A 1986 CBI case over NTPC Korba bills ends forty years on, with the acquittal of two directors upheld

Justice Ravindra Kumar Agrawal found that the payments the CBI called cheating were reconciled, adjusted and recovered with penal interest by NTPC itself in 1982-83, that the truck owners who said their vehicles never went to Korba had no personal knowledge, and that nobody from NTPC ever complained.

The contract was awarded in 1980. The disputed bills were paid in 1982. The CBI registered its case in 1986, the chargesheet went before a magistrate in 1994, the conviction came in 2018, the acquittal in 2019, and on 16 October 2026 the Chhattisgarh High Court closed the file. Justice Ravindra Kumar Agrawal, sitting singly at Bilaspur, dismissed the CBI's appeal against the acquittal of S.S. Sandhu, 64, and D.J.S. Sandhu, 60, former directors of Atlantic Engineering Services Private Limited, New Delhi, who had been accused of conspiring to draw about Rs 20 lakh under an NTPC letter of credit for air-conditioning and ventilation equipment that was never delivered to the Korba thermal power project. Three of their co-accused died during the trial.

What the CBI said happened at Korba

NTPC's Super Thermal Power Project at Korba awarded Atlantic a contract in 1981 for constructing and installing the ventilation system and air-conditioning plant for its Stage 3x200 units; the award letter on record is dated 15 October 1980. Supplies began on 24 April 1981. Payment was to be made through a letter of credit routed through the State Bank of India's Parliament Street branch in New Delhi. On 17 November 1981 the Korba branch of SBI, on NTPC's application, opened a revolving letter of credit for Rs 24 lakh in Atlantic's favour.

The CBI said it received secret information that between January and November 1982 certain NTPC Korba officers conspired with Atlantic to pay about Rs 20 lakh without receiving the goods, on forged bills and vouchers, causing NTPC loss and Atlantic unlawful gain. On 2 June 1986 it registered RC 23(A)/86-08 against the company under Section 120-B read with Sections 420, 468 and 471 of the Penal Code and Section 5(2) read with 5(1)(d) of the Prevention of Corruption Act, 1947. Its case after investigation was that Atlantic presented bills to the bank for goods it had not supplied, that the firms named in the bills did not exist, and that it collected Rs 19,94,593.67 from the Parliament Street branch. The chargesheet named five directors; no NTPC officer was charged.

The Special Judicial Magistrate (CBI), Raipur framed charges under Section 420 read with Section 120-B only. The prosecution examined 32 witnesses. The accused, in their statements under Section 313, said that at meetings with NTPC officers it emerged that certain goods had been paid for but not supplied, that they refunded the money and later supplied the goods, that the accounts were settled in February-March 1983 with no grievance left, that NTPC officers physically verified every consignment before dispatch and again on arrival, and that they had completed a separate Rs 1.40 crore contract for NTPC Singrauli without complaint. Neither NTPC nor the bank had ever complained; the CBI had come four years later; and the litigation had already run some 23 years. V.S. Garewal, P.N. Handa and H.S. Siddhu died while the trial was pending.

On 10 January 2018 the magistrate convicted the two surviving directors under Sections 120-B and 420 and sentenced them to rigorous imprisonment of one year with a fine of Rs 1,000 and three years with a fine of Rs 10,000 respectively. On 13 September 2019 the Special Judge for CBI cases, Raipur allowed their appeal and acquitted them. The CBI then came to the High Court under Section 378(2) of the Code of Criminal Procedure in ACQA No. 479 of 2024.

The truck owners and the gate register

Mr Vaibhav A. Goverdhan for the CBI built the appeal on the transport evidence. PW-5 Rohtan Singh, then assistant security officer at NTPC Korba, said truck No. 7312 did not enter the premises between July and September 1981. PW-7 Sardar Singh, owner of truck CPH 7312, said his vehicle never went to Korba and never carried goods under consignment notes B-7986 and B-6552. PW-8 Jayant Ishwar Shendre, an inspector at the plant, said the material incoming register showed no entry for the truck. PW-9 Makkhan Singh, the truck's earlier owner, said the goods listed in exhibits P-29 to P-34 were never carried to Korba. PW-10 Jaspal Singh, owner of truck CPH 7335, produced toll receipts placing his vehicle at Hoshangabad on 28 January 1982 and Nizamabad on 31 January 1982. Counsel also argued that the inspection witnesses PW-17, PW-18 and PW-19 had shown physical verification at the loading point was not mandatory, that the accused could not deny receiving the money, and that the later meetings and refunds themselves proved a dishonest intention from the start.

