Washeshar Nath Chadha vs Union Of India on 2 September, 1992

JUDGMENT

Sat Pal, J.

(1) This writ petition filed under Article 226 of the Constitution of India read with Section 482 of the Criminal Procedure Code (hereinafter referred to as ‘the Code’) is directed against First Information. Report bearing crime No.RCI(A)/90/ACU-IV registered against certain unnamed persons and three named persons, namely, S/Shri Martin Ardgo, former President of Bofors A.B. (for short called ‘Bofors’), G.P.Hinduja of London and the petitioner W.N. Chadha @ Win Chadha alleging commission of offences under sections 120B read with Sections 161, 162, 163, 164 and 165A of the Indian Penal Code read with sections 5(2)/5(l)(d) and 5(2)/5(l)(c) of Prevention of Corruption Act, 1947 read with sections 409, 420, 463 and 471 of the Indian Penal Code. In the writ petition the petitioner, inter alia, has prayed for quashing of the aforesaid First Information Report and the proceedings and the orders passed thereon and arising there from including the letter rogatory issued by the Special Judge, Delhi. The facts of the case briefly stated are that the petitioner, who is a citizen of India and is residing and working for gain at Dubai had arrangement with Bofors of Sweden to provide representation services to it in India with regard to supply of arms and ammunition and had been charging commission for the services rendered by him in terms of service agreement executed between the said Company and the petitioner from time to time till the end of 1985.

(2) However, in January 1986 Bofors and Anatronic General Corporation Private Ltd., (for short called ‘AGC’) a Company promoted by the petitioner entered into an administrative consultancy agreement with Bofors in respect of its business in India. In terms of the said agreement of 1986, the petitioner through his Company was to render administrative consultancy services to Bofors in India and he was to charge Sek 1 lakh per month for these services. The petitioner was not entitled to enter into negotiation with the Government of India on behalf of Bofors or to commit on behalf of Bofors to any agreement or appointment as he was required to render ony administrative consultancy services. In April 1984 the Cabinet Committee on Political Affairs ( for short called ‘CCPA’) approved the proposal for procurement of 155 Mm guns along with certain related equipments and ammunition at a total estimated cost of Rs.l6 crores and their subsequent licensed manufacture in India. In May 1984 a Negotiation Committee comprising of the defense Secretary as the Chairman, Secretary (DP&S), Scientific Adviser to Raksha Mantri (i.e. Secretary R&D), Secretary (Expenditure), Additional Secretary (Department of Economic Affairs), Financial Adviser (defense Services) and the Deputy Chief of Army Staff as members was constituted for detailed negotiations with the various suppliers.

(3) The Negotiating Committee started its deliberations in June 1984 and decided that fresh sealed technical and commercial offers should be invited from p:3 the four firms, Ims of U.K., Sofma of France, Bofors of Sweden and Voest Alpine of Austria. 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, 1984. Offers were also invited from the ammunition manufacturers. After certain clarifications were sought 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 categorical recommendation on the guns acceptable to them taking into account the technical aspects, delivery schedule etc., and also clearly indicate their preference from amongst the acceptable guns. The then Deputy Chief of Army Staff told the Committee that the French gun was the best and the Swedish gun the second best and if the price difference was marginal, they should go in for the former.

(4) The recommendations of the Army Headquarters to shortlist only M/s. Sofma, France and M/s. Bofors, Sweden for further negotiations were accepted by the Negotiating Committee which, however, felt that the choice between the two was still open and would depend on a combination of technical and Financial considerations.

(5) The two firms on the shortlist mentioned hereinabove were called for negotiation in the middle of December 1985 and the three ammunition manufacturers in the middle of January 1986. The Commercial, contractual and technical aspects of purchase and license production were negotiated with the said two firms. The Negotiating Committee in their silting on 4th March, 1986 noted that while Army Headquarters had found that both the guns met the minimum acceptable parameters, they had expressed the view that the Bofors gun had a clear edge over the Sofma gun. The then Deputy Chief of Army Staff also expressed the view that because of the advantages noted in the Bofors guns, this gun should be procured even if it involved paying more.

(6) In the meeting held on 12th March, 1986 the Negotiating Committee noted that Bofors had offered increased credit for the supply of components for the indigenous manufacture of the gun system under license and it had also reduced (he interest rate on D M credit. The Committee felt that keeping in view the technical, contractual and financial aspects, the offer of M/s. Bofors was the better of the two. It recommended, that pending Finishing touches to the contracts, a letter of intent may be issued to M/s. Bofors to the effect that Government would be willing to award the contract to them subject to being satisfied on all aspects of the purchase, licensed production, credit and other arrangements.

(7) As is evident from the records, the Negotiating Committee received several different offers for the total package from the two short listed firms from January lo March 1986. In this connection it will be relevant to reproduce a statement showing the comparative prices offered from lime to time by these two firms during this period, which has been taken from the report of the Joint Parliamentary Committee (for short called ‘JPC’). The statement is as follows:- DATE4 Sek & RS. & Millions 4 & Crorks 1-03-2-86 9872.195 1587.15 10-2-86 9652.510 1619.59 21-2-86 8762.868 1470.32 11-3-86 8456.906 1418.98 & 1449.72 21-3-86 8348.071 & 1427.02 & 1422.18 (SOFMA) DATE4 SKK. & & RS. & Millions 4 & Crorks 10-2-86 8759.843 & 1509.06 23-2-86 8836.253 & 1522.22 07-3-86 8659.527 & 1491.78 & 1538.11 21-3-86 8096,230 & 1436.76 & 1438.05

From the above comparative chart it is evident that a keen competition was generated from 10th February, 1986 till the contract was finally signed on 24th March. 1986. It will be seen that Bofors had quoted on 10th February, 1986 a price of 1620 crores and the said price came down to 1427 crores on 21st March, 1986. thus there was a reduction of 193 crores. Similarly on the February, 1986 Sofma’s offer was 1509 crores and on 21st March. 1986 it came down to 1436 crores, thus there was a reduction of 73 crores. Here it will be relevant to refer to para 6.16 of Jpc report wherein the then defense Secretary has given an explanation with respect to the increase of price of Bofors between 11-3-86 and 21-3-86 that, “it was primarily because the package of equipment that we wanted to purchase underwent changes at several stages.” Pursuant to the recommendations of the Negotiating Committee, the two Ministers of State for p:3 defense (RRM(s) and RRM(A)) and the then Minister of Finance gave their approval to the proposal on 13th March. 1986 and the then Prime Minister (as defense Minister) gave his approval on 14th March. 1986. Thereafter a letter of intent was issued in favor of Bofors on 14th March, 1986.

(8) Approval of the then Prime Minister to the conclusion of the contract with Bofors was sought by the defense Secretary in a note initialed on 21st March, 1986 by the Joint Secretary (Ordnance), Ministry of defense. It was, inter alia, pointed out in this note that as a result of successive reductions by both the competing partics, the cost of their packages had come down substantially. It was also pointed out that Bofors’ offer would become marginally expensive but it was cheaper in terms of the exchange rates of 11th and 21st March, 1986. It was further pointed out that the very substantial concessions obtained from the Bofors in the license Agreement had also to be kept in mind. Further, Bofors were providing commercial safeguards of a very sizeable magnitude by way of separate bank guarantees. The note also pointed out that the implications of the extra cost of manpower in the Sofma gun. Against a crew of 6 for the Bofors gun. the Sofma gun needed a crew of 7. In the result it was observed that our long association with Bofors in the defense production field (the L-70 A.A. Gun) should also mean a smoother process of setting up indigenous production.

(9) After the letter of intent had been issued to Bofors as slated hercinabove. the note recorded by the defense Secretary on 22-3-86 indicates that as a result of discussion by the then Prime Minister of India with the then Prime Minister of Sweden, the availability of credit worth 3.1 Billion Sek was assured to cover the license production of the gun system and ammunition for a period of 90 months from the date of the agreement. After the letter of indent was issued to Bofors. Sofma offered slight modification i.e. 3.5 per cent across the board reduction and to give 30 guns free over 370 guns paid for instead of earlier offer of 30 guns free over 400 guns paid for. Therefore, the Secretary (defense Production

(10) & Supplies) had carried out a further comprehensive discussion with Bofors on the license production contract and has managed to obtain a number of concessions in terms of license production. But when the Prime Minister was informed about this, he advised the defense Secretary to get further reduction from Bofors. The defense Secretary, in fact got further concessions which amounted to approximately Rs.lO-5 crores.

(11) Finally keeping all the developments stated hereinabove and up-dating the foreign exchange rate to 21st March, 1986, the value of the quotation as on 21st March, 1986 given by Bofors was Rs. 1427.02 crores and that of Sofma was Rs. 1436.75 crores. The proposal to sign the contract with Bofors was approved by the then Prime Minister on 24th March, 1986. It may be pointed out here that the file containing the finalisation of the contract indicates that after the two Firms were short listed the Negotiating Committee has been negotiating with the aforesaid two firms directly and not through any of their agent in India.

(12) On 17th April, 1987 some newspapers in India gave prominent coverage to a Swedish Radio Broadcast, made the previous day, that bribes had been paid to senior Indian politicians and key defense Figures to win the contract awarded by the Government of India to M/s Bofors of Sweden on 24th March. 1986, for the purchase of Fh 77B 155mm Towed Howitzers. The Government of India, however, denied these allegations on 17th April, 1987 itself. M/s. Bofors also issued a statement on 17th April, 1987 that they had not paid any bribe in connection with this order.

(13) On 4th June. 1987 the Sweden Embassy in India gave a copy of the report of the Swedish National Audit Bureau (for short called ‘ SNAB’) to the Government of India. The observations as summarised in the said report are as follows:-

“-that an agreement exists between Ab Bofors and concerning the settlement of commission subsequently to the Fh 7-7 deal; and – that considerable amounts have been paid subsequently lo, among others, Ab Bofors’ previous agent in India.” On receipt of the said report of the Snab, the Government of India decided to request the then Speaker Lok Sabha and the then Chairman Rajya Sabha to set up a Joint Parliamentary Committee to inquire into and establish the identities of the persons who received the payments. Thereafter, a Joint Committee of both the Houses of Parliament consisting of 30 members i.e.. 20 from the Lok Sabha and 10 from the Rajya Sabha was constituted on 28th August, 1987 to enquire into the issues arising from the report of Snab relating to Bofors contract to supply 155mm Towed Howitzers guns to India. The following matters were referred to the Committee for enquiry.

“(I)4Whether the procedures laid down for the acquisition of weapons and systems, were adhered to in the purchase of the Bofors’ gun; (ii)4 to ascertain the identity of the persons who received, and the purpose for which they received, payments of the following amounts: (a) Sek 170-250 million (b) Sek 29-5 million (c) Sek 2.5 million. from M/s. Bofors (as referred to in the Report of the Swedish National Audit Bureau, received by the Government of India on June 4, 1987); (iii) arising out of the enquiry, if there is, prima facie, evidence that M/s. p:3 Bofors have in addition to payments mentioned in (ii) above, made any other payments for securing the Indian contracts, the identify of the persons who received such payments shall be ascertained: (iv)4 to determine, if any, Indian laws/rules/regulations have been violated either by M/s. Bofors or by persons as indicated in (ii) and (iii) above.”

(14) It was also decided that the Comptroller and Auditor General of India and the Attorney General of India will provide assistance to the Committee, as necessary and the investigating agencies of the Government of India shall render such assistance to the Committee as may be required by it for the purposes of its enquiry. In terms of the reference the Committee had the power to ask for and receive evidence, oral or documentary, from foreign nationals or agencies.

THE Committee recorded the evidence of the following witnesses:- (1) General K. Sundarji, the then Chief of the Army Staff. (2) Lt. Gen. Mayadas, the then Director-General, N.C.C. (3) Lt. Gen. E.G. Kerr, the then Director-General, Artillery. (4) Maj. Gen. T.P. Singh, the then Director-General, Weapons and Equipment, Army Headquarters. (5) Subedar Shivaji Jadhav (Surveyor). (6) Shri S.K. Bhatnagar, the then Secretary, Ministry of defense. (7) Shri N. N. Vohra, the then Additional Secrctary, Ministry of defense. (8) Shri T. K. Banerji, the then Joint Secretary, Ministry of defense. (9) Shri A.K. Ghosh, the then Additional Financial Advisory, Ministry of defense. 7 (10) Shri Per Ove Morberg, the then President, A.B. Bofors, Sweden. (11) Shri Lars Gothlin, Chief Jurist and Senior Vice-President, A.B. Bofors, Sweden. (12) Lt. Gen. H. Kaul, Deputy Chief of Army Staff (Retd). (13) Shri M.C. Sarin. Former Secretary, (defense Production). (14) Shri R. Ganapati, Former Secretary, (Expenditure) Ministry of Finance. (15) Shri W.N. Chadha, M/s. Anatronic General Corporation, Vasant Vihar, New Delhi. (Petitioner).

