Delhi District Court
State Through Cbi vs Suchi Dhir & Others on 23 July, 2015
State through CBI v/s Suchi Dhir & others
IN THE COURT OF SH. PAWAN KUMAR JAIN,
SPECIAL JUDGE, CBI-01, NORTH-WEST DISTRICT,
ROHINI COURTS COMPLEX, DELHI
IN THE MATTER OF:
CBI No. 21/2009
ID No. : 02404R0509762002
FIR No. RC-1(E)/2000/EOW-I/CBI/New Delhi
U/Sec: 120B r/w 420/467/468/471 IPC
13(2) r/w 13(1)(d) of PC Act 1988
Police Station: EOW-I/CBI/New Delhi
STATE
THROUGH
CENTRAL BUREAU OF INVESTIGATION,
NEW DELHI
VERUS
1. SMT. SUCHI DHIR
W/o Sh. Mahesh Dhir,
Proprietor of M/s Yatin Prints
CBI No. 21/09 Page 1 of 135
State through CBI v/s Suchi Dhir & others
R/o B-16/6,
Krishna Nagar, Delhi.
(Proclaimed offender vide order dated 12.7.2004)
..........Accused No. 1
2. Mr. MAHESH DHIR
S/o Sh. Sudershan Dhir
B-16/6, Krishna Nagar, Delhi.
(Proclaimed offender vide order dated 12.7.2004)
..........Accused No. 2
3. Mr. H. K. SAWHNEY
S/o Late Sh. Bishan Das Sawhney
R/o K-119, Old Gupta Colony,
New Delhi.
..........Accused No. 3
4. Mr. H.S. ARORA
Sh. Sardar Joginder Singh
R/o 24/20 Shakti Nagar,
New Delhi.
(proceedings abated vide order dated 6.10.2009)
..........Accused No. 4
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State through CBI v/s Suchi Dhir & others
5. MR. H. SURENDRA SHETTY, the then AGM
S/o Late Sh. Sanjeeva Shetty
R/o 1061, Vijaya Bank Layout,
Bannerghat, Banglore-79.
..........Accused No. 5
6. MR. K. VASANT KUMAR SHETTY
Chief Manager,
S/o Late K. Krishna Shetty
R/o Narayani, Ist Floor, 26,
Ram Krishan Pillai Layout,
2nd cross Geddahalli,
Sanjay Nagar, Banglore-94
..........Accused No. 6
7. MR. H. BALAKRISHNA SHETTY
Sr. Manager
S/o Sh Govinda Shetty,
R/o 605, B-Wing, National Park,
View-I, Raheja Estate,
Kulupuwadi, Borivalli East,
Mumbai.
.......Accused No. 7
Date of Institution : 01.04.2009
Date of judgement reserved on : 06.07.2015
Date of pronouncement of judgement : 23.07.2015
CBI No. 21/09 Page 3 of 135
State through CBI v/s Suchi Dhir & others
Appearance:Ms. Shashi Vishwakarma, Public
Prosecutor for CBI
Sh. Neeraj Jain & Sh. Anupam Mishra,
Advocates, counsel for A3
Sh. P. K. Sharma, Advocate, counsel for
A5
Sh. Mukul Sharma, Advocate, counsel for
A6 & A7
J U D G E M E N T:-
1. Briefly stated facts of prosecution case are as under:-
(i) That on December 27, 1999 Mr. B. R. Chandrasekhar, Chief Vigilance Officer of Vijaya Bank, Bangalore had made a written complaint to CBI alleging that M/s Yatin Prints (in short Party) through its proprietrix Mrs. Shuchi Dhir (A1) approached the bank at Barakhamaba Road branch, New Delhi on February 12, 1997 and got opened a current account bearing No. 5947. The account was introduced by Mr. H. K. Sawhney (A3), one of the directors of M/s Kunal Travels (P) Ltd.
(ii) That on February 28, 1997 Party through A1 applied for an Open Loan Cash Credit (OLCC) limit of ` 50 lac. It was alleged that though the loan proposal was non-viable and deficient in many ways, yet officers of the branch recommended the proposal for sanction on March 19, 1997 and Chief Manager (A6) sanctioned the CBI No. 21/09 Page 4 of 135 State through CBI v/s Suchi Dhir & others OLCC limit of ` 20 lac on the security of stock in trade of paper and printing materials, book debts and equitable mortgage, by depositing the title deeds of landed property situated at village Saibabad Daultpur, Delhi bearing Khasra No. 216, 217 and 201 having value of ` 43.32 lac owned by Mr. Satish Kumar, one of the guarantors. The above sanction limit was also guaranteed by Mr. Mahesh Dhir (A2), husband of A1.
(iii) It was alleged that while perusing the sanction, AGM of the branch Mr. H. Surendra Shetty (A5) waived the sanction condition as to the production of audited Balance-sheet as on March 31, 1997 before releasing the limit, thereby facilitated immediate release of the OLCC limit.
(iv) It was alleged that entire loan amount of ` 20 lac was withdrawn by the Party within two days of the release of the limit.
The credit routed through the account aggregating ` 21.75 lac were in the nature of adjustment entries. It was alleged that apart from this, genuine transactions were negligible in the OLCC limit account.
(v) It was alleged that after availing the OLCC limit, Party approached the said branch on March 21, 1997 and again on April 4, 1997 for enhancement of the OLCC limit but it was declined. It was further alleged that when Party realised that the branch was not favouring it, borrower approached the Zonal Office of the Bank for seeking enhancement of OLCC limit. Thereafter, on April 26, 1997 an adhoc OLCC limit to the tune of ` 5 lac was sanctioned by the branch as per the instructions of Zonal Office, New Delhi.
CBI No. 21/09 Page 5 of 135State through CBI v/s Suchi Dhir & others
(vi) It was alleged that though Party was not having export code number since November 18, 1993, no export business was undertaken by the Party. It was alleged that Party vide its application dated June 9, 1997 applied for Packing Credit Limit (in short PCL) of ` 300 lac for executing an export order for garments valued US $ 11 lac backed by Letter of Credit from Bank of America, San Francisco (USA). It was alleged that AGM (A5) sanctioned the PCL on June 9, 1997, the following credit limits on the securities stated there against:-
Sl. Name Limit (Amount) Security
No.
1. Packing Credit ` 50 lakhs Hypothecation of raw
materials, finished/semi-
finished stock of garments.
2. Foreign ` 50 lakhs a) Export bills accompanied
documentary bill by documents evidencing
purchase/foreign export of goods.
usance
documentary bill b) 5% cut back from each
purchase. and every export bill.
(vii) It was alleged that both the above limits were
collaterally secured by equitable mortgage by depositing the title deeds of landed property situated at Plot No. 7 & 8, Shyama Prasad Mukherjee Park Area, village Chaukhandi, Delhi owned by Mr. Wazir CBI No. 21/09 Page 6 of 135 State through CBI v/s Suchi Dhir & others Singh and the said property was valued at ` 60.04 lac and property situated at Kheyat No. 248, Khata no. 363, Khila No. 45, village Kundli Sonipat, Haryana owned by Mrs. Madhu Jain and the said property was valued at ` 37.50 lac. It was alleged that above both the limits were guaranteed by Mr. H. K. Sawhney (A3), Mr. Mahesh Dhir (A2), Mr. Wazir Singh and Mrs. Madhu Jain.
(viii) It was further alleged that on August 26, 1997 Party again approached the DGM Office, Delhi for sanction and release of an additional PCL of ` 15 lac. DGM, Zonal Office, Delhi orally permitted the branch to sanction and release an additional PCL of ` 15 lac. Accordingly, on August 26, 1997 branch had sanctioned and released an additional PCL of ` 15 lac to the Party, which was ratified/confirmed by Zonal Office vide its letter dated October 6, 1997. Accordingly, PCL was enhanced from ` 50 lac to ` 65 lac.
(ix) It was further alleged that thereafter, Party again approached the branch and applied for additional PCL for ` 50 lac each on September 11, 1997 and September 29, 1997 but the request was not considered by the branch because of certain irregularities found in the account.
(x) It was further alleged that PCL availed by the Party was not fully adjusted by purchase of export bills (FDBP) i.e. export proceeds as per the rules of the bank, consequently, PCL with the balance outstanding of ` 49.77 lac had become overdue which was subsequently adjusted from the bill tendered on February 2, 1998.
CBI No. 21/09 Page 7 of 135State through CBI v/s Suchi Dhir & others
(xi) It was further alleged that two export bills aggregating ` 57.55 lac purchased under the limit were realized. One export bill for ` 34,26,072/- purchased on October 8, 1997 was returned unpaid on December 11, 1997. The returned export bill was outstanding under Advance Against Export Bills Receivable Account (AAEBR a/c). However, the remittance towards the returned export bill was received on January 28, 1998 and the outstanding liability under AAEBR account was liquidated.
(xii) It was further alleged that on February 2, 1998 Party had tendered an export bill for ` 89,17,538/- which was purchased by the branch after expiry of relevant LC and shipment date and the proceeds were adjusted as detailed below:-
a) Towards PCL a/c. ` 49,77,000.00
b) Towards Bank Charges ` 55,856.00
c) Towards Fixed Deposit a/c ` 38,84,682.00
--------------------------
Total ...... ` 89,17,538.00
--------------------------
Thus, PCL liability was liquidated.
(xiii) It was alleged that the above export bill was returned
unpaid on March 24, 1998, which was partly adjusted as under:-
CBI No. 21/09 Page 8 of 135State through CBI v/s Suchi Dhir & others
i) Balance o/s under Advance against Export Bills Receivable a/c.
(Returned Export Bill) ` 93,02,937.00
ii) Less amount transferred from fixed
deposit a/c ` 25,63,632.00
iii) Balance o/s under Advance against
Export Bills Receivable a/c. -------------------------
` 67,39,305.00
-----------------------
(xiv) It was further alleged that balance outstanding under
various credit limits sanctioned to the Party was as under:-
Sl. No. Nature of facility & limit Balance
1. OLCC Limit ` 20 lakhs ` 21,23,429.00
2. FDBP/(AAEBR a/c) ` 67,39,305.00
Total ` 88,62,734.00
(xv) It was further alleged that it had become difficult to
recover the said amount from the party and account had become Non Performing Asset (NPA).
(xvi) It was further alleged that Export Credit Guarantee Corporation (ECGC) of India had also rejected the bank's claim.CBI No. 21/09 Page 9 of 135
State through CBI v/s Suchi Dhir & others Accordingly, the title deeds deposited with the bank as security for the credit limits were subjected to re-examination by a different approved lawyer.
(xvii) It was alleged that re-examination of the title deeds revealed that the landed property bearing Khasra No. 216, 217, 201 situated in village Saibabad, Daultpur, Delhi owned by Mr. Satish Kumar had already been acquired by Govt. of Delhi vide award No. 1/98-99 dated April 24, 1998.
(xviii) It was further revealed that Khasra Girdawari and Khatoni produced by Mr. Satish Kumar were bogus documents. The said property was mortgaged to the Bank as security for the OLCC limit.
(xix) It was further revealed that Mrs. Madhu Jain had already sold the landed property i.e. Kheyat No. 248, Khata no. 363, Khila No. 45, village Kundli, Sonipat, Haryana on September 30, 1998, which was mortgaged to the bank on June 12, 1997, to Mr. Om Parkash in the sum of ` 1.03 lac against the valuation of ` 37.50 lac.
(xx) It was further alleged that Mrs. Madhu Jain had written a letter dated June 2, 1999 to the bank stating that the documents were handed over to Mr. H. K. Sawhney (A3) for legal scrutiny as he was interested in purchasing of the property and she never created any mortgage in favour of the bank and alleged that the mortgage, if created, may be by impersonation.
CBI No. 21/09 Page 10 of 135State through CBI v/s Suchi Dhir & others (xxi) It was further alleged that on February 12, 1998, one official of the bank from Zonal Office was deputed to inspect the third landed property, situated at plot no. 7 & 8 Shyama Prasad Mukherjhee Park Area, Village Chaukhand, Delhi owned by Mr. Wazir Singh and it was revealed that no such property was in existence.
(xxii) It was further alleged that the documents/title deeds in respect of all the three properties mortgaged to the bank were found bogus/fake.
(xxiii) It was further alleged that during investigation conducted by the bank, it was revealed that audited financial statements submitted by the Party were fabricated and bogus. It was further alleged that financial statements as on March 31, 1996 were certified/audited by M/s R. Khanna & Co., Jhansi Road, New Delhi whereas Financial statements as on March 31, 1998 was audited by M/s Ashok Kumar & Associates, Karol Bagh, New Delhi. But the name of both the firms did not appear in the "Topographical list of firms according to regions" published by the Institute of Chartered Accountants of India upto the year 1997. Even investigating official could not contact these firms of Auditors over telephone, accordingly, it was alleged that the aforesaid firms did not exist.
(xxiv) It was further alleged that borrower in collusion with the guarantors deposited defective/bogus/fabricated title deeds and produced fabricated/bogus financial statements with an intention to CBI No. 21/09 Page 11 of 135 State through CBI v/s Suchi Dhir & others defraud the bank.
(xxv) It was further alleged that the bank had also extended following credit limits to the sister/associate/group concerns of the Party:-
Sl. Name of the firm & Nature of Limit Balance No partners/directors facility (Amou outstanding nt)
1. Shakti Chit Funds (P) Ltd. Temporary NIL ` 90,863.50 No. 4436, Katra Rajju Overdrawings Paharganj, New Delhi, in Current Director: H. K. Sawhney A/C. and Mrs. Rani Basin.
2. Sawhney Trading Co. - do - NIL ` 23,46,262.90 partners : H. K. Sawhney & Khir Sagar Sawhney, No. 4386, Katra, Rajijee Paharganj, Delhi
3. Kunal Travels (P) Ltd. No. - do - NIL ` 24,49,963.43 409, Ansal Bhawan, No. 16, Kasturba Gandhi Marg, New Delhi.
Directors:
1) Manoj Sawhney
2) Shashi Bala Sawhney
3) K. S. Sawhney
4) Mrs. S. B. Sawhney Total ` 48,87,089.83 CBI No. 21/09 Page 12 of 135 State through CBI v/s Suchi Dhir & others (xxvi) It was alleged that all the above dues had become difficult to recover as account had already become Non-Performing Asset (NPA).
(xxvii) It was further alleged that A1 in collusion with the guarantors Mr. Satish Kumar, Mr. H. K. Sawhney (A3), Mr. Wazir Singh (A2), Mr. Mahesh Dhir and Mrs. Madhu Jain deposited fabricated/fake title deeds with an intention to defraud the bank. The total outstanding liability of the group of ` 137.50 lac was unsecured and likely to be financial loss to the Bank. It was further alleged that the above persons had committed offences of cheating, criminal breach of trust and misappropriation of the property belonging to the bank and the said persons had made wrongful gain to themselves and caused wrongful loss to the bank, thus, requested to register a case against them.
(xxviii) It was further alleged that bank investigation revealed certain lapses in sanction/monitoring of the account on the part of following officials at various levels:-
1. K.P.Hegde, DGM, ZO, Delhi
2. H. Surendra Shetty, AGM (A5)
3. M. Raviraj Shetty, AGM
4. K. Vasanth Kumar Shetty, CM (A6)
5. M. Prabhakar Rao, S.M
6. H. Balakrishna Shetty, S. M. (A7) CBI No. 21/09 Page 13 of 135 State through CBI v/s Suchi Dhir & others (xxix) On receipt of the above complaint, an FIR was registered by the CBI.
2. After completing investigation, chargesheet was filed for the offences punishable under Section 120B read with Section 420/467/468/471 of Indian Penal Code (in short IPC) and under Section 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988 (PC Act in short) against accused persons namely Mrs. Suchi Dhir, (A1), Mr. Mahesh Dhir (A2), Mr. H. K. Sawhney (A3), Mr. H. S. Arora (A4), H. S. Shetty (A5), K. V. Kumar Shetty (A6), H. Balakrishna Shetty (A7), Mr. M Prabhakar Rao, Mr. Shashidhar Hegde, and Mr. K. K. Khurana and for the substantive offences punishable under Section 420/471 IPC against A1 to A3 and substantive offences punishable under Section 13(2) read with Section 13(1)(d) of PC Act against A5, A6 and A7. It was alleged that qua Mr. M. Prabhakar Rao and Shashidhar Hedge, the competent authority of the bank had declined to give the sanction against them and matter had been referred to CVC. It was stated that supplementary chargesheet would be filed against them on receipt of sanction, accordingly, their name had been mentioned in column no. 2 in the chargesheet. It was further stated that no criminality was found against Mr. K. P. Hegde, the then DGM and Raviraj Shetty, the then AGM, accordingly, their name have been mentioned in column no. 2.
3. In brief findings arrived at by CBI during investigation are as under:-
CBI No. 21/09 Page 14 of 135State through CBI v/s Suchi Dhir & others QUA OPENING OF CURRENT ACCOUNT:-
(i) It was alleged that firstly the account of the party was introduced by Mr. H.S. Shetty, AGM and subsequently by Mr. H. K. Sawhney (A3). It was alleged that in order to destroy the evidence of his having affinity with the party, Mr. H. S. Shetty, AGM instructed A1 to furnish fresh account opening form and the same was put in the record of the bank, which was signed by A3 as introducer. In the second opening form, it was alleged that account was opened with the cash deposit of ` 1000/- whereas as per the first account opening form, account was opened with the cash of ` 5000/-. It was further alleged that this evidence shows that Mr. H. S. Shetty had an affinity with the Party since beginning and in order to conceal his link with A1, second account opening form was taken from the Party and it was inserted in the bank account.
(ii) It was alleged that during investigation, it was revealed that the loan application of the Party was entertained in the branch.
INVESTIGATION QUA OLCC LIMIT OF ` 20 LAKHS:-
(i) It was alleged that during investigation it was revealed that the loan application of the Party was entertained in the branch at the instruction of Mr. H.S. Shetty and Mr. S. K. Desai, Manager was directed to process the same. While processing the application on February 28, 1997, Mr. S. K. Desai had collected the legal security report dated September 28, 1996 from M/s K. K. Khurana & CBI No. 21/09 Page 15 of 135 State through CBI v/s Suchi Dhir & others Co. and valuation report dated September 30, 1996 from valuer Mr. Vijender Kumar in respect of the landed property furnished by the borrower and guarantor.
(ii) It was further alleged that during investigation, Mr. S. K. Desai explained that accused Mr. H. S. Shetty (A5) had put pressure on him to recommend the loan facility to the Party and due to that reason, he projected the Party for grant of loan facility of ` 20 lac, however, while recommending, Mr. S. K. Desai specifically wrote that OLCC limit of ` 9 lac may be released initially and remaining ` 11 lac may be released after submitting the audited balance-sheet as on March 31, 1997 along with auditor's report. It was alleged that Mr. M. Prabhakar Rao, Senior Manager while forwarding the note to A6 i.e. Chief Manager deliberately relaxed the condition of submitting the audited balance-sheet up to April 30, 1997. On the recommendation of Mr. M. Prabhakar Rao, A6 sanctioned the OLCC limit, however, before taking further action, A6 sent the file to Mr. H. S. Shetty, AGM for perusal. But Mr. H. S. Shetty waived of the conditions i.e. submitting of audited balance-sheet and ordered for the immediate release of OLCC limit as a special case. It was further alleged that Mr. H. S. Shetty had deliberately overlooked the conditions imposed by Mr. S. K. Desai, which were in the interest of bank. It was further alleged that though as per circular HOC 191/97, it was the duty of Mr. K. V. K. Shetty, Chief Manager (A6) to inspect the collateral security physically but he failed to do so, thus, he facilitated the Party to draw the amount of ` 20 lac without proper checks, which caused heavy loss to the bank.CBI No. 21/09 Page 16 of 135
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(iii) It was further alleged that due to affinity of Mr. H. S. Shetty with A1, A1 could withdraw an amount of ` 10 lac in cash on March 19, 1997 through two self cheques bearing No. 509951 and 509952 and ` 9 lac on March 20, 1997 through two self cheques bearing No. 509954 and 509955. It was further alleged that though Mr. M. Prabhakar Rao knew that the Party had already withdrawn the entire amount on 19th and 20th of March, 1997, he for the sake of formality, issued sanction order to the Party on March 21, 1997 imposing certain conditions on the part of Party.
INVESTIGATION QUA COLLATERAL SECURITY:-
(i) During investigation it was revealed that the landed property of Satish Kumar that was pledged with the bank as collateral security was bogus, forged and fake as the said property had already been acquired by Government of Delhi vide award No. 1/98-99 dated April 24, 1998 and Notification under Section 4 was issued on April 28, 1995. It was further alleged that legal opinion furnished by Mr. K. K. Khurana, Advocate on June 28, 1996 and thereafter, on October 24, 1997 were false, accordingly, it was alleged that Mr. K. K. Khurana had facilitated the Party to obtain credit facility from the bank.
(ii) It was further alleged that during investigation, it was also revealed that Mr. Satish Kumar was not the actual owner of the said property as he had sold the said property to one Mr. B. S. Rana in 1993 and he also denied the factum of mortgaging his property with the bank and also denied that he had furnished any guarantee CBI No. 21/09 Page 17 of 135 State through CBI v/s Suchi Dhir & others in favour of M/s Yatin Prints. It was further alleged that the sale-deed submitted with the bank was different from the copy of sale-deed available in the office of Sub-Registrar. It was further alleged that someone had impersonated him as Mr. Satish Kumar while executing the guarantor deed in favour of the Party.
INVESTIGATION QUA ADDITIONAL OLCC LIMIT FOR ` 5 LAC:-
(i) During investigation, it was revealed that on April 25, 1997 at the instructions of Mr. H. S. Shetty, Mr. S. K. Desai put up a note for enhancement of OLCC limit by ` 5 lac. It was alleged that the said note was initiated as per the discussion of the Party with DGM, who instructed the branch verbally to enhance the limit by ` 5 lac as a special case after obtaining additional guarantee of Mr. H. K. Sawhney, Director of M/s Kunal Travels (P) Ltd. It was further alleged that during investigation Mr. S. K. Desai explained to the CBI that Mr. H. S. Shetty called him in his chamber on April 25, 1997 and instructed him to prepare a note for enhancement of limit and Mr. H. S. Shetty told him that oral instructions of Mr. K. P. Hegde, DGM had already been received in this regard.
