/2022 INSC 0225/
NON­REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION 
CRIMINAL APPEAL NO. 2169 OF 2014
UNION OF INDIA AND OTHERS        ...APPELLANT(S)
VERSUS
LT. GEN. (RETD.) S.K. SAHNI    ...RESPONDENT(S)
WITH
TRANSFERRED CASE (CRIMINAL) NO. 1 OF 2017
J U D G M E N T
B.R. GAVAI, J.
1. Criminal Appeal No.2169 of 2014 is filed by Union of India
and   others   challenging   the   orders   passed   by   Armed   Forces
Tribunal,   Chandigarh   Regional   Bench   at   Chandimandir
(hereinafter referred to as the “AFT”) dated 10 th
 October 2013 in
MA No. 1871 of 2012 and OA No. 262 of 2011 to the effect that
it   reduces   the   sentence   of   three   years   rigorous   imprisonment
and   cashiering   imposed   on   the   respondent   herein­Lt.   Gen.
(Retd.)   S.K.  Sahni   to   dismissal   from   the  service   as   provided   in
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Section   71(e)   of   the   Armed   Forces   Tribunal   Act,   2007
(hereinafter referred to as the “AFT Act”), and 21 st
  March 2014
in   MA   Nos.   3201   and   3202   of   2014   in   OA   No.   262   of   2011,
whereby the learned AFT refused to grant leave to appeal.
2. Transferred   Case   (Criminal)   No.   1   of   2017   is   filed   by   the
petitioner therein (respondent herein), originally  before the High
Court  of  Punjab  and   Haryana   being   Criminal  Writ  Petition  No.
1895 of 2013 , challenging the dismissal of MA No. 1871 of 2012
and OA No. 262 of 2011, which was filed challenging the order
dated 18 th
 February 2011, passed by the General Court Martial
(hereinafter   referred   to   as   the   “GCM”),   vide   which   the
respondent   herein   was   held   guilty   of   first,   third,   fourth,   fifth,
seventh and ninth charges and was sentenced as under:
(i) To be cashiered; and
(ii) Rigorous   imprisonment   for   three   years   subject   to
confirmation.
3. As such, both, the appeal filed by  the Union of India and
others, and the transferred case, filed by the respondent herein
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have   been   heard   together.   For   the   sake   of   convenience,   the
facts are taken from Criminal Appeal No. 2169 of 2014.  
4. The respondent was commissioned in the Indian Army on
16 th
  December 1967 and earned promotions and was promoted
to the rank of Lieutenant General in May 2003. The respondent
was   thereafter   appointed   as   Director   General,   Supplies   and
Transport (hereinafter referred to as “DGST”) with effect from 1 st
February   2005.     He   was   also   awarded   the   “Ati   Vishisht   Seva
Medal” in January 2005.
5. An   anonymous   complaint   was   received   in   the   Directorate
of   Supplies   and   Transport   (hereinafter   referred   to   as   the
“Directorate”)   on   4 th
  April   2005.     On   8 th
  April   2005,   the
complaint   was   forwarded   and   a   request   was   made   to   the
respondent   to   examine   the   complaint   and   forward   his
comments on the file on priority  for perusal of the Directorate.
It   is   contended   by   the   respondent   that   he   replied   to   the   same
on 12 th
 September 2005.
6. A   Court   of   Inquiry   was   ordered   against   the   respondent
under   the   directions   of   General   Officer   Commanding­in­Chief,
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Western   Command   (hereinafter   referred   to   as   “GOC­in­C”),   to
investigate into the following seven allegations:
“i.   Procurement   of   Kabuli   Chana   through   contract
finalized   during   April   05   by   Army   Purchase
Organization;
ii.   Tendering   and   procurement   of   Barley   crushed
and   Gram   kibbled  during   financial   year   2005­2006
by Army Purchase Organization;
iii.   Testing   and   sampling   of   items   of   ration   by   CFL
Delhi   as   per   laid   down   specification   arid   its
subsequent   purchase/procurement   from   various
firms/dealers   as   per   approved   sample   and   ASC
specifications;
iv.   Tendering   and   procurement   of   979   Metric
Tonnes   of   Masoor   Whole   which   was   supplied   by
GRAINFED; ­
v.   Violation, if any, of the laid down quality norms,
ASC   specifications   and   other   desired   parameters
with regard to moisture content, number counts per
100   gm   weight,  system   of   imposing   price   reduction
of commodities contracted.
vi.   Any   undue   favour   granted   to   any   contractor   for
procurement   of   meat   by   HQ   Central   Command
during financial years 2003­2004 and 2004­2005
vii. Any irregularity with regard to permitting a civil
contractor   to   dump   excavated   soil   within   the
compound of ASC Centre and College of any undue
favour taken from any contractor by and Army pers
at ASC Centre and College.”
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7. The   Court   of   Inquiry   only   recommended   for   award   of
recordable censure against the respondent while recommending
disciplinary action qua other officials under the Army Act, 1950
(hereinafter   referred   to   as   the   “Army   Act”)   and   Army   Rules,
1954 (hereinafter referred to as the “Army Rules”).  However, as
per   the   direction   of   Army   Commander,   the   respondent’s   name
was   included   in   the   list   for   disciplinary   action.     The   Court   of
Inquiry   was   finalized   on   24 th
  June   2006,   and   thereafter,   the
GOC­in­C directed a disciplinary action against the respondent.
8. As   contended   by   the   respondent,   the   GOC­in­C,   despite
recommendation   mentioned   in   the   Inquiry   Report   for   an
administrative   action,   directed   disciplinary   action   while
admitting   that   there   was   no   evidence   of   the   acts   of   financial
consideration qua the respondent. The respondent, on attaining
the   compulsory   retirement   age   of   60   years,   retired   on   30 th
September 2006.
9. The respondent filed a writ petition before the High Court
of   Delhi   being   WP   (C)   No.   11839/2006   seeking   for   quashing
and   setting   aside   of   the   proceedings   and   recommendations   of
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the Court of Inquiry in terms of order dated 26 th
 May 2005 and
order   dated   18 th
  July   2006   directing   attachment   of   the
respondent.       The   High   Court   of   Delhi   allowed   the   said   writ
petition,   vide   order   dated   11 th
  January   2007,   in   the   following
terms:
“For   the   reasons   afore­recorded,   we   are   of   the
considered   view   that   the   respondents   have   not
complied   with   the   provisions   of   Rule   180   of   the
Rules,   as   such,   they   cannot   take   any   further
proceedings against the respondents on the basis of
the Court of Inquiry held in furtherance to the order
of   the   competent   authority   dated   26.9.2005.
However,   the   respondents   are   at   liberty   to   give
notice   to   the   respondent   and   continue   with   the
proceedings under Rule 180, and in the alternative,
even   to   take   recourse   to   the   provisions   of   Rule   22,
or exercise any other power available to them under
the   Act,   insofar   as   they   do   not   rely   upon   the
proceedings on the aforesaid Court of Inquiry.”
10. The  appellants,  instead  of  invoking   Rule  180  of  the  Army
Rules,   wherein   opportunity   was   to   be   provided   to   the
respondent, resorted to Rule 22 of the Army Rules and issued a
fresh   notice   and   passed   an   order   dated   31 st
  August   2007   and
ordered attachment under Section 123 of the Army Act.  
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11. The   respondent   challenged   the   above   by   filing   a   writ
petition in the High Court of Delhi being WP(C) No. 6632/2007,
which was then transferred to the learned AFT, Principal Bench
at   New   Delhi.     The   said   learned   AFT,   vide   its   order   dated   3 rd
September   2009,   set   aside   the   subsequent   act   of   the   Army
Authorities   and   held   that   resorting   to   Rule   22   of   the   Army
Rules was totally unwarranted and illegal.  The appellants were
however   directed   to   resort   to   Court   of   Inquiry   after   giving   an
opportunity   to   the   respondent   and   to   comply   with   the
requirement under Rule 180 of the Army Rules.
12. The GOC­in­C, vide its order  dated 22 nd
  September  2009,
directed   reconvening/reassembling   of   the   Court   of   Inquiry   on
the   basis  of   the  liberty   granted   by  the   learned  AFT,  New   Delhi
vide its order dated 3 rd
 September 2009.  The GOC­in­C vide its
order   dated   12 th
  April   2010,   on   the   basis   of   the   Court   of
Inquiry, directed disciplinary action against the respondent.
13. On 30 th
  July  2010, a convening  order, directing  assembly
of   the   GCM   under   the   Army   Act,   was   issued.     The   GCM
consisted of 7 Members, out of which, 6 Members were holding
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ranks of Major General which was lower than the respondent’s
rank.     The   Presiding   Officer,   however,   was   of   the   rank   of
Lieutenant General, but was allegedly junior to the respondent.
Even   the   Judge­Advocate   General   (hereinafter   referred   to   as
“JAG”)   was   allegedly   junior   to   the   respondent   and   was   only
holding   the   rank   of   Colonel.     On   the   same   day,   i.e.,   30 th
  July
2010,   a   charge­sheet   comprising   of   nine   charges   was   served
upon the respondent.
14. The GCM, vide order dated 18 th
  February 2011, found the
respondent   not   guilty   of   the   charges   No.   2,   6   and   8   whereas
found  the  respondent  guilty  of  charges  No.  1,  3,  4,  5,  7  and  9
and was sentenced as under:
(i) To be cashiered; and
(ii) Rigorous   imprisonment   for   three   years   subject   to
confirmation.
The   findings   and   sentence   of   the   GCM   were   confirmed   by   the
Chief of Army Staff vide its order dated 13 th
 January 2012.
15. The   respondent   filed   an   appeal   before   the   learned   AFT
against the order of the GCM dated 18 th
  February 2011, which
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was   further   confirmed   by   the   order   dated   13 th
  January   2012
passed   by   the   Chief   of   Army   Staff.     The   learned   AFT,   vide   the
impugned   order   dated   10 th
  October   2013,   partly   allowed   the
petition.  The learned AFT held that the findings of the GCM as
against the respondent were liable to be affirmed. However, the
learned   AFT   held   that   the   sentence   of   cashiering   and
substantive   imprisonment   of   3   years’   rigorous   imprisonment
was   harsh   and   thus,   modified   the   sentence   to   dismissal   from
service.
 
