Partly allowed

M/S Mspl Limited., v. Central Bureau of Investigation

Karnataka HC20 Dec 2023CRL.P/101257/2022

Case brief

AI extract

What is this about?

Karnataka High Court allowed a criminal petition filed to quash CBI proceedings against M/s MSPL Limited. The court held the CBI lacked jurisdiction as the exporter was involved in less than 50,000 metric tonnes of iron ore, contrary to Supreme Court directions regarding interstate trade cases, and remitted the matter to the State SIT.

What did the court decide?

Charge sheet C.C.No.59 of 2022 and the order taking cognizance are quashed.

M/S Mspl Limited., Vs Central Bureau of Investigation — Company and Corporate | Karnataka HC (2023)

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IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH

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DATED THIS THE 20^TH DAY OF DECEMBER, 2023 BEFORE

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THE HON'BLE MR. JUSTICE M. NAGAPRASANNA CRIMINAL PETITION No.101257 OF 2022

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BETWEEN:

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M/S MSPL LIMITED., A COMPANY REGISTERED IN INDIA UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 WITH ITS CORPORATE OFFICE SITUATED AT BALDOTA ENCLAVE, ABHERAJ BALDOTA ROAD HOSAPETE- 583 203 DIST. VIJAYANAGAR REP.BY ITS AUTHORISED SIGNATORY MR. PRAVIN YESHWANT MANCHALWAR.

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... PETITIONER

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(BY SRI SANDESH J.CHOUTA, SENIOR COUNSEL REPRESENTED SRI ABHISHEK C.PATIL, ADVOCATE)

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AND:

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CENTRAL BUREAU OF INVESTIGATION EOB, ECONOMIC OFFENCES WING RAJAJI BHAVAN CHENNAI- 600 090 REPRESENTED BY INSPECTOR OF POLICE.

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... RESPONDENT

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(BY SRI NEELENDRA D.GUNDE, ADVOCATE)

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THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF CR.P.C., PRAYING TO QUASH THE FIRST INFORMATION REPORT BEARING NO.RC.9/E/2013-CBI/EOW/CHENNAI DATED 24.10.2013 (ANNEXURE-A) AND THE CHARGE SHEET BEARING NO.02/2022 DATED 01.02.2022 (ANNEXURE-B) SUBSEQUENTLY ORDER DATED 09.02.2022 PASSED BY THE CIVIL JUDGE AND JMFC AT ANKOLA, UTTARA KANNADA (ANNEXURE-C) TAKING COGNIZANCE OF THE OFFENCES PUNISHABLE UNDER SEC.120(B) R/W 379, 411, 420 AND 447 OF IPC AND ALL FURTHER PROCEEDINGS IN CC NO.59/2022 PENDING ON THE FILE OF THE CIVIL JUDGE AND JMFC AT ANKOLA, UTTARA KANNADA AS AGAINST THE PETITIONER/ACCUSED NO.1 IS CONCERNED.

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THIS CRIMINAL PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 10.10.2023, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:-

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ORDER

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The petitioner/accused No.1 in the subject petition is calling in question the proceedings in C.C.No.59 of 2022 pending before the Civil Judge and JMFC at Ankola, Uttara Kannada District arising out of crime in Crime No.RC.9/E/2013-CBI/EOB/Chennai dated 24-10-2013 and the order of the concerned Court taking cognizance on 09-02-2022 on a charge sheet filed on 01-02-2022 for offences punishable under Section 120-B read with Sections 379, 411, 420 and 447 of the IPC. In effect, the entire proceedings are sought to be quashed.

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2. The facts, in brief, adumbrated are as follows:-

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The petitioner is a Company registered under the Companies Act, 1956 and is in the business of iron ore mining, trading of iron ore, wind mills etc. On 03-11-2009 the petitioner enters into an agreement with M/s Amalagiris, accused No.8 in the same crime with respect to procurement of iron ore with a rider that clearances of all nature would be the responsibility of accused No.8. Several cases of illegal mining cropped up and reached the Apex Court. The Apex Court on 07-09-2012 passed an order directing the Central Bureau of Investigation (‘CBI’) to conduct a preliminary investigation in respect of 50.79 lakh metric tonnes of iron ore exported from 01-01-2009 to 31-05-2010 from Belekeri port by various companies/individuals or exporters who had exported iron ore of more than 50,000 metric tonnes without valid permits. Pursuant to the direction of the Apex Court, the respondent/CBI registers a FIR against the petitioner/Company and others for the afore-quoted offences and offences under the Mines and Minerals (Development and Regulation) Act, 1957 (‘MMRD Act’ for short). Nine years thereafter the CBI files its charge sheet against the

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petitioner on 01-02-2022. The concerned Court takes cognizance of the offence not under the provisions of the MMRD Act but for offences under the IPC in terms of its order dated 09-02-2022. Taking of cognizance and registering a criminal case against the petitioner/Company is what has driven the Company to this Court in the subject petition.