(ii) It was further alleged that Mr. H. S. Shetty allowed the Party to withdraw the said amount by clearing the cheque issued by the Party in favour of M/s S. D. Handicrafts. It was alleged that Mr. H. S. Shetty is personally responsible for the said withdrawal as it was beyond his power.CBI No. 21/09 Page 18 of 135
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(iii) It was further alleged that the alleged letter dated May 1, 1997 sent by Mr. H. S. Shetty to DGM Mr. K. P. Hegde was neither entered in the dispatch register of the bank nor was otherwise received in the office of DGM, thus, it was alleged that A5 had misused his official position by violating the norms of bank in allowing the Party to withdraw excess money.
(iv) It was further alleged that there was no business dealing between M/s Yatin Prints and M/s S. D. Handicrafts and prima-facie it appeared that M/s S.D. Handicrafts had nothing to do with printing and publishing in which M/s Yatin Prints dealt in.
INVESTIGATION QUA PACKING CREDIT LIMIT (PCL):-
(i) It was alleged that during investigation, it was revealed that Mr. H. Balakrishna Shetty, Sr. Manager (A7) processed the note for said PCL on June 6, 1997 wherein he recommended PCL for ` 50 lac. Apart from this, he also proposed for Bill Discount Limit for ` 50 lac, though it was not asked for by the Party. It was alleged that A7 had deliberately showed in the said process note that the party had applied for ` 50 as Bill Discount Limit which showed that A7 had recorded wrong facts in his note to facilitate the sanctioning authority. It was further alleged that A7 had copied the figures of summarized financial position of the party from the project report of the Party. It was alleged that though A7 could have easily cross checked the figure from the previous banker of the Party, but he deliberately did not cross check the same. It was alleged that the party had showed its project sale at ` 256 lac as on March 31, 1997 CBI No. 21/09 Page 19 of 135 State through CBI v/s Suchi Dhir & others whereas as per the bank statement the turnover of the party was just ` 15.21 lacs. It was further alleged that A7 had mentioned that the OLCC limit of the party was nominal whereas it was highly irregular as certain cheques had been returned unpaid and the limit was over drawn by ` 78,000/-. It was further alleged that A7 had mentioned wrong facts by stating that the operation of current account of M/s Yatin Prints was very limited. It was further alleged that A7 had deliberately with dishonest intention projected the processed note in such a manner which facilitated the sanctioning authority to show that the interest of the bank was safe.
(ii) It was further alleged that the proposal of A7 was approved by A6 Mr. K.V.K.Shetty, Chief Manager and he sent the file to Mr. H. S. Shetty (A5) for sanction. It was alleged that as per circular No. HOC 191/97, it was the duty of Mr. H. S. Shetty to inspect the collateral security physically before sanctioning the limit. But he failed to do so. It was further alleged that he sanctioned the above limits due to the established affinity with the party and he had a pre-set mind to sanction the said limit.
(iii) It was further alleged that at the time of proposing the above limits, A7 had taken two title deeds of the landed properties as collateral securities; one was owned by Mrs. Madhu Jain and another was owned by Mr. Wazir Singh. It was alleged that Mrs. Madhu Jain had sold the said property to Mr. H. K. Sawhney on January 15, 1993 by way of GPA and Agreement to sell in the sum of ` 3.80 lac. It was further alleged that Mrs. Madhu Jain in her letter dated June 2, 1999 intimated the bank that she had handed CBI No. 21/09 Page 20 of 135 State through CBI v/s Suchi Dhir & others over the original sale-deed of the property to Mr. H. K. Sawhney who misplaced the same and further stated that she had never stood guarantor in favour of M/s Yatin Prints. It was further revealed that Mrs. Madhu Jain had further sold the said property on September 30, 1998. It was further revealed during the investigation that Mr. H. K. Sawhney was the brain behind the said criminal conspiracy to cheat the bank and he produced a fictitious female in the name of Ms Madhu Jain in the bank as guarantor.
(iv) It was further alleged that during investigation, it was revealed that Mr. Wazir Singh had already expired on August 19, 1962 and it was further revealed that Mr. Mahesh Dhir (A2) had obtained the original sale deed from Mr. H. S. Arora who knew very well that Mr. Wazir Singh had expired in 1962. It was alleged that Mr. H. S. Arora was one of the employees of Mr. Mahesh Dhir. It was further alleged that Mr. H. S. Arora and Mr. Mahesh Dhir accompanied Mr. S. K. Singh, approved valuer, at the time of valuation of the above landed property.
(v) It was further alleged that in the revenue record, the said property was mutated in the name of Mr. Attar Singh between 1955 to February 1987. Moreover, the said property was acquired by the Government vide Notification dated November 13, 1959 and October 8, 1965, accordingly, it was alleged that Mr. K. K. Khurana and Mr. S. K. Singh had submitted a false report. It was further alleged that though property was in litigation but this fact was deliberately concealed by A7.
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(vi) It was further alleged that the amount of ` 136.20 lac was released to the Party in six installments between June 12, 1997 to October 9, 1997. It was alleged that at first occasion, the amount of ` 29 lac was released on the note prepared by A7 and sanctioned by A6. Thereafter, at subsequent occasions, the notes were prepared by Mr. Sashidhar Hegde, Manager and the same were recommended by A7. At second occasion, the amount was released under the sanction order of A5 whereas at third, fourth and fifth occasions, the amount was released under the sanction order of A6 whereas at last occasion, amount was released under the sanction order of Mr. Raviraj Shetty, AGM.
(vii) It was further alleged that on July 29, 1997, A1 had submitted an export bill for discount amounting to ` 22,10,300/-, which was purchased by the bank and the said bill was released on August 12, 1997. Thereafter, parties submitted another bill for discount on August 19, 1997 for the sum of ` 35,65,000/-, which was also purchased by the bank and realised on September 19, 1997. Thereafter, party submitted another bill on October 8, 1997 for the sum of ` 34,26,972/- and same was also purchased by the bank and realised on January 22, 1998.
(viii) It was further submitted that Party had submitted another export bill on February 2, 1998 for discount amounting to ` 89,17,538/- but this time, both the LC and shipment date had already been expired. Though the bill was allowed to be purchased by Mr. Raviraj Shetty, but he did not allow single penny to be withdrawn by the accused firm. Thereafter, Mr. Ravi Raj Shetty CBI No. 21/09 Page 22 of 135 State through CBI v/s Suchi Dhir & others called a meeting of the bank officers on February 3, 1997 and directed them not to allow any transaction in the said accounts of the party till the said export bill in question was realised. The amount of the export bill of ` 89,17,538/- was adjusted by the bank as under:-
(a) Towards PCL account ` 49,77,000/-
(b) Towards Bank charges ` 55,856/-
(c) towards FD account ` 38,84,682/-
It was alleged that while adjusting the said bill though Mr. Ravi Raj Shetty had violated the bank rules, but it was in the interest of the bank.
INVESTIGATION QUA TEMPORARY OVERDRAFT FACILITY OF M/S KUNAL TRAVELS (P) LTD.:-
(i) It was alleged that Mr. H. S. Shetty had sanctioned bank guarantee to the sum of ` 4.20 lac in favour of M/s Kunal Travels (P) Ltd., of which Mr. H. K. Sawhney was CMD, with 10 % cash margin.
At the time of sanctioning the bank guarantee Mr. H. S. Shetty wrote that permission had already been obtained from DGM, Mr. K. P. Hegde whereas no written confirmation was sought from Mr. K. P. Hegde.
(ii) It was further alleged that at the instance of DGM Mr. K. P. Hegde, Temporary Overdraft Facility (TOD) was granted to M/s CBI No. 21/09 Page 23 of 135 State through CBI v/s Suchi Dhir & others Kunal Travels upto ` 15 lac for a short period after taking the FDRs worth ` 7,15,956/- as security. The permission was granted by Zonal office vide letter dated February 17, 1997. It was further alleged that on April 26, 1997, Mr. H. S. Shetty had requested the DGM to extend the TOD facility for further period of one month but the said letter was not responded by DGM. It was further alleged that Mr. H. S. Shetty vide his letter dated July 17, 1997 brought into the notice of DGM that TOD to the sum of ` 20 lac as permitted by DGM had been entertained and also requested that branch be allowed to continue TOD upto ` 20 lac by July 31, 1997 or till the credit proposal of the party which was under consideration was sanctioned. It was further alleged that Mr. H. K. Sawhney had applied for OD facility to the tune of ` 1 crore and he offered landed property as collateral security. However, on verification the documents of the said property were found forged and bogus. When the said facts were brought in the notice of DGM Mr. K. P. Hegde, he permitted the branch to consider TOD under delegated powers of AGM on merits vide its letter dated August 8, 1997. It was further alleged that M/s Kunal Travels was unauthorisedly allowed to draw TOD facility till July 17, 1997 by Mr. H. S. Shetty and he was also permitted to continue TOD even after the expiry of period of one month ending on March 17, 1997, consequently, outstanding in the account of M/s Kunal Travels as on August 7, 1997 was ` 19,65,695.36. It was alleged that there was no sanction of TOD for the period March 18, 1997 to August 7, 1997. It was further alleged that it was the duty of AGM to point out flaws in the account while allowing for enhancement or extension of period of the facility to the party which was not done by Mr. H. S. Shetty in this case.
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(iii) It was alleged that norms of the bank were violated with impunity and accused officers allowed drawl of bank money in favour of M/s Kunal Travels at will and without any restraint which shows that the concerned officials of bank went out of their way to favour M/s Kunal Travels (P) Ltd.
INVESTIGATION QUA TOD IN FAVOUR OF M/S SAWHNEY TRADING COMPANY.:
(i) It was alleged that M/s Sawhney Trading Company also belongs to Mr. H. K. Sawhney and on April 2, 1997 Mr. H. S. Shetty had granted TOD in favour of the said firm, though there was a debit balance of ` 5600/- in the account of said firm on August 5, 1997. It was alleged that on August 5, 1997 Mr. K. V. K. Shetty moved a proposal for TOD facility to the sum of ` 16 lac in favour of the said firm which was telephonically approved by Mr. K. P. Hegde, DGM and thereafter, it was sanctioned. It was alleged that Mr. K. V. K. Shetty got approval of DGM without highlighting the irregularities in the said account. It was further alleged that the party had not paid the outstanding amount to the bank and as on December 31, 1997 total outstanding amount was ` 23,46,262.90.
INVESTIGATION QUA TOD IN FAVOUR OF SHAKTI CHIT FUND (P) LTD.:-
(i) It was alleged that said firm also belongs to Mr. H. K. Sawhney and investigation revealed that Mr. H. S. Shetty, AGM CBI No. 21/09 Page 25 of 135 State through CBI v/s Suchi Dhir & others accommodated Mr. H. K. Sawhney by way of allowing frequent TODs/CBPs in the current account of M/s Shakti Chit Funds (P) Ltd., which resulted in the outstanding balance in the said account to the extent of ` 90,865.50. It was further alleged that said TODs were sanctioned without any collateral securities, thus, it was alleged that Mr. H. S. Shetty along with Mr. K. V. K. Shetty and Mr. M. Prabhakar Rao in conspiracy with Mr. H. K. Sawhney had cheated the bank to the sum of ` 48,87,089.83 by allowing TODs in favour of three firms of Mr. H. K. Sawhney.
4. Record reveals that CBI had moved an application on June 7, 2002 stating that though the role of Ms. Satish Kumar, Ms. Madhu Jain and Mr. Wazir Singh had been discussed in the chargesheet and no criminality on their part had come forth during the course of investigation, however, inadvertently their name could not be reflected in column no. 2 in the chargesheet. Accordingly, it was prayed that their name be included in column no. 2 of the chargesheet.
(i) It was also revealed that accused Mr. K. K. Khurana had made a representation to CBI on January 31, 2003 claiming his innocence. On receipt of his representation, CBI of its own initiated further investigation and filed a supplementary chargesheet exonerating Mr. K. K. Khurana from all the charges primarily on the ground that no prescribed formate was provided to the Panel Advocates for legal securities report. During investigation CBI recorded the statement of three more witnesses and on the basis of further investigation, CBI exonerated K. K. Khurana from all CBI No. 21/09 Page 26 of 135 State through CBI v/s Suchi Dhir & others the charges.
5. Vide order dated May 31, 2006 following charges were ordered to be framed against the accused persons:-
Sl. No. Name of Accused Charges ordered to be framed
1. Accused no. 3,4,5,6 &7 Offences under Section 120 B r/w 420/467/468/471 IPC and Section 13 (2) read with Section 13(1) (d) of P C Act, 1988.
2. Accused no. 5 Offences under Section 13 (2) read with Section 13(1) (d) of P C Act, 1988.
3. Accused no. 6 Offences under Section 13 (2) read with Section 13(1) (d) of P C Act, 1988.
4. Accused no. 7 Offences under Section 13 (2) read with Section 13(1) (d) of P C Act, 1988.
5. Accused no. 3 Section 420 IPC
6. Accused no. 4 Section 471 IPC
6. In order to bring home the guilt of accused persons, prosecution has examined as many as following 38 witnesses:-
PW1 Mr. Bhupinder Singh, witness related to the CBI No. 21/09 Page 27 of 135 State through CBI v/s Suchi Dhir & others property of Mr. Wazir Singh PW2 Mr. Surender Kumar Singh, witness related to the property of Mr. Wazir Singh PW3 Mr. Shori Lal, witness related to the property of Mr. Wazir Singh PW4 Mr. Anil Kant, witness related to the property of Ms. Madhu Jain PW5 Mr. Raj Kumar, witness related to the property of Ms. Madhu Jain PW6 Mr. Rakesh Khanna, Chartered Accountant PW7 Mr. Prem Prakash, witness related to the property of Mr. Wazir Singh PW8 Mr. Surender Kumar, witness related to the property of Mr. Wazir Singh PW9 Mr. J.B.S Bedi, AGM of Punjab & Sind Bank PW10 Mr. Puran Singh, witness related to the property of Mr. Satish Kumar PW11 Mr. Narayan Dass, witness related to the property of Mr. Satish Kumar PW12 Mr. Rajesh Rattan, Panel Advocate, witness related to the property of Mr. Wazir Singh PW13 Mr. Prem Arora, witness related to the property of Mr. Wazir Singh PW14 Mr. Anil Bhatnagar, Manager of Punjab National Bank PW15 Mr. K. Amarnath Shetty, General Manager of Vijaya bank, witness relating to the sanction qua A6 CBI No. 21/09 Page 28 of 135 State through CBI v/s Suchi Dhir & others PW16 Mr. Michael Bastian, Executive Director of Vijaya bank, witness relating to the sanction qua A5 PW17 Mr. K. Jayakar Shetty, Deputy Gen. Manager, Vijay Bank, witness relating to the sanction qua A7 PW18 Mr. Bharat Singh Rana, witness relating to the property of Mr. Satish Kumar PW19 Mr. Vinod Kumar, photographer PW20 Mr. H. Ratnakar Hegde, General Manager of Vijaya Bank PW21 Mr. Vipin Kumar, Manager, Vijaya Bank PW22 Mr. Sunder Lal, Asstt. Manager, Vijaya Bank, Navyug Market Gaziabad Branch PW23 Mr. B. R. Chandershekhar, DGM, State Bank of Mysore PW24 Mr. Sunil Suri PW25 Mr. Sanjeev Kumar Desai, Manager of Vijaya Bank PW26 Mr. K. K. Rai, Asstt. Manager, Vijaya Bank PW27 Mr. Vijender Kumar, Approved Valuer of Vijaya Bank PW28 Mr. M. S. Sadashiv, Sr. Manager of Vijaya Bank PW29 Mr. Rajeev Shetty, AGM of Vijaya Bank PW30 Mr. S. R. Lalwani, Sr. Manager of Vijaya Bank PW31 Mr. V. P. Hegde, Sr. Manager of Vijay Bank PW32 Mr. M. Raviraj Shetty, AGM of Vijaya Bank PW33 Mr. U. K. Vasudeva Shetty, Manager of CBI No. 21/09 Page 29 of 135 State through CBI v/s Suchi Dhir & others Vijay Bank PW34 Mr. K.Prabhakar Hegde, DGM of the bank PW35 Mr. Nato Singh, Asst. Govt. Examiner PW36 Mr. P. K. Khanna, investigating officer PW37 Mr. Satish Kumar PW38 Mr. D.R.Handa, Sr. Scientific officer of GEQD
7. On Culmination of prosecution evidence, accused persons were examined under Section 313 Code of Criminal Procedure (in short Cr.P.C.) wherein they denied each and every incriminating evidence led by prosecution against them and submitted that they have been falsely implicated in this case. However, they refused to lead any evidence in their defence.
(i) A5 in his statement recorded under Section 313 Cr.P.C submitted that branch had sanctioned the credit limit with collateral security of land and building after taking legal opinion as well as a valuation report from approved valuer on bank panel. It was submitted that bank had taken the collateral security as a matter of abundant caution inspite of the fact that there was no requirement in terms of circular No. 71/2000 dated March 28, 2000 to take such collateral security while granting export credit. It was further submitted that he was transferred from the branch on August 2, 1997 but even then bank had given PCL FDBP/TOD to the party. It was further submitted that he was no criminal misconduct or dishonest intention on the part of any bank employees. Mere fact that there were some minor procedure irregularities in the matter, CBI No. 21/09 Page 30 of 135 State through CBI v/s Suchi Dhir & others but submitted that the same cannot be considered as criminal misconduct.
(ii) A6 in his statement recorded under Section 313 Cr.P.C took the plea that at the time of sanctioning OLCC limit of ` 20 lac, he had put three conditions to protect the interest of bank but the higher authority had taken a contrary view and released the credit facility to the burrower immediately. It was further submitted that in terms of circular No. 191/96, he was not required to visit the property personally. It was further submitted that since bank officers are not well versed in legal aspect, thus, to ensure the correctness of title deeds and valuation of property, bank officers relied upon the opinion of bank panel advocate and valuer.
(iii) A7 in his statement recorded under Section 313 Cr.P.C submitted that since he was looking after the Foreign Exchange department, he forwarded the relevant papers to his superior officers for appropriate action and direction. It was, further submitted that he was not a competent person to take a decision in those matters as it was beyond his jurisdiction. It was thus, submitted that he has been falsely implicated in this case.
8. During trial, A4 passed away, accordingly, proceedings qua him were abated on October 6, 2009. A1 and A2 were declared proclaimed offender on July 12, 2004.
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9. Ms. Shashi Vishwakarma, learned Public Prosecutor for CBI raised following contentions:-
(i) That Mr. H.S. Shetty (A5) was working as AGM at the relevant time and he knew the proprietor of M/s Yatin Prints named Suchi Dhir (A1) since beginning as when current account bearing No. 5947 was got opened, he had introduced the account holder to the bank and the same is proved from the account opening form (Ex.PW29/A) wherein A5 signed as introducer. It was vehemently contended that though there is no procedure of taking second account opening form from the account holder, but in this case second account opening form was taken from M/s Yatin Prints, but this time, introducer was Mr. H.K. Sawhney (A3). The second form is Ex.PW29/D. It was submitted that as per Ex.PW29/A, A1 had deposited ` 5000/- in cash with the bank which is reflected in the statement of account whereas as per Ex.PW29/D, a sum of ` 1000/-
was deposited in the bank account, but the said amount is not reflected in the account of M/s Yatin Prints. It was astutely contended that the subsequent form Ex.PW29/D had been placed on record to cover up the lapses on the part of A5.
(ii) It was further submitted that when an application was moved by A1 for enhancement of OLCC limit facility, PW25 processed the said proposal and loan documents. At that time, he had made a recommendation in his note dated April 04, 1997 that M/s Yatin Prints was not eligible for any enhancement in the limit as party was new for the bank and it had not complied with the terms CBI No. 21/09 Page 32 of 135 State through CBI v/s Suchi Dhir & others and conditions of the sanction. He further pointed out that it would not be prudent to sanction loan for such a large amount of cash credit facility. Senior Manager made a comment on his note and he did not forward the note to Chief Manager and AGM.
(iii) It was vigorously argued that at time of availing credit facility, M/s Yatin Prints had produced PW37 Satish Kumar as a guarantor, but he (PW37) testified that the documents/guarantee deed did not bear his signatures. During investigation, specimen writing of PW37 was taken for comparison with the signatures appearing on the documents furnished to the bank at the time of availing the credit limit in question and from the report of GEQD, it has been established that the signatures appearing on the said documents were not signed by PW37. It was thus urged that A1 had produced fake guarantor at the time of availing credit facility, which shows that A1 had dishonest intention to cheat the bank with others.
(iv) It was further submitted that at the time of availing credit facility, M/s Yatin Prints had submitted three properties as collateral securities. One of them was in the name of Mr. Satish Kumar, but he had already sold the said property to PW18 Bharat Singh Rana, who further sold the same to Mr. Vijay Kumar. It was submitted that though Mr. Satish Kumar was not owner of the said property on the date of availing credit facility from the bank, yet the credit limit was sanctioned in favour of A1 on the basis of said documents without its verification. It was perspicaciously argued that PW25 deposed that the collateral security qua the said property was taken at the instance of A5.
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(v) It was further contended that after the sanction of credit limit, A1 had withdrawn the large amount from the account in the month March, 1997 and PW25 in his deposition deposed that the withdrawal was permitted at the oral directions of A5.
(vi) It was further contended that since A5 had not only played active role in the opening of current account, but he also played an active role in taking collateral security of fake properties and was also an instrumental in releasing the large amount in favour of A1, which shows that A5 was acting under some conspiracy with A1.
(vii) It was further submitted that PW25 in his examination in chief deposed that A5 had handed over the loan application dated February 28, 1997 (Ex.PW29/G) to PW25, which he processed, accordingly, it was urged that this shows that A5 knew the party previously.
(viii) It was further submitted that PW25 deposed that after consultation with Senior Manager, Mr. Prabhakar Rao and Chief Manager (A6), the property of Satish Kumar was got revalued and during revaluation, property was valued at ` 47.4 lac but the bank had taken the value of property at ` 50 lac.
(ix) It was further astutely contended that PW33 has deposed about the involvement of A5 and A6 and further urged that from his testimony, it becomes clear that how A5 had played an active role in sanctioning of various limits in favour of M/s Yatin CBI No. 21/09 Page 34 of 135 State through CBI v/s Suchi Dhir & others Prints. A6 had moved two proposals for sanction of limits in favour of M/s Yatin Prints which shows that he was also involved in the said conspiracy. It was further contended that at the behest of A5 & A6, A1 was permitted to withdraw the amount in cash in the month of March, 1997 despite the fact that borrower was not supposed to withdraw the amount in cash so frequently, but he was permitted to withdraw huge amount in short span of few days.
(x) It was further contended that A7 had also recommended for Packing Credit Limit in favour of A1 and this will clear from the process note dated August 19, 1997 and October 09, 1997 which are exhibited Ex.PW29/S-11 and Ex.PW32/B respectively.
