Delhi District Court
Cbi vs 1 Mrs Saroj Kushwaha W/O Sureh on 31 October, 2012
IN THE COURT OF V .K .MAHESHWARI : SPECIAL
JUDGE: TIS HAZARI COURTS: DELHI
C C No. 58/99
R.C No.1(E)/98//EOW1/New Delhi
CBI Vs 1 Mrs Saroj Kushwaha W/O Sureh
Singh Kushwaha,
R/O 519, Krishna Gali,
Katra Neel, Chandni Chowk,
Delhi.
Proprietor: M/S Kiran Leather
International, 12, Krishna Park,
Devli Road, Khanpur,
New Delhi.
2 Sh. Surinder Pal Singh @
Sh Bhoop Singh @ Surinder
Singh @ Surinder Puran Singh,
S/O Late Puran Singh
R/O Bunglow No.85, Sec.17
Gurgaon ( Haryana )
(Declared P.O on 30.09.2011)
3 Sh Juneed Khan S/O Sharbbir
Khan
C C No.58/99 1/72
Proprietor M/S Concorde Leathers,
67/4, Wuttu Cattan Street,
Chennai.
(Declared P.O on 31.08.2000)
4 P P Arora s/o Sh. Kaju Ram Arora
R/o 79, Sector15A, Faridabad,
Haryanan, Sr.Manager, Central
Bank of India, Sukhdev Vihar,
New Delhi
5 R B Gupta s/o Late Sh. Sant Lal,
r/o E33, Sector11, Faridabad,
Haryana, Deputy Manager
Central Bank of India, Sukhdev
Vihar, New Delhi
Date of Institution 1.12.1999
Under Section U/s 120B, 420, 471 and 511
IPC & Section 13(2) r/w 13(1)(d) of
PC ACT, 1988
Arguments concluded on 5.10.2012
Date of order 20.10.2012
JUDGMENT:
C C No.58/99 2/72
FACTS OF THE CASE.
1. Brief facts of the case according to prosecution are that Smt Saroj Kushwahaha on 15.2.1996 presented an application to Central Bank of India, Sukhdev Vihar Branch for grant of packing credit limit cum bill purchase facility to the extent of Rs.50 lacs for completing an Export Order of leather jackets, skirts, leather purses etc . It was stated in the application by A1 that she was having a long experience in the line of business. Though, in fact A1 had no experience whatsoever in the export of leather garments or any other articles. As per the loan application A2 was supposed to supervise and manage the entire activity of the unit. But there was nothing on record which could reflect that A2 was capable of undertaking the work as stated in the application. A1 was not a previous client of the bank but inspite of all this, the application dt 15.2.96 for grant of loan facility was accepted by A4 on the day Current account was opened by A1 in the name of Kiran Leather International. In the application it has been represented that A1 had a very long experience in this line though she was only a house wife with no experience of working. A4 and A5 while processing the application observed that she had a long C C No.58/99 3/72 experience in the line. There was nothing on record to prove the credentials and bonafide of A2 who as per the application form and process note was supposed to manage the entire activity of the Loni Unit. Accused P P Arora accepted collateral security in the shape of equitable mortgage of property No.519, Krishna Gali, Katra Neel, Chandni Chowk, Delhi without proper legal scrutiny. He accepted a valuation report two years old without attaching any importance to the fact that the owner of the property was late Sh Kayam Singh and not Smt Saroj Kushwahaha. A4 and A5 signed the financial report on 23.3.96 and obtained the legal report after five days i e only on 28.2.96. A4 accepted Zerox copy of the title deed written on the stamp paper of Rs.2 and did not obtain the original title deed alongwith the chain of previous title deeds in original though suggested by Sh Sudesh Yadav Advocate of the bank. A4 disbursed packing credit amount of Rs.43.35 lacs without obtaining 25% margin money as stipulated in the sanction advise dt 27.2.96. He handed over four DDs for a sum of Rs.38.75 lacs in favour of M/S Concord Leather Madras to accused S P Singh A2 on 25.3.96 instead of sending the same to the supplier through registered post or through banking channel to Madras.
C C No.58/99 4/72
2. A2 accompanied A3 to Oriental Bank of Commerce Mount Road, Chennai and got opened current account No.2811 in the name of Concord Leather on 26.3.96 and deposited four DDs therein. A3 withdrew cash amounting to Rs.17.50 lacs on 29.3.96, 30.3.97, 3.4.96, 4.4.96, and 6.4.96 and this amount was deposited in account No.5180757009 of A2 in Citi Bank. A Cheque for Rs.20 lacs dt 9.4.96 was issued by A3 in the name of A2 which A2 deposited in the aforesaid account in Citi Bank and withdrew the same in cash.
3. R B Gupta (A5) processed the proposal for the sanction of the aforesaid limit on the basis of unrealistic project report without any past financial date. He also prepared the financial report dt 23.3.96 showing A1 as owner of the property though she was not the owner and failed to obtain the original title deed. He also stated in the report that the property was free from any encumbrance though A1 had no clean title in the property.
4. A1 withdrew an amount of Rs.60,000/ and R. 3 lacs . She attempted to cheat the Oriental Insurance Co. by getting a cover note No.128613 dt 26.7.96 in favour of M/S Kiran Leather International for an amount of Rs.86 lacs and in trying to obtain a C C No.58/99 5/72 false insurance claim on the basis of forged documents like goods receipt and revalidated Export Order of M/s Design Action Group INC, New York. Current account No. 2811 in OBC, Chennai was opened by A3 in the name of a non existing firm M/s Concord Leather, Chennai. The address 67/4, Watthu Cattan Street, Periament, Madras3 was never the address of A3 or of Concord Leather rather it was the office address of A3.
CHARGE
5. My Ld. Predecessor supplied the copies required U/s 207 Cr PC to all the accused. After hearing both the parties a charge for the offence punishable U/s120 B read with Section 420,471 and 511 IPC and Section 13 (2) read with Section 13 (1) (d) of the Prevention of Corruption Act, 1988 framed against all the accused . A charge for the substantive offence punishable u/s 420,471 and 511 IPC was framed against accused Saroj Kushwahah. Charge for the substantive offences punishable under Section 13(2) r/w 13 (1) d PC Act, 1988 also framed against accused R B Gupta and P P Arora. All the accused pleaded not guilty, claimed trial, hence this trial. C C No.58/99 6/72 PROSECUTION EVIDENCE
6. In order to prove its case CBI has produced following witnesses .
PW1 Sh. Ramesh Chand Gupta has proved specimen Signatures card of Saroj Khuswaha Ex PW1/1, copy of letter of thanks Ex PW1/2, debit voucher ExPW1/3, cheque book receiving book Ex PW1/4, debit vouchers Ex PW1/4( again) , Ex PW1/5, Ex PW1/7, Ex PW1/8,cheque dt 8.3.96 Ex PW1/6 and pay in slips Ex PW1/9, Ex PW1/10.
PW2 Group Captain Raja Singh has deposed orally. He has not proved any document.
PW3 Sh M O Mathai has proved statement of account of CA No.2899 Ex PW3/A. PW4 Mohd Zamirul Hussain has proved cheques Ex PW4/A to Ex PW4/E,Transfer voucher Ex PW4/F, Pay order Ex PW4/G, account opening Form Ex PW4/I and specimen card Ex PW4/J. C C No.58/99 7/72 PW5 R Karun Kannan has deposed orally.
PW6 A Selvaraj Marine Insurance of M/S Kiran Leather International Ex PW6/A, letter dated 1.11.96 Ex PW6/A1 and investigation report Ex PW6/B. PW7 Sh Sanjay Kumar Saxena has proved claim file ExPW7/A and letters Ex PW7/A1, Ex PW7/A2, Ex PW7/A3, Ex PW7/A4 and Ex PW7/A5. He has proved departmental Note ExPW7/A6, Investigation report Ex PW7/A8, cover note of insurance policy Ex PW7/A9.
PW8 Sh. Shiv Kumar has proved insurance cover Note Ex PW7/A9.
PW9 Sh. V N Suryanarayanan has proved demand drafts Ex PW9/A1 to A3 and pay in slip Ex PW9/A4.
PW10 Sh J J Bhattacharya, has proved the sanction for prosecution of accused P P Arora and R B Gupta Ex PW10/A and Ex PW10/B. C C No.58/99 8/72 PW11 Sh. Jagjit Singh Arora has proved stock statements Ex PW11/A & B and Financial report Ex PW11/C. PW12 Sh S K Aggarwal has proved confidential report Ex PW12/A. PW13 Smt Bimla Devi has proved some of the documents already proved by PW1.
PW14 Sh Sanjiv Maheshwari, has proved his endorsement on the request letter Ex P4 vide Ex PW14/A. PW15 Sh Raj Nath Singh has proved application Ex Y8/A and debit voucher Ex Y7.
PW16 Sh. Jacob John has proved survey and investigation report Ex PW16/A. PW17 Sh Satya Dev Bajaj has proved some of the documents already proved by PW1.
C C No.58/99 9/72
PW18 Sh Y K Jain has proved his inspection report Ex PW18/A. PW19 Sh. Sh S K Puri has proved legal opinion/ search report Ex PW19/A. PW20 Sh K K Krithivasan has deposed orally. He has not proved any document.
PW21 Sh. K N Jha has proved Panchnama Ex PW21/A. PW22 Sh. Kiran Karnad has proved GPA Ex PW22/A, clearing voucher Ex PW22/B, cheque No.138226 Ex PW22/C. PW23 Sh. P V Raveendran has proved Sanction Advise Ex Y10 , Ex X2 and legal opinion and search report Ex PW19/A. PW24 Sh. Rati Ram has proved GR receipt Ex PW24/A and copy of booking register Ex PW24/B. PW25 Ms Rekha Dabas has proved verification report Ex C C No.58/99 10/72 PW25/A. PW26 Sh Jyoti Kumar has proved copy of FIR Ex PW26/A and Panchnama Ex PW21/A. DEFENCE OF ACCUSED & DEFENCE EVIDENCE.
7 After closing of evidence by the prosecution, statements of all the accused U/S 313 Cr P C recorded. Entire incriminating evidence against them on the file put to them.
8. Accused Saroj Khuswaha denied all the evidence produced against her and stated that she will file her written statement, but she has not filed the same.
9 Accused R B Gupta has stated fair investigation has not been done by the IO. True picture regarding the case has not been brought before the Court by the prosecution. He is innocent and has not committed any offence.
10. Accused P P Arora has stated that in February 1996 Smt C C No.58/99 11/72 Saroj Kushwahaha after opening C/A in our bank in the name of her firm M/S Kiran Leather express her desire to avail packing credit facilities as she was having an export order . We told her that in order to avail packing credit facility from the bank she must have :
a) Code from RBI
b) Importer / Exporter Code from Govt of India.
c) Confirmed export order .
d) Existing unit .
e) Collateral Security or some property.
She submitted the above documents and for collateral security she stated that she had inherited this property from her father in law namely Sh Kayam Singh and that after due inquiry MCD had issued a mutation certificate in her name . In order to safeguard the interest of the bank we sought the legal opinion regarding the admissibility of the document from Sudesh Yadav Adv who was on the panel of bank. She had given her legal opinion and categorically submitted in writing that there was nothing in going ahead with the proposal based on the documents referred to her. She had also submitted that the opinion was given after verifying the record of the above said property from the office of Sub Registrar since 1982. Subsequently a counter legal opinion was also sought from M/S S R Yadav and C C No.58/99 12/72 company Advocate who had also endorsed the opinion given by Sudesh Yadav Adv. He acted strictly according to the rule of the bank.
