Vinod Kumar Jain vs State Through Central Bureau Of ...
1990 Latest Caselaw 238 Del

JUDGMENT

P.K. Babri, J.

(1) These two petitions. Criminal Miscellaneous (Main) No. 1507/88 filed by Vinod Kumar Jain and Criminal Revision No.53/89 filed by the State (Central Bureau of Investigation), are against the order dated October 19, 1988, of a Metropolitan Magistrate, New Delhi, by which he had directed framing of charges against accused Vinod Kumar Jain, R.K. Jain and Kishan Lal Suri for offences punishable under Section 120-B read with Section 420 of the Indian Penal Code (for short 'IPC').and another charge under Section 420 Indian Penal Code against accused K.L.Suri and charges under Section 109 read with Section 420 Indian Penal Code against accused V.k. Jain and he by the same order had discharged the accused K L. Narang, Swaraj Jaggi and Sudershan Kumar Tandon.

(2) Vinod KumarJain has pleaded for quashment of charges framed against him and also against his .other co-accused pleading that the main offence of conspiracy having been allegedly committed at Singapore and no permission having been obtained of the 'Central Government under Section 188 of the Code of Criminal Procedure (for short 'the Code'), the proceedings against the petitioner and his- co-accused cannot continue before the trial court. Another plea taken by him is that statements of the witnesses recorded by the investigating agency in the present case,who are residents .of .Singapore, are not covered by the provisions of the Code particularly Section 161 of the Code and thus, for framing the charges for the purpose of Sections 239 & 240 of the Code the said statements could not be looked into and thus, the charges could not have been framed against the petitioner and his co-accused on 'the basis of the said statements. Thirdly, it has been pleaded that statements of B.S. Aujla and his son Manmohan Singh, residents of Singapore, being the statements of accopoalices, could not be basis for framing the charges unless the said statements are corroborated by some independent and material evidence being relied upon by the prosecution and there being no such corroborative evidence collected by the prosecution, thus the charges could not have been framed. I would first deal with these points.

(3) The petitioner V.K. Jain is the Managing Director of M/s Jain Shudh Vanaspati Limited whereas his co-accused and his real brother R.K. Jain is the Managing Director of M/s Jain exports (Private) Limited and his other co-accused K..L. Suri is a partner of the firm M/s. Orient Enterprises. B.S. Aujla arid his Manmohan Singh are residents of Singapore and they are having three different companies at Singapore. V K. Jain was having allegedly close business association with BS. Aujia and his son. Manmohan Singh as he has been importing different kinds of palm oil through ..them since 1977. In the year 1978 it. is alleged that V.K. Jain bad entered into conspiracy with B.S. Aujia and pursuance to which he had attempted to import banned coconut oil by showing that in fact he was importing R.B.D Palm Oil but Realizing that his game was up as .the Custom authorities had become wise to this particular conspiracy, he got the ship redirected to Singapore where be had to unload the coconut oil and get it loaded with RBD. Palm Oil and thus, in the process he suffered huge loss of 2.5 million Us dollars. In order to cover up the said loss, V.K.. Jain and his brother R K Jain had decided to make a more careful and planner scheme which is the basis of the present conspiracy,

(4) According to the prosecution. V K Jain visited Singapore on different dates commencing from March 10, 1979 and met B S Aujla on his visits in the months of March and April 1979 and explored the possibility of engaging certain ship which could be scuttled in the sea and certain false documents could be obtained showing the purchase of some valuable goods which could be apparently shown as loaded on the said ship although in fact, no such loading was to take, place of genuine goods and those goods and those goods were to be .got , and certain parties were to be persuaded to import such goods by entering into contracts with the companies B.S. Aujla and they were to open their. Letters of Credit for the said contracts and the goods were to be insured with the insurance companies and after getting the ship scuttled in the mid sea, the amount was to be claimed from the insurance companies.

(5) At the outset I may mention that in the charge-sheet the Central Bureau of Investigation (for short 'CBI') bad mentioned about the conspiracy having been made between V.K..Jain and B.S.Aujla during visits of V.K. Jain to Singapore commencing from March 10, 1979 and the charge sheet also recites that all other criminal acts have been committed in pursuance to the conspiracy so made. 'If we go by the charge sheet, it is evident that initially conspiracy to do illegal things took place at Singapore and on the face of it the provisions of Section 188 of the Code Would become applicable but the Cbi had taken up the position before the trial court that the charge sheet is not in consonance with the evidence collected by .the Cbi and in fact, the conspiracy took place only in the month of June 1979 in a meeting held at Bombay between all the conspirators and on earlier visits to Singapore V.K Jain had merely explored the possibility of a scheme which was in bids mind of arranging for a ship which could be scuttled in mid sea carrying only the containers filled with water and not in the genuine goods and he had been seeking the help of B S.Aujla and his son Manmohan Singh in order to explore the possibility of putting-such a scheme into practice.

(6) The Metropolitan Magistrate, after discussing the complete evidence being relied upon by the Cbi in a very detailed.and elaborate order had concluded that in fact, the conspiracy, according to .the evidence collected by the prosecution, was entered into only for the first time at Bombay in June 1979 and all other acts committed by V.K, Jain or Aujla and his son were in the nature of getting the necessary information and the examining the possibility of obtaining false documents from different parties at Singapore and for finding out the price of the ship which was to be got scuttled and alt those acts by itself did not constitute an agreement to do an illegal act. The Magistrate was also well aware that mere agreement to do an illegal act is covered by the .definition of 'conspiracy' which by itself is an offence. So the question which now to be decided by me is whether the opinion expressed by the Magistrate on these points is corrector not. It is not disputed before me that incase a finding has to be given that conspiracy was made initially at Singapore, then provisions of Section 188 of the Code would direct y come into play. Section 188 of the Code lays down that when an offence is committed outside India by a citizen of India, he may be dealt with in respect of such office as if it had been committed at any place within India provided that no such offence shall be enquired into or tried, in India except with the previous sanction of the Central Government..

