UNION OF INDIA AND OTHERS versus LT. GEN. (RETD.) S.K. SAHNI on 23 March 2022

SUPREME COURT REPORTS

[2022] 16 S.C.R.

UNION OF INDIA AND OTHERS

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LT. GEN. (RETD.) S.K. SAHNI

(Criminal Appeal No. 2169 of 2014)

BMARCH 23, 2022

[L. NAGESWARA RAO AND B. R. GAVAI, JJ.]

Army Rules, 1954 – rr.180, 22 and 40(2) – Army Act, 1950 –s.123 –Respondent, commissioned in the Indian Army in 1967, wasthereafter appointed as Director General, Supplies and TransportC(DGST) in 2005 – A Court of Inquiry (CoI) was ordered to investigateinto several allegations against him – CoI only recommended foraward of recordable censure against the respondent, but the ArmyCommander and GOC-in-C directed disciplinary action under theArmy Act, 1950 and Army Rules, 1954 – After his retirement in 2006,Drespondent filed a writ petition before High Court for quashingproceedings against him – High Court held that appellants cannottake any action against the respondent on basis of CoIrecommendation, but granted liberty to them to give notice to therespondent and continue with the proceedings under r.180 of theArmy Rules, or “exercise any other power available to them underEthe Act, insofar as they do not rely upon the proceedings on theaforesaid Court of Inquiry” – Appellants, instead of invoking r.180of the Army Rules, wherein opportunity was to be provided to therespondent, resorted to r.22 of the Army Rules and orderedattachment of the respondent under s.123 of the Army Act – ThisForder was set aside by Armed Forces Tribunal (AFT), which declaredthe said action as totally unwarranted and illegal – Appellants werehowever directed to resort to COI after giving an opportunity tothe respondent and to comply with the requirement u/r.180 of theArmy Rules – In July 2011, General Court Martial (GCM)proceedings, comprising of junior officers than respondent, foundGrespondent guilty of few charges, and sentenced him (i) To becashiered; and (ii) Rigorous imprisonment for three years subjectto confirmation – Chief of Army Staff confirmed the same in January2012 – Respondent filed appeal before the AFT, which modified thesentence to dismissal from service – Respondent filed writ petitionH

before High Court challenging the decision of AFT – High Courtissued notice – Meanwhile, Appellants filed appeal against AFTdecision before the Supreme Court – Respondent filed applicationfor transfer of his writ petition from High Court to Supreme Court,which was allowed – Held: There are inherent limitations on thejurisdiction of Supreme Court and it will not be permissible to re-appreciate the evidence as recorded by the GCM unless the SupremeCourt finds that the material factors have been either ignored orthe evidence that has come on record, has been appreciated in atotally erroneous manner – Materials placed on record to beconsidered with these limitations in mind – On facts, on considerationof material on record, findings and orders passed by the AFT aswell as the GCM not found to be sustainable in law – Appeal ofappellant dismissed – Transferred criminal case of respondentallowed – Respondent acquitted of all the charges levelled againsthim – He would be entitled to all pensionary and consequentialbenefits in accordance with law – The arrears of such benefits shallbe computed and paid to the petitioner within a period of threemonths from the date of the judgment – Armed Forces Tribunal Act,2007.

Dismissing the appeal and allowing the connected TransferCase, the Court

Conclusion

Dismissing the appeal and allowing the connected TransferCase, the Court HELD:1.1. Though nine charges were framed against therespondent, they are inter-connected and are related to threetransactions. The first charge was that the respondent had agreedto the proposal of M/s Gujarat Co-operative Grain GrowersFederation Limited (hereinafter referred to as “M/sGRAINFED”) for addition of two more tendering stations atGadarwara, District Narsingpur, Madhya Pradesh and Narsingpurin Madhya Pradesh in addition to 14 tendering stations alreadymentioned in the contract. The charge was that this was donewith an intent to defraud the State. It is not even the case of theappellants herein that any loss was caused to the Army on accountof such decision or any additional benefit was accrued to M/sGRAINFED by such deviation. This is apart from the fact thatthe Consolidated Order No. 3 of 1987 itself required any additionalexpenditure incurred by the purchaser/savings made by thesupplier to be reimbursed by the Supplier to the Government.

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AAs such, the findings of the AFT that there was an intention onthe part of the respondent to defraud would not be sustainable.[Paras 31, 35][957-F-H; 958-A; 961-C-E]

1.2 Insofar as the second charge is concerned, it is withregard to the respondent not taking action on the basis of theBanonymous complaint dated 4th April 2005. It could thus be seenthat the Court of Inquiry was directed to examine all associatedissues and pin point responsibility for lapses, if any. It is thusclear that the finding that the respondent had failed to takecognizance of the complaint and direct an inquiry with that regard,is contrary to the material placed on record. [Paras 36 & 37]C[961-E; 963-A-B]

