Delhi District Court
Cbi vs K. Kannadassan on 20 October, 2023
IN THE COURT OF SH. RAKESH KUMAR-III
SPECIAL JUDGE : (CBI)-02 : (PC ACT)
ROUSE AVENUE DISTRICT COURT, NEW DELHI
CNR No. DLCT11-000182-2020
CC No. 30/2020
RC No. DAI-2019-A-0012-DLI
PS : ACB/CBI/ND
U/s : 120B r/w 420, 467, 468 & 471 IPC &
13 (2) r/w 13 (1)(d) of PC Act &
substantive offences thereof.
Central Bureau of Investigation (CBI)
Vs.
1. K. Kannadassan (Accused No. 1)
S/o. Shri V. E. Kanaga Lakshmanan
Present R/o. 19, Satyapuri Street,
West Mambalam, Chennai-33
Permanent R/o. 9, Sumuga Garden
Burani Colony, Coimbatore-4
2. Manoj Kumar Singh (Accused No. 2)
S/o. Shri Rama Shankar Singh
Present R/o. 1412/20, 1st Pushta,
Sonia Vihar, Delhi-94
Permanent R/o. Vill. & Post Kusumhara
Dist. Ajamgarh, U.P.
Date of institution : 06.03.2020
Judgment reserved : 17.10.2023
Judgment delivered : 20.10.2023
Appearance : Sh. V.K. Pathak, Ld. Sr. PP and Sh. Surendra
Singh, PP for CBI.
Sh. SPM Tripathi, Ld counsel for Accused
No.1.
Sh. Shaikh Bakhtiyar, Ld counsel for accused
no.2
RC No. DAI-2019-A-0012-DLI Page 1 of 67
CBI Vs. K. Kannadassan & Anr.
JUDGMENT
1. The instant case RC DAI-2019-A-0012 was registered on the basis of a written complaint dated 14.06.2018 received from Sh. P.K. Roy, Sr. Regional Manager, Central bank of India, Regional Office North, 1398 1st Floor, Chandni Chowk, Delhi-110006 against Sh. K. Kannadassan, AGM (removed from service), Central Bank of India, Sh. Manoj Kumar Singh, Proprietor of M/s. MKS Enterprises, Ms. Rajrani Sahdeva, Sh. Anuj Aggarwal, advocate and unknown others U/s. 120B r/w. 420, 467, 468 & 471 of IPC r/w 13(2) r/w. 13(1)(d) of PC Act, 1988. The complaint was verified and instant RC was registered. As per the FIR and chargesheet, the key allegations are as follows :
The instant case i.e. FIR / RC No. RC-
DAI-2019-A-0012 was registered on the basis of a written complaint dated 14.06.2018 lodged by Sh. P.K. Roy, Senior Regional Manager, Central bank of India, Regional Office North, 1398 1 st Floor, Chandni Chowk, Delhi-110006.
It was alleged that on 25.02.2014
considering the request of M/s. M.K.S.
Enterprises, the then Chief General Manager Mr. K. Kannadassan (then working as AGM) granted and sanctioned the Cash Credit of Rs. 30.00 Lakhs, without guarantee and collateral security. Later on, on 08.08.2015, the said loan was enhanced to Rs. 150.00 Lakhs from Rs. 30 RC No. DAI-2019-A-0012-DLI Page 2 of 67 CBI Vs. K. Kannadassan & Anr.
Lakhs and Mrs. Rajrani Sachdeva stood as guarantor and executed form of guarantee and also created mortgage of property no. 26, Block V, Rajauri Garden, Delhi as security. Prior to that legal search report from Panel Advocate Sh. Anuj Aggarwal was also obtained, which advised that the property was clear from encumbrances.
However, later on various irregularities were observed in the account of M/s. M.K.S. Enterprises, as the balance sheets were found to be fake, title deeds deposited by Rajrani Sachdeva were also fake. As per the report of another panel lawyer Sh. Subodh Kumar Singh dated 27.06.2016, guarantor was not related to borrower in any way and address of the unit of said loan account was the same which was mentioned in another loan account i.e. M/s. Deepa Auto Parts. Later on, the bank declared the account of M/s. M.K.S. Enterprises as fraud on 28.10.2016 and became NPA on 20.06.2016 and NPA amount was of Rs. 306.18 Lakhs.
During investigations, it was found that the said Chief Manager K. Kannadassan did not follow the due diligence stipulated by the bank guidelines and he also did not adhere to the banking norms and practices while sanctioning this loan.
The investigations also revealed that an RC No. DAI-2019-A-0012-DLI Page 3 of 67 CBI Vs. K. Kannadassan & Anr.
internal enquiry was conducted by the Central Bank of India against the said K. Kannadassan in which his role was probed in as many as 48 charges and on the basis of report of inquiry officer, he was removed from services on 13.02.2018.
The investigations also revealed that there were two levels for sanctioning of the loan, as per the CLASS Module, prescribed in Central Bank of India for processing of loan. The loan proposal is required to be processed by a junior officer on the computer and the same is then required to be sanctioned by the sanctioning authority and thereafter print out of the same is to be taken out and both the officers had to sign it.
However, in the present case, the physical copy of the said process note does not have any endorsement/signatures of recommending authority, as per the norms of the bank. This is also corroborated by the statement of Sh. Ashok, the then Assistant Manager, who was the recommending authority at the relevant time.
Investigations also revealed that the CIBIL report of the proprietor Sh. Manoj Kumar Singh was not generated before disbursing the loan to favour M/s. M.K.S. RC No. DAI-2019-A-0012-DLI Page 4 of 67 CBI Vs. K. Kannadassan & Anr.
Enterprises. Further as per the norms of the bank, a report from the Credit Information Bureau of India Limited (CIBIL) is also required to take at the time of sanctioning of loan to ascertain the creditworthiness of the borrower.
Further pre sanction visit to the applicant's place of business is a compulsory part of the process of due diligence, as per the relevant loan policy, which states that the said visit is undertaken to confirm the existence of the unit as well as the assets offered as prime / collateral security and their acceptability and to understand the trade practices / manufacturing process of the unit and to interact with the employees to collect useful information.
However, the same was not done. The due diligence as per the format was also not made part of the processing.
Further in this case Sh. K. Kannadassan has shown an inspection of the unit on 10.02.2014, while no such unit was actually functioning on the said date, as revealed by the fact that the rent agreement purportedly shown for the said office between Sh. Subhash Khanna and Sh. Manoj Kumar Singh was found to be forged / fake and the signatures of the landlord was also sent to CFSL for forensic examination RC No. DAI-2019-A-0012-DLI Page 5 of 67 CBI Vs. K. Kannadassan & Anr.
and the said landlord also confirmed that no room was ever rented out to Manoj Kumar Singh by his father.
Further the physical inspection carried out on 21.01.2016 of the said address revealed that there was no inventory record, creditor / debtor record etc. to verify the stocks of M/s. M.K.S. Enterprises. Therefore, it is clear that K. Kannadassan in conspiracy with the borrower Manoj Kumar Singh, proprietor of M/s. M.K.S. Enterprises dishonestly and fraudulently has mentioned in his physical inspection pre sanction report dated 10.02.2014 that the firm M/s. M.K.S. Enterprises was working there.
The investigations further revealed that Manoj Kumar Singh has submitted fake balance sheets, profit and loss account statement along with schedule of fixed assets for the financial years 2010-11, 2011-12, 2012-13 & 2013-14. The balance sheet has been purportedly audited by one Jain Rajiv & Associates, which was also found to be forged. Further, even the loan was purportedly secured through an agreement of hypothecation of stock as well as an agreement of Books Debts, in the absence of any Books of Accounts and fake balance sheets, the same holds no value.
Further, in the process note, the loan has RC No. DAI-2019-A-0012-DLI Page 6 of 67 CBI Vs. K. Kannadassan & Anr.
been worked out by the sanctioning authority on the basis of projected annual turn over of Rs. 1.5 Crores, whereas there is no basis for arriving on the said figure. Further the loan account sanction showed that on disbursal of the same on 25.01.2014, Rs. 12 Lakhs on 27.02.2014, Rs. 15 Lakhs on 28.02.2014 and Rs. 2.5 Lakhs on 07.03.2014 were transferred into the current account of M/s. M.K.S. Enterprises maintained in the same bank branch from where the funds were withdrawn in cash.
The instruments in respect of these transfers were seized during investigations and scrutiny of the same revealed that they have been prepared in the handwriting of Sh. K. Kannadassan and the instruments for the transfer does not bear the signatures of Manoj Kumar Singh, which implies that the borrower had not requested for transfer. As per the bank norms, funds from the cash credit account cannot move to the current account. The records also proved that on 26.02.2014, accused Manoj Kumar Singh withdrew Rs. 9 Lakhs in cash from the current account of M/s. M.K.S. Enterprises.
The investigations further revealed that the various other guidelines with regard to the end use of the funds of loan policy were flouted RC No. DAI-2019-A-0012-DLI Page 7 of 67 CBI Vs. K. Kannadassan & Anr.
and further during investigations, a diary was recovered during the search proceedings from the residence of Manoj Kumar Singh, wherein the entries pertaining to transaction of money in respect of Ms. Deepa Batra, employer of Manoj Kumar Singh/her family members and her companies were found and not only this, the said dairy also mentions transfer of money in the account of Ms. Kaavyayini, daughter of K. Kannadassan and the statement of account of Ms. Kaavyayini also collected during the investigations.
From the aforesaid facts, the said Sh. K. Kannadassan entered into a conspiracy with Sh. Manoj Kumar Singh and in furtherance of the same dishonestly and fraudulently sanctioned the loan to M/s. M.K.S. Enterprises on the basis of fake balance sheets and documents and thereafter facilitated the withdrawal of the same in cash and thereby caused wrongful loss to the bank and wrongful gain to the borrower.
Sanction u/S. 19 of the PC Act has already been obtained vide sanction order dated 30.12.2019.
The present charge sheet has been filed with regard to the sanctioning of loan of Rs. 30 Lakhs as discussed above. With regard to the enhancement of the loan to Rs. 150 Lakhs on 08.08.2015, wherein one Rajrani Sachdeva stood RC No. DAI-2019-A-0012-DLI Page 8 of 67 CBI Vs. K. Kannadassan & Anr.
as guarantor, in which legal search report was also obtained from the panel lawyer, it is stated in the charge sheet that the further investigation qua the same is pending and a supplementary charge sheet will be filed qua the same.
2. On the aforesaid allegations, the accused persons K. Kannadassan and Manoj Kumar Singh were charge sheeted under following offences i.e. u/S. 120-B r/w 420, 467, 468 & 471 of IPC & Section 13(2) r/w 13 (1)(d) of PC act 1988 and substantive offences thereof. However, the accused persons Anuj Aggarwal and Raj Rani Sehdeva were shown in column no. 12 of the charge sheet, regarding which it is stated that further investigation is still pending and after the completion of the same, supplementary charge sheet will be filed.
3. Chargesheet was filed in the Court on 06.03.2020 and cognizance was taken vide order dated 23.10.2020.
Charge:-
4. Thereafter, vide detailed order on the point of charge(s) dated 12.04.2021, charges u/s 120B r/w. 420/467/468/471 IPC and 13(2) r/w. 13(1)(d) of the PC Act, 1988 against both the accused persons i.e. K. Kannadassan and Manoj Kumar Singh and charges for the substantive offences u/s 420 IPC and section 13(1)(d) r/w 13 (2) of PC Act, 1988 against accused K. Kannadassan and charges for the offences u/s 420/471 IPC against accused Manoj Kumar Singh were directed to be framed. The formal charge(s) were framed accordingly on RC No. DAI-2019-A-0012-DLI Page 9 of 67 CBI Vs. K. Kannadassan & Anr.
01.09.2021 against both the accused persons, to which they pleaded not guilty and claimed trial.
