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Delhi District Court

Cbi vs 1 K L Bhasin, Branch Manager, New Bank Of on 19 May, 2012

       IN THE COURT OF SH. V K MAHESHWARI :SPECIAL                                     
                   
                       JUDGE;  TIS HAZARI DELHI
                        Corruption Case No. 68/99



CBI                 Vs         1   K L Bhasin, Branch Manager, New Bank of
                                     India(Now PNB) Defence Colony, New  Delhi 
                                       Delhi  s/o Late Sh. Mathura Dass, r/o H 
                                      No. EB­46 SFS   Flats, Maya Enclave, 
                                      New Delhi­64                             
                                 2    Sh. G S Tyagi s/o Late Sh. R L Tyagi,
                                        r/o WZ­92, Second Floor, Budhela,Vikas 
                                       Puri, New Delhi at present c/o Sh. Munish 
                                         Tyagi   Advocate, Director   of   M/s Vipee 
                                         Surgicals Pvt.Ltd. New Delhi
                                 3    Sh. R S Bishnoi s/o Raghuraj Singh, r/o 
                                        E­1302 Neel Padam I,Vaishali Ghaziabad,
                                       UP, Director,  M/s Vipee Surgicals Pvt.  
                                         Ltd.  Delhi
                                 4    Sh. P S Sharma (expired on 22.4.2012 and 
                                        proceedings stands abated against him  
                                        vide order dt. 9.5.2012)
                                  5    Sh. Anil Mahajan s/o Sh. C L Mahajan
                                         r/o Qr. No. 6 K, CPWD Colony, Vasant 
                                        Vihar, New Delhi.


R. C No.                                16(A) /96/CBI/ACB/ND



Under Section                   120 Br/w 420, 468,471 IPC and Sec.
                                13 (2) r/w 13 (1) (d) P C Act, 1988

C C  No.68/99                                                                  1/71
 Date of Institution of  case:                     22.12.99            

Arguments concluded on                            8.5.2012

Date of Order                                     19.5.2012

Judgment: 

Facts of the case 

Brief facts of the case according to prosecution are that M/S Vipee Surgical ( P ) Ltd is a registered company with the Registrar of Companies,Delhi and Haryana vide Certificate of Incorporation no.55­33791 dated 4.11.88. As per the resolution dated 1.6.89, accused G S Tyagi ,President ( Comm.) of the company and accused R S Bishnoi, President ( Tech.) of the company were authorized to open an account with the erstwhile New Bank of India at Defence Colony Branch ( hereinafter referred to as ENBI). They were authorized to arrange with the bank for advance to the company by way of loan and over draft from time to time and to change any of the company's property and securities as security thereof. They were authorized to sign any instructions, indemnities and counter indemnities which may be required by the bank from the company in connection with the company's business. They were authorised to acknowledge all type of debts on behalf of company. 2 An application for grant of Cash Credit OD term loan of Rs.240 lacs for working capital and for plant installation was C C No.68/99 2/71 submitted by Vipee Surgical. The company was to manufacture Latex Hand Gloves. Accused K L Bhasin vide document (D.2) recommended that the party was financially sound and enjoyed good reputation in the market based on market inquiries and financial papers submitted with the bank. It was further reported by accused KL Bhasin that the market reputation of the company was good and the proposal being need based can be considered for sanction. The proposal ultimately reached the Head Office and Packing Credit Limit of Rs.26 lacs; FBP Limit of Rs.30 lacs; LC Limit in US$ equivalent to Rs.15 lacs on DP basis; fresh sanction of DP Letter of Credit to the extent of Rs.72 lacs (US$ 4.5 lacs); term loan of Rs.108 lacs for purchase of new plant and machinery imported under FLC and purchase of some indigenous plant and machinery , a generator and some contingencies and term loan of Rs. 23.37 lacs for raising construction of building was granted on the conditions inter alia that Branch Manager was personally to do the pre sanction survey of the guarantors to satisfy himself about fresh assets and send his report to the Head Office and Regional Office. The borrower was first to deposit the margin money before availing any facility and the payment was to be made only by account payees pay order / draft and all necessary original documents and invoices were to be kept on the record. Accused KL Bhasin, Branch Manager was to inspect the C C No.68/99 3/71 main and collateral securities in all accounts immediately on their creation and on every month to ensure that the same were intact. As per terms and conditions, he was personally monitor the progress of the project at regular periodical visits to ensure that the project is implemented as per schedule and bank's interest are watched at all stages of the project. The terms and conditions of the sanction letter were to be complied with before release of the facilities. 3 As per Annexure ­B to the sanction, the Manager was to obtain the legal opinion from the Bank's Chief Legal advisor to ascertain if property bearing plot no.1066 Village Sihani , Meerut Road, Distt. Ghaziabad standing in the name of Hari Singh could be mortgaged with the bank besides complying with all facilities of equitable mortgaged . The owner of the property bearing Khasra No. 1066 Village Sihani, Meerut Road, Distt. Ghaziabad, UP was to give a legal irrevocable unconditional undertaking that he shall not assign, transfer, mortgage , hypothecate etc. or lease any portion of the property under any circumstances without the written consent of the bank. The undertaking was to be taken with the approval of the Bank's Chief Legal Advisor.

4 According to the case of the prosecution, accused K.L.Bhasin did not ensure the fulfillment of the conditions imposed before release of the loan and accepted the letters of M/s. Vipee C C No.68/99 4/71 Surgicals (P) Ltd. signed by its Directors G.S.Tyagi(A2) and R.S.Bishnoi (A.3) respectively and issued the pay orders favouring the firms for whom they wanted. The margin money was not deposited and the amounts released were either misutilised or not utilised either for construction of the building or for purchase of indigenous machinery.

5 It is the case of the prosecution that vide request letter dated 25.9.89 accused R.S.Bishnoi (A.3) and accused G.S.Tyagi (A.

2) being President of Vipee Surgicals Pvt. Ltd. requested for issuance of six pay orders for Rs.1,18,791/­ . The accused K.L.Bhasin (A.1) under his initials on the said letter allowed the issuance of the pay orders. One of the pay orders for Rs.46,280/­ was issued in favour of M/s. Vishal sales Corporation with account no. 1653 Punjab and Sindh Bank, Janpath, which was owned by accused Anil Mahajan (A5) and account was introduced by accused G.S.Tyagi (A.2). On 12.10.89 a request for issuance of eight pay orders was made in the name of different persons for an amount of Rs.2,56,645/­ ,out of which a pay order for Rs.68,500/­ had been diverted to account no.1653, which belongs to accused Anil Mahajan (A5) and account was introduced by accused G.S.Tyagi (A.2). As per request dated 20.10.89 five pay orders for Rs.3,03,916/­ were issued as per approval of accused K.L.Bhasin. Out of this, one pay C C No.68/99 5/71 order for Rs.1,95,000/­ travelled to the account of M/s. Dilshad Supplier & Co. bearing Current Account (hereinafter referred to as C.A.) no.1691 belonging to accused P.S.Sharma (A.4) , which account was introduced by accused G.S.Tyagi (A.2). Out of this amount of Rs.1,95,000/­ an amount of Rs.1 lac. was diverted to the Saving Bank Account of Shri G.S.Tyagi bearing account no.4660, Syndicate Bank, Block no,.3, R.K.Puram, New Delhi and rest of the amount was withdrawn in cash on different dates by accused P.S.Sharma (A4).

6 It is alleged that on 4.12.89 on the request of accused R.S.Bishnoi(A3) pay order for Rs.2,79,352/­ was issued in favour of Surjit Industries on the strength of bill dated 21.11.89 of Surjit Industries for the purchase of indigenous machinery. In this bill, an amount of Rs.95,000/­ had been shown as paid in advance to the firm. The pay order was desposited in Current Account No.13 Punjab and Sindh Bank, Kirti Nagar, New Delhi on 12.12.89. Out of this, an amount of Rs.25,000/­ was withdrawn in cash by the firm on 15.12.89 and pay order of Rs.2,50,000/­ was got made in favour of M/s. Meerut Ago Mills (P) Ltd. belonging to accused P.S.Sharma (A4) having C.A.2191 , New Bank of India, Defence Colony, New Delhi, which account was introduced by Anil Mahajan (A.5). Out of this, amount of Rs.2,50,000/­, a sum of Rs.1,95,000/­ was diverted to C C No.68/99 6/71 M/s. A.M.Arutronics (P) Ltd. vide cheque no.177255 dated 30.12.89 of M/s. Meerut Agro Mills. The firm M/s. A.M.Arutronics (P) Ltd. was operated by accused G.S.Tyagi (A2) and accused Anil Mahajan (A6). According to the case of the prosecution, no machinery was purchased by M/s. Vipee Surgicals (P) Ltd., New Delhi from M/s. Surjit Industries, rather, Mr. Surjit Singh, Proprietor of M/s. Surjit Industries in his statement recorded during investigation has stated that he had prepared the pay order in the name of M/s. Meerut Agro Industries for Rs.2.50 lacs on the direction of accused G.S.Tyagi(A.

2).

7 Vide letter dated 6.2.90, accused G.S.Tyagi (A.2) on behalf of M/s. Vipee Surgical (P) Ltd. requested for issuance of pay orders for purchase of machinery as per details given below :­

1.M/s. Kissan Electric Works : Rs. 6,47,875/­)

2.M/s. A.M.Arutronics Pvt. Ltd. Rs.1,09,060/­) Rs.16,09,165/­

3.M/s. Industrial Machinery Corpn. Rs.5,52,930/­)

4.M/s. Industrial Machinery Corpn. Rs.2,99,300/­) 8 Pay order for Rs.6,47,875/­ was got issued in favour of M/s. Kissan Electricals Works on the strength of invoice no.978 dated 1.2.90. Rs.1,75,000/­ were shown to have been paid in C C No.68/99 7/71 advance. Account no.741 in Syndicate Bank, Sarojini Nagar, New Delhi was opened by accused P.S. Sharma (A.4) on the introduction of accused Anil Mahajan (A.5) . Out of this amount, Rs.5,50,000/­ were transferred to Current Account no.728 of M/s. S. Engineering Industries of accused Anil Mahajan (A.6). Thereafter, this amount was diverted to various other accounts. An amount of Rs.25,000/­ was withdrawn in cash by accused P.S.Sharma (A.4) on 20.2.90. Another amount of Rs.70,000/­ was withdrawn in cash by accused P.S.Sharma (A.4) on 26.2.90 and an amount of Rs.28000/­ was withdrawn in cash by accused Anil Mahajan (A.5) on the basis of a cheque no.023305 issued in his favour. Finally this account was closed on 23.5.90 by withdrawing Rs. 555/­ in cash by accused PS Sharma (A.4).

9 According to the case of the prosecution, the pay order for Rs.1,09,060/­ in favour of M/s. A.M.Arutronics (P) Ltd., which belonged to accused G.S.Tyagi (A.2) and accused Anil Mahajan (A.

5) with Current Account no.1657 in Punjab and Sindh Bank, Janpath, New Delhi was obtained on the basis of invoice dated 5.2.90. In this invoice a sum of Rs.50,000/­ was shown as paid in advance. As per transfer credit voucher dated 9.2.90 prepared by Sumesh Khanna, Accountant and was signed by accused K.L.Bhasin (A.1), the pay order was issued in the name of M/s. A.M.Arutronics (P) Ltd. This C C No.68/99 8/71 pay order was deposited in the C.A.No.1657 maintained at Punjab & Sind Bank, Janpath, New Delhi by accused G.S.Tyagi (A.2) and accused Anil Mahajan(A.5). Out of this amount of Rs.1,09,060/­ an amount of Rs.1 lac was diverted to Saving bank Account no.4660 of accused G.S.Tyagi (A.2) maintained at Syndicate Bank, Block No.3 R.K.Puram, New Delhi and no machinery was purchased as mentioned in the invoice. Similarly, pay order for Rs.5,52,930/­ and Rs.2,99,300/­ in favour of M/s. Machinery Industrial Corporation with Current Account no.1718 was got issued on the basis of bill no. 1206 dated 3.2.90 in which an amount of Rs.2,82,000/­ was shown to have been paid in advance on the basis of invoice no.1221 dated 7.2.90. Various amounts were withdrawn by accused R S Bishnoi (A.3), accused G.S.Tyagi (A.2) and accused Anil Mahajan (A.5) on various dates and these amounts were misutilised and put to different use. Accused G.S.Tyagi (A.2) and accused R.S.Bishnoi(A.3) during the period 1989­90 issued cheques in favour of various firms, many of which like M/s. Vishal Sales Corporation belonged to accused Anil Mahajan (A5), M/s. Dilshad Suppliers & Co. belonged to accused P.S.Sharma (A.4) , M/s. S. Engineering works belonged to accused Anil Mahajan (A.6).

