Delhi District Court
Cbi vs . D. N. Upadhyay Etc. Judgement Dated : ... on 30 April, 2016
CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016
IN THE COURT OF SPECIAL JUDGE03 (P. C. ACT) (CBI),
PATIALA HOUSE COURTS, NEW DELHI
Case ID : 02403R0188072006
CC No. 42/11
RC No. 49A/2003/ACB/CBI/ND
Central Bureau of Investigation
Versus
(1) D. N. Upadhyay, AGM,
Central Bank of India,
Janpath Branch, New Delhi
(2) Ravinder Kapoor, Sr. Manager,
Central Bank of India,
Janpath Branch, New Delhi
(Expired 15.11.2007 and proceedings abated vide
order sheet dated 13.12.2007)
(3) M. L. Vij, S/o Sh. SunderLal Vij,
R/o 204, CA Apartments,
Paschim Puri, New Delhi
(Director M/s Madhusudan International
Pvt. Ltd., 8/28, WEA Karol Bagh, Delhi)
(4) S. C. Gupta, S/o Sh. Suraj Bhan Gupta,
R/o 235/60, Kewal Park, Azad Pur, Delhi
(Director M/s Madhusudan International
Pvt. Ltd., 8/28, WEA Karol Bagh, Delhi)
(5) Vijay Manchanda, S/o late Sh. Des Raj Manchanda,
R/o. 6, Sehgal Colony, Court Lane,
Civil Lines, Delhi.
CC No. 42/11 Page No. 1 of 85
CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016
(6) Balwant Rai Bajaj, S/o Sh. Amrit Lal Bajaj,
R/o C6C, DDA Janta Flats,
Tagore Garden Extn., New Delhi.
(7) V. P. Aneja
R/o C2/19, Janak Puri, New Delhi.
(Expired 9.10.2008 and proceedings abated vide
order sheet dated 21.3.2009)
(8) Anil Sharma, Advocate
R/o H35/1, Connaught Circus,
New Delhi.
(Chamber No. X13, Civil Wing,
Tis Hazari Courts, Delhi).
(proceeding quashed by Hon'ble High Court of Delhi
vide judgement dated 9.2.2015.)
Date of filing of chargesheet : 02.01.2006
Date of conclusion of final arguments : 25.04.2016
Date of announcement of judgement : 30.04.2016
JUDGEMENT
1. This case was registered on the basis of the complaint given by Sh. H. K. Verma, Assistant General Manger, Central Bank of India, Janpath Branch alleging therein that M/s Madhusudan International Pvt. Ltd., A 17, Raghuwar Bhawan engaged in trading in chemicals used for manufacturing of PU Foams had applied for CC No. 42/11 Page No. 2 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 credit facilities, i.e. Import LCDA (90 daus) Rs.100 lacs and Cash Credit facility of Rs.25 lacs for importing Toluene Dissociate (TDI) and Polyol used as raw material in manufacturing of PU Foam, in Central Bank of India, Janpath Branch, New Delhi on 27.02.1997. On 13.03.1997, Sh. D. N. Upadhyay, AGM sanctioned the credit facilities as CC(H) - Rs/15 lacs, Over Draft against book Debts - Rs.10 lacs and Import LC (DA 90 days) - Rs.100/ lacs on certain terms and conditions. Later on the partnership firm converted in to Private Limited company as M/s Madhusudan International Pvt. Ltd. with Sh. ML Vij and Sh. SC Gupta as company's Directors. After its conversion the company requested the bank for enhanced limits, which were sanctioned on 06.07.1998 by Sh. D. N. Upadhyay as CC(H) Rs.40 lacs, ODBD Rs.40 lacs, Foreign LC (DA 90 days) Rs.90 lacs and Inland LC (DA 90 days) Rs.30 lacs. At the time of enhancing the credit limits Sh. D. N. Upadhyay, Sh. HO Malhotra, both AGMs and Sh. Ravinder Kapoor, Sr. Manager in criminal conspiracy with the directors of the company, released the original/ genuine property E1, Dairy Road, Adarsh Nagar, Delhi, mortgaged by the party and another CC No. 42/11 Page No. 3 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 property situated at C1, Ambedkar Road, Gaziabad, UP owned by M/s SLF India was taken as collateral security. Later on it was found that this property was not in existence.
