SRINIVASAN RAMAN Vs. STATE OF GUJARAT
LAWS(GJH)-2013-3-335
HIGH COURT OF GUJARAT
Decided on March 15,2013

Srinivasan Raman Appellant
VERSUS
STATE OF GUJARAT Respondents




JUDGEMENT

K.M.THAKER - (1.)THE Criminal Misc. Applications Nos.6698 of 2012, 6699 of 2012 and 6700 of 2012 have been taken out by Indian Oil Corporation (hereinafter referred to as 'the IOC or petitioner Corporation') under Section 482 of Criminal Procedure Code (hereinafter referred to as the Code) seeking below mentioned relief:
"5(a) Quash the impugned charge sheet no.52 in Case nos.10/11, pending before the Ld. Special Judge (CBI Court No.3), Ahmedabad, arising out of FIR/RC no.12(A)/2000-GNR u/s 120-B, 420, 467, 468, 471 IPC and section 13(2) read with 13(1)(d) PC Act read with section 3 of Essential Commodities Act registered at P.S.CBI, Gujarat, qua the petitioner herein; (b) Quash the impugned cognizance order dated 04.04.11 passed by the Ld. Special Judge (CBI Court No.3), Ahmedabad, in Special Case No.10/11, and proceedings consequent thereto, qua the petitioner herein;" 1.1.At the outset it is relevant to mention that out of the above mentioned six petitions the petitioner Corporation has preferred three petitions viz. Misc. Criminal Application Nos. 6698 of 2012, 6699 of 2012 and 6700 of 2012. So far as Misc. Criminal Application No.6698 of 2012 is concerned, it is stated that the said petition is directed against the charge-sheet No. 52 in case No.10 of 2011 pending before learned Special Judge (CBI Court No.3) and it arises from FIR/RC No.12(A)/2000-GNR. Whereas, the second petition being Misc. Criminal Application No.6699 of 2012 is directed against the charge-sheet No. 53 in case No.9 of 2011 pending before learned Special Judge (CBI Court No.3) and it arises from FIR/RC No.12(A)/2000- GNR and so far as third petition being Misc. Criminal Application No.6700 of 2012 is concerned, it is directed against the charge-sheet No. 54 in case No.8 of 2011 pending before learned Special Judge (CBI Court No.3) and it arises from FIR/RC No.12(A)/2000- GNR.

(2.)THE factual background in all three petitions is common, charge-sheets are similar, except that the concerned establishment (with reference to which the alleged irregularities are cited) are different in said three charge-sheets. The learned Senior Counsel for petitioner Corporation and learned counsel for respondent CBI have respectively raised common and similar contentions in respect of all petitions. The relief prayed for in said three petitions are similar. Therefore, all three petitions are decided by present common order.
2.1.The learned counsel for respondent CBI and learned Senior Counsel for petitioner Corporation have made reference of the material available on record of the petition being Criminal Misc. Application No.6698 of 2012 for all practical purposes and they have also stipulated that except the respective charge-sheets other material on record of the petitions is common. Therefore, for purpose of present order also the details mentioned in and material available on record of Criminal Misc. Application No.6698 of 2012 is taken into account.

The offence alleged against the petitioner Corporation and some of its officers (one of the officers has preferred three separate but almost similar petitions, which also have been heard together with the petitions filed by IOC) are under Section 13(2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988 and Sections 420, 467, 468, 471 and 120(B) of Indian Penal Code and Section 7 read with Section 3 of Essential Commodities Act, 1955.