10 Copies required U/S 207 Cr P C supplied to accused. C C No.68/99 9/71 After hearing both the parties vide order dt. 7.12.06 charge had been framed against all the accused for the offence punishable U/s 120B r/w Secs.420, 468 & 471 IPC and Section 13 (2) r/w Sec. 13 (1) (d) of P C Act, 1988. Charge for substantive offences U/s 420 &471 IPC was framed against accused G S Tyagi, charge for offence U/s 13 (2) r/w 13 (1) (d) of P C Act was framed against accused K L Bhasin and charge for substantive offences U/s 471 IPC was framed against accused R S Bishnoi and P S Sharma. All the accused pleaded not guilty to the charge and claimed trial, hence, this trial. PROSECUTION EVEIDENCE.

11 PW­1, Sh. Moolchand Sharma has proved receipt dated 16­11­1989, Ex.PW­1/A he stated that this was pertaining to his firm M/s Kisan electric Works showing that his firm has received an amount of Rs. 1,75,000 from M/s Vipee Surgicals Pvt. Ltd. but the witness neither issued this receipt nor signed on the revenue stamp nor received this payment and it contained his forged signatures. Similarly, on seeing D­102, invoice No. 978 of his firm, Ex.PW­1/B he stated that the said invoice showing that material amounting to Rs.6,47,875/­ has been supplied to M/s Vipee Surgicals Pvt. Ltd. was never issued by him nor the material was supplied and the invoice contained his forged signatures . He further stated that it appears that somebody had taken out the forms from his bill books which were C C No.68/99 10/71 being used by his firm and either G.S. Tyagi or P.S. Sharma had taken out the receipt and invoice from the bill book because they used to come and sit in his shop. His firm was having current account in Syndicate Bank Noida and Ghaziabad and he never opened account of his firm M/s Kisan Electric Works on the address B­109, Katwaria Sarai New Delhi. On seeing D­100, pay order amounting to Rs. 6,47,875 favouring Kisan Electric Works, Ex.PW­1/C, he stated that this pay order was never received by him and similarly on seeing pay­in­slip dated 9­2­1990 Ex.PW­1/D he stated that vide this pay in slip neither he deposited this pay order in the bank account nor it is filled in by him. He further stated that Ex.PW­1/E1 to E7 were his specimen writings which he gave voluntarily to the I.O. during the investigation of this case.

12 PW­2 Sh. Surjeet Singh has stated that he was running his business as Surjeet Industries and was making power machines. He was having current account No. 13 in Punjab and Sindh Bank, Kirti Nagar, Delhi. He introduced account No. 1657 in the said bank favouring A.M. Arutronics, D­16­A, Kalkaji, New Delhi­19, on the request of G.S. Tyagi because he was known to him. He owned his signatures at point A and identified the signatures of accused G.S. Tyagi at Point B and the signatures of Accused Anil Mahajan at Point C. The account opening form is Ex.PW­2/A. On seeing quotation of C C No.68/99 11/71 his firm dated 21­11­1989 for Rs.2,79,352/­, Ex.PW­2/B he identified that this was quotation of his firm containing his signatures at point A and he further identified, Ex.PW­2/B receipt of Rs. 95,000/­ bearing his signatures at point 'A'. He further stated that he had given the quotation to M/s Vipee Surgicals Pvt. Ltd. for supplying the machinery and also received an advance of Rs.95,000/­ and thereafter also pay order amounting to Rs.2,79,352/­ favouring his firm M/s Surjeet Industries was issued and the said pay order Ex.PW­2/D was deposited by him in his C.A/c No. 13 Punjab and Sindh Bank, Kirti Nagar Branch, New Delhi. He has proved Ex.PW­2/E i.e. A/c opening form for the opening of C. A/c No. 13 in Punjab and Sindh Bank, Kirti Nagar Branch. After making advance payment Sh. G.S. Tyagi accused of M/s Vipee Surgical Pvt. Ltd. had told him that he will not purchase the machinery from his firm and got a pay order of Rs.2.5 lac favouring M/s Meerut Agro Mills Pvt. Ltd. On receipt of his request a cheque Ex.PW­2/G amounting to Rs.2,50,020/­ favouring yourself was issued from his account and the pay order Ex.PW­2/F amounting to Rs.2.5 lac was issued in favour of Meerut Agro Mills and delivered to Sh. G.S. Tyagi. The witness identified cheque amounting to Rs.25,000/­ Ex.PW­2/H. He has proved his specimen writing Ex.PW­2/J1 to Ex.PW­2/J5 were his specimen writings which he gave voluntarily to the investigating officer. He C C No.68/99 12/71 also stated that the cheques Ex.PW­2/K and 2/L amounting to Rs. 7,000/­ and Rs.3,200/­ received by him from M/s Vipee Surgicals Pvt. Ltd. He had also received Ex.PW­2/M a cheque of Rs.25,000 favouring M/s Surjeet Industries but the payment of said cheque was received by one P.S. Sharma. He has proved cheque Ex.PW2/N of Rs.15,000 and stated that payment of this cheque has not been received by him.

13 PW­3, Sh. Mohan Jeet Singh has stated that during the period from 1987 to 1998 he remained posted as special assistance in Punjab and Singh Bank Kirti Nagar Branch, and as per seizure memo dated 7­7­1996 D­192, Ex.PW­3/A he had delivered pay order Ex.PA­46/1 amounting to Rs, 2,79,352/­ to the I.O. The clear stamp is on the back as well as on the front Ex.P2/E is the account opening form for the opening of C. A/c in the name of Surjeet Industries 4/6, Industrial Area, Kirti Nagar, New Delhi. Ex.PW3/B is the specimen signature card containing the signatures of the account holder at point 'A' and 'B' and ExPW­2/F was the pay order amounting to Rs. 2,50,000/­ favouring Meerut Agro Mils Pvt. Ltd. prepared from the branch on 15­12­1989, Ex.PW­2/H was the self cheque amounting to Rs.25,000/­ of account No. 13 of M/s Surjeet Industries, Ex.PW­2/G was a yourself cheque amounting to Rs.2,50,020/­ the cheque was C C No.68/99 13/71 delivered by the party for making a pay order of Rs.2,50,000/­. On seeing photocopies of the account statement of current A/c. No. 13 favouring Surjeet Industries for the period from December 1989 to 20­6­1990 the witness stated that the same was delivered to the I.O. Sh. Anil Sharma Inspector vide seizure memo Ex.PW­3/C. 14 PW­4, Sh.Mahinder has stated that he was working as officer Punjab and Singh Bank, Kirti Nagar Branch, as an officer from 1985 to 1991 and Ex.PW­2/A was the account opening form of C.A. No.1657 in the name of M/s A.M. Arutronics Pvt. Ltd. D­16A, Kalkaji, New Delhi opened on 13­06­1989 on the introduction of Sh. Surjeet Singh and the witness has verified the signature of Surjeet Singh.

15 PW­5, Rekha Anand has stated that as per document D­31/1 and 2 was the opinion in respect of property Plot No. 1066, Village Noor Nagar, Pargana Loni, Distt. and Tehsil, Ghaziabad, the opinion was given by her on 17­6­1991 and the said opinion was Ex.PW­5/A. 16 PW­7, Rajesh Goel HAS stated that he was owner of firm Industrial Machinery Corporation which was dealing with electrical goods Krilosker and Diesel generating sets. On seeing D­129 Ex.PW­7/A i.e. receipt dated 13­11­1989 for Rs.2,62,000/­ issued in favour of M/s Vipee Surgicals Pvt. Ltd., he stated that it C C No.68/99 14/71 does not pertain to their firm although the name of their firm is printed and his signatures have been forged by somebody. Similarly, on seeing invoice No.1206 dated 3­2­1990 for Rs.5,52,930/­ Ex.PW­7/B issued by M/s Vipee Surgicals on behalf of their firm Industrial Machinery Corporation he stated that invoice does not pertain to their firm even the performa is not of their firm and the signature at Q175 have been forged by somebody. He also stated that pay order No. 421778 for Rs.2,79,300/­, Ex.PW­7/C was not received by their firm. Similarly, on seeing D­132, Ex.PW­7/C­1, i.e. pay­in­ slip dated 9­2­1990 pertaining to C.A No.1718 neither pertain to their firm nor the account No. is pertaining to their firm. The document D­133 i.e. invoice bill dated 7­2­1990 mentioning the name of our firm has not been issued by his firm to M/s Vipee Surgicals Pvt. Ltd. and the signatures at Q.74 have been forged by somebody. He further stated that he had no dealings with M/s Vipee Surgicals Pvt. Ltd. and he was not even knowing any of the partners of M/s Vipee Surgicals Pvt. Ltd. (opening of account number 1718 on 9­02­1990 in Punjab and Sindh Bank is admitted by accused R.S. Bishnoi and the amount of Rs.2,99,300/­ has been credited in the said account. 17 PW­8, R.K. Hazrati has stated that he was working as Manager vigilance erstwhile New Bank of India, during January 1989 to September 1993 and had conducted inquiry regarding the loan of C C No.68/99 15/71 Vipee Surgicals Pvt. Ltd. when K.L. Bhasin was Manager in the Defense Colony Branch and he had submitted his inquiry report to his senior officer. He stated that it is a normal practice that before disbursement of loan legal opinion regarding collateral security has to be obtained.

18 PW­9, Rajinder Kumar Jindal, Branch Manager, has stated that he remained posted as officer, Punjab and Sindh Bank, Janpath Branch, during the period from June 1982 to 1992­93 and on seeing specimen signatures card of account No. 1657 Ex.PW­9/A he stated that account in the name of A.M. Arutronics was opened by him and the two persons accused G.S. Tyagi and Anil Mahajan have signed on specimen signature card. The account opening form Ex.PW2/A was received in Janpath Branch from Rajindra Place Branch, vide which account was already introduced by Sh. Surjeet Singh holder of C.A. 13. On seeing D­135 he stated that account No. 1718 was opened on 9­2­1990 by him in the Janpath Branch of the bank in the name of Industrial Machinery Corporation mentioning address B­109, Katwaria Sarai, New Delhi and accused Sh. R.S. Bishnoi had signed before him at Q.165 who was authorized to operate the account and the account was introduced by Vishal Sales Corporation holder of account No. 1653 by signing at Q.274. On seeing four cheques Ex.PW­9/B to Ex.PW­9/E he stated he had C C No.68/99 16/71 passed these cheques and the cheques contained the signatures of account holder Sh. R.S. Bishnoi (Vishals sales corporation was of accused Anil Mahajan). On seeing account opening form Ex.PW­9/F he stated that account in the name of Vishal Sales Corporation was opened under the signatures of Anil Mahajan Accused as the account holder and Sh. J.S. Jolly has authorized the opening of this account, Sh. Kultran Singh has introduced the account and Sh. Anil Mahajan has signed at point 'D'. Ex.PW­9/G was the specimen signature card of this account on which account holder Sh. Anil Mahajan has appended two signatures at point 'A' and 'B' in his presence. 19 PW­10, Sh. Pawan Kumar, PC, CBI, Jaipur Branch has stated that in January 1998 he was posted as constable in the summon section in Jaipur Branch of the CBI. He received a notice u/s 91 Cr.PC for service and he visited the addressee the proprietor of M/s A.M. Arutronics Pvt. Ltd. G­17 B, Industrial Area, Dadu District Jaipur and came to know that no such firm was existing there and as such he submitted his report.