11. Accused in their defence have examined the following Defence witnesses.
DW1 Sh Ramji Lal has produced record related to property No.519/II Katra Neel Delhi marked DW1/A to DW1/J. DW2 Sh Tajinder Pal Singh has deposed orally and has not proved any document.
DW3 HC Pratap Singh has brought photocopies of documents available in Malkhana seized through seizure memo dt 4.9.98 marked DW3/A1 to A17.
DW4 Sh R K Setia has proved verified copies of abstract of the manual of advances of Central Bank of India Ex DW4/A to DW4/D. DW5 Sh R K Vij has produced certified copies marked C C No.58/99 13/72 D5/1 collectively, D5/2, D5/3, D5/4 collectively, D5/5, D5/6 collectively, D5/7 and D5/8 collectively , D5/9, D5/10 to D5/13 collectively, D5/14, D5/15, D5/16, D5/17 to D5/18 collectively, D5/19, D5/20, D5/21 to D5/22 collectively, D5/23, D5/24, D5/25 and D5/26 collectively, D5/27, D5/28, D5/29, D5/30, D5/31, D5/32, D5/33 to D5/35 and D5/36 collectively.
DW6 Sh Sanjeev Joshi has produced copies of record from Regional Office Central Bank of India marked as D6/1 running into 8 pages, D6/2, D6/3 running into one sheet dealt in both the sides, D6/4, D6/5, D6/6, D6/7 running into 4 sheets, D6/8 running into two sheets, D6/9 running into three sheets, D6/10 running into three sheets, D6/11, D6/12, D6/13, D6/14 running into two sheets, D6/15, D6/16, D6/17, D6/18 on both the sides of sheet, D6/19, D6/20, D6/21running into four sheets, D6/22 running into two sheets, D6/23 running into five sheets, D6/24 running into two sheets, D6/25 running into two sheets, D6/26 running into three sheets, D6/27 running into two sheets and D6/28 .
DW7 Sh PP Arora ( U/S 315 Cr P C) has proved copy of application under RTI Ex DW7/A, copies of documents supplied C C No.58/99 14/72 by DRT marked DW7/1 to DW7/3, copy of police report Ex DW7/B, copy of application under RTI Act Ex DW7/C, copy of mutation certificate marked DW7/4 , copy of acknowledgment of ITR of Saroj Kushwahaha Ex DW7/D, copy of Importer and Exporter Code marked DW7/5, copy of Recovery Certificate marked DW7/6, copy of letter of MCD marked DW7/7, copy of website marked DW7/8, DW7/9, DW7/10, DW7/11. He has proved copy of document marked PW1/DX1 to 6 Ex DW7/E to DW7/R. DW8 Sh R B Gupta ( U/S 315 Cr P C) has proved copy of bio date of Mrs Saroj Kushwahaha Proprietor of M/S Kiran Leather International and of Sh Surinder Pal Singh Ex DW8/A and P8/1 to 3.
DW9 Smt Saroj Kushwahaha ( U/S 315 Cr P C) has produced document marked DW9/1 to 24.
PROSECUTION ARGUMENTS C C No.58/99 15/72
12. Ld. Sr. PP Sh. Brajesh Shukla referring relevant paras of deposition of relevant PWs argued that accused Saroj Kushwaha, Surinder Pal Singh, Puran Prakash Arora and Ram Bhagat Gupta, at Delhi and other places during the year 1996 having dishonest intention to cheat Central Bank of India, Sukhdev Vihar Branch fraudulently induced to said bank to disburse/sanction and succeeded in obtaining credit facility to the tune of Rs. 45.30 lacs in the name of M/s Kiran Leather International, which was a proprietorship concern of Saroj Kushwaha. The modus operndi of the case was fake/fabricated documents,i.e. Defective collateral Secutiry pertaining to property no. 519, Krishna Gali, Katra Neel, Chandni Chowk, Delhi on the basis of which credit facility was sanctioned/disbursed. It was also submitted by Sr. PP that accused persons managed fake export order of M/s Design Action Group, Inc, Newyork, which was used in the episode of sanctioning of 'Packing Credit Facility' cum 'Bill purchases limit' to the tune of Rs. 50 lacs against the defective title deed of property no. 519, Krishna Gali, Katra Neel, Chandni Chowk, Delhi. Thereafter, Surinder Pal Singh @ Surinder Puran Singh having close nexus with other accused persons received four demand drafts to the extent of Rs. 38.75 lacs favouring M/s Concord Leathers, Madras and got credited the same in personal saving account no. C C No.58/99 16/72 5180757009, maintained in Citi Bank. It was also further submitted on behalf of prosecution that accused Puran Prakash Arora, Sr. Manager of Central Bank of India, Sukhdev Vihar Branch and Ram Bhagat Gupta, Asstt. Manager of Central Bank of India, Sukhdev Vihar Branch in flagrant disregard of established norms, rules, practices and on the basis of fake/fabricated /defective collateral security of property referred above and export order as detailed above fraudulently sanctioned the limit of Rs. 50 lacs to M/s Kiran Leathers International. In this way, magnitude of evidence deposed by altogether 26 PWs, when taken into consideration with concern exhibited documents, the same will show that prosecution has successfully proved the charged offence against above said accused persons.
DEFENCE ARGUMENTS
13. It is argued on behalf of accused Saroj Kushwaha that she studied up to 7th standard, thus cannot read, write and understand English. She was married to Suresh Singh S/o Kayam Singh, who expired in the year 1981. She was living as widow. In these circumstances, A2 S. P.Singh had extended the helping hand towards C C No.58/99 17/72 her. Her sister in laws had evil eyes on the property of their father Kayam Singh, who expired on 07/08/91. After his death property was mutated in the name of Saroj Kushwaha and her minor daughter in the MCD. S P Singh had business contract in USA as told by him to her. In these circumstances, firm under the name of M/s Kiran Leathers International was floated to execute the export/import orders. All the relevant documents/licence/certificates were obtained. PCL limit got sanctioned after complying due process/banking norms. Accused Saroj Kushwaha did not conceal any information from the bank. Her sisterinlaws filed probate case on the basis of forged Will. S P Singh managed to get leather directly from Madras and goods were fabricated in the workshop to execute the work orders. Shipping space was booked through an agent in Bombay for exporting the finished goods. Goods were booked for transporting to Bombay by road, insurance policy was also obtained for all the transit risks. Goods were finally dispatched, but unfortunately on the way truck carrying the finished goods met with an accident and goods were burned in the fire or looted by the villagers. But insurance company rejected the claim of accused. Accused is innocent. Inspite of all these facts she had paid about Rs. 15 lacs to the bank in a recovery suit filed in DRT, but the matter could not be finally settled. C C No.58/99 18/72 Ld. Defence Counsel has filed detailed written submissions which are on the file, therefore, I am not incorporating all the arguments in this judgment on account of brevity, however, I have taken in consideration all the arguments.
14. Sum and substance of the arguments on behalf of accused P P Arora is that there is no evidence on the file that he is a public servant. Saroj Kushwaha and her daughter were the absolute owner of property bearing no. 519,Krishna Gali, Katra Neel, Chandni Chowk, Delhi6. They have clear title free from all encumbrances, therefore, it has rightly accepted as Collateral Security. Legal Search Report was obtained from Penal Bank Lawyer Ms. Sudesh Yadav and thereafter, another Legal Search Report was also taken from S. R. Yadav and company in order to safeguard the interest of the bank by accused. Accused P P Arora has not committed any offence by accepting certified copy of the title deed for creating equitable mortgage in favour of bank because original sale deed was lost and Saroj Kushwaha had lodged DD entry with the police in this regard. According to Valuation Report, value of the property bearing no. 519, Krishna gali, Katra Neel, Chandni Chowk, Delhi6 was more than Rs. 77 lacs. No specific rules or practice as to how much margin money C C No.58/99 19/72 is to be maintained is prescribed under the banking manual. In a packet credit advance for execution of export order, margin money means the contribution of borrower. In this case the export order was worth about Rs.70 lacs in Indian rupee, bank sanctioned the PCL of Rs.50 lacs only which is about 65% of the amount of export order, which means the party had to contribute about 35 % of the export order. In these circumstances, nothing more was required on the part of bank in respect of margin money. Four demand drafts were issued in the name of M/s Concord Leathers. All the four demand drafts were A/c Payee. It is undisputed fact that all these four drafts credited in the account of M/s Concord Leathers, thus, there is no fault on the part of accused P P Arora in not sending the demand drafts directly to the supplier. Loan application can be entertained even without the account of the party in the bank and party can be asked to open account later on, as per bank rules, therefore, no illegality committed by accused by entertaining loan application of the borrower on the same day when the account was opened. Accused P P Arora is innocent. He is falsely implicated in this case and he may be acquitted. Ld. Defence Counsel has filed detailed written submissions running in 33 pages which are on the file, therefore, I am not incorporating all the arguments in this judgment on account of C C No.58/99 20/72 brevity, however, I have gone through all the written submissions.
15. Sum and substance of the arguments on behalf of accused R B Gupta is that there is no evidence on the file that he is a public servant. He is innocent. He has not violated any banking rules and regulations. He has not fabricated any documents including financial report. There is no evidence on the file to prove that he was at all involved in the alleged conspiracy. Prosecution has failed to prove on the file that there was any meeting of mind between accused R B Gupta and other coaccused to defraud the bank. Prosecution has not produced any evidence to prove that R B Gupta had obtained any financial/pecuniary gain, therefore, no offence U/s 13 (2) r/w Section 13 (1) (d) PC Act, 1988 made out. Ld. Defence Counsel has filed written submissions, which are on the file, therefore, I am not incorporating all the arguments in this judgment on account of brevity, however, I have gone through all the written submissions.
Ld. Defence Counsel in support of his arguments placed reliance on following authorities:
P.K. Narayan Vs. State of Kerala (SC) 1994 (3) Crimes 850, Ram narain Poply Vs. CBI, (SC) 2003 CrilLJ 4801, Saju Vs. Sate of Kerala, (SC) 2000 (4) RCR (Crl) 747, S.V.L. Murthy Vs. State Rep. C C No.58/99 21/72 By CBI, Hyderabad, (SC) 2009 (3) RCR (Crl) 696, K.R. Purushothaman Vs. State of Kerala (SC) 2005 (4) RCR (Criminal)
848.
PUBLIC SERVANT AND SANCTION
16. Accused P.P. Arora was the then functioning as Senior Manager, Central Bank of India, Sukhdev Vihar, New Delhi and accused R.B. Gupta was the then functioning as Dy Manager in Central Bank of India, Sukhdev Vihar, New Delhi.
17. Ld Defence counsels for accused PP Arora and R B Gupta argued that no prosecution witness has deposed that accused P P Arora and R B Gupta were public servant at the time of commission of alleged offence. The only evidence which has come on record is that at the time of commission of alleged offence , accused PP Arora and R B Gupta were employed of Central Bank of India . No evidence oral or documentary has come on record that Central Bank of India in which the accused were employees is a Nationalized bank . In these circumstances, it is not proved that both these accused were the then functioning as public servant. Ld Defence counsels in support of their C C No.58/99 22/72 arguments placed reliance on State of Karnataka Vs M. Muniswami, 2004 SCC ( Crl) 1151.
