Karnataka High Court
State By Central Bureau Of ... vs C Prasad on 19 February, 2026
Author: H.P.Sandesh
Bench: H.P.Sandesh
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NC: 2026:KHC:10301-DB
CRL.A No. 1924 of 2017
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF FEBRUARY, 2026
PRESENT
THE HON'BLE MR. JUSTICE H.P.SANDESH
AND
THE HON'BLE MR. JUSTICE VENKATESH NAIK T
CRIMINAL APPEAL NO.1924 OF 2017
BETWEEN:
STATE BY CENTRAL BUREAU OF INVESTIGATION
(ANTI-CORRUPTION BRANCH)
NO.36, GANGANAGAR
BELLARY ROAD
BENGALURU-560 032.
...APPELLANT
(BY SRI P. PRASANNA KUMAR, SPL.P.P.)
AND:
1. C. PRASAD
S/O. LATE V. CHANDRASEKAR
AGED ABOUT 47 YEARS.
Digitally 2. MRS. ANITA PRASAD
signed by W/O. C. PRASAD
ANJALI M AGED ABOUT 42 YEARS.
Location:
High Court
of RESPONDENT NOS.1 AND 2 ARE
Karnataka RESIDING AT NO.2618, SECTOR-I
27TH MAIN, HSR LAYOUT
BENGALURU-560 102.
3. M/S. LIVE ADS (INDIA) PVT. LTD.
2618 SECTOR-I, HSR LAYOUT
BENGALURU-560 102
REPRESENTED BY ITS DIRECTORS
MR. C. PRASAD & MRS. ANITA PRASAD.
...RESPONDENTS
(BY SRI SHIVAJI H. MANE, ADVOCATE, FOR R-1 TO R-3)
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NC: 2026:KHC:10301-DB
CRL.A No. 1924 of 2017
HC-KAR
THIS CRIMINAL APPEAL IS FILED UNDER SECTION 397 READ
WITH SECTION 401 OF THE CR.P.C. PRAYING TO SET ASIDE THE
JUDGMENT AND ORDER OF ACQUITTAL DATED 8-2-2017 PASSED BY
THE XXI ADDITIONAL CITY CIVIL AND SESSIONS JUDGE AND
PRINCIPAL SPECIAL JUDGE FOR CBI CASES, BENGALURU (CCH-4) IN
CRIMINAL APPEAL NO.589 OF 2015, THEREBY ALLOWING THE
APPEAL FILED BY ACCUSED NOS.1, 2 AND 5/RESPONDENTS HEREIN
AND REVERSING THE JUDGMENT AND ORDER OF CONVICTION AND
SENTENCE DATED 27-3-2015 PASSED BY THE XVII ADDITIONAL
CHIEF METROPOLITAN MAGISTRATE, (SPECIAL COURT FOR CBI
CASES), BENGALURU, IN CRIMINAL CASE NO.21056 OF 2012 AND
CONSEQUENTLY, ALLOW THIS CRIMINAL APPEAL.
THIS CRIMINAL APPEAL IS COMING ON FOR HEARING, THIS
DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE H.P.SANDESH
and
HON'BLE MR. JUSTICE VENKATESH NAIK T
ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE H.P.SANDESH) Heard Sri P. Prasanna Kumar, learned Special Public Prosecutor for the appellant-Central Bureau of Investigation (for short, 'CBI'), Sri Shivaji H. Mane, learned counsel for respondent Nos.1 to 3-accused Nos.1, 2 and 5, and perused the material on record.
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NC: 2026:KHC:10301-DB CRL.A No. 1924 of 2017 HC-KAR
2. This appeal is filed by the appellant-CBI praying to set aside the judgment of acquittal dated 8.2.2017 passed by the XXI Additional City Civil and Sessions Judge and Principal Special Judge for CBI Cases, Bengaluru, (CCH-4), in Criminal Appeal No.589 of 2015 (for short, 'First Appellate Court') and to confirm the judgment of conviction and order on sentence dated 27.3.2015 passed by the XVII Additional Chief Metropolitan Magistrate, (Special Court for CBI Cases), Bengaluru, in Criminal Case No.21056 of 2012 (for short, 'trial Court').
