RESERVED ON 25.03.2021 DELIVERED ON 13.05.2021 Case :- APPLICATION U/S 482 No. - 5693 of 2016 Applicant :- Surendra Agrawal And 3 Others Opposite Party :- Central Bureau Of Investigation Thru S.P. And Another Counsel for Applicant :- Rajiv Lochan Shukla,Gopal Swarup Chaturvedi Counsel for Opposite Party :- Gyan Prakash,A.G.A.
Hon'ble Om Prakash-VII,J.
1. Present application has been filed with the prayer to quash the charge sheet no. 01 of 2016 dated 12.1.2016 as well as the entire proceedings of case no. 2 of 2016, arising out of RC-2(E)/2004/EOW-I/DLI (C.B.I. vs. Sri Bankey Bihari Chemicals Private Limited and others), under Section 120-B read with Sections 420, 467, 468, 471 IPC and 7 and 9 of Essential Commodities Act read with Clause 3(iv) and (v) of Naptha (Acquisition, Sale, Storage and Prevention of Use in Automobile) Order, 2000 pending before Special Judicial Magistrate, C.B.I., Ghaziabad and also the cognizance order dated 02.02.2016 and further to stay further proceedings of the aforesaid case.
2. Heard Shri G.S. Chaturvedi, learned Senior Advocate assisted by Shri Rajiv Lochan Shukla, leanred counsel for the applicants and Shri Gyan Prakash, learned Senior Advocate assisted by Shri Sanjay Kumar Yadav, learned counsel appearing for the C.B.I..
3. It was submitted by the learned Senior Counsel appearing for the applicants that no prima facie case is made out against the applicants. Order taking cognizance on the charge sheet is illegal and without application of judicial mind. Referring to documents annexed with the application as well as the affidavits it was further submitted that there is no breach of any Control Order. Applicants purchased Naphtha after paying the consideration amount and duties/Taxes imposed upon by the Government. It was next contended that the applicants had licence for storage of Naphtha and for manufacturing the industrial solvent. Time to time competent authorities have also taken samples from the Unit of the applicants and certified the process. End use certificates have also been issued by the D.S.O., Moradabad. At this juncture, learned Senior Counsel referred to annxure No. 6 of the application and further submitted that allegations leveled in this regard in the charge sheet against the applicants are false. It was next contended that there was no requirement to obtain end use certificate from the firms to which industrial solvent had been sold. It was also submitted that there was no prohibition regarding import of Naphtha, as is clear from the affidavit submitted by the C.B.I. in the Gujarat High Court. F.I.R. lodged in the State of U.P. and investigation done in lieu thereof is contrary to law and is nullity. Since there was no consent of the State of U.P. on the day of lodging the F.I.R. and the investigation started in lieu thereof, therefore, also the entire proceeding of the aforesaid criminal case is nothing but an abuse of process of law. Learned Senior Counsel appearing for the applicants referred the date of F.I.R. i.e. 21.02.2004 lodged at Delhi and the date of Notification i.e. 31/5/2004 issued by the Central Government regarding the application of Delhi Special Police Establishment Act, 1946 in the State of U. P.
for the cases of Essential Commodities Act and further submitted that mandatory requirements have not been followed. Concerned Magistrate ought to have taken into consideration at the time of taking cognizance the legal mandate required under Section 6 of the Delhi Police Special Establishment Act, 1946 but it failed in doing so. Learned counsel for the applicants also placed reliance on the state of U.P. amendment in Section 11 of the Essential Commodities Act and further submitted that mandatory requirement of Section 11 of the Essential Commodities Act through State of U.P. Amendment have not been followed. Thus, proceedings of the aforesaid criminal case on the aforesaid grounds can also not continue. At this juncture, learned Senior Counsel placed reliance on the law laid by Hon'ble Supreme Court in the case of State of Punjab Vs. Davinder Pal Singh Bhullar and others, AIR 2012 SC
364 and further submitted that as per the provisions of Naptha (Acquisition, Sale, Storage and Prevention of Use in Automobile) Order, 2000 and Solvent, Raffinate and Slop (Acquisition, Sale, Storage and Prevention of Use in Automobiles) Order, 2000 there was no requirement for obtaining end use certificate at the level of applicants. Aforesaid Control Order “Solvent, Raffinate and Slop (Acquisition, Sale, Storage and Prevention of Use in Automobiles) Order, 2000” was amended subsequently and was made applicable since 01.01.2002, therefore, also the proceeding of the aforesaid criminal case is abuse of process of law. Referring to the documents annexed with the application and supplementary affidavits it was further submitted that documents annexed with-it have not been
controverted and vague reply has been given in the counter affidavit. End use certificate annexed with the application was issued by government authority. Since no specific reply has been made by the C.B.I., the aforesaid documents can be relied upon at this stage.