1.3 The third charge is with regard to the relaxation beinggranted to M/s PUNSUP Limited and M/s MMTC Limited inacceptance of tender dated 26th June 2005, vide which 350-400grains per 100 grams of Kabli Chana was permitted on priceDreduction of 0.5% instead of 300-350 grains per 100 grams. Theonly allegation is that the relaxation which was granted was withregard to the number of grains that every 100 grams shouldcontain. As a matter of fact, even the GCM held that therespondent was entitled to benefit of doubt with regard to hisEintent but has found that the said act was prejudicial to good orderand military discipline. [Paras 39 & 41][963-C-D; 964-B-C]

1.4 The AFT specifically came to a finding that therespondent has not committed any fraud or did not commit anyact which resulted in actual loss or wrongful gain to any person.FOne is unable to appreciate as to on what basis the AFT came toa conclusion that the acts lead to an inference that the attemptswere made to cause a wrongful gain. The finding as recorded bythe AFT is totally contrary to the material placed on record. [Para45][965-F-G]

G1.5 The orders passed by the AFT as well as the GCM arenot sustainable in law. Transferred Case filed by the petitioner isallowed; (ii) The order dated 18th February 2011 passed by theGCM holding the petitioner guilty and imposing penalty on himand the impugned order dated 10th October 2013, passed by theAFT are quashed and set aside; (iii) The petitioner is acquittedH

of all the charges levelled against him; and (iv) The petitionerwould be entitled to all pensionary and consequential benefits inaccordance with law. The arrears of such benefits shall becomputed and paid to the petitioner within a period of threemonths from the date of this judgment. [Para 47][966-B-E]

Ex. Lt. Gen. Avadhesh Prakash v. Union of India andAnother [Decision dated 24-01-2019 of SupremeCourt in Criminal Appeal No. 140 of 2019]; Union ofIndia and Another v. Charanjit S. Gill and Others (2000)5 SCC 742 : [2000] 3 SCR 245 and Brig P.S.Gill v.Union of India and Others [Orders dated 24[th] May,2011 of AFT in OA No. 147 of 2010] – referred to.

Case Law Reference

[2000] 3 SCR 245referred toPara 19

CRIMINAL APPELLATE JURISDICTION : Criminal AppealNo. 2169 of 2014.

From the Judgment and Order dated 10.10.2013 of the ArmedForces Tribunal, Chandigarh Regional Bench at Chandimandir in OriginalApplication No.262 of 2011.

With

Transferred Case (Criminal) No. 1 of 2017

R. Balasubramanian, Sr. Adv., Rajan Kr. Chourasia, S. K. Tyagi,Anukalp Jain, Arvind Kumar Sharma, Mukesh Kumar Maroria, K. K.Tyagi, Iftekhar Ahmad, Sarvam Ritam Khare, Rajeev Kumar Bansal, P.Narasimhan, Advs. for the appearing parties.

The Judgment of the Court was delivered by B.R. GAVAI, J.

1. Criminal Appeal No.2169 of 2014 is filed by Union of India andothers challenging the orders passed by Armed Forces Tribunal,Chandigarh Regional Bench at Chandimandir (hereinafter referred toas the “AFT”) dated 10[th] October 2013 in MA No. 1871 of 2012 andOA No. 262 of 2011 to the effect that it reduces the sentence of threeyears rigorous imprisonment and cashiering imposed on the respondentherein-Lt. Gen. (Retd.) S.K. Sahni to dismissal from the service as A

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Aprovided in Section 71(e) of the Armed Forces Tribunal Act, 2007(hereinafter referred to as the “AFT Act”), and 21[st] March 2014 in MANos. 3201 and 3202 of 2014 in OA No. 262 of 2011, whereby the learnedAFT refused to grant leave to appeal.

2. Transferred Case (Criminal) No. 1 of 2017 is filed by theBpetitioner therein (respondent herein), originally before the High Courtof Punjab and Haryana being Criminal Writ Petition No. 1895 of 2013,challenging the dismissal of MA No. 1871 of 2012 and OA No. 262 of2011, which was filed challenging the order dated 18[th] February 2011,passed by the General Court Martial (hereinafter referred to as the“GCM”), vide which the respondent herein was held guilty of first, third,Cfourth, fifth, seventh and ninth charges and was sentenced as under:

(i) To be cashiered; and

(ii) Rigorous imprisonment for three years subject to confirmation.

3. As such, both, the appeal filed by the Union of India and others,Dand the transferred case, filed by the respondent herein have been heardtogether. For the sake of convenience, the facts are taken from CriminalAppeal No. 2169 of 2014.

4. The respondent was commissioned in the Indian Army on 16[th]December 1967 and earned promotions and was promoted to the rankEof Lieutenant General in May 2003. The respondent was thereafterappointed as Director General, Supplies and Transport (hereinafterreferred to as “DGST”) with effect from 1[st] February 2005. He wasalso awarded the “Ati Vishisht Seva Medal” in January 2005.