(xi) It was contended that PW1, PW2, PW4, PW5 are related to the properties mortgaged with the bank and from their testimony, it becomes clear that either the properties were fake or the owner of the property had not mortgaged the said properties with the bank. It was submitted that from the testimony of above witnesses, involvement of A3 and A4 is also established.
(xii) It was argued that from the testimony of PW1, it becomes clear that the documents relating to the property situated at Village Nehra, Tehsil and Post Office Sonipat Haryana were fabricated and this fact is also clear from the deposition of PW12.
(xiii) It was further submitted that from the testimony of PW19, it becomes clear how the fund was transferred from the CBI No. 21/09 Page 35 of 135 State through CBI v/s Suchi Dhir & others account of M/s Yatin Prints at the behest of Javed Akhtar despite the fact that there was no business transaction between M/s Yatin Prints and the firm of PW19.
(xiv) It was urged that PW20 proved that A5 had acted beyond his jurisdiction, which further shows his complicity in the conspiracy.
(xv) It was further submitted that PW21 proved that circular Ex.PW20/A was not followed while sanctioning the TOD and cheque purchase facility.
(xvi) It was further submitted that PW28 proved that there was no stock in the godown of M/s Yatin Prints when the premises was inspected by PW28 along with other bank officials including A7. On inspection, even no property was found at Shayma Prasad Mukherjee Park, which shows that fake report was obtained from PW12.
(xvii) It was further contended that accused H.K. Sawhney (A3) had hatched a conspiracy with A1 and A2 and this fact is established from the fact that he introduced A1 when she opened an account in the bank and thereafter he also stood guarantor in favour of A1. It was further submitted that he had purchased the property of Madhu Jain in the sum of ` 3.80 lac and said fund was deposited in the account of Madhu Jain despite that H.K. Sawhney had produced a fictitious female in the bank to mortgage the said properties and this fact has been established from the report of GEQD as the CBI No. 21/09 Page 36 of 135 State through CBI v/s Suchi Dhir & others documents allegedly executed by Madhu Jain before the bank were not signed by the person who was maintaining the account in which ` 3.80 lac was transferred. It was further vigorously argued that A1 had availed TOD of ` 5 lac from bank and the said amount was deposited in the account of M/s S.D Handicrafts in which A3 was one of the directors. It was submitted that in fact M/s S.D. Handicrafts was the sister concern of A1 and it was their modus operandi to misappropriate the loan amount.
10. Shri Mukul Sharma, Advocate, counsel appearing for A6 & A7 raised the following contentions:-
(i) That A6 came into picture first time on March 19, 1997 when Senior Manager M. Prabhkar had sent a proposal of OLCC of ` 50 lac to A6 with a recommendation to sanction OLCC to the sum of ` 20 lac. It was sagaciously argued that though branch Manager Mr. S.K. Desai and Mr. Prabhakar, Senior Manager had recommended for sanction of OLCC to the party for the sum of ` 20 lac, but A6 had imposed some additional conditions at the time of approving the proposal by directing that audited financial statement/balance sheet be taken from the party by April 30, 1997 before releasing the facility, which means that party would not be able to withdraw the amount unless it submitted the audited balance-sheet with the bank, which was in pursuance of the guidelines contained in circular No. 182/95 issued by the Head Office. Similarly, A6 also imposed a condition that valuation/rectification of securities should be obtained as per circular No. 191/96 and the unit inspection should be done before CBI No. 21/09 Page 37 of 135 State through CBI v/s Suchi Dhir & others disbursement of facility and copy of unit inspection note be kept on record. It was further contended that if A6 had been in the conspiracy with the party or he had any dishonest intention, he would not have imposed the above additional conditions while forwarding a proposal to AGM (A5) for his perusal. It was contended that the said note shows that A6 had neither any criminal / dishonest intention nor conspiracy, when he dealt with the file in question.
(ii) It was sagaciously contended that there is no substance in the allegation that A6 had deliberately relaxed the conditions by permitting the party to submit the audit balance-sheet by April 30 1997 instead of March 31, 1997 as proposed by Mr. Desai. It was astutely submitted that being the Chief Manager, A6 was within in his power to relax, modify or change the condition proposed by Junior officers. Moreover, in the instant case while permitting the party to submit audit balance-sheet by April 30, 1997, A6 had directed that the amount shall not be released unless the party submitted the audit balance-sheet, which means that party would not be in a position to avail the fruits of OLCC limit unless it submitted the audited balance-sheet. Besides that A6 had also imposed two other conditions.
(iii) It was astutely contended that PW33 in his examination in chief categorically deposed that S.K. Desai and M. Prabhakar Rao failed to conduct inspection as column No. 11 remained blank. It was further submitted that had they performed their duty diligently, probably bank would be in a position to save the amount from the party.CBI No. 21/09 Page 38 of 135
State through CBI v/s Suchi Dhir & others
(iv) Qua PCL, it was submitted that in the chargesheet, it was alleged that besides PCL to the sum of ` 50 lac, bill discount limit was also recommended and approved for ` 50 lac, though the same was never asked for by the party. It was submitted that there is no evidence on record to show that party did not ask for the bill discount facility. It was argued that in the absence of any such evidence, there is no substance in the allegation levelled by the CBI in the chargesheet.
(v) It was contended that there is no cogent evidence to show even prima-facie that A7 had any dishonest intention when he dealt with the files in question in charge of his official duties. Mere fact that he had dealt with the file of the borrower in discharge of his official duties is not sufficient in any manner to impose any criminal liability.
11. Shri P.K. Sharma, Advocate, counsel appearing for A5 raised the following contentions:-
(i) That there is no iota of evidence to prove conspiracy between A5 and other accused persons. It was contended that even PW36 investigating officer in his cross examination deposed that he did not remember whether there was any evidence to show that A5 used to meet with other accused persons outside the bank. It was submitted that if A5 never met with the accused persons except while discharging his official duties, it cannot be said that accused entered into any criminal conspiracy with the borrower. It was further CBI No. 21/09 Page 39 of 135 State through CBI v/s Suchi Dhir & others submitted that since there is no evidence of conspiracy, accused cannot be held guilty for penal offences.
(ii) It was sagaciously argued that in order to prove the guilt of accused for the offence punishable under Section 13 (2) read with Section 13 (1) (d) PC Act, prosecution has to show mens rea on the part of A5 but there is no evidence in this regard and this is clarified by PW36 in his cross examination. It was further submitted that assuming for the sake of arguments that there were certain procedure lapses on the part of A5 while dealing with the various credit limits of the borrower, but said lapses cannot be termed as criminal misconduct as defined under Section 13 (1) of PC Act.
(iii) It was further submitted that IO had not investigated the matter fairly as he had not chargesheeted Mr. K.P. Hegde at whose instance various credit limits were sanctioned in favour of borrower. Surprisingly, though IO had chargesheeted Mr. K.K. Khurana as an accused, but later on he exonerated him from all the allegations in the garb of further investigation. It was argued that it is settled law that investigating agency cannot proceed for further investigation without taking permission from the Court concerned and in this case, no such permission had been taken. The further investigation had been initiated just on receipt of a representation from Mr. K.K. Khurana. This itself shows that the IO had not given any opportunity to the accused persons to furnish their version and he had acted as per his sweet will. It was further submitted that though most of the proposals were recommended for sanction by M. Prabhkar Rao, Sr. Manager, but he was also exonerated by the IO.CBI No. 21/09 Page 40 of 135
State through CBI v/s Suchi Dhir & others Similarly, he also exonerated Ravi Raj Shetty.
(iv) It was further submitted that prosecution has set up a case that Madhu Jain was one of the guarantors and her property was mortgaged with the bank as collateral security. As per prosecution version though the property is in existence, but Madhu Jain was not the owner of the said property. As per prosecution version, some fictitious person was produced in the bank as Madhu Jain and to prove the same investigating agency has placed reliance on the letter dated June 02, 1999 (Ex.PW36/DA) which was purportedly sent by Madhu Jain to the bank. But surprisingly, investigating agency did not deem it appropriate to interrogate Madhu Jain. IO in his cross examination deposed that Madhu Jain was not traceable. If there is any substance in the deposition of IO, there is every probability that the letter Ex.PW36/DA may be a forged and fabricated. Surprisingly, IO had not conducted any investigation qua the said letter. It was submitted that in the absence of any evidence on record, it cannot be said that Madhu Jain was a fictitious person. Rather this shows that IO had not investigated the matter fairly and diligently.
(v) It was further contended that though in the first charge sheet, IO had not mentioned the name of Madhu Jain and Wazir Singh as an accused but surprisingly in the supplementary charge sheet, he had mentioned their names in column No. 2. If Madhu Jain had not stood guarantor in favour of the borrower why IO had mentioned her name in column No. 2 in supplementary challan. Moreover, the supplementary challan was filed on the representation CBI No. 21/09 Page 41 of 135 State through CBI v/s Suchi Dhir & others of K.K. Khurana and no investigation was conducted qua Madhu Jain and Wazir Singh but he had mentioned their names in the supplementary challan.
(vi) It was further submitted that CBI has relied upon various circulars to show that it was the duty of AGM to inspect the property but PW36 in his cross examination gave vague answers to questions and from his deposition, it is not clear which circular casts a duty upon AGM to inspect the property physically before sanctioning and disbursing the loan amount.
(vii) It was further contended that though IO admitted in his cross examination that the loan accounts are subject to internal audit as well as audit by RBI but surprisingly IO had not examined the audit reports qua the loan accounts in question to ascertain whether there was any gross violation of banking rules and regulations at the time of dealing with the various credit limits in favour of borrower. It was further submitted that though the complaint was made by the Chief Vigilance officer of the bank, yet he had not made any allegation against the bank official except that there may be some procedural lapses on their part. But surprisingly, IO concluded without any evidence that the bank officers had acted in furtherance of criminal conspiracy.
(viii) It was sagaciously contended that during investigation, IO had seized a piece of paper, upon which the name of cousin of PW34 named Mr. Sudhakar D. Hegde, Electro Exhibition Services P.B. No. 12104 Dubai UAE on the one side and CBI No. 21/09 Page 42 of 135 State through CBI v/s Suchi Dhir & others US $ 15000/- on the other side was written, was recovered from accused Suchi Dhir and Mahesh Dhir. During investigation, K. P. Hegde, DGM admitted that the said paper slip except, the amount of US $ 15,000/-, is in handwriting but surprisingly IO did not conduct any investigation qua the said slip. Nor he placed the same on record. He deliberately concealed the important piece of evidence from the Court. It was submitted that there is every possibility that K.P. Hegde had given the said slip to borrower with a direction to pay the said amount to his cousin in Dubai in lieu of seeking favour from him. Instead of investigating the matter properly, IO preferred to conceal the important piece of evidence from the Court and cited K.P. Hegde as a witness. It was argued that this shows that IO had not conducted the investigation impartially and fairly and he twisted the facts in order to achieve a predetermined goal.
(ix) It was further submitted that PW36 in his cross examination admitted that there was no complaint that either LC or the export order was bogus, therefore, he had not investigated the case on this line and he had also not investigated the matter whether credit facility sanctioned by the bank was not secured by ECGC Policy. None of the witnesses deposed that the borrower had not submitted the genuine LC and export order at the time of availing the PCL. It was argued that since bank had taken the LC of US $ 11 lac against the PCL and FDBP to the tune of ` 50 lac each, it cannot be said that the bank had not secured its money before sanctioning the limit. Rather, the officers had generated good business for the bank by taking adequate security from the borrower. It was further contended that since the borrower was an CBI No. 21/09 Page 43 of 135 State through CBI v/s Suchi Dhir & others export oriented unit, thus, as per the guidelines of bank and RBI, no collateral security was even required to sanction the PCL and FDBP but bank officers took the collateral security as an abundant caution.
12. Shri Neeraj Jain, Advocate, counsel appearing for A3 raised the following contentions:-
(i) That as per the prosecution version, there are three allegations against the accused, firstly that accused had introduced A1 at the time of opening of the account; secondly that he stood guarantor in favour of A1 and arranged a fictitious person by the name of Madhu Jain, who furnished false guarantee deed in favour of A1 and furnished collateral security by equitable mortgaging of the land and thirdly that a cheque of ` 5 lac from the account of M/s Yatin Prints was transferred in the account of M/s S.D. Handicrafts in which A3 was one of the directors.
(ii) It was sagaciously contended that mere fact that A3 had introduced A1 at the time of opening of the account is not sufficient in any manner to attract criminal liability. Admittedly, A3 stood guarantor in favour of A1 and the properties of A3 was found genuine. It was further submitted that A3 had purchased piece of land from Madhu Jain in the year 1993 in the sum of ` 4 lac and he had paid ` 3.80 lac and balance amount was agreed to be paid at the time of execution of sale deed but Madhu Jain failed to execute the sale deed. However, it is undisputed fact that Madhu Jain had handed over the physical possession of the property. It was further argued that when A1 needed a guarantor, A3 agreed to furnish the CBI No. 21/09 Page 44 of 135 State through CBI v/s Suchi Dhir & others same and since sale deed was not executed at that time, A3 requested Madhu Jain to furnish the guarantee in favour of A1 and consequently, she appeared before the bank and executed all necessary documents.
(iii) It was astutely contended that IO PW36 in his cross-
examination fairly admitted that during investigation, it was surfaced that Madhu Jain had appeared personally and executed the documents in the bank, thus, it was urged that there is no substance in the allegation that Madhu Jain did not appear in the bank or any fictitious female was produced by A3. It was submitted once, IO admitted that Madhu Jain appeared before the bank, no reliance can be placed on the prosecution version that A3 had produced a fictitious person before the bank.
(iv) It was further submitted that during investigation, IO failed to examine any bank official to prove the fact that the female who executed the documents in favour of A1 was not Madhu Jain in whose account a sum of ` 3.80 lac was transferred. It was submitted that no doubt GEQD report is against A3 but in the given circumstances, no reliance can be placed on the said piece of evidence.
(v) It was further contended that it is admitted case of CBI that Madhu Jain had sold the said property in the year 1998 to PW4 Anil Kant. It was argued that PW4 deposed that he had purchased the said property in the sum of ` 1,03,000/- from Madhu Jain, which is quite improbable as A3 had purchased the said property in 1993 CBI No. 21/09 Page 45 of 135 State through CBI v/s Suchi Dhir & others in the sum of ` 4 lac and if there is any substance in the allegations, it shows that Madhu Jain had disposed of the property in haste with some malafide intention. It was further submitted that CBI failed to trace Madhu Jain which shows that Madhu Jain tried to avoid her appearance before the investigating officer as well as Court. It was further contended that even PW4 deposed that he met with A3, who told him that he had purchased the property from Madhu Jain but despite that he purchased the property from her. This shows that A4 had purchased the property knowingly well that Madhu Jain had already sold the same to A3, thus, there is every possibility that Madhu Jain with the help of PW4 had cheated the A3.
(vi) It was further sagaciously submitted that prosecution has strongly placed reliance on the letter Ex.PW36/DA wherein Madhu Jain alleged that she never stood guarantor in favour of A1 but no reliance can be placed on the said document as the said document was not proved in accordance with law during trial. It was urged that said document was marked exhibit for the purpose of identification only, moreover, the said document could not be improved by PW36 as it was not executed in his presence. This document could be proved either by Madhu Jain or bank official but neither of them deposed anything qua the said letter. It was further submitted that even the said letter was not sent to GEQD for examination. The documents which were admittedly executed by Madhu Jain in favour of A3 were also not sent for examination.
(vii) It was further submitted that there is no substance in the allegation that either M/s S.D. Handicrafts or any other firm of A3 CBI No. 21/09 Page 46 of 135 State through CBI v/s Suchi Dhir & others is the sister concern of M/s Yatin Prints and in this regard the testimony of PW20 and PW21 is relevant.
(viii) It was further submitted that no doubt, A3 had availed several TOD facility from the bank from time to time but there is no allegation that either the bank official had shown any undue favour to A3 at the time of granting such facility or A3 had paid them any gratification directly or indirectly. It was further submitted that from the statement of account of A3, it would clear that there were credit entries also in his account regularly.
(ix) It was further submitted that there is no cogent evidence on record either to prove the conspiracy between A3 on the one hand and any other accused person on the other hand. Mere fact that A3 knew A1 and A2 is not sufficient to draw a conclusion that he conspired with them. Similarly, it was argued that there is no evidence on record to show that A3 cheated the bank in any manner.
13. I have heard counsel for the parties at length, perused the record carefully and gave my thoughtful consideration to their contentions.
14. Contentions relating to conspiracy :-
(i) In order to establish conspiracy between private persons and bank officers, it was alleged that A5 knew the burrower (A1) and her husband (A2) prior to the transactions and due to that reason, CBI No. 21/09 Page 47 of 135 State through CBI v/s Suchi Dhir & others A5 had introduced the burrower when burrower had opened a current account in the bank. It was further alleged that in order to conceal his affinity with the burrower, A5 later on not only replaced the account opening form of the burrower with a fresh introduction of Mr. H. K. Sawhney but he also struck off his name from the earlier account opening form. In order to prove its allegations, prosecution has placed reliance on the documents Ex. PW29/A (first account opening form) and Ex. PW29/D and re-exhibited as PW34/DB (2nd account opening form). Besides that prosecution has also placed reliance on the deposition of PW26 Mr. K. K. Rai, Assistant Manager and PW29 Mr. Rajiv Shetty, Asstt. General Manager; PW30 Mr. S. R. Lalwani, Sr. Manager; PW31 Mr. V. P. Hegde, Sr. Manager and PW34 Mr. K. P. Hegde, DGM.
(ii). Perusal of Ex. PW29/A and Ex. PW29/B reveals that both bear the date February 12, 1997, which shows that the said documents were executed on February 12, 1997. Further, both the documents also bear the signature of account holder i.e. (A1).
Indisputably, Ex. PW29/A bears the name of A5 Mr. H. S. Shetty as an introducer whereas Ex. PW29/D bears the name of A3 as an introducer. Ex. PW29/D also bears the signature of Assistant Manager who verified the signature of fresh introducer i.e. A3 Mr. H. K. Sawhney.
(iii). As per allegations, Ex. PW29/D was got filled up later on by A5 to conceal his affinity with the burrower. If it was so, this fact could be proved by A1 who signed the fresh account-opening- form (Ex. PW29/D) or by A3 who stood introducer or by Assistant CBI No. 21/09 Page 48 of 135 State through CBI v/s Suchi Dhir & others Manager who verified the signature of A3. No doubt, A1 and A3 have been charge-sheeted, thus, they might not support the prosecution version. But during investigation, no attempt was made to verify from them when they had filled up the said account- opening-form. Even no disclosure statement of A3 had been recorded in this regard. Moreover, Asstt. Manager (PW26) who verified the signature of A3 on Ex. PW29/D though examined by CBI, but he did not utter even a single word about the date when he verified the signature of A3. In nutshell, there is no evidence on record to establish, when the said new account-opening-form was got filled up by A5 in order to conceal his affinity.
(iv). It is the admitted case of prosecution that A5 was transferred on promotion from the branch on August 1, 1997. Thus, if Ex. PW29/D was got filled up later on to conceal his affinity, it must have been got filled up prior to his transfer. But during trial, prosecution failed to produce any cogent evidence in this regard.
(v). Indisputably, A5 was working as AGM, thus he had easy access to the account opening form. If, he had any dishonest intention, he could have easily removed the earlier account opening form Ex. PW29/A from the record. But he had not done so, which shows that he had no dishonest intention when he took fresh account opening form (Ex. PW29/D) from the burrower. It is pertinent to state that as per A5, he had introduced the burrower because at that time her introducer i.e. Mr. H. k. Sawhney was not available and since the burrower knew the DGM who visited the branch along with the burrower and asked A5 to get opened the CBI No. 21/09 Page 49 of 135 State through CBI v/s Suchi Dhir & others account, accordingly, he introduced the burrower and when Party produced her introducer i.e Mr. H. K. Sawhney, he had taken fresh account opening form and placed the same on record.
(vi). Now coming to the deposition of witnesses. PW30 Mr. S. R. Lalwani deposed that the reason for cancellation of signature of A5 on the account opening form Ex. PW29/A appeared to be that since the account had became NPA, hence the second introduction was obtained from the burrower. Thus, as per PW30, Ex. PW29/D was taken on record when the account turned as NPA (Non Performing Assets).
(vii). PW30 further deposed that ordinarily signature of introducer in the account opening form is not cancelled, but in this case it was cancelled by cutting. He further deposed that there was no system in the bank to obtain second account opening form with different introducer but in this case, it was taken. However, in his cross-examination he expressed his ignorance when the account was declared NPA and further expressed his ignorance whether the account was classified as NPA on March 31, 1998 or not. Surprisingly, when his attention was drawn towards the letter Ex. PW30/DC wherein it is recited that the account was classified as NPA on March 31, 1998, he expressed his inability to recognize the said letter. This shows that he had even failed to recognize the letter of the bank wherein it is recited that the account was classified as NPA on March 31, 1998. If account was classified as NPA on March 31, 1998, it would falsify his deposition to the extent that the second account opening form was taken when account was turned as NPA.
CBI No. 21/09 Page 50 of 135State through CBI v/s Suchi Dhir & others
(viii). PW30 further deposed that he cannot say who had cut the signature of Mr. H. S. Shetty on the first account opening form Ex. PW29/A. This further shows that he had no knowledge when the second account opening form was placed on record. It appears that PW29 had deposed on the basis of his assumption and presumption. However, he admitted in his cross-examination that there is no bar if an officer of the bank introduces the customer for the purpose of opening of the bank account. Simultaneously, he deposed that he cannot admit or deny whether DGM had visited branch along with A1, when A1 had opened the current account and he swiftly added that there was no necessity of DGM to visit the branch for opening of current account of a customer, but there are evidence contrary to his deposition. Though in his examination-in- chief, he deposed that second account opening form (Ex. PW29/D) was taken on record at the instruction of A5, but his testimony to that extent was got duly confronted with his statement Ex. PW30/DA that was made to the CBI during investigation, this shows that PW30 had made substantial improvement in his deposition.
(ix). The another relevant witness is PW26 Mr. K. K. Rai, Asstt. Manager. In his deposition, he categorically deposed that at the time of opening of the current account of M/s Yatin Prints, the private party, A1, her husband (A2) and DGM Mr. K. P. Hegde visited the branch and further deposed that some talks had taken place between DGM and AGM (A5) in the cabin of A5 but he expressed his ignorance about the contents of talks. But he also deposed that thereafter an account opening form was given to him for opening of CBI No. 21/09 Page 51 of 135 State through CBI v/s Suchi Dhir & others the account in the name of M/s Yatin Prints, of which A1 was sole proprietor. Thus, PW26 corroborates the version of defence that DGM had visited the branch along with the burrower, thus the possibility that A5 had introduced the borrower at the request of DGM can not be ruled out. It is pertinent to state that CBI had not made any effort to ask from PW26 when he had verified the signature of A3 as an introducer. Even during trial, no such effort was made.
