COMMON CAUSE & ORS. VS UNION OF INDIA & ORS.

Citation: WRIT PETITION (C) NO.463/2012, Crl. M.P. No.387/2015

Coram: Madan B. Lokur, Kurian Joseph, A.K. Sikri

Type of case: Writ Petition

INTRODUCTION

In contemporary world, the effect which every partnership or organization has on the general
public has expanded colossally. The influence which exercises of enterprises have on the open
intellectual elite can be both positive and negative. Until the eighteenth century, researchers
fundamentally centered around hypotheses of corporate character. Besides, they were hesitant
to force criminal obligation on organizations since they contemplated that enterprises can't have
a blameworthy personality, i.e, mens rea and can't be detained. During the turn of the twentieth
century, the legitimate researchers and courts changed their sentiment. It is presently an
entrenched certainty that companies can have mens rea and can be held subject for submitting
offenses.1

India has been in the spotlight in the previous five years for consistent uncovering of tricks on
a practically regular routine. The Corruption Perception Scale by Transparency International
positions India as number 78 among 177 nations. Corporate Criminal Liability has taken an
unparalleled view during this time on account of mass arousing of individuals against the
defilement that stones their majority rules system. Developments driven by famous
personalities like Anna Hazare has brought into open discussion the endemic of defilement
which infections India. Scams like Republic, 2G and Satyam has featured government's
hesitance to make a move and go about as a guard dog over incredible partnerships.2 These
scams have highlighted the importance of corporate criminal liability in India. Through this
paper we shall analyse the biggest yet scam in India, the Coal Block Allocation Scam.

Coal mining controversy was a major fraud that shook India in 2012. It involved Rs 1,86,000
Crore loss to exchequer. This was a serious allegation against the then Government in power

1
http://www.legalserviceindia.com/article/l101-Corporate-Criminal-Liability---An-Analysis.html
2
See BBC South Asia, India corruption: Protests swell in support of Hazare, August 17, 2011, available at
http://www.bbc.co.uk/news/world-south-asia-14564727

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and raised questions against the then Prime Minister of India, Dr Manmohan Singh who was
in a serious scrutiny.

The scam came into light because of the report of the CAG which estimated a loss of
approximately 1.86 lakh crore because the allocation of coal deposits in an arbitrary manner.3
As a result, many major coal producing companies received huge benefits.4

FACTS OF THE COAL GATE SCAM

India is a nation rich of minerals, flavors, spices and tremendous stores of coal. There are
various blocks of coal in India which is under government control. The legislature assigns these
coal blocks to open and private people or endeavor for use. The best possible technique of
distributing these blocks is that there must be a sale held for these coal squares and the intrigued
ventures can take an interest in those closeouts. The most elevated bidder is given the coal
block for his or his undertaking's utilization.

This is/was the legal and correct way to allocate the coal blocks. But in this scam the
government allocated 194 coal blocks wrongly to private enterprises for their captive use but
the right procedure was to that the interested private enterprises has to bid in the auction.

It became public when the Comptroller and Auditor general of India (CAG) accused the
government that without there being auctions, 194 coal squares were assigned to private
people/endeavor for hostage use. This scam is viewed as the greatest scandal in India and has
inclusion of numerous prominent individuals in this scam including the then Finance minister,
P. Chidambaram. 5

Over the Summer of 2012, the opposition BJP filed a complaint resulting in a Central Bureau
of Investigation (CBI) probe into whether the allocation of the coal blocks was in fact
influenced by corruption. Government had the authority to allocate coal blocks by a process of
competitive bidding, but chose not to do so this is the motive of CAG’s argument. Which
resulted both public sector enterprises (PSEs) and private companies paid less than they might
have paid.

3
Report of the Comptroller and Auditor General of India, Performance Audit Report on the Allocation of Coal
Blocks and Augmentation of Coal production by Coal India Limited, (March, 2012).
4
Id.
5
https://www.longdom.org/articles/coal-is-gold-the-coalgate-scam.pdf

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The CBI has named 12 Indian firms in a First information report (FIR), the first step in a
criminal investigation. These FIRs blame them of exaggerating their net worth, failing to tell
past coal allocations, and hoarding rather than developing coal allocations.