(7) In Kailash Sharma v. State, 1973 Cri L.J 1021,it has been held by a Single Judge of this Court that even if one of the ingredients of the offence of cheating takes place outside India the provisions of Section 188 of the Code come into play and no inquiry or trial could take place without obtaining the necessary sanction of the Central. Government Counsel for the petitioner has vehemently argued that in order to prove conspiracy it is. not necessary that there should be availa.bleonly direct evidence,, the offence of conspiracy could be proved even from circumstantial evidence or by implication from facts. He has placed reliance of Mohd Usman Mohd Hussain Maniyar and another v. State of Maharashtra, . It has been laid down that for an offence under Section 120-B, the prosecution need not necessarily prove that the perpetrators expressly agreed to do or cause to be done the illegal acf, the agreement may be proved by necessary implication. He has also referred to Noor Mohammad Mohd. Yusuf Momin v. State of Maharashtra,AlR 1971 SC885, wherein it has been laid down by the Supreme Court that Section 120-B..IPC, makes the criminal conspiracy as a substantive offence which offence postulates an agreement between two or more persons to do or cause to be done an illegal act or an act which is not illegal by illegal means and the same differs from other offences, in that mere agreement is made an offence even if no step is taken to carry out that agreement. He also quoted certain observations from Major E.G. Barsay v. State of Bombay, , wherein it has been mentioned that the gist of the offence of conspiracy is an agreement to break the law although the illegal act agreed to be done has not been done. It, was also observed that it is not an ingredient of the offence that all the parties should agree to do a single illegal act. It may comprise the commission of a number of acts : He has also placed reliance on R.K. Dalmia and others v. The Delhi Administration, , wherein it has been laid down that it is further not necessary that each member of a conspiracy must know all the details of the conspiracy. Lastly, he has referred to Shivnaraya Laxminarayan Joshi & others v. State of Maharashtra & others. , wherein it has been observed by the Supreme Court that it is manifest that a conspiracy is always hatched in secrecy and it is impossible to adduce direct evidence of the same The offence can be only proved largely from the inferences drawn from acts or illegal omission committed by the conspirators in pursuance Of a common design.

(8) The learned counsel for the Cbi does not dispute the legal propositions which are well settled. However, the question remains to be decided whether from the evidence being relied upon by the prosecution, could an inference be drawn or not as has been drawn out by the prosecution itself in the charge sheet that the conspiracy between V.K.Jain and B.S.Aujla initially took place in Singapore ?

(9) Counsel for the petitioner has referred to different portions of the statement of B.S.Aujla in support, of his contention that the same would show that io fact conspiracy has been already hatched between him and V. K. Jain sometimes in the months of March-April 1979. At page 4 of his statement it is mentioned that V.K.Jain wanted to recover losses by fraudulent means and sometimes in February-March 1979 he broche the subject with him and had advised him that in doing such job he must ensure that sufficient backup documents from reliable people should be obtained in order to avoid problems for everybody.At page 6 of the statement, he mentioned that he was informing V.K.Jain on telephone regarding the information collected by him on such lines and in May 1979 V.K.. Jain had made up his mind to carry out the scheme and he had informed him of the items for Which false documents were to be obtained and also about final price that was to be settled about one of the ships and in one of the meetings in May 1979. it was decided by V K.Jain that to give authenticity to the shipments it was not prudent that only one company of B.S. Aujla should be used but his other two companies Palmex Enterprises and Pentrex and Company be also,used. At page 8 of the statement, he mentioned that in May 1979 he discussed with Manmohan Singh about the documents to be procured to support of purchase of commodities and had suggested the name of Rudy Rodriquez and he,talked with the said person who agreed to supply the documents and his son approached Charlie Kwa who also agreed to provide documents at 5% of the invoice value and at page 9. he stated that in May 1979 he bad instructed his employee Ramdas Nair to fill up about 10,000 empty drums with water as Be anticipated that some loading of the goods would have to be shown on the ship and Peter Teh, who was to arrange the ship which was to be scuttled, would definitely request for the same. It is also mentioned by him that before V.K. Jain left Singapore in May 1979 he informed him that he would go back to India and discuss with his intended partners in the said scheme and there was a strong likelihood that the scheme would be carried out. He also mentioned in his statement that his son bad agreed to help in the matter and be told his son that be would arrange the finance for making payment to Peter Teh and others from whom he would have to obtain back up documents and he would also introduce him to some people whom he thought could be relied on Then reference is made to the statement of Manmohan Singh at page 15 wherein be mentioned that V.K. Jain and his companions were their main clients and almost daily calls were made to V.K. Jain, . his brother R.K.Jain or his senior management staff and from April-May 1979 till the end of the year most of the calls made to V.K. Jain were in connection with the matters relating to 'AVERILLA' and 'OHDAI' ships. He also mentioned that during preliminary discussions held with Peter Teh during April 1979 he indicated his willingness to arrange scuttling of the ships as desired by V.K. Jain and his associates and Peter Teh visited his office for discussions a number of times and' on April 20, 1979, Peter Teh had rung up William Ho or Mo in Hongkong from his office in connection with this and there was . then reference to a telephone call made by his father to Peter Teh on April 24, 1979, at the Holiday Inn in Hongkong where Peter Teh was staying and be stated that the said call was made to find out from Peter Teh his progress in obtaining a ship for scuttling scheme. Lastly, reference is made to certain portions of the statement of Ramdas Nair wherein be mentioned that sometime in May 1979 Bhagwan Singh called him to his office and be met him and his son Manmohan Singh and Manmohan Singh told him that he wanted some service certificates and transportation bills for some cargo that be intended to ship to India and a week or later Manmohan Singh told him that he had about 10,000 empty drums in his warehouse and he wanted to fill them with water and later ship them under various shipping orders as scrap and palm oil and be bad agreed to do so.

