(iii) One or more companies (to be called leader companies) from amongst the selected, could be allowed to do mining of coal in one or more captive blocks and the other companies (to be called associate companies) would get coal from the captive block in proportion to their assessed requirements. The local Coal India subsidiary could facilitate this arrangement by taking a nominal service charge. Leader companies will deliver coal to associate companies at a transfer prices to be determined by the Central Government.
8. Mining of Coal by allottee companies The following dispensations are permitted for mining of coal from captive blocks:
(i) Any of the companies engaged in approved end-uses can itself mine coal from a captive coal block; or CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 77 of 350
(ii) A company engaged in any of the approved end-uses can mine coal from a captive block through a mining company supplying the coal on an exclusive basis from the captive coal block to the end-user company or to its subsidiary company, provided the end-user company has firm tie up with mining company for supply of coal, supported by legally binding and enforceable contract/agreement.
(iii) An independent coal/lignite mining company can also be allocated a captive block on the condition that the entire coal/lignite so mined would be transferred to an end user company(ies) for their captive consumption in the specified end uses;
Provided that the said mining company has firm back-to-back tie up with the specified end user company(ies), supported by legally binding and enforceable supply contract/agreement.
9. Inter-se priority for allocation of a block among competing applicants for a captive block may be decided as per the following guidelines:
• Status (stage) level of progress and state of preparedness of the projects; • Net-worth of the applicant company (or in the case
of a new SP/JV, the net-worth of their principals); • Production capacity as proposed in the application ; • Maximum recoverable reserve as proposed in the application;
• Date of commissioning of captive mine as proposed in the application;
• Date of completion of detailed exploration (in respect of unexplored blocks only) as proposed in the application; • Technical experience (in terms of existing capacities in coal/lignite mining and specified end use);
• Recommendation of the Administrative Ministry concerned;
• Recommendation of the State Government concerned (i.e. where the captive block is located); • Track record and financial strength of the company.
Preference will be accorded to the power and the steel sectors. Within the power sector also, priority shall be accorded to projects with more than 500 MW capacity. Similarly, in steel sector, priority shall be given to steel plants with more than 1 CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 78 of 350 million tonne per annum capacity.
B. CONDITIONS OF ALLOTMENT
10. Upon allocation of captive coal block by the Screening Committee the applicant would submit an affidavit in the prescribed format to the effect that all coal mined from the captive block shall exclusively be used in the proposed end use project for which the said block has been allocated and that in case of any slippage in implementation of the end use project or the captive coal mine development project, as per the Schedule of implementation/bar charts submitted and agreed to by the Ministry of Coal, the said block shall be deallocated without any liability to the Government /its agencies, whatsoever.
11. The normative time limit ceilings have been provided to ensure that the coal production from the captive blocks shall commence within 36 months (42 months in case the area is in forest land) of the date of issue of letter of allocation in OC mine and in 40 months (54 months in case the area fall under forest land) from the date of said letter in UG mines.
12. In respect of an unexplored block, the allocattee company shall apply for a prospecting license within three months of the date of issue of allotment. The exploration shall be completed and geological report prepared within two years from the date of issue of prospecting license.
13. Any slippage in meeting with the above time limits, unless previously agreed to by the Screening Committee, for special reasons to recorded in writing, may lead to forfeiture of bank guarantee, or/and cancellation of allocation, previous approval under Section 5(1) of the MMDR Act, 1957 or mining lease, as the case may be.
14. The allocattee company shall be required to submit a bank guarantee equal to one year's royalty amount based on mine capacity as assessed by CMPDIL or NLC, as the case may be, and the weighted average royalty within 3 months of the date of letter of allotment. Subsequently, upon approval of the mining plan the Bank Guarantee amount will be modified based on the final peak/rated capacities of the mine.
15. 50% of the bank guarantee shall be linked to the milestones (time schedule) set for development of captive block, and the remaining 50% to the guaranteed production. The bank guarantee shall be liable to be encashed in the following eventuality:
(i) There shall be an annual review of progress achieved by CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 79 of 350 an allocattee company. In the event of lapses, if any, in the achievements vis-a-vis the milestones set for that year, a proportionate amount shall be encashed and deducted from the bank guarantee.
(ii) Once production commences, in case of any lag in the production of coal/lignite, a percentage of the bank guarantee amount will be deducted for the year. This percentage will be equal to the percentage of deficit in production for the year with respect to the rated/peak capacity of the mine, e.g., if rated/peak capacity is 100, production as per the approved mining plan for the relevant year is 50 and actual production is 35, then (50-35)/100 X 100 = 15% will lead to deduction of 15% of the original bank guarantee amount for that year. Upon exhaustion of the bank guarantee amount, the block shall be liable for de-allocation/cancellation of mining lease.
(iii) The allocatee shall ensure that the bank guarantee remains valid at all times till the mine reaches its rated capacity or till the bank guarantee is exhausted. Any lapses on this count shall lead to de-allocation/cancellation of mining lease.
16. The Company shall obtain the geological report (in respect of fully explored blocks), on payment of requisite charges, from CMPDIL, NLC or the State Government agency concerned, as the case may be, within six weeks of the date of issue of allotment letter.
17. In respect of a fully explored block, the company shall submit a mining plan for approval by the competent authority under the Central Government within six months from the date of issue of the letter of allocation.
18. In respect of an unexplored block, the mining plan shall be submitted for approval by the competent authority within two years and six months from the date of issue of the letter of allocation.
19. Mine opening permission shall be considered only after financial closure for the proposed end use project is achieved.
20. In case a captive block is offered/allocated for washing- cum-end-use all the beneficiated coal from the washery would exclusively be used in the proposed end use project of the allocatee company as approved by the Central Government and not for commercial use or otherwise. All middlings, tailings, or rejects from the washery, as the case may be, and all unusables containing carbon obtained during the mining of coal or in any process thereafter, if any, shall be used for captive consumption only by the allocattee in his proposed end use project or as per the scheme for disposal submitted by the CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 80 of 350 applicant and agreed to by the Screening Committee. In the event that disposal is allowed by the Government, the modalities of disposal of surplus coal/ middlings/ rejects, if any, would be as per the prevailing policy/ instructions of the Government at the relevant point in time and could also include handing over such surplus coal/ middlings/rejects to the local CIL subsidiary or to any person designated by it at a transfer price to be determined by the Government.
(Emphasis supplied by me) PROCESSING OF APPLICATION "The applications received in the Ministry of Coal in five copies, after being checked for eligibility and completeness, would be sent to the administrative Ministry/State Government concerned for their evaluation and recommendations. After receipt of recommendations of the administrative Ministry/State Government concerned, the Screening Committee would consider the applications and make its recommendations. Based on the recommendations of the Screening Committee, Ministry of Coal will determine the allotment."
(Emphasis supplied by me)
97. Thus from a bare perusal of the aforesaid guidelines under the heading "How to Apply" it is clear that every applicant company was required to enclose alongwith its application "Audited Annual Accounts/Reports of last 3 years (5 copies)" beside various other documents mentioned over there. It was further mentioned that the applications without the above accompaniments would be treated as incomplete and shall be rejected. Thus what is required to be seen is whether the application of A-1 M/s KSSPL was accompanied with all the documents as were required to be annexed in terms of the guidelines or not.
98. In this regard it will be worthwhile to refer to application dated CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 81 of 350 04.01.2007 Ex. PW1/F (colly) (D-10) of A-1 M/s KSSPL as was submitted to MOC on 09.01.2007 seeking allotment of Thesgora- B/Rudrapuri Coal block. Alongwith the said application various documents were annexed by the company. The "LIST OF ANNEXURES" (available at page No. 8 in D-10) as enclosed with the application mentioning details of various documents annexed read as under:
"List of Annexures.
1. Certificate of Incorporation
2. Authorisation Certificate from company
3. Memorandum & Articles of Association
4. Audited Balance sheet/Annual Accounts
5. Project Report
6. Implementation schedule of end use project & coal mining development
7. Scheme for disposal of middling & rejects
8. Bank draft.
9. Soft copy of application form in CD."
(Emphasis supplied by me)
99. Thus it is seen that various documents so annexed with the application by the company M/s KSSPL were projected to be in accordance with the guidelines issued by MOC.
100. In fact in the covering letter dated 04.01.2007 of the application (available at page 6 in D-10) also it is specifically stated that the application is being submitted in the duly filled in prescribed proforma alongwith the other requisite documents and the demand draft of Rs. 10,000/- towards processing fees. Even the cover page of Annexure IV (available at page 29 in D-10) mentions the title "AUDITED BALANCE SHEET/ANNUAL ACCOUNTS"
CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 82 of 350 It is however the case of prosecution that though such a claim of having annexed all the required documents with the application has been made in the application Ex. PW 1/F (colly) (D-
10) by the company M/s KSSPL but actually all the requisite documents were not annexed. The Audited Annual Accounts/Reports for the past three years were actually not enclosed with the application. The claim so made by the company in its application or in the covering letter was thus stated to be false.
101. As per the guidelines issued by MOC governing allocation of coal blocks the company M/s KSSPL was clearly and undisputedly required to annex Audited Annual Accounts/Reports of the past three years i.e. for the year(s) 2005-06, 2004-05 and 2003-04. However a perusal of documents as annexed in Annexure-IV of the application Ex. PW 1/F (colly) (D-10) shows that while no Annual Account/Report much less audited was filed for the year 2005-06 and even as regard the year 2004-05 only provisional balance sheet as on 31.03.2005 was filed. For the year 2003-04 however the Audited Annual Account/Report as on 31.03.2004 of M/s Ahluwalia Mining Limited has been annexed. However for the year 2002-03 and 2001-02 the Audited Annual Accounts/Reports of M/s Ahluwalia Mining Ltd. have also been annexed. [Admittedly the name of M/s Ahluwalia Mining Ltd. was subsequently changed to M/s KSSPL.]
102. Thus even if company M/s KSSPL chose to file the Audited Annual Account/Report for the year 2002-03 or for the year 2001- 2002 (even though there was no requirement of filing the same) then CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 83 of 350 also it was still required to file the Audited Annual Accounts/Reports for the year(s) 2005-06 and 2004-05 as per the guidelines issued by MOC.
103. Thus on the face of it the application of A-1 M/s KSSPL was clearly incomplete as it was not accompanied with the requisite Audited Annual Accounts/Reports for the year(s) 2005-06 and 2004-
05. In fact during the course of entire trial no explanation has been furnished by A-1 M/s KSSPL as to why the Annual Account/Report for the year 2005-06 was not annexed with the application much less the Audited Annual Account/Report. As already mentioned even for the year 2004-05 only provisional balance sheet was filed. For a ready reference the Audited Annual Accounts/Reports which were required to be filed and the Annual Accounts/Reports which were actually filed by the company have been tabulated as under:
Audited Annual Accounts/Reports which were required to be filed by company M/s KSSPL and the Annual Accounts/ Reports actually filed by company M/s KSSPL with the application S. No. Year Required to be Actually filed by Whether filed as per company M/s Audited guidelines of KSSPL MOC 1 2005-06 Yes No ---
2 2004-05 Yes Only provisional No balance sheet filed 3 2003-04 Yes Yes Yes 4 2002-03 No Yes Yes 5 2001-02 No Yes Yes
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104. My subsequent discussion would however show that even though the Audited Annual Accounts/Reports for the year(s) 2004-05 and 2005-06 were very much available with the company M/s KSSPL at the time of submission of its application to MOC but for reasons best known to it the same were not filed. In fact no reason at all has been put forth during the entire trial as to why the same were not filed. It was merely stated that the same was the result of an inadvertent mistake.
105. At this stage I may also mention that I am still not on the issue as to whether the figures of financial strength of the company i.e. its net-worth or the existing production capacity of the end use plant as mentioned in the application were correct or not. I shall be discussing the said aspects at a later stage.
106. As regard the Annual Accounts/Reports of the company for the aforesaid two year(s), prosecution examined PW 4 Rakesh Kumar Meena, ROC cum official liquidator, Jaipur, Rajasthan. During the course of investigation he had provided various documents of M/s KSSPL including the Audited Annual Accounts/Reports as were submitted by the company for the year 2003-04, 2004-05 and 2005- 06 with the office of ROC, Jaipur. From the said record which now stands proved on record it is clear that the Audited Annual Accounts/Reports of the company M/s KSSPL for the year 2004-05 was filed with ROC on 25.11.2005. The Audited Annual Accounts/Reports for the year 2005-06 was though uploaded by the company on the website of Ministry of Corporate Affairs on CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 85 of 350 16/17.01.2007 but the same was approved and accepted by the company in its AGM held on 30.09.2006.