5. An anonymous complaint was received in the Directorate ofFSupplies and Transport (hereinafter referred to as the “Directorate”) on4[th] April 2005. On 8[th] April 2005, the complaint was forwarded and arequest was made to the respondent to examine the complaint andforward his comments on the file on priority for perusal of the Directorate.It is contended by the respondent that he replied to the same on 12[th]September 2005.G

6. A Court of Inquiry was ordered against the respondent underthe directions of General Officer Commanding-in-Chief, WesternCommand (hereinafter referred to as “GOC-in-C”), to investigate intothe following seven allegations:

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“i. Procurement of Kabuli Chana through contract finalized duringApril 05 by Army Purchase Organization;

ii. Tendering and procurement of Barley crushed and Gramkibbled during financial year 2005-2006 by Army PurchaseOrganization;

iii. Testing and sampling of items of ration by CFL Delhi as perlaid down specification arid its subsequent purchase/procurementfrom various firms/dealers as per approved sample and ASCspecifications;

iv. Tendering and procurement of 979 Metric Tonnes of MasoorWhole which was supplied by GRAINFED; -

v. Violation, if any, of the laid down quality norms, ASCspecifications and other desired parameters with regard tomoisture content, number counts per 100 gm weight, system ofimposing price reduction of commodities contracted.

vi. Any undue favour granted to any contractor for procurementof meat by HQ Central Command during financial years 2003-2004 and 2004-2005

vii. Any irregularity with regard to permitting a civil contractorto dump excavated soil within the compound of ASC Centreand College of any undue favour taken from any contractor byand Army pers at ASC Centre and College.”

7. The Court of Inquiry only recommended for award of recordablecensure against the respondent while recommending disciplinary actionqua other officials under the Army Act, 1950 (hereinafter referred to asthe “Army Act”) and Army Rules, 1954 (hereinafter referred to as the “Army Rules”). However, as per the direction of Army Commander,the respondent’s name was included in the list for disciplinary action.The Court of Inquiry was finalized on 24[th] June 2006, and thereafter, theGOC-in-C directed a disciplinary action against the respondent.

8. As contended by the respondent, the GOC-in-C, despiterecommendation mentioned in the Inquiry Report for an administrativeaction, directed disciplinary action while admitting that there was noevidence of the acts of financial consideration qua the respondent. The A

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Arespondent, on attaining the compulsory retirement age of 60 years, retiredon 30[th] September 2006.

9. The respondent filed a writ petition before the High Court ofDelhi being WP (C) No. 11839/2006 seeking for quashing and settingaside of the proceedings and recommendations of the Court of InquiryBin terms of order dated 26[th] May 2005 and order dated 18[th] July 2006directing attachment of the respondent. The High Court of Delhi allowedthe said writ petition, vide order dated 11[th] January 2007, in the followingterms:

“For the reasons afore-recorded, we are of the considered viewCthat the respondents have not complied with the provisions ofRule 180 of the Rules, as such, they cannot take any furtherproceedings against the respondents on the basis of the Courtof Inquiry held in furtherance to the order of the competentauthority dated 26.9.2005. However, the respondents are atliberty to give notice to the respondent and continue with theDproceedings under Rule 180, and in the alternative, even to takerecourse to the provisions of Rule 22, or exercise any otherpower available to them under the Act, insofar as they do notrely upon the proceedings on the aforesaid Court of Inquiry.”

10. The appellants, instead of invoking Rule 180 of the Army Rules,Ewherein opportunity was to be provided to the respondent, resorted toRule 22 of the Army Rules and issued a fresh notice and passed anorder dated 31[st] August 2007 and ordered attachment under Section 123of the Army Act.

11. The respondent challenged the above by filing a writ petitionFin the High Court of Delhi being WP(C) No. 6632/2007, which was thentransferred to the learned AFT, Principal Bench at New Delhi. The saidlearned AFT, vide its order dated 3[rd] September 2009, set aside thesubsequent act of the Army Authorities and held that resorting to Rule22 of the Army Rules was totally unwarranted and illegal. The appellantsGwere however directed to resort to Court of Inquiry after giving anopportunity to the respondent and to comply with the requirement underRule 180 of the Army Rules.

12. The GOC-in-C, vide its order dated 22[nd] September 2009,directed reconvening/reassembling of the Court of Inquiry on the basisof the liberty granted by the learned AFT, New Delhi vide its orderH

dated 3[rd] September 2009. The GOC-in-C vide its order dated 12[th] April2010, on the basis of the Court of Inquiry, directed disciplinary actionagainst the respondent.

13. On 30[th] July 2010, a convening order, directing assembly ofthe GCM under the Army Act, was issued. The GCM consisted of 7Members, out of which, 6 Members were holding ranks of Major Generalwhich was lower than the respondent’s rank. The Presiding Officer,however, was of the rank of Lieutenant General, but was allegedly juniorto the respondent. Even the Judge-Advocate General (hereinafterreferred to as “JAG”) was allegedly junior to the respondent and wasonly holding the rank of Colonel. On the same day, i.e., 30[th] July 2010, acharge-sheet comprising of nine charges was served upon the respondent.

14. The GCM, vide order dated 18[th] February 2011, found therespondent not guilty of the charges No. 2, 6 and 8 whereas found therespondent guilty of charges No. 1, 3, 4, 5, 7 and 9 and was sentenced asunder:

(i) To be cashiered; and

(ii) Rigorous imprisonment for three years subject to confirmation.

The findings and sentence of the GCM were confirmed by theChief of Army Staff vide its order dated 13[th] January 2012.