3. The factual matrix of the case of the appellant-CBI is that the Inspector of Police, CBI/ACB, Bengaluru, filed the charge-sheet against accused Nos.1 to 5 for the offences punishable under Section 120B read with Sections 420, 465, 466 and 471 of the Indian Penal Code, 1860, under Sections 132, 135 and 135A of the Customs Act, 1962 and under Section 7(1)(a)(ii) of the Essential Commodities Act, 1955, read with Section 25(1) and (2) of the Fertiliser (Control) Order, 1985. It is alleged in the case of the prosecution that accused Nos.1 and 2, being Directors of accused No.5-M/s. Live Ads -4- NC: 2026:KHC:10301-DB CRL.A No. 1924 of 2017 HC-KAR India Private Limited, and Sri Goutham Jangada @ Jain-accused No.3 and Sri Rajesh Kumar Bhandari @ Raju-accused No.4, have entered into criminal conspiracy to cheat the Government of India in the matter of exporting muriate of potash without reimbursing the subsidy granted by the Government of India which is restricted item of export. It is further alleged that accused No.1 carried the export of muriate of potash in the garb of industrial salt from ICD, Bengaluru, from July-2008 to July-2009, and accused Nos.3 and 4 have supplied muriate of potash to accused No.1 and received amount from accused No.5-Company through their account and also by opening accounts in the names of their workers and in the names of persons working for them. It is further alleged that muriate of potash which is also called as potassium chloride is imported product. As per Government of India, Notification No.30(RE- 2003)/2000-2007 dated 28.02.2004, the export of muriate of potash is restricted and export is permitted under licence. As per Section 7(1)(a)(ii) of the Essential Commodities Act, 1955, read with Section 25(1) and (2) of the Fertiliser (Control) Order, 1985, no person shall, except with the prior permission of the Central Government and subject to such terms and -5- NC: 2026:KHC:10301-DB CRL.A No. 1924 of 2017 HC-KAR conditions as may be imposed by such Government, sell or use fertiliser, for purposes other than fertiliser of the soils and increasing productivity of crops. It is further alleged that on 16.07.2009, accused No.1, Director of M/s. Live Ads India Private Limited, submitted shipping bills through his Clearing House Agents, M/s. Chakiat Agencies, for export of consignment of 550 metric tons of muriate of potash in the garb of industrial salt by false declaration and tried to export fraudulently and dishonestly to Malaysia. Random samples from three containers had been drawn in the presence of representatives of M/s. Chakiat Agencies, the Custom House Agents of M/s. Live Ads India Private Limited, on 21.08.2009, and the samples were sent to the Deputy Director of Agriculture for testing and the samples were found to be muriate of potash, after samples were tested at the Fertiliser Control Laboratory of Agriculture Department of Government of Karnataka, Bengaluru. The Deputy Director of Agriculture in his three reports dated 01.09.2009 has mentioned that tests sample is muriate of potash and samples is according to specification. Thus, it is contented that the accused have entered into criminal conspiracy to cheat the Government of -6- NC: 2026:KHC:10301-DB CRL.A No. 1924 of 2017 HC-KAR India in the matter of exporting of muriate of potash without reimbursing the subsidy granted by the Government of India by falsely declaring the same as industrial salt and thereby, caused wrongful loss to the Government of India to the tune of Rs.26.8 crore and corresponding wrongful gain to themselves. Hence, these accused are alleged to have committed the aforesaid offences.
4. Having considered the accusation made against these accused, they have been secured before the trial Court and they have been enlarged on bail. Thereafter, charges are framed. The prosecution, in order to prove its case, examined PWs.1 to 55 and got marked Exs.P1 to 559. Accused No.1 was examined as DW1 and on behalf of the respondents-accused, Exs.D1 and D2 were got marked.
5. The trial Court, having considered both oral and documentary evidence, came to the conclusion that no material is placed against accused Nos.3 and 4 with regard to the conspiracy is concerned and therefore, acquitted accused Nos.3 and 4 and convicted accused Nos.1 and 2, who are the Directors of accused No.5-Company for the aforesaid offences. -7-
NC: 2026:KHC:10301-DB CRL.A No. 1924 of 2017 HC-KAR Being aggrieved by the same, accused Nos.1, 2 and 5 filed an appeal before the First Appellate Court in Criminal Appeal No.589 of 2015 and the First Appellate Court, having considered both oral and documentary evidence, acquitted the accused by reversing the judgment of conviction passed by the trial Court. Hence, the present appeal is filed by the appellant- CBI questioning the judgment of acquittal passed by the First Appellate Court.
6. Learned counsel for the appellant-CBI mainly contended that the First Appellate Court committed error in acquitting the accused though the evidence of PWs.3 and 4 is clear and consistent; the prosecution had established that the material that was attempted to be exported by accused Nos.1, 2 and 5 on 16.07.2009 was muriate of potash, but not industrial salt. The chemical analysis report at Exs.P24, P27 to P42 clearly establish the fact that what was sought to be exported is muriate of potash. He submitted that PW4 also identified Exs.P43 to P50, which are the payment bills submitted by accused No.5 for testing the samples. He submitted that the evidence of PW7 corroborates with the -8- NC: 2026:KHC:10301-DB CRL.A No. 1924 of 2017 HC-KAR evidence of PWs.3 and 4 and the same has not been properly considered by the First Appellate Court.
