India’s bureaucracy appears to be in a state of shock following the conviction of former coal secretary HC Gupta in a coal block allocation case. On Friday, a special Central Bureau of Investigation court in New Delhi found Gupta and two officers from the Union Ministry of Coal guilty of charges under the Prevention of Corruption Act. Gupta was coal secretary between December 2005 and November 2008. On Monday, the court awarded the three men two years in jail. They were subsequently granted bail.

During the trial, which lasted three years starting 2014, several questions cropped up. For instance, since coal block allocation was a decision made by an inter-ministerial screening committee, could individual officers be punished for a collective decision taken by this panel?

The court decided that in this particular case, the fault lay with the bureaucrats, who, by their acts of omission – of ignoring guidelines – facilitated the allocation of a coal block in Madhya Pradesh to a company that was ineligible under the rules.

In the process, the court seemed to have given a reprieve to former Prime Minister Manmohan Singh, who held the coal portfolio during the relevant period and approved the recommendations of the screening committee headed by Gupta.

The judgment was also unique in the sense that the court has, in the absence of clear documentation of a money trail, relied primarily upon circumstantial evidence to prove the charges. The court has shown that even without concrete evidence that the accused had derived pecuniary benefits from a particular act, the culpability of those involved could still be asserted.

Dark history

In 2012, following a damning report by the Comptroller and Auditor General of India, which said that the Centre incurred a loss of Rs 1.86 lakh crore due to the faulty process of allocation of coal blocks during the United Progressive Alliance regime of 2004-’09, the Union government decided to hand over the case to the CBI for investigation. Several cases were subsequently filed based on preliminary enquiries.

In August 2014, the Supreme Court declared illegal 214 coal block allocations made from 1993. The court termed the entire process, which had no competitive bidding for a crucial natural resource, arbitrary.

Two months later, a CBI court in New Delhi decided to pursue a case that the investigating agency wanted to close for want of evidence. The matter pertained to the allocation of the Thesgora-B/Rudrapuri coal block in Madhya Pradesh to Kamal Sponge Steel and Power Private Limited in 2008.

The allegation was that the officials of the coal ministry and the company hatched a conspiracy to circumvent established guidelines and allocate the coal block to the company despite its ineligibility.

According to the chargesheet filed by the CBI, the company did not attach its audited accounts of the three previous years as required. This was a fatal flaw as the guidelines clearly stated that incomplete applications should be rejected at the initial stage itself. Further, it had also misrepresented its production capacity to ensure that it qualified for the coal block.

However, despite these faults, the screening committee headed by Gupta decided to forward Kamal Sponge Steel and Power Private Limited’s applications to the other relevant ministries and the government of Madhya Pradesh. Other central ministries, such as the Union Ministry of Steel, come into the picture whenever the coal blocks allotted are for the production of material that comes under their jurisdiction. Respective state governments are included in the process too, as the coal blocks are located in these states. In this case, it was the Bharatiya Janata Party-ruled Madhya Pradesh.

The CBI charged that the government officers, including Gupta, deliberately forwarded the applications despite knowing that they were incomplete and misleading.

In his defence, Gupta claimed that as secretary of the coal ministry, he was in no position to scrutinise every application personally as the scope of his duties was too large to allow time for such a process. In all there were more than 1,400 applications for 38 coal blocks that the committee considered. The duty of ensuring that applications fulfilled all criteria belonged to the relevant section officers in the ministry, and that he merely forwarded the applications in good faith. Even here, Gupta argued that the coal ministry did not have enough staff strength to scrutinise each and every application.

Gupta also pointed out that nowhere during the process did anyone put up a dissent note against the forwarded applications and their incomplete nature. All decisions of the committee, he said, were unanimous and there was no malafide intention in the allocation of coal blocks.

Kamal Sponge Steel and Power Private Limited, on the other hand, said that its director Pawan Kumar Ahluwalia, who was also convicted along with the government officers, merely signed the applications believing that officials in the firm would have done their jobs of filling up the applications diligently.

Former coal secretary HC Gupta.

What the judgement said

In his 350-page judgment, Special Judge Bharat Parashar rejected all these arguments. The judgment said as secretary of the ministry, Gupta’s duty was total and undivided. Though a secretary delegated a portion of his work to others, it did not mean that he was devolved of his responsibilities. The same went for the other two officials convicted. These officers, KS Kropha and KC Samaria, were under secretaries in the coal ministry when the allocation in question was made.

The judge in a way reversed an important argument made by the defence when it claimed that the three officials did not personally scrutinise the submissions of all other companies, and not just Kamal Sponge Steel and Power Private Limited’s application. The defence argued that this was proof that no special treatment was given to any company, which could point to a conspiracy.

