Delhi District Court
Cbi vs 1 Sh. Harbir Singh Harnotia @ on 11 October, 2012
IN THE COURT OF SH. V K MAHESHWARI :SPECIAL
JUDGE; TIS HAZARI DELHI
Corruption Case No. 47/95
CBI Vs 1 Sh. Harbir Singh Harnotia @
Sh H S Harnotia,
S/O Sh Asha Ram,
R/O 2830, Bihari Colony,
Shahdara, Delhi32
Former Chairman,
Parishad Cooperative Bank Ltd.,
Karol Bagh, New Delhi .
2 Ram Prakash Nagar @ R P Nagar,
S/O Late Sh Basant Ram,
R/O B7/67, Sector18, Rohini,
Delhi
the then Executive Officer cum
Manager,Parishad Cooperative Bank
Ltd.,Karol Bagh, New Delhi .
3 Sh Ram Gopal Luthra
S/O Late Sh Tirath Ram Luthra
R/O C300, Surajmal Vihar
Delhi92
4 Sh R. N. Luthra
S/O Late Sh Tirath Ram Luthra
R/O 7/377. Jwala Nagar, Opp.
Indira Park, Shahdra,
C C No.47/95 1/36
Delhi32
5 Sh Ramesh Chander Luthra
S/O Late Sh Tirath Ram Luthra
R/OC300, First Floor Surajmal
Vihar, Delhi92
6 Sh Krishan Lal Luthra
S/O Late Sh Tirath Ram Luthra
R/O C153, Surajmal Vihar
Delhi92
R. C No. 1 & 3(A) /93/CBI/SIU (X)
Under Section 120B r/w 420, 467, 471 and
U/s13 (2) r/w 13 (1) (d) P C Act, 1988
Date of Institution of 20.10.95
case:
Arguments concluded on 10.10.2012
Date of Order 11.10.2012
Judgment:
Facts of the case
1 According to prosecution case vide RC 1(A)/93SIU (X) was registered on 28.6.93 on the basis of complaint dt. 28.6.93 received from Sh. Yogendra Makwana, Chairman, the Parishad Co operative Bank Ltd., Karol Bagh, New Delhi against Sh. H.S. Harnotia, U.R. Kapoor and Sh R P Nagar for cheating the Parishad C C No.47/95 2/36 Cooperative Bank Ltd., Karol Bagh New Delhi to the tune of Rs. 27.49 lacs.
2 The case RC 3(A)/93 SIU (X) was also registered on 28.6.93 on the basis of written complaint dt. 23.6.93 received from Sh. Yogendra Makwana Chairman, the Parishad Cooperative Bank Ltd., Bank Ltd., Karol Bagh, New Delhi against S/Sh. R. P. Nagar, RG Luthra and Mrs Mohini Luthra for cheating the Parishad Co operative Bank Ltd. Karol Bagh, New Delhi to the tune of Rs. more than 14.30 lacs.
3 According to prosecution in these two RCs Sh. R. P. Nagar entered into criminal conspiracy with S/Sh. H.S. Harnotia, R.G Luthra, Mohini Luthra and UR Kapoor during the period 199192 to cheat the Parishad Cooperative Bank Ltd., Karol Bagh, New Delhi by corrupt / illegal omission / abusing their official position. In pursuance of the said criminal conspiracy the bank has suffered a financial loss to the tune of Rs. 41.79 lacs.
4 The allegations in RC 1(A)/93SIU(X) was that Sh H S Harnotia, Former Chairman of the bank in connivance with the other staff prepared false vouchers for a total amount of Rs.26.40 lacs and has shown the same to have been spent towards deposit mobilization, whereas this amount was paid as commission which was in violation of Banking Regulation Act and RBI, Special Directives. The amount C C No.47/95 3/36 of Rs.1,09,530/ has been falsely shown to have been spent towards Misc. Expenses between 3.11.92 to 18.11.92 out of which Rs. 20,000/ was illegally paid to Sh U R Kapor, Registrar, Cooperative Societies, New Delhi for getting MCL ( Maximum Credit Limit) sanctioned in favour of the bank. But this payment has been shown to have been made to Sh R K Munjal, Advocate, as his professional fees. Sh R P Nagar, Manager cumChief Executive Officer in conspiracy with H. S. Harnotia opened a fictitious account No.173 in the name of M/S Premier Industries in which a clean overdraft of Rs. 656747.37 was allowed. Out of this, an amount of Rs.2 lacs was transferred to the account of M/s Indo Dutch Foods Ltd. On 10.4.91 and this account was subsequently closed showing Nil balance to the debit of deposit mobilization account.
5 In RC3(A)/93SIU (X) a clean unsecured loan of Rs.3.50 lacs for construction of building was granted to R.G. Luthra against nonacceptable security . Sh Luthra misused the same . Out of this amount Rs.25,000/ were transferred to M/S Indo Dutch Foods Ltd. Sh R.G. Luthra was also sanctioned and disbursed an amount of Rs.1 lakh for purpose of a car without insuring his repayable capacity. M/S Luthra Plastic Industries was sanctioned a cash credit limit of Rs.3.26 lacs against security of nonexisting stocks. Similarly the CC limit was sanctioned to M/S Khilari against hypothecation of non C C No.47/95 4/36 existing stock thereby putting the bank to the wrongful loss of Rs. 1,43,0754.41.
