THE STATE OF KARNATAKA & ORS. versus M/S. VEDANTA LIMITED (FORMERLY KNOWN AS SESA STERLITE LIMITED) & ORS. on 6 March 2018

[2018] 3 S.C.R. 1

THE STATE OF KARNATAKA & ORS.

v.

M/S. VEDANTA LIMITED (FORMERLY KNOWNAS SESA STERLITE LIMITED) & ORS.

(Criminal Appeal Nos. 348-356 of 2018)

MARCH 06, 2018

[A. K. SIKRI AND ASHOK BHUSHAN, JJ.]

Code of Criminal Procedure, 1973 – ss.451 and 457 –Disposal of seized property pending trial – Seizure of illegallystocked iron ore – State filed application u/ss.451/457 CrPC seekingpermission to dispose off the seized iron ore by e-tender – SpecialCBI Judge allowed the application vide order dated 08.05.2015 –Against the order, writ petitions filed by respondents – High Courtallowed the writ petitions and directed release of the iron ore infavour of the respondents – Propriety – Held: High Court whileallowing the writ petition had only relied on acceptance of the finalreport by CBI Judge dated 15.12.2015 which was not relevant withregard to order dated 08.05.2015 – Seizure of the iron ore was notin case Crime No. 2/2014 in which final report has been acceptedby CBI Judge on 15.12.2015, rather seizure of the iron ore was in adifferent proceeding in which Order dated 08.05.2015 was passed– When release of iron ore on an application filed by the State underss.451/457 CrPC was in a different proceeding, there was no effector consequence of acceptance of the final report vide Order dated15.12.2015 in case Crime No. 2/2014 – High Court erred in allowingthe Writ Petition on the strength of the final report accepted on15.12.2015 – However, it shall be open for the respondent to fileappropriate application before the Special CBI Judge for releaseof seized iron ore – Karnataka Forest Act, 1963 – ss. 2(7)(b)(iv),24(e), 62, 80 – Karnataka Forests Rules, 1969 – rr. 143, 162.

Allowing the appeal, the Court

HELD : 1. It is clear that the final Report which wasaccepted on 15.12.2015, was final report in case Crime No. 2/2014which was registered after the investigation by SIT in pursuanceof order of this Court passed in Writ Petition No. 562 of 2009 and

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Ain the above case, no offence was found against the respondent.Order dated 08.05.2015, on the other hand, was passed in differentproceedings which proceedings commenced by registration ofFIR dated 15.03.2010, Ankola Police Station Crime No. 189/2010.[Paras 16, 18] [8-D-E; 9-G-H]

B2. Clearly seizure of the iron ore was not in case CrimeNo. 2/2014 in which final report has been accepted on 15.12.2015rather seizure of the iron ore was in different proceeding in whichproceeding Order dated 08.05.2015 was passed. When releaseof iron ore on an application filed by the State under Section451/457 Cr.P.C. was in different proceeding, there was no effectCor consequence of acceptance of the final report vide Order dated15.12.2015 in case Crime No. 2/2014 and the High Courtcommitted error in allowing the Writ Petition on the strength ofthe final report accepted on 15.12.2015. High Court while allowingthe Writ Petition had only relied on acceptance of the final reportDby CBI Judge dated 15.12.2015 which, was not relevant withregard to Order dated 08.05.2015 passed by the trial court. [Para19] [10-F-H]

3. The order and judgment of the High Court is whollyunsustainable and is hereby set aside. However, it shall be openEfor the respondent to file an appropriate application before theXXXII Additional City Civil and Sessions Judge and Special Judgefor CBI Cases, Bangalore (CCH-34), for release of seized ironore by establishing its existence and its ownership right over thesame, which may be considered by Jurisdictional Criminal Courtin accordance with law. [Para 21] [11-C-D]FCRIMINAL APPELLATE JURISDICTION : Criminal AppealNos. 348-356 of 2018.

From the Judgment and Order dated 04.07.2017 of the High Courtof Karnataka at Bengaluru in Writ Petition No. 18941 of 2016G(GM-MM-S).

Basava Prabhu S. Patil, Sr. Adv, V. N. Raghupathy, ChinmayDeshpande, Pariksith Angadi, Advs for the Appellants.

Dhruv Mehta, Ninad Laud, Jayant Mohan, Anjuman Tripathy, IvoD’Costa, Aditya Swain, Advs for the Respondent.