20 PW­11, Sh. Bijoy Kumar Pandit 1/15, Tata Officers Enclave, Sector Bita­I, Greater Noida has stated that during the period 1996­99 he was working as branch manager Syndicate Bank, Sarojini Depot and had handed over the documents to the I.O. vide seizure memo Ex.PW­11/A. D­113, Ex.PW­11/B was the specimen C C No.68/99 17/71 signature card of a/c. No. 728 which was opened on 31­5­1989 in the name of S. Engineering Industries, Katwaria Sarai, New Delhi operated by accused Anil Mahajan and Ex.PW­11/C was the main accounting opening form showing that the account was introduced by accused Anil Mahajan himself by signing for his firm SMS Network and the signatures of Anil Mahajan as introducer were at point A and the signatures of account holder were at point B. Ex.PW­11/D is the specimen signature card and the account holder had signed at two places. On seeing account opening form of C.A. No. 741 Ex.PW­11/E he stated that account in the name of Kisan Electric Works B 109, Katwaria Sarai New Delhi was opened in the branch and Sh. P.S. Sharma accused has signed as proprietor of the firm at point 'A'. Ex.PW­11/F was the main accounting opening form which shows that Anil Mahajan holder of C.A. No. 728 has introduced this account by signing at point 'A'. Ex.PW­11/G was the ledger sheet pertaining to this account which shows that an amount of Rs. 6,47,875/­ has been credited in the account on 13­2­1990 an amount of Rs.5,50,000/­ has been transferred on 15­2­1990 in account No. 728 and Ex.PW­11/H, 11/J, 11/A, and 11/L are the cheques pertaining to a/c No. 741 amounting to Rs.25,000, 70,000, Rs.2,800 and Rs.555/­ respectively issued in favour of self, self, Anil Mahajan and self and paid by the branch. On seeing cheque amounting to Rs. C C No.68/99 18/71 5,000,20/­. Ex.PW­11/M he stated that this was a cheque pertaining to account No.728 issued for purchasing the pay order for Rs. 50,000,00/­.

21 PW­12, Sh. Subhash Chand Juneja, R/o 103, Amarjyoti Kunj, Mayur Vihar, Phase­I, New Delhi has stated that he was posted as manager Punjab and Sindh Bank, 48, Janpath, New Delhi and on seeing copy of ledger sheet of account No.8047 of R.S. Bishnoi r/o 3/9, Nehru Nagar, Ghaziabad, U.P. and the same was attested by him and it was Ex.PW­12/A and similarly on seeing copy of the ledger sheet of C.A. No. 1691 in favour of Dilshad Supplier and Co. D­25, Prashant Vihar, Delhi, he stated that this was attested by him and was Ex.PW­12/B. 22 PW­13, Jitender Singh, R/o F­O 323, SFS Flats, Phase­ IV, Ashok Vihar, Delhi has stated that he was posted as Branch Manager, Punjab & Sindh Bank, Janpath, during 1988­91. On seeing C.A. opening form 1653, Ex.PW­9/F in the name of Vishal Sales Corporation he stated that Anil Mahajan was authorized to operate this account and Ex.PW­9/G was its specimen signature card. 23 PW­14, D.P.S. Rawat, Syndicate Bank AGI Bhawan, Rao Tula Rao Marg, Delhi has stated that he remained posted as clerk in Sarojani Nagar Branch of Syndicate Bank. On seeing account opening form C.A. No. 741 Ex.PW­11/F, he has stated that account C C No.68/99 19/71 in the name of Kisan Electric Works, B­109, Katwaria Sarai, Delhi was opened and the same was introduced by accused Anil Mahajan holder of C.A. No. 728. He handed over the documents to the I.O. Ex.PW­11/G is the statement of account, Ex.PW­11/E is the letter of proprietorship pertaining to this account. Ex.PW­14/A was the cheque issued by account holder favouring S. Engineering Industries, and Ex.PW­11/H to 11/L were also the cheques issued from this account. Ex.PW­11/M is the cheque for Rs.5,000,20/­ favouring self for issuing pay order in favour of M/s Vipee Surgicals Pvt. Ltd. and Ex.PW­14/B was the cheque amounting to Rs.50,000/­ issued by S. Engineering Industries C.A. No. 728.

24 PW­15, R.P. Tandon, Flat No. 20A, Pocket­I, Sec.­7, Dwarka, New Delhi has stated that he remained posted cash officer in­charge extension counter Sarojani Nagar, Syndicate Bank during the period 1988 to 89. On seeing account opening form C.A.No. 728, Ex.PW­11/D, in favour of Anil Mahajan, proprietor S. Engineering Industries he has stated that the said account was opened on the introduction of SMS Network Anil Mahajan Accused. The Account opening form Ex.PW­11/C had come through Sector ­4, R.K. Puram, Branch of Syndicate Bank and he had verified the signatures of Sh. Bhaskaran of R.K. Puram Branch. On seeing Ex.PW­15/A i.e. ledger sheet of A/c No. 728 he has stated that on 15­02­1990 there was an C C No.68/99 20/71 entry of credit of Rs. 5,50,000/­ and there was also an entry of withdrawal of Rs.50,000/­ on 17­02­1990 and there was also a debit entry of 5,000,20/­. On seeing Ex.PW­11/E & Ex.PW­11/F i.e. proprietorship letter and account opening form vide which C.A/c. No. 741 in Syndicate Bank Sarojani Nagar, New Delhi was opened in the name of Kisan Electric Works B­109, Katwaria Sarai, New Delhi operated by P.S. Sharma mentioning his full address as B­109, Katwaria Sarai, New Delhi. This account was introduced by Anil Mahajan, holder of C.A/c No. 728, Ex.PW­11/G was the ledger sheet of this account which shows an amount of Rs.5,50,000/­ has been transferred to C.A/c. No. 728 on 15­02­1990. The Ledger sheet also shows that an amount of Rs.6,47,875/­ was credited in this account by clearing.

25 PW­16, P.K. Sharma has stated that he was working as Manager erstwhile New Bank of India, Defence Colony Branch, from May 1981 to 1990 and again from September 90, to May 1991. Sh. K.L. Bhasin accused remained manager during the period from 1987 to 1989. The party M/s Vipee Surgicals Pvt. Ltd. were sanctioned the credit facilities by CMD vide letter dated 26­7­1989, Ex.PW­16/A and the credit facilities included PCL of Rs.26 lacs foreign bill purchase limit Rs.30 lacs, foreign import LC limit Rs.15 lacs, letter of Credit limit USD 4.5 lac and term loan Rs.98.54 lacs. The term C C No.68/99 21/71 loan conditions were Annexure 'A' and 'B' and some terms and conditions also been mentioned on page No.1 of the sanctioned letter. The ledger sheet shows that the account of Mr. Vipee Surgicals Pvt. Ltd. has been opened by Sh. K.L. Bhasin and this also shows that no margin money has been deposited by the account holder before the operation of account and further there was an outstanding of Rs. 36,28,467.42 as on 22­02­1990. In term loan account amount is advanced for the purchase of material / services as per the proposal and sanction and cash withdrawals are restricted. The witness identified large number of cheques passed by the accused K. L. Bhasin, and also some of the cheques which have been passed by some other officers. He has given the details of the ceques issued by directors of M/s Vipee Surgicals Pvt. Ltd. viz. accused G.S. Tyagi and R.S. Bishnoi, passed by accused K.L. Bhasin and huge amounts debited to account No.120 of Vipee Surgicals Pvt. Ltd. All the cheques have been reflected in the ledger sheet Ex.PW­16/B showing debits in CC Account No. 120.

26 PW­17, V.K. Dhingra has stated that he remained posted as Sr. Manager, Punjab National Bank, South Ext., New Delhi during October 1996 to 2000. During this period Defense Colony branch of PNB merged with his branch and all the assets and liabilities were transferred to this branch.

C C No.68/99 22/71 27 PW­18, Somesh Khanna has stated that he joined in erstwhile New Bank of India as a trainee officer in the year 1978 and worked as an accountant in Defence Colony branch of the said bank for some time when K.L. Bhasin was the branch manager. Erstwhile New Bank of India merged with PNB during 1993. On seeing Ex.PW16/B he stated that this was a ledger sheet of term loan A/c No 120 in favour of Vipee Surgicals Pvt. Ltd. and said account was opened by Sh. K. L. Bhasin as per signatures at Q50. He further stated that this account was opened by K.L. Bhasin under his signatures at point A and the last debit balance was Rs.36,42,508/­ and on 14­05­1990 the Branch Manager Sh. K.L. Bhasin was instructed to allow no further debit and Sh. Bhasin noted the instructions at Point A. This was a cash credit­cum - term loan account to facilitate the borrower for construction of building. In constructions so many petty withdrawals are required therefore it is not possible to open various term loan accounts and on completion of limit the amount against it is transferred to loan account. The operation of this account had started on 25­09­1989. 28 PW­19, S.C. Bhalla has stated that investigation of this case was initially entrusted to Sh. Anil Kumar Inspector, thereafter to Sh. Ved Prakash and then transferred to him in January 1991. During investigation he collected the documents recorded the statements of C C No.68/99 23/71 witnesses, referred the questioned writings along with the specimen writings of the accused persons to CSFL, obtained opinion and thereafter filed charge­sheet, against the account persons. 29 PW­20, Sh. S.C. Mittal has stated that on the receipt of questioned documents as well as the standard writings of the accused persons he examined the documents in the laboratory and gave his opinion alongwith the reasons. He has given positive opinion about the writings and signatures of the accused persons on the documents written and signed by accused K.L. Bhasin accused G.S. Tyagi, accused R.S. Bishnoi, accused P.S. Sharma and accused Anil Mahajan.

DEFENCE OF ACCUSED AND DEFENCE EVIDENCE 30 Statements of all the accused U/s 313 Cr PC recorded wherein they have denied all the allegations made against them and evidence produced by the prosecution. They have stated that they are innocent & have been falsely implicated in this case. 31 Accused G S Tyagi has denied that the condition for release of money was not complied with. Branch Manager has taken permission from the Head Office and sought the legal opinion before release of the amount. No CC limit was released, only term loan was released partially. DD was deposited in the account of supplied. The unit was sold to M/s Gamro Nexim Ltd. for Rs.55 lacs including C C No.68/99 24/71 the liabilities and the Directors of New Company had given undertaking before the bank that they will deposit the loan amount and abide the condition in the sale transaction. The bank before DRT, Allahabad had accepted the contention of the New Company stating that bank has no grievance against the present accused and the recovery proceedings have been ordered only against the Directors of M/s Gamro Nexim Ltd. The asset of the company with NEPZ was worth of Rs.4­5 crores from which DRT has already ordered the bank to sale the assets and recover the loan amount and the same can be easily recovered. He has further stated that this is a false case and due to improper investigation he has been implicated and the real culprits have been left over by the Investigating Agency. He was neither the Director nor incharge of the affairs of the company at that relevant time when the allegations have been levelled against him.

32 It is stated by accused R S Bishnoi that the loan could not be recovered due to bank negligence since they had sold the unit, valued at that time for Rs.50 lac for a sum of Rs.55 lacs with liabilities to Mr Mohan Murty, Mrs Renu Murty and Mr K K Aggarwal with bank consent as they have in writing to undertake the liability however the bank choose not to pursue the matter in right C C No.68/99 25/71 prospective and have falsely lodged the report with CBI as it is evident from the recovery suit filed by PNB against M/S V P Surgical Pvt Ltd with DRT. He had taken the money in the name of M/s Industrial Machinery Corporation which was in his name, as at that time he was not the Director of the Company and had no role to play when the loan was obtained by the company from the bank. As a Mechanical Engineer he felt that the generator required by the company was costing around Rs.8.25 lacs at that time, while the sanction cost was Rs.7.50 lacs approximately as such to maintain the project costs he under took the assignment. The generator complying with the specifications as per project was procured and installed at 24­A NEPZ, Noida by him and this was inspected by the bank officials .

