. 14. It has been submitted on behalf of the appellant that respondent No.1 did not issue instructions to the inspection team of second consignment of the kits to take random samples from kits and get the same analysed even though he was aware by the time that M/s. Rennice Drug House, Solan had earlier supplied sub-standard kits. This contention has no force in as much as there is no stipulation in the rate contract that respondent No.1 was to give instructions to the inspection team for obtaining random samples from the kits nor it has been proved on record that M/s. Rennice Drug House, Solan had earlier supplied sub-standard kits. In these circumstances there was no question of respondent No.1 for giving instructions to the inspection team as contended on behalf of the appellant. 15. The next contention on behalf of the appellant is that M/s. Rennice Drug House, Solan did not replace the sub-standard medicines nor respondent No.1 insisted M/s. Rennice Drug House, …14… Solan to replace sub-standard medicines before releasing the payment of second consignment. This contention is noticed only to be rejected for more then one reason. It has not been proved that M/s. Rennice Drug House, Solan had earlier supplied sub-standard medicines, therefore, there is no question of respondent No.1 asking M/s. Rennice Drug House, Solan to replace the earlier supplied kits. The payment of the second consignment was released by Dr. Nirmal Sachdeva and not by respondent No.1. Therefore, respondent No.1 cannot be made responsible for releasing the payments to M/s. Rennice Drug House, Solan for supplying the kits. On the contrary, it has come on record that the respondent No.1 after having come to know some irregularities in supplying of kits through news item, he immediately took steps vide Ex.DA and informed the Controller of Stores Himachal Pradesh as well as Superintendent of the concerned branch not to release the payment. This proves the conduct of respondent No.1 that he was quite vigilant for safe guarding the interest of the State. 16. The learned Addl. Advocate General has submitted that the respondents in conspiracy with each other took pecuniary advantage by adopting corrupt or illegal means at the cost of State exchequer. This argument of the learned Addl. Advocate General has also no force. There is nothing on record to show that the respondents have taken any pecuniary advantage at the cost of State exchequer. On the contrary the allegation of the prosecution that sub-standard medicines were supplied by M/s. Rennice Drug House, …15… Solan has not been proved at all on record. In view of the fact that prosecution has failed to prove supply of sub-standard medicines by M/s. Rennice Drug House, Solan, it cannot held that the respondents took pecuniary advantage at the cost of State exchequer. 17. The learned Addl. Advocate General has urged that the respondents have cheated the Government by supplying sub- standard medicines by entering into conspiracy or independent thereof. On facts the prosecution has miserably failed to prove that sub-standard medicines were supplied by M/s. Rennice Drug House, Solan in conspiracy of respondents or independent thereof. Once the prosecution has failed to prove the supply of sub-standard medicines by M/s. Rennice Drug House, Solan, it cannot be held that the respondents have cheated the State for supplying sub-standard medicines. The learned Addl. Advocate General has lastly contended that respondents NO.1 to 3 were responsible for purchasing the medicines, they in furtherence of conspiracy or independent thereof purchased sub-standard allopathic Drug kits from the supplier. It has already been held above that prosecution has miserably failed to prove the supply of sub standard allopathic kits by the supplier in conspiracy with the respondents or independent thereof. The role of respondents No.1 to 3 for causing any wrongful loss to the State has not been proved. There is force in the contention of learned counsel for the respondents that almost in similar situation this Court has not accepted the prosecution case, in case State of H.P.vs. Dr.C.L. Malhotra, 2002 (1) SLC 280. The learned Special Judge has drawn proper …16… inference from the material on record. The view taken by learned Special Judge from the material on record is possible view and while sitting in appeal, this Court will not take other view even if, other view is possible unless it has been demonstrated that learned Special Judge has taken perverse view in the impugned judgment, which has not been shown in the present case . No case for interference has been made out. 18. No other point was urged. 19. The result of the above discussion, appeal fails and is dismissed. Bail bonds discharged. ( Kuldip Singh ) Judge. May 9, 2008 (sks)