6 The Parishad Cooperative Bank Ltd, Karol Bagh, New Delhi was registered on 30.10.85 with the office of Registrar of The Cooperative Societies, Delhi Administration . The said bank was granted a licence to commence and carry on Banking business within Municipal limits of Delhi and New Delhi cities by Reserve Bank of India on 9th December, 1985. Sh H S Harnotia was elected as Chairman of the Board of Directors on 13.5.89. Sh H S Harnotia functioned as Chairman of the Bank till 24th January, 1993 when the Board of Directors appointed Dr Yogendera Makwana, the founder of the bank to accept the Chairmanship of the bank. Sh R P Nagar was appointed as Manager and appointment letter dated 3.1.90 was issued to him under the signatures of H. S . Harnotia, Chairman of the Bank on 3.1.90 itself and he was dismissed from service on 16.3.95 7 The Parishad Cooperative Bank Ltd, Karol Bagh, New Delhi has shown in their record a total sum of Rs.26,53,074.54 spent towards deposit mobilization in the year 199192 and 199293, out of which Rs.15,22,682.49 was spent during the year 199192 i e from 24.9.91 to 31.3.93, which includes 66,000/ transferred from suspenses account and 6,56,747.37 transferred from account No.173 of Premium Industries to the account of deposit mobilization. While C C No.47/95 5/36 during the year 199293 an amount of 5,99,082.15 was shown spent towards mobilization which includes a transfer of Rs.3,41,600/ from CCL account to deposit mobilization. An amount of Rs.5,31,309.90 was paid from interest paid on deposit account towards commission for deposit mobilization . Details of all the above mentioned amount totalling to Rs.26,53,074.54 which was spent from this account for the year 199192 and 199293 are mentioned at paga No.4 of charge sheet.
8 A total sum of Rs.9,19,831.33 is shown to have been paid to Sh Ashok Sardana as commission for mobilization deposits,who had deposited more then Rs.3 crores in the bank on behalf of Nav Sansad Cooperative Group Housing Society and Neelachal Cooperative Group Housing Society. As per the vouchers the many persons are falsely shown to have been paid the major sum mentioned against them as commissions, details of which has been mentioned in Page No.5 of charge sheet.
9 Sh. B N Rana of Vivekanand Cooperative Group Housing Society Ltd., B. Prasad of Priyadarshani Cooperative Group Housing Society, P K Jain of Sanmati Cooperative Group Housing Society, Rajinder Kumar Vaid of Bhai Mati Dass CoOperative Group Housing Society, K C Sharma of Suraksha Sadan Co operative Group Housing Society, Joginder Singh of Military C C No.47/95 6/36 Hospital Cooperative Group Housing Society Ltd, B R Premi and M M Khosla of Ashoka Enclave Cooperative Group Housing Society, K K Bedi of GreenValley Cooperative Group Society Ltd., A K Sharma of Veg Sanchar Vihar Cooperative Group Housing Society, J S Dabbas of Dabas Cooperative Group Housing Society , A P Miglani of Jwala Cooperative Group Housing Society , Gopal Paharia, H S Dua and Ashok Sardana of Nav Sansad Cooperative Group Housing Society, etc. in whose name the payments are falsely shown to have been made from above said account, were examined. Only H S Dua has acknowledged to have received the commission amounting to Rs. 12359/ for bringing the deposits. Sh. Gopal Paharia has acknowledged some of the payments. Rest of the persons have denied to have received any payments as commission or otherwise as mentioned in the vouchers, details of the payments as per the vouchers is mentioned in Page No.6 of charge sheet. 10 It may be mentioned here that as per the directive No. UBD.DC.102/F.I8687 dt. 25th January1987 issued by Reserve Bank of India para 21(b) clearly says that "No Primary Cooperative Bank should pay brokerage on deposits in any form to any individual, firm, company, association, institution or any other person except: (i) Commission paid to agents employed to collect door to door under a special scheme, (ii) Incentives granted to staff members approved by C C No.47/95 7/36 the Reserve Bank of India from time to time.
11 It is clear from the above that the bank was not authorised to pay any commission for deposit mobilization and the bank has paid the commission in clear violation of the directive of Reserve Bank of India.
12 The second allegation relates to expenditure of Rs. 1,09,530/ towards Misc. expenses between 3.11.92 to 18.11.92. This also contains an allegation against Mr U R Kapoor Registrar of Co operative Societies of alleged gratification of Rs. 20,000/ for getting the maximum credit limit (MCL) sanctioned to the said bank. To coverup this payment false voucher is allowed to have been prepared showing the payment to have been made to Sh. R K Munjal, Advocate towards his professional fees.
13 There is a separate account maintained under the head Misc. expenditure during the period 3.11.92 to 18.11.92 there is a nominal expenditure of Rs. 4,562/ only. But after making strenuous effort it was revealed that an amount of Rs. 1,31,304/ was withdrawn from suspense account by R P Nagar and misutilised the amounts towards Misc. expenditure on various dates starting from 3.11.91 to 18.11.92, details of which has been mentioned in Page No.10 of charge sheet.
14 The debit voucher dt. 26.9.92 for Rs. 10,000/ is not C C No.47/95 8/36 available though there is debit entry of this amount in the suspense account. The voucher have been passed for payment by Sh R P Nagar.
15 Out of the above mentioned amounts a sum of Rs. 10,000/ on 8.11.91 was paid to H S Harnoitia by Pratap Atal, CCT of the Bank on the instructions of R P Nagar, Manager who prepared the voucher showing the said payment . It has been corroborated by Sh Pratap Atal. While on 2.2.92 Rs. 10,000/ was paid by Pooran Chand, peon of the Bank to H S Harnotia on the instructions of R P Nagar, Manager. Pooran has also corroborated this fact in his statement. Similarly payment of Rs. 10,000/ was made on 8.2.92 by Anil Bakshi,CCT of the bank to H S Harnotia at Hotel Holiday Inn on the instructions of R P Nagar, Manager of the bank. This fact is also corroborated by Anil Bakshi in his statement. The payment in the two later cases is also corroborated by their conveyance bills i e to Pooran and Anil Bakshi. The voucher dt 17.11.92 for Rs.15,000/ bears the signatures of H.S Harnotia. On 1.9.92 Rs.5,000/ and on 26.9.92 Rs. 4,000/ were paid to Sh A K Sadhu, Employee of M/S Indo Dutch Foods Ltd. Sh Sadhu has stated that he had received the said payments of Rs.9,000/ on behalf of Sh H S Harnotia and the said amount was handed over by him to Sh Harnotia.
