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Petitioner: UNION OF INDIA and another VS Respondent: W. N. CHADHA
Court Name: Supreme Court of India Judge(s): S. Ratnavel Pandian, K. Jayachandra Reddy Title: UNION OF INDIA and another vs W. N. CHADHA Case No.: Criminal Appeal No,567 of 1992 Date of Judgment:1992-12-17 Reported As: 1993 SCMR 285 Result: Leave granted.
JUDGMENT
JUDGMENT ' S. RATNAVEL PANDIAN, J. ---The above appeal is preferred before this Court challenging the judgment of the High Court of Delhi dated 2nd September, 1992 rendered in Criminal Writ No, 501/91 knocking down the very registration of the First Information Report and all the proceedings arising thereon including the issue of letters rogatory in the second round of the bout of this litigation. 2. The first round of the litigation came before this Court on an appeal preferred by Sh. H.S. Chowdhary challenging the order of the learned Single Judge, Justice M.K. Chawla of the High Court of Delhi dated 19th December 1990 dismissing his petition on the ground that he has no locus standi to file his petition and a few other appeals preferred by the Union of India and some political parties which had been seriously litigated before this Court on the earlier occasion and resulted in the pronouncement of an order dated 27th August 1991, giving only the conclusions and the fmal judgment on 28th August 1992 vide Janata Dal v. H.S. Chowdhary (1991) 3 SCC 756 and (1992) 4 SCC 305: (1993 AIR SCW 248) the decisions of which were rendered by this Bench. 3. The synoptically resumption of the case of the prosecution leading to the initiation of the proceedings inclusive of the organic synthesis of the events and the circumstances veering the case have been encapsuled and presented in the order and judgment of this Court rendered in the first round of the batch of appeals. Nonetheless, to assimilate the controversial issues both legal and factual involved, we would like to give a terse sketch, shorn of the detailed facts of the case, as borne out from the records, which has given rise to this appeal. 4. The respondent, namely, W.N. Chadha who is now residing at Dubai in United Arab Emirates (UAE) had his first agreement in 1978 with M/s. A.B. Bofors (hereinafter referred to as 'Bofors') to provide representation services to it in India with regard to supply of arms and ammunition to
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Indian Government. The terms of the said representation services agreement were extended from time to time until the end of 1985. However, in January, 1986, Bofors and Anatronic General Corporation Private Ltd. (for short "AGC') promoted by the respondent entered into a consultancy agreement in 1986 with Bofors in respect of its business in India. According to the responent, at no stage he or any of his concerns was made agent of Bofors. Similarly, he or his concern was not entitled to enter into negotiations with Government of India on behalf of Bofors or to commit or to bind Bofors to any agreement or arrangement with the Goverment of India but as stated supra, he was to render administrative consultancy services to Bofors. 5. The Ministry of Defence, Government of India approved in August, 1980 a proposal forwarded by Army headquarters recommending, inter alia, the introduction of 155 mm calibre medium guns both towed and self-propelled to meet its defence operational requirements. The choice for purchasing the said guns was shortlisted in December, 1982 to (1) M/s. Sofma of France, (2) M/s. A.B. Bofors of Sweden (Bofors), (3) M/s. International Military Services (IMS) of U.K. And (4) M/s. Voest Alpine of Austria. 6. In April 1984, the Cabinet Committee on Political Affairs 'CCPA' for short) approved the proposal for procurement of 155 mm guns alongwith certain related, equipments and ammunition at a total estimated cost of Rs,1,600 crore. In May 1984, a Negotiating Committee comprising of the Defence Secretary as the Chairman, Secretary (DP & S), Scientific Advisor to Raksha Mantri (i,e. Secretary, Research and Development), Secretary (Expenditure) Additional Secretary, Department of Economic Affairs, Financial Advisor, Defence Services and the Deputy Chief of Army Staff as members was constituted for detailed negotiations with the various suppliers. 7. The Negotiating Committee started its deliberations in June, 1984 and decided that fresh sealed technical and commercial offers should be invited from the four shortlisted firms. After the offers were received from the aforesaid four firms, technical and commercial negotiations were held with all the said firms and thereafter revised offers were invited and the same were received on 1st September. Offers were also invited from the ammunition manufactures. After seeking certain clarifications from the aforesaid firms with a view to evaluate the offers of all the competitors, all the four firms submitted fresh commercial offers on 10th May, 1985. Thereafter, members of the Negotiating Committee requested the Army Headquarters to give their recommendations of the guns acceptable to them taking into account the technical aspects, delivery schedule etc. And clearly indicate their preference from amongst the acceptable guns. The then Deputy Chief of the Army Staff told the committee that the French gun was the best and the Swedish gun was the second best and that if the price difference was marginal, they shoud go for the former. The recommendations of the Army Headquarters to shortlist only M/s. Sofma of France and M/s. A. B. Bofors of Sweden for further negotiations were accepted by the Negotiating Committee which, however, felt that the choice between the two was open and it would depend on a combination of technical and financial considerations. The above two shortlisted firms were called for negotiation in the middle of December, 1985. Three ammunition manufacturers were also called in the middle of January, 1986. The commercial contractual and technical aspects of purchase and licensed production were negotiated with the said two firms. 