Delhi High Court
I.B. Singh vs State Through C.B.I. on 9 April, 2010
Author: Sanjiv Khanna
15.
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CRL.M.C. 789/2010
% Date of decision: 9th April, 2010
I B SINGH ..... Petitioner
Through Mr. Dinesh Mathur, Sr. Advocate with
Mr. Kawal Nain & Mr. P.N. Chandan,
Advocates.
versus
STATE THR. CBI ..... Respondent
Through Mr. Vikas Pahwa, Standing Counsel
for CBI & Mr. Biswajit Kr. Patra, Advocate.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
1. Whether Reporters of local papers may be
allowed to see the judgment?
2. To be referred to the Reporter or not ?
3. Whether the judgment should be reported
in the Digest ?
ORDER
Heard.
1. With the consent of the parties, the matter is taken up for final
disposal.
2. The petitioner is facing prosecution in case No. RC AC 1 2002 A
0001 titled CBI versus J.K. Singh and Others under Section 420 read with
120B of the Indian Penal Code. Initially the complaint was filed against
M/s Mideast Integrated Steels Limited (MISL, for short) and Mr. J.K. Singh
and Mr. I.B. Singh. However, by summoning order dated 7th February,
CRL.M.C. 789/2010 Page 1
2005, cognizance was not taken against MISL but process was issued
against Mr. J.K. Singh, Mr. I.B. Singh and Ms. Rita Singh.
3. Ms. Rita Singh filed a petition under Section 482 being Criminal
Miscellaneous No. 810/2005. The said petition was allowed vide judgment
dated 17th January, 2008, inter alia, recording that there was no evidence or
material on the basis of which learned Metropolitan Magistrate should have
issued summons against her.
4. A Petition filed by Mr. J.K. Singh, Criminal Miscellaneous Case No.
1164/2006, was also allowed vide judgment dated 23rd January, 2009. In
this judgment, learned single Judge has examined the charge sheet and the
contents thereof in paragraphs 3 to 5. For the sake of convenience, the said
paragraphs are reproduced below:-
"3. The case of the Central Bureau of
Investigation („CBI‟), which is the
investigating agency in this case, is that on 6th
December 1994 MISL issued a letter to BHEL
under the signature of its Vice President
whereby it stated that two sets of dispatch
documents along with invoices and inspection
certificate were to be sent to the Associate
President of MISL and another four sets
recommending release of payment to MISL
Jajpur. It was stated that on the recommendation
being made from Jajpur payment would be
released to BHEL by MISL. According to the
CBI, that these instructions regarding payment
were contrary to the mode of payment
stipulated in the letter of intent. It is stated that
had this been done, it would have been ensured
that the locomotives would be dispatched to
MISL only after receipt of the full payment
through the nationalized bank. The specific
allegation in the chargesheet is that "M/s. MISL
with the intention of cheating BHEL, changed
the mode of payment eliminating the
CRL.M.C. 789/2010 Page 2
contractual clause wherein dispatch hereby
documents were to be routed through a
nationalized bank which would have ensured
fool proof performance of contractual
obligations by M/s. MISL." The allegation
against the Petitioner is that he "intentionally
and deliberately" changed the mode of
payment.
4. The case of the CBI is that although N.K.
Garg of the BHEL wrote a letter on 29th
December 1994 to the MISL requesting for the
name of the bank through which the documents
were to be routed, as per the directions of the
Petitioner the General Manager (Finance),
MISL was instructed not to furnish the name of
the bank to BHEL. Two locomotives were
dispatched by BHEL Jhansi on 30th March
1995 to the factory of MISL Jajpur. The amount
of Rs.78,98,000/- was received by Shri N.K.
Garg of BHEL vide cheque Nos.672554 to
672561 dated 7th June 1995 issued by MISL.
The third locomotive was dispatched to MISL
on the basis of a letter dated 20th May 1995 of
Shri A.K. Pandey of BHEL. A sum of Rs.15
lakhs from the MISL Delhi office was received
by Shri N.K. Garg of the BHEL by two cheques
No.672601 and 672602 dated 15th June 1995
for Rs. 10 lakhs and Rs.5 lakhs respectively.
Shri A.K. Pandey, BHEL wrote a letter dated
22nd June 1995 to the Associate Vice President,
MISL, New Delhi mentioning that payment of
10% for all the five locomotives had been
received and 70% payment for the first two
locomotives had also been received but that
70% payment against the dispatch of the third
locomotive was outstanding. Thereafter the
fourth locomotive was dispatched on 17th July
1995 and the fifth on 24th July 1995 without
any decision being taken on the non-payment of
the full amount on the earlier three locomotives
CRL.M.C. 789/2010 Page 3
which had already been dispatched. It was
stated that out of the total price of
Rs.3,46,38,056/- for the five locomotives, the
BHEL received payment of only
Rs.1,41,71,681. It was stated in the charge sheet
filed by the CBI that "thus an amount of
Rs.2,04,66,375/- is still outstanding and the
same was intentionally not paid to BHEL by
Shri J.K.Singh, Chairman of M/s. MISL.