KEY CONTENTIONS

The appellants/petitioners herein filed a writ petition through which they wanted the Supreme
court to:

 Direct Mr. Ranjit Sinha, Director CBI, not to interfere in the coal block allocation case
investigations and prosecutions being carried out by the CBI and to recuse himself from
these cases.
 Direct an SIT appointed by the Hon’ble Court to investigate the abuse of authority
committed by the CBI Director in order to scuttle inquires, investigations and
prosecutions being carried out by the CBI in coal block allocation cases and other
important cases.

The court decided to deal with the second issue as the first one became infructious owing to
the fact that Mr. Rajit Sinha has admittedly superannuated the question of his recusal from
investigations and prosecutions being carried out by the CBI in respect of cases arising out of
what is now commonly known as the Coal Block Allocations case.

The respondents6 filed for the following relief:

 Direct the concerned Police Station to register an FIR against Mr. Prashant Bhushan,
the Petitioner Association (i.e. Common Cause) and Mr. Kamal Kant Jaswal for making
deliberate and intentional false statements on oath and before this Hon’ble Court in
these proceedings.
 Pass other or further orders as may be deemed fit and proper.

The court admitted the contentions of both the parties.

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Crl. MP No.387/2015

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IMPORTANT FACTS WITH RESPECT TO THE CURRENT JUDGMENT

During the course of hearing of the writ petition on 24th January, 2013 and in response to a
query made by this Court, a statement was made by the learned Additional Solicitor General
that on the next date of hearing, the status of the investigations (into the allotment of coal
blocks) shall be made known to this Court through an affidavit filed by a competent authority.
The case was then adjourned to 12th March, 2013.7

Once the statement had been made by the Asst. Solicitor General, CBI filed a status report on
8th March 2013 in a sealed cover. The report was then perused and after proper consideration,
the court asked for an affidavit which was to be filed by the CBI director, i.e. Ranjit Sinha that
the report was thoroughly examined by him and there is no political vendetta.

He was also required to state on affidavit that the same procedure would be followed in respect
of subsequent status reports that may be filed in this Court. The status report was then re-sealed
and the case adjourned to 30th April, 2013.

Acting on the above order, the Director, CBI filed the requisite affidavit on 26th April, 2013.
When the case was taken up on 30th April, 2013 the court asked the director of CBI to clarify
the matters mentioned:

“(i) As to why in the status report dated 08.03.2013 no disclosure was made to this Court that
the draft report has been shared with the political executive and officials.

(ii) What was the basis and reasons for the C.B.I. in making the statement on 12.03.2013
through its counsel (Additional Solicitor General) before this Court that the status report dated
08.03.2013 has not been shared with any one and it is meant only for the Court.

(iii) In the affidavit now filed by the Director, C.B.I. on April 26, 2013 it is stated that the draft
of the status report dated March 8, 2013 was shared with the Minister of Law & Justice as
desired by him prior to its submission before this Court and it was also shared with Joint
Secretary level officers each of the Prime Minister’s Officer and Ministry of Coal as desired
by them but nothing has been said in the affidavit whether or not changes were made in the
draft report and, if yes, at whose instance and the extent of changes and whether besides the

7
Id

4
three persons mentioned in para 4 of the affidavit, the draft report was shared with any other
person in that meeting.

(iv) The names of the two officers one each of the Prime Minister’s Office and Ministry of
Coal referred to in para 4 of the affidavit. 8

The court directed the CBI to file an affidavit clarifying the abovementioned issues and the
case was then adjourned. As required, the Director, CBI filed a further affidavit in this regard
on 6th May, 2013.

When the case was taken up again, Mr. Prashant Bhushan learned counsel for Common Cause
made his submissions. The court then directed that CBI shall henceforth ensure the secrecy of
inquiries and investigations into the allocation of coal blocks and that no access of any nature
whatsoever is provided to any person or authority including any Minister of the Central
Cabinet, Law Officers, Advocates of the CBI, Director of Prosecution and Officials/Officers
of the Central Government.

The major reason because of which this writ was in hearing was because the court was made
aware of the fact that Mr. Ranjit Sinha, Director, CBI had met several persons at his residence
who are accused in prominent cases including the Coal Block Allocation scam without any of
the investigating officers being present.

