Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ BAIL APPLN. 1698/2011 & Crl.M.B.No.2109/2011
th
% Judgment reserved on : 24 January, 2012
th
Judgment delivered on: 06 February, 2012
SYED NIZAM AHMED ..... Petitioner
Through : Mr.Vikas Singh, Senior Advocate
with Mr.S.S.Mishra, Adv.
versus
CBI ..... Respondent
Through : Mr.P.K. Sharma Standing Counsel
with Mr.Uday Prakash Yadav, Adv.
CORAM:
HON'BLE MR. JUSTICE SURESH KAIT
SURESH KAIT, J .
1. In the instant petition, the petitioner has assailed the order dated
03.11.2011 whereby learned Additional Sessions Judge, Central
District, Delhi dismissed the bail application of the petitioner.
2. The facts of the instant case in brief are that vide FIR
No.630/2006 dated 21.11.2006 by the Economic Offence Wing of
Delhi Police at Sri Niwas Puri police station, has been registered under
Section 406/409/ 420/ 120B Indian Penal Code, 1860. From the date
of registration of the FIR, Look Out Circular (LOC) was opened
against the petitioner so that he could not flee from India.
BAIL APPLN No.1698/2011
Page 1 of 14
3. Mr.Vikas Singh, learned Senior Advocate appearing on behalf of
petitioner submitted that he was regularly joining the investigation as
and when called upon by the investigating officer of Economic
Offence Wing of Delhi. The petitioner filed various documents before
the investigating agency.
4. In the year 2010, the investigation of the case was handed over
to Central Bureau of Investigation (CBI) by way of an administrate
order apparently because of the reasons that there were many cases of
similar nature which were pending against ‘National Agricultural
Cooperative Marketing Federation of India Limited’ ( NAFED ).
5. The petitioner also joined investigation before CBI on various
dates and also filed some documents relating to the present FIR. The
seizure memo establishes that the petitioner had been joining the
investigation before the IO. However, finally he was arrested on 26-
th
27 September, 2011 by CBI at Bhuvneshwar, Orissa.
6. Learned Senior Advocate has submitted that the petitioner
earlier moved bail application before concerned Additional Chief
Metropolitan Magistrate where his application for concession of
interim bail was turn down vide order dated 18.10.2011.
7. Thereafter, the petitioner, on 19.10.2011 moved a regular bail
application before learned Sessions Court which was heard on the
same day. Meanwhile, the petitioner had prayed for an interim bail on
the ground of Nikaha (marriage) ceremony of his only sister, which
BAIL APPLN No.1698/2011
Page 2 of 14
was to be solemnized on 21.11.2011. Vide order dated 20.11.2011, the
prayer for interim bail was declined and notice to CBI was issued for
31.10.2011. Learned Additional Sessions Judge, Delhi vide order
dated 03.11.2011, dismissed the regular bail application of the
petitioner.
8. The instant application is second in row.
9. Learned Senior Advocate for the petitioner submitted that under
the changed circumstances, and on the basis of the records available in
the present proceedings, the petitioner has filed the copy of the FIR and
the RC under which the Sections under IPC have been invoked against
him. Out of all the allegations contained in the FIR and in which the
Sections of IPC are invoked are not at all applicable on the present
petitioner.
10. The petitioner has asserted that since then the FIR was registered
on 21.11.2006, the applicant consistently has been cooperating in the
investigation. There are two investigating agencies involved in the
present case and none of the agencies would have any grievance
regarding non-appearance of the applicant. The applicant is a resident
of Cuttack, Orissa, still he has been the first person to extent all
possible cooperation to the investigating agency.
11. Learned counsel has further submitted that the allegations in the
FIR and subsequent investigation hinges upon the documents which
are the part of the record before NAFED. The investigating agency
BAIL APPLN No.1698/2011
Page 3 of 14
has seized all those documents. It is not the case of the prosecution
that the case is depending upon any oral evidence. The applicant has
already been confronted with the documents concerning with the
transaction alleged to have been taken place under the command of the
applicant.
12. Learned Senior Advocate had further submitted that the
investigating agency has so far failed to bring any allegations against
the applicant except sweeping remarks regarding the conspiracy.
There has also been no allegation or material so far collected, which
would make out any case much less than the substantive offence
against the applicant. The offence alleged in the FIR is under Section
120B Indian Penal Code, 1860 read with substantive offences under
Section 406/409/120B Indian Penal Code, 1860. The allegations
against applicant and the material on record would not disclose any
offence as mentioned above, if at all except offence under Section
120B Indian Penal Code, 1860.