16 Out of the amount of Rs,1,31,304/ an amount of Rs. C C No.47/95 9/36 66,000/ was credited to suspense account and corresponding debit entry was made in deposit mobilization account. An amount of Rs. 15,000/ was paid to H S Harnotia vide debit voucher dt 17.11.92 and Rs.5000/ vide debit voucher dt 18.11.92, whereas voucher dt 17.11.92 has been signed by H S Harnotia in token of having received the payment but the other voucher dt 18.11.92 does not have any such acknowledgment by H.S Harnotia but instead bears the initials of R P Nagar. Total payment shown to Sh H.S Harnotia from suspense account totals to Rs.1,01,304.00.
17 The payment of Rs.20,000/ to H S Harnotia vide debit voucher dt 17.11.92 and 18.11.92 as discussed above was reversed vide two credit vouchers dt 21.11.92 and credit entries in suspense account on this day have been made in register of suspense and sundry creditors and on the same day a false voucher for Rs.20,000/ was prepared showing the payment to A K Munjal, Advocate towards his professional charges. The said voucher was prepared on the instruction of Sh R P Nagar by Sunita . Sh AK Munjal denied receipt of the said payment during investigation. In this allegation it is also alleged that an amount of Rs. 20,000/ was paid to U.R Kapoor, Registrar, Cooperative Societies, Delhi as illegal gratification for getting the Maximum Credit Limit sanctioned. MCL is the borrowing power of the bank which the bank can borrow from the C C No.47/95 10/36 outside agencies. Initially Maximum Credit Limit is fixed by the Co operative Bank in its Annual General Body Meeting and is sent to Registrar of Cooperative Societies as per Rule 69 of Delhi Co operative Societies Rule 1973. In the instant case the Parishad Co operative Group Housing Society passed a resolution in its A.GM dt 12.7.92 and submitted application in Societies on 20.10.92. The Parishad Cooperative Bank had applied for fixation of MCL of Rs. 18,10,34,500/ to Sh U.R. Kapoor who has sanctioned MCL of Rs. 1,69,34,240/ only vide his order dated 12.11.90 . In view of this position the allegations of bribe to U R Kapoor is not substantiated in the absence of sufficient evidence. Moreover, during the course of searches of the residence of U.R Kapoor no incriminating articles were received in respect of the allegation of bribe. 18 The third allegation relates to opening of fictitious account No.173 in the name M/S Premier Industries . Account No. 173 was opened in the name of Pradeep Kumar on 13.11.90 by an unknown person. The said account opening form has been signed as Pradeep Kumar, authorship of which could not be ascertained. Immediately, after opening of this account cheques of heavy amount have been passed for payment by Sh R P Nagar without any sanction of loan to this firm. Most of the cheques are withdrawal of money have been filled in by Nagar, the details of cheque are given at page C C No.47/95 11/36 No.13 of the charge sheet.
19 The amount of Rs.2 lacs was transferred from this fictitious a/c No.173 to the a/c No.120 of M/s Indo Dutch Foods Ltd of Sh H S Harnotia on 10.4.91. This account No.173 was closed by transferring the amount of Rs.6,56,745.37 equivalent to debit balance from the account of deposit mobilization on 19.3.02.
20 R.G.Luthra had applied for a loan of Rs.5.50 lacs for construction of building on 9.5.91. The loan committee in its meeting on 28.7.91 has recommended a loan of Rs.3.50 lacs to the party which was recommended by the Board of Directors in its meeting on 31.7.91. In the secret office report of Sh O P Kaim, member of the loan committee had observed that " before considering this case, we should have joint inspection by the three Hon'ble Directors". There is no document in the file to indicate whether this inspection is carried out or not. Although the party was sanctioned loan of Rs.3.50 lacs by the Board but actually the loan was released upto 5 lacs till 4.7.92, about 1.50 lacs above the sanction limit. There is no enhancement in the loan by the Board of Directors in this regard. As such the disbursal on the part of the Branch Manager was highly irregular. The loan was disbursed by transfer of various amounts to the S.B Account No.2027 also in the name of R.C Luthra . On 5.5.92 a sum C C No.47/95 12/36 of Rs.25,000/ was transferred at first to S.B account No.2027 but on the same day this account was transferred to current account No.120 of M/S Indo Dutch Food Ltd which does not relate for the purpose of construction of the house.
21 The sublease deed submitted in the bank is a photocopy and in the name of Smt Leelawati and no document showing equitable mortgage in favour of the bank to provide security against the loan have been held by the bank. The mention of power of attorney in favour of Mr R.G Luthra have also not been confirmed by any document or power of attorney thereby rendering the loan fully unsecured. The sublease deed is also not enforceable and cannot be considered to give a proper security. On the basis of these documents the loan should not have been sanctioned and disbursed. The sanctioning authority should have verified the proper ownership of the land before sanctioning the loan. The following documents viz. Demand note and its acknowledgment, original perpetual sublease deed of the property in the name of R.G. Luthra, agreement for creation of equitable mortgage of the said property, estimate of architect towards cost of construction alongwith house map duly passed by the concerned authority are also not available in the loan file. The total amount outstanding in this account as on 22.9.94 is Rs. 1,13,836.10.