(15) Based on the examination of the documents procured by the Jpc, the report of the Central Investigating Agency, the testimony of witnesses examined and the advice tendered by the Attorney General on various legal aspects, the Committee arrived at various conclusions, the relevant portions of which are reproduced herein below:- “(I)The Committee are Firmly convinced that the procedure followed for the selection of the Bofors gun system was sound and objective, and the technical evaluation of the various gun systems considered was thorough, flawless and meticulous. (ii) The Bofors gun meets all the essential technical and operational parameters of a medium field gun. (iii) The Negotiating Committee established by the Government was able to generate keen competition amongst the competing suppliers. No middleman was involved in the commercial negotiations leading to the finalisation of the price and the other terms of the contract with Bofors. As a result, the Government succeeded in securing the contract at the lowest price and on the best financial and other terms. The Committee have noted with satisfaction that the price of the Bofors gun system in the Indian contract was the lowest compared with prices in contracts with other customers. (iv)- – – – (v)- – – –

(16) The Committee have not come across any action or decision of any officer or member of the Government which could be viewed with slightest suspicion at any stage of the Bofors Contract. The evidence before the Committee conclusively establishes that the decision to award the contract to Bofors was purely on merits. (vi) Bofors paid Sek 319.4 million to three companies, not domiciled in India, as winding up charges for terminating agreements for consultancy and marketing services etc. Despite persistent demands from the Government of India, Bofors declined to give details of these payments and the recipients thereof. On the basis of available evidence, two of these companies appear to be front agencies established in tax havens. The certificate rendered by the Public Accountant in Sweden, after auditing Bofors’ accounts in respect of the Indian contract, supports Bofors’ claim that the payment of winding-up charges to these companies in 1986 was to the advantage of Bofors and the Bofors’ agreement with these companies were required to be terminated to fulfill the wishes of Government of India, that no middleman or agent should be involved in the contract for the supply of gun system. (vii) Bofors have expressed inability to furnish copies of their initial as well as the termination agreements with the three companies to whom winding up costs were paid, on the plea of commercial secrecy. They have claimed that such disclosure would be a breach of their confidentiality agreement with these companies. According to the advice of the Attorney-General, the stand taken by Bofors is sustainable in the circumstances of the case. (viii) Shri W.N. Chadha was earlier Bofors’ representative in India and from January 1986, he was appointed as Bofors’ Administrative Consultant. In the agreements covering the period up to the end of 1985, there was a provision for the payment of commission on sales to Shri Chadha, but his role during this period was essentially supportive in nature and not that of a full-fledged agent who could bind Bofors in any way or enter into negotiations on their behalf. Evidence before the Committee shows that Shri Chadha did not take part in the negotiations and did not act as a middleman. In so far as the investigations under Fera are concerned, it would be for the concerned competent authorities to decide the matter. (ix) On the ground of commercial . confidentiality, Bofors have not furnished full details of the persons to whom winding up costs were paid. Nobody has come forward with any evidence in regard to the identity of recipients of payments made by Bofors. The legal advice given to the Committee is that Bofors cannot be compelled to furnish the requisite information/documents to the Committee. It has not been possible for either our investigating agencies or any other source to find any evidence regarding the identity of recipients. The Committee have, therefore, not been able to reach any conclusion in regard to the identity of recipients. However, there is no evidence to show that any part of the winding up costs was paid to any Indian either in India or abroad. (x) The fact that the investigation initiated in this case by the Public Prosecutor in Sweden was closed after examining Bofors’ Official and the relevant records of the Company, suggest that no offence could be made out under the Swedish law. In other words, the Public Prosecutor who had access to all the records in Sweden has not been able to establish any charges involving bribes and kick-backs in Bofors’ Indian contract. (xi) There is no evidence to show that any middleman was involved in the process of acquisition of the Bofors gun. There is also no evidence to substantiate the allegation of commission or bribes having been paid to anyone. (xii) Mere suspicion as regards existence of middleman and/or payment of commission does not constitute sufficient ground for initiating action to terminate the contract with Bofors or to raise claims for the reimbursement to Government of payments made by Bofors to the three foreign companies. This is also the view of the Attorney-General for India. (xiii) There is no evidence to establish that the Bofors’ payment totalling Sek 319.4 million involved a violation of any Indian law.”

(17) The report of the Jpc was presented to Lok Sabha on 26th April, 1988 and was also laid on the table of Rajya Sabha on the same date. On 20th February, 1989, the Government of India and Switzerland signed memorandum of understanding extending/providing for mutual assistance in the investigation of criminal matters subject to the terms and conditions mentioned therein. One of the conditions is that the competent authority to ask for assistance in India will be Court, Tribunal, Judge or Magistrate exercising jurisdiction and under Swiss law the competent authority to ask for assistance will be any examining Magistrate notwithstanding the denomination of “Bezirksanwalt, untersuchungsrichter, judge d’instruction, verhorrichter” a.s.o. and all judicial authorities. Another condition is that the information requested for must be in respect of an offence punishable under the laws of both the countries. Further information obtained through the means of judicial assistance shall not be used for investigative purposes nor be introduced into evidence in the requesting State in any proceeding relating to offences for which assistance is not admissible.

(18) The Comptroller & Auditor General of India in his report for the year ending 31st March, 1988 signed on 26th April, 1989 gave his comments regarding the engagements of agents in the Bofors deals. The relevant portion of the comments is as follows:-    "THE Government informed the representatives of the manufacturers in May 1985 that if any firm had Indian agents, (emphasis provided) its services should be dispensed with. It warned that if it came to notice that any Indian agent or consultant had been appointed by any firm, it would stand disqualified. Further, the firms were asked to make suitable reductions in their offers in case these offers took commissions payable to Indian agents into account. The Government warning was limited to "Indian agents"  

(19) Only (emphasis provided). No information relating to agents located in other countries but may be operating for this contract in India was sought by the Government nor any confirmation/ clarification obtained from the manufacturers. The formal contract eventually signed with Bofors did not somehow contain at all any provision relating to the elimination of any type of agents.  

(20) In July 1985, the High Commission of India, London informed the Ministry that Bofors had a representative (Anatronic General Corporation, New Delhi) in India. No action was taken on this communication in terms of the warning and disqualification conveyed to the manufacturers in May 1985. The Ministry stated in November 1988 that the information provided by the Mission was "not new". - The Ministry added, in February 1989, that since Bofors, Along with other bidders, had been warned (orally) in the matter in May 1985, no further action was called for on the information provided by the Mission.  

(21) On 10th March, 1986, Bofors, in response to a verbal direction. informed the Ministry that they did not have any representative or agent especially employed in India for the gun project. However, for administrative services, e.g. hotel booking, transportation, forwarding of letters, telexes, etc. they were using a firm (M/ s. Anatronic General Corporation, New Delhi) as specified by the Indian Mission. -- No effort was made to verify the veracity of the statement of Bofors as regards the specific nature and d role of their agent in India.  

(22) According to Snab report of 1st June 1987, Bofors and an unnamed party had agreed to the settlement of commission subsequent to the gun deal and that considerable amounts had been paid to, amongst others, Bofors previous agent in India. According to Jpc, Bofors made payment of Sek 319.4 million to three companies not domiciled in India. The Ministry in their reply, in February 1989, in response to the draft Audit review, stated that the Jpc had also concluded that 'there is no evidence to establish that the Bofors payment totalling Sek 319.4 million involved a violation of any Indian law". The Ministry further staled in April 1989 that "the Negotiating Committee dealt directly with the foreign suppliers, and not through agents, throughout the negotiations".  

(23) In view of the foregoing observations, it is the natural and inescapable conclusion that in the absence of a suitable provision in the contract to exclude agents, whether Indian or foreign, irrespective uf domicile, no reduction in cost to the extent of payment made to agents could be sought by the Ministry from Bofors.” In November 1989 general elections were held in India and pursuant to these elections there was change in the Government. Thereafter on 22nd January, 1990 the impugned Fir was registered by Cbi against certain unnamed persons and three named persons including the petitioner alleging commission of offences under sections 120B read with Sections 161. 162, 163, 164 and 165A of the Indian Penal Code read with Section 5(2)/5(l)(d) and 5(2)/5(l)(c) of Prevention of Corruption Act, 1947 read with Section 409, 420, 463 and 471 of the Indian Penal Code. The sources of information recorded in the First Information Report arc media reports, report of Snab, certain facts contained in the report of Jpc and the report of Comptroller & Auditor General of India. It will be relevant to point out here that no public servant of the Government of India has been named in (he First Information Report and against serial No. 14 of column No.7, it has been stated “certain public servants of the Government of India”. It may also be noted here that whereas against serial Nos. 4,5,6,8,9 and 10 concerned directors and employees (though not named) have been mentioned but against serial No.14 the words “certain public servants” and not the concerned public servants have been mentioned.

(24) Relying on a passage from the report of the Jpc, it has been alleged in the Fir that inquiries made by the investigating agency revealed that prior to 1984, the petitioner used to receive his commission from the Government of India. that is after the delivery was completed, the company used to get 98 per cent and 2 per cent was given to him by the Government of India. However, in 1984 the position changed and the petitioner and other Indian representatives were barred from participating in any negotiations regarding defense deals including discussions on technicalities and price structure. It has been further staled that there are reasons to believe that Bofors as well as the petitioner knew even from 1984 that the ban imposed by the Government of India was in respect of all agents and the fact that the Bofors had the knowledge of the prohibition of any middleman is further confirmed from what they slated in their letter dated 6th August, 1987 to the defense Secretary.

(25) In para 7 of the Fir, it has been stated that the fact that Bofors were fully aware that no agents at all were permitted by the Government of india is clear also from the various stands taken by the Bofors including their subsequent claim made sometime after April, 1987, that consequent upon this prohibition, they had terminated their agency contracts with agents abroad also purportedly during January-March, 1986 and paid them, purportedly, “winding up costs”.

(26) In para 8 of the Fir, it has been alleged that facts and circumstances show that Bofors had paid to the so called agents what they themselves called as “commissions” and not “winding up costs”. Bofors had referred to such intermediaries as agents/consultants/ p:3 advisors etc. However, they are referred to as “agents” in this Fir, notwithstanding the fact that there are reasons to believe that they had played a criminal role in this case. Similarly the payments made by Bofors to the agents would be referred to as “commissions” in this Fir notwithstanding the fact that there are reasons to believe that the said payments were in fact gratifications received by the agents, a large part of which was passed on further as illegal gratifications to the concerned public servants who had the authority to award and did award the contracts to Bofors or for certain recipients of such gratifications which were paid by Bofors to agents for such agents to induce the concerned public, servants, by exercise of personal influence or by corrupt or illegal means, to award the contracts to Bofors. In para 13 of the Fir, it has been alleged that Svenska Inc was allowed by Bofors by a written agreement to promote sales in India through AGC. New Delhi, which was an Indian firm, but for such cheating, Bofors could not obtain the contract dated 24th March, 1986 with the Union of India. In paragraph 110, the salient facts of the case have been summed up, which are reproduced hereinbelow:- ‘ (i) up to February 1986 when Sofma had been evaluated as superior to Bofors on 6 occasions, the proceedings relating to the award of the contract progressed slowly. However, with effect from 17th February. 1986 when Bofors took the lead for the first time over Sofma, all the proceedings leading to the contract were concluded with haste in February-March, 1986 and the contracts themselves were signed on 24th March. 1986. The agents and their collaborators thus succeeded in not only getting the contracts for Bofors, but also in expediting the negotiations and securing the execution of the contracts on 24th March, 1986. (ii) Cag has made critical observations regarding the technical and Financial evaluations, the procedure followed by the Negotiating Committee as well as the recommendation made by the Negotiating Committee which led to the award of the contract to Bofors. (iii) Even from May 1984 and in any event from 3rd May, 1985, Bofors was aware that it was the policy of the Government of India that there should be no middleman or agent in the transacctions. In spite of this knowledge, Bofors not only continued the agencies of Svenska Inc. and Pitco/Morcsco/Moineao Sa but engaged Ae services Limited also as agent with effect from 15th November. 1985. Ae Services Ltd. claim to have acted as trustee on behalf of Ciaou Anstalt, Vaduz. Besides, Svenska Inc had been allowed to promote sales through Anatomic General Corporation, New Delhi. (iv) The concerned employees of Bofors had therefore obtained the contracts dated 24th March, 1986 from the Government of India by dishonestly and/or fraudulently concealing, in their letter dated 10th March, 1986, the fact that they had as their agents Svenska Inc, Pitco/Moresco/Moineao Sa and Ae Services Ltd. They made no reference whatsoever to these 3 agents in their letter dated 10th March, 1986 to the Government of India. Besides, Anatomic General Corporation, New Delhi of Shri W.N. Chadha, an Indian, was allowed to be used by Svenska Inc for sales promotin. (v) Bofors paid to these three firms/companies more than Sek 319.40 million as “commission” which Bofors later (iun 1987) described falsely as “winding up costs”. This false nomenclature to the payments was given by Bofors only after 16th April, 1987 when the bribery scandal broke out for the first time. The so called termination of the agreements with the agents during January-March 1986 is false and was a false plea taken in 1987. The concerned employees of Bofors resorted to this as part of the cover up process that was set in motion by the conspirators. This false plea itself, however, proves that Bofors were fully aware that as at the time of the execution of the contract with Government of India, they should not have had any agent anywhere in the world. (vi) The impugned payments were made on various occasions during 1986 and even up to 30th March, 1987. They were due to be made even up to 1990. In the contemporaneous documents of Bofors, banks etc. these payments were described as “commission” and not as “winding up costs”. (vii) The report of the Snab shows that the principal beneficiary of the payments ;made to Svenska Inc is an Indian who had been an agent for Bofors for 10- 15 years (as on 1st June, 1987 on which date the report of Snab was presened). (viii) The remittances made by Bofors to banks in Switzerland included also credit to three secret code named accounts, namely, “lotus”, “tulip” and “Mont Blanc” which do not disclose the names of the firms/companies/persons in whose accounts the amounts were credited. In the case of atleast 4 remittances, the banks if Switzerland were instructed that the name of the payer (Bofors) should not be shown while making the credits. The report of Snab states that “the mode of the payments and other circumstances clearly deviate from existing rules and other foreign payments made by Bofors in recent years and that Bofors own organisation number was not used”. If these payments were only “commission” or even “winding up costs”, such undue secrecy was not warranted. These clandestine procedures and remittance instructions show criminal activity and are indicative of guilt. (ix) Similarly, the single payment of 30th May, 1986 of Sek 188,398,806 purportedly sent in favor of Svenska Inc got credited in four different currencies in Switzerland. This shows that this payment was not meant merely for Svenska Inc as a Company but to four different persons/accounts as beneficiaries. Svenska Inc themselves are reported to have not done any business from about February 1986. Under these circumstances, all the payments made to the benefit of Svenska Inc are highly suspicious and give reason to believe that they were clandestine and illegal payments made for the benefit of certain persons, including certain public servants, whose names were and are still kept secret. Bofors have made certain other payments also to Svenska Inc. 14 (x) The concerned employees of Bofors have made several inconsistent and incorrect statements in respect of the engagement of the agents, the nature of the payments made to them and the purported termination of the agreements with the agents. Regarding Moresco, the concerned employees of Bofors first stated that it was a Company in Switzerland but later changed the stand and said that Moresco was only a code name for Moineao SA. Bofors refused access to their records to Snab when Snab informed Bofors that absolute confidentiality could not be guaranteed as Swedish legislation did not allow the same. Bofors claimed before Snab a right which they did not have under the law and on this pretext, prevented Snab from looking into the records of Bofors and bringing out the truth. (xi) The representatives of Bofors have consistently and unjustifiably refused to furnish the names of the persons who are the actual beneficiaries of the payments of the more than Sek 319.40 million made by them. Their refusal is based on the specious plea of commercial confidentiality or secrecy, which is not available to Bofors either under the Swedish law or Indian law. (xii) It is inconceivable that during January-March, 1986 and before 24th March, 1986 when Bofors could not have, in normal course, known that the contracts would be awarded to them, Bofors would have terminated the agreements and agreed to pay huge sums of over Sek 319.40 million to the agents as this would have been a total and heavy loss to Bofors if they contracts had not been finally awarded to them. (xiii) There are reasons to believe that the termination agreement purportedly dated 2/13th January, 1986 between Bofors and Svenska Inc is a dishonestly or fraudulently created false document. (xiv) The conduct of concerned employees of Bofors and the other concerned persons, including the concerned public servants, subsequent to the exposure has been highly suspicious and shows their desperate efforts to do cover up operations and also to ensure that the contract with Bofors was not cancelled or even threatened to be cancelled on pains of disclosure by Bofors of the names of the beneficiaries. This was despite Ihe clear and strong advice and suggestions made by very senior persons who were very competent professionally, legally and administratively. (xv) When Shri Lars Ringberg, Chief District Prosecutor Stockholm sought mutual co-operation with India in the suspected bribery inquiry/investigation undertaken, no positive response was given to him. Boffors also refused to give him the details of the persons to whom they had made payments. Shri Lars Ringberg had therefore to withdraw the inquiry inconclusively. (xvi) There are highly suspicious entries including in codes in the diary of Shri Martin Ardbo regarding the cover up operations as well as his views and fears regarding them. As set out earlier, he played a vital role in Bofors’ getting the contract from Government of India. 15 (xvii) The conduct of Shri W.N. Chadha, who is an Indian citizen, is highly suspicious. He acted as the agent of Bofors through Anatomic General Corporation as well as Svenska Inc. The engagement of Svenska Inc was completely suppressed by the concerned employees of Bofors as well as W.N. Chadha till late stage in 1987. Even Svenska Inc appears to have acted as a mere front company as the company did not reportedly do any business from 1986. Under this circumstance, payment of large amounts of commission by Bofors to Svenska Inc is highly susspicious. Shri P.O. Morberg himself had disclosed to the officers of the Swedish National Bank that the principal beneficiary of Svenska Inc was an Indian who was agent of Bofors for 10-15 years. This falsified the stand of Bofors that no Indian had been paid any commission. When any incriminating disclosure was made by the media, Shri W.N. Chadha left India. With his long association from 1975 onwards with Bofors,(he has very close contacts with the employees of the Bofors). In the matter of the commission that Svenska Inc got from Bofors, ShriW.N. Chadha appears to have violated also the Income-tax and Foreign Exchange laws of India. He also appears to have made false statements before the Income-tax and Enforcement Directorate Authorities. (xviii) The bank documents of 1982 and 1984 mentioned earlier establish the link between Pitco and G.P. Hinduja on the one hand and Pitco and Sangam Limited on the other. G.P. Hinduja has financial interest in Sangam Ltd. During the meeting of the representatives of the Bofors with the officials of Government of India in September 1987, the said representatives stated that one of their agents was Moresco,(a company registered in Switzerland). They added that Moresco was earlier known as Pitco. However, in a letter dated 6 October 1987 from Bofors to the Government of India it was mentioned that Moresco was not a company but was only a code name for a company, Moineao Sa registered in- Switzerland. The stand of Bofors therefore was that this single agent was known by three names or code name, namely, Pitco/Moresco /Moineao SA. As the connection of Shri G.P. Hinduja with Pitco is established by the bank documents, there are reasons to believe that Shri G.P. Hinduja is connected with Pitco/ Moresco/ Moineao SA. In addition, the personal letter dated 5 February 1987 from G.P. Hinduja to Mr. Martin Ardbo shows not only their personal fricndshi;p but also that they had a meeting prior to that letter. In addition to this, the diary of Mr. Martin Ardbo refers to meetings with various persons including “GPH’, “H’ and “Hanssons’, which under the circumstances give reason to suspect that the reference is to Shri G.P. Hinduja. Bofors have all along withheld disclosure of the names of the real owners/beneficiaries of Pitco/Moresco/ Moineao Sa with the connection of G.P.Hinduja with Pilco/Moresco/Moincao established as aforesaid, there arc therefore reasons to believe that Shri G.P. Hinduja is linked to the payments of commission by Bofors to Pilco/Moresco/ Moineao Sa in respect of the contract in question. (xix) Despite grave accusation of bribery and other illegalities in relation to the contract which were alleged by the various reports and the media as mentioned hereinbefore, no effective steps were taken by the concerned public servants of India to get at the truth. Only statements containing mere platitude have been made or recorded. The ostensible measures that were taken were also half hearted and ineffective. (xx) There are reasons to believe that the aforementioned remittances made by Bofors and credited in accounts in Bank in Switzerland are the proceeds of illegal and criminal acts and were made in pursuance of the criminal conspiracy and the other offences committed in pursuance thereof which are set out elsewhere in this FIR.”