13. Learned Senior Advocate has further submitted that on
12.02.2004 an agreement was entered between NAFED and Zenith
Mining Private Limited ( ZMPL ) wherein NAFED obtained a license
to export Iron Ore Fines (IOF) from India. Accordingly, NAFED
entered into a contract with ZMPL to buy IOF of cut off grade of
62.5% to 63.5% from different mines in Orissa, a transporter to arrange
trucks for transfer of IOF from mining areas to port areas and a
stevedoring company to unload the IOF into port plot from trucks and
BAIL APPLN No.1698/2011
Page 4 of 14
load into vessels/ships for which they need a party to supply the same
on freight on board (FOB) Paradip Port.
14. He has further submitted that another agreement dated
16.03.2004 was entered into between both the parties, wherein NAFED
agreed for financing of export of IOF by ZMPL.
15. It is further submitted that the entire thrust of the prosecution in
the present case is against the other accused persons particularly,
Vinod Kumar Gupta, (regarding whom Bail Application No.1816/2011
is pending), Himanshu Tayal, Homi Rajvanshi. However, prosecution
insisted the case against the applicant on the ground that he being
CMD of ZMPL as such, is a conspirator because eventually ZMPL is
alleged to be the beneficiary company. However, the investigating
agency has lost focus in the entire investigation by not examining the
bank statement of the company, by which the case could have been
solved with clarity, if the agency placed the records straight as to when
and how the money got transferred from NAFED to the company and
subsequently from the company’s account to whose account.
16. Learned counsel for the applicant has asserted that the statement
of company account may be perused to arrive at a conclusion as to who
is the real beneficiary of the entire dealing. The applicant is not the
beneficiary of the fraudulent transaction, rather he is the victim being
the CMD of the company.
17. It is the case of the prosecution that the advances/loans have
BAIL APPLN No.1698/2011
Page 5 of 14
been granted pursuant to the agreement to ZMPL and as per the
agreement despite having received the finances, ZMPL has partly
complied with the terms of the contract. As a result of this contractual
obligation ZMPL could only repay ` 30.47Crores out of ` 90.22Crores.
Out of these allegations, two things are eminently clear on the facts and
consequential legal action would follow accordingly. Firstly, there was
a contractual obligation which could not be fulfilled leading to the non-
payment of the dues, for which civil consequences is being followed.
The NAFED has already initiated arbitration proceedings which would
determine as to how much is the due and whether the due is
recoverable or not. The secondly consequence is that being the CMD
of ZMPL, the applicant is vicariously liable for the civil consequences
of recovery, but there is no criminal liability at all.
18. Learned Senior Advocate further submitted that if at all there is
omission or commission on the part of the applicant that would be a
sheer negligence because of the poor entrepreneurship but mens rea
cannot be read into such omission or commission.
19. It is further submitted that that in the arbitration proceedings, the
pleadings placed on behalf of the company only shows that there is a
differential amount less than 02.00Crores which would be
`
recoverable from the company and not from the applicant.
20. Learned counsel for applicant has referred to Annexure ‘F’
placed at page No.55 of the paper-book, a detailed chart regarding the
payments received by ZMPL from NAFED and material supplied to
BAIL APPLN No.1698/2011
Page 6 of 14
the satisfaction of the NAFED.
21. On perusal of the Annexure ‘F’ mentioned above and from the
comparison of these two charts it reveals that NAFED had advanced
` 87.03Crores whereas ZMPL has already returned approximately
` 85.65Crores. Therefore, the total amount is less than ` 02.00Crores
which is recoverable from the applicant.
22. Learned counsel has further submitted that in the proceedings
before this Court under Section 9 of the Arbitration and Conciliation
Act, 1996 necessary orders are being passed to ensure the recovery of
the amounts from ZMPL qua the applicant in the event of any
impending award by the sole arbitrator. AS per the direction of this
Court, bank account of ZMPL have been frozen. The immovable
properties of the applicant has been injuncted so that the applicant may
not create any charge or any third party interest. Apartfrom the
directions, the applicant has also been directed to make payment of
` 4.50Lacs per month from out of the profit generated from the mining
business of ZMPL. It is an admitted fact that mining business of
ZMPL has been stopped by the order of Orissa Government, despite
that he has been making necessary payments in compliance of the
order of the Court.
23. Learned counsel for petitioner has drawn the attention of this
Court at Annexure ‘H’ at page No.63, whereby the petitioner’s
company has filed a petition before High Court of Orissa at Cuttack
being Writ Petition (Crl) No.326/2011 which is pending adjudication.