15. The respondent filed an appeal before the learned AFT againstthe order of the GCM dated 18[th] February 2011, which was furtherconfirmed by the order dated 13[th] January 2012 passed by the Chief ofArmy Staff. The learned AFT, vide the impugned order dated 10[th]October 2013, partly allowed the petition. The learned AFT held thatthe findings of the GCM as against the respondent were liable to beaffirmed. However, the learned AFT held that the sentence of cashieringand substantive imprisonment of 3 years’ rigorous imprisonment washarsh and thus, modified the sentence to dismissal from service.

16. The respondent filed a writ petition being Criminal Writ PetitionNo. 1895 of 2013 before the High Court of Punjab and Haryana atChandigarh, challenging the aforesaid impugned order dated 10[th] October2013 passed by the learned AFT. The High Court issued notice videorder dated 28[th] October 2013. In the meanwhile, the appellants alsofiled an appeal being Criminal Appeal No.2169 of 2014 before this Court,challenging the order passed by the learned AFT dated 10[th] October AB

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A2013. Thereafter, the respondent filed an application being CRL.M.P.No.24464 of 2014 in Criminal Appeal No.2169 of 2014 seeking transferof Criminal Writ Petition No. 1895 of 2013, pending before the HighCourt of Punjab and Haryana at Chandigarh to this Court.

17. This Court, vide its order dated 22[nd] August 2016, allowed theBsaid application and directed transfer of the said petition to this Court, tobe listed along with Criminal Appeal No.2169 of 2014.

18. We have heard Shri R. Balasubramanian, learned SeniorCounsel appearing on behalf of the Union of India and Shri K.K. Tyagi,learned counsel appearing on behalf of the respondent.C

19. Shri Tyagi, learned counsel appearing on behalf of therespondent, raised a preliminary point that since the Members of theGCM were below the rank of the respondent, the GCM was not properlyconstituted, and as such, violative of sub-rule (2) of Rule 40 of the ArmyRules. He relies on the order of this Court in the case of Ex. Lt. Gen.DAvadhesh Prakash v. Union of India and Another[1]. He submittedthat from perusal of the said order, it will be clear that about 80 LieutenantGenerals were available in the Indian Army at the relevant time, and assuch, the Court-Martial which had Members below the rank of LieutenantGeneral, could not have tried the respondent. He therefore submittedthat the GCM, which is constituted in contravention of sub-rule (2) ofERule 40 of the Army Rules, could not have tried the respondent. Hefurther submitted that on the same ground, in view of Rule 102 of theArmy Rules, since the JAG, who was of the rank of Colonel, which isbelow the rank of Lieutenant General, stood disqualified while acting asa JAG. He relies on the judgment of this Court in the case of Union ofFIndia and Another v. Charanjit S. Gill and Others[2] in this regard.

20. Shri Balasubramanian, learned Senior Counsel appearing onbehalf of the appellants, on the contrary, submitted that though sub-rule(2) of Rule 40 of the Army Rules requires that the Members of a Court-Martial for the trial of an officer shall not be of a rank below than that ofGthe officer, it also provides that a departure from the said rule ispermissible, when in the opinion of the convening officer, having regardto the exigencies of the public service, the officers of such rank are notavailable. He therefore submits that merely because the GCM consisted 1 Criminal Appeal No. 140 of 2019 dated 24.01.2019H2 (2000) 5 SCC 742

of the officers below the rank of Lieutenant General itself, would notipso facto vitiate the proceedings. He submitted that the only requirementis that such an opinion is required to be recorded in the convening order.He submitted that insofar as the order of this Court in the case of Ex.Lt. Gen. Avadhesh Prakash (supra) is concerned, in the said case, theorder was passed by this Court on the concession that such officerswere available. He further submitted that in the said case, no suchopinion as required under sub-rule (2) of Rule 40 of the Army Rules wasrecorded.

21. For appreciating the rival submissions with regard to thepreliminary objections, it will be relevant to refer to sub-rule (2) of Rule40 of the Army Rules:

“40. Composition of General Court-martial.-

(1). …..

(2). The members of a court-martial for the trial of anofficer shall be of a rank not lower than that of theofficer unless, in the opinion of the convening officer,officers of such rank are not (having due regard to theexigencies of the public service) available. Suchopinion shall be recorded in the convening order.”

22. In view of the specific contention with regard to the violationof sub-rule (2) of Rule 40 read with Rule 102 of the Army Rules, wehave summoned the original file. On perusal of the original file, we findthat the convening officer has recorded reasons as to why the officersof the rank of respondent were not available. We find that the reasonsgiven, for doing the same, would fall within the exigencies of the publicservice. The scope of judicial review of such a decision is very limited.Unless it is found that the decision taken by the authority suffers fromarbitrariness, irrationality or unreasonableness, it would not be permissiblefor us to sit in an appeal over the decision of the convening officer. Thelimited inquiry that would be permissible is, as to whether the reasonsrecorded are having regard to the exigencies of the public service ornot. On perusal of the original file, we find that the reasons given aredirectly concerned with the exigencies of the public service. We thereforedo not find any merit in the said submission.

