Supreme Court of India
JINOFER KAWASJI BHUJWALA versus THE STATE OF GUJARAT on 19 June 2020
[2020] 5 S.C.R. 383
JINOFER KAWASJI BHUJWALA
v.
THE STATE OF GUJARAT
(Criminal Appeal No. 460 of 2020)
JUNE 19, 2020
[ASHOK BHUSHAN, M.R. SHAH ANDV. RAMASUBRAMANIAN, JJ.]
Bail – A Company ‘ANL’ was issued a Letter of Intent forConstruction and development of Vessels Traffic and PortManagement System (VTPMS) in the Gulf of Khambhat, on BuildOwn Operate and Transfer basis – It was followed by a ConcessionAgreement, entered into between the Gujarat Maritime Board, ANLand the Government of Gujarat – Dispute arose regarding theCapital Cost incurred by ANL – On basis of a preliminary inspectionreport, the Gujarat Maritime Board claimed that ANL made an extraincome of Rs. 134.38 crores – ANL moved the Commercial Courtu/s.9 of the Arbitration and Conciliation Act, 1996 as there wasthreat of termination of the Concession Agreement and thereaftermatter was referred to Arbitration – The Gujarat Maritime Boardlodged a complaint and on basis of the said complaint FIR wasregistered against 8 accused, including A-1, A-2 and A-3 u/ss. 406,409, 420, 465, 468, 471 and 120 B IPC and s. 13(1)(d) of thePrevention of Corruption Act – A-1(Appellant) and A-2 his son werearrested – Ever since then, the appellant is in judicial custody – Hisbail application was rejected several times – However, the HighCourt gave liberty to the appellant to file a fresh application beforethe trial Court if the trial could not commence within a period of sixmonths – Incidentally, this period of six months has expired andtrial has not commenced yet – Also, the Arbitral Tribunal passedinterim measures and financial interests of the Maritime Board wereprotected – In the background of the above facts, the appellantsought bail – Per contra, the respondent-State contended that thematter involved national security, which stands threatened by theactivities of the appellant – Held: The potential threat to nationalsecurity, cannot be sustained, for two reasons – The first reason isthat the project became operational in August 2010 and the disputes A
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SUPREME COURT REPORTS
Astarted between the parties in 2018 that too with regard to financialmatters – The second reason, by virtue of interim measures ofprotection granted by the Arbitral Tribunal u/s. 17, the terminationof Concession Agreement stands stayed – Therefore, the Companyof which the appellant is the head, continues to operate the VTPMSProject – The Arbitral Tribunal has also permitted the State PoliceBto be there at the Project and allowed Maritime Board to depute acompetent person, familiar with the project in question, to superviseand monitor the functioning of the Project – Also, the period of sixmonths within which the High Court hoped the trial to commence,has expired as on date – Therefore, appellant is entitled to bail andCis directed to be released on bail.
Allowing the appeal, the Court
HELD: 1. The period of six months within which the HighCourt hoped the trial to commence, has expired as on date. Theappellant, who is admittedly 62 years of age has already spentDnearly a year in judicial custody. A period of nine months haspassed from the date of filing of the charge sheet. Though theSolicitor General contended that the sanction to prosecute hasalready been issued as against Government Officials, the factremains that charges have not been framed and the trial has notEcommenced as yet. [Para 20][389-F]
2. The arguments revolving around the potential threat tonational security, cannot be sustained, for two reasons. The firstreason is that the project became operational in August-2010and the disputes between the parties started only in 2018 andFthat too with regard to financial matters. The second reason isthat by virtue of the interim measures of protection granted bythe Arbitral Tribunal (comprising of a former Judge of this court,a former Judge of the High court and a Senior Advocate) in termsof section 17 of the Arbitration and Conciliation Act, 1996, thetermination of the Concession Agreement stands stayed.GTherefore, the Company of which the appellant is the head,continues to operate the VTPMS Project. In any case, the ArbitralTribunal has not merely protected the economic interests of theState, but also permitted the State Police to be there at the projectsite. The Tribunal has also allowed the Maritime Board to depute H
a competent person, familiar with the project in question, tosupervise and monitor the functioning of the project. Therefore,this contention cannot be accepted blind fold. [Para 21][389-G-H; 390-A-B]
3. Though much is said about the tempering of witnesses,it is seen from the material on record that the prosecution restsmainly on documents. In any case, the prosecution is notremedyless, if a person enlarged on bail, indulges in certainactivities. [Para 22][390-C]
4. Therefore, this Court is of the view that the appellant isentitled to bail. Hence, the appeal is allowed and the appellant isdirected to be released on bail, subject to such terms andconditions as the Sessions Court may deem fit and appropriate inthe facts and circumstances of the case, including a condition forthe surrender of the passport, which shall be subject to orderspassed by the Trial Court from time to time. [Para 23][390-D]
CRIMINAL APPELLATE JURISDICTION: Criminal AppealNo. 460 of 2020.
