Fertico Marketing and Investment Pvt. Ltd. v. Central Bureau of Investigation

Citation	2020 SCC OnLine SC 938
Date of Judgement	17 November, 2020
Court	17 November 2020
Case type	Criminal  appeal
Appellant	Fertico marketing and investment
Respondent	C.B.I
Bench	B.R. Gavai, Hrishikesh Roy
Referred	section 6 of DSPE ,section 120-B ,Section 120-B ,Section 13(2)/13(1)(c) of the Prevention of act.

Fertico Marketing and Investment Pvt. Ltd. v. Central Bureau of Investigation

INTRODUCTION

Numerous of cases were filed and in all those cases C.B.I  registered F.I.R  a total of five F.I.R  had been registered .having RC Case no.0062011A0004  of  2011, 0062011A0005 of 2011, 0062011A0006 of 2011, 00620111A0007 of 2011, 00620111A0008 of 2011.

In order to decide all these cases relating to the aforesaid five F.I.R, as per consent of Counsel for the petitioners and C.B.I the Cr.M.C(U/S, 482 Cr.P.C) No.4253 of 2012, Fertico Marketing and Investment Pvt.Ltd. vs. C.B.I relating to RC Case No. 0062011A0005 of 2011 has been taken as a leading case.

The Counsel for the parties agreed that all the other cases may be disposed of on the basis of the pleadings in this case because the facts and the law point raised in all the mentioned cases are almost the same so there is no need of different judgments all these petitions are being decided by the judgment given in the case of Fertico Marketing and Investment Pvt. Ltd. vs. C.B.I which will be considered as a common judgment. 

Facts of the case

•  A new policy was introduced by Coal India Limited On 18th October 2007, under that policy the Fuel Supply Agreement considered as FSA was required to be entered by coal companies and every purchaser of coal. 
• In pursuance of the said policy, on 30th April 2008, an FSA was entered into between the appellants arising out of SLP(Crl.) Nos. 8342-46 of 2019 and the Coal India Limited. 
• On March 25, 2011, the CBI conducted a surprise raid on the factory premises of Fertico Marketing and Investment Private Limited. It was discovered that coal purchased under the FSA (Fuel Supply Agreement) was being sold on the black market. The CBI found that this was done in collusion with unknown government officials, resulting in a loss of Rs.36.28 crore to the Central Government.
• The petitioner, Fertico Marketing & Investment Pvt. Ltd., is a registered small-scale industry involved in manufacturing Special Smokeless Fuel (SSF) using coal obtained from the coal mine projects of Northern Coal Fields Limited (NCL) at subsidized rates under the NCDP (New Coal Distribution Policy).
• The CBI, in the joint surprise check conducted on 25th March, 2011, noticed that the factory was not in an operational condition and there in the factory there was one electric generator of 125 KVA which was found installed in the factory.  Even there was not any power connection was there in the factory for the manufacturing.
• The quality of coal which is found available in the factory premises of the petitioner-Fertico Investment was completely different from the quality of coal that has been received by the petitioner from NCL, Samples of the coal from the factory premises of the petitioner-Fertico Investment were sent for testing the grade/quality.
•  The Mechanical Examiner of coal, in his report, had stated that the quality of coal available in the factory premises of the petitioner-Fertico Investment was Grade-D, while the coal supplied to the petitioner-Fertico Investment by NCL was of Grade-B and Grade-C only. Hence from the report of Mechanical Examiner of coal it is very clear that the coal which is available in the factory was only kept for namesake and, just to display the functional status of the factory to any inspection team.
• During the course of investigation, it was found that two officers namely Ram Ji Singh, the then General Manager, DIC, Chandauli and Yogendra Nath Pandey, Assistant Manager, DIC, Chandauli were also part of the conspiracy. Investigation revealed that these two officials had abused their official positions and fraudulently and dishonestly sent false status reports regarding working conditions of the accused companies and thereby, dishonestly induced the Northern Coalfields Limited to supply coal on subsidized rates, for obtaining pecuniary advantage.
• An FIR was registered by the CBI on April 13, 2011, against the director of Fertico Marketing & Investment Pvt. Ltd. and unknown officials of the District Industries Centerfor the offences punishable under Sections 120B and 420 of the IPC and Section 13 (2) read with Section 13(1)(d) of the Prevention of Corruption Act, .
• The competent authority granted sanction to prosecute the two public servants on May 31, 2012. The charge-sheet was filed against the appellants on the same day. Various petitioners approached the High Court seeking to quash the charge-sheet and summoning order. The High Court framed four questions for determination.

The four questions for determination are as follows:

1. Whether the investigation conducted by the CBI in these cases is illegal and without jurisdiction due to non-compliance with Section 6 of the DSPE Act? If so, what is the effect of this non-compliance?