16. The   respondent   filed   a   writ   petition   being   Criminal   Writ
Petition No. 1895 of 2013 before the High Court of Punjab and
Haryana   at   Chandigarh,   challenging   the   aforesaid   impugned
order dated 10 th
 October 2013 passed by the learned AFT.  The
High   Court   issued   notice   vide   order   dated   28 th
  October   2013.
In   the   meanwhile,   the   appellants   also   filed   an   appeal   being
Criminal Appeal No.2169 of 2014 before this Court, challenging
the   order   passed   by   the   learned   AFT   dated   10 th
  October   2013.
Thereafter,   the   respondent   filed   an   application   being   CRL.M.P.
No.24464 of 2014 in Criminal Appeal No.2169 of 2014 seeking
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transfer   of   Criminal   Writ   Petition   No.   1895   of   2013,   pending
before the High Court of Punjab and Haryana at Chandigarh to
this Court.  
17. This Court, vide its order dated 22 nd
 August 2016, allowed
the said application and directed transfer of the said petition to
this   Court,   to   be   listed   along   with   Criminal   Appeal  No.2169  of
2014.  
18. We   have   heard   Shri   R.   Balasubramanian,   learned   Senior
Counsel appearing on behalf of the Union of India and Shri K.K.
Tyagi, learned counsel appearing on behalf of the respondent.
19. Shri   Tyagi,   learned   counsel   appearing   on   behalf   of   the
respondent, raised a preliminary point that since the Members
of   the   GCM   were   below   the   rank   of   the   respondent,   the   GCM
was not properly constituted, and as such, violative of sub­rule
(2) of Rule 40 of the Army Rules.   He relies on the order of this
Court in the case of  Ex. Lt. Gen. Avadhesh Prakash v. Union
of India and Another 1
.  He submitted that from perusal of the
said   order,   it   will   be   clear   that   about   80   Lieutenant   Generals
1   Criminal Appeal No. 140 of 2019 dated 24.01.2019
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were available in  the  Indian  Army  at  the relevant time, and  as
such, the Court­Martial which had Members below   the rank of
Lieutenant   General,   could   not   have   tried   the   respondent.     He
therefore   submitted   that   the   GCM,   which   is   constituted   in
contravention   of   sub­rule   (2)   of   Rule   40   of   the   Army   Rules,
could not have tried the respondent.  He further submitted that
on   the   same   ground,   in   view   of   Rule   102   of   the   Army   Rules,
since the JAG, who was of the rank of Colonel, which is below
the  rank of  Lieutenant General, stood disqualified while acting
as a JAG.  He relies on the judgment of this Court in the case of
Union of India and Another v. Charanjit S. Gill and Others 2
in this regard.
20. Shri Balasubramanian, learned Senior Counsel appearing
on   behalf   of   the   appellants,   on   the   contrary,   submitted   that
though sub­rule (2) of Rule 40 of the Army Rules requires that
the   Members   of   a   Court­Martial   for   the   trial   of   an   officer   shall
not be of a rank below than that of the officer, it also provides
that a departure from the said rule is permissible, when in the
2   (2000) 5 SCC 742
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opinion of the convening officer, having regard to the exigencies
of the public service, the officers of such rank are not available.
He therefore submits that merely because the GCM consisted of
the   officers   below   the   rank   of   Lieutenant   General   itself,   would
not   ipso   facto   vitiate   the   proceedings.   He   submitted   that   the
only   requirement   is   that   such   an   opinion   is   required   to   be
recorded   in   the   convening   order.   He   submitted   that   insofar   as
the   order   of   this   Court   in   the   case   of   Ex.   Lt.   Gen.   Avadhesh
Prakash   (supra)  is  concerned,  in   the   said  case,  the   order   was
passed by this Court on the   concession   that such officers were
available.   He further submitted that in the said case, no such
opinion   as   required   under   sub­rule   (2)   of   Rule   40   of   the   Army
Rules was recorded.
21. For   appreciating   the   rival   submissions   with   regard   to   the
preliminary objections, it will be relevant to refer to sub­rule (2)
of Rule 40 of the Army Rules:
“ 40.  Composition of General Court­martial.­  
(1). …..
(2).   The members of a court­martial for  the trial of
an   officer   shall   be   of   a   rank   not   lower   than   that   of
the   officer   unless,   in   the   opinion   of   the   convening
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officer,   officers   of   such   rank   are   not   (having   due
regard   to   the   exigencies   of   the   public   service)
available.     Such   opinion   shall   be   recorded   in   the
convening order.”
22. In   view   of   the   specific   contention   with   regard   to   the
violation   of   sub­rule   (2)   of   Rule   40   read   with   Rule   102   of   the
Army Rules, we have summoned the original file.  On perusal of
the original file, we find that the convening officer has recorded
reasons   as   to   why   the   officers   of   the   rank   of   respondent   were
not   available.     We   find   that   the   reasons   given,   for   doing   the
same,   would   fall   within   the   exigencies   of   the   public   service.
The   scope   of   judicial   review   of   such   a   decision   is   very   limited.
Unless   it   is   found   that   the   decision   taken   by   the   authority
suffers  from  arbitrariness, irrationality  or  unreasonableness, it
would   not   be   permissible   for   us   to   sit   in   an   appeal   over   the
decision of the convening officer. The limited inquiry that would
be   permissible   is,   as   to   whether   the   reasons   recorded   are
having regard to the exigencies of the public service or not.  On
perusal   of   the   original   file,   we   find   that   the   reasons   given   are
directly concerned with the exigencies of the public service.  We
therefore do not find any merit in the said submission.  
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23. Insofar   as   the   order   of   this   Court   in   the   case   of   Ex.   Lt.
Gen.   Avadhesh   Prakash   (supra)   is   concerned,   in   the   said