107. A perusal of form-23 AC Ex. PW 3/D (colly) for the year 2005- 06 as was filed by company M/s KSSPL with ROC shows that the annual accounts of the company for the year 2005-06 was prepared, audited and placed before AGM on 30.09.06. A-2 Pawan Kumar Ahluwalia uploaded said form-23 AC on the website of Ministry of Corporate Affairs under his own digital signatures. Alongwith the said form-23 AC a notice earlier issued for holding AGM of the company on 30.09.2006 alongwith agenda of the meeting was also annexed. In the agenda it was stated that the AGM has been called to receive, consider and adopt the audited balance sheet as on 31.03.2006 and the profit and loss account for the year ended on the date and the reports of the directors and auditors thereon. Form-23 AC further states that the AGM as mentioned above was held on 30.09.2006.
108. Similarly, the record of ROC, Jaipur shows that the Audited Annual Accounts of the company M/s Ahluwalia Mining Private Limited for the year 2004-05 were duly signed on 01.09.2005.
109. Thus from the said documents of ROC which clearly stands proved on record, [(All documents are part of Ex. PW 4/C and PW 4/D) (D-38)] it is crystal clear that well before the date of submission of application of A-1 M/s KSSPL, Ex.PW1/F (colly) (D-10) to Ministry of Coal i.e. as on 09.01.2007 seeking allocation of Thesgora- B/Rudrapuri coal block, Audited Annual Accounts/Reports for the year CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 86 of 350 2005-06 and of the year 2004-05 of the company were very much available with it.
110. However on behalf of both A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia it has been only submitted that inadvertently the provisional balance sheet for the year 2004-05 instead of Audited balance sheet was filed by the staff of the company with the application. It was also stated that the wrong figures of financial strength i.e of net-worth as on 31.03.2006 mentioned in the application Ex. PW 1/F (colly) (D-10) was primarily on account of a conceptual mistake committed by the staff of the company in calculating the net-worth from the balance sheets.
As mentioned earlier, I shall be discussing this issue of wrong figures of financial strength of the company at a later stage of the present judgment.
111. What is however important to note is that no explanation at all of any nature whatsoever has been furnished as to why the Audited Annual Accounts/Reports for the year 2005-06 or for the year 2004-05 were not filed even though the same were available with the company as on the date of submission of application to MOC. As regard the plea of inadvertent mistake, A-2 Pawan Kumar Ahluwalia stated that the application in question was prepared by different departments of the company and he merely signed it being the authorised signatory of the company. He thus claimed complete ignorance both as regard the contents of the application or the CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 87 of 350 documents annexed with it. He stated the non-filing of Audited Annual Accounts/Reports of the year 2004-05 and 2005-06 purely on account of an inadvertent error of the staff of the company.
112. However in my considered opinion the explanation of inadvertent mistake of the staff of company as regard filing of only provisional balance sheet for the year 2004-05 or in not filing of any Annual Account/Report for the year 2005-06 much less Audited, is a very feeble attempt being made by A-2 Pawan Kumar Ahluwalia so as to shrug off his responsibility.
113. A-2 Pawan Kumar Ahluwalia in order to prove his plea of defence that he was not aware of the contents of the application, examined one of his employee DW-6 B.K. Tripathi. This witness stated that in the year 2006-07 he was working as Asst. Manager Marketing in M/s KSSPL. He further stated that in the first week of January 2007 at the asking of Accounts Department of the company he had carried five sets of applications alongwith one set of documents from Satna to Barbil, Orissa for getting the applications signed from Sh. Pawan Kumar Ahluwalia. He further stated that after reaching the office of Sh. Pawan Kumar Ahluwalia at the office of M/s Hima Ispat Ltd. at Barbil one of the staff member collected the said set of documents from him for preparing photocopies thereof and stated that he already knows the purpose of his visit. He also then told him to go inside and get the applications signed form Sh. Pawan Kumar Ahluwalia.
CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 88 of 350
114. He further stated that when he presented the applications to Sh. Pawan Kumar Ahluwalia, Orissa then Sh. Pawan Kumar Ahluwalia asked him as to whether the applications have been correctly and properly filled and to which he claimed ignorance. He further deposed that Sh. Pawan Kumar Ahluwalia then talked to someone at Satna office on telephone and thereafter signed the applications. DW-6 B.K. Tripathi however claimed ignorance about the conversation which A-2 Pawan Kumar Ahluwalia had with Satna office or with whom he talked to.
115. However no evidence has been led on record either by A-1 M/s KSSPL or by A-2 Pawan Kumar Ahluwalia as to who actually prepared the applications or as to why the concerned person did not annexe the Audited Annual Accounts/Reports for the said two years despite being available with the company. Certainly onus to prove the said plea of defence even by preponderance of probability was upon the accused persons as the same was asserted by them only. Strangely enough no one from the Satna office of the company M/s KSSPL was examined who could claim and explain as to under what circumstances the application in question was filled in or as to why certain requisite documents even though available with the company were not annexed with the application.
116. At this stage I may mention as a mark of caution that though no benefit to prosecution is sought to be given on account of any weakness of defence but it is only being shown that accused persons have failed to prove even by preponderance of probabilities their CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 89 of 350 claim of inadvertence regarding non-filing of requisite documents despite being available with the company M/s KSSPL and as regard other misrepresentations made in the application.
117. Prosecution was in fact only required to prove that the application Ex. PW 1/F (colly) (D-10) of A-1 M/s KSSPL was signed and submitted to MOC under the signatures of its authorised signatory/director A-2 Pawan Kumar Ahluwalia. However it will be worthwhile to point out that accused persons themselves have also not disputed the said fact. Rather their own witness DW-6 B.K. Tripathi deposed that A-2 Pawan Kumar Ahluwalia before signing the application made enquiry from him as to whether the applications have been correctly and properly filled or not and when he claimed ignorance in this regard then A-2 Pawan Kumar Ahluwalia also made enquiry from his Satna office in this regard and thereafter only he signed the applications.
118. However as already mentioned no evidence has been led on record by A-2 Pawan Kumar Ahluwalia as to what conversation he had with Satna office or which employee(s) of company M/s KSSPL prepared the application or in other words whose inadvertent mistake it was in not enclosing all the requisite documents even though available with the company. The fact however remains that even if the deposition of DW-6 B.K. Tripathi is believed to be true then also it stands proved on record that A-2 Pawan Kumar Ahluwalia signed the application only after being satisfied that the same has been correctly and properly filled.
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119. Thus at the cost of repetition it may be stated that once the prosecution discharged its burden of proving that application Ex. PW 1/F (colly) (D-10) of A-1 M/s KSSPL seeking allocation of Thesgora- B/Rudrapuri coal block was signed and submitted to MOC under the signatures of A-2 Pawan Kumar Ahluwalia then it was only for A-2 Pawan Kumar Ahluwalia to prove at least by preponderance of probability his claim that he was having no knowledge of the documents annexed with the application or that of the contents of the application. Even A-1 M/s KSSPL has also not made any claim disowning its responsibility towards the incomplete application submitted on its behalf by its officers/directors to MOC.
120. Thus in my considered opinion prosecution has been completely successful in proving the circumstance that the application Ex. PW 1/F (colly) (D-10) of A-1 M/s KSSPL was signed and submitted to MOC under the signatures of A-2 Pawan Kumar Ahluwalia. It also stands proved on record that before signing the application A-2 Pawan Kumar Ahluwalia satisfied himself that the application has been correctly and properly filled. Moreover A-2 Pawan Kumar Ahluwalia being the authorised signatory and director of A-1 M/s KSSPL can not even otherwise disown his responsibility in this regard. In these circumstances, it will be thus completely legal and logical to conclude that A-2 Pawan Kumar Ahluwalia signed the application of A-1 M/s KSSPL having full knowledge of the contents of the application and also of the annexures enclosed. On the other hand both A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia have CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 91 of 350 completely failed in raising any shadow of doubt about the said claim of prosecution or any evidence led by prosecution in support thereof which may lead me to disbelieve the case of prosecution in that regard.
121. Thus it stands clearly proved on record that the application of A-1 M/s KSSPL as submitted to MOC seeking allocation of Thesgora- B/Rudrapuri Coal block was incomplete as it was not accompanied with the requisite documents i.e. the Audited Annual Accounts/Reports for the years 2005-06 and 2004-05. Thus in terms of the guidelines of MOC the application of A-1 M/s KSSPL was per- se liable to be rejected being incomplete even before copies thereof were sent either to Ministry of Steel or to State Government of Madhya Pradesh or to CMPDIL.
122. At this stage I would also like to deal with the contention of Ld. Counsel Sh. Pavan Narang that the prosecution has though proved the signatures of A-2 Pawan Kumar Ahluwalia on the application Ex. PW1/F(colly) (D-10) but the contents thereof have not been proved.
123. PW-3 Prashant Ahluwalia who was brother of A-2 Pawan Kumar Ahluwalia and was also a director of A-1 M/s KSSPL identified signatures of A-2 Pawan Kumar Ahluwalia on the application Ex. PW 1/F (Colly) (D-10) and various annexures thereof. He also stated that A-1 M/s KSSPL had also applied to Ministry of Coal (MOC) for allotment of a coal block. The said witness was not at all cross-
CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 92 of 350 examined on behalf of either the company A-1, M/s KSSPL or A-2 Pawan Kumar Ahluwalia. In fact the correctness of his deposition or that of the documents exhibited by him including the application, Ex. PW 1/F (colly) (D-10) was not at all questioned by any of the accused persons.
124. In the aforesaid circumstances the submission of Ld. Counsel for accused that even though the application has been exhibited by the prosecution but the contents thereof have not been proved is certainly not tenable. The prosecution in my considered opinion has even otherwise been clearly successful in proving and establishing on record that application Ex. PW 1/F (colly)(D-10) was the application which was submitted by A-1 M/s KSSPL to MOC. On the other hand, if the application Ex. PW 1/F (colly)(D-10) was not the same application which was submitted by A-1 M/s KSSPL to MOC then after discharge of its burden by prosecution as above the onus shifts upon accused as to what other contents different from that of Ex. PW 1/F (colly) were either mentioned in their application or what other documents were annexed with the application as was submitted by them to MOC. As a mark of caution I may however mention that onus to prove that application Ex. PW 1/F (colly) (D-10) was the application of A-1 M/s KSSPL as was submitted to MOC is in no way being shifted upon the accused persons from prosecution but it is only when prosecution has discharged its burden beyond shadows of all reasonable doubts and proved that application Ex. PW 1/F (colly) (D-
10) is the same application of A-1 M/s KSSPL as was submitted to CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 93 of 350 MOC then if the accused intends to question the correctness of the contents of the application Ex. PW 1/F (Colly) (D-10) than at least he needs to assert/show as to what were the contents of the application as was submitted by them to MOC and in what respect they were different from the one as are mentioned in application Ex. PW 1/F (colly) (D-10).
125. Prosecution in fact also examined PW-1 Dy. SP S.P. Rana, CBI who had collected the application of M/s KSSPL, Ex. PW 1/F (colly) (D-10) from MOC. He clearly stated that the application Ex. PW 1/F (colly) (D-10) was collected by him from MOC after it was produced by PW-5, Sh. Ram Naresh Section officer, CA-I Section, MOC and that too in the presence of two public independent witnesses namely Vishal Tarar and Ayodhya Prasad. However, neither during the course of examination-in-chief of PW-1 Dy. SP S.P. Rana the exhibition of the said application Ex. PW 1/F (Colly) (D-10) was objected to by Ld. Counsel for accused nor in the cross examination of the witness as was carried out by Ld. Counsels for the accused persons the identity or correctness of the application in question was disputed. It was only suggested to the witness that CBI had on its own collected all the files/documents from the office of MOC and later on while sitting at the CBI office prepared various memos and obtained signatures of different persons on the said memos. PW-1 Dy. SP S.P. Rana, however stated the said suggestions to be wrong. What is however important to note is that though Ld. Counsel tried to question the authenticity of the seizure CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 94 of 350 memo(s) prepared by the witness but the correctness of the documents/files including that of application Ex.PW1/F (Colly) was not disputed. Similarly PW 5 Ram Naresh, Section Officer, MOC also stated that various files/documents including the application of M/s KSSPL Ex.PW1/F (colly) (D-10) was produced by him before Dy. SP S.P. Rana and who seized the same vide memo Ex. PW1/E (D-82). In his cross-examination also as conducted by Ld. Defence Counsel for A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia, he stated that document Ex.PW1/F (colly) (D-10) was available in his section only when he handed over the same to CBI. Once again the said witness was also neither suggested nor put any question disputing the correctness of the application Ex.PW1/F (colly)(D-10). However he was also suggested that the documents/files were already collected by CBI from MOC and that he subsequently signed the seizure memos at CBI office. Witness however denied the said suggestion stating it to be false.
