Delhi District Court
Central Bureau Of Investigation vs Dominic Gabriel Philip (D G Philip) on 13 July, 2026
IN THE COURT OF SHRI DHEERAJ MOR
SPECIAL JUDGE, (PC ACT) (CBI), (COAL BLOCK CASES)-01,
ROUSE AVENUE DISTRICT COURT : NEW DELHI
CNR No. DLCT11-001316-2019
CBI Case No. CBI/318/2019
RC No. 220 2015 E 0003 dated 26.03.2015
Branch EOU-IV/EO-II/New Delhi
Date of Institution 05.06.2018
in the Court
Under Sections Sections 120B/420 IPC and Sections 13(2) read
with Section 13(1)(d) Prevention of Corruption Act,
1988
CENTRAL BUREAU OF INVESTIGATION
.... Prosecution
Versus
1. Dominic Gabriel Philip S/o Sh. Gabriel Philip
The then Managing Director, Maharashtra State Mining Corporation
Limited (MSMCL), Plot No. 7, Ajni Chowk, Wardha Road, Nagpur
R/o 103, Indira Apartment, Rahate Colony, Wardha Road,
Nagpur-440022, Maharashtra.
2. Avinash Manohar Rao Warjukar S/o Sh. Manohar Rajaramji
Warjukar
Then then Member Chairman, Maharashtra State Mining
Corporation Limited (MSMCL), Plot No. 7, Ajni Chowk, Wardha
Road, Nagpur
R/o 201, 2nd Floor, Keshav Kal Apartment, Rahate Colony, Wardha
Road, Nagpur-440022, Maharashtra.
....Accused Persons
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Digitally signed
by DHEERAJ
DHEERAJ MOR
MOR Date:
2026.07.13
11:41:14 +0530
ACCUSED PERSONS DISCHARGED IN ACCORDANCE WITH
ORDER DATED 25.05.2023
3. M/s Sunil Hi-Tech Engineers Limited
A company incorporated on 29.05.1998 with Registrar of
Companies, Maharashtra at Mumbai, Registered Office at 6 th Floor,
MET Complex, Near Lilawati Hospital, Bandra, Mumbai-400050,
Maharashtra.
4. Sunil Ratnakar Gutte S/o Sh. Ratnakar Manikrao Gutte
Director, M/s Sunil Hi-Tech Engineers Limited,
R/o 3rd Floor, Residency Building, Union Park Road, Khar (West),
Mumbai-400052, Maharashtra.
5. M/s aXYKno Capital Services Private Limited
A company incorporated on 09.01.2006 with Registrar of
Companies, Maharashtra at Mumbai, Registered Office at Level-3,
Leela Vista, Bajaj Nagar, Nagpur, Maharashtra.
6. R. Ramakrishnan S/o Sh. V. Raman Iyer
Then Chief Executive Officer/Director of M/s aXYKno Capital
Services Pvt. Ltd.
R/o Plot no.3, New Verma Layout, Opposite Ambajari Garden,
Nagpur, Maharashtra.
Date of Conclusion of Final Arguments 26.05.2026
Date of Judgment 13.07.2026
JUDGMENT
1. The preliminary inquiry no. BD-1/2012/E/0005(5/2012) was
registered in the Central Bureau of Investigation (CBI), Government of
India on 28.09.2012 to inquire into the allegation of irregularities in the
allocation of coal blocks by the Ministry of Coal, the award of contract for
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development of such coal blocks and selection of Mine Developers-cum-
Operators by the allottee companies as well as formation of Joint Ventures
(JVs). Sh. R. Parthasarthy, Deputy Superintendent of Police, CBI, EOU-IV
conducted preliminary inquiry in respect of Marki-Zari-Jamni-Adkoli
(hereinafter referred to in short as ‘Adkoli’) Coal Block allocated to
Maharashtra State Mining Corporation Limited, Nagpur, Maharashtra
(hereinafter referred to in short as ‘MSMCL’), a Government of
Maharashtra Undertaking, on 02.08.2006. Upon conclusion of preliminary
inquiry, the Inquiry Officer gave a written complaint based upon which the
present FIR/RC dated 03.09.2012 [Ex.P-1 (Colly), D-2] was lodged under
Section 120B read with Section 420 of Indian Penal Code, 1860
(hereinafter referred to in short as ‘IPC‘) and under Section 13(2) read with
Section 13(1)(d) of Prevention of Corruption Act, 1988 (hereinafter
referred to in short as ‘PC Act‘) against A-3 M/s Sunil Hi-Tech Engineers
Limited, Nagpur (hereinafter referred to in short as ‘SHEL’); A-6 R.
Ramakrishnan S/o Sh. V. Raman Iyer, then CEO/Director of M/s aXYKno
Capital Services Private Limited (hereinafter referred to in short as
‘aXYKno’); unknown officials of the MSMCL; and other unknown
persons for illegalities committed by MSMCL in appointment of aXYKno
as its Financial Consultant; selection of Joint Venture partner SHEL
through the bidding process; and the execution of Joint Venture Agreement
with SHEL on 21.11.2009 leading to incorporation of a Joint Venture
company on 18.02.2010 by the name and style of M/s MSMCL Adkoli
Natural Resources Limited for undertaking the development and mining
operations of Adkoli Coal Block.
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2. The relevant facts of this case, in nutshell and in chronological
order, are that the Ministry of Coal, Government of India vide letter dated
02.08.2006, allocated Adkoli Coal Block situated in Wardha Coal Field,
Maharashtra to MSMCL, a Government of Maharashtra Undertaking,
subject to inter alia condition that coal mining shall be carried out by
MSMCL or a separate company to be created with participation of
MSMCL provided that the separate created company is a Government
company eligible to do coal mining as per the provisions of Coal Mines
(Nationalization) Act, 1973. Significantly, apart from Adkoli Coal Block,
three other coal blocks, namely, Gare Palma Sector-II, Agarzari and
Warora were also allocated to the MSMCL with similar conditions.
However, the present case is in relation to the alleged illegalities
committed qua Adkoli Coal Block only.
3. A-2 Sh. Avinash Warjukar was the Chairman, MSMCL from
11.12.2006 to 28.06.2010, while A-1 Sh. D.G. Philip was the Managing
Director, MSMCL from 13.09.2007 to 28.02.2009. In the 160th meeting of
Board of Directors, MSMCL comprising of the then Chairman, Managing
Director and other officials held on 22.12.2006, it was resolved that as the
post of General Manager (Finance) was vacant since 1989 and the
company proposed to diversify its activities in the field of Coal Mining,
services of a financial consultant were required for carrying out the
financial scrutiny and evaluation of various proposals.
4. In 162nd meeting of the Board of Directors, MSMCL held on
25.06.2007, it was resolved to constitute a Management Committee for
submitting report in relation to appointment of Financial Consultant.
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5. Vide OM dated 01.09.2007, the Government of Maharashtra
constituted a High-Power Committee under the Chairmanship of Hon’ble
Minister (Mining) to scrutinize the bids received under Expression of
Interest, to examine financial matters in context of coal blocks allotted to
MSMCL, in order to make MoU and establishing Joint Venture (JV) for
mineral development. The procedure in that regard was also indicated in
the said OM and its relevant portion is reproduced as under:-
“(i) Managing Director, MSMCL should scrutinize the bids
received with reference to Expression of Interest invited at present
and may be invited hereinafter for the coal blocks, from
administrative and financial view points and should prepare
comparative chart;
(ii) Based on the abovementioned comparative chart, Managing
Director, MSMCL, in consultation with CEO, MIDC, Andheri,
Mumbai or any other Officer directed by the Government, should
prepare draft MoU/JV; and
(iii) The action taken as above may be put up before the Committee.
After that the decision may be taken by Committee and based on that,
Managing Director, MSMCL, Nagpur should take up further action.”
6. Thereafter, an advertisement was published by MSMCL in October,
2007 inviting the interested parties to attend walk-in-interview for
selection as financial consultant. Consequent upon the said process, the
aXYKno was appointed as a Financial Consultant of MSMCL and in that
regard, final appointment letter dated 18.01.2008 was issued by A-1 Sh.
D.G. Philip, MD, MSMCL containing the terms, fees and remuneration
offered to the said company for rendering its services as a Financial
Consultant, which was ultimately accepted by the said company. The
responsibility assigned to the Financial Consultant included preparation of
tender documents/Expression of Interest, evaluation of the various
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Ramakrishnan was the CEO/Director of aXYKno.
7. After taking approval of the Board of Directors, MSMCL in its 165 th
meeting held on 07.02.2008 for development of all the four allocated coal
blocks, including Adkoli Coal Block through Joint Venture, MSMCL
invited bids on 13.02.2008 and 14.02.2008 for identification and
appointment of the respective Joint Venture partner with last date of
submission of bids as 14.03.2008. In the tender/bid document, it was
indicated that the bid was being invited for mining and commercial
use/sale of coal. The qualifying criteria/conditions for a bidder to be
engaged as the Joint Venture partner of MSMCL for the development of
Coal Blocks including Adkoli Coal Block were mentioned in the bid
document which was prepared by the aXYKno/Financial Consultant. In
conformity with the stipulation contained in the allocation letter dated
02.08.2006, the said tender/bid document incorporated a binding condition
requiring the formation of a Joint Venture Special Purpose Vehicle (SPV)
as a Government company wherein MSMCL was to compulsorily hold
controlling stake of 51% equity on cashless basis.
8. The technical qualifications of the prospective Joint Venture
partner/bidder, as contained in the bid document, were as under:-
“(i) The bidder should have been in operation for more than 03
years, and should have minimum 03 years experience in actual
mining of open cast or underground mines including survey and
exploration and should be making profits in each of the immediately
preceding 03 financial years;
(ii) The bidder shall have adequate latest and advanced mining
machinery and technology to execute the project in the minimum
possible time limit;
(iii) The bidder shall have adequate man-power consisting of
statutorily competent, qualified & experienced persons; engineers;
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geologists to successfully complete the mining activities; and also to
engineer, design, supervise, test and commission the coal mining
company; and
(iv) The bidder was required to furnish necessary documentary
evidence in his technical bid as proof of having met the qualifying
requirements mentioned above.”
9. The other relevant provisions in the said bid document in relation to
the responsibility of Joint Venture partner were as under:-
” XV1 Responsibility of JV partner
(1) JV partner shall not sell his shareholding or create any
third party rights in the SPV for the term of the JV agreement.
(2) JV partner shall not pledge, mortgage or lien mark the
shareholding or any rights in the SPV to any third party,
lender or any entity what-so-ever.”
Thus, the bid document prohibited sale or pledge of the shareholding
of JV partner in SPV in favour of any third party. Significantly, the
expression ‘SPV’ as employed in the bid document, referred to the JV
company proposed to be incorporated pursuant to the JV Agreement. This
is unequivocally evident from the terminology used in the bid document,
wherein the proposed company has been described as the ‘Joint Venture
Special Purpose Vehicle’ which MSMCL was in process of setting up.
However, the expression ‘SPV’ appearing in the subsequent portion of this
judgment bears a different connotation and shall be understood in the
manner defined under Clause 12.3.3 of the JV Agreement dated
21.11.2009. Under the said clause, the ‘SPV’ refers to the Special Purpose
Vehicle incorporated by JV partner for the specific purpose of carrying on
the business contemplated under the JV Agreement, in which the JV
partner was contractually required to maintain a minimum shareholding of
51% at all times. It is, therefore, clarified that the expression ‘SPV’ as used
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in the bid document and the expression ‘SPV’ as defined in the JV
Agreement referred to two distinct entities and cannot be used
interchangeably. Accordingly, wherever the term ‘SPV’ is employed in the
subsequent portions of this judgment, it shall be construed exclusively in
the sense assigned to it under the JV Agreement, unless otherwise
expressly stated.
10. In response to the said invitation/advertisement, 13 companies
including SHEL submitted their bid for Adkoli Coal Block. The SHEL
submitted its technical and financial bid on 13.03.2008. All the bids,
including bids for other three coal blocks were opened on 14.03.2008 at
04:00 pm in the Office of MSMCL by the Tender Committee consisting of
five members, including Chairman A-2 Sh. Avinash Warjukar and A-1 Sh.
D.G. Philip, MD, MSMCL. In this meeting, only earnest money deposited
by the bidders was checked by Tender Committee in presence of the
representatives of the bidders and it was decided that the technical details
would be analyzed and examined properly (later). Further, the
representatives of the bidders were informed that they have to give their
presentations before technical analysis and the parties will be informed for
that purpose accordingly. Even as per tender/bid document, bidders were
required to make presentations. On 07.04.2008, all bidders were sent fax
and given time for making presentations. However, as per the prosecution,
no document was found in relation to the alleged presentations made by
the bidders in the Office of aXYKno/Financial Consultant on 10.04.2008.
11. The meeting of Management Committee, MSMCL, chaired by A-2
Sh. Avinash Warjukar and attended by its three other members, namely,
A-1 Sh. D.G. Philip, Dr. Anil Pophare and Sh. R. Ramakrishnan, Director,
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aXYKno was also convened on 10.04.2008. As per minutes of the said
meeting, A-1 Sh. D.G. Philip announced the names of the parties in the
said meeting who were technically qualified for all the four coal blocks.
The said minutes further reflect that out of 13 bidders for Adkoli Coal
Block, 12 bidders including SHEL were declared technically qualified
whose commercial bids were decided to be opened. In the said meeting,
their sealed commercial envelops were opened and the equity and sweat
money offered by the technically qualified bidders were recorded. In the
said process, SHEL emerged as the highest (H-1) bidder for Adkoli Coal
Block as it quoted the highest sweat money over and above the reserve
price of Re.1 i.e. Rs.36.06 + Re.1 = Rs.37.06 per ton of the geological
reserve. It was further resolved that the Managing Committee would refer
the factual position in this regard to the Board of Directors of MSMCL,
who after discussion, would refer the same to the High-Power Committee
appointed by the Government of Maharashtra for finalization and decision.
Similarly, successful bidders for the other three coal blocks were also
identified during the said meeting.
12. As per prosecution, in the files received from MSMCL, an unsigned
tabulation sheet was found containing the details of all the 13 bidders in
respect of Adkoli Coal Block in MSMCL, which appears to have been
prepared during the technical evaluation of the bidders. It contains
handwritten note of A-1 Sh. D.G. Philip showing that SHEL and 07 other
bidders were found to be technically ineligible. The said note indicate that
the offer/bid of SHEL was considered along with M/s S.B. Engineering
Associates (hereinafter referred to in short as ‘SBEA’). The said written
remark is reproduced as under:-
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13. The commercial bids of the technically eligible bidders that were
opened and analyzed on 10.04.2008 in the meeting of Managing
Committee was approved by the Board of Directors of MSMCL in its 167 th
meeting held on 24.04.2008. Accordingly, the Board of Directors, MSMCL
approved SHEL to be the Joint Venture partner of MSMCL for
development and mining of Adkoli Coal Block. Similarly, in the said
meeting, three other JV partners of MSMCL were approved for three other
different coal blocks. In the said meeting, the Board of Directors, MSMCL
further resolved to seek approval of the High-Power Committee
constituted by Government of Maharashtra. Accordingly, communications
dated 16.05.2008 and 13.06.2008 were addressed by A-1 Sh. D.G. Philip
to the Principal Secretary (Industries), Department of Industries, Energy
and Labour, Government of Maharashtra, Mantralaya, Mumbai requesting
consideration and approval of the successful bidders in respect of the four
coal blocks, including SHEL for the Adkoli Coal Block. The copies of bid
documents and their terms & conditions were also submitted as
Annexure-1 along with the said letters/communications.
14. On 22.07.2008, the Government of Maharashtra amended the
resolution dated 01.09.2007 and revised the procedure to the extent that the
Board’s recommendations are to be submitted to the High-Power
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Committee along with the detailed description & justification and after its
approval by the High-Power Committee, it be submitted before the
Infrastructure Committee of Cabinet for final decision. The High-Power
Committee meeting was convened on 01.08.2008 under the Chairmanship
of Hon’ble Minister (Industries & Mining) to deliberate upon the issue
related to the approval of successful bidders for all the four coal blocks,
including Adkoli Coal Block. In the said meeting, the High-Power
Committee raised certain queries which were communicated to MSMCL
vide letter dated 14.08.2008. Vide letter dated 24.08.2008, A-1 Sh. D.G.
Philip replied to the said queries.
15. The High-Power Committee meeting was again convened on
20.11.2008 under the Chairmanship of Hon’ble Minister (Industries &
Mining) in relation to inter alia agenda of the approval of the JVA partner
of MSMCL for development of Adkoli Coal Block. As per the minutes of
the said meeting, High-Power Committee expressed no objection in
principle to the proposal concerning the Adkoli Coal Block, but directed
MSMCL to prepare and submit a draft Joint Venture Agreement (JVA) for
further consideration. Notably, in the said meeting, the High-Power
Committee rejected the recommendation made by the MSMCL with
respect to Gare Palma Sector-II Coal Block.
16. Thereafter, vide letter dated 01.12.2008 of MSMCL, SHEL was
requested to submit a draft JV Agreement. As per minutes of 171 st meeting
of the Board of Directors of MSMCL held on 15.12.2008, MSMCL
prepared a draft JV Agreement before 15.12.2008, which was enclosed
therewith. Further, the minutes reflect that SHEL did not submit the draft
JV Agreement till that date and it was again requested to submit the same.
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The said minutes further demonstrate that in the said meeting, the
Financial Consultant, aXYKno was asked to obtain draft JV Agreements
from the JV partners, hear them, prepare final draft of agreement and
submit it to MD, MSMCL.
17. In response to the minutes of the 171 st Board meeting, the Financial
Consultant, aXYKno gave its 1st draft of the Joint Venture Agreement with
its email dated 19.12.2008. According to this draft, sale or pledge of shares
of JV partner in the JV company to the third party was prohibited.
However, share transfer of JV partner in JV company to the affiliate of JV
partner was partially permitted subject to certain conditions contained
therein, including a condition that the JV company shall remain a
Government company and the affiliate shall accept the obligations of the
transferring party under this agreement. Significantly, this provision was in
consistent with the tender/bid document, which prohibited the transfer of
shares of JV partner in JV company in favour of third party only but did
not impose any restriction on transfer of shares of JV partner in JV
company to its affiliates or SPV formed for the specific purpose of
carrying on the business as per the agreement.
18. The Financial Consultant, aXYKno submitted its second draft on
12.01.2009 with similar terms and conditions as contained in its first draft
except the following relevant modifications:-
(i) It introduced a Clause 6.4.1 under the heading of ‘Reserved
Matters’ to the effect that the pledge of shares of JV partner in JV
company in favour of third party is permissible subject to the
approval of at least one Director nominated by the MSMCL and at
least one Director nominated by JV partner;
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‘Share Transfer to Affiliates’ a provision that JV partner may transfer
its shares to an SPV formed for the specific purpose of carrying on
the business as per this agreement and the said SPV will be required
to execute a Deed of Adherence; and
(iii) ‘Agreed Proportions’ means the ratio which the Share
holdings of MSMCL and JV partner (together with that of their
respective associates and affiliates) bear in the equity share capital to
each other shall be in proportion of 51:49.
19. Subsequently, on 19.01.2009, the Financial Consultant, aXYKno
submitted its third and last draft of JV Agreement which is exactly same as
its first draft dated 18/19.12.2008. Thus, in the third draft, the Financial
Consultant, aXYKno deleted the changes introduced by it in its second
draft dated 12.01.2009.
20. The abovementioned third draft of the JV Agreement was
considered by the Board of Directors, MSMCL in its 172nd meeting held on
21.01.2009 under the Chairmanship of A-2 Sh. Avinash Warjukar and its
other members, including A-1 Sh. D.G. Philip, MD, MSMCL. As the
minutes of the said meeting, the aforementioned draft JV Agreement was
discussed paragraph wise and necessary amendments were made in it. The
draft of the agreement was finalized and unanimously approved. In the
meeting, it was decided that copy of the approved draft be sent to the
Government for final approval. Accordingly, on 23.01.2009, the draft JV
Agreement approved by the Board of Directors, MSMCL was sent to
High-Power Committee for its approval. The said draft JV Agreement
omitted the prohibition of sale/transfer of the shares of the JV partner in JV
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company to the third party and in its Clause 12.4 permitted the same
subject to the condition contained under the said clause. The said
stipulation was in contradiction with the bid document and the draft of JV
Agreement submitted by the Financial Consultant, aXYKno. In
consistence with the bid document, Clause 12.2 of the said draft JV
Agreement prohibited pledge of the shareholdings of the JV partners in JV
company to any third party. However, at the same time, its Clause 6.4.1
with title ‘Reserved Matters’ permitted pledge of shares by JV partner in
JV company in favour of any third party with the approval of one Director
nominated by the MSMCL and one Director nominated by SHEL.
21. The said draft adopted, in toto, the provisions contained in the
second draft of the Financial Consultant, aXYKno dated 13.01.2009, in so
far as they related to the transfer of shareholdings of JV partner to its
affiliates and the said provisions were incorporated in its Clause 12.3.
Further, the said JV Agreement further stipulated that the aggregate
shareholdings of MSMCL and SHEL, together with that of their respective
associates and affiliates, in the JV company would at all times remain in
the ratio of 51:49 i.e. 51% and 49% respectively. Pertinently, at the cost of
repetition, it is reiterated that the aforementioned provisions in relation to
transfer of shares of SHEL to its affiliates or SPV formed for the specific
purpose of carrying on the business as per the JV Agreement, were not in
contradiction with the tender/bid document as no such prohibition or
restriction was contained in the tender/bid document.
22. The minutes of High-Power Committee meeting held on 30.01.2009
have not been placed on record. However, minutes of High-Power
Committee meeting held on 09.04.2009 and the letter dated 31.01.2009
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written by A-1 Sh. D.G. Philip to the Principal Secretary, Department of
Industries, Energy and Labour, Government of Maharashtra finds mention
about the High-Power Committee meeting held on 30.01.2009. As per the
said documents, it can be conclusively inferred that in the meeting held on
30.01.2009, the High-Power Committee directed that the proposal
regarding the draft JV Agreement should be resubmitted for consideration
to the High-Power Committee to resolve the views of the different
departments.
23. Further, the said letter of A-1 Sh. D.G. Philip dated 31.01.2009 was
written with reference to the High-Power Committee meeting held on
30.01.2009 in respect of draft JV Agreement qua Agarzari Coal Block for
M/s Adani Enterprises, proposed JV partner, as it had raised certain issues,
including its right to pledge its shareholdings in JV company in the draft
JV Agreement. Significantly, the draft JV Agreement that was sent on
23.01.2009 was common for the Adkoli as well as Agarzari Coal Block. In
the said letter, A-1 Sh. D.G. Philip made a comment in regard to issue at
Srl. No.10 raised by M/s Adani Enterprises and its relevant portion is
reproduced as under:-
“The Board in its joint intellectual capacity has considered all the
aspects of the say of the J.V. partners and has incorporated all those
that are in conformity with the tender terms and conditions. Those
aspects that are not in conformity with the tender documents were not
incorporated in the Joint Venture Agreement. However, the High-
Power Committee may like to consider the say of the J.V. Partner and
take suitable decision as seem fit.”
24. The 173rd meeting of Board of Directors, MSMCL was held on
25.02.2009. As per the minutes of the said meeting, in Subject No. 13 with
title ‘Progress in respect of Joint Venture Project Agreement of Agarzari,
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Warora and Marki-Zari-Jamni-Adkoli Coal Blocks’, it was recorded that
the High-Power Committee meeting held on 13.02.2009 at Mumbai
directed Managing Director, MSMCL to obtain comments of financial
advisor and to submit them to High-Power Committee. It was further
recorded that accordingly, financial advisor prepared its comments and
same were placed before the Board for approval. They were discussed in
detail and were approved with some amendments. Thereafter, it was
resolved that the said approved amended draft of comments be placed
before the High-Power Committee. The comments of the Financial
Consultant, aXYKno approved in the 173 rd meeting of Board of Directors,
MSMCL were communicated by A-1 Sh. D.G. Philip, MD, MSMCL to the
Principal Secretary (Industries), Department of Industries, Energy and
Labour, Government of Maharashtra vide letter dated 26.02.2009.
Significantly, A-1 Sh. D.G. Philip retired as MD, MSMCL on 28.02.2009.
25. On 09.04.2009, the High-Power Committee, in its meeting under the
Chairmanship of Chief Secretary, discussed in detail the draft of the JV
Agreement. In the said meeting, a presentation was made by the Financial
Consultants Sh. Ramakrishna and Sh. Hetal of aXYKno on the entire
bidding process for the selection of the JV partner for the development of
the coal blocks allotted to the MSMCL. The presentation covered the
matters, including background of the tender process.
26. In subsequent meeting of the High-Power Committee under the
Chairmanship of the Hon’ble Chief Minister, Government of Maharashtra
held on 04.05.2009, the JV Agreement was approved and it was resolved
that the proposal be put up before the Infrastructure Committee for final
approval. Significantly, in relation to the impugned conditions of sale and
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pledge of the shareholdings of JV partner (SHEL) in JV company to the
third party, no changes/modifications were made in the said approved JV
Agreement, vis-a-vis the draft JV Agreement sent by A-1 Sh. D.G. Philip,
MD, MSMCL along with his letter dated 23.01.2009.
27. On 16.06.2009, Sh. A.M. Khan, Principal Secretary (Industries)
prepared a detailed Cabinet note/proposal to be put up before the Cabinet
Committee on Infrastructure under the Chairmanship of Hon’ble Chief
Minister, Government of Maharashtra for approval of the draft JV
Agreement with the proposed JV company (partner), in accordance with
the recommendations made by High-Power Committee for development of
mineral, its usage and sales in the coal blocks allotted to the MSMCL,
including Adkoli Coal Block. In Para No.5 of the said detailed note, the
main conditions as per the tender/bid document dated 14.02.2008 were
delineated and in its Para No.8, the salient features of the proposed JV
Agreement were discussed. The same was approved by the Cabinet
Committee on Infrastructure under the Chairmanship of Hon’ble Chief
Minister, Government of Maharashtra in its meeting held on 18.06.2009.
Thus, the Infrastructure Committee also approved the draft of JV
Agreement sent by A-1 Sh. D.G. Philip, MD, MSMCL along with his letter
dated 23.01.2009 without any change in the stipulations related to sale and
pledge of the shares of JV partners in JV company to the third party and
their transfer to its affiliates.
28. The said approval was communicated by the Government of
Maharashtra to the MSMCL vide letter dated 01.08.2009. Accordingly, Sh.
N.K. Sudhanshu, the then MD, MSMCL issued letter of intent to SHEL.
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29. Thereafter, MSMCL proposed certain modifications in the draft JV
Agreement approved by Infrastructure Committee, Government of
Maharashtra and in that regard, a letter was written by Sh. N.K.
Sudhanshu, the then MD, MSMCL to the Government of Maharashtra. The
Government of Maharashtra, vide its letter dated 23.10.2009 to MD,
MSMCL, communicated that it accepted total 12 proposed modifications
as detailed in chart annexed with the said letter.
30. The final JV Agreement incorporated the aforementioned 12
modifications and it was finally executed between MSMCL and SHEL on
21.11.2009. The 02 out of the said 12 modifications are relevant for the
adjudication of the present case and the same are reproduced as under:-
(i) ‘except as provided in this agreement’ was inserted at the end
of Para No.12.2 regarding right to pledge the shares of JV partner in
JV company; and
(ii) In the end of the Para No.12.3.3, under the heading of ‘Share
transfer to affiliates’, the following sentences were inserted:-
‘It will however be mandatory for the Party No.2 to
maintain atleast 51 percent share in the SPV at all times
during the period of the agreement. In case of consortium, the
consortium partners should have a minimum cash equity
holding of 5% in the SPV’.
31. In accordance with Clause 1 of JV Agreement dated 21.11.2009, a
JV company, namely, M/s MSMCL Adkoli Natural Resources Limited was
incorporated between MSMCL and SHEL on 18.02.2010.
32. M/s Sunil Hi-Tech Energy Private Limited was incorporated on
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as SPV as per the clause 12.3.3 of JV Agreement dated 21.11.2009.
Further, M/s SHEL Investment Consultancy Services Limited was
incorporated on 20.08.2009 as an affiliate of SHEL, which was later used
for transfer of shareholdings of SHEL in JV company in accordance with
Clause 12.3 of the JV Agreement dated 21.11.2009.
33. The Jaypee Development Corporation Limited (hereinafter referred
to in short as ‘JDCL’) was subsidiary of Jaypee Infra Ventures and it was
incorporated on 05.12.2007.
34. On 31.10.2009 i.e. before the execution of JV Agreement dated
21.11.2009, a Term Sheet was signed between SHEL and Jaiprakash
Associates Limited. This Term Sheet provided the indicative terms and
conditions to form the basis of discussions for the proposed acquisition of
shares of Sunil Hi-Tech Energy Private Limited (SPV) by Jaiprakash
Associates Limited or its associates or affiliates or nominees (JDCL is
associate/affiliate of Jaiparkash Associates Limited). It further provided
that M/s Sunil Hi-Tech Energy Private Limited is a private limited
company owned/to be owned entirely by SHEL. It further provided that
M/s Sunil Hi-Tech Energy Private Limited will be a Special Purpose
Vehicle (SPV) formed as holding/investment company to hold 49% stake
(of the JV partner) in the JV company to be incorporated in joint venture
with MSMCL. The Term Sheet noted that considering the requirement of
MSMCL stipulated in the draft JV Agreement in case a Special Purpose
Vehicle (SPV) of SHEL is made a JV partner (instead of SHEL itself) in
the JV company, SHEL shall continue to hold at least 51% share in the
Special Purpose Vehicle (SPV) at all times during the period of the JV
Agreement and Jaiprakash Associates Limited intends to acquire 49% of
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the equity share capital of SHEL in the JV company having a face value of
Rs.10 each (Rupees Ten only) from SHEL. The purchase consideration
towards acquiring 49% of the paid-up share capital of the company was
fixed as Rs.15 crores. On 05.11.2009, a sum of Rs.5 crores was credited by
Jaiprakash Industries Limited in the account of SHEL.