18. Prosecution has produced PW 10 Sh J J Bhattacharya who was posted as G M ( Personnel) in Central Bank of India, Central Office Mumbai during the year 1999 who had accorded the sanction for the prosecution of accused P P Arora and R B Gupta . He has proved the sanction for prosecution of accused PP Arora accorded by him Ex PW10/A and sanction for prosecution of accused R B Gupta Ex PW10/B.
19. I have carefully gone through both these sanction order. Sanctioning authority in the opening paragraph of sanctioning order has specifically mentioned that both the accused abusing their official position as " public servant" caused wrongful pecuniary loss to the bank and wrongful gain to their coaccused. The relevant paragraph of Ex. PW10/A the sanction for the prosecution of accused P P Arora is as under:
"Whereas it is alleged that Sh Puran Parkash Arora S/O Late Panju Ram R/O H. No.798, Sector 15A Ground Floor Faridabad , Haryana while functioning as Senior Manager Central, Bank of India, Sukhdev Vihar Branch N C C No.58/99 23/72 Delhi during the year 1996 entered into a criminal conspiracy with (i) Smt Saroj Kushwahaha Proprietor Kiran Leather International, Delhi (ii) Surinder Pal Singh S/O Sh Bhoop Singh said to be brother of Smt Saroj Kushwahaha (iii) Sh Juneed Khan, Proprietor M/S Concord Leather, Chennai ( All three private persons ) and Sh Ram Bhagat Gupta Dy Manager, Central Bank of India, Sukhdev Vihar Branch N Delhi and in furtherance of the said criminal conspiracy obtained pecuniary advantage for the above named private persons by abusing his official position as a public servant and caused wrongful pecuniary loss to the extend of Rs.45.30 lacs to the Central bank of India, Sukhdev Vihar Branch N Delhi and corresponding wrongful gain to M/S Kiran Leather International represented by Smt Saroj Kushwahaha , S.P Singh and M/S Concorde Leathers represented by Sh Junead Khan."
20. The relevant paragraph of Ex. PW10/B the sanction for the prosecution of accused R B Gupta is as under:
"Whereas it is alleged that Sh Ram Bhagat Singh S/O Late Sh Sant Lal R/O E33, Sector 11, Faridabad while functioning as Dy Manager Central, Bank of India, Sukhdev Vihar Branch N Delhi during the year 1996 entered into a criminal conspiracy with (i) Smt Saroj Kushwahaha Proprietor Kiran Leather International, Delhi (ii) Surinder Pal Singh S/O Sh Bhoop Singh said to be brother of Smt Saroj Kushwahaha (iii) Sh Juneed Khan, Proprietor M/S Concord Leather, Chennai ( all three private persons ) and Sh Ram Bhagat Gupta Dy Manager, Central Bank of India, Sukhdev Vihar Branch N Delhi and in furtherance of the C C No.58/99 24/72 said criminal conspiracy obtained pecuniary advantage for the above named private persons by abusing his official position as a public servant and caused wrongful pecuniary loss to the extend of Rs.45.30 lacs to the Central bank of India, Sukhdev Vihar Branch N Delhi and corresponding wrongful gain to M/S Kiran Leather International represented by Smt Saroj Kushwahaha , S.P Singh and M/S Concorde Leathers represented by Sh Junead Khan."
21. Prosecution has also produced Sh JJ Bhatacharya in the witness box as PW10. He has deposed that in the year 1999 he was posted as GM( Personal) in Central Bank of India, Central office, Mumbai. By virtue of the post held by him he was competent to remove employees up to scale V. Accused P.P. Arora being Senior Manager in Central Bank of India, Sukhdev Vihar branch was in Scale III and accused R.B. Gupta was Deputy Manager in Central Bank of India, Sukhdev Vihar branch. He had received documents/report/statements from SP, CBI through Vigilance Department. After receiving the same, he had gone through the papers and documents supplied to him. After due application of his mind on the documents, he had come to the conclusion that a prima facie case is made out against on both the accused, therefore, he had C C No.58/99 25/72 accorded sanction under his signatures for the prosecution of accused P.P.Arora and R. B. Gupta which are Ex. PW10/A and Ex. PW10/B respectively.
This witness has been crossexamined at length on behalf of the accused. In his crossexamination he had deposed that he had granted sanction for the prosecution of the accused after his satisfaction. He has also deposed that P.P. Arora had abused his official position because of the fact that Saroj Khushwaha to whom credit facility was granted was new to the bank and rules and regulations were not adhere to, while granted export credit facility.
In his entire crossexamination on behalf of accused P.P. Arora not even a suggestion given to accused that accused P.P. Arora and accused R. B. gupta were not the public servants. It is well settled legal preposition that no crossexamination on a substantive point amounts to admission of the same. In these circumstances, there is no merit in the arguments that accused P.P. Arora and R.B. Gupta were not the public servants at the time of commission of offence. As discussed above, there is also no merit in the arguments that prosecution has not produced any document to prove that both these accused were public servants at the time of commission of this offence.
C C No.58/99 26/72
22. I have also gone through the authority State of Karnataka Vs. M. Munni Swami relied upon by Ld. Defence Counsel in view of above discussed evidence produced by the prosecution, ratio of law laid down in this authority is not applicable in the facts and circumstances of the case in hand.
23. It is argued by Ld. Defence Counsels that the sanctioning authority did not apply his mind. I have carefully gone through the sanction order Ex.PW10/A and Ex.PW10/B. Both the orders are detailed orders running in three sheets each having all the relevant material particulars of this case. A bare perusal of these orders reflect that sanctioning authority has passed these order after due application of his mind.
24. Hon'ble Supreme Court has held that where the sanction order itself is a speaking order in such circumstances, it is not necessary to prove it by leading evidence that sanctioning authority has applied his due mind. Reliance is placed on C S Krishnamurthy Vs. State of Karnataka 2005 IV AD (S.C.) 141 wherein in para No.9 it is observed as follows:
C C No.58/99 27/72
"Therefore, the ratio is sanction order should speak for itself and in case the facts do not so appear, it should be proved by leading evidence that all the particulars were placed before the sanctioning authority for due application of mind. In case the sanction speaks for itself then the satisfaction of the sanctioning authority is apparent by reading the order. In the present case, the sanction order speaks for itself that the incumbent has to account for the assets disproportionate to his known source of Incom. That is contained in the sanction order itself. More so, as pointed out, the sanctioning authority has come in the witness box as witness No.40 and has deposed about his application of mind and after going through the reports of the Superintendent of Police, CBI and after discussing the matter with his legal department, he accorded sanction. It is not a case that the sanction is lacking in the present case. The view taken by the Additional Sessions Judge is not correct and the view taken by learned Single Judge of the High Court is justified."
25. In this regard, Hon'ble Supreme Court in Superintendent of police (CBI) Vs. Deepak Chaudhary - 1995 SCC (Crl.) 1095 has held as follows:
''We find force in the contention. The grant of sanction is only an administrative function, though it is true that the accused may be saddled with the liability to be prosecuted in a court of law. What is material at that time is that the necessary facts collected during investigation constituting the offence have to be placed before the sanctioning authority and it has to consider the C C No.58/99 28/72 material. Primafacie, the authority is required to reach the satisfaction that the relevant facts would constitute the offence and then either grant or refused to grant sanction. The grant of sanction, therefore, being administrative act the need to prove an opportunity of hearing to the accused before according sanction does not arise. The High Court, therefore, was clearly in error in holding that the order of sanction is vitiated by violation of the principles of natural justice.''
26. Hon'ble Supreme Court in Kottha Perumal Vs. State Tr. Inspector of Police, Vigilance and Anti Corruption, AIR 2011 Supreme Court 356 has held as follows:
"Prevention of Corruption Act (49 of 1988) - Sanction to prosecute - Legality Examination of material facts by sanctioning authority - Sanction order specifically stating that statement of witnesses have been duly examined - Other materials such as copy of FIR as well as other official documents such as different mahazars were carefully examined Upon examination of statements of witnesses as also material on record, sanctioning authority has duly recorded its satisfaction that appellant should be prosecuted - Sanction order is legal".
In view of above discussion, this Court is of opinion that prosecution has proved valid sanction orders for the prosecution of accused P.P. Arora and R.B. Gupta in this case. C C No.58/99 29/72 ROLE OF ACCUSED SAROJ KUSHWAHA, P P ARORA AND R B GUPTA & EVIDENCE AGAINST THEM.
27. Accused Saroj Khushwaha was allowed to open CA A/c No. 885 in the name of M/s Kiran Leather International, as its proprietor, A12, Krishna Park, Devali Road, Khanpur, New Delhi on 15/02/1996 by PW1 R.C. Gupta vide A/c Opening Form Ex. P1 to P4 on the introduction of one Sh. Zile Singh. PW1 has also deposed that accused Saroj Khushwaha had signed the A/c opening form in his presence. He has also proved PayinSlip Ex. P2 of Rs.5,000/ which was deposited on 15/02/1996 at the time of opening of this account. This witness has also proved credit voucher of Rs. 3 lacs Ex. Y3 and a cheque Ex. P3 for an amount of Rs. 60,000/ issued by accused Saroj Khushwaha under her signatures on behalf of M/s Kiran Leather International as its proprietor for salary.
28. Accused Saroj Khushwaha on 15.02.96 applied for packing credit facility of Rs. 50,00000/ under packing credit facility vide application Ex. P7/1 to 17. On the basis of export order 21.01.1996 purportedly issued by Ms. Design Action Group Inc, Newyork, for supply of readymade garments worth US $ 1,89,400/ C C No.58/99 30/72 up to 30.06.1996, Ex. P11/A. Application form was filled in by R.B. Gupta. Accused P.P. Arora and R.B. Gupta had processed the loan application on the same day. Biodata of accused Saroj Kushwahaha Ex. DW8/A has also been filled in by accused R. B. Gupta on 15/02/1996.
29. Financial report Ex. PW11/C prepared by R B Gupta and P.P. Arora on 23.02.1996, as per PW11 Jagjeet Singh Arora, wherein total worth of assets of M/s Kiran Leather is shown as Rs. 81,12,000/ including an amount of Rs. 4 lacs as investment in the business and value of the property no. 519, Gali Krishna, Katra Neel, Chandni Chowk is shown as Rs. 77,12,000/ relevant portion of deposition of PW11 in this regard is as under:
"I have seen D18 this is a financial report of accused Saroj Kushwahah proprietor of M/s Kiran Leather International dated 23.02.1996 in the hand writing of accused R. B. Gupta and signed countersigned by accused P.P. Arora. I identify the signatures of R.B. Gupta at point A and that of P.P. Arora at point B. I identify their writings as I am conversant with the same. This financial report shows total worth as Rs.81.12 lacs. This amount includes 4,00,000/ as investment in the business as on 31.01.1996. The value of C C No.58/99 31/72 property situated at 519, Gali Krishna, Katra Neel, Chandni Chowk, Delhi worth of Rs.77.12 lacs. Financial report is now Ex. PW11/C. The same was in the handwriting of Sh. R.B. Gupta".
30. Financial report Ex. PW11/C was prepared on 23/02/1996 in which Smt. Saroj Kushwaha is shown as owner of the property no. 519, Katra Neel, Chandni Chowk, Delhi110006, treating its value Rs. 77,12,000/. In column no. 9 of this report, it is mentioned that this property is free from all encumbrances without obtaining the legal search report on 23/02/1996 which is clear from the fact that first legal opinion/ search report regarding this property Ex. X6/Y13( D42) given by Ms. Sudesh Yadav is dated 28/02/1996 which was received in the bank on 29/02/1996 as per following endorsement made on it by ABM "Seen,please keep it on record".