The judge, on the other hand, said the fact that none of the applications were tested on the basis of the guidelines actually strengthened the case against Gupta and the two officers and made the following observations:

“Thus from the overall facts and circumstances of the case and the manner in which the applications were dealt with in Ministry Of Coal, it will be entirely logical to infer and conclude that the accused MOC officers consciously and deliberately ignored compliance with the guidelines and that too without caring for the consequences which were likely to occur in case application of any company which is liable to be rejected being incomplete or company being ineligible on any factor, is processed further and is put at par with the applications of such other companies who were not only eligible but their applications were also complete, in as much as all the necessary documents asked for by MOC were duly annexed with the application. In fact the intention of accused MOC officers in doing so appear to be to keep the field open at the stage of initial scrutiny by not ruling out any applicant company from the zone of consideration of the Screening Committee.”

In other words, by allowing all applications, irrespective of their eligibility, to go through the process, the officers had prepared the ground for arbitrary allocations at a future point for some benefit. The committee did not even make a merit chart for the companies that could aid the selection process, something that would have exposed the flawed applications.

The judge also rejected claims that the lack of manpower was the reason the applications were not scrutinised. He said that Gupta and the two other officers were well aware that there would be a huge number of applications given the demand for coal. In the past, Gupta himself had sanctioned extra staff for particular duties when a request was made, or when the situation demanded it. In this case, no such effort was undertaken to bridge the manpower gap.

On the question of unanimity in the decisions of the screening committee, the court found that the minutes of the screening committee meetings were grossly misleading. Many officers who attended the meetings merely signed the document as proof of attendance. In such meetings, the committee usually took up applications relating to several coal blocks. The pertinent officers for each block would be different as the blocks are situated in different states, and the companies seeking the block might come under different Union government ministries.

However, in all minutes of the meetings, signatures from everyone, irrespective of their relevance to a particular coal block, were obtained in order to show unanimity. This came to light from the deposition of a Madhya Pradesh government official, who had signed on the minutes of meetings that discussed coal blocks outside his jurisdiction as well.

Another point was the recommendation of the Madhya Pradesh government to allot the coal block to another company, BAL Limited. The coal ministry rejected this recommendation as the company wanted the coal block to produce power while the block was earmarked for non-power use. This, however, showed that coal ministry officials had partially scrutinised the application after it came back from the Madhya Pradesh government.

Coal minister’s role

By placing the responsibility of scrutiny entirely on the coal secretary and the screening committee of which he was the chairperson, the court provided a reprieve to former Prime Minister Manmohan Singh, who was holding the coal portfolio after former Union Coal Minister Shibu Soren resigned in 2007 when he was accused in a murder case.

Parashar made it clear that scrutiny of applications was the duty of the screening panel alone and that others could not be held responsible for it. Since the committee, in its recommendation, did not mention that Kamal Sponge Steel and Power Private Limited’s application was incomplete and that there was no scrutiny done, there was no way that Singh would have known about this. The judgment said:

“It is in these circumstances it becomes important to note that in the guidelines itself it was stated that after the Screening Committee would make its recommendation then on the basis of recommendation of the Screening Committee, Ministry of Coal will determine the allotment. However while forwarding the file to Prime Minister as Minister of Coal for approval of the recommendation of the Screening Committee, it was no where mentioned by any of the MOC officers much less by A-4 H.C. Gupta that the applications have not been checked for their eligibility and completeness. There was thus no reason in the facts and circumstances of the case for the Prime Minister as Minister of Coal  to presume that the guidelines issued have not been complied with. It is not only apparent from the record but it is certainly permissible to draw a presumption in the overall facts and circumstances of the case that Prime Minister as Minister of Coal proceeded to consider the recommendation of the Screening Committee on the assumption that the applications must have been checked in MOC for their eligibility and completeness”

Through the trial, the accused officers claimed that they themselves got to know that the applications were incomplete only after the trial began and charges were framed.

Bureaucracy disturbed

Friday’s verdict has clearly disturbed the bureaucracy. On Monday, The Times of India reported that Indian Administrative Service officers wanted Gupta to seek legal help to reverse the verdict. An official quoted anonymously said that decisions would be delayed if one bureaucrat was punished for a collective decision.

Also, officers pointed to the lack of evidence of pecuniary benefits in this case. In the absence of personal gain, should inefficiency or omission on part of the government officials be considered an act of commission?

Speaking to, former Indian Administrative Service officer EAS Sarma said that there should be protection for civil servants taking decisions in good faith. “The Prevention of Corruption Act, as it stands today, renders officers granting undue benefits to private individuals and companies liable to penal action, irrespective of whether they have made any personal gains or whether there are any mala fides,” he said. “I understand that the government is contemplating to amend the Act to protect those acting in good faith. The government should hasten action in that direction.”

Admitting that he was not aware of the facts of Gupta’s case, Sarma said that there were still many areas in which competitive bidding procedures are absent, where public functionaries taking decisions could be readily accused of impropriety.

“Unless the government sincerely addresses this aspect and opts in favour of total transparency, both civil servants and the political leadership could face allegations of malfeasance,” he said.