35. On 25.02.2010, a Deed of Adherence was executed between
MSMCL, SHEL and M/s Sunil Hi-Tech Energy Private Limited whereby
entire 49% shareholding of SHEL in JV company was transferred in favour
of M/s Sunil Hi-Tech Energy Private Limited, the SPV. Simultaneously,
M/s Sunil Hi-Tech Energy Private Limited (SPV) agreed to become bound
by the JV Agreement in the same manner as it had been an original party to
the agreement as the Existing Shareholder (SHEL). Consequently, the SPV
became the successor-in-interest to SHEL under the JV Agreement.
36. On 23.03.2010, another Deed of Adherence was executed between
SHEL (as existing shareholder), SHEL Investment Consultancy Services
Limited (as new shareholder), Sunil Hi-Tech Energy Private Limited
(SPV) (as the ‘company’), MSMCL and MSMCL Adkoli Natural
Resources Limited (Joint Venture company). This deed recorded that the
existing share holder (SHEL) has entered into a Joint Venture Agreement
with MSMCL relating to development and operation of Adkoli Coal Block
through Joint Venture Company, MSMCL Adkoli Natural Resources
Limited. It also recorded that the existing shareholder (SHEL) and
company (SPV) have entered into a Deed of Adherence with MSMCL on
25.02.2010 wherein all the rights and obligations of the existing
shareholder as the JV partner of MSMCL are transferred to the company
(being a SPV of the existing shareholder) as permitted under Clause 12.3.3
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and Clause 14.5 of the Agreement. This Deed also recorded that the
company being SPV promoted by the existing shareholder, the existing
shareholder has to maintain at least 51% shareholding in the SPV at all
times during the period of the JV Agreement as per Clause 12.3.3. The
MSMCL, vide its letter dated 30.03.2010, permitted existing shareholder
to hold such 51% shares in the company along with its affiliate companies.
The Deed recorded that the new shareholder (SHEL Investment
Consultancy Services Limited) proposes to purchase 71,04,240 shares of
the M/s Sunil Hi-Tech Energy Private Limited (SPV) (constituting 37.50%
of shareholding of SHEL of JV company held in SPV) from existing
shareholder (SHEL) for a value of Rs.17 each aggregating to
Rs.12,07,72,080/- (Rupees Twelve Crores Seven Lakhs Seventy Two
Thousand and Eighty Only). Simultaneously, M/s SHEL Investment
Consultancy Services Limited (SHEL affiliate) agreed to become bound by
the JV Agreement in the same manner as it had been an original party to
the agreement as the Existing Shareholder (SHEL).
37. After the aforementioned two transactions dated 18.02.2010 and
23.03.2010, 37.50% of the shares of M/s Sunil Hi-Tech Energy Private
Limited (SPV) were owned by M/s SHEL Investment Consultancy
Services Limited and 62.50% of the shares were held by SHEL. It is
significant to note that the aforementioned entire issued share capital of
SPV represented the 49% of the equity stake in the JV company which had
earlier been held by SHEL alone (JV partner).
38. In the 181st meeting of the Board of Directors of MSMCL held on
23.12.2010, it was resolved that the transfer of 49% (including 5% shares
of Technical Partner) equity shares in SPV Sunil Hi-Tech Energy Private
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Limited by SHEL to Jaypee Group be approved, subject to the condition
that the transfer and transferee company shall execute necessary
undertaking, Deed of Adherence and subject to the verification of the
technical competency of the transferee company by the Managing Director.
39. Pursuant to the approval of the Board of Directors, MSMCL, 49%
shares of SHEL in JV company held by SPV were sold to JDCL on
21.04.2011.
40. Further, on the same date i.e. on 21.04.2011, Share Pledge
Agreement was also executed between M/s SHEL Investment Consultancy
Services Limited (SHEL affiliate) and JDCL. As per this agreement, M/s
SHEL Investment Consultancy Services Limited, which was holding
71,04,240 shares of M/s Sunil Hi-Tech Energy Private Limited (SPV),
equal to 37.50% of the total equity were pledged to JDCL along with all
rights, including voting rights as a security towards the subscription of
1,200 optionally convertible debentures of Rs.1 lakh each for a total
consideration of Rs.12 Crores. It is alleged that on account of Deeds of
Adherence dated 25.02.2010 and 23.03.2010, both the pledger [M/s SHEL
Investment Consultancy Services Limited (SHEL affiliate)] and pledgee
(JDCL) were bound by JV Agreement dated 21.11.2009. However, the said
pledge of shares was not in terms of its Clause 6.4.1(e) in as much as it
was not with the approval of one Director of MSMCL and one Director of
SHEL.
41. The Clause 12.5 of the JV Agreement provides for consequences of
sale of shares in contravention of the Agreement and the said clause is as
under:-
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“12.5 Consequences of Sale of Shares in contravention of the
Agreement.
If any person purports to acquire any of the Shares, or any interest
therein, in a manner not specifically permitted by this Agreement (the
“Default Shares”), whether by operation of law or by voluntary act or
otherwise, the Remaining Party or any person(s) nominated by the
Remaining Party shall have the right, but not the obligation, to
purchase any or all of the Default Shares, purported to have been thus
acquired, at lower of (i) the Fair Value minus 10% (ten) thereof, or
(ii) the apparent consideration paid thereof. However, the failure of
the Remaining Party to purchase the Default Shares at lower of the
Fair Value minus 10% (ten) thereof or the apparent consideration paid
therefore shall not be deemed or construed to validate the purported
transfer of the Default Shares in violation of this Agreement, which
purported transfer shall be null and void. As used in this Clause 12.7
“Fair Value” shall mean Fair Value of Shares in question determined
by an independent advisor selected by the Board. Fair Value so
determined shall be final, conclusive, and binding on the JVC, the
Parties and the person(s) purporting to have acquired the Default
Shares in violation of this Agreement, and their respective successors
in interest.”
42. A Debenture Subscription Agreement dated 31.03.2010 was
executed between M/s SHEL Investment Consultancy Services Limited
(SHEL affiliate) and JDCL, whereby JDCL subscribed to 1,200 convertible
debentures issued by the SHEL affiliate having a face value of Rs.1 lakh
each and accordingly, paid the consideration of Rs.12 crores to M/s SHEL
Investment Consultancy Services Limited (SHEL affiliate) on 21.04.2011.
Significantly, this transaction is unrelated to the JV Agreement and the
prosecution/CBI has failed to disclose what offence, if any, was committed
by either of the parties owing to the said transaction.
43. In terms of Clause 3.8A of JV Agreement, following amount was
received by MSMCL from SHEL:-
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Srl. No. Date of Payment Amount in Rupees Remarks
1 28.04.2008 11,25,00,000/- 15% of Sweat Money Paid
2 18.08.2009 7,40,00,000/- 10% of Sweat Money Paid
3 15.03.2010 to 42,72,085/- Amount spent by M/s. MSMCL and
27.04.2011 later on reimbursed by M/s SHEL.
4 29.07.2010 to 9,62,14,574/- Amount received as interest on
31.03.2014 deferred sweat money.
Total 28,69,86,659/-
44. The following amount was received by SHEL and its subsidiary/
associates from JDCL on account of purchase of shares, subscription to the
debentures and unsecured loan:-
Srl. No. Date of Payment Amount in Remarks
Rupees
1 05.11.2009 to 15,00,00,000/- On account of sale of 91, 72,000
21.04.2011 shares of SPV i.e. M/s Sunil Hitech
Energy Pvt. Ltd. (49% shareholdings)
2 21.04.2011 12,00,00,000/- Issue of 1200 debentures by M/s
SHEL affiliate i.e. M/s SHEL
Investment Consultancy (P) Ltd.
3 23.05.2011 to 12,99,58,000/- Unsecured loan on account of payment
26.05.2015 of interest on deferred sweat money
able to M/s MSMCL.
Total 39,99,58,000/-
45. According to charge-sheet, JDCL had also purchased 35 lakh shares
of M/s Gangakhed Sugar and Energy Private Limited (subsidiary of
SHEL) at face value of Rs.10/- with premium of Rs.90/- per share (total
value Rs.100/-per share) for Rs.35 crores. Notably, this transaction also has
no relation or connection to the JV Agreement. Further, the
prosecution/CBI has also failed to disclose what offence, if any, was
committed by either of the parties on account of the said transaction.
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46. Therefore, in total, Rs.74,99,58,000/- was received by SHEL or its
subsidiary company from JDCL on account of purchase of shares, issuance
of debentures and unsecured loans.
II. ALLEGATIONS IN THE FIR IN NUTSHELL
47. The allegations in this FIR, bereft of the facts of the case which have
already been detailed hereinabove, are as follows:-
(i) SHEL did not fulfill the technical evaluation criteria as per the
bid document in as much as it did not have the actual mining
experience in the open cast or underground mining operations either
on standalone basis or even on the credentials of their consortium
partner SBEA. However, the Tender Committee of MSMCL
consisting of A-1 Sh. D.G. Philip, the then MD, MSMCL and A-2
Sh. Avinash Warjukar, the then Chairman, MSMCL treated SHEL as
technically qualified resulting in opening of its financial bid along
with the financial bids of other technically qualified bidders for
Adkoli Coal Block. Eventually, on the basis of the highest sweat
money quoted by SHEL, their bid was treated as H-1 (successful)
and they were issued letter of intent after approval of the High-
Power Committee of the Government of Maharashtra. Consequently,
a JV Agreement was entered into between MSMCL and SHEL on
21.11.2009 to undertake development and operation of the Adkoli
Coal Block by incorporation of JV company, which was later
incorporated on 18.02.2010 by the name and style of M/s MSMCL
Adkoli Natural Resources Limited; and
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(ii) In the process of evaluation of the bids, a tabulation sheet/
comparative chart was prepared wherein A-1 Sh. D.G. Philip, the
then MD, MSMCL in his own hand written remark mentioned (in
concerned file) that SHEL was ineligible in qualifying the technical
criteria as mentioned in bid documents, on account of their not
having any experience in mining activities. Despite this the Tender
Committee at a later stage, in criminal conspiracy with SHEL, not
only qualified them technically, but also by abusing their official
position as public servants, caused undue pecuniary advantage to
them, by opening their financial bid which eventually resulted in
SHEL becoming the H-1 bidder and being awarded with the
contract.
48. Thus, the only allegation in the FIR relates to declaring technically
unqualified SHEL as a technically qualified bidder by the Tender
Committee of MSMCL consisting of A-1 Sh. D.G. Philip, the then MD,
MSMCL and A-2 Sh. Avinash Warjukar, the then Chairman, MSMCL,
which finally resulted in the award of contract to SHEL for development
and operation of the Adkoli Coal Block in partnership with MSMCL,
thereby causing undue pecuniary advantage to SHEL.
III. INVESTIGATION
49. During investigation, IO examined the relevant witnesses, including
officials of Ministry of Coal; officials of State Government of
Maharashtra; officials of Department of Industries, Energy & Labour,
Government of Maharashtra; officials of Directorate of Geology and
Mining, Government of Maharashtra; officials of Mineral Exploration and
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Consultancy Limited (MECL), Nagpur; officials of Directorate General of
Mine Safety, Dhanbad; officials of CMPDIL, Jharkhand; officials of
Registrar of Companies, Mumbai/Delhi/Uttar Pradesh; officials of
Maharashtra Industrial Development Corporation (MIDC), Maharashtra;
officials of Coal India Limited (CIL); Directors/officials of MSMCL;
officials and bankers of SHEL/aXYKno/Jaypee Group of Companies;
concerned CBI officials; and other relevant witnesses. He also seized the
relevant documents, including files of the Ministry of Coal, State
Government of Maharashtra, MSMCL, SHEL, aXYKno, Jaypee Group of
Companies related to the allocation of Adkoli Coal Block to MSMCL; the
files concerning the process that led to the execution of JV Agreement
between MSMCL & SHEL; and the files, statement of bank accounts and
other financial documents in relation to the financial transactions that took
place between MSMCL, SHEL and its affiliates, M/s Sunil Hi-Tech
Energy Private Limited (SPV) and Jaypee Group of Companies in
connection to the JV Agreement.
IV. THE ALLEGATIONS IN THE CHARGE-SHEET AS OUTCOME
OF INVESTIGATION
50. In brief, the allegations in the charge-sheet are as follows:-
(i) The aXYKno was not suitable to be appointed as financial
expert but it was appointed by MSMCL as its Financial Consultant
by adopting an opaque procedure, it was appointed without approval
of the State Government of Maharashtra and that too at exorbitant
fees;
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the technical bids of the bidders for Adkoli Coal Block, informally
concluded on the tabulated sheet/chart of the bidders that SHEL was
not technically eligible. However, despite that in the tender
committee meeting of MSMCL held on 10.04.2008, he announced
technically ineligible company SHEL as technically eligible thereby
paving the way for opening of its commercial bid and ultimately
leading to execution of JV agreement dated 21.11.2009 between
MSMCL and SHEL for development of Adkoli Coal Block after its
approval by the High Power Committee and Infrastructure
Committee, Government of Maharashtra. In this regard, it is alleged
that A-1 Sh. D.G. Philip, the then MD, MSMCL in criminal
conspiracy with A-2 Sh. Avinash Warjukar, the then Chairman,
MSMCL, SHEL, its Director Sh. Sunil Ratnakar Gutte, Financial
Director aXYKno and its Director Sh. R. Ramakrishnan with a view
to cause undue pecuniary advantage to SHEL, qualified it
technically though it was not earlier found to be eligible;
(iii) Pursuant to the criminal conspiracy amongst all the 06 charge-
sheeted accused persons, in contravention of the terms and
conditions in bid document prohibiting sale and pledge of
shareholdings of the JV partner in JV company to the third party, the
JV Agreement dated 21.11.2009 permitted sale as well as pledge of
the shareholdings of SHEL in JV company to the third party with
conditions contained therein. It is alleged that the said modification
or deviation in the terms of JV Agreement vis-a-vis bid document
was done with a view to cause undue pecuniary advantage to SHEL;
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(iv) SHEL and its affiliate (M/s SHEL Investment Consultancy
Services Limited) in SPV (M/s Sunil Hi-Tech Energy Limited)
derived undue pecuniary benefit by selling and pledging its
shareholdings in JV company (M/s MSMCL Adkoli Natural
Resources Limited) to JDCL either pursuant to the impermissible
terms and conditions incorporated in JV Agreement in violation of
the bid document or in contravention of the other terms and
conditions of JV Agreement; and
(v) It is alleged that accused persons entered into a criminal
conspiracy with the object of cheating MSMCL by securing
appointment of aXYKno as Financial Consultant for MSMCL, at an
exorbitant cost, in an opaque manner, despite the fact that the said
company was ineligible to be appointed as Financial Consultant;
awarding the tender in favour of SHEL as JV partner to carry out,
survey, exploration and mining activities in the Adkoli Coal Block
despite the fact that SHEL was ineligible to bid; permitting
sale/pledge of shares in the JV Agreement contrary to the terms and
conditions of the bid document; and sale and pledge of shares of
SHEL and M/s SHEL Investment Consultancy Services Limited
respectively in favour of JDCL, contrary to the bid document/JV
Agreement and thereby making exorbitant profits running into
several crores.
V. ORDER ON COGNIZANCE
51. Vide order dated 02.11.2021, Ld. Predecessor of this Court took
cognizance for the offences punishable under Section 120B read with
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Section 420 IPC and Section 13(2)(d) of the PC Act and substantive
offence under Section 420 IPC against all the six accused persons i.e. four
natural accused persons and two juridical entities. Further, cognizance for
the offences punishable under Section 13(2) read with Section 13(1)(d) of
PC Act was taken against A-1 Sh. D.G. Philp, the then MD, MSMCL and
A-2 Sh. Avinash Manohar Rao Warjukar, the then Chairman, MSMCL.
VI. CHARGE
52. In compliance of Section 207 CrPC, copies of charge-sheet and
documents annexed therewith were supplied to all the six summoned
accused persons. Thereafter, arguments on charge were heard.
53. Vide detailed order on charge dated 25.05.2023, A-1 Sh. D.G.
Philip, the then MD, MSMCL was directed to be charged for the offence of
criminal misconduct by public servant punishable under Section 13(1)(d)
of PC Act on two counts, first, declaring technically ineligible bidders,
including SHEL as eligible and second, for proposing clauses in JV
Agreement permitting sale, transfer or pledge of shares by JV partner
(SHEL) contrary to terms and conditions of bid document enabling SHEL
to sell 49% of its shares in SPV (M/s Sunil Hi-Tech Energy Private
Limited) in favour of JDCL for Rs.15 crores, resulting in wrongful gain to
SHEL and thereby obtaining valuable thing or pecuniary advantage to
SHEL without any public interest. A-2 Sh. Avinash Warjukar was also
directed to be charged for the offence of criminal misconduct by public
servant punishable under Section 13(1)(d) of PC Act only on the second
count as detailed hereinabove. Further, A-1 Sh. D.G. Philip, the then MD,
MSMCL and A-2 Sh. Avinash Warjukar, the then Chairman, MSMCL were
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also directed to be jointly charged for the offences of criminal conspiracy
for the above detailed offence of criminal misconduct by public servant.
54. Vide said order, it was also concluded that there is sufficient material
to frame charge against SHEL for the offence punishable under Section
120B read with Section 420 IPC read with Section 13(1)(d) PC Act for
entering into criminal conspiracy with accused public servants, namely,
A-1 Sh. D.G. Philip, the then MD, MSMCL and A-2 Sh. Avinash Warjukar,
the then Chairman, MSMCL for proposing the JV Agreement in such a
manner which enabled SHEL to sell its shares in SPV (M/s Sunil Hi-Tech
Energy Private Limited) and pledge shares of its affiliate (M/s SHEL
Investment Consultant Services Limited) in SPV (M/s Sunil Hi-Tech
Energy Private Limited) to JDCL. Further, it was concluded that there is
sufficient material on record to frame charge for the offence of cheating
punishable under Section 420 IPC against SHEL for cheating MSMCL by
pledging shares of its affiliate (M/s SHEL Investment Consultant Services
Limited) without following the procedure provided in Para No.6.4.1(e) of
JV Agreement dated 21.11.2009. However, the said company was directed
to be discharged under Section 32A of the Insolvency and Bankruptcy
Code, 2016 as it was under liquidation.
55. Furthermore, the remaining three accused persons, namely, Sh. Sunil
Ratnakar Gutte, one of the Directors of SHEL; aXYKno; and Sh. R.
Ramakrishnan, the then Chief Executive Officer/Director of aXYKno were
discharged for all the alleged offences against them.
VII. THE CRUX OF ORDER ON CHARGE DATED 25.05.2023
56. The findings of order on charge dated 25.05.2023 are summarized as
under:-
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Consultant, aXYKno by MSMCL or in the alleged exorbitant fees
paid by MSMCL to the said Financial Consultant towards the
services rendered by it. Thus, all the accused persons were
discharged in relation to the said allegations;
(ii) In respect of the allegations relating to declaring technically
ineligible SHEL to be technically eligible bidder, the grave suspicion
arose only against A-1 Sh. D.G. Philip, the then MD, MSMCL to the
effect that his said act was criminal misconduct for being without
any public interest. Significantly, it was held that there is no grave
suspicion to conclude that the said alleged criminal misconduct of
the public servant A-1 Sh. D.G. Philip was in connivance with any
other person, including SHEL and accordingly, all the remaining
accused persons were discharged on the said count;
(iii) In respect of the allegation in relation to incorporation of the
clauses related to sale, transfer or pledge of shareholdings of JV
partner (SHEL) in JV company in JV Agreement dated 21.11.2009
contrary to the bid document dated 14.02.2008, it is concluded that
prima facie there is sufficient material on record giving rise to grave
suspicion that A-1 Sh. D.G. Philip, the then MD, MSMCL and A-2
Sh. Avinash Warjukar, the then Chairman, MSMCL despite being
fully aware of the terms and conditions in the bid document, they
approved JV Agreement in contravention therewith, which
ultimately resulted in execution of JV Agreement between MSMCL
and SHEL on 21.11.2009 with the terms and conditions relating to
sale, transfer or pledge in contravention to the bid document. It wasCBI/318/2019 RC No.220 2015 E 0003 CBI Vs. Dominic Gabriel Philip & Anr.
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held that prima faice there is sufficient reason to presume that SHEL
was the beneficiary of the said conduct and therefore, SHEL along
with the said two public servants are liable to be charged for the
offence of criminal conspiracy to commit the offence of criminal
misconduct by public servants without public interest. The
remaining three accused persons were directed to be discharged for
the said allegations;
(iv) There was no illegality in the sale of 49% of the shareholdings
of SHEL in SPV (M/s Sunil Hi-Tech Energy Private Limited) to
JDCL as it was permissible as per the JV Agreement. However, the
said sale became contractually permissible only on account of
incorporation of the stipulation in JV Agreement contrary to the bid
document for which charge of criminal misconduct by public
servants and its criminal conspiracy had been directed to be framed
against A-1 Sh. D.G. Philip, the then MD, MSMCL, A-2 Sh.
Avinash Warjukar, the then Chairman, MSMCL and SHEL;
(v) The pledge of shares of by the affiliate (M/s SHEL Investment
Consultant Services Limited) in the SPV (M/s Sunil Hi-Tech Energy
Private Limited) without following recourse to clause 6.4.1(e) of JV
Agreement i.e. by the approval of one Director of MSMCL and one
Director of SHEL was prima facie presumed to by an offence of
cheating punishable under Section 420 IPC in as much as the SPV
and affiliate both were bound by the terms and conditions of JV
Agreement by virtue of Deed of Adherences dated 25.02.2010 and
23.03.2010. It was prima facie concluded that MSMCL would not
have entered into JV Agreement with SHEL, if it was not induced to
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believe that SHEL, its SPV or affiliate will not pledge shares
without following recourse to clause 6.4.1(e) of JV Agreement;
(vi) It concluded that prima facie there is sufficient material
available on record to presume that the SHEL had intention to cheat
from beginning as it had signed term sheet agreement to sell 49% of
its shares in SPV in favour of Jaypee Corporation Limited even
before it entered into JV Agreement with MSMCL, which further
indicates that it had no intention to carry out the mining of Adkoli
Coal Block as it had received Rs.5 crore from Jaypee Associates
Limited even before signing of the JV Agreement. Accordingly, it
was concluded that prima facie there is sufficient material available
on record to charge SHEL for the offence of cheating punishable
under Section 420 IPC as well as for criminal conspiracy with the
two public servants i.e. A-1 Sh. D.G. Philip, the then MD, MSMCL
and A-2 Sh. Avinash Warjukar, the then Chairman, MSMCL;
(vii) As SHEL was under liquidation, accordingly, as per Section
32A of Insolvency and Bankruptcy Code, 2016, the said company
was directed to be discharged for the aforementioned offences; and
(viii) The allegations of quid pro quo or any ulterior consideration
including illegal gratification to the accused public servants by any
person for commission of the alleged offence did not find favour
with the Court as it concluded that prima facie there is no credible
material available on record in that regard.
57. During admission/denial of documents under Section 294 CrPC,
total 505 prosecution documents (D-1 to D-505) were put to both the
accused persons and they admitted certain prosecution documents, as per
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their replies to the application of the prosecution under Section 294 CrPC
dated on 02.08.2023. The admitted documents are Ex.P-1 to Ex.P-77.
VIII. PROSECUTION EVIDENCE
58. In order to prove its case, the prosecution has examined total 21
witnesses. The gist of all the prosecution witnesses is incorporated in the
following chart.
Number of Name Designation Substance of the Testimony
Prosecution
Witness
PW-1 Ms. Deepali The then Desk She proved the grant of sanction
Sayaji Patil Officer (Ind.-9) in the for prosecution of the accused
Department of public servant, namely, A-2 Sh.
Industries, Energy Avinash Warjukar, the then
and Labour, State Chairman, MSMCL.
Government of
Maharashtra.
PW-2 Sh. Satish The then Addl. Chief He proved the grant of sanction for
Gavai Secretary (Industries) prosecution of the accused public
in the Department of servant, namely, A-2 Sh. Avinash
Industries, Energy Warjukar, the then Chairman,
and Labour, State MSMCL.
Government of
Maharashtra.
PW-3 Sh. Kumar The then Deputy He proved the advertisement dated
Laxmikant Chief Manager in 14.02.2008 published by MSMCL
Corporate Legal in Times of India, Economics
Department, Bennett Times for inviting bids of the
Coleman & Company proposed JV partners for
Limited. development of Adkoli Coal Block
in partnership with MSMCL.
PW-4 Sh. Sanjay The then Deputy In response to the letters of the IO
Shankarrao Secretary in the during the years 2016 to 2018, he
Ingle Department of handed over five files available in
Industries, Energy the Department of Industries,
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Kishan Vats Secretary working at prosecution of the accused public
the Prosecution Desk, servant, namely, A-1 Sh. D.G.
DoPT, Ministry of Philip, the then MD, MSMCL.
Home Affairs.
PW-6 Sh. R. Preliminary Enquiry He proved the details of
Parthasarthy Officer, CBI. Preliminary Enquiry of this case
that led to registration of this FIR
on the basis of his complaint.
He also gave the details of all the
documents/files collected by him
during the Preliminary Enquiry
and which were later handed over
by him to the IO of this case.
PW-7 Sh. General Manager In response to the letters of the IO
Premchand (Operations), during the years 2015 to 2018, he
Y. Tembhare MSMCL since April, handed over the requisite files
2010. available in the MSMCL in
relation to allocation of coal
blocks to MSMCL, appointment
of financial consultant, process of
bidding for JV partner, process of
execution of JV agreement
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with Establishment servant, namely, A-1 Sh. D.G.
Matters and Philip, the then MD, MSMCL.
Prosecution Desk,
DoPT, Ministry of
Home Affairs.
PW-9 Sh. U.S. Senior Manager He is an expert in the Mining
Singh (Mining) (Retd.), Department. He compared the
Mineral Exploration requisite technicality eligibility
Corporation Limited criteria for a bidder contained in
(MECL). the bid document dated
14.02.2008 with the bid
documents of SHEL. Based upon
the said comparison, he opined
that SHEL did not seem to be
technically eligible/competent as
per the bid documents.
PW-10 Sh. Manish The then Section In response to the letters written
Uniyal Officer in CA-I by the IO, he provided the files
Section, Ministry of and documents pertaining to
Coal. Adkoli Coal Block available in the
Ministry of Coal, Government of
India to the IO.
PW-11 Sh. Suresh Inspector/Malkhana He gave the details of the two files
Kumar In-Charge (Retd.), handed over by him to the IO of
Sharma EO-II Branch, CBI. this case. The said files were
earlier received by him from
Ministry of Coal and were
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deposited in the Malkhana of CBI.
PW-12 Sh. Gajanan The then Chief In response to the letters of the IO
Chandrabhan Accounts/Finance during the year 2016, he handed
Bokde Officer, MSMCL, over the requisite files available in
Nagpur. the MSMCL in relation to
allocation of coal blocks to
MSMCL, appointment of financial
consultant, process of bidding for
JV partner, process of execution of
JV agreement between SHEL and
MSMCL, the minutes of the
relevant meetings of Board of
Directors, MSMCL, the minutes of
the Tender Committee meeting,
minutes of the Management
Committee meeting and other
relevant documents related to the
present case including documents
related to Adkoli Coal Block.
PW-13 Sh. Vijay Senior Scientific He is an handwriting expert. He
Verma Officer, Grade-I, compared the admitted specimen
CFSL, CBI, Delhi. handwriting of A-1 Sh. D.G. Philip
with his purported handwriting on
the tabulation chart found
available at MSMCL in the files of
the bidding process of JV partner
for MSMCL. As per his report, he
opined and attributed
responsibility of A-1 Sh. D.G.
Philip to the said writing on the
tabulation chart.
PW-14 Sh. Darshan The then Officer in He participated as a witness in the
Bhalekar Shankar Nagar raid conducted by the IO in the
Branch, Circle Office, premises of SHEL at Nagpur and
Canara Bank, Nagpur. witnessed the files related to the
present case seized by the IO. He
gave details of the files seized
during the said raid.
PW-15 Sh. Amit Senior Assistant In response to the letters of the IO
Kumar Officer in Jaiprakash during the year 2016, Sh. S.K.
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Limited, New Delhi. handed over the requisite files
available in the said office in
relation to the present case
including share purchase
agreement dated 21.04.2011,
debenture subscription agreement
dated 31.03.2010 and share pledge
agreement dated 21.04.2011. He
identified the signatures of Sh.
S.K. Thakral on the seizure memos
of the aforementioned documents.
PW-16 Sh. S.K. The then Joint In response to the letters of the IO
Thakral President (Finance), during the year 2016, he handed
Jaypee Group and over the requisite files available in
also worked as Chief the said office in relation to the
Finance Officer in present case including details of
Jaypee Power Grid the balance sheets, ledgers, bank
Limited. accounts statements of the
payments made by JDCL to
SHEL, its affiliate and SPV as
well as other relevant financial
documents of JDCL including
original term sheet dated
31.10.2009 and share pledge
agreement dated 21.04.2011.