Sd/ R.B. Gupta 29.02.1996
31. It proves beyond reasonable doubts that the above referred financial report was prepared by accused R. B. Gupta and C C No.58/99 32/72 and also signed by accused P P Arora on 23/02/1996, was a document created with the malafide intention to create evidence for sanctioning the PCL limit of Rs. 50 lacs in favour of accused Saroj Kushwahah, proprietor of M/s Kiran Leather International.
32. Value of the property no. 519, Krishna Gali, Katra Neel, Chandni Chowk, Delhi has been mentioned as Rs. 77,12,000/ in the above referred financial report on the basis of valuation report Ex. Z7/Y14( D43) dated 26/04/1994 in financial report prepared on 23/02/1996, thus, it is again proved that both the accused have relied upon two year back valuation report wherein actually this property was occupied by tenants at a very low rent, thus, actually having very low market value.
33. Ms. Sudesh Yadav, Advocate in her legal opinion/ search report dated 28/02/1996 qua the property in question Ex. X6/Y13 has specifically mentioned that she has examined the "certified copy of the sale deed". Thus, she was not informed that original sale deed was not available with the bank. Therefore, she had prepared her report without seeing the original sale deed.
She has observed as follows in her report:
C C No.58/99 33/72
"That Shri Kayam Singh died leaving behind the daughter in law Smt. Saroj Kushwaha & grand daughter Kumari Kiran Kushwahaha wife of Late Shri Suresh Kushwaha as legal heir. Late Shri Suresh the only son of Shri Kayam Singh has been died in his life time.
That after the death of Shri Kayam Singh, Smt. Saroj Kushwaha and Kr. Kiran Kushwaha became the owner of the property in equal share being the legal heir of late Shri Kayam Singh and the property stands mutated in their name in the record of M.C. D. vide letter No. TAX/CE/Suptd/M/2643 dated 8.8.94".
34. I have also perused the relevant order of mutation produced by accused in his defence which is DW3/A No. TAX/CZ/Suptd./ M/2643 dated 8.8.94, in para no. 2 of this order,it is specifically mentioned that this mutation is only for purpose of payment of property tax and does not devolve legal title which is as under:
" This is to make it clear that this mutation is only for the purpose of payment of property taxes and does not devolve legal title".
C C No.58/99 34/72
35. Even according to this, property has been mutated in the name of Smt. Saroj Kushwaha and Baby Kiran Kushwaha(minor daughter of Suresh Kushwaha).
36. In the above quoted paragraph of the legal opinion and search report dated 28/02/1996, Ms. Sudesh Yadav, Advocate has mentioned that Smt. Saroj Kushwaha and Kr. Kiran Kushwaha become the owner of the property in equal share being the legal heirs of Late Kayam Singh. She has also mentioned in her report as quoted above that Sh. Kayam Singh died leaving behind daughter in law Saroj Kushwaha and grand daughter Kiran Kushwaha W/o Late Sh. Suresh Kushwaha as legal heirs. Late Suresh was the only son of Kayam Singh, which is factually wrong.
37. Prosecution has produced PW2 Captain Raja Singh son inlaw of Late Kayam Singh Kushwaha, who has deposed that his fatherinlaw Late Sh. Kayam Singh had two daughters also namely Smt. Sheela Chauhan and Smt. Usha Singh. His entire statement is as under:
"The property bearing No. 519, Krishna Gali, Katra C C No.58/99 35/72 Neel, Chandni Chowk was the property of my fatherinlaw late Sh. Kayam Singh Kushwaha was had will his two daughters namely Smt. Sheela Chauhan and Smt. Usha Singh. Usha Singh is my wife. We had filed this Will for probate vide Probate Case No. 160/92 in the Court of Distt. & Sessions Judge, Tis Hazari. Smt. Saroj Kushwaha, who is present in the Court today appeared in this case to oppose the probate. The probate was decided in favour of Sheela Chauhan and Usha Singh vide judgment dated 03.06.2000, the photocopy of judgment is mark A. XXXXX on behalf of A1, A2 and A4 Nil opp given.
XXXX on behalf of remaining accused.
Nil opp. given".
38. PW2 has specifically deposed that they had filed a probate case no. 160/92 in the court of Distt. & Sessions Judge, Tis Hazari and Smt. Saroj Kushwaha appeared in that case to oppose the probate. He has also deposed that Kayam Singh was having two daughters also. He has not been crossexamined on behalf of any of accused inspite of the opportunity granted to them, as quoted above. It is well settled legal proposition that no crossexamination on a C C No.58/99 36/72 substantive point amounts to the admission of same, thus, it is undisputedly proved that Kayam Singh was also having two daughters namely Smt. Sheela Chauhan and Smt. Usha Singh in addition to a son Suresh Kushwaha.
39. Accused Saroj Kushwaha had filed her affidavit DW1/D, produced by the accused in defence evidence, dated 18.04.1994 in the MCD along with her application for mutating property no. 519, Krishna Gali, Katra Neel, Chandni Chowk, Delhi6, in her name concealing all the above material facts. The entire affidavit is as under:
AFFIDAVIT I, We, Smt. Saroj Kushwaha wd/o late Suresh Kushwaha and Baby Kiran Kushwaha d/o Late Suresh Kushwaha, through U/G Smt. Saroj Kushwaha, both r/o 519, Krishna Gali, Katra Neel, Chandni Chowk, Delhi110006, do hereby solemnly affirm and declare as under:
1.That Late Sh. Kayam Singh is the recorded owner of the property no. 519, Krishna Gali, Katra Neel, Chandni Chowk, Delhi6, and he C C No.58/99 37/72 has died on 07.08.1991.
2.That Late Sh. Kayam Singh had left leaving behind is not registered and unregistered Will.
3.That my motherinlaw Smt. Saroj Devi died on 26.05.1993.
4.That my husband Sh. Suresh Kushwaha died on 25.01.1981.
5.That I am in physical possession of the said property and there is no dispute of any nature pending in any court of law, and if any dispute may come up, the MCD will nto be a party to the same.
6.That now we seek the joint mutation of the said property as per law.
7.That we are willing the pay of arrears property tax demand if any.
Deponent Deponent Verification:
Verified at Delhi on this 18th day of April, 94, that the above statement true and correct to the best of our knowledge and belief.
Deponent Deponent
40. Ms. Sudesh Yadav, Advocate in her legal opinion/search report has specifically mentioned that equitable mortgage by way of C C No.58/99 38/72 depositing all original title deed along with the mutation certificates be created after taking necessary permission from the Court for the property of minor. The relevant portion of her report is as under:
"In the above noted facts and circumstances I am of the opinion that the aforesaid property is free from all registered encumbrances bears a marketable title and fit to create equitable mortgage by way of depositing the all original title deeds ( mentioned in the registry) along with mutation certificate. Before creating the charge over the property of Minor necessary permission is required from the Court but since the property is acquired inheritance so mother being the natural guardian of the minor cum create the charge over the property for the benefit of the minor child".
41. From the above quoted portion of legal opinion, it is proved that even Ms. Sudesh Yadav, Advocate had opined that equitable mortgage be created after depositing all the original documents. From her above report, it is also apparent that she was not aware that bank was not having original documents, otherwise, C C No.58/99 39/72 she would not have mentioned for depositing original documents for creating equitable mortgage.
In this regard, PW23, P.V. Ravindaran has deposed as follows:
" I have seen Ex. PW19/A, i.e. legal opinion and search report regarding the property no. 519 situated at Krishna Gali, Katra Neel, Chandni Chowk, Delhi belonging to Smt. Saroj Kushwahaha W/o late Sh. Suresh Kushwahaha. This legal opinion has been given by Smt. Suresh Yadav, advocate about the title deed of the above said property as security for the credit facility sanctioned to M/s Kiran Leather International vide Ex. Y10 and Ex. S2. On the record she has stated that she is of the opinion that the aforesaid property is free from all registered encumbrances bears a marketable titled and fit to create equitable mortgage by way of depositing the all original title deeds( mentioned in the registry) along with mutation certificate. Before creating the charge over the property of minor necessary permission is required from the court but since the property is acquired by inheritance so the mother being the natural guardian to the minor can create the charge over the property for the benefit of the minor child".
C C No.58/99 40/72
42. Further, to safeguard the interest of the bank Smt. Saroj Kushwahah should be asked to furnish an affidavit that she and her daughter are the only legal heirs of late Sh. Kayam Singh, and their property in question is free from all type of encumbrances. Advocate has stated in her opinion that she has examined the certified copy of the sale deed and other records. As per bank policy legal opinion should be submitted after verifying the original title deeds of the property and other related documents which was not done in this case by advocate Sudesh Yadav while offering her opinion Ex. PW13/A. Mutation done in favour of Smt. Kiran Kushwahaha and Saroj Kushwahah will not amount to transfer of property in their favour as it do not devolve a legal title upon them rather it serves the purpose of payment of property tax only.
43. I have seen D13, i.e. appraisal Note dated 26.02.96 already Ex. Y9/a to 17 prepared by Sukhdev Vihar Branch submitted by the then Asstt. Branch Manager. In this Appraisal Note there is a mention under serial No. 19 collateral Security " equitable mortgage"
519 at Gali Krishna, katra Neel, Chandni Chowk, Delhi, value Rs. C C No.58/99 41/72 77.12 lacs as on 26.04.1994. According to this Appraisal Report as submitted by Asstt. Branch manager " good collateral security is there" for credit facility. Since I have not seen the property nor I am involved in the processing of the credit proposal I cannot comment upon the quality/value of security".
He has further deposed as follows:
"Original title deed was not deposited with the bank as required for creating of equitable mortgage of property. The bank officials have only taken documents pertaining to title deed on Rs. 2/ stamp paper".
44. Accused Saroj Kushwaha had also filed her affidavit, DW3/A8 produced by accused in defence evidence, dated 1st March, 1996 in the bank deposing that she had inherited property bearing no. 519, Katra Neel, Chandni Chowk, Delhi6 from her father in law. There is no other legal heir except her minor daughter Kiran Kushwaha. Her entire affidavit is as under:
"I, Smt. Saroj Kushwaha wife of late Shri Suresh Kushwahah resident of 519, Katra Neel, Chandni Chowk, Delhi6 do hereby solemnly affirm and declare as under:
1.That I have inherited the property bearing municipal No. 519, Katra C C No.58/99 42/72 Neel, Chandni Chowk, Delhi, from my fatherinlaw Late Sh. Kayam Singh.
2.That there is no other legal heirs except my minor daughter Kiran Kushwaha d/o late Sh. Suresh Kushwahah.
3.That the property above sated is free from all sorts or encumbrance.
Deponent.
Verification:
Verified at New Delhi on this 1st day of March,1996, that the contents of the above affidavit are true and correct to the best of my knowledge and belief.
Deponent
45. From the statement of PW2, as quoted above, it is proved beyond reasonable doubt that daughters of late Kayam Singh Smt. Sheela Chauhan and Usha Singh had filed a probate case in the year 1992 which was opposed by Saroj Kushwaha. Inspite of knowing all the facts, Saroj Kushwaha on 01.03.1996 has filed C C No.58/99 43/72 above quoted affidavit in the bank concealing all the material facts with regard to her title to the above referred property and other legal heirs of late Kayam Singh and the Will executed by him. Accused P.P. Arora and R. B. Gupta without making any verification and in utter violation of the legal opinion/search report had accepted the certified copy of the title deed of property no. 519, Katra Neel, Chandni Chowk, Delhi6, for creating equitable mortgage.
