UNION OF INDIA VS LT. GEN. (RETD.) S.K. SAHNI Case

UNION OF INDIA VS LT. GEN. (RETD.) S.K. SAHNI Case

NON­REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION 
CRIMINAL APPEAL NO. 2169 OF 2014
UNION OF INDIA AND OTHERS        ...APPELLANT(S)
VERSUS
LT. GEN. (RETD.) S.K. SAHNI    ...RESPONDENT(S)
WITH
TRANSFERRED CASE (CRIMINAL) NO. 1 OF 2017
J U D G M E N T
B.R. GAVAI, J.
1. Criminal Appeal No.2169 of 2014 is filed by Union of India
and   others   challenging   the   orders   passed   by   Armed   Forces
Tribunal,   Chandigarh   Regional   Bench   at   Chandimandir
(hereinafter referred to as the “AFT”) dated 10th October 2013 in
MA No. 1871 of 2012 and OA No. 262 of 2011 to the effect that
it reduces the sentence of three years rigorous imprisonment
and   cashiering   imposed   on   the   respondent   herein­Lt.   Gen.
(Retd.) S.K. Sahni to dismissal from the service as provided in
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Section   71(e)   of   the   Armed   Forces   Tribunal   Act,   2007
(hereinafter referred to as the “AFT Act”), and 21st March 2014
in MA Nos. 3201 and 3202 of 2014 in OA No. 262 of 2011,
whereby the learned AFT refused to grant leave to appeal.
2. Transferred Case (Criminal) No. 1 of 2017 is filed by the
petitioner therein (respondent herein), originally before the High
Court of Punjab and Haryana being Criminal Writ Petition No.
1895 of 2013, challenging the dismissal of MA No. 1871 of 2012
and OA No. 262 of 2011, which was filed challenging the order
dated 18th February 2011, passed by the General Court Martial
(hereinafter   referred   to   as   the   “GCM”),   vide   which   the
respondent herein was held guilty of first, third, fourth, fifth,
seventh and ninth charges and was sentenced as under:
(i) To be cashiered; and
(ii) Rigorous   imprisonment   for   three   years   subject   to
confirmation.
3. As such, both, the appeal filed by the Union of India and
others, and the transferred case, filed by the respondent herein
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have been heard together. For the sake of convenience, the
facts are taken from Criminal Appeal No. 2169 of 2014.  
4. The respondent was commissioned in the Indian Army on
16th December 1967 and earned promotions and was promoted
to the rank of Lieutenant General in May 2003. The respondent
was   thereafter   appointed   as   Director   General,   Supplies   and
Transport (hereinafter referred to as “DGST”) with effect from 1st
February 2005.   He was also awarded the “Ati Vishisht Seva
Medal” in January 2005.
5. An anonymous complaint was received in the Directorate
of   Supplies   and   Transport   (hereinafter   referred   to   as   the
“Directorate”)   on   4th  April   2005.     On   8th  April   2005,   the
complaint   was   forwarded   and   a   request   was   made   to   the
respondent   to   examine   the   complaint   and   forward   his
comments on the file on priority for perusal of the Directorate.
It is contended by the respondent that he replied to the same
on 12th September 2005.
6. A Court of Inquiry was ordered against the respondent
under the directions of General Officer Commanding­in­Chief,
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Western Command (hereinafter referred to as “GOC­in­C”), to
investigate into the following seven allegations:
“i. Procurement of Kabuli Chana through contract
finalized   during   April   05   by   Army   Purchase
Organization;
ii. Tendering and  procurement  of  Barley crushed
and Gram kibbled during financial year 2005­2006
by Army Purchase Organization;
iii. Testing and sampling of items of ration by CFL
Delhi   as   per   laid   down   specification   arid   its
subsequent   purchase/procurement   from   various
firms/dealers   as   per   approved   sample   and   ASC
specifications;
iv.   Tendering   and   procurement   of   979   Metric
Tonnes   of   Masoor   Whole   which   was   supplied   by
GRAINFED; ­
v.  Violation, if any, of the laid down quality norms,
ASC   specifications   and   other   desired   parameters
with regard to moisture content, number counts per
100 gm weight, system of imposing price reduction
of commodities contracted.
vi. Any undue favour granted to any contractor for
procurement   of   meat   by   HQ   Central   Command
during financial years 2003­2004 and 2004­2005
vii. Any irregularity with regard to permitting a civil
contractor   to   dump   excavated   soil   within   the
compound of ASC Centre and College of any undue
favour taken from any contractor by and Army pers
at ASC Centre and College.”