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The Judgment of the Court was delivered by ASHOK BHUSHAN, J. 1. Delay condoned. Leave granted.

2. This appeal has been filed against the impugned judgment andorder of Karnataka High Court dated 04.07.2017 in Writ Petition No.18941/2016 and Writ Petition Nos. 19328-19335/2016(GM-MM-S). HighCourt vide its judgment dated 04.07.2017 has allowed the Writ Petitionsdirecting for release of the iron ore in favour of writ petitioners(respondent herein).

3. The brief facts necessary to be noted for deciding this appeal are:

A First Information Report No. 17/2009-10 dated 15.03.2010 wasregistered for illegal storage of iron ore by violating Sections 2(7)(b)(iv),62, 80 of the Karnataka Forest Act, 1963 and Rules 143, 162 of theKarnataka Forests Rules, 1969. Judicial Magistrate First Class, Ankolapermitted for further inquiry by including Section 24(e) of KarnatakaForest Act, 1963. On 20.03.2010 about 5 Lakhs Metric Tonnes of illegallystocked iron ore has been seized on “as-is-where-is-basis” and seizurereport has been submitted to the Judicial Magistrate First Class, Ankolawho permitted to retain the same until further orders.

4. Another case registered was CBI Crime No. RC 17(A)/2012.Chargesheets were filed after investigation in Special C.C. No. 268/2013,Special C.C. No. 11/2014, Special C.C. No. 14/2014, Special C.C. No.15/2014, Special C.C. No. 36/2014, Special C.C. No. 37/2014, SpecialC.C. No. 38/2014, Special C.C. No. 53/2014, Special C.C. No. 54/2014.The State filed an application under Section 451/457 Cr.P.C. in theaforesaid cases before the XXXII Additional City Civil and SessionsJudge and Special Judge for CBI Cases, Bangalore (CCH-34), seekingpermission to dispose off 56 heaps of iron ore lying at the Belekeri Portapproximately weighing 2,72,713.347 Metric Tonnes by e-tender.

5. Notices were published in the newspapers inviting the filing ofapplication for the interim disposal of seized 56 heaps of iron ore atBelekeri Port by Dy. Conservator of Forests, Karwar on 29.03.2015.The XXXII Additional City Civil and Sessions Judge and Special Judgefor CBI Cases, Bangalore (CCH-34) after considering the applicationpassed an order on 08.05.2015 allowing the application under Section451/457 Cr.P.C. permitting the applicant/State to dispose off the seizediron ore through e-tender on certain terms and conditions as enumeratedin the order.

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A6. Against Order passed on 08.05.2015, Writ Petition No. 18941/2016 and Writ Petition Nos. 19328-19335/2016(GM-MM-S) were filedby the respondents in the High Court of Karnataka at Bangalore. In theWrit Petition following prayers were made:

“PRAYER

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Wherefore, for the reasons and circumstances stated tohereinabove, it is most humbly prayed that this Hon’ble Court may bepleased to:

(i) Issue a Writ of Certiorari or any other appropriate Writ orCOrder or direction setting aside the Order dated 08.05.2015 passedby the Court XXXII Additional City Civil & Sessions Judge &Special Judge for CBI Cases in Bangalore (CCH 34) in Spl. C.C.Nos. 268/2013, 11, 14, 15, 36, 37, 38, 53 & 54 of 2014 vide Annexure– A & all further consequential proceedings thereto, only in so faras the petitioner is concerned, in the interest of justice and equity.

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(ii) Issue a Writ of Mandamus or any other appropriate Writ orOrder or Direction, directing the 2nd,3rd, 4th & 5th Respondentsto consider the representation dated 04.02.2016, 08.02.2016 &24.02.2016 submitted by the petitioner vide Annexure –‘P’,’P1’& ‘P2’ and permit the petitioner to remove and transport the entireEquantity of approximately 34.544 Metric Tonnes of iron ore fromBelekere Port premises to the Pig Iron Plant of the petitioner atAmona in State of Goa by endorsing the Mineral Dispatch Permits& Forest Transit Passes & without insisting on any further paymentof Royalty, in the interest of justice and equity.

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(iii) Issue such other appropriate Writ or Order or Direction asdeemed fit under the facts and circumstances of the case, in theinterest of justice and equity.”