8. On 4th March, 1986, the Negotiating Committee expressed the view that Bofors gun had a clear edge over Sofma gun of France with which view the then Deputy Chief of the Army Staff also agreed. On 12th March 1986, the Negotiating Committee recommended that a letter of intent might be issued to Bofors to the effect that the Government of India would be willing to award the contract to them subject to the condition of being satisfied on all aspects of the purchase, licensed production, credit and other arrangements. Finally, the order was placed by the Government of India to Bofors on 24th March, 1986 19941 Union of India v. W.N. Chadha 291 (S. Ratnavel Pandian, J),for the supply of 410 numbers (400 plus 10 free) of 155 mm Field Howitzer 77B gun system/spare
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guns vide contract No,6 (9)/84/D (GS-IV) for a total amount of SEK 8410.66 million (Swedish Kroners) equivalent to about Rs,1437.72 crore. The related contract for supply of the gun package (towed) and other related agreements/contracts were concluded, approved and signed on 24th March, 1986 with Bofors. 9. On 17th April, 1987, some newspapers in India gave prominent coverage to a Swedish Radio broadcast made on the previous day, broadcasting that bribes had been paid to senior Indian politicians and key Defence figures to win the contract awarded by the Government of India to Bofors on 24th March, 1986. 10. The above news item was again broacast by Swedish Radio on 17th April, 1987 claiming that it had documentary proof of pay-offs in four instalments to Indian accounts in ,Swiss Banks and it had checked with Skandinaviska Ensilds Banker, the bankers for Bofors. This news item was refuted by Bofors denying the allegations of paying any kickbacks to Indian politicians or officials in respect of the deal. The Government of India also issued a statement on 17th April, 1987 itself denying the allegations of payments of alleged kickbacks. On 20th April 1987, Shri K.C. Pant, the then Minister of Defence made a suo motu statement in the Lok Sabha stating inter alia, that the Government of India did not employ any representative/agent for the contract and added that "for administrative services, e.g. Hotel bookings, transportation, forwarding of letters, telexes etc., they use the services of a local firm". The then Defence Minister added that "if any evidence is produced involving violations of the law, the matter will be thoroughly investigated and the guilty, whoever they may be punished". A similar statement was also made by the Minister of State for Defence in the Rajya Sabha on 21st April, 1987. 11. This issue created furore both in the Lok Sabha and the Rajya Sabha. Several issues were raised by the Members of both Houses not only with regard to the alleged kickbacks paid by Bofors for winning the contract but also about the quality and suitability of the gun selected for procurement. 12. On 20th April 1987, Shri Rajiv Gandhi, the then Prime Minister of India intervening in the debate in the Lok Sabha reaffirmed the statement of Minister for Defence in the following words: And like Panditji has said now, you show us any evidence, we do not want proof. We will bring the proof. You show us any evidence that there has been involvement of middlemen, of pay-offs or of bribes or commissions, we will take action and we will see that nobody however high-up is allowed to go free." 13. Again the then Minister for Defence made the assurance based on the statement of the then Prime Minister. 14. A demand was made by the Members of both Houses---Lok Sabha and Rajya Sabha---to make a probe into the matter by a Parliamentary Committee. When the matter stood thus, on 4th June 1987, the Swedish Embassy in India forwarded a copy of the report dated 1st June, 1987 of the Swedish National Audit Bureau ('SNAB' for short) with a note to the Ministry of External Affairs, Government of India, stating that what is made available to the Government of India was only one part of the report of the SNAB but not the report in its entirety and the rest was withheld by the Government of Sweden on the bank secrecy requirement. (The summary of the observations of SNAB is extracted in the Report of Joint Parliamentary Committee). 15. It may be noted that the said Report did not disclose the names of the recipients of the kickbacks. The them Prime Minister after having the discussion about this matter with the leaders of the opposition parties on 17th June, 1987 decided to request the Speaker of the Lok Sabha and the Chairman of the Rajya Sabha to set up a Joint Parliamentary Committee (for short JPC). As both the Speaker and the Chairman declined to set up the JPC on their own motion, on 29th June 1987 the then Minister for Defence (Shri K.C. Pant) moved a motion in the Lok Sabha for appointment of the JPC, and added in justification of the constitution of the same that "The Goverment has nothing to hide. The Government wants to get at the truth and that is why this Committee has been set up".