2. The company was also accommodated up to Rs.50.89 lacs on 29.06.1999 against sanctioned OD Limit of Rs.40 lacs inspite of the fact that the performance of the company was not satisfactory. Most of the cheques deposited by the company returned unpaid and the fund was transferred from CC to OD account and from other accounts to cover up the over drawings.
3. During the investigation, it is revealed that Sh.
Manohar Lal Vij, s/o S. L. Vij and Sh. Shiv Charan Gupta s/o Suraj Bhan Gupta entered into a partnership on 17.02.1997 and started a new firm in the name & style of M/s Madhusudan International having its office at A17, Kewal Park, Azad Pur, New Delhi.
4. M/s Madhusudan International applied for the following facilities on 27.02.1997 under the signatures CC No. 42/11 Page No. 4 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 of Sh. M. L. Vij.
Import L/C DA 90 days : Rs.100 lakhs
Cash Credit : Rs.25 lakhs
5. In its request for the credit facilities, it was mentioned by the firm that the demand of polyurethane products has been estimated about 40000 mt. ton per annum whereas the production in the country is about 6000 mt. ton only. The party submitted the proposals mentioning therein its projected sales during 199798, 199899, 19992000 and 200001 as Rs.1180.88 lakhs, Rs.1435.73 lakhs, Rs.1809.53 lakhs and Rs.2177.57 lakhs respectively. In the application it was also mentioned that M/s. ADL International and M/s. Rajdhani Metal Industries were other associates companies. Sh. M. L. Vij, Chartered Accountant, was one of the Directors in ADL International and Sh. S. C. Gupta was one of the partners in M/s Rajdhani Metal Industries.
6. The application for credit facility was processed CC No. 42/11 Page No. 5 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 by Sh. Ravinder Kapoor, the then Sr. Manager on 08.03.1997. As per record he conducted the pre sanction inspection of the office cum godown of the firm on 03.03.1997 but this preinspection report is in the handwriting of Sh. M. L. Vij and signed by Sh. Ravinder Kapoor. A residential plot measuring 400 sq. yards situated at E1, Dairy Road, Adarsh Nagar Extn., Delhi, owned by Sh. Suraj Bhan Gupta father of Sh. SC Gutpa was offered as collateral security. The Search Report regarding the property was given by M/s S. R. Yadav & Company on 11.03.1997 and Valuation Report was given Er. SSK Bhagat, Approved Govt. Valuer on 06.03.1997 assessing the value of house as Rs.1,00,78,000/. Sh. Suraj Bhan Gupta was also one of the guarantors.
7. Sh. Ravinder Kapoor accepted the projected sales given by the party and on the basis of the said projections, recommended for following credit facilities on 08.03.1997.
C/C (H) Rs.15 lakhs 25% Margin
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CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016
OD against
book debt (30 days) Rs.10 lakhs 50% Margin
Import L/C Rs.100 lakhs 25% Margin
(DA 90 Days)
8. Sh. D.N. Upadhyay sanctioned the credit facilities on 12.03.1997 as recommended by Sh. Ravinder Kapoor on certain terms and conditions. Including the condition that the party shall not change line of activity.
9. The sanction was communicated to the party vide branch letter No. Adv.9697/918 dated 13.03.1997 which was duly received by Sh. M.L. Vij on 13.03.1997 itself and who accepted the terms and conditions of the cash credit limits.
10. Both the partners had given an undertaking on 24.03.1997 to follow the terms and conditions of the sanction and the loan documents were signed by both of them. Sh. Suraj Bhan Gupta also signed the relevant documents of guarantee to the loan and submitted the original title deed of his property situated at E1, Dairy Road, Adarsh Nagar Extn., Delhi.