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Heard Sri Sandesh Chouta, learned senior counsel appearing for the petitioner and Sri Neelendra D.Gunde, learned counsel appearing for the respondent.

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The learned senior counsel would vehemently contend that

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the CBI has no jurisdiction to register the crime even. The Apex Court has clearly indicated that the CBI would step in only if the export by an individual or Company would be more than 50,000 metric tonnes. A perusal at the crime or the charge sheet so filed would clearly indicate that all put together the export, that the charge sheet would reveal, is 39,000 metric tonnes. Therefore, the CBI admittedly had no jurisdiction to register the crime or even file a charge sheet. He would further contend that inordinate delay of

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nine years in filing the charge sheet has vitiated the entire proceedings. The other contention is that in few cases, which are heard along with this case, the Directors are arrayed as party respondents who have no role to play nor have they been alleged of any particular act. He would, therefore, contend that the entire proceedings be quashed against the Company and the Directors on the score that the concerned Court while taking cognizance has not looked into the settled principle of law that there cannot be vicarious liability under the IPC and there has to be application of mind while taking cognizance of the offence.

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Per contra, the learned counsel appearing for the CBI would vehemently refute the submissions to contend that all the crimes put together should be taken note of, not the individual crimes. If all the crimes are put together, it would be more than 50,000 metric tonnes. Therefore, the CBI has got jurisdiction. He would contend that the role of the Directors would only come to light when trial takes place. Mere statement that the Directors have no role to play cannot be accepted at this juncture, as it is a matter of trial. He would seek dismissal of the petition on the score that

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the subject matter concerned is illegal mining which the Apex Court has found fault with and this Court in exercise of its jurisdiction under Section 482 of the CrPC should not interfere in the case.

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I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record.

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The status of the Company is a matter of record. The agreement between accused No.8 and the petitioner/Company is also a matter of record. In the year 2012, the Apex Court while dealing with matters pertaining to mining in Karnataka, in a petition filed by Samaj Parivartana Samudaya and others in Writ Petition (Civil) No.562 of 2009 in terms of its order dated 07-09-2012 directed the CBI to conduct preliminary investigation in respect of 50.79 lakh metric tonnes of iron ore which was said to have been exported between 01-01-2009 and 31-05-2010 particularly from Belekeri port by various Companies in the State of Karnataka. The CBI and the Anti Corruption Bureau conducted investigation and filed a preliminary enquiry report before the Apex Court in PE

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No.5(A)/2012 and an application in I.A.No.189 of 2013 was filed seeking permission to register criminal cases against various persons. The Apex Court in terms of its order dated 16-09-2013 permitted the CBI to register criminal cases on certain conditions. The order of the Apex Court reads as follows:

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“UPON hearing counsel the Court made the following

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O R D E R

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We have heard learned counsel for the Central Bureau of Investigation on whose behalf of this interlocutory application has been filed and we issue the following directions:-

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(a) The CBI is permitted to register criminal case against those exporters who were enquired into in the preliminary enquiry and who had exported iron ore of more than 50,000 MT without valid permits and as recommended by the Central Empowered Committee in its report dated 5^th September, 2012.

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(b) The CBI is permitted to refer the matter with respect to the exporters who had exported less than 50,000 MT and were not enquired into in the preliminary enquiry, to the Government of Karnataka for taking further necessary action under the relevant laws, as recommended by the Central Empowered Committee in its Report dated 5^th September, 2012.

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(c) We also permit the Central Bureau of Investigation to refer to the Government of Karnataka for taking further action under relevant laws with regard to those exporters who were enquired into in the preliminary enquiry and who had exported less than 50,000 MT of iron ore without valid permits as recommended by the Central Empowered Committee in its Report dated 5^th September, 2012.

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(d) We direct the State of Karnataka to take further necessary action under the relevant laws as recommended by the CEC in its Report dated 5^th September, 2012 with regard to those exporters who have exported less than 50,000 MT and report compliance within a period of four weeks from the date of receipt of communication of this order.

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A copy of this order be furnished to the Chief Secretary, Government of Karnataka and to the Director, Central Bureau of Investigation for compliance.

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We make it clear that the restrictions imposed by Section 6 of the Delhi Special Police Establishment Act, 1946 will not apply to the investigations directed by this Court in view of the judgment of this Court in State of West Bengal & Others v. Committee for Protection of Domestic Rights, West Bengal and Another.

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When the matter comes up for hearing next, the learned Additional Solicitor General will apprise this Court as to whether direction No. 13 in the judgment dated 18th April, 2013 has been complied with by the Surveyor General of India.”