PW-17 Sh. Kumar The then Manager, The bank accounts of Jaypee
Praveen Vasant Vihar Branch, Group Companies, SHEL, SPV
Axis Bank, New (M/s Sunil Hi-Tech Energy Private
Delhi. Limited), SHEL affiliate, namely,
M/s Sunil Investments Consultants
Private Limited and M/s
Gangakhed Sugar and Energy
Limited were there in the said
branch of Axis Bank. He has
proved all the relevant certified
copies of bank accounts of the
aforementioned companies, which
were handed over by Sh. Anil Jain,
official of Axis Bank to the IO in
the year 2016.
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59. Thereafter, on 30.07.2025, prosecution evidence was closed and the
matter proceeded for recording statements of accused persons under
Section 313 CrPC (351 BNSS).
60. Statements of both the accused under Section 313 CrPC (351 BNSS)
were separately recorded wherein they were put all the incriminating
evidence against them for seeking their respective explanations.
IX. STATEMENT OF A-1 SH. D.G. PHILIP UNDER SECTION 313
CRPC (351 BNSS)
61. In response to the incriminating evidence put to A-1 Sh. D.G. Philip,
he stated that he is innocent and has been falsely implicated in this case.
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He denied that the technical bid selection of SHEL was not in accordance
with the bid document. He stated that the SHEL did not submit MoU/
document pertaining to existence of consortium between it and SBEA
along with its technical bid submitted on 13.03.2008. He stated that MoU
in that regard between SHEL and SBEA was submitted before the
presentation of SHEL on 10.04.2008 i.e. before evaluation of its technical
eligibility. He further stated that in consortium with SBEA and its mining
experience, SHEL had mining experience of more than 03 years and thus,
it was technically eligible in consortium with SBEA. As SHEL had not
submitted the MoU dated 14.03.2008 of its consortium with SBEA along
with its technical bid dated 13.03.2008, the documents of SBEA showing
03 years of mining experience, even though filed along with the technical
bid were not considered during initial evaluation and therefore, in absence
of the said documents, SHEL was ineligible. According to the bid
document, the bidders were required to make their presentation to
MSMCL, before the opening of their commercial bids. As per G.R. of
Government of Maharashtra in Industry Department Numbered, BRVS –
(1094)/2679 Ind. 6 dated 30.04.1994, bidders were allowed to submit any
document which was not submitted in their technical bid envelope before
the opening of the technical bid envelope. As per the guideline stated at
Para No.1.4.107 (2) in the said G.R., in case any document of technical
nature is not submitted by the bidders while submitting the technical
envelope, the bidder should be permitted to clear such defect before
opening of the commercial envelope. Accordingly, all the bidders
including SHEL were permitted to submit their supporting documents of
technical nature, which could not be submitted along with their technical
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bids, to MSMCL during their presentation on 10.04.2008. Based upon the
said permission, SHEL submitted its MoU with SBEA to the MSMCL
before their presentations on 10.04.2008 at the office of Financial
Consultant, aXYKno. During the scrutiny of the same, SHEL was found
fulfilling the required eligibility criteria in consortium with SBEA.
Therefore, on the strength of MoU of consortium between SHEL and
SBEA, SHEL became eligible and it was accordingly, announced.
62. He further stated that analysis of the scrutiny of bidders in 36
column statement of spread sheet was prepared by him but it was a rough
preliminary analysis which was neither signed nor finalized. He stated that
the hand written analysis on the said spreadsheet was done prior to
submission of MoU of consortium between SHEL and SBEA. Therefore,
even though the mining experience documents of SBEA were enclosed
with the technical bid of SHEL, the said documents could not be
considered in absence of any MoU and accordingly, SHEL was not given
benefit of the said documents till the submission of MoU dated 14.03.2008
which was submitted after the aforementioned rough & tentative analysis
and before the presentation bidders, including SHEL on 10.04.2008.
Accordingly, the remarks made in the aforementioned chart by him were
made considering SHEL to be a single unit, which did not fulfill the
qualifying criteria of having 03 years of mining experience and
accordingly, SHEL was ineligible until submission of MoU dated
14.03.2008. He further stated that his aforementioned hand written remark
constituting preliminary observation on the tabular chart before submission
of MoU dated 14.03.2008 by SHEL is not an official document. During the
presentation on 10.03.2008 at the office of Financial Consultant, aXYKno,
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as stated above and the documents submitted, the technical scrutiny of the
bidders was done by the members of the Management Committee and
those bidders found technically eligible were noted. He further stated that
the minutes of the proceedings of the presentation meeting, scrutiny of the
technical document, considering the same for deciding the eligibility or
otherwise of the bidders, could not be drafted for want of time, as the
Management Committee members had to rush to the office of MSMCL for
opening of the commercial bids of the bidders on the same day i.e.
10.03.2008, which were to be opened at 4:30 pm, at the office of M/s
MSMCL. The decision taken by the Management Committee of the
eligibility or ineligibility of the bidders, was announced by him being MD,
MSMCL at the beginning of the opening of the commercial bid. The
minutes of the opening of commercial bid dated 10.04.2008 were written,
finalized and signed by all the members of the Management Committee.
63. In response to the incriminating evidence put to him, A-1 Sh. D.G.
Philip gave details of 16 documents enclosed with the technical bid of
SHEL in the form of a chart depicting that based on the said documents,
the SHEL was technically eligible to be JV partner of MSMCL for
development of Adkoli Coal Block in accordance with the conditions laid
in the bid document. He further stated that the above mining experience of
the consortium partner and Sub-Contractor SBEA, clearly indicates and
proves that SBEA, as a consortium partner of SHEL had vast mining
experience of more than 03 years, who has done the mining work as a Sub-
Contractor of various clients and therefore, it had the mining experience of
both of the open cast and in the underground mines.
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64. He further stated that as per the Adkoli Coal Block allotment order
dated 02.08.2006, one of the mandatory conditions was that the separate
JV company constituted by the MSMCL for development of Adkoli Coal
Block must be a Government company, wherein MSMCL must hold at
least 51% equity shares. In order to protect the interest of the MSMCL &
the Government and to maintain the JV company as a Government
company, a condition was imposed in the JV Agreement that the equity
share of MSMCL in JV company shall not reduce from 51% at any point
of time, which was in accordance with the terms and conditions of the bid
document. He further stated that the estimated cost for the development of
Adkoli Coal Block was Rs.300 crores and as per the JV Agreement, the
said cost was to be exclusively borne by SHEL (JV partner). In addition to
the said cost, SHEL was required to expend Rs.74 crores towards the
payment of sweat money to MSMCL, Rs.20 crores for performance
guarantee, insurance, etc. totaling to approximately Rs.420 crores. Thus,
the said funds were required by SHEL for the successful commencement
and performance of the Adkoli Coal Project. Failure to raise and invest
such amount would have led to the failure of the project and losses to
MSMCL and SHEL. In the said project, the SHEL would have started
receiving funds for refund of the said amount of Rs.420 crores only after
extraction and sale of the coal of Adkoli Coal Block commenced. In order
to facilitate SHEL in raising the said funds, MSMCL had agreed to provide
necessary support to SHEL in accordance with the bid document.
Accordingly, as per JV Agreement, SHEL was permitted to sell its 49%
shareholdings in the JV company so that it holds 51% of the equity in JV
company subject to the restrictions and conditions contained therein,
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including execution of Deed of Adherence by the purchasing party and
grant of previous permission by the Government of Maharashtra in that
regard. He further stated that there are provisions or clauses, in the bid
document, which permit and allow the MSMCL to make necessary
changes in the terms and conditions of the Agreement and that too in the
overall interest of the Corporation and for the success and completion of
the business of Adkoli Coal Block by mining of coal from it provided it is
not contrary to the conditions laid down in the allocation letter dated
02.08.2006.
65. He further stated that the changes proposed in the JV Agreement
were neither contrary to the terms and conditions of the bid document nor
contrary to the terms and conditions of the allotment order dated
02.08.2006 of Adkoli Coal Block but supports the same and help in
achieving the object of exploitation of Adkoli Coal Block successfully and
at the same time protecting the interest of MSMCL and newly formed
company and the G.O. Maharashtra and MSMCL and keeping or retaining
the J.V. Company always as a Government company, the Corporation
being having 51% of its share always as equity. The terms and conditions
in the bid document gave MSMCL, the sole discretion of changing the
terms and conditions of the Bid Documents, and incorporating the said
changes in the JV Agreement wherever essential to facilitate required the
work of (1) commencing and exploiting the Adkoli Coal Block by
extraction of coal from the Adkoli Coal Block and (2) while doing so,
protecting the interest and survival/existence of the Corporation. He further
stated that after discussions on all points raised, as mentioned in the bid
document and the objects of Adkoli Coal Block to be achieved in the
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meetings with SHEL, it was decided to approve insertion of the clause in
the JV Agreement of permitting the sale/mortgage and transfer of share of
the JV partner (SHEL) in the SPV to a third party for ensuring the
commencement of the Adkoli Coal Project.
66. He further stated that there may be difference of opinion amongst
the members of the Board of Directors, but while deciding the issue, the
differences were resolved and no such differences is recorded by any
member in the proceedings of the meeting including Sh. Anil Pophre,
when the draft of the proceedings of the minutes were sent to all members
of the Board of Director, including Sh. Anil Pophre, they approved them
without communicating any of their differences and in the next meeting of
the Board of Directors, the minutes of the previous meeting of the Board of
Directors is confirmed by all members of Board of Directors including Sh.
Anil Phophre.
67. He denied that he misused his official position as a public servant by
altering the terms and conditions of the tender bid, which prohibited the JV
partner from selling, transferring and mortgaging its share and debentures
in the Special Purpose Vehicle (SPV) to any third party. He stated that the
change in terms of bid document vis-a-vis JV Agreement was not only
permissible for MSMCL but the same was also approved by the High-
Power Committee and the Infrastructure Committee, Government of
Maharashtra. The changes were in the interest of the MSMCL and the
Government as well as necessary for smooth development of Adkoli Coal
Block.
68. He further stated that SHEL gained no pecuniary advantage as in
order to become JV partner of MSMCL, it had to incur total cost of Rs.420
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crores, including cashless equity, sweat money, cost of developing Adkoli
Coal Block, cost of performance guarantee and cost of insurance. MSMCL
was not required to invest or expend any amount of money till coal
extracted from Adkoli Coal Block was sold. As per letter dated 08.09.2014
(PDF Page No.12242) addressed to the MD, MSMCL by MD, M/s
MSMCL Adkoli Natural Resources Limited, on the subject Hon’ble
Supreme Court’s Judgment dated 25.08.2014, on allocation of coal blocks,
the JV partner (SHEL) had spent Rs.50.19 crores on the Adkoli Coal block
initially, including sweat money of Rs.18.05 crores. From the above, it can
be clearly seen that the amount received by the SHEL from the
sale/transfer of its shares in JV company to JDCL is about Rs.40 crores
which is Rs.10.19 crores less than the expenses incurred by the SHEL for
Adkoli Coal Block. The remaining amount of about Rs.35 crores received
by the subsidiary of SHEL, namely, M/s Gangakhed Sugar and Energy
Private Limited from JDCL is for the sale of shares of the subsidiary
company and it is unrelated to the present JV Agreement. Therefore, by
sale/transfer of shares, debentures and unsecured loan, SHEL has not
received any undue gain.
69. He further stated that the decision taken in the meetings of the
Management Committee, MSMCL or the meetings of the Board of
Directors, MSMCL, including decision to declare SHEL technically
eligible were taken collectively by all the members jointly and not by him,
in his individual capacity. No individual member of the Management
Committee or the Board of Directors was authorized and empowered to
take any executive decision pertaining to the MSMCL individually.
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70. He preferred to lead evidence in his defence and accordingly, he was
given liberty to lead evidence in his defence.
X. STATEMENT OF A-2 SH. AVINASH WARJUKAR UNDER
SECTION 313 CRPC (351 BNSS)
71. In addition to recording of statement under Section 313 CrPC (351
BNSS), A-2 Sh. Avinash Warjukar filed a written statement under Section
313(5) CrPC [351(5) BNSS] as a sufficient compliance of the said Section.
The substance of both the statements are same.
72. In response to the admissible incriminating evidence put to A-2 Sh.
Avinash Warjukar, he stated that he is innocent and has been falsely
implicated in this case. He admitted that he was appointed as the Chairman
of MSMCL but it was an ex-officio/political posting. He stated that he had
no technical or other knowledge regarding the manner of functioning of
MSMCL. He did not participate in the day-to-day affairs of the business of
MSMCL, which was handled by the staff under the guidance of the MD,
MSMCL. He did not interfere in the policy decisions of MSMCL. He
stated that there were total 06 Directors in MSMCL Board and all except
him had either technical, financial or other knowledge of different aspects
under consideration. He stated that neither he was shown the documents
nor he was part of discussions nor he had the knowledge or understanding
qua them. He did not even understand English properly. He stated that the
Government had duly intimated to him vide letter dated 25.04.2007 that he
did not have any power etc. in MSMCL and the same was to be managed/
seen by the Managing Director. He stated that he never saw the final bid
document. He stated that no discussion on the sale/pledge of the shares of
JV partner in JV company took place in his presence. He further stated that
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no terms of any draft were ever discussed or finalized by him at any stage
of the process. He further stated that he did not participate in any
discussion about the change of terms or conditions of the draft JV
Agreement, share sale, creation of third-party interest in SPV, or pledging
of shares, and nor did he participate in para-wise discussion or any other
discussion on the draft JV Agreement relating to Adkoli Coal Block. He
further stated that he was neither aware about any such modification/
alteration nor was involved in the same in its any process. He further stated
that the record reflects that the said draft JV Agreement was approved by
the Government of Maharashtra after the same was gone through different
levels of scrutiny.
73. He also preferred to lead evidence in his defence.
74. Thereafter, the matter proceeded for defence evidence.
XI. DEFENCE EVIDENCE
75. The accused persons examined total 05 witnesses to discredit the
prosecution/CBI version and to substantiate their defence. The gist of the
said 05 defence witnesses is incorporated in the following chart.
Number of Name Designation Substance of the Testimony
Defence
Witness
DW-1 Sh. Vivek Chief Accountant He proved the reply of MSMCL to
Kollipara Finance Officer and the RTI application dated
Information Officer, 27.07.2021. He also placed on
MSMCL, Nagpur. record originals of the agenda for
165th, 171st and 172nd meeting of
Board of Directors, MSMCL along
with other summoned documents.
DW-2 Sh. Mahinder One of the partners of He deposed about the execution of
Singh Bhasin SBEA. Memorandum of Understanding
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Corporation Limited (Geology) with effect from
(MECL). January, 2008 to May, 2008 and he
had 20 years of experience in the
field of exploration and survey of
minerals in the coal blocks before
he joined SHEL. He prepared and
submitted the technical bid dated
14.03.2008 with MSMCL duly
signed by him. He deposed that at
that time, SHEL was having
experience in survey and
exploration of coal through his
expertise for being its employee.
DW-4 Sh. Akshay Section Officer, He testified that he could not trace
Nagdive Mining Department, the letter dated 25.04.2007
Government of purportedly written by Sh. R.D.
Maharashtra. Mande, the then Deputy Secretary,
Government of Maharashtra,
Industries, Energy and Labour
Department, Maharashtra, in the
records of his department.
DW-5 Sh. R.D. The then Deputy He proved the copy of letter dated
Mande Secretary in the 25.04.2007 written by him in his
Department of capacity as Deputy Secretary,
Industries, Energy Government of Maharashtra to
and Labour, MD, MSMCL as well as its copy
Government of sent to A-2 Sh. Avinash Warjukar,
Maharashtra. the then Chairman, MSMCL.
76. Thereafter, defence evidence was closed and the matter was listed
for final arguments.
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77. Final arguments on behalf of both the parties are carefully heard at
length. The case file and the written submissions filed on behalf of both the
sides are meticulously perused.
XII (A). FINAL ARGUMENTS ON BEHALF OF THE CBI/
PROSECUTION
78. Sh. Sanjay Kumar, Learned ALA for CBI assisted by the IO
Inspector (Retd.) Sh. Jairaj Katiyar contended that the prosecution/CBI has
proved the charges framed against A-1 Sh. D.G. Philip, the then MD,
MSMCL and A-2 Sh. Avinash Warjukar, the then Chairman, MSMCL
beyond any reasonable doubt by leading cogent and conclusive evidence.
He contended that MSMCL was allocated Adkoli Coal Block by the
Ministry of Coal, Government of India vide letter dated 02.08.2006
Ex.P-288/PW-15 (D-270, PDF Page No.10120). The said coal block was
allocated to the MSMCL in addition to three other coal blocks. After taking
approval of Board of Directors, MSMCL for development of various coal
blocks, including Adkoli Coal Block through JV company, MSMCL
invited bids for JV partners on 13.02.2008 and 14.02.2008 in accordance
with the tender/bid document Ex.P-10 (D-44, PDF Page Nos.5284-5331).
Before that, MSMCL engaged aXYKno as its Financial Consultant for the
said project and its job description included preparation of tender
documents, evaluation of the bids, preparation of the draft JV Agreement
and MoU. As per tender/bid document, the eligible technical qualification
for the bidder for were inter alia as follows:- (i) the bidders should have
been in operation for more than 03 years and should have minimum 03
years experience in actual mining of Open Cast or Underground mines
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including survey & exploration and should be making profits in each of the
immediately preceding three financial years; and (ii) the bidders shall have
adequate manpower consisting of statutorily competent & qualified and
experienced persons, engineers, geologists to successfully complete the
mining activities and also to engineer, design, supervise, test and
commission the coal mining company successfully.
79. He contended that in response to the said advertisement for inviting
bids, 13 bidders submitted their respective bids for Adkoli Coal Block,
including SHEL, which submitted its bid on 13.03.2008. As per the
technical eligibility condition contained in the bid document, SHEL was
not technically eligible and therefore, it should have been declared
ineligible. However, A-1 Sh. D.G. Philip, MD, MSMCL in the meeting of
management committee, MSMCL held on 10.04.2008 declared it to be
technically eligible, though, he himself in the tabulation sheet/comparative
chart remarked in his own handwriting that it did not qualify the technical
criteria and so, it was ineligible. He contended that on account of declaring
ineligible SHEL company to be technically eligible, its financial bid was
opened, after comparison with the other bidders it was declared successful
for being H-1 bidder and ultimately a JV Agreement dated 21.11.2009 was
executed between MSMCL and SHEL thereby giving undue pecuniary
advantage to SHEL in the Adkoli Coal Block against public interest.
80. He further contended that as per Government of Maharashtra letter
dated 01.09.2007 Ex.P-270/PW-7 (D-139, PDF Page Nos.7037-7038),
MD, MSMCL was directed to scrutinize the bids received with reference to
expression of interests for the Coal Blocks from administrative and
financial view point and to prepare comparative chart. He contended that
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as in the normal procedure, in this case also the bid comprised of technical
bids and financial bids. He contended that the technical bids for Adkoli
Coal Block, including the bid of SHEL, were opened in the meeting of
tender committee held on 14.03.2008 but the bidders were informed that
their technical bids will be analyzed and examined later. Therefore, the
technical eligibility of the bidders was not examined on 14.03.2008. In the
said meeting, it was resolved that the bidders shall make presentation and
thereafter, commercial bids will be opened. He further contended that no
document or evidence emerged to show that presentations were made by
the bidders before evaluation of technical bids. He contended that as per
the minutes of management committee meeting held on 10.04.2008, MD,
MSMCL announced the names of the parties who were technically
qualified and name of SHEL was also included in the said list. It was
contended that the said minutes do not record that the technical evaluation
of the bids were done by the tender committee or the presentations of
bidders preceded the said announcement. He contended that as per material
available on record, only A-1 Sh. D.G. Philip, the then MD, MSMCL was
responsible to scrutinize the bids, preparation of comparative chart and
evaluate the technical eligibility of the bidders. He contended that PW-18
Sh. Parasmal Bhawarilal Lalwani, Assistant Manager (Audit) (Retd.),
MSMCL has deposed that the files relating to the process of tender and
formation of JV partner always remained in the custody of MD, MSMCL.
In these circumstances, it is conclusively established that only A-1 Sh.
D.G. Philip, the then MD, MSMCL was responsible for declaring
technically ineligible SHEL to be technically eligible.
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81. He further contended that the bid of SHEL was submitted with the
forwarding letter dated 13.03.2008 in a spiral-bound book. However, MoU
dated 14.03.2008 between SHEL and SBEA was attached with the spiral-
bound book with a stapler pin. It was further contended that the bid was to
be submitted till 14.03.2008 by 01:00 pm, the technical bids were to be
opened at 04:00 pm on 14.03.2008. Before that, it was difficult to assume
that SHEL entered into an MoU with SBEA, got it documented on the
stamp paper which was duly notarized and submitted in the office of
MSMCL before 01:00 pm. He has, therefore, contended that interpolation
on behalf of SHEL was permitted to include MoU with SBEA after the last
date of submitting the bids was over.
82. He further contended that the SHEL failed to qualify the technical
eligible criteria even in consortium with SBEA in accordance with MoU
dated 14.03.2008 as the documents annexed with the technical bid of
SHEL did not establish that SHEL or SBEA had any experience in ‘actual
mining’ any time before execution of MoU, leave aside immediately
preceding three financial years. Further, the said documents did not show
that the said consortium had experience in survey and exploration.
Moreover, the said consortium did not have manpower consisting of
statutorily competent and qualified engineers and geologists. Therefore,
SHEL did not meet the technical eligibility criteria as per the tender/bid
document. He contended that PW-9 Sh. U.S. Singh, Senior Manager
(Mining) (Retd.), Mineral Exploration Corporation Limited (MECL), an
expert in Mining Department has opined that based upon the documents
annexed with the technical bid of SHEL, it did not qualify the technical
criteria contained in the tender/bid document.
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83. It was further contended that DW-2 Sh. Bhasin, one of the partners
of SBEA, admitted in his cross-examination that there is no document/
certificate of the period between 14.03.2005 to 14.03.2008 reflecting that
his partnership firm had carried out any mine development work during the
said period. He further contended that he admitted that his partnership firm
never carried out any coal extraction from any coal mine and Sh. Vinod
Kumar and Sh. Pradeep Kumar, whose names are mentioned in the list of
key personnel available were not DGMS certified Surveyors. He further
contended that the author of technical bid of SHEL DW-3 Sh. Satish
Shyamkant Kulkarni admitted in his cross-examination that no certificate
of DGMS was annexed with the said bid and he did not verify the
qualification and experience of the personnel of SBEA, whose list was
annexed with the bid.
84. He further contended that for Adkoli Coal Block, there were 13
bidders. According to the chart prepared by A-1 Sh. D.G. Philip, 08 of
them were ineligible and 05 were eligible, technically. It was not that none
of the bidders was technically eligible and to make the bid successful, all
the ineligible bidders were declared eligible. There was no justification for
A-1 Sh. D.G. Philip to open the bids of technically ineligible bidder SHEL.
Thus, the action of A-1 Sh. D.G. Philip conclusively establishes that he, as
a public servant, obtained for ineligible bidder SHEL valuable thing/
pecuniary advantage without any public interest. The valuable thing in this
case is clearing ineligible bidder as technically eligible, thereby enabling it
to clear first round of the bid and go to the second round of financial bid.
This is without any public interest because for Adkoli Coal Block there
were 05 technically eligible bidders and therefore, there is no justification
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for declaring technically ineligible SHEL as technically eligible. He further
contended that public functionaries, while dealing with money matters,
cannot change the terms and conditions proposed in the bid. In case, it was
made known to the public that the conditions for mining required in the bid
will be relaxed, there is a possibility that some bidders may have offered
even more than the offer of SHEL. He has, therefore, contended that the
prosecution/CBI has established beyond any reasonable doubt, the criminal
misconduct of A-1 Sh. D.G. Philip, the then MD, MSMCL in declaring an
ineligible bidder (i.e. SHEL) as eligible for obtaining valuable pecuniary
benefit to it against public interest. Accordingly, he deserves to be
convicted for the offence punishable under Section 13(1)(d)(iii) PC Act on
the proof of the first count of charge of criminal misconduct.
85. In respect of the second count of charge of criminal misconduct
punishable under Section 13(1)(d)(iii) PC Act, Learned ALA for CBI
contended that A-1 Sh. D.G. Philip, the then MD, MSMCL and A-2 Sh.
Avinash Warjukar, the then Chairman, MSMCL attended 165 th meeting of
the Board of Directors, MSMCL held on 07.02.2008 wherein the terms and
conditions of the tender/bid document were finalized. Thus, both of them
were fully aware about the terms and conditions of tender/bid document,
including absolute prohibition of sale, transfer or pledge of the shares of
JV partner in JV company to the third party. The Financial Consultant,
aXYKno submitted its final draft of JV Agreement on 19.01.2009 in
conformity with the aforementioned condition of sale, transfer or pledge in
the tender/bid document. However, in 172nd meeting of the Board of
Directors, MSMCL under the Chairmanship of A-2 Sh. Avinash Warjukar
attended by A-1 Sh. D.G. Philip, the then MD, MSMCL held on
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21.01.2009 omitted the clauses restricting sale/transfer of shares by the JV
partner of the JV company to the third party in the draft JV Agreement and
included a Clause 7.3 with the title ‘Reserved Matters’ permitting pledging
of shares of JV partner in JV company in favour of any third party subject
to approval of one Director, nominated by MSMCL and one Director,
nominated by JV partner. He contended that earlier the High-Power
Committee in its meeting held on 20.11.2008 had directed MSMCL to
prepare a draft JV Agreement in respect of three coal blocks, including
Adkoli Coal Block and submit the same to it for its approval. Accordingly,
the said draft JV Agreement, approved in the 172 nd meeting of Board of
Directors, MSMCL in contravention of the terms and conditions contained
in the tender/bid document, was forwarded by A-1 Sh. D.G. Philip to the
High-Power Committee for its approval.
86. He further contended that A-1 Sh. D.G. Philip was fully conscious
that any provision relating to sale, transfer or pledge of the shares of JV
partner in JV company, if inconsistent with the terms and conditions of the
tender/bid document, could not be incorporated in the JV Agreement. In
support of his contention, reliance was placed on the letter dated
31.01.2009 addressed by A-1 Sh. D.G. Philip to the Principal Secretary
(Industries), Industries, Energy and Labor Department, Mumbai wherein
he himself recorded as follows:
“…..Those aspects that are not in conformity with the tender
documents were not incorporated in the Joint Venture Agreement…”
It was further argued that A-1 Sh. D.G. Philip sent the draft JV
Agreement to the High-Power Committee on 23.01.2009, which was
approved in the 172nd meeting of the Board of Directors, MSMCL held on
21.01.2009 and which was in violation of terms and conditions contained
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in the tender/bid document. The said draft JV Agreement permitted sale
and transfer of shares of JV partner in JV company to the third party and
also incorporated Clause 12.5 containing the consequences of sale of
shares in contravention of the JV Agreement.
87. He further contended that thereafter, High-Power Committee
meeting was held on 09.04.2009 under the Chairmanship of Chief
Secretary regarding formation of JVs with MSMCL for development of
coal blocks. Subsequently, in the meeting of High-Power Committee held
on 04.05.2009, draft JV Agreement was approved and it was directed to be
placed before the Infrastructure Committee. The same was approved by the
Infrastructure Committee in its meeting held on 18.06.2009 and
consequently, JV Agreement was executed between MSMCL and SHEL on
21.11.2009. It was further contended that considering the manner in which
the JV Agreement was finalized, permitting sale as well as pledge of shares
conclusively shows that A-1 Sh. D.G. Philip and A-2 Sh. Avinash Warjukar
knew too well the terms and conditions of the tender/bid document
prohibiting sale/pledge of shares, but still approved the draft of JV
Agreement in violation of the said stipulations in 172 nd meeting of the
Board of Directors, MSMCL held on 21.01.2009. Their said act
conclusively falls within the purview of the criminal misconduct of the
public servants as by execution of JV Agreement dated 21.11.2009,
permitting sale, transfer or pledge of shares of SHEL in JV company based
upon the draft approved and proposed by them resulted in obtaining
valuable thing/pecuniary advantage in favour of SHEL without any public
interest.
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88. He further contended that sale of shares of SHEL (JV partner) in JV
company was permitted by the JV Agreement dated 21.11.2009 in
contravention of tender/bid document dated 14.02.2008. As per the JV
Agreement, the ratio of shares of MSMCL and SHEL in the JV company
was decided to be 51:49 for all times during subsistence of the JV
Agreement. However, on 31.10.2009 i.e., even before the execution of JV
Agreement, a term sheet was signed between SHEL and it provided the
indicative terms and conditions to form the basis of discussions for the
proposed acquisition of shares of M/s Sunil Hi-Tech Energy Private
Limited (SPV) by Jaiprakash Associates Limited or its associates or
affiliates or nominees. As per the term sheet, M/s Sunil Hi-Tech Energy
Private Limited was proposed to function as a Special Purpose Vehicle
(SPV), to be incorporated as a holding/investment company for holding
entire 49% shareholdings of JV partner (SHEL) in the JV company
pursuant to the JV Agreement between SHEL and MSMCL. The term
sheet noted that in case Special Purpose Vehicle (SPV) of SHEL is made a
JV partner (instead of SHEL itself) in the JV company, Jaiprakash
Associates Limited intends to acquire its 49% of its equity shares having a
face value of Rs.10 each (Rupees Ten only) from the promoters and SHEL
shall continue to hold at least 51% share in the Special Purpose Vehicle
(SPV) at all times during the period of the JV Agreement. The purchase
consideration towards acquiring 49% of the paid-up share capital of the
SPV was fixed as Rs.15 crores and on 05.11.2009, a sum of Rs.5 crores
was credited by Jaiprakash Industries Limited in the account of SHEL.