5. After investigations, the role of each of the accused persons as found is discussed as under :
Firstly, the role of K. Kannadassan, public servant (hereinafter referred to as A-1) is being discussed :
6. As per the charge sheet, A-1 was posted as AGM, Central Bank of India, Anand Parvat, Delhi. On 25.02.2014, considering the request of M/s MKS Enterprises, the above named accused granted and sanctioned the cash credit of Rs. 30 lakhs without guarantee and collateral security and later on, on 08.08.2015, the said loan was enhanced to Rs. 150 lakhs from Rs. 30 lakhs and Mrs. Raj Rani Sachdeva stood as guarantor and executed form of guarantee and also created mortgage of property of Rajouri Garden, Delhi as security.
7. Prior to that, legal search report from Penal Advocate Sh. Anuj Aggarwal was also obtained, which advised that the property was clear from encumbrances. However, later on, various irregularities were observed in the account of M/s MKS Enterprises as the balance sheet were found to be fake and title deeds deposited by Raj Rani Sachdeva were also fake. It was found that accused no.1 K. Kannadassan did not follow the due diligence stipulated by the bank guidelines and he also did not adhere to the banking norms and practices while sanctioning this loan.
8. The Investigation also revealed that an internal enquiry was got conducted by the Central Bank of India against RC No. DAI-2019-A-0012-DLI Page 10 of 67 CBI Vs. K. Kannadassan & Anr.
K. Kannadassan in which his role was proved in as many as 48 charges and on the basis of the report of enquiry officer, he was removed from services on 13.02.2018.
9. The investigation also reveals that there were two levels for sanctioning of loan, as per the class module, prescribed by Central Bank of India for processing of loan. The loan proposal was required to be processed by a junior officer on the computer and the same was then required to be sanctioned by the sanctioning authority and thereafter print out of the same was to be taken out and both the officers had to sign it.
10. However, in the present case as per the bank norms, the physical copy of the said process note does not have any endorsement / signatures of recommending authority. This is also corroborated by the statement of Sh. Ashok, the then Assistant Manager, who was the recommending authority at the relevant time.
11. Investigation also revealed that the CIBIL report of the proprietor Sh. Manoj Kumar Singh was not generated before disbursing the loan in favour M/s. M.K.S. Enterprises. Further as per the norms of the bank, a report from the Credit Information Bureau of India Limited (CIBIL) was also required to be taken at the time of sanctioning of loan to ascertain the creditworthiness of the borrower but not taken.
12. Further pre sanction visit to the applicant's place of business is a compulsory part of the process of due diligence, as RC No. DAI-2019-A-0012-DLI Page 11 of 67 CBI Vs. K. Kannadassan & Anr.
per the relevant loan policy, which states that the said visit is undertaken to confirm the existence of the unit as well as the assets offered as prime / collateral security and their acceptability and to understand the trade practices / manufacturing process of the unit and to interact with the employees to collect useful information. However, the same was not done. The due diligence as per the format was also not made part of the processing.
13. Further, in this case Sh. K. Kannadassan has shown an inspection of the unit on 10.02.2014, while no such unit was actually functioning on the said date, as revealed by the fact that the rent agreement purportedly shown to the said office between Sh. Subhash Khanna and Sh. Manoj Kumar Singh was found to be forged / fake and the signatures of the landlord were also sent to CFSL for forensic examination and son of landlord (present landlord) also confirmed that no room was ever rented out to Manoj Kumar Singh by his father.
14. Further the physical inspection carried on 21.01.2016 of the said address revealed that there was no inventory record, creditor/debtor record etc. to verify the stocks of M/s. M.K.S. Enterprises. It is alleged that K. Kannadassan in conspiracy with the borrower Manoj Kumar Singh, proprietor of M/s. M.K.S. Enterprises dishonestly and fraudulently has mentioned in his physical inspection pre sanction report dated 10.02.2014 that the firm M/s. M.K.S. Enterprises was working there.
Regarding the role of accused Manoj Kumar Singh (hereinafter referred to as A-2)
15. The investigation further revealed that Manoj Kumar RC No. DAI-2019-A-0012-DLI Page 12 of 67 CBI Vs. K. Kannadassan & Anr.
Singh has submitted fake balance sheets, profit and loss account statement along with schedule of fixed assets for the financial years 2010-11, 2011-12, 2012-13 & 2013-14. The balance sheet has been purportedly audited by one Jain Rajiv & Associates, which was also found to be forged. Further, even the loan was purportedly secured through an agreement of hypothecation of stock as well as an agreement of Books Debts, in the absence of any Books of Accounts and fake balance sheets, the same holds no value. As per income tax department, the ITR for the year 2012-13 was not filed by Sh. Manoj Kumar Singh.
16. Further, in the process note, the loan has been worked out by the sanctioning authority on the basis of projected annual turn over of Rs. 1.5 Crores, whereas there is no basis for arriving on the said figure. Further the loan amount sanctioned showed that on disbursal of the same on 25.01.2014, Rs. 12 Lakhs on 27.02.2014, Rs. 15 Lakhs on 28.02.2014 and Rs. 2.5 Lakhs on 07.03.2014 were transferred into the current account of M/s. M.K.S. Enterprises maintained in the same bank branch from where the funds were withdrawn in cash.
17. The instruments in respect of these transfers were seized during investigation and scrutiny of the same revealed that they were prepared in the handwriting of Sh. K. Kannadassan and the instruments for the transfer do not bear the signatures of Manoj Kumar Singh, which implies that the borrower had not requested for transfer. As per the bank norms, funds from the cash credit account cannot move to the current account. The records also proved that on 26.02.2014, accused Manoj Kumar Singh withdrew Rs. 9 Lakhs in cash from the current account of RC No. DAI-2019-A-0012-DLI Page 13 of 67 CBI Vs. K. Kannadassan & Anr.
M/s. M.K.S. Enterprises.
18. The investigations further revealed that the various other guidelines with regard to the end use of the funds of loan policy were flouted and further during investigations, a diary was recovered during the search proceedings from the residence of Manoj Kumar Singh, wherein the entries pertaining to transaction of money in respect of Ms. Deepa Batra, employer of Manoj Kumar Singh / her family members and her companies were found and not only this, the said dairy also mentions transfer of money in the account of Ms. Kaavyayini, daughter of K. Kannadassan and the statement of account of Ms. Kaavyayini also collected during the investigations.
19. Sh. K. Kannadassan entered into a conspiracy with Sh. Manoj Kumar Singh and in furtherance of the same, dishonestly and fraudulently sanctioned the loan to M/s. M.K.S. Enterprises on the basis of fake balance sheets and documents and thereafter facilitated the withdrawal of the same in cash and thereby caused wrongful loss to the bank and wrongful gain to the borrower. Sanction u/S. 19 of the PC Act has already been obtained vide sanction order dated 30.12.2019.
20. The present charge sheet has been filed with regard to the sanctioning of loan of Rs. 30 Lakhs as discussed above. With regard to the enhancement of the loan to Rs. 150 Lakhs on 08.08.2015, wherein one Rajrani Sachdeva stood as guarantor, in which legal search report was also obtained from the panel lawyer, it is stated in the charge sheet that the further investigation qua the same is pending and a supplementary RC No. DAI-2019-A-0012-DLI Page 14 of 67 CBI Vs. K. Kannadassan & Anr.
charge sheet will be filed qua the same.
Prosecution Evidence:-
21. Thereafter, prosecution has examined 16 witnesses in support of its case, the description of which is given as under :
PW/Name Proved Document Exhibit No.
No.
PW-1 Parveen He had filed complaint dated P-1/PW-1
Kumar Rai,Chief 14.06.2018.
Internal Audit,
Central Bank of
India
PW-2 Ashok He proved certain vouchers, D-18 P-2/PW-2,
Kumar, Assistant certain cheques and sanction P-3/PW-2 &
Manager, Central letter of loan of Rs. 30 lakhs P-4/PW-2
Bank of India, dated 25.02.2014
PW-3 Amit Verma, Proved production cum D-7, D-8, D- PW-5/PW-
Chief Manager seizure memo, seizure memo 15, D-16, D- 3, P-6/W-3,
Central Bank of dated 07.11.2019, letter dated 17, D-19, D- P-7/PW-3, India. 06.11.2019, office order 20, D-21, D- P-8/PW-3, register from 28.11.2011 to 23, D-24, D- P-2, PW-2,
09.02.2018, vouchers and 25 P-3/PW-2, cheques, production cum P-9/PW-3, seizure memo along with P-19/PW-3 documents, statement of & P-20/PW-
accounts along with certificate 3u/s 2A of Bankers Book of Evidence Act PW-4 Suresh Proved the application for D-3 P-10/PW-4 RC No. DAI-2019-A-0012-DLI Page 15 of 67 CBI Vs. K. Kannadassan & Anr.
Kumar, Senior CGTMSE guarantee cover.
Manager, Central
Bank of India.
PW-5 Amit Proved production cum D-2, D-3, D- Ex. P-
Nijhawan, seizure dated 15.05.2019, loan 4 11/PW-5,
Manager, Central document pertaining to the P-20/PW-5,
Bank of India. account of M/s MKS P-22/PW-5,
Enterprises for Rs. 30 lakhs P-23/PW-5,
and other documents and the P-24/PW-5,
processed note, the letter of P-25/PW-5
interest, letter of paper, DP
note and agreement and
agreement of hypothecation to
secure cash credit against
goods, the loan application
form and the Stock Inspection
report dated 03.10.2015 and
payment of guarantee fee
under CGTMSE guarantee
cover, file of internal
departmental enquiry,
production cum seizure memo
dated 15.05.2019
PW-6 Sh. He has proved the sanction D-18 Ex. P-
Purushottam letter along with process note 4/PW-2 and
Thadani, Manager, and certain vouchers. P-2/PW-2.
Central Bank of
India.
PW-7 Vijay Accorded Sanction along with D-28 P-12/PW7
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CBI Vs. K. Kannadassan & Anr.
Kumar Singh, office memo . & P-13/PW-
GM, HRD, 7
Nariman Point,
Mumbai.
PW-8 Sh. Rajiv He proved that he has not Ex. P-
Jain, Chartered prepared the balance sheet. 14/PW-8.
Accountant.
PW-9 V.V. He had conducted the D-3 & D-6 P-15/PW-9
Natarajan, AGM, departmental enquiry against Corporate Finance accused K. Kannadassan Branch, Central Bank of India.
PW-10 Sanjay He deposed that premises D-3, D-10 P-16/PW-
Khanna no.28/1540 Naiwala Karol 10, P-
Bagh was never rented out to 17/PW-10
A-2/M/s MKS Enterprises.
PW-11 Dr. Reena She has proved the CFSL P-27/PW-11
R. Gupta, Sr. report.
Scientific Officer,
Grade-I, CFSL.
PW-12 B. Ashok, He accorded permission for D-13 Ex. P-
General Manager, conducting enquiry against 29/PW-12
Central Bank of accused K. Kannadassan
India.
PW-13 Kishore He proved that accused Manoj D-22 Ex. P-
Pandey, Income Kumar Singh had not filed the 30/PW-13
Tax Officer. ITR for A.Y 2012-13
PW-14 B.K. He acted as a witness for Ex. P-
Arvind, taking specimen writing/ 31/PW-14
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Administrative signatures of accused Manoj
Officer, LIC. Kumar Singh
PW-15 Sanjay He was the member of the D-11 and D- Ex. P-
Kumar, Head team for witnessing the search 12 32/PW-15 ,
Hawaldar, CGST proceedings and the search list P-33/PW-15
dated 12.04.2019.
PW-16 CMS Negi, He was the IO of the case and D-1, D-11, Ex. P-
IO of the case. he deposed about the 34/PW-16,
investigation conducted by P-35/PW-16
him.
