Case: Union of India &amp; Others Vs. Ramesh Gandhi

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 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,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.5. FIR reads asSPECIAL POLICE ESTABLISHMENT, RANCHI BRANCHFIRST INFORMATION REPORTCrime 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 2000Name 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, RanchiINFORMATIONA 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 Honble 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 Honble 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 underon as is where is basis.(i) Slurry(ii) Dirty Slurry(iii) Middlings(iv) RejectsIt 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.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 underSALES SCHEME IIwith 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.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 `DIt 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 GradeF (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. 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 Honble 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 Honble 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 Honble 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 Honble High Court, Calcutta since the Coal Controller was authorised to issue such letters, the Honble 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.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 Honble 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 Honble 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 Honble Supreme Court and simply the authority of the Coal Controller was challenged.

Reasoning: But, in our opinion, the entire enquiry proceeded on a wrong premise that no 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 paras all judicial acts, ecclesiastical orobserved 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.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.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 adjudicating the rights and obligations of the parties to the said litigation24. 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 ashe 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.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.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 6is 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, 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 Courts 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, ....................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 asIn 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 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