The judge went through the same witnesses and found each one hollowed out in cross-examination. Rohtan Singh admitted the gate register was written up by security guards whose identity and handwriting he could not establish, that he could not say how many trucks entered in a day, and that after 2 December 1981 the CISF kept its own register. Sardar Singh admitted he bought the truck only in May 1982, after the disputed consignments, did not know whether the previous owner had sent it to Korba, could not remember the purchase date, had no purchase papers, kept no record of what his truck carried, and pleaded ignorance when shown the two consignment notes. Makkhan Singh, who sold the truck in March or April 1982, said he sometimes engaged a driver, kept no account of the vehicle's running, did not know where his driver had taken it, and that the CBI never questioned the driver. Jaspal Singh said his father had bought the truck and died in 1992, that he himself was a minor at the time, and that he knew nothing of the truck's movements. Shendre, posted at Korba only from May 1986, made his inquiry on a CBI letter of 13 June 1987 with no written instructions and could not say on what date he did it.

The rest of the prosecution's transport evidence pointed the other way. PW-21 Prakashchand Wahi of Jeet Interstate Carrier said his truck did carry goods from Delhi to Korba on 28 January and 9 February 1982 and that the truck number had simply been entered wrongly in the documents. PW-30 Bihari Lal Sidana, a transporter whose office faced Atlantic's, said he carried the company's goods to NTPC Korba 80 to 85 times between 1980 and 1983, was paid by cheque, and never received a complaint.

NTPC reconciled the accounts and recovered the excess

The NTPC and bank witnesses did more damage to the CBI's theory than the defence could have. PW-11 K.R. Soni and PW-25 M.B. Dubey of SBI Korba, and PW-24 C.P. Chawla of the Parliament Street branch, described the mechanism: NTPC's own inspection officers at Delhi examined the goods and issued a material dispatch clearance certificate, the certificate went to the bank with the invoice and consignment note, and the bank paid on the documents without verifying physical supply. Chawla said NTPC Korba never complained of any excess payment; Dubey said the letter of credit's validity was extended from 30 April 1982 to 30 July 1982. The inspection witnesses PW-17 R.C. Dhoop, PW-18 R.K. Kaul, PW-19 Jaiveer Singh and PW-22 A.D. Shrivastava confirmed issuing certificates after inspection, Kaul and Singh adding that they found the goods on the spot. PW-31, the manager of contract services, explained that because Atlantic had furnished no bank guarantee, 55 per cent rather than 60 per cent was payable against dispatch and 15 per cent after delivery.

PW-13 Kamlesh Kumar Sharma, the accountant at NTPC Korba, said an excess of Rs 10,02,703.37 had been paid to Atlantic and recovered from its other bills, as recorded in the general voucher exhibit P-96. In cross-examination he admitted that NTPC's own documents showed the goods had been received, that a meeting on 20 July 1982 had settled that excess payments would be adjusted against supplies and would carry penal interest at 25 per cent if not squared within 60 days, and that there was no dispute about the recovery. PW-14 S.K. Sur, senior manager (erection), said in chief that Atlantic had been paid for goods it did not supply, but admitted in cross-examination that there was a written adjustment agreement (exhibit P-9), that there was no outstanding amount between the parties before 2 June 1986, and, in paragraph 32 of his deposition, that NTPC had made no double payment for any goods supplied. PW-16, the deputy manager (contract) at NTPC Delhi, produced the reconciliation statement of 25 February 1983 (exhibit P-6), which after adjustment showed Rs 83,546.78 payable by NTPC to Atlantic, and said a further meeting on 24 March 1983 settled that the overdue amount under the letter of credit would be repaid with 25 per cent penal interest. PW-23 Ramsharan Sharma, who had himself raised the objection about non-supply in 1982, admitted the recovery of the excess with penal interest and the adjustment under the reconciliation.