BAIL APPLN No.1698/2011
Page 7 of 14
24. He further submitted that the petitioner was arrested on
27.09.2011. Vide order dated 03.09.2011 his application was rejected.
The charge-sheet has already been filed by the prosecution on
19.12.2011, and charges have yet not been framed. Therefore, the trial
will taken substantial time. The petitioner is settled in India and he is
the CMD of the company mentioned above, therefore, no chances to
flee from India.
25. Learned counsel has relied upon Sanjay Chandra v. CBI 2011
(4) JCC 2913 wherein the Apex Court has been held that the
investigating agency has already completed the investigation and the
charge-sheet has already been filed, therefore, their presence in the
custody may not be necessary for further investigation and the
petitioners are entitled to grant of bail pending trial.
26. Learned counsel has emphatically relied upon the observation
made in para No.28 of Sanjay Chandra(supra) which reads as under:-
“28) We are conscious of the fact that the accused
are charged with economic offences of huge
magnitude. We are also conscious of the fact that
the offences alleged, if proved, may jeopardize the
economy of the country. At the same time, we
cannot lose sight of the fact that the investigating
agency has already completed investigation and
the charge sheet is already filed before the Special
Judge, CBI, New Delhi. Therefore, their presence
in the custody may not be necessary for further
investigation. We are of the view that the
appellants are entitled to the grant of bail pending
trial on stringent conditions in order to ally the
apprehension expressed by CBI.”
BAIL APPLN No.1698/2011
Page 8 of 14
27. He further submitted that there is no apprehension of the
petitioner to flee from trial or from the country. In the present case,
charge-sheet has been filed and he is no more required for any
custodial interrogation.
28. Learned Senior Advocate for petitioner has also relied upon the
decision rendered by coordinate bench of this Court on 19.01.2012 in
Bail Application No.1692/2011 titled as Suresh Kalmaadi v. CBI .
29. On the other hand, Mr.P.K. Sharma, learned Standing Counsel
for CBI has submitted that the applicant being the CMD of ZMPL in
connivance with the other co accused on the basis of the false claims
obtained loan/advances to the tune of ` 90.22Crores from NAFED for
carrying out business of procurement and export of IOF. Out of the
said amount, ` 30.47Crores was paid back. An amount of
` 67.11Crores including interest and service charges are outstanding.
ZMPL has executed an agreement dated 12.02.2004 with NAFED for
supplying 66000 MTs of IOF on tie-up basis. Against this agreement,
the co accused Vinod Kumar Gupa, on behalf of accused wrote letters
to NAFED to release the advances and an amount of ` 09.00Crores
was released and credited to the account of the company, operated by
the accused/applicant. Out of the advance of ` 09.00Crores,
` 06.65Crores were got released even after expiry of the agreement and
that too by producing a bogus SGS certificate to NAFED. No material
was supplied against the said advance of ` 09.00Crores released
BAIL APPLN No.1698/2011
Page 9 of 14
against the agreement dated 12.02.2004 and entire amount was
misappropriated by the applicant and other co-accused persons.
30. Learned counsel for respondent further submitted that
subsequently another agreement dated 16.03.2004 with NAFED for
export of 90000 MTs of IOF was signed between ZMPL and NAFED.
Against this agreement, an amount of ` 18.22Crores was released on
the basis of fake and bogus SGS certificates and claiming quality and
quantity of the material.
31. Learned counsel relied upon the decision rendered by this Court
on 21.12.2009 Mukesh Jain v. CBI 2010(1) AD (Delhi) 443 wherein
co-ordinate bench has observed as under:-
“It is true that the petitioner has been in custody
for more than eight months and the charge-sheet
has already been filed, but considering the huge
amount of public money, being retained by him, his
having been in custody for eight months by itself
would, in the facts and circumstances of this case,
not entitle him to grant of bail at this stage. The
economic offences having deep rooted
conspiracies and involving huge loss of public
funds whether of nationalized banks or of the State
and its instrumentalities need to be viewed
seriously and considered as grave offences
affecting the economy of the country as a whole
and thereby posing serious threat to the financial
health of our country. Therefore, the persons
involved in such offences, particularly those who
continue to reap the benefit of the crime committed
by them, do not deserve any indulgence and any
sympathy to them would not only be entirely
misplaced but also against the larger interest of
BAIL APPLN No.1698/2011
Page 10 of 14
the society.”
32. In the instant case, though the petitioner has spent more than
four months in custody. The petitioner was the CMD of the company
involved in the offence. His responsibility and involvement cannot be
denied. The charge-sheet has already been filed and the petitioner has
all liberty to argue his case on charge. The Trial Court may discharge
the accused, if the Trial Court so desired on the material placed before
it. Public money is involved in the present case and if he is admitted
on bail, he shall enjoy the ill-gotten wealth obtained by illegal means,
which will encourage other persons to commit similar crime on the
belief that they could lead a lavish and comfortable life after spending
few months in jail, therefore, a wrong message will go in public. The
public funds are involved being obtained on loan by the company and
petitioner.