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11. Vide its letter dated 10.09.1997 the party requested the branch to extend limit of OD against book debts from 30 days to 60 days and to reduce the margin on the book debt from 50% to 25%. The party further requested to allow them interchangeable limits against book debts and cash credit and convert their current account into in CC account. Sh. Ravinder Kapoor recommended the request of the party to extend the limit of OD against book Debts to 60 days, interchangeably of CC and OD limit to the extent of Rs.5,00,000/ subject to the party is maintaining margin as per original sanction for a maximum period of three months and release of CC limit. His recommendations were agreed to by Sh. D. N. Upadhyay with the direction to monitor the account closely.
12. On 10.11.1997 the party requested the Bank to allow them to convert the partnership firm in to Private Limited Company with the name "Madhusudan International Pvt. Ltd." and transfer the credit facility to new Pvt. Ltd. Company. The request of the party was agreed by Sh. D.N. Upadhyay on 21.11.1997, subject to CC No. 42/11 Page No. 8 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 liability of existing partners and guarantors.
13. The party vide their letter dated 20.02.1998 informed that they did not require facility against stock and the OD against Book Debt limit of Rs.25 lakhs be allowed to them. The request of the party was recommended by Sh. Ravinder Kapoor, mentioning that at the time of renewal of CC limit may be decided, which was allowed by Sh. D.N. Upadhyay.
14. The company was registered with ROC Delhi and Haryana on 05.02.1998 and the fresh loan documents i.e. Hypothecation agreements, Agreement of Book Debts, Omnibus counter guarantee, DP Note and form of guarantee for Advances and Credits were got signed by the both the directors, Sh. S. C. Gupta and Sh. ML Vij, regarding the credit facility on 23.03.1998.
15. In its letter dated 18.02.1998, the company requested for change over of account of M/s Madhusudan International to M/s Madhusudan International Pvt. Ltd. It was also informed that the company was able to imkport goods valued at US $ CC No. 42/11 Page No. 9 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 522,825 CIF (approximately Rs.204 lacs). The request of the party was accepted by Sh. DN Upadhyay.
16. The party vide their letter dated 16.03.1998 informed the branch that due to certain stipulations in sanction, the party could not achieve the projection and requested the margin against L/C be fixed at 10% instead of 25% fixed earlier so that they have more funds to increase their turnover. It was further mentioned that bank is secured with the equitable mortgage of collateral security of about Rs.2 crores. Sh. Ravinder Kapoor, recommended the request of the party mentioning that the party has since executed loan documents and take over of Madhusudan firm limits has been done. He further mentioned that the bank may switch over the credit limits to the company's name as no dilution's made in this process in the net worth or securities charged to the bank. The recommendations of Sh. Ravinder Kapoor were agreed to by Sh. DN Upadhyay on 27.03.1998. In this letter the company informed that they were able to import goods valued at US $ 466,455 CIF (approximately Rs.182 lacs).
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17. On 26.05.1998, M/s Madhusudan International Pvt. Ltd. under the signatures of Sh. ML Vij submitted the proposal for enhancement of credit facilities. In this letter the party informed that they were able ti import goods valued at US $ 522,825 CIF (approximately Rs.210 lacs). The party also requested for renewal of facilities earlier granted. The company also requested for change of collateral security and offered the residential flat of Sh. ML Vij situated at 244, GH13, Paschim Puri, New Delhi in place of the property earlier mortgaged. But no action was taken on this letter. In this letter company gave following reasons for their poor performance during the year 199798.
1. Certain terms and conditions of last sanction restricted on imports during first three months.
2. The market witnessed recession due to increase in price of TDI & Polycol due to sudden increase in CIF rates of the products.