The investigating officer, PW-32 Mukesh Chandra Sahni, Superintendent of Police, CBI, admitted that the investigation found no criminal misconduct by any NTPC officer, that the certificates at exhibits P-52 to P-89 were issued after physical verification, that the parties had met in 1982-83 and drawn up the adjustment documents at exhibits P-3, P-4 and P-6, that NTPC had received Rs 10 lakh under them, and that goods not supplied earlier were supplied later. The handwriting examiner, PW-28 D.D. Goyal, admitted he had no educational qualification in the field, that specimen signatures had not been taken in his presence, and that several of the documents he examined bore only a departmental seal and no signature. S.S. Sandhu entered the witness box himself and walked through every transaction. “This witness has not been cross-examined by the prosecution/CBI.”

Discrepancies in performance are not cheating at inception

Mr Anupam Lal Das, Senior Advocate, with Mr Kunal Verma and Mr Kashif Shakeel for the directors, had argued that the FIR named NTPC officers who were then dropped from the chargesheet for reasons best known to the CBI, that the company itself was never made an accused, that there could be no conspiracy with officers who were not accused, and that there was no loss, no complaint and no outstanding dues. In his words, “Leaving the officers of the NTPC itself creates suspicion over the prosecution’s case.” Had there been cheating, he said, the letter of credit would not have been extended, the security would have been forfeited and no reconciliation meeting would have been held.

The judge first set out the limits on an appeal against acquittal, quoting State of Rajasthan v. Kistoora Ram, Jafarudheen v. State of Kerala, CBI v. Shyam Bihari and, at length, the Supreme Court's 2026 decision in Tulasareddi v. State of Karnataka, which collects the principles from Chandrappa, Rajesh Prasad, Babu Sahebagouda Rudragoudar and H.D. Sundara: the appellate court may reappreciate the whole evidence, but an acquittal doubles the presumption of innocence and may be reversed only for patent perversity, misreading or omission of material evidence, or where the only possible view is guilt.

Applying that, he held that the transport witnesses suffered from material limitations on their personal knowledge of the vehicles and transactions, while the NTPC officials established that disputes over supply and excess payment were taken up in meetings, that excess payments were recovered or adjusted against subsequent supplies, and that the accounts were reconciled. The evidence of non-supply could not be read in isolation from the later supplies, adjustments and reconciliation that the prosecution's own witnesses had proved. Payments under the letter of credit were made on the prescribed documents, including dispatch certificates issued by NTPC's own officers after inspection; the bank did not verify supply; the credit was extended from time to time; and the reconciliation statement of 25 February 1983 showed money owed by NTPC to Atlantic. None of this conclusively ruled out an offence, the judge said, but cumulatively it supported the defence that the discrepancies arose in the course of contractual performance and subsequent reconciliation “rather than necessarily from a dishonest intention existing at the inception of the transactions”.

On cheating, he applied V.Y. Jose v. State of Gujarat: the dishonest intention must exist when the representation is made and cannot be presumed from a later breach or irregularity. On conspiracy, the prosecution had to prove an agreement or meeting of minds, and it had charged nobody at NTPC whose acts were material to the transaction; irregularities alone, without evidence of a prior agreement, do not make out Section 120-B. He added that no complaint was ever lodged by NTPC and that the FIR came in 1986 for events of 1981-82. Those facts did not by themselves justify quashing a prosecution, he said, but alongside the rest of the record they called for careful scrutiny of whether the ingredients of the offences were made out at all.

Order

The court held that the appellate court had assessed the evidence in its entirety and reached a view reasonably supported by the oral and documentary record, and that its findings showed no perversity or illegality. The appeal against acquittal was dismissed and the judgment of 13 September 2019 of the Special Judge, Special Court for CBI cases, Raipur, acquitting S.S. Sandhu and D.J.S. Sandhu of the offences under Sections 120-B and 420 read with 120-B of the Penal Code, was affirmed. The judgment was reserved on 7 October 2026 and delivered on 16 October 2026. A copy of the judgment and the original records were ordered to be sent to the trial court forthwith.