89. He further contended that the JV Agreement dated 21.11.2009
permitted formation of Special Purpose Vehicle (SPV) by SHEL (JV
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partner) with the condition that SHEL had to maintain 51% shareholding
in the SPV. On 18.02.2010, a Deed of Adherence was executed between
MSMCL, SHEL and SPV (M/s Sunil Hi-Tech Energy Private Limited)
whereby 49% shareholding of SHEL, in JV company was transferred in
favour of SPV (M/s Sunil Hi-Tech Energy Private Limited). Further, on
23.03.2010, another Deed of Adherence was executed between SEHL,
SHEL Investment Consultancy Services Limited (SHEL affiliate), Sunil
Hi-Tech Energy Private Limited (SPV), MSMCL and M/s MSMCL Adkoli
Natural Resources Limited (JV company). It recorded the execution of
Deed of Adherence dated 18.02.2010 in accordance with Clause 12.3.3 and
Clause 14.4 of the JV Agreement. The deed recorded that SHEL affiliate
proposes to purchase 71,04,240 shares of SHEL in the JV company held by
SPV for a value of Rs.17 each aggregating to Rs.12,07,72,080/- (Rupees
Twelve Crores Seven Lakhs Seventy Two Thousand and Eighty Only). The
deed records that the SHEL affiliate undertakes to be bound by the JV
Agreement and Deed of Adherence in all respects as if it was a party to the
JV Agreement. After the aforementioned two transactions dated
18.02.2010 and 23.03.2010, 37.50% of the shares of the M/s Sunil Hi-Tech
Energy Private Limited (SPV) were owned by M/s SHEL Investment
Consultancy Services Limited (SHEL affiliate) and 62.50% of the shares
were held by SHEL.
90. He further contended that the Board of Directors, MSMCL in its
181st meeting held on 23.12.2010 approved the transfer of 49% (including
5% shares of Technical Partner, SBEA) equity shares of SHEL in M/s
Sunil Hi-Tech Energy Private Limited (SPV) to Jaypee Group and
accordingly, on 21.04.2011, vide share purchase agreement, the said
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transaction was executed. He further contended that on 21.04.2011, share
pledge agreement was also executed between SHEL Investment
Consultancy Services Limited (SHEL affiliate) and JDCL whereby the
former pledged its total 37.50% of equity shares in SPV company to JDCL
along with all rights, including voting rights for a total consideration of
Rs.12 crores. The said pledge of shares was not in terms of Clause 6.4.1(e)
of the JV Agreement dated 21.11.2009 in as much as it was not with the
approval of one Director of MSMCL and one Director of SHEL. He
contended that as per the Deeds of Adherence dated 18.02.2010 and
23.03.2010, M/s Sunil Hi-Tech Energy Private Limited (SPV) and SHEL
affiliate had undertaken to abide by the JV Agreement and therefore, the
pledge could have been permissible only by following recourse to Clause
6.4.1(e) of the JV Agreement, i.e., by the approval of one Director of
MSMCL and one Director of SHEL. It was, therefore, argued that such
conduct constituted the offence of cheating punishable under Section 420
IPC, inasmuch as SHEL had entered into JV Agreement representing that
neither it nor its affiliate would pledge the shares except in accordance
with the stipulated procedure. It was further submitted that the said
obligation was equally binding upon the SPV and SHEL affiliate by virtue
of Deeds of Adherence dated 18.02.2010 and 23.03.2010. He argued that
MSMCL would not have entered into JV Agreement with SHEL, had it not
been induced to believe that neither SHEL nor its affiliate holding shares in
M/s Sunil Hi-Tech Energy Private Limited (SPV) would pledge such
shares otherwise than in accordance with Clause 6.4.1(e) of the JV
Agreement. He further contended that the pledging of the shares by the
affiliate of SHEL resulted in wrongful gain to SHEL. According to the
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prosecution, the subsequent pledge of shares in breach of the said
stipulation establishes that MSMCL was induced to enter into the JV
Agreement on the basis of a false representation, thereby attracting the
ingredients of the offence of cheating. He further contended that the
intention to cheat from the beginning is evident in this case inasmuch as
SHEL had signed term sheet agreeing to sell 49% of its shares in SPV in
favour of Jaypee Corporation even before it entered into JV Agreement
with MSMCL. Further, SHEL had no intention to carry out the mining of
the Adkoli Block which is evident from the facts that it received Rs.5
crores even before the signing of JV Agreement from Jaypee Associates
and further, its affiliate pledged its shares with voting rights in favour of
JDCL in contravention to the terms and conditions of the JV Agreement.
91. It is, therefore, contended that while on merit SHEL would have
been liable to be convicted for the offence of cheating punishable under
Section 420 IPC in connivance with the two public servants, namely, A-1
Sh. D.G. Philip, the then MD, MSMCL and A-2 Sh. Avinash Warjukar, the
then Chairman, MSMCL. However, as SHEL has been discharged under
Section 32A of Insolvency and Bankruptcy Code for being under
liquidation, it cannot be convicted for the said offence. Nevertheless, there
is sufficient credible evidence on record to conclude that the said two
public servants are liable to be convicted for the offence of criminal
conspiracy to commit the offence of cheating as detailed hereinabove,
thereby enabling SHEL to sell its 49% shares of JV company in M/s Sunil
Hi-Tech Energy Private Limited (SPV) in favour of JDCL for Rs.15 crores.
92. He, accordingly, contended that based upon the cogent and
uncontroverted evidence led by the prosecution, the respective charges
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against both the accused public servants have been duly proved beyond
any shadow of doubt and therefore, they are liable to be convicted for the
same.
XII (B). FINAL ARGUMENTS ON BEHALF OF A-1 SH. D.G. PHILIP,
THE THEN MD, MSMCL
93. Sh. Abhinav S. Gonnade, Learned Counsel for A-1 Sh. D.G. Philip,
the then MD, MSMCL contented that the prosecution/CBI has miserably
failed to prove criminality/charges against him. He admitted that the rough
undated sheet/chart bears his handwriting, wherein he prima facie
remarked that SHEL was technically ineligible. The said remarks were
solely based upon the general understanding of A-1 and they were made
prior to submission of MoU dated 14.03.2008 between SHEL and SBEA
depicting establishment of a consortium between them. He contended that
the said remarks were made as the technical bid of SHEL did not contain
any MoU between it and SBEA and therefore, it could not have got the
benefit of consortium of SHEL and SBEA. He contended that as per G.R.
of Government of Maharashtra in Industry Department Numbered, BRVS –
(1094)/2679 Ind. 6 dated 30.04.1994, bidders were allowed to submit any
document which was not submitted in their technical bid envelope before
the opening of the technical bid envelope. As per the guideline stated at
Para No.1.4.107 (2) in the said G.R., in case any document of technical
nature is not submitted by the bidders while submitting the technical
envelope, the bidder should be permitted to clear such defect before
opening of the commercial envelope. Accordingly, all the bidders,
including SHEL, were permitted to submit their supporting documents of
technical nature, which could not be submitted along with their technical
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bids, to MSMCL during their presentation on 10.04.2008. Based upon the
said permission, SHEL submitted its MoU dated 14.03.2008 with SBEA to
the MSMCL before their presentations on 10.04.2008 at the office of
Financial Consultant, aXYKno. During the scrutiny of the same, SHEL
was found fulfilling the requisite eligibility criteria in consortium with
SBEA. Therefore, on the strength of MoU of consortium between SHEL
and SBEA, SHEL became eligible and it was accordingly, announced. He
contended that even otherwise the said remarks did not culminate into a
final decision, have no sanctity in law and hence, cannot be held against
A-1 to fasten his criminal liability.
94. It was contended that MSMCL, in its 162 nd meeting of Board of
Directors held on 25.06.2007 (i.e. prior to joining of A-1 Sh. D.G. Philip in
MSMCL), constituted and delegated its powers to the Management
Committee, MSMCL. He further contended that A-1 did not have Veto
Power in the said Management Committee. The decision to declare SHEL
as technically eligible was collectively and unanimously taken by the
Management Committee, MSMCL in its meeting held on 10.04.2008,
which was merely announced by A-1 to all the bidders in the said meeting.
The Board of Directors, MSMCL, in its 167th meeting held on 24.04.2008,
discussed in detail the entire process carried out but no objections
whatsoever were raised, at any point in time, by any of the board members.
95. He further contended that even otherwise SHEL was technically
eligible as per the tender/bid document, which was prepared by the
Financial Consultant, aXYKno. He further contended that the term ‘actual
mining’ is not defined in any statute. Section 3(d) of the Mines and
Minerals (Development & Regulation) Act, 1957 defines ‘mining
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operations’ as any operation undertaken for the purpose of mining any
mineral and the SBEA’s work details annexed with the technical bid were
squarely covered under the said definition. Further, MSMCL had 50+ years
of mining experience and as per Clause (v) of the allocation letter dated
02.08.2006, the exploration of Adkoli Coal Block was to be carried out
through CMPDIL. Thus, even assuming that SHEL and SBEA consortium
did not have experience in survey and exploration, the said clause ought to
be considered ancillary in nature and not mandatory. The statements under
Section 161 CrPC of the witnesses, namely, Sh. P. Ranganatheeshwar,
Deputy DGMS; Sh. Anil Kumar Rana, GM, CMPDIL; and Sh. D.N.
Prasad, Advisor, Ministry of Coal, whom the prosecution/CBI chose not to
examine as prosecution witnesses, have falsified the story of the
prosecution to state that SHEL was technically eligible. The statement of
PW-19 Sh. U.S. Singh is inadmissible as (i) he is not an expert witness
under Section 45 of Evidence Act, 1874; and (ii) the meaning of clauses in
the tender/bid document is to be construed by its author (i.e. MSMCL and
Financial Consultant, aXYKno) and not by a stranger like Sh. U.S. Singh,
who neither drafted the tender/bid document nor participated in its
evaluation.
96. He further contended that neither any of the officials of MSMCL nor
the official of Financial Consultant, aXYKno was examined by the
prosecution/CBI to comprehend the meaning and requirement of technical
eligibility to ascertain what was the requirement of MSMCL for engaging
a JV partner. He contended that it is a settled law that the selection of
private entrepreneurs is an administrative decision and the administrative
authority has the liberty to select or reject a particular bidder as per its
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requirement. The scope of judicial intervention is mandatory only where
there is arbitrariness or mala fide intent during the administrative decision,
as held in Tata Cellular Vs. Union of India (1994) 6 SCC 751. He further
contended that in the instant case, the prosecution has miserably failed to
show any arbitrariness or mala fide intent on the part of A-1 or any of the
members of the Management Committee, MSMCL. On the contrary, A-1
has yielded exponential monetary benefits to the Government of
Maharashtra and MSMCL.
97. He further contended that the technical evaluation of the bidders,
including SHEL, was thoroughly checked and approved by (a) the Board
of MSMCL consisting of Government officials and Members of the High-
Power Committee, Government of Maharashtra; (b) the High-Power
Committee; and (c) the Cabinet Committee on Infrastructure headed by the
then Hon’ble Chief Minister, Government of Maharashtra. Not even a
single member, at any stage, recorded any dissent or stated that the process
was illegal or arbitrary to suit bidder SHEL. He contended that the High-
Power Committee or Infrastructure Committee were not bound by the
technical evaluation of the bidders and their recommendation by MSMCL.
The High-Power Committee rejected MSMCL’s recommendation in
respect of Gare Palma-II Coal Block on 20.11.2008, which conclusively
negates any suggestion that High-Power Committee merely rubber stamps
the proposals of MSMCL. He has, therefore, contended that declaration of
SHEL technically eligible was not only a collective decision of the
Management Committee, MSMCL but it was subsequently approved by
two High Level Committees of the Government of Maharashtra, which
culminated into the monetary benefit to the MSMCL and Government of
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Maharashtra clearly showing that the said decision was not against public
interest. Besides, the prosecution itself has not leveled any allegations of
dishonest intention or mala fide against A-1 or his connivance with SHEL
in declaring SHEL as a technically eligible bidder.
98. He contended that even assuming there are some procedural
irregularities, the same cannot be elevated to criminality. An erroneous
administrative decision taken in good faith should not be construed as
unlawful in the absence of clear, clinching and cogent evidence
establishing all the essential ingredients of the offence (Mariam Fasihuddin
Vs. State 2024 INSC 49).
99. He further contended that tender/bid document dated 14.02.2008
was in law and fact, an expression of interest floated by MSMCL which
was an invitation to offer and not a binding contract. The MSMCL had
expressly reserved its rights to amend the terms and conditions of the
tender/bid document at any date prior to execution of the JV Agreement.
He contended that before execution of JV Agreement on 21.11.2009, no
binding contract came into existence. He contended that the very fact that
the draft JV Agreement was redrafted and finalized over a period of one
year after multiple meetings of the Board of Directors, MSMCL, the High-
Power Committee, Cabinet Committee on Infrastructure itself shows that
the bid clauses were tentative and open to refinement. He contended that
the prosecution has failed to examine any witness, including officials of
MSMCL, State Government of Maharashtra or Ministry of Coal to show or
prove that the conditions stated in the tender/bid document were
mandatory and they could not be altered. On the contrary, vide its letter
dated 23.10.2009, the State Government of Maharashtra allowed 12
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modifications in the draft JV Agreement even after its approval by the
Cabinet Committee on Infrastructure. He contended that if the terms and
conditions contained in the tender/bid document were indispensable and
mandatory, the prosecution would have also leveled allegations against the
officials involved in the said 12 modifications in JV Agreement. Thus, as
per the prosecution itself, it is evident that alteration in terms and
conditions of the JV Agreement was legally permissible.
100. He further contended that the sole substantive restriction in the
allocation letter dated 02.08.2006 issued by the Ministry of Coal,
Government of India was that the JV company must remain a Government
company. The said condition was expressly incorporated in the JV
Agreement and it continued to be scrupulously observed as JV company
(M/s MSMCL Adkoli Natural Resources Limited) is a Government
company till date. The sale or pledge of shares in SPV does not and cannot
alter the Government company character of JV company.
101. He further contended that as per the Adkoli Coal Block allotment
order dated 02.08.2006, one of the mandatory conditions was that the
separate JV company constituted by the MSMCL for development of
Adkoli Coal Block must be a Government company, wherein MSMCL
must hold at least 51% equity shares. In order to protect the interest of the
MSMCL & the Government and to maintain the JV company as a
Government company, a condition was imposed in the JV Agreement that
the equity share of MSMCL in JV company shall not reduce from 51% at
any point of time, which was in accordance with the terms and conditions
of the bid document. He further contended that the estimated cost for the
development of Adkoli Coal Block was Rs.300 crores and as per the JV
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Agreement, the said cost was to be exclusively borne by SHEL (JV
partner). In addition to the said cost, SHEL was required to expend Rs.74
crores towards the payment of sweat money to MSMCL, Rs.20 crores for
performance guarantee, insurance, etc. totaling to approximately Rs.420
crores. Thus, the said funds were required by SHEL for the successful
commencement and performance of the Adkoli Coal Project. Failure to
raise and invest such amount would have led to the failure of the project
and losses to MSMCL and SHEL. In the said project, the SHEL would
have started receiving funds for refund of the said amount of Rs.420 crores
only after extraction and sale of the coal of Adkoli Coal Block
commenced. In order to facilitate SHEL in raising the said funds, MSMCL
had agreed to provide necessary support to SHEL in accordance with the
bid document. Accordingly, as per JV Agreement, SHEL was permitted to
sell its 49% shareholdings in the JV company so that it holds 51% of the
equity in JV company subject to the restrictions and conditions contained
therein, including execution of Deed of Adherence by the purchasing party
and grant of previous permission by the Government of Maharashtra in
that regard. He further contended that there are provisions or clauses, in the
bid document, which permit and allow the MSMCL to make necessary
changes in the terms and conditions of the Agreement and that too in the
overall interest of the Corporation and for the success and completion of
the business of Adkoli Coal Block by mining of coal from it provided it is
not contrary to the conditions laid down in the allocation letter dated
02.08.2006. He has, therefore, contended that the change in clause related
to sale, transfer or pledge of shares of SHEL in JV company was
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recommended only for safeguarding the interest of MSMCL and the State
of Maharashtra.
102. He further contended that MSMCL received Rs.25.44 crores from
SHEL in the said transaction and the said JV Agreement averted
substantiate amount of loss which the MSMCL would have suffered in its
absence. The said fact is corroborated by the Inquiry Officer PW-6 Sh. R.
Parthasarthy, Deputy Superintendent of Police, CBI in his statement under
Section 161 CrPC. Furthermore, MSMCL, in its reply dated 06.01.2020 to
the Government of Maharashtra, admitted that SHEL was technically
eligible and there was no irregularity or illegality in the entire case
whatsoever. Further, SHEL did not obtain any valuable thing or pecuniary
advantage against public interest due to recommendation made by the
MSMCL for treating it as a JV partner and for execution of JV Agreement
with it.
103. It was further argued that the essential ingredients of any of the three
offences charged against A-1 Sh. D.G. Philip have remained
unsubstantiated. In respect of the offence punishable under Section 13(1)
(d) PC Act, it was contended that admittedly, there are no allegations of
demand, acceptance or recovery of illegal gratification by A-1. Further,
there are no allegations of any quid pro quo or illegal consideration being
instrumental in the alleged conduct of A-1. It was contended that the
prosecution has failed to lead any evidence that the alleged act/omission of
A-1 was not in public interest. On the contrary, the record establishes that
MSMCL received substantial amount of Rs.25.44 crores as part of sweat
money inclusive of interest component from SHEL in the present
transaction qua Adkoli Coal Block. Besides, as per the records, SHEL did
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not derive any pecuniary advantage in the said transaction as the amount
expended by it in the said transaction for payment of sweat money and
development of the coal block surpassed the amount received by it from
JDCL. Further, Sh. R. Parthasarthy, Deputy Superintendent of Police, CBI
(Inquiry Officer) has himself admitted that a substantial amount of loss
which could have been caused to MSMCL has been averted by execution
of JV Agreement with SHEL. Therefore, the alleged act of A-1 cannot be
held to be against public interest or to obtain any valuable thing or
pecuniary advantage to SHEL.
104. In respect of the allegation of the criminal conspiracy to cheat, it
was argued that the essential ingredients of the offence punishable under
Sections 120B/420 IPC are not made out. He contended that there is no
material on record to establish that MSMCL was deceived by SHEL into
entering JV Agreement or acting upon any such alleged deception,
MSMCL delivered any valuable security or property to SHEL. It was
further argued that the prosecution has failed to produce any evidence
demonstrating that MSMCL suffered any wrongful loss or that SHEL
derived any corresponding wrongful gain as a consequence of the
execution of the JV Agreement. On the contrary, he argued that, as already
noticed hereinabove, MSMCL received Rs.25.44 crores under the JV
Agreement and was in fact, placed in financially advantageous position
pursuant thereto. It was, therefore, submitted that the foundational
ingredients necessary to constitute the offence of cheating and criminal
conspiracy to commit the said offence, are glaringly absent.
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105. With these submissions, Learned Counsel for A-1 has contended that
the prosecution has miserably failed to prove its case and therefore, he is
entitled to be acquitted for the charges framed against him.
XII (C). FINAL ARGUMENTS ON BEHALF OF A-2 SH. AVINASH
WARJUKAR, THE THEN CHAIRMAN, MSMCL
106. Sh. Mudit Jain, Ld. Counsel for A-2 Sh. Avinash Warjukar, the then
Chairman, MSMCL contented that the prosecution has miserably failed to
establish criminality/charges against him. He submitted that A-2
functioned as an Ex-Officio Non-Executive Chairman of MSMCL with
effect from 11.12.2006 to 28.12.2010. His role was confined to attending
meetings of the Board of Directors, MSMCL in a non-executive capacity
and neither had right nor exercised control over policy decisions nor he
was involved in the day to day affairs of MSMCL. He only attended its
board meetings in non-executive capacity. His posting as a Chairman was a
political appointment and he had no technical knowledge or expertise. He
was neither involved in the drafting of the tender/bid documents or draft
JV Agreement.
107. He argued that prosecution has failed to prove that A-2 had any
knowledge of the terms and conditions contained in tender/bid document,
particularly the clauses prohibiting the sale, transfer or pledge of the
shareholdings of JV partner in JV company to the third party. It was
contended that no evidence has been led to establish that these stipulations
were discussed in the 165th meeting of the Board of Directors of MSMCL
held on 07.02.2008. On the contrary, PW-21 Sh. Anil Pophare, the only
prosecution witness who attended the said meeting, categorically claimed
that no such discussion took place in his presence. The minutes of the said
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meeting are also silent on the said issue. It was further contended that there
is no admissible evidence on record to suggest that the draft of the tender/
bid document was placed before the Board in the said meeting dated
07.02.2008. It was contended that A-2 was not involved, in any manner, in
drafting of the tender/bid document and the same was prepared by the
Financial Consultant, aXYKno. Thus, there is no material to infer that A-2
was aware of the impugned restrictions contained in the tender/bid
document.
108. He submitted that the draft JV Agreement approved in 172 nd meeting
of the Board of Directors, MSMCL was merely a proposal which was
considered, scrutinized and approved at multi stages thereafter. The said
proposed draft JV Agreement underwent scrutiny by the High-Power
Committee, which sought comments from the Financial Consultant before
approving it. Subsequently, it was examined by the Infrastructure
Committee, which approved the same. Even thereafter, twelve further
modifications were incorporated in the finally approved draft with the
consent of the Government of Maharashtra before JV Agreement was
finally executed on 21.11.2009. The draft JV Agreement forwarded by A-1
Sh. D.G. Philip, the then MD, MSMCL to the High-Power Committee on
23.01.2008 for its approval was tentative. It was neither final nor binding
upon the said Committee. The multiple revisions carried out at different
stages clearly demonstrate that the conditions contained in tender/bid
document were not immutable. Throughout the elaborated and detailed
scrutiny, no objection was raised by the authority regarding the clauses
presently under challenge. It was, therefore, argued that the variations
between the tender/bid document and the draft JV Agreement were neither
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within the knowledge of A-2 nor legally impermissible nor the variations
proposed in the draft JV Agreement were binding upon the final approval
authorities, which scrutinized the draft JV Agreement in detail having all
the relevant documents, including tender/bid document in their knowledge.
It was further contended that A-2 cannot be singled out for any alleged
illegality committed by the collective body of the Board of Directors of
MSMCL which was subsequently approved by the High-Power Committee
and Infrastructure Committee consisting of multiple members, particularly
when none of the members of those bodies has been prosecuted.
109. He contended that the alleged modification relating to the sale of
shareholdings of SHEL in JV company to the third party did not result in
undue benefit to SHEL. It was contended that SHEL never transferred its
shares in JV company to any third party. Instead, it transferred its 49%
shares in SPV to the third party i.e. JDCL in accordance with the terms of
the JV Agreement, regarding which there was no restriction in the tender/
bid document. It was argued that the restriction or prohibition contained in
the tender/bid document related only to sale of shareholdings to the third
party and did not extend to transfer its shareholdings in SPV formed for the
specific purpose of carrying on the business as per the JV Agreement. The
said transfer of shares of SHEL in SPV was carried out with the approval
of MSMCL, as contemplated under the JV Agreement and was not
prohibited in the tender/bid document. Consequently, the prosecution’s
allegation that SHEL unlawfully gained Rs.15 crores by transferring its
49% shares in SPV to JDCL is misconceived as there was no restriction in
that regard in the tender/bid document. He further pointed out that even in
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the order of charge, this Court did not find any illegality in the said
transaction.
110. He contended that the prosecution has failed to produce any
evidence to demonstrate that clauses incorporated in the draft JV
Agreement relating to sale, transfer or pledge of the shares of JV partner
were without any public interest. It was contended that the prosecution has
admitted that there is no evidence to suggest that the said decision was
actuated by any quid quo pro, illegal gratification or other corrupt
consideration. No allegation of mala fide or ill motive has been attributed
against any of the accused public servants in relation to the modification of
the relavant clauses nor any evidence has been led to that effect.
111. He contended that the judgment of Hon’ble Delhi High Court in
Runu Ghosh Vs. CBI, 2011 SCC Online Delhi 5501 is inapplicable to the
facts of the present case. Reliance has been placed upon the subsequent
judgment in Ashok Kumar Gupta Vs. CBI, Crl. M.C. No.194/2019 decided
on 14.08.2025, wherein the Hon’ble Delhi Court distinguished Runu
Ghosh (supra) and observed misconduct by public servant arises only if it
results in pecuniary advantage to a private party by disregarding
safeguards intended to public interest and where a demonstrable nexus
exists between the conduct of the public servant and such pecuniary gain to
the private party. He argued that as per Runu Ghosh (supra), mens rea may
not always be necessary for indicting the public servant but demonstrable
nexus between his conduct and pecuniary gain to the private party must be
established to bring him within the ambit of Section 13(1)(d)(iii) PC Act. It
was submitted that in the instant case, no such nexus has been established
by the prosecution between accused public servants and SHEL.
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112. It was also contended that there is no legal prohibition or restriction
in altering or modifying a term of a tender/bid document, which is merely
an invitation to offer. Further, the prosecution has not alleged any
criminality against the other public servants who modified the other terms
and conditions in the JV Agreement vis-a-vis tender/bid document. Thus,
the prosecution has implicitly acknowledged that the terms and conditions
of the tender/bid document were capable of being altered. It was further
submitted that there is no evidence that the impugned clauses in JV
Agreement were unfair, arbitrary or against public interest.
113. It was contended that the prosecution has not examined any official
from MSMCL, Government of Maharashtra or Ministry of Coal to
establish that the said changes in the JV Agreement in relation to sale or
pledge of shares of SHEL in JV company were prejudicial or detrimental
to the interest of MSMCL or Government of Maharashtra. On the contrary,
it was argued, the same were beneficial to the MSMCL inasmuch as any
pledge was permissible only in respect of ‘Reserved Matters’, while sale of
shares was subject to MSMCL’s right of first refusal. Thus, in the JV
Agreement, MSMCL retained effective control and discretion on both the
eventualities and no unfettered right was conferred upon SHEL to deal
with its shareholdings in the JV company independently.
114. On the strength of the aforesaid submissions, he contended that the
prosecution has utterly failed to establish the charges against A-2 Sh.
Avinash Warjukar, the then Chairman, MSMCL beyond reasonable doubt
and therefore, he is entitled to be acquitted for the charges framed against
him.
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115. Sh. Sanjay Kumar, Learned ALA for CBI assisted by the IO
Inspector (Retd.) Sh. Jairaj Katiyar has reiterated his arguments and
countered the arguments of the defence. In addition to the reiteration, he
contended that even if some amount was received by MSMCL from SHEL,
it was far outweighed by consequential and continuing financial loss
caused by delay and non-performance in development of Adkoli Coal
Block. He contended that even if the experience/completion certificates of
SBEA (consortium partner) enclosed with the bid of SHEL are considered,
SHEL was not technically eligible vis-a-vis scope of work and technical
requirement mentioned in the tender/bid document. It was, therefore,
contended that the act of A-1 Sh. D.G. Philip in declaring SHEL as
technically eligible amounts to criminal misconduct as by declaring a
technically ineligible company as eligible, he obtained pecuniary
advantage to it by paving the way for entering into JV Agreement with
MSMCL. He contended that similarly, both the accused public servants
committed the offence of criminal misconduct by incorporating provisions
relating to sale, transfer and pledge of the shareholdings of SHEL in JV
company in the draft JV Agreement which were inconsistent with the
tender/bid document. He contended that the said incorporation was without
any public interest and resulted in obtaining pecuniary advantage to SHEL.
He concluded with the submissions that the prosecution has proved the
respective charges against both the accused public servants beyond
reasonable doubt by leading cogent, consistent and convincing evidence.
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116. It is a settled principle of criminal law that in a criminal trial, the
accused is presumed to be innocent till he is proved guilty beyond any
reasonable doubt. Further, prosecution has to stand on its own legs and it
has to prove its case against the accused beyond any reasonable doubt by
leading cogent and conclusive evidence. Burden of proving its case
exclusively lies upon the prosecution and in order to succeed, it has to
discharge the said burden. It is for the prosecution to travel the entire
distance from ‘may have’ to ‘must have’. If the prosecution appears to be
improbable or lacks credibility, the benefit of doubt necessarily has to go to
the accused.
117. In the succeeding paragraphs, the nature of the admitted facts and
the contentious issues shall be discussed, followed by an analysis of the
facts deduced from the admissible and credible evidence in relation to the
contentious issues. Thereafter, it shall be examined whether the facts so
established satisfy the essential ingredients of the charged offences under
consideration, culminating in the decision thereon.
