Coal scam: Working of PMO officials not above board, says Court

New Delhi: The working of Prime Minister's Office (PMO) during the UPA regime Monday came in for sharp criticism by a special court which said the functioning of PMO officials "does not appear to be above board" in a coal blocks allocation case.

The court made the observations in an order relating to a case of Nagpur-based Grace Industries Ltd (GIL) in which it directed the CBI to further probe the alleged role and collusion between public servants and company officials.

The court also noted that when there were specific remarks by then Minister of State for Coal Dasari Narayan Rao that GIL was "not eligible" for allocation of Lohara (east) coal block in Maharashtra, the PMO officials should have highlighted the same before the file was submitted to then Prime Minister Manmohan Singh, who was also the Coal Minister at that time.

"In these circumstances, I am constrained to observe that even the working of the officers of PMO also does not appear to be above board. When there was a specific observation by the Minister of State for Coal (Rao) regarding the case of M/s GIL, then at least the officers in PMO ought to have highlighted the said fact before the file was submitted to the Prime Minister," Special CBI Judge Bharat Parashar said.

"Be that as it may, the aforesaid nature of proceedings however clearly shows the extent to which the MOC (Ministry of Coal) officers went in order to favour a private party i.e M/s GIL in securing allotment of a coal block," the court said in a 40-page order.

The order came in a coal blocks allocation scam case in which the CBI had chargesheeted GIL and one of its Director, Mukesh Gupta, as accused for the offence under section 420 (cheating) of the IPC.

The agency, in its charge sheet, has said that sufficient incriminating evidence warranting prosecution of GIL's other Director Seema Gupta or any other public servant involved in the entire process could not come on record.

The court, in its order, asked the CBI to place before the sanctioning authority the records of the case so that they may consider the question of according sanction to prosecute two public servants -- K S Kropha, the then Joint Secretary in the Coal Ministry, and Vishwas Sawakhande, Director of Directorate of Geology and Mining Maharashtra government, for offences under the Prevention of Corruption Act PCA).

"In view of the aforesaid circumstances when sanction to prosecute two public servants involved is required, so before proceeding to take cognizance of any of the offences either against the private parties involved or the public servants, I deem it appropriate to refer the present matter for further investigation to the CBI," the judge said and directed the CBI to file a progress report of the further probe on February 4.

It also observed that then Coal Secretary H C Gupta has since retired from government service and there was no need for sanction under section 19 of the PCA.

"It is thus prima facie clear that the private parties i.e. M/s GIL and its two directors, Mukesh Gupta and Seema Gupta, entered into a criminal conspiracy with the public servants namely H C Gupta, who was Secretary, MOC and was also the Chairman Screening Committee, K S Kropha...And Vishwas Sawakhande, Director, Directorate of Geology & Mining, Govt. of Maharashtra with a view to mis-appropriate the nationalized natural resources of the country," the court said.

It noted that public servants facilitated misappropriation of nationalized natural resources of the country by the GIL by acting contrary to the direction of law i.e. The guidelines laid down by the Screening Committee and the trust imposed in them.

"They thus prima facie committed the offence of criminal breach of trust i.e. Under section 409 IPC and the offence of criminal mis-conduct under section 13(1)(c) and 13(1)(d) (iii) read with section 13(2) PC Act, beside the offence of criminal conspiracy as discussed above," it said.

The court also said that GIL and its two directors "cheated Government of India by making false claim regarding net-worth of the company and its installed capacity so as to obtain wrongful gain i.e. Seeking allotment of coal block."

"Wrongful loss was also caused not only to the government but also to the other applicant companies who could have been allotted the coal block, had subjectivity not prevailed over the objectivity in the working of the screening committee, or the rule of law followed," it noted.

The court also said the way in which GIL was allocated coal block showed that officials of the Coal Ministry were "all out to help" the case of the firm.

Regarding H C Gupta, the judge said despite the fact that then Minister of State for Coal had specifically highlighted that GIL was not eligible as it did not fulfil the eligibility criteria, Gupta, in his meeting with Principal Secretary to the Prime Minister, continued to support the case of the firm.

"Thus in these circumstances, the decision makers who were having dominion over the nationalised natural resources of the country i.E. Coal blocks, have to take responsibility of the consequences," the court said.

"It appears from the overall facts and circumstances that H C Gupta, Secretary Coal, K S Kropha, Joint Secretary Coal and Vishwas Sawakhande, Director, Directorate of Geology & Mining, Govt. Of Maharashtra acted in active connivance with GIL and its directors in order to facilitate misappropriation of important nationalised natural resources of the country i.e. Coal by M/s GIL," it noted.

"Thus in view of my aforesaid discussion, it is prima facie clear that the conclusion drawn by CBI in its final report qua Seema Gupta or public servants involved can not be accepted.
"Prima facie there is sufficient incriminating evidence on record to suggest, existence of a criminal conspiracy between the private parties and the public servants involved in the entire allocation of Lohara (East) Coal Block to M/s GIL," it said.

According to CBI, the 34th Screening Committee had jointly allotted Lohara (east) Coal Block to M/s GIL and to M/s Murli Agro Products Pvt Ltd and letter of allotment was issued on June 27, 2008.

CBI had chargesheeted the firm and one of its directors saying they had falsely misrepresented the facts to bag the coal block.