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A23. Insofar as the order of this Court in the case of Ex. Lt. Gen.Avadhesh Prakash (supra) is concerned, in the said case, the contentionmade on behalf of the petitioner therein was that the respondents thereincould have tried to make Lieutenant General available. In any case,from the said order, it is not clear as to whether the subjective satisfactionas required under sub-rule (2) of Rule 40 of the Army Rules was, in fact,Brecorded or not. Another reason that weighed with this Court forinterfering with the order of the learned AFT was that the learned AFThad recorded that since the appellant therein had already retired fromthe service, there was no illegality in constitution of GCM. This Courtfound that such a finding was not permissible on the bare reading ofCRule 40 of the Army Rules.

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24. Insofar as the merits of the present matter are concerned,Shri Balasubramanian submits that after the learned AFT had concurredwith the findings of the GCM that the charges against the respondentstood proved, there was no occasion for the learned AFT to have interferedDwith the penalty imposed on the respondent. Insofar as the appeal ofthe appellants herein is concerned, the learned Senior Counsel for theappellants submitted that since there are concurrent findings of fact withregard to the charges being proved, no interference would be warrantedin the appeal of the appellants. He therefore submitted that the appealof the appellants deserves to be allowed and the Transferred CaseE(Criminal) No. 1 of 2017 filed by the petitioner (respondent in CriminalAppeal No. 2169 of 2014) be dismissed.

25. Shri Tyagi, learned counsel appearing for the respondent, onthe contrary, would submit that the findings as recorded by the GCM aswell as the learned AFT are recorded on the basis of conjectures andFsurmises. He submitted that in the GCM, the standard that is required tobe followed is of a criminal trial. It is therefore submitted that unless thecharges against an officer are proved beyond reasonable doubt, he cannotbe held guilty in GCM. It is submitted that like a criminal trial, the benefitof doubt must go to the officer and not to the prosecution. He, however,Gsubmitted that in the present case, the GCM as well as the learned AFThave given the benefit of doubt to the prosecution.

26. He submits that as a matter of fact, not a single charge standsproved beyond reasonable doubt against the respondent. However, therespondent has been convicted by the GCM without any evidence. HeHtherefore submitted that the Transferred Case (Criminal) No. 1 of 2017

filed by the petitioner (respondent in Criminal Appeal No. 2169 of 2014)deserves to be allowed and the appeal filed by the appellants be dismissed.

27. With the assistance of the learned counsel for the appellantsand the respondent, we have perused the order passed by the GCM aswell as the learned AFT and the materials placed on record.

28. At the outset, we may state that there are inherent limitationson the jurisdiction of this Court and it will not be permissible toreappreciate the evidence as recorded by the GCM unless this Courtfinds that the material factors have been either ignored or the evidencethat has come on record, has been appreciated in a totally erroneousmanner. With these limitations in mind, we will consider the materialsplaced on record.

29. Though nine charges have been framed against the respondent,he has been found guilty insofar as charges No. 1, 3, 4, 5, 7 and 9 areconcerned. He has been found not guilty insofar as charges No. 2, 6and 8 are concerned. The learned AFT has also concurred with thefinding of fact holding the respondent guilty of the aforesaid charges.The learned AFT has observed that the evidence led with regard to allthese charges is mostly common and as such, has decided all the saidpoints together.

30. The learned AFT has come to a finding of fact that though thecontracts were finalized by the Army Purchase Organization (hereinafterreferred to as the “APO”), insofar as the provisioning of dry supplies forthe troops is concerned, it found that both the APO as well as theDirectorate, are concurrently and co-jointly responsible for the monitoring,examination and the progress of the contracts.

31. The respondent, at the relevant time, was holding the post ofDGST. Though nine charges have been framed against the respondent,they are inter-connected and are related to three transactions as under:

(i) That the respondent had agreed to the proposal of M/sGujarat Co-operative Grain Growers Federation Limited(hereinafter referred to as “M/s GRAINFED”) foraddition of two more tendering stations at Gadarwara,District Narsingpur, Madhya Pradesh and Narsingpurin Madhya Pradesh in addition to 14 tendering stations A

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Aalready mentioned in the contract. The charge was thatthis was done with an intent to defraud the State;

(ii) That though the respondent had enquired in the complaintdated 4[th] April 2005 alleging fake tendering and presenceof Kesari Peas and Akra, which were unfit for humanBconsumption, he had omitted to ensure investigation ofthe alleged presence of Kesari Peas and Akra in DalMasur Whole. Therefore, the respondent wasinstrumental in feeding the food to the Army Personnel,which was not as per the standards. As a continuationof the same transaction, with an intent to defraud, heChad agreed to the proposal of M/s GRAINFED forupgradation of Dal Masur Whole supplied by the firmknowing that the said item had been found and declaredunfit for human consumption; and

(iii) That the respondent had approved deviation withDrelaxation to M/s PUNSUP Limited and M/s MMTCLimited of permitting 350-400 grains per 100 grams ofKabli Chana as against 300-350 grains per 100 grams,and that this was done with an intent to defraud.