XIV. ADMITTED FACTS
118. Before adverting to the contentious issues, it is desirable and proper
to delineate the relevant admitted facts which stand corroborated during
trial of this case. The said facts are as under:-
(i) The Ministry of Coal, Government of India vide letter dated
02.08.2006 Ex.P-288/PW-15 (D-270, PDF Page No.10120),
allocated Adkoli Coal Block situated in Wardha Coal Field,
Maharashtra to MSMCL, a Government of Maharashtra
Undertaking, subject to inter alia condition that coal mining shall be
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carried out by MSMCL or a separate company to be created with
participation of MSMCL provided that the separate created company
is a Government company eligible to do coal mining as per the
provisions of Coal Mines (Nationalization) Act, 1973. Significantly,
apart from Adkoli Coal Block, three other coal blocks, namely, Gare
Palma Sector-II, Agarzari and Warora were also allocated to the
MSMCL with similar conditions. However, the present case is in
relation to the alleged illegalities committed qua Adkoli Coal Block
only;
(ii) A-2 was the Chairman, MSMCL from 11.12.2006 to
28.06.2010, while A-1 was the Managing Director, MSMCL from
13.09.2007 to 28.02.2009. In view of MSMCL’s proposed entry into
coal mining, the Board of Directors, MSMCL in its 160th meeting
held on 22.12.2006 resolved to appoint a Financial Consultant and
subsequently constituted Management Committee for the said
purpose in its 162nd meeting held on 25.06.2007. The minutes of the
said two meetings are Ex.P-220/PW-7 (D-41, PDF Page Nos.5068-
5090) and Ex.P-118/PW-7 (D-41, PDF Page Nos. 5109-5134)
respectively;
(iii) Thereafter, vide OM dated 01.09.2007, the Government of
Maharashtra Ex.P-270/PW-7 (D-139, PDF Page Nos.7037-7038)
constituted a High-Power Committee under the Chairmanship of
Hon’ble Minister (Mining) to scrutinize the bids, examine financial
matters in context of coal blocks allotted to MSMCL, in order to
make MoU and approve the proposed Joint Venture Agreements for
mineral development;
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(iv) Pursuant thereto, MSMCL appointed aXYKno as its Financial
Consultant vide final appointment letter dated 18.01.2008
Ex.P-566/PW-20 (D-311, PDF Page Nos.10648-10649). The scope
of its engagement included preparation of tender/bid documents,
evaluation of bids and drafting of the JV Agreement;
(v) After approval of the Board of Directors, MSMCL in its 165 th
meeting held on 07.02.2008 invited bids on 13.02.2008 and
14.02.2008 for selction of JV partners for development of all the
four allocated coal blocks, including Adkoli Coal Block with last
date of submission of bids as 14.03.2008. The minutes of the said
meeting are Ex.P-118/PW-7 (D-41, PDF Page Nos.5156-5161). The
tender/bid document Ex.P-10 (D-44, PDF Page Nos.5284-5331) was
prepared by Financial Consultant, aXYKno and in conformity with
the allocation letter, it contemplated the incorporation of JV
company as a Government company in which MSMCL would hold
51% equity on a cashless basis. It also prescribed technical
eligibility criteria for bidders and prohibited the JV partners from
selling or creating third party rights in, or pledging, its shareholding
in the proposed JV company to the third party during the currency of
the JV Agreement. In addition to the other technical eligibility
criteria, the tender/bid document required the bidder should have
minimum 03 years experience in actual mining of open cast or
underground mines, including survey and exploration, and must
have adequate man-power consisting of statutorily competent,
qualified & experienced persons;
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(vi) In response to the said invitation/advertisement, 13 companies
including SHEL submitted their bid for Adkoli Coal Block. The
SHEL submitted its technical and financial bid on 13.03.2008
Ex.P-217/PW-9 (D-28, PDF Page Nos.2611-2951). All the bids,
including bids for other three coal blocks were opened on
14.03.2008 at 04:00 pm in the Office of MSMCL by the Tender
Committee consisting of five members, including Chairman (A-2)
and MD (A-1), MSMCL. However, technical analysis of the bid was
not conducted in the said meeting and the representatives of the
bidders were informed that they have to give their presentations
before technical analysis. The minutes of the said meeting are
Ex.P-225/PW-7 (D-33, PDF Page Nos.4503-4504). Even as per
tender/bid document, bidders were required to make presentations.
On 07.04.2008, all bidders were sent fax and given time for making
presentations Ex.P-258/PW-14 (D-369, PDF Page Nos.11833-
11834). However, as per the prosecution, no document was found in
relation to the alleged presentations made by the bidders in the
Office of aXYKno/Financial Consultant on 10.04.2008;
(vii) The meeting of Management Committee, MSMCL, chaired
by A-2 and attended by its three other members, namely, A-1 Sh.
D.G. Philip, PW-21 Dr. Anil Pophare and Sh. R. Ramakrishnan,
Director, aXYKno was also convened on 10.04.2008. As per
minutes of the said meeting Ex.P-5 (D-36, PDF Page Nos.4650-
4666), A-1 announced the names of the parties in the said meeting
who were technically qualified for all the four coal blocks. Out of 13
bidders for Adkoli Coal Block, 12 bidders including SHEL were
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declared technically qualified whose commercial bids were decided
to be opened. Thereafter, SHEL emerged as the highest (H-1) bidder
for Adkoli Coal Block as it quoted the highest sweat money over and
above the reserve price of Re.1 i.e. Rs.36.06 + Re.1 = Rs.37.06 per
ton of the geological reserve. The recommendation was approved by
the Board of Directors, MSMCL in its 167 th meeting held on
24.04.2008. The minutes of the said meeting are Ex.P-236/PW-7
(D-42, PDF Page Nos.5258-5279). Thereafter, it was forwarded to
the High-Power Committee appointed by the Government of
Maharashtra for the final approval. In the said meeting, three other
JV partners of MSMCL were also approved for three other different
coal blocks and their proposals were also forwarded to High-Power
Committee for approval;
(viii) During the course of investigation, the prosecution recovered
an unsigned tabulation sheet Ex.P-114/PW-6 (D-33, PDF Page
Nos.4337-4339) containing handwritten remark of A-1 indicating
that SHEL was technically ineligible for want of actual mining
experience and other qualifying requirements. However, despite the
said note, A-1 declared SHEL as technically qualified and its
financial bid was considered;
(ix) The communications dated 16.05.2008 Ex.P-107/PW-4
(D-161, PDF Page Nos.8418-8421) and 13.06.2008
Ex.P-570/PW-19 (D-153, PDF Page Nos.7699-7704) were
addressed by A-1 to the Principal Secretary (Industries), Department
of Industries, Energy and Labour, Government of Maharashtra
Mantralaya, Mumbai requesting consideration and approval of the
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successful bidders in respect of the four coal blocks, including
SHEL for the Adkoli Coal Block. The copies of bid documents and
their terms & conditions were also submitted as Annexure-1 along
with the said letters/communications;
(x) On 22.07.2008, the Government of Maharashtra amended the
resolution dated 01.09.2007 and revised the procedure to the extent
that the Board’s recommendations are to be submitted to the High-
Power Committee along with the detailed description & justification
and after its approval by the High-Power Committee, it be submitted
before the Infrastructure Committee of Cabinet for final decision.
The said OM dated 22.07.2008 is Ex.P-166/PW-7 (D-145, PDF Page
Nos.7079-7081). The High-Power Committee meeting was
convened on 01.08.2008 under the Chairmanship of Hon’ble
Minister (Industries & Mining) to deliberate upon the issue related
to the approval of successful bidders for all the four coal blocks,
including Adkoli Coal Block. The minutes of the said meeting are
Ex.P-410/PW-18 (D-140, PDF Page Nos.6907-6909). In the said
meeting, the High-Power Committee raised certain queries which
were communicated to MSMCL vide letter dated 14.08.2008
Ex.P-410/PW-18 (D-31, PDF Page No.3892). Vide letter dated
24.08.2008 Ex.P-96/PW-4 (D-153, PDF Page Nos.7798-7805), A-1
replied to the said queries;
(xi) The High-Power Committee, in its meeting held on
20.11.2008, under the Chairmanship of Hon’ble Minister (Industries
& Mining), expressed no objection in principle to the proposal
concerning the Adkoli Coal Block, but directed MSMCL to prepare
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and submit a draft JV Agreement for further consideration. Notably,
in the said meeting, the High-Power Committee rejected the
recommendation made by the MSMCL with respect to Gare Palma
Sector-II Coal Block. The minutes of the said meeting are
Ex.P-186/PW-7 (D-140, PDF Page No.6902);
(xii) Thereafter, vide letter dated 01.12.2008 of MSMCL
Ex.P-258/PW-14 (D-369, PDF Page No.11797), SHEL was
requested to submit a draft JV Agreement. As per minutes of 171 st
meeting of the Board of Directors of MSMCL held on 15.12.2008
Ex.P-194/PW-7 (D-148, PDF Page Nos.7269-7280), MSMCL
prepared a draft JV Agreement Ex.D-8/DW-1 (PDF Page
Nos.25887-25913) before 15.12.2008, which was enclosed
therewith. Further, the minutes reflect that SHEL did not submit the
draft JV Agreement till that date and it was again requested to
submit the same. The said minutes further demonstrate that in the
said meeting, the Financial Consultant, aXYKno was asked to obtain
draft JV Agreements from the JV partners, hear them, prepare final
draft of agreement and submit it to MD, MSMCL;
(xiii) In response to the minutes of the 171 st Board meeting, the
Financial Consultant, aXYKno gave its 1st draft of the Joint Venture
Agreement with its email dated 19.12.2008 (D-738, PDF Page
No.25560). According to this draft, sale or pledge of shares of JV
partner in the JV company to the third party was prohibited.
However, share transfer of JV partner in JV company to the affiliate
of JV partner was partially permitted subject to certain conditions
contained therein, including a condition that the JV company shall
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remain a Government company and the affiliate shall accept the
obligations of the transferring party under this agreement.
Significantly, this provision was in consistent with the tender/bid
document, which prohibited the transfer of shares of JV partner in
JV company in favour of third party only but did not impose any
restriction on transfer of shares of JV partner in JV company to its
affiliates or SPV formed for the specific purpose of carrying on the
business as per the agreement;
(xiv) The Financial Consultant, aXYKno submitted its second draft
on 12.01.2009 Ex.P-347/PW-7 (D-32, PDF Page No.4076) with
similar terms and conditions as contained in its first draft except the
following relevant modifications:-
(a) It introduced a Clause 6.4.1 under the heading of
‘Reserved Matters’ to the effect that the pledge of shares of JV
partner in JV company in favour of third party is permissible
subject to the approval of at least one Director nominated by
the MSMCL and at least one Director nominated by JV
partner;
(b) It introduced another Clause 12.4.3 under the heading
of ‘Share Transfer to Affiliates’ a provision that JV partner
may transfer its shares to an SPV formed for the specific
purpose of carrying on the business as per this agreement and
the said SPV will be required to execute a Deed of Adherence;
and
(c) ‘Agreed Proportions’ means the ratio which the Share
holdings of MSMCL and JV partner (together with that ofCBI/318/2019 RC No.220 2015 E 0003 CBI Vs. Dominic Gabriel Philip & Anr.
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their respective associates and affiliates) bear in the equity
share capital to each other shall be in proportion of 51:49;
(xv) Subsequently, on 19.01.2009, the Financial Consultant,
aXYKno submitted its third and last draft of JV Agreement
Ex.P-348/PW-7 (D-742, PDF Page No.25917) which is exactly same
as its first draft dated 18/19.12.2008. Thus, in the third draft, the
Financial Consultant, aXYKno deleted the changes introduced by it
in its second draft dated 12.01.2009;
(xvi) The abovementioned third draft of the JV Agreement was
considered by the Board of Directors, MSMCL in its 172nd meeting
held on 21.01.2009 under the Chairmanship of A-2 and its other
members, including A-1 Sh. D.G. Philip, MD, MSMCL. Its minutes
are Ex.P-278/PW-7 (D-42, PDF Page No.1529) and its true English
translation is Ex.P-194/PW-7 (D-148, PDF Page No.7264). As per
the said minutes, the aforementioned draft JV Agreement was
discussed paragraph wise and necessary amendments were made in
it. The draft of the agreement was finalized and unanimously
approved. In the meeting, it was decided that copy of the approved
draft be sent to the Government for final approval. Accordingly, on
23.01.2009, the draft JV Agreement approved by the Board of
Directors, MSMCL was sent to High-Power Committee for its
approval. The said draft is Ex.P-102/PW-4 (D-158, PDF Page
No.8354). The said draft JV Agreement omitted the prohibition of
sale/transfer of the shares of the JV partner in JV company to the
third party and in its Clause 12.4 permitted the same subject to the
condition contained under the said clause. The said stipulation was
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in contradiction with the bid document and the draft of JV
Agreement submitted by the Financial Consultant, aXYKno. In
consistence with the bid document, Clause 12.2 of the said draft JV
Agreement prohibited pledge of the shareholdings of the JV partners
in JV company to any third party. However, at the same time, its
Clause 6.4.1 with title ‘Reserved Matters’ permitted pledge of shares
by JV partner in JV company in favour of any third party with the
approval of one Director nominated by the MSMCL and one
Director nominated by SHEL;
(xvii) The said draft adopted, in toto, the provisions contained in the
second draft of the Financial Consultant, aXYKno dated 13.01.2009,
in so far as they related to the transfer of shareholdings of JV partner
to its affiliates and the said provisions were incorporated in its
Clause 12.3. The said JV Agreement further stipulated that the
aggregate shareholdings of MSMCL and SHEL, together with that
of their respective associates and affiliates, in the JV company
would at all times remain in the ratio of 51:49 i.e. 51% and 49%
respectively. Pertinently, at the cost of repetition, it is reiterated that
the aforementioned provisions in relation to transfer of shares of
SHEL to its affiliates or SPV formed for the specific purpose of
carrying on the business as per the JV Agreement, were not in
contradiction with the tender/bid document as no such prohibition or
restriction was contained in the tender/bid document;
(xviii)The minutes of High-Power Committee meeting held on
30.01.2009 have not been placed on record. However, minutes of
High-Power Committee meeting held on 09.04.2009 (D-155, PDF
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Page No.8224) and the letter dated 31.01.2009 written by A-1 to the
Principal Secretary, Department of Industries, Energy and Labour,
Government of Maharashtra Ex.P-342/PW-7 (D-31, PDF Page
No.3649) finds mention about the High-Power Committee meeting
held on 30.01.2009. As per the said documents, it can be
conclusively inferred that in the meeting held on 30.01.2009, the
High-Power Committee directed that the proposal regarding the
draft JV Agreement should be resubmitted for consideration to the
High-Power Committee to resolve the views of the different
departments;
(xix) Further, the said letter of A-1 dated 31.01.2009 was written
with reference to the High-Power Committee meeting held on
30.01.2009 in respect of draft JV Agreement qua Agarzari Coal
Block for M/s Adani Enterprises, proposed JV partner, as it had
raised certain issues, including its right to pledge its shareholdings in
JV company in the draft JV Agreement. Significantly, the draft JV
Agreement that was sent on 23.01.2009 was common for the Adkoli
as well as Agarzari Coal Block. In the said letter, A-1 made a
comment in regard to issue at Srl. No.10 raised by M/s Adani
Enterprises and its relevant portion is reproduced as under:-
“The Board in its joint intellectual capacity has considered all
the aspects of the say of the J.V. partners and has incorporated
all those that are in conformity with the tender terms and
conditions. Those aspects that are not in conformity with the
tender documents were not incorporated in the Joint Venture
Agreement. However, the High-Power Committee may like to
consider the say of the J.V. Partner and take suitable decision
as seem fit.”
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(xx) The 173rd meeting of Board of Directors, MSMCL was held
on 25.02.2009 and its minutes are Ex.P-9 (D-148, PDF Page
No.7518). As per the said minutes in Subject No. 13 with title
‘Progress in respect of Joint Venture Project Agreement of Agarzari,
Warora and Marki-Zari-Jamni-Adkoli Coal Blocks’, it was recorded
that the High-Power Committee meeting held on 13.02.2009 at
Mumbai directed Managing Director, MSMCL to obtain comments
of financial advisor and to submit them to High-Power Committee.
It was further recorded that accordingly, financial advisor prepared
its comments and same were placed before the Board for approval.
They were discussed in detail and were approved with some
amendments. Thereafter, it was resolved that the said approved
amended draft of comments be placed before the High-Power
Committee. The comments of the Financial Consultant, aXYKno
approved in the 173rd meeting of Board of Directors, MSMCL were
communicated by A-1 to the Principal Secretary (Industries),
Department of Industries, Energy and Labour, Government of
Maharashtra vide letter dated 26.02.2009 Ex.P-409/PW-18 (D-153,
PDF Page No.7559). Significantly, A-1 retired as MD, MSMCL on
28.02.2009;
(xxi) On 09.04.2009, the High-Power Committee, in its meeting
under the Chairmanship of Chief Secretary, discussed in detail the
draft of the JV Agreement. The minutes of the said meeting are
available at D-155, PDF Page Nos.8224-8228. In the said meeting, a
presentation was made by the Financial Consultants Sh.
Ramakrishna and Sh. Hetal of aXYKno on the entire bidding
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process for the selection of the JV partner for the development of the
coal blocks allotted to the MSMCL. The presentation covered the
matters, including background of the tender process;
(xxii) In subsequent meeting of the High-Power Committee under
the Chairmanship of the Hon’ble Chief Minister, Government of
Maharashtra held on 04.05.2009, the JV Agreement (D-156, PDF
Page Nos.8250-8298) was approved and it was resolved that the
proposal be put up before the Infrastructure Committee for final
approval. The minutes of the said meeting held on 04.05.2009 are
Ex.P-284/PW-7 (D-134, PDF Page Nos.6802-6803). Significantly,
in relation to the impugned conditions of sale and pledge of the
shareholdings of JV partner (SHEL) in JV company to the third
party, no changes/modifications were made in the said approved JV
Agreement, vis-a-vis the draft JV Agreement sent by A-1 along with
his letter dated 23.01.2009;
(xxiii)On 16.06.2009, Sh. A.M. Khan, Principal Secretary
(Industries) prepared a detailed Cabinet note/proposal (D-146, PDF
Page Nos.7160-7170) to be put up before the Cabinet Committee on
Infrastructure under the Chairmanship of Hon’ble Chief Minister,
Government of Maharashtra for approval of the draft JV Agreement
with the proposed JV company (partner), in accordance with the
recommendations made by High-Power Committee for development
of mineral, its usage and sales in the coal blocks allotted to the
MSMCL, including Adkoli Coal Block. In Para No.5 of the said
detailed note, the main conditions as per the tender/bid document
dated 14.02.2008 were delineated and in its Para No.8, the salient
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features of the proposed JV Agreement were discussed. The same
was approved by the Cabinet Committee on Infrastructure under the
Chairmanship of Hon’ble Chief Minister, Government of
Maharashtra in its meeting held on 18.06.2009 Ex.P-180/PW-7
(Colly) (D-134, PDF Page No.6808). Thus, the Infrastructure
Committee also approved the draft of JV Agreement sent by A-1
along with his letter dated 23.01.2009 without any change in the
stipulations related to sale and pledge of the shares of JV partners in
JV company to the third party and their transfer to its affiliates;
(xxiv) The said approval was communicated by the Government of
Maharashtra to the MSMCL vide letter dated 01.08.2009
Ex.P-119/PW-7 (D-135, PDF Page No.6806). Accordingly, Sh. N.K.
Sudhanshu, the then MD, MSMCL issued letter of intent to SHEL
and the same is Ex.P-250/PW-12 (D-29, PDF Page No.3312);
(xxv) Thereafter, MSMCL proposed certain modifications in the
draft JV Agreement approved by Infrastructure Committee,
Government of Maharashtra and in that regard, a letter was written
by Sh. N.K. Sudhanshu, the then MD, MSMCL to the Government
of Maharashtra. The Government of Maharashtra, vide its letter
dated 23.10.2009 to MD, MSMCL, communicated that it accepted
total 12 proposed modifications as detailed in chart annexed with the
said letter. The said letter along with chart of the approved
modifications in JV Agreement is Ex.P-258/PW-14 (D-369, PDF
Page Nos.11732-11735);
(xxvi) The final JV Agreement incorporated the aforementioned 12
modifications and it was finally executed between MSMCL and
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SHEL on 21.11.2009 Ex.P-260/PW-14 (D-61, PDF Page Nos.5847-
5895). The 02 out of the said 12 modifications that are relevant for
the adjudication of the present case are reproduced as under:-
(a) ‘except as provided in this agreement’ was inserted at
the end of Para No.12.2 regarding right to pledge the shares
of JV partner in JV company; and
(b) In the end of the Para No.12.3.3, under the heading of
‘Share transfer to affiliates’, the following sentences were
inserted:-
‘It will however be mandatory for the Party No.2 to
maintain atleast 51 percent share in the SPV at all times
during the period of the agreement. In case of consortium, the
consortium partners should have a minimum cash equity
holding of 5% in the SPV’.
(xxvii) In accordance with Clause 1 of JV Agreement dated
21.11.2009 Ex.P-260/PW-14 (D-61, PDF Page Nos.5847-5895), a
JV company, namely, M/s MSMCL Adkoli Natural Resources
Limited was incorporated between MSMCL and SHEL on
18.02.2010;
(xxviii) M/s Sunil Hi-Tech Energy Private Limited was
incorporated on 07.02.2008 by the promoters of SHEL which was
later decided to be used as SPV as per the clause 12.3.3 of JV
Agreement dated 21.11.2009. Further, M/s SHEL Investment
Consultancy Services Limited was incorporated on 20.08.2009 as an
affiliate of SHEL, which was later used for transfer of shareholdings
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of SHEL in JV company in accordance with Clause 12.3 of the JV
Agreement dated 21.11.2009;
(xxix) JDCL was subsidiary of Jaypee Infra Ventures and it
was incorporated on 05.12.2007;
(xxx) On 31.10.2009 i.e. before the execution of JV
Agreement dated 21.11.2009, a Term Sheet was signed between
SHEL and Jaiprakash Associates Limited Ex.P-318/PW-16 (D-275,
PDF Page Nos.10128-10132). This Term Sheet provided the
indicative terms and conditions to form the basis of discussions for
the proposed acquisition of shares of Sunil Hi-Tech Energy Private
Limited (SPV) by Jaiprakash Associates Limited or its associates or
affiliates or nominees (JDCL is associate/affiliate of Jaiparkash
Associates Limited). It provided that M/s Sunil Hi-Tech Energy
Private Limited is a private limited company owned/to be owned
entirely by SHEL. It further provided that M/s Sunil Hi-Tech Energy
Private Limited will be a Special Purpose Vehicle (SPV) formed as
holding/investment company to hold 49% stake (of the JV partner)
in the JV company to be incorporated in joint venture with MSMCL.
The Term Sheet noted that considering the requirement of MSMCL
stipulated in the draft JV Agreement, in case a Special Purpose
Vehicle (SPV) of SHEL is made a JV partner (instead of SHEL
itself) in the JV company, SHEL shall continue to hold at least 51%
share in the Special Purpose Vehicle (SPV) at all times during the
period of the JV Agreement and Jaiprakash Associates Limited
intends to acquire 49% of the equity share capital of SHEL in the JV
company having a face value of Rs.10 each (Rupees Ten only) from
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SHEL. The purchase consideration towards acquiring 49% of the
paid-up share capital of the company was fixed as Rs.15 crores. On
05.11.2009, a sum of Rs.5 crores was credited by Jaiprakash
Industries Limited in the account of SHEL Ex.P-354/PW-17 (D-172,
PDF Page No.8443);
(xxxi) On 25.02.2010, a Deed of Adherence was executed
between MSMCL, SHEL and M/s Sunil Hi-Tech Energy Private
Limited whereby entire 49% shareholding of SHEL in JV company
was transferred in favour of M/s Sunil Hi-Tech Energy Private
Limited, the SPV Ex.P-240/PW-12 (D-62, Page Nos.113-116, also at
PDF Page No.11728). Simultaneously, M/s Sunil Hi-Tech Energy
Private Limited (SPV) agreed to become bound by the JV
Agreement in the same manner as it had been an original party to the
agreement as the Existing Shareholder (SHEL). Consequently, the
SPV became the successor-in-interest to SHEL under the JV
Agreement.
(xxxii) On 23.03.2010, another Deed of Adherence was
executed between SHEL (as existing shareholder), SHEL Investment
Consultancy Services Limited (as new shareholder), Sunil Hi-Tech
Energy Private Limited (SPV) (as the ‘company’), MSMCL and
MSMCL Adkoli Natural Resources Limited (Joint Venture
company) Ex.P-237/PW-12 (Colly) (D-62, PDF No.5918). This
deed recorded that the existing share holder (SHEL) has entered into
a Joint Venture Agreement with MSMCL relating to development
and operation of Adkoli Coal Block through Joint Venture Company,
MSMCL Adkoli Natural Resources Limited. It also recorded that the
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existing shareholder (SHEL) and company (SPV) have entered into
a Deed of Adherence with MSMCL on 25.02.2010 wherein all the
rights and obligations of the existing shareholder as the JV partner
of MSMCL are transferred to the company (being a SPV of the
existing shareholder) as permitted under Clause 12.3.3 and Clause
14.5 of the Agreement. This Deed also recorded that the company
being SPV promoted by the existing shareholder, the existing
shareholder has to maintain at least 51% shareholding in the SPV at
all times during the period of the JV Agreement as per Clause
12.3.3. The MSMCL, vide its letter dated 30.03.2010
Ex.P-258/PW-14 (D-369, PDF Page No.11654), permitted existing
shareholder to hold such 51% shares in the company along with its
affiliate companies. The Deed recorded that the new shareholder
(SHEL Investment Consultancy Services Limited) proposes to
purchase 71,04,240 shares of the M/s Sunil Hi-Tech Energy Private
Limited (SPV) (constituting 37.50% of shareholding of SHEL of JV
company held in SPV) from existing shareholder (SHEL) for a value
of Rs.17 each aggregating to Rs.12,07,72,080/- (Rupees Twelve
Crores Seven Lakhs Seventy Two Thousand and Eighty Only).
Simultaneously, M/s SHEL Investment Consultancy Services
Limited (SHEL affiliate) agreed to become bound by the JV
Agreement in the same manner as it had been an original party to the
agreement as the Existing Shareholder (SHEL);
(xxxiii) After the aforementioned two transactions dated
18.02.2010 and 23.03.2010, 37.50% of the shares of M/s Sunil Hi-
Tech Energy Private Limited (SPV) were owned by M/s SHEL
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Investment Consultancy Services Limited and 62.50% of the shares
were held by SHEL. It is significant to note that the aforementioned
entire issued share capital of SPV represented the 49% of the equity
stake in the JV company which had earlier been held by SHEL alone
(JV partner);
(xxxiv) In the 181st meeting of the Board of Directors of
MSMCL held on 23.12.2010, Ex.P-140/PW-7 (D-78, PDF Page
No.6059), it was resolved that the transfer of 49% (including 5%
shares of Technical Partner) equity shares in SPV Sunil Hi-Tech
Energy Private Limited by SHEL to Jaypee Group be approved,
subject to the condition that the transfer and transferee company
shall execute necessary undertaking, Deed of Adherence and subject
to the verification of the technical competency of the transferee
company by the Managing Director;
(xxxv) Pursuant to the approval of the Board of Directors,
MSMCL, 49% shares of SHEL in JV company held by SPV were
sold to JDCL on 21.04.2011 Ex.P-263/PW-14 (D-373, PDF Page
Nos.12066-12091);
(xxxvi) Further, on the same date i.e. on 21.04.2011, Share
Pledge Agreement was also executed between M/s SHEL
Investment Consultancy Services Limited (SHEL affiliate) and
JDCL Ex.P-263/PW-14 (D-373, PDF Page Nos.11994-12008). As
per this agreement, M/s SHEL Investment Consultancy Services
Limited, which was holding 71,04,240 shares of M/s Sunil Hi-Tech
Energy Private Limited (SPV), equal to 37.50% of the total equity
were pledged to JDCL along with all rights, including voting rights
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as a security towards the subscription of 1,200 optionally convertible
debentures of Rs.1 lakh each for a total consideration of Rs.12
Crores;
(xxxvii) A Debenture Subscription Agreement dated 31.03.2010
was executed between M/s SHEL Investment Consultancy Services
Limited (SHEL affiliate) and JDCL, whereby JDCL subscribed to
1,200 convertible debentures issued by the SHEL affiliate having a
face value of Rs.1 lakh each and accordingly, paid the consideration
of Rs.12 crores to M/s SHEL Investment Consultancy Services
Limited (SHEL affiliate) on 21.04.2011. Significantly, this
transaction is unrelated to the JV Agreement and the
prosecution/CBI has failed to disclose what offence, if any, was
committed by either of the parties owing to the said transaction;
(xxxviii) In terms of Clause 3.8A of JV Agreement, following
amount was received by MSMCL from SHEL:-
Srl. No. Date of Payment Amount in Rupees Remarks
1 28.04.2008 11,25,00,000/- 15% of Sweat Money Paid
2 18.08.2009 7,40,00,000/- 10% of Sweat Money Paid
3 15.03.2010 to 42,72,085/- Amount spent by M/s. MSMCL and
27.04.2011 later on reimbursed by M/s SHEL.
4 29.07.2010 to 9,62,14,574/- Amount received as interest on
31.03.2014 deferred sweat money.
Total 28,69,86,659/-
(xxxix) The following amount was received by SHEL and its
subsidiary/associates from JDCL on account of purchase of shares,
subscription to the debentures and unsecured loan:-
Srl. No. Date of Payment Amount in Remarks
Rupees
1 05.11.2009 to 15,00,00,000/- On account of sale of 91, 72,000
21.04.2011 shares of SPV i.e. M/s Sunil Hitech
Energy Pvt. Ltd. (49% shareholdings)
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2 21.04.2011 12,00,00,000/- Issue of 1200 debentures by M/s
SHEL affiliate i.e. M/s SHEL
Investment Consultancy (P) Ltd.
3 23.05.2011 to 12,99,58,000/- Unsecured loan on account of payment
26.05.2015 of interest on deferred sweat money
able to M/s MSMCL.