22. PW1: Sh. Parveen Kumar Rai, Chief Internal Auditor, Central Bank of India, stated that he was posted as Sr. Regional Manager, Central Bank of India, Delhi from April 2018. He stated that during his tenure, he had filed one complaint to CBI in respect of account of M/s M.K. Enterprises maintained with Anand Parvat Branch of their bank. He stated that a credit limit of Rs. 30 lakhs was sanctioned to M/s MKS Enterprises which was further enhanced to Rs. 1.5 Crores and the said account turned NPA during the internal audit and it was found that there were gross irregularities with regard to sanction process and collaterals. He stated that thereafter, special enquiry was conducted in the branch with respect to many accounts, during the course of which, it came to the light that the title deeds of the property offered as collaterals in this account were fake and the address of this account was same as some other accounts of the branch. This witness proved the complaint dated 14.06.2018 which was filed by him in the CBI and the said complaint is exhibited as Ex. P1/PW1.
RC No. DAI-2019-A-0012-DLI Page 18 of 67CBI Vs. K. Kannadassan & Anr.
During the cross examination of this witness, a question is asked about the loan transaction of Rs. 30 lacs and witness states that loan transaction of Rs. 30 lacs was sanctioned by accused K. Kannadassan and during further cross examination nothing fruitful come out for accused persons.
23. PW-2 Sh. Ashok Kumar who retired as Assistant Manager of Central Bank of India, deposed that he remained posted in the Anand Parvat branch from February 2014 to February 2016 and during his tenure at Anand Parvant Branch, accused K. Kannadassan was the Chief Manager of the Branch and this witness correctly identified the accused K. Kannadassan by pointing towards him. He deposed that when he was posted there, he was looking after the credit department in Anand Parvat branch and he deposed that he is acquainted with the handwriting and signatures of accused K. Kannadassan as he has worked with him in the said branch during his tenure. PW-2 proved the voucher of Rs. 12 lakhs dated 26.02.2014, voucher of Rs. 15 lakhs dated 28.02.2014 and voucher of Rs. 2.5 lakhs dated 07.03.2014 which were in the handwriting of accused K. Kannadassan and the same are Ex. P-2/PW-2 (colly three separate sheets) (D-18).
In the cross examination, this witness states that the signature of the party who is availing the loan are required on vouchers but this witness after seeing the vouchers stated that the signatures of the party who has availed the loan are not there and rather accused K. Kannadassan has signed at the place where the party had to sign. This witness states that accused K. Kannadassan used to do everything himself from preparation of RC No. DAI-2019-A-0012-DLI Page 19 of 67 CBI Vs. K. Kannadassan & Anr.
the loan documents to the sanctioning of the loan and further preparing the vouchers for the purpose of transferring the loan account into the current account of the party.
24. PW-3 Sh. Amit Verma, Chief Manager, Central Bank of India deposed that he joined Central Bank of India in the year 1999 as clerk and thereafter he got promoted and he was posted in the Anand Parvat Branch on 23.07.2019 as Chief Manager. This witness proved the production cum seizure memo along with documents as Ex. P5/PW-3 (D-7 & D-8), seizure memo dated 07.11.2019 Ex. P6/PW-3 (D-15), letter dated 06.11.2019 with the signature of Sh. D.P. Khurana as Ex. P7/PW- 3 (D-16), office order register from 28.11.2011 to 09.02.2018 as Ex. P-8/PW-3 (colly) (D-17), vouchers and cheques Ex. P-2/PW- 2 and P-3/PW-2 (colly), production cum seizure memo along with documents Ex. P-9/PW-3 (colly) (D-19, D-20 & D-21), production cum seizure memo Ex. P19/PW-3 (D-23), statement of accounts along with the certificate u/s 2A of Bankers Book of Evidence Ex. P-20/PW-3 (D-24, D-25).
During cross examination, it is admitted by this witness that in every loan, there is requirement of two bank officials for processing and sanctioning the loan. He states that cash withdrawal is not permitted in the CC account. He further states in the cross examination that as per loan policy, as per clause 12.1.14, end use of funds, prohibits the transfer of loan amount from CC account to CD account or any other account and it is necessary for the branch to ensure that withdrawals from each credit/OD accounts are strictly for the purpose for which the credit limits are sanctioned.
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25. PW-4 Sh. Suresh Kumar deposed that he has been retired as Senior Manager, Central Bank of India, Najafgarh, Delhi. He stated that he was posted at Anand Parvat branch of Central Bank of India from 10.10.2013 to 05.05.2016 and at that time, accused K. Kannadassan was the Chief Manager of that branch. He stated that he was posted as Sr. Manager in the said branch and worked as Second man in the said branch. He stated that the loans in the branch were processed through computer system in class module and the loan officers used to access the class module through password and those passwords used to come from Regional office and they used to communicate the password to the branch head through telephone. This witness proved the application for CGTMSE guarantee cover as Ex. P- 10/PW-4 (part of D-3, page 6-9) . He stated that he had faced departmental enquiry due to the charge for recommending the various loan applications and the said recommendations were made by him on the instructions of accused K. Kannadassan after disbursement of the loan. He stated that he know accused Manoj Kumar Singh as he was the driver of the K. Kannadassan and he used to drive him to the bank.
In the cross-examination, this witness states that he was punished in the departmental inquiry and four increments already granted to him were taken back. He was further cross examined at length but nothing fruitful come out for accused persons.
26. PW-5 Sh. Amit Nijhawan, Manager, Central Bank of India, deposed that he was posted in the Anand Parvat branch of Central of Band of India from February 2016 to July 2019 and RC No. DAI-2019-A-0012-DLI Page 21 of 67 CBI Vs. K. Kannadassan & Anr.
during the said period, he had submitted certain documents to CBI vide production cum seizure memo dated 15.05.2019 and said memo is Ex. P-11/PW-5 (D-2). He stated that vide this memo, he had submitted the loan documents pertaining to the account of M/s MKS Enterprises for Rs. 30 lakhs and other documents. He stated that he has seen document D-31 i.e. loan file of MKS Enterprises and Sanction letter and process note is already Ex. P-4/PW-2. He further stated that the borrower had submitted the loan application form and also submitted financial documents along with rent agreement. The borrower had also executed letter of interest, letter of waiver, DP note and agreement and agreement of hypothecation to secure cash credit against goods dated 26.02.2014. He stated that he had submitted certain documents to the CBI and those documents are Ex. P- 21/PW-5 (colly) (CFSL documents part of D-3) (excluding Ex. P- 14/PW-8 and Ex. P-16/PW-10). The loan application form of the borrower M/s MKS Enterprise is Ex. P-22/PW-5 (part of D-3) and the Stock Inspection report dated 03.10.2015 and payment of guarantee fee under CGTMSE guarantee cover is Ex. P-23/PW-5 (page 3-5 of D-3). He stated that he had also handed over file of documents of recovery proceedings which had been certified by Sh. Gajender Singh Chauhan vide his seal and signatures and same is Ex. P-24/PW-5 (D-4) (colly). He stated that he had handed over file of internal departmental enquiry already Ex. P- 15/PW-9 and he proved the production cum seizure memo dated 15.05.2019 Ex. P-25/PW-5. He deposed that the vouchers already Ex. P-2/PW-2 are three vouchers and all bears the signatures of accused K. Kanndassan.
RC No. DAI-2019-A-0012-DLI Page 22 of 67CBI Vs. K. Kannadassan & Anr.
27. PW-6 Sh. Purushottam Thadani, Manager, Central Bank of India, deposed that he was posted in Anand Parvat Branch, Central Bank of India, from January 2014 to May 2017 and he used to lookafter the work of operations in the branch and at that time, accused K. Kannadassan was the branch head. He stated that loans used to be processed through class module of the system and the class module used to be accessed through password which used to be received from the regional office. He stated that the sanction letter along with process note Ex. P- 4/PW-2 part of D-3 bears the signature of K. Kannadassan and the said process note has not been recommended by any body and the present note was required to be recommended from loan officer/loan authority before sanction. He stated that certain vouchers have already been exhibited as Ex. P-2/PW-2 (colly 3 separate sheets) (D-18) and the vouchers of Rs. 12 lakhs had been firstly passed by him and the vouchers above Rs. 10 lakhs were required to be passed by two officers of the branch and this voucher bears the signature of K. Kannadassan and voucher of Rs. 2.5 lakhs has also firstly passed by him.
During the cross examination, this witness admitted that at the place where the party had to sign the same bears the signatures of accused K. Kannadassan on all the three vouchers. This witness also admitted that at the time when he passed the above vouchers, it came to his notice that said vouchers do not have the signatures of the party. He further states that since the Chief Manager was signing himself, he had no option but to pass the vouchers.
28. PW-7 Vijay Kumar Singh, deposed that in RC No. DAI-2019-A-0012-DLI Page 23 of 67 CBI Vs. K. Kannadassan & Anr.
December 2019, he was posted as General Manager, HRD, at Nariman Point, Mumbai Central Office. He stated that he received a communication from CBI for according sanction for prosecution against accused K. Kannadassan. He stated that he studied the detailed investigation report including the documents of bank through which loan was sanctioned and he found that there were glaring malafide mistakes committed by accused K. Kannadassan in disbursing the loan. He deposed that he also noticed through the documents that actually the borrower never had any business in the said premises and chartered accountant had also denied that he ever signed any balance sheet based on which sanction was granted which means that the balance sheet were fabricated. He further deposed that on the basis of these documents, he accorded the sanction which is Ex. P-12/PW-7 (D- 28 running into three sheets) and this sanction order was forwarded by Mr. Anchit Kumar, the then, Manager along with copy of office memorandum dated 30.10.2019 vide which he had been empowered to accord the sanction and he also proved the letter along with office memo Ex. P-13/PW-7 (D-28).
This witness was cross examined at length by the defence counsel but failed to shake the credibility of the witness. No issue is raised on to the competency of this witness for granting sanction. It is clear and apparent from the documents that sanction Ex. P-12/PW7 has been passed with proper application of mind. No suggestion has been put to this witness that he accorded sanction without consideration of the relevant record.
29. PW-8 Sh. Rajiv Jain, deposed that he is a practicing RC No. DAI-2019-A-0012-DLI Page 24 of 67 CBI Vs. K. Kannadassan & Anr.
Chartered Accountant and he does not know anything about M/s. MKS Enterprises and he also does not know Manoj Kumar Singh. He stated that he had never prepared any such balance sheet. (page 72 to page 89 of D-3) (colly) and signature on balance sheet Ex. P-14/PW-8 are not his signatures.
30. PW-9 V. V. Natarajan, deposed that upto May 2018, he was posted at Delhi as AGM, Corporate Finance Branch, Central Bank of India, Delhi. He stated that this case was entrusted to him by the Central Bank of India for enquiry as there were 48 charges against Mr. K. Kannadassan and transaction relating to the present case was one of the charge. He stated that in this particular case, the processing and sanctioning was done single handedly against the bank norms of multi layer approach. He stated that the findings of final order of the disciplinary authority has been signed by Mr. Anurag Sharma and also by accused K. Kannadassan. The enquiry proceedings have been signed by him, by accused K. Kannadassan as well as by presenting officer Mr. Naresh Bhatia. He stated that administrative order dated 13.02.2018 regarding the removal from service has been signed by Mr. Rajesh Akhauri. The documents are Ex. P-15/PW-9 (colly) (D-6). He further stated that he has seen sanction letter along with process note Ex. P- 4/PW-2 (D-3) and this sanction has been accorded single handedly without the signature of recommending authority. He further deposed that Cent Sahyog Scheme is primarily to fund the MSME units for either setting of new units or expanding the existing business and class module is online loan processing system introduced by the bank to ensure that the loans are RC No. DAI-2019-A-0012-DLI Page 25 of 67 CBI Vs. K. Kannadassan & Anr.
sanctioned in a structured manner and in this case, during the course of enquiry conducted by him, instead of following the prescribed procedure laid down by the bank, the loan amount was directly credited to the current account of borrower from where cash was allowed to be withdrawn thereby violating bank norms of ensuring end use of funds.