(10) The learned counsel for the petitioner has vehemently argued that all these facts coming out from the.statements of the said three witnesses, an irresistible inference can be drawn that conspiracy had already taken place inasmuch as all these acts were being performed in pursuance to the conspiracy.

(11) The learned counsel for the respondent, on' the other hand, has read out the statements of these three persons in quite detail before me and has argued that all these acts which have been highlighted by the learned counsel for the petitioner were only in the nature of possibilities being examined for the scheme which was in the mind of V.K. Jain and ultimately an agreement to do illegal acts took place between conspirators only in the month of June 1979 when a meeting took place at Bombay of the conspirators. I need not refer to the details which were agreed upon in the meeting which took place in June 1979 because they have been given out in the judgment of the Metropolitan Magistrate with which there is no dispute.It is evident from the perusal of the statements of these important witnesses viz. B.S.Aujla, Manmohan Singh and Ramdas Nair,that during his visits to. Singapore. V K Jain was exploring the possibility of. carrying out his scheme of earning easy money by having some ships scuttled. In order to makeup his mind whether such a scheme could be brought into existence or not, V.K. Jain sought the help of B.S. Aujla and B.S. Aujla started getting information It is evident that unless and until an agreement has been made between V.K. Jain and B.S. Aujla for committing illegal acts, the offence of conspiracy cannot be said to have come into existence, Mere fact that B.S. Aujla had expressed his willingness to help V.K. Jain in his scheme is not the agreement made to do illegal acts because for reaching the agreement V.K. Jain wanted some information to be collected and B.S. Aujla started collecting information and getting into touch with the persons who could be helpful in this particular scheme which was in the mind of V.K.Jain, He had approached Peter Teh and found out the possibility of getting a 'ship which could be scuttled and had also negotiated the price of the ship with him and also had associated his son in getting in touch with different persons who could supply false, documents on payment of some money showing the sale of certain goods to the companies of BS.Aujla which were to be shown as shipped' to India in that particular ship which was to be scuttled and certain parties had agreed to supply the documents and as B.S. Aujla visualised that some loading has to be shown on the ship, he had 10,000 empty drums already available in his godown and had asked.Ramdas Nair to fill those drums with water which Nair had agreed to do so, and he bad conveyed all these information to V.K. Jain either on telephones or in person pn various visits of V K Jain to Singapore

(12) It cannot be urged that when B.S. Aujla and his son Manmohan Singh were moving in the matter and were even incurring some expenditure in collecting the information and meeting the people and probing the possibility of getting the ship and false documents from different persons that an agreement had been already reached between B.S. Aujla and .V K. Jain for doing illegal acts. I hence, agree with the opinion of the Magistrate expressed in detail in his order that in fact, an agreement to commit illegal acts was made only at Bombay when meeting took place between V.K.Jain and others including B.S, Aujia and Manmohan Singh when they agreed to commit illegal acts. In the whole of the statement of BS.Aujla there has nothing come out that any such agreement was made to commit illegal acts prior to June 1979. He had used the words that it was V K. Jain who had the scheme in his.mind of earning easy money by getting the ship scuttled and was asking his help to get him necessary information to explore the possibility of putting such a scheme into practice and B.S. Aujla was collecting all such information in order to help his friend and business associate and ultimately VK. lain had gone. back to Bombay mentioning that he would discuss the matter with his other colleagues in order to decide whether the scheme is to be gone through or not. So, it is in the month of June1979 that B.S. Aujla and Manmohan Singh came over to Bombay on being asked to do so that actually the agreement was made for committing the illegal acts in respect of implementing the said scheme and thus, prima facie, the offence of conspiracy appears to have been committed for the first time at Bombay in the month of June 1979 I may make it clear that I am giving this finding on the basis of the prima facie view of the evidence collected by the prosecution and being relied upon in support of the charge-sheet. It may be that during the trial the evidence may come which may show that conspiracy had taken place initially at Singapore and if the Magistrate comes to such a conclusion on such evidence, the trial being carried out without obtaining the sanction of the Central Government would become vitiated. As a present advised, I hold that front the reading of the evidence being relied upon by the prosecution it cannot be said that conspiracy, in fact, took place initially at Singapore. Mere fact that in the charge-sheet a wrong inference has been drawn by the prosecution from the aforesaid evidence that conspiracy took place at Singapore initially is not binding on the respondent A wrong inference drawn in the charge-sheet from the facts is not binding on any one.

(13) Counsel for the petitioner has vehemently argued that prior to the meeting taking place in June 1979 at Bombay, it has been already decided by V. K.Jain to show that items Pvc resins, cloves and brass scrap are to be shown imported and for that purpose false documents have to be obtained by B.S. Aujla from different companies and negotiations had also taken place between B.S.Aujla and Peter Teh for getting the ship and price of the ship was also got reduced from 2 million Us dollars to 1.5 million Us dollars, and V.K.Jain also bad given out that in case prices of those items are quoted as somewhat lower level the Indian traders would grab those items and would readily open Letters of Credit and already directions had been issued to Ramdas Nair for filling 10,000 drums with water and thus, there can be no escape from coming to the conclusion that in fact, the conspiracy between V.K. Jain and B.S. Aujla has already come into existence at Singapore. The statement of B.S. Aujla shows that V.K.Jain and R.K. Jain during the period March 12, 1979 to March 16, 1979, visited Singapore and one Sheik Allouddin also came from Malayasia and during discussions he told about Peter Teh who Was expert in scuttling of the ships and V.K.Jain visited Singapore again between April 2, 1979, to April 6, 1979 and requested B.S. Aujla to find out cost of the scuttling of the ship and Aujla contacted Peter Teh and he quoted the cost as 2 million Us dollars, and V.K. Jain again came to Singapore between May 13, 1979 to May 22, 1979 and by that time V K. Jain had made up his mind to carry out the scheme and he informed B.S. Aujla that he was in close touch with a broker in India who could arrange to establish Letters .of Credit for the said commodities if.the prices are quoted slightly below market rates prevalent in India in respect of those commodities which will true the Indi traders to grab those items and open Letters of Credit for importing those items and B.S. Aujla again contacted Peter Teh and on his request he reduced the price from 2 million US. dollars to 1.5 million Us dollars and at that point of time, it was decided that in order to give authenticity that in. fact genuine items are being shipped B.S. Aujla was to use not the name of one of his companies but was to use his other two companies as well. However, B.S. Aujia has also stated in same sequence that V.K: Jain had left Singapore after telling. B S. Aujla that be would discuss the scheme with his intending partners in India and there was a strong likelihood that the scheme would be carried out and thereafter he told Manmohan Singh that since V.K.Jain Was their biggest client and he was most probably going to carry out the scheme, it would be impossible for P.S. Aujla to refuse to cooperate with V. K. Jain and asked Manmohan Singh to handle this project if it comes through.

