Rouse Avenue Court Special CBI Judge Sh. Bharat Parashar acquitted former Coal Secretary Harish Chandra Gupta and a Delhi Based Company in a Corruption case related to allocation of “Brahmapuri coal block” situated in the State of Madhya Pradesh to M/s Pushp Steel & Mining Pvt Ltd after CBI miserably failed to prove charges.
Court in re: CBI v M/s Pushp Steels & H.C. Gupta, observed, “…whether this Court can undertake a judicial review of the sufficiency of the reasons for which any given coal block came to be allocated in favour of any applicant company. The answer in my considered opinion is “No”, except in the circumstances when evidence is led by the prosecution to show that the said reasons or the exercise of discretion by the Screening Committee or by the competent authority was on account of any extraneous consideration or was malafide.”
Facts
Pushp Steels had filed tender for allocation in response to an advertisement inviting applications for allocation of the ‘Brahmapuri Coal Block’ situated in Madhya Pradesh. The captive coal blocks were earmarked for end use in a sponge iron plant, under the Ministry of Steel.
Pushp Steels was a newly constituted company having been constituted on 02.06.04 and thus it was yet to commence its production. Accordingly there was no turnover or profit of the company in the last three financial years. The column for net-worth was also left blank for the same reason. Instead, the promoters profile and balance sheet of group companies were declared to be enclosed in the application.
The company was held ineligible at first. However, in a meeting with H.C. Gupta the then Secretary, Ministry of Coal, Pushp Steels was allocated the Brahmapuri coal block among others. The Ministry of Steel however did not concur with Ministry of Coal, and the allocation was supposed to be awarded to the next eligible applicant.
Ms. Vini Jain, the then Director, PMO released a note mentioning the rationale behind the Screening Committee’s recommendation. The note said Pushp Steels had presented a detailed plan for using the resource to make high-grade steel used in building automobile parts, hence pitching for import substitution. “The whole process would result in high value addition across the chain. They also propose to set up a 24 MW captive power plant through the waste heat recovery method. The Committee felt that such ventures should be encouraged…”
In absence of comments from the Steel Ministry after sharing aforesaid information, PMO, incharge of the Coal Ministry at that time, approved the recommendation for allocation on 16th Feb 2007. The Ministry of Steel then informed the PMO that there were two other applicants in a higher category. PMO notified final allocation to Pushp Steels on 12th June 2007.
Investigation by CBI
After allegations of wrong doing and corruption in coal block allocation matters, CBI conducted a preliminary enquiry following which it chose to register the case on 25th April 2013. CBI found that the recommendation came from the “the Screening Committee headed by Sh. H.C. Gupta. Secretary (Coal) without there being any recommendation in its favour either by the state Government of Madhya Pradesh or by the Administrative Ministry i.e. Ministry of Steel at the relevant time.”
The company recommended by State of Madhya Pradesh however could not have been eligible as it was a power generation company as against the advertisement for Brahmapuri coal block which stated end use for companies engaged in production of cement or sponge iron. Also, the minutes of the meeting were completely silent on facts that led to the Committee’s decision to prioritize Pushp Steels above other more eligible companies. H.C. Gupta was said to have stated facts to the Principal Secretary to PMO with respect to Pushp Steels that did not figure in the application or the techno economic feasibility report (TEFR). It was also submitted that the company had no prior experience in the manufacturing of steel or sponge iron.
Proceedings before Court
The final report submitted by CBI under Sec 173 CrPC said that “Sh. H.C. Gupta who was Secretary Coal and Chairman, Screening Committee conspired with M/s PSMPL and its director Atul Jain in order to ensure allocation of “Brahmapuri coal block” in favour of M/s PSMPL in violation of all guidelines laid down…”
They were charged with Section 120-B of IPC read with Sec 409 IPC and Sec 13(1)(d) Prevention of Corruption Act, 1988. Atul Jain was discharged in the final chargesheet.
The report alleged that on material facts, the Company did not have any financial capacity of its own to even arrange the margin money required for availing credit facility to the required extent. Court held that the promoter directors had high net worth and the company’s financial status is proved by the Chhattisgarh High Court’s order to its State Government to execute the iron ore mining lease in favour of the company.
Defence Arguments
The investigation report filed stated “no misrepresentation was found on the part of Company.” With regard to the Screening Committee meeting, it was stated “no objection was received from any member at least to the effect that no decision was arrived at in the meeting held on 22.09.06.” and that “no allegation of any nature whatsoever was received from any member of the Screening Committee qua the recommendation.”
Counsel for H.C. Gupta argued that no evidence was shown to prove “meeting of minds” between any of the parties; hence no inference of criminal conspiracy can be drawn. Further, the Screening Committee met thrice and Gupta was present only in the last one. The recommendation was a unanimous decision. It was submitted that merely on the basis of certain notings in the file, no criminality can be found against the officers unless it is shown that the notings have been made with a malafide intention.
Court’s observations
Court quoted itself on Hanumant v State of Madhya Pradesh, “where the evidence is of a circumstantial nature, the circumstances from which the conclusion of guilt is to be drawn should in the first instance be fully established, and all the facts so established should be consistent only with the hypothesis of the guilt of the accused.”
On the issue whether the company M/s PSMPL was indeed ineligible, Court observed, “the earlier comments about company M/s PSMPL being ineligible as per the internal guidelines of Ministry of Steel were given not on the basis of the application of M/s PSMPL seeking allocation of Brahmapuri coal block but on the basis of three other applications of M/s PSMPL seeking allocation of three other coal blocks i.e. Tubed, Chakla and Jitpur.”
Further, KAS Deo, Joint secretary, Coal, the representative of Ministry of Steel was present at the Screening Committee meetings and a note signed by him says the eligibility of Push Steels was explained. In absence of an objection at that point, bars any objection of Ministry of Steel when final allocation was made.
Court held that no information was withheld from the PMO. It was in fact the Joint Secretary, PMO’s decision of considering information as to other eligible companies in higher categories irrelevant. Since officers of the then PMO are not accused in the instant case, the said decision need not be questioned or discussed. State Government’s recommendation held no ground because of deficiencies in the application process of that other company.
CBI failed to prove that no discussion and no decision took place in the Screening Committee’s last meeting dated 22nd September 2006.
CBI also failed to prove its allegation that MP Govt was given too short a notice to attend the Screening Committee meeting.
Court held that no misrepresentation of any sorts was made by the Company. Prosecution failed to prove by cogent and convincing evidence that there was no tie-up of water. investigation carried out in this regard is clearly half-hearted. The allocation of specific quantity of water as is referred to in the said communications was already agreed upon. Thus a consensus existed short of a formal agreement and the same cannot be pulled up as working against Pushp Steels.
In view of failure of prosecution to lead such evidence, a court cannot undertake a review of sufficiency of the reasons for allocation to any company as such.
No malafide intention on the part of accused H.C. Gupta stands proved on record nor has it been shown that he in any manner abused his official position.
On the allegation of criminal breach of trust by a public servant under the P.C. Act, the basic ingredient of reposal of trust was not proved. Certainly H.C. Gupta played a major role but as such “it can not be stated that he was exercising any exclusive dominion over the coal blocks to be allocated… or that the said nationalised natural resources of the country were entrusted to him in any manner.”
Court has thus acquitted both Pushp Steels as well as H.C.Gupta of all charges.
–India Legal Bureau