4. On the other hand, learned Senior Counsel appearing for C.B.I. Submitted that since specific order has been given by Gujarat High Court for enquiry, therefore, F.I.R.s were lodged in different States in compliance of the enquiry report. It was also submitted that F.I.R. was lodged in compliance of the directions of the Court, therefore, provisions of Section 6 of the Delhi Special Police Establishment Act, 1946 as well as Section 11 of the Essential Commodities Act will not come in the way. At this juncture, learned Senior Counsel referred to the contents of charge sheet as well as para no. 27 of counter affidavit and has placed reliance on 1999 Cri. L. J. 787 (Anweshi Women's Counselling Centre and etc. Vs. State of Kerala nd others) and 1995 Cri. L. J. 2228 (Yeshwant s/o Natthuji Meshram Vs. State of Maharashtra. It was further submitted that all the pleas taken at the end of applicants in this application can appropriately be raised before the Trial court and same may be decided after evidence. There is no infirmity, illegality, perversity in the impugned order warranting interference by this Court. Cognizance order is in accordance with law.
5. Brief facts of the case, as disclosed in the affidavit filed in support of this application, F.I.R. lodged at Delhi and the charge sheet are that the applicants were the Directors of the firm M/s Sri Bankey Bihari Chemicals Private Limited, (in short 'M/s SBBCPL') a Company duly incorporated under the Companies Act, 1956. The said Company has been wound-up and is not in existence. Criminal proceeding has been initiated against them on the basis of a complaint dated 16.10.2003 addressed to DIG, C.B.I., EOW, Delhi Region, New Delhi filed by one Rajeev Chandola, Inspector CBI, ACB, Gandhinagar with the averments that one Saurin Rasik Lal Shah of Ahmedabad filed a Special Civil Application No. 3274 of 2001 before Hon'ble Gujarat High Court seeking direction for C.B.I. inquiry with the allegation that Naphtha was being imported through Mundra and Kandla ports as fuel for power generation but same was being diverted to various outlets of automobile for the purpose of adulteration against the directions contained in control orders. The Gujarat High Court vide its order dated 19.10.2001 directed the C.B.I. Gandhinagar to enquire into the matter against which a PE.8(A)/2001-GNR was registered against certain unknown public servants and private persons on 23.10.2001. Later on , another Civil Application being application no. 12106 of 2001 in the main petition seeking direction for inquiry regarding misuse of Naphta imported through all ports in Gujrat was filed. The Court vide its order dated 27.12.2001 also directed for enquiry as prayed for in the said application.
6. Enquiry in respect of M/s J.B. Overseas, having its office at KD-20 MIG Flats, Pitampura, Delhi – 34 was conducted and it revealed that Shri Jai Bhagwan Garg, Proprietor of said Company / Firm and other unknown persons were parties to a criminal conspiracy during the year 2001 in the matter of import of 5147.677 MTs. Naphtha from Glencore International, Switzerland through vessel 'Falcon Chemist'. M/s J.B. Overseas has entered into agreements with several actual users of Naphtha including M/s SBBCPL, which, as mentioned above, was incorporated under the Companies Act vide Certificate of Incorporation dated 1.12.1999 issued by the Assistant Registrar of Companies, Kanpur, U.P.. At the time of incorporation applicants were the Directors of the said Company. It also revealed that M/s J.B. Overseas made second import of 2301.23 Mts. Naptha from Golden Crown Shipping Co. (LLC) Dubai (UAE) through Vessel 'MV Green Land' in the month of July, 2001. The material on arrival at Kandla port was warehoused by M/s J.B. Overseas after Customs clearance on filing three yellow bill of entry nos. 5475, 5476, 5477 all dated 18.7.2001 for warehousing with Customs, Kandla. After warehousing, the product was sold to the various users including M/s SBBCPL on 'Transfer of Ownership Basis'. The users took the possession of the said material by filling Ex-Bond Bills of Entry and paying necessary duties with Customs, Kandla. It further revealed that M/s J.B. Overseas was never in possession of any licence under Naphtha Control Order, 2000 issued from any District Magistrate nor filed any end use certificates (obtained from customers to whom they had sold Naphtha issued by District Magistrate or any State Supply Authorities, hence, violated the provisions of said Order, 2000.
