Karnataka high court declines to bin CBI case againstCEO of US-based defence supplier

Time of India

16-06-2025

Bengaluru: The high court has declined to quash criminal proceedings against the president and CEO of California-based Akon Inc in a CBI case related to the supply of allegedly defective engines to an Indian defence establishment.
Surya Sareen, named as accused no. 4, had sought to have the proceedings quashed, denying his direct involvement in the case.
Justice M Nagaprasanna held that the case presents a prima facie instance of offences under Sections 420 (cheating) and 120B (criminal conspiracy) of Indian Penal Code (IPC), involving disputed and documented facts that require examination during trial.
The matter stems from a global tender floated on March 23, 2007, by the Defence Avionics Research Establishment (Dare), a Bengaluru-based lab of DRDO.
Akon secured the contract and received a purchase order on July 11, 2007. According to the contract, 90% of the payment was to be made through a SBI line of credit upon delivery, with the balance payable after technical approval.
Akon delivered 35 units between Feb 19 and 27, 2009, and Dare acknowledged receipt by March 11, 2009. However, concerns about irregularities in shipment emerged, prompting a CBI inquiry. Between 2009 and 2011, correspondence was exchanged among Akon, other accused parties and Dare regarding technical issues with the supplied equipment.
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On March 16, 2012, Dare filed a complaint with the director (vigilance) highlighting procurement irregularities and unauthorised payments. Following an investigation, CBI filed a chargesheet on Dec 12, 2022. A special judge subsequently issued a summons to the accused on June 5, 2023.
Sareen argued that no specific allegations of conspiracy were substantiated. He also raised concerns about delays in the investigation and maintained that Akon had multiple shareholders, questioning the attribution of liability to him individually.
CBI maintained that Sareen, in his capacity as president of Akon, had knowingly supplied non-functional VO-based radio frequency engines, thereby misleading Dare. The agency also submitted that delays in the investigation were due to the sensitive nature of the case and prolonged communication with various parties.
In his order, Justice Nagaprasanna observed that delays were justifiable given the international scope of the probe. He further noted that the presence of potential civil remedies does not preclude criminal proceedings, especially where both civil and criminal aspects coexist.