Titanium Company Scam : Kerala High Court Orders CBI Investigation, Says State VACB Not Equipped To Deal With International Transactions

“Resultantly, respondent No.4 is directed to issue orders entrusting the investigation in VC 01-2015/SIU-1 of VACB (Special Investigation Unit-I), Thiruvanathapuram with the CBI. Respondent Nos.5 and 6 are directed to take over the investigation in VC 01-2015/SIU-1 of VACB (Special Investigation Unit-I), Thiruvanathapuram. The CBI shall complete the investigation within six months from this date. The investigating agency is at liberty to approach this Court seeking extension of time, if found necessary.”, Justice K. Babu stated.

Allegations were raised against higher officials of Titanium Company (State Public Sector Undertaking) for hatching a criminal conspiracy to hire MECON (Central Government Public Sector Enterprise under the Ministry of Steel, Government of India) as project consultant for a government project involving more than 256 crores. It was alleged that high officials of Titanium Company gained pecuniary advantage from the project and the company faced huge losses and gained no benefit.

Justice K. Babu observed that the investigation conducted by State investigation Agency, that is, Vigilance and Anti-Corruption Bureau (VACB) has to come to a standstill as it might be unequipped to handle investigation involving interstate and international transactions.

“The investigation by the ordinary State Investigating Agency may often be quick but not well equipped to handle the interstate and international dimensions involved in the case. The investigation of the case as of now is at a standstill, mainly due to the interstate and international ramifications of the transactions involved. This is an exceptional situation where providing credibility and confidence in investigations becomes necessary.”

The Deputy Superintendent of Police, VACB Special Unit 1, Thiruvananthapuram, based on the complaint of the petitioner registered FIR under Sections 10, 11 and 13(1)(d) of the Prevention of Corruption Act, 1988 and Section 120B read with Section 34 of the Indian Penal Code.

The high officials of the Titanium Company were alleged to be involved in corruption, illegal acts and abuse of official positions for handing over the government project without proper ground study, without inviting tenders and without proper sanctions to MECON. The allegations were made against high officials of Titanium Company -Eapen Joseph (former Managing Director), Santhosh Kumar (Chief Manager, Marketing), Late A.M.Bhaskaran (Executive Director), Thomas Mathew (former Chief Commercial Manager), B. Gopakumaran Nair (Chief Commercial Manager). The VACB constituted a special team and conducted the investigation. It found that MECON paid crores of money to foreign based companies, including a Finland Based Company for purchase of machineries.

Senior Government Pleader P.Narayanan submitted before the Court that State Government decided to hand over the investigation to CBI as the case has interstate connections and international ramifications. It was submitted that VACB has limited resources to carry investigation involving MECON, a central public sector enterprise.

The Court noted that VACB was unable conduct investigation into supply of money to foreign based companies for purchase of equipments by MECON. It observed thus:

“As part of the investigation, the VACB attempted to collect the details regarding the supply of equipment for acid and copperas recovery plants from foreign companies with the assistance of Interpol. However, there was no progress in the attempt of the VACB. It has come out that since the supply aspects of equipments from foreign companies could not be verified, the VACB found it difficult to proceed with the investigation. The transactions made by MECON with the Finland-based Company and the UK-based Company are to be investigated in detail for which the VACB has no resources. The materials would reveal that the foreign countries' assistance and co- operation for assessing the project's technical feasibility is essential for further investigation.”

Accordingly, the Court allowed the petition and ordered Central Government to direct CBI to conduct the investigation.

Counsel for the petitioner: Advocates Suresh Babu Thomas, Nandagopal S.Kurup

Counsel for the respondents: Senior Government Pleader P.Narayanan, Central Government Counsel O.M.Shalina, Deputy Solicitor General S.Manu, Special Public Prosecutor Sreelal Warriar, Assistant Solicitor General P.Vijayakumar, Government Pleader Rajesh A and Public Prosecutor Rekha

Citation: 2023 LiveLaw (Ker) 658

Case title: S Jayan v State of Kerala

Case number: WP(C) NO. 20903 OF 2020

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