(27) In para 111 of the Fir, it has been alleged that the “agents” did not do any purported service to get the contract in favor of Bofors and yet they were paid large sums as “commission”. When the total commission payable to Svenska Inc and Anatronic General Corporation was reduced, Ae Services Ltd. suddenly entered the scene with an agreement with Bofors on 15th November, 1985. virtually guaranteeing the execution of the contract in favor of Bofors before 31st March, 1986 and achieved this with 7 days to spare. Ae Services Ltd. themselves had acted as trustee for Ciaou Anstalt, Vaduz. The payment made to Ae Services Ltd. by Bofors in September 1986 was exactly 3% of the 20% advance amount received by Bofors. This was as stipulated in the agreement dated 15th November, 1985 between Ae Services Ltd. and Bofors. This shows that the said agreement was not terminated w.e.f. 5/8 March 1986 as contended. It is further stated that when the agreement dated 15th November 1985 between Ae Services Ltd. and Bofors would have even otherwise expired on 31st March 1986, Bofors could have merely executed the contract on 1st April, 1986 or later and avoided paying any amount as commission or even as winding up costs to Ae Services Ltd. and saved the entire amount of Sek “;. 50,463,966 which they paid to Ae Services Ltd. on 2/3 September, 1986. It is also alleged that the payment of commission by Bofors to Pitco/Moresco were remitted by Bofors to code named accounts (Tulip, Lotus and Mont Blanc) in Swiss Banks indicating clandestine transactions. Such secrecy, code names etc. were unwarranted if the payments were only commissions or even winding up costs as alleged by Bofors. The concerned employees of Bofors also attempted to mislead by falsely staling that Moresco is not a company but only a code name for Moineao SA. Pitco/Moresco are also seen to be linked with Shri G.P. Hinduja and Sangam Limited. The so called termination agreements are found ante-dated and afterthought. It is also stated that the concerned public servants of India did not take any effective steps to obtain the names of the actual beneficiaries from Bofors though suggestions to this effect were repeatedly made by various competent persons. In para 113 of the Fir it has been stated that the facts mentioned in the earlier paragraphs disclose that the named accused persons and others (mentioned in column 7 of the FIR) entered into a criminal conspiracy at New Delhi and other places during 1982-87 in pursuance of which the accused public servants obtained illegal gratification in the form of money from Bofors 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 aforesaid contracts which were finalised and concluded on 24th March, 1986. It is further alleged that there is reason to believe that in pursuance of the said criminal conspiracy, the impugned payments were made by Bofors and were obtained by the aforesaid firms companies/persons as gratifications and as motive or reward for their inducing or having induced, the said public servants of the Government of India in the matter of processing and award of the said contract to Bofors and that the said public servants had also abetted the same.

(28) In para 114 of the Fir it has been stated that the concerned public servants failed to obtain from Bofors corresponding reduction, atleast to the extent of the commission payable by Bofors to the so called agents, from the contract amount payable by the Government of India to Bofors. There has, therefore, been dishonest or fraudulent diversion of the funds of the Government of India to Bofors atleast to the extent of over Sek 319.40 million which was the commission paid by Bofors to the agents. There are. therefore, reasons to believe that in pursuance of the said criminal conspiracy, the concerned public servants had also dishonestly or fraudulently misappropriated or otherwise converted for their own use the funds of Government of India that had been entrusted to them or kept under their control or dominion as public servants or allowed other persons so to do or willfully suffered other persons so to do and thereby committed criminal breach of trust (embezzelement) of the funds of the Government of India. Wrongful loss to Government of India and wrongful gain to the concerned accused persons were also dishonestly caused thereby.

(29) In para 115 of the Fir it has been alleged that the concerned employees of Bofors had dishonestly and/or fraudulently concealed the fact that they had as their agents Svenska Inc, Pitco/Moresco/Moineo Sa and Ae Services Ltd., and thereby induced Government of India to award the contracts to them and thereby committed the offence of cheating of Union of India. By their aforesaid action, fraud has also been committed on Union of India. In para 116 of the Fir it has been alleged that offence of forgery, use of forged document and cheating also appear to have been committed in an attempt to cover up the offences that were committed as mentioned in the FIR.

(30) In para 117 of the Fir it has been alleged that the concerned accused employees of Bofors and the other accused persons also appear to have, inter alia, committed offences of criminal conspiracy and bribery punishable under Chapter 23 Section 2 read with Chapter 17 Section 7 and relevant Sections of the Swedish Penal Code, 1986. In conclusion it has been alleged in para 119 of the Fir that the facts and circumstances set out in the Fir disclose that there are reasons to believe the commission of offences under sections 120B read with Sections 161, 162, 163, 164 and 165A of the Indian Penal Code read with sections 5(2)/5(l)(d) and 5(2)/5(l)(c) of Prevention of Corruption Act. 1947 read with sections 409, 420, 463 and 471 of the Indian Penal Code.

(31) 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 blocked only up to 28th February, 1990 and that a request for judicial assistance should be made before that date and further necessary assistance would be rendered only on receipt of the letter rogatory from a competent judicial authority in India.

(32) On 2nd February, 1990 Cbi requested special Judge Delhi to send a letter rogatory to Switzerland for getting the necessary assistance in the investigation to be conducted in Switzerland. By a letter dated 5th February, 1990 Shri R.C. Jain, the then Special Judge, Delhi allowed the application of the Cbi to the extent that a request to conduct the necessary investigation and to collect necessary evidence be made to the competent judicial authority of Switzerland through the Ministry of External Affairs, Government of India. The Special Judge also directed that certain documents be sent along with the letter of request such as the copy of the Fir and mutual assistance agreement.

(33) The letter of request was examined and found in order by the examining Magistrate of Geneva, who decided on 26th March, 1990 to accept the letter of request. The decision of the examining Magistrate was, however, challenged by one of the affected parties in the criminal court of Canton of Geneva. The said court vide order dated 3rd July, 1990, inter alia, held that the request for mutual judicial assistance prevented by India does not, in its form, satisfy the requirement of Article 28 of the Federal Act on International Mutual Assistance In Criminal Matters (for short called (IMAC). In view of this the order of admissibility of mutual judicial assistance passed by the examining Magistrate was set side.

(34) Thereafter, Cbi submitted another application to the Special Judge on 16th August, 1990 praying that an amended letter of request to the competent judicial authority in the Confederation of Switzerland be issued. It was also grayed in this application that the proceedings on this application be held in camera as the information contained in the enclosed documents and the proceedings thereon involve sensitive aspects, and, therefore, disclosure would be detrimental to the on going investigation. Shri V.S. Aggarwal, the then Special Judge, Delhi by his order dated 21st August, 1990 held that the objections/clarifications sought by the learned Judges of

(35) follows:- as observed been has it order this of 14 para

(36) On 13th August, 1990 a Delhi lawyer, namely, Shri Harinder Singh Choudhary filed an application in the Court of the Special Judge by way of public interest litigation under Article 51(a) of the Constitution of India, praying that no letter of rogatory be issued at the instance of the Cbi to the Swiss authority for assistance without giving to the accused persons an opportunity of being heard, and unless the allegations against the named persons in the Fir have been established to the satisfaction of the Court. The said application was dismissed by the Special Judge by his order dated 18th August, 1990. Against the said order of the Special Judge dated 18th August, 1990, Shri Harinder Singh Choudhary filed a revision petition being Crl. Misc.(Main) No. 1821/90 under sections 397 and 482 of the Criminal Procedure Code challenging the legality and validity of the said order and praying that the Fir be quashed and he be allowed to participate in the proceedings before the Special Judge. It was also prayed by him that a direction be issued to the Special Judge not to issue any letter rogatory, on the request of the Cbi, unless the allegations against the named persons in the Fir were established to the satisfaction of the Special Judge.

(37) A learned Single Judge of this Court by order dated 19th December, 1990 dismissed the petition of Shri Harinder Singh Choudhary and held that neither the said public interest litigant nor the other applicants, seeking impleadment, had any locus standi to raise the matters. The learned Single Judge, however, issued a suo moto notice to the Cbi and the Union of India requiring them to show cause why the proceedings, initiated by the said Fir, be not quashed. The order dated 19th December, 1990 of the learned Single Judge of this Court was challenged in the Supreme Court. The Supreme Court by order dated 27th August, 1990 upheld the First part of the order dated 19th December, 1990 passed by the Learned Single Judge of this Court that Shri Harinder Singh Choudhary and other intervening parties have no locus standi. The Supreme Court, however set aside the second part of the order passed by the learned Single Judge whereby he had taken suo moto congnizance and issued show cause notice to the State and CBI. In this order the Supreme Court also observed as follows:- “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.”

(38) From the above observations it is clear that the affected accused persons could challenge the First Information Report and the proceedings initiated against them but the third parties under the garb of public interest litigants had no locus standi to challenge the said proceedings. It may also be relevant to point out here that in the order dated 27th August, 1991 mentioned hereinabove the Supreme Court gave only conclusions to avoid further delay in the matter. It was specifically mentioned that reasons in support of the conclusions will follow in the detained judgment at a later stage.