(14) The agreement could come into existence only when offer of V.K. Jain bad been accepted by B.S. Aujla A person may think of purchasing some smuggled items and could get in touch with another person and till the other person agrees to supply the smuggled items it cannot be said that any agreement had come into existence. In order to facilitate the negotiations which may ultimately lead to an agreement, the other person may probe the possibility of procuring the smuggled goods on his own and convey the price of the said smuggled goods to the other party but till both parties agree to the transaction it cannot be said that an agreement bus come into existence. In the present case. it is evidence from the careful perusal of the testimony of B.S. Aujla that he had previously long and varied trade relations with B.K. Jain as V.K. Jain earlier was importing Palm Oil from him and they had entered into a conspiracy on earlier occasion too to enable V.K Jain to import banned item like coconut oil on she pretext of importing Palm Oil which conspiracy had misfired resulting in huge loss to V.K. Jain and thus, B.S. Aujla was inclined to render all help and assistance to V.K. Jain in his new fraudulent scheme but till an agreement had been made between B S. Aujla and V.K. Jain to do illegal acts it cannot be said that a conspiracy came into existence. In order to reach an agreement to do illegal acts V.K. Jain bad explained his fraudulent scheme to B.S. Aujla and bad asked him to find out the possibility of putting such a scheme into practice and for that purpose B.S. Aujla bad moved in the matter and bad found out the price of scuttling of a ship from Peter Teh and bad also got in touch with the parties who could supply false documents with regard to aforesaid items and the price they would charge for preparing the false documents and he conveyed all this information to V.K. Jain on his various visits to Singapore But no agreement was made because it has come out in the statement of B.S. Aujla that V.K.Jain had left Singapore informing him that be would get in touch with his partner and discuss the scheme with him and there was a strong likelihood that scheme could be carried out and B.S. Aujla also told his son that V.K. Jain was most probably going to carry out his scheme and it would be impossible for B.S. Aujla to refuse to cooperate V. K. Jain, meaning. thereby that once V.K. Jain informs B.S. Aujla that he was to execute the said fraudulent scheme he would agree to the same and this agreement by B.S. Aujla for carrying out the said fraudulent scheme occurred only in meeting at Bombay where V.K. Jain, R.K. Jain, K.L. Suri, M.L. Gupta, M.K. Sureka, and Siraj J. Hamid met and then they decided that K.L. Suri would act as a front for V.K. Jain and K.L. Suri's company would act as broker for the said items and share of V.K. Jain and K.L. Suri would be 50% of the value of all Letters of Credit to be of opened by different export houses and B.S. Aujla would get the payments on opening of Letters of Credit and in this way B.S. Aujla would profit between 10% to 20% and balance amount shall be spent by B.S.Aujla for the expenses including purchase of ships which were to be scuttled and purchase of false documents and other miscellaneous expenses.

(15) Counsel for the petitioner made reference to D 128 in support of his contention that Letters of Credit of export houses,in India had been opened in February 1976 I have perused this document and find that all Letters of Credit had been opened by about nine export houses in between the period June 19, 1979 to June 26, 1979. So, this document docs not show that Letters of Credit had been opened prior to the meeting taking place in June 1979 at Bombay. Hence, I hold that the learned Metropolitan Magistrate was right in coming to the conclusion that in fact, conspiracy had not taken at Singapore and rather took place at Bombay in the month of June 1979 and the provisions of Section 188' of the Code are not applicable.

(16) It has been next contended by the learned counsel for the petitioner that the statements recorded at Singapore could not have been taken note of by the Metropolitan Magistrate for framing the charge. He has argued that the Code of Criminal Procedure, 1973, applies only in regard to the statements recorded by .the police under section 161 of the Code in India. He has urged that under Section 240 of the Code the Magistrate is required to take into account only the police report and the documents sent under Section 173 and Section 173 requires submission of the police report after investigation which shall comprise of besides other things the statements recorded by the police under Section 167 of the Code. So, according to the learned counsel for the petitioner the statements of B.S.Aujla and others recorded at Singapore could not be treated as statements recorded under Section 161 of the Code and thus, no charge could have been framed on the basis of the said statements. Section 161 of the Code only lays down that any police officer making any investigation under this Chapter, ..may examine orally any person supposed to be acquainted with the facts and circumstances of the case. It is true that under Section 160 of the Code, a police officer has power to call for attendance of any person who is available within the limits of his own or any adjoining station. Obviously the police officer has no power to send any order in writing requiring attendance of any person who is not residing within the limits mentioned in Section 160 but Section 161 does not say that police officer can record statements of only such persons who are available within the limits of his Police Station or any adjoining Police Station. Section 161 is quite comprehensive that during investigation the police officer can examine any person supposed to be acquainted with the facts and circumstances of the case.