(x). It is pertinent to mention here that PW34 Mr. K. P. Hegde, DGM had not categorically denied the factum of his visit to the branch at the time of opening of account as he preferred to evade the answer by stating that he did not recall whether he visited the branch at the time of opening of the account or not.
(xi). Similarly, he also evaded the answer by stating that he did not remember that since Mr. H. K. Sawhney was not available on that day, he requested AGM (A5) to open the account by his own introduction. It is also pertinent to state that he did not deny this fact. In these circumstances there is no reason to disbelieve the testimony of PW26 who categorically deposed that DGM had visited the branch along with burrower and he had conversation with AGM in his chamber and thereafter, account opening form was given to him. The testimony of PW26 corroborates the defence version.
(xii). PW31 Mr. V. P. Hegde, Sr. Manager also testified that there is no rule in the banking prohibiting the bank officers from introducing a customer at the time of opening of the account. He CBI No. 21/09 Page 52 of 135 State through CBI v/s Suchi Dhir & others further deposed that the account of M/s Yatin Prints was not classified as NPA during the tenure of A5. PW34 deposed that A5 was relieved from the branch on August 2, 1997. He further deposed that the limit in the account of M/s Yatin Prints was enhanced by ` 15 lac on August 26, 1997 and till then there was no irregularity in operation of the said account. From the deposition of PW31 and PW34, it becomes clear that the account was not classified as NPA during the tenure of A5 as deposed by PW30, thus no reliance can be placed on the deposition of PW30 when he deposed that second account opening form was taken on record when it was turned as NPA.
(xiii) PW36 Mr. P. K. Khanna, investigating officer in his cross-examination deposed that he did not recollect if he had collected any evidence to show the meeting of minds of bank officers with private parties outside the bank. Similarly, he deposed that he did not recollect whether he collected any evidence to support the allegation of conspiracy among bank officers and private persons. This shows that the investigating officer himself is not sure whether he had collected any evidence to prove the conspiracy or not. No doubt, it is very difficult to find out a direct evidence to prove the conspiracy and it is also settled law that conspiracy can also be proved by circumstantial evidence. But investigating officer in his testimony deposed that he even did not recollect whether he had found any such circumstance against the accused persons or not.
(xiv). PW31 Mr. V. P. Hegde, Sr. Manager was deputed by the bank to inspect the loan account of M/s Yatin Prints, thereafter CBI No. 21/09 Page 53 of 135 State through CBI v/s Suchi Dhir & others he inspected the loan account of M/s Yatin Prints thoroughly. During his cross-examination, he deposed that during inspection of the account, he had not come across with any allegation or evidence that any illegal gratification or undue favour was taken by any of the bank officer. He further deposed that on the basis of inspection carried out by him in the account and after looking to the documents of the case, he could say that there was no malafide or dishonest intention apparent on the part of any bank official. However, he deposed that an unintentional irregularity may occur during appraisal, sanction and disbursement of the loan and department may take disciplinary action against the erring official. From the testimony of PW31, it becomes clear that during the investigation of loan account of M/s Yatin Prints, no evidence was found which may show that bank officers (A5 to A7) had either taken any illegal gratification or undue favour. Even no evidence was found to show that bank officers had any dishonest or malafide intention while they dealt with the loan account of the said firm.
(xv). Similarly, PW32, AGM of the bank deposed that during his tenure he had an opportunity to deal with the loan files of the account in question and further deposed that he did not find any material or anything to infer that there was any conspiracy between the bank officers and the party concerned either in sanctioning or disbursement of the loan.
(xvi). From the above discussion, it can safely be culled out that there is no iota of cogent and admissible evidence on record even to draw an inference that there was any conspiracy between CBI No. 21/09 Page 54 of 135 State through CBI v/s Suchi Dhir & others bank officers i.e.A5 to A7 on the one hand and other accused persons i.e. A1 to A4 on the other hand.
15. Whether Sanction u/s 197 Cr.P.C is required qua A5 to A7 for Penal offences:-
(i) It is admitted case of prosecution that accused persons had dealt with the files in question during discharge of their official duties. There is no allegation that any of the bank officers (A5 to A7) had committed any forgery in the record when they dealt with the files in question. Admittedly, bank officers (A5 to A7) had been roped in with the aid of Section 120 B IPC otherwise there is no allegation that any of them had committed any penal offences. From the evidence adduced by prosecution, it can safely be culled out that prosecution case is that bank officers (A5 to A7) had been connected with conspiracy as they had dealt with the files in question while processing, recommending, sanctioning or disbursing various credit limits to the burrower. Indisputably, the bank officers acted or dealt with the files in question while processing, recommending, sanctioning or disbursing various credit limits while discharging their official duties. If, it is so, question arises whether sanction under Section 197 Cr.P.C is required for penal offences including alleged conspiracy?
(ii). In case State of Madhya Pradesh Vs Sheetla Sahai and others (2009) 8 SCC 617 appellant was charge-sheeted for the offences punishable under Section 13(2) and (3) PC Act read with CBI No. 21/09 Page 55 of 135 State through CBI v/s Suchi Dhir & others Section 120 B IPC. In the said case, it was held that Sanction under Section 197 Cr.P.C is required and in this regard relevant paras are 60 to 63 and 66, same are reproduced as under:-
Para 60 This leaves us with the question as to whether an order of sanction was required to be obtained. There exists a distinction between a sanction for prosecution under Section 19 of the Act and Section 197 of the Code of Criminal Procedure. Whereas in terms of Section 19, it would not be necessary to obtain in respect of those who had ceased to be a public servant, Section 197 of the Code of Criminal Procedure requires sanction both for those who were or are public servants.
Para 61 Strong reliance has been placed by Mr. Tulsi on a judgment of this Court in Centre for Public Interest Litigation and Another Vs Union of India and Another [(2005) 8 SCC 202]. In that case, it was held :
"9 The protection given under Section 197 is to protect responsible public servants against the institution of possibly vexatious criminal proceedings for offences alleged to have been committed by them while they are acting or purporting to act as public servants. The policy of the legislature is to afford adequate protection to public servants to ensure that they are not prosecuted for anything done by them in the discharge of their duties without reasonable cause, and if sanction is granted, to confer on the Government, if they choose to exercise it, complete control of the prosecution.
This protection has certain limits and is available only when the alleged act done by the pubic servant is reasonably connected with the discharge of his official duty and is not merely a cloak for doing the objectionable act. If in doing his official duty, he acted in excess CBI No. 21/09 Page 56 of 135 State through CBI v/s Suchi Dhir & others of his duty, but there is a reasonable connection between the act and performance of the official duty, the excess will not be a sufficient ground to deprive the public servant, but whether it was committed by a public servant acting or purporting to act as such in the discharge of his official capacity. Before Section 197 can be invoked, it must be shown that the official concerned was accused of an offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duties. It is not the duty which requires examination so much as the act, because the official act can be performed both in the discharge of the official duty as well as in dereliction of it. The act must fall within the scope and range of the official duties of the pubic servant concerned. It is the quality of the act which is important and the protection of this section is available if the act falls within the scope and range of his official duty. There cannot be any universal rule to determine whether there is a reasonable connection between the act done and the official duty, nor is it possible to lay down any such rule. One safe and sure test in this regard would be to consider if the omission or neglect on the part of the public servant to commit the act complained of could have made him answerable for a charge of dereliction of his official duty. If the answer to this question is in the affirmative, it may be said that such act was committed by the public servant while acting in the discharge of his official duty and there was every connection with the act complained of and the official duty of the public servant. This aspect makes it clear that the concept of Section 197 does not get immediately attracted on institution of the complaint case.
10. Use of the expression "official duty"
implies that the act or omission must have been done by the public servant in the course of his service and that it should have been in CBI No. 21/09 Page 57 of 135 State through CBI v/s Suchi Dhir & others discharge of his duty. The section does not extend its protective cover to every act or omission done by a public servant in service but restricts its scope of operation to only those acts or omissions which are done by a public servant in discharge of official duty.
11. If on facts, therefore, it is prima-facie found that the act or omission for which the accused was charged had reasonable connection with discharge of his duty then it must be held to be official to which applicability of Section 197 of the Code cannot be disputed."
Para 62 Were the respondent Nos. 1 to 7required to act in the matter as a part of official duty? Indisputably, they were required to do so. Be he an Executive Engineer, Superintending Engineer, Chief Engineer-in- Chief, Secretary or Deputy Secretary, matters were placed before them by their subordinate officer. They were required to take action thereupon. They were required to apply their own mind. A decision on their part was required to be taken so as to enable them to oversee supervision and completion of a government project. The Minister having regard to the provisions of the Rules of Executive Business was required to take a decision for and on behalf of the State. Some of the respondents, as noticed hereinafter, were required by their superiors. They were members of the Committee constituted by the authorities, viz., the Minister or the Secretary. At that stage, it was not possible for them to refuse to be a Member of the Committee and / or not to render any opinion at all when they were asked to perform their duties. They were required to do the same, and thus there cannot be any doubt whatsoever that each one of the respondent Nos. 1 to 7 was performing his official duty.
Para 63 For the Purpose of attracting the provisions of Section 197 of the Code of CBI No. 21/09 Page 58 of 135 State through CBI v/s Suchi Dhir & others Criminal Procedure, it is not necessary that they must act in their official capacity but even where a public servant purports to act in their official capacity, the same would attract the provisions of Section 197 of the Code of Criminal Procedure. It was so held by this Court in Sankaran Moitra v. Sadhna Das and Another [(2006) 4 SCC 584].
The question came up for consideration before this Court in Matajog Dobey v. H.C. Bhari (AIR 1956 SC 44 ; 1955 (2) SCR 925) wherein it was held :
"17 Slightly differing tests have been laid down in the decided cases to ascertain the scope and the meaning of the relevant words occurring in Section 197 of the Code; "any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty". But the difference is only in language and not in the substance.
The offence alleged to have been committed must have something to do, or must be related in some manner with the discharge of official duty. No question of sanction can arise under Section 197, unless the act complained of is an offence; the only point to determine is whether it was committed in the discharge of official duty. There must be a reasonable connection between the act and the official duty. It does not matter even if the act exceeds what is strictly necessary for the discharge the duty, as this question will arise only at a later stage when the trial proceeds on the merits. What we must find out is whether the act and the official duty are so inter-related that one can postulate reasonably that it was done by the accused in the performance of the official duty, though possibly in excess of the needs and requirement of the situation. In Hori Barn singh v. Crown Sulaiman, J. Observes:CBI No. 21/09 Page 59 of 135
State through CBI v/s Suchi Dhir & others "The section cannot be confirmed to only such acts as are done by a public servant directly in pursuance of his pubic office, though in excess of the duty or under mistaken belief as to the existence of such duty. Nor is it necessary to go to the length of saying that the act constituting the offence should be so inseparably connected with the official duty as to form part and parcel of the same transaction."
Para 66 Thus, in this case, sanction for prosecution in terms of Section 197 of the Code of Criminal Procedure was required to be obtained.
(emphasis supplied)
(iii). In State of Punjab Vs Labh Singh, 2014 SCC online SC 1019, learned Special Judge framed charges against the public servants for penal offences punishable under Section 218/409/465/467/120B IPC and under Section 13 (1) (c) read with Section 13 (1) (2) of PC Act. The said order was set-aside by the High Court on the ground that there was no sanction under Section 197 Cr. P.C. Accordingly, State approached the Apex Court. Apex Court set-aside the order of High Court qua the charges framed under PC Act. Relevant para is 8 and same is reproduced as under:
"Para 8 However as regards charges for the offences punishable under the IPC concerned the High Court was absolutely right in setting aside the order of the Special Judge. Unlike section 19 of the POC Act, the protection under section 197 of Cr. P.C. is available to the concerned public servant even after retirement. Therefore, if the matter was considered by the sanctioning authority and CBI No. 21/09 Page 60 of 135 State through CBI v/s Suchi Dhir & others the sanction to prosecute was rejected first on 13.09.2000 and secondly on 24.09.2003, the court could not have taken cognizance insofar as the offences punishable under the Indian Penal Code are concerned . As laid down by this Court in State of Himachal Pradesh v. Nishant Sareen, the recourse in such cases is either to challenge the order of the Sanctioning Authority or to approach it again if there is any fresh material".
(emphasis supplied)
(iv). In R. Balakrishna Pillai vs. State of Kerala and another, 1996 SCC (1) 478, while dealing with the question of sanction under Section 197 Cr.P.C, Hon`ble Court placed reliance on the decision of constitution bench in M. Karunanidhi vs. Union of India, 1997 (3) SCR 254. The relevant portion is reproduced as under:-
5. A Constitution Bench of this Court in M. Karunanidhi v. Union of India [(1979) 3 SCC 431 : 1979 SCC (Cri) 691 : (1979) 3 SCR 254] was required to consider whether a Chief Minister was a public servant within the meaning of Section 21 of the Indian Penal Code and Section 197 of the Code.
This Court referred to the decision of the High Court of Bombay in Namdeo Kashinath Aher v. H.G. Vartak [AIR 1970 Bom 385 :
1970 Cri LJ 1427 : 1970 Mah LJ 662] and extracted the following passage there from:
..................................................................... ...................................................................
6. The next question is whether the offence alleged against the appellant can be said to have been committed by him while acting or purporting to act in the discharge of CBI No. 21/09 Page 61 of 135 State through CBI v/s Suchi Dhir & others his official duty. It was contended by the learned counsel for the State that the charge of conspiracy would not attract Section 197 of the Code for the simple reason that it is no part of the duty of a Minister while discharging his official duties to enter into a criminal conspiracy. In support of his contention, he placed strong reliance on the decision of this Court in Harihar Prasad v.
State of Bihar [(1972) 3 SCC 89 : 1972 SCC (Cri) 409 : 1972 Cri LJ 707] . He drew our attention to the observations in paragraph 74 of the judgment where the Court, while considering the question whether the acts complained of were directly concerned with the official duties of the public servants concerned, observed that it was no duty of a public servant to enter into a criminal conspiracy and hence want of sanction under Section 197 of the Code was no bar to the prosecution. The question whether the acts complained of had a direct nexus or relation with the discharge of official duties by the public servant concerned would depend on the facts of each case. There can be no general proposition that whenever there is a charge of criminal conspiracy levelled against a public servant in or out of office the bar of Section 197(1) of the Code would have no application. Such a view would render Section 197(1) of the Code specious. Therefore, the question would have to be examined in the facts of each case. The observations were made by the Court in the special facts of that case which clearly indicated that the criminal conspiracy entered into by the three delinquent public servants had no relation whatsoever with their official duties and, therefore, the bar of Section 197(1) was not attracted. It must also be remembered that the said decision was rendered keeping in view Section 197(1), as it then stood, but we do not base our decision on that distinction. Our attention was next invited to a three-Judge decision in CBI No. 21/09 Page 62 of 135 State through CBI v/s Suchi Dhir & others B. Saha v. M.S. Kochar [(1979) 4 SCC 177 :
1979 SCC (Cri) 939] . The relevant observations relied upon are to be found in paragraph 17 of the judgment. It is pointed out that the words "any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty" employed Section 197(1) of the Code, are capable of both a narrow and a wide interpretation but their Lordships pointed out that if they were construed too narrowly, the section will be rendered altogether sterile, for, "it is no part of an official duty to commit an offence, and never can be". At the same time, if they were too widely construed, they will take under their umbrella every act constituting an offence committed in the course of the same transaction in which the official duty is performed or is purported to be performed. The right approach, it was pointed out, was to see that the meaning of this expression lies between these two extremes. While on the one hand, it is not every offence committed by a public servant while engaged in the performance of his official duty, which is entitled to the protection. Only an act constituting an offence directly or reasonably connected with his official duty will require sanction for prosecution. To put it briefly, it is the quality of the act that is important, and if it falls within the scope of the aforequoted words, the protection of Section 197 will have to be extended to the public servant concerned. This decision, therefore, points out what approach the Court should adopt while construing Section 197(1) of the Code and its application to the facts of the case on hand.
7. In the present case, the appellant is charged with having entered into a criminal conspiracy with the co-accused while functioning as a Minister. The criminal conspiracy alleged is that he sold electricity CBI No. 21/09 Page 63 of 135 State through CBI v/s Suchi Dhir & others to an industry in the State of Karnataka "without the consent of the Government of Kerala which is an illegal act" under the provisions of the Electricity (Supply) Act, 1948 and the Kerala Electricity Board Rules framed thereunder. The allegation is that he in pursuance of the said alleged conspiracy abused his official position and illegally sold certain units to the private industry in Bangalore (Karnataka) which profited the private industry to the tune of Rs 19,58,630.40 or more and it is, therefore, obvious that the criminal conspiracy alleged against the appellant is that while functioning as the Minister for Electricity he without the consent of the Government of Kerala supplied certain units of electricity to a private industry in Karnataka. Obviously, he did this in the discharge of his duties as a Minister. The allegation is that it was an illegal act inasmuch as the consent of the Government of Kerala was not obtained before this arrangement was entered into and the supply was effected. For that reason, it is said that he had committed an illegality and hence he was liable to be punished for criminal conspiracy under Section 120-B, IPC. It is, therefore, clear from the charge that the act alleged is directly and reasonably connected with his official duty as a Minister and would, therefore, attract the protection of Section 197(1) of the Act.
For the above reasons, we are unable to accept the view taken by the High Court of Kerala insofar as the requirement of sanction under Section 197(1) of the Code is concerned, in relation to the charge of criminal conspiracy. We, therefore, allow this appeal, set aside the decision of the High Court insofar as that charge is concerned, and hold that sanction under Section 197(1) of the Code was a sine qua non. As pointed out earlier so far as the second charge CBI No. 21/09 Page 64 of 135 State through CBI v/s Suchi Dhir & others under Section 5(2) read with Section 5(1)(d) of the Prevention of Corruption Act is concerned, the view of the High Court remains undisturbed. The appeal is allowed accordingly and will stand so disposed of.
(emphasis supplied)
(v). Applying above propositions of law in the facts and circumstances of the case, I am of the considered opinion that since A5 to A7 had acted in discharge of their official duty while dealing with the various loan requests of the burrower, thus, sanction under Section 197 Cr.P.C was also required to prosecute A5 to A7 for penal offences. Since, there is no sanction under Section 197 Cr.P.C, they cannot be held guilty for the penal offences.
16. Contentions relating to Section 13(1)(d) of Prevention of Corruption Act:-
(i). Now coming to the contention whether dishonest intention is pre-requisite ingredient for the offence punishable under Section 13(1) (d) of PC Act or not?
(ii) Section 13(1) (d) of Prevention of Corruption Act is in following three parts:-
(i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage;
or CBI No. 21/09 Page 65 of 135 State through CBI v/s Suchi Dhir & others
(ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or
(iii) while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest;
(emphasis supplied)
(iii). Though in the instant case, A5 to A7 have been chargesheeted for the offences punishable under Section 13(2) read with 13(1)(d) of P C Act, yet, no specific clause of Section 13(1)(d) is mentioned in the chargesheet. However, from bare perusal of chargesheet, it can safely be culled out that A5 to A7 have been chargesheeted for the violation of clause (i) and clause (ii) of Section 13(1)(d) of PC Act.
(iv). On bare perusal of clause (i) and (ii) of Section 13(1)
(d) of PC Act, it becomes abundantly clear that 'dishonest intention' is essential ingredient and same was also held by the Apex court in C. K. Jaffer Sharief v/s. State, 2012 (11) SCALE 71 . The same view was taken by the Apex court in S. K. Kale vs. State of Maharashtra AIR 1997 Supreme Court 822.
(v). The dishonest intention is defined under Section 24 of IPC and same is reproduced as under:-
24. "Dishonestly".--Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another CBI No. 21/09 Page 66 of 135 State through CBI v/s Suchi Dhir & others person, is said to do that thing "dishonestly".
(emphasis supplied)
(vi). Wrongful gain and loss are defined under Section 23 of IPC, which is reproduced as under:-
23. "Wrongful gain".--"Wrongful gain" is gain by unlawful means of property to which the person gaining is not legally entitled.
"Wrongful loss".--"Wrongful loss" is the loss by unlawful means of property to which the person losing it is legally entitled.
Gaining wrongfully, losing wrongfully.--A person is said to gain wrongfully when such person retains wrongfully, as well as when such person acquires wrongfully. A person is said to lose wrongfully when such person is wrongfully kept out of any property, as well as when such person is wrongfully deprived of property.
(emphasis supplied) Thus, in order to prove the guilt of A5 to A7 for the violation of clause
(i) and (ii) of Section 13(1) (d) of PC Act, CBI is also bound to satisfy the ingredients of Section 23 and 24 of IPC.
(vii). Now question arises whether there is any evidence to prove dishonest intention on the part of A5 to A7 or not?
(viii). In this regard, the testimony of PW29, PW32, PW33 CBI No. 21/09 Page 67 of 135 State through CBI v/s Suchi Dhir & others and PW36 are relevant.
(ix). PW36 Mr. P. K. Khanna, investigating officer in his cross-examination admitted that during investigation he did not come across any evidence against any of the bank officers of taking any gratification whatsoever either from the accused persons or from anyone else. He also admitted that CBI had not initiated or recommended any action for possessing disproportionate assets to the known source of income of bank officers i.e A5 to A7. When a question was asked whether he could point out any evidence to show that there was any dishonest or criminal misconduct on the part of bank officers in sanctioning of loan in this case, PW36 did not give any straight answer; rather he preferred to state that it is a matter of record. But during the course of arguments, counsel for CBI also failed to point out any specific evidence against A5 to A7 to prove that they had any dishonest intention or they had committed any criminal misconduct while dealt with the files in question.
(x). When a question was put to PW29 Mr. Rajiv Shetty Asstt. Genl. Manager whether there was any intentional lapse on the part of bank officers in sanctioning of loans, he deposed that he could not comment upon the intention of bank officers as he was posted in the said branch much after the account of M/s Yatin Prints had became NPA. He further deposed that during his tenure in the branch, he had come to the conclusion that Party had played fraud with the bank and due to that reason the matter was handed over to CBI for investigation. No doubt PW29 expressed his inability to state whether there was any dishonest intention on the part of bank CBI No. 21/09 Page 68 of 135 State through CBI v/s Suchi Dhir & others officers, but he was sure that the Party had played fraud with the bank. It is pertinent to state that PW29 did not depose that the bank officers (A5 to A7) had any dishonest intention or they misused their official position in any manner or adopted corrupt practices while dealing with the loan requests of the burrower.
