[Cites 10, Cited by 0]
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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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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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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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
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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
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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
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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.
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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
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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.
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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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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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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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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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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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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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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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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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ORDER
Criminal appeal is dismissed.
Sd/-
(H.P.SANDESH)
JUDGE
Sd/-
(VENKATESH NAIK T)
JUDGE
KVK
List No.: 1 Sl No.: 7