7. It also revealed that applicants (Directors of M/s SBBCPL) and their Company hatched conspiracy with M/s J.B. Overseas to cheat the government by importing naphtha and earning profit by black marketing the same. In furtherance of the conspiracy, the Company i.e. M/s SBBCPL purchased 200 metric tons of Naphtha vide bill of entry no. 6686 dated 10.8.2001 from M/s J.B. Overseas for a sum of Rs. 2418982/- on high sea purchase basis. Similarly, vide bill of entry no. 00693 dated 19.4.2001 M/s SBBCPL purchased 500 metric tons of Naphtha from M/s J.B. Overseas for a sum of Rs. 6848186/- on high sea purchase basis. The concerned Naphtha was imported by M/s J.B. Overseas from UAE for its own consumption. It further revealed that against the aforesaid purchase applicants has signed various cheques and got issued DDs against these cheques from Account No. CC 28018 of the Company maintained at Union Bank of India, Moradabad and made payments to M/s J.B. Overseas for procurement of Naphtha from M/s J.B. Overseas for a sum of Rs. 94,04,500/-. It further revealed that Naphtha so purchased by M/s SBBCPL was transported from Kandla to Moradabad Factory of M/s SBBCPL by the Tankers of M/s Kiran Road Lines against gate passes and lorry receipts. Investigation further revealed that the applicants fraudulently mentioned in the ledger of the Company that after manufacturing the end product i.e. Industrial Solvent the same was sold to thirteen firms, mentioned in the charge sheet filed in the matter. It further revealed that M/s SBBCPL was required to obtain end use certificates from the said thirteen firms in respect of solvent claimed to have been sold to them and file the same with the office of District Supply Officer, Moradabad but the District Supply Officer, Moradabad vide its letter dated 23.4.2009 informed that no such end use certificates have been filed by M/s SBBCPL after obtaining the same from above firms. Out of the aforesaid 13 firms, six firms have refused to have purchased any industrial solvent from M/s SBBCPL and the proprietors of the said firms have categorically stated that invoices showing supply of industrial solvents were falsely prepared by the applicants. Thus, naphtha was black marketed by M/s SBBCPL and subsequent cover up operations were made by obtaining false payment details from aforesaid firms. It further revealed that accused persons have fraudulently mentioned in the invoice books various vehicle numbers as mode of transportation of industrial solvent but the Regional Transport Officers of concerned areas have confirmed that the alleged vehicles were not tankers and liquid chemicals cannot be transported through any other vehicle than tankers.
8. I have considered the rival submissions made by the learned counsel for the parties and have gone through the entire record carefully.
9. In this matter, as is evident from the record, there is no dispute between the parties that applicant's company have purchased Naphtha from M/s G.B. Overseas after paying the consideration amount which had imported the aforesaid material from foreign countries. Affidavit submitted by the C.B.I. in the Gujrat High Court in Special Civil Application NO. 3274 of 2001 annexed with IInd Supplementary Affidavit shows that Naphtha was freely importable commodity since 01.04.2001. It is also evident from the record that applicants posses valid licence for manufacturing of Industrial Solvent from Naphtha duly issued by the competent authority under Solvent, Raffinate and Slop (Acquisition, Sale, Storage and Prevention of Use in Automobiles) Order, 2000. Naphtha was transported at the unit of the applicants from Kandla directly to Moradabad, U.P.. It is also evident from the record that time to time competent authorities have taken samples to check the restrictions imposed by the Government for preparing the industrial solvent. FI.R. has been lodged by the C.B.I.. at Delhi but there was no consent given by the Government of State of U.P. for investigation into the matter in the State of U. P. No permission was taken at the time of lodging the F.I.R. as required under Section 11 of Essential Commodities Act through State of U.P. Amendment.
10. Before dealing with the submissions raised across the Bar, the Court finds it necessary to quote Section 6 of the Delhi Special Police Establishment Act, 1946 and Section 11, as amended by the State of U.P., of the Essential Commodities Act, which are as under :
11. Section 6 of the Delhi Special Police Establishment Act, 1946 “Consent of State Government of exercise of powers and jurisdiction.- Nothing contained in section 5 shall be deemed to enable any member of the Delhi Special Police Establishment to exercise powers and jurisdiction in any area in [a State, not being a Union territory or railway area], without the consent of the Government of that State.]”