(39) The petitioner, who is named in the Fir dated 22nd January, 1990 registered by the Cbi, has challenged the legality, validity and propriety of the said Fir and letter rogatories issued by the Special Judge vide orders dated 5th February. 1990 and amended letter rogatory issued by the Special Judge vide order dated 21st August, 1990 in this writ petition and has prayed for quashing of the aforesaid Fir and the proceedings and orders passed thereon or arising there from including the letter rogatories. Shri Rajinder Singh, Sr. Advocate, the learned counsel for the petitioner urged the following contentions:- 1)Having regard to the nature of the Jpc, its functions, scope of enquiry. the report of the Jpc pertaining to the subject matter of the impugned Fir and its adoption by the Parliament would constitute a legal bar, to any further enquiry, investigation by Cbi or trial of any offence with regard to the subject matter of the proceedings before the said Committee. The said contention has to be considered in view of another fact that the Jpc was assisted by investigating agencies of the Government of India including the Cbi and was assisted by the Attorney General of India on the legal aspects of the matter. 2) The Fir does not disclose any offence whatsoever and certainly nothing committed by the petitioner. The allegation that the petitioner received certain sums by way of winding up charges/commission through some other company even if it be taken to be true would not constitute the offence of conspiracy to bribe public servants. 3) Even assuming the so called winding up charges paid by the Bofors were in fact commission and further assuming that such commission was paid to the petitioner, it would not amount to any criminal offence either committed by Bofors or by the petitioner. At the most it could entitle the Government of India to claim damages for breach of any alleged warranty. 4) No civil case has been filed by the Government of India for recovery of either the so called commission in India or elsewhere either in a Court of law or by invoking the arbitration clause of the contract and hence the entire controversy is based on conjectures. 5) The entire Bofors controversy mentioned in the Fir is alleged to have arisen out of certain allegations of bribery but Fir does not name any public servant whatsoever. Even 31 months after the registration of the Fir, no public servant has been named so far. This is so because in fact there are no public servants involved and as such the allegations as mentioned in the Fir do not constitute any offence under Indian Penal Code. 6) On the basis of the evidence recorded by the Jpc it has been clearly proved that the Bofors gun was amongst the best such guns available and was given to India at the minimum price which was even lower than the price at which such guns were supplied to the Swedish Army. 7) Since there is no disclosure of any entrustment of money by the Government of India in the Fir, the question of any breach of trust does not arise and as such the allegations as made in Fir do not constitute any offence under section 409 and 420 Indian Penal Code Since as per the allegations made in the Fir documents alleged to have been forged by Bofors after the contract for supply of guns had been made, no offence under sections 468 and 471 Indian Penal Code is made out of these allegations. 8)The investigation has been going on since 22nd January, 1990 and after a period of more than 31 months it has not been reached to any conclusion despite there being no stay on the investigation from any Court of law at any stage. In fact the investigation is intentionally being prolonged for the purposes of keeping certain political personalities with whom the petitioner has no connection whatsoever, under a cloud. This would vitiate the entire investigation. 9)The Fir was conceived with mala fide motivation of the persons in authority and the proceedings based thereon being initiated with an oblique purpose would constitute the gross abuse of the proce.ss of law. The Fir does not disclose any offence and at any rate there is no material or evidence against the petitioner to sustain the Fir and investigation. 10) The Special Judge had no jurisdiction or power to issue the letter rogatory on 5/7 th February, 1990. 11) The Special Judge ought to have issued notice to the petitioner, who is a named accused in Fir, before issuing letter rogatory on 5/7th February. 1990 as well as on 21st August, 1990. 12) In terms of memorandum of understanding dated 20th February, 1989, the letter of rogatory could be issued by a Court of law in India and the proceedings before the Court of law being judicial proceedings, the named accused persons in Fir were entitled to a reasonable opportunity of being heard by virtue of well established principle of natural justice. 13) There can be no jurisdiction to issue the letter rogatory unless the Special Judge is satisfied with regard to the extent of dual criminality and the prima facie involvement of the accused persons whose property or rights are sought to be affected by letter of rogatory. This being a condition precedent the Special Judge could exercise this jurisdiction only after affording a reasonable opportunity of being heard to the named accused. The Special Judge erred in law and fact by issuing letter of rogatory as he failed to appreciate that the Fir in this case does not disclose any offence whatsoever, leave alone any offence of dual criminality.

(40) It may be noted here that parties were given opportunity to file their written submissions and in the written submissions filed on behalf of the petitioner, three additional contentions were raised which are reproduced herein below:- 1)The Memorandum of Understanding (MOU) entered into by the Government of India and Switzerland is neither a Treaty nor enforceable contract between two Governments. II) The Memorandum of Understanding (MOU) is incompetent because India’s Ambassador in Switzerland has no authority to negotiate or execute such a document. Ill) The Memorandum of Understanding (MOU) was not ratified by the President of India or by the Parliament.

(41) In support of the first contention the learned counsel submitted that Cbi was given full power to investigate for Jpc and that very matter cannot be permitted to be gone into again. In this connection he referred to clause 3(ii) at page 32 of the report of Jpc wherein it has been stated that the Central Investigating Agencies “including CBI” were assigned the task of ascertaining the fact with regard lo items (ii) and (iii) of the terms of reference, namely, to ascertain the identity of the persons who received and purpose for which they received payments amounting to Sek 170.250 million, Sek 29.5 million and Sek 2.5 million and to ascertain if there is a prima facie case that M/s. Bofors have in addition to payments mentioned hereinabove made any payments for securing the Indian contract, the identity of the persons who received such payments. The learned counsel further submitted that in any case Jpc being a high power authority and having gone into all evidence, due weight ought to be given to the findings of JPC. In this connection he referred to the conclusion of Jpc given in clause 9.3 wherein the Jpc had given its findings that no extraneous influence or consideration such as kick backs or bribes as alleged in the media affected at any stage the selection and the evaluation of the gun system or the commercial negotiation with the competing suppliers. The Committee has not come across any action or decision of any officer or member of the Government which could be viewed with silliest suspicion at any stage in the Bofors contrat. He also referred to the conclusion , the Jpc that the Bofors gun meets all the essential technical and operational parameters of medium field gun. In support of this contention the learned counsel placed reliance on two Supreme Court judgments reported in Manipur Administration vs. Thokcliom Bira Singh. and Lalita and others vs. Stale of U.P. Air 1970 Sc 1981.

(42) The learned counsel further submitted that Jpc had obtained legal advice of the then Attorney General of India, In this connection he referred to paragraphs 8.6, 8.7, 8.8., 8.9, 8.13, 8.15 and 8.17 of the Jpc report. He submitted that in these paragraphs it has clearly been staled that the Attorney General was of the view that there is even no circumstantial evidence from which one can come lo an inference that the payments in question were necessarily the payments for middlemen. The Attorney General had further staled that the charges of bribe related only to public servants or persons holding public office who have taken illegal gratification to show official favor but an arrangement by which some money is paid by a private person to another private person docs not strictly fall in the concept of bribe.

(43) The learned counsel also referred to paragraph 8.27 of the report of Jpc wherein it has been staled, “the Committee enquired whether on the basis of available evidence, an inference could be drawn that the payments approximately made by Bofors could have influenced the winning of the contract”. The Attorney General observed that such an inference could not be drawn.

(44) The learned counsel contended that all the allegations made in the Fir arc highly vague and do not constitute any offence even if they are read as true. He drew our attention to item No. 14 of the accused in the Fir wherein it has been stated “certain public servants of the Government of India”, He submitted that these words arc of no consequence to establish or remotely prove the commission of any offence of bribery or corruption.

(45) In support of his contentions on letter rogatory. the learned counsel submitted that both the orders dated 5th February. 1990 and 21sl August. 1990 passed by the Special Judge. Delhi on the application of Cbi for issue of letters arc judicial orders which affected the petitioner adversely and cast serious prejudice to his person. He. therefore. submitted that the Special Judge. Delhi ought to have given notice of this application to the petitioner. who is a named accused in the FIR. and he should have been given an opportunity of being heard before passing of the impugned orders. He contended that it has resulted in grave miscarriage of justice and has vitiated the letters of request issued by the Special Judge.

(46) Shri Altaf Ahmed, Additional Solicitor General appearing on behalf of the respondents raised the following contentions:- 1)THEJPC enquiry by the very nature of its constitution and the scope of its function could not be regarded as an investigation within the contemplation of the Code of Criminal Procedure. 2) The association of Cbi with Jpc does not in any manner elevate the enquiry by Jpc to the status of an investigation under Criminal Procedure Code . because no case stood registered between August 1987, when Jpc was constituted and April 1988, when the Jpc presented the report to Parliament. 3) In law, it is fundamentally fallacious to contend that if Parliament or any of its Committees has engaged itself in a debate and for that purpose of verification and inquiry into an issue of public importance that issue cannot become a subject matter of investigation under Code of Criminal Procedure at the hands of an authority under the Code, subject of course to there being material sufficient to constitute reason to suspect the commission of a cognizable offence. 4) If the Jpc had come to a contrary conclusion and found evidence pointing to the guilt of persons involved in commission of cognizable offences, it would neither have nor the magistrate could take cognizance of its report in view of section 173 Criminal Procedure Code . 5) Once this legal perspective is correctly appreciated, the proposition that recording of Fir and consequent investigation constitute a reflection on Parliament will appear as nothing but wholly untenable. 6) In any case the Parliament itself is unanimous in expecting the Cbi to find out the truth through expeditious investigation. 7) The contention of the petitioner that the Fir does not disclose any offence is misconceived which is evident from (lie facts which have been duly mentioned in the FIR.

(47) Payments were made by Bofors to their agents in breach of their agreement with the Government of India and thereby Bofors intentionally deceived the Government of India that guns were sold at lowest price. In fact they dishonestly induced the Government of India to buy guns at a price which included component of the commission. This amounts to offence under sections 420 read with section 415 of the Indian Penal Code.

(48) Bofors resorted to forgery by dishonestly and fraudulently making documents indicating that they had terminated all their agencies but actually commissions were paid irrespective of the gun deal in question to their agents and thereby Bofors induced the Government of India to pay a price which included commission. This amounts to commission of offence under sections 463, 464, 468 and 420 of the IPC. Forgery is committed in preparing documents dishonestly and fraudulently regarding the termination of agreement of commission by resorting to using these documents for the purpose of inducing the Government of India that no middleman is involved for the gun deal in executing the contract in their favor.

(49) Payment of Sek 18398806 in four different currencies was remitted on 30.5.1986 to Svenska Inc account with Swiss Bank Geneva representing 2.24 per cent commission of payment on the payments received by Bofors from Government of India on 2.5.1986. The purpose of remittance was to make payments to public servants of the Government of India as motive or reward for such public servants who helped for awarding of contract to Bofors by dishonestly using their official position by corrupt means.

(50) The public servants entrusted with and having dominion over the funds of the Government of India dishonestly and in violation of the prescribed mode prohibiting/allowing any payments to any middleman diverted funds of the Government of India to Bofors for the contract in question who in turn made remittance from out of such payments from Government of India to Swiss Bank accounts for the benefit of those public servants. In breach of the policy of the Government of India prohibiting involvement of any middleman in Bofors contraet, the public servants of Government of India entered into a criminal conspiracy with employees and agents of Bofors to pay a price for the guns which the Government of India would not have paid if it was not deceived to believe that no middleman was involved with the object of obtaining the contract in question on the part of Bofors and receiving reward on the part of the public servants for helping Bofors to secure the contract.

(51) In support of his contention the learned Additional Solicitor General further submitted that the reasons to suspect for the commission of offences mentioned in the Fir arc divisible into following lour categories. 1.The conclusions recorded by Jpc left intact scope for further investigation: 2. The report of the Comptroller and Auditor General of India presented to the Lok Sabha and the Rajya Sabha on 18 and 19 July. 1989 respectively. 3. (i) A part of the report of the Swedish National Audit Bureau (SNAB) dated 4.6.1987 which was made available by the Swedish authorities to Government of India, (ii) The remaining part of the report which had been withheld by the Swedish authorities from Government of India came to he published in the issue dated October 9.1989 of ‘Hindu’. It is significant that Swedish Government ordered enquiry into the leakage of the aforesaid part of the Report. 4. Documents published in ‘Hindu’ in its issues dt. 22.4.1988, 22.6.1988. 23.6.1988 and 25.6.1988. The authenticity of these documents was confirmed by the Chief District Prosecutor of Sweden – Mr. Lars Ringberg.” Referring to the report of the CAG. he submitted that it has been stated in para 11.5.11 of this report that the statement of costs projected on 21st March. 1986 by the Ministry on the basis of which the final approval 26 was secured for placement of the order on Bofors was flawed. It is further stated in this paragraph that even the office of the Prime Minister in its note of March 1986 sent to the Ministry had itself expressed doubts about the evaluation procedure not being thorough. He also submitted that the secret part of the report clearly brought out that an Indian who had been agent of Bofors for 10-15 years was the principal beneficiary of payments made by Bofors to Svenska Inc in connection with the Gun deal in question. He submitted that though the first agreement between Bofors and Agc owned by the petitioner was signed in 1978, the petitioner was representing another company since 1975 which was taken over by Bofors in 1975-76. He pointed out certain similarities between the agreements signed between Bofors and Svenska Inc and between Bofors and Agc owned by the petitioner. In support of his contention he submitted that in fact Svenska Inc was only a front company established in Panama and its beneficiary was the petitioner.

(52) The learned counsel further submitted that the enquiry conducted in Panama revealed that Svenska Inc was managed by a lady advocate who was also acting as the local representative of the company. Initially Jose Antonio Valdes Dutary was the President of the company but later Ms. Carmen Fernandez De Pyrex was made the President. The said advocate informed the investigating agency that she used to be paid her retainer fees and service charges from Switzerland. He submitted that from the facts mentioned hereinabove the points establishing the link of the petitioner with Svenska Inc are as follows:- (A)Svenska Inc was authorised to operate in India through Bofors sole representative i.e. AGC. (b) Bofors sole representative (AGC) must certify (hat the order was as a result of Svenska Inc and only then the payment to Svenska Inc was to be made. (c) In case of any breach of the contract by the Bofors sole representative, no commission (payment) will be made to Svenska Inc. (d) As per para 1.1 of the agreement dt. 3/13 January, 1986 between Bofors and Agc, Agc continues to be middleman of Bofors for sale. promotion in India. In other words the petitioner was kept alive as the middleman.

(53) In support of his contention that there were reasons to establish the commission of the offences mentioned in the Fir, the learned counsel submitted that this is evident from the following allegations as mentioned in the FIR. “(A)Payments were made by Bofors to their agents for the gun deal in question in breach of the understanding between them and the Government of India thereby inventorially deceiving Government of India into believing that the guns were sold at the lowest price and thus dishonestly inducing Government of India lo buy the guns at a price which included the component of these commissions: (paras 12. 13, 19, 28. 38, 53, 57. 62-67, 69. 71, 72, 79, 109. 115, 166 of FIR). 27 (B) Bofors resorted to forgery by dishonestly and fraudulently making documents indicating that they had terminated the agencies of all their agents but actually the commissions were paid in relation to the gun deal in question to their agents thereby inducing the Government of India into paying a price which included in it the component of commissions; (para 53, 110, 116 of FIR). (C) The forgeries committed by dishonestly and fraudulently preparing documents regarding termination of agreements with their agents, were resorted to for using these forged documents for the purpose of inducing Government of India into believing that there were no middlemen involved for the gun deal in question, thereby inducing Government of India into executing the contract in their favor for purchase of the guns; (D) A payment of Sek 188 million in four different currencies (USD. Sfr, Ff, ECU) was remitted by Bofors on 30.5.86 to Svenska Inc account with Swiss Banking Corporation Geneva representing 2.24% commission of the 20% payment received by Bofors from Government of India on 2.5.86. The purpose of this remittance was to make payments to public servants of Government of India as motive and/or reward for such public servants who helped in award of contract in question to Bofors by dishonestly abusing their official position thus by corrupt or illegal means obtaining pecuniary advantage for themselves. (Paras 3,4,8, 10, 11, 14. 35, 45, 47, 49, 51, 60, 67, 73, 80, 82, 98, 101, 103, 104. 110. 113, 117 of FIR). (E) The public servants entrusted with and having dominion over the funds of Government of India dishonestly and in violation of the prescribed mode prohibiting allowing payments to any middleman, diverted funds of Government of India to Bofors for the contract in question who in turn made remittance from out of such payments from Government of India to Swiss Banks accounts for the benefit of the concerned public servants; (para 114 of FIR). (F) In breach of Government of India’s policy prohibiting involvement of any middlemen by Bofors in regard to the contract in question the public servants of Government of India entered into a criminal conspiracy with employees/agents of Bofors to pay a price for the guns which it would not have paid if it were not deceived into believing that no middlemen were involved, with the object of obtaining the contract in question on the part of Bofors and receiving reward on the part of public servants for helping Bofors to so secure the contract. (Para 14, 24. 26, 28, 49, 73, 78. 79,109,110,114. 117 of FIR).