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7. The   Court   of   Inquiry   only   recommended   for   award   of
recordable censure against the respondent while recommending
disciplinary action qua other officials under the Army Act, 1950
(hereinafter referred to as the “Army Act”) and Army Rules,
1954 (hereinafter referred to as the “Army Rules”).  However, as
per the direction of Army Commander, the respondent’s name
was included in the list for disciplinary action.   The Court of
Inquiry was finalized on 24th  June 2006, and thereafter, the
GOC­in­C directed a disciplinary action against the respondent.
8. As contended by the respondent, the GOC­in­C, despite
recommendation   mentioned   in   the   Inquiry   Report   for   an
administrative   action,   directed   disciplinary   action   while
admitting that there was no evidence of the acts of financial
consideration qua the respondent. The respondent, on attaining
the   compulsory   retirement   age   of   60   years,   retired   on   30th
September 2006.
9. The respondent filed a writ petition before the High Court
of Delhi being WP (C) No. 11839/2006 seeking for quashing
and setting aside of the proceedings and recommendations of
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the Court of Inquiry in terms of order dated 26th May 2005 and
order   dated   18th  July   2006   directing   attachment   of   the
respondent.     The High Court of Delhi allowed the said writ
petition, vide order dated 11th  January 2007, in the following
terms:
“For   the   reasons   afore­recorded,   we   are   of   the
considered   view   that   the   respondents   have   not
complied   with   the   provisions   of   Rule   180   of   the
Rules,   as   such,   they   cannot   take   any   further
proceedings against the respondents on the basis of
the Court of Inquiry held in furtherance to the order
of   the   competent   authority   dated   26.9.2005.
However,   the   respondents   are   at   liberty   to   give
notice   to   the   respondent   and   continue   with   the
proceedings under Rule 180, and in the alternative,
even to take recourse to the provisions of Rule 22,
or exercise any other power available to them under
the   Act,   insofar   as   they   do   not   rely   upon   the
proceedings on the aforesaid Court of Inquiry.”
10. The appellants, instead of invoking Rule 180 of the Army
Rules,   wherein   opportunity   was   to   be   provided   to   the
respondent, resorted to Rule 22 of the Army Rules and issued a
fresh notice and passed an order dated 31st August 2007 and
ordered attachment under Section 123 of the Army Act.  
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11. The   respondent   challenged   the   above   by   filing   a   writ
petition in the High Court of Delhi being WP(C) No. 6632/2007,
which was then transferred to the learned AFT, Principal Bench
at New Delhi.   The said learned AFT, vide its order dated 3rd
September 2009, set aside the subsequent act of the Army
Authorities and held that resorting to Rule 22 of the Army
Rules was totally unwarranted and illegal.  The appellants were
however directed to resort to Court of Inquiry after giving an
opportunity   to   the   respondent   and   to   comply   with   the
requirement under Rule 180 of the Army Rules.
12. The GOC­in­C, vide its order dated 22nd September 2009,
directed reconvening/reassembling of the Court of Inquiry on
the basis of the liberty granted by the learned AFT, New Delhi
vide its order dated 3rd September 2009.  The GOC­in­C vide its
order   dated   12th  April   2010,   on   the   basis   of   the   Court   of
Inquiry, directed disciplinary action against the respondent.
13. On 30th July 2010, a convening order, directing assembly
of   the   GCM   under   the   Army   Act,   was   issued.     The   GCM
consisted of 7 Members, out of which, 6 Members were holding
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ranks of Major General which was lower than the respondent’s
rank.     The   Presiding   Officer,   however,   was   of   the   rank   of
Lieutenant General, but was allegedly junior to the respondent.
Even the Judge­Advocate General (hereinafter referred to as
“JAG”) was allegedly junior to the respondent and was only
holding the rank of Colonel.  On the same day, i.e., 30th July
2010, a charge­sheet comprising of nine charges was served
upon the respondent.
14. The GCM, vide order dated 18th February 2011, found the
respondent not guilty of the charges No. 2, 6 and 8 whereas
found the respondent guilty of charges No. 1, 3, 4, 5, 7 and 9
and was sentenced as under:
(i) To be cashiered; and
(ii) Rigorous   imprisonment   for   three   years   subject   to
confirmation.
The findings and sentence of the GCM were confirmed by the
Chief of Army Staff vide its order dated 13th January 2012.
15. The respondent filed an appeal before the learned AFT
against the order of the GCM dated 18th February 2011, which
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was further confirmed by the order dated 13th  January 2012
passed by the Chief of Army Staff.  The learned AFT, vide the
impugned order dated 10th  October 2013, partly allowed the
petition.  The learned AFT held that the findings of the GCM as
against the respondent were liable to be affirmed. However, the
learned   AFT   held   that   the   sentence   of   cashiering   and
substantive imprisonment of 3 years’ rigorous imprisonment
was harsh and thus, modified the sentence to dismissal from
service.