3. As they were new in the market, some time is taken to create/ established own set of buyers/ customers.
18. The above said letter dated 26.05.1998 was not processed and after that the accused persons Sh. M.L. Vij and CC No. 42/11 Page No. 11 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 Sh. S.C. Gupta entered into a criminal conspiracy with Sh. D.N. Upadhyay, AGM, Sh. Ravinder Kapoor, Sr. Manager of the bank, Sh. Vijay Manchanda, Sh. B.R. Bajaj, private persons, Sh. V.P. Aneja, Approved valuer and Sh. Anil Sharma, Advocate to cheat the bank by submitting forged/ fake document. In pursuance of the said criminal conspiracy Sh. M.L. Vij submitted another letter dated 26.05.1998 to the AGM of the bank and requested for following enhanced credit facilities.
C/C (H) : Rs.50 lakhs
OD Limits against Book debit : Rs.75 lakhs
Import L/C : Rs.100 lakhs
Inland L/C : Rs.40 lakhs
19. They also requested for reduction in margin from 25% to 10% on L/C and change in collateral security. But in this letter he did not mention the details of the property to be mortgaged to the bank to replace the earlier. They further offered to give equity shares worth Rs.20 lakhs of listed companies but the details of the company was not mentioned.
20. The company also submitted following projections.
(Fig. In lakhs)
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CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016
1997 - 98 199899 19992000
Projected Provisional Projected Projected
Net Sales 1183.38 195.25 1200.00 1450.00
Net Profit 37.05 .32 28.68 39.48
Capital 30.00 19.91 19.91 19.91
21. It is further submitted by Ld. Senior Public Prosecutor that in pursuance to the said criminal conspiracy Sh. Vijay Manchanda, Partner, SLF Housing Company, C1, Ambedkar Road, Ghaziabad, executed a sale deed in favour of M/s SLF India Ltd. through Sh. B. R. Bajaj, S/o A. L. Bajaj regarding a plot measuring 25 sq. yards situated at C1, Ambedkar Road, Ghaziabad, on 09.06.1998 and after that by adding figure "9" before 25 sq. yards it was shown that the plot was measuring 925 sq. yds. Investigation revealed that plot no. C1, Ambedkar Road, Ghaziabad, measuring 4050 sq. mts. was allotted to M/s SLF Housing Company in 1986 for a sum of Rs.30,70,000/ which was to be paid in 4 installments. Sh. Vijay Manchanda paid only one installment of Rs.7,60,000/ after that he moved to Hon'ble High Court agitating the increase in price by the GDA. Once the lease amount was not paid to GDA, so Sh. Manchanda was not authorized to sell the said land as even the lease deed was not executed by GDA CC No. 42/11 Page No. 13 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 in his favour. Later on, the lease deed was signed in favour of M/s SLF Housing Company through Thakur Vikram Singh on 31.03.2003. Fact remains that Sh. Vijay Manchanda was neither owner of the said land nor authorized lease deed holder and unauthorizedly and illegally executed the said sale deed. Thus, it is established that the sale deed in question was executed only for the purpose of cheating the bank by way of submitting the said sale deed as equitable mortgage.
22. Investigation further revealed that in pursuance of the said criminal conspiracy Sh. V. P. Aneja, Approved Valuer, evaluated the said plot on 11.06.1998 and as per his report he evaluated the said property to be of Rs.64,75,000/ @ Rs.7,000/ per Sq. Yds. The said valuation was falsely done is proved from the fact that subsequently at the time of filing the suit before DRT, when valuation of the said property was done by Sh. J. P. Verma, Approved Valuer then he specifically mentioned that the value of the said property stated in the sale deed should be considered as nil. The plot mentioned in the sale deed does not exists at the site. Moreover, as mentioned earlier the sale of the said property submitted to bank was executed on 09.06.1998 at a premium of Rs.2,19,500/ and on 11.06.1998 i.e. after three days how a CC No. 42/11 Page No. 14 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 property can evaluated to be of Rs.64.75 lakhs. It appears that since Sh. Aneja was in league with Sh. Vij and Sh. S. C. Gupta, so he falsely in order to avail the credit facilities evaluated a nonexisting property at Rs.64.75 lakhs.