(54) In support of his contention the learned counsel for the respondents placed reliance on two judgments in Emperor vs. Khwaja Nazir Ahmad, Air (32) 1945 Privy Council 18 and Bhajan Lal (supra). Regarding contention of the petitioner that no public servant has been named in the Fir and as such the Fir is not sustainable in the eyes of law, the learned Additional Solicitor General submitted that the said contention was wholly untenable. He submitted that there are situations in which the involvement of some of the accused persons come to light only during the investigation stage and they are added in the list of accused persons only at the time of filing the charge sheet in the Court. In the present Fir while certain persons are named as accused, certain un-named public servants of Government of India have also been shown as accused. These public servants will be known only after completion of investigation.

(55) Regarding the contention of the learned counsel for the petitioner that the petitioner has a right of notice before issuing the letter rogatory, the learned counsel for Cbi submitted that in India law does not give any right to accused to control or interfere with the investigation. Hence the accused does not have any locus standi at the stage of investigation to question the manner for collection of evidence. In support of his contention he referred to two judgments. in M.P. Sharma vs. Satish Chandra, District Magistrate, Delhi, and Kekoo J. Maneckji vs. Union of India, 1980 Cri. LJ. 258. The learned counsel further submitted that even after the inclusion of section 166A in the Code of Criminal Procedure, there is no provision for any right of audience to the accused before issuing letter rogatory by the Court. He stated that the issue of letter rogatory by the Court is for collection of evidence which may or may not be used against the accused, during the course of investigation. He also submitted that Chapter Xii of the Code of Criminal Procedure relating to the registration of Fir and investigation thereof by the Police, does not provide for the concept of audi alteram partem for the accused from the inception till culmination of the investigation into a report under section 173 Criminal Procedure Code . The learned counsel further contended that the resort to section 166A Criminal Procedure Code . becomes necessary inasmuch as section 161 of the Code is not available to the investigating officer on foreign soil.

(56) Regarding contention of the learned counsel for the petitioner that Special Judge has no jurisdiction on 5/7.2.1990 when the first letter rogatory was issued, the learned counsel for Cbi submitted that the Special Judge issued the said letters rogatory on the strength of the memorandum of understanding between Government of India and Switzerland in the discharge of his obligation mandated on him by the Constitution and the law. In support of his contention he placed reliance on a Supreme Court decision in the case of Gramophone Company of India Lid. vs. Birendra Bahadur Pandey, . He further submitted that during the course of making submissions it has in any case been made clear that the amended letter rogatory was issued on 22nd August, 1990 by the Special Judge under section 166A Criminal Procedure Code . and now ‘ this is the letter rogatory which is under consideration with Cantonal Court of Geneva and section 166A Criminal Procedure Code . clearly confers jurisdiction on the Special Judge to issue such letter rogatory.

(57) Before we deal with the arguments advanced by the learned counsel for the parties, it will be appropriate to examine the powers of the High Court under Article 226 of the Constitution of India and Section 482 of the Code of Criminal Procedure to prevent the abuse of the process of court or otherwise to secure the ends of justice. In this connection we would like to refer to a Supreme Court judgment in R.P. Kapur vs. State of Punjab, . In this case the Supreme Court held that it is not possible, desirable or expedient to lay down any inflexible rule which would govern the exercise of this inherent jurisdiction. The Supreme Court, however, indicated some category of cases which call for the exercise of this jurisdiction. The relevant portion from this judgment is reproduced hereinbelow:- “THERE may be cases where it may be possible for the High Court to take the view that the institution or continuance of criminal proceedings against an accused person may amount to the abuse of the process of the court or that the quashing of the impugned proceedings would secure the ends of justice. If the criminal proceedings in question is in respect of an offence alleged to have been committed by an accused person and it manifestly appears that there is a legal bar against the institution or continuance of the said proceeding the High Court would be justified in quashing the proceedings on that ground. Absence of the requisite sanction may, for instance, furnish cases under this category. Cases may also arise where the allegations in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety, do not constitute the offence alleged; in such cases no question of appreciating evidence arises; it is a matter merely of looking at the complaint or the First Information Report to decide whether the offence alleged is disclosed or not. In such cases it would be legitimate for the High Court to hold that it would be manifestly unjust to allow the process of the criminal court to be issued against the accused person. A third category of cases in which the inherent jurisdiction of the High Court can be successfully invoked may also arise. In cases falling under this category the allegations made against the accused person do constitute an offence alleged but there is either no legal evidence adduced in support of the case or evidence adduced clearly or manifestly fails to prove the charge. In dealing with this class of cases it is important to bear in mind the distinction between a case where there is no legal evidence or where there is evidence which is manifestly and clearly inconsistent with the accusation made and cases where there is legal evidence which on its appreciation may or may not support the accusation in question.”

(58) Another case decided by the Supreme Court on this subject is Superintendent and Remembrancer of Legal Affairs, W.B. vs. Mohan Singh and others, . In this case the Supreme Court held that where no prima facie case is made out against the accused, the High Court can quash long drawn criminal proceedings and the fact that on an earlier occasion the High Court refused to quash the same proceedings will be no bar to quashing of the long drawn criminal proceedings when an application for quashing the same is moved.. The other case decided on this point is State of Karnataka vs. L. Muniswamy and others, . In this case it was contended by the counsel for the prosecution that the High Court could not take upon itself the task of assessing or appreciating the weight of the materials on record in order to find whether any charges could be legitimately framed against the respondents. It was further contended that so long as there is some material on record to connect the accused with the crime, the criminal case must go on and the High Court has no jurisdiction to put a premature end to the proceedings on the belief that the prosecution is not likely to succeed. The Supreme Court, however, rejected these contentions with the observation, “This in our opinion, is too broad a proposition to accept . With reference to Section 482 of the Code of Criminal Procedure. The Supreme Court held as follows:- “IN the exercise of this wholesome power, the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed. The saving of the High Court’s inherent powers, both in civil and criminal matters is designed to achieve a salutary -public purpose which is that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In a criminal case, the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in quashing the proceeding in the interest of justice. The ends of justice are higher than the ends of mere law though justice has got to be administered according to laws made by .the legislature. The compelling necessity for making these observations is that without a proper realisation of the object and purpose of the provision which seeks to save the inherent powers of the High Court to do justice between the Stale and its subjects it would be impossible to appreciate the width and contours of that salient jurisdiction.”

(59) Dealing with the observations of Gajendragadkar, J., in the case of R.P. Kapur (supra) the Court observed as follows:-    "IT was not possible, desirable or expedient to lay down any flexible rule which would govern the exercise of the High Court's inherent jurisdiction. The three instances cited in the judgment as to when the High Court would be justified in exercising its inherent jurisdiction are only illustrative and can in the very nature of things not be regarded as exhaustive. Considerations justifying the exercise of inherent powers for securing the ends of justice naturally vary from case to case and a jurisdiction as wholesome as the one conferred by S. 482 ought not to be encased within the strait-jacket of a rigid formula."  

(60) In State of West Bengal vs. Swapan Kumar Guha, , while considering the question whether the First Information Report giving rise to the investigation by the police should be quashed, the Supreme Court observed in para 65 of the judgment as follows:-    "-IN considering whether an offence into which an investigation is made or to be made, is disclosed or not, the Court has mainly to take into consideration the complaint or the F.I.R. and the Court may in appropriate cases take into consideration the relevant facts p:'6 and circumstances of the case. On a consideration of all the relevant materials, the Court has to come to the conclusion whether an offence is disclosed or not. If on a consideration of the relevant materials, the Court is satisfied that an offence is disclosed, the Court will normally not interfere with the investigation into the offence and will generally allow the investigation into the offence to be completed for collecting materials for providing the offence, if, on the other hand, the Court on a consideration of the relevant materials is satisfied that no offence is disclosed, it will be the duty of the Court to interfere with any investigation, and to stop the same to prevent any kind of uncalled for and unnecessary harassment to an individual".  

(61) In Madhavrao Jiwaji Rao Sciendia vs. Sambhajirao Chandrojirao Angre, , the following principles were laid down:-    "THE legal position is well settled that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the Court is as to whether the uncontroversial allegations as made prima facie establish the offence. It is also for the Court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the Court cannot be utilised for any oblique purpose and where in the opinion of the Court chances of an ultimate conviction are bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the Court may while taking into consideration the special facts of a case also quash the proceeding even though it may be at a preliminary stage".  

(62) The latest decision by the Supreme Court on this issue is the case of Ch. Bhajan Lal (Supra). In this case the Supreme Court has laid down the guidelines for exercising the power to quash the investigation which are as follows:- “1.Where the allegations made in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. 2. Where the allegations in the First Information Report and other materials, if any, accompanying the F.I.R. do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code. 3. Where the uncontroverter allegations made in the Fir or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. 4. Where, the allegations in the F.I.R. do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. 5. Where the allegations made in the F.I.R. or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. 6. Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. Where a criminal proceeding is manifestly attended with malafide and/or where the proceeding is maliciously instituted with an ulterior motive for wrecking vengeance on the accused and with a view to spite him due to private and personal grudge”.

(63) First of all we deal with the contentions urged by the learned .counsel for the petitioner regarding issue of letter rogatory by the Special Judge. Before examining the main contention on this issue as to whether the Special Judge ought to have issued notice to the petitioner, who is a named accused in the Fir before issue of letter rogatory, we deal with three additional contentions raised by the learned counsel in the written submissions which have been reproduced hereinabove. The first contention is that Memorandum of Understanding (for short called ‘MOU’) entered into by Government of India and Government of Switzerland is neither a treaty nor an enforceable contract between the two Governments. We do not find any merit in this contention. In this connection we may refer to Article 2 of Vienna Convention on Treaties in terms of which treaty means an international agreement concluded between States in written form and governed by International Law whether embodied in a single instrument or in two or more instruments and whatever its particular designation. It is, therefore, clear that the treaty has to be written form and the designation or name is not of much relevance. The second contention that Mou is incompetent because Indian Ambassador in Switzerland has no authority to negotiate or execute such a document, is also without merit in view of the letter of credence, a copy of which has been annexed by the respondents along with their additional written submissions. We also do not find any merit in the third contention that Mou was not ratified by the President or Parliament as there is no express provision in Mou envisaging its ratification. In fact the Mou has been acted upon by both the parties concerned, namely, Government of India and Government of Switzerland.

(64) The main contention on the issue of letter rogatory urged by the learned counsel for the petitioner is that the order passed by the Special Judge on the application of Cbi for issue of letter rogatory is a judicial order which affects him adversely and causes serious prejudice to his person. He has, therefore, contended that Special Judge ought to have given notice of this application to the petitioner, who is a named accused in the Fir, and the petitioner should have been given an opportunity of being heard before passing of the impugned order. Since no notice was given by the Special Judge before passing the order regarding issue of letter rogatory, it has resulted in grave miscarriage of justice and vitiates the letter rogatory both dated 5/7.2.1990 and 22.8.1990.

(65) We may point out here that in reply to written submissions filed by the petitioner, Cbi had filed additional written submissions and had stated therein that besides three contentions mentioned in the preceding paragraphs, the learned counsel for the petitioner, during the course of oral arguments, had not pressed the contention that the Special Judge had no jurisdiction to issue the first letter rogatory on 5/7lh-2-1990. Meanwhile an application was filed on behalf of Shri Prashant Bhushan, Adv. in the capacity of public interest litigant which we will deal with subsequently. Notice of this application was given to the counsel for the petitioner and Cbi for 19-8-1992 and on that day, the learned counsel for Cbi was given an opportunity to make oral submission in addition to additional written submissions.

(66) Before examining this issue it will be relevant to refer a few paragraphs from the judgment of the Supreme Court in Smt. Maneka Gandhi vs. Union of India, . In paragraph 32 of this judgment the Supreme Court held as follows:-

“Its well established that even where there is no specific provision in a statute or rules made there under for showing cause against action proposed to be taken against an individual, which affects the rights of that individual, the duty to give reasonable opportunity to be heard will be implied from the nature of the function to be performed by the authority which has the power to take punitive or damaging action. This principle was Said down by this Court in the State of Orissa vs. (Miss) Binapani Dei, in the following words:

“THE rule that a party to whose prejudice an order is intended to be passed is entitled to a hearing applies alike to Judicial tribunals and bodies of persons invested with authority to adjudicate upon matters involving civil consequences. It is one of the fundamental rules of our constitution set-up that every citizen is protected against exercise of arbitrary authority by the State or its officers. Duty to act judicially would, therefore, arise from the very nature of the function intended to be performed; it need not be shown to be super-added. It there is power to decide and determine to the prejudice of a person, duty to act judicially is implicit in the exercise of such power. If the essentials of justice be ignored and an order to the prejudice of a person is made, the order is a nullity. That is a basic concept of the rule of law and importance thereof transcends the significance of a decision in any particular case.”

(67) In para 57 of this judgment the Supreme Court observed, “although there are no positive words in the statute requiring that the party shall be heard, yet the justice of the common law will supply the commission of the legislature” The principle of audi alteram partem which mandates that no one shall be condemned unheard, is part of the rules of natural justice. In para 58 of this judgment the Supreme Court further observed,”natural justice is a great humanising principle intended to invest law with fairness and to secure justice and over the years it has grown into a widely pervasive rule affecting large areas of administrative action…The inquiry must, therefore, always be: does fairness in action demand that an opportunity to be heard should be given to the person affected”.

(68) In para 61 of the same judgment the Supreme Court also observed,”the law must, therefore, now be taken to be well settled that even in an administrative proceedings, which involves civil consequences, the doctrine of natural justice, must be held to be applicable”. Keeping in view the law laid down by the Supreme Court hereinabove, we examine the contention of the Cbi that the accused cannot be allowed to control the investigation and there can be no interference at the investigation stage by any one. The Criminal Procedure Code confers right on an accused at various stages. The cardinal principle that an accused person arrested in connection with a case has to be produced before a Magistrate is a safeguard in his favor so that the judicial mind can look into the grounds on which he has been arrested and ascertain by scrutiny of relevant papers whether such arrest is based on any material. Further the provision of section167Criminal Procedure Code . are invoked at the very commencement of investigation (i.e. 24 hours) and police/executive authority has to satisfy the Magistrate before further custody can be allowed. In exercising jurisdiction under section 167 Criminal Procedure Code ., the Magistrate does not act mechanically, he has to apply his mind to all facts and circumstances before passing his orders. In the case of re. Madhu p:’6 Limeye and others, Air 1969 Sc 1014 the Supreme Court held that once it is shown that the arrests made by the police officers were illegal, it was necessary for the State to establish that at the stage of remand the Magistrate directed detention in jail custody after applying his mind to all relevant matters.