Total 39,99,58,000/-
(xl) JDCL also purchased 35 lakh shares of M/s Gangakhed Sugar
and Energy Private Limited (subsidiary of SHEL) at face value of
Rs.10/- with premium of Rs.90/- per share (total value Rs.100/-per
share) for Rs.35 crores. Notably, this transaction also has no relation
or connection to the JV Agreement. Further, the prosecution/CBI has
also failed to disclose what offence, if any, was committed by either
of the parties on account of the said transaction; and
(xli) Therefore, in total, Rs.74,99,58,000/- was received by SHEL
or its subsidiary company from JDCL on account of purchase of
shares, issuance of debentures and unsecured loans.
XV. THE ADMITTED/CONCLUDED ASPECTS EXCLUDED FROM
CONSIDERATION IN THE PRESENT JUDGMENT
119. In the instant case, no charge was framed in respect of certain
allegations made in the charge-sheet and the concerned accused persons
stood discharged in relation thereto, at the stage of framing of charge.
Furthermore, no evidence has emerged during the course of trial to
substantiate the said allegations. Consequently, those aspects have attained
finality and fall outside the scope of adjudication in the present judgment.
They neither required any discussion on merits nor call for any finding in
the subsequent part of this judgment. The said aspects are as follows:-
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in the appointment of Financial Consultant, aXYKno by MSMCL or
in the alleged exorbitant fees paid by MSMCL to the said Financial
Consultant towards the services rendered by it. Consequently, none
of the accused persons is liable to be proceeded against or indicted
on the basis of the said unsubstantiated allegation;
(ii) Declaration of SHEL as technically eligible bidder: In respect
of the allegations relating to declaration of SHEL technically eligible
despite its alleged ineligibility, the alleged criminal misconduct of
the public servant A-1 was not found to be in conspiracy or
connivance with any other person, including SHEL. Accordingly,
the said allegation survives for consideration only in relation to
alleged criminal misconduct of A-1;
(iii) Deviation in JV Agreement: The allegation regarding
incorporation of the clauses related to sale, transfer or pledge of
shareholdings of JV partner (SHEL) in JV company in JV
Agreement dated 21.11.2009 contrary to the bid document dated
14.02.2008, survives only for consideration in the context of the
alleged criminal misconduct of A-1 and A-2 public servants, acting
without public interest in connivance with SHEL and not in relation
to the remaining charge-sheeted accused persons;
(iv) Execution of JV Agreement and subsequent shareholding
transactions: The allegations relating to cheating and criminal
conspiracy in execution of JV Agreement dated 21.11.2009 and
subsequent transactions concerning the shareholdings of SHEL in
JV company with its affiliate, SPV and JDCL, survive only for
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consideration in context of the alleged criminal misconduct of A-1
and A-2 public servants without public interest in connivance with
SHEL and not in relation to the remaining charge-sheeted accused
persons; and
(v) Quid Pro Quo/Illegal Gratification: The allegations of quid
pro quo or any ulterior consideration including illegal gratification
to the accused public servants by any person in connection with the
alleged offences remained wholly unsubstantiated even at a prima
facie level at the stage of charge. Consequently, the said allegations
do not survive for consideration and require no deliberation in the
subsequent part of this judgment.
XVI. CONTENTIOUS ISSUES
120. In the backdrop of the preceding paragraphs, the following
contentious issues survive for determination in the present case:-
(i) Whether declaration of SHEL as technically eligible to bid for
selection as the JV partner of MSMCL, gives rise to any criminality
and if yes, against whom;
(ii) Whether the incorporation in the JV Agreement dated
21.11.2009 of clauses relating to the sale, transfer or pledge of
shares of SHEL in JV company, which allegedly deviated from the
corresponding provisions contained in the tender/bid document,
constitutes any criminal offence and if yes, against whom;
(iii) If issue no.(ii) is answered in affirmative, whether any
transaction was undertaken by SHEL, its affiliate (M/s SHEL
Investment Consultancy Services Limited), the SPV (M/s Sunil Hi-
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Tech Energy Private Limited) and JDCL in accordance with the
impugned terms and conditions related to sale, transfer or pledge of
shares of SHEL in JV company to the third party as incorporated in
the JV Agreement dated 21.11.2009 and if so, whether such
transactions attract any criminal liability; and
(iv) Whether the transactions undertaken by SHEL, its affiliate
(M/s SHEL Investment Consultancy Services Limited), the SPV
(M/s Sunil Hi-Tech Energy Private Limited) and JDCL in
accordance with the remaining terms and conditions of JV
Agreement dated 21.11.2009, particularly those relating to share
transfers to affiliates, in respect of which no deviation from the
tender/bid document has been alleged, attracts any criminality.
XVII. ALLEGATIONS RELATING TO DECLARATION OF
TECHNICALLY INELIGIBLE SHEL AS TECHNICALLY
ELIGIBLE BIDDER
121. The charge in respect of the aforesaid allegation has been framed in
only against A-1 Sh. D.G. Philip, the then MD, MSMCL. Significantly,
despite SHEL being the beneficiary of the impugned decision, it has not be
arraigned as an accused in relation to this allegation. The reason for
excluding SHEL from the said allegation has been succinctly recorded in
the order of charge dated 25.05.2023 in the following terms:-
‘Although by relaxing the conditions for technical requirements, M/s.
SHEL was awarded the tender being H-1, but nothing can be read
into this because this relaxation was for all the 7 ineligible bidders
and not peculiar to M/s. SHEL alone and to win the contract, the
financial bid had to be the highest for which there was no certainty. In
the absence of any allegation in the chargesheet, it is only in the
domain of surmises and conjectures, that after declaring eligible, the
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technically ineligible bid of M/s SHEL, its financial bid was rigged to
make him H-1′.
The aforesaid finding has attained finality as despite a detailed and
comprehensive trial, the prosecution has failed to produce any evidence
warranting a different conclusion in so far as SHEL is concerned.
Accordingly, the aforesaid conclusion recorded at the stage of framing of
charge continues to hold good and does not require any consideration in
the present judgment.
122. Thus, the present allegation is required to be examined in the
backdrop of the findings that have attained finality, namely, that there is no
material or evidence of any connivance between A-1 and SHEL in
declaring SHEL as technically eligible, despite its alleged ineligibility and
that there is no material to establish any quid pro quo, illegal gratification
or ulterior consideration flowing to A-1 for taking the impugned decision.
123. In order to bring home the charge against A-1 for the present
allegation of criminal misconduct punishable under Section 13(1)(d)(iii)
PC Act, the prosecution is required to establish beyond reasonable doubt,
the following facts :-
(i) SHEL did not fulfill the technical eligibility criteria prescribed
under the tender/bid document for selection as the JV partner for
development of the Adkoli Coal Block;
(ii) A-1 was solely responsible for and independently took the
impugned decision declaring SHEL technically eligible, thereby
paving the way for the opening and consideration of its financial
bid; andCBI/318/2019 RC No.220 2015 E 0003 CBI Vs. Dominic Gabriel Philip & Anr.
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(iii) By taking the aforesaid decision, A-1, by abusing his official
position, obtained for SHEL valuable thing or pecuniary advantage
without any public interest.
124. The aforesaid ingredients are required to be examined sequentially
in the light of the oral and documentary evidence adduced by the
prosecution. Failure to establish anyone of the essential ingredients would
be fatal to the prosecution case in relation to the present allegation.
XVII (A). TECHNICAL ELIGIBILITY OF SHEL
125. The first part of this ingredient centers around the allegation of the
prosecution that despite having recorded in the unsigned tabulation sheet
Ex.P-114/PW-6 (D-33, PDF Page Nos.4337-4339) a handwritten remark of
A-1 indicating that SHEL was technically ineligible, he subsequently
declared it to be technically eligible. The said handwritten remark has been
proved by handwriting expert i.e. PW-13 Sh. Vijay Verma, Senior
Scientific Officer, Grade-I, CFSL, CBI, Delhi to be in the handwriting of
A-1. Further, A-1 has also not disputed that the said handwritten remark
was written by him.
126. A-1, however, explained that the aforesaid remark was made before
SHEL submitted a Consortium Agreement/MoU dated 14.03.2008
executed between SHEL and SBEA. According to him, as no Consortium
Agreement or MoU had accompanied the original bid, the experience and
qualification of SBEA could not initially be considered while assessing the
technical eligibility of SHEL. It is his defence that the handwritten remark
merely reflected the position prevailing at that stage. Subsequently, upon
an opportunity being afforded to SHEL and other bidders to remove
deficiencies in their technical bids by furnishing supporting documents in
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terms of the Government Resolution dated 30.04.1994 issued by the
Industry Department, Government of Maharashtra, SHEL submitted the
aforesaid MoU. Consequently, the experience and technical qualification
of SBEA became available for consideration and SHEL, as a consortium
partner with SBEA, was found to satisfy the prescribed technical
eligibility. According to A-1, the earlier handwritten remark, therefore,
ceased to have any relevance after submission of the MoU. His consistent
defence is that the said handwritten remark was a tentative assessment
which was neither recorded during any formal decision making process nor
intended to constitute a final and binding determination regarding the
technical eligibility of SHEL. It is his consistent stand that the said
tentative opinion underwent a legitimate change upon alteration of the
factual matrix, namely, the subsequent furnishing by SHEL of the deficient
supporting document i.e. MoU in a legally permissible manner.
127. The Government Resolution dated 30.04.1994 issued by the Industry
Department, Government of Maharashtra prescribes the procedure
governing the ‘two envelope system’. The said resolution provides that
where shortcomings are noticed in a technical bid or supporting documents
are found to be deficient, the bidder may be permitted to furnish such
documents before opening of the commercial bids so as to ensure receipt
of the best competitive offers. Thus, the resolution expressly contemplates
curing deficiencies in the technical bid before consideration of the
financial bids.
128. It is the specific defence of A-1 that in conformity with the aforesaid
Government Resolution, SHEL as well as other bidders, whose technical
bids were found deficient were granted an opportunity to remove such
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deficiencies by furnishing the requisite supporting documents. Availing the
said opportunity, SHEL submitted the MoU dated 14.03.2008 with SBEA,
enabling it to rely upon the later’s mining experience and technical
expertise for satisfying the eligibility criteria in order to gain JV
partnership.
129. The aforesaid defence of A-1 is not only forceful and persuasive but
it has also been accepted in order on charge dated 25.05.2023. The bid of
SHEL was submitted with the forwarding letter dated 13.03.2008 in a
spiral-bound compilation. Significantly, the MoU dated 14.03.2008
executed between SHEL and SBEA is not part of spiral-bound compilation
but is attached thereto separately by a stapler pin. This circumstance prima
facie indicates that the MoU was furnished subsequent to submission of
the original bid. The prosecution has not led any evidence to establish that
A-1 recorded the aforementioned handwritten remark after receipt of the
said MoU. On the contrary, the surrounding circumstances probabilise the
defence version that the remark was recorded prior to submission of the
MoU when SHEL could not legitimately claim the benefit of SBEA’s
experience. In absence of the MoU, SHEL would not have fulfilled the
prescribed technical eligibility criteria and the contemporaneous remark
describing it as technically ineligible, is therefore, consistent with the then
prevailing factual position. Thus, it is reasonably expected that the
aforementioned handwritten remark was made by A-1 before submission
of the said MoU.
130. There is no evidence on record to suggest that any interpolation,
insertion or manipulation was carried out in the tender/bid document of
SHEL by any person, much less by A-1. The allegation that the MoU dated
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14.03.2008 was subsequently interpolated into the tender/bid document of
SHEL is founded purely on suspicion and conjecture. The prosecution has
failed to adduce any substantive or admissible evidence to establish that
the said MoU was illegally inserted into the tender/bid document after its
submission or that such insertion was carried out at the instance of A-1. In
the absence of any such evidence, the allegation of interpolation remains a
matter of mere imagination rather than proof.
131. The explanation furnished by A-1 that the aforementioned MoU was
submitted subsequently by SHEL pursuant to the opportunity granted to
remove deficiencies in technical bid, in terms of the Government
Resolution dated 30.04.1994 issued by the Industry Department,
Government of Maharashtra, finds support from the surrounding
circumstances and appears to be both satisfactory and probable.
Consequently, the prosecution has failed to dislodge the said explanation.
132. In view of the foregoing discussion, it stands established that the
prosecution has failed to prove any interpolation, insertion or manipulation
in the tender/bid document of SHEL. It is further held that no illegality was
committed in affording SHEL an opportunity to cure the deficiency in its
technical bid by furnishing the requisite supporting document, namely, the
MoU dated 14.03.2008 with SBEA, in accordance with the Government
Resolution dated 30.04.1994. It also stands established that the handwritten
remark made by A-1 describing SHEL as technically ineligible was
recorded prior to the submission of the said MoU and merely reflected the
position obtaining at that stage.
133. The next question, therefore, that falls for consideration is whether,
upon taking into account the MoU dated 14.03.2008 along with the other
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bid documents submitted by SHEL, the consortium of SHEL and SBEA
satisfied the technical eligibility criteria prescribed under the tender/bid
document. The answer to this issue would determine whether the
subsequent decision declaring SHEL technically eligible was in conformity
with the tender conditions or was actuated by any illegality or criminal
misconduct.
134. In order to establish that SHEL was technically ineligible, the
prosecution principally relied upon the testimony of its expert witness i.e.
PW-9 Sh. U.S. Singh, Senior Manager (Mining) (Retd.), Mineral
Exploration Corporation Limited (MECL). After comparing the tender/bid
documents with the documents submitted by SHEL, PW-9 opined that
SHEL did not satisfy the prescribed technical eligibility criteria on the
following counts: (i) it did not possess experience in ‘actual mining’; (ii) it
lacked experience in survey and exploration; and (iii) it did not have the
requisite statutorily competent and experienced manpower.
135. Admittedly, the term ‘actual mining’ has not been defined either in
the tender/bid document or under any statute. Section 3(d) of the Mines
and Minerals (Development & Regulation) Act, 1957 defines ‘mining
operations’ to mean any operation undertaken for the purpose of mining
any mineral. PW-9, however, did not explain the basis on which he
interpreted the expression ‘actual mining’ to mean only the activity of
winning coal or minerals from mother earth. The statutory definition of
‘mining operations’ is of wide amplitude and it is capable of encompassing
various activities undertaken by SBEA as per its work experience
certificates annexed with the bid document of SHEL. Further, whether the
work experience reflected in those documents satisfied the expression
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‘actual mining’ employed in the tender/bid document is, therefore, a matter
capable of more than one interpretation. Significantly, PW-9 was neither
associated with the drafting of the tender/bid document nor with the
evaluation of the technical bid. Therefore, the subjective understanding of
PW-9 regarding the expression ‘actual mining’ cannot be accepted to be
the true import of the said expression in the tender/bid document unless the
same is corroborated by its author i.e. Financial Consultant, aXYKno. His
opinion was rendered only during the course of investigation. Such
opinion, however valuable, cannot substitute intention of the author of the
tender/bid document or conclusively determine the true import of the
eligibility conditions. Therefore, his subjective opinion does not inspire
sufficient confidence to conclusively hold that SHEL was technically
ineligible on the ground that it lacked experience in ‘actual mining’.
136. The defence examined DW-2 Sh. Mahinder Singh Bhasin, Partner of
SBEA to establish that SHEL, in consortium with SBEA, satisfied the
prescribed technical eligibility criteria. He testified that SBEA had been
engaged in mining development activities since the year 1990 and had
been providing machines to Coal India Limited (CIL) for extraction of
coal. During his cross-examination, he admitted that no certificate
evidencing mine development work undertaken during the period from
14.03.2005 to 14.03.2008 was enclosed with the tender/bid document of
SHEL Ex.P-217/PW-9 (D-28, PDF Page Nos.2611-2951). However,
Annexure-2 (Bidders Experience Information-Last Five Years) forming
part of the said tender/bid document at PDF Page No.2623 specifically
records that SBEA had undertaken mine development work, including
open excavation, construction of RCC box and drivage during the relevant
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period of three years preceding submission of the tender/bid. Therefore, it
cannot be said that A-1 acted without any material while considering the
technical eligibility of SHEL in consortium with SBEA on the aforesaid
aspect of its experience immediately preceding three years. Thus, the said
part of the testimony of DW-2 cannot be read against A-1 to indict him for
culpably ignoring the condition of experience of SHEL in mining
immediately preceding three financial years. Likewise, although DW-2
admitted that none of the key personnel mentioned in the tender/bid
document of SHEL were DGMS certified surveyors. Such omission, by
itself, cannot automatically render SHEL technically ineligible. Whether
the said requirements constituted mandatory conditions going to the root of
eligibility or were capable of deviation could have been explained by the
author of the tender/bid document or by the competent officials of
MSMCL. In absence of such evidence, the Court is unable to accept that
every deviation from the prescribed requirements necessarily rendered
SHEL technically ineligible.
137. Significantly, the prosecution did not examine any witness who was
instrumental in drafting or formulating the technical eligibility criteria
contained in the tender/bid document. Neither the author of the tender/bid
document, namely, Financial Consultant, aXYKno nor any competent
official of MSMCL associated with framing the eligibility conditions was
examined. Such witnesses would have been the most appropriate persons
to explain the true import, object and intended scope of the technical
requirements prescribed in the tender/bid document. In the absence of such
evidence, the opinion of a third-party expert, howsoever qualified, cannot
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by itself be regarded as conclusive of the meaning and application of the
eligibility criteria incorporated in the tender/bid document.
138. It has also come on record that during the course of investigation,
the prosecution recorded the statement of another expert, namely, Sh. Anil
Kumar Rana, GM, CMPDIL under Section 161 CrPC. Although the
investigating agency was aware of his opinion, it chose not to examine him
as a prosecution witness during trial and he has been cited as an unrelied
witness. Undoubtedly, his statement under Section 161 CrPC is not
substantive evidence and cannot be relied upon to determine the technical
eligibility of SHEL. Nevertheless, the fact that the prosecution itself did
not place before the Court the evidence of another expert, whose opinion
was apparently at variance with that of the expert examined during trial,
assumes significance while appreciating whether the prosecution has
discharged its burden of proving its case beyond reasonable doubt.
139. In the aforesaid circumstances, this Court is unable to hold that the
prosecution has established, beyond reasonable doubt, that SHEL was
technically ineligible under the tender conditions. The evidence on record
demonstrates that the issue of technical eligibility admitted of more than
one plausible interpretation. Thus, at best, the material on record discloses
the existence of divergent views regarding the interpretation and
application of the technical eligibility criteria. Such divergence of opinion
is wholly inconsistent with the degree of certainty required for recording a
finding of criminal misconduct. The benefit of such doubt must necessarily
enure to the accused.
140. Another significant circumstance which weakens the prosecution
case is that no officer from MSMCL or the Government of Maharashtra,
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who was associated with the tender process or was competent to explain
the object and significance of the technical eligibility criteria, has been
examined to establish that SHEL was, in fact, technically ineligible. More
importantly, no such witness has deposed that the declaration of SHEL as
technically eligible was contrary to the tender conditions, prejudiced the
interests of MSMCL or the Government of Maharashtra, caused any
wrongful loss to the Government, or conferred any undue or unwarranted
pecuniary advantage upon SHEL. In the absence of such evidence, the
prosecution’s allegation that the declaration of SHEL as technically
eligible constituted an act of criminal misconduct rests merely upon its
own interpretation of the tender conditions. Criminal liability under
Section 13(1)(d)(iii) PC Act cannot be founded upon assumptions or
differing interpretations of contractual or technical stipulations. The
prosecution was required to establish, by cogent and reliable evidence, that
SHEL was technically ineligible but also that the impugned decision
resulted in obtaining for SHEL a valuable thing or pecuniary advantage
without public interest. The prosecution has failed to discharge either of
these burdens.
XVII (B). RESPONSIBILITY OF A-1 IN DECLARING SHEL TO BE
TECHNICALLY ELIGIBLE BIDDER
141. The Government of Maharashtra vide letter dated 01.09.2007 had
directed the Managing Director, MSMCL to scrutinize the bids received
with reference to Expression of Interest for the coal blocks from
administrative and financial viewpoints and should prepare comparative
chart, Ex.P-270/PW-7 (D-139, PDF Page Nos.7037-7038). Notably, A-1
was the Managing Director, MSMCL during the relevant period.
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142. Vide OM dated 01.09.2007, the Government of Maharashtra
Ex.P-270/PW-7 (D-139, PDF Page Nos.7037-7038) constituted a High-
Power Committee under the Chairmanship of Hon’ble Minister (Mining)
to scrutinize the bids, examine financial matters in context of coal blocks
allotted to MSMCL, in order to make MoU and approve the proposed Joint
Venture Agreements for mineral development.
143. All the bids, including bids for other three coal blocks were opened
on 14.03.2008 at 04:00 pm in the Office of MSMCL by the Tender
Committee consisting of five members, including Chairman (A-2) and MD
(A-1), MSMCL. However, technical analysis of the bid was not conducted
in the said meeting and the representatives of the bidders were informed
that they have to give their presentations before technical analysis. The
minutes of the said meeting are Ex.P-225/PW-7 (D-33, PDF Page
Nos.4503-4504). Even as per tender/bid document, bidders were required
to make presentations. On 07.04.2008, all bidders were sent fax and given
time for making presentations Ex.P-258/PW-14 (D-369, PDF Page
Nos.11833-11834).
144. It is the consistent defence of A-1 that the presentations were made
by the bidders in the Office of aXYKno/Financial Consultant on
10.04.2008. The prosecution, however, sought to dispute the very
occurrence of such presentations on the ground that no contemporaneous
record pertaining thereto could be recovered during investigation and
therefore, concluded that no such presentations had taken place. In support
of this contention, the prosecution relied upon the testimony of PW-21 Sh.
Anil Pophare, one of the Directors of MSMCL, who initially denied to
have attended any such presentations. However, during his cross-
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examination, he was confronted with his statement under Section 161
CrPC dated 29.02.2016 Ex.P-571/PW-21, wherein he had categorically
stated that he attended the said presentations. Although, the previous
statement recorded under Section 161 CrPC is not substantive evidence
and cannot be relied upon to prove that the presentations in fact took place,
the proved contradiction materially affects the credibility of PW-21 on this
aspect and renders his testimony unreliable to sustain the prosecution’s
assertion that no such presentations were made.
145. Apart from the aforesaid inconsistent testimony of PW-21, the
prosecution did not examine any of the alleged attendee of the said
presentations, including the Financial Consultant, aXYKno and other
bidders to establish that no such presentations took place. Mere non-
recovery of records relating to the presentations cannot, by itself, justify
the inference that the presentations never took place. Consequently, in
these circumstances, the possibility of the presentations being done on the
said date and place cannot be conclusively ruled out.
146. The meeting of Management Committee, MSMCL, chaired by A-2
and attended by its three other members, namely, A-1 Sh. D.G. Philip,
PW-21 Dr. Anil Pophare and Sh. R. Ramakrishnan, Director, aXYKno was
also convened on 10.04.2008. As per minutes of the said meeting Ex.P-5
(D-36, PDF Page Nos.4650-4666), A-1 announced the names of the parties
in the said meeting who were technically qualified for all the four coal
blocks. The said minutes were signed by all the members of the said
committee but none of them objected to the said declaration or gave a
dissenting note in the said minutes. Out of 13 bidders for Adkoli Coal
Block, 12 bidders, including SHEL, were declared technically qualified
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whose commercial bids were decided to be opened. Thereafter, SHEL
emerged as the highest (H-1) bidder for Adkoli Coal Block as it quoted the
highest sweat money over and above the reserve price of Re.1 i.e. Rs.36.06
+ Re.1 = Rs.37.06 per ton of the geological reserve. The recommendation
was approved by the Board of Directors, MSMCL in its 167 th meeting held
on 24.04.2008. The minutes of the said meeting are Ex.P-236/PW-7 (D-42,
PDF Page Nos.5258-5279). In the said minutes also, no objection
regarding the technical eligibility of SHEL was raised by any of the
attendee, including the Financial Consultant, aXYKno who authored and
incorporated the technical eligibility criteria in the tender/bid document.
Thereafter, it was forwarded to the High-Power Committee appointed by
the Government of Maharashtra for the final approval. In the said meeting,
three other JV partners of MSMCL were also approved for three other
different coal blocks and their proposals were also forwarded to High-
Power Committee for approval.
147. The communications dated 16.05.2008 Ex.P-107/PW-4 (D-161, PDF
Page Nos.8418-8421) and 13.06.2008 Ex.P-570/PW-19 (D-153, PDF Page
Nos.7699-7704) were addressed by A-1 to the Principal Secretary
(Industries), Department of Industries, Energy and Labour, Government of
Maharashtra Mantralaya, Mumbai requesting consideration and approval
of the successful bidders in respect of the four coal blocks, including
SHEL for the Adkoli Coal Block. The copies of bid documents and their
terms & conditions were also submitted as Annexure-1 along with the said
letters/communications.
148. On 22.07.2008, the Government of Maharashtra amended the
resolution dated 01.09.2007 and revised the procedure to the extent that the
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Board’s recommendations are to be submitted to the High-Power
Committee along with the detailed description & justification and after its
approval by the High-Power Committee, it be submitted before the
Infrastructure Committee of Cabinet for final decision. The said OM dated
22.07.2008 is Ex.P-166/PW-7 (D-145, PDF Page Nos.7079-7081). The
High-Power Committee meeting was convened on 01.08.2008 under the
Chairmanship of Hon’ble Minister (Industries & Mining) to deliberate
upon the issue related to the approval of successful bidders for all the four
coal blocks, including Adkoli Coal Block. The minutes of the said meeting
are Ex.P-410/PW-18 (D-140, PDF Page Nos.6907-6909). In the said
meeting, the High-Power Committee raised certain queries which were
communicated to MSMCL vide letter dated 14.08.2008 Ex.P-410/PW-18
(D-31, PDF Page No.3892). Vide letter dated 24.08.2008 Ex.P-96/PW-4
(D-153, PDF Page Nos.7798-7805), A-1 replied to the said queries.
149. The High-Power Committee, in its meeting held on 20.11.2008,
under the Chairmanship of Hon’ble Minister (Industries & Mining),
expressed no objection in principle to the proposal concerning the Adkoli
Coal Block, but directed MSMCL to prepare and submit a draft JV
Agreement for further consideration. Notably, in the said meeting, the
High-Power Committee rejected the recommendation made by the
MSMCL with respect to Gare Palma Sector-II Coal Block. The minutes of
the said meeting are Ex.P-186/PW-7 (D-140, PDF Page No.6902). Thus, it
is evident that the High-Power Committee was not bound by the
recommendations or decisions of the Board of Directors, MSMCL. Rather,
it exercised an independent and objective scrutiny of the proposal placed
before it and was fully empowered either to approve, modify or reject the
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recommendations of MSMCL. The rejection of the proposal relating to
Gare Palma Sector-II Coal Block in the same meeting conclusively negates
any suggestion that High-Power Committee merely acted as a rubber
stamp or mechanically endorsed the recommendations of MSMCL.
150. Consequently, the decision taken by A-1 regarding the technical
eligibility of SHEL was neither final nor determinative. Under the tender
process, the assessment of technical eligibility was required to undergo
scrutiny and receive approval from the Board of Directors of MSMCL.
The decision of the Board was thereafter placed before the High-Power
Committee and subsequently, before the Infrastructure Committee of the
Government of Maharashtra for their consideration and approval. The
relevant documents pertaining to the technical eligibility of SHEL,
including the MoU dated 14.03.2008 and the supporting material as well as
the original tender/bid document dated 14.02.2008 Ex.P-10 (D-44, PDF
Page Nos.5284-5331), were available before all these collective bodies.
Despite such scrutiny, the Board of Directors, the High-Power Committee
and the Infrastructure Committee approved the proposal and proceeded on
the basis that SHEL satisfied the prescribed technical eligibility criteria.
The prosecution has neither challenged the independent application of
mind by these collective bodies nor alleged that their approvals were
obtained by concealment, fraud or misrepresentation practiced by A-1.
This is yet another significant circumstance which militates against the
prosecution case.
151. In these circumstances, it would be wholly unsafe to isolate the
initial opinion of A-1 and attribute criminal liability exclusively to him for
a decision which was ultimately examined, endorsed and approved by
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several independent statutory and administrative authorities. In the absence
of evidence that A-1 misled or deceived these decision-making bodies or
procured their approval by dishonest means, the collective decision cannot
be treated as the unilateral act of A-1 so as to attract criminal misconduct
under Section 13(1)(d)(iii) of the PC Act solely against him. Criminal
liability under the said provision cannot be fastened upon A-1 by isolating
his role from the subsequent independent approval accorded by the
competent statutory and administrative bodies. Accordingly, the
prosecution has failed to establish that A-1 alone was responsible for
declaration of SHEL technically eligible.
XVII (C). WHETHER THE DECISION OF DECLARING SHEL TO BE
TECHNICALLY ELIGIBLE BY A-1, OBTAINED VALUABLE
THING OR PECUNIARY ADVANTAGE TO IT WITHOUT ANY
PUBLIC INTEREST
152. The prosecution has proceeded on the premise that once SHEL is
held to be technically ineligible, the decision of A-1 declaring it technically
eligible automatically constitutes criminal misconduct. The proposition
cannot be accepted. Even assuming, for the sake of argument, that the
decision of A-1 was erroneous, an erroneous administrative decision, by
itself, does not attract Section 13(1)(d)(iii) of the PC Act. The prosecution
was further required to establish that A-1 abused his official position and
thereby obtained for SHEL a valuable thing or pecuniary advantage
without public interest. None of these essential ingredients has been
proved. The evidence on record, on the contrary, establishes that the issue
of technical eligibility was debatable; the decision was taken after
permitting removal of deficiencies in accordance with the Government
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independent scrutiny and approval by the Board of Directors, MSMCL; the
High-Power Committee; and the Infrastructure Committee; and no
evidence has been adduced to establish any concealment, fraud,
misrepresentation, quid pro quo or other dishonest motive on the part of
A-1. In these circumstances, even if another view of the tender conditions
were possible, the impugned decision cannot be elevated to the level of
criminal misconduct punishable under Section 13(1)(d)(iii) of the PC Act.
