A Matter of Military’s Honour and credibility

A Matter of Military’s Honour and credibility

Our armed forces have always made us proud by their exemplary behaviour, both in the battlefield and outside.  If anything, for them, the sense of honour, sacrifice and dignity has always mattered more than money and material comforts. This is certainly the case with the overwhelming majority of our soldiers. There are, of course, rare exceptions. I would like to deal with one such exception, with the hope that defence minister Nirmala Sitharaman and Prime Minister Narendra Modi will read it and officers who violate the letter and spirit of prevailing laws and established rules pertaining to our glorious military should be taken to task and given exemplary deterring treatment.

This is the case of Major General V N Prasad (Retd). He was granted “Permanent Regular Commission” in the Indian Army on 10th June 1978. After completing 35 years and nine months of military service, he retired on March 31, 2014.

Of the many schemes that the Ministry of Defence has launched to help the ex-servicemen through the Department of Director General Resettlement (DGR), there is one that facilitates the formation of ESM (ex-servicemen) companies, which, in turn, can be empanelled by the DGR, to carry out various schemes, including the scheme for sponsoring of ex-servicemen for work of loading/unloading and transportation of coal for Coal India Limited (CIL) and its subsidiaries. The said scheme for sponsoring ex-servicemen for coal transportation companies was formulated by the Ministry of Defence and the erstwhile Ministry of Energy (now Coal). In terms of the said scheme, the work of coal loading and transportation is provided to ESM Companies formed with the said object. Five ex-servicemen are grouped together to promote and act as directors of an ESM Company, which is thereafter sponsored to take up the work of coal transportation. By virtue of the Memorandum of Understanding (MoU) with CIL, such work is awarded by them to the sponsored ESM Companies.

On 13th October 2015, the DGR issued a letter informing various ex- servicemen petitioner that they are likely to be sponsored as directors of ESM Companies and called upon the said persons for forwarding their willingness to be a director of an ESM Company formed with the object of carrying on the business of coal transportation. Maj General Prasad indicated his willingness for being a director of an ESM Company and submitted the necessary documents as required by the DGR.

These documents include, among others, undertakings (affidavit) by the retired officers to the effect that they are “unemployed/not self-employed at the time of the sponsorship for the scheme and have not availed any other job/placement”. They have also to pledge that after being sponsored for ESM coal loading and transportation scheme by the DGR, the “will not be practising any self-employment venture, including running/be associated with any training institute/school or any other commercial activity individually”. They have to submit also a form “26-AS”every year by 30th May to provide proof of employment and income.

Accordingly Maj Gen Prasad forwarded an affidavit dated 30.10.2015.  The documents submitted by him were scrutinized and he was found eligible. Thereafter, he  and four other ex- officers of the Indian Armed Forces formed an ESM Company, namely, Trispace Logistics Private Limited (hereafter ‘Trispace’), which was duly registered under the Companies Act, 2013.

Certificate of Incorporation, Memorandum of Association and Articles of Association were forwarded by the promoters of Trispace to DGR on 15.03.2016. Thereafter, Maj Gen Prasad and the other promoters of Trispace furnished an undertaking dated 06.04.2016 reiterating their commitment to abide by the Guidelines issued by DGR and also the Memorandum of Understanding (MoU) signed between DGR and CIL.

By letter dated 11.04.2016, the DGR sponsored Trispace to undertake coal loading, unloading and transportation work in Odisha of Mahanadi Coalfields Limited (hereafter ‘MCL’) at Hingula Area for a period of five years. On the same date, the DGR also attached certain other ex-servicemen with Trispace.

However, the problems arose when in terms of the Guidelines – and also the affidavits submitted – Maj General Prasad  and other promoters of Trispace failed to submit Form 26AS (statement of tax deducted at source) to the office of the DGR last year. The said form would have confirmed whether the petitioner and the other promoters of Trispace (ex-servicemen) had any other source of income or were pursuing any other employment contrary to their given undertaking and the Guidelines. Instead, Prasad wrote to the DGR saying that since his ESP was sponsored on 11.04.2016, it was not associated with any DGR scheme during the FY 2015-16 and hence it was not necessary to provide the Form 26AS.

Subsequently, the company was issued a show- cause notice dated 17.10.2016 by the DGR. And in protest, Maj Gen Prasad went to the Delhi High Court to seek justice. But astoundingly, his argument in the Court was not on why he did not provide the Form 26AS. He now found faults with the whole system of the guidelines and undertakings and argued that these were violative of Article 19 (1) (g) of the Constitution of India. According to him, the restrictions contained in the Guidelines, which prohibits the petitioner from carrying on any other employment or from pursuing any other vocation while associated with Trispace as a director, is unreasonable and violative of Article 19(1) (g) of the Constitution of India.

The learned counsel appearing for Maj General Prasad  contended that (i) the role of DGR was to assist ex-servicemen in availing resettlement opportunities and the ex-servicemen could not be restrained from carrying on other vocations to earn their livelihood; (ii) Trispace was an independent company and the work awarded by MCL to Trispace was strictly a matter between the two companies and it was not open to DGR to impose any restriction;(iii) the petitioner was no longer an army officer and was not subject to the Army Act, 1950 and the rules made thereunder; (iv) the petitioner and other promoters (ex-servicemen) had invested their funds in the formation of Trispace, without any grant from the government; (v) DGR has no locus to lay down the Guidelines; and (vi) the Guidelines in as much as they impose restrictions on the petitioner/directors carrying on other business, is violative of fundamental rights.