126. Moreover in the overall facts and circumstances of the case, knowledge as to the contents of their application can be exclusively to accused applicant company i.e. A-1 M/s KSSPL and its director A- 2 Pawan Kumar Ahluwalia only as the application was submitted under his signatures. Thus u/s 106 Indian Evidence Act, 1872 the accused persons were liable to discharge the said burden of proof especially when the prosecution has first discharged its burden of proving that Ex. PW 1/F (colly) (D-10) is the application of M/s KSSPL as was submitted to MOC and the same was collected from the CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 95 of 350 authority with whom the same was supposed to be available in the routine course of performance of official acts in MOC. Moreover nothing has been alleged as to in what context or manner the contents of application Ex. PW 1/F (colly) (D-10) were different from the application submitted by company M/s KSSPL to MOC, if Ex. PW 1/F (colly) (D-10) is not the same application. Moreover even in their statement recorded u/s 313 Cr.PC both A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia when asked about the application Ex. PW 1/F (colly) (D-10) to be the one as was submitted by M/s KSSPL to MOC, simply answered it as a "matter of record".
Thus in my considered opinion the contention of Ld. Counsel for A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia that the prosecution has only proved the application Ex. PW 1/F (colly) (D-10) but not the contents thereof is completely misplaced being devoid of any legal or logical basis.
127. Be that as it may, the contents of the application Ex. PW1/F (colly) (D-10) can now certainly be referred to in order to see whether A-1 M/s KSSPL made any false claim in its application either qua its net-worth or its existing production capacity of sponge iron or not. The fact that the application of company M/s KSSPL was incomplete has already been discussed and demonstrated above. Certainly in the absence of Audited Annual Accounts/Reports for the year(s) 2005-06 and 2004-05, the application Ex. PW1/F (colly) (D-10) of company M/s KSSPL was clearly incomplete and was accordingly liable to be rejected at the initial stage of processing of the CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 96 of 350 applications itself in accordance with the guidelines issued by MOC .
(B) Whether A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia misrepresented the figures of financial strength i.e. net-worth of the company M/s KSSPL in the application Ex. PW 1/F (colly) (D-10).
128. As regard the figures of financial strength i.e. net-worth as mentioned in the application form at Point no. 10 it has been claimed by the prosecution that the figures mentioned in the application were clearly wrong. The information mentioned in this regard at point nos. 8, 9 and 10 in the application Ex. PW1/F (colly) (D-10) read as under:
03-04 04-05 05-06 8. TURNOVER IN THE LAST 3 YEARS (in Crores) 22.87 57.33 52.54 9. PROFIT IN LAST 3 YEARS (in Crores) 3.00 1.02 1.64 10. NETWORTH (as on 31.03.06) (in Crores) 40.40 64.75
129. Ld. Counsel Sh. Pavan Narang for A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia has however submitted that the discrepancy in the said figures of net-worth mentioned in the application arose on account of some bonafide accounting mistakes committed by the staff in as much as while calculating the net-worth of the company, the staff instead of applying the formula
(i) Net-worth = Share capital as per + reserves and surplus audited accounts applied the formula
(ii) net-worth = (fixed assets + current assets)
- current liabilities Total assets.
CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 97 of 350
130. It was argued by Ld. Counsel Sh. Pavan Narang that if the net-worth of the company is calculated as per the above formula mentioned at (ii) then the figures mentioned in the application form could clearly be culled out from the Annual Accounts/Reports of the company. It was also submitted by Ld. Counsel that the aforesaid mistake in the application form was a bonafide mistake and there was no malafide intention or malice in mentioning the said figures.
131. While I shall be discussing at a later stage as to what could be the motive in mentioning the highly inflated figures of its net-worth by the company or whether there was any malafide intention on the part of company M/s KSSPL in mentioning the same or not but for the purposes of present discussion it is suffice to state that A-1 M/s KSSPL was clearly found to have mentioned wrong figures as regard its net-worth in the application. In fact both A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia have also not disputed the aforesaid fact except stating that it was the result of an inadvertent mistake. However in this regard, I may mention that despite having an accounts department in the company M/s KSSPL as deposed to by DW-3 Arunendra Prasad Tiwari and DW-6 B.K. Tripathi, both employees of A-1 M/s KSSPL, no one was examined from the accounts department who could even remotely claim or explain that the said figures were mentioned wrongly by him by applying a wrong formula. In fact the issue of mentioning of wrong figures in the application appears to be directly related to non-filing of Audited Annual Accounts/Reports for the year 2005-06 and 2004-05. When CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 98 of 350 the Audited Annual Accounts/Reports for the year 2005-06 and 2004- 05 were admittedly not filed then the question of cross-checking the said figures mentioned in the application either in MOC or in Ministry of Steel or by the officers of Government of Madhya Pradesh does not arise at all. Thus the claim of A-1 M/s KSSPL that if checked the figures mentioned in the application or the factum of wrong formula having been applied in calculating the net-worth would have become clearly evident from the audited balance sheets itself also losses its all significance as no such audited balance sheets were filed alongwith the application either for the year 2005-06 or for the year 2004-05. In the application only the net-worth of the company as on 31.03.2006 was to be mentioned. Thus the Audited Annual Accounts/Reports for the year 2005-06 was the most important document to be filed. Thus it will not be even wrong to state that the Audited Annual Accounts/Reports especially for the year 2005-06 was not filed with the application despite being available with the company M/s KSSPL only with a view to even defeat any attempt if ever made by any authority to cross-check the figure of net-worth as mentioned in the application from the Audited Annual Accounts/Reports, if attached.
132. Moreover as shall be discussed at a later stage also the property being sought for by the company was an important nationalised natural resource i.e. coal of the country and coal was equally crucial as an important raw material to be used by the company M/s KSSPL in its day to day operations and for its future expansion. However the company M/s KSSPL and its CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 99 of 350 officers/directors seems to have dealt with the entire matter in the most casual manner as if they were sure to obtain allocation of a coal block in all eventualities and that the submission of application or other documents by them to MOC was merely a formality. (This conclusion will stand further fortified when at a later stage the role played by accused MOC officers in the coal block allocation process shall be examined).
133. The fact however remains that the figures of financial strength i.e. net-worth as on 31.03.2006 as mentioned in the application Ex. PW 1/F (colly) (D-10) were not only wrong but were also highly inflated.
(C) Whether A-1 M/s KSSPL misrepresented about the existing and the proposed production capacity of its end use project.
134. In the application Ex. PW1/F (colly) (D-10) the existing, proposed and ultimate capacity of the end use project was mentioned as follows:
III PROPOSED END USE (PROJECT) POWER/IRON & STEEL/SPONGE IRON/CEMENT.
(Tick the main end use project, associate end use not to be indicated) Capacity of end use plant LINKAGE LINKAGE LINKAGE Quantity POWER SPONGE mtpa Grade Source MW MW Mtpa WHGB THERMAL 11 EXISTING 10 0.1 0.21936 E/F Korba, Rigarh CAPACITY (SECL, Bilaspur) CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 100 of 350 12 PROPOSED 40 50 0.5 CAPACITY 13 ULTIMATE 50 50 0.6 CAPACITY (TOTAL) 14 ROM COAL 2 MTY REQUIREM ENT 15 LOCATION SAGMA, SATNA (M.P) (District, State)
135. Thus the existing capacity of the end use project was stated as one lac tonne per annum (0.1 MTPA). The prosecution has alleged that the company M/s KSSPL had misrepresented about the said existing production capacity also in as much as in various other documents submitted by the company to different authorities the existing production capacity of the company was never stated to be more than 87000 tonne per annum. On the other hand Ld. Counsel Sh. Pavan Narang has sought to explain the figure of one lac tonne per annum by stating that as the company M/s KSSPL worked for 337 days and 335 days during the financial years 2005-06 and 2006- 07 respectively so the production capacity came to be about one lac tonne per annum. It was further stated that as MOC had not specified any minimum production capacity of the end use project so mentioning of the said figure in no way was relevant to the Screening Committee in making recommendation for allocation of a coal block in favour of A-1 M/s KSSPL. It was also submitted that even otherwise the said capacity was mentioned as the existing installed production capacity of the company and not the actual sponge iron produced by the company in the relevant years.
CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 101 of 350
136. However, in order to appreciate the aforesaid issue in the light of rival claims made by the prosecution and the accused persons, it will be worthwhile to refer to the company profile of M/s KSSPL as was mentioned in the project report enclosed as annexure-V to the application Ex. PW 1/F (Colly) (D-10).
137. In the said company profile it has been mentioned in Section-I, Chapter-2, Para-1 [at page 96 in Ex. PW 1/F (colly) (D-10)] that the company at present is producing about one lac tonne of sponge iron and is having a linkage of 1,39,600 tonne of coal per annum from M/s SECL. It has been further stated that in second phase i.e. in the year 2007, 2 lacs tonne sponge iron will be added and thereby making a total capacity of 3 lac tonnes by the end of 2007. It is further mentioned that in the third phase another kiln of 2 lac tonnes of sponge iron plant shall be set up. In the fourth phase it is stated that additional sponge iron plant of one lac tonne will be set up by 2010.
138. Thus what has been claimed in the project report is that the company M/s KSSPL is at present producing one lac tonne of sponge iron. The said assertion thus clearly belies the claim being now made that in the application, only the existing production capacity has been mentioned as being 0.1 MTPA (One lac tonne per annum) and not the actual sponge iron being produced by the company.
139. However apart from the aforesaid falsity in the claim of the accused persons that the capacity 0.1 MTPA as mentioned in the CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 102 of 350 application is the existing installed production capacity and not the actual sponge iron being produced, it will be worthwhile to examine as to whether the company was even having the actual installed production capacity of sponge iron to the tune of 0.1 MTPA also or not.
140. In this regard, it will be worthwhile to refer to various documents/applications as were submitted by company M/s KSSPL to various authorities at different points of time. From the said documents, it is clearly evident that the claims made by the company M/s KSSPL in its various applications made either to Madhya Pradesh Pollution Control Board or to Trade & Industries Center, Government of Madhya Pradesh or to Excise Department clearly contradicted the claim of the company as have been made in its application Ex. PW 1/F (Colly) (D-10) submitted to MOC regarding its existing production capacity. Even the claim being made now that the actual installed capacity of the company was 0.1 MTPA also stands falsified.
141. PW 8 Dr. P.S. Sharma who was Chief Chemist, Madhya Pradesh Pollution Control Board (MPPCB) was examined by the prosecution in this regard. During the course of investigation he had produced before the IO various applications submitted by A-1 M/s KSSPL for obtaining consent orders u/s 25/26 of Water (Prevention and Control of Pollution) Act, 1974 and u/s 21 of Air (Prevention and Control of Pollution) Act, 1981 beside also producing various consent orders so issued by the Pollution Control Board. All CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 103 of 350 such applications and consent orders in original were seized by IO DSP Sanjay Dubey vide production and receipt memo Ex. PW 8/A (D-49). The documents so seized vide the said memo read as under:
"PRODUCTION & RECEIPT MEMO 1 Case No. & Date : CBI Rc 219 22012 E 0016 CBI EO-I/EO-II, dated 13.10.2012 2 Date & Place of receipt : 05.02.2013 at O/o CBI, EOU-V, EO-II Branch, New Delhi 3 By whom Production and : Shri P.S. Sharma S/o Shri R.S.
handed over Sharma, working as Scientist, Regional Office, Madhya Pradesh Pollution Control Board (MPPCB), Satna, Madhya Pradesh. 4 By whom received : Sanjay Dubey 5 Description of : documents received on production a. Application dated 17.01.2000 submitted by Kamal
Sponge & Steel, Satna for consent u/s 25/26 of the Water (Prevention & Control of Pollution),Act 1974. b. Letter dated 20.01.2000 issued by Regional Office, MPPCB to Kamal Sponge & Steel, Satna.
c. Reply of Kamal Sponge & Steel, Satna dated 21.10.2000 to Regional Officer, MPPCB, Satna. d. Consent of MPPCB dated 10.07.2001 issued u/s 25/26 of the Water (Prevention & Control of Pollution), Act 1974. e. Application dated 17.01.2000 submitted by Kamal Sponge & Steel for consent u/s 21 of the Air (Prevention & Control of Pollution), Act 1981.
f. Consent of MPPCB dated 10.07.2001 issued u/s 21 of the Air (Prevention & Control of Pollution), Act 1981. g. Consent of MPPCB dated 05.04.2004 issued u/s 25/26 of the Water (Prevention & Control of Pollution),Act 1974. h. Consent of MPPCB dated 05.04.2004 issued u/s 21 of the Air (Prevention & Control of Pollution),Act 1981. i. Application dated 01.07.2006 submitted by M/s Kamal Sponge, Steel & Power Ltd., Satna for renewal of consent of Air & Water Pollution.
CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 104 of 350 j. Renewal of consent of MPPCB dated 04.12.2006 issued u/s 21 of the Air (Prevention & Control of Pollution), Act 1981. k. Renewal of consent of MPPCB dated 04.12.2006 issued u/s 25/26 of the Water (Prevention & Control of Pollution),Act 1974.
l. Application dated 19.03.2007 submitted by M/s Kamal Sponge, Steel & Power Ltd., Satna for renewal of consent of Air and Water Pollution.
m. Renewal of consent of MPPCB dated 07.09.2007 issued u/s 21 of the Air (Prevention & Control of Pollution),Act 1981. n. Renewal of consent of MPPCB dated 07.09.2007 issued u/s 25/26 of the Water (Prevention & Control of Pollution),Act 1974.
o. Form D dated 09.08.2012 as submitted online by M/s Kamal Sponge, Steel & Power Ltd. Satna for renewal of consent u/s 25/26 of the Water (Prevention & Control of Pollution),Act 1974.
p. Form 1 dated 09.08.2012 as submitted online by M/s Kamal Sponge, Steel & Power Ltd. Satna for renewal of consent u/s 21 of the Air (Prevention & Control of Pollution),Act 1981.
q. Renewal of consent of MPPCB dated 20.09.2012 issued u/s 21 of the Air (Prevention & Control of Pollution),Act 1981. r. Renewal of consent of MPPCB dated 20.09.2012 u/s 25/26 of the Water (Prevention & Control of Pollution),Act 1974. (All the above-mentioned documents are in original).
Handed over by Taken Over By (Shri P.S. Sharma) (SANJAY DUBEY) Scientist, Regional Office, INSPECTOR OF POLICE MP Pollution Control Board, Satna, CBI/EOU.V/NEW DELHI Madhya Pradesh Satna."
142. From a bare perusal of the aforesaid documents it is crystal clear that vide orders dated 20.09.2012, Ex. PW 8/Q (available at pages 139-142 in D-50) and Ex. PW 8/Q-1 (available at pages 143- 144 in D-50) Madhya Pradesh Pollution Control Board in reference to the online application dated 16.08.2012 of company M/s KSSPL, renewed the consent of Pollution Board both u/s 21 Air (Prevention & CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 105 of 350 Control of Pollution) Act, 1981 and u/s 25/26 Water (Prevention & Control of Pollution) Act, 1974 for a total production capacity of 290 tonnes per day sponge iron. The two consent orders were issued for the period 01.09.2012 to 31.08.2013. Similarly it was found that vide letter dated 19.03.07 Ex. PW8/M (colly) the company M/s KSSPL had sought renewal of consent (Air and water) qua sponge iron for existing production capacity of 290 TPD (87000 tonnes per annum). The pollution control board accordingly renewed the consent so issued to company M/s KSSPL vide order dated 07.09.07 Ex. PW 8/N-1 for the period 01.09.2007 to 31.08.2008.
143. At this stage it will be worthwhile to mention that when various documents as above were collected by the IO from Madhya Pradesh Pollution Control Board then PW-8 Dr. P.S Sharma alongwith Dr. R.S. Parihar, the then Regional officer Satna Regional office also prepared a chart on the basis of said documents mentioning therein the production capacity of M/s KSSPL during different time period and the dates when various consent certificates were issued by the department to M/s KSSPL. The said chart bearing signatures of PW 8 Dr. P.S Sharma and that of Dr. R.S. Parihar was submitted to IO vide letter dated 04.02.13 Ex.PW8/B (colly)(D-48). The said chart is thus a ready and convenient reproduction of the relevant facts of various applications submitted by M/s KSSPL to Madhya Pradesh Pollution Control Board at different points of time seeking issuance or renewal of consent orders under Water & Air Acts as above and the consequent orders issued by the Pollution Control Board.
CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 106 of 350
144. For a ready reference the said chart which is part of Ex. PW 8/B (colly) (D-48) has been reproduced hereunder:
मे सर् सर्र कमल स्पं ज स्टील एण्ड पावर िलिमटे ड सर्गमा सर्तना को जारी सर्म्मित एवं नवीनीकरण उत्पादन क्षमता सर्िहित की जानकारी क. उद्योग द्वारा सर्म्मित एवं नवीनीकरण सर्म्मित/नवीनीकरण अविध उत्पादन क्षमता उद्योग जल/वायु िरमाकर प्राप्त आवेदन जारी िदनांक (जल/वायु) (जल/वायु) द्वारा सर्म्मित/ िदनांक प्रस्तुत नवीनीक आवेदन रण पत्रों पत्रों मे मे फ्लैग फ्लैग नं.
नम्बर 1 17.1.2000 1417 िदनांक 10.7.2001 29.10.2000 सर्े 28.10.2001 27000 टी.पी.ए. ए ए 2 21.10.2000 1415 िदनांक 10.7.2001 29.10.2000 सर्े 28.10.2001 27000 टी.पी.ए. बी-1 बी-1 3 17.7.2001 1404 िदनांक 23.7.2003 29.10.2001 सर्े 28.10.2003 27000 टी.पी.ए. बी-2 बी-2 4 05.3.2002 1405 िदनांक 23.7.2003 29.10.2001 सर्े 28.10.2003 27000 टी.पी.ए. बी बी 5 िनल 214 िदनांक 30.1.2004 29.10.2003 सर्े 28.10.2004 27000 टी.पी.ए. सर्ी सर्ी 6 22.1.2004 5708,5706 िदनांक 01.9.2004 सर्े 31.8.2005 290 टी.पी.डी. डी डी 05.4.2004 7 04.7.2005 17838, 17840 िदनांक 01.9.2005 सर्े 31.8.2006 290 टी.पी.डी. ई ई 21.9.2005 8 01.7.2006 9263,9265 िदनांक 01.9.2006 सर्े 31.8.2007 290 टी.पी.डी. एफ एफ 04.12.2006 9 19.3.2007 7068,7070 िदनांक 01.9.2007 सर्े 31.8.2008 290 टी.पी.डी. जी जी 07.9.2009 10 11.4.2008 5292,5294 िदनांक 01.9.2008 सर्े 31.8.2009 290 टी.पी.डी. एच एच 30.6.2008 11 23.6.2009 10966,10968 िदनांक 01.9.2009 सर्े 31.8.2010 290 टी.पी.डी. आई आई 18.12.2009 12 12.7.2010 9475, 9477 िदनांक 01.9.2010 सर्े 31.8.2011 290 टी.पी.डी. जे जे 08.10.2010 13 17.8.2011 882,884 िदनांक 01.9.2011 सर्े 31.8.2012 290 टी.पी.डी. के के 09.2.2012 14 09.8.2012 7052,7054 िदनांक 01.9.2012 सर्े 31.8.2013 290 टी.पी.डी. एल एल 20.9.2012
-Sd-
क्षेत्रीय अिधकारी, म. प्र. प्रदूषण िनयंत्रण बोडर सर्तना(म.प्र) CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 107 of 350 खतरनाक अिधिनयम अं त गर त जारी प्रािधकार िववरण क. उद्योग द्वारा प्राप्त प्रािधकार जारी िदनांक प्रािधकार अविध िरमाकर आवेदन िदनांक 1 19.9.2006 765 िदनांक 29.3.2007 25.4.2003 सर्े 24.4.2005 फ्लैग (एम) 2 14.5.2010 1704 िदनांक 05.7.2010 25.4.2005 सर्े 24.4.2010 फ्लैग (एन) 3 20.8.2010 2239 िदनांक 20.12.2011 25.4.2010 सर्े 24.4.2015 फ्लैग (ओ)
-Sd-
क्षेत्रीय अिधकारी, म. प्र. प्रदषू ण िनयंत्रण बोडर सर्तना(म.प्र)
145. Thus from the various documents of MPPCB the information whereof has been collated in the chart reproduced above it is clear that from 17.01.2000 till 30.01.04 the production capacity of the company M/s KSSPL was 27000 TPA of sponge iron. Thereafter from 22.01.04 till 31.08.13 the production capacity of the company continued to remain 290 TPD. [The said figure of 290 TPD amounts to 87000 MTPA by multiplying the figure of daily production capacity with a figure of 300 working days in a year i.e 290 X 300 = 87000 MTPA. I shall be however discussing at a later stage as to how the multiplying factor is applied as 300 for calculating production capacity of any industry].
146. Thus from the aforesaid documents itself it is clear that the company M/s KSSPL on its own never claimed its production capacity of sponge iron as more than 87000 Tonne Per Annum. However, prosecution also examined PW 7 A.P Singh who was CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 108 of 350 General Manager District Trade and Industries Center, Satna under Department of Commerce and Industries, Govt. of Madhya Pradesh. He submitted that every industry registered with their department is required to obtain a production certificate from their department. In this regard the company has to apply to their department by way of an application enclosing therewith various no objection certificates/permissions obtained from other departments such as Pollution Control Board, Local Gram Panchayat, Department of Sales Tax etc. He further stated that the applicant company is also required to enclose a list of the plant machinery installed so as to justify the capacity of the industry and the date of commencement of production. He further stated that their department accordingly carries out inspection of the industrial plant and after completion of all necessary formalities the production certificate is issued to the industry concerned. He further stated that in the production certificate the date of commencement of production and the capacity thereof is mentioned. He also stated that the capacity of the industry as mentioned on the production certificate is mentioned on annual basis and the standard criteria adopted by the department to calculate the said capacity on annual basis was to multiply the existing production capacity per day with 300 working days in a year. During the course of investigation this witness also handed over to IO Dy. SP Sanjay Dubey, the original file of their department regarding the production certificates issued to A-1 M/s KSSPL at different points of time. The said file was duly proved on record and was exhibited as Ex. PW7/B (Colly) (D-53). He also proved an application dated 28.08.2003 CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 109 of 350 submitted by A-1 M/s KSSPL to their department seeking issuance of production certificate. Alongwith the said certificate the company had enclosed various documents such as :
"a. Copy of Memorandum and Article of Association b. Copy of Acknowledge from S.I.A.
c. Copy of long term coal linkage from CIL d. Copy of list of plant and machinery purchase for new kiln e. Copy of sanction letter from MPSEB f. Copy of MPST/CST registration certificate g. Copy of Central Excise Registration Certificate h. List of raw material and incidental goods"
147. The witness further stated that pursuant to receipt of said application he himself carried out an inspection of the industrial plant of the company on 09.10.03 and during the course of inspection he found the existing annual production capacity of the plant to be 57000 MTPA. He further stated that the original production capacity of the plant was 27000 MTPA and 30000 MTPA capacity was subsequently added and thus at the time of inspection the production capacity of the plant was 57000 MTPA. He further stated that the original partial production of the plant started on 28.10.2000 and the final target of 27000 MTPA production capacity was achieved on 28.12.2000. The expanded production thereafter started from 19.07.2003. The witness further pointed out that alongwith its application the company M/s KSSPL had also enclosed copy of acknowledgement of submission of I.E.M. (Industrial Entrepreneurship Memorandum) as is required to be submitted by every company with Ministry of Commerce and Industry, Govt. of India. It was submitted that in the said CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 110 of 350 acknowledgement of memorandum which is issued by the Ministry of Commerce and Industry, Govt of India on the basis of Memorandum submitted by the company the existing production capacity of sponge iron was stated as 27000 tonne with proposed capacity as 60000 tonne and total capacity as 87000 tonne.
148. The company alongwith its application seeking issuance of Production Certificate had also annexed two orders both issued by MOC, Govt. of India dated 07.11.2001 and 01.07.2003 regarding grant of coal linkage to the company. Vide order dated 07.11.2001, the company was granted coal linkage for a capacity of 27000 tonne per annum sponge iron. Vide order dated 01.07.2003, the company was granted coal linkage for additional 30000 tonne per annum sponge iron capacity (expanded capacity). PW-7 A.P. Singh further stated that the third kiln installed by the company was having an annual production capacity of 30000 tonnes per annum i.e. @ 100 tonne daily. The company M/s KSSPL was thus issued certificate of commencement of production of sponge iron for a total capacity of 57000 metric tonne per annum on 16.10.2003. The said certificate clearly mentioned the original capacity of the company as on 28.10.2000 to be 27000 MT (Metric Tonne) and as on 19.07.2003, the expanded capacity to be 30000 MT with total capacity being 57000 MT.
149. PW-7 A.P. Singh further stated that subsequently vide application dated 28.03.2005 the company M/s KSSPL applied to their department seeking production certificate qua expanded CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 111 of 350 capacity stating that fourth kiln has also been installed by them and the same has started commercial production w.e.f 15.03.2005. The said application was also enclosed with various documents viz.
"a. Copy of Memorandum and Article of Association b. Copy of Acknowledge from S.I.A.
c. Copy of long term coal linkage from CIL d. Copy of list of plant and machinery purchase for new kiln e. Copy of sanction letter from MPSEB f. Copy of MPST/CST registration certificate g. Copy of Central Excise Registration Certificate h. List of raw material and incidental goods."
150. After the said application was processed in the department then an inspection of the industrial plant of the company was carried out by Sh. R.K. Singh Assistant Manager and who submitted his report dated 05.07.2005 Ex. PW 7/H (D-53). During the course of inspection the original production capacity of the plant qua sponge iron being 57000 MTPA was found to have been expanded by another 30000 MTPA and thus the total existing capacity of the plant was found to be 87000 MTPA. Accordingly a production certificate dated 15.07.2005 Ex. PW 7/J (D-53) was issued to company M/s KSSPL by District Trade and Industries Centre, Govt. of M.P. for a total capacity of 87000 MTPA sponge iron.