33 It is stated by accused K L Bhasin that the cheques were passed in good faith and during the course of normal banking operation. Sh Joginder Singh was Senior officer of the bank and before passing the cheque he had also made sure that prima facie the withdrawals are in order that is why he passed the cheques. The margin money for purchase of machinery was deposited directly by the borrowers and they produced receipts to this effect and the same were verified by Loan Incharge Sh Somesh Khanna . The same are on record as document D­89, D­91, D­92, D­102, D­117, D­118, C C No.68/99 26/71 D­130, D­134. Other advances were for construction of factory premises on the plot of land at Noida NEZP. The accounts bearing No.120 was a Cash Credit term loan and after the completion of the factory the said account was to be converted into term loan alone when the borrowing company had attained financial closure. All the conditions of the sanction were fulfilled before the release of the bank fund and all the safeguards to protect the interest of the bank were taken by way of duly executed loan documents supported by tangible security , primary as well as collateral and personal guarantee of the Directors of the company . As regards margin money the same was deposited by the borrowers directly with the machinery supplier and the borrowers had produced proper receipts to this effect which were found to be in order prima facie by the loan officer of the bank . The collateral security as well as the primary security consisting of land was duly got mortgaged after the opinion of legal advisor of the bank Sh Ravi Kant Chadda who was a senior legal advisor of the bank . Pre sanction and post sanction inspections were carried out by him alongwith Sh Sumesh Khanna loan officer of the branch and the higher authorities were duly informed about the state of affairs prevailing in the factory premises of the borrower company. The bank had stopped further advance to the company mid way and it cannot be said that the bank suffered a loss of Rs 36 lacs C C No.68/99 27/71 as the same is secured by adequate tangible security and because of the valid legal documents with the bank duly obtained by him from the borrowers the bank is pursuing a recovery suit against the borrowers before DRT, Allahabad and the bank has claimed the suit amount to be recovered by auctioning the tangible security lying with the bank. As regards opening two separate accounts, it is matter of practice that for a unit under construction all withdrawals which are part of term loan are first recorded in CC cum term loan account and the outstanding is later on transferred to a term loan when the unit attains financial closure after that no further debts are allowed in the term loan account as the same amounts to giving a fresh term loan. However in any case, all the transaction carried out on behalf of the borrowing company were duly recorded . As regards delivery of DDs to the borrower instead of sending the same by regd post to the supplier , it is a practice to deliver the same to the borrower in good faith so that he can give the same to the supplier and negotiate the schedule of delivery of machinery as otherwise if the DD are sent directly to the supplier the bank runs the risk of the supplier not delivering the machinery and forcing the bank into undue litigation. This fact has also been substantiated by the Prosecution witness Sh Somesh Khanna incharge of loan department. H has been implicated falsely. He had carried out his duty as Branch Manager to the best of C C No.68/99 28/71 his abilities in good faith and without negligence and had taken all the necessary steps to safeguard the interest of the bank that is why the bank has been able to pursue a civil suit before DRT, Allahabad and is likely to succeed in all probability.

34 Accused Anil Mahajan has stated that he has simply introduced the account of correct person to whom he knew. 35 Accused P S Sharma has stated that he has no connection with the case.

36 In their defence accused have examined following witnesses:

37 DW1 Sh. Mohan Murthy , DW2 Sh. Anil Kumar, DW3 Sh.S K Panday DW­4 Sunil Nagpal , DW5 Sh. Naval Kishore , DW6 Sh. R K Saini and DW8 Sh. Mahinder Kumar Khattar have deposed orally.

38 DW7 Sh H L Arora has proved certified copy of plaint Ex DW7/A. DW9 Sh Joginder Singh has proved his statement Ex DW9/A. 39 DW10 Sh Ajit Singh has proved the photocopy of death certificate of his father H S Chaddha Ex DW10/A. 40 During the pendency of the case, accused P S Sharma expired on 22.4.2012. , CBI has verified the fact of his death and C C No.68/99 29/71 confirmed the same, hence, proceedings against him stand abated vide order dt. 9.5.2012.

PROSECUTION ARGUMENTS 41 Ld. Special Prosecutor Sh. I D Vaid referring the statements of witnesses and documents produced and proved on the judicial file by the prosecution argued that prosecution has proved its case that Sh. K.L. Bhasin the then Manager erstwhile New Bank of India, Defence Colony Branch, being a public servant entered into a criminal conspiracy with S/SH. G.S. Tyagi and R.S. Bishnoi, the Presidents of M/s Vipee Surgicals Pvt. Ltd. And also with P.S. Sharma guarantor of loan advanced to M/s Vipee Surgicals Pvt. Ltd. by New Bank of India, Defence Colony Branch and also with Sh. Anil Mahajan a private person during the year 1989­90. In pursuance of the said criminal conspiracy Sh. K.L. Bhasin, the public servant released advances in favour of M/s Vipee Surgicals Pvt. Ltd. of which S/Sh. G.S. Tyagi and R.S. Bishnoi were the Presidents and P.S. Sharma was the guarantor, without observing the proper formalities viz. fulfillment of the conditions imposed before release of loan i.e. without getting the opinion of Chief Legal Advisor of the bank regarding the property plot No. 1066, Noor Nagar, Village Sihani Ghaziabad as to whether the said property could be collaterally secured by equitable mortgage, without getting deposited C C No.68/99 30/71 whole margin money, and without conducting proper pre­sanction survey. In pursuance of a said criminal conspiracy S / Sh. G.S. Tyagi, R.S. Bishnoi and P.S. Sharma also cheated the bank by dishonestly and fraudulently inducing the bank to issue pay orders for purchasing machinery or for constructions but the proceeds of pay orders were illegally diverted to accounts opened by S/Sh. G.S. Tyagi, R.S. Bishnoi, P.S. Sharma and Anil Mahajan, without purchasing the machinery or for spending for construction and huge amounts were withdrawn either by issuing cheques or in cash resulting huge debit balance in the said account. In pursuance of the said criminal conspiracy R.S. Bishnoi and P.S. Sharma forged / got forged the invoices / bills and used the same as genuine for getting the pay orders issued in favour of suppliers but the same were mis­utilized and the erstwhile New Bank of India, Defence Colony was defrauded to the extent of Rs.36,28,467/­ and thereby they all committed offences under section 120B IPC read with 13 (2) read with 13 (1)(d) of P.C.Act and also under section 420, 468 & 471 IPC . DEFENCE ARGUMENTS 42 In nutshell it is argued on behalf of accused K L Bhasin that he was the then Branch Manager in erstwhile New Bank of India, Defence Colony Branch. He has forwarded the loan proposal to the Regional Office which had accepted the loan proposal and sanctioned C C No.68/99 31/71 the loan after due satisfaction. Accordingly in compliance of the sanction order of the Regional Office accused K L Bhasin had disbursed the loan amount complying all the necessary formalities. As the detailed written submissions filed on behalf of accused K L Bhasin is on the file hence I am not incorporating his all the arguments in this judgment on account of brevity however I will deal his arguments at appropriate stage.

43 It is argued on behalf of accused Anil Mahajan that he has simply introduced the opening of bank account by Sh. P S Sharma who is not a fictitious person. Mere introduction of a bank account is no offence. Co­accused have not repaid the amount of loan, thus at the most it may be a civil dispute, no criminal offence is made out.

44 It is argued on behalf of accused G S Tyagi and R S Bishnoi that they were not the Directors but simply employee of M/s Vipee Surgical Pvt. Ltd. In discharge of their official duties they had communicated with the bank on behalf of M/s Vipee Surgical Pvt. Ltd. Entire loan amount was utilised by Vipee Surgical Pvt. Ltd. There is no evidence on the file that they have received any financial/pecuniary benefit out of this loan transaction. Accused are innocent. They may be acquitted.

SANCTION & PUBLIC SERVANT C C No.68/99 32/71 45 According to prosecution accused K L Bhasin was the then Manager of erstwhile New Bank of India, Defence Colony Branch, his services were terminated prior to the filing of chargesheet in the court, therefore, he was not a public servant on the date of filing of chargesheet in the court, thus no sanction for his prosecution was required. In these circumstances prosecution has not obtained sanction for his prosecution in this case from the competent authority.

WITH REGARD TO MISAPPROPRIATION OF PAY ORDER OF RS.6,47,875/­ 46 A pay order of Rs. 6,47,875/­ was issued by New Bank of India, Defence Colony Branch, in favour of M/s Kisan Electric Works which was delivered directly to Shri GS Tyagi by accused KL Bhasin (A­1).

47 Accused G S Tyagi had written letter dt. 6/2/90 Ex PD­59/Ex PA49 (D­98) for Vipee Surgicals Pvt. Ltd. to the Manager, New Bank of India, Defence Colony Branch for disbursement of term loan for indigenous machinery which is as follows:

"Dated: 6.2.90 The Manager, New Bank of India, C C No.68/99 33/71 Defence Colony Branch, New Delhi Sub: Dispersement of term loan for Indegenious Machinery.

Dear Sir, We are enclosing herewith performa bill/invoice of the undersigned firm . We have already paid the advance to this firm and receipt has already been submitted to your office.

You are requested to kindly issue the three pay orders in favouring the under said parties.

1. M/S Kissan electric works Rs.6,47,875/­

2. M/s A M ARUTRONICS PVT LTD Rs.1,09,060/­

3. M/S INDUSTRIAL MACHINERY LTD Rs.5,52,930/­

4. M/S Industrial Machinery Corp; Rs.2,99,300/­ Total Rs.16,09,165 (Rs Sixteen Lacs Nine Thousand One Hundred Sixty Five ) Thanking you, Yours faithfully , For VIPEE SURGICAL PVT LTD"

48 In the above referred letter , it is clearly mentioned by accused G S Tyagi that they have already paid advance receipt of which had already been submitted. This letter was written by G S Tyagi as authorised signatory of M/s Vipee Surgicals Pvt. Ltd. Receipt Ex PW1/A purportedly issued by Kishan Electric Works, Dasna Road, Ghaziabad under the signatures of Mool Chand at point C C No.68/99 34/71 Q178 with regard to receiving of an amount of Rs.1,75,000/­ as advance for electrification from M/s Vipee Surgicals Pvt. Ltd. Invoice Ex PA­51 purportedly issued by Kishan Electric Works, Dasna Road, Ghaziabad for an amount of Rs.6,47,875/­under the signatures of Mool Chand at Q179/1. On the basis of both these documents a pay order of Rs.6,47,875/­ Ex PA­50 was issued by accused K L Bhasin under his signatures at point Q27 in the name of Kishan Electrical Works which was handed over to accused G S Tyagi by accused K L Bhasin directly instead of sending it to the supplier.

49 PW1 Sh. Mool Chand owner/proprietor of M/s Kishan Electrical Works, Dasna road, Ghaziabad has appeared in the witness box and denied of receiving Rs.1,75,000/­ from M./s Vipee Surgical Pvt. Ltd. and issuing of receipt Ex PW1/A and his signatures on the same. He has also denied issuing of invoice No.978 Ex PW1/B (D­102) for an amount of Rs.6,47,875/­. He has also stated that somebody had stolen his bill book which was used by G S Tyagi or P S Sharma. He has also deposed that his firm was having current acount in Syndicate Bank, Noida and Ghaziabad and had never opened C C account No. 741 with Syndicate Bank, Sarojoni Nagar Deport. Relevant portion of his statement, in this regard is as under: C C No.68/99 35/71

" I had a firm with the name and style M/s. Kisan Electric Works at 6A Maliwara, Dasna Road, Ghaziabad. I know Shri GS Tyagi and Shri PS Sharma, accused present in court since the year 1980. GS Tyagi was running a factory in the name of M/s. Raj Cables in Sector 6 NOIDA. I used to purchase material on some occasions from Shri GS Tyagi, when he was having factory at NOIDA. I know accused PS Sharm also who was working for Dabur and he used to visit my shop during those days. GS Tyagi accused had told me that he will start a factory and will purchase material from me. But that factory was never opened and I never supplied the material.

I have seen receipt dated 16.11.89(D.101) , which is of the firm M/s. Kisan Electric Works and shows that my firm had received an amount of Rs.1,75,000/­ from M/s. Vipee Surgicals (P) Ltd. I have neither received this amount nor have signed on the receipt on the revenue stamp and somebody had forged my signatures.

