Delhi High Court
Ramesh Kumar Jayaswal vs Central Bureau Of Investigation on 1 August, 2025
Author: Amit Sharma
Bench: Amit Sharma
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 20th May, 2025
Pronounced on: 1st August, 2025
+ CRL.A. 14/2025
RAMESH KUMAR JAYASWAL .....Appellant
Through: Mr. Siddharth Aggarwal, Sr. Adv.,
Mr. Faraz Maqbool, Mr. Rahul Pandey,
Ms. Sana Juneja, Ms. A. Sahitya
Veena, Ms. Vismita Diwan, Ms.
Arshiya Ghosh, Advocates.
versus
CENTRAL BUREAU OF INVESTIGATION .....Respondent
Through: Mr. R.S. Cheema, Senior Advocate
with Ms. Tarannum Cheema, Mr.
Akshay Nagarajan, Mr. Akash Singh
and Mr. Sadeev Kang, Advocates.
CORAM:
HON'BLE MR. JUSTICE AMIT SHARMA
JUDGMENT
AMIT SHARMA, J.
CRL.M.A. 185/2025 (Ad-Interim Stay/Suspension of Impugned Judgment
of Conviction & Order on Sentence)
1. The present application under Section 430 read with Section 528 of the
of the Bharatiya Nagarik Suraksha Sanhita, 2023, (for short, ‘BNSS’), has
been filed seeking ad-interim ex-parte stay of the impugned judgment of
conviction and order on sentence dated 09.12.2024 and 11.12.2024
respectively qua the present appellant/applicant.
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2. Vide the impugned judgment of conviction, the appellant (A-2) along
with his brother/co-convict, Manoj Kumar Jayaswal (A-1) and M/s AIPL (A-
3), has been convicted by the learned Special Judge, (PC Act) (CBI), Coal
Block Cases-01, RADC, New Delhi, in Case No. CBI-41/2020, arising out of
FIR No.: RC 221 2016 E 002, under Section 120B read with Section 420 and
Section 471 of the Indian Penal Code, 1860, (for short, ‘IPC‘), registered with
Branch, CBI/EO-III/New Delhi, for the offences punishable under Section
420 of the IPC and Section 120B and Section 120B read with Sections
471/420 of the IPC and vide order on sentence dated 11.12.2024, the appellant
has been sentenced to undergo rigorous imprisonment for 3 years for each
offence along with a total fine of Rs. 20 Lakhs and in default of payment of
fine, to undergo simple imprisonment for a period of 4 months for each
offence. All the sentences were directed to run concurrently.
3. In the present case, the appellant along with other co-convicts has been
convicted in Coal Scam case. He was found guilty of being in conspiracy with
convict no.3, Abhijeet Infrastructure Private Ltd. (“AIPL”) and convict no.1,
Manoj Kumar Jayaswal, for cheating the 24th Screening Committee, Ministry
of Coal, Ministry of Steel and the State of Jharkhand while having knowledge
that numerous forged documents were used on behalf of AIPL for the purpose
of procuring the Brinda, Sisai Coal Blocks.
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4. As per the case of the prosecution before the learned Trial Court, the
appellant had made false representations and was having knowledge of forged
documents being furnished to the Screening Committee and the Ministry of
Steel for procuring the recommendation of the 24th Screening Committee for
the Brinda, Sisai, Dumri, underground mining of non-coking Coal Blocks. It
was alleged that the appellant had misrepresented himself as Director/Joint
Managing Director of AIPL and was also engaged in acts which amount to a
betrayal of trust of shareholders by a key-functionary in a company. It was
further alleged that from 30.10.2003, the appellant was the authorized
signatory of the convict no.3, company and prior thereto, he had falsely
impersonated himself out to be authorized signatory by addressing letter dated
15.07.2003 to the Ministry of Coal and Ministry of Steel. One other letter
dated 30.08.2003 is written by the appellant, addressed to the Chairman
Screening Committee wherein, he had falsely represented himself to be
authorized signatory of AIPL. As per the case of prosecution, the appellant
had repeatedly represented himself to be in official position which he did not
hold, i.e., Director/Joint Managing Director of the Convict Company, M/s
AIPL (A-3), before the 18th, 21st, 22nd and 24th Screening Committee
Meetings which were held in 2003, despite the fact that he had already
resigned from the said position in 2002.
5. Learned Senior Counsel for the appellant, at the very outset, has drawn
the attention of this Court towards the order on charge dated 03.06.2022 and
chargesheet and submitted that both the CBI as well as the learned Trial Court
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has found that there was a separation in entire family business in 2002
whereby the appellant along with his father and elder brother, separated and
formed “Neco Group” and convict no.1, Manoj Kumar Jayaswal, formed
AIPL, convict no.3, which was headed and run by him entirely. It was the
convict no.1(A-1) who was handling all the affairs of AIPL including coal
allocation. The present offences were committed in 2004 and not in 2003 and
during the said relevant point in time, the present appellant was not the
director of AIPL and the convict no.1 was running AIPL on his own and was
responsible for the alleged submission of forged documents to Ministry of
Steel and Ministry of Coal and forgeries committed at his behest. He has
further submitted that the convict no.1 was the direct beneficiary of coal block
allocation to AIPL and after securing of same, all post-allocation
correspondence to various authorities including the Ministry of Coal were
sent by him. It is further pointed out that in the investigation of the CBI as
also the order on charge passed by learned Trial Court primary allegations
were against the convict no.1, Manoj Kumar Jayaswal, brother of the present
appellant.
6. Learned Senior Counsel has further submitted that as per the case of
CBI, the appellant had misrepresented himself as Director/Joint Managing
Director of AIPL and was engaged in acts which amount to the betrayal of
trust of shareholders by a key-functionary in a company, however, none of the
prosecution witnesses examined before the learned Trial Court has deposed
anything incriminating against the present appellant. It has been contended
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that by way of testimonies of prosecution witnesses, it has been established
that convict no.1 was running affairs of AIPL and post the separation of
business in 2002, he had exclusive control over its affairs including coal
allocation. Attention of this Court has been drawn towards the fact that the
learned Trial Court had formulated only one triable issue qua the present
appellant that “he has to explain his presence during the screening committee
meeting and has to explain during trial the recordings in the minutes…..”. It is
submitted that in respect of said issue, the prosecution had examined only one
witness, i.e., PW-14, AK Shrivastava, and the other person, V.S. Garg, was
dropped as witness by the prosecution/CBI during the course of trial. It is
pointed out that PW-14, in his testimony, had stated that the questions posed
by 24th Screening Committee regarding AIPL were answered by convict no.1.
Further, PW-14 has not named the appellant as the person who was
nominated on behalf of AIPL to answer queries before the 24th Screening
Committee and the prosecution has not cross-examined him nor any
clarification was sought qua this issue and the learned Trial Court had erred in
convicting the present appellant on the basis of piecemeal appreciation of
testimony of the said witness. It is further submitted that the key prosecution
witness regarding the forgery of documents was PW-20 and he had deposed
that all forgeries were committed at the behest/asking of convict no.1 and
further that, the present appellant has not been incriminated at all by PW-20 in
this regard. It is further submitted that the prosecution has miserably failed to
prove that the present appellant had knowledge of any forged documents, let
alone establish that he had portrayed himself with any authority on behalf of
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AIPL before the 24th Screening Committee, by any submission or otherwise at
the relevant point in time.
7. Learned Senior Counsel has further submitted that the learned Trial
Court at around the time of reserving of judgment for pronouncement had
embarked on an enquiry and had summoned records pertaining to other coal
scam cases and other screening committee meetings and had based its
conviction on the said records which is violation of principles of fair trial as
the said records were not led during prosecution evidence nor they were put to
the appellant while his statement under Section 313 of the CrPC was
recorded. It is pointed out that learned Trial Court had in a very callous
manner put the said record to the appellant and he had firmly stated that
nothing incriminatory was found by the learned Trial Court as well as the
prosecution at the time of framing of charge from the said records. It is, thus,
contended that the impugned judgment of conviction suffers from various
self-contradictions and illegal findings as the prosecution has failed to
cogently prove before the learned Trial Court that the present appellant was
managing the affairs of AIPL (A-3) or he was having knowledge of the
forgery of the documents and was main beneficiary of the AIPL’s scam.