case,   the   contention   made   on   behalf   of   the   petitioner   therein
was   that   the   respondents   therein   could   have   tried   to   make
Lieutenant General available.  In any case, from the said order,
it   is   not   clear   as   to   whether   the   subjective   satisfaction   as
required under  sub­rule (2) of Rule 40 of the Army  Rules was,
in fact, recorded or not.  Another reason that weighed with this
Court for interfering with the order of the learned AFT was that
the   learned   AFT   had   recorded   that   since   the   appellant   therein
had   already   retired   from   the   service,   there   was   no   illegality   in
constitution of GCM. This Court found that such a finding was
not   permissible   on   the   bare   reading   of   Rule   40   of   the   Army
Rules.
24. Insofar as the merits of the present matter are concerned,
Shri Balasubramanian submits that after  the learned AFT had
concurred   with   the   findings   of   the   GCM   that   the   charges
against the respondent stood proved, there was no occasion for
the learned AFT to have interfered with the penalty imposed on
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the respondent.   Insofar as the appeal of the appellants herein
is   concerned,   the   learned   Senior   Counsel   for   the   appellants
submitted that since there are concurrent findings of fact with
regard   to   the   charges   being   proved,   no   interference   would   be
warranted   in   the   appeal   of   the   appellants.     He   therefore
submitted   that   the   appeal   of   the   appellants   deserves   to   be
allowed and the  Transferred Case (Criminal) No. 1 of 2017 filed
by   the   petitioner   (respondent   in   Criminal   Appeal   No.   2169   of
2014) be  dismissed.
25. Shri Tyagi, learned counsel appearing for the respondent,
on the contrary, would submit that the findings as recorded by
the GCM as well as the learned AFT are recorded on the basis
of   conjectures   and   surmises.     He   submitted   that   in   the   GCM,
the   standard   that   is   required   to   be   followed   is   of   a   criminal
trial.   It is therefore submitted that unless the charges against
an   officer   are   proved   beyond   reasonable   doubt,   he   cannot   be
held   guilty   in   GCM.     It   is   submitted   that   like   a   criminal   trial,
the   benefit   of   doubt   must   go   to   the   officer   and   not   to   the
prosecution.   He, however, submitted that in the present case,
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the   GCM   as   well   as   the   learned   AFT   have   given   the   benefit   of
doubt to the prosecution.
26. He   submits   that   as   a   matter   of   fact,   not   a   single   charge
stands   proved   beyond   reasonable   doubt   against   the
respondent.     However,   the   respondent   has   been   convicted   by
the   GCM   without   any   evidence.     He   therefore   submitted   that
the   Transferred   Case   (Criminal)   No.   1   of   2017   filed   by   the
petitioner   (respondent   in   Criminal   Appeal   No.   2169   of   2014)
deserves to be allowed and the appeal filed by the appellants be
dismissed.
27. With   the   assistance   of   the   learned   counsel   for   the
appellants   and   the   respondent,   we   have   perused   the   order
passed   by   the   GCM   as   well   as   the   learned   AFT   and   the
materials placed on record.  
28. At   the   outset,   we   may   state   that   there   are   inherent
limitations   on   the   jurisdiction   of   this   Court   and   it   will   not   be
permissible   to   reappreciate   the   evidence   as   recorded   by   the
GCM   unless   this   Court   finds   that   the   material   factors   have
been   either   ignored   or   the   evidence   that   has   come   on   record,
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has   been   appreciated   in   a   totally   erroneous   manner.     With
these limitations in mind, we will consider the materials placed
on record.  
29. Though   nine   charges   have   been   framed   against   the
respondent, he has been found guilty insofar as charges No. 1,
3,  4,  5,  7 and  9 are  concerned.   He  has  been  found  not  guilty
insofar  as  charges  No.  2, 6  and  8  are concerned.    The  learned
AFT   has   also   concurred   with   the   finding   of   fact   holding   the
respondent   guilty   of   the   aforesaid   charges.     The   learned   AFT
has   observed   that   the   evidence   led   with   regard   to   all   these
charges   is   mostly   common   and   as   such,   has   decided   all   the
said points together.
30. The learned AFT has come to a finding of fact that though
the contracts were finalized by the Army Purchase Organization
(hereinafter   referred   to   as   the   “APO”),   insofar   as   the
provisioning   of   dry   supplies   for   the   troops   is   concerned,   it
found   that   both   the   APO   as   well   as   the   Directorate,   are
concurrently   and   co­jointly   responsible   for   the   monitoring,
examination and the progress of the contracts.
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31. The respondent, at the relevant time, was holding the post
of   DGST.     Though   nine   charges   have   been   framed   against   the
respondent,   they   are   inter­connected   and   are   related   to   three
transactions as under:
(i) That the respondent had agreed to the proposal of M/s
Gujarat Co­operative Grain Growers Federation Limited
(hereinafter   referred   to   as   “M/s   GRAINFED”)   for
addition   of   two   more   tendering   stations   at   Gadarwara,
District   Narsingpur,   Madhya   Pradesh   and   Narsingpur
in Madhya Pradesh in addition to 14 tendering stations
already mentioned in the contract.  The charge was that
this was done with an intent to defraud the State;
(ii) That   though   the   respondent   had   enquired   in   the
complaint   dated   4 th
  April   2005   alleging   fake   tendering
and presence of Kesari Peas and Akra, which were unfit
for   human   consumption,   he   had   omitted   to   ensure
investigation of the alleged presence of Kesari Peas and
Akra   in   Dal   Masur   Whole.     Therefore,   the   respondent
was   instrumental   in   feeding   the   food   to   the   Army
18