(69) From above it is clear that the investigating agency had a duty to carry on the process of investigation against the accused in a reasonable and fair manner. Under Article 21 of the Constitution, the accused is entitled and it is implicit in the spirit of Article 21 itself that the accused has a right that the investigation is carried on not only in accordance with the procedure established by law but also touch stone of reasonableness and fairness is adhered.to. All the safeguard in favor of the accused contained in the Criminal Procedure Code have now become a part of our Constitutional law and now they are governed by Articles 14, 19, 20,21 and 22. The Supreme Court has discussed at length the importance of these rights and. their enforcement in several decision including the celebrated case of Khatri and others vs. State of Bihar, . Criminal jurisprudence in India after Articles 19, 20, 21 and 22 were enshrined in the Constitution has developed a great deal on the spirit of its being fair, equitable and reasonable keeping in view the right to equality guaranteed by Article 14 of the Constitution. The procedure contemplated under Article 21 requires that it should not be arbitrary, fenciful, oppressive or discriminatry.

(70) In view of the above discussion now we have to see as to whether the petitioner was entitled to hearing before issue of letters rogatory against him. Learned counsel for the Cbi submitted that the first letter rogatory issued on 7th February, 1990 was on the basis of Mou signed between the Government of India and Government of Switzerland on 20th February, 1989 and the amended letter rogatory issued on 22nd August, 1990 was based on the said Mou and section 166A Criminal Procedure Code . As stated earlier, the Mou was signed by the two Governments for extending/providing for mutual assistance in the investigation of criminal matters subject to the terms and conditions mentioned therein. One of these conditions is that the competent authority to ask for assistance in India will be Court, Tribunal, Judge or Magistrate exercising jurisdiction and under Swiss law the competent authority is an Examining Magistrate notwithstanding the denomination of “Bezirksanwalt, Untersuchungsrichter, juged’ instruction. verhorrichter” a.s.o. of all judicial authorities. Another condition is that the information requested for must be in respect of an offence punishable under the laws of both the countries and information obtained through the means of judicial system shall not be used for investigative purposes nor be introduced for the offence in the requesting State in any proceedings relating to offence for which assistance is not admissible. Another condition is that within the limits of law of the requesting State, information will be provided on the assets owned or possessed by persons who are the subjects of the investigation in the requesting country. From this it is clear that such an order will be a judicial order and will be passed during the course of judicial proceedings. Even in terms of section 166A Criminal Procedure Code . which was enacted by the Criminal Procedure Code (Amendment Act) of 1990 on 20th April, 1990, only a criminal Court can issue a letter of request to a court or authority in another country. In this connection it will be relevant to point out here that initially section 166A Cr.P.C. was inserted by way of an Ordinance promulgated on 19th February. 1990 and in terms of the Ordinance the power to issue of letter of request to authorities outside India was conferred on the Investigating Officers also besides the criminal Courts but when the law was to be enacted by the Parliament, the conferment of power on the Investigating Officers as provided for in the Ordinance were not approved by the Parliament and in the amended section 166A as enacted by the Code of Criminal Procedure (Amendment) Act, 1990, it was left to criminal courts only to deal with the request for assistance from out side country. From this it becomes clear that the condition precedent for a Court to issue a letter rogatory is to satisfy itself that the facts described or placed before it by the investigating agency constitute an offence in India according to Indian laws as the Court outside India is not expected to interpret the Indian laws and procedure in preference to the Indian Courts. It was on this ground that the Parliament while considering the Ordinance did not consider it proper to confer this power on the Investigating Officers also just as the power to keep under detention beyond 24 hours has been given to the Court of law under our Constitution so that an accused may get an opportunity to oppose his arrest beyond 24 hours. Similarly once the power has been conferred on the criminal Court to issue the letter rogatory, it follows that the court will have to apply its mind and give an opportunity of hearing .to the person whose property or rights are sought to be affected by letter rogatory.

(71) We may point out here that pursuant to our directions copies of the original letters rogatory along with their enclosures issued on 7th February.l990 and 22nd August, 1990 have been made available to us. From the records we find that first application for issue p:’6 of letter rogatory was Filed on 2nd February, 1990 before Shri R.C. Jain, the then Special Judge. Pursuant to this application the Cbi was permitted to make submissions in support of the application by their counsel. In para 10 of the order dated 7th February, 1990 passed by the then Special Judge it has been stated, “Shri Arun Jaitley, Additional Solicitor General of India. Shri K.N.Sharma, Deputy Legal Advisor Cbi and Shri Baljit Singh, Senior Public Prosecutor appeared for and on behalf of Cbi to make submissions on the application and they were heard at length”.

(72) In this letter rogatory the Court concerned in Switzerland was requested to collect oral and documentary evidence from concerned banks in which connected accounts have been got frozen on 26th January, 1990. The records further indicate that letter dated 26th January, 1990 contained the name of the petitioner W.N. Chadha, Mr. Harsh Chadha, besides a few other names. Thus. by this letter rogatory the information sought pertained to the seizing of properties and rights of certain persons including the petitioner but none of them was given any opportunity by the learned Special Judge before issuing the letter rogatory whereas, as stated hereinabove, the arguments on behalf of Cbi through their counsel were heard at length.

(73) In this connection it will also be relevant to refer to para 14 of the order passed by Shri V.S. Aggarwal, Special Judge, on 21st August, 1990 with respect to the issuance of the amended letter rogatory which has been reproduced earlier. In this paragraph it has been stated, “that Additional Solicitor General, who had conducted the case before the then Special Judge, had informed this Court that he had presented a copy of the said letter to the then Special Judge for perusal”. From this it is clear that Cbi was again represented to make submission on their behalf by their counsel, the then Additional Solicitor General of India, whereas no accused named in the FIR. nor any other person whose property or rights sought to be affected, was given any opportunity to represent their case. Once the proceedings are judicial proceedings and one side is given full opportunity by the Court to be represented by a counsel of its choice, the other party to be affected by the order which is sought to be passed by the Court, has to be given an opportunity to represent his case’ under the principle of natural justice and in terms of the law laid down by the Supreme Court in the case of Maneka Gandhi (supra) and Khatri and others (supra). As stated earlier, one of the conditions mentioned in the Mou is that within the limits of the law of the requested State, information will also be provided on the assets owned or possessed by persons who are the subjects of the investigation in the requesting country. From records we, however, find that through letter rogatory information regarding assets owned/possessed by many persons (besides the named accused) including certain Indian citizens, who are neither named accused in the Fir, nor there is any allegation against them in the Fir, has been asked for an even the Swiss Authorities were requested to freeze their bank accounts. This clearly shows non application of mind on the part of the learned Special Judge while passing the impugned orders dated 5th February, 1990 and 21st August, 1990. Some more facts also show that the learned Special Judge who passed the order on 21st August, 1990 for issue of amended letter rogatory did not apply his mind while passing the said order. As stated earlier, letter rogatory issued by the Special Judge on 7th February, 1990 was found to be in order by the Examining Magistrate in Geneva vide his order dated 26th March, 1990 but the said order was annulled by the Cantonal Court of Geneva vide order dated 3rd July, 1990. The Cantonal Court, however, gave time of 60 days to India for furnishing the necessary clarifications and compliance. Along with the application for issue of amended letter rogatory, Cbi appended note of compliance (consisting of 34 pages) furnishing clarification and compliance on the observations made in the order dated 3rd July, 1990 passed by the Cantonal Court of Geneva. One of the objections raised by the Cantonal Court was that between points 9 and 10, they had added and pasted a piece of paper referring to the names mentioned in the letter dated 26th January, 1990 given by Shri M.K. Madhavan, Cbi, New Delhi to the Federal Department of Justice & Police, whereas the said letter of 26th January, 1990 was not mentioned in either the letter rogatory issued by the learned Special Judge or in the annexures to which he referred. The clarification given by Cbi was that the slip was pasted only for convenience of ready reference of the investigating Judge setting out the names which had been mentioned in the letter dated 26th January, 1990 of Mr. K.Madhvan for the purpose of freezing bank accounts. It was further stated that “the intention in pasting a piece of paper was innocent but all the same mis-understanding that has arisen and the inconvenience caused are regretted”. Another objection was that on 19th June, 1990. a day before the date of hearing, a note marked “secret” was received by the Cantonal Court but this note was unsigned, undated and on a plain piece of paper. Cbi confirmed this fact in reply that this note was given to the Federal Department of Justice & Police. By another clarification the Cantonal Court asked to supply some explanation concerning Indian Civil Servants who may have been corrupted in this affair and concerning them any penal proceedings that may have started in India. In reply Cbi, inter alia, submitted that certain the then public servants of Ministry of defense of the Government of India, who were at the relevant time responsible for processing or awarding contract for Bofors had committed alleged offence of bribery or corruption or swindling and name of one such public servant at the relevant time was also mentioned. But in Fir the name of the said public servant has not been mentioned and even during the course of arguments on a query from us as to whether any public servant by now has been named, the learned counsel for Cbi replied in the negative. The note then deals with the other observations of the Cantonal Court about the result of investigation carried out at Sweden, it has been stated that the letter of request for assistance of the Swedish Government was delivered on 2nd April, 1990 and the result of investigation carried out in Sweden would become known to the Government of India only some month hence. Another observation of the Cantonal Court was that the competent Indian authority supply an attestation certificating the lawfulness -in India of seizing object acquired from an offence. In reply to this observation the note mentions the Criminal Law Amendment Ordinance, 1944 and section 104 Criminal Procedure Code . pertaining to the affairs of the court regarding attachment of properties acquired by the commission of certain offences and copies of these documents were annexed along with the note. In the order dated 21st August, 1990 the learned Special Judge has dealt only with the piece of paper pasted between point 9 and 10 by Cbi and clarification given by Cbi thereon but about the other observations mentioned in the note, he has not applied his mind which is evident from para 16 of the said order passed by the learned Special Judge: “IN India investigation is conducted by the police. The court in normal circumstances does not interfere in the investigation. Therefore, the question pertaining to investigation conducted at Sweden, the manner in which the piece of paper was attached, about secret note. about explanation concerning Indian Civil Servants who may have been corrupted in this affair and concerning any penal proceedings that may have started in India are being explained by the CBI. The explanation of Cbi was in its note Annexure-DD, which is being forwarded in the manner in which it has been submitted”.

(74) This paragraph clearly shows that the learned Special Judge did not apply his mind at all to the points raised by the Cantonal Court and reply thereto submitted by the Cbi in the said note. He has simply forwarded the said note though in terms of Mou he was required to apply his mind while issuing letter rogatory and documents appended thereto. As stated in the preceding paragraph, Cbi in its compliance note has referred to Criminal Law Amendment Ordinance, 1944 with regard to the powers of the Criminal Courts in India for attachment of properties and a copy of this Ordinance has been appended to the note. Here it will be relevant to refer to Section 4 of the said Ordinance. Under sub-section (1) of Section 4, the District Judge has power to pass an ad-interim order attaching the money or other property alleged to have been procured by means of offence. But in terms of sub-section (2) of Section 4. the District Judge simultaneously is required to issue to the person whose money or other property is being attached, a notice accompanied by copies of the order, the application, affidavits and of evidence, if any recorded, calling upon him to show cause why the order of attachment should not be made absolute.

(75) In para 9 of the application dated 2nd February, 1990 filed by Cbi before Special Judge praying for issuing letter rogatory (with enclosures), it was stated that pursuant to letter dated 23rd January. 1990 sent by the Director Cbi and letter dated 26th Janury, 1990 given by Shri K. Madhavan. D.I.G. Cbi at Berne, Switzerland, the Judge of Geneva and the concerned Judge Zurich ordered freezing the relevant Bank accounts in this regard on 26th January, 1990. In para 10 of this application, it was further stated that Federal Department of Justice & Police vide their letter dated 29th January, 1990 confirmed the freezing of accounts but stated that request for judicial assistance from Switzerland in this matter should be made by 28th February, 1990, failing which the Swiss Law obliges the withdrawal of instructions to block the accounts. Copies of the said communication were enclosed with this application. It was, therefore. requested in this application that letter rogatory be sent to Switzerland urgently. As pointed out earlier, the letter dated 26th January, 1990 given by Shri Madhavan contained the names of persons including that of the petitioner whose accounts were got frozen in Switzerland up to 28th February, 1990 and by the said application issue of letter rogatory was prayed for freezing them beyond 28th February, 1990. Thus when Cbi itself has relied upon provisions of Criminal Amendment Ordinance. 1944 and under section 4(2) of the said Ordinance. the District Judge at the time of passing the order of ad-interim attachemnt, is required to issue to the person whose money or property is being attached, the learned Special Judge was in law obliged to issue show cause notice to the petitioner whose property i.e. Bank account was sought to be frozen.

(76) As stated earlier the proceedings before the criminal court are judicial proceedings, these proceedings are of utmost sanctity more so when order based on these proceedings has been forwarded to a Court in another country. The Mou contains a clear condition that the competent authority to issue letter rogatory is a Court, Tribunal etc., in India and similarly an Examining Magistrate etc., in Switzerland. Similarly in terms of section 166A Criminal Procedure Code . it is only the criminal court which can issue letter of request and not the investigating authority. We are surprised to note that when the letter rogatory was forwarded from Court in India to another Court in Switzerland. Cbi pasted a piece of paper, as staled hereinabove, and also introduced a secret note before the Cantonal Court. Whatever explanation for this may be, we disapprove the said action of the officer of Cbi who had done this as it may amount to tampering with the judicial records.

(77) In view of the above discussion, we are of the view that the Special Judge had jurisdiction to issue letter rogatory on the basis of Mou 20th February, 1989 between Government of India and Government of Switzerland and section 166A Criminal Procedure Code . Since in the present case, the learned Special Judge failed to issue notice and- deemed opportunity of hearing to the petitioner whose property and rights were sought to be affected by the issue of the impugned letter rogatory and further there was non-application of mind by the learned Special Judge, we quash letters rogatories issued in pursuance of the orders dated 5th February, 1990 and 21st August, 1990 passed by the learned Special Judge. Now we deal with the contention raised by the learned counsel for the petitioner that Jpc having p:’6 thoroughly gone into the matter, particularly in association with Cbi, the registration of FIR. and present investigation are bad in law and fact. In support of this contention the learned counsel submitted that Jpc was a High Power Committee having its member form both the Houses of Parliament. It examined as many as 15 witnesses including the petitioner and took assistance of the investigating agencies. The Committee had also the assistance of the Attorney General of India on legal aspects of the matter and it was thereafter that the Committee arrived at the conclusions given in various sub-paras of paragraph 9 of its report. The learned counsel submitted that in terms of these conclusions, the Committee found that the Bofors gun meets all the essential technical and operational parameters of a medium field gun. He particularly referred to sub-para (v) of paragraph 9.3 of the conclusions wherein it has been stated as under:- “(V)No extraneous influence or consideration such as kickbacks or bribes as alleged in the media effected at any stage the selection and the evaluation of the gun systems or the commercial negotiations with the competing suppliers. The Committee have not come across any action or decision of any officer or member of the Government which could be viewed with slightest suspicion at any stage of the Bofors Contract. The evidence before the Committee conclusively establishes that the decision to award the contract to Bofors was purely on merits.”