8. Learned Senior Counsel has further submitted that the operation of
impugned judgment of conviction is to be stayed as the same is based on
erroneous considerations and its operation will lead to irreversible
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consequences which would not be rectified in future, in case, he is acquitted
of the charges levelled against him in the present appeal. Further that, the
appellant is currently Managing Director of a listed entity, i.e., M/s JNIL,
which is India’s one of the largest Alloy Steel Manufacturers and serves
critical industries such as automotive, power, engineering, defense and
railways. It is further submitted that the appellant has played a pivotal role to
the revenue growth of JNIL which has a workforce of more than 9,500
workers and their livelihoods are dependent on the successful running of the
said company. The appellant has also played a significant role in fostering
industrial development, creating employment, promoting entrepreneurship,
and inspiring countless individuals to become job providers in Vidarbha
Region’s (Maharashtra) and Chhattisgarh’s industrial growth thereby making
substantial contribution to the society. The significant investment from public
equity shareholders including global investors is at stake as JNIL has secured
its lenders on the basis of the personal guarantee of the appellant and the
impugned judgment of conviction is a major impediment in the repayment of
its obligations as the appellant has now become a subject to the
disqualification emanating from Section 196 of the Companies Act, 2013, on
account of being convicted by a Court for offence and sentenced for a period
of more than six months. It is further submitted that this disqualification will
also create issues on financial closure for viable projects including scheduled
Debt Refinance and will also be responsible for plummeting the M/s JNIL’s
hard earned-reputation and credit ratings. It is, thus, contended that the
appellant may be protected from such disqualification for being appointed as
Managing Director of JNIL by staying the operation of the impugned
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judgment of conviction. Reliance has been placed on Afjal Ansari v. State of
Uttar Pradesh1, to contend that the decision in the said case was rendered
primarily on two grounds, firstly, that there was an existing
benefit/post/privilege to protect and secondly, the existing/ongoing nature of
the said post made the appellant qualify the test of suffering “irreversible
consequences” if suspension of judgment of conviction is not granted.
Learned Senior Counsel has tried to draw analogy from the said case in
respect of the fact that the present appellant does have an existing
post/qualification to lose, if the present application is not allowed and further,
the irreversible consequences that will follow from the said decision which
have been noted hereinabove.
9. Lastly, it is submitted that the appellant has deep roots in the society
and has a family comprising of his wife, 2 sons, one daughter and his father
and has played significant role in fostering industrial development, creating
employment, promoting entrepreneurship etc., and otherwise has clean
antecedents. Also, the gravity of the offence is not very high as the appellant
has been sentenced to 3 years of imprisonment. It is further submitted that the
hearing of the present appeal is likely to take time and the trials in other coal
block cases are also pending since long. It is further submitted that the
sentence of convict no.1 has already been suspended by a Coordinate Bench
of this Court vide order dated 23.12.2024 in CRL.A. 1186/2024. It is further
submitted that the appellant was not arrested by CBI during investigation and
1
(2024) 2 SCC 187
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he had not misused the liberty granted to him and had duly complied with all
the conditions imposed by him even while travelling abroad on various
occasions. It is further submitted that there has been no accusation of the
appellant tampering with the evidence or influencing any witness during the
course of trial. Even otherwise, the appellant has good case on merits and in
case, the impugned judgment is allowed to operate, the injury to be suffered
and damage to the reputation of the Companies under his management would
be irreparable and irreversible.
10. Learned Senior Counsel for the appellant/applicant to support the
present application has placed reliance on the following precedents: –
i) Afjal Ansari v. State of Uttar Pradesh2;
ii) Rama Narang v. Ramesh Narang3;
iii) State of T.N. v. A. Jaganathan4;
iv) K.C. Sareen v. CBI, Chandigarh5;
v) Ravikant S. Patil v. Sarvabhouma S. Bagali6;
vi) Navjot Singh Sidhu v. State of Punjab7;
vii) Madhu Koda v. State through CBI8;
2
Ibid; supra note 1
3
(1995) 2 SCC 513
4
(1996) 5 SCC 329
5
(2001) 6 SCC 584
6
(2007) 1 SCC 673
7
(2007) 2 SCC 574
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viii) Madhu Koda v. State through CBI9;
ix) Dilip Ray v. CBI10;
x) Madhu Koda v. State through CBI11;
11. Per contra, learned Senior Counsel for CBI has drawn attention of this
Court towards the various provisions pertaining to the disqualifications
emanating from conviction for certain offences from the perspective of
Representation of Peoples Act, 1951 12 , Companies Act, 1956, and
Companies, 2013. It is pointed out that Section 8 of the RPA provides for the
disqualifications which follows from certain offences and the same have been
classified into three categories. First being that, under Section 8(1) of the
RPA, on conviction for specified offences, irrespective of the quantum of
sentence, the convict shall stand disqualified in the manner prescribed.
Secondly, under Section 8(2) of the RPA, three kinds of offences have been
specified and lastly, under Section 8(3) of the RPA, the person may be
convicted of any offence and sentenced to imprisonment of not less than 2
years. It is, thus, pointed out that the disqualification has been attached with
the nature of the offence coupled with the sentence awarded under each
category. Coming to the provision involved in the present case, learned Senior
Counsel for CBI has drawn attention of this Court towards Section 267(c) of
the Companies Act, 1956, wherein it was stipulated that, “no person is to be
8
2020 SCC OnLine Del 599
9
2024 SCC OnLine Del 7271
10
2024 SCC OnLine Del 2522
11
Order dated 25.10.2024 passed by Hon’ble Supreme Court in SLP (Criminal) Diary No. 49236/2024
12
For short, ‘RPA’
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appointed as Managing Director or continue as such or a Whole Time
Director who has at any time been convicted by a Court of an offence
involving moral turpitude”. It is submitted that under erstwhile Companies
Act, 1956, it was essential that the twin conditions attracting the
disqualification, i.e., conviction for commission of an offence and such
offence is involving moral turpitude, were fulfilled. Such determination
attracting disqualification was primarily dependent on the fact that the offence
involved moral turpitude as a condition precedent.
12. Learned Senior Counsel for CBI has further drawn attention of this
Court towards Section 196(3)(d) of the Companies Act, 2013, wherein it has
been provided that, “no Company shall appoint or continue the appointment
of any person as Managing Director, Whole Time Director or Manager who
has at any time been convicted by a Court of any offence and sentenced for a
period of more than six months” and has submitted that the provision
providing for disqualification for being appointed as Managing Director,
Whole Time Director, or, Manager of a Company, has undergone severe
change from law in 1956 to 2013 as the disqualification stipulated by Section
267 of erstwhile Companies Act was not applicable to Manager, however,
under Section 196(3)(d) of the Companies Act, 2013, such disqualification is
applicable to the Manager as well. Further, now the conviction for any
offence entails disqualification provided that the sentence is awarded for a
period of six months for such offence. Thus, it may be concluded that the
legislative intent behind such enactment was to make the provision more
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stringent irrespective of the nature of the offence for which an individual has
been convicted, provided that the sentence of more than six months has been
provided by the Court. It is submitted that the word “shall” employed in
Section 196(3)(d) of the Act of 2013 underlines the mandatory nature of the
provision and the disqualification is mandatorily attracted on conviction for
any offence provided that the sentence awarded is more than six months. The
removal of the condition of such offence being falling within the ambit of
“moral turpitude” is self-explanatory.
13. Learned Senior Counsel for CBI has submitted that the law regarding
the stay of conviction is well settled that each case shall have to be decided on
its own facts and within the parameters stipulated in the statute applicable to
the case and there can be no general rule of uniform application. Reliance has
been placed on the minority judgment of the Hon’ble Supreme Court in Afjal
Ansari (supra), wherein in paragraph 56 it was observed that the Hon’ble
Supreme Court has differently dealt with approaches made by, inter alia, a
Managing Director of a company, a Member of the Legislative Assembly, a
Member of Parliament, a film actor intending to join politics, a bank officer, a
civil post holder and a Principal of an institution, while they sought for stay of
conviction. Reliance has also been placed on K.C. Sareen (supra) case to
contend that the exercise of power under Section 389(1) of the CrPC should
be limited to very exceptional cases. Reliance has also been placed on
Ravikant S. Patil v. Sarvabhouma S. Bagali (supra), to contend that such
power should be exercised only in exceptional circumstances where failure to
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stay the conviction, would lead to injustice and irreversible consequences.
