CRIMINAL MISCELLANEOUS 2985 of 2018 on 1 April 1998

1. This is an application under Section 482 Cr.P.C. filed by the petitioner for quashing the criminal proceeding initiated against him by the CBI pending before the court of learned ACJM-cum-Special CJM (CBI), Bhubaneswar in SPE Case No.5 of 2000 on the grounds, inter alia, that it is unsustainable in law.

2. According to the petitioner, the CBI opposite party No.1 does not have any authority or jurisdiction to initiate the criminal proceeding against him being a private individual in absence of any order of the High Court or Supreme Court and/or direction of the State Government or Government of India and therefore, it is to be quashed. It is contended that the petitioner was one of the Directors of M/s. Sabitri Metals Pvt. Ltd. till 1.1.1993, on which date, he resigned from the Directorship and thereafter, the exiting Directors of the said company changed its name to M/s. Sabitri Metals Ltd., wherein, he was not a Director and sometime in 1997, again the name was changed to M/s. Sabitri India Ltd. and in that company also, he was never a Director, inasmuch as, he was one of the Directors of M/s. Sabitri Metals Pvt. Ltd. from the date of its incorporation till 1.1.1993, the date on which, he was ceased to be by virtue of resignation and thus, for that matter, the criminal prosecution by the CBI opposite party No.1 is wholly misconceived. It is contended that an F.I.R. was lodged against M/s. Sabitri India Ltd. on the ground that the company had placed purchase order to NALCO in the year 1998 and consequently, 9000 tons of aluminum wire rods, aluminum ingots, billets, etc. were purchased for a period of one year i.e., from 1.4.1998 to 31.3.1999 through its nominated carrier, namely, M/s. Express Shipping and Carriers Ltd. but it did not make the payment amounting to Rs.1,54,94,073/- in spite of repeated demands by NALCO, as a consequence whereof, a complaint was received by the CBI opposite party No.1 against the company and its directors including the petitioner and after conducting an enquiry, it lodged the F.I.R. vide Crime No. RC 02/E/2000 in connection with the alleged transaction for the year 1998-99 under Section(s) 420/467/468 and 471 read with 120-B IPC. The CBI opposite party No.1, after investigation, submitted the charge sheet against M/s. Sabitri India Ltd. and others besides the petitioner before the learned court below in SPE Case No.5 of 2000, where after, order of cognizance was passed on 24.12.2001 under Section(s) 420 and 407 read with 120-B IPC and process was issued against him and other accused persons.

3. The pertinent question is, whether, in the facts and circumstances of the case, taking of cognizance of the alleged offences pursuant to the submission of charge sheet in SPE

No.5 of 2000 by the learned court below is to be quashed? The quashing of the criminal proceeding is claimed on the grounds, such as, (i) no consent of the State Government was obtained as per Section 6 of the Special Police Establishment Act, 1946; (ii) CBI opposite party No.1 did not have the authority, particularly, due to want of sanction to initiate criminal proceeding against the petitioner, who is a private individual; (iii) a criminal action against the petitioner is untenable in view of the Court’s order in CRLMC No.1276 of 2002, when the issue of process was indeed quashed; (iv) no prima facie case as to commission of the alleged offence is made out against the petitioner, who may be held guilty for breach of a contractual obligation; and (v) the petitioner was never a Director of the alleged company in the year 1998-99 and therefore, was not responsible for the transaction in question and in spite of that, he was being roped as an Ex-Director of the company in question, morefully when, the process issued by the court below was quashed in CRLMC No.1276 of 2002.

4. The CBI opposite party No.1, on the contrary, strongly objected to the grounds of challenge vis-à-vis the proceeding initiated and pending before the learned court below by contending that the consent of the State Government is already in place for such an action and that apart, it is not a case of breach of any obligation under a contract, rather, NALCO was defrauded and denied its payment and in so far as the petitioner is concerned, even not being a director of the alleged company, was very much involved in its business affairs, which is specified in the charge sheet.