From the Judgment and Order dated 09.12.2019 of the High Courtof Gujarat at Ahmedabad in CRLMA No. 19125 of 2019.
Tushar Mehta, SG, Harish Salve, Siddhartha Dave, Mukul Rohatgi,Sr. Advs., A.R. Gupta, Mohit Chaudhary, Aditya A. Gupta, KunalSachdeva, Ms. Puja Sharma, Omar Ahmad, Jaspal Singh, BalwinderSingh Suri, Anup Kumar Mishra, M/s. Kings and Alliance Llp , AniruddhaP. Mayee, Gursharan H. Virk, Ms. Misha Rohatgi, Nakul Mohta,Ms. Shubhangi Rathore, Advs. for the appearing parties.
The Order of the Court was passed by
V. RAMASUBRAMANIAN. J.
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1. Leave granted.
2. Aggrieved by the dismissal of his bail application by the HighCourt of Gujarat at Ahmedabad, a person who is cited as A-1 in the FirstInformation Report in Crime No.I-I/5/2019 dated 26.06.2019 for allegedoffences under Sections 406, 409, 420, 465, 468, 471 and 120B of the A
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AIndian Penal Code and Section 13(1)(d) of the Prevention of CorruptionAct, 1988, has come up with the above appeal.
3. We have heard Mr. Harish Salve and Mr. Siddhartha Dave,learned Senior Counsel appearing for the appellant; Mr. Tushar Mehta,learned Solicitor General appearing for the State of Gujarat andMr. Mukul Rohatgi, learned Senior Counsel appearing for Gujarat MaritimeBoard.
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4. Pursuant to an invitation to offer floated in November-2006and the assessment of the proposals received from interested parties, acompany by name Aatash Norcontrol Limited (for short “ANL”), wasCissued with a Letter of Intent on 26.02.2007 for the construction anddevelopment of Vessels Traffic and Port Management System(hereinafter referred to as “VTPMS”) in the Gulf of Khambhat, onBuild Own Operate and Transfer (BOOT) basis. It was followed by aConcession Agreement dated 30.09.2007 entered into between theGujarat Maritime Board, ANL and the Government of Gujarat.D
5. As per the Concession Agreement, Aatash Norcontrol Limitedis obliged to install Key Radar Stations at 7 places in the Gulf of Cambayand repeater Radar Stations at 2 places, with the master control beingset up at Dumas. The object of setting up the Radar Stations is to monitorthe vessels entering the Gulf of Khambhat and to ensure Coastal andENational Security.
6. VTPMS for the Gulf of Khambhat became operational inAugust, 2010 after a completion certificate was issued by the GujaratMaritime Board. But in 2018 disputes arose regarding the capital costincurred by ANL. An expert committee was appointed under Clause 18Fof the agreement and they submitted a report indicating a particularamount as the capital cost.