Reliance has also been placed on Rama Narang v. Ramesh Narang (supra),
to contend that the present application has to be examined in the light of the
provisions of Companies Act, 2013, and that the Appellate Court while
granting stay or suspension of the order of conviction must examine its pros
and cons. It is further submitted that Rama Narang (supra) is a case wherein,
the applicant was a Managing Director and it was duly noted in the said case
that statutory provisions are more stringent in case of a Managing Director as
he is personally responsible for conducting the business of the company. It
has further been argued that under the present provisions, conviction for any
offence entails disqualification provided that the sentence awarded is for a
period of more than six months. Therefore, even if, a person is convicted for
the offence punishable under Section 138 of the Negotiable Instrument Act,
1881, or an offence under IPC, such disqualification will be applicable.
14. Learned Senior Counsel for CBI has further submitted that the majority
judgment of the Hon’ble Supreme Court in Afjal Ansari (supra), provided
that the Court exercising power under Section 389 of the CrPC must consider
that the very notion of irreversible consequences is centered on factors
including the individual’s criminal antecedents, the gravity of the offence, and
its wider social impact, while simultaneously considering the facts and
circumstances of the case. It is further submitted that the decision in Afjal
Ansari (supra) was rendered in different factual context as the said case was
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related to a sitting member of the Parliament and the decision in said case is
of no assistance to the appellant in the present case.
15. Learned Senior Counsel has also submitted that public interest impact
involved in the Coal Block cases also requires due consideration of this Court
while deciding the present application. Reliance has been placed on Manohar
Lal Sharma v. Principal Secretary and Ors. 13 , to show that the large
number of allottees in Coal Block cases were linked with politicians and
ministers or those who came with high-profile recommendations and they had
misrepresented the facts and were not more meritorious than others whose
claims have been rejected, but by serious manipulations and abuse, they were
able to get the Coal Blocks. Reliance has also been placed on Girish Kumar
Suneja v. CBI 14 , to show that the Coal Block Allocation cases form one
identifiable category cases that are distinct from other cases since they have
had a massive impact on public interest and there have been large-scale
illegalities associated with the allocation of coal blocks. It is, therefore,
necessary to treat these cases differentially since they form a unique
identifiable category and their classification is in public interest and for the
public good with a view to bring persons who have allegedly committed
corrupt activities within the rule of law. Further that, these cases are
concerned with large-scale corruption that polluted the allocation of coal
blocks and they form a clear and distinct class that need to be treated in a
manner different from the cases that our justice-delivery system usually deals
13
(2014) 9 SCC 516
14
(2017) 14 SCC 809
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with. It is further pointed out that the impact on public interest in the present
case in view of Coal Block scam has also been noted by the learned Trial
Court in the order on sentence dated 11.12.2024.
16. Learned Senior Counsel for CBI has further submitted that the sum and
substance of the allegation against the convict no.1 and convict no.2 is that
they were responsible for misrepresentation about land acquisition and
securing recommendations of Ministry of Steel on the basis of forged
documents as also for securing recommendation of 24 th Screening Committee
meeting dated 09.12.2004 for allocation of coal blocks. Attention of this
Court has been drawn towards the record (Attendance Sheet) of the Screening
Committee dated 09.12.2004 to show that the present appellant had appeared
as director of the AIPL (A-3), convict company, and AK Srivastava, PW-14,
and VS Garg were also described as General Manager (Projects) and director
respectively, before the said Committee. It is further pointed out that both
convict no.1 and convict no.2 were involved in a game of musical chairs to
present a deceptive scenario before the Screening Committee and have
interpreted the minutes of the Screening Committee to support/belie the
statement of PW-14 to support their own individual cases. It is further
submitted that VS Garg, whose statement was recorded as PW-29 but not
examined, had stated that he was new to the company and was not aware of
the issue and never dealt with the convicts and the same was the reason for
not examining him before the learned Trial Court during the course of trial.
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17. Learned Senior Counsel has further drawn attention of this Court
towards the testimony of PW-14 and statement of the present appellant
recorded under Section 313 of the CrPC to show that as per those statements,
the appellant had attended the meeting of the Screening Committee and in the
relevant documents had misrepresented himself as the director of the AIPL. It
is further pointed out that case of the present appellant before the learned
Trial Court was that he was director in so many companies that by oversight,
he might have presented himself as Director of AIPL, convict no.3, before the
24th Screening Committee meeting and the same was held by the learned Trial
Court to be a tactic to escape liability. Further, the appellant has not named
anyone who was responding to the queries posed by the Screening Committee
on behalf of AIPL. Learned Senior Counsel has further submitted that the
present appellant was the promoter Director of the AIPL and at the time of
24th Screening Committee meeting, AIPL was run under the control of convict
no.1 as the business in Abhijeet group was being carried out under his
leadership, however, the assets were not separated by that particular point in
time. The assets were allegedly separated in 2008 between the Jayaswal
brothers equally and the same shows that at the time of Screening Committee
meeting all four persons in the family were benefited at the time of partition
of assets by allocation of Coal Blocks in favour of AIPL. This is also crucial
for inferring the conduct of both the convicts with respect to the conspiracy
hatched between them.
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18. Learned Senior Counsel for CBI has vehemently argued that the
appellant has miserably failed to disclose before this Court that he along with
M/s Jayaswal Neco Ltd. is also facing prosecution under the coal allocation
matters wherein he is individually an accused. This concealment by the
appellant disentitles him to the reliefs sought in the present application and it
is further pertinent to note that in the said case he is facing prosecution in his
capacity as a key functionary of M/s JNIL. It is, thus, contended that the
conviction of the appellant in the present case cannot be seen in isolation and
the factum of appellant being facing trial in other coal block cases in his
capacity as key personnel of M/s JNIL cannot be ignored by this Court at this
stage in view of the larger public interest and wider public impact of the coal
block cases on the society. Reliance has also been placed on the judgment of
Coordinate Bench of this Court in Madhu Koda v. State through CBI15, to
contend that the application seeking similar reliefs was dismissed by the said
Court despite recording a finding that there was a prima facie case in favour
of the appellant/applicant therein. Thus, it is prayed that the present
application be dismissed.
19. In rejoinder thereto, learned Senior Counsel for the appellant has
submitted that the latter is 65 years of age and is presently Managing Director
of a listed company wherein public shareholders are involved. He has handed
over a chart showing the status of the appeals filed in the cases arising out of
the Coal Block Scam cases and the same shows that 43 cases are pending
15
Ibid; supra note 8
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even after 12 years. Learned Senior Counsel has further relied on the ratio of
Hon’ble Supreme Court in Rama Narang (supra) in respect of the exercise
of power to stay of conviction wherein the person was a Managing Director of
a public company. He further submitted that the present appellant duly
satisfies the twin test of loss of an existing privilege/qualification and
irreversible consequences/damages as laid down by the Hon’ble Supreme
Court in Afjal Ansari (supra). It is, thus, prayed that the present application
be allowed and the operation of the impugned judgment of conviction be
stayed by this Court qua the present appellant.
20. Heard learned Senior Counsels for the appellant as well as the
CBI/respondent and perused the record.
21. The Hon’ble Supreme Court in Afjal Ansari (supra) has set out the
parameters to be considered for suspension of conviction under Section
389(1) of the CrPC. In the said judgment, the Hon’ble Supreme Court was
dealing with the case of the appellant therein who had served as a Member of
Legislative Assembly in Uttar Pradesh for five consecutive terms and as a
Member of Parliament for two terms. Until the disqualification following the
judgment rendered by the learned Trial Court qua him, the appellant therein
was an incumbent Member of Parliament at the time when he incurred
disqualification. Dealing with the aforesaid facts, the Hon’ble Supreme Court
had observed and held as under: –
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“14. At the outset, it is imperative to delineate the essential parameters
that must be meticulously examined to determine whether a case can be
made out for suspension of conviction under Section 389(1)CrPC.
Section 389(1) enjoins upon the appellate court, the power to issue an
order for the suspension of a sentence or an order of conviction during
the pendency of an appeal. It may be thus of paramount importance to
scrutinise the precise language of Section 389(1)CrPC, which is
articulated as follows:
“389. Suspension of sentence pending the appeal; release of
appellant on bail.–(1) Pending any appeal by a convicted
person, the appellate court may, for reasons to be recorded by it
in writing, order that the execution of the sentence or order
appealed against be suspended and, also, if he is in confinement,
that he be released on bail, or on his own bond.”
