Back
2024 Supreme(Online)(SC) 7967
SUPREME COURT OF INDIA
M/S. KARNATAKA EMTA COAL MINES LTD. – Appellant
Versus
CENTRAL BUREAU OF INVESTIGATION – Respondent
Crl.A. No.-001659-001660 - 2024
The court ruled that an audit report lacking finality cannot serve as the basis for criminal prosecution, emphasizing that the allegations against the appellants were primarily civil in nature.
Headnote:(A) Prevention of Corruption Act, 1988 - Sections 13(1)(d), 13(2) - Indian Penal Code, 1860 - Sections 120-B, 409, 420 - Appeals against the Order on Charge and framing of Charges in a coal block allocation case - The appellants challenged the framing of charges alleging conspiracy and misappropriation of coal rejects - The court found that the allegations were based on an audit report that had not attained finality and that the appellants had acted within the contractual framework - The court emphasized that the audit report could not be the sole basis for prosecution and that the appellants had not committed any criminal act - The court quashed the charges against the appellants. (Paras 21.1, 21.2, 21.3, 21.4)
Facts of the case:
The appeals were filed by Karnataka EMTA Coal Mines Limited and its Chairman against the orders framing charges under the Prevention of Corruption Act and IPC for alleged conspiracy and misappropriation of coal rejects. The allegations stemmed from a CAG audit report claiming financial loss due to improper disposal of coal rejects.
Findings of Court:
The court found that the audit report was not conclusive and that the appellants had complied with the contractual obligations. The court noted that the allegations were primarily civil in nature and did not constitute a criminal offence.
Issues: Whether the audit report could serve as a basis for criminal charges and whether the appellants had acted unlawfully in the disposal of coal rejects.
Ratio Decidendi: The court ruled that the audit report lacked finality and could not be the basis for criminal prosecution. The appellants had acted within the contractual framework, and the allegations did not amount to a criminal conspiracy.
Result: Charges quashed and set aside.
JUDGMENT
HIMA KOHLI, J.
A. PREFACE
1. The present appeals challenge the Order on Charge dated 24th December, 2021 and Order framing Charges dated 03rd March, 2022 passed by the learned Special Judge (Prevention of Corruption Act1) Central Bureau of Investigation2, Coal Block Case No. - 01, Rouse Avenue District Court, Delhi3 in a case4 registered under Section 120- B read with Sections 409 /420 of the Indian Penal Code5 and Sections 13(1)(d)/ 13(2) of
1 In short ‘P.C. Act’
2 In short CBI
3 Hereinafter referred to as ‘learned Special Judge, CBI’
4 Case No. CBI/317 /2019; CNR No. DLCT11-001312-2019 in RC No. 220-2015- E-0002; Branch: CBI/EOU-IV, EO-II/New Delhi
5 In short ‘ IPC ’
the P.C. Act, 1988 titled ‘CBI vs. S.M. Jaamdar & Others’. The appellants before this Court are M/s Karnataka Emta Coal Mines Limited6 arrayed as accused No. 12 in the chargesheet and Shri Ujjal Kumar Upadhaya, Chairman and Managing Director of Emta Coal Limited and former Managing Director of accused No. 12, arrayed as accused No.
6 in the chargesheet.
2. It may be noted at the outset that a challenge has been laid to the impugned orders passed by the learned Special Judge directly before this Court in the light of the directions issued in M.L. Sharma v. The Principal Secretary and Others 7 vide order dated 25th July, 2014 and upheld in Girish Kumar Suneja v. CBI 8 vide Judgement dated 13th July, 2017 wherein directions have been issued that this Court alone shall have the jurisdiction to entertain cases relating to coal block allocation across the country, in particular, cases where the parties seek a stay of the investigation/trial in a matter relating to coal.
B. FACTUAL BACKDROP
3. The contours of the case being intricately intertwined with several documents including Agreements, Memorandum of Understandings9, correspondence etc. referred to by both sides, the factual narrative must be delineated chronologically at some length to appreciate the context of the case.
6 In short “KECML” 7 (2014) 9 SCC 614 8 (2017) 14 SCC 809
9 In short ‘MoU’
3.1. JOINT VENTURE AGREEMENT
3.1.1 A Joint Venture Agreement10 was executed between Karnataka Power Corporation Limited11 and M/s Eastern Mineral and Trading Agency12 for a period of 25 years for the development of captive coal mines and supply of coal to the Thermal Power Plant operated by KPCL namely, Bellary Thermal Power Station13 with the tentative date of commissioning scheduled in December, 2005. KPCL was allocated three coal blocks by the Government of India under the Western Coalfield Limited command area situated in the State of Maharashtra for the development/operation of coal mines dedicated to feeding BTPS.
3.1.2 The JVA was executed between KPCL and EMTA on 13th September, 2002 which gave birth to the Joint Venture Company14 namely, M/s KECML. The shareholding of EMTA in the JVC was to the extent of 76 per cent and that of KPCL was 24 per cent. In the JVA, it was agreed that there would be five directors from each of the two companies and the nominee of KPCL would be the Chairman of KECML who would have the right to cast vote. The relevant clauses of the JVA referred to and relied upon by the parties are extracted hereinbelow:
10 In short ‘JVA’ 11 In short ‘KPCL’ 12 In short ‘EMTA’ 13 In short ‘BTPS’ 14 In short ‘JVC’
“AGREEMENET ON CAPTIVE COAL MINING PROJECT THROUGH A JOINT VENTURE xxxxx “COAL” means washed coal with guaranteed values as per article-6 clause 3 C and satisfies quality parameter laid down in Annexure-1 attached to this agreement.
xxxxx “KPCL Coal Mines” means the coal mine(s) to be allotted to KPCL by Ministry of Coal, Government of India in which mining rights shall be given to the Company and which shall be developed/operated through the Company for captive use of KPCL.
Xxxxx “GCV (ADB)” Gross Calorific value on ‘Air dried basis’ in kcal/kg determined through a Bomb Calorimeter as measured at BTPS as per IS
1350(part -I)
xxxxx “D Grade Coal” means “Non-long flame coal” having Useful Heat Value(UHV) in