16. The respondent filed a writ petition being Criminal Writ
Petition No. 1895 of 2013 before the High Court of Punjab and
Haryana at Chandigarh, challenging the aforesaid impugned
order dated 10th October 2013 passed by the learned AFT.  The
High Court issued notice vide order dated 28th  October 2013.
In the meanwhile, the appellants also filed an appeal being
Criminal Appeal No.2169 of 2014 before this Court, challenging
the order passed by the learned AFT dated 10th October 2013.
Thereafter, the respondent filed an application being CRL.M.P.
No.24464 of 2014 in Criminal Appeal No.2169 of 2014 seeking
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transfer of Criminal Writ Petition No. 1895 of 2013, pending
before the High Court of Punjab and Haryana at Chandigarh to
this Court.  
17. This Court, vide its order dated 22nd August 2016, allowed
the said application and directed transfer of the said petition to
this Court, to be listed along with Criminal Appeal No.2169 of
2014.  
18. We have heard Shri R. Balasubramanian, learned Senior
Counsel appearing on behalf of the Union of India and Shri K.K.
Tyagi, learned counsel appearing on behalf of the respondent.
19. Shri Tyagi, learned counsel appearing on behalf of the
respondent, raised a preliminary point that since the Members
of the GCM were below the rank of the respondent, the GCM
was not properly constituted, and as such, violative of sub­rule
(2) of Rule 40 of the Army Rules.  He relies on the order of this
Court in the case of Ex. Lt. Gen. Avadhesh Prakash v. Union
of India and Another1
.  He submitted that from perusal of the
said order, it will be clear that about 80 Lieutenant Generals
1 Criminal Appeal No. 140 of 2019 dated 24.01.2019
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were available in the Indian Army at the relevant time, and as
such, the Court­Martial which had Members below the rank of
Lieutenant General, could not have tried the respondent.   He
therefore   submitted   that   the   GCM,   which   is   constituted   in
contravention of sub­rule (2) of Rule 40 of the Army Rules,
could not have tried the respondent.  He further submitted that
on the same ground, in view of Rule 102 of the Army Rules,
since the JAG, who was of the rank of Colonel, which is below
the rank of Lieutenant General, stood disqualified while acting
as a JAG.  He relies on the judgment of this Court in the case of
Union of India and Another v. Charanjit S. Gill and Others2
in this regard.
20. Shri Balasubramanian, learned Senior Counsel appearing
on behalf of the appellants, on the contrary, submitted that
though sub­rule (2) of Rule 40 of the Army Rules requires that
the Members of a Court­Martial for the trial of an officer shall
not be of a rank below than that of the officer, it also provides
that a departure from the said rule is permissible, when in the
2 (2000) 5 SCC 742
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opinion of the convening officer, having regard to the exigencies
of the public service, the officers of such rank are not available.
He therefore submits that merely because the GCM consisted of
the officers below the rank of Lieutenant General itself, would
not  ipso facto  vitiate the proceedings. He submitted that the
only requirement is that such an opinion is required to be
recorded in the convening order. He submitted that insofar as
the order of this Court in the case of Ex. Lt. Gen. Avadhesh
Prakash (supra) is concerned, in the said case, the order was
passed by this Court on the concession that such officers were
available.  He further submitted that in the said case, no such
opinion as required under sub­rule (2) of Rule 40 of the Army
Rules was recorded.
21. For appreciating the rival submissions with regard to the
preliminary objections, it will be relevant to refer to sub­rule (2)
of Rule 40 of the Army Rules:
“40.  Composition of General Court­martial.­
(1). …..
(2).  The members of a court­martial for the trial of
an officer shall be of a rank not lower than that of
the officer unless, in the opinion of the convening
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officer, officers of such rank are not (having due
regard   to   the   exigencies   of   the   public   service)
available.   Such opinion shall be recorded in the
convening order.”
22. In   view   of   the   specific   contention   with   regard   to   the
violation of sub­rule (2) of Rule 40 read with Rule 102 of the
Army Rules, we have summoned the original file.  On perusal of
the original file, we find that the convening officer has recorded
reasons as to why the officers of the rank of respondent were
not available.   We find that the reasons given, for doing the
same, would fall within the exigencies of the public service.
The scope of judicial review of such a decision is very limited.