32. Insofar as the first charge is concerned, the findings of theElearned AFT would reveal that the request of M/s GRAINFED for twoadditional tendering stations at Gadarwara and Narsingpur was madeon 3[rd] March 2005 to the Chief Director of Purchase (hereinafter referredto as the “CDP”), APO. The APO forwarded the said request forcomments/views of the Directorate vide communication dated 9[th] MarchF2005. The perusal of the orders of the learned AFT as well as the GCMwould reveal that, after accepting the recommendation of PW-6-MajorGeneral (Retd.) S.C. Mohan, the respondent did not agree to the requestof M/s GRAINFED. However, the proposal was put up before him forreconsideration pursuant to the note prepared by PW-13-Col. (Retd.)N.K. Yadav, Director Provisioning, stating that the entire quantity againstGthe acceptance of tender has already been tendered at Gadarwara withinthe delivery period. The respondent therefore agreed to the request ofM/s GRAINFED for two additional tendering stations and the decisionof the respondent was intimated to the APO.

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UNION OF INDIA AND OTHERS v. LT. GEN. (RETD.) S.K.SAHNI [B.R. GAVAI, J.]

33. With regard to the aforesaid charge, it will also be relevant torefer to the order passed by the learned AFT, in the case of Brig P.S.Gill v. Union of India and Others[3]. In the said case, the petitionertherein (Brig. P.S. Gill), at the relevant time, was working as CDP, APO.The relevant portion of the said findings are as under:

“2. From a bare reading of the aforesaid charges it appears thatthe petitioner in the capacity of his being Chief Director ofPurchase, Army Purchase Organisation, Ministry of Defencecontrary to APO/MOD Consolidated Order No.3 of 1987, withintent to defraud/improperly approved addition of two moretendering stations namely Gadarwara and Narsingpur inMadhya Pradesh. For the purpose of drawing the charges,reliance appears to have been placed by the respondents on theexhibits, the details of which may be charted out as under:

ExhibitPageParaL239-LXIX294-XXVII1932VI141-1431 and 2II83-85-V139-140-LXXV303-305-XXVIII to XXXIII/I194-204/80- From the perusal of the exhibits noted above, there is nothing toshow that the addition of two tendering stations was not withinthe powers of the petitioner. Nothing could be pointed out toshow the relevancy of these documents for making out primafacie case against the petitioner. Further the statement of thewitness namely, PW1 Brig PPS Bal of CDP Army PurchaseOrganisation, AHQ New Delhi was scrutinised. He wascategorical in his statement that he was aware of the ConsolidatedOrder No.3 of 1987 (Ext.2) permits the inclusion of additionaltendering station. Ext.1 is related to the letter dated 06.10.2008

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Awritten to M/s M.P. Trade & Investment Facilitation CorporationLtd. for “procurement of 1000 MT Gram Crushed (Kibbled)against A/T even no. dated 05.12.2007 from M/s. MPTRIFAC-Addition of Tendering Station-Delhi. This one example wasquoted by the witness. This itself indicates that the addition oftendering stations is within the discretion of the competentBauthority to the effect that “stores can be tendered at Delhi as aspecial case in the subject A/T, subject to the condition that anyadditional expenditure incurred by the purchaser/savings accruingto the supplier, on account of this addition of tendering Station,shall be reimbursed by the Supplier to the Government” whichCis also exactly the requirement mandated in defence ConsolidatedOrder No.3 of 1987. Further with regard to the making of theadditional tendering stations by the accused-petitioner as perthe reply of PW1, the contract was amended as required byGovernment of India orders and the amended contract was alsocommunicated by Exh. VI. There was no objection to suchDacceptance of tendering stations from Audit authorities or byPCDA. Apart from it, witness also makes it clear in his answerto Question No.4 that the tenderer has option to select stationswhere he can tender stores as per the contract. The APO doesnot dictate the tendering stations. However, they must lendEthemselves to ease of inspection and movement of stores toconsignee depots. Lastly this witness also clarified that bymaking the addition of two tendering stations no monetarybenefits could be acquired by petitioner nor there was any extraexpenditure borne out by the respondents owning to acceptanceof two new stations by the accused-petitioner. Further by addingFthese two new stations, no violation of any rule or order wasmade by the accused petitioner.”

34. It could thus be seen that the very same AFT has come to afinding that the CDP, APO was within the powers to include additionaltendering stations. It has further been found that there was no objectionGto acceptance of such tendering stations from Audit Authorities or byCDP, APO. It is further to be observed that the learned AFT has clearlynoted that the Consolidated Order No. 3 of 1987 permitted inclusion ofadditional tendering station subject to the condition that the additionalexpenditure incurred by the purchaser/savings accrued to the supplier, H

on account of this addition of tendering station, shall be reimbursed bythe Supplier to the Government. There was a specific finding that onaccount of addition of two tendering stations, neither any monetarybenefits could be accrued to the petitioner therein (Brig P.S. Gill), northere was any extra expenditure borne out by the Army owing toacceptance of two new stations by the petitioner therein (Brig P.S. Gill).In any case, it is clear from the said order that the authority to acceptsuch additional tendering stations was with the CDP, APO. In view ofthis specific finding of the learned AFT recorded in the order dated 24[th]May 2011, we find that the finding, to the contrary, recorded by anotherBench of the learned AFT vide the impugned order dated 10[th] October2013 in the case of the present respondent, would not be sustainable.