7. The State filed an objection in the Writ Petitions opposing theprayers made in the Writ Petitions. The High Court vide its judgmentGand order dated 04.07.2017 allowed the Writ Petitions. The State aggrievedby the judgment of the High Court has come up in this appeal.

8. We have heard Shri B.P.S. Patil learned Senior Advocate forthe appellant and Shri Dhruv Mehta, Advocate for the respondent.

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9. Learned counsel for the appellant in support of the appealcontends that the High court committed error in allowing the Writ Petitionsand directing release of the iron ore in favour of the writ petitioner. It iscontended that the basis of the judgment of the High Court is the finalreport accepted by learned CBI Judge vide Order dated 15.12.2015which has nothing to do with the proceeding in which, an Order waspassed by Special Judge CBI on 08.05.2015. It is contended that theHigh Court on wrong premise has allowed the Writ Petitions. It issubmitted that the writ petitioners themselves have filed an applicationin the Special C.C. Nos. 268/2013, 11, 14, 15, 36, 37, 38, 53 & 54 of 2014under Section 451/457 Cr.P.C. dated 08.03.2016, praying for directingthe release in favour of the applicant company herein entire quantity ofabout 34544 Metric Tonnes of iron ore, belonging to the applicant companyseized on 20.03.2010, which application was subsequently, withdrawn.

10. Learned Senior Counsel for the appellant submits that CrimeNo. 2/2014 dated 11.07.2014 in which final report was submitted andaccepted by XXXII Additional City Civil and Sessions Judge and SpecialJudge for Prevention of Corruption Act at Bangalore City was a casewhich was registered by Special Investigation Team of KarnatakaLokayukta, was altogether a different case, unconcerned with proceedingunder which an application under Section 451/457 Cr.P.C. has beenallowed.

11. Learned Counsel appearing for the respondent refuting thesubmission of the Senior Counsel for the appellant contends that theinvestigations were carried out by the CBI in pursuance of the directionspassed by this Court in Writ Petition (C) No. 562/2009 and under theorders of this Court Special Investigation Team, Karnataka Lokayukta,Bangalore carried on investigations and registered a case with KarnatakaLokayukta SIT Police Station, being Crime No. 2/2014 in whichproceeding after thorough investigation, a final report dated 08.10.2015was submitted by SIT, which was accepted by the Court on 15.12.2015.No offence having been found proved against the respondent, High Courthas rightly directed for release of iron ore seized in favour of therespondent. Respondent’s claim for release of iron ore is confined to thequantity of about 34544 Metric Tonnes of iron ore belonging to therespondent company that has been seized on 20.03.2010 and lying at theplot allotted to applicant-company by Shree Mallikarjun Shipping Pvt.Ltd in Belekeri Port Area. He submitted that the claim of above iron oreis different from that seized and pending in case No. 189/2010.

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A12. We have considered the submissions of the learned counselfor the parties and have perused the record.

13. High Court in the impugned judgment has based its decisionof allowing the Writ Petition and directing the release of the iron ore infavour of the respondent on the final report being accepted by the learnedBCBI Judge by Order dated 15.12.2015. High court has further noticedthat this Court directed on 07.09.2012 to CBI to investigate into illegallystocked iron ore in pursuance of which direction, SIT was constitutedand final report was submitted. Paragraphs 10 and 15 of the judgment ofthe High court are the entire consideration of the High Court for allowingthe Writ Petition. It is useful to extract the Paragraphs 8 to 15 of theCjudgment which is to the following effect:

“8. Accordingly, a Special Investigation Team (SIT, for short) wasappointed by the State. They submitted a final report, which is infavour of the writ petitioner. The final report has been acceptedby the learned CBI Judge by an order dated December 15, 2015.D9. Mr. K. N. Phanindra, learned advocate, seeks a direction forrelease of the materials in favour of his client.

10. Mr. V. G. Bhanuprakash, learned additional governmentadvocate, submits that a case of theft is pending and, therefore,the seized materials could not be released in favour of the petitioner.

11. In the wake of the final report being submitted by the SIT, wedo not find any impediment to release the iron ore in favour of thepetitioner. An inventory has to be prepared and, thereafter, theiron ore shall be released in favour of the writ petitioner,immediately. The entire process must be completed by four weeks.

