Rail Neer Conspiracy | Delhi High Court refuses to quash FIR against errant IRCTC licencees for causing alleged loss to the government exchequer

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Delhi High Court: The petitions were filed seeking quashing of FIR dated 14-10-2015 registered at CBI, New Delhi for offences under Section(s) 120-B read with 420 Penal Code, 1860 (IPC) and Sections 13(2) read with 13(1)(d) of the Prevention of Corruption Act and setting aside all consequential orders/ proceedings arising and emanating therefrom. Yogesh Khanna, J., refused to quash FIR against the licensees for causing alleged loss to the government exchequer.

The dispute is if it was mandatory for the licensee (Caterers) engaged in Rajdhani/Shatabdi trains to provide only Rail Neer Packaged Drinking Water (PDW), or if they could provide packaged drinking water of another company. It is alleged during the period 2013-14, these licensees (Caterers) deliberately supplied packaged drinking water other than Rail Neer despite the huge availability of the same. It is further alleged by not picking up Rail Neer, the licensees (Caterers) had caused a loss of Rs. 19.55 crores approx to the government exchequer and corresponding undue pecuniary gain to themselves as they claimed reimbursement for Rail Neer packed drinking water which they allegedly did not supply in Rajdhani / Shatabdi trains. Upon conclusion of the investigation, CBI filed a chargesheet for offences punishable under Sections 120-B read with 420 IPC and Sections 13(2) read with 13(1)(d) of the PC Act against two public servants and various licensees (Caterers).

The main grievance of the petitioners is that it has been six years since the sword of prosecution has been hanging over the petitioners and an amount of Rs. 2,64,00,330/- belonging to the R.K. Associates & Hoteliers Pvt. Ltd. (arraigned as Accused 5) in which the petitioner is a Director stands seized by the respondent despite there being no basis for the same. The impugned FIR has caused immense financial and reputational loss to the petitioner. Due to the pendency of the impugned FIR, proceedings under the Prevention of Money Laundering Act have also been initiated against the petitioner as well as against R.K. Associates & Hoteliers Private Limited.

The Court noted that the facts reveal the petitioners were duty bound to supply packaged drinking water of IRCTC’s brand called Rail Neer but instead have been supplying other packaged drinking water, a brand cheaper than Rail Neer, but simultaneously have been claiming reimbursement at the rate of Rail Neer, I.e., Rs 15 per bottle, though allegedly in conspiracy with public servants viz. Chief Claims Officer/CCM causing loss calculated to the Government Exchequer was about Rs. 19,55,39,017/-.

As per clause 1.3.4 of the agreement, the petitioners were mandated to supply only Rail Neer in specified Trains and other PDW could be supplied only when a) Rail Neer was not available with IRCTC and b) only after getting prior permission from Railways. Admittedly, no evidence was produced to show Rail Neer was in less supply for special trains and further no prior permission for the supply of other branded PDW was ever sought. As per the agreement, the Rail Neer was to be picked up directly from the platform and was to be supplied in specified trains.

The Court further noted that the petitioners want the Court to believe that there is no substantial criminal cause made out in the present case that requires trial. The Court’s scope of interference under Section 482 CrPC is well known, however, in the present case, at this stage, the High Court cannot record findings on disputed facts or consider the defence of the accused and it cannot embark upon an enquiry whether the evidence in question is reliable or appreciation of evidence would lead to accusation being sustained or not. The Court, at this stage must only see whether the allegations made disclose a cognizable offence or not.

The Court concluded that the allegations of conspiracy in the chargesheet have two facets viz. the conspiracy of contractors to dupe/cheat the railway by charging them for Rail Neer on supplying cheaper PDW. The second facet of conspiracy involves public servants against whom sanction has not been received. Now the conspiracy of the petitioners can be proved/disproved only after a trial. The matter of sanction qua public servant would have no effect upon allegations of conspiracy and alleged cheating by private accused and the only effect would be Section 120-B IPC would now not be used to prosecute private individuals for the offences under the Prevention of Corruption Act. Merely because the sanction is not granted does not mean the findings qua conspiracy/cheating cannot stand trial.

Thus, the Court held that no case is made out for quashing of FIR at this stage.

[Ambuj Hotels and Real Estate Private Limited v. Central Bureau of Investigation, 2023 SCC OnLine Del 3869, decided on 04-07-2023]

Advocates who appeared in this case :

Mr. Mahesh Jethmalani and Mr. Vikas Pahwa, Sr Advocates with Mr. S.S.Sisodia, Mr. Saruva Kumar, Advocates in Crl.M.C. No.456/2020;

Mr. Mahesh Jethmalani, Sr Advocate with Mr. Jasmeet Singh, Mr. Divjot Singh Bhatia, Mr. Saif Ali, Mr. Gautam Khazanchi, Mr. Kumar Vaibhav, Mr. Anurag Sarda, Ms. Mugdha Pandey, Mr. Ajay Awasthi, and Mr. Hedo Khalo, Advocates in Crl.M.C. No.2083/2021;

Mr. Vikas Pahwa, Sr Advocate with Mr. Gautam Khazanchi, Mr. Kumar Vaibhav, Mr. Vaibhav Dubey, Ms. Sukanya Joshi, Mr. Anurag Sarda, Ms. Namisha and Mr. Rohan Wadha, Advocates with AR in person in Crl.M.C. No.2092/2021;

Mr. Nikhil Goel, SPP and Mr. Kartik Kaushal, Advocate for CBI.

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