5. Heard learned counsel for the petitioner and learned counsel for the CBI opposite party No.1.

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6. Learned counsel for the petitioner referring to a decision of the Supreme Court in the case of Thermax Ltd. and others Vrs. K.M. Johny and others reported in (2011) 13 SCC 412 contended that the alleged transaction and consequential events are nothing but a case of breach of contractual obligation between the parties and therefore, the prosecution initiated by the CBI opposite party No.1 is unjustified. In the decision (supra), it is held and observed that the ingredients of cheating are to be fulfilled with the proof of dishonest intention. It is held therein that if there is a flavour of civil nature, the same cannot be agitated in the form of a criminal proceeding and in the facts and circumstances of the aforesaid case, it was held that there was no dishonest intention, rather, the dispute inter se parties purely related to contractual obligation. It is settled law that a color of cheating cannot be attributed to a civil dispute since the element of dishonest intention is required to be satisfied that it existed from the very inception. In the instant case, the details of the circumstances leading to the lodging of F.I.R. by NALCO stands described in the charge sheet. In the opinion of the CBI opposite party No.1, the conduct of the alleged company and its Directors including the petitioner resulted in denial of payment, whereby, NALCO was cheated to the tune of Rs.1.42 crore. Considering the charge sheet, it would not be wrong to hold that though, it was a commercial transaction but due to the specific conduct and alleged criminal intent of the accused persons and the fact that NALCO lost its dues, prima facie, the alleged offences are made out, for the purpose of investigation and trial. That apart, it is not the stage to thoroughly examine the materials on record. Regard being had to the charge sheet wherein allegations have been made against the petitioner of being involved in the functioning the company even though resigned from the Directorship and said to have purchased the materials from NALCO in the name of M/s. Sabitri Non-Ferro // 5 //

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Metals Pvt. Ltd. owned by him which led to the alleged non-payment to NALCO, the Court is of the considered view that no adverse view could be taken against initiation of criminal action. So the conclusion is that it does not appear to be a case of exclusively civil in nature.

7. The petitioner is claiming not to be a Director of the alleged company in the year 1998-99 and thus, it is contended that the criminal action against him to be not tenable. Learned counsel for the petitioner cited the order of the Court passed in CRLMC No.1276 of 2002. Admittedly, this Court by order dated 22.03.2006 quashed the order of learned court below as to issue of summons under Section 63 Cr.P.C. on the ground that he was not the Director of M/s. Sabitri India Ltd. on the date of initiation of the case but then granted liberty to the parties to work out the remedies available to them in consonance with law. In spite of such an order, CBI opposite party No.1 added the petitioner and charge sheeted him as Ex-Director of the company in question, where after, the learned court below continued with the criminal proceeding. It is contended that the learned court below could not have proceeded against the petitioner after the Court’s order dated 22.3.2006 in CRLMC No.1276 of 2002. However, the petitioner admitted the fact that once again the matter was brought before the Court in CRLMC No.2043 of 2008 which was dismissed by order dated 21.02.2014. In any case, in CRLMC No.2043 of 2008, the Court did not consider appropriate to intervene in the criminal proceeding fully aware of its earlier order in CRLMC No.1276 of 2002. The contention of the petitioner is that as an Ex-Director, he could not have been proceeded with. No doubt, the alleged transaction is of the year 1998-99. There is no denial to the fact that the petitioner shown to have resigned from the alleged company in 1993. The CBI

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opposite party No.1, after the order of the Court in CRLMC No.1276 of 2002, added the petitioner as an Ex-Director and the learned court below continued with the proceeding against him which was not interfered in CRLMC No.2043 of 2008. Under the above circumstances, the question is, whether, the petitioner was still to be arrayed as an accused for the purpose of criminal prosecution in SPE No.5 of 2000? As earlier discussed, in the charge sheet, allegations stand elaborately described against the company and its Directors including the petitioner though resigned from M/s. Sabitri India Ltd. but was found actively involved in the function of the company and said to have purchased the materials in the name of M/s. Sabitri Non-Ferro Metals Pvt. Ltd., as a consequence of which, all the accused persons, who are related as brothers apparently cheated NALCO to the tune of Rs.1.42 crore. Thus, considering the charge sheet, the Court is of the humble opinion that the petitioner though was not the Director of the company by 1998-99 but CBI opposite party No.1 alleged him to be involved in the daily functions of the company and in connivance with the other Directors cheated NALCO. The Court does not find any compelling ground to disrupt the criminal prosecution since the petitioner stands charge sheeted as an Ex-Director of the company.