(17) The word 'investigation' is defined in Section 2(h) as follows : "Investigation includes all the proceedings under this Code for the collection of evidence conducted by a police officer or by any person (other than a Magistrate) who is authorised by a Magistrate in this behalf."

The definition of the word 'investigation' is inclusive. So, it does not mean that any investigation which is beyond the provisions of the Code is not contemplated. There is no provision in the Code which prohibits the police officer from recording statements of persons who are residing outside India. Even otherwise it is settled law that any illegality committed in investigation docs not vitiate the evidence collected by the Investigating Officer. (See H.N. Rishbud & another v. State of Delhi, and State v. Usman Gani, 1964 (1) Crl.L.J 254). At any rate, I am of the firm view that t statements recorded by the Investigating Officer of persons resident outside India very much fall within the scope of the word 'investigation'. The definition of the word 'investigation' means collecting evidence for proving a particular fact. The Investigating Officer by recording statements of witnesses, may be in India or outside India, is merely collecting evidence for the purpose of investigation into allegations regarding commission of an offence. The very reading of Section 161 does not exclude the statements recorded by the Investigating Officer during the course,of investigation of persons residents outside India However, the opinion of the learned Magistrate that the statements recorded by the Investigating Officer outside India would fall under the category of documents submitted Along with police report does not appear to be sound. Section 173 while referring to documents collected by the police in proving the charge would definitely exclude the statements recorded under Section 161 because they are mentioned separately in the Code itself So, the statements recorded during the course of investigation could not be treated as documents as has been held by the learned Magistrate. Be that as it may, I having come to the conclusion that these statements are recorded during investigation and are covered by provisions of Section 161 of the Code, so question of treating said statements as documents does not arise. I hence, negative this contention as well.

(18) It is, no doubt, settled law that statements of accomplices can be relied upon for bringing home the offence only if they are corroborated in material particulars by independent evidence. In the order of the learned Metropolitan Magistrate reference has been made to the independent evidence corroborating the facts in material particulars appearing in the statements of co-conspirators like B.S. Aujla, his son and others. The learned counsel for the petitioner did not in all fairness to him press this contention any further. So, I need not refer to the said evidence which has been elaborately discussed in the order of the learned Magistrate. This petition (Criminal Misc. (Main) No. 1507/88) is liable to be dismissed as I find no illegality or impropriety in the impugned order.

(19) In the Criminal Revision Petition No 53/89, the State has soughs quashment of the order of the learned Magistrate by which he has discharged the accused Kishan Lal Narang, Swaraj Jaggi and Sudershan Kumar Tandon. Prayer is also made ior direction to the Metropolitan Magistrate for framing additional charges against V.K. Jain, R.K. Jain and K.L. Suri for offence punishable under Section 511 read with Section 420 Indian Penal Code and V.K. Jain and R.K. Jain to he charged further under Section 420 IPC. It is prayed in the petition that the other three accused, namely. K.L. Narang, S. Jaggi and S.K. Tandon be charged for offences punishable under Section 120 B read with Section 420 Indian Penal Code and under Section 420 Indian Penal Code independently and also under Section 511 read with Section 420 IPC. Accused-V.K Jain, R.K. Jain and K.L.Suri have been charged under Sections 120B/420 Ipc and entering into a criminal conspiracy to cheat the four insurance companies and accused-K. L Suri has been charged under Section 420 Indian Penal Code for cheating different export houses who are persuaded to open the Letters of Credit and accused-V.K. Jain has been charged under Section 109 read with Section 420 Indian Penal Code for abetment of the offence of cheating the different export houses

(20) Counsel for the State has referred to para 279 of the order of the learned Metropolitan Magistrate in support of his contention that the Magistrate had committed an error in not framing additional charges against the said three accused In para 279 the Metropolitan Magistrate has expressed the finding as follows : "As a result of this conspiracy claims have been filed by Sh. V.K. Jain. R K. Jain and Sh. K.L Suri against the Insurance Companies and by some of the exporters who had opened the Sellers of Credit These claims have not been paid but prima facie the offence of an attempt to cheat the Insurance Companies is made out against accused .Sh. V.K. Jain, R.K. Jain and K.L. Suri because they had insured cargo which was not actually shipped and which they knew would never reach the destination. They have filed claims in an attempt to get the insurance money and thus are liable to be tried for offence of an attempt to cheat the Insurance Companies".

But the learned Magistrate by mistake omitted to frame charge in respect of this finding. Paras 15, 16, 24 and 25 of the charge sheet indicate that accused-V.K. Jain in pursuance to criminal conspiracy had received 21 cheques from B.S. Aujla out five of which cheques of 2,50,000 Us dollars each were encashed by him during July 1979 and he has also received 3,661,955.58 Us dollars from B.S. Aujla as his share of the defrauded amount bat no charge had been framed by the Magistrate in respect to this act of cheating So these facts had been noticed by the Magistrate in the impugned order and the prima facie evidence collected in support of the said allegations also stand enumerated in the impugned order, yel due to inadvertence the Metropolitan Magistrate has failed to frame the charge against the said accused- V.K. Jain in respect of the said cheating Similarly, R.K. Jain had also sent telex messages dated August 18, 1979 and August 20, 1979 to B.S. Aujla for telegraphic transfer of 2,50,000 Us dollars in favor of M/s. Dagora trading Company through Bank of India, New York Branch and that the said amount was duly transferred and R.K. Jain also received the amount of 1,35,000 Us dollars and Belgium Frances 5 3 million equivalent to 1,85,500 Us dollars which was the share of R.K. Jain in the said fraudulent scheme in respect of the transactions pertaining to ships 'AVERILLA' and 'OHDAI'. In this way, B.S. Aujla had paid 5,67,500 Us dollars to accused-R.K. Jain as part of his share in the criminal conspiracy and no independent charge had been framed against R K. Jain respect of the cheating. The learned counsel for V.K. Jain, R.K. Jain and K..L. Suri frankly concerned that these additional charges are liable to be framed. I direct that the Metropolitan Magistrate concerned shall frame the additional charges, as as mentioned above, against three accused.