Personnel,   which   was   not   as   per   the   standards.     As   a
continuation of the same transaction, with an intent to
defraud,   he   had   agreed   to   the   proposal   of   M/s
GRAINFED   for   upgradation   of   Dal   Masur   Whole
supplied   by   the   firm   knowing   that   the   said   item   had
been found and declared unfit for human consumption;
and
(iii) That   the   respondent   had   approved   deviation   with
relaxation   to   M/s   PUNSUP   Limited   and   M/s   MMTC
Limited of  permitting  350­400 grains per  100  grams of
Kabli Chana as against 300­350 grains per 100 grams,
and that this was done with an intent to defraud.
32. Insofar as the first charge is concerned, the findings of the
learned   AFT   would   reveal   that   the   request   of   M/s   GRAINFED
for   two   additional   tendering   stations   at   Gadarwara   and
Narsingpur  was  made  on  3 rd
  March 2005 to  the  Chief  Director
of   Purchase   (hereinafter   referred   to   as   the   “CDP”),   APO.     The
APO   forwarded   the   said   request   for   comments/views   of   the
Directorate   vide   communication   dated   9 th
  March   2005.     The
19

perusal   of   the   orders   of   the   learned   AFT   as   well   as   the   GCM
would reveal that, after accepting the recommendation of PW­6­
Major General (Retd.) S.C. Mohan, the respondent did not agree
to   the   request   of   M/s   GRAINFED.     However,   the   proposal   was
put   up   before   him   for   reconsideration   pursuant   to   the   note
prepared   by   PW­13­Col.   (Retd.)   N.K.   Yadav,   Director
Provisioning,   stating   that   the   entire   quantity   against   the
acceptance   of   tender   has   already   been   tendered   at   Gadarwara
within the delivery  period.   The respondent therefore agreed to
the   request   of   M/s   GRAINFED   for   two   additional   tendering
stations   and   the   decision   of   the   respondent   was   intimated   to
the APO.
33. With regard to the aforesaid charge, it will also be relevant
to   refer  to   the  order  passed  by  the   learned  AFT, in   the  case of
Brig   P.S.   Gill   v.   Union   of   India   and   Others 3
.     In   the   said
case, the petitioner therein (Brig. P.S. Gill), at the relevant time,
was   working   as   CDP,   APO.       The   relevant   portion   of   the   said
findings are as under: 
3   OA No. 147 of 2010 dated 24 th
 May 2011
20