Unless it is found that the decision taken by the authority
suffers from arbitrariness, irrationality or unreasonableness, it
would not be permissible for us to sit in an appeal over the
decision of the convening officer. The limited inquiry that would
be   permissible   is,   as   to   whether   the   reasons   recorded   are
having regard to the exigencies of the public service or not.  On
perusal of the original file, we find that the reasons given are
directly concerned with the exigencies of the public service.  We
therefore do not find any merit in the said submission.  
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23. Insofar as the order of this Court in the case of  Ex.  Lt.
Gen.   Avadhesh   Prakash  (supra)   is   concerned,   in   the   said
case, the contention made on behalf of the petitioner therein
was that the respondents therein could have tried to make
Lieutenant General available.  In any case, from the said order,
it   is   not   clear   as   to   whether   the   subjective   satisfaction   as
required under sub­rule (2) of Rule 40 of the Army Rules was,
in fact, recorded or not.  Another reason that weighed with this
Court for interfering with the order of the learned AFT was that
the learned AFT had recorded that since the appellant therein
had already retired from the service, there was no illegality in
constitution of GCM. This Court found that such a finding was
not permissible on the bare reading of Rule 40 of the Army
Rules.
24. Insofar as the merits of the present matter are concerned,
Shri Balasubramanian submits that after the learned AFT had
concurred   with   the   findings   of   the   GCM   that   the   charges
against the respondent stood proved, there was no occasion for
the learned AFT to have interfered with the penalty imposed on
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the respondent.  Insofar as the appeal of the appellants herein
is concerned, the learned Senior Counsel for the appellants
submitted that since there are concurrent findings of fact with
regard to the charges being proved, no interference would be
warranted   in   the   appeal   of   the   appellants.     He   therefore
submitted   that   the   appeal   of   the   appellants   deserves   to   be
allowed and the Transferred Case (Criminal) No. 1 of 2017 filed
by the petitioner (respondent in Criminal Appeal No. 2169 of
2014) be dismissed.
25. Shri Tyagi, learned counsel appearing for the respondent,
on the contrary, would submit that the findings as recorded by
the GCM as well as the learned AFT are recorded on the basis
of conjectures and surmises.  He submitted that in the GCM,
the standard that is required to be followed is of a criminal
trial.  It is therefore submitted that unless the charges against
an officer are proved beyond reasonable doubt, he cannot be
held guilty in GCM.  It is submitted that like a criminal trial,
the  benefit of  doubt  must  go to  the  officer and  not to the
prosecution.  He, however, submitted that in the present case,
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the GCM as well as the learned AFT have given the benefit of
doubt to the prosecution.
26. He submits that as a matter of fact, not a single charge
stands   proved   beyond   reasonable   doubt   against   the
respondent.   However, the respondent has been convicted by
the GCM without any evidence.   He therefore submitted that
the  Transferred   Case   (Criminal)   No.   1  of   2017   filed   by   the
petitioner (respondent in Criminal Appeal No. 2169 of 2014)
deserves to be allowed and the appeal filed by the appellants be
dismissed.
27. With   the   assistance   of   the   learned   counsel   for   the
appellants   and   the   respondent,   we   have   perused   the   order
passed   by   the   GCM   as   well   as   the   learned   AFT   and   the
materials placed on record.  
28. At   the   outset,   we   may   state   that   there   are   inherent
limitations on the jurisdiction of this Court and it will not be
permissible to reappreciate the evidence as recorded by the
GCM unless this Court finds that the material factors have
been either ignored or the evidence that has come on record,
16
has been appreciated in a totally erroneous manner.   With
these limitations in mind, we will consider the materials placed
on record.  
29. Though   nine   charges   have   been   framed   against   the
respondent, he has been found guilty insofar as charges No. 1,
3, 4, 5, 7 and 9 are concerned.  He has been found not guilty
insofar as charges No. 2, 6 and 8 are concerned.  The learned
AFT has also concurred with the finding of fact holding the
respondent guilty of the aforesaid charges.   The learned AFT
has observed that the evidence led with regard to all these
charges is mostly common and as such, has decided all the
said points together.
30. The learned AFT has come to a finding of fact that though
the contracts were finalized by the Army Purchase Organization
(hereinafter   referred   to   as   the   “APO”),   insofar   as   the
provisioning   of   dry   supplies   for   the   troops   is   concerned,   it
found   that   both   the   APO   as   well   as   the   Directorate,   are
concurrently   and   co­jointly   responsible   for   the   monitoring,
examination and the progress of the contracts.