However, Hon’ble Justice Vibhu Bakhru, who was hearing the case, was totally unimpressed by such arguments. He found the contentions advanced on behalf of the petitioner to be totally bereft of any merits. The principal objective of the scheme entailing promotion of ESM Companies by ex-servicemen to carry on the work of loading, unloading and transportation of coal is to provide employment opportunities to ex-servicemen. CIL and its subsidiaries had agreed to provide work to such companies pursuant to the MoU with DGR. Accordingly, the DGR had issued the Guidelines for formation of ESM Companies.

The Guidelines clearly indicate the eligibility criteria for various categories of ex- servicemen to be associated with such ESM Companies.  The petitioner had applied for being considered in terms of the said Guidelines and had also filed an affidavit on 30.10.2015, inter alia, affirming that “I will adhere to all the provisions of Memorandum of Understanding signed between DGR, CIL and Coal Subsidiaries and guidelines made by DGR for the formation and running of ESM Coal companies as applicable to me as Director of ESM Coal Loading and Transportation Company”, that “submission of Report & Return- The Ex-Servicemen, Coal Loading & Transport Company sponsored by the DGR will submit various Reports & Returns as decided by DGR from time to time. Non-submission of specified Reports/Returns or incorrect facts and figures may result in cancellation of sponsorship/non-renewal of contract leading to closure of the Company.”

“In view of the above”, so said Justice Bakru in his order on July 10, 2017, “it is apparent that the petitioner had volunteered to avail the benefits under the Guidelines and having availed the same, it is no longer open for the petitioner to now challenge the said guidelines. The work of coal transportation was awarded by MCL to Trispace only pursuant to the DGR sponsoring Trispace for such work. The sponsorship was in terms of the Guidelines and it is not open for the petitioner to continue availing the benefit of sponsorship and yet challenge the Guidelines.

“The contention that neither Trispace and nor its promoters (including the petitioner) receive any grant and therefore are not bound by the restrictions imposed under the Guidelines is unmerited, as indisputably, Trispace has been awarded the work of coal transportation by MCL only on the DGR sponsoring it. The petitioner would plainly be at liberty to give up the work of coal transportation under the sponsorship scheme and take up any other vocation including the work of coal transportation, albeit not under the sponsorship of DGR; but, he cannot insist on securing a sponsorship from DGR without following the attendant conditions.

“The contention that any of the restrictions imposed under the Guidelines are violative of Article 19 is also unmerited. On the contrary, the Guidelines provide a framework for providing employment opportunities to ex-servicemen. The restriction that ex-servicemen availing such opportunities cannot carry on any other business has been inserted only to exclude such ex-servicemen who have other employment opportunities, from availing the benefits of the resettlement scheme. This is to ensure that only the ex-servicemen who otherwise do not have the necessary opportunities are ensured some work post their retirement.”

Similarly, Justice Bakhru was not convinced of Maj Gen Prasad’s claim that “the affidavit furnished by him was under duress of being rendered ineligible for being considered for the scheme and without getting an understanding of the business opportunities, risks and the likely income from the business.”  Dismissing the latter’s petition, Justice Bakhru wrote in his verdict that “the said contention is plainly unacceptable. The petitioner retired as a senior officer of the Indian Armed Forces and would have known the implications of affirming the affidavit submitted by him. The affidavit was in conformity with the Guidelines and the petitioner had voluntarily applied to DGR on the basis of the Guidelines.”

It may be noted that Major General Prasad is now Vice President of M/S Larsen and Toubro. And it is not a sheer coincidence that his affidavit dated 30.10.2015 and verified at Coimbatore, carried the signatures of two Larsen and Toubro employees belonging to the company’s “Coimbatore Central Management”. That means that either he was already in job of the company or had the job offer from the company when he made the affidavit for the consideration of the DGR. In other words, it was a clear case of dishonesty on his part to promise in the affidavit that he was unemployed and would not take any other job.

In fact, clause (h) of his affidavit said “In case any such report/complaint received and found to be correct, I understand that DGR will take legal course of lodging of FIR and filing a criminal case against me besides dis-empanelling me and removing me from directorship of the ESM Company”.  And clause (j) said “That I am aware of the repercussions of the criminal case i.e. once proved I may have to forfeit my pension.”

Will the DGR now initiate actions as per the pledges made by Maj Gen Prasad as per his own affidavit? Prima facie, there is a case of his giving false affidavit. At the time of writing, it has asked him to provide this year’s 26-AS, failing which it may dis-empanel his company from the coal-loading and transportation job. Maj Gen’s response is awaited.

Incidentally, Maj General’s wife happens to be a senior officer in the Ministry of Defence. She is Smt. Veena Prasad, Controller General of Defence Account. In fact, his affidavit carries the picture of his wife, who also happens to be his nominee of all his financial rights “in case of my demise during the tenure of ESM Coal Transportation Company”.   In the affidavit, Maj Gen Prasad also has given his residential address (D-8, Tower 3, New Motibagh Residential Complex, New Delhi) that happens to be the official residence of Veena Prasad.

By Prakash Nanda

(prakash.nanda@hotmail.com)

 

 

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