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2023 (6) TMI 1235 - HC - VAT and Sales TaxSale of High Speed Diesel (for short HSD ) to various private industries of three States viz. Gujarat, Maharastra and Madhya Pradesh at concessional rates of sales tax without complying with the mandatory requisite permission from the Ministry of Petroleum Natural Gas - diversion thereof has caused huge revenue loss to the Government and wrongful gain to the concerned - whether C.B.I. had any case to even lodge a prosecution? HELD THAT - Admittedly CVC too had not found any case against the accused to grant sanction. The compilation and circulation by OCC on 08.07.1991, of the Guidelines for Release of Petroleum Products and Lubricants to Direct Consumers have not been denied, which suggests that the same was in force and all oil companies were following the guidelines since 1991. The charge-sheet has been filed for period between 1997-2000. The guidelines of OCC dated 08.07.1991 had not found any change. Mr. Shastri had referred in his Fax message of no change in the guidelines for allocation of HSD to processors. According to him, HSD allocation to the processors is approved by the MoP NG based on the certification and recommendation of the TEC of the Oil Companies. The guidelines referred and relied upon does not reflect any certification and recommendation of the TEC to the oil companies, and, when a clarification was sought by P. Sudarsnam by a letter dated 23.08.1999, Mr. Shastri states before the C.B.I. that there was no change in the allocation policy and requested P.Sudarsnam of IOC not to make HSD supplies to the processors without the Ministry s allocation / Linkage, and, since clarification was sought by the E.D., IOC from OCC, reply was sent by OCC, which stated by Mr. Shastri, according to the existing guidelines available, the directions were to be followed by the oil companies necessarily, and according to him the clarification was in accordance with the existing guidelines of the Ministry, and, in the present case, to his clarification on behalf of OCC, Ministry did not issue any such amendment, which implies, concurrence of the MoP NG on the particular issue, upon which the Oil Companies were required to act accordingly. It is required to be noted that TEC was dissolved with effect from 01.04.2002; the non-requirement of the TEC had been noted in the letter dated 27.03.2002. The C.B.I. while filing the F.I.R. has failed to take a clarification from the authorized person of the Ministry as to why the Circular dated 02.01.1981 was only addressed to IOCL for the utilization of HSD from Koyali Refinery and not for any other oil companies. While the guidelines of the OCC does not refer to the requirement of TEC recommendation for uplifting HSD from any other oil companies. All the letters/circulars referred earlier hereinabove with the communication starting from 1988-1996 require TEC evaluation only for supplying LSHF-HSD/High Flash-HSD, LDO and Crude Sludge to processors for the manufacture of petroleum specialities - All the companies were clear on the fact that in the year 1991, the MoP NG had issued the instruction vide letter/circular dated 2/6.1.1981 for instituting a procedure for utilization of HSD from Koyali Refinery and not from any other refineries, and the Ministry had addressed by Circular dated 17.03.1988 to all the oil companies regarding the constitution of TEC on supply of feed-stock for the production of petroleum specialities, by making a reference to the Ministry s letter dated 02.01.1981, for reconstitution of the TEC; it was clarified that it would initially look into the supply of LSHF-HSD, LDO and Crude Sludge for the manufacture of petroleum specialities. There was no reference with regard to the supply of regular HSD. There was no reason for the C.B.I. to file charge-sheet against any of the accused. None of the communications of the Ministry, except of 02.01.1981, for the utilization of HSD from Koyali Refinery, required any TEC recommendation for lifting of HSD from any other companies. The C.B.I. failed to take into account that the Ministry had never called for any clarification from any other company during the period between 1997 2000 in connection with the alleged facts noted in the F.I.R., the officers, who were working in the company, would go by the understanding of the Circulars. The learned Special Judge observed that as per the record, four oil companies are of Gujarat, Maharashtra and Madhya Pradesh and there is no evidence to show that the officers of the oil companies had gathered, or met sales tax officers or staff or purchasers with an intention to commit the alleged offence - For the offence under the P.C. Act, the learned Special Judge found that there is no prima facie evidence to show that the applicants had accepted any gratification from any person as a motive or reward, and the applicants accused had followed all the instructions issued by the MoP NG and acted in