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31. The respondent, at the relevant time, was holding the post
of DGST.  Though nine charges have been framed against the
respondent, they are inter­connected and are related to three
transactions as under:
(i) That the respondent had agreed to the proposal of M/s
Gujarat Co­operative Grain Growers Federation Limited
(hereinafter   referred   to   as   “M/s   GRAINFED”)   for
addition of two more tendering stations at Gadarwara,
District Narsingpur, Madhya Pradesh and Narsingpur
in Madhya Pradesh in addition to 14 tendering stations
already mentioned in the contract.  The charge was that
this was done with an intent to defraud the State;
(ii) That   though   the   respondent   had   enquired   in   the
complaint dated 4th  April 2005 alleging fake tendering
and presence of Kesari Peas and Akra, which were unfit
for   human   consumption,   he   had   omitted   to   ensure
investigation of the alleged presence of Kesari Peas and
Akra in Dal Masur Whole.   Therefore, the respondent
was   instrumental   in   feeding   the   food   to   the   Army
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Personnel, which was not as per the standards.  As a
continuation of the same transaction, with an intent to
defraud,   he   had   agreed   to   the   proposal   of   M/s
GRAINFED   for   upgradation   of   Dal   Masur   Whole
supplied by the firm knowing that the said item had
been found and declared unfit for human consumption;
and
(iii) That   the   respondent   had   approved   deviation   with
relaxation   to   M/s   PUNSUP   Limited   and   M/s   MMTC
Limited of permitting 350­400 grains per 100 grams of
Kabli Chana as against 300­350 grains per 100 grams,
and that this was done with an intent to defraud.
32. Insofar as the first charge is concerned, the findings of the
learned AFT would reveal that the request of M/s GRAINFED
for   two   additional   tendering   stations   at   Gadarwara   and
Narsingpur was made on 3rd March 2005 to the Chief Director
of Purchase (hereinafter referred to as the “CDP”), APO.   The
APO  forwarded  the  said  request  for  comments/views of  the
Directorate vide communication dated 9th  March 2005.   The
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perusal of the orders of the learned AFT as well as the GCM
would reveal that, after accepting the recommendation of PW­6­
Major General (Retd.) S.C. Mohan, the respondent did not agree
to the request of M/s GRAINFED.  However, the proposal was
put up before him for reconsideration pursuant to the note
prepared   by   PW­13­Col.   (Retd.)   N.K.   Yadav,   Director
Provisioning,   stating   that   the   entire   quantity   against   the
acceptance of tender has already been tendered at Gadarwara
within the delivery period.  The respondent therefore agreed to
the   request   of   M/s   GRAINFED   for   two   additional   tendering
stations and the decision of the respondent was intimated to
the APO.
33. With regard to the aforesaid charge, it will also be relevant
to refer to the order passed by the learned AFT, in the case of
Brig  P.S.  Gill   v.  Union  of   India  and  Others3
.   In the said
case, the petitioner therein (Brig. P.S. Gill), at the relevant time,
was working as CDP, APO.     The relevant portion of the said
findings are as under: 
3 OA No. 147 of 2010 dated 24th May 2011
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“2. From a bare reading of the aforesaid charges it
appears that the petitioner in the capacity of his
being Chief Director of Purchase, Army Purchase
Organisation,   Ministry   of   Defence   contrary   to
APO/MOD Consolidated Order No.3 of 1987, with
intent to  defraud/improperly   approved   addition
of   two   more   tendering stations   namely
Gadarwara   and   Narsingpur   in  Madhya   Pradesh.
For the purpose of drawing the charges, reliance
appears to have been placed by the respondents on
the exhibits, the details of which may be charted
out as under:
Exhibit Page Para
L 239 ­
LXIX 294 ­
XXVII 193 2
VI 141­143 1 and 2
II 83­85 ­
V 139­140 ­
LXXV 303­305 ­
XXVIII to XXXIII/I 194­204/80 ­
From the perusal of the exhibits noted above, there
is   nothing   to   show   that   the   addition   of   two
tendering stations was not within the powers of the
petitioner. Nothing could be pointed out to show the
relevancy of these documents for making out prima
facie   case   against   the   petitioner.   Further   the
statement of the witness namely, PW1 Brig PPS Bal
of   CDP   Army   Purchase   Organisation,   AHQ   New
Delhi   was   scrutinised.   He   was   categorical   in   his
statement that he was aware of the Consolidated
Order No.3 of 1987 (Ext.2) permits the inclusion of
additional tendering station. Ext.1 is related to the
letter dated 06.10.2008 written to M/s M.P. Trade &
21
Investment   Facilitation   Corporation   Ltd.   for
"procurement of 1000 MT Gram Crushed (Kibbled)
against A/T even no. dated 05.12.2007 from M/s.
