15-Year wait: TS HC quashes plea against DRI officers probing Rs 3.5 Cr fraud by Hyderabad's Flytech Aviation

Hyderabad: Telangana high court has quashed a charge sheet filed against the two Directorate of Revenue Intelligence (DRI) officials probing the alleged customs fraud by Hyderabad-based Flytech Aviation Limited (FAL).

FAL had filed the case against an intelligence officer and senior intelligence officer of the DRI after they launched a probe into the alleged customs fraud to the tune of Rs 3.5 Crore. DRI is the Intelligence and Enforcement Agency of the Anti Smuggling matters under the Ministry of Finance.

"As the intention behind Section 197 Cr.P.C. as well Section 155 of the Customs Act is to protect the public servants acting in the discharge of their official duties from facing harassing, retaliatory, revengeful and frivolous proceedings, the initiation of prosecution against them without sanction from the competent Government would erode their confidence in discharging their duties efficiently. Conducting parallel proceedings against them for the acts done by them in the discharge of their official duties and rendering them liable for prosecution would not allow them to discharge their duties fearlessly. As such, it is considered fit to allow the petition quashing the proceedings against the petitioners in CC No.57 of 2016," the court said.

The judgment is likely to infuse confidence among hundreds of investigation officers who are facing parallel probes against them

Flytech Aviation academy was founded in 1995 by VenuGopal and Co. The company is engaged in training commercial pilots and holds an aviation engineering college. The company was recently in the news following the death of a young trainee pilot who crashed into an electric pole in Nalgonda district of Telangana. The academy lost their young trainee pilot and the aircraft.

Case details:

The case dates back to 2007 when DRI -Hyderabad initiated an investigation into the import of 180 LED Panels from Hong Kong and Aerophile Helium Baloon from the United Kingdom. It was found that imports of FAL were made from the company - Sigma Resources Group Incorporation, New York, USA (Sigma), which was apparently owned by Fly Tech Director.

Sigma, in turn, purchased the goods from another company Strongbase Investment Ltd and Benson International HK Ltd., both based in Hong Kong. It is to note that both the purchaser and vendor companies were owned by FAL, according to DRI.

According to DRI's investigation, FAL paid small amounts to Sigma for the imports, but Sigma and other entities paid huge amounts to Benson International and Strongbase Investment Ltd., for the same imports. Lesser amounts were shown in invoices (bills) to FAL from Sigma to evade customs.

DRI searches:

In 2007, DRI conducted searches at the FAL office in Hyderabad. It was found that the FAL director held 69% shares of FAL and he was the sole owner of Sigma, Benson, and Strongbase investment.

It was found that FAL allegedly had imported 'spares removed' parts from the damaged aircraft at cheap prices from the USA and supplied them to his own company at highly inflated prices. Tax evasion of Rs 3.5 Crore was found. The file was sent to the Enforcement Directorate and Income tax for further probe.

Plea against DRI officers

Later FAL director Venu Gopal was arrested. He later moved the court alleging that his brother bore grudge against him and with a criminal conspiracy with the two DRI officials, forged the invoices of the supplier of LED Panels – Benson International, Hong Kong and boosted the sale figures in the invoice as against the actual value paid and obtained a search warrant and inserted the incriminating documents and removed the genuine documents to implicate the director in false charges.

Based on his petition, the Hyderabad CCS wing registered a case against the director's brother and the two DRI officials.

Hyderabad Police Investigation:

On examination of the report and depositions of the witnesses, the Investigating Officer came to know that the said invoices were not by the Benson International Hong Kong Limited company. And the invoices were forged, fake, and not genuine. The Investigating Officer considered that the petitioners being officials of DRI in criminal conspiracy with brother tarnished the image of the director, misused their powers as public servants, and created various documents alleged to have been retrieved from the laptop submitted by the 2nd respondent in their office and filed a charge sheet

The charge sheet alleged that the petitioners in furtherance of their criminal conspiracy created false data as though it emanated from the laptop.

The legal battle:

The two parties knocked on the doors of the court. While FAL Director cited grudge and criminal conspiracy between the DRI officials and his brother. The DRI officials alleged that this was a classic case of 'certain' State Police Officers creating a flimsy case against DRI officials to help the FAL to evade the taxes, penalties and prosecution proceedings for violation of the Customs Act, Income Tax Act and Prevention of Money Laundering Act.

The fifteen year-long battle ended when Justice G Radha Rani quashed the charge-sheet against the DRI officials and the brother of FAL director. The court said, "Conducting parallel proceedings against them for the acts done by them in the discharge of their official duties and rendering them liable for prosecution would not allow them to discharge their duties fearlessly".