(xi). PW31 Mr. V. P. Hegde Sr. Manager of the bank was deputed to inspect the loan account of M/s Yatin Prints. Accordingly, he inspected the loan account minutely. In his cross-examination, he deposed that if, any unintentional irregularity may occur during appraisal sanction and disbursement of the loan, for that department may take disciplinary action against the erring officer. He further deposed that during inspection of the account, he did not come across with any allegation or evidence that any illegal gratification or undue favour was taken by any bank official. He further testified that on the basis of investigation conducted by him and after going through the documents, he could say that there was no malafide or dishonest intention on the part of any of the bank officers. Thus, he also did not support the charge of CBI that accused persons had any dishonest intention or they adopted any corrupt practice or misused their official position in any manner.
(xii). PW32 Mr. Raviraj Shetty, Asst. General Manager also testified in his cross-examination that there was no illegality or irregularity in sanctioning of the loan. He also admitted that in the present case Export Credit Guarantee Corporation (ECGC) was available and further admitted that in the instant case Export Credit was extended by the bank in good faith and without any negligence.CBI No. 21/09 Page 69 of 135
State through CBI v/s Suchi Dhir & others In his cross-examination, he further deposed that he did not find any material or anything to infer that there was any conspiracy between the bank officers and the Party concerned in sanctioning or disbursement of loan in the case. Thus, PW32 also did not support the charges of CBI that accused persons (A5 to A7) had either adopted any corrupt practice or misused their official position in any manner or they had any dishonest intention while dealing with various credit limits granted to the burrower.
(xiii). PW33 Mr. U.K. Vasudeva Shetty was also deputed to inspect the account of M/s Yatin Prints to find out whether there was any irregularity in the account or not? When a question was put to him whether in this case there can be carelessness but there was no dishonest intention on the part of bank officers in processing/sanctioning of loan proposal? PW33 deposed that it was a procedure lapse but he expressed his inability to comment on the remaining part of suggestion. No doubt, PW33 failed to make any comment on the intention of bank officers but he categorically deposed that it was a procedure lapse. In the absence of any material on record, it can not be said that there was any dishonest intention on the part of A5 to A7 or they adopted any corrupt practice or misused their official position while dealing with the requests of burrower for various credit facilities.
(xiv). From the above it can safely be culled out that the evidence adduced by the CBI are not sufficient to prove the charges for the offence punishable under Section 13(1) (d) (i) and (ii) of PC Act qua A5 to A7.
CBI No. 21/09 Page 70 of 135State through CBI v/s Suchi Dhir & others
(xv). Now coming to the question whether there is any evidence to prove the guilt of bank officers (A5 to A7) under Section 13(1) (d)(iii) of PC Act or not?
(xvi). Clause (iii) of Section 13(1) (d) of PC Act reads as under:-
While holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest;
(emphasis supplied) (xvii). Bare perusal of clause (iii) makes it clear that to bring home the guilt of bank officers, prosecution has to establish that the act of accused persons was without any public interest.
(xviii). Admittedly, A5 to A7 were working as bank officers at the relevant time and bank deals in various types of commercial transactions including of granting various types of credit limits to its customers. No doubt, in certain cases the loan turns as NPA but this cannot be a sole ground to draw an inference that the act of bank officers was without any public interest. Needless to say that granting of loan/various kinds of credit facilities to the firms/companies/corporations is one of the major source of income of banks. Thus, it cannot be said that since the bank officers dealt with files relating to various kinds of limits while sanctioning the CBI No. 21/09 Page 71 of 135 State through CBI v/s Suchi Dhir & others limits in favour of the burrower, they had acted without any public interest. On the contrary, their act was in the interest of public as it would not only generate income to the bank but loan/credit limits also help firms/companies to strengthen the economy. Mere fact that the account turned NPA and burrower had furnished some forged documents to induce the bank to grant credit limits in its favour is also per se insufficient to draw an inference that bank officers had acted without any public interest unless it is proved on record that it was in the knowledge of bank officers or they had acted gross negligently and carelessly and disregarded the settled banking norms.
(xix). Clause (iii) of Section 13(1)(d) was discussed in detail by High Court of Delhi in case Runu Ghosh v/s. CBI decided by the High Court of Delhi in Criminal Appeal No. 482 of 2002 on December 21, 2011 wherein it was held that dishonest intention is not pre-requisite to prove the guilt for the offence under Section 13(1)(d)(iii) of P C Act. The relevant paras of the judgment are reproduced as under:-
70. There is no doubt that Section 13 (1) (d)
(iii) differs from other parts of the Act, not only in structure, but also in substance. The use of terms such as habitually accepts agrees to accept attempts consideration which he knows to be inadequate dishonestly or fraudulently misappropriates.
(property entrusted to him or allows any other person so to do); corrupt or illegal abusing his position are clear pointers to Parliamentary intention that mens rea is essential to be proved in relation to the CBI No. 21/09 Page 72 of 135 State through CBI v/s Suchi Dhir & others offences provided for under Section 13 (1)
(a) to (d) (i) and (ii). Section 13 (1) (d) (iii) contains no such words, which point to criminal intent. There is substance in the Appellants arguments that the Supreme Court had previously interpreted Section 5 (1) (d) so as to mean the existence of criminal motive (dishonest intent). This was stated in Narayanan Nambyar's case (supra) as follows:
The gist of the offence under this clause is, that a public officer abusing his position as a public servant obtains for himself or for any other person any valuable thing or pecuniary advantage. Abuse means misuse i.e. using his position for something for which it is not intended. That abuse may be by corrupt or illegal means or otherwise than those means. The word otherwise has wide connotation and if no limitation is placed on it, the words corrupt, illegal, and otherwise mentioned in the clause become surplus age, for on that construction every abuse of position is gathered by the clause. So some limitation will have to be put on that word and that limitation is that it takes colour from the preceding words along with which it appears in the clause, that is to say something savouring of dishonest act on his part.... Similarly, the other cases cited, i.e. S.P. Bhatnagar (whether the accused abused their position and acted dishonestly or with a corrupt or oblique motive) Abdulla Mohammed (supra); A. Wati Ao; C.K. Damodaran Nair; M. Mohiuddin and R. Balakrishna Pillai (supra) support this view. In the last decision, it was held that the offence requires intention, and the offence comprehended an element of mental state would be necessary to do a conscious act to get the required result of pecuniary advantage or to obtain any valuable thing, even if it is for someone else.CBI No. 21/09 Page 73 of 135
State through CBI v/s Suchi Dhir & others
71. The question is, whether this setting compels the court to hold that mens rea is, like the other provisions, a necessary pre-requisite or pre-condition which the prosecution has to establish, from the conduct of a public servant.
It would also be relevant here to mention that Section 13 (1) (e) appears to be in line with Section 13 (1) (d) (iii) in as much as there is no pointer to criminal intent. That provision declares that a public servant in possession of pecuniary resources or property which he cannot satisfactorily account, or which are disproportionate to his known sources of income is guilty of criminal misconduct. Here, the sources of income may or may not be connected with the public servants duties; the emphasis is on inability to satisfactorily account, or that the wealth or assets held are disproportionate to the servants known sources of income. If the ingredients of the provision are satisfied, it is not necessary to prove mens rea. Section 13 (1) (e) enacts that a public servant is guilty of criminal misconduct:
(e) if he or any person on his behalf, is in possession or has, at any time during the period of his office, been in possession for which the public servant cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income.
The ingredients which the prosecution has to prove in relation to this offence, (which is in pari materia with Section 5 (1) (e) of the 1947 Act, were spelt out in M. Krishna Reddy v State Deputy Superintendent of Police 1992 (4) SCC 45 as follows:
To substantiate a charge under Section 5(1)(e) of the Act, the prosecution must prove the CBI No. 21/09 Page 74 of 135 State through CBI v/s Suchi Dhir & others following ingredients, namely, (1) the prosecution must establish that the accused is a public servant, (2) the nature and extent of the pecuniary resources or property which were found in his possession (3) it must be proved as to what were his known sources of income, i.e. known to the prosecution and (4) it must prove, quite objectively, that such resources or property found in possession of the accused were disproportionate to his known sources of income... It is clear therefore, that mens rea or criminal intent does not have to be proved in the case of a charge under Section 13 (1) (e); it is enough for the prosecution to establish the four ingredients of the offence. As noticed earlier, the setting of this provision too needs to be taken into account, along with the legislative history (of Section 5 of the earlier Act, with its amendments, and the new Section 13 (1) (d) re-cast in a totally different manner) -it appears immediately after another offence of criminal misconduct (Section 13 (1) (d) (iii)) that does not textually allude to or require intent, or mens rea.
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24. The distinction between a strict construction and a more free one has disappeared in modern times and now mostly the question is what is true construction of the statute? A passage in Craies on Statute Law, 7th Edn. reads to the following effect:
The distinction between a strict and a liberal construction has almost disappeared with regard to all classes of statutes, so that all statutes, whether penal or not, are now construed by substantially the same rules. ... They are construed now with reference to the true meaning and real intention of the CBI No. 21/09 Page 75 of 135 State through CBI v/s Suchi Dhir & others legislature. At p. 532 of the same book, observations of Sedgwick are quoted as under:
The more correct version of the doctrine appears to be that statutes of this class are to be fairly construed and faithfully applied according to the intent of the legislature, without unwarrantable severity on the one hand or unjustifiable lenity on the other, in cases of doubt the courts inclining to mercy
73. Having regard to the previous history of the statute, the amendments to the 1947 Act, its avowed objects and the distinctive structure which Parliament adopted consciously, under the 1988 Act, despite being aware of the pre-
existing law, as well as the decisions of the Court- the conclusion which this Court draws is that mens rea is inessential to convict an accused for the offence under Section 13 (1)
(d) (iii). It would be sufficient if the prosecution proves that the public servant "obtains" by his act, pecuniary advantage or valuable thing, to another, without public interest. The inclusion of public interest, in the opinion of the Court, tips the scale in favour of a construction which does not require proof of mens rea. There can be many acts of a public servant, which result in pecuniary advantage, or obtaining of a valuable thing to someone else; typically these may relate to payment of royalty, grant of license or concessions, issuance of permits, authorizations, etc. Yet, such grants, concessions, or other forms of advantages to third parties would not criminalize the public servants actions, so long as they have an element of public interest. They (acts of the public servant) are outlawed, and become punishable, if they are "without public interest".
74. Having now settled the true interpretation of whether the offence under Section 13 (1) (d)
(iii) requires proof of mens rea, it would now CBI No. 21/09 Page 76 of 135 State through CBI v/s Suchi Dhir & others be vital to settle what really the prosecution would have to establish to say that the public servants actions or decisions, which result in a third party obtaining a pecuniary advantage or valuable thing, without public interest. The expression "public interest" is known to law; at the same time its meaning is not rigid, and takes colour from the particular statute or policy (Ref. Srinivasa Co-operative House Building Society v Madam Gurumurthy Sastry 1994 (4) SCC 675). It might be useful to consider the following formulation of what is public interest, in relation to actions by public officials or agencies or instrumentalities of state, in every sphere of government functioning, given in Shrilekha Vidyarthi (Kumari) v. State of U.P., (1991) 1 SCC 212:
There is an obvious difference in the contracts between private parties and contracts to which the State is a party. Private parties are concerned only with their personal interest whereas the State while exercising its powers and discharging its functions, acts indubitably, as is expected of it, for public good and in public interest. The impact of every State action is also on public interest. This factor alone is sufficient to import at least the minimal requirements of public law obligations and impress with this character the contracts made by the State or its instrumentality. It is a different matter that the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes...To this extent, the obligation is of a public character invariably in every case irrespective of there being any other right or obligation in addition thereto. An additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non- arbitrariness at the hands of the State in any of its actions. In a later decision, LIC of CBI No. 21/09 Page 77 of 135 State through CBI v/s Suchi Dhir & others India v. Consumer Education & Research Centre, (1995) 5 SCC 482, it was held that:
Public authorities or those whose acts bear insignia of public element, action to public duty or obligation are enjoined to act in a manner i.e. fair, just and equitable, after taking objectively all the relevant options into consideration and in a manner that is reasonable, relevant and germane to effectuate the purpose for public good and in general public interest and it must not take any irrelevant or irrational factors into consideration or appear arbitrary in its decision. A recent judgment, has examined the concept, in NOIDA Entrepreneurs Association v. NOIDA, (2011) 6 SCC 508, in the light of provisions of Section 13 (1) (d), though the context of the courts' judgment were directions issued to investigate into action of public servants.
The court held that:
The State or the public authority which holds the property for the public or which has been assigned the duty of grant of largesse, etc. acts as a trustee and, therefore, has to act fairly and reasonably. Every holder of a public office by virtue of which he acts on behalf of the State or public body is ultimately accountable to the people in whom the sovereignty vests. As such, all powers so vested in him are meant to be exercised for public good and promoting the public interest. Every holder of a public office is a trustee.
xxxxxxxxxxxx xxxxxxxxxxxx
41. Power vested by the State in a public authority should be viewed as a trust coupled with duty to be exercised in larger public and social interest. Power is to be exercised strictly adhering to the statutory provisions and fact CBI No. 21/09 Page 78 of 135 State through CBI v/s Suchi Dhir & others situation of a case. Public authorities cannot play fast and loose with the powers vested in them. A decision taken in an arbitrary manner contradicts the principle of legitimate expectation. An authority is under a legal obligation to exercise the power reasonably and in good faith to effectuate the purpose for which power stood conferred.
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77. The court, as a consequence has to determine the objective criteria by which acts (of public servants) without public interest, are to be judged, if mens rea (to obtain pecuniary advantage or valuable thing to another) is not a necessary ingredient. This exercise is essential because in the absence of mens rea (which has been ruled out) the court has to say what "acts" resulting in someone obtaining pecuniary advantage or valuable thing are "without public interest". Obviously the mere fact that a third party obtains pecuniary advantage, or a valuable thing, is insufficient; a supplier of equipment to public servants or offices, a travel agent who makes bookings for a public agency, a businessman or corporate group granted licenses or clearances, by departments or agencies of the Government, would all stand to benefit. Many of these decisions are in fact, and all are, expected to be in public interest. Therefore, the kind of behaviour which amounts to an "act" resulting in someone "obtaining pecuniary advantage"
or "valuable thing" "without public interest"
needs to be spelt out.
78. In a previous part of this judgment, what constitutes "public interest" and the trust element, which informs every decision of a public servant or agency, was discussed and emphasized. The State in its myriad functions enters into contracts, of various kinds, involves CBI No. 21/09 Page 79 of 135 State through CBI v/s Suchi Dhir & others itself in regulation, awards or grants largesse, and holds property. Each action of the State must further the social or economic goals sought to be achieved by the policy. Therefore, when a public servants decision exhibits complete and manifest disregard to public interest with the corresponding result of a third party obtaining pecuniary advantage or valuable thing, he is fastened with responsibility for "criminal misconduct" under Section 13 (1) (d) (iii). There is nothing reprehensible in this interpretation, because the "act" being "without public interest" is the key, the controlling expression, to this offence. If one contrasts this with "abuse" of office resulting in someone "obtaining" "pecuniary advantage or valuable thing", it is evident that Section 13 (1)(d) (ii) may or may not entail the act being without public interest. This offence- under Section 13 (1) (d) (iii) advisedly does not require proof of intent, or mens rea, because what Parliament intended was to punish public servants for acts which were without public interest. This kind of offence is similar to those intended to deal with other social evils, such as food and drug adulteration, (offences under Prevention of Food Adulteration Act, Section 13 (1), Drugs and Cosmetics Act;
Section 7 (1) Essential Commodities Act, 1955, Section 25, Arms Act, 1959), possession of explosives, air and water pollution, etc.
79. What then is the behaviour or act which attracts such opprobrium as to result in criminal responsibility? It is not every act which results in loss of public interest, or that is contrary to public interest, that is a prosecutable offence. There can be no doubt that all acts prejudicial to public interest, can be the subject matter of judicial review. In those cases, courts consider whether the decision maker transgressed the zone of reasonableness, or breached the law, in his action. However, it is only those acts done with complete and manifest disregard to the norms, CBI No. 21/09 Page 80 of 135 State through CBI v/s Suchi Dhir & others and manifestly injurious to public interest, which were avoidable, but for the public servants overlooking or disregarding precautions and not heeding the safeguards he or she was expected to, and which result in pecuniary advantage to another that are prosecutable under Section 13(1) (d) (iii). In other words, if the public servant is able to show that he followed all the safeguards, and exercised all reasonable precautions having regard to the circumstances, despite which there was loss of public interest, he would not be guilty of the offence. The provision aims at ensuring efficiency, and responsible behaviour, as much as it seeks to outlaw irresponsibility in public servants functioning which would otherwise go unpunished. The blameworthiness for a completely indefensible act of a public servant, is to be of such degree that it is something that no reasonable man would have done, if he were placed in that position, having regard to all the circumstances. It is not merely a case of making a wrong choice; the decision should be one such as no one would have taken.
(emphasis supplied)
17. Now question arises whether act of A5 to A7 was without any public interest when they dealt with the requests of M/s Yatin Prints for various credit limits?
(i). It is admitted case of CBI that bank had granted OLCC limit in the sum of ` 20 lac against the request of ` 50 lac and PCL of ` 50 lac against the request of ` 300 lac in favour of burrower i.e. M/s Yatin Prints. It is also admitted case of CBI that the bank had granted DBP/FU-DBP to the extent of ` 50 lac in favour of the CBI No. 21/09 Page 81 of 135 State through CBI v/s Suchi Dhir & others burrower i.e. Yatin Prints.
(ii) Now, I proceed to examine all these facilities one by one to ascertain whether the act of A5 to A7 while dealing with the requests of burrower to grant the above facilities was without any public interest or not.
18. OLCC Limit:-
(i). It is admitted case of CBI that the proposal for the said facility was processed by PW25 Mr. S. K. Desai and the proposal is exhibited as Ex. PW22/A.
(ii) In his process note, PW25 had examined the request of burrower and thereafter, recommended to grant OLCC limit of ` 20 lac against the request of ` 50 lac against the principle security of stock and trade and collateral security of the guarantor Satish Kumar. The financial position of the borrower is highlighted in the proposal is as under:-
The firm had turn over of ` 32.47 lac in the financial year 1994-1995; ` 38.47 lac in the financial year 1995-1996 and ` 200 lac till January 31, 1997 in the financial year 1996- 1997. As per the certified statement of Chartered Accountant, firm was likely to achieve the sale to the tune of ` 256.43 lac till March 31, 1997. In order words, there was substantial improvements in the sale figures of the firm from the previous years.CBI No. 21/09 Page 82 of 135
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(iii) It is also recited in the proposal that firm had received good orders from M/s Lee Cooper and some other important clients.
On the basis of new contracts received by the firm and assurance given by M/s Lee Coopers, firm had anticipated that its sale figure would be to the tune of ` 322.10 lac.
(iv) As per process note, the current ratio of the firm during the financial year 1993-1994 and 1994-1995 was excellent whereas in the year 1995-1996, it was satisfactorily. Debt equity ratio was also found sound by PW25.
(v) After analyzing the financial condition of the firm and its requirements, PW25 assessed that the bank should consider to grant limit to the extent of ` 20 lac against the request of ` 50 lac.
(v) PW25 also found that the location of the unit of the firm was ideal as the skilled and unskilled labours were easily available at cheaper rate in the said locality and the cheaper labours would make the product compatible in all respects. It was also highlighted that the trade creditors in the firm were almost negligible; capital base was very strong and firm had net high working capital; working results were found satisfactorily and it was also observed that credit facility had been secured by the applicant by the stock in trade and collateral security. It was also observed that the report of the previous banker of the firm was satisfactorily.
(vi) It was also highlighted that the unit of the Party was visited and on visit premises had given the impression that the firm CBI No. 21/09 Page 83 of 135 State through CBI v/s Suchi Dhir & others was getting most of the work done at its unit and had reputed off set printers; printing quality was found good; rates were competitive. It was also observed that the Party was able to procure good orders from the reputed clients.
(vii) PW25 also observed in his note that the total assets of the firm in the financial year 1996-1997 was ` 97.69 lac against the liability of ` 50.12 lac whereas the projected assets in the financial year 1997-1998 was ` 103.45 lac against the liability of ` 50.26 lac.
(viii) Value of the property of guarantor named Mahesh Dhir was found ` 37.50 lac while the valuation of property of Satish Kumar was assessed at ` 47.50 lac.
(ix) On the basis of detailed analysis, PW25 recommended to sanction a limit of ` 20 lac on the basis of hypothecation of the stock in trade of printing papers; printing materials such as ink, dyes, chemicals; printing material etc with 25 % margin on invoice price or market value whichever is lower; hypothecation of entire books of company and collateral security of Satish Kumar having value of ` 47.34 lac.
(x) In his process note, PW25 also recommended the following conditions:-
(i) Party should maintain proper books of accounts such as sale and purchase register, daily stock register, bills and invoices;
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(ii) Party should submit stock statement showing separately credit purchase and book debt statement;
(iii) Stocks and machinery should be ensures comprehensively for full value;
(iv) Sale tax register certificate and sale stock returns file; advance tax and tax paid receipts should be submitted;
(v) Statement of accounts from April 1, 1996 to January 1, 1997 of OBC Chawri Bazar to be submitted;
(vi) OLCC of ` 9 lac only to be released initially and remaining ` 11 lac to be released after the balance sheet as on March 31, 1997 be submitted along with auditor note;
(vii) The limits should be regulated as per the Drawing Powers available.
(xi) Sr. Manager accepted the above recommendations of PW25, however, Sr. Manager permitted the party to submit the audited balance sheet by April 30, 1997 and sent the file to Chief Manager i.e. A6 Mr. K. V. K. Shetty.
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(xii) Chief Manager (A6) sanctioned the OLCC limit of ` 20 lac with following additional conditions:-
(i) Party should submit the audited financial statement balance sheet before releasing of this facility as per guidelines contained in Head Office circular No. 182/95.
(ii) Valuation/verification of the proposed security should be obtained as per Head Office circular No. 191/96.
(iii) Unit inspection should be done before the disbursal of facility and a copy of unit inspection should be kept in the file. Therefore, Chief Manager sent the file to AGM for perusal.
(xiii) From the conditions imposed by Chief Manager (A6), it becomes clear that Chief Manager had overruled the condition no.
