2024 (8) TMI 1418 - HC - Customs

Rejection of discharge application - non-forwarding of bills of user departments for scrutiny - delay in uploading soft copies of the bills - incorrect claim of expenditure towards conveyance of custom officials - HELD THAT - The material sought to be produced by CBI clearly falls short of the accusations that are sought to be pressed. From the material available on record and in the light of discharge of the SCI officials, it cannot be stated that any grave suspicion can be raised against Petitioners. As held by the Apex Court in Union of India Versus. Prafulla Kumar Samal and anr 1978 (11) TMI 151 - SUPREME COURT if the judge is satisfied that only suspicion arises on prima-facie examination of evidence and not grave suspicion, the accused is entitled to discharge. In absence of prosecution of public servants, it otherwise becomes questionable as to whether CBI can be permitted to carry forward prosecution against Petitioners in the light of ratio of the judgment of the Delhi High Court in Kartongen Kemi Och Farvaltning AB and Ors. Versus. State through CBI 2004 (2) TMI 745 - DELHI HIGH COURT ., holding that once charge of conspiracy against the main public servant is dropped, then the charge of abatement of conspiracy can neither be framed nor can be subjected to trial. Thus, no case of grave suspicion is made out on the basis of material available on record. Continuation of proceedings against Petitioners would therefore be a mere empty formality, with no chance of prosecution securing conviction. Continuing of prosecution in such circumstances would be abuse of process of law. The order dated 23 November 2017 passed by the learned Special Judge is set aside and Petitioners are discharged - petition allowed.

Issues Involved:
1. Challenge to the order dated 23 November 2017 by the learned Special Judge rejecting the discharge application.
2. Allegations of criminal conspiracy and abuse of official position by SCI officials in collusion with the Petitioners.
3. Refusal of prosecution sanction against certain SCI officials and subsequent discharge of those officials.
4. Examination of whether there is sufficient material to proceed against the Petitioners.
5. The role of the CMD, SCI in refusing prosecution sanction and its impact on the case.
6. The relevance of the CBI auditor's report and its findings.
7. Legal principles regarding the continuation of prosecution against private persons when public servants are discharged.

Issue-Wise Detailed Analysis:

1. Challenge to the order dated 23 November 2017 by the learned Special Judge rejecting the discharge application:
The Petitioners challenged the order dated 23 November 2017, wherein the learned Special Judge held that there was sufficient material to proceed against them for framing of charge and accordingly rejected their discharge application. The Petitioners, being the partner and firm of M/s. J.M. Baxi & Co., were arraigned as Accused Nos. 2 and 3 in Special Case CBI No. 60/2010.

2. Allegations of criminal conspiracy and abuse of official position by SCI officials in collusion with the Petitioners:
The prosecution alleged that four officials of SCI conspired with the Petitioners to grant undue benefits to Petitioner No. 2 by failing to comply with agreement conditions, dishonestly not forwarding bills for scrutiny, and not questioning unsupported vouchers. Specific claims included unsupported expenses of Rs. 3,21,647.50/- for FY 2005-06 and Rs. 3,08,246/- for FY 2006-07, as per the report of M/s. R.B. Jain & Associates, Chartered Accountants appointed by the CBI.

3. Refusal of prosecution sanction against certain SCI officials and subsequent discharge of those officials:
The competent authority, CMD of SCI, refused to grant prosecution sanction against Mr. N.R. Saraiya and Smt. Vaishali Ladi. Consequently, they were discharged by this Court. Shri. Hari Prakash Kamath was also discharged following a similar refusal of prosecution sanction. The CMD's refusal was based on the finding that no separate and independent allegations existed against these officials, and no wrongful loss was caused to SCI.

4. Examination of whether there is sufficient material to proceed against the Petitioners:
The Petitioners argued that the allegations were primarily against public servants and that there were no specific allegations against them. They contended that the invoices submitted by them were disallowed and no payments were made. The CMD of SCI confirmed that no loss was caused to SCI and that the expenses claimed were legitimate, as per standard practice.

5. The role of the CMD, SCI in refusing prosecution sanction and its impact on the case:
The CMD, SCI, after examining the allegations, concluded that the bills in question were never settled or paid, and the claims were reversed by issuing credit notes. The CMD criticized the CBI's reliance on the statement of a single customs official and emphasized the standard practice of escorting customs officers to expedite port activities. The CMD's findings were crucial in determining that no wrongful loss was caused to SCI.

6. The relevance of the CBI auditor's report and its findings:
The CBI auditor's report highlighted unsupported claims by the Petitioners for FY 2005-06 and FY 2006-07. However, it was found that these claims were never settled or paid by SCI. The CMD's order dated 18 September 2010, refusing prosecution sanction, established that no payments were made towards these bills, and the claims were reversed.

7. Legal principles regarding the continuation of prosecution against private persons when public servants are discharged:
The Court referred to the judgments in Kartongen Kemi Och Farvaltning AB and Ors. Versus. State through CBI, Yogesh alias Sachin Jagdish Joshi Versus. State of Maharashtra, and Central Bureau of Investigation Versus. Akhilesh Singh, which held that once the main accused (public servants) are discharged, the charge of abetment of conspiracy against private persons cannot be sustained. The Court concluded that no grave suspicion was raised against the Petitioners, and continuation of prosecution would be an abuse of process of law.

Conclusion:
The petition succeeded, and the order dated 23 November 2017 passed by the learned Special Judge was set aside. The Petitioners were discharged in Special Case No. 60/2010.

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