“2.   From   a   bare   reading   of   the   aforesaid   charges   it
appears   that   the   petitioner   in   the   capacity   of   his
being   Chief   Director   of   Purchase,   Army   Purchase
Organisation,   Ministry   of   Defence   contrary   to
APO/MOD   Consolidated   Order   No.3   of   1987,   with
intent   to   defraud/improperly   approved   addition
of   two   more   tendering   stations   namely
Gadarwara   and   Narsingpur   in   Madhya   Pradesh .
For   the   purpose   of   drawing   the   charges,   reliance
appears to have been placed by the respondents on
the   exhibits,   the   details   of   which   may   be   charted
out as under:
Exhibit Page Para
L 239 ­
LXIX 294 ­
XXVII 193 2
VI 141­143 1 and 2
II 83­85 ­
V 139­140 ­
LXXV 303­305 ­
XXVIII to XXXIII/I 194­204/80 ­
From the perusal of the exhibits noted above, there
is   nothing   to   show   that   the   addition   of   two
tendering stations was not within the powers of the
petitioner. Nothing could be pointed out to show the
relevancy of these documents for making out prima
facie   case   against   the   petitioner.   Further   the
statement of the witness namely, PW1 Brig PPS Bal
of   CDP   Army   Purchase   Organisation,   AHQ   New
Delhi   was   scrutinised.   He   was   categorical   in   his
statement   that   he   was   aware   of   the   Consolidated
Order  No.3 of   1987  (Ext.2)  permits  the   inclusion  of
additional   tendering   station.   Ext.1   is   related   to   the
letter dated 06.10.2008 written to M/s M.P. Trade &
21