23. Similarly, Sh. Anil Sharma, Advocate also submitted nonincumbrance certificate dated 21.07.1998, wherein, he certified that the said nonexisting property is free from all incumbrances. The perusal of search/ legal report submitted by Sh. Anil Sharma shows that at one place he mentioned that NOC must be obtained from Ghaziabad Development Authority for creation of equitable mortgage. However, later he mentioned that "No Objection Certificate may be obtained in due course, and bank may release the loan in the meantime". It is also pertinent to mention that as discussed earlier, when the perusal of the sale deed itself shows the above discrepancies so as to why and how Sh. Anil Sharma failed to highlight the same in his report. Being an advocate, Sh. Anil Sharma tried to facilitate M/s Madhusudan International (P) Ltd. to create mortgage of a property which is nonexisting. In fact, Sh. Anil Sharma used guarded words while doing so, but fact reveals that he was also a person who facilitated in creation of a property as equitable mortgage, CC No. 42/11 Page No. 15 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 whose valuation is nil today. The advocates are being put in by bank to safeguard their interests, and not for facilitating parties to obtain financial help from the bank by hook and crook. It was his duty to check the genuineness of the sale deed also but he failed to do so.
24. After that proposal was processed by Sh. Ravinder Kapoor, the then Sr. Manager on 04.07.1998 wherein apart from others the following points were written.
1. S/Sh. SC Gupta and ML Vij, Directors and M/s SLF India will stand as guarantors.
2. Collateral security at E1, Dairy Road, Adarsh Nagar, Azadpur, valuing Rs.1,00,78,000/ is to be replaced by property at C1, Ambedkar Road, Ghaziabad owned by M/s. SLF India Limited valuing Rs.64.75 lakhs and LIC Policies of Rs.15 lakhs of Sh. ML Vij, or third party who will also be a guarantor.
3. As Sh. ML. Vij has been dropped from the Board of Directors of M/s ADL International Ltd. it is not associate company.
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4. On page 11 and 11 (a) of the process note, the following conditions were proposed to be imposed.
a. Increase in equity by at least Rs.20 lakhs which may be Rs.10 lakhs within six months, which may be even from internal accruals.
b. For first three months, the existing limit would continue and thereafter limits may be released after watching the performance.
c. Since company's stock holding has been absent, CC limit may be held in abeyance unless it is required by them.
d. Company should offer adequate collateral security to fill the gap of mortgaged property requested to be released and the new one offered. As the owners have to be made guarantors, the property ought to be in the name of individual. But it can also be corporate as proposed.
e. Personal guarantee of Sh. Suraj Bhan may continue even if his property is to be released. In case the equitable mortgage of property offered is accepted, corporate guarantee shall have to be taken.
f. The company should not invest in the associate concerns.
CC No. 42/11 Page No. 17 of 85CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 g. The company should not change the line of activity.
25. Though the party could achieve sale of Rs.195.25 lakhs only during 199798 against the projection of Rs.1183.38 lakhs and the market was having recession, Sh. Ravinder Kapoor, accepted the sale projection without giving any reason. On the recommendations of Sh. Ravinder Kapoor, the following enhanced credit facilities were sanctioned by Sh. D.N. Upadhyay.
Existing Revised/Enhanced C/C (H) Rs.40 lakhs ODBD Rs.25 lakhs Rs.40 lakhs 15% margin Import L/C Rs.100 lakhs Rs.90 lakhs 25% to 10% to (90 days DA) margin. be reduced in phased Inland L/C Rs.30 lakhs (90 days DA)
26. The perusal of records revealed that the meeting of Board of Directors of M/s Madhusudan International Pvt. Ltd. held on 07.07.1998, a request was made to M/s SLF India Ltd. to offer their property as collateral security by way of CC No. 42/11 Page No. 18 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 equitable mortgage to cover the revised credit facilities granted or to be granted to the firm. On the same day in a meeting of board of directors, M/s SLF India Ltd decided to offer its property situated at C1, Ambedkar Road, Ghaziabad, UP as collateral security to the bank for the credit facilities sanctioned to M/s Madhusudan international Ltd. At the time Sh. Ravinder Kapoor was processing the note there is nothing on record which shows that the party wanted to mortgage the plot situated at C1, Ambedkar Road Ghaziabad, owned by M/s SLF India Ltd. but he mentioned the details in his process note which shows that he was in hand and gloves with the directors of M/s Madhusudan International Pvt. Ltd.