He deposed that he has seen pre-sanction visit report at page 52 of Ex. P-4/PW-2 (D-3) which bears the signature of K. Kannadassan where he has mentioned that firm is working in the rented premises. During the course of his enquiry, it was found that in the same premises, another borrower namely Deepa Auto was also functioning and there was no proper segregation of stocks and the findings of disciplinary authority regarding the present transaction is Ex. P-15/PW-9 (colly) (D-6).
This witness was cross examined at length but failed to shake his credibility.
31. PW-10 Sanjay Khanna, deposed that his father Sh. Subhash Chander Khanna has expired in the month of February, 2014. He stated that he is running his business from the premises no. 28/1540, Naiwalan, Karol Bagh, Delhi and the said premises was earlier owned by his father and presently, all three brothers including mother are owning the same. There were separate 10 rooms on the 2nd floor and they were rented out by his father to separate tenants since the year 2000. He further deposed that he does not know any firm in the name of M/s. MKS Enterprises and their premises was never rented out to the said firm.
After seeing the rent agreement dated 01.03.2012 purportedly executed between his father Sh. Subhash Khanna RC No. DAI-2019-A-0012-DLI Page 26 of 67 CBI Vs. K. Kannadassan & Anr.
and Manoj Kumar Singh in respect of property no. 1520/28, 2nd Floor, Naiwalan, Karol Bagh, he deposed that the said rent agreement does not bear the signatures of his father at Q60A. The said document is Ex. P16/PW10 (D-3). He has also proved the seizure cum production memo dated 22.10.2019 vide which he handed over the copy of the election ID card of his father Ex. P-17/PW-10 (D-10).
This witness was cross-examined at length and he denied the suggestion that the rent agreement Ex. P-16/PW-10 is a genuine document executed by his father with M/s MKS Enterprises.
32. PW-11 Dr. Reeta R. Gupta, deposed that she is a Senior Scientific Officer, Grade-I, Documents-cum-Assistant Chemical Examiner to the Government of India, CFSL and she has proved the CFSL report in this case Ex. P-27/PW-11. She deposed that she had examined several document sent by CBI and she had expressed her opinion in the handwriting examination report Ex. P-27/PW-11.
33. PW-12 B. Ashok, deposed that he was working as General Manager, HRD, Central Bank of India in the year 2019 and he received communication from the Local Regional Officer regarding the permission of conducting enquiry against accused K. Kannadassan. He accorded permission vide letter dated 23.01.2019 Ex. P-29/PW-12 (D-13).
34. PW-13 Kishore Pandey, deposed that in the month of November 2019, he was posted as Income Tax Officer in the Ward 60(7), New Delhi. He received certain communication RC No. DAI-2019-A-0012-DLI Page 27 of 67 CBI Vs. K. Kannadassan & Anr.
regarding the filing of income tax return and he provided the information to the CBI vide letter dated 18.11.2019 and he found that Sh. Manoj Kumar Singh having PAN No.BLBPS9719M had not filed ITR for the assessment year 2012-13 and he proved the letter along with the annexures Ex. P30/PW13 (D-22).
35. PW-14 B. K. Arvind, deposed that he was working as Administrative Officer (LIC) in Jeevan Prakash Building, KG Marg, New Delhi in the month of September 2019 and on the instructions of the senior officer, he had attended the office of CBI and on the instructions of IO, he acted as witness for taking of specimen writing/signatures of accused Manoj Kumar Singh. After seeing the signatures/specimen handwriting of Manoj Kumar Singh from S-1 to S-20 (20 sheets), he deposed that all these pages bears his signatures at point A on each of the sheet and the same are Ex. P-31/PW-14 (Colly).
36. PW-15 Sanjay Kumar, deposed that in the month of April 2019 he was posted as Head Havildar, CGST West and he was called by the CBI for witnessing the search proceedings and the search list dated 12.04.2019 bears his signatures at point A on both the pages. The search was conducted at Sonia Vihar. The articles mentioned therein were found during the search. The search list dated 12.04.2019 is Ex. P-32/PW15 (D-11). He after seeing the diary (D-12) deposed that it was found during the search and the same bears his signatures at point A on each page. The diary is Ex. P33/PW15 (D-12).
37. PW-16 CMS Negi deposed regarding the investigations, as were carried out by him during the course of RC No. DAI-2019-A-0012-DLI Page 28 of 67 CBI Vs. K. Kannadassan & Anr.
this case. He deposed regarding the complete investigations done by him in this case along with the relevant documents. He deposed that the FIR of the present case was registered on the basis of the complaint filed by Sh. P.K. Roy, Sr. Regional Manager, Central Bank of India and the said FIR was marked to him for investigation. He stated that he has seen the FIR dated 31.03.2019 which bears the signature of Sh. Sudhanshu Dhar Mishra, the then, SP, ACB, New Delhi at point A and the FIR is Ex. P-34/P-16 (D-1). He stated that during the investigation, searches were conducted and he saw the search list already Ex.P- 32/PW-15 which was conducted by Sh. Raj Saurav under the authorisation issued by him Ex. P-35/PW-16 (part of D-11). He deposed that during the investigation, he collected the documents from the bank and other officers and he proved the seizure memo Ex. P-11/PW-5 (D-2). He stated that vide this production cum seizure memo, he collected the documents including the file marked as M/s MKS Enterprises for a loan of Rs. 30 lakhs from Mr. Amit Nijjawan. He stated that he collected the file pertaining to internal enquiry of accused K. Kannadassan and documents relating to recovery proceedings. He stated that he had collected the loan policy updated upto the month of March, 2014 and inspection circular no.779 dated 30.09.2011 pertaining to retail lending scheme " Cent Sahyog".
He further deposed that he collected several documents relating to the loan scheme, recovery proceedings, internal departmental enquiry proceedings, registers, vouchers, statements of accounts, income tax returns etc. through various production cum seizures memos.
RC No. DAI-2019-A-0012-DLI Page 29 of 67CBI Vs. K. Kannadassan & Anr.
Statement u/s 313 Cr.PC.
38. After closure of prosecution evidence, statements of accused persons have been recorded u/s 313 CrPC on 19.04.2022 by putting across incriminating evidence through each of them separately in question answer form to seek their explanation.
39. In his statement, Accused K. Kannadassan (A-1) admitted that the sanction of Rs. 30 lakhs was under CGTSME Scheme and from 2014 to 2016 he was the Chief Manager of the Bank and looking after the credit department. He stated that this loan was sanctioned after following due procedure. Accused no.1 also admitted that the vouchers of Rs. 12 lakhs dated 26.02.2014, voucher of Rs. 15 lakhs dated 28.02.2014 and voucher of Rs. 2.5 lakhs dated 07.03.2014 were prepared by him and same were prepared on the asking of account holder. K. Kannadassan further admitted that sanction letter dated 25.02.2014 of the loan of Rs. 30 lakhs to M/s MKS Enterprises bears his signatures being sanctioning authority. Accused K. Kannadassan further stated in response to question no.12 that all documents related to loan of M/s MKS Enterprises were not placed on record and withhold but he failed to explain what were the loan documents which were withhold. K. Kannadassan also admitted that departmental enquiry was conducted against him. K. Kannadassan also admitted that voucher of Rs. 12 lakhs had been firstly signed by him. He also admitted that cheques Ex. P-3/PW2 and Rs. 2.5 lacs were also passed by him and the statement of account of M/s MKS Enterprises pertaining to account no. 3325378686 Ex. P- 9/PW-3 contains the entry of Rs. 12 lakhs, Rs. 15 lakhs and Rs. 2 lakhs corresponding to above vouchers at point B, C & D. He RC No. DAI-2019-A-0012-DLI Page 30 of 67 CBI Vs. K. Kannadassan & Anr.
also admitted that there were 48 charges against him and enquiry was conducted.
40. In his statement, accused Manoj Kumar (A-2) stated that he was the driver of Ms Deepa Batra and he never used to come to the branch for operating the above account of Ms. Deepa Batra on her behalf and he only acted what his employer had asked him to do in good faith. He stated that if any document is filed, it is filed by his employer Ms. Deepa Batra and other culprits. He further stated in his statement u/s 313 Cr.PC that he was not having any knowledge about the sanctioning of the loan or of any other aforesaid documents, however, he had signed some documents on the asking of Ms. Deepa Batra during the course of his employment with her in good faith. He further stated that he had signed some documents under the pressure of employment and by influence of Ms. Deepa Batra. He further admitted that the alleged loan has been taken on his name without his knowledge during the course of his employment with Ms. Deepa Batra. He stated that under the pressure of employment and by influence, he got signed some documents on asking specifically by his employer Ms. Deepa Batra.
41. Two witnesses Sh. Ram Shanker Mishra and Sh. Devesh Kumar Gupta were examined as DW-1 and DW-2.
Defence Evidence
42. DW-1 Sh. Ram Shanker Mishra, Chief Manager, Central Bank of India has been examined and he has produced the internal audit report for the month of January 2015 in respect of term loan and CCOD, Concurrent Audit Report for quarter RC No. DAI-2019-A-0012-DLI Page 31 of 67 CBI Vs. K. Kannadassan & Anr.
ending March 2014, Concurrent Audit Report for the month ending June 2014, Concurrent Audit Report for the month, July to December 2014, statutory audit report for the year ending March 2015. All these reports cannot be read in evidence as all the reports are photocopies and unattested and specific objections regarding mode of proof has been raised by Ld. Sr. PP for CBI.
43. DW-2 Devesh Kumar Gupta, Chief Manager, Central Bank of India had produced the certified copies of department enquiry report against K. Kannadassan as well as the written submission submitted on behalf of accused K. Kannadassan during the course of enquiry.
ON ARGUMENTS
44. I have heard Sh. SPM Tripathi Ld. Counsel for A-1, Sh. Sheikh Bakhityar, Ld counsel for A-2 and Sh. V. K. Pathak, Ld. Sr. PP for CBI.
45. Arguing for the prosecution, Sh. V.K. Pathak, Ld. Sr. PP for CBI submitted that sufficient evidence has been brought on record to prove the case in the form of oral and documentary evidence. The matter pertains to the grant and sanction of cash credit of Rs. 30 lakhs without guarantee and collateral security and later on the said loan was enhanced to Rs. 150 lakhs from Rs. 30 lakhs to M/s MKS Enterprises on behalf of Central Bank of India and the officer of the bank I.e. Accused no.1 being public servant has violated the procedural aspects and guideline of the bank and thereby misused his official position and extended pecuniary advantage to the borrower. Accused no.2 Sh. Manoj Kumar Singh on behalf of M/s MKS Enterprises RC No. DAI-2019-A-0012-DLI Page 32 of 67 CBI Vs. K. Kannadassan & Anr.
submitted loan application on 10.01.2014 for a sum of Rs. 30 lakhs along with fake documents and his intentions were dishonest from beginning as he disclosed incorrect particulars in the application and submitted forged documents. Accused No.1 K. Kannadassan in conspiracy and collusion, sanctioned the said loan of Rs. 30 lakhs without following due process of the bank and in this way facilitated and sanctioned the loan in favour of M/s MKS Enterprises. Even post sanction disbursement has not been properly monitored and cash amount was allowed to be withdrawn without seeking justification as to where the said amount was utilised. Bank declared account of M/s MKS enterprises as fraud on 28.10.2016 and account became NPA on 20.06.2016 and NPA amount was Rs. 306.18 lacs.