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Accordingly, the JPC was constituted on 28th August, 1987 to make a probe into the above allegations. The JPC submitted its Report on 22nd April 1988 with its conclusions and also with the dissenting note of one of its members. The said report of the JPC was presented to Lok Sabha on 26th April 1988 and then laid on the table of the Rajya Sabha on the same day. In spite of the report of the JPC, the allegations of malpractices in the deal with Bofors, payments of kickacks and receipt of illegal gratification were persistently reiterated and the matter was relentlessly agitated. In the meanwhile, there was a change in the Government. 16. Thereafter, on 22nd January, 1990 the Superintendent of Police, CBI/DSPE/ACU-IV, New Delhi registered the impugned First Information Report in Crime No,RC1(A)/90/ACU IV under section 120B read with sections 161, 162, 163, 164 and 165-A of the Indian Penal Code read with sections 5 (2), 5 (1) (d) and 5 (2)/5 (1) (c) of the Prevention of Corruption Act, 1947 read with sections 409, 420, 468 and 471 of the Indian Penal Code against 14 accused of whom three are named, they being (1) Shri Martin Ardbo, former President of M/s. A.B. Bofors, Sweden, (2) Shri Chadha alias Win Chadha, s/o Shri Assa Nand, President of M/s. Anatomic General Corporation/Anatornic General Companies Ltd., C/4, Main Market, Vasant Vihar, New Delhi and Shri G.P. Hinduja, New Zealand House, Hay Market, London SW1. The rest of the 11 accused are stated in general as Directors/ employees/holders/beneficiaries of account code and public servants of the Government of India. The prefatory note of the First Information Report reveals that the case was registered "on the basis of reliable information received from certain sources, certain facts and circumstances that have become available, media reports, report dated 1st June 1987 of the Swedish National Audit Bureau (SNAB), cetrtain facts contained in the report dated 22nd April, 1988 of the Joint Parliamentary Committee (WC) and the report dated 28th April 1988 of the Comptroller and Auditor-General of India (CAG)". The First Information Report gives a detailed sequence of the events relating to the purchase of guns from M/s. A.B. Bofors, Sweden and the related agreements entered thereupon in violation of the Government's policy i,e. Not to involve any agent and the existing law of this land. Various allegations are mentioned in the F.I.R. Regarding the payment of bribes/kickbacks and receipt of illegal gratification. It is further averred in the First Information Report that even in the letter dated 3-10-1986 sent to the Swedish National Bank, Bofors had referred to some of the payments to Svenska Inc. And the code name 'Mont Blane' as "commission payments" and that the payment of M/s. Moresco/Moineao/SA/ Pitco, Geneva was deposited by Bofors in three code name accounts, namely, "Lotus" in Suissee Bank Coporation, 2 Rue de law Confederation 1204, Geneva "Tulip" in Manufacturers Hannover Trust Company, 84 Rue du Rhone, 1204, Geneva and "Mont Blane" in Credit Suissee, 2 Place Belle Air, 1204, Geneva and that these payments to code name accounts are without mentioning or disclosing the payer's names. Ultimately, reference was also made in paragraph 112 of the F.I.R. To the statement of Mr. Thulholm, Chairman of Noble Industries. 17. In the F.I.R., it is summed up that the facts and circumstances set out in the F.I.R. Disclose that the above-named and unnamed accused persons and others had entered into a criminal conspiracy at New Delhi and other places during 1982-87 in pursurance of which the accused public servants obtained illegal gratification in the form of money from Bofors, a Swedish company through the agent firms/companies/persons as motive or reward for such public servants who by corrupt or illegal means or by otherwise dishonestly abusing their official position as public servants caused pecuniary advantage to themselves, Bofors, the agents and others in the matter of the said contract finalised on 24th March 1986 and that there is reason to believe that in pursuance of the said criminal conspiracy, the :impugned payments were made by Bofors and obtained by the above firms/companies/persons as gratifications and as motive or reward for their inducing or having induced, by corrupt or illegal means or by the exercise of personal influence, the said public servants of the Government of India in the matter of processing and award of the said contracts to Bofors and that the public servants had also abetted the same.
