Gujarat High Court Refuses to Quash Forgery and Corruption Charges Against Former SEZ Officers Accused of Aiding Illegal Metal Scrap Imports Through False Inspection Report
Sanchayita Lahkar
The High Court of Gujarat, Single Bench of Justice J.C. Doshi refused to quash forgery, cheating, and corruption charges against two former officials of the Kandla Special Economic Zone (KASEZ) accused of submitting a false inspection report relating to a firm that allegedly diverted duty-free imported metal scrap into the open market. The officers, prosecuted by the CBI under the Prevention of Corruption Act and the Indian Penal Code, sought to quash the proceedings citing exoneration in departmental inquiries. The Court held that such pleas could not be entertained under Article 226 and dismissed the petition as legally untenable.
The case arose from allegations concerning the functioning of a unit operating within the Kandla Special Economic Zone (KASEZ), which had obtained permission to import metal scrap duty-free for export-oriented manufacturing. It was alleged that the unit fraudulently diverted imported materials into the domestic market and fabricated export documents, causing loss to the government. Two officers serving on deputation as Officers on Special Duty in the office of the Development Commissioner, KASEZ, were later implicated in the CBI charge sheet for offences under Sections 120B, 420, 467, 468, and 471 of the Indian Penal Code, and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988.
The prosecution’s case rested on a joint inspection report submitted by the two officers in July 2002, which recorded that machinery was installed and that two of three furnaces at the industrial unit were operational. The CBI alleged that the report was misleading and that the officers failed to verify the unit’s actual manufacturing capacity, thereby facilitating the misuse of the duty-free import scheme. The officers contended that the report was prepared in compliance with official directions and that no falsity or criminal intent was involved.
The petitioners applied for discharge before the Special CBI Court, asserting that the allegations lacked evidentiary support and that one of them had already been exonerated in departmental proceedings on identical charges. The CBI opposed the applications, maintaining that sufficient material existed to justify prosecution and that departmental clearance did not absolve criminal liability. After the discharge applications were rejected, the petitioners approached the High Court under Article 226 of the Constitution seeking to quash the proceedings.
The Court observed that “the petitioners were fully conscious of the express bar contained in Section 19(3)(c) of the Prevention of Corruption Act, 1988, which precludes the grant of stay of proceedings or entertainment of revision against interlocutory orders.” It further stated that “what could not have been achieved under Sections 397 and 401 Cr.P.C. cannot be permitted to be attained sub silentio through the writ jurisdiction of this Court under Article 226 of the Constitution.”
The Court relied upon the Supreme Court’s judgements in Satya Narayan Sharma v. State of Rajasthan (2001) and State through Special Cell, New Delhi v. Navjot Sandhu alias Afshan Guru (2003), stating that High Courts ought not to use inherent or writ jurisdiction to stall proceedings before special courts constituted under the Prevention of Corruption Act. Quoting from Satya Narayan Sharma, the Court noted: “Thus in cases under the Prevention of Corruption Act there can be no stay of trials... However, even if petition under Section 482 Criminal Procedure Code is entertained there can be no stay of trials under the said Act.”
Justice Doshi also cited Neeta Singh v. State of Uttar Pradesh (SLP (Criminal) No. 13578 of 2024), wherein the Supreme Court held that once a charge sheet is filed and cognizance taken, judicial orders of criminal courts are not amenable to writ jurisdiction. The judgment quoted: “It is entirely within the discretion of a High Court whether to interfere or not when other remedies are available... If a judicial order passed by a civil court cannot be challenged in a writ petition under Article 226, a fortiori, a judicial order passed by a criminal court cannot also be challenged in a writ petition under Article 226.”
On the petitioners’ claim that departmental exoneration should terminate criminal prosecution, the Court noted that “the argument advanced by learned Senior Advocate on the ground of departmental exoneration is wholly devoid of legal substratum and cannot be countenanced.” Justice Doshi recorded that “the petition, when read as a whole, is confined to assailing the order of the learned CBI Court rejecting the discharge application, and does not traverse any other substantive grounds warranting interference under Article 226.”
The Court concluded that the petition sought to indirectly appeal against the Special Court’s order and that “the petition, as framed and filed, is fundamentally misdirected and bereft of any sustainable cause to invoke the extraordinary writ jurisdiction of this Court.”
Justice Doshi stated: “In view of the foregoing conspectus, it unequivocally emerges that the petition, as framed and filed, is fundamentally misdirected and bereft of any sustainable cause to invoke the extraordinary writ jurisdiction of this Court. Consequently, the petition, being not maintainable in the eyes of law, stands DISMISSED. Interim relief, if any, granted heretofore, stands vacated forthwith.”
Advocates Representing the Parties:
For the Petitioners: Mr. Harsha R. Jadav and Mr. Y.V. Vaghela, Advocates for the Applicants.
For the Respondents: Mr. R.C. Kodekar, Advocate for the CBI, and Mr. Chintan Dave, Additional Public Prosecutor for the State of Gujarat.
Case Title: Chirala Sesha Srinivas & Anr. v. State of Gujarat & Anr.
Neutral Citation: 2025: GUJHC:61152
Case Number: R/Special Criminal Application (Quashing) No. 5364 of 2014
Bench: Justice J.C. Doshi
