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OFFENCBS' Comml1tbd -BY .JUTB Tit.AI>B (~r : ~,~ <) c., P. "v. No. 39$' ," OMMITTEEONPUBLIC UNDERTAK.IN~S· (1978-79) . ' (SIXTH LOK SABHA) PlFfY FIRST REPORT , ;>. Ac:dOD taken by Government on the recommeu.4adoD. COIltaUaed iQthe SJsteeuth Refort of th~ C01b$ltcee OD Public' Undertakings (Sixth Lok Sabha) , , ' OTli ",)'U1'B CORpORADON OF INDIA Ll'J)-BCONOMIC OFFENCBS' COMMl1TBD -BY .JUTB TIt.AI>B AND JUTE IN~USTRY MINISTRY OF INDUSTRY (Depar~ent of Industrial De'Oelopmenl) Presented to Lok Salilla on the JOth April, 1979 Laid i~ Rajya Sabha on the 27t h April, 1979 .' LOIt SABRA SBCRETARIA T NEW DBLHI April, :l979/Vaisak!aa, :1901 (8) Price: Rs. 3.64. , CORRIGENDA.' 51st Report on Action Taken by Government on the recommendations contained in the Sixteenth Report f of the Committee on Public Undertakings (6th Lok Sabha) on Jute Corporation of India Ltd. - Economic .~ offences committed by Jute Trade and Jute Industry (Ministry of Industry) _ f;I :Page Line E2r. -Read 3 20 identirf ied Indentif ied 3 30 proversco perverse 13 30 promt prompt 13 35 direc and direct and direct texes indirect taxes 45 29 exces; excess 58 36 cours course 62 19 conset consent 72 22 Impted Imptex 73 31 cons"",.tting consulting 74 19 cay say 74 21 daeed dated 75 4 unsed used 78 25 ascertion assertion 79 last delet 'the'before from ShIi S.C. Ghosh bottom CONTENTS PAOE , , -COMPOSITION OP THB CoIlnllTl'BE (iii.) ·CoIlPOllTlON OP THE SUB-CoMMlTl"BB ON ACTION TAKEN (V) INTRODUC'nOH • (vii) ·CJu.PTBIl I. Report CHAPTIIR II. Recommendations that have b~n accepted by the Govern- ment. III 'CHAPTER III. Recommendationl/Observations in resJl«'Ct of which repliCi of" GoYernment are not .ati_tory. 20 -CRAPTER IV. RecommendatiOlll/OblervatioDs which the Committee do not delire to punuc in the light or Government repliet. 113 CUAPTElt V. Recommendation&/Observationl in respect of which final repliea of Government are still awaited 115 Al'PENDJCEI I. Staternen t of casea considered fit for pt'OlCCtution by the Collector as abo by the Enquiry Committee. • • •• 116 II. Statement or C&!eS recommended for prosecution by the Committee. 0 III. Deptt. of Revenue and Banking CirculAr No. IS/76-CX.6 33 IV. Ministry of Law, justice and Company Afl'ain O.M. No. F. 50(1I)/79-jU(1I. Dt. 11-11-79 •••• 37 V. Ministry of Law, Justice and Company Affain O.M. No. F.5Q{II)/79-Judl. Dc. 11-11-1979· • • •• ~9 VI. Ministry of Law, Justice and Company Affain O.M. No. F.5O (11)/79 -Judi. Dt. 11-11-1979. •• VII. Ministry of Law, JUitice and Company Afi"ain O.M. No. 1-85(r)/79-0.I:M. Dt. 11-11-1979 43 vm. Letter of the Director of Enforcement to Ministry of Law 45 IX. Letto" of Joint Secretary, Ministry of Law, JUitice and Company Affain giving their opinion. • • • •• 55 X. Ministry of Law. Justice and Company Affain U.O. No. 1117I10/7g-A1iv. (B) Dt. 111-3-1979-.. •• 6s XI. Note of the Enforocment Directoc on Committee', Oblervationl and RecommendatiOlll. 65 XII. Analysis or the action taken by the Governmention recommenda- tion. contained In the Sixteenth Report or the Committee 011 -. Public UDdertak.il1~ (6th Lok Sabha). 83 '700 LS-l. COMMITTEE ON PUBLIC UNDERTAKINGS (1978-79) OWRMAN Shri Jyotirmoy Bosu MEMBERS 2. Shri O. V. Alagesan 3. Shri Maganti Ankineedu 4. Shrimati Chandravati S. Shri Tridib Chaudhuri 6. Shri Hitendra Desai 7. Shri Anant Ram Jaiswal 8. Shri L. L. Kapoor 9. Shri K. Lakkappa 10. Shri Dharamsinhbhai Patel 11. Shri Raghavji 12. Shri Padmacharan Samantasinhar 13. Shri Bhanu Kumar Shastri 14. Shri Madhav Prasad Tripathi 15. Dr. Subramaniam Swamy 16. Shri S. W. Dhabe 17. Shri K. N. Dhulap 18. Shri H. B. Mahida 19. Shri Murasoli Maran 20. Shri Era Sezbiyan 21. Shri Vireo 1. Shah -22. Shri Sultan Singh SECRETARIAT 1. Shri H. G. Paranjpe-1oint Secrelary. 2. Shri T. R. Krishnamachari-Chief Financial CommltUe Officer .. 3. Shri T. N. Khanna-Senlor Financial Committee OfJicer. -EJected w.e.f. 26.12.1978 vice Shrl Deorao Patn died. (iii) SUB-COMMITIEE ON ACTION TAKEN OF THE COMMITIEE ON PUBLIC UNDERTAKINGS • (1978-79) 1. Shri Jyotirmoy Bosu~hGrman. 2. Shri O. V. Alagesan~onvener. 3. Shri Tridib Chaudhuri ., 4. Shri L. L. Kapoor 'W , J 5. Shri Hitendra Desai 6. Shri K. LakJtappa 7. Shri Bhanu Kumar Shastri 8. Shri K. N. Dhulap 9. Dr. Subramaniam Swamy ,.. 10. Shri Era Sezhiyan 1l. Shri Viren 1. Shah. .INTRODUCTION I, the Chairllllin, Committee on Public Undertakings having been ,authorised by the Committee to submit the Report on their behalf, present this Fifty-First Report on Action Taken by Government on the recom- ,mendations contained in the Sixteenth Report of the Committee on Public Undertakings (Sixth Lok Sabha) on Jute Corporation of India-Economic Offences committed by Jute Trade and Jute Industry. 