151. However in the cross-examination of this witness as was carried out by Ld. Counsel for A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia, he was asked as to on what basis the production capacity of the plant was calculated on the basis of 300 working days. In reply thereto PW-7 A.P. Singh stated that though there were no written CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 112 of 350 guidelines or rules/regulations in this regard but quite a few years back a standard format was received in their department from Directorate of Industries, Govt. of Madhya Pradesh with respect to final/permanent registration of small scale industries. In the said format the production capacity of any plant was asked for on the basis of 25 working days in a month and 8 hours per day per shift. He thus stated that on the basis of said standard format a practice developed over a period of time and which ultimately became an established norm that the production capacity of any industry, be it small, medium or large, established in the state of Madhya Pradesh shall be calculated on the basis of 25 X 12= 300 working days in a year. He further stated that the said practice was in fact adopted by all concerned in the state of Madhya Pradesh and even the Chartered Accountants who used to prepare project reports qua various kinds of industries for submission to Govt. departments also adopted the said norm of 300 working days in a year. The said witness was though put a suggestion by Ld. Defence Counsel that an industry engaged in production of steel runs through out the year for all three shifts per day except for shutting down for yearly maintenance purposes but the witness stated that beside shutting down for yearly maintenance purposes the industry also shuts down depending upon the market conditions. He further stated that subject to all other conditions being suitable the industry engaged in production of steel runs throughout the year on all days.
152. The said witness was however subsequently put a Court question as to whether any industry engaged in production of sponge CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 113 of 350 iron/steel or in production of any other product submits information to the department of industries whenever it shuts down for any period either for maintenance purposes or on account of any market condition or still on any other account be it a holiday etc. The witness however stated that no such information is given to their department by any industry.
153. Thus from the deposition of PW-7 A.P. Singh and that of PW- 8 Dr. P.S. Sharma coupled with various documents placed and proved on record by them it is crystal clear that the company M/s KSSPL had itself never claimed its total production capacity to be more than 87000 MTPA at any point of time. It is also clearly evident that the company M/s KSSPL itself calculated its production capacity on the basis of 300 working days in a year and thus multiplied its per day production capacity of 290 tonne per day with a factor of 300 days i.e. 290 X 300 = 87000 MTPA. Moreover in the cross- examination of none of the two witnesses, the veracity or correctness of the documents proved on record by them was disputed. In these circumstances, an important question which arises for consideration is as to why the claim regarding existing capacity to be one lac tonne per annum was made in the application of A-1 M/s KSSPL as was submitted to MOC under the signatures of A-2 Pawan Kumar Ahluwalia.
154. In fact during the course of trial the effort of A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia has been consistently to show that the existing production capacity of the company was about 1 lakh CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 114 of 350 tonne per annum since the company functioned on more than 300 days in the relevant years. During the course of investigation the accused persons even produced two certificates issued by PW-17 Ashok Kumar Aggarwal, Superintendent (Technical), Central Excise Department, Satna, M.P. showing that the sponge iron plant of the company M/s KSSPL worked for more than 300 days in the year(s) 2005-06 and 2006-07. The said two certificates Ex. PW 17/B (D-70) and Ex. PW 17/C (D-71) read as under:
(Ex. PW 17/B) (D-70) "TO WHOM SOEVER IT MAY CONCERN This is to certify that the Sponge Iron Plant of M/s Kamal Sponge Steel & Power Ltd , Satna, was in operation for 245 days during the period from 1st April, 2006 to 31st December, 2006. This certificate is issued after verification of excise records i.e. R.G.I of the company.
Sd/-
12.04.2013 Superintendent Central Excise, Range II Satna (M.P.)"
(Ex. PW 17/C) (D-71) "TO WHOMSOEVER IT MAY CONCERN This is to certify that, on verification of Production records maintained under Rule 10 of the Central Excise Rules 2002 by the company, it is found that the plant of M/s Kamal Sponge Steel & Power Ltd., Satna (M.P) was in operation for 337 days during the Financial Year 2005-06 and 335 days during the Financial Year 2006-07.
This Certificate is issued on the request made by the Company M/s Kamal Sponge Steel & Power Ltd, Satna (M.P.) Sd/-
22.04.2013 Superintendent Central Excise, Range II Satna (M.P.)"
CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 115 of 350
155. On the basis of the aforesaid two certificates, it was submitted by Ld. Defence Counsel that if the total per day capacity of the kilns installed by the company is multiplied by 335 days for the year 2006- 07 and 337 days for the year 2005-06, then the approximate existing production capacity comes to around 1 lakh tonne per annum.
156. Thus if the aforesaid argument of A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia as duly supported by two certificates Ex. PW 17/B and Ex. PW 17/C is believed then certainly not much can be read against the company for having made a claim in the application that the existing production capacity of the company was one lac tonne per annum. In case of 335 and 337 working days in a given year the total production capacity of the company with capacity of 290 TPD would certainly be more than 97000 MTPA.
157. However the situation is actually not so and as shall be clear from my subsequent discussion that the two certificates Ex. PW 17/B and Ex. PW 17/C clearly seems to have been got issued from PW-17 Ashok Kumar Aggarwal with a view to create a false plea of defence for A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia both during the course of investigation and trial.
158. If the two certificates Ex. PW 17/B dated 12.04.2013 and Ex. PW 17/C dated 22.04.2013 are seen in the circumstances under which the same came to be issued then it will be crystal clear that during the course of investigation serious efforts were made by the accused persons so as to cover up their acts of misrepresentation CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 116 of 350 made in their application Ex. PW 1/F (Colly). Even otherwise, I may state that from the documents of Madhya Pradesh State Pollution Control Board and that of Department of Trade and Commerce as stands proved on record, it is clear that company itself also never considered its existing production capacity to be more than 87000 MTPA. [290 tonne per day X 300 days = 87000 MTPA].
The company at all times submitted its application to various departments considering 300 working days in a year.
Circumstances in which certificate Ex. PW 17/B (D-70) dated 12.04.2013 and Certificate Ex. PW 17/C (D-71) dated 22.04.2013 were issued by PW-17 Ashok Kumar Aggarwal.
159. During the course of investigation of the present case, PW-17 Ashok Kumar Aggarwal had produced before the IO, the original "Annual installed capacity statement" of A-1 M/s KSSPL, Satna dated 06.11.2008, 27.04.2012 and 03.05.2012 as were submitted by company M/s KSSPL in ER-7 form with the Excise Department. The said ER-7 forms were collected by IO Insp. Sanjay Dubey vide production and receipt memo Ex. PW 17/A (colly) (D-59). Moreover ER-7 form dated 06.11.2008 was also put to DW-3, Arunendra Prasad by Ld. Sr. P.P. in his cross examination and the same has been proved on record as Ex. DW-3/PX-1. In the said ER-7 form titled "Annual Installed Capacity Statement" the annual production capacity of sponge iron of the company M/s KSSPL was mentioned as 87000 MT. However PW-17 Ashok Kumar Aggarwal stated in his deposition that during the time when investigation of the present case was in CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 117 of 350 progress he had issued two certificates indicating the number of working days during the two financial years i.e. 2005-06 and 2006-07. Upon being shown the two certificates Ex. PW 17/B and Ex. PW 17/C he identified the same having been issued by him. As regard the circumstances in which the said certificates were issued by him he stated that some representative of A-1 M/s KSSPL had approached him stating that some iron ore racks of the company had got stuck in Orissa and the company required the said certificates for the two financial years to get the said iron ore racks released. He thus stated that in the said circumstances he issued the two certificates. He further stated that the representative of the company M/s KSSPL had brought alongwith him, the production cum dispatch register maintained by the company for the said two financial years.
160. However in his cross-examination as conducted by Ld. Counsel for A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia, he stated that there was no requirement for any manufacturer to inform the excise department on daily basis, if there is no production in his plant/industry on any given day. He also stated that while assessing the monthly returns filed by a manufacturer, the particulars mentioned therein are not cross-checked with the register maintained by the manufacturer at its plant site.
161. The aforesaid witness i.e. PW-17 Ashok Kumar Aggarwal was however thereafter extensively examined by the Court under Section 165 Indian Evidence Act, 1872. In response to the questions so put to him by the Court he admitted that in ER-1 form submitted by M/s CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 118 of 350 KSSPL with excise department on monthly basis, the production of the goods carried out in a given month, its quantity, dispatched quantity, value of the goods dispatched, duty payable on the said goods etc. is mentioned by the company. He also admitted that in the registers produced by the representative of A-1 M/s KSSPL on the basis of which the two certificates Ex. PW 17/B and Ex. PW 17/C were issued by him, similar particulars regarding the goods produced or dispatched or duty payable on the said goods was mentioned.
162. He also admitted that the correctness of all such figures as were mentioned in the two registers thus could have been got cross- checked from the ER-1 forms already filed by company M/s KSSPL with the excise department. However upon being asked as to whether he cross-checked the entries in the two registers with the ER-1 forms of the company, the witness stated that as the record related to ER-1 forms was voluminous so comparison thereof would have taken 1-2 days and thus on account of urgency expressed by the representative of A-1 M/s KSSPL that in the absence of the two certificates they are not in a position to procure iron ore, he did not cross-check the entries made in the register with ER-1 forms. He however also admitted that neither in the applications submitted by M/s KSSPL seeking issuance of said two certificates nor in the said two certificates issued by him any such facts relating to release of iron ore racks were mentioned.
163. I have deliberately reproduced a major portion of the deposition of PW-17 Ashok Kumar Aggarwal as from a bare perusal CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 119 of 350 of his deposition and from the circumstances in which the two certificates Ex. PW 17/B and Ex. PW 17/C have been issued by him, it is clear that the same was a feeble attempt on the part of company M/s KSSPL towards creating a false plea of defence. Certainly the conduct of PW-17 Ashok Kumar Aggarwal in issuing the two certificates Ex. PW 17/B and Ex. PW 17/C is also not above board. The explanation furnished by him that the two certificates were issued on the request of a representative of A-1 M/s KSSPL on the ground that some iron ore racks of the company have got stuck in Orissa and the two certificates are required for getting the iron ore racks released is per-se vague and completely unbelievable. Moreover neither any such request was made in the application by the company nor any such ground of issuing the two certificates is mentioned in the said certificates. Thus apart from the conduct of company M/s KSSPL in procuring the two certificates, the conduct of PW-17 Ashok Kumar Aggarwal is also more daring and blatant in as much as he stated in his deposition that though prior to issuing certificate dated 12.04.2013 Ex. PW 17/B, he was not aware that any investigation was being conducted in the present matter by CBI but before issuing the second certificate dated 22.04.2013 i.e. Ex. PW 17/C he was aware that investigation in the present matter was being carried out by CBI. Apparently there could not have been any correlation for getting any iron ore racks of company M/s KSSPL released in the year 2013 with the two certificates certifying the total number of working days for which the company M/s KSSPL worked during the financial years 2005-06 and 2006-07. Moreover in the cross-examination of this CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 120 of 350 witness neither A-1 M/s KSSPL nor A-2 Pawan Kumar Ahluwalia furnished any explanation worth the name as to for what purpose the two certificates were got issued by them from PW-17 Ashok Kumar Aggarwal or what reason was spelled out by them to him for getting the two certificates issued. However in the written submissions filed on behalf of the two accused persons as well as in their statements u/s 313 Cr.PC, it has been stated that the two certificates were obtained from PW-17 Ashok Kumar Aggarwal as IO PW-18 Dy. SP Sanjay Dubey told them to produce evidence of actual number of working days during the said two years. Had it been so then apart from the fact that such a reason ought to have been mentioned in the applications submitted to PW-17 Ashok Kumar Aggarwal for obtaining the said two certificates, the said reason at least ought to have been put to the witness in his cross-examination. It can not be even remotely believed that no reason at all was disclosed either in writing or even orally to PW-17 Ashok Kumar Aggarwal while getting the two certificates issued. The fact however remains that no prudent person can even remotely believe the reason put forth by PW-17 Ashok Kumar Aggarwal for issuing the two certificates except that he tried to help A-1, company M/s KSSPL and A-2 Pawan Kumar Ahluwalia in creating a false plea of defence.
164. It is in the light of aforesaid facts and circumstances that the deposition of DW-3 Arunendra Prasad Tiwari, Assistant Clerk, Marketing Division, Dispatch Section, M/s KSSPL needs to be seen.
165. DW-3 Arunendra Prasad Tiwari deposed that in the dispatch CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 121 of 350 section of the company a register called RG-1 (Daily stock register) is maintained. He accordingly identified three registers Ex. DW 3/A (colly). Ex. DW 3/B (colly) and Ex. DW 3/C (colly) to be three such registers maintained by the company for the year(s) 2005-06, 2006- 07 and 2007-08 respectively. He also stated that the said three registers were maintained by him and he identified his signatures/initials over there. He also deposed that every year audit inspection of the said registers was carried out by the officials of Central Excise Department and at the time of inspection they put an endorsement to that effect on the registers under their signatures. He also stated that the monthly excise returns submitted in Form ER-1 to the Central Excise Department are submitted by the company on the basis of said registers only.