46. Ld. PP for the CBI has argued that A-1 is the public servant, who at that time was working as AGM at Anand Parvat Branch and he had granted and sanctioned the cash credit of Rs. 30 lakhs without guarantee and collateral security. Later on, the said loan was enhanced to Rs. 150 lakhs from Rs. 30 lakhs. It is argued by Ld. PP that later on, various irregularities were found in the account of M/s MKS Enterprises as the balance sheet were found to be fake and title deed were also found to be fake.
47. Ld. Sr. PP further argued that accused no.2 Manoj Kumar Singh while applying the loan had filed the rent agreement of his office and the rent agreement was found to be forged. It is further argued that accused no.2 Manoj Kumar Singh has also submitted fake balance sheets, profit and loss account along with schedule of fixed assets for the financial years 2010- 11, 2011-12, 2012-13 and 2013-14 and the balance sheet has RC No. DAI-2019-A-0012-DLI Page 33 of 67 CBI Vs. K. Kannadassan & Anr.
been purportedly audited by one Jain Rajiv & Associates which was also found to be forged. Therefore, he submits that both the accused persons were acting in concert after the agreement to commit a crime which was entered into by them, therefore, anything said, done or written by anyone of them during the course of said conspiracy in reference to the common design is admissibility against all the other accused by the Principle of Agency, as contained in Section 10 of Indian Evidence Act. Therefore, he submits that both the accused are liable to be convicted u/s 120B r/w 419, 420, 467, 468 & 471 IPC & 13 (2) r/w 13 (1)(d) of PC Act & 420, 471 IPC.
48. On the other hand, Ld counsel for accused K. Kannadassan had argued that collateral was not required for sanctioning of loan of Rs. 30 lakhs as per the prevailing bank rules. It is further argued by Ld counsel for accused that with regard to class module, the accused was not at fault. Recommending authority had not signed on the said documents and it was the duty of recommending authority to sign the said documents and the accused cannot be held guilty for the said omission. It was further argued that it was also not the duty of accused no.1 to visit the place of business and it was the duty of recommending authority to visit the place of business and to file the report.
49. Ld counsel for A-2 argued that his client is innocent and he was not aware about the banking procedure. It is further argued that entire investigation is faulty and his client has been made scapegoat.
RC No. DAI-2019-A-0012-DLI Page 34 of 67CBI Vs. K. Kannadassan & Anr.
FINDINGS
50. The case of the prosecution is that in the year 2014, accused persons entered into criminal conspiracy to do an illegal act and in furtherance of said conspiracy, accused no.2 Manoj Kumar Singh being proprietor of M/s MKS Enterprises submitted loan application dated 10.01.2014 for a sum of Rs. 30 lakhs along with fake balance sheets, profit and loss account statements along with schedule of fixed assets and accused no.1 K. Kannadassan sanctioned the said cash credit loan of Rs. 30 lakhs without following due diligence stipulated by the bank guidelines and bank norms and also without recommendation of the recommending authority of the bank. After sanction of the said limit, the said amount was diverted into the current account of M/s MKS Enterprises without any genuine business transactions, the instruments of which were prepared by accused no.1 K Kannadassan and he also allowed the transfer of funds and thereby accused persons cheated the Central Bank of India and thereby dishonestly induced the bank to deliver the loan amount to accused Manoj Kumar Singh and thereby caused wrongful losses for not repaying the loan.
51. The officer of the bank (public servant namely K. Kannadassan) overlooked various irregularities and discrepancies appearing in the proposal and misused his official position and wrongfully extended pecuniary benefits in favour of Manoj Kumar Singh i.e. accused no.2.
52. The complainant in this case is Sh. Parveen Kumar Roy (PW-1), Chief Internal Auditor, Central Bank of India. This complaint was filed as MKS Enterprises was sanctioned a credit RC No. DAI-2019-A-0012-DLI Page 35 of 67 CBI Vs. K. Kannadassan & Anr.
limit of Rs. 30 lakhs which was later on enhanced to Rs. 150 lakhs and the said account turned into NPA and during the internal audit, it was found that there were gross irregularities with regard to sanction process and collateral. Thereafter, special enquiry was conducted in the branch with respect to many accounts and during the course of which, it came into light that the title deeds of the property offered as collateral in this account were fake and the address of this account was same as some other accounts of the branch.
53. The borrower had submitted loan application form Ex. P-22/P25 (Part of D-3) alongwith financial documents including rent agreement. The borrower has also executed letter of interest, letter of waiver, DP note and agreement and agreement of hypothecation to secure cash credit against goods dated 26.02.2014 and agreement of Book Debts. The complaint Ex. P1/PW-1 given by Shri P.K. Roy, Senior Regional Manager, (examined as PW-1) contains details of discrepancies and irregularities so committed by the borrower and also at the Branch level and number of accounts turned NPA in Anand Parbat Branch during internal investigation in account of M/s M.K.S. Enterprises. PW-1 Shri P.K. Roy in his complaint and some other witnesses of the bank pointed out the following discrepancies :
a) The cash credit of Rs.30 Lacs was granted and sanctioned without any guarantee and collateral security.
b) Balance sheets filed by the borrower were fake.
c) Title deeds deposited by Raj Rani Sachdeva were fake as per the report taken from panel lawyer Mr. Subodh RC No. DAI-2019-A-0012-DLI Page 36 of 67 CBI Vs. K. Kannadassan & Anr.
Kumar Singh.
d) The guarantor was not related to borrower in any way which was against the policy.
e) Address of Unit of said loan account was the same which is mentioned in another loan account of M/s Deepa Auto Parts.
f) Accused K. Kannadassan had not conducted due diligence and failed to generate CIBIL report of accused No.1 &
2.
g) Accused K. Kannadassan had also not created charge in CERSAI.
h) As per the policy, the money disbursed from the loan account can be utilized only for the purpose for which it has been sanctioned. In the present case, the money has been transferred from the loan account to the current account of the borrower and as per the bank policy, it cannot be done.
i) Sanction letter alongwith process note (Ex. P-4/PW-
2) has not been recommended by anybody and the present loan was required to be recommended from Loan officer/Recommending authority before sanctioning. As per PW- 9, the processing of loan and sanctioning was done single handedly against the bank norms of Multilayer approach.
j) The rent agreement where the firm was stated to be functioning was forged document.
54. PW-9 Sh. V.V. Natarajan another Senior Officer of Central Bank of India was deputed for enquiry into the matter as there were 48 charges against Mr. K. Kannadassan and RC No. DAI-2019-A-0012-DLI Page 37 of 67 CBI Vs. K. Kannadassan & Anr.
transaction related to the present case was one of the charge. During this process, PW-9 scrutinized the entire record. He stated that as far as this particular case is concerned, the processing and sanctioning was done single handedly against the bank norms of multi layer approach. Other than that, certain other policy guidelines like ensuring minimum CIBIL score, ensuring proper functioning of unit and procedure with regard to due diligence as far as financial statement and final release of funds by way of ensuring end use of funds were not followed. This witness also examined sanction letter along with process note Ex. P-4/PW-2 and the sanction had been accorded single handedly without the signature of recommending authority.
55. It is important to mention here that the banking procedure prescribed for sanction of loan/credit facility. As evident from statement of PW-9 Sh. V.V. Natrajan to whom the enquiry was entrusted, certain guidelines were required to be followed. He stated that Cent Sahyog Scheme was primarily to fund MSME unit for either setting of new units or expanding the existing business. The guidelines for Cent Sahyog Scheme are prescribed in Inspection Circular no.779, dated 03.09.2001 which is as follows:
Sl. No. Particulars Details 1 Title of the Scheme "Cent Sahyog" for MSE Sector (Manufacturing and Services).
2. Eligbility The scheme is available to cover credit facility to eligible borrower in MSE of sector ( Manufacturing & Services). All RC No. DAI-2019-A-0012-DLI Page 38 of 67 CBI Vs. K. Kannadassan & Anr.
types of unorganised service and manufacturing sector including small shop owners like those engaged in mobile/TV repairing (Not selling), small garage, juice shop, bakery owner, sweet, meat/Farsan sho etc will be eligible. However, the following category will not eligbile under the scheme:
Retail trade (categorized as small
services)
Educational/Training Institutions
SHGs
3. Quantum of Finance Maximum Rs. 100.00 lacs per borrower for MSE sector (Manufacturing and services
4. Mode of Assessment UPTO Rs. 10.00 Lakh( Inclusive Rs. 10 lakh) For those borrowers who are not filing income tax returns the income can be assessed on the basis of income and expenditure statement and other financial papers. Limit assessment to be done as per the annual income general method I.e. 48 times of monthly income or 4 times of annual income can be considered for sanction of OD/CC limit.
Above Rs. 10.00 Lakh RC No. DAI-2019-A-0012-DLI Page 39 of 67 CBI Vs. K. Kannadassan & Anr.
Overdraft/cash credit working capital limit is to be assessed as per turn over method i.e. 20 per cent of projected annual turnover. The working capital limit shall be for a period of 12 months and to be renewed/reviewed annually.
Term loan limit for purchase of plant, equipment and machinery can also be considered on the basis of cash flow subjected to minimum DSCR of 1.5:1.
Term loan account is to be monitored closely for regular repayment of loan installments.
5. Security No collateral security and guarantee required upto loan of Rs. 100 lakhs, as the loan for MSE sector (Manufacturing and Services) will be covered under CGTMSE , however, primary security i.e. hypothecation of stock and receivables or charge on Fixed assets to be kept as security (Please note that apart from Land & Building Purchase/built out of Bank finance existing land and building on which propose activity will be run, will also be considered as primary security under CGTMSE Scheme)
6. Nature of Finance 1. The facility may be either overdraft/cash credit working capital limit RC No. DAI-2019-A-0012-DLI Page 40 of 67 CBI Vs. K. Kannadassan & Anr.
or terms loan.
2. In case of loans up to Rs. 10 lakhs, over draft limits may be allowed without insisting for stock statements, particularly for service sector.
3. Working capital limit is to be secured by hypothecation of stock and receivables and terms loan by fixed assets.
4. Viability of the present should be exmained, besides cash flow, in case of term loan. Term loan amount will be repayable in equated monthly installments subjected to a maximum period of 84 months.
7 Margin - 10% upto 10.00 lacs
- 15% above 10.00 lacs and upto Rs. 50 lacs
- 20% above 50.00 lacs and upto Rs. 100 lacs
8. Insurance The full value for the hypothecated stock and fixed assets will be insured for fire, riot and where ever required against other appropriate hazards with bank clause.
9. Rate of Interest BR + 1% upto 10.00 lacs.
BR + 1.5% for more than 10.00 lacs and upto 50.00 lacs.
BR + 2% for more than 50.00 lacs and upto 100.00 lacs.
Guarantee fe and annual service fee RC No. DAI-2019-A-0012-DLI Page 41 of 67 CBI Vs. K. Kannadassan & Anr.
payable to CGTMSE should be specified and recovered, as given in the scheme.
10 Processing Charge Upto Rs.50,000 --- Rs.100 per proposal For more than Rs.50,000 & upto Rs.5.00 lacs ----Rs.1000 per proposal.
For more than Rs.5.00 lacs & upto Rs.100 lacs ----Rs.0.5% of the loan amount (maximum Rs.25,000) Renewal charges @ 0.10% of the loan amount (maximum Rs.15,000) 11 Details of 1. Application form.
Forms/Documents 2. Details of Primary securities. required 3. Balance sheets for the past 2 years alongwith estimated & projected balance sheets and other financial statements, wherever applicable.
4 Documents for KYC verification.
5 Constitution of the borrower i.e.
individual, proprietorship, partnership,
limited company with supporting
documents.
6 Usual O/D/CC and terms loan
documents of the bank.
12 Sanctioning authority Manager Scale II ---- upto 25 lacs.
(As per the lending Senior Manager Scale III ---- upto 75 lacs. powers) RM/ Scale IV/CM-CCPC ---- upto 100 lacs. (Max. as per the scheme) 13 Risk Assessment For loans upto Rs.10 lacs, common rating sheet for Retail Loans should be used RC No. DAI-2019-A-0012-DLI Page 42 of 67 CBI Vs. K. Kannadassan & Anr.