In this regard PW11 Jagjit Singh has deposed as follows:
"The collateral security of the property situated 519, Gali Krishna, Katra Neel, Chandni Chowk, Delhi on the basis of certified copy of the documents of the property were taken on 07.03.96. Mrs. Saroj Kushwaha was personally called in the bank by R B Gupta and P P Arora to create equitable mortgage of the property. As per the banks terms it is mandatory that before creating equitable mortgage original document of the property to be mortgaged are required. If the original documents of the property are not obtained from the party for creating equitable mortgage in such circumstances it creates a serious doubts regarding the genuineness of the title deed or the party".
C C No.58/99 44/72
In this regard, PW12 Sh. S. K. Aggarwal has deposed as follows:
"The collateral securities in this case was a residential house in Katra Neel Chandni Chowk and it had many defect in itself. The property of collateral security belonged to Late Sh. Kayam Singh who had two daughters and a deceased son who was husband of Saroj Kushwahah. Branch accepted only Zerox copy of the title deed from Saroj Kushwahah as owner despite there being dispute to title with other coowner. Moreover, the property was in possession of several tenants who had their litigation against late Kayam Singh, such property as a collateral security should not have been accepted by a prudent Branch Manager if the proper inquiry had been made. As such I can say that there was no inquiry on the part of sanctioning/appraisal official as to collateral securities offered by the borrower and defective collateral securities in this case was accepted by the sanctioning official with some ulterior motive".
46. Accused P.P. Arora had taken second legal opinion from M/s S.R. Yadav, another penal advocate on the advise of International C C No.58/99 45/72 Division of the bank with regard to steps for safeguarding of bank interest in view of letter dated 17.09.1996, but instead of documents examined by legal department at regional office or Zonal office, he had referred the matter to S.R. Yadav vide letter dated 20.09.96, language of which is such that branch is sending to him photocopies of all the documents and originals are in possession of the branch (As referred in Ex. PW12/A, D39). In these circumstances, it is clear that M/s. S.R. Yadav was also not informed of lose of original title deed . In these circumstance, Sh S R Yadav Advocate had given his opinion the 6/7, produced by accused in defense evidence, wherein he has opined that documents have been correctly executed and are legally valid.
Accused P.P Arora had prepared sanction note on 27/02/1996 in his own handwriting under his signatures wherein he has made wrong entries stating therein that accused Saroj Kushwahah has long experience in that line.
47. The entire sanctioned note Ex. X1 dated 27.2.96 is as under:
C C No.58/99 46/72
M/s Kiran Leather International Sanction Note.
Smt. Saroj Kushwahah W/o Late Sh. Suresh Singh Kushwahah aged 35 years is desirous of standing on her feet and has set up a SSI Export Oriented Unit for manufacturing goods like jackets, wallets, bags, gloves and belts etc. She has received Importer Exporter Code from Ministry of Commerce Government of India. Photocopy of the same has been obtained and kept on record for future reference. Name of the Unit is M/s Kiran Leather International and she is the proprietor. All the necessary infrastructure has been built up which is required for the new unit and ready for undertaking big export orders. She has long experience in this line and has engaged one Sh. Zulfikar Khan who has 15 years experience in this filed and reportedly considered to be an expert. She has also appointed her brother Shri Surinder Pal Singh aged 39 years to mange and supervise the entire activity of the unit. He has also worked as Manager with M/s Surya Leathers for 5 years and she has been advised to give her brother's biodata also which when received should be kept on record. Presanction visit to the unit located at A12, Krishna Gali, Devli Road, Khanpur has been made by Mr. R. B. Gupta, ABM and the undersigned on 23/02/1996 and 24/02/1996 respectively and visit report has been kept on record. Looking to the location of the Unit, Transportation, Labour skilled/unskilled and other basic things needed for running the Unit appears to be available in abundance. From the infrastructure laid down so far and credit appraisal made and scrutinized unit appears to be quite financially and economically viable. They have already received C C No.58/99 47/72 export order of worth Rs. 70 lacs from USA and reportedly there is no dearth of Export order of Smt. Saroj Kushwahah appears to be genuinely interested in the Unit as she is ready to give EM of her property no. 519, Katra Neel, Chandni Chowk, Delhi110006 value in Rs. 77 lacs approximately of her valuation report dated 26/04/1994 by Sh. J.L. Nagpal, Architect of M/s Nagpal & Associates. Legal and Search report has also been received from Mr. Sudesh Yadav and Advocate on bank panel which states that the subject property should EM in favour of bank.
Thus, in view of forgoing and of the unit is 100 % export oriented fully secured and with bright future the following credit limit are sanctioned with usual terms and conditions: Packing Credit Cum Rs. 50 lacs with 25 % Export Bills Purchased margin The loan ( packing credit) should be disbursed in 35 stages and after every disbursement proper and regular monitoring should be done to ensure proper use of funds. It may be disbursed after completing all formalities and obtaining security documents.
27.02.1996 C C No.58/99 48/72
48. Wherein actually Saroj Kushwahah was under Metric, a pardanasheen, country side lady, having no skill or experience in the line. General skill and good education is required to deal with the export business/matters. In this case, it is proved that borrower did not possess sufficient experience and expertise in the field, therefore, it is again proved that accused P.P. Arora intentionally and deliberately incorporated wrong facts in this sanction note to mislead and to induce the sanctioning authority to sanction the PCL for an amount of Rs. 50 lacs with the malafide intention to obtain financial gain to his coaccused. In this regard, PW12 Sh. S. K. Aggarwal, who had investigated this matter on the direction of Zonal office has deposed as follows:
"The improper identification I mean that the borrower Saroj Kushwahah was very low educated and had not passed even matriculate as she had not filed any supporting document as to her education. She had no past experience of any business as gathered from the inquiries made from her neighborhood and concerned person. She was a country lady and she also happened C C No.58/99 49/72 to be a Pardanasheen woman. During my inquiry, the reputed shopkeeper of the area had expressed surprise how could she handled an export business of turn our of 8 crores approximately. The borrower Saroj Khushwah as in fact incapable of running such a huge business of export without any past experience. Generally skill and good qualification and good experience for running an export business is required from the person engaged in such business. S P Singh who was supposed to manage the entire business of borrower had also no document in support of his past profile of running an export business and no details as to his addresses and other important details were filed at the time of appraisal of credit facility. Another person named as Zulfikar was also engaged by accused Saroj Kushwahah to support his case of credit facility as he was shown to possess an experience over 10 years in running export business of leather but no documents in support thereof was found during course of my inquiry".
49. When legal opinion/search report of Ms Sudesh Yadav is dated 28.2.96 received in the bank on 29.2.96 vide endorsement made on the same ABM R B Gupta as quoted above C C No.58/99 50/72 in this judgment, how accused PP Arora in his above quoted sanctioned note dated 27.2.96 has referred the legal and search report of Sudesh Yadav Advocate which is as follows:
"Legal and search report has also been received from Ms Sudesh Yadav Advocate on bank's panel which states that the subject property should equitably mortgage in favour of bank".
50. Referring of the legal opinion/search report dated 28.2.96 received in the bank on 29.2.96 by accused PP Arora in his sanctioned note dated 27.2.96 proves beyond reasonable doubt his involvement in this conspiracy to defraud the bank by abusing his official position along with his coaccused R. B. Gupta and Saroj Kushwaha, which is further corroborated by the fact that he had created equitable mortgage of the above referred property by keeping certified/zerox copy of the title deed without obtaining the original title deed in utter disregard to legal opinion given by Ms. Sudesh Yadav and by getting the same ratified through the legal opinion of S.R. Yadav, concealing the material facts of not having original title deeds with the bank and by relying upon two years old valuation report of the property at Rs. 77.12 lacs. In spite of the fact that property was inhabited by the tenants as deposed by PW12 quoted C C No.58/99 51/72 above.
51. Accused P P Arora had not taken any third party guarantee before disbursing the PCL amount of Rs. 50 lacs to Saroj Kushwahah, who was a housewife having no experience and adequate qualification and expertise to manage the business. The collateral security accepted by accused P P Arora of property no. 519, krishan gali, katra neel, Chandni Chowk, Delhi6 was also not of adequate value. Accused P P Arora and R B Gupta had blindly and blatantly accepted the valuation report of M/s Nagpal & Associates dated 26/04/94 furnished by borrower Saroj Kushwahah without verifying its genuineness from the approved valuer of the bank. This property was inhabited by the tenants at a very low rent, thus, having actual very less market value.
52. Accused P.P. Arora disbursed the packing credit limit amount of Rs. 45,35,000/ without obtaining 25 % margin money. Accused Saroj Kushwaha was allowed to withdraw Rs.60,000 on 07/03/96 in cash for salary purpose, Rs. 3 lacs on 09/03/96 for paying to M/s Dagar International, Rs. 3 lacs on 14/03/96 in cash for petty expenses and Rs.38,75,000/ on 25/03/96 by way of four DDs. The C C No.58/99 52/72 borrower should have arranged about Rs. 15 lacs as margin money to execute export order of over Rs.60 lacs. But from the withdrawal referred above, it appears that borrower had no money even to pay salary and petty expenses which is clear from the fact that she had withdrawn Rs.3 lacs on 14/03/96 for petty expenses and Rs.60,000/ on 07/03/96 for salary purpose. Huge amount of PCL Rs.43,35,000/ were allowed to be withdrawn by the borrower within a time of 18 days only.
53. The payment of the cheque of Rs.3 lacs was made to Saroj Kushwaha through the peon of the bank as per the instructions of accused P P Arora. In this regard PW17 Sh. Satya Dev Bajaj has deposed as follows:
" I have seen D9 cheque of Central bank Sukhdev Vihar Branch of a sum of Rs.3,00,000/ already Ex. P6 which bears my signatures at point B which I identify and the signatures of Smt. Bimla Asstt. Cashier at point A. This cheque was issued by Saroj Kushwahah, being proprietor of M/s Kiran Leather International under her signatures at point Y and Y1 and the back side of cheque also bears the signatures of Saroj Kushwahah at point X and X1. The C C No.58/99 53/72 payment against this cheque was given by me to the peon of the bank as per the instruction of P P Arora, the then Senior Manager of the branch and the payment was received by Saroj Kushwahah. Saroj Kushwahah had not visited the cash counter to collect the said amount of Rs. 3 lacs against her cheque. I have seen credit voucher for Rs.5,000/ dated 26.03.96 already Ex. PW1/10 which bears my signatures at point B which I identify. The cash was received by the then Asstt. Cashier Smt. Bimla under her signature at point A which I identify as I have seen her writing and signing in official course of business".
54. Margin money should be taken from the borrower at the time of each disbursement as per sanction note/terms and conditions. In this case, 25 % margin was required. Branch manager allowed to the Party for request to pay his contribution as margin, cash directly to the supplier is not as per Bank's guidelines. As per the terms and conditions 25 % margin was to be obtained before disbursement and this would not have been done in one go, rather margin of 25 % has to be taken with each and every disbursal through bank account of the party.