12. Section 11, as amended by the State of U.P., of the Essential Commodities Act is quoted below :
“11. Cognizance of offences.—No Court shall take cognizance of any offence punishable under this Act except on a report in writing of the facts constituting such offence made by a person who is a public servant as defined in section 21 of the Indian Penal Code (45 of 1860) 1[or any person aggrieved or any recognised consumer association, whether such person is a member of that association or not].
[Explanation.—For the purposes of this section and section 12AA, “recognised consumer association” means a voluntary consumer association registered under the Companies Act, 1956 (1 of 1956) or any other law for the time being in force.] “ “Uttar Pradesh.- In section 11, for the words ” by a person who is a public servant as defined in section 21 of the Indian Penal Code” substitute the words “by order of, or under authority from the District Magistrate or such other officer as may be empowered by the State Government by general or special order in this behalf.”
13. In the instant matter, prayer has been made on behalf of applicants to quash the entire proceeding of Case No. 02 of 2016 for the offence under Sections 120-B IPC read with Section 420, 467, 468, 471 IPC and Section 7 & 9 of the Essential Commodities Act, 1955 read with Clause 3(iv) and (v) of Naphtha (Acquisition, Sale, Storage and Prevention of Use in Automobile) Order, 2000. Para no. 16.19 of copy of the chare sheet annexed with the application also reveals the same penal provisions for which charge sheet has been submitted Cognizance has been taken on 02.02.2016 mentioning therein the words “substantive crime”. Nothing has been mentioned regarding the violation of Solvent, Raffinate and Slop (Acquisition, Sale, Storage and Prevention of Use in Automobiles) Order, 2000.
14. Now coming to the first submission raised on behalf of applicants regarding the applicability of Section 6 of Delhi Special Police Establishment Act, 1946, it is noteworthy that F.I.R. has been lodged in the present matter in Delhi State. Order for inquiry regarding misuse of imported Naphtha was passed by Hon'ble Gujarat High Court. Charge sheet has been submitted before the C.B.I. Court situated at Ghaziabad within the territorial of jurisdiction of State of U.P.. Section 6 of Delhi Special Police Establishment Act, 1946 specifically provide that without the consent of the Government of the particular state, any member of Delhi Special Police Establishment Act shall not exercise power and jurisdiction for investigation in any matter in that particular state. Contention of the learned counsel for the applicants that there was no consent on part of the State of U.P., therefore, investigation started in the matter was nullity and entire consequential steps for the aforesaid reason also become nullity and illegal. Relying on the case laws disclosed in the counter affidavit, learned counsel appearing for the C.B.I. has argued that since there was direction of Hon'ble Gujarat High Court, therefore, provisions of Section 6 of Delhi Special Police Establishment Act, 1946 will not come in the way. If the submission of learned counsel appearing for the parties are compared with the legal and factual position in the present matter, it clearly emerges that F.I.R. has been lodged on 21.02.2004 in Delhi State and on the day of lodging the F.I.R. central notification regarding the investigation in the cases of Essential Commodities Act in the State of U.P. was not in existence but it came into existence on 31.05.2004. Thus, it is clear that on the day of lodging the F.I.R., there was no consent on part of the State Government to investigate the matter. As far as provisions of Section 11 of the Essential Commodities Act is concerned specific provision through amendment has been made w.e.f 24.04.1974 in it and specific procedure has been provided through the aforesaid amendment for launching the prosecution regarding the violation of any control order. In the present matter, mandatory requirement made under Section 11 of the Essential Commodities Act through State Amendment have not been followed. Trial Court has taken cognizance on the charge sheet submitted by the C.B.I., without taking into consideration the State of U.P. amendment.