I have also seen invoice no.978 of my firm M/s. Kisan Electric Works showing to have supplied the material amounting to Rs. 6,47,875/­ . I have neither supplied the material mentioned in the invoice nor have signed at Q179 and Q179/1. It appears that somebody had forged my signatures on these points. the receipt and invoice are Ex.PW1/A and Ex.PW1/B with my forged signatures at points X. It is correct that receipt no.15 Ex.PW1/A and invoice no.978 i.e. Ex.PW1/B have been taken out from the bill books which were being used by my firm. It appears that either accused GS Tyagi or accused PS Sharma have taken out the receipt and invoice Ex.PW1/A and Ex.PW1/B from the bill books because they used to come and sit in my shop.

My firm was having Current Account in Syndicate Bank, NOIDA and Ghaziabad. I have never opened account in Syndicate Bank with the name of M/s. Kisan Electric Works, B­109 Katwaria Sarai, New Delhi.

I have seen a pay order of New Bank of India amounting Rs. 6,47,875/­ favouring M/s. Kisan Electric Works. This pay order was never received by my firm. It is Ex.PW1/C. I have also seen pay in slip dated 9.2.90 vide which this pay order has been deposited in the bank.

C C No.68/99 36/71

This pay in slip has not been filled in by me. The same is Ex.PW1/D. During investigation of this case, IO had come to me and had obtained my signatures on 7 sheets. I have seen those 7 sheets, which I have signed in presence of the IO. The same are Ex.PW1/E1 to E7 (collectively)."

50 In his cross examination he has deposed as follows:

"It is wrong to suggest that I cannot identify the handwriting of my other employee or associate. It is wrong to suggest that handwriting i.e. the receipt filled in by pen on Ex.PW1/A belongs to my employee or associate."

51 C C account No.741 was opened on 9.2.1990 vide account opening form Ex PW11/F in the name of Kishan electrical works, B­109 Katwaria Sarai, New Delhi by accused. P S Sharma under his signatures at point A­2 on the introduction of accused Anil Mahajan. Statement of account of which is Ex PW11/G. Pay order for an amount of Rs.6,47,875/­ was credited in this account on 13.2.90. This account was closed on 23.5.90.

52 Out of Rs.6,47,875/­ an amount of Rs.2,800/­ was transferred in the account of Anil Mahajan vide cheque Ex PW11/K issued by accused P S Sharma for Kishan Electrical Works under his signatures at point Q 317 as its proprietor. Accused P S Sharma had issued self cheques Ex PW11/H, Ex PW11/J and Ex PW11/L for an amount of Rs. 25,000/­ Rs.70,000/­ and Rs.555/­ for Kishan C C No.68/99 37/71 Electrical Works as its proprietor and received the payments of all these three cheques himself.

53 Accused P S Sharma had also issued cheque Ex PW14/A dt. 15.2.90 for an amount of Rs.5,50,000/­ for Kishan Electrical works under his signatures at point Q312 in favour of S Engineering Industries (D­103). A cheque Ex PW11/Hof Rs. 5,20,000/­ was issued in the name of "Yourself" on 20.2.90 by Anil Mahajan for S. Engineering Ltd. as its proprietor (D­110). He has also made an endorsement on the back of this cheque Ex PCZ for issuing a pay order in favour of M/s Vipee Surgical Pvt. Ltd. for Rs.5 lacs.

54 From the above discussion it is clear that the amount of pay order of Rs.6,47,875/­ delivered by accused K L Bhasin to accused G S Tyagi was misappropriated by accused G S Tyagi, P S Sharma and Anil Mahajan in connivance and conspiracy with accused K L Bhasin.

WITH REGARD TO MISAPPROPRIATION OF PAY ORDER OF Rs,2,99,300/­ 55 Accused G S Tyagi had written a letter dt. 8.2.90 Ex P| A­59/PD­50 (D­134) to the Manager, New Bank of India, Defence C C No.68/99 38/71 Colony Branch for the disbursement of term loan for indigenous machinery for Vipee Surgical Pvt. Ltd. under his signatures at point Q153 as authorised signatory which is as follows:

"From:

M/S VIPEE SURGICAL PVT LTD, 24­ANEPZ, Noida ( Ghaziabad) Dated: 8.2.1990 The Manager, New Bank of India, Defence Colony Branch, New Delhi Sub: Dispersement of term loan for Indegenious Machinery.

Dear Sir, We are enclosing herewith performa bill/invoice of M/S Industrial Machinery Corporation for Rs.2,99,300/­ . We have already paid advance Rs. 2,62,000/­ to this firm. The total advance had been adjusted by the firm on their invoice No.1206 dated 3.2.90.

You are requested to kindly issue a pay order for Rs.2,99,300/­ in favour of M/S Industrial Machinery Corporation at an early date.

Thanking you, Yours faithfully , For VIPEE SURGICAL PVT LTD ( AUTHORISED SIGNATORY )"

56 From the above letter it is clear that accused G S Tyagi C C No.68/99 39/71 has stated that they had paid an amount of Rs.2,62,000/­ as advance against invoice No. 1206 dt. 3.2.90 57 It has come in the evidence of PW 7 Shri Rajesh Goyal that he was having his firm M/s Industrial Machinery Corporation dealing with the electrical goods like Kirloskar Gen Set etc. receipt ( D 129) dated 13.11.1989 for Rs. 2,62,000/­ issued in favour of M/s Vipee Surgiclas Pvt. Ltd. in the name of his firm is a forged document because he never issued the said receipt. Similarly invoice No. 1206 dated 13.02.1990 is also a forged document as he never issued the said invoice. Pay order no. 421778 Ex PW7/C for Rs. 299300/­ was never received by his firm. Pay in slip dated 09.02.1990 also neither pertain to his firm nor to his account as such it was a forged document. In voice Ex PA­58 (D 133) has not been issued by his firm to M/s Vipee Surgicals Pvt. Ltd. nor his firm was having dealing with M/s Vipee Surgicals Pvt. Ltd. 58 D­133 Ex. PA­58 has been issued for Industrial Machinery Corporation by P S Sharma under his signatures at point Q174 as its partner.

59 The entire statement and cross examination of PW7 Rajesh Goyal is as under:

"I was owner of the firm Industrial Machinery C C No.68/99 40/71 Corporation which has now been closed. The firm was dealing with electrical goods, i.e. Kirloskar Diesel generating set etc. The firm was also supplying Kirloskar Dieseal Generating Set on demand. I have seen D129 which is receipt dt. 13.11.89 for Rs. 2,62,000/­ issued in favour of M/s V P Surgicals Pvt. Ltd. the receipt does not pertain to our firm although name of our firm is printed on it. The signatures on the siaid receipt are also forged by somebody. The receipt is Ex PW7/A. My firm was a proprietorship firm and on this receipt, the word partner is mentioned. I have also seen invoice no. 1206 dt. 3.2.90for Rs. 5,52,930/­ issued in favour of M/s VP Surgicals Pvt. Ltd. on behalf of my firm Industrial Machinery Corporation. This invoice also does not pertain to our firm. Even the proforma is not that of our firm and signatures at Q175 have also been forged by somebody on it. The invoice is Ex PW7/B. Pay Order No. 421778 for Rs. 2,99,300/­ was not received by our firm. The pay order is Ex PW7/C. Similarly, the document D 131 showing the name of our firm also does not pertain to our firm . Pay in slip dt. 9.2.90 pertaining to current account no. 1718 neither pertain to our firm nor account no. pertains to our firm. Pay in slip is Ex PW7/C. The document D 133 has also not been issued by our firm to M/s V P Surgicals Pvt. Ltd. and signatures on it at Q174 have been forged by somebody. The document is Ex PA­58. My firm had not dealings with M/s V P Surgicals Pvt. Ltd. and I was not even knowing any of the partners of Directors of M/s V P Surgicals Pvt. Ltd.

XXXX by Advocate Sh. Y Kahol Counsel for accused K L Bhasin and R S Bishnoi M/s Industrial Machinery Corporation was started somewhere in the year 1985 and was closed somewhere in the year 1995. I do not remember the name of all the customers to whom I had supplied the goods. It is wrong to suggest that I am deposing falsely."

60 C C Account no. 1718 in the name of M/s Industrial Machinery Corporation 109, Katwaria Sarai New Delhi was opened C C No.68/99 41/71 on 9.2.90 by Sh. R S Bishnoi under his signatures at point Q165 as its proprietor vide account opening form Ex PC­13/PB­52 (D­135) on the introduction of ac accused Anil Mahajan as proprietor of Vishal Sales Corporation at point Q234.

61 It has come in the evidence of PW 9 Shri Rajinder Kumar Jindal that D 135 was account opening form of account no. 1718 in the name of M/s Industrial Machinery Corporation 109, Katwaria Sarai New Delhi and accused RS Bishnoi was authorized to open this account. This account was opened on the introduction of accused Anil Mahajan who was having his account no. 1653 in the name of Vishal Sales Corporation. The statement of PW9 in this regard is as under:

" I have seen D­135, account opening form Ex PC­13 vide which account No.1718 was opened on 9.2.90 by me in the Janpath Branch of the bank in the name of Industrial Machinery Corporation mentioning address B­109 Katwaria Sarai, New Delhi. My signatures are at point A vide which I had verified and the signatures of Sh. D S Jolly, Chief Manager are at point B. Sh. R S Bishnoi who had signed before me at Q­165 was authorised to operate this account. Vishal Sales Corporation holder of account No. 1653 has introduced this account. The signatures of introducer are at Q­274."

62 Opening of account No.1718 in Punjab and Sindh Bank is also admitted by accused R.S. Bishnoi and the amount of Rs. C C No.68/99 42/71 2,99,300/­ has been credited in the said account, the pay order amounting to Rs.2,99,300/­ was obtained by accused persons after presenting forged documents in the name of PW­7 Sh. Rajesh Goel. 63 This is how an amount of Rs.2,99,300/­ has been misappropriated by accused R.S. Bishnoi and others and the said amount has been debited in account No.120 of M/s. Vipee Surgicals Pvt. Ltd. opened in the bank by Sh. K.L. Bhasin. WITH REGARD TO MISPPROPRIATION OF PAY ORDER OF Rs.2,79,352/­ 64 Accused R S Bishnoi had written a letter dt. 4.12.89 Ex PB­51/PA­45 (D­89) to the Manager, New Bank of India, Defence Colony Branch with regard to disbursement of term loan for indigenous machinery for M/s Vipee surgicals Ltd. under his signatures at point Q155, which he has admitted during admission and denial, as president, which is as follows:

"M/s Surgicals Private Limited To The Manager, New Bank of India, Defence Colony Branch, New Delhi Sub: Disbursement of term loan for indigenous machinery. Dear Sir, We are enclosing herewith the proforma bill of M/s Surjeet Industries for Rs.3,74,352/­. Out of which we have already paid Rs.95,000/­ to C C No.68/99 43/71 the party. You are requested to kindly issue a pay order for Rs.2,79,352/­ in favour of M/s Surjeet Industries.

We have already submitted you the required CA certificate for the margin we have already paid tot he plant supplier. The stamped receipts of the following suppliers are also enclosed:

i M/s Surjit Industires ii M/s A M Arutronics P. Ltd.

iii M/s Kishan Electric Works iv M/s Industrial Machinery Corporation Thanking you, Yours faithfully, Sd/­ R S Bishnoi, for M/s. Vipee Surgicals Pvt. Ltd.

President"

65 In the above quoted letter accused R S Bishnoi has specifically mentioned that margin has already been paid to the Plant Supplier. He had also enclosed the stamp receipts of the suppliers mentioned in the above referred letter. The stamp receipt Ex PW2/C/Ex.PA­48 dt. 24.11.89 is issued by Surjeet Industries. It bears signatures of Surjeet Singh at point Q 177. This receipt is with regard to receiving of an advance of Rs.95,000/­ from Vipee Surgicals Pvt. Ltd. Invoice Ex PW2/B/Ex PA­47 issued on behalf of M/s Surjeet Industries is also annexed for the machinery supplied to Vipee Surgicals Pvt. Ltd. of a total amount of Rs.3,74,352/­ and after deducting advance amount of Rs.95,0000/­, Rs.2,79352/­ has been shown as the balance amount.