discharge of the duties; no sanction has been brought on record by the C.B.I., while sanction has been refused against the officers of the oil companies and against refusal C.B.I. had written to Central Vigilance Committee, but the said committee to confirm the order of non-issuance of sanction against the officers of the oil companies and therefore, no summons were issued against those accused persons. The Petroleum Rules, 2002 came into force on 13.03.2002. A technical body being Oil Industry Safety Directorates Standards (OISD) had been formed for assisting the safety council constituted under the MoP NG. The rules deals with restrictions of delivery and dispatch of petroleum in all classes A, B and C, the requirement of the licence for the import of petroleum, and the dispute with regard to the HSD would have to be resolved by the Board, which is governed by the Petroleum and Natural Gas Regulatory Board Act, 2006. The legal provision of the Petroleum Act and rules thereunder become relevant in this case, since chargesheet came to be filed on 25.03.2009. This Court finds that the Special Judge has not committed any error in discharging the accused. No sanction has been granted for prosecuting the officers of the oil companies. The assessment made by the Special Judge discharging the accused is consistent with the record - the orders passed by the learned Special Judge discharging the accused respondents herein are just and correct, the findings are in accordance to the documents on record, the accused are rightly discharged, as there are no sufficient grounds for proceedings against them. All the present revision applications fail merits and are dismissed as rejected.
Issues Involved:
1. Legality of the discharge orders by the Special C.B.I. Judge. 2. Compliance with mandatory permissions for HSD sales. 3. Evidence sufficiency for framing charges. 4. Requirement of sanction for prosecution. 5. Allegations of conspiracy, cheating, and abuse of official position. Summary: Legality of the Discharge Orders: The Central Bureau of Investigation (C.B.I.) challenged the orders passed by the Special C.B.I. Judge, Ahmedabad, which discharged the accused in cases registered under sections 120B, 420, 467, 468, and 471 of the Indian Penal Code (IPC) and section 13(2) read with section 13(1)(d) of the Prevention of Corruption Act, 1988. The allegations involved officials of four public sector oil companies selling High Speed Diesel (HSD) to private industries at concessional sales tax rates without mandatory permissions from the Ministry of Petroleum & Natural Gas (MoP & NG). Compliance with Mandatory Permissions: The C.B.I. argued that the trial court erred in discharging the accused, asserting that the court improperly appreciated the evidence at the charge-framing stage. The prosecution contended that the officials sold HSD without necessary physical or technical inspections, leading to wrongful gains for private firms and revenue loss for the government. The C.B.I. highlighted that the MoP & NG's guidelines required Technical Evaluation Committee (TEC) recommendations for HSD sales, which were allegedly ignored by the officials. Evidence Sufficiency for Framing Charges: The C.B.I. claimed sufficient evidence existed against the public servants for conspiracy, cheating, and abuse of official position. It was argued that the trial court wrongly interpreted the circulars and failed to recognize the prima facie case established by the prosecution. The C.B.I. cited various witness statements and procedural lapses, such as the use of fake sales tax certificates and non-existent firms, to support its case. Requirement of Sanction for Prosecution: The defense argued that no sanction for prosecution under section 197 of the Cr.P.C. was required for public sector employees. The trial court found that the circulars did not mandate TEC recommendations for regular HSD sales, and the prosecution failed to establish that the accused acted beyond their official duties. The court noted that the Ministry's circulars applied only to specific refineries and products, not regular HSD. Allegations of Conspiracy, Cheating, and Abuse of Official Position: The trial court observed no prima facie evidence of conspiracy or cheating, noting that the accused acted within their official capacities and followed government-issued guidelines. The court emphasized that the prosecution did not prove any illegal acts or misuse of authority by the accused. The court also highlighted the lack of evidence showing that the accused benefited financially from the alleged misconduct. Conclusion: The High Court upheld the trial court's decision to discharge the accused, finding no sufficient grounds for proceeding against them. The court concluded that the orders were just and correct, consistent with the documents on record, and the accused were rightly discharged. The revision applications filed by the C.B.I. were dismissed.
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