It was also discovered that Mr. Ranjit Sinha had several meetings with Mr. Vijay Darda, and
his son Mr. Devendra Darda, who are being investigated in the case of illegal allocation of coal
blocks. Mr. Sinha also met with Mr. Subodh Kant Sahay, former Union Minister, whose
brother’s company is one of the beneficiaries of the allocation of coal blocks and is being
investigated by the CBI.9

8
Manohar Lal Sharma vs The Principle Secretary & Others, (CRL.) NO. 120 OF 2012
9
Id

5
HELD

The court held that the submissions made by Mr. Vikas Singh do not deserve acceptance. It
was true that the Court had required the Director, CBI to ensure, by its order dated 8th May,
2013 that the secrecy of the inquiries and investigations into the allocation of coal blocks is
maintained.

However, if somebody gets access to the documents that are supposed to be carefully
maintained by the CBI, it would be difficult to find fault with such a whistle blower particularly
when his or her action is in general public interest. It is another matter entirely if the whistle
blower uses the documents for a purpose that is mala fide or that may damage the public
interest.

In that event, it would be permissible for this Court or an appropriate Court to take action
against the whistle blower, if he or she is identified. However, the present case is not of any
such category. The whistle blower, whoever it is, acted purportedly in public interest by seeking
to bring out what he or she believes is an attempt by Mr. Ranjit Sinha to scuttle the
investigations into the affairs of the Dardas or others in the Coal Block Allocation case.

As referenced over, the court did not think about whether the record notes really reveal an
endeavor by Mr. Sinha to abandon the examinations. All that is of pertinence is whether the
divulgence by the informant was mala fide or not. The court was of the supposition that the
divulgences made by the informant were expected to be in public interest.

The court decided that, it is difficult to hold that Mr. Prashant Bhushan or Common Cause or
Mr. Kamal Kant Jaswal had any intention to mislead this Court in any manner, nor did the
court agree that they have perjured themselves. The file notes speak for themselves and any
interpretation, even an allegedly twisted interpretation said to have been given to them, cannot
fall within the realm of perjury.

With regard to IA No. 13 of 2014, since the court had held that it was completely inappropriate
for Mr. Ranjit Sinha to have met people blamed in the Coal Block Designation case without
the examining official being available or without the investigating group being available, it is
important to investigate the inquiry whether even one such gatherings of Mr. Sinha with
accused people without the exploring official have had any effect on the examinations and
resulting charge sheets or conclusion reports recorded by the CBI. For rendering help to the

6
court, especially for deciding the approach for leading such a request, see was issued to the
Focal Cautiousness Commission returnable on sixth July, 2015.

ROLE OF CENTRAL BUREAU OF INVESTIGATION

The Central Bureau of Investigation was set up through the 1946 Delhi Special Police
Establishment Act even though the origin of CBI is traced back to a Central Government Police
force, which was set up in 1941 by the Government of India to investigate bribery and
corruption in transactions with the War and Supply Department of India.

Though CBI has been instrumental in saving the economic health of the country and solving
many difficult cases, but it has been criticized on various grounds. Time and again, it has been
criticized for engaging in nepotism, wrongful prosecution and corruption. As an institution, it
is the responsibility of the CBI to ensure that the public does not suffer because of white collar
crimes.

The Central Bureau of Investigations most important job is to unearth the scams that take place
in India. For the same, CBI sends auditors and these auditors after thorough Forensic
examination send reports to CBI as to the functioning of the company. If anything suspicious
is found, the auditor then informs the CBI and the whole process of whistle blowing begins.

The impact of white-collar crime on corporate India is significant. Today, fraudsters are
motivated by greed and financial gain more than ever before, exhibiting deviant and
exploitative behaviour. Some of the new trends seen include:

• Average age of fraudsters is getting lower

• Increasing cases of fraud or other wrongdoings being detected by whistle-blowers

• Proliferation of technology to evade detection, e.g., using instant messengers and social media
networks instead of emails

• Innovative modes of kickbacks and favours obtained

It has been seen that the typical perpetrators of white-collar crime do not have a prior criminal
record and believe that their act will go undetected because they are not being observed. They
also do not consider themselves culprits, tend to continue the misdemeanours until detected.
Typology also suggested that these are typically committed by individuals in positions of trust.

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The CBI plays an important role in protecting the integrity of the economy of the country and
making sure that in no way people in political positions can illegally screw around with the
country.

RANJIT SINHA, THE DEFAMED

An FIR was registered against Ranjit Sinha, the then CBI director. It was registered on 25 April
2017, which alleged that Sinha abused his official position to indulge in corruption. On orders
from the Supreme Court, the CBI set up a special investigation team to look into the allegations
against Sinha in which he was ordered to not interfere with for obvious reasons.