MPTRIFAC­Addition   of   Tendering   Station­Delhi.
This one example was quoted by the witness. This
itself   indicates   that   the   addition   of   tendering
stations is within the discretion of the competent
authority to the effect that "stores can be tendered
at   Delhi   as   a   special   case   in   the   subject   A/T,
subject   to   the   condition   that   any   additional
expenditure   incurred   by   the   purchaser/savings
accruing to the supplier, on account of this addition
of   tendering  Station,   shall   be   reimbursed  by   the
Supplier to the Government" which is also exactly
the requirement mandated in defence Consolidated
Order   No.3   of   1987.   Further   with   regard   to   the
making of the additional tendering stations by the
accused­petitioner   as   per   the   reply   of   PW1,   the
contract was amended as required by Government
of India orders and the amended contract was also
communicated by Exh. VI. There was no objection
to such acceptance of tendering stations from Audit
authorities or by PCDA. Apart from it, witness also
makes it clear in his answer to Question No.4 that
the tenderer has option to select stations where he
can tender stores as per the contract. The APO does
not  dictate  the  tendering  stations.  However,  they
must   lend   themselves   to   ease   of   inspection   and
movement of stores to consignee depots. Lastly this
witness also clarified that by making the addition of
two tendering stations no monetary benefits could
be acquired by petitioner nor there was any extra
expenditure borne out by the respondents owning to
acceptance   of   two   new   stations   by   the   accusedpetitioner.   Further   by   adding   these   two   new
stations, no violation of any rule or order was made
by the accused petitioner."
22
34. It could thus be seen that the very same AFT has come to
a finding that the CDP, APO was within the powers to include
additional tendering stations.   It has further been found that
there was no objection to acceptance of such tendering stations
from Audit Authorities or by CDP, APO.   It is further to be
observed   that   the   learned   AFT   has   clearly   noted   that   the
Consolidated   Order   No.   3   of   1987   permitted   inclusion   of
additional tendering station subject to the condition that the
additional   expenditure   incurred   by   the   purchaser/savings
accrued to the supplier, on account of this addition of tendering
station, shall be reimbursed by the Supplier to the Government.
There was a specific finding that on account of addition of two
tendering   stations,   neither   any   monetary   benefits   could   be
accrued to the petitioner therein (Brig P.S. Gill), nor there was
any   extra   expenditure   borne   out   by   the   Army   owing   to
acceptance of two new stations by the petitioner therein (Brig
P.S. Gill).  In any case, it is clear from the said order that the
authority to accept such additional tendering stations was with
the CDP, APO.   In view of this specific finding of the learned
AFT recorded in the order dated 24th May 2011, we find that the
23
finding,   to   the   contrary,   recorded   by   another   Bench   of   the
learned AFT vide the impugned order dated 10th October 2013
in   the   case   of   the   present   respondent,   would   not   be
sustainable.
35. In any case, it is not even the case of the appellants herein
that any loss was caused to the Army on account of such
decision   or   any   additional   benefit   was   accrued   to   M/s
GRAINFED by such deviation.  This is apart from the fact that
the   Consolidated   Order   No.   3   of   1987   itself   required   any
additional   expenditure   incurred   by   the   purchaser/savings
made by the supplier to be reimbursed by the Supplier to the
Government.   As such, the findings of the learned AFT that
there was an intention on the part of the respondent to defraud,
in our view, would not be sustainable.
36. Insofar   as   the   second   charge   is   concerned,   it   is   with
regard to the respondent not taking action on the basis of the
anonymous complaint dated 4th April 2005.  The related charge
is that though the Dal Masur Whole was found to also contain
24
Kesari Peas and Akra, the respondent cleared the samples and
the supply of said Dal Masur Whole was cleared.  It is the case
of the appellants that on account of this, the Dal Masur Whole,
which was  not  as  per the  standards, was fed to  the  Army
Personnel.  It is their further case that the respondent also did
not take immediate steps for preventing the consumption of the
same.   It   is   to   be   noted   that   after   the   receipt   of   the   said
anonymous complaint, the samples were sent for analysis and
the   presence   of   traces   of   Kesari   Peas   was   revealed   during
analysis   of   samples   on   13th  May   2005.     The   respondent
thereafter issued instructions to freeze the stocks.  It is further
to be noted that the DGST, vide order dated 12th  April 2005,
had directed a Departmental Court of Inquiry to inquire into
whether there were any irregularities in tendering/inspection
procedure of Dal Masur Whole offered by M/s GAINFED.  It will
be apposite to refer to the said order dated 12th April 2005:
“1. A departmental Court of Inquiry composed as
under will assemble at the place, date and time to
be   fixed   by   the   Presiding   Officer   to   investigate
whether   there   were   any   irregularities   in
tendering/inspection   procedure   of   Masur   Whole
offered   by   M/S   Gujarat   Coop   Grain   Growers’
Federation Ltd. for inspection by CFL ASC, Delhi
25
against   AT   No.J­13028/1/4­03/45­RP/2005­PUR
III dated 28 Feb 2005:­
Presiding Officer  – Brig V Marwaha
         DDST, HQ Delhi Area
Technical Members – Col SC Chakravarty
   Dir ST (FI)
2. The court will specifically examine the following
issues:­
(a)Whether  the   complete  qty  of   979.600  MT  was
tendered by 15 Mar 2005.  If so why was the BIO
instructed to inspect only 440.800 MT.