C C No.68/99 44/71 66 K L Bhasin had issued a pay order of Rs.2,79,352/­ Ex P2/D/PA­46/1(D90/1) in the name of M/s Surjeet Industries. 67 It has come in the evidence of Shri Surjeet Singh that he was prop. of his firm M/s Surjeet Industries and he had introduced opening of account no. 1657 in Punjab and Sind Bank, Kirti Nagar Branch in the name of M/s AM Arutronics operated by both the accused GS Tyagi and Anil Mahajan. He also identified his signature on the quotation dated 21.11.1989 for Rs. 279352 and a receipt for Rs. 95,000/­ given to M/s Vipee Surgicals Pvt. Ltd. He had also received a pay order of Rs. 2, 79,352/­ which was deposited by him in his current account no. 13 of Punjab and Sind Bank, Janpath. This is because accused GS Tyagi had told him that he will purchase the machinery which he did not purchase and a pay order Rs. 2.5 lacs favoring M/s Meerut Agro Mills was obtained and given to him. For making a pay order of Rs. 2.5 lacs he issued a cheque Ex PW2/G for Rs. 2,50,020/­ and the body of the cheque was written by accused GS Tyagi.

68 PW2 Surjeet Singh, Proprietor of M/s Surjeet Industries has deposed that G S Tyagi had told him that they did not want to purchase machinery from him and asked him for a pay order of Rs. 2,50,000/­ in favour of M/s Meerut Agro Mills Pvt. Ltd., therefore, he C C No.68/99 45/71 got prepared pay order of Rs.2,50,000/­ and delivered the same to Mr. Tyagi for obtaining pay order of Rs.2,50,000/­ Ex PW2/F he had issued the above referred cheque of Rs.2,50,020/­. Body of the cheque has been written by accused G S Tyagi. Relevant portion of his statement is as under:

"Sh. G S Tyagi of M/s Vipee Surgicals had told me that he will not purchase the machinery from my firm and wanted a pay order for Rs.2,50,000/­ favouring M/s Meerut Agro Mills Pvt. Ltd. At the instance of G S Tyagi the said pay order was got prepared by me and delivered to Mr. Tyagi. The said pay order is Ex PW2/F. For making the said pay order a cheque of Rs. 2,50,020/­ was issued from my account. The cheque is Ex PW2/G bearing my signatures at point A. The body of the cheque was written by Mr. Tyagi. Rs.2,50,000/­ was the amount of the pay order and Rs.20/­ was the commission."

69 On receipt of Cheque of Rs.2,50,000/­ in favour of Meerut Agro Mills it was deposited in account No. 2191, PNB Kirti Nagar Industrial Area opened and operated by P.S. Sharma. The ledger sheet of C.A/c of Meerut Agrol Mills Ex PA­60 (D­149) is an admitted document in which the amount of Rs.2,50,000/­ has been credited on 18.12.89 thus, it is proved that accused P.S. Sharma had actually utitilised this amount of Rs.2,50,000/­. 70 He had also received cheques amounting to Rs. 7000/­ Ex PW2K/Ex PD44/ExPA37 (D­79) in the name of M/s Surjeet C C No.68/99 46/71 Industries dt. 25.1.90 issued under the signatures of R S Bishnoi and G S Tyagi for Vipee Surgicals Pvt. Ltd. as its President and 3200/­Ex PW2/L/ExPD­46 (D­81) dt. 3.2.90 issued under the signatures of R S Bishnoi and G S Tyagi for Vipee Surgicals Pvt. Ltd. as its President. Relevant portion of statement of PW2, in this regard, is as under:

" I am running my business as Surjeet Industries and my industry is making power machines. I am running this business for the last more than 25 years. I was having my current account No. 13 in Punjab & Sind Bank, Kirti Nagar Branch. I had introduced for the opening of account No. 1657 favouring A M Arutronics on the request of Mr. G S Tyagi who was known to me. Account Opening Form Ex PW2/A contains my signatures at point A. and the signatures of G S Tyagi and Anil Mahajan at points B and C. This account was opened in the Punjab & Sind Bank, Janpath Branch, mentioning the address of the firm D16 A, Kalkaji, New Delhi. I have seen quotation of my firm dt. 21.11.89 for Rs.2,79,352/­ which is Ex PW2/B containing my signatures at point A and I have also seen my receipt for Rs.95,000/­ which is Ex PW2/C bearing my signatures at points A and A1. This quotation was given by me to M/s Vipee Surgicals Pvt. Ltd. for supplying machinery which is mentioned in the quotation and an advance of Rs.95,000/­ was also received. I had received a pay order in the name of my firm M/s Surjeet Industries for Rs.2,79,352/­ which was deposited by me in my current account No.13 Punjab & Sind Bank, Kirti Nagar Branch. The pay order is Ex PW2/D. I have seen account opening form for the opening of current account no. 13 in Punjab & Sind Bank, Kirti Nagar branch which is Ex PW2/E under my signatures at point A. C C No.68/99 47/71 I have seen cheque No.996801 for Rs.25,000/­ which is a self cheque and is Ex PW2/H bearing my signatures at point A. I had introduced for the opening of account No. 1657 in Punjab & Sind Bank, Janpath at the instance of Sh. G S Tyagi because he was known to me and he had told me that he will give me further orders for the supply of machinery for his company M/s Vipee Surgicals Pvt. Ltd. During the investigation of this case IO had obtained my specimen writings on five separate sheets which are Ex PW2/J1 to J5. I have seen cheque No. 124544 dt. 25.1.90 for Rs. 7,000/­ and cheque No. 124545 dt. 3.2.90 for Rs. 3,200/­. Both these cheques were received by me from M/s Vipee Surgicals for doing some work for the said company and the cheques are Ex PW2/K and Ex PW2/L I have seen cheque no. 177253 dt. 18.12.89 for Rs.25,000/­ favouring M/s Surjeet Industries which is Ex PW2/M. The payment of this cheque was collected by one P S Sharma.

I have seen cheque No. 177257 dt. 3.1.89 for Rs. 15,000/­ which is Ex PW2/N but I have not received payment of this cheque. I know Sh. G S Tyagi present in the court today (correctly identified)."

71 This is how the pay order for Rs.2,79,352/­ was misappropriated by the accused in connivance and conspiracy with each other.

ROLE OF ACCUSED K L BHASIN AND EVIDENCE AGAINST HIM 72 According to loan terms and conditions of loan sanctioned note party will deposit the whole margin amount must C C No.68/99 48/71 before availment of the loan .

73 Branch Manager shall satisfy himself about the reputation of supplier and quality and value of machinery etc to be purchase from domestic market.

74 The payment of machinery and building material etc shall be made direct to the suppliers of machinery etc by including the margin money received from the party by way of account payee pay order/ draft.

75 All the facilities shall be collaterally secured by way of equitable mortgage of property having present market value of Rs. 27,40,000/­ bearing khasra No.1066 at Sehani Gate, Meerut Road, Distt. Ghaziabad standing in the name of Sh. Hari Singh Sharma.

i Legal opinion to be obtained from bank's chief Legal adviser to ascertain whether property bearing khasra No.1066 at Sehani Gate, Meerut Road, Distt. Ghaziabad standing in the name of Sh. Hari Singh Sharma can be equitably mortgaged with the bank besides, complying with all formalities of equitable mortgage. Further, completion certificate of the factory issued by GDA/Ghaziabad Municipal Committee be obtained to ascertain the conversion of land used from agriculture to Industrial land.

Ii Independent Valuation Report to be obtained from Govt. Approved valuer to ascertain that the value of the property bearing khasra No.1066 at Sehani Gate, Meerut Road, Distt. Ghaziabad standing in the name of Sh. Hari Singh Sharma is not less than Rs.27.40 lacs. This is required because existing valuation report is from an unapproved valuer.

Iii the owner of the property known as khasra No.1066 at Sehani Gate, Meerut Road, Distt. Ghaziabad shall give legal irrevocable and unconditional undertaking that he shall not assign, transfer, mortgage, hypothecate alienate, mark lien, gift, part, possession with, lease out, rent out etc. any portion of the property under any circumstances without the written consent of the bank. This C C No.68/99 49/71 undertaking to be taken with the approval of bank's Chief Legal Adviser." 76 Sh. Ravi Kant Chadha advocate had given his search report/legal opinion dt. 14.2.89 with regard to property situated at khasra No.1066 at Sehani Gate, Meerut Road, Distt. Ghaziabad, UP. Relevant portion of his opinion is as under:

"In my opinion and as per the available records with the said Chief Sub Registrar, Ghaziabad and the inspection got done, I am of the opinion that the said property can be mortgaged if the following conditions are complied with:

iThat the original gift deed registered on 31.8.89 duly signed by the registrar on 1.9.89 is deposited with the bank.

ii That the certified extract of the revenue records duly certified by the concerned patwari that the said property was in the name of Mr. Hari Singh, in the past and also making an endorsement that the property is not under acquisition nor any proceedings have been initiated against the said property.

Iii That the original house tax receipts/bills, electricity and water bills and other receipts/bills as issued by the local authority be obtained and kept on the record.

Iv that an affidavit be obtained from Mr. Hari Singh that he was the proper owner of the said property and he has not sold, transferred, alienated, hypothecated or parted with the possession of the same either in full or in part to anybody in any manner during the past and the said property remained in his continuous possession for the last so many years.

V That an affidavit be obtained from Mr. Parmatma Saran and now he is the absolute owner of the said property by virtue of the gift deed and wherein Mr. Parmatma Saran should also given an irrevocable undertaking in favour of the bank to this effect. The affidavits given by the said two persons Mr. Hari Singh and Mr. Parmatma Saran should be duly attested.

Vi That the description of the said property should also be given by way of a site plan.

Vii That since the property has recently been owned by Mr. Parmatma Saran an undertaking be also obtained from him that he shall get the property mutated in his name in the revenue records and shall submit the mutation certificate to the effect afterwards to the bank.

C C No.68/99 50/71

Viii that after the creation or the mortgage by Mr. Parmatma Saran the bank charges shall be got noted with the concerned Patwari.

Ix That a resolution shall be obtained from the company M/s Vipee Surgicals Pvt. Ltd. wherein they should specifically mentioned that the said property owned by Mr. Parmatma Saran is being offered as a collateral security for the financial facility granted in favour of the said company.

x That Sh. Hari Singh should give his personal guarantee."

77 Bank had taken another legal opinion in respect of the property situated at khasra No.1066 at Sehani Gate, Meerut Road, Distt. Ghaziabad, UP. from Rekha Anand Advocate which is dt. 17.6.91. She has opined that bank cannot create equitable mortgage of this property. Relevant portion of her report Ex PW5/A is as under:

" the bank cannot create equitable mortgage of the property because Sh. Parmatama Saran is not the owner of the plot of land because 'Dan Patra" i.e. Donation Deed can be executed and property can be donated only to religious, charitable or other institution working purely for the public welfare. Dan cannot be granted for some other purpose. Had it been a Gift Deed, it would have been valid because gift can be created in favour of anybody. Since Dan Patra is not valid one, no title over the plot of land passes over to Sh Sh. Parmatama Saran.

Khatauni record is also in the name of Sh. Hari Singh.

Keeping in view the facts stated above, it is not advisable to create equitable mortgage of the property. Opinion sent accordingly."

78 Ms. Rekha Anand Advocate has appeared in the witness box as PW5. Her entire deposition is as under:

C C No.68/99 51/71

"I have seen document D31/1 and 2 which is legal opinion in respect of property Khasra No.1066 Village Noor Nagar, Pargana Loni, Distt. & Tehsil Ghaziabad. This opinion was given by me on 17.6.91. It bears my signatures at point A. My opinion is Ex PW5/A. This opinion was sent by me to New Bank of India, Defence colony, New Delhi. Today I have been shown Ex PE­24 running into five pages but the opinion was given on the basis of the photo copy of the Donation Deed dt. 21.8.89 provided to me at that time by the concerned bank branch.

          XXX by Advocate  Sh.  Y Kahol      Counsel for accused 
          KL Bhasin and R S Bhasin
                  Nil, opp. given. 
          XXX by other accused persons
                  Nil, opp. Given."

79                  Ms.   Rekha   Anand   advocate     has   not   been     cross 

examined on behalf of any of accused inspite of opportunity granted to them. No cross examination on the substantive point amounts to the admission of the same. In these circumstances, there is no reason to disbelieve her above report in this case.

