Case: JINOFER KAWASJI BHUJWALA Vs. THE STATE OF GUJARAT

4. Pursuant to an invitation to offer floated in November- 2006 and the assessment of the proposals received from interested parties, a company by name Aatash Norcontrol Limited (for short ANL ), was issued with a Letter of Intent on 26.02.2007 for the construction and development of Vessels Traffic and Port Management System (hereinafter referred to as VTPMS) in the Gulf of Khambhat, on Build Own Operate and Transfer (BOOT) basis. It was followed by a Concession Agreement dated 30.09.2007 entered into between the Gujarat Maritime Board, ANL and the Government of Gujarat5. As per the Concession Agreement, Aatash Norcontrol Limited is obliged to install Key Radar Stations at 7 places in the Gulf of Cambay and repeater Radar Stations at 2 places, with the master control being set up at Dumas. The object of setting up the Radar Stations is to monitor the vessels entering the Gulf of Khambhat and to ensure Coastal and National Security6. VTPMS for the Gulf of Khambhat became operational in August, 2010 after a completion certificate was issued by the Gujarat Maritime Board. But in 2018 disputes arose regarding the capital cost incurred by ANL. An expert committee was appointed under Clause 18 of the agreement and they submitted a report indicating a particular amount as the capital cost7. But Gujarat Maritime Board claimed, on the basis of a preliminary inspection report of the Principal Accountant General that ANL made an extra income of Rs. 134.38 crores during the financial years 2015-16 and 2017-18 and that the said amount should be paid by ANL8. ANL moved the commercial court at Ahmedabad under section 9 of the Arbitration and Conciliation Act, 1996, as there was a threat of termination of the Concession Agreement. The disputes were also referred to arbitration. Before the Arbitral Tribunal constituted on 01.03.2019, both parties (ANL and Gujarat Maritime Board) moved applications under section 17 of the Arbitration and Conciliation Act9. However, on 01.05.2019, the Gujarat Maritime Board lodged a complaint with the CID Crime, Gandhi Nagar Zone, alleging that ANL was guilty of (1) inflation of cost (2) non execution of certain works (3) creation of shell companies and carrying out work through them (4) siphoning and round tripping of funds through those companies (5) not carrying out construction on the lands allotted for Master Control Room (6) raising of false bills and forged invoices (7) managing the issue of completion certificate through the then Superintending Engineer and Chief Nautical Officer of the board and (8) entering into a conspiracy with each other to exceed the expenditure of the project upto Rs. 100 crores and committing criminal breach of trust10. On the basis of the above complaint, a FIR bearing no. I- I/5/2019 was registered on 26.6.2019 against eight named accused, for alleged offences under sections 406, 409, 420, 465, 468, 471 and 120B of IPC and section 13(1)(d) of the Prevention of Corruption Act. The appellant herein and his son and daughter were cited as A-1, A-2 and A-3 respectively, as they happen to be the Directors of the Companies11. On 27.6.2019, the appellant and his son were arrested. After being in police custody under orders of court, the appellant was sent to judicial custody on 2.7.2019. Ever since then, the appellant is in judicial custody. His bail application was first rejected by the Sessions Court on 6.7.2019. Though the appellant moved the High Court, he withdrew the application on 6.8.2019 with liberty to move a fresh application after the filing of the charge sheet. But, it is relevant to note that the two officers of the Maritime Board who were also implicated, were granted bail by the High Court12. A charge sheet was filed by the Investigating Officer on 21.9.2019, as against the appellant and the others. However, no charge sheet was filed against the Officers of the Maritime Board, as orders of sanction from the Government were awaited at that time13. In view of the filing of the charge sheet, the appellant moved a bail application before the Sessions Court but the same was rejected on 3.10.2019. Therefore, the appellant moved the High Court of Gujarat, which, by the order impugned in the appeal, dated 09-12-2019, dismissed the application. However, the High Court gave liberty to the appellant to file a fresh application before the Trial Court if the trial could not commence within a period of six months. Incidentally, this period of six months has now expired and the trial has not commenced as yet14. Before proceeding further, it is to be noted that on 7.8.2019, the Arbitral Tribunal passed orders on the applications under section 17 of the Arbitration Act (1) granting a stay of the termination notice (2) directing ANL to deposit the entire amount generated out of the VTPMS project in an escrow account and to file a monthly report regarding the details of deposits so made (3) permitting ANL to withdraw 25% of the gross amount so deposited, to meet the overheads and to run the project (4) permitting the State Police Personnel deputed at the project site to continue without any interference with the day to day functioning of the project except overseeing safety aspects (5) permitting the Maritime Board to depute a competent person to supervise and monitor the functioning of the project (6) directing ANL not to encumber or dispose of the plant and machinery and other valuable items and (7) directing ANL to pay Rs. 16,43,44,227/- to the Maritime Board payable for the month of July, 201915. As a result of the aforesaid interim measures ordered by the Arbitral Tribunal, ANL continues to operate the project under the Concession Agreement and the financial interests of the Maritime Board stand protected by those directions.

Court's reasoning:
19. At the outset, we should point out that the impugned order of the High Court is dated 9.12.2019.20. Obviously, the period of six months within which the High Court hoped the trial to commence, has expired as on date. The appellant, who is admittedly 62 years of age has already spent nearly a year in judicial custody. A period of nine months has passed from the date of filing of the charge sheet. Though the learned Solicitor General contended that the sanction to prosecute has already been issued as against Government Officials, the fact remains that charges have not been framed and the trial has not commenced as yet21. The arguments revolving around the potential threat to national security, cannot be sustained, for two reasons. The first reason is that the project became operational in August- 2010 and the disputes between the parties started only in 2018 and that too with regard to financial matters. The second reason is that by virtue of the interim measures of protection granted by the Arbitral Tribunal (comprising of a former Judge of this court, a former Judge of the High court and a Senior Advocate) in terms of section 17 of the Arbitration and Conciliation Act, 1996, the termination of the Concession Agreement stands stayed. Therefore, the Company of which the appellant is the head, continues to operate the VTPMS Project. In any case, the Arbitral Tribunal has not merely protected the economic interests of the State, but also permitted the State Police to be there at the project site. The Tribunal has also allowed the Maritime Board to depute a competent person, familiar with the project in question, to supervise and monitor the functioning of the project. Therefore, we cannot accept this contention blind fold22. Though much is said about the tempering of witnesses, it is seen from the material on record that the prosecution rests mainly on documents. In any case, the prosecution is not remedyless, if a person enlarged on bail, indulges in certain activities.