Telangana High Court Rejects Vanpic’s Plea to Quash CBI Prosecution

Hyderabad:In a setback to Vadarevu and Nizampatnam Industrial Corridor (Vanpic) Projects Pvt. Ltd, a corporate entity set up by the industrialist Nimmagadda Prasad, the Telangana High Court on Tuesday dismissed its plea to quash its criminal prosecution by the CBI.

Justice E.V. Venugopal of the High Court passed the order on a plea filed by Vanpic, represented by its general manager P. K. Ravi. Criminal prosecution of the company is pending on the file of Principal Special Judge for CBI cases in Nampally. The entity challenged the action of the CBI court in taking cognisance of the alleged offences attributed to it in the quid pro quo cases of Y.S. Jagan Mohan Reddy.

Vanpic during the tenure of Y.S. Rajashekar Reddy as Chief Minister had planned an industrial park between the districts of Guntur and Prakasam in erstwhile Andhra Pradesh and allegedly invested in the companies of Y.S. Jagan Mohan Reddy for getting land from government. Based on the investigation, the CBI filed a case and chargesheet before the special court which is pending trial.

Vanpic filed a criminal petition before the Telangana High Court in 2021 to quash the case against it.

On July 28, 2022, the High Court allowed the petition of Vanpic, quashing the case on the ground that the petitioner was a corporate entity and an artificial person run through its chairman. Challenging the orders, the CBI approached the Supreme Court stating that its contentions were not heard by the High Court.

The Supreme Court remanded the case to the Telangana High Court. The CBI petition was heard by Justive Venugopal , who on Tuesday dismissed the plea of Vanpic.

During the arguments, Srinivas Kapatia, special counsel for CBI, submitted that Nimmagadda Prasad, chairman of Vanpic (Accused No. 3), had changed the shareholding of the company. Counsel argued that if the person or group of persons who control the affairs of the company commit an offence with criminal intent, their criminality can be imputed to the company as well, as they are the alter ego of the company.

According to the CBI, 14 accused persons were to face trial in the case and this included Vanpic represented by Nimmagadda Prasad for the offences of cheating, criminal conspiracy and others.

In 2008, the then AP government proposed to develop ports at Vodarevu and Nizampatnam and a port-based industrial corridor in Prakasam and Guntur districts and named it Vodarevu and Nizampatnam Ports and Port-Based Industrial Corridor (Vanpic) and awarded it for development to the Government of Ras Al Khaima (RAK), an United Arab Emirate, on a government to government (G2G) basis avoiding open competitive bidding.

The estimated project cost was `17,000 crore. The principal terms and conditions included that the RAK government shall contribute not less than 51 per cent of the approved project cost and it shall hold 51 per cent of the equity in the special purpose vehicles (SPV) to be formed for the implementation of the Vanpic Project.

Nimmagadda Prasad and his younger brother Prakash entered the project as an Indian partner with 49 per cent equity in the proposed SPV, 'Vanpic Ports Pvt. Ltd. Dr Rajasekhar Reddy decided to allot 24,000 acres of land for the development of the industrial corridor. The then AP Council of Ministers approved awarding of the entire project on build-own-operate-transfer (BOOT) basis to the SPV Vanpic Ports Pvt. Ltd. and to allot 4,000 acres of land, 2000 acres each, for both the ports on lease basis. The Cabinet also accorded approval for the draft concession agreement.

It was later observed that the concession agreement contained serious deviations from the Cabinet approval and the spirit of the memorandum of understanding between the state and the RAK government. This included a provision for dilution of RAK's share in the SPV from 51 per cent to 26 per cent without knowledge/approval of AP government. This provision facilitated clandestine entry of a private company, Navayuga Engineering Company Ltd, into the Vanpic Project with 65 per cent equity in the SPV.

Further, it was noticed that a direction was issued in 2008 by the government to the district collectors of Prakasam and Guntur to send land alienation proposal for industrial corridor in favour of Vanpic Projects Pvt. Ltd, deceptively using the same acronym (Vanpic) instead of Vanpic Ports Pvt. Ltd, the Cabinet-approved SPV. The council of ministers and the then Chief Secretary were unaware that the 24,000 acres was being alienated to Vanpic Projects Pvt. Ltd, instead of Vanpic Ports Pvt. Ltd, the SPV as part of Vanpic Project for the purpose of development. The fact remained that Vanpic Projects Pvt. Ltd was an alien company controlled by Prasad and that there was no privity of contract between AP and Vanpic Projects Pvt. Ltd., for the purpose of enforcing the rights of the government on the project.

According to CBI, as part of quid pro quo, Prasad in the guise of investments paid illegal gratification of `854.50 crore to Jagan Mohan Reddy and his group companies, for the undue favours obtained by the government headed by his father Rajashekar Reddy.