Accused K L Bhasin, the then Branch Manager, New Bank of India had accepted the collateral security of property bearing Khasra No.1066 Village Noor Nagar, Pargana Loni, Distt. & Tehsil Ghaziabad without obtaining the opinion of Chief Legal Adviser.

80 Defence Counsel referring the statements of PW 16 Sh.

P K Sharma and PW18 Somesh Khanna argued that both these C C No.68/99 52/71 witnesses have deposed that margin money is the share of borrower to be paid by him to the supplier of machinery. There are two ways for obtaining margin money i.e. either the amount to be deposited in the bank or the advance given to the supplier and evidence with regard to the payment is to be produced in the bank that borrower had made the payment to the supplier. It is further argued that in this case borrower had advanced the money to the supplier and produced the receipts with regard to the same.

81 In the sanction note there is specific clause in this case that the party will deposit the whole margin money amount first before availment of the loan.

82 When there is specific clause that margin money has to deposit first before availment of the loan then it is to be specifically complied with. In these circumstances there is no merit that margin money was paid by the borrower to the supplier of the machinery. In view of the above referred specific condition to deposit the whole margin money first before the availment of loan deposition of PWs 16 and 18 is of no help to the accused K L Bhasin.

83 Moreover from the above discussion in this judgment it is proved beyond reasonable doubt that the so called receipts of C C No.68/99 53/71 the payment of advance money allegedly made by the borrower are forged and fictitious, hence the argument that margin money had been paid in advance by the borrower to the supplier of the machinery is meritless and proves the involvement of K L Bhasin in the conspiracy with his co accused.

84 It is argued on behalf of accused K L Bhasin that accused persons cheated the Bank Manager Sh. K L Bhasin by producing forged/fictitious invoices and receipts for the purchase of machinery. They got issued pay orders in the name of the machinery supplier and encashed the same by opening accounts in the name of machinery supplier in different banks.

85 There are specific conditions in the sanction note that the Branch Manager shall satisfy himself about the reputation of supplier and quality and value of machinery etc. to be purchased from domestic market and the payment of machinery and building material etc. shall be made direct to the supplier of machinery etc. by including the margin money received from the party by way of account payee pay order/draft.

86 From the above discussion in this judgment it is proved beyond reasonable doubts that Kishan Electric Works of which receipt /invoice was produced by the borrower was a non functional C C No.68/99 54/71 firm existed on papers floated by the co­accused P S Sharma and its account was opened by P S Sharma as its proprietor on the introduction of accused Anil Mahajan. M/s A M Arutronics Pvt. Ltd.

was a non functional firm existed on papers floated by the co­ accused G S Tyagi and its account was opened by G S Tyagi and Anil Mahajan as its Directors on the introduction of Surjeet Singh.

PW 10 Shri Pawan Kumar HC, CBI, Jaipur has stated that as per his verification the firm M/s AM Arutronics was not existing at the given address. Relevant portion of his statement, in this regard is as under:

"During January 1998 I was posted as Constable in the summon section of the Jaipur Branch. I had received a notice U/s 91 Cr PC which had come by post to Jaipur Branch which was to be served onthe proprietor of M/s M Aeronautis Pvt. Ltd. G­17­B Industrial Area Dudu Distt. Jaipur. I visited the place for the service of notice but I came to know that no such firm existed on the said address for the last six years. I reported the same thing on the notice which was delivered in the section for sending to the firm where it was received."

87 S Engineering Industries was a non functional firm existed on papers floated by the co­accused Anil Mahajan and its CC account No.728 was opened by Anil Mahajan on his own introduction as the proprietor of S M S Network. Had the accused K L Bhasin satisfy himself after verifying about the reputation of supplier and quality and value of machinery purchased from such C C No.68/99 55/71 firms he would have come to know that these firms are non functional firms existed on papers only. It again proves his connivance with co accused and his involvement in this conspiracy. 88 From the above discussion in this judgment it is also proved that accused K L Bhasin had handed over the pay orders to the borrowers directly instead of sending the same to the supplier directly inspite of the specific condition mentioned in the sanction note that the payment of machinery and building material etc. shall be made direct to the suppliers of machinery by including the margin money received from the party by way of account payee pay order/draft.

89 From the above discussion it is proved that accused K.L. Bhasin, being a public servant abused his official position by corrupt and illegal means has accepted the collateral security of the guarantor P.S. Sharma i.e. property Plot No. 1066, Village Noor Nagar, Pragana, Loni, Dist. & Tehsil, Ghaziabad, U.P. which could not be collaterally secured, without the opinion of bank's chief legal advisor erstwhile New Bank of India, he did not get the whole margin money deposited before release of credit facilities and had not verified the reputation of the supplier of the machinery and quality and value of the machinery from the domestic market and had directly handed over the pay orders to the Directors of the said firms. An amount of C C No.68/99 56/71 Rs.36,27,468/­ remained outstanding against the firm M/s Vipee Surgicals Pvt. Ltd. and accused S/Sh. G S Tyagi and R S Bishnoi were its Presidents.

90 According to Section 10 of Indian evidence Act "where there is reasonable ground to believe that two or more persons have conspired together to commit an offence or an actionable wrong, anything said, done, or written by anyone of such persons in reference to that common intention, after the time when such intention was first entertained by anyone of them, is relevant fact as against each of the persons believed to be so conspiring, as well for the purpose of proving the existence of the conspiracy as for the purpose of showing that any such person was a party to it." 91 Conspiracy consists in a combination or agreement between two or more person to do an unlawful act or to do a lawful act by unlawful means. A conspiracy is an inference drawn from the circumstances. There cannot always be much direct evidence about it. Conspiracy can be inferred even from the circumstances giving rise to a conclusive or irresistible inference of an agreement between two or more persons to commit an offence. Since Conspiracy is often hatched up in utmost secrecy, it is most impossible to prove conspiracy by direct evidence. It has to be inferred from the acts, statements and conduct of parties to the conspiracy. Thus, if it is proved that the accused pursued, by their acts, the same object often by the same means, one performing one part of the act and the other another part of the same act so as to complete it with a view to attainment of the object which they were pursuing, the court is at liberty to draw the inference that they conspired together to effect that object. Conspiracy has to be treated as a continuing offence and whosoever is a party to the conspiracy, during the period for which he is charged, is liable under this section.

C C No.68/99 57/71 92 It is not an ingredient of the offence under this section that all the parties should agree to do a single illegal act. It may comprise the commission of a number of acts. The entire agreement must be viewed as a whole and it has to be ascertain as to what in fact the conspirators intended to do or the object they want to achieve. It is not necessary that each member of conspiracy must know each other or all the details of the conspiracy. It is also not necessary that every conspirator must have taken place in each and every act done in pursuance of a conspiracy.

93 Though to establish the charge of conspiracy there must be agreement, there need not be proof of direct meeting or combination , nor need the parties be brought into each other's presence; the agreement may be inferred from the circumstances raising presumption of a common concerted plan to carry out the unlawful design. Conspiracy need not be established by proof which actually brings the party together; but may be shown like any other fact, by circumstantial evidence. So again it is not necessary that all should have joined in the scheme from the first point; those who come in at a later stage are equally guilty.

94 Conspiracy hatched in secrecy and executed in darkness. In a case of conspiracy, it is not expected from the prosecution that it will produce evidence to show that conspirators executed agreement to commit crime before the witnesses to prove the existence of conspiracy. Conspirators take all precautions to keep their plan secret hence prosecution cannot produce direct evidence to prove agreement to commit conspiracy. 95 In Kher Singh Vs State AIR 1988 SC 1883 it is observed as follows:

C C No.68/99 58/71

" Generally, a conspiracy is hatched in secrecy and it may be difficult to adduce direct evidence of the same. The prosecution will often rely on th evidence of acts of various parties to infer that they were done in reference to their common intention. The prosecution will also more often rely upon the circumstantial evidence. The conspiracy can be undoubtedly proved by such evidence direct or circumstantial. But the Court must require whether the two persons are independently pursuing the same end or they have come together to the pursuit of the unlawful object. The former does not render them conspirators, but the later does. It is however, essential that the offence of conspiracy required some kind of physical manifestation or agreement the express agreement however need not be proved. Nor mutual meetings of the two persons is necessary. Nor it is necessary to prove the actual words of communication. The evidence as to transmission of thoughts sharing the unlawful design may be sufficient. Conspiracy can be proved by circumstances and other material."

96 In a case of criminal conspiracy any evidence available against any of the accused is admissible against all the accused. Once a conspiracy is proved among the accused, act of one conspirator become act of all other conspirators also. In this regard Ld. SPP placed reliance on Shiv Narain Laxmi Narain Joshi Vs State of Maharashtra, (1980 ) 2 Supreme Court Cases 465 has held as follows:

" Penal Code, 1860­ Section 120­B - Since it is impossible to adduce direct evidence of conspiracy, the offence can only be proved largely from the inference drawn from acts or illegal omissions committed by the conspirators in pursuance of a common design­ Once such a conspiracy is proved, act of one conspirator becomes act of the other­ A co­ conspirator, who joins subsequently and commits overt acts in C C No.68/99 59/71 furtherance of the conspiracy, held is also liable­ Evidence Act, 1987­ Section 10."

97 Hon'ble Supreme Court in Firozuddin Basheeruddin & Ors. Vs. State of Kerala, (2001) 7 Supreme Court Cases 596 has held as follows:

"Conspiracy is not only a substantive crime but on the basis of it a conspirator can also be held liable for the crimes committed by conspirators in furtherance of the objectives of the conspiracy­ Conspiracy can be established on the basis circumstances evidence­ As regards admissibility of evidence strict standards are not necessary inasmuch as any declaration made by a conspirator in furtherance of and during pendency of a conspiracy though hearsay, is admissible against each co­ conspirator­ On facts held, Supreme Court's interference with concurrent finding that criminal conspiracy proved and on the basis offence of murder also made out not called for."

98 Hon'ble Supreme Court in Ram Naryan Popli Vs. CBI AIR 2003, SC 2748 has held as follows:

"The essential ingredient of the offence of criminal conspiracy is the agreement to commit an offence. In a case where the agreement is for accomplishment of an act which by itself constitutes an offence, then in that event no overt act is necessary to be proved by the prosecution because in such a situation, criminal conspiracy is established by proving such an agreement. Where the conspiracy alleged is with regard to commission of a serious crime of the nature as contemplated in Section 120­B read with the proviso to sub Section (2) of Section 120­A, then in that event mere proof of an agreement between the accused for commission of such a crime alone is enough to bring C C No.68/99 60/71 about a conviction under Section 120­B and the proof of any overt act by the accused or by any one of them would not be necessary."

99 Hon'ble Supreme Court in P K Narayan Vs. State of Kerala, All India Criminal Law Reporter 1994 (3) 785, has held as follows:

"Penal Code, 1860, Section 120­B ­Evidence Act, 1872, Section ­3 - Criminal Conspiracy ­Essence of Criminal conspiracy - It is an agreement to do an illegal act - Agreement can be proved either by direct evidence or by circumstantial evidence or by both - Complicity of the accused - Circumstances proved before, during and after the occurrence required to be considered to decide about the complicity of the accused ­But if the circumstances are compatible with the innocence of the accused persons then it could not be held that the prosecution had successfully established its case."

100 Hon'ble Supreme Court in S. Swamirathnam, Appellant Vs. State of Madras, Respondent, (s) AIR 1957 S.C. 340 in this regard has held as follows:

"If a specific instance of cheating was proved beyond doubt against any of the accused that would furnish the best corroboration of the offence of conspiracy because conspiracy was the root and the specific instances were the fruit."