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12. The writ petitions are, therefore, allowed.

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13. Mr. Phanindra, at this stage, expresses an apprehension thatthe authorities may claim royalty.

14. When the material is in the port area, it is presumed that royaltyhas, already, been paid, otherwise transport permit would not havebeen granted. Therefore, his apprehension is unfounded.

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15. We make no order as to costs.

Sd/-

CHIEF JUSTICESd/- JUDGE”

14. The investigation which was carried out by SIT was registeredas Crime No. 2/2014. The respondent in his compilation has filed a noticeissued under Section 91 Cr.P.C. to the Managing Director/Director ofM/s SESA Goa Limited, presently, M/s Vedanta Limited (respondent).Notice dated 21.08.2014 refers to the Order of this Court and registrationof Crime No. and it is useful to extract the opening paragraph of thenotice issued to the respondent dated 21.08.2014:

“ KARNATAKA LOKAYUKTA Special Investigation Team No. SP2/CR/02/2014/SIT/KLA/03 DATE: 21.08.2014

POLICE NOTICE

(U/S 91 Cr.P.C.)

Special Investigation Team, Karnataka, Lokayukta, Bangalore, isinvestigating the cases of illegal mining of Iron ore in KarnatakaState on the orders of the Hon’ble Supreme Court (Writ ApplicationNo. 562/2009 IA 189 dated 16.09.2013) and that of the Govt. ofKarnataka. In this regard a case is registered against your companyin KLA SIT Police Station Cr. No. 02/2014 u/s 379, 420 r/w120(b)IPC & 13(2), r/w 13(1)(d) PC Act & 21, 23 r/w 4(1)(a)MMRD Act 1957.

In this connection, you are requested to direct a competent officialconversant with the activities/transactions of your company (M/s. Mineral Enterprises Limited No. 49,3rd Floor Khanija Bhavana,Race Course Road,) to appear before the undersigned at 10.30hrs on 30.8.2014 at the office of Special Investigation Team, ATICBuilding, University of Veterinary Science, Hebbal, Bangalore alongwith the following original documents/data. The said official mayalso carry soft copy of the data/tables/charts of the informationas mentioned below.

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15. It was in the aforesaid proceeding that final report wassubmitted on 08.10.2015. The respondent has filed a copy of the ordersheet of XXXII Additional City Civil and Sessions Judge and SpecialJudge for Prevention of Corruption Act at Bangalore City in Crime No.2/2014 where filing of the final report is noticed and Court also directedfor issue notice to the complainant returnable by 15.12.2015. On15.12.2015, the Court in Crime No. 2/2014 passed the following order:

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A“Complainant by name Sri Manjunatha Annigeri, Superintendentof police attached Special Investigation Team, Karnataka Lokayuktha,Bengaluru is present and submits that he has gone through the recordswhich disclosed that no case is made out against all the accused at theconclusion of investigation. He submits that he has no objection to acceptthe ‘B’ report.B

I have gone through the records. It is seen that according to theInvestigating Officer, there is no convincing evidence to arrive atconclusion that allegations against all the accused are made out. Afterhaving gone through the ‘B’ report I find that there are no grounds toproceed further against all the accused and accordingly ‘B’ report isCaccepted.

(V. G. BOPAIAH)

XXIII ACC and Spl. Judge, Bangalore City.”

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16. From the above, it is clear that the final Report which wasaccepted on 15.12.2015, was final report in case Crime No. 2/2014 whichwas registered after the investigation by SIT in pursuance of order ofthis Court passed in Writ Petition No. 562 of 2009 and in the above case,no offence was found against the respondent.

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17. The Order dated 08.05.2015 was passed allowing theapplication under Section 451/457 Cr.P.C. of the State in Special C.C.No. 268/2013 and C.C. No. 11, 14, 15, 36, 37, 38, 53 & 54 of 2014 whichis mentioned in the operative portion of the order itself. It is useful toextract the operative portion of the Order dated 08.05.2015 which is toFthe following effect:

“ORDER

The Application filed by the State Government U/ss. 451/457 ofCr.P.C., are allowed permitting the Applicant/State to dispose offthe seized iron ore through e-tender with the following terms andGconditions:

1. The auction of the property shall be through e-tender under thesupervision of the ‘Monitoring committee’ constituted by theHon’ble Supreme Court.