7. Learned counsel would further submit that the evidence of PW5 clearly establishes that as per the Lab Test Report, the material attempted to be exported by accused Nos.1, 2 and 5 on 16.07.2009 was muriate of potash, but not industrial salt and hence, the customs clearance agency had stopped the export of the said material. He would submit that Ex.P63 to P102 are the shipping bills generated at ICD, Whitefield, Bengaluru, and the said evidence has not been properly appreciated by the First Appellate Court. He would further submit that PW8-Superintendent of Customs was examined and has clearly stated regarding seizure of thousand bags each containing 50 kgs. of muriate of potash as per mahazar at Ex.P62 in the presence of the witnesses. He would submit that PW9 clearly established the preparation of the shipping bills at Exs.P63 to 102 pertaining to accused No.5 and PW9 has identified Exs.P103 to 109, which are samples taken from the materials exported by accused No.5-Company. The evidence of PW9 also corroborates with the evidence of PW13. -9-
NC: 2026:KHC:10301-DB CRL.A No. 1924 of 2017 HC-KAR He would submit that even evidence of PWs.10, 14, 15 and 19 would reveal that seized fertilser container belongs to accused No.5-Company of which accused Nos.1 and 2 are the Directors and the same has not been properly appreciated by the First Appellate Court. Since the Chemists have not been examined before the trial Court and that cannot be a ground to acquit these accused. Hence, he prays for allowing the appeal and to convict the accused.
8. Per contra, the learned counsel for the respondents- accused Nos.1, 2 and 5 would submit that the trial Court acquitted accused Nos.3 and 4, but convicted accused Nos.1, 2 and 5 on relying the evidence of PWs.4, 7, 9 and 10. The trial Court also failed to take note of the documents, which are marked, have not been proved by examining the Chemists. The First Appellate Court while re-appreciating both oral and documentary evidence, held that the prosecution failed to prove that accused Nos.1, 2 and 5 entered into criminal conspiracy to cheat the Government of Indian and in furtherance of the said criminal conspiracy have exported muriate of potash under the garb of industrial salt from July
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NC: 2026:KHC:10301-DB CRL.A No. 1924 of 2017 HC-KAR 2008 to July 2009 without reimbursing the subsidy amount to the Government of India and thereby, caused wrongful loss to the Government of India to the extent of Rs.26.8 crore and wrongful gain for themselves, and rightly acquitted accused Nos.1, 2 and 5, and detailed reasoning is given after Paragraph No.40 of its judgment. Hence, it does not require any interference of this court.
9. Having heard the learned counsel for the parties, the points that would arise for consideration of this Court are:
i. Whether the First Appellate Court committed error in reversing the findings of the trial Court and erroneously, acquitted accused Nos.1, 2 and 5 for the offences invoked against them in Criminal Appeal No.589 of 2015?
ii. Whether it requires interference of this Court by reversing the finding of the First Appellate Court and to restore the judgment of conviction and order on sentence passed by the trial Court?
iii. What order?
10. Learned counsel for the appellant-CBI during the course of his arguments reiterated the grounds urged in the appeal memo and mainly contended that the very approach of
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NC: 2026:KHC:10301-DB CRL.A No. 1924 of 2017 HC-KAR the First Appellate Court is erroneous. He mainly relies on the evidence of PWs.4, 7, 14 and 15, so also the evidence of PWs.9, 10 and 19. On the other hand, the learned counsel for the respondents-accused Nos.1, 2 and 5 would vehemently contend that the First Appellate Court has not committed any errors in re-appreciating the evidence.
11. No doubt, PWs.2 and 3 are the Chemists, who have conducted the Tests (samples sent for chemicals analysis). PW2, in his cross-examination, has categorically admitted that he has no personal knowledge about the procedures followed in getting the test report; he verified and submitted the report; he admits that he can only speak on the report marked at Ex.P24 and he does not speak on the authenticity or correctness of Ex.P24; he admits that work book is not produced; he admits that all forms of mixtures and chlorides can be called as salt. He also states that he does not agree that industrial salt can be derived by processing chlorides in various compositions proportions, which are non-edible. He further admits that he has not personally conducted the test. The CBI has not personally asked to test the samples sent by the Customs
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NC: 2026:KHC:10301-DB CRL.A No. 1924 of 2017 HC-KAR Department. Hence, from the evidence of this witness, it is very clear that he is not having personal knowledge about the procedure to be followed in getting the test report, he has not conducted the test in presence of the Customs Department and except Ex.P24-Report, he has not produced any other report.