5. It is stated in paras 19 and 20 of the charge
sheet as under:
"19. That during the relevant period M/s.
MISL had a bank balance of at least
Rs.40 crores approximately, in ANZ
Grindlays Bank, Connaught Circus
Branch and in spite of having such a
huge amount in his company‟s account
Shri J.K. Singh did not honour the
contractual payment obligation with
BHEL. This clearly indicates that right
from the beginning, when M/s. MISL
unilaterally changed the mode of
payment which was contrary to terms
and conditions of payment and till the
time when he intentionally defaulted on
payment for 5 locomotives, Shri J.K.
Singh was intent on cheating BHEL.
20. That the above facts disclose that
Shri J.K. Singh Chairman-cum-
Managing Director of M/s. MISL in
conspiracy with Shri I.B.Singh Dy.
General Manager of M/s. MISL, cheated
BHEL to the tune of Rs.2,04,66,375/- by
intentionally and deliberately changing
the mode of payment which was to be
routed through a nationalised bank as per
terms of contract. Further, even after
changing the mode of payment, they
CRL.M.C. 789/2010 Page 4
defaulted on pending payment in spite of
having a huge bank balance of Rs.40
crores in ANZ Grindlays Bank
Connaught Circus Branch. In this regard,
Shri A.K. Mathur, the then Dy. General
Manager Shri N.K. Garg, Dy. General
Manager BHEL, TBD, New Delhi Shri
Vijay Sharda, Addl. General Manager
BHEL Bhopal and Shri A.K. Pandey Sr.
Engineer, LMC, BHEL Jhansi also
committed acts of commission and
omission which resulted in wrongful
pecuniary loss to BHEL. The aforesaid
public servants were negligent in not
ensuring proper performance of contract
by M/s. MISL as per laid down terms
and conditions."
5. A reading of the aforesaid paragraphs show that the said allegations
pertain to purchase/supply of five diesel locomotives to MISL and the
resultant pecuniary loss to Bharat Heavy Electricals Limited. Mr. J.K.
Singh was being prosecuted as he was Chairman/Managing Director of
MISL in view of the aforesaid allegations.
6. In the charge sheet filed before the learned Metropolitan Magistrate,
Mr. J.K. Singh has been described as Chairman-cum-Managing Director of
MISL and Mr. I.B. Singh has been described as Deputy General Manager of
MISL. Name of Mr. I.B. Singh appears in paragraphs 10 and 20 of the
charge sheet, which for the sake of convenience are reproduced below:-
"10. That with reference to the letter of intent
(LOI) dated 29.9.94 M/s MISL on 6.12.94
issued detailed dispatch instruction under the
signature of Shri I.B. Singh, Vice President of
M/s MISL, whereby it was stated that 2 sets of
dispatch documents alongwith the invoices and
inspection certificate were to be sent to the
association president of M/s MISL and another
CRL.M.C. 789/2010 Page 5
4 sets recommending release of payment to M/s
MISL Jajpur. The same dispatch instruction
also stated that it would be on the basis of
recommendation from Jajpur that payment shall
be released to BHEL by M/s MISL. The above
instructions regarding payment were contrary to
the purchase order dated 29.9.94 which had
clearly stipulated that the payments shall be
released through a nationalized bank. However,
M/s MISL with the intention of cheating BHEL,
changed the mode of payment eliminating the
contractual clause wherein dispatch documents
were to be routed through a nationalized bank
which would have ensured fool proof
performance of contractual obligations by M/s
MISL.
20. that the above facts disclose that Shri J.K.
Singh, Chairman cum Managing Director of
M/s MISL in conspiracy with Shri I.B. Singh,
Dy. General Manager of M/s MISL cheating
BHEL to the tune of Rs.2,04,66,375/- by
intentionally and deliberately changing the
mode of payment which was to be routed
through a nationalized bank as per terms of
contract........."
7. There is merit in the contention of the petitioner that the reasoning
and the findings given by the learned single Judge in his judgment dated
23rd January, 2009 passed in Criminal Miscellaneous Case No. 1164/2006
are equally and squarely applicable to the case of Mr. I.B. Singh. Reference
in this regard can be made to paragraphs 12 to 16 of the said judgment,
which for the sake of convenience are reproduced below:-
"12. The first issue to be considered is whether
the petitioner, in his capacity as Chairman of
MISL, could be prosecuted for an IPC offence
in the absence of the company MISL being
prosecuted. A perusal of the order dated 7th
CRL.M.C. 789/2010 Page 6
February 2005 passed by the learned MM shows
that although the court was satisfied that there
was sufficient ground to proceed under Section
120 B read with Section 420 IPC against the
MISL, J.K. Singh Chairman, Ms. Rita Singh,
MD and I.B.Singh DGM, process was issued
only to "J.K. Singh, Rita Singh and I.B. Singh."
In other words, not only was MISL not named
as an accused in the charge sheet filed by the
CBI, but even process was not issued to it by the
learned MM. For all purposes therefore MISL
itself is not being prosecuted as an accused in
the case.