15. It becomes manifestly evident from the plain language of the
provision, that the appellate court is unambiguously vested with the
power to suspend implementation of the sentence or the order of
conviction under appeal and grant bail to the incarcerated convict, for
which it is imperative to assign the reasons in writing. This Court has
undertaken a comprehensive examination of this issue on multiple
occasions, laying down the broad parameters to be appraised for the
suspension of a conviction under Section 389(1)CrPC. There is no
gainsaying that in order to suspend the conviction of an individual, the
primary factors that are to be looked into, would be the peculiar facts
and circumstances of that specific case, where the failure to stay such a
conviction would lead to injustice or irreversible consequences.
[Ravikant S. Patil v. Sarvabhouma S. Bagali, (2007) 1 SCC 673, paras
15 and 16.5 : (2007) 1 SCC (Cri) 417] The very notion of irreversible
consequences is centred on factors, including the individual’s
criminal antecedents, the gravity of the offence, and its wider social
impact, while simultaneously considering the facts and
circumstances of the case.
16. Turning to the case in hand, the appellant was convicted on the basis
of a gang chart that hinged solely on an old FIR, where the appellant
had already been acquitted vide judgment dated 3-7-2019. Thereafter,
the new FIR was registered, in which the appellant had been convicted
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by the trial court under Section 3(1) of the U.P. Gangsters Act. The
sequence of events, beginning from the registration of the new FIR until
the rejection of the appellant’s plea for suspension of conviction by the
High Court, is beset with some fundamental misconceptions and,
therefore deserves closer legal scrutiny.
17. Upon careful consideration of the judgment of the trial court
and the order [Afjal Ansari v. State of U.P., 2023 SCC OnLine All
2818] passed by the High Court, it appears to us that, firstly, the
impugned order [Afjal Ansari v. State of U.P., 2023 SCC OnLine All
2818] suggests that there is no cogent evidence to establish that the
appellant has been indulging in anti-social activities and crimes
such as murder or ransom. Secondly, the appellant’s role in the old
FIR, which stood as the singular reference point in the gang chart
in the new FIR, had already resulted in his acquittal. Thirdly, the
impugned judgment [Afjal Ansari v. State of U.P., 2023 SCC OnLine
All 2818] also indicates the absence of corroborative evidence
supporting the contention that the appellant had been responsible
for influencing witnesses in retracting their statements. Lastly, the
High Court in its impugned order [Afjal Ansari v. State of U.P., 2023
SCC OnLine All 2818] has meticulously highlighted that in the
various FIRs that had been registered against the appellant, either
he was not charge-sheeted or the investigating agencies had
exonerated him.
18. The High Court has further held that owing to the age of the
appellant and the extensive backlog of pending cases, the prospects of a
prompt hearing of the first criminal appeal were low. It thus came to the
conclusion that the refusal to suspend the sentence might render the very
appeal otiose. Although the High Court stayed the execution of the
sentence and granted bail to the appellant, it refused to suspend the
conviction itself. The High Court justified such a recourse, after making
reference to a multitude of judgments from this Court. While the
impugned judgment [Afjal Ansari v. State of U.P., 2023 SCC OnLine
All 2818] remains largely sound in its approach to affording relief in
terms of bail and staying the sentence, we are unable to agree, partly,
with its approach in declining the suspension of conviction, for those
very reasons.
19. This Court has on several occasions opined that there is no reason to
interpret Section 389(1)CrPC in a narrow manner, in the context of a
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stay on an order of conviction, when there are irreversible
consequences. Undoubtedly, Ravikant S. Patil v. Sarvabhouma S.
Bagali [Ravikant S. Patil v. Sarvabhouma S. Bagali, (2007) 1 SCC 673,
para 15 : (2007) 1 SCC (Cri) 417] , holds that an order granting a stay of
conviction should not be the rule but an exception and should be
resorted to in rare cases depending upon the facts of a case. However,
where conviction, if allowed to operate would lead to irreparable
damage and where the convict cannot be compensated in any
monetary terms or otherwise, if he is acquitted later on, that by
itself carves out an exceptional situation. Having applied the specific
criteria outlined hereinabove to the present factual matrix, it is our
considered view that the appellant’s case warrants an order of stay
on his award of conviction, though partially.
20. It remains uncontested that the foundation of the new FIR, which is
the origin point of the present proceedings, rests solely on a general
statement and involved the rekindling of the old FIR, in which the
appellant had already been acquitted. Though the aforementioned gang
chart projects the appellant as a repeat offender, the fact remains that he
has not been convicted in any prior case, apart from the case presently
under consideration. In this context, the detailed circumstances
elaborated hereinabove, serve as compelling reasons to advocate for
the suspension of the appellant’s conviction and the consequent
disqualification.
21. We say so primarily for the reason that the potential ramifications of
declining to suspend such a conviction are multifaceted. On the one
hand, it would deprive the appellant’s constituency of its legitimate
representation in the legislature, since a bye-election may not be held
given the remainder tenure of the current Lok Sabha. Conversely, it
would also impede the appellant’s ability to represent his constituency
based on the allegations, the veracity whereof is to be scrutinised on a
reappraisal of the entire evidence in the first criminal appeal pending
before the High Court. This would potentially lead to de
facto incarceration of the appellant for a period of four years under the
U.P. Gangsters Act and an additional six-year disqualification period,
even if he is eventually acquitted, which would effectively disqualify
him from contesting elections for a period of ten years.
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27. It is therefore imperative to weigh the competing interests presented
by both the appellant and the State. This case pertains to
(a) the appellant’s disqualification as a Member of the Lok Sabha under
Section 8(3) of the RPA, which disentitles a person who has been
convicted and sentenced for a period exceeding two years, from holding
office or contesting elections; and
(b) the State’s pursuit of a conviction under Section 3(1) of the U.P.
Gangsters Act, which penalises individuals labelled as a “gangster” for
participation in organised crime and engaging in anti-social activities.
While the pending appeal raises significant legal and factual issues, it is
exigent that the appellant’s future not be left hanging in the balance
solely due to the said conviction. In such instances, where the
appellant’s disqualification and the State’s criminal proceedings
intersect, it becomes incumbent upon the court in which the appeal is
pending, to hear the matter out of turn and expeditiously adjudicate the
same.”
(emphasis supplied)
22. In Rama Narang (supra), the three-judge Bench of the Hon’ble
Supreme Court was dealing with the case of the appellant therein who was
Managing Director of a company and was convicted for offences punishable
under Section 120B and Section 420 read with Section 114 of the IPC which
was stayed by Delhi High Court under the provisions of Section 389(1) of the
CrPC. In the said case, the issue which arose for consideration was whether
the appellant therein was liable to be visited with the consequence of Section
267 of the Companies Act, 1956, notwithstanding the interim order passed by
the Delhi High Court while admitting the appellant’s appeal against his
conviction and sentence passed by learned ASJ and was, thus, eligible to hold
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office as a Managing Director. The Hon’ble Supreme Court had observed and
held under: –
“14. The provisions contained in the Companies Act have relevance to
the management of the affairs of companies incorporated under that law.
The operation of Section 267 would take effect as soon as conviction is
recorded by a competent court of an offence involving moral turpitude.
Sections 267, 274 and 283 referred to earlier constitute a code
whereunder a Director, Managing Director and the whole-time Director
are visited with certain disqualifications in the event of conviction. As
already pointed out above, the Companies Act itself makes a distinction
in the matter of fixation of the point of time when the disqualification
becomes effective in the case of a Director and a Managing Director.
That is because of the fiduciary nature of the relationship, vide Needle
Industries (India) Ltd. v. Needle Industries Newey (India) Holding
Ltd. [(1981) 3 SCC 333 : (1981) 3 SCR 698]
15. Under the provisions of the Code to which we have already referred
there are two stages in a criminal trial before a Sessions Court, the stage
up to the recording of a conviction and the stage post-conviction up to
the imposition of sentence. A judgment becomes complete after both
these stages are covered. Under Section 374(2) of the Code any person
convicted on a trial held by a Sessions Judge or an Additional Sessions
Judge may appeal to the High Court. Section 384 provides for summary
dismissal of appeal if the Appellate Court does not find sufficient
ground to entertain the appeal. If, however, the appeal is not summarily
dismissed, the Court must cause notice to issue as to the time and place
at which such appeal will be heard. Section 389(1) empowers the
Appellate Court to order that the execution of the sentence or order
appealed against be suspended pending the appeal. What can be
suspended under this provision is the execution of the sentence or the
execution of the order. Does ‘order’ in Section 389(1) mean order of
conviction or an order similar to the one under Section 357 or Section
360 of the Code? Obviously the order referred to in Section 389(1) must
be an order capable of execution. An order of conviction by itself is not
capable of execution under the Code. It is the order of sentence or an
order awarding compensation or imposing fine or release on probation
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required to be executed by the authorities. Since the order of conviction
does not on the mere filing of an appeal disappear it is difficult to accept
the submission that Section 267 of the Companies Act must be read to
apply only to a ‘final’ order of conviction. Such an interpretation may
defeat the very object and purpose for which it came to be enacted. It is,
therefore, fallacious to contend that on the admission of the appeal by
the Delhi High Court the order of conviction had ceased to exist. If that
be so why seek a stay or suspension of the order?