C C No.58/99 54/72
55. The borrower is supposed to maintain 25 % as margin money from his own sources, but there is no such mention in the financial report as to how the borrower would arrange the amount of margin money. In this regard PW12 has deposed as follows:
"The export order of Rs.70 lacs against which the disbursement were to be made was found to be incomplete and lacking vital details like mode of shipment etc. The borrower was supposed to continue 25 % as margin money from his own resources but in his financial report no details were gathered as to how the borrower will arrange an amount of Rs. 15 to 20 lacs as her contribution. Thus, a basic requirement of even borrower minimum stipulated stake of 25 % in the business was not ensure. This is a serious irregularities on the part of branch official".
In this regard PW19 S. K. Puri has deposed as follows:
"I have seen stock statement dated 30.04.96 already exhibited as P10 the margin maintained showed in this statement is much more less then the required margin to be maintained by the party. As per sanction and disbursement of loan amount the party should have maintained more margin then 25 % and they C C No.58/99 55/72 should have also more margin in respect of stock. Today I have seen cheque No. 91525 dated 14.03.96 already exhibited as X6 vide which a amount of Rs. 3 lacs was withdrawn from the account No. 885 but no purpose of withdrawal is clear from this cheque. In normal banking practice such a huge withdrawal is not permissible, however, the parties should have declared it in writing regarding the purpose of withdrawal in cash. Today I have seen voucher dated 25.03.96 already exhibited as Y8/A vide which four drafts No. 3135 to 3138 were issued, total amounting to Rs.38,75,000/ in favour of M/s Concord Leathers. All the DDs were issued from packing credit account from Kiran Leather International".
In this regard PW11 Sh. Jagjeet Singh Arora has deposed as follows:
"I have seen D17 this is a letter dated 07.03.96 communicating sanction of limit of Rs. 50 lac as packing credit cum foreign bill purchase on DP( Drawing Power) basis with 25 % margin. It also contains the terms and conditions of sanction to the party M/s Kiran Leather International. It is in the handwriting of Sh. R. B. Gupta signed by Sh. PP Arora at point A and initial by Sh. R. B. Gupta at point B and showing ( received, terms and condition C C No.58/99 56/72 accepted by M/s Kiran Leather under the signatures of Saroj Kushwahah) this document has already been Ex. As X3, P9 and Y11.
25 % margin means the contribution in the business by M/s Kiran Leather of the total export order".
56 On 25.03.96 an application, PW1/DX, which is put to PW1 on behalf of accused in his crossexamination was given to the Manager, Central bank of India, Sukhdev Vihar branch on the letter head of M/s Kiran Leather International under the signatures of Saroj Kushwaha (in Hindi), as proprietor while the entire application is typed in English requesting for issuing demand draft in favour of M/s Concord Leather payable at Madras of Rs.38 lacs. It bears the endorsement of R.B. Gupta also. Request was allowed and four demand drafts totaling Rs. 38.75 lacs were issued in favour of Concord Leather, which were handed over to SP Singh directly instead of sending the same to the supplier firm.
In this regard PW15 Rajnath Singh has deposed as follows:
"I have seen documents Y8/A which is the application for preparing draft. It is in my handwriting. It bears the signatures of C C No.58/99 57/72 RC Gupta at point A and R B Gupta at point B. I identify the same as I have seen them writing and signing in official course of business. Vide these drafts No. 3135,3136,3137 and 3138 a total amount of which were Rs.38,75,000/ were issued in favour of M/s Concord Leather Madras, an amount of Rs.3900/ was charged as commission by the bank. I have seen debit voucher Ex. Y7, it is in my handwriting. It bears the signatures of RC Gupta at poin tA and R B Gupta at point B. I identify the same. Vide it an amount of Rs. 38,75,000/ was debited to the account of Kiran Leather International. The commission was debited from the account of Kiran Leather International. It bears the signatures of R C Gupta at point A and R B Gupta at point B I identity the same".
In this regard PW11 Jagjeet Arora has deposed as follows:
"Four demand drafts totaling to Rs.38.75 lacs were issued in favour of M/s Concorde Leathers and the same were handed over to one Sh. S.P. Singh as far as I remember who was reported to be the Manager of the firm M/s Concord Leathers. I have seen D27, i.e. Four DDs three each for an amount of Rs. C C No.58/99 58/72 9,90,000/ and one for Rs.9,0,5000/ all dated 25.03.96 in favour of M/s Concord Leather and payable at Madras NBO. All the four DDs are already exhibited as Ex. X12/1 to 4.
He has further deposed that:
"On 25.03.1996 four DDs amounting to Rs.38.75 lacs was issued in favour of M/s Concord Leather payable at Madras which DDs were personally handed over to Sh. S.P.Singh, the representative of Saroj Kushwahah which is not the general practice, which in itself is wrong because it should have been sent directly at Madras office".
In this regard PW12 has deposed as follows:
"Against a demand of Rs.51.50 lacs to purchase leather, a demand draft of Rs.38.75 lacs only was issued in favour of M/s Concord Leathers Madras without obtaining the balance amount of Rs.13 lac from the borrower which should have been included in the draft amount. Moreover, the draft should have been sent to M/s Concord leather Madras directly by the bank but it was handed over to Mr. S.P. Singh in person thus flouting all banking norms and procedure which helped the miscreants to collect this draft in a newly open bogus account in the name of M/s Concord C C No.58/99 59/72 Leather at Madras. M/s Concord leather was a bogus and not existed firm which was floated by Mr J. Khan on behalf of M/s Kiran Leather International. Thus the relaxation/violation in norms by the Branch Official led in fraudulent diversion of fund and same resulted ultimate monetary loss to the bank for which the bank official including sanctioning official were responsible. Thus is clear that M/s Kiran Leather International had opened a bogus firm in the name of M/s Concord leather through Zulfikar Khan and thereby purchased leather based on forged and bogus document on paper only and issued a draft of Rs.38.75 lacs in favour of said fictitious firm. i.e. M/s Concord".
57. Interestingly enough, borrower in her loan application Ex. P7/1 to 17 ( D12) at page no. 7 against Sr. No. 12.9 with regard to raw material/component has specifically mentioned as follows:
"Leather easily available in indegenious market"
meaning thereby that leather is available in the local market easily still accused P P Arora and R B gupta had issued four DDs referred above in sum of Rs. 38.75 lacs for purchasing leather from M/s Concord Leather Madras without verifying the genuity/existence of C C No.58/99 60/72 M/s Concord Leather Madras and handed over the drafts to S P Singh without bothering for sending the same to the alleged firm directly. Over Kindness and generosity on the part of P P Arora and R B Gupta is also apparent from the fact that borrower had requested the bank to issue drafts in sum of Rs.38 lacs only but benevolently P P Arora and R B Gupta graciously issued 4 drafts in sum of Rs.38.75 lacs.
58. The four drafts for a total amount of Rs. 38,75,00/ were issued by accused PP Arora in one go to an out side supplier without obtaining any financial report about the past credential of the supplier and without obtaining any banker report with regard to his credit worthiness in order to ascertain whether M/s Concord Leather was a genuine /reputed supplier of leather in bulk and worthy of being delivering drafts of Rs. 38,75,000/. All the four drafts were handed over to S P Singh on 25.3.96.
In this regard, PW11 Jagjeet Singh has deposed as follows:
"Four demand drafts totaling to Res.38.75 lacs were issued in favour of M/s Concord Leathers and the same were handed over to one Sh. S. P. Singh as far as I remember who was reported to C C No.58/99 61/72 be the Manager of the firm M/s Concord Leathers. I have seen D27, i.e. four DDs, three each for an amount of Rs.9,90,000/ and one for Rs.9,0,5000/ all dated 25.03.96 in favour of M/s Concord Leather and payable at Madras NBO. All the four DDs are already exhibited as Ex. X12/1 to 4".
59. According to general rule and banking practice, drafts should have been sent directly to the party. In this regard, PW11 Jagjeet Arora has deposed as follows:
"According to general rule and practice of the bank, drafts are to be sent direct to the parties on the given address. As the main purpose of bank is safety, liquidity, security and purpose of advance and utmost care is taken in such cases, hence the Dds should not be given personally to the parties. In the banking rules it is mentioned that drafts should be sent directly to the parties. It is incorrect that there is no such rule".
60. One J Khan on 26.3.96 had moved application Ex PW4/I(D29) in the name of M/s Concord Leather as its proprietor 67/4, Wuthucattan Street , Periamate, Madras to the Manager, OBC, Mount Road Branch, Madras which was allowed on the introduction C C No.58/99 62/72 of A Muneer Account No. 1729. In this way account No. 2811 was opened on 26.3.96 in the name of M/s Concord Leathers by its alleged proprietor J Khan. In this regard PW9 V N Suryanarayanan has deposed as follows:
" I was working as Chief Manager in OBC Mumbai in the year 1996. I have seen Ex PW4/I, this is an account opening form with respect to account No. 2811 of M/s Concorde Leather . This account was opned in our bank I identify the signatures of Sh Kiran Karnad who was the authorized signatory to open the account in our bank".
61. Two DDs out of the above referred four DDs were deposited in the CA account no. 2811 in the name of M/s Concord Leather on 28.3.96, one DD was deposited on 30.03.96 and one DD was deposited on 03.04.96 as per statement of account Ex. PW3/A after opening this account on 26/03/96.
62. It is strange enough that borrower had obtained above referred four Dds on 25/03/96 in the name of M/s Concord Leathers while the current account no. 2811 in the name of M/s Concord Leathers was opened on 26/03/96.
C C No.58/99 63/72
63. Mr. J. Khan alleged proprietor of M/s Concord Leather had withdrawn an amount of Rs.3,50,000/ in cash by issuing self cheque Ex. PW22/C( D34) dated 29.03.96 and received the amount himself after signing on the back of this cheque. He had withdrawn another amount of Rs.3,50,000/ in cash by issuing self cheque Ex. PW4/A(D34) dated 04.04.96 and received the amount himself after signing on the back of this cheque. He had withdrawn an amount of Rs.3,50,000/ in cash by issuing self cheque (D34)dated 30.03.96 and received the amount himself after signing on the back of this cheque, as reflected in the statement of account. He had withdrawn an amount of Rs.3,50,000/ in cash by issuing self cheque (D34)dated 03.04.96 and received the amount himself after signing on the back of this cheque, as reflected in the statement of account. He had issued one cheque for an amount of Rs.44,572/ in favour of one Sh. Janki Raman(D34)dated 04.04.96. He had withdrawn an amount of Rs.3,50,000/ in cash by issuing self cheque (D34)dated 06.04.96 and received the amount himself after signing on the back of this cheque. He had withdrawn an amount of Rs.50,000/ in cash by issuing self cheque (D34)dated 08.04.96 and received the amount himself after signing on the back of this cheque. J Khan the alleged C C No.58/99 64/72 proprietor of M/s Concord leather had issued cheque Ex. PW4/E dated 09/04/1996 in sum of Rs. 20 lacs in the name of Surinder Puran Singh which was deposited by Surinder Puran Singh( S. P. Singh) in his account in Citi Bank, Delhi.
In this regard, PW4 Mohd. Jamirul Hussain has deposed as follows:
" I have seen D34 cheque dated 09.04.96, it was issued by J. Khan for an amount of Rs.20,00000/ in favour of Surinder Puran Singh. This cheque was presented to our bank through clearing by Citi Bank. This cheque is Ex. PW4/E. The Code No. of our bank is at the back side of this cheque and the same is encircled in red Code No. 600".