6 as recommended by PW25 wherein he recommended to release ` 9 lac initially and balance ` 11 lac after submitting the audited balance sheet as on March 31, 1997. But Chief Manager imposed the condition that party should submit the audited balance sheet before the release of facility. But surprisingly, the CBI found criminality on the part of A6 but failed to find any criminality on the part of PW25. CBI failed to clarify which of the conditions imposed by A6 attracts the criminality or criminal misconduct as defined under Section 13(1)(d) of Prevention of Corruption Act. To my mind, CBI No. 21/09 Page 86 of 135 State through CBI v/s Suchi Dhir & others none of the conditions imposed by A6 attracts any criminality or misconduct as defined in Prevention of Corruption Act. Nor any of the conditions imposed by A6 shows that he had acted without any public interest.
(xiv) On receipt of the file, AGM i.e. A5 permitted the party to submit the audited balance sheet within 20 days as a special case and also permitted the bank to release ` 20 lac OLCC limit as a special case. No doubt the relaxation given by A5 is contrary to the recommendation of PW25 and Sr. Manager but this itself is not sufficient to prove that A5 had any criminal intent or he acted without any public interest. Being the AGM of the bank, he was within his jurisdiction to permit the burrower to file audited balance sheet within 20 days and permitted the bank to release OLCC limit as a special case. Admittedly, PW25 also recommended to release the sum of ` 9 lac initially and ` 11 lac after submitting the audited balance sheet. Thus, A5 in fact had enhanced the limit of ` 9 lac to ` 20 lac. There is nothing on record on what basis PW25 calculated ` 9 lac and decided that the balance ` 11 lac should be released after filing of the audited balance sheet. Mere fact that there is a variation in the figure of amount which was to be released to the Party without submitting audited balance sheet is itself not sufficient to draw a conclusion that either A5 had any criminal intent or he conducted criminal misconduct or he acted without any public interest.
(xv) It is admitted case of CBI that Sr. Manager permitted the Party to file audited balance sheet by April 30, 1997 whereas CBI No. 21/09 Page 87 of 135 State through CBI v/s Suchi Dhir & others AGM permitted the Party to file within 20 days. Since, the loan was sanctioned on March 19, 1997, it means that Party was required to submit the balance sheet by April 7, 1997. Thus, it cannot be said that the condition imposed by A5 in any manner contrary to the public interest.
(xvi) It is also admitted case of CBI that in the process note Ex. PW22/A, PW25 had highlighted the sound financial condition of the burrower. After considering the sound financial condition of the burrower and the fact that burrower had furnished sufficient security against the sanction limit, it cannot be said that the act of A5 i.e. permitting the bank to release ` 20 lac OLCC as a special case was against the public interest.
(xvii) Now coming to the circular No. 182/95 (Ex. PW25/H). The relevant portion of circular is reproduced as under:-
"........All the branch managers are, therefore, advised to verify the loan files immediately and to obtain audited financial statements with auditors reports as on 31. 3. 95 in respect of all such borrowal accounts where instructions remain not complied with as on date. Branch managers are also directed to submit to their RO/ZO a list of non-corporate borrowal accounts of the following categories, where audited financial statements and auditors report as per Form No. 3CB are NOT obtained. This list should be submitted to their controlling office within 7 days of receipt of this circular. In case there are no such accounts, a certificate to the effect has to be CBI No. 21/09 Page 88 of 135 State through CBI v/s Suchi Dhir & others invariably submitted to RO/ZO."
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------------------------------------------------------------ All concerned are once again instructed not to sanction credit limits in future, if the applicants/burrowers fail to submit audited financial statements together with the report/certificate of as in Form 3CB. Violation would be dealt with without any leniency, which may please be noted.
(emphasis supplied) (xviii) Bare perusal of the said circular makes it clear that two directions were given in the said circular. First was to obtain the audited financial statement in all pending matters within a week and in second part, instructions were issued that in future no credit limit shall be sanctioned without submitting audited financial statement. But the circular is silent whether audited balance sheet should be of the current year or of the immediate previous financial year. Admittedly, in the instant case, the loan was sanctioned on March 17, 1997, thus it was not possible for the Party to submit the audited balance sheet in the year ending March 31, 1997. The same could be produced by the Party only after the expiry of financial year. Similarly, there is nothing in the said circular which may debar the competent authority to permit the party to file audited balance sheet within reasonable period. Thus, it can not be said that there is any violation of the said circular when the Sr. Manager and AGM had permitted the Party to submit the audited balance sheet with audit report by April 30, 1997 or within 20 days respectively.
(xix) Now coming to the circular No. 191/96 (Ex. PW25/G).
CBI No. 21/09 Page 89 of 135State through CBI v/s Suchi Dhir & others The relevant portion is reproduced as under:-
Valuation Report:-Another short coming observed is with regard to the valuation reports of properties which are not subjected to independent verification by branch Manager. Branch Managers should visit the site and they should independently comment about the accessibility to the property, tenancy, occupation, if any, fair market value, etc. the valuer should also be advised to mention in the valuation report whether the property is self occupied residential property or whether it is partly occupied with tenants, etc., and the valuation method should be correctly justified by approved valuers.
In the appraisal memoranda, location (Urban or not), full description of the property including Survey No., area, valuation of land, valuation of building, name of the valuer, whether self-occupied/tenanted, date of valuation, method of valuation etc., should be clearly indicated.
(emphasis supplied) (xx) Bare perusal of the above circular makes it clear that stress was given that the Branch Manager should visit the property and he should give his independent comment over the said property.
There is nothing in the said circular which may suggest that property was required to be visited either by Chief Manager or by AGM. If property was required to be visited, PW25 being the Manger was supposed to visit the property. Admittedly, PW25 had not visited the collateral security but in his note, he recited that he had visited the unit of the M/s Yatin Prints. In these circumstances, it CBI No. 21/09 Page 90 of 135 State through CBI v/s Suchi Dhir & others cannot be said that there was any violation either on the part of A5, A6 or A7. If there is any violation about the said circular, it was on the part of PW25. But CBI preferred to cite him as a witness. In these circumstances, I am of the view that there is no iota of evidence to show that A5 to A7 had violated the said circular in any manner.
18. It is also admitted case of CBI that M/s Yatin Prints had approached the AGM (A5) vide its letter dated 4.4.1997 (Ex. PW25/A9) wherein burrower had made a request to AGM to sanction the OLCC for remaining amount of ` 30 lac but the request of burrower was declined at Sr. Manager level itself. Thereafter, again burrower had approached AGM through its letter dated 19.4.97 (Ex. PW25/D4) and again requested to enhance the credit limit by another ` 30 lac i.e. balance amount but again no action was taken by the AGM on the said request. This shows that AGM had not shown any undue favour to the burrower. If A5 had any kind of conspiracy with the burrower or he intended to give any undue favour to the Party, A5 being the AGM could easily entertain the said request and he could easily enhance the credit limit but he preferred not to entertain the said request of the Party.
19. It is also admitted case of CBI that on April 25, 1997 PW25 had put up a note (Ex. PW25/C) at the instruction of AGM (A5) for enhancement of Open Cash Credit limit by ` 5 lac. As per the said note, the party had met DGM Zonal Office, Delhi personally for enhancement of limit by ` 5 lac and as per the discussion held between DGM and the party, DGM had instructed the Branch CBI No. 21/09 Page 91 of 135 State through CBI v/s Suchi Dhir & others Manager orally to enhance the limit by ` 5 lac as a special case in order to enable the Party to execute the order at hand and obtained additional guarantee of Mr. H. K. Sawhney, Director of Kunal Travel (P) Ltd.
(i) At the time of processing the note, PW25 raised the following points:-
(i) The party has not been able to justify the satisfactorily need for higher working capital finance within a month of the release of the facility;
(ii) The provisional balance sheet of the firm as on March 31, 1997 duly certified by the Chartered Accountant shows sale of ` 238.40 lac. However, from the turnover in the statement of accounts received from the previous banker, the total sales in the region of ` 25 to ` 30 lac. The party has not been able to explain clearly the facts behind this vast variation and has informed that he will call on his CA to clarify it within next two days;
(iii) Earlier the OLCC limit of ` 20 lac was released to the party on 19.3.97 as a special case as they had assured that audited balance sheet will be submitted by 7.4.1997, which had not been complied with till date. The audited balance sheet and form No. 3CB are necessary for limit above ` 10 lac as per CBI No. 21/09 Page 92 of 135 State through CBI v/s Suchi Dhir & others Head Office stipulation in circular No. 182/95. PW25 also wrote "we might write to DGM for written confirmation of his instructions".
(ii) With these observations PW25 placed the note before Sr. Manager, who in his note stated that in view of the DGM instruction and additional security of Mr. Sawhney, adhoc limit may be extended till 30.6.1997 and the same was permitted by AGM (A5).
(iii) Thus, from the note it is abundantly clear that the additional limit was sanctioned under the instruction of DGM. As already discussed that since AGM had declined previously to entertain the requests of the party for enhancement of the limit, it appears that party had approached the DGM and after discussion with the party, DGM had directed the branch to sanction additional limit of ` 5 lac by taking additional guarantee of H. K. Sawhney director of M/s Kunal Travel (P) Ltd.
(iv) It is pertinent to state that at the time of enhancing the limit by ` 5 lac bank had not only taken the additional guarantee of H. K. Sawhney of ` 25 lac but bank had also taken fresh guarantee from previous surety namely Mahesh Dhir and Satish Kumar in the sum of ` 25 lac each. This shows that bank had taken additional precaution to secure the bank money. Admittedly, CBI preferred not to implead DGM as an accused; rather preferred to keep him in column no. 2.CBI No. 21/09 Page 93 of 135
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(vi) From the said note, it is difficult to hold that the act of Sr. Manager or AGM amounts any kind of criminal misconduct.
(vii) Moreover, the condition no. 2 highlighted by PW25 in his note Ex. PW25/C that there is a huge variation in the sale figures of the Party is contrary to the previous process note Ex. PW22/A. Indisputably, in his original note Ex. PW22/A, PW25 highlighted that party had total turnover in the year 1994-95 to the sum of ` 32.47 lac and in the year 1995-96 to the sum of ` 38.47 lac and till 31.1.97 the firm had achieved the sale to the tune of ` 200 lac and as per the certificate given by Chartered Accountant firm is likely to achieve turnover of ` 256.43 lac. Admittedly, PW25 in his note Ex. PW25/C mentioned that firm had shown the sales as on 31.3.1997 to the tune of ` 238.40 lac, which corroborates the previous note wherein it was mentioned that firm was likely to achieve sale to the tune of ` 256.43 lac. Thus, in these circumstances, it is not clear on what basis CBI had placed reliance on the note of PW25 that he had seen major variation in the sale figures.
(viii) Admittedly, firm had not furnished the audited balance sheet as directed by AGM at the time of sanctioning the original limit. But PW25 in his note Ex. PW25/C categorically stated that firm had submitted the provisional balance sheet as on 31.3.97 which was duly certified by Chartered Accountant. This shows that the firm had at least submitted the provisional balance sheet, thus it can not be said that firm had not submitted any audited balance sheet.
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(ix) It is also admitted case of CBI that AGM vide its letter dated 1.5.1997 (Ex. PW29/S1) had intimated the DGM that the party approached the bank for adhoc limit for execution of huge order and as the party had not submitted audited financial statement, bank had not evinced any interest. Subsequently, party approached you (DGM) and after discussion and as advised by you (DGM), by taking additional guarantor, bank had released adhoc limit of ` 5 lac.
(ix) Since CBI failed to trace out the said letter in the office of DGM, it was alleged that AGM had fabricated the said letter to save his skin but to my mind in the facts and circumstances of the case, this itself is not sufficient in any manner to disbelieve the version of AGM that additional limit was sanctioned to the party under the instruction of DGM. It has already been discussed that DGM knew the party and even at the time of opening of the account, DGM had accompanied the party. Moreover, there are other also evidence on record to show that party used to meet DGM directly and DGM had permitted the party to avail additional Packing Credit limit, which will be discussed while dealing with the Packing Credit Limit.
(x) Admittedly, the office of AGM and DGM is located in the same building. Thus, mere fact that the entry of letter Ex. PW29/S1 is not found in the dispatch register or the fact that no entry was found in the register of DGM is not sufficient to prove that AGM had not written the said letter. It is quite probable that letter may be sent to DGM by hand or through messenger. At the cost of repetition, it is pertinent to state that AGM was competent and had CBI No. 21/09 Page 95 of 135 State through CBI v/s Suchi Dhir & others an opportunity to enhance the limit without the instruction of DGM, thus it looks quite improbable that AGM would misrepresent PW25 by stating that DGM had instructed to sanction the limit after taking additional security.
(xi) No doubt DGM (PW34) in his deposition deposed that there is no rule in writing to permit oral sanction but he fairly conceded that it was the practice of the banking that such permission can be accorded orally. When a specific question was put to him that he had orally instructed the concerned branch for granting of cash credit limit and TOD to all three parties i.e. M/s Yatin Prints, Kunal Trading and Sawhney Trading company, PW34 deposed that the same were granted on the recommendation of the branch and no irregularity was pointed out in the account when he permitted the enhancement of limit. He categorically admitted that some times recommendation was made orally and some time in writing. Thus, it becomes clear that PW34 did not deny that he did not use to issue oral instructions to the branch at the time of enhancement of cash credit limit and TOD facility. No doubt, PW34 had taken a plea that no irregularity was pointed out by the branch to him but said plea has no substance because there is nothing on record which may suggest that DGM had ever made any inquiry from the branch before issuing oral instruction. There is an evidence on record that the burrower had recited in its letter at the time of seeking enhancement of PCL limit that DGM had permitted to enhance the limit. The said letter will be discussed later on. But this itself shows that the burrower had some nexus with the DGM. In the absence of any evidence on record, no reliance can be placed on CBI No. 21/09 Page 96 of 135 State through CBI v/s Suchi Dhir & others the statement of DGM that branch had not pointed out any irregularity in the account. On the contrary, there are evidence on record that there was no irregularity in the OLCC account when the PLC was granted to the firm, which shows that there was no irregularity in the account when the additional limit of ` 5 lac was sanctioned under the instruction of DGM.
20. Now coming to the oral deposition of the witnesses relating to the OLCC limit.
(i) PW25 in his deposition deposed that he had put up the said note at the instruction of AGM. But to my mind this itself is not sufficient to attract any kind of criminality on the part of AGM because being AGM, A5 was within his jurisdiction to direct the Branch Manager to process the note. There is no allegation that AGM had pressurized PW25 in any manner to recite wrong facts or do any favour to the Party in any manner. Had it been shown PW25 had not highlighted the deficiencies in his note.
(ii) PW25 in his deposition testified that he had not proposed for hypothecation of the machinery of the firm as it was not essential because the loan was sanctioned as cash credit limit against stock and book debts which corroborates the defence version that OLCC was sanctioned against the stock and book debt and not on the basis of collateral security. He further deposed that there was no illegality in processing and approval of the said loan. Though he deposed that since AGM had overruled his recommendation by permitting the party to withdraw the entire CBI No. 21/09 Page 97 of 135 State through CBI v/s Suchi Dhir & others amount as a special case, but this fact has already been discussed in detail. Mere fact that AGM permitted the bank to release the limit as a special case does not amount any criminal mis-conduct as defined under Section 13(1)(d) of PC Act.
(iii) PW26 in his deposition testified that normally if there is any illegality or irregularity in the proposal, it should have been pointed out by the processing officer i.e. Mr. S.K. Desai in his note. He further testified that it was his duty to rectify the irregularity, if any, before putting the note. This shows that it was the duty of PW25 to verify the genuineness of guarantor i.e. Mr Satish Kumar and properties mortgaged by him with the bank as a collateral security. PW26 further deposed that since no adverse remark was made either by Branch Manager and Sr. Manager, thus there was no illegality on the part of Chief Manager when he sanctioned the loan and further testified that the proposal was considered in a normal course and bank officers had taken normal precaution while entertained the loan proposal. But he swiftly added that there were some procedural lapses. Assuming for the sake of arguments that there were some procedural lapses, but there is no evidence to show that there was any gross violation of any essential banking rule. Mere fact that there were some procedural lapses here and there is not sufficient to cast any criminal liability.
(iv) PW26 further admitted that to get cash discount, party generally used to take cash payments from the bank from the loan amount and same is permissible in the banking rule and guidelines. But contrary to this deposition, PW33 deposed that since loan was CBI No. 21/09 Page 98 of 135 State through CBI v/s Suchi Dhir & others sanctioned for the purpose of procuring raw material, bank officials should not have permitted the party to withdraw the entire amount in the short span of two days. This deposition appears to be an opinion of PW33 as he failed to cite any banking rule in this regard. In the absence of any cogent evidence on record, I am of the view that his testimony is not sufficient to impose any kind of criminal liability on the bank officers.
(v) PW25 further deposed that on April 25, 1997 i.e. at the time of enhancement of OLCC by ` 5 lac, AGM had called him in his chamber and directed to put up a note for enhancement of the limit by ` 5 lac as he had received the instruction from DGM. Mere fact that AGM asked him to put up a note is not sufficient to show that AGM had any dishonest intention or he wanted to do favour the Party. Indisputably, PW25 also deposed that AGM told him that he had received instruction from DGM to enhance the limit. As already discussed that the version of AGM is quite probable. Further, PW25 also admitted in his cross-examination that he had seen DGM sitting in the chamber of AGM along with the party. This further corroborates the defence version that DGM knew the Party very well, thus the defence version looks more probable that the party approached the DGM for enhancement of the limit when party found that AGM had not entertained its request to enhance the limit at two erstwhile occasions.
21. PCL/DBP-FUDBP Limit:-
(i). It is admitted case of CBI that M/s Yatin Export CBI No. 21/09 Page 99 of 135 State through CBI v/s Suchi Dhir & others proprietorship of A1 had applied for Packing Credit Limit to the tune of ` 300 lac and against the said request PCL to the sum of ` 50 lac and DBP and FU-DBP to the tune of ` 50 lac was proposed for sanction. The proposal was put up by Sr. Manager (A7). Perusal of Ex. PW32/E reveals that in order to get the above facilities, burrower had hypothecated all raw material, semi-finished and unfinished goods of garments, bills with supporting documents of title to goods.
At the time of obtaining the said facility, the proprietor (A1) had disclosed her net means to the extent of ` 97.57 lac and also furnished collateral security of Mr. Wazir Singh and Ms. Madhu Jain, value of which was assessed ` 60.50 lac and ` 37.50 lac respectively. In other words, at the time of seeking the said limit, the burrower had furnished the property worth of ` 195.57 lac approximately. Besides that, the above limit was covered under WTPSG of ECGCI. At the asking of the bank, burrower had also furnished irrevocable Letter of Credit of bank of America San Francisco USA for US $ 11 lac (approx. ` 3,93,25,000) at sight for export of ready-made garments valid up to July 15, 1997 for shipment up to ` 4 crore for working capital requirements. Besides that burrower had also furnished two guarantors namely Mr. Mahesh Dhir and Mr. H. K. Sawhney. Status of account of OLCC was found nominal.
(ii) From the above, it can safely be culled out that burrower had furnished adequate security to avail the above PCL and DBP. Since, the burrower had furnished irrevocable Letter of Credit to the extent of ` 3,93,25,000/- for the export of ready-made garments valid up to July 15, 1997, which appears to be more than CBI No. 21/09 Page 100 of 135 State through CBI v/s Suchi Dhir & others sufficient security for obtaining the said limits, but besides that bank had also obtained collateral security worth of ` 98 lac and bank also assessed the net means of the proprietor (A1) to the sum of ` 97.57 lac.
(iii) In the note, it was highlighted that there was direction from the Head office to go rapidly for credit extension in view of the comfortable fund position of the bank.
(iii) On the basis of fund position and security furnished by the burrower, Sr. Manager (A7) had recommended to sanction PCL and DBP on adhoc basis. The proposal was approved by Chief Manager with certain routine conditions and on the basis of the recommendation made by Sr. Manager and Chief Manager, AGM had sanctioned the limit.
(iv) On perusal of the said process note, recommendation and sanction, this court failed to find out anything which may attract the criminality against the said officers for processing, recommending and sanctioning of the limit. Mere fact that later on collateral securities were found forged is not sufficient to draw a conclusion that there was any criminality on the part of bank officers. It is admitted case of CBI that the bank officers had placed reliance on the report furnished by bank's panel advocate and panel valuer. Moreover, there is other cogent evidence on record to prove that collateral security was not even required to grant PCL against the irrevocable Letter of Credit. Indisputably, in the instant case irrevocable letter of credit was to the tune of ` 3,93,25,000/- which CBI No. 21/09 Page 101 of 135 State through CBI v/s Suchi Dhir & others was sufficient enough to sanction the above limits.
(v) The above PCL was availed by the party from time to time i.e. on June 12, 1997 (Ex. PW29/SA); on July 3, 1997 (Ex. PW29/S7; on July 30, 1997 (Ex. PW29/S9); on August 26, 1997 (Ex. PW29/S3) and on October 9, 1997 (Ex. PW 32/B). At the time of availing PCL, party had furnished all requisite documents and it was released in terms of the sanction of the limit.
(vi) It is also admitted case of CBI that on July 30, 1997 party had made a request to enhance the PCL to ` 1 crore vide its letter Ex. PW29/S10 but no action was taken on the said request.
(vii) On August 26, 1997 party again approached the Chief Manager vide its letter Ex. PW29/S4 requesting to enhance the limit by ` 15 lac to comply with the shipment and further recited that DGM had permitted to release the said limit.
(viii) On receipt of the said letter, the bank had processed a note and enhanced the limit by ` 15 lac. It was also mentioned by the Chief Manager that a confirmation be taken from the DGM. Accordingly, a letter was sent to DGM on September 6, 1997 (Ex. PW29/S5) stating that as permitted by DGM, bank had sanctioned the Packing Credit Limit of ` 15 lac to enable the party to acquire the required stock to execute the existing export orders and further intimated DGM that after sanctioning of the above limit, total liability under PCL had come to ` 64.59 lac against the sanctioned limit of ` 50 lac. The same was approved by the DGM vide letter dated CBI No. 21/09 Page 102 of 135 State through CBI v/s Suchi Dhir & others October 6, 1997 (Ex. PW29/S6) stating that in view of the Branch recommendations, DGM had approved/ratified branch action in allowing ` 15 lac excess under existing PCL limit of ` 50 lac sanctioned to the firm. Though from Ex. PW29/S6, an attempt was made to give impression that DGM had approved/ratified the action of branch on the recommendation of branch, but the evidence on record is contrary to the above. As already stated that when the party approached the bank vide its letter Ex. PW29/S4, party had specifically mentioned therein that it had discussed the matter with DGM and he had permitted to release the same. There is no evidence on record to show that the before permitting to release the limit, DGM had made any inquiry from the bank. Similarly, from the letter Ex. PW29/S5, it is clear that the bank had sanctioned the limit only at the direction of DGM. In these circumstances, there is no substance in the contention of learned Public Prosecutor that the DGM had ratified the action of branch at the recommendation of branch Manager. On the contrary, evidence on record proves that the branch had complied with the direction of DGM.