15. If the factual matrix of the present case also compared with the submission of learned counsel for the parties, import of Naphtha was done by M/s J.B. Overseas. Applicants' company purchased the Naphtha from M/s J.B. Overseas on 19.04.2001 & 10.08.2001. As per allegations, M/s J.B. Overseas imported the Naphtha for the purposes of fuel but sold it to the applicant's company on high seas basis violating the Naphtha control order. Applicant's case is that they had licence for storage of Naphtha and manufacturing of industrial solvent and it was renewed time to time. It is also case of the applicants that said Naphtha was purchased after paying consideration amount and the duties/taxes imposed upon by the Government. If such is the position, in the opinion of Court, charge sheet was submitted before the C.B.I. Court at Ghaziabad in utter violation of the mandatory provisions provided under State of U.P. Amendment made in Section 11 of the Essential Commodities Act. Cognizance could not be taken on the aforesaid charge-sheet as there is specific bar for taking cognizance. Thus, entire proceedings of aforesaid criminal case on this score itself becomes illegal. It also appears that concerned court while taking cognizance on the charge sheet did not take into account the mandatory requirement provided under Section 6 of Delhi Special Police Establishment Act, 1946 and State amendment under Section 11 of the Essential Commodities Act, thus, it committed illegality. Applicants have annexed the “End use certificate” issued by D.S.O. Moradabad and other documents with the application showing that time to time competent authority have taken samples of the processing of Naphtha into the industrial solvent to check the restrictions contained in control orders and no violation was found.
16. Hon'ble Supreme Court in case of State of Punjab Vs. Davinder Pal Singh Bhullar and others, (Supra) in para no. 72 has held as under:-
“It is settled legal proposition that if initial action is not taken in accordance with law, all subsequent and consequential proceedings would fall through for the reason that illegality strikes at the root of the order. In such a fact-situation, the legal maxim “sublato fundamento cadit opus” meaning thereby that foundation being removed, structure/work falls, comes into play and applies on all scores in the present case.”
17. In the present matter after analysis of entire facts and circumstances of the case, no breach/violation of the Naphtha control order is found at the end of the applicants or its company. Criminal prosecution for the offence under Section 3/7/9 Essential Commodities Act could only be started in the State of U.P. after complying with the mandatory requirement provided under Section 11 of Essential Commodities Act as amended by State of U.P. Amendment. It is pertinent to mention here that charge sheet submitted in the matter does not specifically discloses the violation of Solvent, Raffinate and Slop (Acquisition, Sale, Storage and Prevention of Use in Automobiles) Order, 2000. Thus, other consequential allegation regarding the preparation of forged document and distribution of solvent without obtaining “End use certificate” becomes immaterial. The entire proceeding of the aforesaid criminal case on the basis of charge sheet submitted in the matter is illegal and learned Court below has committed illegality in taking cognizance on the charge sheet for the violation of Naphtha control order under Essential Commodities Act. No prima facie case is made out for violation of Naphtha Control order. Thus, keeping in view the specific amendment made in the State of U.P. under the Essential Commodities Act, submission raised on behalf of C.B.I. to the extent that charge sheet was submitted in compliance of the direction of Gujarat High Court cannot be accepted. No benefit could be extended to the C.B.I. with the law laid down in cases relied upon by it. Facts of the case laws relied upon by C.B.I. in para no. 27 of counter affidavit differ with the facts of the present matter. Nothing is on record to show that there was any direction that investigation could be done and charge sheet could be filed without complying with the State amendment. If prosecution case is taken into consideration as a whole then also applicants could not be prosecuted only taking recourse to the provision of Section 120-B IPC for violation of Naphtha Control Order under the Essential Commodities Act, particularly, when there is no concrete evidence to attract the aforesaid legal provision. There is specific provision for initiation of criminal prosecution under Essential Commodities Act in the State of U.P.. Any deviation with the State Amendment would render the entire prosecution illegal and nullity. Thus, in the opinion of Court, continuation of the proceeding of the aforesaid criminal case against the applicants is nothing but an abuse of process of law as there is no violation of Naphtha control order on part the applicants. Therefore, application having substance is liable to be allowed. Entire proceeding of the aforesaid criminal case for the reason discussed here-in-above is liable to be quashed.
18. Accordingly, the present application is allowed. Entire proceeding of case no. 2 of 2016, arising out of RC- 2(E)/2004/EOW-I/DLI (C.B.I. vs. Bankey Bihari Chemicals Private Limited and others), under Section 120-B read with Sections 420, 467, 468, 471 IPC and 7 and 9 of Essential Commodities Act read with Clause 3(iv) and (v) of Naphtha (Acquisition, Sale, Storage and Prevention of Use in Automobile) Order, 2000 pending before Special Judicial Magistrate, C.B.I., Ghaziabad and also the cognizance order dated 02.02.2016 are hereby quashed / set aside against the applicants only.
Order Date :- 13.05.2021
safi/sanjeet