64. Ultimately, Mr. J. Khan as proprietor of M/s Concord Leather had closed CA A/c No. 2811 on 15/04/96. He had issued authority letter dated 08/05/96 in favour of S.P. Singh directing the Branch Manager, OBC, Mount Road, Madras to allow him to collect the balance amount pending in this account, which is Ex. PW4/H. Accordingly, payment of Rs.35,350/was made to S.P. Singh vide pay order 066134/582/96.
C C No.58/99 65/72
In this regard, PW4 Mohd. Jamirul Hussain has deposed as follows:
" I have seen D35 this is a transfer voucher dated 15.04.96, it bears my signatures at point A. The same is Ex. PW4/F. This transfer voucher for an amount of Rs.35,403/ vide this a pay order dated 15.04.96 ( D33) was made pay order for an amount of Rs.35,350/ the pay orders bears my signatures at point A and the same is Ex. PW4/G. I have seen authority letter dated 08.05.96, it bears the initial of dealing clerk at point A. Vide this authority letter, pay order No. 066134/182/96 was handed over to Surinder Puran Singh who appears to have received pay order as per Ex. PW4/H. The cheque leaves from No. 138235 to 138250 were received by me and the same were destroyed.
I have seen D29 this is a account opening form bearing No. 2811 of Concord Leathers. The same was closed by me and same is Ex. PW4/1, the endorsement to that effect is encircled in red. I have seen D30 this is a specimen signatures card, it bears my signatures at point A and it also b ears the endorsement encircled in red, the specimen card is Ex. PW4/J". C C No.58/99 66/72
65. Mr. J. Khan had also executed a General Power of Attorney in favour of S. P. Singh R/o A12, Krishna Park, Devli Road, Khanpur, New Delhi62 authorizing him to operate bank account etc. and to perform all other functions on his behalf, photocopy of which is Ex. PW22/A. Accused Saroj Kushwaha is one of the attesting witness of this GPA which proves that actually J Khan, S P Singh and Saroj Kushwaha were acting in connivance and conspiracy to siphon off the PCL amount of Rs. 38.75 lacs through the current account no. 2811 opened in the name of M/s Concord Leathers by J.Khan. With regard to GPA PW22 Sh. Kiran Karnad has deposed as follows:
"Today I have seen D31 which is GPA, the same also contains photograph of Sh. J. Khan and impression of stamp for M/s Concord Leather along with signature of Sh. J. Khan on both the pages, the GPA is Ex. PW22/A. This power of attorney contains authorization to one Surender Pal Singh S/o Puran Singh for the operation of bank up to some extent. As far as I remember Mr. J. Khan used to come to over bank accompanying Sh. Surender Pal Singh whose photograph is on GPA Ex. PW22/A". C C No.58/99 67/72
66. CA A/c No. 2811 in the name of M/s Concord Leathers was opened on 26/03/96 and closed on 15/04/96 after withdrawing the entire amount of four drafts of PCL of Rs.38.75 lacs. There was no other transaction except the transactions relating to transfer/ withdrawal of the above referred PCL amount. Actually, M/s Concord Leather was a dummy firm floated just to siphon off the PCL amount by the accused in connivance and conspiracy with each other, which is clear from the fact that it was not even existing on the given address. In this regard, PW5 has deposed as follows:
"During the year 1999 a registered envelop addressed to Proprietor J Khan of M/s Concord Leathers was sent for delivery from Park Town Head Post Office ChennaiIII. This letter was not delivered adn the same was returned back with an endorsement by Sh. M. Ramalingam postman " not known".
67. Had the firm M/s concord Leather was existing on the given address, the above referred registered letter would not be returned back with the endorsement " not known" by the postman C C No.58/99 68/72 concerned.
68. According to borrower finished goods were dispatched to Bombay through road on 25/08/96 vide GR No. 001497 dated 25.08.96 of M/s Sumeet Road Carriers, by Road through Mini Tata 709, No. MH31 M7915. FIR No. 194/96 dated 26/08/96 was lodged with the Bhim Police Station U/s 279/427 IPC. It is also mentioned in the FIR that the leather garment packet weighing approximately 1.5 MT have been burned to ashes. But in the G.R. Weight of goods is mentioned as 4.5 M.T. On 12.09.96 borrower had informed the bank vide a letter about the destruction of these goods on 26/08/96 in a fire accident of truck carrying the goods. This information was received in the branch on 14/09/96. M/s Kiran Leather International had lodged a fire accident claim with the Oriental Insurance Company claiming the damages because of burning of finished goods in sum of Rs.86,34,000/. Oriental Insurance Company had assigned the investigation of the claim to M/s R. L. Aggarwal & Sons.
69. After the investigation police filed chargesheet U/s 279 IPC r/w Section 184 M.V. Act before the court of concerned Judicial C C No.58/99 69/72 Magistrate, who had closed the case after imposing the fine.
70. Prosecution has produced PW24 Rati Ram, owner of the Sumeet Road Carrier, who has stated that format of GR No. 14.97 pertaining to M/s Kiran Leather International belongs to his company but the information mentioned in the same does not belong to his company. It was neither filled by him nor any person of his company. His statement in this regard is as under:
"I was the owner of M/s Sumeet Road Carrier whose office was situated at Ganga Complex, Sona Adda, Jail Raoad, Gurgaon. Office of this company was on rent. I closed my said business in the year 2005 and before that I did my business near about 10 years. In this set up I was having one truck and 10 to 12 other trucks were also attached with some other persons which were used for carrying the load on commission basis. Through this transport business I used to carry the loads locally in Haryana as well as outside Haryana as per request of the parties".
"Today I have seen GR No. 1497 pertaining to claim No.21/97/00004POL. No.21/97/0038 I on account of M/s Kiran Leather International. I state that the format belongs to our C C No.58/99 70/72 company M/s Sumeet Road Carrier, however, the contents/information filled in thsi performa does not belong to our company. Neither it is filled in by me nor it is filled in by any person of our company. Moreover, truck No. MH31097915 does not belong to our company. It does not bears signatures or seal of our company. We have not sent any packages of leather garments mentioned in this GR to Mumbai. The receipt is Ex. PW24/A".
Today I have seen copy of booking register maintained in daily course of business the same is Ex. PW24/B which bears my signatures at point A vide which one entry at point A shows that on 24.08.96 one Haryana registered vehicle No. 4750 left Bombay from Merrut, the entry is at point A and is in my hand. My statement was recorded".
In his crossexamination he has deposed that:
"It is correct for format of the billty is from our original billty book and signatures are forged and it was filled in some somebody's else writing. It is correct that we used to hire vehicle from outside. It is correct that my clerk also used filled up GR at the site from where the consignment was taken. It is C C No.58/99 71/72 wrong to suggest that the GR was filled by our clerk at the place from where the consignment was lifted for transportation. It is wrong to suggest that I am deposing falsely at the instance of CBI".
71. As discussed above, actually M/s Concord Leather was a nonexistence firm floated with the object to siphon of the PCL amount by the accused in connivance and conspiracy with each other. CA A/c No. 2811 in the name of M/s Concord Leathers was opened on 26/03/96 and closed on 15/04/96 after withdrawing the entire amount of four drafts of PCL of Rs.38.75 lacs. There was no other transaction except the transactions relating to transfer/ withdrawal of the above referred PCL amount. Actually, this firm had not supplied any raw material to M/s Kiran Leather, thus there was no mean for M/s Kiran Leather to manufacture the finished goods and sent the same to Bombay by road as claimed by it in the fire insurance claim. In this regard, PW16 Sh. Jacob John has deposed as follows:
"During the period 1996, I was working as Asstt. General Manager in the Head Ofice of Oriental Insurance Company Ltd. New Delhi.Today I have seen survey and investigation report of Marina Claim issue under cover note 0128613 dated 26.7.96 favouring M/s Kiran Leather International A12, Krishna Park, Deoli Road, Khanpur, New Delhi already Ex PW6/B. This survey C C No.58/99 72/72 investigation report was prepared by M/s R L Aggarwal & Sons. Ex PW6/B contains the photocopy of cover note 0128613 dated 26.7.96 issued by one of ours officer at Delhi under the seal of RL Aggarwal at point A on each page which I identify as the same was affixed in the normal course of business. The same is Ex PW16/A(Objected to). On receipt of survey report Ex PW6/B the same was examined by the department and finally it was received by me and after examination certain shortcomings were found by the department and on the basis of their recommendation I have recommended for repudiation of claim to my higher authority. Further stated the transporter pertaining to the said claim was not carrying the subject matter of the insurance hence the claim was not payable under the marine policy. The insured was unable to produced any documents in support of his claim."
In his cross examination he has deposed as follows:
" On the basis of FIR of the police I reached to conclusion that vehicle was not carrying consignment and only the vehicle was burnt. Now orally I do not remember where the incident had taken place. I have no idea if the goods were stolen or taken up by the villagers. As they were not having raw material to C C No.58/99 73/72 prepare the garments for exports and we concluded that it was a fraudulent claim. No preinsurance survey was conducted since that is not the practice. Premium was charged for the policy on the basis of declaration made by the parties as it was not charged on the basis of pre insurance survey report. It is wrong to suggest that pre shipment survey was conducted in the factory and extra survey fees was paid to the surveyor who had inspected the goods and mentioned the details of the goods. It is incorrect to suggest that I am deposing falsely".
72. In view of above discussion, this court is of opinion that actually no finished goods were dispatched by M/s Kiran leather International to Bombay as M/s Kiran Leather had not received any raw material from M/s Concord Leather, but it was a story concocted for the sake of dishonestly/falsely claiming amount from the Oriental Insurance Company in the garb of fire accident claim.
73. Conspiracy consists in a combination or agreement between two or more person to do an unlawful act or to do a lawful act by unlawful means. A conspiracy is an inference drawn from the circumstances. There cannot always be much direct evidence about it. Conspiracy can be inferred even from the circumstances giving C C No.58/99 74/72 rise to a conclusive or irresistible inference of an agreement between two or more persons to commit an offence. Since Conspiracy is often hatched up in utmost secrecy, it is most impossible to prove conspiracy by direct evidence. It has to be inferred from the acts, statements and conduct of parties to the conspiracy. Thus, if it is proved that the accused pursued, by their acts, the same object often by the same means, one performing one part of the act and the other another part of the same act so as to complete it with a view to attainment of the object which they were pursuing, the court is at liberty to draw the inference that they conspired together to effect that object. Conspiracy has to be treated as a continuing offence and whosoever is a party to the conspiracy, during the period for which he is charged, is liable under this section.
74. It is not an ingredient of the offence under this section that all the parties should agree to do a single illegal act. It may comprise the commission of a number of acts. The entire agreement must be viewed as a whole and it has to be ascertain as to what in fact the conspirators intended to do or the object they want to achieve. It is not necessary that each member of conspiracy must know each other or all the details of the conspiracy. It is also not necessary that every conspirator must have taken place in each and every act done in pursuance of a conspiracy.
75. Though to establish the charge of conspiracy there must be agreement, there need not be proof of direct meeting or combination , nor need the parties be brought into each other's presence; the agreement may be inferred from the circumstances raising presumption of a common concerted plan to carry out the C C No.58/99 75/72 unlawful design. Conspiracy need not be established by proof which actually brings the party together; but may be shown like any other fact, by circumstantial evidence. So again it is not necessary that all should have joined in the scheme from the first point; those who come in at a later stage are equally guilty.
76. Conspiracy hatched in secrecy and executed in darkness. In a case of conspiracy, it is not expected from the prosecution that it will produce evidence to show that conspirators executed agreement to commit crime before the witnesses to prove the existence of conspiracy. Conspirators take all precautions to keep their plan secret hence prosecution cannot produce direct evidence to prove agreement to commit conspiracy.