166. However in his cross-examination as conducted by Ld Sr. P.P. Sh. V.K. Sharma, he stated that the daily production figures as are mentioned in the register were used to be given by production department of the company to him and he had no personal knowledge about the actual production undertaken by the company on any given day. He also claimed ignorance about the installed production capacity of sponge iron in the company. He also claimed ignorance as to when the audit inspection qua the entries in the three registers was carried out or as to who were the officers of Excise Department who signed the said registers as the registers were not signed by them in his presence. He also stated that the audit inspection is carried out in the Accounts Department.
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167. In his further cross-examination, the witness was also shown form ER-7 dated 06.11.2008 titled "Annual Installed Capacity Statement" Ex. DW3/PX-1 as was filed by company M/s KSSPL with Excise Department. He though stated that the said form was signed by him but claimed ignorance about the contents of the form. He further stated that he signed the said form at the instance of officers of Accounts Department of the company. In the said ER-7 Form, the annual installed capacity of the company was stated as 87000 MTPA.
168. Moreover for reasons best known to the accused persons the said registers were not at all shown to PW-17 Ashok Kumar Aggarwal in his cross-examination as to whether the two certificates Ex. PW 17/B and Ex. PW 17/C were issued by him on the basis of said registers or not. In fact PW-17 Ashok Kumar Aggarwal denied that the Excise Department is required to carry out regular physical inspection of the plant/industry of any given manufacturer so as to ensure that there is no violation of excise duty payable. He though stated that surprise inspections are carried out by the department but denied that there were any rules/regulations which mandated that inspection of any manufacturer's site is necessarily to be carried out by the department at least once every year.
169. Thus it is crystal clear that neither the deposition of DW-3 Arunendra Prasad Tiwari inspires confidence nor the two certificates Ex. PW 17/B and Ex. PW 17/C issued by PW-17 Ashok Kumar Aggarwal can be given any credence.
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170. Company M/s KSSPL however also examined DW-4 S.K. Pandey, the then Inspector (Audit) Central Excise Department. He deposed that he alongwith his other colleagues from the office of Central Excise Department had carried out excise audit of the company M/s KSSPL. He stated that at the time of inspection they had inspected RG-1 register Ex. DW 3/C (colly) for the year 2007-08 and as a token thereof made an endorsement with their signatures on the first page of the register. He further stated that at the time of audit inspection they also checked the official record maintained by the company beside the said RG-I register. However in his cross- examination as conducted by Ld. Sr. P.P. Sh. V.K. Sharma he stated that putting of signatures on RG-1 register at the time of any such inspection was not part of any rules and regulations or circulars of Excise Department but the same were undertaken as a part of practice being followed by the officers of the Excise Department.
171. DW-4 S.K. Pandey was in fact examined by A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia in order to substantiate their claim of total number of working days in the year 2007-08. However as already mentioned for reasons best known to the accused persons, the said three RG-1 registers were never put to PW-17 Ashok Kumar Aggarwal who had admittedly issued certificates Ex. PW 17/B and Ex. PW 17/C. The said witness only could have stated as to whether the two certificates were issued by him after seeing the said RG-1 registers i.e. Ex. DW 3/A, Ex. DW 3/B and Ex. DW 3/C respectively for the years 2005-06, 2006-07 and 2007-08 or not. Thus in these CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 124 of 350 circumstances the deposition of DW-4 S.K. Pandey looses all its significance in as much as it does not stand proved on record that the two certificates Ex. PW 17/B and Ex. PW 17/C were issued on the basis of the aforesaid three RG-1 registers or not. Moreover, as discussed above at length the two certificates Ex. PW 17/B and Ex. PW 17/C seems to have been issued solely with a view to create a false plea of defence in favour of company A-1, M/s KSSPL and A-2 Pawan Kumar Ahluwalia.
172. At this stage, I am refraining from commenting as to the reasons why the investigating agency chose to buy such a lame excuse or turned a blind eye to the circumstances under which the two certificates were issued since in my initial orders rejecting the closure report filed by CBI, I have already dealt with the said aspect. The fact however remains that the two certificates Ex. PW 17/B and Ex. PW 17/C issued by PW-17 Ashok Kumar Aggarwal are documents created solely with a view to create a false plea of defence in order to justify the false claim of existing production capacity made in the application of A-1 M/s KSSPL as submitted to MOC under the signatures of A-2 Pawan Kumar Ahluwalia.
173. Moreover no explanation at all has been put-forth by either A-1 M/s KSSPL or A-2 Pawan Kumar Ahluwalia as to under what circumstances the annual installed capacity was stated to be 87000 MTPA in various documents/applications submitted to different Government departments during the relevant period of time i.e. both prior to and after submission of application Ex. PW 1/F (colly) (D-10) CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 125 of 350 to MOC. There is also no explanation as to whether at any point of time the said claims made by A-1 M/s KSSPL before different authorities regarding its annual installed capacity as initially being 27000 MTPA and thereafter having been expanded to 57000 MTPA or even to 87000 MTPA was sought to be corrected by the company much less in the year 2013 when the two certificates Ex. PW 17/B and Ex. PW 17/C were got issued from excise department.
174. Thus from the aforesaid discussion, it is crystal clear that A-1 M/s KSSPL deliberately chose to mention inflated figures of existing production capacity of its end use project in application Ex. PW 1/F (colly) (D-10) submitted to MOC under the signatures of A-2 Pawan Kumar Ahluwalia.
175. It thus stands proved beyond shadows of all reasonable doubts that the company M/s KSSPL with-held the Audited Annual Accounts/Reports for the year 2005-06 and 2004-05 despite the same being available with it at the time of filing of application before MOC. It also stands proved beyond shadows of all reasonable doubts that the company not only made highly inflated claims about its financial strength i.e. net-worth and also grossly misrepresented about its existing production capacity. At this stage I may also mention that company M/s KSSPL had in fact even furnished highly inflated claims of its future production capacity also even though it had no intention to do so or to achieve such targets in future.
176. The failure of the company in achieving post-allocation CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 126 of 350 milestones clearly suggests so. Though at this stage I may mention that Ld. Counsel for A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia has tried to present the post allocation activities undertaken by the company emphasizing that company M/s KSSPL was sincere in mining the coal block allotted to it and to expand the capacity of its sponge iron plant. However the fact remains that even in the year 2012-13, the production capacity of the company remained only 87000 MTPA. Thus it is clear that the company M/s KSSPL even grossly failed in achieving other targets of production of sponge iron also as were claimed either in the main application or in the project report annexed thereto i.e. achieving 0.3 MTPA till the end of 2007 or adding 2 lac tonne capacity of sponge iron production in the third phase or adding another capacity of one lac tonne sponge iron in the fourth phase by the year 2010 and thereby achieving the ultimate total capacity of 0.6 MTPA (6 lac tonne per annum) by the year 2010.
(D) Whether A-1 M/s KSSPL dishonestly withheld the requisite documents from MOC and it also dishonestly made misrepresentations in its application.
177. After having concluded that there were clear misrepresentations and false claims made in the application form submitted on behalf of A-1 M/s KSSPL, the next issue to be considered is whether the said misrepresentations or false claims were made dishonestly. In this regard it needs to be examined as to why company M/s KSSPL chose to with-held any documents or misrepresented about its net-worth or about its existing production capacity or future projected capacity of the end use project. Certainly CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 127 of 350 the reasons thereof can not be proved by prosecution by way of any direct evidence, for the same can be exclusively to the knowledge of accused persons only. However the intention thereof has to be gathered from the attending circumstances only and that too from only such circumstances which stands well proved on record. It is well settled that guilty intention in committing any given act is always in the mind of the offender and prosecution can not be expected to lead any direct evidence qua it. However the only effort which prosecution can make in this regard is to prove on record various circumstances from which it may be legally and logically inferred that company M/s KSSPL had deliberately with-held documents from MOC despite the same being available with it and also that it dishonestly misrepresented about its net-worth and existing production capacity. Thus the object to be achieved by the company and the means adopted by it in achieving the said object becomes important.
178. As discussed above the prosecution has clearly been successful in proving on record that the Audited Annual Accounts/Reports of the company M/s KSSPL for the year 2004-05 and 2005-06 were very much available with the company as on 09.01.2007 i.e. when the application Ex. PW 1/F (colly) (D-10) was submitted by it to MOC the same were not filed in MOC alongwith the application. Except for stating that it was an inadvertent mistake on the part of staff of the company no other explanation worth the name has been put forward either by A-1 M/s KSSPL or by A-2 Pawan CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 128 of 350 Kumar Ahluwalia. However the said explanation has also been shown as a feeble plea of defence raised by the accused and which is highly unbelievable. My subsequent discussion will in fact further show that the aforesaid acts of non-filing of requisite documents and making highly inflated claims regarding net-worth and existing or proposed sponge iron capacity were conscious acts of the accused persons and can in no way be termed as inadvertent acts.
179. However before proceeding further I may state that in drawing the aforesaid conclusion neither I have presumed the existence of any fact till now nor I intend to proceed further on the basis of presumptions. Effort is being made to draw all such conclusions on the basis of only such facts and circumstances as stands proved on record by legally admissible evidence. I am also not at all suggesting that the burden was upon the accused persons to prove their innocence.
180. The aforesaid note of caution is being made consciously as all through the trial and final arguments it was being repeatedly argued on behalf of the accused persons that Court may not draw any conclusions merely on the basis of presumptions even though no legally sustainable and admissible evidence is led by the prosecution to discharge its burden of proving the guilt of accused persons beyond shadows of all reasonable doubts.
181. Thus in these circumstances before adverting further as to what could be the reason of such misrepresentation or withholding of CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 129 of 350 documents, it would be worthwhile to have a glance over the definition of the word "dishonestly" as given in Section 24 IPC.
Section 24 IPC defines the word "dishonestly" as under:
"24. "Dishonestly". - Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person, is said to do that thing "dishonestly"."
However, in order to arrive at a finding in this regard it will be important to first see as to what could have been the purpose of making such a false representation or with-holding of documents by the accused persons. Admittedly MOC while inviting applications by way of an advertisement had also advertised the guidelines vide which inter-se priority for allocation of a block among competing applicants for a captive block may be decided by the Screening Committee. The said guidelines relating to inter-se priority read as under:
"9. Inter-se priority for allocation of a block among competing applicants for a captive block may be decided as per the following guidelines:
• Status (stage) level of progress and state of preparedness of the projects; • Net-worth of the applicant company (or in the case of
a new SP/JV, the net-worth of their principals); • Production capacity as proposed in the application ; • Maximum recoverable reserve as proposed in the application;
• Date of commissioning of captive mine as proposed in the application;
• Date of completion of detailed exploration (in respect of unexplored blocks only) as proposed in the application; • Technical experience (in terms of existing capacities in coal/lignite mining and specified end use);
• Recommendation of the Administrative Ministry CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 130 of 350 concerned;
• Recommendation of the State Government concerned (i.e. where the captive block is located);
• Track record and financial strength of the company. Preference will be accorded to the power and the steel sectors. Within the power sector also, priority shall be accorded to projects with more than 500 MW capacity. Similarly, in steel sector, priority shall be given to steel plants with more than 1 million tonne per annum capacity."
(Emphasis supplied by me)
182. The very first guideline shows that the status (stage), level of progress and state of preparedness of the projects will be one of the factors to be considered by the Screening Committee. The guidelines also says that the track record and financial strength of the company shall also be a relevant consideration beside the production capacity as proposed in the application.
183. Moreover as per the implementation schedule of the end use project and development of coal mine as was enclosed with the application Ex. PW 1/F (colly) (D-10) the development of both was to be undertaken simultaneously. Certainly all such activities would have required huge investment and thus the net-worth of the applicant companies or the track record or financial strength of the companies gains material importance. Accordingly various factors as were chalked out by MOC to govern the allocation of coal blocks to different applicant companies were thus closely related to each other. Moreover the basic factors i.e. the net worth of the applicant company or the track record or financial strength of the company clearly had a direct co-relation with the status (stage), level of progress and state of preparedness of the projects.
CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 131 of 350
184. The aforesaid circumstances thus clearly explains as to what prompted the accused persons to present highly inflated claims with respect to their status (stage), level of progress and state of preparedness of the projects both as regard the existing or the proposed production capacity or to withhold the Audited Annual Accounts/Reports for the year 2005-06 and 2004-05. If at all the claim of net-worth as on 31.03.06 was to be cross-checked then the same would have been possible only if the Audited Annual Accounts/Reports for the year 2005-06 would have been filed by the company M/s KSSPL alongwith its application.