C C No.47/95 13/36 22 Sh R N Luthra applied for a loan of Rs.5.26 lacs in the name of M/s Luthra Plastic Industries for the purpose of plant, machinery and working capital loan limit on 15.12.90. The name of the firm has been changed from Luthra Polythene Bags ( Regd) to Luthra Plastic Industries on the application form. On the signatures also the stamp of Luthra Polythene Bags ( Regd) and Luthra Plastic Industries on the application form. On the signatures also the stamp of Luthra Polythene Bags ( Regd.) and Luthra Plastic Industries have been used. On 15.2.91 the loan committee in its noting recommended a loan of Rs.5.26 lacs to M/S Luthra Polythene Bags for machinery and working capital. The name appears at Sl No.5 of the list under secured loan on 15.2.91. The Board of Directors in its meeting on 17.5.91 have sanctioned a loan of Rs.5.26 lacs to M/S Luthra Polythene Bags ( Regd.) as recommenced by the loan committee. The name of the party appeared at Sl No.4 of the typed list pasted on the Board proceeding book. No loan has been either recommended by the loan committee or approved by the Boar of Director to M/S Luthra Platic . On the back of the secret office Report the Branch Manager, Sh R P Nagar has written note for Chairman mentioning therein that Board of Directors has sanctioned Rs.2 lac working capital limit and Rs.3.26 lacs as term loan and that all the legal and other formalities have been completed.
C C No.47/95 14/36 23 The account is secured by the deposit of the title deed of the property and had asked for the permission to release the limit in favour of M/S Luthra Plastic Industries on 12.3.91. On the same day the Chairman Harnotia has noted " Release only for machinery under hypothecation and rest amount may release after taking another additional property." Sh R P Nagar, Branch Manager, has incorrectly mentioned on the Secret Report that the loan has been sanctioned to Luthra Plastic Industries. It appears that the cheque in the firms name has been made subsequently and this fact was not placed before the Board of Directors. Any term loan payment is made against invoice for purchase of machinery etc through draft/pay orders. On 13.3.91 first debit entry in term loan account pertains to pay order No.43271 for Rs.2.19 lacs issued in favour of M/S Ramesh Engineering Works. No stamp receipt is received that the amount has been received from the above firm. The details of the item purchased is also not on record. There is only one stamp receipt dt 3.3.91 for Rs.1,22,750/ of the same party starting having received a total sum of Rs.1,22,750/ on different dates till 3.3.91 against confirm standing orders of specific machinery and plant of PVC etc. This receipt has no relation with the amount of above cited cash order for Rs.2.19 lacs. Likely there are 3 more entries dt 13.3.91, 12.6.91 and 25.6.91 for Rs. 6,000/ being transferred to M.S Account No.2198 of R.N. Luthra , C C No.47/95 15/36 Rs.62,000/ transferred to S.B Account No.2027 of R.G Luthra, brother of the Prop and Rs.24,000/ to one Sh Suresh Chand Singal. This does not indicate that the amount of advance has been withdrawn for the purpose for which the limit was sanctioned. As against sanctioned limit of Rs.2 lacs, in CC account No.32, an amount of Rs.3,40,795.58 have been disbursed as on 28.8.92 to M/S Luthra Plastic whereas in the MTL account No.17 a sum of Rs. 3,70,950.25 have been disbursed as on 29.8.90 to the said firm against sanctioned limit of Rs.3.25 lacs. No enhancement either in the CC Limit or in the term loan has been sanctioned by the Board of Directors. No stock statements have been obtained from the party to show whether the loan amount is being used for the purpose for which it has been sanctioned. It is mandatory for the party to submit stock statement to the bank at regular intervals. The total outstanding in the MTL account No.17 as on 11.9.94 is Rs.1,35,463.50 while in CC account No.32 the total outstanding is Rs.2,77,889.35 as on date. 24 The pay order No.43271 for Rs.2.19 lacs was issued in favour of Ramesh Engineering Works from the said term loan account. The address of the firm is given as Y8/2, Loha Mandi, Naraina,Delhi28. During investigation the said firm Ramesh Engineering Works was found to be a fictitious and nonexisting firm and it was further disclosed that Sh Ramesh Chand Luthra younger C C No.47/95 16/36 brother of R N Luthra got opened a current account No.4718 on 8.3.91 in Oriental Bank of Commerce, Shahdra Branch, Delhi in the name of M/S Ramesh Engineering Works, Y8/2, Loha Mandi, Naraina, Delhi28 viz R C Luthra as its prop. The account was introduced by K L Luthra, elder brother of Sh R N Luthra and the said cheque No.043271 for Rs.2,19,000/ was deposited in this account by Sh R N Luthra . The amount was subsequently withdrawn from the said account by R.C Luthra and R N Luthra vide cheque No. 430354 dt 21.3.91 for Rs.40,000/,Cheque No.430351 dt 15.3.91 for Rs.1,10,000/ ,cheque No.430353 dt 20.3.91 for Rs.60,000/ and ultimately the account was closed on 7.9.91 by withdrawing the remaining amount of Rs.940/ vide cheque No.430352. 25 The GEQD opinion has confirmed the hand writings of S/Sh R N Luthra, R.C Luthra and K L Luthra on the account opening form, vouchers and the receipt dt 3.3.91 for Rs.1,22,750/ issued by R C Luthra as prop of Ramesh Engineering works.
CHARGE 26 Copies required U/S 207 Cr P C supplied to accused. After hearing both the parties vide order dt. 20.8.20002 charge has been framed against all the accused U/S 120B, R/W Section 420 IPC and 13(2) R/W 13(1) (d) of P C Act. Substantive charge for the offence punishable U/S 420 IPC and U/S 13(2) R/W 13(1) (d) of P C C C No.47/95 17/36 Act has been framed against accused H S Harnotia and R P Nagar. Substantive charge for the offence punishable U/S 420 IPC has been framed against accused R G Luthra, R C Luthra, R N Luthra and K L Luthra. All the accused have pleaded not guilty to the charge and claimed trial. Hence, this trial.