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18. After the registration of the case, the Director, CBI by his letter dated 23rd January, 1990 followed by another letter dated 26th January, 1990 requested the concerned authority in Switzerland for freezing/blocking certain bank accounts said to be relevant to the case, on which the Federal Department of Justice and Police, Switzerland moved a Geneva and a Zurich Judge who froze certain bank accounts on 29th January, 1990. It was, however, pointed out that the relevant accounts would remain frozen till 28th February, 1990 and that further necessary assistance would be rendered only on receipt of the letter rogatory from a competent judicial authority in India. 19. On 2nd February, 1990, the second appellant (C.B.I.) requested Shri R.C. Jain, Special Judge, Delhi to issue a letter rogatory/request to Switzerland urgently for getting the necessary assistance so that the investigation can be conducted in Switzerland lest very important and relevant evidence would remain uncollected and the cause of justice would be frustrated. 20. The Special Judge after hearing the prosecution allowed the application by his order dated 5th February, 1990. The said order reads thus: "In the result, the application of the CBI is allowed to the extent that a request to conduct the necessary investigation and to collect necessary evidence which can be collected in Switzerland and to the extent directed in this order shall be made to the competent Judicial Authorities of the Confederation of Switzerland through the Ministry of External Affairs, Government of India subject to the filing of the requisite/paper undertaking required by the Swiss Law and assurance for reciprocity." 21. It appears that though the Examining Magistrate of Geneva decided on 26th March, 1990 to accept the letter of request, on a challenge by two of the affected parties, the Criminal Court of Canton of Geneva held that the request for mutual judicial assistance presented by India did not in its form satisfy the requirement of Article 28 of the Federal Act on International Mutual Assistance in Criminal Matters (for short "MAC') and sent back the letter rogatory for compliance of certain procedural formalities. Thereafter, the CBI submitted another application to the Special Judge on 16th August, 1990 praying for issuance of an amended letter rogatory to the competent judicial authority in the Constitution of Switzerland. It was also prayed to have the proceedings on this application in camera since the proceedings arising thereon involve sensitive aspects. By that time. Shri V.S. Aggarwal assumed charge as Special Judge in place of Shri R.C. Jain. 22. It was at this relevant time i,e. On 13th August, 1990 Shri H.S. Chowdhary, an Advocate claiming to be the General Secretary of an Organisation named as Rashtriya Jan Parishad as a public interest litigant filed Criminal Miscellaneous Case No,12 of 1990 before the Special Judge seeking certain prayers inclusive of not to issue letter rogatory on the reques of the CBI unless the allegations against the named persons are established and that no request for feezing bank accounts be made to Swiss Government etc. The details of the prayers are given in our judgments in (1991) 3 SC;: 756 and (1992) 4 SCC 305; AIR 1993 SCW 248). The Special Judge, Shri V.S. Aggarwal dismissed the petition of Shri H.S. Chaudhary on 18th August, 1990 holding that he has no locus standi. Then the Special Judge for the reasons mentioned in his order issued (1) Note of compliance and (2) Amended Letter rogatory on August 21, 1990. 23. It may be recalled that H.S. Chaudhary filed a criminal revision before the High Court of Delhi which came up for hearing before Justice M.K. Chawla who by his order dated 19th December, 1990 dismissed the revision petition holding that H.S. Chaudhary had not locus standi to present the revision but took suo motu cognizance of the matter in exercise of powers vested on him under sections 397 and 401 read with section 482 of the Criminal Procedure Code and directed the issuance of show-cause notice to the CBI and the State calling them "as to why the proceedings initiated on the filing of F.I.R. No, RC 1 (A)/90/ACU-IV dated 22-1-1990 pending in the Court of Shri V.S. Aggarwal, Special Judge, Delhi, be not quashed".