77. In Kher Singh Vs State AIR 1988 SC 1883 it is observed as follows:
" Generally, a conspiracy is hatched in secrecy and it may be difficult to adduce direct evidence of the same. The prosecution will often rely on th evidence of acts of various parties to infer that they were done in reference to their common intention. The prosecution will also more often rely upon the circumstantial evidence. The conspiracy can be undoubtedly proved by such evidence direct or circumstantial. But the Court must require whether the two persons are independently pursuing the same end or they have come together to the pursuit of the unlawful object. C C No.58/99 76/72 The former does not render them conspirators, but the later does. It is however, essential that the offence of conspiracy required some kind of physical manifestation or agreement the express agreement however need not be proved. Nor mutual meetings of the two persons is necessary. Nor it is necessary to prove the actual words of communication. The evidence as to transmission of thoughts sharing the unlawful design may be sufficient. Conspiracy can be proved by circumstances and other material."
78. In a case of criminal conspiracy any evidence available against any of the accused is admissible against all the accused. Once a conspiracy is proved among the accused, act of one conspirator become act of all other conspirators also. In this regard Ld. SPP placed reliance on Shiv Narain Laxmi Narain Joshi Vs State of Maharashtra, (1980 ) 2 Supreme Court Cases 465 has held as follows:
" Penal Code, 1860 Section 120B - Since it is impossible to adduce direct evidence of conspiracy, the offence can only be proved largely from the inference drawn from acts or illegal omissions committed by the conspirators in pursuance of a common design Once such a conspiracy is proved, act of one conspirator becomes act of the other A coconspirator, who joins subsequently and commits overt acts in furtherance of the conspiracy, held is also liable Evidence Act, 1987 Section 10."
79. Hon'ble Supreme Court in Firozuddin Basheeruddin & Ors. Vs. State of Kerala, (2001) 7 Supreme Court Cases 596 has held C C No.58/99 77/72 as follows:
"Conspiracy is not only a substantive crime but on the basis of it a conspirator can also be held liable for the crimes committed by conspirators in furtherance of the objectives of the conspiracy Conspiracy can be established on the basis circumstances evidence As regards admissibility of evidence strict standards are not necessary inasmuch as any declaration made by a conspirator in furtherance of and during pendency of a conspiracy though hearsay, is admissible against each co conspirator On facts held, Supreme Court's interference with concurrent finding that criminal conspiracy proved and on the basis offence of murder also made out not called for."
80. Hon'ble Supreme Court in Ram Naryan Popli Vs. CBI AIR 2003, SC 2748 has held as follows:
"The essential ingredient of the offence of criminal conspiracy is the agreement to commit an offence. In a case where the agreement is for accomplishment of an act which by itself constitutes an offence, then in that event no overt act is necessary to be proved by the prosecution because in such a situation, criminal C C No.58/99 78/72 conspiracy is established by proving such an agreement. Where the conspiracy alleged is with regard to commission of a serious crime of the nature as contemplated in Section 120B read with the proviso to sub Section (2) of Section 120A, then in that event mere proof of an agreement between the accused for commission of such a crime alone is enough to bring about a conviction under Section 120B and the proof of any overt act by the accused or by any one of them would not be necessary."
81. Hon'ble Supreme Court in P K Narayan Vs. State of Kerala, All India Criminal Law Reporter 1994 (3) 785, has held as follows:
"Penal Code, 1860, Section 120B Evidence Act, 1872, Section 3 - Criminal Conspiracy Essence of Criminal conspiracy - It is an agreement to do an illegal act - Agreement can be proved either by direct evidence or by circumstantial evidence or by both
- Complicity of the accused - Circumstances proved before, during and after the occurrence required to be considered to decide about the complicity of the accused But if the circumstances are compatible with the innocence of the accused C C No.58/99 79/72 persons then it could not be held that the prosecution had successfully established its case."
82. Hon'ble Supreme Court in S. Swamirathnam, Appellant Vs. State of Madras, Respondent, (s) AIR 1957 S.C. 340 in this regard has held as follows:
"If a specific instance of cheating was proved beyond doubt against any of the accused that would furnish the best corroboration of the offence of conspiracy because conspiracy was the root and the specific instances were the fruit."
83. Agreement to do an illegal act can be proved either by direct evidence or by substantial evidence. Circumstances proved before, during and after the occurrence is to be considered to decide about the complicity of the accused in the criminal conspiracy. In this case meeting of mind between accused P P Arora, R B Gupta, Saroj Kushwaha can be inferred from the above discussion in this judgment raising presumption of a common concerted plan to carry out the unlawful design of committing the criminal conspiracy.
C C No.58/99 80/72
84. I have carefully gone through all the authorities relied upon by Ld. Defence Counsel for accused R B Gupta. There is no dispute with regard to ratio of law laid down in these authorities. However, in every authority ratio of law laid down according to the peculiar facts and circumstances of that case. From the above discussions in this judgment, it is clear that facts and circumstances of this case are different, in these circumstances ration of law laid down in these authorities are not applicable in the facts and circumstances of this case.
85. It is correct that prosecution has not produced any evidence to prove that accused R B Gupta and P P Arora had themselves obtained any valuable thing or pecuniary advantage. But U/s 13 (1) (d) obtaining valuable thing or pecuniary advantage for himself is not the necessary ingredient. Obtaining any valuable thing or pecuniary advantage for any other person also constitute an offence defined U/s 13 (1) (d) of PC Act, 1988, which is clear from the language of Section itself which is as under:
" If he ,
(i) by corrupt of illegal means, obtains for himself or for C C No.58/99 81/72 any other person any valuable thing or pecuniary advantage; or
86. In this case from the above discussion it is proved beyond reasonable doubt that accused P P Arora and R B Gupta by abusing their official position as public servant had obtained pecuniary advantage in favour of their coaccused Saroj Kushwaha, S. P. Singh and J Khan.
87. In view of above discussion it is proved beyond reasonable doubt from the evidence produced by the prosecution that accused P P Arora, who was then working as Branch Manager and accused R B Gupta who was the then working as Asstt. Branch Manager (Loan) in Central Bank of India , as public servants, abused their official position, in connivance and conspiracy with their coaccused Saroj Kushwaha, S.P. Singh and J . Khan for granting PCL in sum of Rs. 50 lac to M/s Kiran Leather International and siphoning off the same through the account opened in the name of M/s Concord Leathers. Therefore, I hold accused P P Arora, R B Gupta, Saroj Kushwaha guilty for the offences punishable U/s 120B C C No.58/99 82/72 r/w Sec. 420/471 and 511 r/w Section 420 IPC & U/s 13 (2) r/w Sec. 13 (1) (d) of P C Act, 1988.
88. In view of above discussion, I also hold guilty accused P P Arora, R B Gupta for the commission of substantive offence punishable U/s 13 (2) r/w Sec. 13 (1) (d) of P C Act, 1988 and accused Saroj Kushwaha for the commission of substantive offences punishable under Section 420,471,511 r/w Section 420 IPC.
Ordered accordingly.
Announced in open court ( V K MAHESHWARI ) Dt. 20th October,2012. SPECIAL JUDGE: DELHI C C No.58/99 83/72 IN THE COURT OF SH. V K MAHESHWARI :SPECIAL JUDGE; TIS HAZARI: DELHI C C No. 58/99 R.C No. 1(E)/98//EOW1/New Delhi CBI Vs Saroj Kushwaha & Ors ORDER ON SENTENCE: Vide my detailed judgment dated 20.10.2012 I held guilty accused P P Arora, R B Gupta, Saroj Kushwaha for the
offences punishable U/s 120B r/w Sec. 420/471 and 511 r/w Section 420 IPC & U/s 13 (2) r/w Sec. 13 (1) (d) of P C Act, 1988. I also held guilty accused P P Arora, R B Gupta for the commission of substantive offence punishable U/s 13 (2) r/w Sec. 13 (1) (d) of P C Act, 1988 and accused Saroj Kushwaha for the commission of substantive offences punishable under Section 420,471,511 r/w Section 420 IPC.
Arguments on sentence heard.
C C No.58/99 84/72 It is argued on behalf of convict Saroj Kushwaha that she is 53 years old and suffering from complicated Renal Functions and has been diagnosed having a large size of cyst upon her kidney and has to undergo a major surgery. Her father is a diabetic patients, she has to take care of him. She remain in custody for six months. She is not a previous convict . She has deep roots in the society. It is prayed that a lenient view may be taken against her.
It is argued on behalf of convict P P Arora that he is 67 years of age and suffering from Hyper Tension and Transit Ischemic Attack memory loss . His wife is also 62 years old and suffering from various diseases like High Blood Pressure, diabetes, migraine and isolation. He has three children, all of them are married. His son is posted abroad as such there is no one to look after him and his wife. He has not gained any pecuniary advantage. He has roots in society . It is prayed that a lenient view may be taken against him.
It is argued on behalf of convict Ram Bhagat Gupta that C C No.58/99 85/72 he is senior citizen . He is a patient of hypertension and diabetes . It is prayed that a lenient view may be taken against him.
It is argued by Ld Sr PP Sh Brajesh Shukla for CBI that keeping in view the deterrent theory of punishment a strict view may be taken against the convicts. Convicts have committed serious economic offence, no leniency be shown to them. They may be awarded maximum imprisonment as per law and consecutive sentence .
Entire money involved in this case was transferred / encahsed either under the signature or on the directions of convict Saroj Kushwaha. As per judicial record convict Saroj Kushwaha was arrested on 8.5.2004 and released on bail on 23.9.2004 Thus she remained in judicial custody for four months and 15 days..
I have carefully considered all the arguments raised before me and have gone through the record. After considering all the facts and circumstances of this case, and arguments raised in the C C No.58/99 86/72 Court , I consider it proper to award Three years RI each along with a fine of Rs. 10,000/ each ( Ten Thousand Only), I D three months S I each U/s 120B, r/w 420/471 and 511 r/w Section 420 IPC and Section 13 (2) r/w Sec. 13 (1) (d) of P C Act 1988 to convicts P P Arora, R B Gupta and Saroj Kushwaha .
Convicts P P Arora and R B Gupta are also awarded Three Years RI along with a fine of Rs.30,000/ (Rs Thirty Thousand only) each I D three months S I for the substantive offence punishable u/s 13 (2) r/w Sec. 13 (1) (d) of P C Act 1988 Convict Saroj Kushwaha is also awarded three years RI along with a fine of Rs. 10, 000/ ( Rs. Ten Thousand Only) I D three months S I for the substantive offence punishable u/s 420 IPC.
Convict Saroj Kushwaha is also awarded three years RI along with a fine of Rs. 10, 000/ ( Rs. Ten Thousand Only) I D three months S I for the substantive offence punishable u/s 471 IPC.
She is further awarded three years RI along with a fine of Rs. C C No.58/99 87/72 10, 000/ ( Rs. Ten Thousand Only) I D three months S I for the substantive offence punishable u/s 511 r/w Section 420 IPC.
All the sentences shall run concurrently. Benefit of Section 428 Cr P C is also given to all the convicts. A copy of judgment and this order on sentence be given to convicts free of costs. Ordered accordingly.
ANNOUNCED IN OPEN COURT (V K MAHESHWARI)
TODAY ON 31.10.2012 SPECIAL JUDGE: DELHI
C C No.58/99 88/72