101 Invoice no.51/89­90 dated 5.2.90 Ex PA 54/Ex PC­7 ( D­118)of M/s. A. M. Arutronics (P) Ltd. was submitted by accused G.S.Tyagi vide letter dated 6.2.90 Ex PA 49/Ex PD­59. It was C C No.68/99 61/71 represented that an advance of Rs.50,000/­ had already been paid to M/s. A.MArutronics (P) Ltd. and pay order for Rs.1,09,060/­ was obtained in the name of M/s. A.M.Arutronics (P) Ltd. , which was shown to be having its factory at Industrial Area, Dudu Jaipur, Office at G­16A Kalkaji . PW10 has deposed that no such factory was functional at the address as mentioned in the invoice. Amount of Rs.1,09,060/­ had gone to Current Account No.1657 , which was opened by accused G.S.Tyagi (A.2) and accused Anil Mahajan (A.5) and was introduced by accused Anil Mahajan (A.5). Invoice no,51 (Document D.118) is shown to have been signed by accused Anil Mahajan (A.5 ) at points Q172 and Q172/1 as per report of Govt. Examiner Questioned Documents (for short as GEQD. Invoice No. 1206 dated 3.2.90 was issued for Rs.8,14,000­ in the name of M/s. Vipee Surgical (P) Ltd. . An amount of Rs.2,62,000/­ (Document D­133)was shown to have been paid in advance to this company and a pay order for Rs.5,52,930/­ was obtained on the strength of this bill by accused G.S.Tyagi. Similarly on the basis of invoice no.1221 purported to be issued by Industrial Machinery Corporation (Document D­133) Ex PA 58 a pay order for Rs.2,9,300/­ was issued. This firm was found to be not in existence and the amount of Rs. 5,52,930/­ and Rs.2,99,300/­ ultimately went to Current Account no. 1718 belonging to accused R.S.Bishnoi (A.3). This account was C C No.68/99 62/71 introduced by accused Anil Mahajan (A.5). Thus, it is proved on the record that these pay orders were obtained on the basis of forged invoices (D­1206 and D­1221. ). Similarly, invoice no. 978 dated 1.2.90 for Rs.8,22,875/­ was produced before ENBI by accused G.S.Tyagi (A.2) for obtaining a pay order for Rs.6,47,875/­ . This invoice (D­102) Ex PW1/B and Ex PA­51 would show that an advance of Rs.1,75,000/­ was shown to have been paid to M/s. Kisan Electric Works from the total amount of invoice of Rs.8,22,875/­ and thus a pay order for Rs.6,47,875/­ was obtained and this amount again went to the Current Account no.741 in Syndicate Bank, Sarojini Nagar, New Delhi opened by accused P.S.Sharma (A.4) who was also a guarantor, introduced by accused Anil Mahajan (A.5) PW1. Mool Chand, proprietor of M/s. Kisan Electric Works in his statement has denied the genuineness of the invoice (Document D­102) Ex PW1/B and Ex PA­51. He has also not authorized accused P.S.Sharma (A.4) to open any account on behalf of M/s. Kisan Electric Works in any other bank. P.W.2 Surjit Singh, proprietor of M/s. Surjit Industries has also stated that he did not supply any machinery to M/s. Vipee Surgical (P) Ltd. Although he had deposited the draft amounting to Rs.2,89,312/­ in the account of his firm. He wihdrew the amount of Rs.25,000/­ in cash and got a draft of Rs.2.50 lacs in favour of Meerut Agro Mills of accused C C No.68/99 63/71 G.S.Tyagi (A.2) and P.S.Sharma (A.4.) Thus, it is proved that the draft issued at the request of accused G.S.Tyagi(A.2) and accused P.S.Sharma (A.3) have not been utilized for purchasing the machinery or for construction of the building and the amounts have been diverted to the accounts opened by accused G.S.Tyagi (A.2), accused R.S.Bishnoi (A.3), accused P.S.Sharma (A.4) and Anil Mahajan (A.5) with introduction of each other in various accounts. In connivance and conspiracy with their co ­accused K L Bhasin, the then Branch Manager, New Bank of India, Defence Colony Branch who had issued the pay orders without verifying the reputation /credibility/genuineness of the supplier firm and handed over the pay orders/drafts in question directly to the accused instead of sending the same to the supplier and without getting the whole margin money deposited in advance and had accepted the collateral security without the verification of bank's Chief Legal Advisor. 102 Agreement to do an illegal act can be proved either by direct evidence or by circumstantial evidence. Circumstances proved before, during and after the occurrence is to be considered to decide about the complicity of the accused in the criminal conspiracy. In this case meeting of mind between the accused can be inferred from the above discussed circumstances raising presumption of a C C No.68/99 64/71 common concerted plan to carry out the unlawful design to commit the criminal conspiracy.

103 Ld. Defence Counsel Sh. Y Kahol for accused Anil Mahajan and R S Bishnoi referring the statement of PW2 Surjeet Singh has argued that investigation of this case has not been fairly and property conducted. If IO has cited Anil Mahajan and R S Bishnoi accused in this case he would have also impleaded PW2 Surjeet Singh as an accused in this case because he has specifically admitted in this case that after taking out money the same was transferred by him to M/s Meerut Agro Mills of P S Sharma and had also given money in cash to Sh. G S Tyagi.

104 PW2 has deposed that initially he was asked to supply the machinery by G S Tyagi and an amount of Rs.95,000/­ was paid to him in advance and balance amount of Rs.2,79,352/­ was to be paid after delivery of the machinery. He has further deposed that lateron G S Tyagi had refused to take machinery from him and asked him to return the money by way of pay order favoring M/s Meerut Agro Mills Pvt. Ltd. There is no evidence on the file that PW Surjeet Singh was aware of any malafide/dishonest intention of G S Tyagi or he was in any way involved in this conspiracy, hence there is no merit in the argument that he should be impleaded in this case as an accused.

C C No.68/99 65/71 105 Moreover, defence cannot take advantage of bad investigation where there is evidence available on the record against the accused. In this regard Hon'ble Supreme Court in a latest judgment titled Zindar Ali Vs. State of West Bengal & Anr., 2009 III AD (S C ) 7 held as follows:

"Indian Penal Code, 1860 ­Secs. 376 and 417 - Immediate disclosure of rape by the prosecutrix - Version of prosecutrix unchallenged - Admission by the accused in village panchayat - Medical evidence also another proof - Accused behind bar for five years - SC held - Defence cannot take advantage of bad investigation where there is clinching evidence available to the Prosecution."

106 Hon'ble Supreme Court in Rohtash Vs. State of Rajasthan (2007) 2 SCC (Crl.) 382 has held that that defective investigation would not lead to total rejection of prosecution case. 107 Hon'ble Supreme Court in State of MP Vs Man Singh ( 2007) 2 SCC 390 in this regard has held as follows:

"Criminal Trial­ Investigation­ Deficiencies in investigation­ Effect­ Held, cannot be a ground to discard the prosecution version which is authentic, credible and cogent­ Criminal Procedure Code, 1973­ S.157."

108 In Karnail Singh Vs. State of MP 1995 SCC 977it has C C No.68/99 66/71 been held by Hon'ble Supreme Court that in case of defective investigation it would not be proper to acquit the accused if the case is otherwise established conclusively because in that event it would tantamount to be falling in the hands of an erring Investigating Officer.

109 Considering the case from all the angles there is no merit in this argument of Ld. Defence counsel.

110 It is argued by Ld. Defence Counsel that accused Anil Mahajan had simply introduced the opening of account in the name of Kishan electric Works, B­109, Katwaria Sarai, New Delhi by P S Sharma who is a genuine person, and opening of account in the name of Industrial Machinery Corporation, B­109, Katwaria Sarai, New Delhi by R S Bishnoi who is also a genuine person and opening of account in the name of S Engineering Industry by himself and introduced this account himself as proprietor of S M S Network who is also a genuine person thus he has not committed any offence. It is also argued that accused P S Sharma was also running his business under the name and style M/s Kishan electric Works and accused R S Bishnoi was also running his business under the name and style Industrial Machinery Corporation. PW1 Mool Chand has appeared in the witness box and specifically deposed that he was runnign his firm under the name and style M/s Kishan electric works at 6­A, C C No.68/99 67/71 Maliwara, Dasna road, Ghaziabad. This witness has been cross examined on behalf of all the accused including G S Tyagi, Anil Mahajan and P S Sharma, not even a single suggestion has been given to him that accused P S Sharma was also running his business under the name and style of M/s Kishan Electric Works. Statement of accused P S Sharma recorded U/s 313 Cr PC even he has not stated even a single word in his statement that he was independently running his business under the name and style of Kishan electric Works, B­109, Katwaria Sarai, New Delhi.

111 PW2 Surjeet Singh has deposed that he was running his business as Surjeet Industries. This witness has also been cross examined at length on behalf of accused R S Bishnoi and Anil Mahajan , Not even a single suggestion has been given on behalf of accused Anil Mahajan that he was running his business under the name and style S Engineering Industries.

112 Even accused Anil Mahajan in his statement recorded u/s 313 Cr C has not stated that he was running his business under the name and style S Engineering Industries. He has simply deposed in his statement Us 313 cr PC as follows:

"I have simply introduced the account of correct person to whom I knew."

113 In view of above discussion there is no merit in the C C No.68/99 68/71 argument that accused Anil Mahajan had genuinely introduced opening of the account of M/s Kishan Eletric Works by P S Sharma who was genuinely running his business under the name and style of M/s Kishan Electric Works, opening of account in the name of S Engineering Industry by himself and introduced this account himself as proprietor of S M S Network who is also a genuine person thus he has not committed any offence rather this defence is an after thought defence which has only saw the light of day during the course of argument only.

114 It is argued by Ld. Defence Counsel that even bank has not filed suit for recovery against the present accused which shows that bank does not claim any liability against the present accused. It has come in the defence evidence itself that unit in question was sold to M/s Gamro Nexim Ltd. for Rs.55 lacs including the liabilities and the Directors of New Company had given undertaking before the bank that they will deposit the loan amount and abide the condition in the sale transaction. The bank before DRT, Allahabad had accepted the contention of the New Company stating that bank has no grievance against the present accused and the recovery proceedings have been ordered only against the Directors of M/s Gamro Nexim Ltd. Thus, from the defence evidence itself it is clear why the civil suit for recovery has not been filed by the bank against present C C No.68/99 69/71 accused. In these circumstances there is no merit in this argument. 115 It is further argued by Ld. Defence Counsel that loan was advanced by the bank to M/s Vipee surgical Pvt. Ltd. Which could not be repaid, hence at the most it is a civil dispute no criminal offence is made out. From the above discussion it is clear that forged and fictitious invoices/bills were prepared by the accused and submitted to the bank for the disbursement of term loan amount and CC Account No.741 was opened in the name of M/s Kishan Electric works by P S Sharma fictitiously which proves the existence of dishonest intention from the very beginning. In these circumstances there is no merit in this argument. 116 Accused G S Tyagi has produced DW1 Mohan Lal Murthy in his defence evidence, who has not supported the defence version at all and has deposed that accused should be convicted. Relevant portion of his deposition is as follows:

"Vol. From the proceedings before this Hon'ble Court in which I have been compelled to deposed as a defence witness by accused No.3 I have realized that the economy of our country and people of our country are suffering because of corrupt practices exercised by the bank employees and dishonest persons posing as businessman in conspiracy with each other and unlawfully and fraudulently taking away the hard earned money of tax payers kept in trust with nationalized banks by employing dishonest means and pocketing the same for personal use. The accused in the instant case and their profile as borne out from their conduct clearly paves the C C No.68/99 70/71 way for their conviction with the most rigorous punishment preferably for life because economic offence. are more grave than the offence committed by human beings in the heat of passion."

117 In view of above discussion accused K L Bhasin, G S Tyagi, R S Bishnoi and Anil Mahajan are convicted for the offences punishable U/s 120B r/w Sec. 420, 471 r/w 468 IPC and Section 13 (2) r/w Sec. 13 (1) (d) of P C Act.

118 Accused K L Bhasin is also convicted for the commission of substantive offences punishable u/s 13 (2) r/w Sec. 13 (1) (d) of P C Act 1988.

119 Accused G S Tyagi is also convicted for the commission of substantive offences punishable u/s 420, 471 r/w 468 IPC. 120 Accused R S Bishnoi is also convicted for the commission of substantive offences punishable u/s 471r/w 468 IPC. 121 Ordered accordingly.

Announced in open court                       ( V. K. Maheshwari) 
On 19.5. 2012                               SPECIAL JUDGE: (P C Act)­03  
                                                     CBI: DELHI




C C  No.68/99                                                                   71/71