153. The prosecution has relied upon the decision of the Hon’ble Delhi
High Court in Runu Ghosh (supra) to contend that, for an offence under
Section 13(1)(d)(iii) of the PC Act, proof of mens rea or abuse of official
position is not an essential ingredient. There can be no quarrel with the
said proposition. However, the said decision does not dispense with the
prosecution’s obligation to establish the remaining statutory ingredients,
namely, that the public servant obtained for another person a valuable thing
or pecuniary advantage without any public interest. In the present case, the
prosecution has failed to establish these foundational facts as discussed in
the preceding paragraph. Consequently, even applying the principles laid
down in the judgment Runu Ghosh (supra), the essential ingredients of
Section 13(1)(d)(iii) of the PC Act remain unproved.
154. Further, in Ashok Kumar Gupta (supra), the Hon’ble Delhi Court
distinguished Runu Ghosh (supra) and observed misconduct by public
servant arises only if it results in pecuniary advantage to a private party by
disregarding safeguards intended to public interest and where a
demonstrable nexus exists between the conduct of the public servant and
such pecuniary gain to the private party. Thus, mens rea may not always be
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necessary for indicting the public servant but demonstrable nexus between
his conduct and pecuniary gain to the private party must be established to
bring him within the ambit of Section 13(1)(d)(iii) PC Act. In the instant
case, no such nexus has been established by the prosecution between
accused public servants and SHEL.
155. Thus, even applying the ratio of Runu Ghosh (supra), the
prosecution has failed to establish the essential statutory ingredients of
Section 13(1)(d)(iii) PC Act. At the highest, the prosecution seeks to
criminalise an administrative decision regarding interpretation of the
tender conditions. Such an approach is contrary to the principle
emphasised by the Hon’ble Supreme Court in Tata Cellular (supra) that
every erroneous or debatable administrative decision does not ipso facto
constitute criminal misconduct. It held that the scope of judicial
intervention is desirable only where there is arbitrariness or mala fide
intent during the administrative decision. In the instant case, the
prosecution has miserably failed to show any arbitrariness or mala fide
intent on the part of A-1 or any of the members of the Management
Committee, MSMCL.
156. The prosecution has contended that the declaration of SHEL as
technically eligible was not in public interest, since five other bidders had
already been found technically eligible and there was, therefore, no
necessity to permit SHEL to cure the deficiencies in its technical bid. It
was further argued that had it been known to other prospective bidders that
deficiencies in the technical bid could subsequently be cured by furnishing
supporting documents, more entities might have participated in the bidding
process and some of them could have offered a higher financial bid than
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SHEL. According to the prosecution, the impugned decision thus curtailed
competition and conferred an undue advantage upon SHEL.
157. The aforesaid submission does not merit acceptance. Firstly, the
opportunity to remove deficiencies in the technical bid was not extended
exclusively to SHEL. The evidence on record establishes that the same
opportunity was afforded uniformly to all similarly situated bidders in
accordance with the Government Resolution dated 30.04.1994. Thus, no
preferential or discriminatory treatment was extended to SHEL. Once a
uniform procedure was adopted for all bidders, the mere fact that SHEL
successfully availed itself of that opportunity cannot, by itself, lead to an
inference that it was conferred an undue pecuniary advantage without
public interest.
158. Secondly, the very object of the Government Resolution dated
30.04.1994 is to permit bidders to furnish deficient supporting documents
before opening of the financial bids so that the best competitive offers are
received. Therefore, the policy of the Government itself recognises that
permitting removal of curable deficiencies serves, rather than defeats,
public interest. The decision of A-1, if otherwise in conformity with the
said Government Resolution, cannot be characterised as being against
public interest merely because it enabled one additional bidder to
participate in the financial bidding process.
159. Thirdly, the prosecution’s contention that other entities, had they
known of such a procedure, might also have participated and might have
submitted bids higher than that of SHEL, is entirely speculative. No
evidence has been adduced to establish that any prospective bidder
refrained from participating on account of the tender conditions or that any
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person was denied an equal opportunity to compete. Equally, there is no
evidence to establish that any prospective participant would have fulfilled
the prescribed eligibility criteria after curing deficiencies or would have
quoted a higher financial bid than SHEL. Criminal liability cannot be
founded upon hypothetical possibilities or conjectural assumptions
regarding what might have transpired under an altogether different factual
scenario.
160. Lastly, the existence of five technically eligible bidders did not
render the participation of any additional eligible bidder contrary to public
interest. Public interest in a competitive tender process ordinarily lies in
maximising fair competition, provided the tender conditions are uniformly
applied to all participants. Enlargement of the competitive field by
permitting all similarly situated bidders to remove curable deficiencies, in
accordance with the prescribed policy, cannot ipso facto be regarded as an
act detrimental to public interest. In the absence of any evidence of
discrimination, favouritism, concealment or manipulation, the prosecution
has failed to establish that the declaration of SHEL as technically eligible
was an act ‘without public interest’ within the meaning of Section 13(1)(d)
(iii) of the PC Act.
161. Furthermore, it has also emerged from the record that during the
course of investigation the statement of the Preliminary Inquiry Officer
PW-6 Sh. R. Parthasarthy, Deputy Superintendent of Police, CBI was
recorded under Section 161 CrPC, wherein he stated ‘There is no
corresponding wrongful loss caused to M/s. MSMCL due to the act of
omission and commission on the part of the members of the tender
committee. On the contrary, by taking a call on M/s. Sunil Hi-Tech
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Engineers Ltd, by default, a substantial amount of loss which would have
been caused to MSMCL has been averted. M/s. Sunil Hi-Tech Engineers
Ltd has quoted the highest upper front to sweat money of Rs. 36.06 + Rs.1
= Rs. 37.06 per ton of the geological reserves as against Rs. 31/- quoted by
H-2 bidder’. However, when the said officer entered the witness box, the
prosecution did not elicit from him any evidence to establish that the
declaration of SHEL as technically eligible had caused wrongful loss to
MSMCL or the Government of Maharashtra or had otherwise operated
against public interest. Although the statement recorded under Section 161
CrPC is not substantive evidence and cannot be relied upon as proof of the
facts stated therein. Nevertheless, the omission of the prosecution to elicit
from its own witness any evidence regarding absence of public loss or the
existence of public interest assumes significance while appreciating
whether the prosecution has discharged its burden of proof to establish that
the impugned decision of A-1 in declaring SHEL technically eligible
caused wrongful loss to MSMCL or the Government and was without
public interest. In the absence of such evidence, the said ingredient
remains unproved.
XVII (D). CONCLUSION IN RESPECT OF ALLEGATIONS OF
CRIMINAL MISCONDUCT AGAINST A-1 IN
DECLARING SHEL TECHNICALLY ELIGIBLE
162. In view of the foregoing detailed and meticulous discussion, the
prosecution has failed to establish beyond reasonable doubt that SHEL was
technically ineligible under the tender/bid conditions, that the declaration
of SHEL as technically eligible was unilateral decision of A-1 without its
supervision or scrutiny by the Higher Committees or that the said decision
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resulted in obtaining pecuniary advantage to SHEL or causing undue loss
to MSMCL or to the Government or that the said decision was without any
public interest. Therefore, the prosecution has failed to prove the essential
ingredients of the offence of criminal misconduct punishable under Section
13(1)(d) of the PC Act against A-1 on account of the aforesaid impugned
decision taken by A-1 to declare and recommend SHEL to be technically
eligible bidder for development of Adkoli Coal Block. Accordingly, A-1 is
entitled to be acquitted of the said charge.
XVIII. THE ALLEGATIONS RELATING TO PERMITTING SALE,
TRANSFER OR PLEDGE OF SHAREHOLDINGS OF
SHEL IN JV COMPANY TO THE THIRD PARTY IN JV
AGREEMENT IN CONTRAVENTION WITH THE
TENDER/BID DOCUMENT.
163. The second allegation in the present case is that A-1, A-2 and SHEL
is that, in furtherance of their criminal conspiracy, A-1 and A-2 abused
their official position by incorporating clauses in the JV Agreement dated
21.11.2009 permitting the sale, transfer or pledge of shareholdings of
SHEL in JV company to the third party, allegedly in contravention of the
tender/bid document dated 14.02.2008, which prohibited such transactions.
164. In order to indict accused public servants (A-1 and A-2) and SHEL
for the offence of criminal misconduct and criminal conspiracy in respect
of the present allegation, the prosecution is required to establish the
following essential ingredients:-
(i) That the terms and conditions contained in the tender/bid
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or pledge of shareholdings of JV partner/SHEL in JV company to
the third party were immutable and incapable of modification;
(ii) That the impugned clauses incorporated in the JV Agreement
dated 21.11.2009 were introduced solely at the instance of A-1 and
A-2;
(iii) That the incorporation of the impugned clauses was
prejudicial to the interest of MSMCL or the Government of
Maharashtra; and
(iv) That the said impugned clauses were incorporated to obtain
undue pecuniary advantage to SHEL without any public interest,
resulting in wrongful loss to MSMCL.
165. Before evaluating the present allegations, it is expedient that the
relevant facts in relation to this allegation are reiterated in nutshell for
quick reference:-
(a) After approval of the Board of Directors, MSMCL in its 165 th
meeting held on 07.02.2008 invited bids on 13.02.2008 and
14.02.2008 for selection of JV partners for development of all the
four allocated coal blocks, including Adkoli Coal Block. The
tender/bid document Ex.P-10 (D-44, PDF Page Nos.5284-5331) was
prepared by Financial Consultant, aXYKno and in conformity with
the allocation letter, it contemplated the incorporation of JV
company as a Government company in which MSMCL would hold
51% equity on a cashless basis. It also prescribed technical
eligibility criteria for bidders and prohibited the JV partners from
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in the proposed JV company to the third party during the currency of
the JV Agreement;
(b) In response to the said invitation/advertisement, 13 companies
including SHEL submitted their bid for Adkoli Coal Block. The
SHEL submitted its technical and financial bid on 13.03.2008
Ex.P-217/PW-9 (D-28, PDF Page Nos.2611-2951);
(c) The recommendation of SHEL as JV partner for Adkoli Coal
Block was approved by the Board of Directors, MSMCL in its 167 th
meeting held on 24.04.2008. Thereafter, it was forwarded to the
High-Power Committee appointed by the Government of
Maharashtra for the final approval. In the said meeting, three other
JV partners of MSMCL were also approved for three other different
coal blocks and their proposals were also forwarded to High-Power
Committee for approval;
(d) The High-Power Committee, in its meeting held on
20.11.2008, under the Chairmanship of Hon’ble Minister (Industries
& Mining), expressed no objection in principle to the proposal
concerning the Adkoli Coal Block, but directed MSMCL to prepare
and submit a draft JV Agreement for further consideration;
(e) As per minutes of 171st meeting of the Board of Directors of
MSMCL held on 15.12.2008 Ex.P-194/PW-7 (D-148, PDF Page
Nos.7269-7280), MSMCL prepared a draft JV Agreement
Ex.D-8/DW-1 (PDF Page Nos.25887-25913) before 15.12.2008,
which was enclosed therewith. The said minutes further demonstrate
that in the said meeting, the Financial Consultant, aXYKno was
asked to obtain draft JV Agreements from the JV partners, hear
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them, prepare final draft of agreement and submit it to MD,
MSMCL;
(f) In response to the minutes of the 171 st Board meeting, the
Financial Consultant, aXYKno gave total three drafts of the JV
Agreement i.e. first draft on 19.12.2008, second draft on 12.01.2009
and third draft on 19.01.2009. In the third draft, the terms and
conditions prohibiting sale, transfer or pledge of the shareholdings
of JV partner in JV company were incorporated in accordance with
the tender/bid document;
(g) The abovementioned third draft of the JV Agreement was
considered by the Board of Directors, MSMCL in its 172nd meeting
held on 21.01.2009 under the Chairmanship of A-2 and its other
members, including A-1. As per the said minutes, the
aforementioned draft JV Agreement was discussed paragraph wise
and necessary amendments were made in it. The draft of the
agreement was finalized and unanimously approved. In the meeting,
it was decided that copy of the approved draft be sent to the
Government for final approval. Accordingly, on 23.01.2009, the
draft JV Agreement approved by the Board of Directors, MSMCL
was sent to High-Power Committee for its approval. The said draft is
Ex.P-102/PW-4 (D-158, PDF Page No.8354). The said draft JV
Agreement omitted the prohibition of sale/transfer of the shares of
the JV partner in JV company to the third party and in its Clause
12.4 permitted the same subject to the condition contained under the
said clause. The said stipulation was in contradiction with the
tender/bid document. In consistence with the tender/bid document,
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Clause 12.2 of the said draft JV Agreement prohibited pledge of the
shareholdings of the JV partners in JV company to any third party.
However, at the same time, its Clause 6.4.1 with title ‘Reserved
Matters’ permitted pledge of shares by JV partner in JV company in
favour of any third party with the approval of one Director
nominated by the MSMCL and one Director nominated by SHEL;
(h) In the said draft, the provision in relation to the transfer of
shareholdings of JV partner to its affiliates were incorporated in its
Clause 12.3. It further stipulated that the aggregate shareholdings of
MSMCL and SHEL, together with that of their respective associates
and affiliates, in the JV company would at all times remain in the
ratio of 51:49 i.e. 51% and 49% respectively. Significantly, the
aforementioned provisions in relation to transfer of shares of SHEL
to its affiliates or SPV formed for the specific purpose of carrying on
the business as per the JV Agreement, were not in contradiction with
the tender/bid document as no such prohibition or restriction was
contained in it;
(i) The minutes of High-Power Committee meeting held on
30.01.2009 have not been placed on record. However, minutes of
High-Power Committee meeting held on 09.04.2009 (D-155, PDF
Page No.8224) and the letter dated 31.01.2009 written by A-1 to the
Principal Secretary, Department of Industries, Energy and Labour,
Government of Maharashtra Ex.P-342/PW-7 (D-31, PDF Page
No.3649) finds mention about the High-Power Committee meeting
held on 30.01.2009. As per the said documents, it can be
conclusively inferred that in the meeting held on 30.01.2009, the
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High-Power Committee directed that the proposal regarding the
draft JV Agreement should be resubmitted for consideration to the
High-Power Committee to resolve the views of the different
departments;
(j) Further, the said letter of A-1 dated 31.01.2009 was written
with reference to the High-Power Committee meeting held on
30.01.2009 in respect of draft JV Agreement qua Agarzari Coal
Block for M/s Adani Enterprises, proposed JV partner, as it had
raised certain issues, including its right to pledge its shareholdings in
JV company in the draft JV Agreement. Significantly, the draft JV
Agreement that was sent on 23.01.2009 was common for the Adkoli
as well as Agarzari Coal Block. In the said letter, A-1 made a
comment in regard to issue at Srl. No.10 raised by M/s Adani
Enterprises and its relevant portion is reproduced as under:-
“The Board in its joint intellectual capacity has considered all
the aspects of the say of the J.V. partners and has incorporated
all those that are in conformity with the tender terms and
conditions. Those aspects that are not in conformity with the
tender documents were not incorporated in the Joint Venture
Agreement. However, the High-Power Committee may like to
consider the say of the J.V. Partner and take suitable decision
as seem fit.”
(k) The 173rd meeting of Board of Directors, MSMCL was held
on 25.02.2009 and its minutes are Ex.P-9 (D-148, PDF Page
No.7518). As per the said minutes in Subject No. 13 with title
‘Progress in respect of Joint Venture Project Agreement of Agarzari,
Warora and Marki-Zari-Jamni-Adkoli Coal Blocks’, it was recorded
that the High-Power Committee meeting held on 13.02.2009 at
Mumbai directed Managing Director, MSMCL to obtain comments
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of financial advisor and to submit them to High-Power Committee.
It was further recorded that accordingly, financial advisor prepared
its comments and same were placed before the Board for approval.
They were discussed in detail and were approved with some
amendments. Thereafter, it was resolved that the said approved
amended draft of comments be placed before the High-Power
Committee. The comments of the Financial Consultant, aXYKno
approved in the 173rd meeting of Board of Directors, MSMCL were
communicated by A-1 to the Principal Secretary (Industries),
Department of Industries, Energy and Labour, Government of
Maharashtra vide letter dated 26.02.2009 Ex.P-409/PW-18 (D-153,
PDF Page No.7559). Significantly, A-1 retired as MD, MSMCL on
28.02.2009;
(l) On 09.04.2009, the High-Power Committee, in its meeting
under the Chairmanship of Chief Secretary, discussed in detail the
draft of the JV Agreement. The minutes of the said meeting are
available at D-155, PDF Page Nos.8224-8228. In the said meeting, a
presentation was made by the Financial Consultants Sh.
Ramakrishna and Sh. Hetal of aXYKno on the entire bidding
process for the selection of the JV partner for the development of the
coal blocks allotted to the MSMCL. The presentation covered the
matters, including background of the tender process;
(m) In subsequent meeting of the High-Power Committee under
the Chairmanship of the Hon’ble Chief Minister, Government of
Maharashtra held on 04.05.2009, the JV Agreement (D-156, PDF
Page Nos.8250-8298) was approved and it was resolved that the
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proposal be put up before the Infrastructure Committee for final
approval. The minutes of the said meeting held on 04.05.2009 are
Ex.P-284/PW-7 (D-134, PDF Page Nos.6802-6803). Significantly,
in relation to the impugned conditions of sale and pledge of the
shareholdings of JV partner (SHEL) in JV company to the third
party, no changes/modifications were made in the said approved JV
Agreement, vis-a-vis the draft JV Agreement sent by A-1 along with
his letter dated 23.01.2009;
(n) On 16.06.2009, Sh. A.M. Khan, Principal Secretary
(Industries) prepared a detailed Cabinet note/proposal (D-146, PDF
Page Nos.7160-7170) to be put up before the Cabinet Committee on
Infrastructure under the Chairmanship of Hon’ble Chief Minister,
Government of Maharashtra for approval of the draft JV Agreement
with the proposed JV company (partner), in accordance with the
recommendations made by High-Power Committee for development
of mineral, its usage and sales in the coal blocks allotted to the
MSMCL, including Adkoli Coal Block. In Para No.5 of the said
detailed note, the main conditions as per the tender/bid document
dated 14.02.2008 were delineated and in its Para No.8, the salient
features of the proposed JV Agreement were discussed. The same
was approved by the Cabinet Committee on Infrastructure under the
Chairmanship of Hon’ble Chief Minister, Government of
Maharashtra in its meeting held on 18.06.2009 Ex.P-180/PW-7
(Colly) (D-134, PDF Page No.6808). Thus, the Infrastructure
Committee also approved the draft of JV Agreement sent by A-1
along with his letter dated 23.01.2009 without any change in the
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stipulations related to sale and pledge of the shares of JV partners in
JV company to the third party and their transfer to its affiliates;
(o) The said approval was communicated by the Government of
Maharashtra to the MSMCL vide letter dated 01.08.2009
Ex.P-119/PW-7 (D-135, PDF Page No.6806). Accordingly, Sh. N.K.
Sudhanshu, the then MD, MSMCL issued letter of intent to SHEL
and the same is Ex.P-250/PW-12 (D-29, PDF Page No.3312);
(p) Thereafter, MSMCL proposed certain modifications in the
draft JV Agreement approved by Infrastructure Committee,
Government of Maharashtra and in that regard, a letter was written
by Sh. N.K. Sudhanshu, the then MD, MSMCL to the Government
of Maharashtra. The Government of Maharashtra, vide its letter
dated 23.10.2009 to MD, MSMCL, communicated that it accepted
total 12 proposed modifications as detailed in chart annexed with the
said letter. The said letter along with chart of the approved
modifications in JV Agreement is Ex.P-258/PW-14 (D-369, PDF
Page Nos.11732-11735);
(q) The final JV Agreement incorporated the aforementioned 12
modifications and it was finally executed between MSMCL and
SHEL on 21.11.2009 Ex.P-260/PW-14 (D-61, PDF Page Nos.5847-
5895). The 02 out of the said 12 modifications that are relevant for
the adjudication of the present case are reproduced as under:-
(i) ‘except as provided in this agreement’ was inserted at
the end of Para No.12.2 regarding right to pledge the shares
of JV partner in JV company; andCBI/318/2019 RC No.220 2015 E 0003 CBI Vs. Dominic Gabriel Philip & Anr.
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(ii) In the end of the Para No.12.3.3, under the heading of
‘Share transfer to affiliates’, the following sentences were
inserted:-
‘It will however be mandatory for the Party No.2 to
maintain atleast 51 percent share in the SPV at all times
during the period of the agreement. In case of consortium, the
consortium partners should have a minimum cash equity
holding of 5% in the SPV’; and
(r) In accordance with Clause 1 of JV Agreement dated
21.11.2009 Ex.P-260/PW-14 (D-61, PDF Page Nos.5847-5895), a
JV company, namely, M/s MSMCL Adkoli Natural Resources
Limited was incorporated between MSMCL and SHEL on
18.02.2010.
XVIII (A). WHETHER THE TERMS AND CONDITIONS CONTAINED IN
THE TENDER/BID DOCUMENT WERE IMMUTABLE
166. In law, a tender or bid document is ordinarily only an invitation to
offer (invitatio ad offerendum) and not, by itself, a concluded or binding
contract. The binding rights and obligations of the parties arise only upon
execution of the final agreement. Until then, the parties are at liberty to
negotiate and settle the terms of their contractual relationship. Therefore,
unless the tender conditions themselves expressly prohibit clarification,
supplementation or curing of deficiencies, the prosecution cannot proceed
on the assumption that every condition contained in the tender/bid
document was immutable or incapable of lawful supplementation before
the execution of the JV Agreement dated 21.11.2009.
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167. The very premise of the prosecution that the bid document was
immutable and incapable of any modification is devoid of merit. If the
terms and conditions contained in the tender/bid document were intended
to be inflexible and incapable of alteration, there would have been no
occasion for the Board of Directors, MSMCL; the High-Power Committee;
and the Infrastructure Committee to deliberate upon, negotiate and finalize
the terms and conditions to be incorporated in the final JV Agreement. The
evidence on record unmistakably demonstrates that several clauses of the
proposed agreement were discussed, modified and finalized after the
bidding process.
168. Significantly, the prosecution itself has not attributed any criminality
to the 12 admitted modifications proposed by Sh. N.K. Sudhanshu, the
then Managing Director, MSMCL and thereafter, approved by the
Government of Maharashtra vide letter dated 23.10.2009 Ex.P-258/PW-14
(D-369, PDF Page Nos.11732-11735), notwithstanding the fact that such
modifications were incorporated after the Infrastructure Committee had
approved the draft JV Agreement on 18.06.2009. This admitted position
completely undermines the prosecution’s contention that the tender/bid
conditions were incapable of alteration. If modifications made after the
Infrastructure Committee’s approval were themselves considered
permissible and lawful, there is no rational or legal basis to contend that
any other modification or clarification of the tender conditions, undertaken
during the process of negotiations and before execution of the final JV
Agreement, would ipso facto constitute an illegality or criminal
misconduct.
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169. Furthermore, the prosecution has failed to examine any official from
MSMCL, Government of Maharashtra, the High-Power Committee or the
Infrastructure Committee to establish that the impugned clauses could not
be legally altered/modified. Equally, no witness has deposed that the
approving authorities were unaware of, misled about or deceived regarding
the alleged deviation or that the approving authority would have withheld
approval, had the variation been brought to its notice.
170. In the absence of such evidence, the prosecution’s assertion that the
tender conditions were incapable of alteration remains a mere assumption
unsupported by any legal provision, contractual stipulation or
contemporaneous evidence. Accordingly, it is established beyond any
reasonable doubt that the tender/bid document’s conditions, including
prohibition of sale, transfer or pledge of the shareholdings of the JV
partner in JV company to the third party were not immutable or incapable
of modification. Consequently, modification/alteration of any such clause
prior to the execution of the JV Agreement, by itself, be regarded as illegal
or constitute criminal misconduct.
XVIII (B). WHETHER THE IMPUGNED CLAUSES INCORPORATED IN
THE JV AGREEMENT DATED 21.11.2009 WERE
INTRODUCED SOLELY AT THE INSTANCE OF A-1 AND A-2
171. The changes related to permitting sale, transfer or pledge of the
shareholdings of the JV partner (SHEL) in JV company to the third party
were incorporated in the draft JV Agreement approved in the 172nd meeting
of the Board of Directors, MSMCL under the Chairmanship of A-2 and
attended by A-1 as the then Managing Director, MSMCL. Although, those
clauses were in variance with the tender/bid document, the draft JV
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Agreement was neither final nor binding. The entire proposal, together
with all the relevant documents, including tender/bid document and the JV
Agreement, was forwarded by A-1 to the High-Power Committee on
23.01.2009 for approval. The record, therefore, demonstrates that the
High-Power Committee had before it all the relevant documents and was
fully aware of the contents of the draft JV Agreement as well as the
tender/bid document. Besides, the prosecution has failed to examine any
member of the High-Power Committee to establish either their ignorance
about the said variation or that approval would have been refused had the
variation been highlighted to them.
172. The same position prevailed before the Infrastructure Committee.
After approval by the High-Power Committee, the entire proposal was
placed before the Infrastructure Committee along with all the relevant
documents for its subsequential approval. The detailed Cabinet note/
proposal dated 16.06.2009 (D-146, PDF Page Nos.7160-7170) prepared by
Sh. A.M. Khan, Principal Secretary (Industries), separately sets out the
principal conditions of the tender/bid document and the salient provisions
of the proposed JV Agreement. The note itself demonstrates that the
Infrastructure Committee was fully conscious of the variations between the
two documents. Yet, no member of the Infrastructure Committee has been
examined to state either that the variations escaped their notice or that
approval would have been declined, had they noticed the variations. Thus,
it can be safely inferred that the decision to incorporate the impugned
clauses was not unilateral decision of A-1 and A-2. Rather, it was a
collective institutional decision.
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173. The evidence on record establishes that the impugned clauses were
not incorporated into the draft JV Agreement by A-1 and A-2 in secrecy or
without institutional scrutiny. Rather, the impugned clauses were subjected
to scrutiny at successive levels by independent decision-making authorities
before the JV Agreement came to be executed. Furthermore, the
prosecution has not proved that the members of the High-Power
Committee or the Infrastructure Committee were kept unaware of the
impugned clauses or that their approval was obtained by concealment,
deception or misrepresentation.
174. Relying upon the letter dated 31.01.2009 written by A-1 to the High-
Power Committee Ex.P-342/PW-7 (D-31, PDF Page No.3649), the
prosecution has sought to contend that he misrepresented the facts by
stating that the terms and conditions of draft JV Agreement were in
conformity with the tender/bid document, notwithstanding the existence of
a variation in the impugned clauses. The contention does not merit
acceptance. The forwarding note has to be read as a whole and in the
context in which it was made. In the said letter, A-1 stated that those
aspects that are not in conformity with the tender documents were not
incorporated in the JV Agreement. Simultaneously, he left the matter to the
decision of the High-Power Committee after consideration of all relevant
aspects, including version of the JV partner. The High-Power Committee
as well as Infrastructure Committee, had all the relevant documents,
including draft JV Agreement and tender/bid document before them.
Further, the said committees were fully competent to examine every
provision, accept or reject any proposed modification and approve the
agreement in such form as they considered appropriate.
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175. The prosecution contends that A-1 and A-2 were fully aware that the
tender/bid document expressly prohibited the sale, transfer or pledge of the
shareholding of the JV partner in the JV Company to the third party.
Despite such knowledge, they allegedly omitted the said prohibition while
forwarding the draft JV Agreement to the High-Power Committee on
23.01.2009 and, instead, incorporated clauses permitting the sale, transfer
or pledge of such shareholding in favour of a third party. According to the
prosecution, this deliberate deviation from the tender/bid document was
intended to confer an undue benefit upon SHEL and constitutes criminal
misconduct and criminal conspiracy.
176. The aforesaid contention of the prosecution cannot be accepted in
the facts and circumstances of the present case. Once it has been held that
the terms and conditions of the tender/bid document were neither
immutable nor incapable of modification, the mere fact that A-1 and A-2
were aware of the prohibition contained therein does not, by itself, render
the subsequent incorporation of a different provision in the draft JV
Agreement illegal or indicative of any criminal intent. Knowledge of an
existing tender condition cannot be equated with knowledge that such
condition was incapable of lawful modification. In the absence of any
contractual stipulation, statutory prohibition or other evidence establishing
that the relevant clause could not be altered during negotiations preceding
the execution of the final JV Agreement, the omission of the original
prohibition and incorporation of the impugned clauses cannot, by itself,
constitute criminal misconduct or furnish evidence of criminal conspiracy.
177. It is equally significant that the draft JV Agreement prepared and
forwarded by A-1 and approved by the Board of Directors of MSMCL
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under the Chairmanship of A-2 was merely recommendatory in nature and
did not attain finality by itself. It was thereafter subjected to independent
scrutiny and consideration by the High-Power Committee and
subsequently by the Infrastructure Committee, both of which were
competent either to approve, modify or reject any provision of the draft
agreement. The prosecution has neither alleged nor proved that the
members of these committees acted in conspiracy with A-1 and A-2 or
shared any dishonest intention. In fact, none of them has been charge-
sheeted or prosecuted for any offence arising out of their approval of the
impugned clauses.
