Karnataka High Court Declines Relief To President Of US-Based Company Accused Of Supplying Faulty Equipment To DRDO, DARE

The Karnataka High Court has refused to quash criminal proceedings initiated against 76-year-old Surya Sareen, President and Chief Executive Officer of M/s AKON Inc, a company incorporated in the United States of America, which is accused of cheating Defence Avionics Research Establishment ('DARE') and Defence Research and Development Organization ('DRDO') by supplying faulty VO based radio frequency engines.Justice M Nagaprasanna said, “The case at hand is a classic illustration of prima facie offence of Sections 420 and 120B of the IPC against the petitioner and the entire issue revolves round a maze of facts, certain disputed and certain matters on record. Therefore, interference at this stage of the proceedings would run foul of the judgment of the Apex Court.” As per the prosecution case, a purchase order on 11-07-2007 was issued to M/s AKON Inc. in which the payment terms decided were that 90% to be paid through Line of Credit ('LoC') at State Bank of India upon delivery of generators and the final payment after approval. In terms of the purchase order, M/s AKON is said to have shipped 12 units on 19-02-2009, 12 units on 23-02-2009 and 11 units on 27-02-2009. On 04-03-2009 the first 24 units were received by DARE, DRDO and the remaining 11 units were received on 11-03-2009. It was submitted that there appeared to be some mischief played in the said shipping. The CBI was asked to step in and conduct a preliminary inquiry. On 16-03-2012, a complaint was preferred to the Director (Vigilance) by DARE, DRDO, highlighting irregularities in the procurement of VO-based RF engines and also complained that balance payments made to M/s AKON were deliberately and erroneously done after the expiry of the warranty period. The petitioner sought to quash the case registered for offences punishable under Sections 120B r/w 420 of the IPC and Sections 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988, and contended that there are no specific allegations against the petitioner in the charge sheet or specific overt acts attributed to him to satisfy the ingredients of the alleged offences. Further, it was said that the statements of witnesses lack completeness as they fail to include 6 key statements to be taken of key personnel. There is a gross delay in the investigation and filing of the final report by the CBI, as it has taken three years for conduct of preliminary inquiry and two years for investigation to file a charge sheet. It was his submission that the complainant knew about irregularities way back in 2012, and no action was taken. Therefore, his emphatic submission is that the proceedings are hit by gross delay and that delay has vitiated the proceedings.Finally it was said that petitioner is not the sole owner of M/s AKON which is an incorporated Corporation, and therefore, the petitioner could not have been singled out for allegations, as the IPC does not provide for vicarious liability and holds the individual liable for the offence if there is concrete evidence of his involvement. CBI opposed the plea, submitting that the petitioner, being the President of M/s AKON Inc, has cheated DARE, DRDO. M/s AKON supplied all dummy goods on the purchase order. It was stated that accused No.1 and accused No.3 were aware of the fact that Radio Frequency Generators delivered by M/s AKON headed by the petitioner, were never in a working condition. In such cases where equipment is for defence, delay would not vitiate the proceedings, for the reason that there has been continuous communication between the parties.Finally, it was said that the investigation led to the entire activity of the petitioner himself, and therefore, he is charged with the offence.Findings: The bench, on going through the complaint, chargesheet and statement of witnesses, said, “If the summary of the charge sheet, paragraphs of which are quoted hereinabove, and the statements of witnesses, in their entirety, are noticed, the role of the petitioner is clearly brought out. The witness statements are in clear narration of what the petitioner has done.” It added “The witness statements are clear that the petitioner is the sole owner of M/s AKON, USA and his son Sandeep Sareen is Director of M/s AKON and the petitioner is the independent owner and beneficiary of M/s AKON; he controls M/s AKON Electronics India Pvt. Ltd. and all the mail communications clearly point at the involvement of the petitioner.” Referring to the sanction order, the court said “A perusal at the order of taking cognizance and issuance of summons nowhere indicates that it suffers from non-application of mind. It does not reveal dearth of application of mind but it is abundance of application of mind.” Rejecting the contention of the petitioner about delay in proceedings, the court said, “The case at hand is of a global tender and the successful tenderer allegedly cheated the DRDO. Therefore, there has been some delay in investigating an overseas allegation. In that...

Karnataka High Court Declines Relief To President Of US-Based Company Accused Of Supplying Faulty Equipment To DRDO, DARE

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