Investment   Facilitation   Corporation   Ltd.   for
"procurement   of   1000   MT   Gram   Crushed   (Kibbled)
against   A/T   even   no.   dated   05.12.2007   from   M/s.
MPTRIFAC­Addition   of   Tendering   Station­Delhi.
This   one   example   was   quoted   by   the   witness.   This
itself   indicates   that   the   addition   of   tendering
stations   is   within   the   discretion   of   the   competent
authority   to   the   effect   that   "stores   can   be   tendered
at   Delhi   as   a   special   case   in   the   subject   A/T,
subject   to   the   condition   that   any   additional
expenditure   incurred   by   the   purchaser/savings
accruing to the supplier, on account of this addition
of   tendering   Station,   shall   be   reimbursed   by   the
Supplier   to   the   Government"   which   is   also   exactly
the   requirement   mandated   in   defence   Consolidated
Order   No.3   of   1987.   Further   with   regard   to   the
making   of   the   additional   tendering   stations   by   the
accused­petitioner   as   per   the   reply   of   PW1,   the
contract   was   amended   as   required   by   Government
of  India   orders   and  the   amended   contract  was  also
communicated   by   Exh.   VI.   There   was   no   objection
to such acceptance of tendering stations from Audit
authorities   or   by   PCDA.   Apart   from   it,   witness   also
makes  it  clear   in   his   answer   to   Question   No.4   that
the   tenderer   has   option   to   select   stations   where   he
can tender stores as per the contract. The APO does
not   dictate   the   tendering   stations.   However,   they
must   lend   themselves   to   ease   of   inspection   and
movement of stores to consignee depots. Lastly this
witness also clarified that by making the addition of
two   tendering   stations   no   monetary   benefits   could
be   acquired   by   petitioner   nor   there   was   any   extra
expenditure borne out by the respondents owning to
acceptance   of   two   new   stations   by   the   accused­
petitioner.   Further   by   adding   these   two   new
stations, no violation of any rule or order was made
by the accused petitioner."
22

34. It could thus be seen that the very same AFT has come to
a   finding   that  the  CDP,   APO  was   within   the   powers  to   include
additional   tendering   stations.     It   has   further   been   found   that
there was no objection to acceptance of such tendering stations
from   Audit   Authorities   or   by   CDP,   APO.     It   is   further   to   be
observed   that   the   learned   AFT   has   clearly   noted   that   the
Consolidated   Order   No.   3   of   1987   permitted   inclusion   of
additional   tendering   station   subject   to   the   condition   that   the
additional   expenditure   incurred   by   the   purchaser/savings
accrued to the supplier, on account of this addition of tendering
station, shall be reimbursed by the Supplier to the Government.
There was a specific finding  that on account of addition of two
tendering   stations,   neither   any   monetary   benefits   could   be
accrued to  the petitioner  therein (Brig  P.S.  Gill), nor  there was
any   extra   expenditure   borne   out   by   the   Army   owing   to
acceptance   of   two   new   stations   by   the   petitioner   therein   (Brig
P.S.   Gill).     In  any   case,   it  is  clear   from   the   said   order  that   the
authority to accept such additional tendering stations was with
the   CDP,   APO.     In   view   of   this   specific   finding   of   the   learned
AFT recorded in the order dated 24 th
 May 2011, we find that the
23

finding,   to   the   contrary,   recorded   by   another   Bench   of   the
learned   AFT   vide   the   impugned   order   dated   10 th
  October   2013
in   the   case   of   the   present   respondent,   would   not   be
sustainable.
35. In any case, it is not even the case of the appellants herein
that   any   loss   was   caused   to   the   Army   on   account   of   such
decision   or   any   additional   benefit   was   accrued   to   M/s
GRAINFED by such deviation.   This is apart from the fact that
the   Consolidated   Order   No.   3   of   1987   itself   required   any
additional   expenditure   incurred   by   the   purchaser/savings
made   by   the   supplier   to   be   reimbursed   by   the   Supplier   to   the
Government.     As   such,   the   findings   of   the   learned   AFT   that
there was an intention on the part of the respondent to defraud,
in our view, would not be sustainable.
36. Insofar   as   the   second   charge   is   concerned,   it   is   with
regard   to   the  respondent  not   taking   action   on   the   basis  of   the
anonymous complaint dated 4 th
 April 2005.  The related charge
is that though the Dal Masur Whole was found to   also contain
24

Kesari Peas and Akra, the respondent cleared the samples and
the supply of said Dal Masur Whole was cleared.  It is the case
of the appellants that on account of this, the Dal Masur Whole,
which   was   not   as   per   the   standards,   was   fed   to   the   Army
Personnel.   It is their further case that the respondent also did
not take immediate steps for preventing the consumption of the
same.   It   is   to   be   noted   that   after   the   receipt   of   the   said
anonymous  complaint, the  samples were sent  for  analysis and
the   presence   of   traces   of   Kesari   Peas   was   revealed   during
analysis   of   samples   on   13 th
  May   2005.     The   respondent
thereafter issued instructions to freeze the stocks.   It is further
to   be   noted   that   the   DGST,   vide   order   dated   12 th
  April   2005,
had   directed   a   Departmental   Court   of   Inquiry   to   inquire   into
whether   there   were   any   irregularities   in   tendering/inspection
procedure of Dal Masur Whole offered by M/s GAINFED.  It will
be apposite to refer to the said order dated 12 th
 April 2005:
“1.   A   departmental   Court   of   Inquiry   composed   as
under   will   assemble   at   the   place,   date   and   time   to
be   fixed   by   the   Presiding   Officer   to   investigate
whether   there   were   any   irregularities   in
tendering/inspection   procedure   of   Masur   Whole
offered   by   M/S   Gujarat   Coop   Grain   Growers’
Federation   Ltd.   for   inspection   by   CFL   ASC,   Delhi
25