185. Thus from the aforesaid circumstances it is clear that the sole intention of both A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia was to present A-1 M/s KSPPL as better placed/prepared in terms of status (stage) level of progress and state of preparedness of the projects by showing higher production capacity, both existing as well as proposed. The track record and financial strength of the company was also presented as sound and capable enough to undertake future expansion of the end use project or in mining of the coal block which may be allotted. A picture was also sought to be painted about the future expansion plan of the company and its techno-economic capability to do so and thereby present itself as a major bonafide player in the field of production of sponge iron. The end result of all the aforesaid activities so undertaken by A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia was clearly to cause wrongful gain to themselves by procuring allocation of a coal block in favour of CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 132 of 350 A-1 M/s KSSPL.
186. Thus from my aforesaid discussion it stands proved beyond shadows of all reasonable doubts that A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia with-held the Audited Annual Accounts/Reports for the year 2005-06 and 2004-05 from MOC dishonestly. It also stands proved beyond shadows of all reasonable doubts that highly inflated claims regarding its net-worth and the existing and proposed sponge iron production capacity of sponge iron of A-1 M/s KSSPL were made in the application dishonestly with a view to cause wrongful gain to A-1 M/s KSSPL.
187. At this stage, I would also like to deal briefly with one other submission of Ld. Counsel Sh. Pavan Narang for A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia that had there been any malafide intention in inflating the existing or future proposed production capacity targets then in accordance with the priority criteria benchmark fixed by MOC that in steel sector companies having production capacity to the tune of 1 MTPA (One Million Tonne Per Annum) shall be given preference, the company would have mentioned at least its proposed production capacity as 1 MTPA.
188. Though on the face of it the argument appears to be attractive but on a deeper thought the fallacy in the argument becomes evident. Certainly there was no restriction if any company chose to mention its proposed ultimate production capacity as 1 MTPA if not the existing capacity itself. However in such an eventuality the figures of financial CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 133 of 350 strength would have been required to be equally inflated. The proposed total investment required would have grown manifold. Similarly the requirement of land and other factors would have grown exponentially high. The requirement of seeking various clearances from different Government departments would have also arisen. There would have been also a requirement of putting in a new project report to show such a proposed plant and keeping in view the resources available with the company such as land, finance etc. the preparation of any such report could not have been possible. There could have been another important issue of non-matching of the coal reserves as available in the impugned coal block with the requirement of the company if it was to produce 1 MTPA of sponge iron.
189. However at this stage, I may mention that all the aforesaid reasons as mentioned above may appear to be presumptive in nature but the same have been so coined only because Ld. Counsel for accused persons themselves are calling upon this Court to venture into such an exercise to analyse as to why company M/s KSSPL did not mention its proposed ultimate capacity as 1 MTPA. Certainly the reasons thereof must be to the knowledge of accused persons only but it can be said with certainty that mere non-mentioning of its proposed ultimate production capacity of sponge iron as 1 MTPA does not have any effect of any nature whatsoever on the conclusions arrived at by this Court in the earlier part of present judgment. Moreover the issue being considered over here is whether A-1 M/s KSSPL made highly inflated claims in its application CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 134 of 350 dishonestly or not.
(E) Whether both Ministry of Steel and State Government of Madhya Pradesh relied upon the aforesaid highly inflated claims made by the company M/s KSSPL in its application believing them to be true, while submitting their comments/views/recommendation to MOC.
190. The next question which is required to be considered is whether the claims made by company M/s KSSPL as regard its financial strength i.e. net-worth or as regard its existing or proposed production capacity of its end use project were considered by State Govt of Madhya Pradesh and by Ministry of Steel in making its recommendation or submitting its comments/views to MOC. Subsequently it will be also required to be seen as to whether the screening committee and thereby MOC, Govt of India considered the said information as given in the application form in arriving at its final decision.
(i) State Government of Madhya Pradesh
191. PW 9 Sewa Ram, the then Secretary Mines, Government of Madhya Pradesh had attended two meetings of 36 th Screening committee meetings as were held on 07.02.2008 and 08.02.2008. In his deposition he stated that when various applications were received by Government of Madhya Pradesh from MOC for submitting its comments/views/recommendations then an empowered committee headed by Chief Secretary of the State with Secretary Industry, Secretary Mines, Secretary Energy and Secretary Finance as CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 135 of 350 members was constituted. He further stated that on the basis of recommendation of the said empowered committee the Chief Minister of the State made recommendations to MOC for various coal blocks in favour of different applicant companies. Accordingly the recommendations as were made by Government of Madhya Pradesh were duly communicated by him to Sh. H.C. Gupta during the course of meeting held on 07.02.08 itself. He thus stated that qua Thesgora- B/ Rudrapuri Coal block, Government of Madhya Pradesh had recommended the name of M/s BLA Power Ltd. In his cross examination this witness stated that the empowered committee duly chalked out the criteria on the basis of which recommendations were to be made and the said criteria was duly reproduced in the file by Sh. S.K. Mandal, Addl. Secretary Mines. He further stated that based on the said criteria a sub committee comprising of Additional Secretary, Sh. S.K. Mandal alongwith Director Mines and General Manager, State Mining Corporation, examined all the applications and accordingly assigned points for different factors to all the applicant companies. As regard Thesgora-B/Rudrapuri Coal Block 85 points were thus assigned to M/s BLA Power Ltd., whereas 84 points were assigned to M/s Rewati Cement Pvt. Ltd. and 82 points were assigned to A-1 M/s KSSPL. In his cross-examination as conducted on behalf of A-6 K.C Samria this witness however stated it to be correct that while considering the financial status of the applicant companies their net-worth was also considered. He further volunteered that the information as was available in the application form was considered. In his further cross-examination as carried out CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 136 of 350 by Ld. Counsel for A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia he stated that the sub committee comprising of Mr. S.K. Mandal had gone through all the applications and had thereafter prepared detailed charts on the basis of information mentioned in the applications. He also stated it to be correct that in the said charts the turnover of the applicant companies for the financial year 2003-04, 2004-05 and 2005-06 was mentioned beside the proposed investments to be made by the companies. He also stated it to be correct that in the said charts prepared by the sub committee the net- worth of the applicant companies as on 31.03.06 was mentioned and that of A-1 M/s KSSPL was mentioned as 64.75 crores. [ The said figure was undisputedly picked up from the application of A-1 M/s KSSPL Ex.PW1/F (Colly)(D-10)].
192. It was also pointed out to the witness in his cross-examination that in the note dated 02.11.2007 of Sh. S.K. Mandal points were assigned to various applicant companies on the basis of their financial position. The relevant portion of the note dated 02.11.07 [available at note sheet page 23-25 in note sheet pages Ex. PW 9/B (colly) in file Ex. PW 9/A (colly) (D-46)] which read as follows was also pointed out to the witness:
"3. Company ki Vittiya Stithi 1. 100 crore tak 05 2. 101 se 500 crore tak 15
3. 500 crore se adhik 20"
193. It was also put to the witness by Ld. Counsel for A-1 M/s CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 137 of 350 KSSPL and A-2 Pawan Kumar Ahluwalia that in order to assess the "Vittiya Stithi" of a company it was not only the net-worth of the company which was considered but many other factors were also relevant in this regard such as any tie-up for loan, if made by the company or any other financial arrangements or resources made available by the company. It was further put to the witness that in the note dated 06.02.2008 recorded by him on pages 30-35 in note sheet pages Ex.PW9/B (colly) in file Ex.PW9/A (colly) (D-46) it was stated that the "Vittiya Stithi" was assessed on the basis of turnover of the applicant companies for the year 2005-06.
194. Ld. Counsel Sh. Pavan Narang has however submitted that the purpose of referring to different slabs of "Vittiya Stithi" of a company as was done by the sub-committee was only in order to show that irrespective of the wrong figures of financial strength i.e. net-worth mentioned in the application the points as were assigned to M/s KSSPL would have remained the same even if actual figures would have been mentioned in the application.
195. I may however state that the issue being considered over here at this stage is whether the figures related to financial strength of the applicant company as mentioned in the application were considered by Govt of MP in making its recommendation to MOC or not. (I shall be separately dealing with the issue of grant of points under different slabs at a slightly later stage in the light of fact as to whether the application of M/s KSSPL being incomplete and liable to be rejected at the initial stage itself, was to be at all even received by CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 138 of 350 State Government of Madhya Pradesh much less considered]. However from the deposition of PW 9 Sewa Ram coupled with the notes as prepared by the sub committee and by the empowered committee in file Ex.PW9/A (Colly) (D-46) it is crystal clear that the figure of net-worth was a relevant factor duly considered by Government of Madhya Pradesh in making its recommendation to MOC. Thus it again stands cogently established that withholding of Audited Annual Accounts/Reports for the year 2005-06 and 2004-05 beside mentioning highly inflated figures of net-worth or existing or proposed production capacity are not only acts of dishonest concealment of facts but also that of dishonest misrepresentation of facts solely with a view to obtain wrongful gain to A-1 M/s KSSPL.
196. Moreover if the argument of Ld. Counsel Sh. Pavan Narang that if actual figures of net-worth would have been mentioned in the application form then also points assigned to M/s KSSPL would not have been different is considered then the same will primarily amount to overlooking the fact that the application of M/s KSSPL was in fact per-se liable to be rejected being incomplete in terms of guidelines issued by MOC governing allocation of coal blocks. In these circumstances, the question of assigning any points qua any factor whatsoever would not have arisen at all.
197. Thus from the aforesaid discussion it stands clearly proved that the figures of financial strength i.e. net-worth of the company were not only relevant but were also duly considered by State Government of Madhya Pradesh in sending its CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 139 of 350 recommendations to MOC.
(ii) Ministry of Steel.
198. Ministry of steel had admittedly placed various applicant companies under different categories on the basis of its own internal guidelines. In order to appreciate the issue as to whether Ministry of steel considered the figures of financial strength as mentioned in the applications by the applicant companies or the existing and proposed production capacity of the end use project, it will be worthwhile to first reproduce the guidelines so framed by Ministry of Steel.
"Guidelines to be followed for the consideration of allotment of Coal Block [available at page 288-290 in file Ex. PW 13/J-2 (Colly) (D-4A) • 0.3mT (million metric Ton) or more capacity of production of sponge iron either existing or proposed up to December, 2010. • 0.5mT (million metric Ton) or more capacity of production of pig iron either existing or proposed up to December, 2010. • Background of the company-whether associated with steel, sponge, iron, pig iron or mining activity. • Financial status of the company and the extent of financial tie up.
• Coal washery should be envisaged in the project. • Capacity of the company to quickly undertake development of coal mines based on experiance or any credible effective steps.
2. While the above criteria will determine eligibility, following priorities may be considered for allocation of coal blocks up to 50% satisfaction level which are mentioned below:-
Category I: Companies having existing eligible capacity (0.3 mT or 0.5 mT as the case may be)
(a) No coal linkage, no captive coal block.
(b) Partial coal linkage, no captive coal block.(c) With coal linkage, no captive coal block.
Category II: Companies having existing capacity less than eligible capacity (0.3 mT or 0.5 mT as the case may be) but CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 140 of 350 their proposed expansion capacity which is likely to be commissioned by Dec, 2010 will enable them to have eligible capacity.
(a) No coal linkage, no captive coal block. (b) Partial coal linkage, no captive coal block. (c) With coal linkage, no captive coal block.
Category III: Any group of companies or consortium whose individual existing capacities are ineligible, make a viable joint venture and which joint venture enables it to have eligible capacity and the application is submitted in the name of joint venture.
(a) No coal linkage, no captive coal block. (b) Partial coal linkage, no captive coal block. (c) With coal linkage, no captive coal block.
Category IV: Companies having existing eligible capacity (0.3 mT or 0.5 mT as the case may be)
(a) No coal linkage, captive coal block with less than 50% satisfaction level.
(b) Partial coal linkage, captive coal block with less than 50% satisfaction level.
Category V: Companies having existing capacity less than eligible capacity (0.3 mT or 0.5 mT as the case may be) but their proposed expansion capacity which is likely to be commissioned by Dec, 2010 will enable them to have eligible capacity.
(a) No coal linkage, captive coal block with less than 50% satisfaction level.
(b) Partial coal linkage, captive coal block with less than 50% satisfaction level.
Category VI: Companies having no existing capacity, but proposes eligible capacity to be commissioned by December, 2010.
Category VII: Any group of companies or consortium which forms a Joint Venture and such Joint Venture has Ineligible existing capacity but proposed expansion capacity of the Joint Venture enables it to have eligible capacity and the application is submitted in the name of Joint Venture."
(Emphasis supplied by me)
199. Thus from a bare perusal of the aforesaid guidelines it is clear that before putting various applicant companies under different CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 141 of 350 categories the eligibility criteria so devised by Ministry of Steel clearly stated that Financial status of the company and the extent of financial tie-up shall be a relevant criteria of eligibility of applicant companies before they are put under one or the other category so devised by Ministry of Steel. The existing and proposed production capacity of the end use plant was also an important criteria adopted by Ministry of Steel in carving out various categories in which the applicant companies were categorised.