In January 2018, the court observed that “progress in the investigations by the CBI and ED in
the coal scam cases has been slow.” Given the politicised nature of the CBI over the last decade,
and the alacrity with which the agency has been used to target opposition politicians from the
AAP to the Congress, the delay in the case against Ranjit Sinha—which involves several
Congress leaders—was dragged. While serving as the CBI director, Sinha chose an opportune
moment to change the political character of his public statements. After staying silent on the
cases involving the BJP president Amit Shah through much of his tenure, in February 2014,
with the political landscape clearly indicating a change of government, Sinha appeared to have
adopted a definitive stance.

A committee was formed to investigate Ranjit Sinha which was called as the Sharma
Committee. The progress made by CBI coupled with the reports of the Committee put Sinha
in hot water. Through visitors registered which were maintained in various organisations, it
was found that Sinha had visited almost all the major names that had surfaced in the Scam
during the allocation period and even before they were allocated during his tenure as the
Director of CBI. The Delhi Police personnel deployed at Sinha’s house verified the authenticity
of the registers to the Sharma Committee.

The registered listed majorly all the details of the visits which included the visitors that Sinha
too had. They had the vehicle number as well as the phone numbers of the people who visited
him. The committee identified the visitors via the recorded number plates, with the assistance
of the transport department of a number of states. 31 of the most frequent visitors were filtered
and a statement was taken from all of them regarding their involvement with Sinha. Alongside,
various calls were traced and tracked.

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According to the logs, Vijay Darda met Sinha 3 times during this period, while his son
Devendra met him 12 times. Most damningly, Santosh Bagrodia, the former minister of state
for coal, met Sinha 46 times during the 15 months for which the logs were available.10

The registers also detail the visits of some people such as Sreyas Sripal, who visited the former
director 144 times, and Ketan Desai, who visited him 10 times—both of whom had CBI cases
pending against them in matters unrelated to the coal scam, and both of whom Sinha was not
authorised to meet in the absence of a member of the investigating team. In relation to the coal
sector, one visitor stands out: Mithilesh Kumar Singh, who retired as General Manager (Civil)
of the Central Mines Planning Design Institute in Ranchi. Singh was virtually at home at the
Sinha residence, which he visited 298 times over the 15 months recorded in the logs. It is learnt
that the committee noted that Sinha retired from a senior position in the coal sector, and while
it found no link to any specific case, it raised questions about the nature of his interactions with
Sinha.

Because of all these facts coming into limelight coupled with the fact that CBI was always too
slow and dim witted when it came to massive scams in India, the public was outraged and
demanded the resignation of Ranjit Sinha. However, he was still the director of the CBI and
retired on December 2, 2014.

10
https://caravanmagazine.in/vantage/sharma-committee-cbi-director-ranjit-sinha-congress-politicians-
influenced-coal-scam-investigations-corruption-case

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CONCLUSION

Scams in India can be categorized as either those financial crimes which are committed by
private parties for their personal interests or those where the state machinery which involves
politicians and/or bureaucrats who employ their discretion and influence in blocking out crores
from the exchequer in the course of their duties. It can be noted that the prosecution has been
successfully made in the case involving private entities, but there has been almost non-existent
prosecution in the case of the latter. Political interference in every process of investigation is a
major reason for this trend. Therefore, India needs to immediately adopt the right discourse
that achieves effective investigation and trial of persons involved in white collar crimes which
involves public money.

It can also be seen that very scam involving private individuals, the government and the courts
have not only realized the lapses in the regulatory framework but have also taken stringent
remedial measures. However, the same vigor has not been showed when the accused are
bureaucrats and politicians. While the Lokpal seemed like welcome measure and it is urged in
this paper that it is readily brought in, till the time it can become a reality other ideas must be
explored. For example, the CBI and it’s investigation should be made autonomous and
independent from the clutches of the government, more power should be handed to the
Vigilance departments, bringing forth of a legislation which protects the whistleblowers,
ensuring protection to RTI activists etc.11

Coalgate scam is a huge landmine of injustice that would require complete dedication to study
and understand. However through this paper we understood the wrong committed by the
director of CBI which is a small yet an important part of the whole scam.

11
Law Commission of India, One Hundred Sixty Sixth Report on the Corrupt Public Servants (Forfeiture of
Property) Bill (February, 1999).

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