35. In any case, it is not even the case of the appellants hereinthat any loss was caused to the Army on account of such decision orany additional benefit was accrued to M/s GRAINFED by such deviation.This is apart from the fact that the Consolidated Order No. 3 of 1987itself required any additional expenditure incurred by the purchaser/savings made by the supplier to be reimbursed by the Supplier to theGovernment. As such, the findings of the learned AFT that there wasan intention on the part of the respondent to defraud, in our view, wouldnot be sustainable.

36. Insofar as the second charge is concerned, it is with regard tothe respondent not taking action on the basis of the anonymous complaintdated 4[th] April 2005. The related charge is that though the Dal MasurWhole was found to also contain Kesari Peas and Akra, the respondentcleared the samples and the supply of said Dal Masur Whole wascleared. It is the case of the appellants that on account of this, the DalMasur Whole, which was not as per the standards, was fed to the ArmyPersonnel. It is their further case that the respondent also did not takeimmediate steps for preventing the consumption of the same. It is to benoted that after the receipt of the said anonymous complaint, the sampleswere sent for analysis and the presence of traces of Kesari Peas wasrevealed during analysis of samples on 13[th] May 2005. The respondentthereafter issued instructions to freeze the stocks. It is further to benoted that the DGST, vide order dated 12[th] April 2005, had directed aDepartmental Court of Inquiry to inquire into whether there were anyirregularities in tendering/inspection procedure of Dal Masur Whole AB

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Aoffered by M/s GAINFED. It will be apposite to refer to the said orderdated 12[th] April 2005:

“1. A departmental Court of Inquiry composed as under willassemble at the place, date and time to be fixed by the PresidingOfficer to investigate whether there were any irregularities intendering/inspection procedure of Masur Whole offered by M/S Gujarat Coop Grain Growers’ Federation Ltd. for inspectionby CFL ASC, Delhi against AT No.J-13028/1/4-03/45-RP/2005-PUR III dated 28 Feb 2005:- B

Presiding Officer– Brig V Marwaha

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DDST, HQ Delhi Area

Technical Members – Col SC Chakravarty

Dir ST (FI)

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(a) Whether the complete qty of 979.600 MT was tendered by15 Mar 2005. If so why was the BIO instructed to inspectonly 440.800 MT.

(b) Was it ascertained by the BIO that the complete qty i.e.979.600 MT has been tendered and a report made to thatEeffect.

(c) Why did the BIO not carry out sampling of the consignment,and why were the samples of bags rejected, not brought forthe perusal of CO/Lab analysis.

(d) The decision of CO, CFL ASC Delhi to repack and retenderthe stocks as and when ready when the AT Note is againstRisk Purchase; resulting in automatic extn of DP.

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(e) The acceptance of a cert from the contractor that the balanceof the consignment ie, 538.400 MT is packed in the sameGquality bags as the 440.800 MT; and thereby ordering itsrebagging.

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3. The Court will examine all associated issues, and pin pointresponsibility for lapses if any.

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4. The proceedings duly completed will be submitted personallyto ADGST (SM) by 19 Apr 2005.”

37. It could thus be seen that the Court of Inquiry was directed toexamine all associated issues and pin point responsibility for lapses, ifany. It is thus clear that the finding that the respondent had failed to takecognizance of the complaint and direct an inquiry with that regard, iscontrary to the material placed on record.

38. It is further to be noted that the GCM has itself, in its orderdated 18[th] February 2011, come to a conclusion that 560.727.380 MetricTons of Dal Masur Whole was declared gone bad within warranty periodfor which recoveries were made from M/s GRAINFED.

39. That leaves us with the third charge with regard to the relaxationbeing granted to M/s PUNSUP Limited and M/s MMTC Limited inacceptance of tender dated 26[th] June 2005, vide which 350-400 grainsper 100 grams of Kabli Chana was permitted on price reduction of 0.5%instead of 300-350 grains per 100 grams. It is to be noted that, leaveapart the respondent or anyone else gaining from the said relaxation,there is a specific finding that on account of the decision of reducing0.5% contract amount for such a relaxation, there has been a benefit tothe public exchequer. It will be relevant to refer to the finding of thelearned AFT in the case of Brig P.S. Gill (supra):

“There is no dispute on the point that DGST was the competentauthority for making relaxation in the specification. There is alsoample evidence that the DGST being competent authoritypermitted to despatch 400 grains per 100 gms. in the place of300-350 grains per 100 gms. DGST also appears to have madereduction of 0.5% from the contract amount, in that theGovernment money to the tune of Rs.7,57,480.16 was saved inthe matter of supplier M/s. Punjab State Civil SuppliesCorporation Ltd pertaining to Charge Nos. 3 and 4. Similarly,within his powers, he granted relaxation to M/s. MMTC to thetune of Rs.4,48,050.00.”