(21) Now coming to the impugned order regarding discharge of the other three accused, I would take up the case of S. Jaggi at fust. The conspiracy which has been entered into by accused-V. K. Jain, R K. Jain and K.L. Suri with B.S Aujla, in brief, was that in fact, import of genuine goods like cloves, brass scrap and Pvc resin, was to be shown to be made in the ships 'AVERILLA' and 'OHDAI' and B.S Aujia was to arrange for false documents from parties in Singapore showing sale of such items to three companies of B.S. Aujla who was to then obtain false Letters of Lading and arrange for independent Surveyor and Ramdas Nair was to perform the said job who was the man of B.S.Aujla himself and be was to supply blank documents to V.K.Jhin,R K.Jain and K.L. Suri so that contracts on behalf of his three companies could be entered into in India with different export as well as houses with V.K.Jain R.K. Jain and K.L. Suri showing import of those goods from Singapore from the companies of B.S. AujLa and those goods were to be got insured with different insurance companies after Letters of Credit had been opened by the accused as well as by other export houses which could be lured to enter into such contracts and the ships were to be loaded with drums filled with water or with bags containing rice bran and those ships were to be shown scuttled in the mid sea, and then Claims were to be pal to the Insurance Companies. The scheme were carried out The ships were scuttled and claims were put up before she insurance companies running into crores of rupees. The export houses who had opened the Letters of Credit genuinely lost lot of money on account of this fraudulent scheme of the accused. The case set up against S. Jaggi is that he, acting as an Inspector of the Insurance Company, joined into the conspiracy and issued insurance cover notes in respect of the so-called goods at the request of the accused-V.K. Jain, R.K. Jain and K.L. Suri and be had not cared to get confirmed the name of the vessel, the name of the shipper and had not got imposed any warranty to safeguard the interests of the insurance company. It is alleged that normally insurance covers are not issued covering any loss of profit yet S.Jaggi managed to get issued insurance cover covering 100% profit which was subsequently reduced to 50% profit and due to this conspiracy false documents to the tune of Rs. 8,92,27,500.00 had been filed against the insurance company, which have been repudiated by the insurance company. The learned counsel for the petitioner has referred to extracts of the statements of Ram Parkash Anand, K.C. Panoppa, K.B. Chalan, R.K. Trehan. S.N. Saproo, S. Choudhary and B.N. Madan and has argued that before issuance of insurance covers it was the duty and responsibility of this accused-S. Jaggi, being a senior inspector in the insurance company, to verify the details before acceptance of the proposals that the party insured should disclose the full facts of the insurance as marine insurance is done under utmost good faith and he should have examined the proposal with regard to the details regarding packing, transit destination and should have avoided the acceptance of heavy risk and should have seen that the particulars of the supplier, name of the insurer, name of the vessel aie disclosed and the past experience of the party should have been also verified. He has pointed out that V.K. Jain bad given the application for insurance dated July 23, 1979. mentioning that cloves are being imported which would be packed in polythene bags and thereafter in gunny bags and the same would palletized On July 24, 1979 S. Jaggi prepared the data sheet in which he did not mention the name of the party from whom the cloves were to be imported and in the column regarding packing he mentioned wooden cases. The matter was referred to the head office. The head office mentioned that conditions be mentioned that goods would be inspected by Surveyor at Singapore and the shipment would be in first class vessel and at first S. Jaggi recommended for 50% profit insurance cover but later on he asked his officers to recommend 100% profit insurance and on July 30, 1979 S. Jaggi prepared a cover note showing 100% profit insurance without mentioning other conditions proposed by. the head office. He did not disclose to the head office the quality of cloves, name of the ship or of the shipper. place of inspection of the cargo and despite head office sending reminders, Jaggi did not collect any information and passed on to the head office and he had followed the same procedure for issuing insurance cover notes for M/s. Orient Enterprises and M/s. Jain Exports (P) Limited and another Insurance cover for M/s. Jain Shudh Vanaspati. He has argued that even after the information had been received regarding sinking of the ship and a claim had been lodged, still Jaggi obtained commission to the extent of Rs. 22,000.00 and paid the same to R.K.. Jain's wife on the pretext that she had brought this business of insurance. He has argued that Jaggi was aware that V.K. Jain had not earlier dealt with import of cloves and the correspondence revealed that V.K. Jain was not aware how the doves were to be packed and ultimately it was revealed by V.K. Jain in his letter dated July 23, 1979. that cloves could be packed only in gunny bags and not in polythene bags, and Jaggi or his own had mentioned in the Bata sheet that the goods would be packed in wooden cases Counsel for the petitioner has referred to letter dated August 4, 1979, written by V K.Jain in which he mentioned that the supplier had confirmed that the cloves would he packed in gunny bags and in the last part he mentioned that payment would he made regarding total sum insured against bank guarantee showing if the goods were not received in perfect condition he would take the delivery and refund the claim.It is urged that the contents of this letter clearly indicated that the party was interested in getting insurance claim even without waiting for the ships to be loaded and put on sea.