8. As to sanction under Section 6 of the Special Police Establishment Act, 1946, it is contended that the same was not obtained from the State Government and that too against the petitioner, who is a private individual. Learned counsel for the CBI opposite party No.1 contended that a general consent is available, inasmuch as, the State consented for every investigation and criminal action by the CBI long back. It is further contended that the State Government offered its general consent on 25.6.1957 and therefore, no specific consent was necessary. A decision of the // 7 //

Supreme Court in M/s. Fertico Marketing and Investment Pvt. Ltd. and others etc. Vrs. CBI and another etc. decided on 15.10.2020 in Criminal Appeal Nos.762 & 764 of 2020 is referred to from the side of CBI opposite party No.1. In the decision ibid, it is held that no consent is required in respect of private individuals and post facto consent cannot vitiate a criminal action when there is no prejudice shown by the accused. Such a claim of existence of a general consent is not disputed or could not be challenged by the learned counsel for the petitioner. So, when, a general consent of the State Government under the Special Police Establishment Act, 1946 is already in place, the CBI opposite party No.1, thus, was not required to obtain any specific consent in far as the instant case is concerned. Anyways, in view of the ratio laid down by the Supreme Court, consent is not required for a criminal action by the CBI against private individuals. For the present case, since there is a general consent of the State Government and in such view of the matter, the contention of the petitioner in that respect cannot be sustained.

9. The Court is reminded of the settled position of law regarding quashing of a criminal proceeding which time and again reiterated by the Supreme Court besides its judgment classicus that the State of Haryana and others –Vrs.- Ch. Bhajan Lal and others reported in AIR 1992 SC 604, wherein it has been held and observed that power under Section 482 Cr.P.C. though extra ordinary but should sparingly to be exercised to prevent abuse of process of court or to secure the ends of justice. It is also observed therein that though it may not be possible to lay down any précise, clearly defined and sufficiently channelised and inflexible guide considering the myriad kinds of cases but outlined that such inherent jurisdiction either under Section 482 Cr.P.C. or power under Article 226 of the Constitution should be in respect of cases; where the allegations made in the F.I.R. or complaint even if they // 8 //

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are taken at their face value and accepted in its entirety did not prima facie constitute any offence or make out a case against the accused; where the allegations as such did not disclose a cognizable offence justifying an investigation by police under Section 156(1) Cr.P.C.; where the controverted allegations made in the F.I.R. or complaint and evidence collected in support of the same did not disclose commission of any offence or constitute a cognizable offence; or there is an express legal bar; or the allegations in the F.I.R. or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach at a just conclusion that there is sufficient ground for proceeding against the accused. In the instant case, none of the above illustrations in Bhajanlal case (supra) applies to the case of the petitioner inasmuch as, he has been alleged to be involved in daily affairs of the company in question even though as an Ex-Director. The CBI OP No.1 reaffirmed its stand by including the petitioner as Ex-Director despite an order of this Court in CRLMC No.1276 of 2002 alleging that he was instrumental and responsible in the regular business of the company albeit not as a Director which issued the supply order to NALCO. Prima facie the allegations found to have been against the petitioner for which the learned court below took cognizance of offence and proceeded against him. It is not a stage whether the court can reach at conclusion regarding the extent of involvement of the petitioner vis-à-vis the business of the company which can only be considered during enquiry and trial. The petitioner may raise such a question before the learned court below at the stage of framing of charge or during the trial after the evidence being received in order to show that he was in no way responsible for the alleged transaction of the year 1998-99 as he had demitted the office of Directorship way back in 1993. The Court, thus, holds that such a question which needs threadbare examination of materials // 9 //

may only be possible by receiving some evidence and cannot be looked into at present.

10. In view of the discussions made herein above, the Court reaches at a logical conclusion that the materials on record prima facie suggested for a criminal action against the petitioner and for such an action, the CBI opposite party No.1 did have the authority to investigate the case in view of a general consent of the State Government available since 1957. Hence, so far as the case is concerned, the facts in the charge sheet indicated the involvement of the company as well as its Directors including the petitioner, who, with the requisite criminal intent in connivance with each other, allegedly denied payment to the NALCO to the tune of Rs.1.42 crore. Having arrived so, the attempt on the grounds raised by the petitioner in order to scuttle the criminal proceeding in SPE No.5 of 2000 falls flat and therefore, the challenge in respect of thereof has to be held as untenable. In other words, it is to be concluded that CBI opposite party No.1’s action against the petitioner in criminal proceeding vide SPE No.5 of 2000, for the reasons stated above, cannot be interfered with and accordingly, it is ordered.

11. In the result, the CRLMC sans merit and thus, dismissed. As a necessary corollary, the criminal proceeding in SPE No.5 of 2000 warrants no interference at the instance of the Court in exercise of jurisdiction under Section 482 Cr.P.C.

12. The CRLMC is accordingly disposed of.

(R.K. Pattanaik)