200. PW 16 N.R. Dash, Director, Ministry of Steel was the Incharge ID-Wing where the applications received in Ministry of Steel from MOC were examined. In his deposition he stated that while placing various applicant companies under different categories the information so required was picked up from the applications of the companies only.
201. In his cross examination as conducted by Ld. Counsel for A-6 K.C. Samria he admitted it to be correct that in the guidelines framed by Ministry of Steel for its internal use the financial status of the company and the extent of financial tie-up were relevant factors. He also stated that capacity of the end use project of the company was an important criteria followed by Ministry of Steel. In his cross- examination as conducted by Ld. Counsel for A-1 company M/s KSSPL and A-2 Pawan Kumar Ahluwalia he admitted it to be correct that as per the criteria adopted by Ministry of Steel for sponge iron the applicant company was to achieve 0.3 MT capacity by December 2010, if not already having the same as existing capacity. In fact in CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 142 of 350 the office memorandum dated 06.12.07, EX. PW13/J-1 in file Ex. PW13/C (colly) (D-5A) vide which the status of various applicant companies qua different categories as devised by Ministry of Steel was communicated to MOC it was specifically stated by Ministry of Steel in para 6 as under:
"6.0 The Screening Committee may like to discuss and consider on the following parameters:-
(i) Progress made in respect of the steel capacity projects for which the application for coal block has been submitted.
(ii) Potential and credibility of the applicants in setting up capacity addition in steel sector. (iii) Efforts made towards development of natural resources allocated earlier." (Emphasis supplied by me)
202. Thus from the aforesaid observations made by Ministry of Steel also it is clear that it was very much concerned with the potential and credibility of the applicants in setting up capacity addition in steel sector. The progress made qua the end use project or efforts made towards development of natural resources earlier allocated were also stated to be relevant factors which the screening committee may like to consider so as to facilitate the projected growth of domestic steel capacity. In fact a perusal of minutes Ex. PW 13/L (colly) of 36th Screening Committee also shows that during the meeting held on 03.07.2008, Joint Secretary, Ministry of Steel stated that blocks be allocated to those companies which are genuine, technically and financially sound to take up the project and where capacity addition is expected to be accomplished by the year 2010.
CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 143 of 350
203. Thus from the aforesaid circumstances it is crystal clear that both financial status of the applicant companies as well as the existing and projected capacity of the end use project were relevant factors even to Ministry of Steel while making its recommendations qua various applicant companies to MOC.
204. It is in the light of aforesaid circumstances that the other contentions of Ld. Counsel for A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia are required to be seen especially as regard the category in which A-1 M/s KSSPL was placed by Ministry of Steel or as to under what circumstances no presentation was stated to have been made before the screening committee or no feedback form was submitted on behalf of A-1 M/s KSSPL.
205. In the cross-examination of PW 16 N.R. Dash it was suggested by Ld. Counsel A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia that since A-1 M/s KSSPL was already having coal linkage so its category under the guidelines issued by Ministry of Steel ought to have been II (b) and not II (a). However as already discussed while referring to the guidelines issued by MOC governing allocation of coal blocks the application of A-1 M/s KSSPL ought to have been rejected at the thresh-hold itself by MOC and thus the very question of sending the application of A-1 M/s KSSPL to Ministry of Steel for its recommendation/comments would not have arisen. The question of placing the company either under category II (a) or II (b) or under any other category would not have arisen at all. Moreover if the subsequent conduct of the company after allocation of impugned coal CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 144 of 350 block is seen then it is found that even till the year 2012 the existing production capacity of the company continued to remain 87000 tonnes per day [290 TPD]. The claim made by it in its application and also in the project report annexed with the application regarding its proposed capacity was also thus never achieved. As earlier also pointed out that in the project report forming part of application Ex. PW 1/F (colly) (D-10) it was stated that at present the company is having existing production capacity of one lac tonne per annum and that in the year 2007 another capacity of 2 lac tonne per annum shall be added or that in the 3 rd phase yet another sponge iron production capacity of 2 lac tonne will be added with yet another one lac tonne production capacity in the year 2010. Thus as per the guidelines adopted by Ministry of Steel the company M/s KSSPL failed to achieve any of its projected targets. In fact this failure of A-1 M/s KSSPL in not able to achieve its projected targets also seems to explain the reason as to why A-2 Pawan Kumar Ahluwalia chose not to appear before the Screening Committee for making presentation or for submitting feedback form also titled "Latest Status of End Use Project".
(F) Whether any presentation was made before the Screening Committee on behalf of A-1 M/s KSSPL and whether any feedback form was submitted.
206. As is the admitted and undisputed case that all the applications in response to advertisement issued by MOC in November 2006 were received latest by 12.01.2007 only and the 36 th Screening Committee met for the first time on 07.12.2007. Thus on CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 145 of 350 account of such a long gap in considering the applications it was decided that all the applicant companies shall be called upon to make a presentation qua the proposed end use project and shall also submit a feedback form titled as under:
"Form for feedback"
(Latest status of end use project)
207. The purpose as is reflected from the title itself was to give the applicant companies a chance to update their information as was submitted earlier in their applications. At the same time, it would have served as a guiding factor to the Screening Committee also in making its recommendations in a more objective manner by having with it the latest status/stage of progress made by the applicant companies towards establishing their end use project.
208. The blank format of the said form for feedback was uploaded on the website of MOC and the applicant companies were to download it and after filling it were to submit the same to the Screening committee alongwith 25 copies thereof to be supplied to all the members of screening committee at the time of making presentation. A schedule for all the applicant companies as per which they were to appear before the screening committee to make presentation and submit feedback form was also uploaded on the website of MOC. As per the said schedule M/s KSSPL was to make a presentation before the screening committee in its meeting held on 08.12.2007. Thus as on 08.12.2007 beside making presentation about its end use project the company was also supposed to submit CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 146 of 350 the filled up feedback form mentioning therein the "Latest Status of End Use Project".
209. Thus if the progress which was proposed to be made by the company towards achieving its projected targets till the year 2007 as were mentioned in the project report forming part of its application are seen then as on 08.12.2007 the company would have been required to explain as to in what manner the projected target of 3 lac tonne per annum is going to be achieved in another 23 days time i.e. till 31.12.2007. The progress made by the company towards achieving the said target and thereafter other targets of achieving 0.6 MTPA by December 2010 would have been required to be explained. However as earlier also discussed that A-1 M/s KSSPL could not exceed its production capacity target beyond 87000 MTPA even in the year 2012 so it is clear that the company could not have achieved its target of 0.3 MTPA in 2007 much less to add another 0.2 MTPA capacity in third phase and thereafter to reach the final ultimate capacity of 0.6 MTPA by December 2010.
210. It is in these circumstances the observations of Ministry of Steel as were made in its office memorandum dated 06.12.2007 Ex. PW 13/J-1 (D-5A) would have become immediately relevant. As earlier also mentioned Ministry of Steel had stated in the said office memorandum that the Screening Committee may like to discuss and consider the progress made in respect of the steel capacity projects for which the application for coal block has been submitted. The said observations/pointers would have immediately stood attracted being CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 147 of 350 relevant to the issue. There is also nothing on record to show that company M/s KSSPL had made any efforts to at least meet the eligibility criteria of Ministry of Steel i.e. to achieve production capacity of 0.3 MTPA of sponge iron by December 2010 much less its own projected capacity of 0.6 MTPA by December 2010. The observations made by Joint Secretary, Steel during the Screening Committee meeting held on 03.07.2008 that those companies may be discouraged who are not expected to set up the projected capacities based on their track record also shows as to how much importance was being attached to the latest status/stage of progress made towards establishing the end use project.
211. Moreover, the issue as to whether a presentation was made before the screening committee on behalf of A-1 M/s KSSPL as claimed by prosecution needs to be seen from two different stand points.
During the course of investigation A-2 Pawan Kumar Ahluwalia submitted a reply Ex. PW 3/R (colly) dated 07.01.2013 to a notice u/s 91 Cr.PC stating that only a power point presentation was made on behalf of the company before the screening committee but neither any hard copy of presentation nor any feedback form was submitted. He however further stated that the said power point presentation was also not traceable with the company due to lapse of time. At the same time during the course of investigation copy of no such presentation if made by A-1 M/s KSSPL or feedback form, if submitted by the company could be made available to the CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 148 of 350 investigating agency even by MOC (In fact during the course of investigation of various coal block allocation matters number of record of MOC was found to be missing. CBI in fact also registered a Preliminary Enquiry in this regard also). Thus in these circumstances, it was stated by Ld. Senior P.P. Sh. V.K. Sharma that the investigating agency was left with no other option but to rely on the said reply of A- 2 Pawan Kumar Ahluwalia only to prove that a power point presentation was indeed made on behalf of A-1 M/s KSSPL by A-3 Amit Goyal. However not only A-3 Amit Goyal on the other hand denied having made any such presentation before the Screening Committee but it has also been argued that any reply submitted by A-2 Pawan Kumar Ahluwalia in response to a notice u/s 91 Cr.PC issued by the IO during the course of investigation was inadmissible in evidence being hit by section 162 Cr.PC as the said reply is in the nature of a statement u/s 161 Cr.PC only. It was also submitted that even otherwise the said reply being in the nature of a statement of an accused without recovery of any fact or thing in pursuance thereto can not be read against another co-accused.
212. In this regard I may state that Ld. Counsel for accused persons are certainly right that such a reply if given by a witness or suspect during the course of investigation in response to a notice u/s 91 Cr.PC is certainly inadmissible in evidence being hit by section 162 Cr.PC. Such a reply if received by investigating officer can at the most serve as a guide or indicator to the investigating officer as to whether the investigation being carried on by him is proceeding in the right direction or not and also what other aspects of investigation are CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 149 of 350 left out or are required to be looked into by him. Certainly on the basis of such a reply if the investigating officer is able to collect some other piece of legally admissible evidence then the said reply can certainly be referred to as indicative of the circumstances in which the investigating officer proceeded to investigate various aspects of any such given case or to collect any piece of evidence.
213. Coming back to the case in hand I may state that as neither the presentation nor the feedback form if any submitted by company M/s KSSPL was available in the records of MOC nor could be found in possession of accused persons during the course of search operation carried out by CBI and the accused persons have now turned around stating that no such presentation was made before the screening committee so this court certainly cannot rely upon any admission made in this regard by A-2 Pawan Kumar Ahluwalia in his reply to notice u/s 91 Cr.PC issued by IO during the course of investigation.
214. However in this regard it will be worthwhile to note the answers given by A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia to question no. 204 in their statements u/s 313 Cr.PC relating to presentation made by A-1 M/s KSSPL before the Screening Committee.
Question no. 204 and the answers of the two accused persons read as under:
"Q. 204 It is further in evidence against you that in reply dated 07.01.2013, part of Ex. PW-3/R (colly) submitted by accused company M/s KSSPL under the signatures of accused Pawan Kumar Ahluwalia as Director/authorised signatory of M/s KSSPL it was stated in para 5 & 6 that ".....A power point CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 150 of 350 presentation from the computer was made to the Screening Committee. However the same is not traceable with the Company due to lapse of time" and "the Chartered Accountant of the Company Sh. Amit Goyal went to attend the Screening Committee meeting on 08.12.2008 as replacement of accused Pawan Kumar Ahluwalia who due to some personal commitment could not go". What have you to say? A-1 M/s KSSPL Ans. It is matter of record.
A-2 Pawan Kumar Ahluwalia Ans. This information was provided to the IO based on the inputs provided by the officers of M/s KSSPL, when I had asked them about the said details. This was done as I had personally not attended the Screening Committee meetings."
215. Thus from the aforesaid nature of answers given in response to question no. 204 so put to A-1 M/s KSSPL and A-2 Pawan Kumar Ahluwalia in their statements u/s 313 Cr.PC it is clear that the factum of submission of reply Ex. PW3/R (colly) (D-63) by A-1 M/s KSSPL under the signatures of A-2 Pawan Kumar Ahluwalia has not been denied. However the same is now being assailed during the course of final arguments by Ld. Counsel Sh. Pavan Narang on the ground that the said reply is inadmissible in evidence being hit by section 162 Cr.PC. As already mentioned the said position of law is not being disputed even though in the statement u/s 313 Cr.PC there is an admission of such a reply having been submitted by A-2 Pawan Kumar Ahluwalia in response to notice u/s 91 Cr.PC Ex.PW18/O (D-
62) served upon him during the course of investigation.
216. However as shall be evident from my subsequent discussion of the prosecution evidence and the evidence led by the accused persons in their defence that the accused persons are consistently CBI Vs. M/s Kamal Sponge Steel & Power Ltd. & Ors., Judgement dated 19.05.2017 Page No. 151 of 350 changing their stand in this regard during the course of trial. It was in this context that the answers given by the accused persons in their statement u/s 313 Cr.PC were highlighted as above.