(ix) During the course of arguments, no evidence has been brought into the notice of Court by the CBI which may be sufficient even to infer that there was any criminal intent on the part of A5 to A7 while dealing with the above limits or their acts amount to criminal misconduct or that they had acted without any public interest. It is pertinent to state that to grant the credit limit against sufficient surety i.e. Irrevocable letter of credit is rather in the interest of bank. Mere fact that later on party committed some default or bank failed to recover the amount is not sufficient to impose criminal CBI No. 21/09 Page 103 of 135 State through CBI v/s Suchi Dhir & others liability on the bank officials/officers who dealt with the files in good faith.
22. Now coming to ocular evidence.
(i) PW29 Rajiv Shetty, AGM of the bank in his cross- examination fairly conceded that at the relevant time the equivalent value of US $ 11 lac was above ` 5 crore and further admitted that against the above said export order of US $ 11 lac, Mr. H Balakrishna Shetty (A7) being Sr. Manager proposed the PCL of ` 50 lac and FDBP of ` 50 lac in favour of the party and further deposed that apparently such kind of proposal looks attractive and safe from bank's point of view. However, in his next breath, he swiftly added that in the present case all documents which were submitted by the party were fake. Here is it pertinent to mention that it is not the case of CBI that letter of credit and ECGC furnished by the party were fake. Rather, the case of CBI is that title documents of collateral security were found fake. Thus, there is no substance in the deposition of PW29 that in the present case, all documents were fake. PW29 further deposed that there was no system of verifying the correctness and genuineness of such documents i.e. Letter of Credit of the foreign bank and further deposed that bank used to proceed on the apparent tenor of the documents. He further deposed that in the instant case letter of credit and export orders looked genuine and due to that reason proposal was processed. He further deposed that on the basis of such sound export order supported by LC of Bank of America, proposal was considered as very less risky to sanction loan to the party. Thus, from the testimony CBI No. 21/09 Page 104 of 135 State through CBI v/s Suchi Dhir & others of PW29 it becomes clear that the bank officers i.e. A5 to A7 acted diligently while processing and sanctioning PCL and FDBP to the tune of ` 50 lac each as they had taken the letter of credit of US $ 11 lac from the party and the proposal was very less risky to the bank.
(ii) PW32 M. Raviraj Shetty, AGM of the bank in his cross examination admitted that there was no illegality or irregularity while sanctioning the loan and further admitted that in the present case ECGC (Export Credit Guarantee Corporation) coverage was available and further admitted that export credit was extended in good faith without any negligence and further deposed that since it was a priority sector lending, although there was no need of LC cover, yet in this case LC coverage was also made available by the party. This further proves that bank officers i.e. A5 to A7 had taken all precautions to protect the bank money.
(iii) He further admitted that as per the prevalent practice in the bank, loan proposal used to be processed on the basis of documents, title report of panel advocate, valuation report of panel valuer of the bank and other documents provided by the party and the bank officer was not required to visit the work place of the party except in exception circumstances where a doubt arises in the mind of bank official. He further admitted that in such a case lower level officers used to visit the work place of party and not the superior officers.
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(iv) PW32 further deposed that as per the circular 71/2000 (Ex. PW33/DA), bank was not required to insist for collateral security in case of facility granted for export credit. However, in this case collateral security was also taken by the bank by way of abundant caution. This further proves that bank officers i.e. A5 to A7 had taken collateral security as abundant caution otherwise they were not required to take the same as per the banking rules.
(v) In view of the above deposition, no reliance can be placed on the allegation of CBI that it was the duty of A5 to visit the property before sanctioning the loan.
(vi) Prosecution has strongly relied on the deposition of PW33. But to my mind, his testimony is not much helpful to the prosecution as his testimony is based on assumption and presumption. In his cross-examination, he fairly admitted that he had not dealt with the sanction of loan pertaining to the export oriented units. But swiftly added that he was aware about the procedure of the bank in sanctioning of the loan to export oriented units and he was also aware about the bank guidelines and circulars in this respect. But surprisingly, he expressed his ignorance about the circular issued by RBI that no collateral security is required from the burrower of export oriented units and this fact has been already proved by PW32. This shows that PW33 is not well conversed with the requirements of loan to export oriented units. Similarly, he deposed that since in the proposal, the actual sale turnover for the year ending March 31, 1996 was ` 38.47 lacs whereas the projected sale figure for the year ending March 31, 1997 was ` 256.43 lac, CBI No. 21/09 Page 106 of 135 State through CBI v/s Suchi Dhir & others accordingly, he felt that it was an inflated figure. This fact has already been discussed in detail in the above portion of the judgment. There is no base to presume that the figure of the sale was inflated as PW25 in his process note (Ex. PW22/A) recited that the party had achieved the sale above to ` 200 lac till January 31, 1997 and as per the certificate issued by Chartered Accountant, firm was likely to achieve the sale target to the tune of ` 256 lac. This shows that PW33 had deposed on the basis of his assumption and presumptions, thus, I am of the view that his testimony is not helpful to the prosecution to bring home the guilt of any of the accused persons.
(vii) PW34 Mr. K. Prabhakar Hedge, the then DGM also corroborated the testimony of PW32 by admitting that while sanctioning the financial assistance to an export oriented limit, no collateral security is required and bank had taken the collateral security by way of abundant precaution.
(viii) From the above, it becomes abundantly clear that there is no iota of evidence to establish that A5 to A7 had given any undue favour to the burrower or they acted without any public interest while dealing with the request of the party for PCL. On the contrary, from the evidence led by prosecution, it can safely be culled out that A5 to A7 had taken all precautions while processing, approving and sanctioning the PCL and FDBP of ` 50 lac each to the burrower by asking the party to furnish the collateral security, though it was not required.
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23. Contentions relating to FDBP:-
(i). The prosecution case is that A5 to A7 had committed various irregularities while discounting the documents produced by accused from time to time in support of DBP/FDBP facility. In this regard, the letter dated February 10, 1998 of the bank (Ex. PW29/S-
21) to Export Credit Guarantee Corporation of India Ltd. is quite relevant. In the said letter, bank informed ECGC of India Ltd. that bank had negotiated three export bills i.e. on July 29, 1997, August 19, 1997 and October 8, 1997 worth of ` 92,01,372/- and the said bills had been realised. Bank further informed ECGC of India Ltd.
that bank had discounted another export worth of ` 89,17,138/- on February 2, 1998 and proceeds of the said bill was yet to be realised. From the said letter it becomes crystal clear that previous three export bills worth of ` 92,01,372/- had been realised by the bank, however, fourth bill could not be realised. It is undisputed fact that fourth bill was discounted by the bank on February 2, 1998 and it is admitted case of the CBI that A5 had already been transferred from the branch, thus A5 had no role in the discount of said bill.
(ii) From the letter dated February 14, 1998 (Ex. PW29/S-
22), it is clear that when bank had received a telex message from the Bank of America on February 12, 1998 that the buyer M/s Circle Trade Service Ltd. refused to pay the said documents, bank requested the burrower to contact the buyer immediately and make necessary arrangement to retire the bill. Thereafter, bank vide its letter dated March 19, 1998 ( Ex. PW29/S-24) intimated the burrower that bill had been returned unpaid by the Overseas Bank CBI No. 21/09 Page 108 of 135 State through CBI v/s Suchi Dhir & others on the ground that payment was not forthcoming. Simultaneously, Bank also made a request to RBI to hand over the case to Directorate of Enforcement to get the payment immediately.
(iii) From the above documents, it becomes clear that bank had purchased an export bill worth of ` 89,17,138/- but the said bill could not be realised as the buyer refused to make the payment to the overseas bank i.e. Bank of America.
(iv) In this regard the testimony of PW29 and PW32 are relevant.
(v) PW29 Mr. Rajiv Shetty was AGM at the relevant time. In his deposition he testified that he had told the investigating officer that during the incumbency of Ravi Raj Shetty (PW32) a bill of ` 89 lac was purchased by the Bank on February 2, 1998 in the account of M/s Yatin Prints but he swiftly added that he also told CBI that Mr. Raviraj Shetty had not parted with the money; rather he had adjusted the same against packing credit facility of M/s Yatin Prints. PW29 has not uttered anything against A5 to A7.
(vi) PW32 Mr. Ravi Raj Shetty, the then AGM deposed that the memorandum for sanction of export bill No. FDBP-20201698 (Ex. PW32/F) worth of US $ 2,30,130 equivalent to ` 87 lac approximately was put up before him by Assistant Manager whose name he did not recall and Sr. Manager (A7) and further deposed that Chief Manager (A6) also signed the said memorandum and he approved the said memorandum with the remarks "Per party ECGC CBI No. 21/09 Page 109 of 135 State through CBI v/s Suchi Dhir & others cover should be obtained over and above discounted. Proceeds should be kept in a fixed deposit till the realization of the bill. Further decision will be taken for the adjustment of fixed deposit after realization." Thus, PW32 permitted to buy the bill with condition that proceeds shall be kept in a fixed deposit till the realisation of the amount. In his testimony, he further clarified that as per banking rule, they had to discount the said bill otherwise ECGC cover would not be available. He further deposed that he kept the proceeds of the bill in a fixed deposit as an abundant precaution as he had some doubts about the credentials of the said bill and party.
(vii) In his deposition, PW32 has not even uttered a single word either against A5 to A7 qua the said bill. On the contrary, he deposed that the bank had no option except to discount the bill otherwise ECGC cover could not have been available. This itself shows that there was no lapse on the part of A6 and A7 when they dealt with the said bill.
(viii) Indisputably, the memorandum was put up by Assistant Manager and approved by PW32 but neither of them has been impleaded as an accused. Admittedly, neither PW29 nor PW32 had deposed anything adverse against A6 to A7 qua the said bill, thus to my mind no criminal liability can be imposed against them qua the said bill.
(ix) In view of the above discussion, I am of the considered opinion that CBI has also failed to bring home the guilt of any of the bank officer qua the FDBP facility.
CBI No. 21/09 Page 110 of 135State through CBI v/s Suchi Dhir & others
24. Contentions relating to A3 H. K. Sawhney:-
(i) CBI in its chargesheet alleged first allegation against A3 that at the instruction of AGM (A5), a fresh account opening form duly introduced by A3 was taken later on and same was placed in the record of bank. Though both the account opening forms bear the same date i.e. February 12, 1997, yet in order to show conspiracy between AGM on the one hand and private accused persons on the other hand, it was alleged that the second account opening form was taken later on. In the charge-sheet, it was also alleged that signatures of Mr. H. K. Sawhney were verified by Mr. K. K. Rai, Assistant Manager at the instruction of Mr. H. S. Shetty (A5).
Since, as per the allegations, signatures of A3 were verified by Mr. K. K. Rai, thus he was a material witness for the prosecution to establish the fact that second account opening form was taken on record later on at the instruction of A5. Prosecution has examined Mr. K. K. Rai as PW26.
(ii) However, in his entire deposition PW26 has not even utter a single word about the alleged second account opening form. In his examination in chief, he merely deposed that on February 12, 1997 Smt. Suchi Dhir (A1) had opened a current account and he identified the signature of Suchi Dhir as he was acquainted with her handwriting and signature as he had passed several cheques drawn by her from the aforesaid account during his tenure. He did not tell even a single word under which circumstances, the second account opening form was taken on record. He also even did not utter a CBI No. 21/09 Page 111 of 135 State through CBI v/s Suchi Dhir & others single word when he had verified the signatures of Mr. H. K. Sawhney. In these circumstances, the testimony of PW26 is not helpful to the prosecution to establish the allegation that second account opening form was taken at the behest of A5 and PW26 Mr. K. K. Rai verified the signatures of A3 at the instructions of A5.
(iii) Though the testimony of two other witnesses namely PW25 Mr. S.K. Desai and PW30 Mr. S. R. Lalwani are also relevant, yet, I do not deem it appropriate to discuss the same here as their testimony had already been discussed in detail on this issue and it has been held that their testimony are not sufficient in any manner to prove any conspiracy between A5 on the one hand and private accused persons on the other hand.
(iv) From the above, it becomes clear that CBI has failed to prove the first allegation against A3. It is pertinent to state that mere fact that A3 had introduced A1 at the time of opening of the current account is ipso-facto not sufficient in any manner to draw an inference that he had any conspiracy with A1. No doubt, this fact is relevant to prove that A3 knew A1 but is not sufficient in any manner to prove that he had any conspiracy with A1.
(v) The second allegation levelled by the CBI in the chargesheet is that at the time of enhancement of OLCC limit by ` 5 lac, A3 stood guarantor in favour of A1 on April 25, 1997.
(vi) Learned counsel appearing for A3 fairly conceded that A3 stood guarantor in favour of A1 as he knew her previously but he CBI No. 21/09 Page 112 of 135 State through CBI v/s Suchi Dhir & others argued sagaciously that mere fact that he stood guarantor in favour of A1 is not sufficient in any manner to draw an inference that he was in conspiracy with A1. In the absence of any cogent evidence on record, I am fully agree with learned counsel.
(v) The third allegation levelled by CBI in the chargesheet is that on April 25, 1997, A1 had issued a cheque in favour of M/s S. D.Handicrafts, which was owned by A3. It was alleged that though M/s S. D. Handicrafts was engaged in the business of export but it was not clear whether it also dealt in export of handicrafts/clothes etc. It was further alleged that it looked that M/s S. D. Handicrafts had nothing to do with the job of printing and publishing for which M/s Yatin Prints might had made any payment to the said firm. By making this allegation, CBI made an attempt to show that this was the modus-operandi of A1 to siphon-off the fund.
(vi) But to my mind, the said allegation is without any substance. It is admitted case of the CBI that initially M/s Yatin Prints was engaged in the business of printing but later on the said firm applied for PCL as it had started the business of export of ready-made garments and firm had also furnished a letter of credit worth of US $ 11 lac. This itself shows that M/s Yatin Prints was diversifying its business from printing to export of ready-made garments.
(vii) Further there is no evidence on record to show that M/s S.D. Handicrafts was the sister concern of M/s Yatin Prints and similarly, there is no evidence on record to show that it was the CBI No. 21/09 Page 113 of 135 State through CBI v/s Suchi Dhir & others modus-operandi of the parties to siphon-off the fund. In this regard, the testimony of PW20 and PW31 are also relevant.
(viii) PW20 Mr. H. Ratna Hegde in his examination-in-chief deposed that M/s Kunal Travel, Sawhney Travelling Company and Shakti Chit Fund can be called as sisters concerns as they had common directors and partners but he could not say if M/s Yatin Prints was the sister concern of any of the said firms. Similarly, PW31 V. P. Hegde in his examination-in-chief deposed that the Kunal Travels, Sakti Chit Funds and M/s Sawhney Trading company were not the sister concerns of M/s Yatin Prints. Thus, it becomes clear that there is no evidence on record to show that M/s S. D. Handicrafts was the sister concern of M/s Yatin Prints. Mere fact that M/s Yatin Prints had issued a cheque in favour of M/s S. D. Handicrafts is not sufficient to draw any conclusion against A3.
(ix) The next allegation against A3 is that Ms. Madhu Jain had sold her property to A3, consequently, A3 had made the payment of ` 3.80 lac by cheque, which was deposited in the account of Ms. Madhu Jain. It was alleged that Ms. Madhu Jain had handed over all her original documents to A3. It was further alleged that thereafter, A3 had produced a fictitious lady in the bank to execute guarantee deed and pledged the said property. It was further alleged that it was the brain of A3 behind the entire conspiracy.
(x) It is admitted case of CBI that Ms. Madhu Jain had sold her property to A3 on January 15, 1993 by way of GPA and CBI No. 21/09 Page 114 of 135 State through CBI v/s Suchi Dhir & others Agreement to Sell. Perusal of the Agreement to Sell reveals that it was executed on January 15, 1993 and it is also revealed that total sale consideration was agreed between the parties at ` 4 lac and out of the said, A3 had paid ` 3.80 lac and balance was agreed to be paid at the time of execution of sale deed. It was also mentioned in the said agreement that Ms. Madhu Jain had handed over physical possession of the said property to A3 and she also handed over her original title documents. In other words, it is admitted case of CBI that Ms. Madhu Jain had sold the property in question to A3 in the sum of ` 4 lac and she had received ` 3.80 lac; balance was agreed to pay at the time of execution of sale deed and in lieu of receipt of sale consideration of ` 3.80 lac Ms. Madhu Jain had handed over the physical possession of the property as well as original documents to A3. Thus, it cannot be said that A3 was possessing the said documents unauthorisedly or illegally.
(xi) Perusal of the GPA reveals that it was executed by Ms. Madhu Jain in April 1997 authorising A3 to execute sale deed or to transfer the property or to sell the same. This shows that no sale deed was executed by Ms. Madhu Jain till April 1997.
(xii) It is also admitted case of CBI that Ms. Madhu Jain had sold the said property to Om Parkash on September 30, 1998. PW12 Rajesh Rattan, panel Advocate of the bank deposed in his testimony that Ms. Madhu Jain had purchased the said property in the sum of ` 1.81 lac on May 28, 1992 and sold the same to Om Parkash on September 30, 1998 in the sum of ` 1.03 lac by registered sale deed and Mr. Om Parkash further sold the said CBI No. 21/09 Page 115 of 135 State through CBI v/s Suchi Dhir & others property to M/s Mahavir Ice & Cold Storage. In other words, Ms. Madhu Jain who had sold the property to A3 in 1993 in the sum of ` 4 lac, had again sold the said property to Mr. Om Parkash in the year 1998 at the throw away price of ` 1.03 lac.
(xiii) In this regard, the testimony of PW4 and PW5 are also relevant.
(xiv) PW4 Anil Kant deposed that he had purchased the said property through Mr. Raj Kumar, property dealer and he had paid ` 1 lac and further clarified that he had purchased the said property from Mr. Om Parkash in the sum of ` 1.03 lac and he categorically denied the suggestion that he had purchased the said property in the sum of ` 7.85 lac. He further testified that before purchasing the property, he met A3 who told him that Ms. Madhu Jain had sold the said property to him and executed all necessary documents. This shows that PW4 had purchased the said property knowingly well that Ms. Madhu Jain had sold the property to A3 and executed all documents.
(xv) PW5 Raj Kumar deposed that Anil Kant (PW4) had purchased the property of Ms. Madhu Jain through him and deal was struck between them in the sum of between ` 7.5 lac to ` 8 lac. However, PW4 Anil Kant could not arrange the sale consideration, accordingly, the property was transferred in the name of his brother i.e. Mr. Om Parkash and when Anil Kant (PW4) arranged the sale consideration, a fresh sale deed was executed in his favour. This shows that Madhu Jain had sold the said property to Anil Kant in the CBI No. 21/09 Page 116 of 135 State through CBI v/s Suchi Dhir & others sum of ` 7.50 lac to ` 8 lac. Though this fact is denied by PW4. But one thing is clear that Ms. Madhu Jain had sold the said property to Mr. Om Parkash who further sold the property to PW4. Thus, Ms. Madhu Jain had sold her property twice; firstly to A3 and thereafter, to Om Parkash.
(xvi) The defence version is that since A3 had purchased the said property from Ms. Madhu Jain in the sum of ` 4 lac and he had made the substantial payment of ` 3.80 lac, thus when the property was to be pledged with the bank in favour of A1, he made a request to Ms. Madhu Jain to execute the guarantee deed in favour of A1, consequently, Ms. Madhu Jain appeared in the bank and executed all necessary documents. In these circumstances the defence version looks quite probable.
(xvii) CBI had alleged that A3 had produced a fictitious lady in the bank who executed a guarantee deed and mortgaged the said property with the bank in favour of A1. In order to establish this allegation, CBI placed reliance on the report of GEQD. CBI had sent the questioned documents (Q36 to Q54) which were executed by said fictitious lady in the name of Ms. Madhu Jain and admitted writings of Madhu Jain from her bank account in which a cheque of ` 3.80 lac was deposited. As per the GEQD report, both the handwritings did not match. On the basis of said, it was alleged that the documents executed in the bank were forged and fabricated as the same were not executed by Ms. Madhu Jain.
(xviii) CBI also placed reliance on the questioned writings CBI No. 21/09 Page 117 of 135 State through CBI v/s Suchi Dhir & others Q56 to Q59 i.e. signatures of Ms. Madhu Jain appeared on the letter Ex. PW36/DA which she wrote to the bank that she had not mortgaged her property to A1. The said questioned writing was tallied with admitted writings i.e. A1 to A8 and as per the report of GEQD, the same were matched and it was opined that both were written by one and same person.
(xix) However, to my mind no reliance can be placed on the said opinion because during trial CBI failed to prove the alleged admitted writings i.e. A1 to A8. None of the witnesses had proved the alleged admitted writing. Further, CBI failed to produce Ms. Madhu Jain to disprove the fact that she had not signed and she had not executed any document in favour of A3.
(xx) Similarly, CBI also failed to prove the letter Ex. PW36/DA in accordance with law. On the said letter, exhibit was given during the cross-examination of PW36 i.e. investigating officer for the purpose of identification of the document only. Admittedly, the said document was not executed in the presence of PW36 and he was not well conversant to the signature of Ms. Madhu Jain, thus, he was not in a position to prove the same. The said letter could be proved either by Madhu Jain or by the bank official. But neither Ms. Madhu Jain graced the witness box nor any bank official/officer deposed that the said letter was written by Ms. Madhu Jain.
(xxi) The entire allegation of the CBI is that Ms. Madhu Jain did not appear before the bank to execute the documents but PW36, CBI No. 21/09 Page 118 of 135 State through CBI v/s Suchi Dhir & others investigating officer of the case demolished the entire case by deposing in his cross-examination that Ms. Madhu Jain herself deposited the original documents with the bank, this shows that Ms. Madhu Jain herself appeared before the bank and executed the documents and mortgaged her property.
(xxii) It is pertinent to state that during investigation, investigating officer had not made any effort to ascertain whether Ms. Madhu Jain in whose account a sum of ` 3.80 lac was deposited ever appeared before any bank officer to execute the document in question. Needless to say that investigating officer could show the photograph of Ms. Madhu Jain from the bank where she was maintaining her account, to the bank officer but no such effort was made. It is admitted case of CBI that Ms. Madhu Jain was not traceable. This shows that Ms. Madhu Jain preferred not to appear before CBI. As already discussed that Ms. Madhu Jain had deliberately sold her property twice, this shows that Ms. Madhu Jain had some dishonest intention. Had she been fair or innocent, she would not have sold her property twice and would not have absconded to unknown place.