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24. On being aggrieved by the order of Justice M.K. Chawla, H.S. Chaudhary preferred an appeal challenging the findings of the High Court that he had no locus standi and the appellant herein (Union of India) and several political parties such as Janata Dal, Communist Party of India (Marxist) and Indian Congress (Socialist) preferred appeals canvassing the correctness of the order of Justice M.K. Chawla taking suo motu cognizance and issuing notice calling upon the CBI and the State to show cause as to why the proceedings initiated on the strength of the F.I.R. Be not quashed. One independent writ petition was also filed for the same relief as sought for by the political parties. This Court by its order dated 27th August, 1991 allowed the appeal of the Union of India and quashed the suo motu action of the High Court but reserved the reasons to be given later on vide Janata Dal v. H.S. Chowdhary, (1991) 3 SCC 756. Thereafter, this Bench rendered its final judgment on 28th August, 1992 giving the reasons in justification of its earlier order. In the final judgment, this Court confined the question only with regard to the scope and object of public interest litigation and the suo motu exercise and inherent powers of the High Court and ultimately held that H.S. Chowdhary did not have any locus standi to challenge the veracity of the First Information Report and the proceedings arising thereon and quashed the show-cause notice issued to the CBI and the State. However, in the earlier Order itself, we expressed our view as regards the right of parties aggrieved by initiation of criminal procceedings to challenge the said proceedings, in the following words: "Even if there are million questions of law to be deeply gone into and examined in a criminal case of this nature registered against specified accused persons, it is for them and them alone to raise all such questions and challenge the proceedings initiated against them at the appropriate time before the proper forum and not for third parties under the garb of public interest litigants." 25. After the first round of the bout (i,e. The public interest litigation) was lost by H.S. Chowdhary. Shri W.N. Chadha, the respondent herein who is one of the named accused in the F.I.R. Has entered into the arena by preferring Criminal Writ No,501 of 1991 before the High Court of Delhi through his Pairokar, Shri S. Nandi of Delhi challenging the legality and validity of the First Information Report dated 22nd January, 1990 and the letter rogatory issued by the Special Court vide its order dated 5th February, 1990 and the amended letter rogatory issued by the Special Court on 21st August, 1990 and praying for quashing of the F.I.R. And all other proceedings arising thereon inclusive of the letters rogatory and for restraining the appellants from further proceeding in the investigation on the basis of the F.I.R.. 26. It appears from the judgment of the High Court that a volley of attacks had been triggered on against the entire criminal proceedings inclusive of the registration of the case, the main contentions of which are as follows:-- (1) The report of the JPC pertaining to the subject-matter of the impugned F.I.R. Would constitute a legal bar not only for the registration of the F.I.R. And the continuation of the investigation in pursuance of it but also for any further inquiry or investigation by the CBI or trial of any offence with regard to the subject-matter of the proceedings in question which had been deeply gone into by the JPC and finally decided as borne out from the Report of the JPC. (2) The First Information Report does not disclose the commission of any offence and at any rate against the respondent even assuming that the respondent had received certain amount by way of winding up charges/commission through some other company. (3) The very fact that no civil case has yet been filed by the Government of India for recovery of the so-called commission in India and elsewhere by invoking the arbitration clause of the contract, the entire entroversy is to be held as being based on mere conjectures and surmises. (4) The report of the JPC clearly reveals that the Bofors gun was best amongst the other available guns and was offered at the minimum price.
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(5) Though 31 months have passed by since the registration of the F.I.R., no public servant has been brought on record as accused so far. (6) The F.I.R. Was conceived with a mala fide motivation of the persons in authority and the criminal proceeding has been initiated with an oblique purpose. (7) The letters rogatory are liable to be quashed on the grounds: firstly that the Special Judge had no jurisdiction to issue letter rogatory and secondly he had not complied with the principle of audi alteram partem in the sense that he failed to issue notice to the respondent who is a named accused in the F.I.R. And to afford him a reasonable opportunity of being heard before issuing letter rogatory on 5/7th February, 1990 as well on 21/22nd August, 1990. (8) The Special Judge had erred both in law and on facts in issuing the letters rogatory as…
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