40. It could thus be seen that the learned AFT has specificallycome to a finding that on account of such decision, public money tothe tune of Rs.7,57,480.16 was saved in the case of supplierM/s Punjab State Civil Supplies Corporation Ltd. Similarly, an amount AB

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Aof Rs.4,48,050/- was saved in the case of relaxation granted toM/s MMTC Limited.

41. It is not the case of the appellants that the Kabli Chana sosupplied was of inferior quality or not as per the standards. The onlyallegation is that the relaxation which was granted was with regard toBnumber of grains that every 100 grams should contain. On the contrary,on account of reduction in price, there has been a substantial saving to the public exchequer, leave aside any pecuniary gain to the supplier. Asa matter of fact, even the GCM in paragraph (26) held that the respondentwas entitled to benefit of doubt with regard to his intent but has foundthat the said act was prejudicial to good order and military discipline.C

42. In any case, it is to be noted that clause 6 (a)(iv) in the tenderinquiry of the APO, which has been in vogue for decades, permitted thesame to be done. It will be relevant to refer the same, which reads thus:

“6 (a)(iv). When an appeal is preferred by the supplier againstDthe decision of the inspecting officer the final finding of theappellate authority viz. QMG’s Branch, ST-7/8 will automaticallysupersede the original report of the Inspecting Officerirrespective of the fact whether the said inspecting officerrecommended the consignment to be accepted subject to qualityallowance price reduction etc. In the event of any supplies beingEfound not conforming to the prescribed specification but beingconsidered of acceptable quality the Chief Director of Purchasemay, at his sole discretion, accept the supplies subject to suchreduction in price as he considers reasonable, in the light of thedefects found in the supplies or the quality of the suppliesFaccepted. In case, the reduction in price is up to 5%, theconsignment will be accepted without any reference to thecontractor for acceptance of the price reduction and thecontractor will not raise any objection thereto. However, if anyconsignment is acceptable on price reduction over 5% theconsent of the contractor will be obtained before acceptance ofGsupplies.”

43. It could thus be seen that the finding in that regard, in ourview, is also not sustainable. It will also be apposite to refer to the followingobservations of the learned AFT in the impugned order:

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“38. However, we are of the opinion that though these chargesstand proved which show that he had failed to perform the dutiesof the post of which he was assigned the duties and had donesuch acts prejudicial to good order and military discipline and hecannot escape the responsibilities in this regard. It is true thathis acts were prejudicial to army discipline and he had committedsuch acts with intent to defraud but it cannot be said that heactually committed fraud or did any such act which resulted inactual loss or wrongful gain to any person though his acts leadto an inference that attempts were made to cause a wrongfulgain and, therefore, he cannot escape his liabilities.”

44. It could thus clearly be seen that the learned AFT has come toa conclusion that it cannot be said that the respondent has actuallycommitted fraud or did any such act, which resulted in actual loss orwrongful gain to any person. However, in the same breath, the learnedAFT observes that the acts lead to an inference that attempts weremade to cause a wrongful gain, and therefore, the respondent cannotescape his liabilities. Observing this, the learned AFT comes to a findingthat the offence under Section 52(f) of the Army Act, 1950, which readsthus, was made out against the respondent:

“52. Offences in respect of property.-

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(f) . does any other thing with intent to defraud, or to causewrongful gain to one person or wrongful loss to another person.”

45. We are afraid as to whether such a finding would be sustainablein law. The learned AFT has specifically come to a finding that therespondent has not committed any fraud or did not commit any act whichresulted in actual loss or wrongful gain to any person. We are unable toappreciate as to on what basis the learned AFT comes to a conclusionthat the acts lead to an inference that the attempts were made to causea wrongful gain. The finding as recorded by the learned AFT is totallycontrary to the material placed on record.

46. We, therefore, find that the orders passed by the learned AFTas well as the GCM are not sustainable in law. The appeal of theappellants deserves to be dismissed and the Transferred Case (Criminal)

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ANo. 1 of 2017 filed by the petitioner (respondent in Criminal Appeal No.2169 of 2014) be allowed.

47. In the result, we pass the following order:

A. Criminal Appeal No. 2169 of 2014:

B(i) Criminal Appeal No. 2169 of 2014 filed by the appellants isdismissed.

B. Transferred Case (Criminal) No. 1 of 2017:

(i) Transferred Case (Criminal) No. 1 of 2017 filed by thepetitioner (respondent in Criminal Appeal No. 2169 of 2014)Cis allowed;

(ii) The order dated 18[th] February 2011 passed by the GCMholding the petitioner guilty and imposing penalty on himand the impugned order dated 10[th] October 2013, passed bythe learned AFT are quashed and set aside; D

(iii) The petitioner is acquitted of all the charges levelledagainst him; and

(iv) The petitioner would be entitled to all pensionary andconsequential benefits in accordance with law. The arrearsof such benefits shall be computed and paid to the petitionerEwithin a period of three months from the date of this judgment.

Devika Gujral and Amarendra Kumar(Assisted by : Rituja Chouksey, LCRA)

Appeal dismissed andTransferred Case allowed.

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