(78) He, therefore, contented that in view of the findings of this High Power Committee, Cbi cannot be permitted to re-open the case de novo. We, however, asked the learned counsel if there is any provision in the Code of Criminal Procedure barring investigation by Cbi in such circumstances, the counsel could not point out any such provision. The learned counsel for C.B.I., on the other hand, submitted that the inquiry of Jpc by its very nature of constitution and scope of its function could not be treated as an investigation within the contemplation of the Code of Criminal Procedure. He referred to the terms of reference of Jpc wherein it has been stated that the investigating agencies shall render such assistance to the Committee as may be required by it for the purposes of its inquiry. He, therefore, contented that the association of Cbi with Jpc does not in any manner elevate the inquiry by Jpc because no case was registered between August 1987 when Jpc was constituted and April 1988 when it presented the report to the Parliament. Since there is no provision in the Code of Criminal Procedure barring investigation by Cbi in a case where the matter has been inquired into by Jpc, we do not find any merit in this contention. But Jpc being a High Power Committee of both Houses of Parliament and having gone into substantial evidence we are of the opinion that we also cannot totally ignore the conclusions arrived at by JPC.

(79) Now we deal with another contention urged by the le’arned counsel for the petitioner that the Fir does not disclose any offence and at any rate there is no material evidence against the petitioner to sustain the Fir and the investigation. To appreciate this contention it will have to be examined as to whether proper and established procedure was followed while finalising the contract for purchase of Bofors gun. As stated earlier Bofors contract was finalised after prolonged negotiations between the parties. After Ccpa approved the proposal for procurement of 155 mm gun along with certain equipment and ammunition in April 1984, a Negotiating Committee comprising of high ranking officers of the Government of India, namely. defense Secretary, Secretary (DP&S), Scientific Adviser to Raksha Mantri (i.e. Secretary R&D), Secretary (Expenditure), Additional Secretary (Deptt. of Economic Affairs), Financial Adviser (defense Services) and the Deputy Chief of Army Staff as members, was constituted for detailed negotiations with various suppliers. On the basis of the recommendations of the Army Headquarters, M/s. Sofma, France and Bofors, Sweden were short listed by Negotiating Committee in their meeting held on 29th October, 1985.

(80) The urgency of acquisition of 155 mm gun is evident from the letter dated 29th November, 1985 written by the then Chief of Army Staff to the then Raksha Rajya Mantri (A), which we have perused from the original record. The relevant portion of the same is reproduced hereinbelow:-    "IN no way the Army Headquarter delays the matter. My concern was to ensure that you know the correct position and expedite the matter of acquisition of the 155 mm Towed gun system as it has been delayed for such a length of time that it is causing me grave concern in context of our operational capability".  

(81) The records further indicate that the Negotiating Committee from time, to time had been examining various evaluation reports submitted by the departments concerned. In this connection it will be relevant to refer to some portion from the record of discussion of the Negotiating Committee held on 4th March, 1986 and 12th March, 1986. The meeting held on 4th March, 1986 besides five members of the Committee was also, inter alia, attended by D.G.W.E. and Deputy Director General Artillery of Army Headquarters. - The following portion from the minutes which is relevant, is reproduced hereinbelow:-    "IT was noted that while Army Headquarters had found both the guns meeting the minimum acceptable parameters, they had expressed the view that the Bofors gun has a clear edge on the Sofma gun. This was so particularly because of its higher degree of automation, burst fire capability and greater stretch potential for incorporating future developments. The Dcaos expressed the view that because of the advantage enjoyed by the Bofors gun we should go in for it even if it involved paying more for it".  

(82) The record of discussion of meeting held on 12th March, 1986 indicates that this meeting was attended by six members and in addition by Deputy Director General Artillery and Member Ordnance Factory Board. The then Finance Secretary also attended as an invitee. In the minutes it is stated,”keeping in view the technical, contractual and financial aspects the Committe felt that the offer of Bofors as the better of the two.” The records further show that on the basis of the unanimous recommendations given by this Negotiating Committee the then Joint Secretary (O) prepared a comprehensive note dated 12th March, 1986 consisting of 10 pages containing the history of the case and comparative favorable and unfavorable points in respect of guns of M/s. Bofors and Sofma along with relevant reords. This note was examined and approved by the then defense Secrtary, Secretary (DP&S). Secretary (E), Finance Secretary, Raksha Rajya Mantri (S), Raksha Rajya Mantri (A), Finance Minister and Prime Minister (as RM). There is no dissent from any one of them.

(83) The records further show that the negotiation between the Government of India and Bofors for finalisation of the contract were not conducted through any Indian agent. The correspondence has been addressed directly by Bofors, right from May, 1985 till March, 1986. From the facts mentioned hereinabove, it is clear that the decision regarding finalisation of the contract with Bofors was not taken by one or two persons, it was based on the recommendations of the Negotiating Committee of five Secretaries, Financial Advisor and Dcaos and these recommendations were duly examined and approved by the then Secretaries of the various departments as also by the. then two Ministers of State for defense, the then Finance Minister and the then Prime Minister (as RM). Thus, the decision was taken in accordance with the well established procedure.

(84) As stated earlier between the period from 10th February, 1986 and 21st March, 1986, a keen competition was generated by the Negotiating Committee. It was because of this competition that Bofors brought down their price from 1620 crores to 1427 crores on 21st March, 1986 and Sofma brought down their offer from 1509 crores to 1436 crores on the same date. As pointed out earlier even after the letter of intent has been issued to Bofors, on the advice of the then Prime Minister, the then defense Secretary got further concessions from Bofors amounting to approximately Rs.l0.5 crores. All this clearly shows that the procedure adopted for finalisation of the contract with Bofors was perfect and bonafide.

(85) There is no allegation even in the Fir that any favor was shown by the Negotiating Committee to M/s. Bofors. Since the concerned defense and civil authorities acted in most meticulous manner as shown in the report of the Negotiating Committee, no inference of ulterior motive can be drawn unless some clear allegation based on some evidence is brought on record by Cbi against any public servant who had at any stage dealt with the finalisation of the contract though as stated above, as per records it was not a decision of a single person. It may be relevant to point out here that in Fir, which was registered on 22nd January, 1990, no public servant has been named as an accused. During the course of arguments we specifically asked the learned Additional Solicitor General if by now any public servant has been named as an accused in this case, he replied in the negative. Though no stay was granted in the case, amended letter rogatory was sent in August, 1990 and fresh communication dated 2nd April, 1990 was sent to Swedish Government for assistance, even then after the expiry of more than 31 months from the registration of the Fir, Cbi has failed to name any public servant as an accused. Here we may also refer to para 8.16 of the report of Jpc wherein the opinion of then Attorney General had been sought on the concept of bribe. The same is reproduced hereinbelow:- “JURISPRUDENTIALLY,it is related only to public servants or persons holding public offices, who have taken illegal gratification to show official favor. An arrangement by ‘which some money is paid by a private person to another private person does not strictly fall in the concept of bribe. The Prevention of Corruption Act applies to public servants. As far as private parties are concerned they can be related or involved in an offence relating to bribe as abettors. To that extent, they will be liable.”

(86) Thus, in the absence of any public servant being an accused, the petitioner cannot be treated as an abettor in view of the observations given hereinabove. Besides this. the record shows that the petitioner has not represented Bofors as their representative during the course of finalisation of the contract. As stated earlier, the record shows that the Bofors have been corresponding directly with the authorities of Government of India and in any case the petitioner cannot be treated as a middleman. Here it will be relevant to refer to para 8.6 of the report of Jpc wherein the opinion of the then Attorney General was sought, which is as follows:- “A business activity, particularly an activity like this, cannot be carried out by one person. In order to carry out the business, sometimes the person may not even know anything and others will be advising him. So, a person carrying on a business activity is likely to have an expert advice vis-a-vis the business aspect; expert advice on legal aspects; expert advice on accountancy aspects; expert advice on market conditions, etc. Therefore, the appointing Advisors, Planners, Executives, Consultants; or Marketing Surveyors are not middlemen. Similarly, the Financiers are not middlemen. They certainly get a good share; sometimes the terms of the contract may specify it.”

(87) In view of the discussion made in the preceding paragraph, we are of the view that no offence under sections 120B read with sections 161, 162, 163, 164 and 165A of the Indian Penal Code read with sections 5(2)/5(l)(d) and 5(2)/5(l)(c) of the Prevention of Corruption Act, 1947 is made out against the petitioner, particularly when the allegations made in the paragraph are read along with the conclusions arrived at by Jpc, which are based on evidence collected by it and our conclusions mentioned hereinabove, which are based on the records of the case. The petitioner who was getting I lakh Sek per month for administrative services e.g. transportation, forwarding of letters, telex etc. cannot be called a middleman as he never represented on behalf of Bofors for the finalisation of the contract as explained hereinabove. In the Fir there is no allegation as regards the payment of I lakh Sek to the petitioner. However, the learned counsel for Cbi submitted that in terms of the report of Snab received by the Government of India in January 1987, there was observation that considerable amounts have been paid subsequently to Bofors’ previous agent in India. There is an observation in the Fir that the-secret part of the report indicated that an Indian who had been Bofors agent for 10-15 years was the principal beneficiary of the payment made to Svenska Inc in connection with the gun deal in question. The counsel, therefore, drew conclusion that the principal beneficiary of payments made by Bofors to Svenska Inc in connection with the gun deal in question was the petitioner. In support of his contention the learned counsel submitted that there were similarities between the agreements of Bofors with Svenska Inc and Agc which is owned by the petitioner. In this respect he submitted two charts which are reproduced hereinbelow:- A)Signed by Bofors on a) Signed by Bofors on 21.12.197 21.12.1978. b) Signed by Svenska on b) On 24.10.1978 14.12.1978. c) Consultant for promotion c) Sale representative of sales in India, for promotion of sales Nepal and Sri in India.. Functions Lanka spelt out in detail – paras 2.1 to 2.18. d) Allowed to represent d) Allowed to represent following companies following companies also. i) Satt Electronics i) Salt Electronics ii) Kokums ii) Kokums iii) Karlskronavervet iii) Karlaskronavarvet iv) Whitehead Moto Fides iv) Whitehead Moto (Italy). Fides (Italy). e) Commission 4% e) Commission 2%% + 100,000 Ser for 4+2 = 6% 11.1984 a) Signed by Bofors on a) Signed by Bofors on 10.5.84. b) Signed by Svenska b) Signed by Win Chadha Inc on 29.5.19844 on 30.11.1984 (Chadha delayed signing: c) Consultant and c) Sole representative Adviser for promoting for India for sales in India, Nepal promotion of sales, Sri Lanka either functions spelt out directly or through in detail, sole-representative identical with 1984 in the “territory”, agreement d) Allowed to represent d) Allowed to represent the same six companies the same 6 companies as in the agreement as in 1981 agreement, with AGC. e) Commission 5% on e) Commission 0.25% and ex-works value of the 100,000 Sek per annum order, for expenses. 46 On 19.9.1984 Bofors sent a letter to Svenska and increased the commission by 0.75%. f) Valid up to 30.9.1987 f) Valid up to 30.9.1987 from the date of from the date of signature, signature.

(88) Overall figure of commission for Svenska and Agc remained 6% On the basis of these charts he submitted that overall figure of commission for Svenska and Agc always remain 6% and, therefore, beneficiary of Svenska Inc is the petitioner. The submission made by the learned counsel, however, does not appear to be correct as explained hereinbelow. The above charts indicate that contractual obligation between M/s. Bofors on the one hand and Svenska Inc and Agc on the other had existed much before the decision of the Government of India taken in November 1984 prohibiting the involvement of agents and middlemen in relation to the gun contract. The charts further show that Svenska Inc has been a consultant throughout not only for promoting sales in India but also in Nepal and Sri Lanka. Even according to the allegations made in the Fir, the payments made to Svenska is 2.24% and not 6% as alleged by the learned counsel for CBI. Further it has been alleged in para 111 of the Fir that the total commission paid to Svenska Inc and Agc was reduced, and Ae Services Limited suddenly entered the scene with an agreement with Bofors on 15th November, 1985 virtually granting the execution of the contract in favor of Bofors before 31st March, 1986 and achieved this with 7 days to spare. From these allegations if is clear that if at all anybody can be alleged having played any role for finalisation of the contract, it is Ae Services Limited with whom association of the petitioner has not been alleged even in the FIR.

(89) It has also been stated in Fir that Svenska Inc is being run in Panama by certain lady Advocates. There is no allegation in Fir that any agreement on the part of Svenska Inc was signed by the petitioner. How the affairs of the said company are being run by those ladies, the petitioner cannot be alleged of being associated with the same. As opined by the then Attorney General in para 8.15 of the Report of Jpc, it may be that some company/agent was being used for siphoning of money by Bofors or any one else. But the petitioner cannot be alleged to be associated with this company on the basis of media reports, surmises and conjectures.

(90) The contention of the learned counsel for Cbi that as per Snab report the amount is alleged to have been paid to a person who was an Indian agent of Bofors for the last 10-15 years and as such that person was the petitioner, again is based on conjectures and not on facts. As stated in Fir, the petitioner became an agent for Bofors for the first time in 1978 and this report was published in June 1987, though the deal was finalised in March 1986. Even if we take the date as June 1987. the petitioner had not been an agent for Bofors for 10-15 years prior to that month as he became the agent of Bofors for the first time in 1978.

(91) Regarding the payment of Sek I lakh per month to Agc which was owned by the petitioner, in para 96 of Fir the advice given by the then Attorney General. which is relevant to be noted here, is reproduced hereinbelow:-    "ON the basis of the letter dated 10th March, 1986 of Bofors the only payment that could be made was Sek I lakh per month to AGC. There can be no further payment which they could legitimately made for winding up to any alleged agency agreement."  

(92) From this it is clear that even as per allegations made in the Fir the said amount paid to the petitioner was a legitimate one as the same was for administrative services as stated earlier.  

(93) In para 100 of the Fir it has been alleged that after the report of Snab was received in India, the then defense Secretary discussed the security implications with the then Chief of the Army Staff who stated that, "we apply full pressure on Bofors to part with the information needed for legal action against the culprits and explained the reason that this may in the worst case lead to the cancellation of the contract." It is further stated that initially this was the view of the then defense Secretary also but he expressed a total different view in the brief which was enclosed with his letter dated 27th July, 1987 and there are reasons to believe that the defense Secretary did so either of his own or was prevailed upon to do so. From this paragraph, an inference has been drawn that some public servants could be involved in this case though none of them has been named so far as stated hereinabove. This inference is again without any merit. In this connection the opinion of the then Chief of Army Staff given in his letter dated 29th November. 1985 would be relevant. In this letter the Coas had clearly stated that, "the matter of acquisition of the 155 mm Towed gun system has been delayed for such a length of time that it is causing me grave concern in context of our operational capability." In this connection it will also be relevant to refer to the opinion of the Attorney General given in para 8.13 of the report of Jpc which is reproduced hereinbelow:-    "A contract can be cancelled only if there is a breach of the terms of the contract. If there is no breach of the terms of contract, there cannot be unilateral cancellation of the contract. That certain persons are being implicated by rumours is not a ground for terminating the contract. Law recognises only facts which are capable of proof before a court of law. .......On the facts established, payments to certain companies are proved. The termination of the agreement is proved. They are saying during the evidence they made a mistake in not informing that they paid the winding up charges. From these I am not able to see how inference can be drawn that they were middlemen related to the Bofors deal."  

