No Criminal Liability for Private Vendor in Govt Contract Irregularities Absent Evidence of Conspiracy: Allahabad High Court - 2025-07-08

Private Vendor's Role Different from Public Servants in Contract Award, Prosecution an Abuse of Process: Allahabad HC Quashes Charges

Allahabad, UP – July 7, 2025 – In a significant ruling concerning liability in government contract irregularities, the Allahabad High Court has quashed criminal proceedings against a private vendor and his company, holding that their prosecution in the absence of concrete evidence of conspiracy constitutes an abuse of the process of the court.

Justice Sanjay KumarSingh , while allowing an application under Section 482 of the Cr.P.C., discharged Ajay Mishra and his firm, M/s Infolink Consultancy Services Pvt. Ltd., from charges of conspiracy, cheating, and corruption in a case related to the National Rural Health Mission (NRHM) scam. The court distinguished the role of the private vendor from that of the accused public officials, stating that the responsibility for procedural compliance in awarding contracts lay with the government bodies.

Background of the Case

The case stemmed from a CBI investigation into the implementation of the Hospital Management Information System (HMIS) in 15 districts of Uttar Pradesh during 2009-10. The CBI had filed a charge sheet against several public servants and the applicants, Ajay Mishra and his company, M/s Infolink.

The allegations included entering into a criminal conspiracy to award the HMIS project, budgeted at ₹5.25 crores, to M/s Infolink at inflated rates without a proper tender process. This, the CBI claimed, caused a wrongful loss of approximately ₹2 crores to the government exchequer. A Special CBI Court in Ghaziabad had rejected the discharge applications of the accused and framed charges, leading to the present application before the High Court.

Arguments from Both Sides

Applicants' Submissions:

Mr. Tanveer Ahmad Mir, Senior Advocate for the applicants, argued that Ajay Mishra was a bona fide service provider whose firm was duly empanelled with the Uttar Pradesh Electronics Corporation Ltd. ( UPLC ) when the work order was issued. He contended that: - The project was completed within the government-approved budget. - The responsibility for the selection process rested with UPLC and NRHM officials, not the vendor. - UPLC 's internal policies permitted outsourcing work without a competitive tender process. - The prosecution's case lacked any evidence of conspiracy, kickbacks, or undue gratification. - The case, at best, was a civil dispute over service issues, for which the government had already made financial deductions.

CBI's Counter-Arguments:

Mr. Rahul Srivastava, representing the CBI, maintained that a criminal conspiracy existed between senior officials and Mr. Mishra to grant the contract unduly. The CBI argued that: - The work was deliberately awarded to Mr. Mishra 's firm, bypassing more cost-effective options like the National Informatics Centre (NIC). - The rates quoted for hardware and software were exorbitant, leading to significant loss to the exchequer. - Officials at NRHM and UPLC colluded to modify procedures and ensure the contract went to a pre-decided, non-empanelled firm (at the time of initial proposal).

Court's Analysis and Findings

The High Court meticulously analyzed the material on record and concluded that the case against the private applicants was unsustainable. Justice Singh made several key observations:

> "The case of applicant no.1- Ajay Mishra , who is a private entity / vendor stands on different footing than that of other co-accused persons who, at the relevant point of time, were holding different posts in NHRM and UPLC . Hence the case of applicants is distinguishable from other co-accused."

The court found that the essential ingredients for the offences of criminal conspiracy (Section 120-B IPC), cheating (Section 420 IPC), and using a forged document (Section 471 IPC) were not met with respect to the applicants.

On the charge of conspiracy, the judgment noted: > "Ex facie, there is no material to show that a conspiracy had been hatched by the applicant no.1, hence no offence for Section 120A I.P.C. punishable under Section 120B I.P.C. is made out against the applicants."

The court also pointed out that the charges under the Prevention of Corruption Act, 1988, were primarily directed at public servants and the allegations against the private applicants did not fit within the statutory framework, especially in the absence of any evidence of bribery or gratification.

Final Verdict and Implications

In its concluding remarks, the court relied on the principles laid down by the Supreme Court in cases like ** Union of India vs. Prafulla Kumar Samal **, which empower a judge to sift evidence at the charge stage to determine if a prima facie case exists.

The Court held that subjecting the applicants to a criminal trial based on the available evidence would be an abuse of legal process.

> "As a fallout and consequence of aforementioned discussion, this Court feels that criminal prosecution of the applicants under the facts and material evidence relied upon by the C.B.I. in support of charge-sheet against the applicants is abuse of the process of the Court as no offence is made out against them..."

Consequently, the High Court quashed the Special Court's orders dated March 2, 2024 (rejecting discharge) and April 29, 2024 (framing of charges) in relation to Ajay Mishra and M/s Infolink Consultancy Services Pvt. Ltd., and discharged them from all charges.