(copy enclosed) For loans above Rs.10 Lacs, existing manual scoring model for MSE, as given in the Loan policy should be adopted.
(Note: All proposals, for sanction of CGTMSE guarantee approvals for credit facilites above Rs.50 lacs and upto Rs.100 lacs will have to be rated internally by the bank and should be of investment grade).
However, all proposals are to be internally rated as mentioned above.
14 Product code CENT SAHYOG TERM LOAN - 6280- 1055 CENT SAHYOG CASH CREDIT -
6180-1015 CENT SAHYOG OVER DRAFT - 6080- 1019 15 Others Proper classification under CBS should be done so as to Reflect the exposure under MSE.
56. PW-9 Sh. V.V. Natrajan while explaining the Cent Sahyog Scheme has deposed that this scheme is primarily to fund the MSME unit for either settling of new units or expanding the existing business. As per bank norms, application in prescribed format along with financial documents is to be obtained from the applicant and loan to be processed as per the eligibility after ensuring due diligence of the applicant. He deposed that after sanction, necessary documents are to be obtained and thereafter, RC No. DAI-2019-A-0012-DLI Page 43 of 67 CBI Vs. K. Kannadassan & Anr.
the sanctioned loan amount is to be disbursed to the supplier for machinery or raw material after verifying the genuineness of their business.
PW-9 further deposed that class module is online loan processing system introduced by the bank to ensure that the loans are sanctioned in a structured manner and when the data is entered, the process note as well as the sanction letter/necessary documents are available in the system for taking printout. It ensures that two persons are necessarily involved and as per the guidelines, the hard copy of process note is to be signed by both the recommending as well as sanctioning authority. He stated that at the time of sanction of loan, the details of the suppliers of raw material or machinery along with necessary quotations are to be obtained and guidelines as to whether they are actually engaged in the particular field of business are to be necessarily ensured. Thereafter, while disbursement of the sanctioned amount, the funds are to be sent directly to the credit of the concerned bank account of such supplier or a draft in their favour is to be issued.
He deposed that in the present case, during the course of enquiry conducted by him, instead of following the above procedure laid down by the bank, the loan amount was directly credited to the current account of the borrower from where cash was allowed to be withdrawn and in this way, violated bank norms of ensuring end use of funds.
He stated that he has gone through the sanction visit report Ex. P-4/PW-2 which bears the signatures of accused K. Kannadassan where he has mentioned that firm is working in RC No. DAI-2019-A-0012-DLI Page 44 of 67 CBI Vs. K. Kannadassan & Anr.
rented premises. During the course of his enquiry, it was found that in the same premises, another borrower namely Deepa Auto was also functioning and there was no proper segregation of stocks and the finding of disciplinary authority regarding the present transaction is Ex. P-15/PW-9.
57. PW-8 namely Sh. Rajiv Jain, Chartered Accountant, appeared in the court and deposed that he does not know anything about M/s MKS Enterprises. After seeing the provisional balance sheet, PW-8 stated that he has never prepared such balance sheet and signatures and seal appearing at almost 11 places are not his signatures and seals.
58. PW-10 Sh. Sanjay Khanna came in the witness and deposed that he runs his business at the premises 28/1540, Naiwala, Karol Bagh, Delhi and this premises was earlier owned by his father and at present after the demise of his father, all three brothers including their mother is owning this property. He further stated that he does not know any firm in the name of M/s MKS Enterprises and this premises was never rented out to the said firm. After seeing the rent agreement Ex. P-16/PW-10, he stated that this rent agreement does not bear the signature of his father and his father had never executed the above rent agreement in favour of any M/s MKS Enterprises or Manoj Kumar Singh.
59. Prosecution has examined PW-11 Dr. Reeta R. Gupta who is a Senior Scientific Officer who had examined the documents which had been sent by the CBI. She had examined all the documents which had been submitted by A-2 Manoj RC No. DAI-2019-A-0012-DLI Page 45 of 67 CBI Vs. K. Kannadassan & Anr.
Kumar Singh when the loan was taken. The relevant portion of the report of PW-11 is as under:
I. Handwriting evidence points to the writer of the specimen initials/signatures marked S-1 to S-20 attributed to Manoj Kumar Singh being the person responsible for writing the question initials/ signatures marked Q-2, Q-3, Q- 5to Q-45, Q-48, Q-50 to Q-60, G-4 to Q- 73, Q-75, Q-77, Q-79. Q-81, Q-83, Q-- 84, Q-87, Q-89, Q-90, Q-O,Q-97, Q-99 to Q-106, Q-123 to Q-141, Q-148 to Q-
155, Q-13A, G13B, Q-127A, due to the following reasons-
The questioned initials/ signatures are written freely showing Smooth line quality & natural variations. The specimen initials Signatures are also written freely showing smooth line quality & natural variations, Qualities of imitation are not present in them. In Specimen initials/ signatures are suitable and sufficient tor Comparison and examination.
Both the questioned and the specimen initials/ signatures degree with each other in the general writing characteristics such as movement, slant, spacing, alignment, relative size, proportion or letters. The skill and line quality of the questioned initial/ signatures is also found consistent with these qualities of the specimen initial/signatures.
Both the questioned and the specimen signatures also agree with each other in individual writing characteristics without any material divergence.
60. Dr. Reeta R Gupta who was Sr. Scientific Officer, Grade-1, Document cum Assistant Chemical Examiner with Government of India, CFSL has proved her report Ex. P-27/PW-
RC No. DAI-2019-A-0012-DLI Page 46 of 67CBI Vs. K. Kannadassan & Anr.
11 after examination of the documents sent to her through letter Ex. P-26/PW-11 (D-27). It is submitted by Ld. Sr. Public Prosecutor for CBI that the result of the examination of documents and reason thereof is mentioned in the report and she has opined that signature mark at Q-2, Q-3, Q-5 to Q-45, Q- 48,Q-50 to Q-60,Q-64 to Q-73,Q-75,Q-77,Q-79,Q-81,Q-83,Q- 84,Q-87,Q-89,Q-90,Q-95,Q-97,Q-99 to Q-106,Q-123 to Q-141, Q-148 to Q-155,Q-13A,Q-13B,Q-127A are made by the person who put his initials/signatures from mark S-1 to S-20 which is attributed to Manoj Kumar Singh being the person responsible for writing the questioned initials/signatures.
In the cross-examination of witness, defence could not brought any material to disprove the credibility or competency of the expert witness.
61. I have carefully examined the documents allegedly signed/prepared by Manoj Kumar Singh being proprietor of M/s MKS Enterprises. From the testimony of several witnesses including PW-11 Dr. Reeta R. Gupta, it has been proved that the signatures of Manoj Kumar Singh are appearing on Q-56 to Q-60 (on rent agreement), signatures are appearing on Q-25 to Q-29, Q-32 to Q-37, Q-39 to Q-44, Q-48 and Q-50 to Q-52 (balance sheets), signatures are appearing on Q-30 , Q-31 (income tax acknowledgment for the Assessment Year 2013-14), Q-38 (income tax acknowledgment for the Assessment year 2012-13 ), Q-45 (income tax acknowledgment for the Assessment year 2011-12) ( acknowledgments for income tax). It establishes the contention of prosecution that accused Manoj Kumar Singh has used these documents for sanction of the loan. Although the RC No. DAI-2019-A-0012-DLI Page 47 of 67 CBI Vs. K. Kannadassan & Anr.
expert witness Dr. Reeta R. Gupta has not opined as to who had made these documents and she has not given any opinion on the signature of the Chartered Accountant, however, PW-8 Rajiv Jain had appeared and testified that he never prepared such balance sheet and signatures appearing Q-164 to Q-174 are not his signatures. During the cross-examination, nothing has been brought by the defence counsel to disprove the credibility of witnesses namely PW-8 Rajiv Jain.
Similar is the case with the deposition of PW-10 Sanjay Khanna regarding the fake rent agreement and PW-13 Kishore Kumar Pandey, Income Tax Officer with respect to Income tax returns. From the testimonies of PW-11 Dr. Reeta R. Gupta, PW-8 Rajiv Jain, PW-10 Sanjay Khanna and PW-13 Sh. Kishore Kumar Pandey, it is established beyound reasonable doubts that rent agreement, balance sheets and income returns are fake document and these documents were used by accused Manoj Kumar Singh at the time of sanction of cash credit of Rs. 30 lacs.
62. It is clear on examining the statements of above witnesses and the papers submitted by accused Manoj Kumar Singh that the intention of accused had been dishonest from the very inception and he furnished false and fabricated particulars and got loan sanctioned through deceitful means. From the documents and oral testimony of witnesses, it has been proved that accused Manoj Kumar Singh was the proprietor of M/s MKS Enterprises and he filed loan application form Ex. P-22/PW-5 (D-3) along with other documents i.e. Ex. P-21/PW-5 including the balance sheet Ex. P-14/PW-8 (D-3) and rent agreement Ex.
RC No. DAI-2019-A-0012-DLI Page 48 of 67CBI Vs. K. Kannadassan & Anr.
P-16/PW-10. The said application form was processed and finally sanctioned by accused K. Kannadassan and process note is Ex. P-4/PW-2. The said process note has been proved by the witness Sh. Ashok Kumar (PW-2) who was posted as Assistant Manager and he was looking after the credit department in Anand Parvat branch and during his tenure, accused K. Kannadassan was the Chief Manager. He categorically stated that he had never dealt with the loan of M/s MKS Enterprises and the sanction letter Ex. P-4/PW-2 only has the signature of accused K. Kannadassan at point A on pages 49, 50 & 52 of D-3. This witness during the cross examination has stated that accused K. Kannadassan used to do everything himself from the preparation of loan documents to the sanctioning of the loan and further preparing the vouchers for the purpose of transferring the loan amount into the current accounts of the parties.
63. From the documents and oral testimonies of the witnesses it is proved that accused K. Kannadassan was working as Chief Manager and he was the head of the branch and being sanctioning authority, it was incumbent on him to fulfill all the formalities before sanctioning of the loan. The said loan application was processed in the class module and as per the procedure after processing the said loan, the printout of the said processing note was required to be taken and it was required to be signed by the recommending authority and sanctioning authority. The sanction letter Ex. P-4/PW-2 clearly establishes that it was processed single handedly by accused K. Kannadassan and signed by him. PW-9 Sh. V.V. Natrajan has categorically stated that class module is online loan processing RC No. DAI-2019-A-0012-DLI Page 49 of 67 CBI Vs. K. Kannadassan & Anr.
system introduced by the bank to ensure that the loans are sanctioned in structured manner and when the data is entered, the process note as well as sanctioned letter and necessary documents were also available in the system for taking printout. It actually ensures that two persons are necessarily involved. As per the guidelines of the bank, the hard copy of the process note are to be signed by both recommending as well as sanctioning authority.
64. Procedure has been prescribed by the bank for sanction of loan but while sanctioning the said loan, accused K. Kannadassan did not follow the established procedure of the bank. As per established guidelines of the bank, a pre sanction visit to the place of business of applicant is a compulsory part of the process of due diligence as per clause 5.2.6 of the relevant loan policy Ex. P-5/PW-3 (D-8). It was also mandated by the bank policy that the bank has to ascertain information before sanction of loan pertaining to present state and future prospect of the particular industrial activity in which the applicant is engaged. As per the inspection report dated 10.02.2014, Ex. P- 4/PW-2 (D-3 page-52), accused K. Kannadassan visited the premises of applicant, however, Sanjay Khanna PW-10 stated that the said rent agreement Ex. P-16/PW-10, D-3 in respect of property no. 1540/28, Second Floor, Naiwalan, Karol Bagh was not executed by his father and the said agreement does not bear the signatures of his father at point Q-68. Mr. Sanjay Khanna also stated that the said premises was never rented out to M/s MKS Enterprises. Thus from the testimonies of the witnesses, it is clear and established that M/s MKS Enterprises was not RC No. DAI-2019-A-0012-DLI Page 50 of 67 CBI Vs. K. Kannadassan & Anr.
working from the said premises and accused K. Kannadassan prepared false documents of the inspection report.