27. At the time of enhancing the limits the company had informed that their sales during the previous year were Rs.195 lacs but there is very few credit entries in their accounts and the account was not running satisfactorily. Either the claim of the party regarding the sale was false or they were maintaining any other accounts as there were very few credit entries in the account. But the claim was accepted by Sh. Ravinder Kapoor and Sh. D. N. Upadhyay without making any enquiry. It is also pertinent to mention here that CC No. 42/11 Page No. 19 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 M/s Madhusudan themselves vide letter dated 28.02.1998, 16.03.1998 and 26.05.1998 mentioned that their import was Rs.204 lakh, 182 lakhs and 210 lakhs respectively. Thus, it is clear that the party themselves were uncertain as to what is their import. But inspite of this, the above limits were enhanced by Sh. Ravinder Kapoor and D. N. Upadhyay.
28. Though there is nothing on record to show that Sh. M. L. Vij has been dropped from the Board of Directors of M/s ADL International Ltd. during July, 1998, Sh. Ravinder Kapoor mentioned in the process note that he has been dropped from the Board of Directors of M/s ADL International Ltd. It was done just to bring the sanction of limit of M/s Madhusudan International Pvt. Ltd. within the lending powers of AGM as the following credit limits were already sanctioned to M/s ADL International Ltd. : 199798 199899 Cash Credit Rs.135.00 lakhs Rs.155 lakhs ODBD Rs. 46.00 lakhs Rs. 53 lakhs EBD/EPN/EBN Rs. 32.00 lakhs Rs.213.00 lakhs CC No. 42/11 Page No. 20 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016
29. The revised/ enhanced limits were sanctioned, among others, on following terms and conditions :
1. Increase in limits allowed to be released in phased manner. To begin with existing limits. After three months, C/C Rs.25 lakhs an ODBD Rs.40 lakhs allowable and remaining after another three months satisfactory performance. Nonfund based limits to be released from now onwards.
2. Equitable mortgage of free hold commercial complex owned by M/s SLF India Ltd. with clean and marketable title as per legal search report along with guarantee of corporate owner to be taken.
3. Personal guarantee of promoter Directors to be taken.
4. The personal guarantee of Suraj Bhan Gupta to be discontinued, withdrawn as the same was taken by virtue of property since withdrawn.
5. Shares of Rs.15 lakhs to Rs.20 lakhs of listed companies having at least face value of shares to be held as added security.
6. LIC Policies of Rs.1520 lakhs of promoters/ guarantors to be held under lien.
7. Fresh capital required to be inducted by at least Rs.20 lakhs, i.e. Rs.10 lakhs immediately and Rs.10 lakhs within six months even from internal accruals of CC No. 42/11 Page No. 21 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 conversion of unsecured loan.
8. Current Ratio to be maintained as projected.
9. Company to submit audited Balance sheet of 31.03.1998 by 31.08.1998 failing which 1% penal interest to be charged.
30. The company was informed about the decision taken by the Bank regarding enhancement of its credit limits vide letter no. Adv.9899/277 dated 06.07.1998. This letter was received by Sh. ML Vij. Sh. ML Vij submitted an undertaking on 14.07.1998 that the company accepted all the terms and conditions of sanction of credit facilities. The documents i.e. letter of interest, promissory note, agreement to the book debts, agreement to hypothecation of CC against goods, etc. were signed by Sh. ML Vij and Sh. SC Gupta, Directors of the company on 14.07.1998.