(3.)SO far as factual background is concerned, it has emerged from the record that Ministry of Petroleum and Natural Gas, Government of India (hereinafter referred to as the concerned Ministry) had issued guidelines dated 02.01.1981 which, inter alia, dealt with utilization of High Speed Diesel (hereinafter referred to as the HSD) produced at Koyali Refinery.
4.1.It is the case of petitioner Corporation that another set of guidelines came to be issued on 17.03.1988. However, the said guidelines made reference of LSHF ­ HSD, LDO (Light Diesel Oil) and Crude Sludge only and supply of HSD simplicitor was not mentioned in the said guidelines issued in March 1988. It is also claimed by the petitioner that the said guidelines did not require the oil companies or its officials to verify genuineness of requirement of HSD or to ensure bonafide usage of HSD. It is further claimed that in February 1994 fresh guidelines dated 9.2.1994 was issued in supersession of previous guidelines and thereafter again in May 1995 another set of guidelines was issued on 23.05.1995, which was followed by yet another set of guidelines issued on 18.09.1996 and in all those subsequent guidelines reference of HSD was not made/included and the said guidelines did not, according to the petitioner Corporation or its officers, apply to HSD and did not require, according to IOC and its officers, the oil companies or its officers to verify genuineness of requirement of HSD and/or its bonafide usage and/or physical verification of establishment of the user companies. 4.2.It is alleged against the petitioner Corporation and its officers that with aid of forged and fabricated documents, HSD was shown to have been sold to companies which, in reality, were non-existent and paper companies and thereby large scale scam was perpetrated in Gujarat, Maharashtra and Madhya Pradesh. It is also alleged that the sale of HSD to such allegedly non-existent companies also resulted into evasion of Sales Tax or drawl of undue benefit towards Sales Tax and corruption on part of the oil companies (including IOC) and its officers. 4.3.In such background the respondent CBI carried out investigation and upon completion of investigation CBI filed charge-sheets against various oil companies viz. IOC, IBP, HPCL and BPCL as well as against the officers of the said oil companies. The charge-sheets alleged commission of offence under Essential Commodities Act, Prevention of Corruption Act and Indian Penal Code. 4.4.Upon submission of charge-sheet the learned Special Court i.e. CBI Court took cognizance and passed order to issue process. Accordingly, process came to be issued against IOC and its officers whose names are mentioned in the charge-sheets. The charge- sheets also alleged, inter alia, that the conspiracy was hatched to divert HSD, which is restricted item, to open market so as to avail undue benefit including Sales Tax benefit wherein about 46 companies/units in Gujarat, Maharashtra and Madhya Pradesh are found involved. 4.5.At this stage, it would be appropriate to reproduce some of the relevant details mentioned in the FIR. "The Oil Companies viz. I.O.C., I.B.P., I.P.C.L. and B.P.C.L. sell High Speed Diesel to their customers and extend Sales Tax concession in payment of Sales Tax. However, various legal formalities are to be observed to avail this concession. The following are the main Sales Tax concessions extended to the customers: (1) ........... (2) ........... (3) ........... Inter State transportation of diesel is prohibited if it is to be delivered to the Petrol Pumps. The Petrol Pump owners can lift diesel for the pumps only from the earmarked lifting terminal of the Oil Company within the State and have to pay sales tax at the rate of 18% cum 20%s surcharge. However, inter State transportation of HSD is permissible............ It has been reliably learnt that various private firms in collusion with Oil Companies and Sales Tax officials circumvent the mandatory legal provisions and lift HSD at concessional rate of Sales Tax. It is learnt that many of the private firms procuring HSD are lying closed and not functioning, but such firms in collusion with the officials of the Oil Companies and the officials of Sales Tax Department show themselves to be in running condition and manage to get more and more quota of HSD at a concessional rate of Sales Tax. The Field/Area Officers of the Oil Companies in collusion with the private firms have wrongfully certified the requirements of HSD of these firms. The Sales Tax Officers have also colluded with the private firms and have wrongly issued Eligibility Certificate to these firms, enabling them to lift HSD from the Oil Companies against Form-2. The HSD so lifted by the private firms is actually not used as raw material and is diverted to the Petrol Pumps at a comparatively higher rate. ..............The firms gave false declaration in the Form No.2 that the HSD would be utilized by them as raw material for manufacture of taxable goods and the same would be sold within the State of Gujarat, but actually instead of complying with the said condition, the firms have diverted the HSD to the open market for wrongful gains. It is also alleged that the Field Officers of the Oil Companies were required to verify the working condition of the private firms physically before allotting the quota of HSD. The same has not been done by them. Instead in conspiracy with the private firms they have wrongfully certified the requirement of the firms, enabling the private firms to lift the HSD worth crores of rupees during the past few years. The private firms did not ensure the end-use of the HSD as raw material for manufacturing purposes. In the aforesaid manner, the acts and omissions of the officials of the Oil Companies, Gujarat Sales Tax Department and the Private Firms thus caused huge revenue loss to the Government and wrongful gain to the private firms which prima facie constitute offences of criminal conspiracy and abuse of official position punishable u/s.120-B, 420 IPC and Sec.13(2)(d) of PC Act, 1988. Hence, this Regular Case is registered and entrusted to Shri J.Meena, Dy. SP, CBI, SPE, Gandhinagar for investigation." 4.6.The said FIR was lodged on 23rd May 2000, whereas, the charge-sheets came to be filed on or around 25.03.2009 and the order to issue process came to be passed on 04.04.2011. The Oil Companies, IOC being one of them, are also referred to as accused in the charge-sheets. Upon feeling aggrieved by the said charge-sheets and order issuing process, IOC has preferred captioned three petitions. 4.7.The petitioner Corporation has challenged the charge-sheets and the order dated 04.04.2011. The relevant part of the charge sheet reads thus:- 6. SUPPLY of HSD TO M/S SUN PHARMA CHEMICALS BY M/S IOCL:- i) Processing of application and role of accused IOCL Officials:- It is revealed during investigation that M/s Sun Pharma Chemicals had initially requested M/s. IOCL for supply of HSD vide its letter dtd. 26.04.1999. Shri R.Srinivasan has issued Delivery Order on 30.04.1999. During investigations no person could be linked with the aforesaid non-existing firm M/s. Sun Pharma Chemicals. The IOCL Officials namely S/Shri M.V.Awale, M.D.Kumar, R.Srinivasan and Harsh Sachdev were relevant Officers who were responsible for supplying HSD to M/s. Sun Pharma Chemicals. It is revealed that supplies were initiated to M/s. Sun Pharma Chemicals without any physical verification. Shri R. Srinivasan had issued DO No. 4214, dtd. 30.04.1999 against the application dtd. 26.04.1999 of the firm. After initiation of supplies, Delivery Orders were issued under the signatures of S/Shri R.Srinivasan, M.V.Awale and M.D.Kumar, OICL Officials of Rajkot Divisional Office. ii) Details of 'C' form issued to M/s. Sun Pharma Chemicals:- M/s. Sun Pharma Chemicals submitted 'C' form Nos. 13962578 and 17X358370. The supplies of HSD from IOCL during the period were made against the said C Forms. As is already mentioned above 3564 KL was released in the name of M/s. Sun Pharma Chemicals from Vashi and 1190 KL was released from Wadala Terminal against form "C". Thus it is established that M/s.IOCL sold a quantity of 4754 KL HSD to M/s. Sun Pharma Chemicals in Criminal Conspiracy with each other. iii) Role of IOCL Officials:- On submission of report by the field officer Shri S.K. Suman that no factory of M/s Sun Pharma Chemicals existed at the spot. Shri R. Srinivasan stated to have visited the spot and found the factory existing. Shri R. Srinivasan also stated that he had issued the Delivery Orders and gave to a person namely Shri Rajubhai of M/s. Sun Pharma Chemicals. Shri R.Srinivasan also stated that while he visited the factory, he found the same Shri Rajubhai Shah available there. He also reported about his visit to his superior Officer Shri Harsh Sachdev and subsequently continued supplies to the subject firm. ................. During investigation