A special court here has acquitted three former senior officials of Hindustan Antibiobiotics Limited (HAL) in an alleged conspiracy to cause wrongful loss of Rs 26 lakh to the Pimpri-based public sector pharma company in the export of medicines to Kenya. The alleged crime occurred between 1994 and 1997.

In January 1998, CBI's Mumbai unit had registered an offence against A K Basu, the then Managing Director (MD) of HAL; A Y Alurkar, who was chief general manager (CGM)-materials and exports; K P Sesha Sai, the then CGM-commercial; K S Shankarnarayana, who was deputy general manager; and K K Solanki, MD of a distribution company in Kenya, in relation to the alleged crime.

While the case against Basu and Solanki was dropped following their death in 2010 and 2013, respectively, Shankarnaryana (69), Alurkar (73) and Sesha Sai (67) were tried for the offences of criminal conspiracy and breach of trust and criminal misconduct by public servant.

In a ruling on October 27, special judge D M Deshmukh cited facts relating to the export deal that emerged during trial and ruled, "There is no evidence that there was criminal conspiracy between the accused with an intent to cheat HAL and that they misused their official possition and committed criminal breach of trust."

"On the contrary, evidence on record indicates that the accused tried their level best to sell products in open market as well as to send the products to the ministry of health, Government of Kenya (MOH-GOK). Hence, the CBI has failed to prove its case against the accused," the judge held.

The HAL had appointed Trinity Pharmaceuticals Limited (TPL) in Kenya, headed by Solanki, as its sole distributor for Kenya, Uganda and Tanzania through an agreement on October 1, 1993. According to CBI, Alurkar misused his position to sign a supplementary agreement with TPL, amending the earlier agreement to give TPL a status of "independent dealer".

In July 1994, TPL bagged a tender from MOH-GOK for supply of 5,270 health centre kits, each comprising seven medicines by sea via Mombassa. TPL placed an order with HAL for supply of these seven medicine items within six months from April 13, 1995.


However, on May 24, 1995, the Kenyan government withdrew the order placed with the TPL. Solanki allegedly concealed the withdrawal with the HAL and did not send the import declaration form (IDF) necessary for exporting material from India to Kenya. As a result, the material produced by HAL was lying idle, losing its shelf life.


The CBI alleged that Basu did nothing to regain the supply order and did not act against TPL. There were no efforts to dispose the material in open market and when the Kenyan government placed an order for three medicines viz. Triple Penicillin, Procaine Penicillin and Pen V Tabs, Solanki quoted huge rates to MOH-GOK and much lower rates to HAL for the export transaction. The HAL management decided to send two of these medicines by air instead of sea to cut delay. The difference in the rates quoted to Kenyan government and to HAL caused a wrongful loss of Rs 26 lakh to HAL and an undue gain to TPL, the CBI alleged.


Referring to evidence on record, the court held that the accused cannot be held responsible for the management's decision and that, the supplementary agreement had no legal validity in view of the main agreement of October 1993. Also, apt efforts were taken to dispose of a part of the material in the open market.

Sources :timesofindia.indiatimes.com