2. The Sixteenth Report of the Committee on Public Undertakings was presented on 30 August, 1978. Replies of Government to all the recommendations contained in the Report were received in March, 1979. The replies of Government were considered by the Action Taken Sub- Committee on April 26, 1979. The Report was finally adopted by the Committee on April 27, 1979. 3. The Committee had called for launching of prosecution against J. K. Udyog and others for violation of Foreign Exchange Regulations, as 'well as against the former Director of Enforcement Shri S. B. Jain and others for entering into a criminal conspiracy. Unfortunately Government have in consultation with the Law Ministry and the present Director of Enforcement concluded that no action was either warranted or possi- "ble. This plea is not acceptable. Action as suggested earlier must be taken by referring the cases to the Attorney General and the CBI/Central Vigilance Commission respectively. 4. Although only in lout of 86 cases of violation of Central Excise and Salt Act prosecution was launched after the Committee took up the matter, in 23 cases prosecution has now been found to be justified. This shows the extent of leniency if not worse, shown to the economic offenders. S. The record of Enforcement agencies has been dismal. It is a matter of interest therefore to see how far the poSition is going to be improved after the Yardi Committee reports on its findings on the working of the Enforcement agencies and suggest measures to combat the evil of economic "offences. 6. Analysis of action taken by Government on the recommendations contained in 12th Report of CPU (6th Lok Sabha) is given at Appendix. JYOTIRMOY BOSU, Chairman, NEW DELffi,' Committee on Public Undertaking.f. April 27, 1979 "Vaisakha'7,190f7S) (vii) CHAPTER I REPORT The Report of the Committee deals with the Action Taken by Govern- ment on the recommendations contained in the sixteenth Report (Sixth Lok Sabha) of the Committee on Public Undertakings on Jute Corpora- tion of India Ltd.-Economic offences committed by Jute Trade and Jute Industry, which was presented to Parliament on 30 August, 1978. Action Taken notes have been received from Government in respect of all the 9 recommendations contained in the Report. The Action Taken Notes on the recommendations of the Committee have been categorised as follows:- (i) Recommendations/observations that have been accepted by Government :- Serial Nos. 1, 3, 5, 6, 7 and 8. (ii) Recommendations/observations in respect of which replies of Government are not satisfactory. Serial No.2. (iii) Recommendations/observations which the Committee do not desire to pursue in the light of Government replies. Serial Nos. 4, 9. (iv) Recommendations/observations in respect of which final rep- lies of Government are still awaited. Nil. The Committee will now deal with Action Taken by Government on some of the recommendations : I.K. Udyog Ltd. R.eeomaIeDdadon l (Par ....... 83) R.eferring to the case of 1.K. Udyog Ltd. which was alleged to have coJ1llDitted violations of Foreign Exchange Reaulation Act by setting up a Bcaami Company (Paramount Backing and Burlope Jnc. New York) ostensibly to promote sales in USA but really to accumulate outside un- 2 disclosed profits in foreign exchange, the Committee had in para 83 of that 16th Report (1977-78) recommended that:- "There were clear materials of evidence to indicate collusion between certain high officers of the Directorate; .0£ Enforcement, inel ud ing the Dircctor and certain persons connected with the J.K. Udyog Limited, who were involved in a very serious violation of Foreign Exchange Regulation Act. A twist to the whole case was given by Shri S. N. Jain, Director of Enforcement, in June, 1976 asking for a complete reappraisal of the issues in the caSe and the turn of events that took shape thereafter were such as to provoke even the Special Director attached to the Directorate, Shri Dixit to retaliate in a forth night manner exposing what in the view of the Committee was a very serious case of conspiracy. In regard to this parti- cular case, the Committee had made the following recommendations: - (1) The case should be reopened and prosecution should be lauched against Bharat Hari Singhania, Rameshwar Agarwal, N. P. Puria, R. L. Rastogi, J.K. Udyog and Ganges Manu- facturing Co. without any delay; (2) The Central Bureau of Investigation and Central Vigilance Commission should be asked to launch prosecution against Sarvashri S. B. Jain, T. N. Kaul and A. N. Banerjee for having entered into cirminal conspiracy of committing offences punishable under Section 218 of the Indian Penal Code; (3) The Central Bureau of Investigation and the Central Vigilance Commission should be asked to initiate action against Shri S. B.
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