Shri R.Srinivasan was given ample opportunity to identify the said person Shri Rajubhai Shah and the plant of M/s. Sun Pharma Chemicals. Shri R.Srinivasan could not identify any such person and could not furnish any particulars or whereabouts of Shri Rajubhai Shah. Investigation has revealed that subsequently the Field Officer Shri S.K.Suman had submitted his report dtd. 18.07.1999 to the Sr. Divisional Manager, Shri Harsh Sachdev regarding non- existence of M/s. Sun Pharma Chemicals. Shri Harsh Sachdev has marked this report to Shri R.Srinivasan on 19.07.1999. Shri R.Srinivasan also put his remarks dtd. 19.07.1999 wherein he noted of having sent message for stoppage of supplies to Vashi Terminal. Subsequently, Shri R.Srinivasan forwarded a message to TM, Vashi vide No.RDO/C/1300 dtd. 19.07.1999 requesting to stop supplies to M/s. Sun Pharma. It is further revealed that M/s Sun Pharma Chemicals requested IOCL, Rajkot vide its letter dated 24.07.1999 to correct the address of the plant location from 338-341 to 334/2, Liliya Road. This letter contained the administrative office of the firm as Nirmal Complex, 1st floor, Canal Road, Rajkot. It is very surprising that after the report of the Field Officer about non-existence of the firm Shri R.Srinivasan and Shri Harsh Sachdev processed this application. M/s. Sun Pharma Chemicals is mentioned to have submitted photographs as a proof of existence of factory to Shri R.Srinivasan. During investigation Shri R. Srinivasan took a plea that he had visited the factory on 27.07.1999 and saw the factory of M/s Super Cast Foundry Flux Co. having the signboard of M/s. Sun Pharma Chemicals. It appears that the said visit was planned accordingly and to satisfy the requirement, the signboard was changed for taking photographs. In the light of the omission on the part of IOCL Officials that no other efforts to verify the genuineness of M/s. Sun Pharma Chemicals were made. The local village Talati and factory registration office etc. could have been approached for verification. The Official had relied upon the information and xerox copies of certificates provided by the so-called firm owner Rajubhai Shah. Even no efforts were made to verify the genuineness of the registration certificates of Sales Tax and SSI registration, in a situation wherein the IOCL Official had only reported about non-existence. Shri R. Srinivasan did not make any effort to verify the office address located nearby the IOCL Office at Rajkot i.e. Nirmal Complex, 1st Floor, Canal Road, Rajkot. During investigation, the said address was verified in the presence of 2 independent witness namely Shri K.M.Parmar and Shri M.L.Muchhadia, Sales Tax Inspectors of Rajkot. Investigation has revealed that no office of M/s Sun Pharma Chemicals ever existed at the said address. The said premises belongs to one Shri Hemant Pandya R/o Kalyan Society, Rajkot who has stated that no firm M/s Sun Pharma Chemicals C/o Balaji Metal and Chemicals ever existed or operated from his premises. Shri Harsh Sachdev................. Shri Varan Mansukhlal Mavjibhai................. Investigation has thus proved that accused persons namely (A-1) Shri M.Devendra Kumar, (A-2) Shri Harsh Sachdev, (A-3) Shri R. Srinivasan, (A-4) Shri Mohan Venkantrao Awale, (A-5) Shri Ramji Nanda, (A-6) Shri Devchard P. Chheda and (A-7) M/s. Indian Oil Corporation Ltd. Public Sector Undertaking, Rajkot by way of criminal conspiracy and cheating have caused wrongful loss to the Government exchequer by evading Sales Tax to the tune of Rs.1,21,98,967/- thereby committing offence under Section 120-B r/w 420, 467, 468 and 471 of IPC, Section 7 r/w section 3 of E.C. Act, 1955 and 13(2) r/w 13(1)(d) of PC Act, 1988 and substantive offences thereof. On completion of investigation, investigation reports have been sent to oil companies for obtaining sanction for prosecution u/s 19 of Prevention of Corruption Act against the serving oil company officials. Replies from oil companies are awaited. The aforesaid acts of omission and commission on the part of the accused persons constitute offences punishable under section 120-B, 420, 467, 468 and 471 IPC 13(2) r/w 13(1) (d) of PC Act, 1988 and section 7 r/w section 3 of E.C. Act, 1955 and substantive offence thereof. Hence, this charge sheet is submitted before this Hon'ble Court with a request to try the accused persons in accordance with law." (emphasis supplied)



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