65. Sh. V.V. Natrajan PW-9 deposed that during the course of his enquiry, it was found that in the same premises, another borrower namely Deepa Auto was also functioning and there was no proper segregation of stocks in respect of M/s Deepa Auto Parts and applicant/borrower accused Manoj Kumar Singh. It has been established from the testimony of the witnesses that accused Manoj Kumar Singh in conspiracy with accused K. Kannadassan mentioned the address of M/s Deepa Auto Parts and accused K. Kannadassan fraudulently prepared the said inspection report.
66. Another allegation in the charge sheet against accused no.2 Manoj Kumar Singh is that he submitted fake balance sheets, profit and loss account statements alongwith schedule of fixed assets for the financial year 2010-11, 2011-12, 2012-13 and 2013-14. The said balance sheets have purportedly been audited by one Jain Rajiv & Associates and Sh. Rajiv Jain PW-8 appeared in the witness box and he stated that he had never prepared the balance sheets Ex. P-14/PW-8 (D-3) and the signatures and seal appearing on the same purported to be signed by him are not his signatures. This witness was cross examined by Ld counsel for accused but nothing fruitful came out for accused.
67. As per the charge sheet, it is alleged that after the loan was sanctioned to M/s MKS Enterprises on 25.02.2014 by Central Bank of India, Anand Parvat Branch, Delhi, it was RC No. DAI-2019-A-0012-DLI Page 51 of 67 CBI Vs. K. Kannadassan & Anr.
disbursed on the same day and thereafter on 27.02.2014 Rs. 12 lakhs, on 28.02.2014 Rs. 15 lakhs and on 07.03.2014 Rs. 2.5 lakhs were transferred in the current account of M/s MKS Enterprises. As per the bank policy, the bank had to ensure that there are no diversion of funds and it was necessary for branches to ensure that withdrawal from the cash credit/over draft accounts are strictly for the purpose for which credit limits are sanctioned. The above mentioned amount was transferred by the accused into the current account of MKS Enterprises with the documents which were prepared by accused K. Kannadasan and were in his handwriting and those documents/vouchers are collectively exhibited as Ex. P-2/PW-2 (D-18). The above mentioned amount was transferred by accused K. Kannadassan without ensuring the end use of funds disbursed.
68. PW-15 Shri Sanjay Kumar, Head Havildar appeared in the witness box on 03.03.2022 and he stated that he was called by the CBI for being a witness in search proceedings and the said search was conducted at Sonia Vihar and during the search, one diary Ex. P-33/PW-15 (D-12) was recovered. It is the case of the prosecution that the above mentioned diary which was recovered during the search proceedings from the residence of accused Manoj Kumar Singh is a very important document where the entries pertaining to the transaction of money in respect of M/s Deepa Batra, employer of accused Manoj Kumar Singh, her family members and her companies were found. This diary is reflecting the transfer of money in the account of Ms. Kaavayayini daughter of accused K. Kannadassan. In the above- mentioned diary, there are references of the deposit of money in RC No. DAI-2019-A-0012-DLI Page 52 of 67 CBI Vs. K. Kannadassan & Anr.
the account of Ms. Kaavayayini and the statement of accounts of Ms. Kaavayayini which is at Ex.P-20/PW-3 corroborates the deposit of amount of Rs.10,000/-, Rs.3,000/-, Rs.15,000/-, Rs.11,000/-, Rs.10,000/- on 14.01.2015, 03.02.2015, 17.02.2015, 17.04.2015 & 10.06.2015.
69. In the statement u/s 313 Cr.PC, accused no.2 Manoj Kumar Singh has stated that he has nothing to do with the alleged offence and whatever documents he had signed, he had signed the same on asking by his employer or under the pressure of his employment. It is pertinent to mention here that when he came to know about the loan fraud, he did not make any complaint to any authority or any police officer regarding the fraud. More so, he has not led any defence evidence to show that he was the employee of Ms. Deepa Batra or that he signed certain documents under pressure or under the influence of Ms. Deepa Batra. He has failed to place on record single document to show that he was working under Deepa Batra.
70. Conspiracy is the main offence attributed to the accused persons and therefore it is essential to reproduce the concept of conspiracy.
Criminal Conspiracy (Concept)
71. The relevant legal position as regards, what constitutes conspiracy may be noted at the outset. Section 120-A defines criminal conspiracy as under:-
"When two or more persons agree to do or cause to be done, (1) An illegal act, or (2) An act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy:
Provided that no agreement except an agreement to commit an RC No. DAI-2019-A-0012-DLI Page 53 of 67 CBI Vs. K. Kannadassan & Anr.
offence shall amount to a criminal conspiracy unless some act besides the agreement is done by one or more parties to such agreement in pursuance thereof.
Explanation:-It is immaterial whether the illegal act is the ultimate object of such agreement, or is merely incidental to that object."
72. Thus, ingredients of the offence of criminal conspiracy are:
(i) an agreement between two or more persons;
(ii) an agreement must relate to doing or causing to be done either
(a) an illegal act;
(b) Act which is not illegal in itself but is done by illegal means.
73. To establish a charge of conspiracy, indulgence in either an illegal act or a legal act by illegal means is necessary. The definition of 'illegal' is provided for in Section 43 of the Indian Penal Code.
"43. The word 'illegal' is applicable to everything which is an offence or which is prohibited by law, or which furnishes ground for a civil action; and a person is said to be 'legally bound to do' whatever it is illegal in him to omit."
74. The word 'illegal' as defined u/s 43 of Indian Penal Code has been given a very wide meaning. It consists of three ingredients:
a) everything which is an offence or ;
b) everything which is prohibited by law; or
c) everything which furnishes ground for civil action.
75. With regard to conspiracy, Section 10 of the Indian Evidence Act comes into play which reads as under:-
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"10. 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 any one of such persons in reference to their common intention, after the time when such intention was first entertained by any one of them, is a relevant fact as against each of the persons believed to 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."
76. Analysis of Section 10 of Indian Evidence Act would show that it envisages:
(1) prima facie evidence affording a reasonable ground for a court to believe that two or more persons are members of a conspiracy; (2) if the said condition is fulfilled, anything said, done or written by any one of them in reference to their common intention shall be evidence against the other;
(3) anything said, done or written by the alleged conspirators should have been said, done or written after the intention was formed by any one of them;
(4) it would also be relevant for the said purpose against another who entered the conspiracy, whether it was said, done or written before he entered the conspiracy or after he left it, and it can only be used against a co-conspirator and not in his favour."
77. Four well known fundamental requirements for proving conspiracy by way of circumstantial evidence are:
(I) circumstances from which the conclusion is drawn be fully established;
(II) all the facts should be consistent with the hypothesis of guilt;
(III) circumstances should be of a conclusive nature and tendency;
(IV) circumstances should, by a moral certainty, actually exclude every hypothesis but the one proposed to be proved;
78. It may be noted that criminal conspiracy in terms of Section 120 B of the Code is an independent offence which is punishable separately. Conspiracy requires an act (actus reas) and RC No. DAI-2019-A-0012-DLI Page 55 of 67 CBI Vs. K. Kannadassan & Anr.
an accompanying mental state (mens rea).
79. Legal position is well settled that in order to constitute a single general conspiracy there must be a common design. The evil scheme may be promoted by few, some may drop out and some may join at a later stage, but the conspiracy continues until it is broken up. The conspiracy may develop in successive stages. There may be general plan to accomplish the common design by such means as may from time to time be found expedient. When the ultimate offence consists of a chain of actions, it would not be necessary for the prosecution to establish to bring home the charge of conspiracy, that each of the conspirators had the knowledge of what the other collaborator would do, so long as it is known that the collaborator would put the goods or service to an unlawful use.
80. Direct independent evidence of criminal conspiracy is generally not available and its existence is a matter of inference which are normally deduced from acts of parties in pursuance of a purpose in common between the conspirators. It is not always possible to give affirmative evidence about the date of the formation of the criminal conspiracy, about the persons who took part in the formation of the conspiracy, about the object, which the conspirators set before themselves as the object of conspiracy, and about the manner in which the object of conspiracy is to be carried out, all is necessarily a matter of inference.
81. Meeting of minds of two or more persons for doing RC No. DAI-2019-A-0012-DLI Page 56 of 67 CBI Vs. K. Kannadassan & Anr.
an illegal act or an act by illegal means is sine qua non of the criminal conspiracy but it may not be necessary prove the agreement between them. The existence of conspiracy and its objectives can be inferred from the surrounding circumstances and the conduct of the accused involved. Incriminating circumstances must form a chain of events from which a conclusion about the guilt of the accused could be drawn. A conspiracy may further be a general one and a separate one. A smaller conspiracy may be a part of a larger conspiracy.
82. Court while drawing an inference from the materials brought on record to arrive at a finding as to whether the charges of the criminal conspiracy have been proved or not, bears in mind that a conspiracy is hatched in secrecy and it is, thus, difficult, if not impossible, to obtain direct evidence to establish the same. The manner and circumstances in which the offences have been committed and the level of involvement of the accused persons therein are relevant factors. For the said purpose, it is necessary to prove that the pro-pounders had expressly agreed to or caused to be done the illegal act but it may also be proved otherwise by adducing circumstantial evidence and/ or by necessary implication. To establish an offence of criminal conspiracy, it is not required that a single agreement should be entered into by all the conspirators at one time. Each conspirator plays his separate part in one integrated and united effort to achieve the common purpose. Each one is aware that he has a part to play in a general conspiracy though he may not know all its secrets or the means by which the common purpose is to be accomplished.
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83. Cumulative effect of the proved circumstances has to be taken into account in determining the guilt of the accused rather than adopting an isolated approach to each of the circumstances and each one of the circumstances has to be proved beyond reasonable doubt, while appreciating evidence relating to the conspiracy, Court takes care to see that the acts or conduct of the parties must be conscious and clear enough to infer their concurrence as to the common design and its execution.
84. (As regards the afore noted legal position, following precedents are referred : State (NCT) of Delhi v. Navjot Sandhu @ Afsal Guru 13, Ram Narayan Popli Vs. CBI 14, Yogesh @ Sachin Jagdish Joshi v. State of Maharashtra 15, Nirmal Singh Hahlon vs State of Punjab and Others 16, Mohammad Usman Mohammad Hussain Maniyar & Ors. v. State of Maharashtra 9, Jagannatha Shetty, J in Kehar Singh and Ors. v. State (Delhi Administration 10, State of Maharashtra v. Som Nath Thapa 11, K.R. Purushothaman v. State of Kerala 12.
85. In the background of aforesaid legal positions, I proceed to analyse the prosecution evidence to find out the specific role of accused w.r.t conspiracy.