16. In certain situations the order of conviction can be executable, in the
sense, it may incur a disqualification as in the instant case. In such a
case the power under Section 389(1) of the Code could be invoked. In
such situations the attention of the Appellate Court must be specifically
invited to the consequence that is likely to fall to enable it to apply its
mind to the issue since under Section 389(1) it is under an obligation to
support its order “for reasons to be recorded by it in writing”. If the
attention of the Court is not invited to this specific consequence which
is likely to fall upon conviction how can it be expected to assign reasons
relevant thereto? No one can be allowed to play hide and seek with the
Court; he cannot suppress the precise purpose for which he seeks
suspension of the conviction and obtain a general order of stay and then
contend that the disqualification has ceased to operate. In the instant
case if we turn to the application by which interim ‘stay’ of the
operation of the impugned judgment was secured we do not find a
single word to the effect that if the operation of the conviction is not
stayed the consequence as indicated in Section 267 of the Companies
Act will fall on the appellant. How could it then be said that the Delhi
High Court had applied its mind to this precise question before granting
‘stay’? That is why the High Court order granting interim stay does not
assign any reason having relevance to the said issue. By not making a
specific reference to this aspect of the matter, how could the appellant
have persuaded the Delhi High Court to stop the coming into operation
of Section 267 of the Companies Act? And how could the Court have
applied its mind to this question if its pointed attention was not drawn?
As we said earlier the application seeking interim stay is wholly silent
on this point. That is why we feel that this is a case in which the
appellant indulged in an exercise of hide and seek in obtaining the
interim stay without drawing the pointed attention of the Delhi High
Court that stay of conviction was essential to avoid the disqualification
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continuance of the conviction order, the Court would have applied its
mind to the specific question and if it thought that case was made out
for grant of interim stay of the conviction order, with or without
conditions attached thereto, it may have granted an order to that effect.
There can be no doubt that the object of Section 267 of the Companies
Act is wholesome and that is to ensure that the management of the
company is not in soiled hands. As we have pointed out earlier the
Managing Director of a company holds a fiduciary position qua the
company and its shareholders and, therefore, different considerations
would flow if an order is sought from the Appellate Court for staying
the operation of the disqualification that would result on the application
of Section 267 of the Companies Act. Therefore, even on facts since the
appellant had not sought any order from the Delhi High Court for stay
of the disqualification he was likely to incur under Section 267 of the
Companies Act on account of his conviction, it cannot be inferred that
the High Court had applied its mind to this specific aspect of the matter
and had thereafter granted a stay of the operation of the impugned
judgment. It is for that reason that we do not find in the order of the
High Court a single reason relevant to the consequence of the conviction
under Section 267 of the Companies Act. The interim stay granted by
the Delhi High Court must, therefore, be read in that context and cannot
extend to stay the operation of Section 267 of the Companies Act.
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19. That takes us to the question whether the scope of Section 389(1) of
the Code extends to conferring power on the Appellate Court to stay the
operation of the order of conviction. As stated earlier, if the order of
conviction is to result in some disqualification of the type mentioned in
Section 267 of the Companies Act, we see no reason why we should
give a narrow meaning to Section 389(1) of the Code to debar the court
from granting an order to that effect in a fit case. The appeal under
Section 374 is essentially against the order of conviction because the
order of sentence is merely consequential thereto; albeit even the order
of sentence can be independently challenged if it is harsh and
disproportionate to the established guilt. Therefore, when an appeal is
preferred under Section 374 of the Code the appeal is against both the
conviction and sentence and therefore, we see no reason to place a
narrow interpretation on Section 389(1) of the Code not to extend it to
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under Section 482 of the Code if the power was not to be found in
Section 389(1) of the Code. We are, therefore, of the opinion that the
Division Bench of the High Court of Bombay was not right in holding
that the Delhi High Court could not have exercised jurisdiction under
Section 482 of the Code if it was confronted with a situation of there
being no other provision in the Code for staying the operation of the
order of conviction. In a fit case if the High Court feels satisfied that the
order of conviction needs to be suspended or stayed so that the
convicted person does not suffer from a certain disqualification
provided for in any other statute, it may exercise the power because
otherwise the damage done cannot be undone; the disqualification
incurred by Section 267 of the Companies Act and given effect to
cannot be undone at a subsequent date if the conviction is set aside by
the Appellate Court. But while granting a stay of (sic or) suspension of
the order of conviction the Court must examine the pros and cons and if
it feels satisfied that a case is made out for grant of such an order, it may
do so and in so doing it may, if it considers it appropriate, impose such
conditions as are considered appropriate to protect the interest of the
shareholders and the business of the company.
20. For the above reasons we are of the opinion that since the interim
order of stay did not specifically extend to the stay of conviction for the
purpose of avoiding the disqualification under Section 267 of the
Companies Act, there is no substance in the appeal and the appeal is,
therefore, dismissed. The appellant will pay the costs of this appeal
which is quantified at Rs 25,000.”
It is noted that in the facts of the aforesaid case, the Hon’ble Supreme
Court held that the order staying the impugned order of conviction did not
specifically extend the stay of conviction for the purposes of Section 267 of
the Companies Act, 1956.
23. Learned Senior Counsel appearing on behalf of the appellant has urged
that in view of the test of “irreversible consequences” as held in Afjal Ansari
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(supra), the operation of the impugned judgment of conviction qua the
present appellant is to be stayed. In this context, the following averments have
been made in the present application: –
“6. The Applicant submits that if a person is convicted of an offence and
sentenced to more than 6 months imprisonment, then disqualifications
under S.196 Companies Act, 2013 might ensue which will result in
irreversible consequences. The individual may be protected from the
operation of these disqualifications in the event the Appellate Court
suspends the Impugned Order(s).
7. The Applicant, aged 65 years, is the Promoter and Managing Director
of Jayaswal Neco Industries Limited [‘JNIL’], a public listed company
since 1998. JNIL is amongst top 350 Companies in India by Revenue
Count and is engaged in the manufacturing of alloy steel, wire rods, bars,
bright bars, along with steel billets, pig iron, sponge iron, pellets and iron
& steel castings. It is India’s one of the largest Alloy Steel
Manufacturers. It serves critical industries such as automotive, power,
engineering, defence and railways with a workforce of over 9,500
employees. The Applicant has played a pivotal role in the growth of
JNIL securing significant business opportunities & fostering industrial
development. He has contributed significantly to its revenue growth in
that the Net Revenue of M/s JNIL has grown by 9.26 times from Rs.
640.56 Cr in FY 2003-04 to Rs. 5933.55 Cr in FY 2023-24.
8. The Applicant’s ability to function in the corporate world would
impact:
a. Large workforce/employees: JNIL has a total workforce of 9,503
workers including contractual workers. Their livelihoods depend on a
successful running/operation of the Company, which has happened
under the stewardship of the Applicant. In this regard, it is pertinent to
note that:
• The Company has achieved 94% employee retention rate.
• Employees that have benefitted from healthcare initiatives of the
Company are more than 4,000.
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b. Equity Shareholders: M/s JNIL has significant investment from
public equity shareholders including equity holding of 26.44% by
ACRE Trusts which is backed by Global Financial Investors.
c. Secured Lenders: JNIL owes around Rs. 3,052 Crores to its secured
lenders through NCDs, where the Applicant has given personal
guarantees in his own name. The Impugned Orders ought to be stayed
since their continued operation create massive uncertainty & hurdles in
the Company’s repayment obligations which is due in 2025.
9. Any such disqualification will also create issues for the Applicant &
M/s JNIL on the following counts:
a) Financial Closure for viable Projects: JNIL will face hurdles in
securing desired financial closure for its ongoing & future projects
including its scheduled Debt Refinance.
b) Its hard-earned goodwill and reputation will take a huge hit.
c) Its hard-earned & deserved credit ratings for securing loans will get
affected.