(22) Before I deal with the contentions, it may be necessary to refer to the duties of an Inspector for dealing with the proposal coming to him for marine insurance S. Jaggi was working under the Divisional Office beaded by Shri R. P.Anand, Divisional Manager and which was .controlled by area office headed by Senior Area Manager, Shri R.K. Trehan, The head office of the company is situated at Bombay and the marine cargo business was being looked after by Shri Chelan, Manager. The marine insurance is a business of good faith both on the side of the insurer and the insured. The job of S. Jaggi was to bring insurance business for the company and to supply necessary information to the insurer as per the instructions of the Management The acceptance or non-acceptance of the business was nut within the power of the Inspector as it was done either by the Branch. Manager or Area Manager The Inspector had no power to settle any claims. It is admitted fact that the companies of V.K.Jain and R.K.. Jain were valued clients of the insurance company as they bad been giving insurance business to this insurance company for the last about five years and had a satisfactory claim exprience. This is also evident from the statement of Shri R K. Trehan wherein at page 2 he admitted having sent a telex mentioning that M/s Jain Shudh Vanaspati and M/s Jain Export (P) Limited are valued clients since 1975 and even prior to that they used to give small business to the insurance company from their group. It is also clear from the statement of K.C. Panoppa that Jaggi had no power to directly communicate with head office. As an Inspector he could only forward the proposal to the Branch Manager. All marine insurance policies are subject to institute classification clause which indicates that all ships are covered unless a particular ship is not a first class ship but client has to pay additional premium under "Held Covered". The expression "Held Covered" implies that in the event of the protection being invoked, the underwriters shall charge a reasonable premium irrespective of whether risk had safety run off, or whether loss or damage had already occurred. S. Jaggi had referred to Marine Cargo Insurance manual which contains scope of institute classification clause (1st Ju)y 1978), and the same provides for detailed procedure regarding approval of vessel where loading had to take place at any ports in India. It clearly lays down that the system of approving vessels is applicable to vessels loading export cargo from ports in India only and it does not apply to export cargo vessels arriving at Indian ports. S Jaggi is referring to these documents in order to show that particulars of the ship in which the cargo was to go which had been insured, were not necessary to have been noted in the insurance covers. With regard to the controversy being raised regarding the packing, he referred to Confidential Guide regarding marine insurance which lays down that the type of goods to be insured should be clearly specified as certain goads are more susceptible to certain types to damage than ethers and. therefore, warrant higher rates. The nature of the container or the packing is important factor to be taken into consideration and it would be clearly stated. But he pointed out that Clean Bill of Lading as defined in ship/international trade terms and abbreviations 'means that a Bill of Lading which has no supper-imposed clause (s) expressly declaring a defective condition of the packing of goods and 'warranty' means an implied condition or express guarantee or negation contained in policy. He has then referred to Confidential Guide page 3 and also to the telex dated August 11, 1979 (document D-95) which clearly show that it is not necessary that party should take out insurance cover for the payment to Customs duty as well. He has referred to document D-132 to show that the insurance cover given in support of goods which could be imported under 'Open General license' category, no profit claim can be entertained if a client can obtain license to re-import the goods. The cloves were admittedly under the category of Open General license and thus even if 100% profit or 50% profit insurance had been taken out no claim could be entertained regarding profits as the client could easily re-import such goods S. Jaggi has also pointed out that in other cases 75% of the actual profit is liable to be paid as available in the local market. The General Average Claims are not payable if the ship sinks. These contentions of S. Jaggi are not being controverter before me. Public Witness 67 and Public Witness 70 have in their statements clearly admitted that marine insurance can be accepted even on verbal proposals. It has also come out from the statements of Public Witness 75 B.N. Madan, Public Witness 229 Ram Parkash that the insurance companies were keen to have the marine insurance business in respect of the goods allegedly being imported through the aforesaid two ships Even Public Witness 53 Suresh Thus says so. S. Jaggi has pointed out that the contracts in respect of the said goods were made on July 14, 1979. The Letter of Credit was opened on July 20, 1979 and the proposal came to him turn the first time only on July 23, 1979. Public Witness 58 Rakesh Jain had given out these facts So, at the time S. Jaggi cams into picture, it is evident that the Banks had already issued Letters of Credit giving loans to the clients for purchasing the said goods The shipping company had already issued the Bills of Lading The Bill of Lading bungs about a contract of ball or and bailee which incorporates the duty of the carrier to deliver the cargo in the same condition as it is received at the port of loading and in case any cargo is damaged during shipment the responsibility lies on the shipping company to make good the loss to the clients. The claim against the insurance company could be made only if damages cannot be recovered from the shipping company. It is also not disputed before me that all the four insurance companies had acted in a similar manner in issuing the insurance.covers but the Cbi had thought fit to implead only S. Jaggi and S.K. Tandon, the Inspectors of two companies as accused.

(23) In the month of February 1979. M/s. Jain Export (P) Limited had obtained an open insurance cover from the company of S. Jaggi regarding import of copper/brass scrap which was duly sanctioned and accepted by area office for a sum of Rs. 50.00.000.00 (fifty lakhs) C & F plus 50% profit. The letter dated July 23, 1979. of V.K. Jain asking for insurance cover indicated the amount of Rs. 2.5 crores C & F value plus 100% profit plus 5% incidental charges. S. Jaggi prepared the data and forwarded the same to the Branch Manager for sanction. The sanction was obtained from the head office and the cover note was issued. S. Jaggi bad proposed 50% profit insurance cover. It appears that a telex dated July 26, 1979 had been issued from the Area Office recommending 100% profit policy on the ground that the client was a valued client for the past five years. The head office had sanctioned insurance cover with !00% profit. The learned counsel lor the Cbi could not point out to any document or piece of evidence which could show that S. Jaggi had recommended for 100% profit coverage. It is not disputed before me that S. Jaggi had not on his own approved any insurance cover. Sanctions had been obtained from the head office and thereafter he had issued the insurance cover. It is evident that the initially name to the ship was not indicated by the client but as soon as it was communicated by the client the same was told to the head office. Statements of O.P. Rana and K. B. Chalan clearly show these facts. It is not understandable that when the matter had to be routed by the Inspector through his Branch Manager and Thereafter Area Manager and then head office, how could any inference be drawn that S. Jaggi was party to the conspiracy and bad done any act in pursuance to any alleged conspiracy. The learned Metropolitan Magistrate from paras 265 to 272 has given out detailed reasons for coming to the conclusion that from the evidence sought to be relied upon by the prosecution against S Jaggi, no case is made out for framing the charge against him. I need not reproduce the reasons given by the Metropolitan Magistrate in support of his order. I have gone through them and I endorse them.