13. The offence with which the Petitioner is
charged is under Section 120 B read with
Section 420 IPC and he has been roped in as an
accused in his capacity as Chairman of MISL,
without MISL itself being named as an accused.
In a recent judgment in R. Kalyani v. Janak C.
Mehta 2008 XII AD (SC) 277 the Supreme
Court has observed thus:
"27. If a person, thus, has to be
proceeded with as being variously liable
for the acts of the company, the
company must be made an accused. In
any event, it would be a fair thing to do
so, as legal fiction is raised both against
the Company as well as the person
responsible for the acts of the
Company."
Earlier in S.K. Alagh v. State of U.P. 2008 (II)
SCC (Crl) 686 the Court reiterated this aspect
when it held, in the context of an IPC offence,
that "a Director of a Company or an employee
cannot be held to be vicariously liable for any
offence committed by the Company itself."
Further in Maksud Saiyed it was explained that:
"The Penal Code does not contain any provision
CRL.M.C. 789/2010 Page 7
for attaching vicarious liability on the part of
the Managing Director or the Directors of the
company when the accused is the company."
14. In the case on hand, it requires to be noticed
that the Petitioner is sought to be roped in only
in his capacity as Chairman, MISL and not even
as a Director. Without going into the question
whether under the Companies Act, 1956 any
liability attaches to a „Chairman‟, it requires to
be noted that MISL has in any event not been
arraigned as an accused. On the strength of the
law explained by the Supreme Court in Maksud
Saiyed, S.K. Alagh and R. Kalyani it is held
that in the absence of MISL being itself named
as an accused, and where the offences are only
under the IPC, the Petitioner, in his capacity as
Chairman of MISL cannot be sought to be
roped in as an accused.
15. The learned Senior counsel for the petitioner
is also right in his contention that in the context
in which the allegation is made in the charge
sheet the Petitioner cannot be said to have been
in criminal conspiracy with another employee
of MISL itself. The allegation is that payments
were made by MISL and received by officials
of BHEL directly and not through a
nationalized bank. Without participation of the
officials of the BHEL there is no question of
any criminal conspiracy being hatched or
executed or completed. When the officials of
the BHEL themselves have not been proceeded
against for want of sanction, the question of
proceeding against only Petitioner under
Section 120B IPC is clearly not tenable in law.
Moreover, the charge sheet itself only accuses
of officials of BHEL in acting „negligently‟ and
this is inconsistent with the case of the CBI that
a criminal conspiracy attracting the offences
under Section 120 B read with Section 420 IPC
CRL.M.C. 789/2010 Page 8
had taken place. In Amrit Lal Rati Lal Mehta v.
State of Gujarat 1980 SCC (Crl) 81 it was
observed that mere inadvertence and negligence
would be destructive of the charge of having
acted dishonestly with intent to defraud.
16. As regards the contention that what is
sought to be enforced is only a contractual
obligation, it requires to be noticed that once the
charge of the Petitioner deliberately making
payments directly to the BHEL as constituting
an act of cheating goes, the only charge that
remains is that of the failure on the part of
MISL to make full payment to the BHEL for
the five locomotives dispatched to it by the
BHEL. The failure to make the full payment
towards the contract cannot be by itself
constitute the offence of cheating. The law in
this regard is well settled in the judgments in
Anil Mahajan, Zandu Pharmaceutical Works
Ltd. and Duncans Agro Industries Ltd."
8. It is accepted and admitted in the reply affidavit that the respondent-
CBI has not challenged the findings recorded above and has accepted the
decision dated 23rd January, 2009 passed in Criminal Miscellaneous Case
No. 1164/2006.
9. It is noticed that the summoning order was passed on 7th February,
2005 and the present petition has been filed on or about 6th January, 2010.
It is not possible to agree with the contention of the petitioner that no
limitation period has been prescribed for filing of a petition under Section
482 of the Code of Criminal Procedure, 1973 and, therefore, it is open to
the petitioner to challenge and question the summoning order at any time.
Even if no limitation period is prescribed for filing of a petition under
Section 482, the petition should be filed within reasonable time. What is a
reasonable time would depend upon facts of each case. In the present case,
CRL.M.C. 789/2010 Page 9
I am not inclined to dismiss the present petition on the ground of delay as
even Charge has not been framed and evidence has not been recorded. It is
also noticed that the proceedings before the learned Metropolitan
Magistrate had remained stayed after the earlier miscellaneous cases were
filed before this High Court challenging the summoning order in the case of
Ms. Rita Singh and Mr. J.K. Singh. No distinction has been drawn or made
out by the respondent-CBI in the case of Mr. I.B. Singh and, therefore, the
ratio of the decision of the learned single Judge dated 23rd January, 2009
passed in Criminal Miscellaneous Case No. 1164/2006 in the case of J.K.
Singh versus State will fully apply to the facts of the present case. The
petition is accordingly allowed and the summoning order against the
petitioner is quashed.
SANJIV KHANNA, J.
APRIL 09, 2010
VKR
CRL.M.C. 789/2010 Page 10