10. It is submitted that in granting relief(s) as prayed for in the present
Application, no prejudice will be caused to CBI or anyone else. On the
contrary, irreparable and irreversible damage will be caused to the
Applicant.”
Relying on Afjal Ansari (supra), it is submitted that the appellant does
have an existing post and qualification to loose if the present application is
not allowed and the appellant further qualifies the test of “irreversible
consequences” as noted hereinabove.
24. On the other hand, learned Senior Counsel appearing on behalf of the
respondent/CBI has drawn attention of this Court towards the minority
judgment of Hon’ble Supreme Court passed by Hon’ble Mr. Justice Dipankar
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Datta in Afjal Ansari (supra), to submit that the power under Section 389 of
the CrPC to stay the order of conviction has to be exercised in exceptional
circumstances. Reliance was placed on paragraph 56 thereof which reads as: –
“56. Bare perusal of the aforementioned decisions reveal how this Court
has differently dealt with approaches made by, inter alia, a Managing
Director of a company, a Member of the Legislative Assembly, a
Member of Parliament, a film actor intending to join politics, a bank
officer, a civil post holder and a Principal of an institution, while they
sought for stay of conviction.”
25. It was also submitted that the appellant has been convicted in coal
block cases which requires further consideration of this Court while deciding
the present application. Reliance was placed on Girish Kumar Suneja
(supra) to show that the Coal Block Allocation cases form one identifiable
category of cases that are distinct from other cases since they have had a
massive impact on public interest. It is further contended that the present
appellant alongwith the company M/s JNIL is also facing prosecution under
coal allocation matters where he is being charged individually as an accused.
It was pointed out that he is facing prosecution in his capacity as a key
functionary of M/s JNIL in the said case and therefore, the conviction of the
appellant in the present case cannot be seen in isolation and the fact of
appellant facing trial in other coal block cases in his capacity as key personnel
of M/s JNIL cannot be ignored by this Court at this stage in view of the larger
public interest and public impact of the coal block cases on the society.
Attention of this Court has been drawn on the judgment of Coordinate Bench
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of this Court in Madhu Koda 16 (supra), to submit that the application
seeking similar reliefs of the appellant therein was dismissed by the said
Court by observing as under: –
“59. This Court is of the view that the appellant has a prima facie case.
However, this Court is not persuaded to accept that his conviction is
liable to be stayed on this ground alone. The appellant has been
convicted of an offence after trial. One of the consequences of the
conviction is that the appellant is not qualified to run for public office.
While it is contended that this would lead to injustice and irreversible
consequences, the Court must also consider wider ramifications of the
same.
60. In recent times, there has been an increasing demand that steps be
taken for decriminalization of politics. A large number of persons with
criminal antecedents or who are charged with heinous crimes stand for
and are elected to Legislative Assemblies and the Parliament. This has
been a matter of some concern. In Public Interest Foundation v. Union
of India, (2019) 3 SCC 224, the Supreme Court had observed as under:
“2. The constitutional functionaries, who have taken the pledge
to uphold the constitutional principles, are charged with the
responsibility to ensure that the existing political framework does
not get tainted with the evil of corruption. However, despite this
heavy mandate prescribed by our Constitution, our Indian
democracy, which is the world’s largest democracy, has seen a
steady increase in the level of criminalization that has been
creeping into the Indian polity. This unsettlingly increasing trend
of criminalization of politics, to which our country has been a
witness, tends to disrupt the constitutional ethos and strikes at the
very root of our democratic form of government by making our
citizenry suffer at the hands of those who are nothing but a
liability to our country.”
61. The Court considered the plea of the petitioner in that case to
disqualify persons who were charged with heinous offences to contest
16
Ibid; supra note 8
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elections to public offices. The Law Commission, in its 244th Report,
had also recommended that a person against whom the charges have
been framed be disqualified from standing for elections.
62. The Supreme Court in Public Interest Foundation v. Union of India
(supra), had extensively referred to the recommendations of the Law
Commission and, after noting various decisions, had observed as
under:
“118. We have issued the aforesaid directions with immense
anguish, for the Election Commission cannot deny a candidate to
contest on the symbol of a party. A time has come that the
Parliament must make law to ensure that persons facing serious
criminal cases do not enter into the political stream. It is one
thing to take cover under the presumption of innocence of the
accused but it is equally imperative that persons who enter public
life and participate in law making should be above any kind of
serious criminal allegation. It is true that false cases are foisted
on prospective candidates, but the same can be addressed by the
Parliament through appropriate legislation. The nation eagerly
waits for such legislation, for the society has a legitimate
expectation to be governed by proper constitutional governance.
The voters cry for systematic sustenance of constitutionalism.
The country feels agonized when money and muscle power
become the supreme power. Substantial efforts have to be
undertaken to cleanse the polluted stream of politics by
prohibiting people with criminal antecedents so that they do not
even conceive of the idea of entering into politics. They should
be kept at bay.”
63. Clearly, if the wider opinion is that persons charged with crimes
ought to be disqualified from contesting elections to public offices, it
would not be apposite for this Court to stay the appellant’s conviction
to overcome the disqualification incurred by him.”
26. In all the judgments referred to on behalf of the appellant/applicant
including Afjal Ansari (supra), the merits of the case qua an order of
convictions have been examined. In Afjal Ansari (supra), the Hon’ble
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Supreme Court of India has categorically recorded that factual matrix in the
said case warranted an order of stay on the judgment of conviction of the
appellant therein as highlighted hereinbefore. Similarly, in Navjot Singh
Sidhu (supra), the Hon’ble Supreme Court while staying the order of
conviction of the said appellant had observed as under: –
“17. We have pointed out above the broad features of the case. The
incident happened all of a sudden without any premeditation. The
deceased was wholly unknown to the appellant. There was no motive for
commission of the crime. The accused are alleged to have lost temper
and started giving abuses on account of objection raised by the occupants
of the Maruti car due to obstruction being caused by the vehicle of the
appellant. Blows by fist are alleged to have been given and no weapon of
any kind had been used. The medical evidence shows that the deceased
had a diseased heart. The doctor who performed the post-mortem
examination was unable to give the cause of death. The Medical Board
gave its opinion after nearly a fortnight and that too does not ascribe the
death due to any external injury but says “effects of head injury and
cardiac condition”. The medical evidence does not conclusively establish
that the death occurred due to blow given on the head. If in the FIR,
which is the earliest version, and, also in his statement in the court which
was recorded after more than 4 years on 20-1-1993, Jaswinder Singh did
not assign any role of causing injury on the head of the deceased to the
appellant, whether his subsequent statement given after several years,
wherein he assigned the specific role to the appellant of hitting the
deceased on the head by a fist and thereby making him responsible for
causing the death of the deceased should be believed, will certainly
require consideration at the time of hearing the appeal. If the statement
which Jaswinder Singh gave after several years wherein he attributed the
head injury to the appellant is not accepted for the reason that it is at
variance with the version in the FIR and his earlier statement, the
appellant cannot be held guilty under Section 304 Part II IPC. These
features of the case which touch upon the culpability of the
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recorded in favour of the appellant by the learned Sessions Judge
resulting in acquittal have been reversed in appeal by the High
Court.
18. The incident took place on 27-12-1988. It has no correlation with
the public life of the appellant which he entered much later in 2004
when he was elected as a Member of Parliament. It is not a case
where he took advantage of his position as MP in commission of the
crime. As already stated, it was not necessary for the appellant to
have resigned from the membership of Parliament as he could in law
continue as MP by merely filing an appeal within a period of 3
months and had he adopted such a course he could have easily
avoided incurring any disqualification at least till the decision of the
appeal. However, he has chosen to adopt a moral path and has set
high standards in public life by resigning from his seat and in
seeking to get a fresh mandate from the people. In the event prayer
made by the appellant is not granted he would suffer irreparable
injury as he would not be able to contest for the seat which he held
and has fallen vacant only on account of his voluntary resignation
which he did on purely moral grounds. Having regard to the entire
facts and circumstances mentioned above we are of the opinion that
it is a fit case where the order of conviction passed by the High Court
deserves to be suspended.”