31. The party vide its letter dated 15.07.1998 again requested for release original documents of the collateral security belonging to Sh. Suraj Bhan Gupta situated at E1 Dairy Road, Adarsh Nagar, Extn. Delhi saying that they had already submitted the original papers of new collateral security and various other necessary documents with the CC No. 42/11 Page No. 22 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 bank. However, the address of the new property proposed to be given as collateral security is not mentioned in this letter also. Sh. Ravinder Kapoor in his note has stated that "we have since obtained the compliance of terms and condition of sanction. We may release the existing property at Dairy Road Adarsh Nagar to Sh. Suraj Bhan Gupta who is no longer remain guarantor." But from the record it is revealed that the original title deed of the property was deposited by Sh. Balwant Rai Bajaj on 29.07.1998 and other documents were executed by him on 29.,07.1998. Moveover, the Search/ Legal report given by Anil Sharma advocate is also of 21.07.1998. Ignoring all these facts that the party had not complied with the terms and conditions and the documentation was not done completely. Sh. D. N. Upadhyay only to facilitate the company, approved the proposal given by Sh. Ravinder Kapoor.
32. After that Sh. D. N. Upadhyay was transferred and Sh. HO Mehrotra joined in his place as AGM. The company again requested to release the original documents of collateral security i.e. property belonging to Sh. Suraj Bhan Gupta vide their letter dated 28.07.1998.
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33. Sh. H.O. Malhotra vide his note dated 31.07.1998 directed Sh. Ravinder Kapoor to put up after registration of charge with ROC in account of SLF India Ltd. and to ascertain surrender value of the LIC Policy given by the party. But later on he also joined hands with the accused persons and ordered to release the earlier collateral security on 07.08.1998 without ascertaining the surrender value of LIC policies and the actual value of the shares pledged with the bank.
34. During investigation, it is found that the new property offered as collateral security owned by M/s SLF India Ltd. plot i.e. measuring 925 sq. yards situated at C1, Ambedkar Road, Ghaziabad. It is established during the investigation that as per the record of the SubRegistrar, Ghaziabad the area of the said property was only 25 sq. yds and the sale deed was executed at a valuation of Rs.2,19,500/. It can be seen from bare eyes that by putting figure "9" before "25" the area of property was increased from 25 sq. yds. to 925 sq. yds. Besides this, the area of the property was also increased to 77.420 sq. mts after erasing the actual figure of 20.903 sq. meter. It is pertinent to mention that it is already mentioned in the sale deed itself CC No. 42/11 Page No. 24 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 that the Government Rate of the said plot is Rs.10,500 per sq. mts. Therefore, if anybody would have been examined the sale deed properly then by calculating the rates of the Govt. could arrive to a conclusion that the sale deed cannot be executed at evaluation of Rs.2,19,500/ as the valuation should have been about Rs.91,20,910/. Apart from that the Stamp Duty should have also be increased correspondingly, which was paid only Rs.22,000/. Thus, the sale deed is false, could have been detected on face of it. But Sh. Ravinder Kapoor, DN Upadhyay, Sh. HO Mehrotra, Sh. VP Aneja and Sh. Anil Sharma knowingly ignored the said forgery.
35. Investigation further dislcosed, Sh. B. R. Bajaj, who is/was an employee of Sh. Vijay Manchanda submitted the said forged/ fabricated sale deed with the bank vide his letter dated 29.07.1998 duly signed by him. He also created charge in ROC regarding the said plot.
36. That instead of LIC Policies for Rs.15 to Rs.20 lakhs of promoters/ guarantors, policies for Rs.14.35 lakhs only have been taken, out of which policies for Rs. 7 lakhs belong to Sh. NK Arora, who is not a guarantor. The surrender value of LIC Policies was not enquired in absence of which it is CC No. 42/11 Page No. 25 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 meaningless to keep the same as security.