(94) The learned counsel for Cbi had also submitted that Bofors were aware of the policy of the Government of India prohibiting agents and the same was confirmed in their letter dated 6th August, 1987. But inspite of the known policy of the Government it was later on found that payments were made by Bofors to their agents for the gun deal in question and this amounted to dishonest inducement on their part which led the Government of India that there were no agents and the agreement was entered into without such inducements. He further submitted that the Government of India would not have paid the price for the guns which it had paid if they were not deceived into believing that no agents were involved in this deal and Bofors committed forgery by dishonestly indicating in the documents published in 'The Hindu' that they had terminated the agencies of all their agents. Thus, there was a criminal conspiracy between the Bofors and their named and un-named persons.  

(95) As stated earlier the contract between the Government of India and Bofors was entered into on 24th March, 1986. As pointed out in the report of Cag of India for the year ending 31st March. 1988. the formal contract signed with Bofors did not contain at all any provision relating to the elimination of any type of agents. It was, therefore, at best a unilateral decision of the Government of India taken in November 1984 that they will not deal with the agents or middlemen in negotiation of the defense deals. As stated earlier the First written contract between Bofors and Agc of the petitioner was signed on 24th October, 1978 and was valid up to 30th September, 1981. Similarly, another agreement between Svenska Inc, Panama and Bofors was signed by Svenska Inc on 14th December, 1978 and by Bofors on 21st December, 1978 and was valid up to 30th September, 1981. The aforesaid agreements were further extended for a period of three years and again in 1984 Bofors signed another agreement with Svenska Inc and AGC.  

(96) From the preceding paragraphs it is established that the contractual obligations between Bofors on the one hand and Svenska Inc and Agc on the other hand existed much before the decision of the Government of India which was taken in November 1984. Similarly in paragraphs 40 and 41 of the Fir it has been alleged that Bofors had been making payments to Pitco C/o Shri G.P. Hinduja and Pitco C/o Sangam Limited, New Zealand. London from the period 1982 to 1984. After the Government of India's policy decision prohibiting involvement of agents, Bofors might have been required to settle their contractual obligations with their agents which is a matter purely between Bofors and their former agents. If Bofors made payments out of its own resources as alleged by the Cbi to their former agents as winding up charges or commission in whatever form may be for termination of the earlier existing contract, it would not constitute any criminal offence. Besides as stated earlier, Svenska Inc had been representing Bofors not only for promoting sales in India but also in Nepal and Sri Lanka. In this connection it will be relevant to reproduce the opinion of the then Attorney General which is contained in para 8.7 of the report of Jpc and is as follows;-    "IF the evidence before the Committee clearly established to the satisfaction of the Committee that none of these three or four companies which are alleged to be middlemen had anything to do with this transaction in the sense that they came to India or certain Indian officials went and discussed about these transactions, they brought the Bofors and the Indian authorities together - if nothing of that kind is there, if no material is available - merely from the circumstances of Bofors having paid certain amount to certain company, one cannot draw the inference that they are middlemen."  

(97) Here it will also be relevant to reproduce clause 26 of the agreement entered into between Government of India and Bofors which is as under:-    "BOTH parties agree not to disclose to third parties, except as may be necessary for the execution of this con tract, any confidential, private proprietary information supplied in the course of negotiations or under this contract by the other party."  

Explaining the implication of this clause the Attorney General gave his opinion which is stated in para 8.9 of the report of Jpc which is as follows:-    "IT means there is a complete embargo on both the Government of India and the Bofors, from disclosing to third part is any information about this contract. The only narrow area and cover where they can depart from this mandate of secrecy is that such disclosure may be necessary for the execution or performance of this contract. Otherwise there is an embargo on both the parties."  

(98) In para 8.15 of the report of Jpc it has been stated that,    "IF there is any payment, it is not necessarily related to commission.......It may be the service charges or other business connection charges or the consultancy payment made to them. Or it may be used for siphoning of the money."  

(99) From the various opinions given by the then Attorney General as accepted by Jpc it is clear that unless there is a specific allegation regarding payment of any money to a public servant in India it cannot be said that the amount paid by Bofors to any of his agents outside India was a bribe meant for certain public servants. As pointed out in the report of Cag of India, the Government’s warning was limited to Indian agents only. though the formal contract did not contain any provision relating to the elimination of any type of agents. From the facts stated in the preceding paragraphs it is clear that the presence or absence of the agents was not the dominant consideration for entering into this contract and placing the order on M/s. Bofors. if that would have been so the same would have been incorporated in the written contract between the parties. The dominant factors obviously were the price and the quality of the gun system and as stated earlier the competition was generated by the Negotiating Committee and within a period of one month and ten days from 10th February, 1986 to 21st March, 1986. there was a reduction of about Rs.l93 crores by Bofors and about Rs.73 crores by Sofma. From the record it appears that the Government of India got the gun for the minimum negotiated price. But how the supplier deals with his agents in respect of the contracts already entered and how much he pays out of his pocket to his agents for termination of their contract cannot be termed as dominant factor of the contract. It is well known that the conditions of cheating require the allegation of deceit or inducement on the basis of which the former parts with his property. In the present case, all the material consideration for entering into written agreement were incorporated therein. There is no reference to the agents or middlemen in the contract. There is no nexus between the false representations and the execution of the contract. The procedure followed for finalisation of the contract has been perfect as explained hereinabove. There was thus no case of cheating under secion 420 of the Indian Penal Code. But in any case the petitioner, as explained hereinabove, had not represented Bofors during the course of finalisation of the contract. The original record also shows that Bofors right from May 1985 till the finalization of the contract had been corresponding with the authorities of the Government of India directly and in the month of March 1986 their President Mr. Martin Ardbo himself had been camping in Delhi for some days during the month of March 1986. In view of these facts there cannot be any slightest allegation of cheating or abetment to cheat against the petitioner.

(100) The charge under section 409 Indian Penal Code is again inconsistent with the allegations contained in the FIR. The negotiated price of the gun and the terms of the contract do not indicate that any amount, if at all paid to any agent, would be included in the price of the ‘ gun. In a matter like this, the terms and conditions contained in the contract are binding on the parties and it cannot be said that the price paid by the Government of India to M/s. Bo’fors constitute any criminal breach of trust by them. In any case no offence under section 409 Indian Penal Code is made out even on the basis of the allegations as contained in the FIR. Even neither any suit has been filed nor any arbitration proceedings have been initiated for recovery of the amount of alleged commission.

(101) The allegations in the Fir relating to the offence of forgery of three agreements is wholly misconceived so far as the petitioner is concerned. These documents are alleged to have been published in newspapers and are not documents between the Government of India and M/s. Bofors. Neither the principal, namely, M/s. Bofors nor their agents in whose favor these documents are alleged to have been executed had made any allegation that anyone of them wanted to cause any wrongful gain or wrongful loss to either side. Learned counsel for the Cbi has not brought to our notice any original document on the basis of which the allegation of forgery is made out. The newspapers’ reports and other materials mentioned in the Fir cannot be the subject matter of the evidence of forgery. In any case as explained hereinabove no nexus can be made out between Svenska Inc and the petitioner. In view of this no offence is made out against the petitioner under sections 468 and 471 IPC.

(102) Alter hearing the arguments, when the case was reserved for judgment, an application, being Crl. M. 334 of 1992 was filed by Shri Prashant Bhushan, Advocate, in the capacity of public interest litigant. It was alleged in this application that at the end of arguments, some disquieting developments have necessitated this intervention application by the applicant. It was further stated that the counsel for the petitioner during the course of arguments has only submitted that letter rogatory could not be issued without notice to the petitioner, who was an accused, but no submissions were made about the legality of the letter rogatory or the competency of the Special Court to issue such a letter rogatory. But in the written submissions challenge has been made about the legality of the letter rogatory or the competency of Special Courts to have issued such a letter rogatory by the petitioner.

(103) A notice of this application was given to counsel for the petitioner as well as of CBI. This application came up for hearing on 19th August, 1992. The learned counsel for the petitioner opposed the application on the ground that in terms of the judgment passed by the Supreme Court in Janta Dal v. H.S.Chaudhary, Crl. A. No. 304 of 1991, the applicant has no locus standi to seek this intervention. Nevertheless we gave opportunity to Shri Shanti Bhushan, learned for the applicant, to make his submissions. During the course of submissions, the learned counsel for the applicant submitted that on the point of letter rogatory, written submissions made on behalf of Janta Dal in Crl.A. 304/91, copy of which was Annexure B to the application, may be taken into consideration. We also gave an opportunity to learned counsel for Cbi to make his submissions in support of his additional written submissions in reply to additional contentions made in the written submissions of the petitioner. The learned counsel for Cbi also raised strong objection against the application for intervention and particularly he refuted ‘the allegations made in the application that the case on behalf of Cbi was not being argued effectively. He pointed out that after a copy of the written submissions filed on behalf of the petitioner was received by CBI. within two days from the receipt of this copy, additional written submissions were filed on behalf of the CBI. He also submitted that he relied on the additional submissions in respect of the additional contentions urged by the learned counsel for the petitioner, in their written submissions. We. however, find that all the relevant points mentioned in the written submissions on behalf of Janta Dal were fully argued by counsel for the Cbi and the allegations made against counsel for Cbi in the application were unfounded. The application is accordingly disposed of.

(104) As stated earlier, the Supreme Court had given only conclusions in the case of H.S.Chaudhary (supra) on 27th August. 1991 and the reasons in support of the conclusions were reserved. Meanwhile, the reasons in the said judgment have been rendered by the Supreme Court on 28th August, 1992. The Supreme Court reiterated its earlier view that it is for the accused persons to raise all questions of law, which can be gone into and examined in a criminal case of this nature and also to challenge the proceedings initiated against them at the appropriate time before a proper forum and not for a third party under the garb of public interest litigant. Besides dealing with the question of public interest litigations, the Supreme Court has also given an observation on one of the points framed by a learned Single Judge of this Court, on which the learned Single Judge had issued a show-cause notice to CBI. The relevant point was “That the Fir filed by the Cbi does not disclose any offence”.

(105) On this point, the Supreme Court observed that, “we have carefully and scrupulously gone through the First Information Report and we are unable to share this view of Mr.Justice Chawla, quite apart from the other grounds on which the accused may like to attack the First Information Report. None of the named accused, came before Mr.Justice Chawla raising this question of lack of allegations and particulars in the Fir so as to constitute any offence, much less a cognizable offence”. The Supreme Court further observed that, “While so, it shocks our judicial conscience that Mr. Justice M.K.Chawla before whom no aggrieved or affected party had come challenging the Fir, has taken suo moto action and recorded such a categorical assertion that ‘no offence’ thereby meaning much less a cognizable offence is made out in the FIR.” Since the petitioner was a named accused in the Fir, we had admitted this petition on 10th September, 1991, keeping in view the observations of the Supreme Court that an accused in a Fir could raise questions of law to be gone and examined in a criminal case of this nature and he can challenge the proceedings initiated against him. We, however, declined stay in the matter.

(106) With respect, we are also of the view that it may not be correct to say that the Fir on the face of it does not disclose any offence against any one, named or unnamed accused. But while dealing with the issues raised by the petitioner, in this case, we have come to the conclusion that if the allegations made in the Fir are read by themselves or along with the conclusions by Jpc (which was a high powered committee, representing both Houses of Parliament), which j are based on evidence collected by the said Committee and conclusions arrived at by us, explained hereinabove, which are again based on the records of the case, and further that Cbi has failed to name any public servant as an accused in the case, even after the expiry of more than 31 months from the registration of the case, as explained earlier, no offence is made out against the petitioner under sections 120B, Indian Penal Code read with Sections 161, 162, 163, 164 and 165A of the Indian Penal Code read with sections 5(2)/5(l)(d) and 5(2)/5(l)(c) of the Prevention of Corruption Act, 1947 read with Sections 409, 420, 468 and 471 IPC.

(107) Without naming any public servant as an accused during all these 31 months when there was no stay in the case, the investigation cannot be allowed to continue against the petitioner on the basis of surmises and conjecture such as the language of the agreement between Bofors and Agc owned by the petitioner and between Bofors and Svenska Inc is identical or the total commission payable to Agc and Svenska Inc has been 6 per cent in terms of the agreement though as per the allegations made in the Fir the commission paid to them in fact is 2.24 per cent and not 6 per cent. Further in para 11 of the Fir it has been alleged that the total commission payable to Svenska Inc and Agc was reduced and Ae Services Ltd. (with whom the petitioner is not even alleged to have any association) suddenly entered the scene with an agreement with Bofors on 15th November, 1985 virtually p:’6 guaranteeing the execution of the contract in favor of Bofors before 31st March, 1986 and achieved this with 7 days to spare. This shows that even according to the allegations the guarantee for the execution of the contract in favor of Bofors was from Ae Services Ltd., and not from the petitioner. Besides as stated earlier the petitioner did not participate during the course of finalisation of the contract between Bofors and Government of India and the Bofors had been corresponding with the authorities of the Government of India directly. All these facts result in the conclusion that there is no case against the accused for continuance of the investigation against him. Here we may refer to a judgment of the Supreme Court in the case of Mohan Singh (supra) wherein it was held that the order for quashing of criminal proceedings on the ground of absence of prima facie case should be passed in view of the circumstances existing at the time when the order is passed. Relying on this judgment we have taken into consideration all these facts mentioned hereinabove. It may be noted here that pursuant to the registration of the Fir against the petitioner his passport has been impounded. Non-bailable warrants for his arrest were issued and the same have been quashed by a learned Single Judge of this Court and the matter is now pending before the Supreme Court. In these circumstances it is a fit case where investigation cannot be allowed to continue against the petitioner.

(108) In view of the discussion, we allow the writ petition and quash the letters rogatory, both dated 5/7lh-2-1990 and 21/22nd-8-1990 issued by the Special Judge and the impugned Fir registered by the Cbi against the petitioner under sections 120B. Indian Penal Code read with Sections 161, 162, 163, 164 and 165A of the Ipc read with sections 5(2)/5(l)(d) and 5(2)/5(l)(c) of the Prevention of Corruption Act. 1947 read with Sections 409, 420, 468 and 471 Indian Penal Code and proceedings and orders based on the said FIR. However, we leave the parties to bear their own costs.