PROSECUTION EVIDENCE 27 In order to prove its case prosecution has examined following witnesses.
PW1 Shri Pratap Singh has proved a file relating to M/S Premier Industries Ex PW1/A, its account opening form Ex PW1/A1, credit voucher Ex PW1/A2, withdrawal cheques Ex PW1/A3, Ex PW1/A4, Ex PW1/A6 to Ex PW1/A24. He has also proved vouchers Ex PW1/B1 to B4 PW2 Shri Om Parkash has proved bye laws of Parishad Cooperative Bank Ex PW2/A, proceedings of Loan Committee ExPW2/B , Ex PW2/C and proceedings minute book dated 31.7.91 Ex PW2/D. PW3 Sh Vijay Luthra has deposed that no firm existed by the name of M/S Premier Industries at F14/13 Krishna Nagar.
PW4 Shri Devender Singh has also deposed that he had C C No.47/95 18/36 not seen any firm existed by the name of M/S Premier Industries at F14/13 Krishna Nagar.
PW5 Shri Yogender Kumar Makwana has proved his complaints Ex PW5/A and PW5/B. PW6 Shri Rakesh Khandelwal has deposed that no office of M/S Ramesh Engineering Works existed at Plot No.Y8/2 Loha Mandi Naraina.
PW7 Ramesh Kumar Atal has proved seizure memo Ex PW7/A , PW7/B, PW7/T. He has proved vouchers Ex PW7/C, Ex PW7/D, Ex PW7/D , Ex PW7/E, Ex PW7/F,Ex PW7/G,Ex PW7/H , Ex PW7/J,Ex PW7/L, Ex PW7/N,Ex PW7/O, Ex PW7/P1 to P12. He has also proved voucher Ex PW7/Q1 to Ex PW7/Q44, Ex PW7/R, Ex PW7/S1 to PW7/S15. He has proved account opening form of M/S Indo Dutch Foods Ltd Ex PW7/U. He has also proved original ledger Sheet Ex PW7/I, entry about debit voucher Ex PW7/D PW8 Sh Om Parkash has deposed that there was no company in the name of M/S Remesh Engineering at Y8/2, Loha Mandi.
PW9 Sh Dalip Kumar has deposed that he has not seen the firm of office by the name of M/S Remesh Engineering at Y8/2, Loha Mandi.
PW10 Sh Bal Kishan Dhawan has proved seizure memo C C No.47/95 19/36 Ex PW10/A, account opening form Ex PW10/B, payinslip Ex PW10/C, specimen signature Card Ex PW10/D, Cheque Ex PW10/E, PW10/F, PW10/G and PW10/H. PW11 Shri K R Awasthi has proved letter Ex PW11/A. PW12 Sh B.M. Sethi has proved notings Ex PW12/A , PW12/B and order of enquiry officer Ex PW12/C. Inadvertantly PW 14 has come after PW 12.
PW 14 Shri Aseem Kumar Sadhu has also proved voucher Ex PW7/N, Ex PW7/Q1, PW7/H and payment vouchers Ex PW7/N and PW7/Q.1.
PW15 Sh Anil Kr Baxi has also proved vouchers Ex PW15/A, PW15/B, PW15/C, Ex PW15/D, Ex PW15/E , PW15/F and Ex PW15/H, PW15/I and Ex PW15/J. PW16. Ramji Lal has proved minutes of meeting dated 5.9.87 Ex PW16/A. PW17 Sh Uday Vir Singh has deposed orally.
PW18 Shri Rakesh Munjal has also proved voucher Ex PW7/34.
PW19 Shri J B Naqtiwala has deposed orally.
PW20 Sh Shyam Sunder has also deposed orally.
PW21 Sh Santosh Kumar has also proved Ex PW15/A and Ex PW7/S1.
C C No.47/95 20/36
PW22 Sh Chandra Kishore Mehrotra has also proved Ex PW2/C, Ex PW2/D4, PW2/F, Ex PW2/E. PW23 Ms Kavita Chhabra has proved entries of ledger sheet of account No.30 and 40 Ex PW23/A and PW23/B, vouchers Ex PW Ex PW23/A1 to A4 and Ex PW23/C. PW24 Sh Vinod Kumar Gupta has deposed that no firm in the name and style of Premier Industries was running at F14/13 Krishna Nagar, Delhi.
PW25 Sh B.S Rana has deposed orally.
PW26 Sh Vinod Kumar Goel has not proved any document and deposed orally.
PW27 Sh Darshan Singh has also proved documents Ex PW10/B, Ex PW10/D, PW10/F, PW10/G and PW10/H. PW28 P K Dhar has proved letter Ex PW28/A, Directives issued by Urban Bank Department, RBI Ex PW28/B to PW28/E. PW29 Smt Jyoti Joshi has proved account opening form Ex PW29/A, cheques Ex PW29/A1, PW29/A2, copy of ledger Ex PW29/A3 and Ex PW29/A4, Membership form Ex PW29/B, Ex PW29/B1, credit voucher Ex PW29/B2, cash books Ex PW29/C, Ex PW29/C1, Ex PW29/C3, all Expenses register Ex PW29/D. PW30 Shri Raj Kumar has deposed orally and not C C No.47/95 21/36 proved any document.
PW31 Shri Hari Smrit Singh Dua has also proved vouchers Ex PW7/U56, Ex PW7/U44, ExPW7/U45 and Ex PW7/U34.
PW32 Dr B A Vaid ,GEQD has given his reasons for opinion Ex PW32/P1 and Ex PW32/P2.
PW33 Sh Puran Chand has deposed orally.