(b)Was it ascertained by the BIO that the complete
qty i.e. 979.600 MT has been  tendered and a
report made to that effect.
(c)Why did the BIO not carry out sampling of the
consignment, and why were the samples of bags
rejected, not brought for the perusal of CO/Lab
analysis.
(d)The decision of CO, CFL ASC Delhi to repack and
retender the stocks as and when ready when the
AT Note is against Risk Purchase; resulting in
automatic extn of DP.
(e)The acceptance of a cert from the contractor that
the balance of the consignment ie, 538.400 MT is
packed in the same quality bags as the 440.800
MT; and thereby ordering its rebagging.
CONFIDENTIAL
3. The Court will examine all associated issues, and
pin point responsibility for lapses if any.
26
4. The proceedings duly completed will be submitted
personally to ADGST (SM) by 19 Apr 2005.”
37. It   could   thus   be   seen   that   the   Court   of   Inquiry   was
directed   to   examine   all   associated   issues   and   pin   point
responsibility for lapses, if any. It is thus clear that the finding
that   the   respondent   had   failed   to   take   cognizance   of   the
complaint and direct an inquiry with that regard, is contrary to
the material placed on record.
38. It is further to be noted that the GCM has itself, in its
order dated 18th  February 2011, come to a conclusion that
560.727.380 Metric Tons of Dal Masur Whole was declared
gone   bad  within   warranty   period   for   which   recoveries   were
made from M/s GRAINFED.
39. That leaves us with the third charge with regard to the
relaxation   being   granted   to   M/s  PUNSUP   Limited   and   M/s
MMTC Limited in acceptance of tender dated 26th June 2005,
vide which 350­400 grains per 100 grams of Kabli Chana was
permitted on price reduction of 0.5% instead of 300­350 grains
per   100   grams.     It   is   to   be   noted   that,   leave   apart   the
respondent or anyone else gaining from the said relaxation,
27
there is a specific finding that on account of the decision of
reducing 0.5% contract amount for such a relaxation, there has
been a benefit to the public exchequer.   It will be relevant to
refer to the finding of the learned AFT in the case of Brig P.S.
Gill (supra): 
“There is no dispute on the point that DGST was the
competent authority for making relaxation in the
specification. There is also ample evidence that the
DGST   being   competent   authority   permitted   to
despatch 400 grains per 100 gms. in the place of
300­350 grains per 100 gms. DGST also appears to
have   made   reduction   of   0.5%   from   the   contract
amount, in that the Government money to the tune
of   Rs.7,57,480.16   was   saved   in   the   matter   of
supplier   M/s.   Punjab   State   Civil   Supplies
Corporation Ltd pertaining to Charge Nos. 3 and 4.
Similarly, within his powers, he granted relaxation
to M/s. MMTC to the tune of Rs.4,48,050.00.”
40. It could thus be seen that the learned AFT has specifically
come to a finding that on account of such decision, public
money to the tune of Rs.7,57,480.16 was saved in the case of
supplier   M/s   Punjab   State   Civil   Supplies   Corporation   Ltd.
Similarly, an amount of Rs.4,48,050/­ was saved in the case of
relaxation granted to M/s MMTC Limited.
28
41. It is not the case of the appellants that the Kabli Chana so
supplied was of inferior quality or not as per the standards.
The only allegation is that the relaxation which was granted
was with regard to number of grains that every 100 grams
should contain.   On the contrary, on account of reduction in
price,   there   has   been   a   substantial   saving   to   the   public
exchequer, leave aside any pecuniary gain to the supplier.  As a
matter of fact, even the GCM in  paragraph (26)  held that the
respondent was entitled to benefit of doubt with regard to his
intent but has found that the said act was prejudicial to good
order and military discipline. 