(emphasis supplied)
27. Turning to the facts of the present case, it is noted that the present
appellant has been convicted for being part of a conspiracy to secure
recommendations of 24th Screening Committee meeting dated 09.12.2004 for
allocation of coal block in favour of M/s AIPL (A-3). It was argued on behalf
of the appellant that PW-14, A.K. Srivastava, in his testimony before the
learned Trial Court had stated that the questions posed by the said Screening
Committee were being answered by Manoj Kumar Jayswal (Convict no. 1)
and not the present applicant/appellant. It was also argued that the key
prosecution witness, i.e., PW-20, regarding forgery of documents has also
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deposed that all the forgery were committed at the behest/asking of aforesaid
Manoj Kumar Jayaswal (convict no. 1).
28. During the course of trial, it has come on record that PW-14, AK
Srivastava, had stated that in the 24th Screening Committee meeting DY
Moghe, Manoj Kumar Jayaswal (A-1), VS Garg, Ramesh Kumar Jayaswal
(A-2; present appellant) were present. It was noted that the present appellant
had relied on the minutes of the meeting and had taken various defenses.
Learned Trial Court had, after considering the submissions made on behalf of
Manoj Kumar Jayaswal (A-1), opined that AK Srivastava, PW-14, had made
improvements in his statement and had shifted the burden on Manoj (A-1) by
alleging that he had answered the queries on behalf of AIPL, A-3. Thus,
statement of PW-14 that Manoj Kumar Jayaswal (A-1) had answered queries
during the 24th Screening Committee meeting was rejected by the learned
Trial Court. Learned Trial Court had further noted that the present appellant
had not named anyone who gave responses during the said Screening
Committee meeting on behalf of M/s AIPL and no effort was made on his
behalf to elicit favourable responses from the relevant witnesses regarding the
fact that who had answered the queries on behalf of AIPL before the
Screening Committee.
29. It was further noted that the present appellant was the promoter
Director of M/s AIPL, A-3, since its incorporation in 1984 and from
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30.10.2003, he was the authorized signatory of the said accused company. It
has come on record that when the present appellant was yet to be appointed as
authorized signatory of A-3, he addressed letter dated 15.07.2003 to Ministry
of Coal with a copy of the same to Ministry of Steel and other. Vide this letter,
a revised application which was necessitated due to change in captive Coal
blocks and suitability of the location of the sponge iron plant in Jharkhand
was submitted. In this letter, the present appellant had provided the details of
the accused company, A-3, for allocation of Coal Blocks to meet the
requirement of Annual Capacity of Sponge Iron. It has also come on record
that the present appellant had also written another exhaustive letter on
30.08.2003 (Exhibit P-14) to the Chairman, Screening Committee in
connection with allocation of Coal blocks to the accused company. The said
letter was in respect of the discussion in 21st Meeting of the Screening
Committee held on 19.08.2003 on the subject of allotment of requested blocks
for AIPL and was signed by the present appellant in his capacity as
Authorized Signatory of the accused company, A-3.
30. On examination of the aforesaid two letters, it was concluded that the
appellant had deep knowledge about the affairs of AIPL and he had signed
both the aforesaid letters as authorized signatory of AIPL whereas he had
become authorized signatory of AIPL thereafter. The present appellant had, in
his written statement under Section 313(5) of the CrPC, stated that he was
briefed about the information submitted with Ministry of Steel (MoS)
however, he has not stated anything in respect of the submissions attributed to
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him in the minutes of the Screening Committee. Defences of the appellant
were also dealt by the learned Trial Court on merits and it was concluded that
AIPL was under the flagship of Manoj Kumar Jayaswal (A-1) at the time of
24th Screening Committee meeting, however, the assets were not separated by
that time and the present appellant had deep knowledge about the affairs of
M/s AIPL as the same was evident from the revised application given by him
for allocation of Coal block and the other application mentioning detailed
background of the discussions held in 21st Screening Committee meeting. The
appellant was also aware about the progress of AIPL and its subsequent
developments. Learned Trial Court, based on evidences, concluded that as per
PW-14, the present appellant misrepresented before 24th Screening
Committee meeting that he was Director of AIPL and Manoj Kumar Jayaswal
(A-1) had appeared as Joint Managing Director of Jayaswal Neco Ltd.
31. In view of the aforesaid, it cannot be stated, at this stage, that the
judgment of conviction is prima facie unsustainable. The grounds taken in the
present appeal would be evaluated on its own merits during the final hearing.
32. It has been argued that the appellant would face “irreversible
consequences” if the judgment of conviction is not stayed. In support of the
aforesaid submission, certain facts relating to the company, M/s JNIL, have
been placed on record, as noted hereinbefore. Reliance was placed upon by
the learned Senior Counsel appearing on behalf of the appellant on the
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judgment of Hon’ble Supreme Court in Rama Narang (supra) to submit that
disqualification incurred by Section 267 of the Companies Act, 1956, (similar
to Section 196(3)(d) of the Companies Act, 2013) if given effect to cannot be
undone at a subsequent date, if the conviction is set aside at later stage.
However, it was further observed by the Hon’ble Supreme Court in the said
case that while granting stay of the order of conviction, the Court must
examine pros and cons of a case. The relevant observation made by Hon’ble
Supreme Court reads as under: –
“19. …….. But while granting a stay of (sic or) suspension of the
order of conviction the Court must examine the pros and cons and
if it feels satisfied that a case is made out for grant of such an order,
it may do so and in so doing it may, if it considers it appropriate, impose
such conditions as are considered appropriate to protect the interest of
the shareholders and the business of the company.”
(emphasis supplied)
33. In the said judgment, the Hon’ble Supreme Court while analyzing the
disqualification under provisions of Section 267 of the Companies Act, 1956,
had observed and held as under: –
“10. The above resume would show that the principal question which
falls for our determination is whether the appellant is liable to be visited
with the consequence of Section 267 of the Companies Act
notwithstanding the interim order passed by the Delhi High Court while
admitting the appellant’s appeal against his conviction and sentence by
the Additional Sessions Judge, Delhi. As we have said earlier the factum
of his conviction and the imposition of sentence is not in dispute.
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Section 267 of the Companies Act, to the extent it is relevant for our
purposes, may be set out:
“267. No company shall, after the commencement of this Act,
appoint or employ, or continue the appointment or employment of
any person as its managing or whole-time Director who–
(a) * * *
(b) * * *
(c) is, or has at any time been convicted by a court of an offence
involving moral turpitude.”
On a plain reading of this section it seems clear to us from the language
in which the provision is couched that it is intended to be mandatory in
character. The use of the word ‘shall’ brings out its imperative
character. The language is plain, simple and unambiguous and does not
admit of more than one meaning, namely, that after the commencement
of the Companies Act, no person who has suffered a conviction by a
court of an offence involving moral turpitude shall be appointed or
employed or continued in appointment or employment by any company
as its managing or whole-time Director. Indisputably, the appellant was
appointed a Director in 1988 and Managing Director in 1990 after his
conviction on 22-12-1986. On the plain language of Section 267 of the
Companies Act, the Company had, in making the appointments,
committed an infraction of the mandatory prohibition contained in the
said provision. The section not only prohibits appointment or
employment after conviction but also expects discontinuance of
appointment or employment already made prior to his conviction. This
in our view is plainly the mandate of Section 267. As rightly pointed out
by the Division Bench of the High Court, Section 274 of the Companies
Act provides that a disqualification which a Director incurs on
conviction for an offence involving moral turpitude in respect of which
imprisonment of not less than six months is imposed, the Central
Government may, by notification, remove the disqualification incurred
by any person either generally or in relation to any company or
companies specified in the notification to be published in the Official
Gazette. Such a power is, however, not available in the case of a
Managing Director. Secondly, Section 283 of the Companies Act
provides that the office of a Director shall become vacant if convicted
and sentenced as stated hereinabove but sub-section (2) thereof, inter
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alia, provides that the disqualification shall not take effect for thirty
days from the date of sentence and if an appeal is preferred during the
pendency of appeal till seven days after the disposal of the appeal. This
benefit is not extended in the case of a Managing Director. The
Companies Act has, therefore, drawn a distinction between a
Director and a Managing Director; the provisions in the case of the
latter are more stringent as compared to that of the former. And so
it should be because it is the Managing Director who is personally
responsible for the business of the Company. The law considers it
unwise to appoint or continue the appointment of a person guilty of
an offence involving moral turpitude to be entrusted or continued to
be entrusted with the affairs of any company as that would not be in
the interests of the shareholders or for that matter even in public
interest. As a matter of public policy the law bars the entry of such
a person as Managing Director of a company and insists that if he is
already in position he should forthwith be removed from that
position. The purpose of Section 267 is to protect the interest of the
shareholders and to ensure that the management of the affairs of
the company and its control is not in the hands of a person who has
been found by a competent court to be guilty of an offence involving
moral turpitude and has been sentenced to suffer imprisonment for
the said crime. In the case of a Director, who is generally not in-
charge of the day-to-day management of the company affairs, the
law is not as strict as in the case of a Managing Director who runs
the affairs of the company and remains in overall charge of the
business carried on by the company. Such a person must be above
board and beyond suspicion.”