against   AT   No.J­13028/1/4­03/45­RP/2005­PUR
III dated 28 Feb 2005:­
Presiding Officer  – Brig V Marwaha
         DDST, HQ Delhi Area
Technical Members – Col SC Chakravarty
   Dir ST (FI)
2.   The   court   will   specifically   examine   the   following
issues:­
(a) Whether   the   complete   qty   of   979.600   MT   was
tendered by 15 Mar 2005.  If so why was the BIO
instructed to inspect only 440.800 MT.
(b) Was   it   ascertained   by   the   BIO   that   the   complete
qty   i.e.   979.600   MT   has   been   tendered   and   a
report made to that effect.
(c) Why   did   the   BIO   not   carry   out   sampling   of   the
consignment,  and   why   were   the   samples   of   bags
rejected,   not   brought   for   the   perusal   of   CO/Lab
analysis.
(d) The decision of CO, CFL ASC Delhi to repack and
retender the stocks as and when ready when the
AT   Note   is   against   Risk   Purchase;   resulting   in
automatic extn of DP.
(e) The acceptance of a cert from the contractor that
the balance of the consignment ie, 538.400 MT is
packed   in   the   same   quality   bags   as   the   440.800
MT; and thereby ordering its rebagging.
CONFIDENTIAL
3. The Court will examine all associated issues, and
pin point responsibility for lapses if any.
26

4. The proceedings duly completed will be submitted
personally to ADGST (SM) by 19 Apr 2005.”
37. It   could   thus   be   seen   that   the   Court   of   Inquiry   was
directed   to   examine   all   associated   issues   and   pin   point
responsibility for lapses, if any. It is thus clear that the finding
that   the   respondent   had   failed   to   take   cognizance   of   the
complaint and direct an inquiry with that regard, is contrary to
the material placed on record.
38. It   is   further   to   be   noted   that   the   GCM   has   itself,   in   its
order   dated   18 th
  February   2011,   come   to   a   conclusion   that
560.727.380   Metric   Tons   of   Dal   Masur   Whole   was   declared
gone   bad   within   warranty   period   for   which   recoveries   were
made from M/s GRAINFED.
39. That   leaves   us   with   the   third   charge   with   regard   to   the
relaxation   being   granted   to   M/s   PUNSUP   Limited   and   M/s
MMTC   Limited   in   acceptance   of   tender   dated   26 th
  June   2005,
vide   which   350­400   grains   per   100   grams   of   Kabli   Chana   was
permitted on price reduction of 0.5% instead of 300­350 grains
per   100   grams.     It   is   to   be   noted   that,   leave   apart   the
respondent   or   anyone   else   gaining   from   the   said   relaxation,
27

there   is   a   specific   finding   that   on   account   of   the   decision   of
reducing 0.5% contract amount for such a relaxation, there has
been   a   benefit   to   the   public   exchequer.     It   will   be   relevant   to
refer to the finding  of the learned AFT in the case of   Brig P.S.
Gill  (supra): 
“There is no dispute on the point that DGST was the
competent   authority   for   making   relaxation   in   the
specification.   There  is   also  ample   evidence   that   the
DGST   being   competent   authority   permitted   to
despatch   400   grains   per   100   gms.   in   the   place   of
300­350 grains per 100 gms. DGST also appears to
have   made   reduction   of   0.5%   from   the   contract
amount, in that the Government money to the tune
of   Rs.7,57,480.16   was   saved   in   the   matter   of
supplier   M/s.   Punjab   State   Civil   Supplies
Corporation Ltd pertaining  to Charge Nos. 3 and 4.
Similarly,   within   his   powers,   he   granted   relaxation
to M/s. MMTC to the tune of Rs.4,48,050.00.”
40. It could thus be seen that the learned AFT has specifically
come   to   a   finding   that   on   account   of   such   decision,   public
money   to   the   tune   of   Rs.7,57,480.16   was   saved   in   the   case   of
supplier   M/s   Punjab   State   Civil   Supplies   Corporation   Ltd.
Similarly, an amount of Rs.4,48,050/­ was saved in the case of
relaxation granted to M/s MMTC Limited.
28