(xxiii) In view of the peculiar facts of the case, I am of the considered opinion that the report of GEQD is not sufficient to draw any adverse inference against A3. There is no other cogent evidence on record to establish that A3 had produced any fictitious female with the assumed name of Ms. Madhu Jain to mortgage the property and to execute a guarantee deed in favour of A1.
CBI No. 21/09 Page 119 of 135State through CBI v/s Suchi Dhir & others
25. Contentions relating to various Temporary Overdraft (TOD) facility in favour of firm of A3:-
(i) As per the charge-sheet, on January 3, 1997 A5 had issued a bank guarantee of ` 4.2 lac on the ground that permission had already been taken from DGM whereas no such permission was taken by A5, in this way he had favoured A3.
(ii) In this regard, the letter Ex. PW34/B is relevant. As per said letter, A3 had approached the bank for issuance of bank guarantee in favour of Indian Airlines Ltd. valid from January 1, 1997 to December 31, 1998. On the said letter, A5 had made an endorsement "Bank guarantee may be issued with 10 % margin, oral permission had already been obtained from DGM". DGM had been examined by prosecution as PW34. He nowhere deposed that he had not granted any oral permission. On the contrary, in his cross-examination, he deposed that though there is no written rule to give oral sanction but it is practice of the banking to accord such sanction and he also admitted that sometimes, he had given oral sanction and sometimes in writing at the time of granting various TODs in favour of M/s Kunal Travels (P) Ltd and Sahani Trading Company. In these circumstances, it is seldom to place any reliance on the CBI version that A5 had not obtained oral sanction of DGM before issuing the bank guarantee.
(iii) It is pertinent to state that bank guarantee was issued to A3 in continuation of previous letter dated December 28, 1996, which is already exhibited as Ex. PW34/A. At that time A3 had CBI No. 21/09 Page 120 of 135 State through CBI v/s Suchi Dhir & others made a request to issue bank guarantee of ` 12 lac valid for the period January 1, 1997 to December 31, 1997 with a claim upto December 31, 1998. The same was allowed by A5 by mentioning that permission had already been obtained from DGM. It is pertinent to state that though in 1996, a bank guarantee of ` 12 lac was issued in favour of A3 on the same ground, yet CBI had not mentioned about the same in the chargesheet. Similarly, though CBI had examined DGM as PW34 but he had not deposed that he had not granted any such permission. On the contrary, he deposed that sometimes he had granted oral sanction and sometime written permission at the time of granting various TOD in favour of the firm.
Further, there is nothing on record which may show that A5 had violated any banking rules at the time of granting the bank guarantee. At the time of granting bank guarantee, sufficient margin money was taken from A3. In these circumstances, I am of the view that there is no substance in the allegation levelled by the CBI.
(iv) The next allegation against A3 and A5 are that A5 had sanctioned a TOD of ` 15 lac for a short period in favour of M/s Kunal Travels (P) Ltd. after obtaining the FDR of ` 7,15,956/- and A5 requested DGM to extend the TOD facility for a period of one month. But, no reply was sent by the DGM. It was alleged that AGM brought in the notice of DGM that firm had requested for TOD of ` 20 lac and further stated that as permitted by the DGM the request of the Party had been entertained. Accordingly, AGM requested DGM that branch may be permitted to continue TOD facility by July 31, 1997. It was alleged by the CBI that AGM had unauthorisedly allowed the firm to draw TOD facility till July 17, 1997.
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(v) In this regard, the letter Ex. PW21/C and Ex. PW21/D are relevant.
(vi) As per letter Ex. PW20/C DGM had accorded the permission to grant TOD of ` 15 lac for a period of one month. Thereafter, AGM office made a request to the DGM vide its letter dated April 26, 1997 (Ex. PW21/C) to continue the TOD for upto one month. From the letter Ex. PW21/D it is revealed that the Party i.e. A3 had a FDR of ` 12 lac in the bank and on the basis of said FDR, it was recommended to the DGM office by AGM to grant TOD in favour of the firm of A3 till July 31, 1997. There is nothing on record which may show that A3 was not entitled to avail TOD at that time. No doubt, PW34 deposed that at the time of seeking approval, branch had not brought irregularities committed by the customer in the account. But there is no evidence on record that there was any major irregularity in the account of customer. On the contrary, there is evidence on record to prove that grant of TOD was normal feature of the banking and it is also in evidence on record that party had deposited huge amount to the tune of ` 1 crore in its account from time to time. In these circumstances, I am of the view that mere fact that A5 had granted some TODs in favour of M/s Kunal Travels (P) Ltd. is not sufficient to hold that either A5 had misused his official position or he had acted without any public interest.
(vii) As per the chargesheet, Chief Manager Mr. K.V. Shetty had moved a proposal for TOD for ` 16 lac in favour of another firm of A3 i.e. M/s Sahani Trading company and obtained the approval of CBI No. 21/09 Page 122 of 135 State through CBI v/s Suchi Dhir & others DGM telephonically. It was alleged that at the time of taking approval, Chief Manager had not highlighted the irregularities in the account of said firm. It was alleged that on April 2, 1997, there was a debt balance in the said account of the customer to the tune of ` 5,600/- and a cheque of ` 2,20,000/- was bounced due to insufficient fund. It is pertinent to state that a person seeks TOD facility only when there is not sufficient balance in his account and, if party has sufficient balance in the account no purpose would be achieved to avail TOD facility. It is also pertinent to mention here that in current account, bank do not give any interest to the customer and as and when they granted TOD facility to any customer, they charge interest on the said facility treating as a loan. Thus, mere fact that there was debit balance in the account of M/s Sahani Trading company or a cheque was bounced, is not a ground to deny TOD facility; rather it was a ground for the party to avail TOD facility. There is no evidence on record what mandatory banking rules Chief Manager had violated at the time of making recommendation and seeking approval of DGM. To my mind, there is no admissible evidence on record either to show that Chief Manager had misused his official position or he had acted without any public interest.
(viii) In the charge-sheet, it is also alleged that AGM had accommodated A3 by way of allowing frequent TOD/CBP in the current account of M/s Shakti Chit Fund (P) Ltd., which resulted outstanding in the account to the extent of ` 90,865,50/-. Mere fact that there is some debt balance in the account of account holder, who availed TOD facility is not sufficient either to hold that the bank officers had misused their official position or they had acted without CBI No. 21/09 Page 123 of 135 State through CBI v/s Suchi Dhir & others public interest.
(ix) During the course of arguments, counsel appearing for CBI has strongly placed reliance on the circular no. 17/97 dated February 1, 1997 and contended that A5 to A7 had violated the said circular at the time of granting various TOD facilities in favour of A3.
(x) I have perused the said circular. The said circular deals with the power of officers to grant TOD. As per the said circular, AGM is empowered to grant secure TOD to the tune of `40 lac and clean to the extent of ` 20 lac. There is nothing on record to show that at the time of granting TOD, A5 had acted beyond his powers. Assuming for the sake of arguments that there were some irregularities in granting the TOD facilities but mere irregularities cannot be a basis to impose criminal liability on any person.
(xi) PW21 in his cross-examination admitted that lacs of rupees were deposited in the account of Sahani Trading company during the period February 1997 to September 1997 and further admitted that at various occasions, there was a credit balance in the said account to the tune of ` 15 lac and above. If, it is so, then how can it be said that there was no balance in the account of the firm or the account was highly irregular.
(xii) PW13 in his deposition deposed that since the Overdraft facility was given to the party continuously without regularizing the account, thus, according to witness, A5 and A6 had committed irregularities. But to my mind, mere fact that frequent CBI No. 21/09 Page 124 of 135 State through CBI v/s Suchi Dhir & others TOD was granted in favour of different companies/firms of a person is not sufficient to impose any criminal liability in the absence of any other cogent evidence.
(xiii) PW31 Mr. V. P. Hegde in his cross-examination deposed that he did not find any material during his investigation that there was any collusion between bank officers and the private party. No doubt, he further deposed that there was certain irregularities in the account of Kunal Travels, Sahani Trading company and Shakti Chit Funds. But he also categorically deposed that he did not find any collusion between bank officers and private party. This shows that bank officers had acted bonafide while dealt with the request of A3 to grant TOD facility from time to time.
(xiv) Though CBI has examined PW21, PW30, PW31 and PW34 to prove the allegations qua TOD, and some of them also talked about the irregularities. But none of the witnesses deposed what irregularities had been committed by the bank officers at the time of granting the TOD facility from time to time. Mere fact that there was some debt balance in the account of firm/company of A3 is not sufficient to hold that bank officers had any criminal intent particularly when there is evidence on record that there were credit balance also in the account of burrower from time to time and firm had deposited huge amount during the relevant period.
(xv) Moreover, it is pertinent to mention here that in the complaint it was alleged that all the firms of A3 i.e. Kunal Travels (P) Ltd., Sahani Trading and Shakti Chit Fund were the sister CBI No. 21/09 Page 125 of 135 State through CBI v/s Suchi Dhir & others concerns/associate firms of M/s Yatin Prints and bank officers had granted TOD facility to the said firms being the group concerns of M/s Yatin Prints. But as already discussed, there is no scintilla of evidence to prove the fact that the said firms were the sister concerns of M/s Yatin Print. Thus, it cannot be said that while granting TODs to the firms/companies of A3, bank officers were acting in furtherance of any criminal conspiracy.
(xvi) In view of the above, I am of the considered opinion that there is no cogent evidence on record to prove that either bank officers had abused their official position or acted without public interest while granting TOD facility.
26. Lapses in the investigation:-
(i) It is admitted case of the CBI that during investigation PW36, investigating officer had recovered a small piece of paper from A1 & A2. On one side of the said paper, name of Sudhakar D. Hegde (cousin of PW34) Electro Exhibition Services P. B NO. 12104 Dubai UAE and on the another side the amount US $ 15000 was written. PW36 in his cross-examination admitted that he had recovered the said piece of paper from Mahesh Dhir and Suchi Dhir, but he did not recollect whether he had seized the same vide seizure memo or not. He further admitted that he had taken the said piece of paper in his possession as he found it relevant for the purpose of investigation. But surprisingly he did not deem it appropriate to place the said piece of paper on court record. He further testified that though he had recorded the disclosure CBI No. 21/09 Page 126 of 135 State through CBI v/s Suchi Dhir & others statement of Mahesh Dhir and Suchi Dhir in this regard, but he did not recollect whether the fact of handing over the said piece of paper was mentioned in the said disclosure statements or not. He further admitted that the said disclosure statements are not the part of the court record as he had recorded the same in case diary. He further deposed that K. P Hegde (PW34) informed him that the name of Sudhakar D Hegde and his address was in his handwriting but simultaneously PW36 deposed that he did not know in whose handwriting the figure of US $ 15000 was written. He further deposed that he did not investigate the matter on this aspect. He further testified that he could not say whether the figure of US $ 15000 was in the handwriting of Ms. Suchi Dhir or Mr. Mahesh Dhir or Mr. K. P. Hegde. He further deposed that he did not recollect whether he had interrogated Suchi Dhir and Mahesh Dhir on this aspect and what the said amount denoted and further admitted that he had not sent the said piece of paper for examination to ascertain who had written the said amount. Admittedly, PW36 had also not examined Sudhakar D. Hegde.
(ii) Indisputably, PW34 in his statement recorded under Section 161 Cr.P.C (Ex. PW36/DB) told the investigating officer that he had written the name and address of his cousin on the said piece of paper at the request of Mahesh Dhir as Mahesh Dhir wanted to extend his business in Dubai by exploring the possibility of finding new buyers in Dubai with the help of Sudhakar D. Hegde who is his cousin. He further told the investigating officer that since Mahesh Dhir was leaving for Dubai, he requested him to get introduced Mahesh Dhir with influential man at Dubai, accordingly, he had given CBI No. 21/09 Page 127 of 135 State through CBI v/s Suchi Dhir & others the address of his cousin.
(iii) From the testimony of PW36 and the statement of PW34 (Ex. PW36/DB), it becomes clear that a piece of paper was recovered from accused Mahesh Dhir and Suchi Dhir. On the one side of said paper name and address of cousin (Sudhakar) of PW34 is written whereas on the another side the figure of US $ 15000/-
was written. There may be possibility that either the said figure was written by anyone among three namely Ms. Suchi Dhir, Mahesh Dhir or K. P. Hegde. It may also be possible that the figure may be written by any other person. But the amount mentioned on the one side of the slip and address of the cousin brother of PW34 on another side creates a reasonable doubt to investigate the matter in detail. But surprisingly, PW36 did not even deem appropriate to investigate on the said piece of paper. He even did not deem it appropriate to place on record the said piece of paper. Since, PW34 took the plea that he had given the address of his cousin at the request of Mahesh Dhir as he intended to extend his business in Dubai and for that he requested PW34 to introduce him with influential person in Dubai. It means that Mahesh Dhir had visited Dubai. This fact could be easily verified by the investigating officer from his passport but there is nothing on record which may show that IO had made any such effort. Nor he interrogated Sudhakar D Hegde nor examined the bank accounts of Sudhakar D Hegde and K. P. Hegde to rule out the possibility whether any transaction had taken place between them as indicated in the said slip. Rather, PW36 preferred to ignore the said slip and preferred not to conduct any investigation in this regard.
CBI No. 21/09 Page 128 of 135State through CBI v/s Suchi Dhir & others
(iv) Further, the said slip shows that PW34 had good relations with Mahesh Dhir, thus this could be a ground that he had instructed the branch from time to time to extend financial assistance/facility to the firms of A1 and A2. But investigating officer preferred not to place any reliance on the said piece of evidence; rather he alleged that A5 had affinity with A1 and A2 as he had introduced them while A1 had opened an account in the bank. This slip corroborates the defence version that PW34 knew the party and he visited the branch at the time of opening of the account, which further strengthen the defence version that A5 had introduced A1 at the instance of PW34.
(v) To my mind, it was paramount duty of the investigating officer to investigate in detail about the said slip to find out the truth whether any money transaction had taken place between PW34 on the one hand and A1 And A2 on the other hand for seeking various credit limits from the branch of the bank of PW34. But unfortunately PW36 preferred not to conduct any investigation in this regard.
27. Qua Ms. Madhu Jain:-
(i) PW36 in his cross-examination deposed that he did not record the statement of Ms. Madhu Jain as she was not traceable.
He further deposed that she had many addresses. But he failed to disclose such addresses but swiftly added that he had sent notices at the given addresses but said notices are not the part of court record. From the testimony of PW36, it can safely be culled out that CBI No. 21/09 Page 129 of 135 State through CBI v/s Suchi Dhir & others he had made several efforts to trace Ms. Madhu Jain but he could not succeed in his efforts. It is admitted case of CBI that Ms. Madhu Jain had not only approached the bank intimating the bank that she had not mortgaged her property and she had not executed any guarantee deed in favour of M/s Yatin Prints but she had also made efforts to sell her property to PW4 through PW5. She had also executed sale deed in favour of Mr. Om Parkash despite the fact that she had already sold the property to PW3. From the testimony of PW36, it can safely be culled that Ms. Madhu Jain was intentionally and deliberately avoiding her appearance before CBI otherwise it is not believable that CBI would not be able to trace a person who had approached the bank and buyer. This conduct of Ms. Madhu Jain itself is sufficient to raise suspicion over her acts. Thus, when the chargesheet was filed, matter should have been investigated in detail to find out the role of Ms. Madhu Jain but no such sincere efforts were made. Rather, investigating officer preferred to place reliance on the report of GEQD to establish that Ms. Madhu Jain did not appear in the bank to execute the documents. But contrary to this, he in his deposition deposed that Ms. Madhu Jain deposited the title deed in the bank in person. Indisputably, when chargesheet was filed initially by the investigating officer, name of Ms. Madhu Jain was neither mentioned in column no. 1 nor column no. 2. But surprisingly when investigating officer filed supplementary chargesheet, her name was inserted in column no. 2 and he gave vague explanation that he failed to mention the name of Ms. Madhu Jain in the first chargesheet inadvertently. If it was an inadvertently mistake, investigating officer would have mentioned some role of Ms. Madhu Jain in the first chargesheet but CBI No. 21/09 Page 130 of 135 State through CBI v/s Suchi Dhir & others he had not attributed any role to Ms. Madhu Jain. Rather, he categorically stated that A3 had produced a fictitious female in the bank to execute the documents. If, it was so, where was the occasion for the investigating officer to mention her name even in column no. 2. In that situation she could be mere a witness and not an accused. Thus, to my mind, the investigation conducted by the investigating officer qua Ms. Madhu Jain is not upto the mark.
28. Qua Krishan Kumar Khurana:
(i) While filing the main chargesheet, in para no. 22, it was alleged that Mr. K. K. Khurana had submitted a false legal opinion and on the basis of said legal opinion, M/s Yatin Prints availed huge credit facilities from the bank. On the basis of said false report, he was charge-sheeted along with the other persons. Para no. 22 is reproduced as under:-
Investigation has further disclosed that though the said property of Sh. Wazir Singh was registered in the office of Sub-Registrar, Delhi. It was never muted in his name. As per the revenue records the said property had been muted in the name of one Sh. Attar Singh since 1955 till February 1987 when the Delhi Government acquired the said landed property vide notification no. 1955 of Acquisition Collector (P), Delhi. The notification under section 4 & 6 of Land Acquitiion Act were already issued earlier on 13.11.59 and 8.10.1965 respectively.
Thus, it proves that the legal opinion given by K. K. Khurana in respect of the said property was false, on the basis of which M/s Yatin Prints availed huge credit facilities from the bank. Sh. S.K. Singh, Approved Valuer in his valuation CBI No. 21/09 Page 131 of 135 State through CBI v/s Suchi Dhir & others report of the said property of Sh. Wazir Singh had categorically mentioned that the said property was under litigation. This fact was also concealed by Sh. H. Balakrishna Shetty who had accepted the property in question as well as legal opinion and valuation reports. While processing the process note dated 6.6.1997 Sh. H. Balakrishna Shetty did not highlight these facts and thus facilitated M/s Yatin Prints to avail huge amount of loan from the bank.
(ii) However, on receipt of a representation from Mr. K. K. Khurana, investigating officer conducted further investigation under Section 173 (8) Cr.P.C and gave a clean chit to him by concluding that Mr. K. K. Khurana in his report had suggested various safeguards to the bank to obtain affidavit from the mortgagor/owner of the property thereby declaring that no acquisition notice had been issued or received by them. Therefore, it was imperative on the part of bank officers to ask the mortgagor to furnish such affidavit and verifying the genuineness of the same. It was further recited that it has been proved that the mandate of the Advocate Mr. K. K. Khurana for conducing security/rendering legal opinion was limited/confined to scrutiny of the title deed relating to mortgage property offered as security, therefore, Mr. K. K. Khurana, Advocate was no way criminally liable in this case.
(iii) No doubt, under Section 173(8) Cr.P.C, investigating agency has power to conduct further investigation but here real question is on what basis investigating officer had concluded initially that Mr. K. K. Khurana had submitted a false and bogus report. Does it mean that investigating officer did not examine Mr. K. K. CBI No. 21/09 Page 132 of 135 State through CBI v/s Suchi Dhir & others Khurana, Advocate before filing the main chargesheet? If so, then is it the proper way of investigation? Or if, investigating officer had interrogated Mr. K. K. Khurana before filing the main chargesheet, whether Mr. K. K. Khurana had furnished any explanation about his conduct, if yes, whether the same was considered by the investigating officer? And if not, why Mr. K. K. Khurana had not furnished any such explanation? It is pertinent to state that the main object of investigation if to find out truth in the allegations levelled by the complainant. And in order to find the truth, it is duty of investigating officer to give proper opportunity to the accused persons/suspects to explain the circumstances. But in the main chargesheet, there is nothing on record which may show that investigating officer had either interrogated Mr. K. K. Khurana or any other accused persons before filing the chargesheet.
(iv) From the supplementary challan, it becomes clear that CBI had arrived at a conclusion that the report of Mr. K. K. Khurana, Advocate was not false and bogus. If it was so, then it is not clear how the bank officers had become criminals by acting on his report. Mere fact that there were some irregularities on the part of bank officers in complying with the said report is ipso-facto not sufficient to impose any criminal liability.
CONCLUSION :-
28. From the ongoing discussion, following facts have been proved:-CBI No. 21/09 Page 133 of 135
State through CBI v/s Suchi Dhir & others
(i) That CBI has failed to prove the conspiracy among the accused persons.
(ii) That in the instant case sanction under Section 197 Cr.
P.C. was essential to prosecute the public servants i.e. A5 to A7 for penal offences including under Section 120B IPC. Since, CBI had not obtained any sanction under Section 197 Cr. P. C., A5 to A7 can not be held guilty for the penal offences.
(iii) That CBI has also failed to establish any dishonest intention on the part of A5 to A7, which was a pre-requisite condition to prove the guilt of a public servant for the offence under clause (i) and (ii) of Section 13(1)(d) of P.C. Act.
(iv) That CBI has also failed to establish that the act of public servants i.e. A5 to A7 was without any public interest, which is an essential ingredient to bring home the guilt of a public servant for the offence under clause (iii) of Section 13(1)(d) of P.C. Act.
(v) That CBI has also failed to bring home the guilt of A3 for the offence punishable under Section 420.
29. Pondering over the foregoing discussion, I am of the considered opinion that prosecution has failed to bring home the guilt of:-
(i) accused H.K. Sawhney (A3), H.Surendra Shetty (A5), K. Vasant Kumar Shetty (A6) and H. Balakrishna Shetty CBI No. 21/09 Page 134 of 135 State through CBI v/s Suchi Dhir & others (A7) for the offence punishable under Section 120B read with Section 420/467/468/471 IPC and Section 13(2) read with 13(1)
(d) of Prevention of Corruption Act, 1988;
(ii) accused H.Surendra Shetty (A5), K. Vasant Kumar Shetty (A6) and H. Balakrishna Shetty (A7) for the offence punishable under Section 13(2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988;
(iii) accused H.K. Sawhney (A3) for the offence punishable under Section 420 IPC;
beyond the shadow of all reasonable doubts, thus, I hereby acquit them thereunder.
30. Since, A1 (Suchi Dhir) and A2 (Mahesh Dhir) are proclaimed offenders, file be consigned to record room with direction that file shall be revived as and when they are arrested.
ANNOUNCED IN THE OPEN COURT ON 23rd day of July 2015 (PAWAN KUMAR JAIN) Special Judge-01/CBI/North-West Rohini Courts, Delhi/sv CBI No. 21/09 Page 135 of 135