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The Apex Court divided the jurisdiction to register criminal cases by directing the CBI to register cases where iron ore exported was more than 50,000 metric tonnes without any valid permit in terms of preliminary inquiry report and the Central Empowered Committee’s (‘CEC’ for short) report. Insofar as exports being less than 50,000 metric tonnes, the Apex Court directed that it was for the Government of Karnataka to take action as recommended in the

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report of the CEC dated 05-09-2012. The Apex Court further directed that the CBI should refer the matters to the Government of Karnataka for taking further action under the relevant laws with regard to those exporters who were enquired into in the preliminary inquiry and who had exported less than 50,000 metric tonnes of iron ore without valid permit and the Government of Karnataka was directed to take necessary action as per the recommendations of the CEC and the preliminary enquiry. This becomes the genesis of power to register criminal cases against Companies who have exported iron ore between 01-01-2009 and 31-05-2010 in the quantum as directed.

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What would unmistakably emerge is, (i) in cases where exporters who have exported more than 50,000 metric tonnes without valid permits the CBI would get jurisdiction to register crimes and (ii) in cases where export is less than 50,000 metric tonnes, Government of Karnataka has to take further action in accordance with law. In the case at hand, what is called in question is registration of crime and filing of charge sheet by the CBI.

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Whether it is in tune with the power conferred by the Apex Court as aforesaid is what is required to be noticed.

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To consider the said issue, it is germane to notice the crime registered or the charge sheet filed against the petitioner. In the subject petition the export indicated against the petitioner is as

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follows:

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“10	Total quantity of iron ore exported by M/s MSPL through shipment I to VI	*3,00,135 Mts*
11	Export of iron ore legal – M/s MSPL (from own mines)*94505 MTs*
12	Iron ore supplied by M/s Amalagiris M/s Priyanka/M/s Rajmahal (Legal) *1,07,550 MTs*	*202055 MTs*”

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The columns would indicate clearly that where charge sheet is already filed for illegal mining to the tune of 58,600 metric tonnes, the charge sheet that is the subject matter of the present crime is for the balance of illegal mining through the agreements noted hereinabove, which even in terms of the charge sheet is assessed at 39,480 metric tonnes. Therefore, it is less than 50,000 metric tonnes. The export of iron ore through M/s Amalagiris is 27,186 metric tonnes and through M/s Priyanka Agencies it is 12,295

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metric tonnes. This quantity forms the proceedings impugned. If this is the quantity that forms the proceedings impugned, it straight away runs foul of the power conferred by the Apex Court supra . Therefore, the very registration of crime by filing charge sheet against the petitioner by the CBI is contrary to law.

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Whether the entire proceedings should be quashed on that score is what is required to be noticed. Though the CBI does not have jurisdiction to enquire into or register the charge sheet against the petitioner, it is not that the petitioner can be left scot free. The other clauses in the directions of the Apex Court would emerge. It is submitted at the bar that Special Investigating Team (‘SIT’) is constituted by the State through the Karnataka Lokayukta to enquire into cases of this nature which arise out of directions issued by the Apex Court. Therefore, the SIT is empowered to initiate proceedings against the petitioner but not the CBI. The proceedings initiated by the CBI by filing the charge sheet would become contrary to the power conferred on it by the Apex Court. The power conferred by the Apex Court would straight away empower the SIT to initiate proceedings. Therefore, SIT or any

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agency of Government of Karnataka as is directed by the Apex Court shall initiate such proceedings in accordance with law. The proceedings initiated by the CBI are thus without jurisdiction.

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The other submission of the learned senior counsel is that the order of the concerned Court taking cognizance suffers from non-application of mind and, therefore, the order taking cognizance should be obliterated. This issue need not be gone into, as the very jurisdiction of the CBI to have filed the charge sheet itself is found fault with. If the CBI had no jurisdiction to file the charge sheet, all actions taken by the CBI would tumble down like a pack of cards. Therefore, that submission need not be answered.

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ROLE OF DIRECTORS:

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The other submission is with regard to role of the Directors. Though the complaint and the findings in the charge sheet are required to point at particular role of every Director in the alleged illegality as the Directors cannot be arrayed as accused in complete vacuum, they need to have their roles attributed in the complaint, in the investigation and even in the charge sheet so filed, failing

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which, it would run counter to plethora of judgments rendered by the Apex Court. Reference if made would only lead to the bulk of the judgment, as they are all settled principles of law. But, on that score this Court at this juncture cannot get into those facts. The SIT which is now empowered to register proceedings shall also look into the role of the Directors and only if it is found that they have active role qua the illegality alleged, then they have to be brought into the web of crime, failing which, it would become an abuse of the process of law. Since these are issues to be considered by the SIT afresh, the SIT shall bear in mind the contents and averments

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made in these petitions qua the Directors and their role.

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For the aforesaid reasons, I pass the following:

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O R D E R

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(i) Criminal Petition is allowed in part.

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(ii) Charge sheet filed in No.RC 9/E/2013-CBI/EOB/Chennai which has become C.C.No.59 of 2022 before the Civil Judge and JMFC at Ankola, Uttara Kannada and taking

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of cognizance thereto are quashed in the light of the observations / findings in the course of the order.

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Sd/JUDGE

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bkp CT:MJ

M/S Mspl Limited., v. Central Bureau of Investigation

Case brief

What is this about?

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M/S Mspl Limited., v. Central Bureau of Investigation

Case brief

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