PW34 Sh S C Dandriyal has proved FIRs Ex PW34/A, PW34/B, Seizure memo Ex PW34/C, Ex PW34/D, Ex PW34/E, PW34/F, PW34/G, ExPW34/L, ExPW34/M, PW34/N, PW34/O, PW7/T, letter Ex PW34/H, Ex PW34/I, Ex PW34/Q, Ex PW34/R , Ex PW34/S, Ex PW34/T, Ex PW34/U, and Ex PW34/V, endorsement Ex PW34/J, copy of opinion of GEQD Ex PW34/J and PW34/K, copy of charge sheet Ex PW34/P. DEFENCE OF ACCUSED AND DEFENCE EVIDENCE.
28 Statement of all the accused recorded u/s 313 Cr.PC.
Accused H S Harnotia has stated he is innocent, complainant Y K Makwana had filed six FIRs against him on the same day with CBI who was under his influence as he was Ex State Home Minister . In RC No.6 which was also regd on the same day he has already C C No.47/95 22/36 been discharged because the Hon'ble Court found misjoinder of accused and mis joinder of charges. FIR was lodged due to political motive as he was main political rival of Mr Makwana and he had not obliged him by fulfilling his political motive.
Accused R P Nagar has stated that he is innocent. He has been falsely implicated in this case. With all his honesty and integrity he acted in good faith and without negligence in the bank during normal banking hours. He had no choice to given his consent or choice to grant any facility to the bank because he had not been delegated with the powers as would be seen from Reserve Bank of India, Inspection Report dt 31.8.91 and bye laws of Parisad Cooperative Bank, rule No.49 (1) (xviii) . He strive every nerve and serve the bank interest without any benefit from the bank.
Accused R N Luthra has stated that he is innocent. It is a false case , no wrongful loss has been caused to the bank and there is no gain to him from Parishad Co operative Bank of any of his misrepresentation or concealment of facts.
Accused Ramesh Chand Luthra has stated that he is innocent. He has been falsely implicated in this case. Ramesh Engineering Works was in existence under his proprietorship at Y8/2, Loha Mandi, Naraina, New Delhi. Any clerical shortcoming or irregularity on the part of bank official may not be considered and C C No.47/95 23/36 termed as conspiracy on him.
Accused Ram Gopal Luthra has stated that he is innocent. It is a false case .There is no evidence that he was in any way maneuvered or arranged any finances for Indo Dutch Foods Ltd. Investing of Rs.25,000/ from his saving bank account is an independent act . He was a common customer of bank and had given all requisite guarantee and documents .
Accused K L Luthra has stated that he is innocent. He has been falsely implicated in this case. He was not an introducer to the borrower nor any guarantor nor had any influence over the bank for sanctioning any loan to Luthra Plastic Industries . He has not caused any wrongful loss to the bank.
DEFENCE EVIDENCE .
29 Accused in their defence have produced following witnesses:
DW1 Sh S S Bhatia, Architect has proved his valuation report Ex DW1/A. C and D form Ex DW1/B and C. DW2 Sh Satyapal has proved copy of lay out plan Ex DW2/A1 to A7.
DW3 Sh Surender Kharbanda has deposed orally.
DW4 Sh J K Sharma has also deposed orally.
DW5 Sh. Ramesh Chand has deposed orally.
C C No.47/95 24/36 DW6 Sh Subhash Singal has deposed orally.
DW7 Sh Ajit Singh has brought the summoned record title CBI Vs H S Harnotia & Ors CC No.01/05 RC No6A/93.
DW8 Sh Ramesh Kumar Atal has brought the original record of Parishad Cooperative Bank in respect of loan granted to R N Luhra, R.C Luthra and R.G Luthra.
DW9 Sh Sanjay Vij , has stated that as per the file Luthra Plastic Industries was having ISI mark.
DW10 Sh R K Yadav has proved copy of application for grant of Factory Licence to Sh Ram Nath Ex DW10/A,Ex DW10/C and Ex DW10/E, copy of security form Ex DW10/B and copy of factory licence Ex DW10/D. DW11 Sh Mahesh K Choudhary, Advocate has proved the inspection report Ex DW11/A. DW12 Sh Jagpal Singh Chaney,Architect & Valuer has proved his report Ex DW12/A. Accused R G Luthra and R N Luthra appeared as their own witness U/S 315 Cr P C Arguments Heard. file perused.
SANTION AND PUBLIC SERVANT.
C C No.47/95 25/36
30 Ld Sr P P argued that accused R P Nagar the then working as Chief Executive Officer in Parisad Co operative Bank and H S Harnotia was the Director of the bank hence both these accused are public servants.
31 It is further argued that accused R P Nagar was the then working as Chief Executive Officer in Parisad Co operative Bank however he has been dismissed from the services. H S Harnotia was the then Director of the Parisad Co operative Bank however he has already been removed as Director of the Bank, in these circumstances, no sanction for the prosecution of both these accused is required as they were not the public servants at the time of filing of this charge sheet.
32 It is submitted on behalf of prosecution that according to Section 2(b) of P C Act 1988 ( Public duty ) means a duty in discharge of which the State, the public or the community at large has an interest. U/S 2 (c) there are XII clauses, supported with 2 explanations, under which the meaning of public servant are elaborated. According to explanation 2 " wherever the word ' public servant' occur, they shall be understood of every person who is in actual possession of situation of a public servant, whatever legal defect there may be in his right to hold that situation." As such accused R P Nagar and H S Harnotia are public servant at the time of C C No.47/95 26/36 commission of offence.
33 Ld Defence counsels for all the accused forcefully argued that Parisad Co operative Bank was a private bank its employees are neither cover U/S 2(c) (ix) of P C Act 1988 as the bank was being run by a Co operative society and has not received any financial aid from the Central Govt or State Govt or from any co operation or any authority or body owned or control by the Govt, nor its employees covered U/S 2(c) (viii) of P C Act 1988 as even they do not hold any such office by virtue of which they were authorise or require to perform any public duty.