41. It is not the case of the appellants that the Kabli Chana so
supplied   was   of   inferior   quality   or   not   as   per   the   standards.
The   only   allegation   is   that   the   relaxation   which   was   granted
was   with   regard   to   number   of   grains   that   every   100   grams
should   contain.     On   the   contrary,   on   account   of   reduction   in
price,   there   has   been   a   substantial   saving   to   the   public
exchequer, leave aside any pecuniary gain to the supplier.  As a
matter   of   fact,   even   the   GCM   in   paragraph   (26)   held   that   the
respondent   was   entitled   to   benefit   of   doubt   with   regard   to   his
intent   but   has   found   that   the   said   act   was   prejudicial   to   good
order and military discipline. 
42. In   any   case,   it   is   to   be   noted   that   clause   6   (a)(iv)   in   the
tender inquiry of the APO, which has been in vogue for decades,
permitted  the  same to  be done.   It  will  be relevant  to   refer  the
same, which reads thus: 
“6   (a)(iv).   When   an   appeal   is   preferred   by   the
supplier   against   the   decision   of   the   inspecting
officer the final finding of the appellate authority viz.
QMG's Branch, ST­7/8 will automatically supersede
the   original   report   of   the   Inspecting   Officer
irrespective   of   the   fact   whether   the   said   inspecting
officer   recommended   the   consignment   to   be
accepted   subject   to   quality   allowance   price
29

reduction   etc.   In   the   event   of   any   supplies   being
found not conforming to the prescribed specification
but being considered of acceptable quality the Chief
Director   of   Purchase   may,   at   his   sole   discretion,
accept   the   supplies   subject   to   such   reduction   in
price as he considers reasonable, in the light of the
defects   found   in   the   supplies   or   the   quality   of   the
supplies accepted. In case, the reduction in price is
up to 5%, the consignment will be accepted without
any reference to the contractor for acceptance of the
price reduction and the contractor will not raise any
objection   thereto.   However,   if   any   consignment   is
acceptable   on   price   reduction   over   5%   the   consent
of the contractor will be obtained before acceptance
of supplies."  
43. It   could   thus   be   seen   that   the   finding   in   that   regard,   in
our view, is also not sustainable. It will also be apposite to refer
to   the   following   observations   of   the   learned   AFT   in   the
impugned order: 
“38.   However,   we   are   of   the   opinion   that   though
these charges stand proved which show that he had
failed to perform  the duties of the post of which  he
was   assigned   the   duties   and   had   done   such   acts
prejudicial to good order and military discipline and
he cannot escape the responsibilities in this regard.
It   is   true   that   his   acts   were   prejudicial   to   army
discipline   and   he   had   committed   such   acts   with
intent   to   defraud   but   it   cannot   be   said   that   he
actually committed fraud or did any such act which
resulted   in   actual   loss   or   wrongful   gain   to   any
person   though   his   acts   lead   to   an   inference   that
attempts   were   made   to   cause   a   wrongful   gain   and,
therefore, he cannot escape his liabilities.”
30

44. It   could   thus   clearly   be   seen   that   the   learned   AFT   has
come to a conclusion that it cannot be said that the respondent
has   actually   committed   fraud   or   did   any   such   act,   which
resulted in actual loss or wrongful gain to any person. However,
in the same breath, the learned AFT observes that the acts lead
to   an   inference   that   attempts   were   made   to   cause   a   wrongful
gain,   and   therefore,   the   respondent   cannot   escape   his
liabilities.     Observing   this,   the   learned   AFT   comes   to   a   finding
that   the   offence   under   Section   52(f)   of   the   Army   Act,   1950,
which reads thus, was made out against the respondent: 
“ 52.  Offences in respect of property.­
…..
(f).    does  any  other   thing   with   intent  to  defraud,   or
to   cause   wrongful   gain   to   one   person   or   wrongful
loss to another person.”
45. We   are   afraid   as   to   whether   such   a   finding   would   be
sustainable in law.   The learned AFT has specifically come to a
finding that the respondent has not committed any fraud or did
not   commit   any   act   which   resulted   in   actual   loss   or   wrongful
gain to any person.   We are unable to appreciate as to on what
basis the learned AFT comes to a conclusion that the acts lead
31

to   an   inference   that   the   attempts   were   made   to   cause   a
wrongful   gain.     The   finding   as   recorded   by   the   learned   AFT   is
totally contrary to the material placed on record.
46. We,   therefore,   find   that   the   orders   passed   by   the   learned
AFT as well as the GCM are not sustainable in law.  The appeal
of the appellants deserves to be dismissed and the Transferred
Case (Criminal) No. 1 of 2017 filed by the petitioner (respondent
in Criminal Appeal No. 2169 of 2014) be allowed.
47. In the result, we pass the following order:
A. Criminal Appeal No. 2169 of 2014:
(i) Criminal   Appeal   No.   2169   of   2014   filed   by   the
appellants is dismissed. 
B. Transferred Case (Criminal) No. 1 of 2017:
(i) Transferred   Case   (Criminal)   No.   1   of   2017   filed   by   the
petitioner   (respondent   in   Criminal   Appeal   No.   2169   of
2014) is allowed;
(ii) The order dated 18 th
 February 2011 passed by the GCM
holding   the   petitioner   guilty   and   imposing   penalty   on
32

him   and   the   impugned   order   dated   10 th
  October   2013,
passed by the learned AFT  are quashed and set aside;
(iii) The   petitioner   is   acquitted   of   all   the   charges   levelled
against him; and
(iv) The   petitioner   would   be   entitled   to   all   pensionary   and
consequential   benefits   in   accordance   with   law.     The
arrears of such benefits shall be computed and paid to
the petitioner within a period of three months from the
date of this judgment.
…..…..….......................J.
                                                      [L. NAGESWARA RAO]
      …….….........................J.
[B.R. GAVAI]
NEW DELHI;
MARCH 23, 2022.
33