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

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

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,

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.”

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

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.

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

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

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

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

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

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

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.

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

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,

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,

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.

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

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

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

“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 &

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."

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

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

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

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.

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,

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.

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

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.”

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

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

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.

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