34 It is further argued on behalf of all the accused that prosecution has not produced even an iota of evidence on the judicial file to prove that Parisad Co operative Bank was receiving or having ever received any financial aid from the Central Govt or State Govt or from any co operation or any authority or body owned or control by the Govt . Prosecution has also not produced any evidence to prove that accused H S Harnotia and accused R P Nagar or any other employee of Parisad Co operative bank were holding office by virtue of which they are authorized or required to perform any public duty. It is argued on behalf of accused H S Harnotia that he was part time C C No.47/95 27/36 Honorary Director and was not charging any money. Thus prosecution has failed to prove that HS Harnotia and R P Nagar were covered under the definition of public servant as defined U/S 2 (c) of P C Act 1988. Ld Defence counsels placed reliance on the following authorities in support of their submissions.
State of Maharashtra Vs Laljit Rajshi Shah & Ors 2000 Cr L J 1494.
Greater Bombay Cooperative Bank Ltd Vs M/S United Yarn Pvt Ltd & Ors AIR 2007 SC 1584.
Federal Bank Ltd Vs Sagar Thomas & Ors AIR 2003 13 SCC
418. State of Punjab Vs Nirmal Kaur ( 2009) 12 SCC 418. State of Maharashtra Vs Prabhakarrao & Anr JT 2002 ( Suppl.
1) SC 5 35 I have carefully considered all the arguments raised before me by the Ld Senior Prosecutor and all the Ld Defence counsels and have also gone through the record. There is no averment in the charge sheet whether Parisad Co operative Bank was receiving or having ever received any financial aid from the Central Govt or State Govt or from any co operation or any authority or body owned C C No.47/95 28/36 or control by the Govt .
36 Undoubtedly, Parisad Co operative Bank was a private bank in which only the members of Co operative society can open their accounts or obtain loan etc according to its bye laws. 37 There is no averment in the charge sheet that accused H S Harnotia and accused R P Nagar or any other employee of Parisad Co operative bank were holding office by virtue of which they were authorize or required to perform any public duty. 38 Prosecution has not produced any evidence to prove that Parisad Co operative Bank was receiving or having ever received any financial aid from the Central Govt or State Govt or from any co operation or any authority or body owned or control by the Govt or that accused H S Harnotia and accused R P Nagar were holding office by virtue of which they were authorized or required to perform any public duty.
39 Hon'ble Supreme Court in State of Maharashtra & And Vs Prabhakarrao & Ans JT 2002 ( Suppl.1) SC 5 has held as follows:
" The question for consideration is whether the accused in the present case comes within the purview of the aforementioned clauses or any other clauses of Section 2(c) of the PC Act 1988. For determination of the question, enquiry into facts, C C No.47/95 29/36 relating to the management, control and funding of the society is necessary to be ascertained."
40 Hon'ble Supreme Court in State of Karnataka Vs M Muniswamy 2004 SCC (Cri) 1151 has observed as follows:
" In this particular case no document has been produced to show that Indian Tourism Development Corporation was a government company. PW16, the General Manager of Ashoka Gotel did not say that ITDC was a government company. All that he had said was that it was a corporation created under the Companies Act. If PW16 had further said that the Government held more than 50% of the shares of that Company the court could perhaps have come to the conclusion that even in spite of a specific statement made by the witness, the Corporation was a government company. As we have checked up the evidence of PW 16 we have noticed that the witnesses had not stated anything about that crucial aspect. It is important in this context to point out that even when the respondent was questioned under Section 313 of the Code of Criminal Procedure no question could be put by the Court regarding the status of the Corporation as a government company."
41 Thus from the ratio of law laid down in the above cited authorities it is clear that prosecution has to establish by substantive evidence that accused at the time of commission of offence were working as public servant.
42 In this case prosecution has not produced any evidence C C No.47/95 30/36 to prove that Parisad Cooperative Bank was aided or control by the Govt.
43 In this case accused H S Harnotia on 21.11.2008 moved an application for dropping the proceedings as he was not a public servant because Parisad Cooperative bank was neither aided nor control by Government, thus the Court of Special Judge has no jurisdiction to try this case for committing any offence under P C Act 1988 . This Court vide order dated 3.7.2009 dismissed that application holding that he was a public servant, relying upon the Banking Regulation Act 44 Accused H S Harnotia has challenged the above order of this Court in the Hon'ble High Court of Delhi vide Crl MC No. 2033/2009 Crl MA No.7548/2009. Hon'ble High Court vide order dated 7.9.2009 dismissed the same as withdrawn as per following order :
" 1. The first contention of the learned Senior counsel for the petitioner is that the petitioner is not a public servant, Secondly, that there was misjoinder or charges and thirdly that the charge sheet was without jurisdiction.
2 The learned Additional Standing Counsel for the State /CBI has stated that the prosecution evidence has already been completed and the statement of the accused persons have also been recorded. The petitioner has now to produce his defence . He C C No.47/95 31/36 further states that he has no objection in case all these points are permitted to be raised by the petitioner at the stage of final argument.
3 Learned Senior counsel for the petitioner has stated that he is satisfied with the statement made by learned Additional Standing Counsel for CBI and therefore, does not press for the petition at this stage.
4 The petition is accordingly, dismissed as withdrawn with the liberty to the petitioner to urge all the above points at the stage of final arguments."