(emphasis supplied)
34. As observed by the Hon’ble Supreme Court, the statutory provision of
disqualification in the Comapanies Act, 1956, were applicable to a Managing
Director because he is supposed to be the person responsible for conducting
the business of the company; however, under the provisions of Section
196(3)(d) of the Companies Act, 2013, the disqualification is applicable not
just to the Managing Director but also to whole time Director or the Manager.
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The disqualification which would come into effect on account of the aforesaid
conviction has been provided under Section 196(3)(d) of the Companies Act,
2013, which reads as under: –
“196. Appointment of managing director, whole-time director
or manager.–
**** **** ****
(3) No company shall appoint or continue the employment of
any person as managing director, wholetime director or
manager who —
(a) is below the age of twenty-one years or has attained the age of
seventy years:
Provided that appointment of a person who has attained the
age of seventy years may be made by passing a special
resolution in which case the explanatory statement annexed to
the notice for such motion shall indicate the justification for
appointing such person;
1
[Provided further that where no such special resolution is
passed but votes cast in favour of the motion exceed the
votes, if any, cast against the motion and the Central
Government is satisfied, on an application made by the Board,
that such appointment is most beneficial to the company, the
appointment of the person who has attained the age of seventy
years may be made.]”;
(b) is an undischarged insolvent or has at any time been adjudged
as an insolvent;
(c) has at any time suspended payment to his creditors or makes, or
has at any time made, a composition with them; or
(d) has at any time been convicted by a court of an offence and
sentenced for a period of more than six months.
**** **** ****"
(emphasis supplied)
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As rightly pointed out by the learned Senior Counsel appearing on
behalf of the respondent/CBI, disqualification in Companies Act, 1956, would
come into effect if the person concerned has at any time been convicted of an
offence involving moral turpitude. However, the same has now been amended
to the extent that, it will come into effect if the person has been convicted of
an offence and sentenced for a period of more than six months irrespective of
the nature of the offence.
35. In the present case, it has come on record that the present appellant
along with company, M/s JNIL, are also facing prosecution in the coal block
matter. It has come on record that the present appellant is facing prosecution
in his capacity as key personnel of the said company, M/s JNIL. The Hon’ble
Supreme Court in Afzal Ansari (supra) had observed and held as under: –
“15. …….. The very notion of irreversible consequences is centred
on factors, including the individual’s criminal antecedents, the
gravity of the offence, and its wider social impact, while
simultaneously considering the facts and circumstances of the case.”
(emphasis supplied)
Keeping in view the aforesaid circumstances and the wider social
impact, the case of the appellant cannot fall in the category of “exceptional
circumstance” in order to give benefit of stay of conviction. Following
observation of the Hon’ble Supreme Court in Girish Kumar Suneja (supra),
ought to be considered with respect to impact of the Coal Block scam: –
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“43. In our opinion, it is not as if one single case has been taken up for
allegedly discriminatory treatment out of an entire gamut of cases. All
the cases relating to the allocation of coal blocks have been
compartmentalised and are required to be treated and dealt with in the
same manner. The Coal Block Allocation cases form one identifiable
category of cases that are distinct from other cases since they have
had a massive impact on public interest and there have been large-
scale illegalities associated with the allocation of coal blocks. It is
therefore necessary to treat these cases differentially since they form
a unique identifiable category. The treatment of these cases is certainly
not arbitrary–on the contrary, the classification is in public interest and
for the public good with a view to bring persons who have allegedly
committed corrupt activities, within the rule of law. It is hence not
possible to accept the submission that by treating the entire batch of Coal
Block Allocation cases in a particular manner different from the usual
cases that flood the courts, there is a violation of Article 14 of the
Constitution.
**** **** ****
45. Insofar as the present appeals are concerned, the cases fall in a class
apart, arising as they do out of the illegal and unlawful allocation of coal
blocks. It is only in respect of these cases that this Court monitored the
investigations and it is only in respect of these cases that the order was
passed by this Court on 25-7-2014 [Manohar Lal Sharma v. Union of
India, (2015) 13 SCC 35 : (2015) 13 SCC 37 : (2016) 1 SCC (Cri) 418 :
(2016) 1 SCC (Cri) 419] . The cases are concerned with large-scale
corruption that polluted the allocation of coal blocks and they form a
clear and distinct class that need to be treated in a manner different
from the cases that our justice-delivery system usually deals with.
The classification being identifiable and clear, we do not see any
violation of Article 14 of the Constitution.
**** **** ****
49. It must not be forgotten that the cases arising out of the Coal Block
Allocations are not ordinary cases but fall under a special or distinct
category which requires special attention given the magnitude of the
illegalities allegedly committed including some with criminal intent. It is
in this view of the matter that this Court had no option but to hand over
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the investigations to CBI and to monitor the investigations so that they
reach their logical conclusion, without any interference from any quarter.
The magnitude of the illegalities is such that it appears that even the
integrity of the Director of CBI was prima facie compromised, and this
Court had to intervene and direct investigations into the conduct of the
Director of CBI. That being so, it can hardly be said with any degree of
seriousness that the procedure adopted by this Court, in the facts and
circumstances of the case, violate any right to the life and liberty of any
of the appellants or any other persons allegedly involved in the
criminality associated with the allocation of coal blocks.”
(emphasis supplied)
36. Thus, the fact that the present appellant is also facing trial in another
coal block case in his capacity as key personnel of M/s. JNIL cannot be
ignored at this stage.
37. In view of the aforesaid facts and circumstances of the present case, the
present application so far as it seeks suspension of impugned judgment of
conviction dated 09.12.2024 is dismissed.
38. Regarding the suspension of order on sentence dated 11.12.2024,
learned Senior Counsel has submitted that the co-convict of the appellant,
Manoj Kumar Jayaswal (A-1), has also filed appeal, CRL.A. 1186/2024,
assailing the impugned judgment of conviction. In the said appeal, the
sentence of Manoj Kumar Jayaswal (A-1), has been suspended by a
Coordinate Bench of this Court vide order dated 23.12.2024 passed in
CRL.M.(BAIL) 2138/2024 in CRL.A. 1186/2024. The present appellant has
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a family comprising of his wife, 2 sons, one daughter and his father. The
appellant is 65 years of age. The appellant was granted permission to travel
abroad by this Court on several occasions during the pendency of the
captioned appeal as well as by the learned Trial Court during the course of
trial and he has not misused the liberty granted to him.
39. In the totality of the facts and circumstances of the present case, the
present application is partly allowed. The sentence of the appellant is
suspended and he is directed to be released on bail on his furnishing personal
bond in the sum of Rs.1,00,000/- along with one surety of the like amount to
the satisfaction of the learned Trial Court/Link Court, further subject to the
following conditions: –
i. The memo of parties shows that the applicant is residing at Usha
Sadan, Pandit Ravishankar Shukla Marg, Civil Lines, Nagpur,
Maharashtra, 440001. In case of any change of address, the applicant is
directed to inform the same to this Court by way of an affidavit.
ii. The applicant shall not leave India without the prior permission
of this Court.
iii. The applicant is directed to give all his mobile numbers to the
Investigating Officer and keep them operational at all times.
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iv. The applicant shall not directly or indirectly make any
inducement, threat or promise to any person acquainted with the facts
of the case.
40. The present application is partly allowed and disposed of accordingly.
41. Interim order dated 08.01.2025 is made absolute in the aforesaid terms.
42. Needless to state that, nothing mentioned hereinabove, is an opinion on
the merits of the present appeal or the case of co-convicts and any
observations made herein are only for the purposes of the present application.
43. Copy of the judgment be sent to the learned Trial Court as well as
concerned Jail Superintendent for necessary information and compliance.
44. Judgment be uploaded on the website of this Court forthwith.
AMIT SHARMA, J.
AUGUST 01, 2025/sn/kr/ns
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