(24) As far as case of S.K.Tandon is concerned, it is alleged that he procured business for insurance of goods having value of Rs. 56,00,000.00 within short span of two months. S.K. Tandon had brought to the notice of his higher officers that insurance in respect of import of goods on the aforesaid ships has been already done by New India Assurance Company and S K.. Tandon wanted come business to be done for his own company. So, he moved in the matter quickly and obtained the substantial business for his company. The ship 'AVERILLA' is reported to have sunk on September 5. 1979. A cheque in respect of ihe premium had been shown received on September 7, 1979 and it is alleged that the cheque had been pre-dated. The cheque was in respect of additional premium relating to the goods being imported by ship 'OHDAI' as per document D-103. The cheques had been given in the office either Ok September 6, 1979 or on September 5, 1979, R.S. Gupta, Senior Divisional Manager and K.L. Dhall. Administrative Officer, had come to know about the sinking of the 'AVERILLA' ship on September 7, 1979 and they stated that they bad gone to the residence of S.K. Tandon to verity this fact. If that is so, it is not understood how S.K. Tandon managed to get the receipt issued in respect of those cheques on September 7,1979. It is not disputed by all the higher officers of S.K. Tandon that whatever business was brought by S.K. Tandon the same was accepted after full discussion with the head office and even the additional premium on account of over age of the ship similar to role of S. Jaggi do not find any evidence which could, prima facie,show that he was in conspiracy with other accused and had suppressed any material facts while giving the proposal of insurance of the parties. Mere fact that he had obtained substantial business for the company in short span in good faith is no ground to hold that he was party to conspiracy. It is not the case of the prosecution that either S. Jaggi or S. K. Tandon were the get anything from these deals from the parties. The learned Metropolitan Magistrate has given good reasons for holding that no case is made out against S.K.. Tandon and he has discussed the case of S.K. Tandon in para 276 to 278. Nothing has been pointed out to show that the reasoning of the learned Metropolitan Magistrate is vitiated or is not based on any evidence.

(25) As far as the case against K L. Narang @ Saqi is concerned, the learned counsel for the Cbi has argued that in the light of the conspiracy Pvc resin was shown to be imported and under the import policy of the relevant period the said item could be imported for actual users and two, fictitious firms were brought into existence, namely, M/s. Imperial Industries Corporation and M/s. Chona Enterprises as the firms who are actual users of said item and certain import houses were lured in to open Letters of Credit for importing the said item for the benefit of the said two firms. Counsel for the Cbi has referred to the evidence collected by the Cbi to show that those two firms Were fictitious firms and K. L. Suri was instrumental in putting up those firms and K.L.Narang being friend of K.L Suri lured the different export houses to enter into contacts for importing the said item lor the actual use of the said two firms Counsel for the Cbi has not been able to refer to any price of evidence to show that in fact, K.L. Narang was aware at any time that the said two firms were fictitious firms. K L. Narang is dealing in the business of purchase and sale of licenses and in the course of his business, may be at the behest of K L Suri he had brought about the contracts with the other export houses, but unless and until it is shown from evidence that K.L. Narang was aware of the conspiracy that in fact, no genuine goods were to be imported and a fraud was to be committed in getting the ship scuttled, no criminal liability could be imposed on K.L. Narang The learned Magistrate has dealt with the case of K.L Narang in paras 254 to 264 to show that in fact, no evidence had been collected which could indicate that K.L. Narang was aware of the conspiracy.T'he only evidence collected by the prosecution against K.L. Narang shows that he was a close friend of K.L Suri and on the request of K.L. Suri he had contacted 12 parties directly or through local brokers for and on behalf of M/s. Orient Enterprises. M/s. Imperial Industrial Corporation and M/s. Chona Enterprises turn bringing about the contracts. Manmohan Singh had supplies the contract forms which were got typed by K. L Suri but they were typed in the office of K. L. Narang but it has not been pointed out from the statements of any of the witness that K.L. Narang was aware that any false contracts are being typed out in his office. It is also not shown from any piece of evidence that he was ware that the said two firms were fictitious firms. It is also not the case of the prosecution that K.L. Narang had got any monetary benefit by bringing about these contracts. It is not disputed that M/s. Imperial Industrial Corporation and M/s. Chona Enterprises were registered firms and were shown as actual users of Pvc resin. It was ordinary business of K.L. Narang to bring about contracts between the export houses and the firms having the actual user licenses. So, in performance of his ordinary business he had brought about the contracts. Unless and until it is shown from the facts collected by the Cbi that there were any suspicious circumstances which could show implication of K.L. Narang in the fraudulent scheme, it is not possible to even prima facie come to the conclusion that he has become member of the conspiracy and had done any illegal acts in pursuance to the conspiracy. I agree with the reasons given by the Metropolitan Magistrate in coming to the conclusion that no casein made out against his accused K.L. Narang.

(26) In view of the above discussion, I dismiss the Criminal Miscellaneous (Main) No. 1507/88 and partly allow Criminal Revision Petition No. 53/89 and give directions to the Metropolitan Magistrate to frame additional charges against accused V.K. Jain, R.K. Jain and K.L. Suri in the light of my above order. The order of the Metropolitan Magistrate discharging the accused K.L. Narang, Swaraj Jaggi and S.K. Tandon is affirmed. The file of the trial court be immediately returned to the trial court for further proceedings.