2011 (11) TMI 538 - SC - Indian Laws

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?

Issues Involved:
1. Legality of the FIR registered against the accused.
2. Allegations of criminal conspiracy and corruption.
3. Suppression of crucial facts in court proceedings.
4. Jurisdiction and authority of the Coal Controller.
5. Scope of judicial review in quashing an FIR.

Detailed Analysis:

1. Legality of the FIR Registered Against the Accused
The FIR was registered on 15th November 2000 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. The FIR accused nine individuals and a private company of entering into a criminal conspiracy to confer an illegal and unjust benefit on the private company by suppressing relevant facts in various court proceedings, resulting in favorable orders for the private company.

2. Allegations of Criminal Conspiracy and Corruption
The FIR alleged that the accused public servants, in conspiracy with the private company, abused their official positions to help the private firm by illegally transferring different grades of coal and suppressing relevant facts before the courts. This resulted in the private company obtaining coal at a cheaper rate meant for actual users, causing a wrongful loss of approximately Rs. 90 lakhs to Central Coalfields Limited (CCL).

3. Suppression of Crucial Facts in Court Proceedings
The crux of the FIR was that the accused suppressed crucial facts from the courts, which would have disentitled the private company from obtaining favorable orders. The private company failed to comply with its contractual obligations, including lifting the contracted coal and making timely payments. The FIR alleged that the suppression of these facts was deliberate and due to a conspiracy among the accused to enable the private company to derive an unjust benefit.

4. Jurisdiction and Authority of the Coal Controller
The Supreme Court, in its judgment dated 18th March 1997, had examined the authority of the Coal Controller to issue directions that amounted to variations in the terms of the contracts between the private company and Coal India Limited (CIL). The court held that the Coal Controller had the requisite legal authority to issue such directions. However, the court did not examine whether the private company had breached its contractual obligations.

5. Scope of Judicial Review in Quashing an FIR
The High Court quashed the FIR 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 the Supreme Court, and therefore, no magistrate could decide that any unjust pecuniary advantage was made available to the private company. However, the Supreme Court held that fraud vitiates everything, including judicial acts, and that an enquiry into whether a judgment was secured by playing fraud on the court is permissible. The court emphasized that non-disclosure of all necessary facts tantamounts to playing fraud on the courts.

Conclusion:
The Supreme Court set aside the judgment of the High Court, holding that the FIR disclosed a prima facie case of criminal conspiracy and corruption. The court emphasized that the suppression of crucial facts from the courts could amount to fraud, and such an enquiry is permissible. The appeal was allowed, and the FIR was reinstated for further investigation.

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