7. But Gujarat Maritime Board claimed, on the basis of apreliminary inspection report of the Principal Accountant General thatANL made an extra income of Rs. 134.38 crores during the financialGyears 2015-16 and 2017-18 and that the said amount should be paid byANL.
8. ANL moved the commercial court at Ahmedabad under section9 of the Arbitration and Conciliation Act, 1996, as there was a threat oftermination of the Concession Agreement. The disputes were also referredHto arbitration. Before the Arbitral Tribunal constituted on 01.03.2019, both parties (ANL and Gujarat Maritime Board) moved applicationsunder section 17 of the Arbitration and Conciliation Act.
9. However, on 01.05.2019, the Gujarat Maritime Board lodged acomplaint with the CID Crime, Gandhi Nagar Zone, alleging that ANLwas guilty of (1) inflation of cost (2) non execution of certain works (3)creation of shell companies and carrying out work through them (4)siphoning and round tripping of funds through those companies (5) notcarrying out construction on the lands allotted for Master Control Room(6) raising of false bills and forged invoices (7) managing the issue ofcompletion certificate through the then Superintending Engineer and ChiefNautical Officer of the board and (8) entering into a conspiracy witheach other to exceed the expenditure of the project upto Rs. 100 croresand committing criminal breach of trust.
10. On the basis of the above complaint, a FIR bearing no. I-I/5/2019 was registered on 26.6.2019 against eight named accused, foralleged offences under sections 406, 409, 420, 465, 468, 471 and 120Bof IPC and section 13(1)(d) of the Prevention of Corruption Act. Theappellant herein and his son and daughter were cited as A-1, A-2 andA-3 respectively, as they happen to be the Directors of the Companies.
11. On 27.6.2019, the appellant and his son were arrested. Afterbeing in police custody under orders of court, the appellant was sent tojudicial custody on 2.7.2019. Ever since then, the appellant is in judicialcustody. His bail application was first rejected by the Sessions Court on6.7.2019. Though the appellant moved the High Court, he withdrew theapplication on 6.8.2019 with liberty to move a fresh application after thefiling of the charge sheet. But, it is relevant to note that the two officersof the Maritime Board who were also implicated, were granted bail bythe High Court.
12. A charge sheet was filed by the Investigating Officer on21.9.2019, as against the appellant and the others. However, no chargesheet was filed against the Officers of the Maritime Board, as orders ofsanction from the Government were awaited at that time.
13. In view of the filing of the charge sheet, the appellant moveda bail application before the Sessions Court but the same was rejectedon 3.10.2019. Therefore, the appellant moved the High Court of Gujarat,which, by the order impugned in the appeal, dated 09-12-2019, dismissedthe application. However, the High Court gave liberty to the appellant to A
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Afile a fresh application before the Trial Court if the trial could notcommence within a period of six months. Incidentally, this period of sixmonths has now expired and the trial has not commenced as yet.
14. Before proceeding further, it is to be noted that on 7.8.2019,the Arbitral Tribunal passed orders on the applications under section 17Bof the Arbitration Act (1) granting a stay of the termination notice (2)directing ANL to deposit the entire amount generated out of the VTPMSproject in an escrow account and to file a monthly report regarding thedetails of deposits so made (3) permitting ANL to withdraw 25% of thegross amount so deposited, to meet the overheads and to run the project(4) permitting the State Police Personnel deputed at the project site toCcontinue without any interference with the day to day functioning of theproject except overseeing safety aspects (5) permitting the MaritimeBoard to depute a competent person to supervise and monitor thefunctioning of the project (6) directing ANL not to encumber or disposeof the plant and machinery and other valuable items and (7) directing DANL to pay Rs. 16,43,44,227/- to the Maritime Board payable for themonth of July, 2019.
15. As a result of the aforesaid interim measures ordered by theArbitral Tribunal, ANL continues to operate the project under theConcession Agreement and the financial interests of the Maritime BoardEstand protected by those directions.