2. The e-tender auction shall be conducted by involving the CBIAuthorities and under intimation to the Lokayukta Department.

3. The e-tender auction shall be conducted only after measurementof the quality and quantity of each of the 56 iron ore heapsseparately through mines and Geology Department.

4. The e-auction shall be conducted after taking samples of eachof the 56 iron ore heaps separately for which Panchanama shallbe drawn.

5. The e-auction process is over the disposal off the iron ore becovered by videography.

6. The auction amount shall be deposited immediately with theCourt in Spl. CC. No. 268/2013 and a copy of the document forhaving deposited the amount be kept in connected cases.

7. The DMG shall keep records of the exact quantity of iron oretransported by the successful bidder of the property.

The Original of the Order be kept in Spl. CC. No. 268/13 and acopy thereof be kept in Spl. CC. Nos. 11/14, 14/14, 15/14, 36/14,37/14, 38/14, 53/14 & 54/14.

(Directed to the Judgment Writer, transcribed by the correctedand then signed and pronounced by me in the open court on this8th day of May 2015), Sd/-08/05

(Pradeep S. Balikal) XXXII Addl. City Civil and Sessions Judge and Spl. Judge for CBI Cases, Bangalore”

18. From the above, it is clear that Order dated 08.05.2015 waspassed in different proceedings which proceedings commenced byregistration of FIR dated 15.03.2010, Ankola Police Station Crime No.189/2010. After investigation by CID/CBI chargesheets were filed, whichwere the cases as referred above. Iron ore which was directed to bereleased by Order dated 08.05.2015 was iron ore seized on 20.03.2010.

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AIn the additional documents filed by the appellant, IA filed on behalf ofthe respondent under Section 451/457 Cr.P.C. dated 08.03.2016 has beenbrought on record. It is useful to extract the prayer made in the applicationof the respondent, which is to the following effect:

“PRAYER

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Wherefore, it is prayed that this Hon’ble Court be pleased to allowthe above application and direct the release in favour of theapplicant company herein, of about 34,544 MT of Iron Orebelonging to the applicant company that has been seized on20.03.2010 and is lying at the plot allotted to applicant companyby Shree Mallikarjun Shipping Private Limited in Belekeri Portarea, in the interest of justice & equity.

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Place: BangaloreDate 08.03.2016

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19. It is, thus, clear that seizure of the iron ore was not in caseCrime No. 2/2014 in which final report has been accepted on 15.12.2015rather seizure of the iron ore was in different proceeding in whichproceeding Order dated 08.05.2015 was passed. When release of ironore on an application filed by the State under Section 451/457 Cr.P.C.Fwas in different proceeding, there was no effect or consequence ofacceptance of the final report vide Order dated 15.12.2015 in case CrimeNo. 2/2014 and the High Court committed error in allowing the WritPetition on the strength of the final report accepted on 15.12.2015. Wehave already extracted the entire consideration of the High Court whileGallowing the Writ Petition from paragraphs 8 to 15 of the judgment.High Court while allowing the Writ Petition had only relied on acceptanceof the final report by CBI Judge dated 15.12.2015 which as has beennoted above, was not relevant with regard to Order dated 08.05.2015passed by the trial court.

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20. Learned Senior Counsel for the appellant has also brought onrecord subsequent judgment of the High Court where High Court inWrit Petition filed against the same Order dated 08.05.2015 by anotherwrit petitioner has disposed off the Writ Petition granting liberty to thatWrit Petitioner to approach Jurisdictional Criminal Court for release ofthe seized iron ore by establishing its existence and ownership rights.Reference has been made to the Order of the Karnataka High Courtdated 20.11.2017 in Writ Petition Nos. 29527-29531 of 2017 and WritPetition Nos. 29881-29884 of 2017 filed as Annexure P-11.

21. In result of foregoing discussion, we are of the view that orderand judgment of the High Court is wholly unsustainable and is herebyset aside. We, however, observe that it shall be open for the respondentto file an appropriate application before the XXXII Additional City Civiland Sessions Judge and Special Judge for CBI Cases, Bangalore (CCH-34), for release of seized iron ore by establishing its existence and itsownership right over the same, which may be considered by JurisdictionalCriminal Court in accordance with law. The Criminal Appeal is allowed.

Bibhuti Bhushan Bose

Appeal allowed.

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