J&K INSURANCE SCAM | HC declines to quash CBI’s FIR
Srinagar, Mar 27: The High Court of J&K and Ladakh Wednesday declined a plea by M/S Trinity Re-Insurance Brokers Limited to quash an FIR the Central Bureau of Investigation (CBI) has registered against the company related to allegations of malpractices in awarding of a contract for the group medical insurance scheme for government employees in J&K.
The CBI has registered two FIRs in connection with corruption allegations levelled by former J&K Governor Satya Pal Malik in the awarding of contracts for the group medical insurance scheme for government employees and work related to the Kiru hydroelectric power project in the erstwhile State.
M/S Trinity Re-Insurance Brokers Limited through its director, Harshit Jain in its plea before the court had sought intervention for quashing FIR No RC1232022A0004 dated April 19, 2022, registered by the CBI at the instance of the J&K government under Section 120-B (Criminal conspiracy) read with Section 420 (cheating) of J&K Penal Code (Ranbir Penal Code) and under Section 5(2) r/w Section 5(1)(d) of the J&K PC Act.
M/S Trinity Re-Insurance Brokers Limited had been selected by the J&K government to act as broker and in pursuance of the this assignment, tenders were floated by the company on behalf of the government and Reliance General Insurance Company Limited (RGICL) was selected as insurer to design and implement the Group Mediclaim Healthcare Insurance Policy for all the erstwhile State government employees including their dependant family members for a period of three years.
According to the company, an agreement was entered into between it and the government on November 27, 2017.
A tender was floated by the Finance Department through the petitioner company for appointment of insurance company for its Group Mediclaim Healthcare Insurance Policy but due to poor response, no one could be selected and fresh tenders were floated by the Finance Department for the purpose on June 1, 2018.
The RGICL was declared as the lowest bidder and finally was recommended for issuance of a Letter of Award.
The company pleaded that it had not received any amount from the J&K government but received remuneration from RGICL only for a period of three months as brokerage charges in terms of the agreement.
It said that subsequently the agreement was terminated abruptly vide notice dated November 30, 2018, by J&K’s Finance Department without assigning any justification and thereafter an investigation was carried out by the Anti-Corruption Bureau (ACB) in respect of alleged malpractices in awarding the aforesaid contract to RGICL and “after thorough investigation, the ACB concluded that no irregularity was found in the matter”.
In its response, the CBI said that M/S RGICL was selected as Insurer for Group Mediclaim Insurance of employees and pensioners of the J&K government in the year 2018 by violating the Financial Rules and an amount of Rs 61,43,78,800 was released in favour of the company before signing of the agreement.
“M/S RGICL has paid any amount of Rs 4,36,07,033 to the petitioner as brokerage out of the premium received from the government. The J&K government had deducted the premium amount from the salaries of lakhs of government employees and received the premium amount from the pensioners as well,” the CBI said.
A bench of Justice Rajnesh Oswal after hearing the Trinity Re-Insurance Brokers Limited through its counsel and DSGI, T M Shamsi for the CBI rejected the plea to quash the FIR against the company.
“From the principles laid down by the apex court, it is clear that the High Courts should refrain from interfering with the investigation when the facts are hazy and not clear. The investigation should not be scuttled at the initial stage and quashing of FIR or complaint is not a rule but an exception,” a court said while relying on a batch of Supreme Court judgments.
The aggrieved broker company had based its plea to challenge the FIR on several grounds.
About the company’s contention that there are no allegations against it in FIR in respect of the commission of any offence, the court said: “This is an undisputed fact that the premium paid to the RGICL was deducted from the salaries of the government employees and an amount of Rs 61.44 crore was paid to M/S RGICL as the first instalment of premium and out of that premium, an amount of Rs 4,36,07,033 has been admittedly received by M/S Trinity Reinsurance Brokers Limited as brokerage.”
It said that the FIR was registered by respondent No 1 pursuant to the communication dated March 23, 2022, and the office memoranda dated February 10, 2022, of the Finance Department, Codes Division, Government of J&K, Civil Secretariat, Jammu, forms part of the said communication.
“The perusal of the communication dated February 10, 2022, reveals certain allegations in respect of the award of contract to RGICL without e-tendering process and that changes were made in the agreement with the petitioner after the agreement was signed, have been leveled,” the court said.
“So far as the present case is concerned, there are allegations levelled against the petitioner and other government officials as well as against RGICL which are required to be probed in detail and at this stage when the investigation has not reached the final stage and the investigating agency is still in the process of gathering evidence, the FIR cannot be quashed.”
It said that the facts were still hazy and not clear and as such the contention raised by the petitioner-company was mis-conceived.
“With regard to the contention by the aggrieved company that once the ACB had inquired in detail the similar allegations, the FIR under challenge could not have been registered by the CBI at the instance of J&K governments GAD,” the court said.
“This court has examined the record produced by the CBI and has found that the CBI is not only investigating the allotment of the contract to M/S RGICL but also the engagement of the petitioner company as an insurance broker. This court will not like to comment in respect of the mode and manner in which the petitioner was engaged as an insurance broker at this stage because the matter is still being investigated by respondent No 1 (CBI Delhi). This aspect of the case was never enquired into by the ACB, J&K. Therefore, the contention of the petitioner in this regard too is not sufficient for quashing of the impugned FIR.”
In response to the contention that there was a delay of four years in the registration of FIR, the court said: “Simply on the ground that the FIR has been registered after a huge delay, the same cannot be quashed as earlier the matter was being enquired into by the ACB which submitted its reports on November 27, 2019, and February 8, 2022.”
The court said that the contention that the CBI has no jurisdiction to investigate the cases about the erstwhile State of J&K was also misconceived given judgments passed by the Coordinate Bench of this court in cases ‘Kumar Avinav versus the Union of India’, 2023 (1) Crimes J&K 455, and ‘Major General V K Sharma and Another Versus CBI’ CRMC No 248/2016 decided on February 7, 2024.
“This court does not find any reason to show indulgence to quash the impugned FIR,” the court said and directed the CBI to conclude the investigation of the case as expeditiously as possible.
It also directed the Trinity Re-Insurance Brokers Limited to participate in the investigation and enable the CBI to conclude the investigation expeditiously.