42. In any case, it is to be noted that clause 6 (a)(iv) in the
tender inquiry of the APO, which has been in vogue for decades,
permitted the same to be done.  It will be relevant to refer the
same, which reads thus: 
“6   (a)(iv).   When   an   appeal   is   preferred   by   the
supplier   against   the   decision   of   the   inspecting
officer the final finding of the appellate authority viz.
QMG's Branch, ST­7/8 will automatically supersede
the   original   report   of   the   Inspecting   Officer
irrespective of the fact whether the said inspecting
officer   recommended   the   consignment   to   be
accepted   subject   to   quality   allowance   price
29
reduction etc. In the event of any supplies being
found not conforming to the prescribed specification
but being considered of acceptable quality the Chief
Director of  Purchase  may, at  his sole  discretion,
accept the supplies subject to such reduction in
price as he considers reasonable, in the light of the
defects found in the supplies or the quality of the
supplies accepted. In case, the reduction in price is
up to 5%, the consignment will be accepted without
any reference to the contractor for acceptance of the
price reduction and the contractor will not raise any
objection thereto. However, if any consignment is
acceptable on price reduction over 5% the consent
of the contractor will be obtained before acceptance
of supplies."
43. It could thus be seen that the finding in that regard, in
our view, is also not sustainable. It will also be apposite to refer
to   the   following   observations   of   the   learned   AFT   in   the
impugned order: 
“38. However, we are of the opinion that though
these charges stand proved which show that he had
failed to perform the duties of the post of which he
was assigned the duties and had done such acts
prejudicial to good order and military discipline and
he cannot escape the responsibilities in this regard.
It  is  true  that  his  acts  were  prejudicial  to   army
discipline  and  he  had  committed  such   acts with
intent   to   defraud   but   it   cannot   be   said   that   he
actually committed fraud or did any such act which
resulted   in   actual   loss   or   wrongful   gain   to   any
person though his acts lead to an inference that
attempts were made to cause a wrongful gain and,
therefore, he cannot escape his liabilities.”
30
44. It could thus clearly be seen that the learned AFT has
come to a conclusion that it cannot be said that the respondent
has   actually   committed   fraud   or   did   any   such   act,   which
resulted in actual loss or wrongful gain to any person. However,
in the same breath, the learned AFT observes that the acts lead
to an inference that attempts were made to cause a wrongful
gain,   and   therefore,   the   respondent   cannot   escape   his
liabilities.  Observing this, the learned AFT comes to a finding
that the offence under Section 52(f) of the Army Act, 1950,
which reads thus, was made out against the respondent: 
“52.  Offences in respect of property.­
…..
(f).  does any other thing with intent to defraud, or
to cause wrongful gain to one person or wrongful
loss to another person.”
45. We  are   afraid   as   to  whether   such   a   finding   would   be
sustainable in law.  The learned AFT has specifically come to a
finding that the respondent has not committed any fraud or did
not commit any act which resulted in actual loss or wrongful
gain to any person.  We are unable to appreciate as to on what
basis the learned AFT comes to a conclusion that the acts lead
31
to   an   inference   that   the   attempts   were   made   to   cause   a
wrongful gain.  The finding as recorded by the learned AFT is
totally contrary to the material placed on record.
46. We, therefore, find that the orders passed by the learned
AFT as well as the GCM are not sustainable in law.  The appeal
of the appellants deserves to be dismissed and the Transferred
Case (Criminal) No. 1 of 2017 filed by the petitioner (respondent
in Criminal Appeal No. 2169 of 2014) be allowed.
47. In the result, we pass the following order:
A. Criminal Appeal No. 2169 of 2014:
(i) Criminal   Appeal   No.   2169   of   2014   filed   by   the
appellants is dismissed. 
B. Transferred Case (Criminal) No. 1 of 2017:
(i) Transferred Case (Criminal) No. 1 of 2017 filed by the
petitioner (respondent in Criminal Appeal No. 2169 of
2014) is allowed;
(ii) The order dated 18th February 2011 passed by the GCM
holding the petitioner guilty and imposing penalty on
32
him and the impugned order dated 10th October 2013,
passed by the learned AFT are quashed and set aside;
(iii) The petitioner is acquitted of all the charges levelled
against him; and
(iv) The petitioner would be entitled to all pensionary and
consequential   benefits  in   accordance   with   law.     The
arrears of such benefits shall be computed and paid to
the petitioner within a period of three months from the
date of this judgment.
…..…..….......................J.
                                                      [L. NAGESWARA RAO]
      …….….........................J.
[B.R. GAVAI]
NEW DELHI;
MARCH 23, 2022.
33

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