178. In these circumstances, the prosecution cannot, without any cogent
evidence, isolate A-1 and A-2 for criminal prosecution merely because
they participated in the initial decision-making process. Once the proposal
was independently examined, deliberated upon and consciously approved
by the competent authorities, the ultimate decision became an institutional
decision and not the unilateral act of A-1 and A-2. In the absence of
evidence establishing that A-1 and A-2 dishonestly concealed the
impugned modification, misled the approving authorities or procured the
approvals by fraud or deception, they cannot be held individually and
solely criminally liable for a decision that was consciously endorsed at
every subsequent level. The prosecution has also not alleged or established
that the subsequent approving authorities acted in concert with A-1 and
A-2 pursuant to any criminal conspiracy or shared any dishonest intention.
In the absence of such evidence, the selective prosecution of A-1 and A-2
alone, while treating the subsequent approvals by independent statutory
and governmental authorities as legally inconsequential, is wholly
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inconsistent with the prosecution’s own case and does not satisfy the
standard of proof required in criminal law.
XVIII (C). WHETHER IMPUGNED CLAUSES WERE PREJUDICIAL TO
THE INTEREST OF MSMCL OR THE GOVERNMENT
179. The prosecution has failed to examine any official of MSMCL or the
Government of Maharashtra to establish that the impugned clauses were
prejudicial or detrimental to the interest of MSMCL or Government of
Maharashtra. Likewise, no member of the High-Power Committee or the
Infrastructure Committee has been examined to state that the impugned
clauses escaped their notice or that approval would have been withheld,
had it been noticed as the impugned clauses were prejudicial to the interest
of MSMCL. In the absence of any such evidence, the prosecution cannot
unilaterally assume or invite the Court to infer that the incorporation of the
impugned clauses was impermissible, detrimental to the interests of
MSMCL or devoid of public interest.
180. The record establishes that MSMCL received substantial amount of
Rs.25.44 crores as part of sweat money inclusive of interest component
from SHEL in the present transaction qua Adkoli Coal Block. Further,
PW-6 Sh. R. Parthasarthy, Deputy Superintendent of Police, CBI
(Preliminary Inquiry Officer) has himself admitted that a substantial
amount of loss which could have been caused to MSMCL has been averted
by execution of JV Agreement with SHEL.
181. Admittedly, SHEL did not sell or transfer its shareholdings in JV
company to any third party. The subsequent transaction of sale or transfer
related only to sale of its shareholdings in JV company held in the SPV to
the third party i.e. JDCL, which is in conformity with the terms and
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conditions of JV Agreement regarding which no allegations are made in
the present case as it was not prohibited in the tender/bid document.
182. Thus, the prosecution has failed to establish that the incorporation of
impugned clauses in the JV Agreement dated 21.11.2009 caused any
wrongful loss to MSMCL or the Government of Maharashtra or that it was
prejudicial to their interests.
XVIII (D). WHETHER THE INCORPORATION OF IMPUGNED
CLAUSES OBTAINED PECUNIARY ADVANTAGE OR
VALUABLE SECURITY TO SHEL WITHOUT ANY PUBLIC
INTEREST
183. As per records, the estimated cost for the development of Adkoli
Coal Block was Rs.300 crores and as per the JV Agreement, the said cost
was to be borne exclusively by SHEL (JV partner). Besides, SHEL was
required to incur Rs.74 crores towards sweat money payable to MSMCL
and approximately Rs.20 crores towards performance guarantee, insurance
and other project related obligations, taking its financial commitments to
nearly Rs.420 crores. The incorporation of the impugned clauses was,
therefore, consistent with the commercial necessity of enabling SHEL to
mobilize funds for implementation of the project, the success of which was
equally in the interest of MSMCL.
184. As per letter dated 08.09.2014 (PDF Page No.12242) addressed to
the MD, MSMCL by MD, M/s MSMCL Adkoli Natural Resources
Limited, on the subject Hon’ble Supreme Court’s Judgment dated
25.08.2014, on allocation of coal blocks, the JV partner (SHEL) had spent
Rs.50.19 crores on the Adkoli Coal block initially, including sweat money
of Rs.18.05 crores. Even assuming the prosecution case regarding the
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subsequent transaction with JDCL, the amount of about Rs.40 crores
received by SHEL from transfer of its interest was less than the
expenditure already incurred by it for the project. The remaining amount of
approximately Rs.35 crores admittedly related to a separate transaction
involving the shares of SHEL’s subsidiary company, namely, M/s
Gangakhed Sugar and Energy Private Limited and has no nexus with the
JV Agreement or the present allegation. Although, the aforesaid
explanation of A-1 has not been formally proved in accordance with law, it
appears plausible and finds substantial corroboration from the prosecution
records themselves. Most importantly, the prosecution has led no evidence
to rebut the said explanation or to establish that the incorporation of
impugned clauses was without any public interest or intended to solely to
confer an undue benefit upon SHEL. In these circumstances, the
prosecution has failed to establish either that SHEL obtained any undue
pecuniary advantage or valuable security or that the impugned clauses
were incorporated without any public interest.
185. In respect of the instant allegation also, the prosecution has failed to
establish any nexus between accused public servants and SHEL or with the
undue pecuniary advantage obtained by SHEL. In Ashok Kumar Gupta
(supra), while distinguishing Runu Ghosh (supra), the Hon’ble Delhi High
Court held that misconduct by public servant arises only if it results in
pecuniary advantage to a private party by disregarding safeguards intended
to public interest and where a demonstrable nexus exists between the
conduct of the public servant and such pecuniary gain to the private party.
Although, proof of mens rea may not invariably be necessary, the
prosecution must establish a clear causal connection between the official
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act complained of and the pecuniary advantage secured by the private
party.
XVIII (E). CONCLUSION IN RESPECT OF ALLEGATIONS OF
CRIMINAL MISCONDUCT AGAINST A-1 AND A-2 IN
INCORPORATING THE IMPUGNED CLAUSES IN THE
DRAFT JV AGREEMENT
186. In view of the foregoing discussion, the prosecution has failed to
establish any of the essential ingredients of the present allegation. It has
failed to prove that the relevant terms of the tender/bid document were
immutable or incapable of modification; that the impugned clauses were
incorporated solely at the instance of A-1 and A-2; that the approving
authorities were kept unaware of the modifications or that their approval
was obtained by concealment or misrepresentation; that the incorporation
of the impugned clauses was prejudicial to the interests of MSMCL or the
Government of Maharashtra; or that the said clauses were incorporated to
confer any undue pecuniary advantage or valuable security upon SHEL
without any public interest. On the contrary, the evidence establishes that
the impugned clauses formed part of the draft JV Agreement which was
consciously scrutinised and approved by the competent authorities,
MSMCL suffered no wrongful loss and, in fact, derived substantial
financial benefit under the JV Agreement. The prosecution has, therefore,
failed to prove this allegation beyond reasonable doubt.
XIX. TRANSACTIONS UNDERTAKEN BY SHEL OR ITS
AFFILIATES UNDER THE JV AGREEMENT AND THEIR
LEGAL RAMIFICATIONS
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187. In order to appreciate the present discussion in its proper
perspective, it is necessary to reiterate and clarify that the impugned
clauses of the JV Agreement dated 21.11.2009 confined only to sale,
transfer or pledge of the shareholdings of SHEL in JV company to the third
party, which are incorporated in its clauses, namely, 6.4.1 and 12.4. The
tender/bid document neither prohibited sale, transfer or pledge of such
shareholdings to the affiliates of SHEL nor restricted sale, transfer or
pledge of such shareholdings held in SPV, contemplated to be formed for
the specific purpose of carrying on the business as per the JV Agreement in
favour of the third party. Therefore, the scope of the impugned clauses
does not extend to these transactions. Accordingly, the provisions
permitting the said transactions and the provisions other than impugned
clauses in the JV Agreement dated 21.11.2009 are hereinafter referred in
short for clarity as ‘indubitable clauses’. The said clauses are all the
clauses of JV Agreement except impugned clauses i.e. Clause 6.4.1
(Reserved Matters, in relation to pledge) and Clause 12.4 (Share Transfers
to the Third Party).
188. As already held in the preceding part of this judgment, even the
impugned clauses of the JV Agreement dated 21.11.2009 do not suffer
from illegality or criminality. It necessarily follows that any transaction
undertaken by SHEL, its affiliates or the SPV in conformity with those
clauses of the JV Agreement cannot be regarded as illegal. A fortiori, the
transactions undertaken in accordance with indubitable clauses of the JV
Agreement are wholly beyond the pale of criminality.
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AFFILIATES UNDER THE INDUBITABLE CLAUSES OF THE
JV AGREEMENT AND THEIR LEGAL RAMIFICATIONS
189. M/s Sunil Hi-Tech Energy Private Limited was incorporated on
07.02.2008 by the promoters of SHEL which was later decided to be used
as SPV in terms of indubitable clause 12.3.3 of JV Agreement dated
21.11.2009 Ex.P-260/PW-14 (D-61, PDF Page Nos.5847-5895). Further,
M/s SHEL Investment Consultancy Services Limited was incorporated on
20.08.2009 as an affiliate of SHEL and was later utilized for transfer of
shareholdings of SHEL in JV company in accordance with indubitable
clause 12.3 of the JV Agreement dated 21.11.2009.
190. The first transaction in the series of transactions under the present
caption was the execution of the Term Sheet dated 31.10.2009
Ex.P-318/PW-16 (D-275, PDF Page Nos.10128-10132) between SHEL
and Jaiprkash Associates Limited before the execution of JV Agreement
dated 21.11.2009. It contemplated that M/s Sunil Hi-Tech Energy Private
Limited would be a Special Purpose Vehicle (SPV) formed as holding/
investment company to hold 49% stake of SHEL in the JV company to be
incorporated in joint venture with MSMCL. It further stipulated that SHEL
would retain at least 51% shareholding in the SPV throughout the
subsistence of the JV Agreement. It further envisaged acquisition by
Jaiprakash Associates Limited (or its associates) of 49% equity share
capital of SHEL in the JV company held in the SPV for a consideration of
Rs.15 crores, out of which Rs.5 crores was paid on 05.11.2009.
191. Significantly, there is no allegation that the said consideration was
undervalued or that the source of funds was illegal. The execution of the
Term Sheet (terms containing prospective transactions) was entirely
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consistent with indubitable clause 12.3.3 of JV Agreement. Therefore, no
illegality can be attributed in the said agreement. The prosecution contends
that non-disclosure of the said Term Sheet amounted to cheating because
MSMCL would not have entered into JV Agreement had it known of the
proposed transaction. The said contention shall be examined separately
while dealing the charge of cheating in the subsequent part of this
judgment. For the present purpose, it would be suffice to state that the
execution of the Term Sheet, viewed independently, does not disclose any
illegality or criminality as it is in conformity with the indubitable clause
12.3.3 of the JV Agreement.
192. The second transaction in the series under the present heading was
the execution of a Deed of Adherence dated 25.02.2010 Ex.P-240/PW-12
(D-62, Page Nos.113-116, also at PDF Page No.11728) between MSMCL,
SHEL and M/s Sunil Hi-Tech Energy Private Limited whereby SHEL
transferred its entire 49% shareholding in the JV company in favour of M/s
Sunil Hi-Tech Energy Private Limited (SPV). Simultaneously, the SPV
agreed to be bound by the JV Agreement as if it were the original
shareholder, thereby becoming the successor-in-interest of SHEL. The said
transaction was expressly contemplated by the indubitable clause 12.3.3 of
the JV Agreement. Further, MSMCL itself was party to the Deed of
Adherence, and no witness from MSMCL has been examined to establish
that the said transaction violated any provision of the JV Agreement or
caused any prejudice to MSMCL. Consequently, no illegality or
criminality can be attributed to this transaction.
193. The third transaction in the series under the present caption was
execution of the Deed of Adherence dated 23.03.2010 Ex.P-237/PW-12
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(Colly) (D-62, PDF No.5918) executed between SHEL, SHEL Investment
Consultancy Services Limited (affiliate of SHEL), Sunil Hi-Tech Energy
Private Limited (SPV), MSMCL and MSMCL Adkoli Natural Resources
Limited (JV company), whereby SHEL affiliate acquired 37.50%
shareholding in the SPV from SHEL for a consideration of
Rs.12,07,72,080/- (Rupees Twelve Crores Seven Lakhs Seventy Two
Thousand and Eighty Only). MSMCL by its letter dated 30.03.2010,
expressly permitted SHEL to hold such 51% shares in the SPV along with
its affiliate companies. The Deed recorded that SHEL together with its
affiliate would continue to maintain the minimum 51% shareholding in the
SPV, consistent with Clause 12.3.3 of the JV Agreement. Simultaneously,
M/s SHEL Investment Consultancy Services Limited (SHEL affiliate)
agreed to become bound by the JV Agreement in the same manner as it had
been an original party to the agreement as SHEL. Notably, there is no
allegation regarding undervaluation of shares or illegality in the source of
the consideration. The said transaction was in complete conformity with
the indubitable clauses 12.3.2 and 12.3.3 of JV Agreement and also in
accordance with the aforementioned letter dated 30.03.2010 of MSMCL.
Hence, no illegality or criminality can be attached to the said transaction.
194. After the aforesaid transactions, SHEL held 62.50% of the equity in
the SPV, while its affiliate, M/s SHEL Investment Consultancy Services
Limited, held the remaining 37.50%. Collectively, the SPV continued to
represent the same 49% equity stake in the JV company originally held by
SHEL. The restructuring merely altered the internal shareholding pattern
within entities expressly recognised under the JV Agreement and did not
affect MSMCL’s rights or the equity structure of the JV company.
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Accordingly, the arrangement was entirely consistent with the indubitable
clauses of the JV Agreement.
195. In continuation of the first transaction/agreement in relation to
signing of the Term Sheet dated 31.10.2009, the Board of Directors of
MSMCL, in its 181st meeting held on 23.12.2010, approved transfer of
49% equity in the SPV to the Jaypee Group, subject to execution of the
necessary Deed of Adherence and verification of the technical competence
of the transferee. Pursuant to the approval of the Board of Directors,
MSMCL, 49% shares of SHEL in JV company held by SPV were sold to
JDCL on 21.04.2011 after receipt of balance sale consideration of Rs.10
crores in accordance with Term Sheet dated 31.10.2009. Thus, JDCL paid
total amount of Rs.15 crores to SHEL for purchase of the said shares.
196. Once again, the prosecution has not leveled any allegation in respect
of the pricing of the shares or illegality in the source of the said
consideration. More importantly, the transfer itself was undertaken
pursuant to the prior approval of the Board of Directors of MSMCL and
remained consistent with Clause 12.3.3 of the JV Agreement, which
required SHEL to retain not less than 51% shareholding in the SPV. In
these circumstances, the transaction cannot, by any stretch of reasoning, be
characterised as illegal or criminal.
197. Thus, none of the above detailed transactions attract any illegality,
irregularity or criminality.
XIX (B). TRANSACTIONS UNDERTAKEN BY SHEL OR ITS
AFFILIATES UNRELATED TO JV AGREEMENT AND THEIR
LEGAL RAMIFICATIONS
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198. Out of the total transactions cited by the prosecution in the present
case/charge-sheet, two transactions come under the present caption.
199. The first transaction under the present heading was execution of a
Debenture Subscription Agreement dated 31.03.2010 between M/s SHEL
Investment Consultancy Services Limited (SHEL affiliate) and JDCL,
whereby JDCL subscribed to 1,200 convertible debentures issued by the
SHEL affiliate having a face value of Rs.1 lakh each and accordingly, paid
the consideration of Rs.12 crores to M/s SHEL Investment Consultancy
Services Limited (SHEL affiliate) on 21.04.2011. Pertinently, this
transaction is unrelated to the JV Agreement and the prosecution/CBI has
failed to disclose what offence, if any, was committed by either of the
parties owing to the said transaction.
200. The second transaction under the present heading was purchase of
35 lakh shares of M/s Gangakhed Sugar and Energy Private Limited
(subsidiary of SHEL) by JDCL at face value of Rs.10/- with premium of
Rs.90/- per share (total value Rs.100/-per share) for Rs.35 crores. Notably,
this transaction also has no relation or connection to the JV Agreement.
Further, the prosecution/CBI has also failed to disclose what offence, if
any, was committed by either of the parties on account of the said
transaction.
201. The aforesaid two transactions are entirely independent of and
unconnected with the JV Agreement dated 21.11.2009. Neither transaction
involved transfer, pledge or dealing with the shareholding of SHEL in the
JV company, nor were they governed by any provision of the JV
Agreement. They were purely commercial transactions between private
entities concerning securities of companies other than the JV company.
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The prosecution has neither alleged nor proved that these transactions were
sham, fictitious or colourable, or that the consideration paid thereunder
was undervalued, excessive or otherwise unlawful. No evidence has been
adduced to establish that the source of the funds was illegal or that any part
of the consideration represented proceeds of any unlawful activity. Equally,
no evidence has been led to show that MSMCL suffered any loss or that
either party obtained any wrongful gain on account of these transactions.
In fact, the charge-sheet itself fails to disclose the offence, if any,
constituted by these transactions or the statutory provision allegedly
violated. In the absence of proof that these transactions were themselves
illegal or were the result of any criminal act connected with the JV
Agreement, they are wholly irrelevant for determining the criminal liability
of the accused in the present case.
XIX (C). TRANSACTIONS UNDERTAKEN BY SHEL OR ITS
AFFILIATES UNDER OR IN ALLEGED VIOLATION OF THE
IMPUGNED CLAUSES OF JV AGREEMENT AND THEIR
LEGAL RAMIFICATIONS
202. The only transaction relied upon by the prosecution as being in
alleged violation of any impugned clause of the JV Agreement dated
21.11.2009 was the Share Pledge Agreement dated 21.04.2011 executed
between M/s SHEL Investment Consultancy Services Limited (SHEL
affiliate) and JDCL, whereby M/s SHEL Investment Consultancy Services
Limited pledged all its 37.50% equity shares in SPV to JDCL along with
all rights, including voting rights as a security towards the subscription of
1,200 optionally convertible debentures for a total consideration of Rs.12
Crores. On account of Deeds of Adherence dated 25.02.2010 and
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23.03.2010, both the pledger [M/s SHEL Investment Consultancy Services
Limited (SHEL affiliate)] and pledgee (JDCL) were bound by JV
Agreement dated 21.11.2009. However, the said pledge of shares was not
in terms of its Clause 6.4.1(e) in as much as it was not with the approval of
one Director of MSMCL and one Director of SHEL.
203. There is no allegation whatsoever that SHEL, its affiliates or the
SPV ever violated Clause 12.4 relating to sale or transfer of the
shareholding of SHEL in the JV Company to a third party. Thus, even
according to the prosecution, the entire edifice of the alleged criminality,
insofar as post-execution transactions are concerned, rests solely on the
alleged breach of Clause 6.4.1(e).
204. Even assuming, for the sake of argument, that the pledge was
effected without obtaining the approval contemplated under Clause
6.4.1(e), such an act, by itself, cannot be elevated to the level of a criminal
offence. The JV Agreement itself contemplates the eventuality of a transfer
or dealing with shares in breach of its provisions and expressly prescribes
the consequences thereof under Clause 12.5. The Agreement confers upon
the remaining party a contractual right to purchase the default shares at a
stipulated price and further declares that the unauthorised transfer would
be null and void. Thus, the parties themselves consciously treated any
breach of the transfer restrictions as a matter governed by contractual and
civil consequences rather than one attracting penal consequences. Where
the contract itself provides a complete mechanism to deal with its breach,
it would be wholly impermissible to infer criminality merely because one
of its terms is alleged to have been violated.
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205. More importantly, the prosecution has failed to establish any of the
essential ingredients of the offences of cheating or criminal conspiracy.
There is no evidence whatsoever that, at the time of entering into the JV
Agreement, SHEL or its affiliates had any dishonest or fraudulent intention
not to abide by Clause 6.4.1(e) or to deceive MSMCL. Such an inference is
wholly speculative, particularly when the JV Agreement itself provides
remedies for breach, thereby indicating that the parties contemplated the
possibility of contractual defaults and consciously agreed upon their
consequences.
206. It is equally significant that neither MSMCL nor the Government
delivered any property or valuable security to SHEL or its affiliates on
account of the alleged pledge transaction. Likewise, no witness from
MSMCL or any concerned Government department has entered the
witness box to depose that MSMCL suffered any wrongful loss or that
SHEL or its affiliates obtained any wrongful gain as a consequence of the
alleged breach. There is also no evidence that the pledge transaction was a
sham, was supported by unlawful consideration, or was intended to defeat
any right of MSMCL. In the absence of proof of deception, fraudulent
inducement, delivery of property pursuant to such inducement, or any
meeting of minds to commit an illegal act, the foundational ingredients of
Sections relating to cheating and criminal conspiracy remain wholly
unsubstantiated.
207. Accordingly, even if the prosecution case is accepted at its highest
and it is assumed that the Share Pledge Agreement dated 21.04.2011 was
executed without the approval contemplated under Clause 6.4.1(e), the
same would, at best, constitute an alleged breach of a contractual
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stipulation for which the JV Agreement itself provides civil consequences.
Such an alleged breach cannot, in the facts and circumstances of the
present case, be converted into an offence of cheating, criminal conspiracy
or any other criminal misconduct. Consequently, the said transaction does
not furnish any incriminating circumstance against any of the accused,
including SHEL, nor does it advance the prosecution case in any manner.
XIX (D). CONCLUSION IN RELATION TO ALL THE
AFOREMENTIONED TRANSACTIONS OF SHEL AND ITS
AFFILIATES
208. The cumulative effect of the foregoing discussion is that none of the
transactions undertaken by SHEL, its affiliates or the SPV, whether
individually or collectively, disclose the commission of any criminal
offence. Broadly, the transactions fall into three distinct categories,
namely: (i) transactions expressly contemplated and permitted under the
indubitable clauses of the JV Agreement; (ii) transactions wholly
independent of and unconnected with the JV Agreement; and (iii) the Share
Pledge Agreement dated 21.04.2011, which, according to the prosecution
itself, is the only transaction allegedly carried out in violation of Clause
6.4.1(e) of the JV Agreement. As already discussed, the first category is
completely authorised by the contractual framework; the second has no
nexus whatsoever with the JV Agreement or the subject matter of the
prosecution; and the third, even if assumed to be in breach of a contractual
stipulation, attracts at best the civil consequences expressly provided under
the JV Agreement itself and cannot, without more, be transformed into a
criminal offence.
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209. Significantly, the prosecution has not alleged, much less proved, that
any of the aforesaid transactions were sham, fictitious or colourable, that
the consideration paid thereunder was undervalued or otherwise unlawful,
that the source of funds was illegal, or that any transaction was undertaken
for an unlawful purpose. Equally absent is any evidence that MSMCL
suffered any wrongful loss or that SHEL, its affiliates or any other accused
derived any wrongful gain by reason of the execution of those transactions.
No witness from MSMCL or any concerned Government department has
entered the witness box to state that any of the transactions was
unauthorised, prejudicial to the interests of MSMCL, or resulted in any
pecuniary loss to it. The prosecution has also failed to identify any
statutory provision, apart from the alleged contractual breach, which stood
violated by any of these transactions.
XX. THE ALLEGATIONS OF CHEATING AND CONSPIRACY
AGAINST A-1, A-2 AND SHEL
210. The prosecution has sought to rely upon the execution of the
aforesaid Term Sheet to contend that SHEL never intended to honour the
JV Agreement and that its execution itself demonstrates a pre-existing
dishonest intention to cheat MSMCL. The contention, however, is devoid
of merit. As already held in the preceding part of this judgment, the
execution of the Term Sheet was fully consistent with Clause 12.3.3 of the
JV Agreement and did not violate either the impugned clauses or any of the
indubitable clauses of the JV Agreement. The Term Sheet merely
contemplated a future corporate restructuring through an SPV, a course of
action expressly recognised and permitted under the JV Agreement itself.
A transaction expressly authorised by the contract cannot, by any
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reasonable standard, be relied upon to infer that one of the contracting
parties had, from the very inception, no intention of honouring the
contract.
211. The prosecution’s argument proceeds on the erroneous premise that
the mere existence of a prior commercial arrangement necessarily
establishes a dishonest intention existing at the time of execution of the JV
Agreement. Such an inference is neither supported by the evidence nor
permissible in law. A dishonest intention, which is the sine qua non of the
offence of cheating, cannot be presumed merely because a party entered
into another commercial arrangement, particularly when such arrangement
was itself lawful and in conformity with the contractual framework
governing the parties. If the very transaction relied upon by the prosecution
was permissible under the JV Agreement, it cannot simultaneously be
treated as evidence of a fraudulent design to violate that very agreement.
212. Even otherwise, the essential ingredients of the offence of cheating
are conspicuously absent. There is no evidence that MSMCL was
dishonestly induced by any false representation to execute the JV
Agreement or that, acting upon such inducement, it delivered any property
or valuable security to SHEL or its affiliates. The execution of the JV
Agreement did not result in any transfer of property or valuable security by
MSMCL in consequence of the alleged deception. Equally, there is no
evidence of any meeting of minds between the accused to commit an
illegal act so as to attract the offence of criminal conspiracy. In the absence
of proof of fraudulent intention at the inception of the transaction,
dishonest inducement, delivery of property pursuant thereto, or any
agreement to commit an unlawful act, the execution of the Term Sheet
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cannot be construed as furnishing evidence either of cheating or of
criminal conspiracy.
213. Accordingly, the execution of the Term Sheet dated 31.10.2009,
viewed independently or in conjunction with the subsequent transactions,
does not disclose any criminality. On the contrary, being a transaction
expressly contemplated by and consistent with the JV Agreement, it
negates rather than supports the prosecution’s allegation that SHEL entered
into the JV Agreement with a preconceived intention not to honour its
obligations thereunder.
XXI. FINAL CONCLUSION
214. Insofar as the allegation relating to the declaration of SHEL as
technically eligible is concerned, the evidence on record unmistakably
demonstrates that there is no conclusive evidence to show that SHEL was
technically ineligible. Further, the said decision was taken after due
consideration by the competent authorities on the basis of the material
placed before them and thereafter received approval at every successive
level. The prosecution has failed to prove that A-1 abused his official
position, acted dishonestly, or intentionally acted contrary to law with a
view to obtaining for SHEL any pecuniary advantage or to cause any
wrongful loss to MSMCL or the Government. The essential ingredients of
the offence of criminal misconduct are, therefore, wholly absent.
215. Equally, the prosecution has failed to establish that the incorporation
of the impugned Clauses 6.4.1 and 12.4 in the JV Agreement dated
21.11.2009 constituted any illegal or dishonest act. As discussed in detail
in the preceding paragraphs, the tender conditions were capable of
modification; the draft JV Agreement underwent scrutiny at multiple
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administrative levels; the changes were consciously approved by the High-
Power Committee as well as the Infrastructure Committee; and the
impugned clauses themselves neither violated any statutory provision nor
defeated the object of the tender process. The prosecution has failed to
prove that A-1 and A-2, in concert with SHEL or any other accused,
incorporated those clauses pursuant to any prior agreement to commit an
illegal act or to obtain any unlawful pecuniary advantage. Consequently,
neither the offence of criminal misconduct nor that of criminal conspiracy
is made out in relation to the incorporation of the impugned clauses.
216. The prosecution has further relied upon various commercial
transactions undertaken by SHEL, its affiliates and the SPV after execution
of the JV Agreement to contend that they constituted the fruits of the
alleged conspiracy and demonstrated a dishonest intention from the very
inception. However, as held hereinbefore, the overwhelming majority of
those transactions were expressly contemplated and permitted under the JV
Agreement, while the remaining transactions were wholly independent of
and unconnected with it. Even the solitary transaction alleged to be
contrary to Clause 6.4.1 of the JV Agreement, namely the Share Pledge
Agreement dated 21.04.2011, at its highest, gives rise only to contractual
consequences expressly provided under the agreement itself and cannot, in
the absence of the essential ingredients of the penal offences alleged, be
elevated to the status of a criminal act.
217. The prosecution has failed to prove that any of the aforesaid
transactions involved deception, fraudulent inducement, dishonest
intention at the inception, wrongful gain, wrongful loss, unlawful
consideration, or any clandestine agreement amongst the accused persons.
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There is no evidence that MSMCL was induced to part with any property
or valuable security on account of any alleged deception, nor is there any
evidence that any accused public servant entered into an agreement with
SHEL to commit an illegal act or to accomplish a lawful act by illegal
means. The foundational ingredients of the offences of cheating and
criminal conspiracy thus remain wholly unestablished.
218. Accordingly, the prosecution has failed to prove beyond reasonable
doubt that: (i) the declaration of SHEL as technically eligible constituted
criminal misconduct on the part of A-1; (ii) the incorporation of Clauses
6.4.1 and 12.4 in the JV Agreement dated 21.11.2009 constituted criminal
misconduct by A-1 and A-2 or was the result of any criminal conspiracy
between them and SHEL; or (iii) any of the subsequent transactions
undertaken by SHEL, its affiliates or the SPV constituted, either
individually or collectively, the offences of cheating, criminal conspiracy
or any other offence alleged in the charge-sheet.
219. Considering the above detailed discussion, both the accused persons,
namely, A-1 Sh. Dominic Gabriel Philip S/o Sh. Gabriel Philip and A-2 Sh.
Avinash Manohar Rao Warjukar S/o Sh. Manohar Rajaramji Warjukar are
entitled to be acquitted for the respective offences under which they were
charged. Accordingly, both of them are ordered to be acquitted.
Announced in the open Court on 13.07.2026.
Digitally signed by
DHEERAJ DHEERAJ MOR
MOR Date: 2026.07.13
11:57:54 +0530
(Dheeraj Mor)
Special Judge, (PC Act) (CBI)
(Coal Block Cases)-01, RADC
New Delhi: 13.07.2026
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