2. Whether these cases are primarily of a civil nature based on breach of contract (FSA) and whether the criminal prosecutions should be quashed?

3. Whether the CBI failed to follow the doctrine of parity in filing criminal prosecutions against the petitioners? If so, what is the effect of this failure?

4. Whether the charge of criminal conspiracy under Section 120-B IPC can be made in the absence of officers or officials of NCL?

• In this case, the High Court was tasked with determining the legality and jurisdiction of the investigation conducted by the CBI (Central Bureau of Investigation) in relation to cases involving the alleged black marketing of coal. The court framed four questions for determination.
• The first question asked whether the CBI’s investigation was illegal and without jurisdiction due to non-compliance with Section 6 of the DSPE (Delhi Special Police Establishment) Act. The learned single judge disagreed with a previous ruling and concluded that the investigation conducted by the CBI was without the permission or

consent of the U.P (Uttar Pradesh) government, which he considered a breach of the mandatory provisions of Section 6 of the DSPE Act.

• The second question asked whether the cases were primarily of a civil nature based on breach of contract and whether the criminal prosecutions should be quashed. However, the Division Bench did not provide an answer to this question.
• The Division Bench, in its judgment and order dated July 6, 2015, answered the first question by stating that the government order dated June 15, 1989, permitted the investigation and it was not a case of the CBI assuming suo moto jurisdiction. However, they did not provide an answer to the second question.
• After receiving these answers from the Division Bench, the case returned to the learned single judge for further proceedings. The learned single judge examined the issue of post facto consent given by the state government against two public servants accused of black marketing coal.
•  The judge found that the post facto consent granted by the state government was sufficient for the CBI’s investigation. The judge also held that if the names of these public servants were not mentioned in the FIR (First Information Report) and only came to light during the course of the investigation, the consent given after the completion of the investigation would still be considered valid under Section 6 of the DSPE Act.
• In summary, the High Court determined that the CBI’s investigation was not illegal due to the post facto consent granted by the state government and that the investigation could proceed based on this consent. 

Arguments

• Shri Mukul Rohatgi, the learned senior counsel from the side of the appellants, argued that without the consent of the state government under Section 6 of the DSPE Act, the CBI had no powers to conduct the investigation. 
• He emphasized that the consent of the state government is mandatory as per Section 6 of the DSPE Act. He further argued that failure to obtain consent prior to registering the FIR would invalidate the entire investigation. He pointed out that the appellants, who are private individuals, have been charged with offenses under various sections of the IPC and the Prevention of Corruption Act. He stated that an offense under the Prevention of Corruption Act can only be registered against a public servant. 
• Therefore, since Section 120B of the IPC has been invoked in this case, there must be 
• a meeting of minds, which cannot happen between a public servant and private individuals. As a result, he argued that the FIR could not be registered. He also contended that an investigation into a conspiracy involving a private individual and a public servant would not be allowed unless there is valid consent under Section 6 of the DSPE Act. He relied heavily on a previous judgment of the court in the case of Ms. Mayawati v. Union of India and Others to support his arguments.
• Mr. Ajit Kumar Sinha, the learned Senior Counsel representing the accused public servants, submitted that without valid consent, the CBI could not have exercised its powers and jurisdiction to investigate the matter. He argued that the post facto sanction granted on September 7, 2018, would not cure the defect of not obtaining prior consent. He therefore submitted that the proceedings should be quashed and set aside.
•  Shri S.V. Raju, learned Additional Solicitor submitted that the prior consent under Section 6 of the DSPE Act is not mandatory but directory. He submitted, that in any case unless the appellants point out that on account of the procedural irregularity of not obtaining the prior consent, prejudice is caused to the appellants or it has resulted in miscarriage of justice, the investigation would not be vitiated. 
• He submitted, that insofar as the appellants-private individuals are concerned, the grievance of the said appellants is totally unwarranted inasmuch as the Notification dated 15th June, 1989 vide which a general consent has been granted to investigate the matters arising out of PC Act, unless it concerns a public servant under the control of the State Government. Insofar as the public servants are concerned, the learned ASG submitted, that in any case, the consent has been granted after completion of the investigation on 7 th September 2018 and as such the defect, if any, stands cured. He submitted, that in any case, there are no pleadings by the appellants-public servants with regard to prejudice caused to them or with regard to miscarriage of justice. He therefore submitted, that no interference is warranted with the judgment of the High Court.

Judgment 

The cognizance and the trial cannot be set aside unless the illegality in the investigation can be shown to have brought about miscarriage of justice. It had been held that the illegality may have a bearing on the question of prejudice or miscarriage of justice but the invalidity of the investigation has no relation to the competence of the court.

This article on case analysis is written by Hidatul Fatima law student at Aligarh Muslim University centre Murshidabad and a legal intern at Legal Vidhiya