86. With regard to the conspiracy angle, the collusion and conspiracy between accused K. Kannadassan and Manoj Kumar Singh is evident from the fact that Manoj Kumar Singh being proprietor of M/s M.K.S. Enterprises submitted loan application dated 01.10.2014 for a sum of Rs.30 Lacs alongwith RC No. DAI-2019-A-0012-DLI Page 58 of 67 CBI Vs. K. Kannadassan & Anr.
fake balance sheets, profit and loss account statement alongwith schedule of fixed assets and accused K. Kannadassan sanctioned the said cash credit loan for Rs.30 Lacs without following the due diligence stipulated by the bank guidelines and bank norms and also without recommendation of the recommending authority of the bank. After sanction of the said limit, the loan was diverted immediately into the current account of M/s M.K.S Enterprises without any genuine business transaction, the instruments of which were prepared by accused K. Kannadassan. Forged and fabricated documents were prepared and filed in agreement by both the accused persons and being in Government job, it was in the knowledge of K. Kannadassan that it is an illegal act and an offence. Therefore, from the above discussion and after evaluating evidence, as also from the series of facts of the conspirators/accused persons in furtherance of common object of the conspiracy as elaborated above, the prosecution has been able to prove beyond shadow of doubt that it was a large conspiracy of which both the accused persons were the members and they had active and had done acts in furtherance of common objective of the conspiracy so as to say that they had boarded the bus, which was traveling to the same destination with each of them playing their own part in completion of the said journey.
87. All the above mentioned acts on the part of A-1 and A-2 clearly depicts meeting of mind, unity of purpose and design, commonality of agreement between them to commit crime and to do acts in furtherance of their common object of the said conspiracy and agreement and focalization of their efforts on the project of seeking loan from Central Bank of India by RC No. DAI-2019-A-0012-DLI Page 59 of 67 CBI Vs. K. Kannadassan & Anr.
preparation of false documents and withdrawal of money.
88. Therefore, it can be said that there was conspiracy for sanctioning the cash credit loan of Rs.30 Lacs and in this way both accused K. Kannadassan and Manoj Kumar Singh committed an offence punishable U/s 120B IPC read with section 420,467,468, 471 & 13(2) r/w section 13(1)(d) of PC Act.
89. It is the case of the prosecution that during the year 2014, both the above mentioned accused persons entered into a criminal conspiracy to do an illegal act and in furtherance of the said conspiracy, Manoj Kumar Singh being proprietor of M.K.S. Enterprises submitted loan application dated 10.01.2014 for sum of Rs.30 Lacs alongwith fake balance sheets, profit and loss account statements alongwith schedule of fixed asset and accused K. Kannadassan sanctioned the said cash credit loan of Rs.30 Lacs without following the banking norms and after sanctioning the said cash limit, the amount was diverted into the current account of M/s M.K.S. Enterprises without any genuine business transaction and in this way both the accused persons cheated the Central Bank of India and thereby dishonestly induced the bank to deliver the loan amount to accused Manoj Kumar Singh without any genuine transaction and caused corresponding loss to the bank.
90. On analysing the prosecution evidence, (A-1) K. Kannadassan and (A-2) Manoj Kumar Singh are liable to be convicted U/s 420 IPC.
91. On analysing the evidence, it has been established that Manoj Kumar Singh accused no.2 fraudulently and RC No. DAI-2019-A-0012-DLI Page 60 of 67 CBI Vs. K. Kannadassan & Anr.
dishonestly used as genuine balance sheet, profit and loss account statement along with schedule of fixed assets for the financial year 2010-11, 2011-12, 2012-13 and 2013-14 for getting the sanction of cash credit loan which accused Manoj Kumar Singh knew that the said document were forged and in this way accused Manoj Kumar Singh has committed an offence u/s 471 IPC.
Role of Public Servant K. Kannadassan.
92. Accused K. Kannadassan was working as AGM, Central Bank of India and being a public servant sanctioned cash credit loan facility of Rs. 30 lakhs on the basis of fake documents in favour of M/s MKS Enterprises without following the due diligence and bank guidelines and thereby caused pecuniary advantage to accused Manoj Kumar Singh (Sole Proprietor of M/s MKS Enterprises) and also got pecuniary gain by way of deposit of money in the account of his daughter Ms. Kaavyayini and he abused his official position without any public interest and committed offence of criminal misconduct defined u/s 13 (1)
(d) and punishable u/s 13 (2) of Prevention of Corruption Act.
Criminal Misconduct
93. In so far as the charge under Section 13 (1) (d) read with Section 13 (2) of the PC Act is concerned, the ingredients are:-
• that the accused should be a public servant; • that he should use some corrupt or illegal means or otherwise abuse his position as a public servant;
• he should have obtained a valuable thing or pecuniary advantage;
and
• for himself or any other person,
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CBI Vs. K. Kannadassan & Anr.
94. Section 13 (1)(c) & (d) of Prevention of Corruption Act deal with the criminal misconduct by a public servant by allowing any other person to convert for his own use any property entrusted to him and by means of corrupt or illegal means, obtains for himself of for any other person any valuable thing or pecuniary advantage; or by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest.
95. In the light of above said legal position, evidence brought on record, is required to be considered to find out whether prosecution has established necessary facts and circumstances to prove charge of criminal misconduct.
96. The first question in context with public servants needs to be decided is of Sanction u/s 19 of Prevention of Corruption Act.
97. The law on the question of sanction has been deliberated by the Apex Court in State of Maharashtra through CBI Vs. Mahesh G.Jain (2013) 8 SCC 119 and the court culled out the principles of law relating to sanction. The relevant portion of the said judgment is reproduced hereunder:
i. It is incumbent on the prosecution to prove that the valid sanction has been granted by the sanctioning authority after being satisfied that a case for sanction has been made out.
ii. The sanction order may expressly show that the sanctioning authority has perused the material placed before him and, after RC No. DAI-2019-A-0012-DLI Page 62 of 67 CBI Vs. K. Kannadassan & Anr.
consideration of the circumstances, has granted sanction for prosecution.
iii. The prosecution may prove by adducing the evidence that the material was placed before the sanctioning authority and his satisfaction was arrived at upon perusal of the material placed before him.
iv. Grant of sanction is only an administrative function and the sanctioning authority is required to prima facie reach the satisfaction that relevant facts would constitute the offence.
v. The adequacy of material placed before the sanctioning authority cannot be gone into by the court as it does not sit in appeal over the sanction order.
vi. If the sanctioning authority has perused all the materials placed before him and some of them have not been proved that would not vitiate the order of sanction.
vii. The order of sanction is a pre-requisite as it is intended to provide a safeguard to public servant against frivolous and vexatious litigants, but simultaneously an order of sanction should not be construed in a pedantic manner and there should not be a hyper-technical approach to test its validity.
98. In the present case, PW-7 Vijay Kumar Singh, General Manager, Human Resources Department of Central Bank of India, has granted sanction for prosecution against accused K. Kannadassan (A-1). There is no issue as to the competence of PW-7 for granting sanction for prosecution against accused K. Kannadassan. It is apparent that relevant sanction order Ex.PW-12/PW-7 has been passed with proper application of mind. During cross-examination, PW-7 clearly spelled out the basic points on which sanction was accorded for prosecution of K. Kannadassan. Interestingly, no suggestion has been put to PW-7 that he accorded sanction without consideration of relevant record.
99. PW-7 Vijay Kumar Singh, General Manager, HRD, RC No. DAI-2019-A-0012-DLI Page 63 of 67 CBI Vs. K. Kannadassan & Anr.
Nariman Point, Mumbai, Central Office, granted sanction against accused K. Kannadassan (A-1). The sanction order has been proved as Ex. PW-12/PW-7 (D-28). According to the witness, the sanction was granted on being satisfied about prima-facie material against the accused. During cross- examination, PW-7 confirmed that he had considered all documents in the light of role and responsibilities of A-1 while granting sanction. He had gone through the relevant documents and material including the financial statements of the borrower. According to the witness, glaring mistakes were committed by accused K. Kannadassan and it was noticed through the document that actually the borrower never had any business in the said premises and the balance sheet were fabricated. PW-7 states that he found that there was transfer of money in the account of daughter of K. Kannadassan and this fact was corroborated from the diary which was recovered from Manoj Kumar Singh. On the basis of above investigation, he accorded the sanction to prosecute K. Kannadassan. The specific suggestion has been denied by the witness that he did not apply his mind while granting the sanction.
100. It is clear that sanction order was accorded after taking into consideration the relevant record and this sanction order was forwarded by Mr. Anchit Kumar, the then Chief Manager, along with copy of office memorandum. The sufficient material was placed before the sanctioning authorities to properly evaluate the issue of grant of sanction. The sanction orders itself show that it was passed with due application of mind and therefore, I conclude that sanction has been properly granted RC No. DAI-2019-A-0012-DLI Page 64 of 67 CBI Vs. K. Kannadassan & Anr.
against accused K. Kannadassan. I do not find any meaningful defence taken by accused in this regard.
101. Accused K. Kannadassan (A-1) has been the Chief Manager, Central Bank of India, Anand Parvat Branch. On examining the statements of prosecution witnesses and relevant documents, I find sufficient evidence on record indicating the active involvement of accused in the sequence of events.
102. The role and responsibility of Chief Manager comes at the first level as the proposal for loan originates from the branch. Accused Manoj Kumar Singh (A-2) submitted loan application along with documents on 10.01.2014 as evident from Ex.P-10/PW-4. It is proved that accused K. Kannadassan (A-1) is public servant and K. Kannadassan sanctioned the loan after taking fake documents i.e. fake balance sheet, profit and loss account, rent agreement and other documents. The firm where where M/s MKS Enterprises was allegedly working was inspected by accused K. Kannadassan and he had mentioned that firm was working in the rented premises and pre-sanction report Ex. P-4/PW-2 (D-3) was prepared and signed by him but infact the firm was not working from there. Cash credit loan of Rs. 30 lacs was granted without following the due diligence and bank norms and also without recommendation of the recommending authority of the bank. There was deposit of money in the account of Ms. Kavyavani daughter of K. Kannadassan. Statement of account of Ms. Kavyavani corroborates the deposit of amount of Rs. 10,000/-, Rs. 3000/-, Rs. 15,000/-, Rs. 11,000/- and Rs. 10,000/- on 14.01.2015, 03.02.2015, 17.02.2015, 17.04.2015 & RC No. DAI-2019-A-0012-DLI Page 65 of 67 CBI Vs. K. Kannadassan & Anr.
10.06.2015. Voucher of Rs. 12 lacs dated 26.02.2014, voucher of Rs. 15 lacs dated 28.02.2014, voucher of Rs. 2.5 lacs dated 07.03.2014 were prepared by accused K. Kannadassan and all the vouchers are having his signatures. Sanction letter of loan dated 25.02.2014 of Rs. 30 lacs in the account of M/s MKS Enterprises bears the signature of accused K. Kannadassan and the said process note has not recommended by any other person.
103. In view of the above discussions, the charge for the offence punishable u/s 13 (2) r/w Section 13 (1) (d) of PC Act has been proved beyond reasonable doubt against K. Kannadassan (A-1).
104. I accordingly hold both A-1 K. Kannadassan and A-2 Manoj Kumar Singh guilty and record their conviction in the following manners:
Accused K. Kannadassan (A-1) is convicted for the offence under Section 120 B IPC r/w Section 420, 467, 468, 471 IPC & 13 (2) r/w 13 (1) (d) of the Prevention of Corruption Act.
Accused Manoj Kumar Singh (A-2) is convicted for the offence under Section 120 B IPC r/w Section 420, 467, 468, 471 IPC & 13 (2) r/w 13 (1) (d) of the Prevention of Corruption Act.
Accused K. Kannadassan (A-1) is convicted for the offence under Section 420 IPC.
Accused Manoj Kumar Singh (A-2) is convicted for the offence under Section 420 IPC.RC No. DAI-2019-A-0012-DLI Page 66 of 67
CBI Vs. K. Kannadassan & Anr.
Accused Manoj Kumar Singh (A-2) is convicted for the offence under Section 471 IPC.
Accused K. Kannadassan is convicted for the offence u/s 13 (2) r/w Section 13 (1) (d) of PC Act.
Announced in the Open Court (Rakesh Kumar-III) th on 20 Oct. 2023 Special Judge (PC Act) (CBI)-02 Rouse Avenue District Courts New Delhi RC No. DAI-2019-A-0012-DLI Page 67 of 67 CBI Vs. K. Kannadassan & Anr.