12. The other evidence available before the Court is PW3. He was subjected to cross-examination. He also categorically admits that they will not take much care of the standard of packing subjecting the samples to test, he does not know when the samples was drawn by the Customs Department; there is no sample packing specification test before subjecting the samples to test witness volunteers that they only see the condition of the material; the chemical composition in the given sample varies, if it is not properly packed as per standard norms; he does not know when materials are exposed to atmosphere, the chemical composition in the material would vary. He further admitted that he has not produced the samples in this case and on Ex.P24, it is not possible to say what is the fool proof test methods adopted while giving observation as per Ex.P24. He further admits that he has not
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NC: 2026:KHC:10301-DB CRL.A No. 1924 of 2017 HC-KAR produced any documents to show that he has adopted the system of preserving the samples and analysis data for two years. He also admits that he is working as a Chemist in the Lab, but he does not know whether the samples and analysis data would be asked by customs or CBI within a given time. He further admits that he has not given any documents to show that their (PWs.2 and 3) Lab is having authority to test samples and he has not conducted the solubility test.
13. Having taken note of the answers elicited from PW3 also, the same will not come to the aid of the prosecution to prove the charges against accused Nos.1, 2 and 5.
14. Learned counsel for the appellant-CBI relies on the evidence of PWs.4 and 7. In the evidence of PWs.4 and 7 also, it is very clear that they have not personally conducted the test. Hence, when such being the evidence available before the Court, the said contention relied on by the learned counsel for the appellant cannot be accepted.
15. Now, this Court has to rely on the evidence of PWs.14 and PW15. PWs.14 and 15, in their evidence, have clearly
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NC: 2026:KHC:10301-DB CRL.A No. 1924 of 2017 HC-KAR stated that though they have collected the samples, but they have not conducted the test. However, only PW15 says that, in his presence, the test was conducted. When question was put to this witness, he categorically says that in his supervision, analysts have conducted analysis. Since he has not been asked to produce the report, he has not produced the same. His evidence is very clear that all the tests conducted by them discloses the +VE result that of the potassium chloride, but he has handed over the form K, form P and office copy of the analysis report and at that time, the Inspector prepared seizure memo. In the cross-examination, he has admitted that their Technicians will conduct analysis or tests on known fertilisers only and they have not conducted the solubility test in these samples, as it is not necessary. This witness categorically admits that their Lab is not having any facility to test industrial salt, but he admits that their Lab has facility only to conduct fertiliser as per norms of FCO, their Lab has facility to conduct solubility test.
16. Evidence of PWs.14 and 15 is also very clear that they have not conducted the tests. PW15 has stated that the
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NC: 2026:KHC:10301-DB CRL.A No. 1924 of 2017 HC-KAR tests were conducted by Smt. Hemalatha S.V. and Sri Kiran Kumar K.P. However, Smt. Hemalatha S.V. and Sri Kiran Kumar K.P. have not been examined before the Court.
17. Having considered the material available before the Court in respect of all reports, the prosecution has not examined the author(s) of the reports. When the very test reports are not proved by the prosecution and the competent persons are not examined before the Court, the very contention of the learned counsel for the appellant-CBI that the evidence of PWs.2, 3, 4, 7, 14 and 15 comes to the aid of the prosecution cannot be accepted.
18. Learned counsel for the appellant-CBI would vehemently contend that accused No.1 carried the export of muriate of potash in the garb of industrial salt without reimbursing the subsidy amount to the Government of India and thereby, caused wrongful loss to the Government of India. When the very charges levelled against the accused were not proved, the question of proving of the forgery and creation of documents under the provisions of the Indian Penal Code,
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NC: 2026:KHC:10301-DB CRL.A No. 1924 of 2017 HC-KAR 1860, also will not come to the aid of the prosecution to invoke those penal provisions against the accused.
19. Having considered the grounds which have been urged and also considering both oral and documentary evidence, the First Appellate Court has in detail discussed from paragraph No.40 onwards and it has taken note of the fact that even permission was granted to the Customs Department to export the same in the cargo and the First Appellate Court has clearly discussed the evidence of PWs.2, 3, 4, 7, 8, 9, 10, 14, 15 and 19. When such detailed reasoning is given by the First Appellate Court, we do not find any grounds to come to other conclusion that the First Appellate Court committed error in acquitting accused Nos.1, 2 and 5. The basic charges, which have been framed against these accused, have not been proved by the prosecution and we also do not know for what reason the Chemists, who conducted the tests, were not examined before the trial Court and the same is known only to the CBI for withholding those witnesses before the trial Court in order to prove the charge. In view of the discussions made above, we pass the following
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NC: 2026:KHC:10301-DB CRL.A No. 1924 of 2017 HC-KAR ORDER Criminal appeal is dismissed.
Sd/-
(H.P.SANDESH) JUDGE Sd/-
(VENKATESH NAIK T) JUDGE KVK List No.: 1 Sl No.: 7