16. In the background of the above facts, it is contended by thelearned Senior Counsel appearing for the appellant (1) that a cloak ofcriminality has been given to a dispute of purely civil nature (2) that theeconomic interests of the Board stand protected by the interim measuresFgranted by the Arbitral Tribunal (3) that the appellant is a senior citizenhaving medical complications and (4) that since the charge sheet hasbeen filed and the trial has not commenced, the continued incarcerationof the appellant is unjustified.
17. The prayer for bail is opposed by the State and the MaritimeGBoard, on the ground inter alia (1) that the very object of the ConcessionAgreement was to establish Radar Stations to monitor and identifyinfiltration by non-State vessels involved in anti-national activities (2)that what is on hand is not just a civil dispute but a huge financial scam(3) that the appellant is the brain behind such a scam involving roundtripping of funds through a maze of shell companies (4) that the matterH
involves national security, which now stands threatened by the activitiesof the appellant and the companies managed by him (5) that the appellanthas already started influencing the witnesses, by sending gifts to thesenior officers of the Maritime Board (6) that under his pressure, twoChartered Accountants who had earlier given statements, retracted (7)that even before the report of the Forensic Sciences Laboratory couldreach the Investigating Officer, the appellant exhibited knowledge of itscontents, thereby showing his influence and power (8) that one of theco accused is absconding and (9) that since many witnesses for theprosecution are either the former or present employees of the appellantor retired Government Officials, they are vulnerable and hence theappellant’s request for bail should be rejected.
18. We have carefully considered the pleadings, the documents,the written notes of submissions and the issues involved.
19. At the outset, we should point out that the impugned order ofthe High Court is dated 9.12.2019. The operative portion of the order ofthe High Court is extracted as follows:
“In view of the aforesaid discussion, I am not inclined toexercise the discretion in favour of the present applicant.Application is, therefore, dismissed. However, liberty isreserved to the applicant to file fresh application before theconcerned trial Court if the trial is not commenced within aperiod of six months”.
20. Obviously, the period of six months within which the HighCourt hoped the trial to commence, has expired as on date. The appellant,who is admittedly 62 years of age has already spent nearly a year injudicial custody. A period of nine months has passed from the date offiling of the charge sheet. Though the learned Solicitor General contendedthat the sanction to prosecute has already been issued as againstGovernment Officials, the fact remains that charges have not been framedand the trial has not commenced as yet.
21. The arguments revolving around the potential threat to nationalsecurity, cannot be sustained, for two reasons. The first reason is thatthe project became operational in August-2010 and the disputes betweenthe parties started only in 2018 and that too with regard to financialmatters. The second reason is that by virtue of the interim measures ofprotection granted by the Arbitral Tribunal (comprising of a former Judge A
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Aof this court, a former Judge of the High court and a Senior Advocate) interms of section 17 of the Arbitration and Conciliation Act, 1996, thetermination of the Concession Agreement stands stayed. Therefore, theCompany of which the appellant is the head, continues to operate theVTPMS Project. In any case, the Arbitral Tribunal has not merelyprotected the economic interests of the State, but also permitted theBState Police to be there at the project site. The Tribunal has also allowedthe Maritime Board to depute a competent person, familiar with theproject in question, to supervise and monitor the functioning of the project.Therefore, we cannot accept this contention blind fold.
22. Though much is said about the tempering of witnesses, it isCseen from the material on record that the prosecution rests mainly ondocuments. In any case, the prosecution is not remedyless, if a personenlarged on bail, indulges in certain activities.
23. Therefore, we are of the view that the appellant is entitled tobail. Hence, the appeal is allowed and the appellant is directed to beDreleased on bail, subject to such terms and conditions as the SessionsCourt may deem fit and appropriate in the facts and circumstances ofthe case, including a condition for the surrender of the passport, whichshall be subject to orders passed by the Trial Court from time to time.
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Ankit Gyan
Appeal allowed.
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