33. In Bail application No.1511/2011 co-ordinate bench of this
Court on 09.11.2011 in matter of Homi Rajvansh v. CBI has observed
regarding conduct of present applicant in para No.16 which can be
quoted with profit as under:-
“16. The next question which arises is as to whether
the allegations against the petitioner are serious or
not, and if, serious as to whether it warrants his
interrogation by insulating his liberty by granting
him anticipatory bail or whether the investigating
agency be given free hand to interrogate the
petitioner in custody. In this regard, the conduct of
the petitioner in so called joining the investigation
will have to be seen, with regard to the enormity of
charges and the seriousness of the allegations. There
is no dispute about the fact that the enormity of the
BAIL APPLN No.1698/2011
Page 11 of 14
charges or the allegations against the petitioner are
very serious in nature. I was informed during the
course of oral submissions by the learned counsel for
the CBI that an amount of ` 630 crores
approximately has been pilferaged or
misappropriated /cheated from the NAFED by the
number of persons and different organizations under
the garb of various kind of business propositions. It
may be pertinent here to refer to the observations of
Hon'ble Mr.Justice Manmohan Singh while
entertaining three petitions for arbitration, the
learned Judge had observed as under:
"1. In a short span of about five months, I have
come across three cases wherein petitioner-
NAFED, a national level cooperative society
set up under the Multi- State Co-operative
Societies Act, 2002, has filed proceedings to
secure its interest in financial transactions.
2. While in OMP No. 589/2007 petitioner-
NAFED advanced a sum of Rs.223.93 Crores
as a means of finance for the purpose of
procurement of iron ore, in OMP No.
449/2007 petitioner-NAFED advanced an
amount of Rs.90.7 Crores for export of iron
ore. Similarly, in A.A. No. 73/2010 petitioner-
NAFED advanced a sum of Rs.2.3 Crores
towards financial assistance for export of fuel
oil, sugar and other products.
3. In the above three cases, according to
petitioner-NAFED, larger amount of monies
advanced were misappropriated by the
parties to whom the same were disbursed. In
OMP 589/2007, which was disposed of by me
vide order dated 3rdNovember, 2009, it was
the petitioner- NAFED’s case that the amount
advanced by it, namely, Rs. 223.93 Crores was
utilised for buying immovable properties and
for buying paintings of a famous painter. I
may mention that in the said case, it was the
petitioner- NAFED’s case that Central Bureau
of Investigation had initiated criminal
BAIL APPLN No.1698/2011
Page 12 of 14
prosecution against not only private
beneficiaries but also against its own officials.
4. In all these three matters, petitioner-
NAFED has now initiated arbitral proceedings
to seek recovery of monies advanced by it,
which shows that huge amount of public
money has been siphoned off by various
private companies/individuals by taking huge
loans/advances from petitioner-NAFED. It is
apparent that the above three transactions
reflect a systematic failure of internal process
of an organisation registered under a Statute
and controlled by the Government.
5. I am also of the prima facie opinion that
these three cases need to be taken as case
studies by a committee comprising a
representative each from Cabinet Secretariat,
Comptroller and Auditor General of India and
Department of Agriculture and Co-operation,
Ministry of Agriculture, Government of India
to consider whether structural changes are
required to be carried out to ensure that there
is a proper system of checks and balances so
that in future similar transactions do not
recur.
6. Consequently, I direct the Registry of this
Court to open a separate Public Interest
Litigation file in which it should place copies of
petitions filed by petitioner-NAFED in OMP
Nos. 449/2007, 589/2007 and A.A. 73/2010
along with a copy of this order. The said PIL
be listed before a Division Bench of this Court
according to Roster on 7th April, 2010.
7. List the present petition before this Court for
further proceedings on 22nd March, 2010.”
34. Therefore, I am not inclined to admit the applicant to bail at this
stage, especially when the charges has are yet to be framed against
BAIL APPLN No.1698/2011
Page 13 of 14
him and matter is not tracked for trial.
35. Accordingly, Bail Application No.1698/2011 is dismissed.
36. Before parting with the present order, it is made clear that
nothing observed herein shall amount to an observation on the merits
of the case, as still it is pending adjudication before learned Trial
Court.
37. In view of above, Crl.M.B.No.2109/2011 does not require any
further adjudication and stands disposed of as such.
38. No order as to costs.
SURESH KAIT, J
th
FEBRUARY 06 , 2012
Mk
BAIL APPLN No.1698/2011
Page 14 of 14