45 In view of the above order of Hon'ble High Court accused H S Harnotia and R P Nagar have addressed arguments on the point that they are not public servants as defined U/S 2(c) clause viii and ix of P C Act 1988 and I have considered the same. 46 In Federal Bank Ltd Vs Sagar Thomas & Ors AIR 2003 13 SCC 418 Hon'ble Supreme Court has held as follows:
" Merely because the Reserve Bank of India lays the banking policy in the banking system or in the interest of monetary stability or sound economic growth having due regard to the interests of the depositors etc as provided under S. 5(c) (a) of the Banking Regulation Act does not mean that the private companies carrying on the business of or commercial activity of banking, discharge any public function or public duty. These are all regulatory measures applicable to those carrying on commercial activities in banking and these companies are to act according to these provisions failing which certain consequences follows as indicated in the Act itself. C C No.47/95 32/36 Provision regarding acquisition of a banking company by the Government , it may be pointed out that any private property can be acquired by the Government in public interest. It is now judicially accepted norms that private interest has to give way to the public interest. If private property is acquired in public interest it does not mean that the party whose property is acquired is performing or discharging any function or duty of public character though it would be so for acquiring authority."
47 Hon'ble Supreme Court in Greater Bombay Cooperative Bank Ltd Vs M/S United Yarn Tex Pvt Ltd & Ors has observed as follows:
"Cooperative banks' established under the Maharashtra Cooperative Societies Act, 1960 (MCS Act, 1960): the Andhra Pradesh Cooperative Societies Act, 1964 (APCS Act, 1964): and the MultiState Cooperative Societies Act, 2002 (MSCS Act, 2002) transacting the business of banking, do not fall within the meaning of 'banking company' as defined in S.5(c) of the Banking Regulation Act, 1949 (BR Act).
Therefore, the provisions of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 (RDB Act) by invoking the Doctrine of Incorporation are not applicable to the recovery of dues by the cooperative from their members.
It is further held as follows in this authority. The distinction between peoples cooperative banks serving their members and corporate banks doing commercial transactions is fundamental to the constitutional dispensation and understanding cooperative banking generally and in the context of co operative banking not coming under the ambit of the BR Act. Thus, even if the co operative are involved in the activity of banking which involves lending and borrowing, this is purely incidental to their main cooperative activity which is function in public C C No.47/95 33/36 domain.
The RDB Act was passed in 1993 when Parliament had before it the provisions of the BR Act as amended by Act No.23 of 1965 by addition of some more clauses in Section 56 of the Act. The Parliament was fully aware that the provisions of the Br Act apply to cooperative societies as they apply to banking companies. The Parliament was also aware that the definition of 'banking company' in S.5 (c) had not been altered by Act No.23 of 1965 and it was kept intact and in fact additional definitions were added by S.56 (c). Cooperative bank was separately defined by the newly inserted Cl. (cci) and primary cooperative bank was similarly separately defined by Cl. (ccv). The Parliament was simply assigning a meaning to words; it was not incorporating or even referring to the substantive provisions of the BR Act. The meaning of banking company must therefore, necessarily be strictly confined to the words used in S.5(c) of the Br Act. It would have been the earliest thing for Parliament to say that banking company shall mean banking company as defined in S.5(c) and shall include cooperative bank as defined in S.5(cci) and primary cooperative bank as defined in S.59ccv). However, the Parliament did not do so. There was thus a conscious exclusing and deliberate omission of cooperative banks from the purview of the RDB Act. The reason for excluding co operative banks seems to be that cooperative banks have comprehensive, self contained and less expensive remedies available to them under the State Cooperative Societies Acts of the States concerned, while other banks and financial institutions did not have such speedy remedies and they had to file suit in Civil Courts." 48 Hon'ble Supreme Court in State of Punjab Vs Nirmal Kaur (2009) 13 SCC418 has held that clause viii, ix and xii of Section 2 (c) of PC Act 1988 have no application wherein accused was running a private coaching center and not performing any public C C No.47/95 34/36 duty. It is held as follows:
" Prevention of Corruption Act, 1988 S 2(c) (viii) Applicability of Whether respondent a public servant Respondent running a coaching center Respondent was not holding an office by virtue of which she was authorized to perform any public duty Stand of appellant State that in any event by running a coaching centre, respondent was performing public duty Held, submission overlooks basic requirement of cl. (viii) of S. 2(c) which is applicable only when a public servants hold an office by which he is authorized or required to perform any public duty."
49 In view of above observation of Hon'ble Supreme Court with regard to Banking Regulation Act qua the private companies carrying on business of commercial activities of banking and with regard to co operative bank run by co operative societies, now this Court is of opinion that employee of such co operative banks which are neither receiving or having ever received any financial aid from the Central Govt or State Govt or from any co operation or any authority or body owned or control by the Govt are not the public servant as defined U/S 2 (c) (viii) and (ix) of PC Act 1988.
50 According to prosecution except accused H S Harnotia and R P Nagar none of the other accused are public servant in C C No.47/95 35/36 this case. In view of my above finding that accused H S Harnotia and R P Nagar were not public servants at the relevant time as defined U/S 2 (c) (viii) and (ix) of PC Act 1988 , as such none of the accused was public servant at the time of commission of this offence. In these circumstances, when none of the accused was public servant at the time of commission of this offence provision of P C Act 1988 are not applicable to any of the accused because according to Section 3 and 4 of P C Act 1988 a Special Judge, duly notified, is empowered for conducting the trial of only those cases which are punishable under section P C Act and any conspiracy to commit or any attempt to commit or any abatement of any of the offence specified under P C Act. Therefore, this court of Special Judge has no jurisdiction to conduct the trial of this case. Hence, no fruitful purpose will be served in entering the merit of this case without jurisdiction.
51 In view of above finding this file be put up before Ld CMM, Tis Hazari Delhi for the trial of this case as per law who will either himself conduct the trial of this case as per law or will assign to any other court of competent jurisdiction for the trial .
C C No.47/95 36/36
Announced in open court ( V K MAHESHWARI )
Dt. 11.10.2012 SPECIAL JUDGE: DELHI
C C No.47/95 37/36