37. The party also submitted1,54,070 shares of M/s Standard Capital Markets Ltd. vide their undated letter to the branch of faced value of Rs.15,40,700/. Sh. Ravinder Kapoor at the time of accepting the said shares as security for the cash credit facilities did not make enquiry regarding the actual value of these shares in the market. As per the certificate dated 04.04.2002 given by Sh. Tarun C. Malik, Chartered Accountants the shares of M/s. Standard Capital Markets Ltd. having its registered office at 8/28, WEA Abdul Aziz Road, Karol Bagh, New Delhi are listed at Mumbai, Delhi and Jaipur Stock Exchange but are not actively traded. The last quotation as per information available by him was Rs.5.45 on 27.02.2002 at Bombay Stock Exchange. It is also to mention here that Sh. ML Vij was directed to M/s Standard Capital Markets Ltd. as evident from the share certificates itself.
38. The investigation revealed that the Debit summations in account was Rs.90 lakhs and credit summations Rs.88.26 lakhs, there was no operation in account in October, November, 1998 and no credit in CC No. 42/11 Page No. 26 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 December 1998 and January 1999 and the OD account was running overdrawn. Ignoring all the negative features and poor performance of the party, revised limits were released on 29.06.1999 by Sh. HO Mehrotra on the recommendations of Sh. Ravinder Kapoor, which already shows that the release of limits was not linked with the actual performance/ financial position of the party and limits were increased only to cover up the overdrawn in the accounts. After increasing the limits, Sh. HO Mehrotra also cleared the two cheques submitted by the party on 26.06.1999 on the recommendations of Sh. Ravinder Kapoor. After clearing the above cheques the debit balance in the OD account went up to Rs.50,89,431.86 against the sanction limit of Rs.40 lakhs.
39. The stock statements/ details of sundry debtors submitted by the party were not verified by the Branch. The amount shown as received from the sundry debtors was not routed through the bank. It is evident that most of the cheques deposited in the account were received back unpaid and it was done just to show the transaction in the account in order to arrive at enhanced credit summations. Later on the account turned NPA and the bank has filed a suit in the Debt Recovery Tribunal for the recovery of Rs.1,14,75,675/ on CC No. 42/11 Page No. 27 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 17.05.2000.
40. During the investigation the following irregularities on the part of Sh. D.N. Upadhyay, Sh. H. O. Mehrotra, both AGMs and Sh. Ravinder Kapoor, Sr. Manager are surfaced.
1. Sh. Ravinder Kapoor, the then Senior Manager who processed the proposal, suppressed the fact that M/s SLF India Ltd., whose property was proposed to be mortgaged releasing the property of Rs.1,00,78,000/ of Suraj Bhan Gupta, is an associate concern of M/s Raj Rexine (P) Ltd. and M/s Raj PU Foam Industries, mentioned that M. L. Vij has been dropped from Board of Directors of M/s ADL International Ltd. without supporting evidence and recommended for sanction of credit facilities without mentioning the fact that the proposal does not fall within the lending powers of AGM of the Branch.
Sh. Kapoor further favoured the party by suppressing the fact that the party had not complied with the terms and conditions of sanction and got the instructions to release the property of value Rs.1,00,78,000/. Further, ignoring the fact that the operation in the account of party was not satisfactory, CC No. 42/11 Page No. 28 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 Sh. Kapoor got the enhanced credit facilities released and facilitated the party to defraud the bank. Sh. Kapoor also favoured the party by taking the fresh LIC Policies having negligible surrender value and shares of unlisted company.
2. Sh. D. N. Upadhyay, the then AGM, ignoring all negative features of the Account, sanctioned various credit facilities to the party though the proposal was not within his lending powers. He also diluted the collateral security by agreeing to release the property worth Rs.1,00,78,000/ with property of lesser value and LIC policies and shares without knowing their value. He also favoured the party by agreeing to take the property of SLF India Ltd. at C1, Ambedkar Road knowing fully well that the shop is commercial complex built on the same plot have already been mortgaged to the Bank.
3. Sh. H. O. Mehrotra, the then AGM, favoured the party by releasing the security worth Rs.1,00,78,000/ without ascertaining the surrender value of LIC policies, accepting the property C1, Ambedkar Road, knowing fully well that party of same property build on the same plot has already been mortgaged with the bank. He also favoured the party by releasing enhanced limit ignoring negative features of the CC No. 42/11 Page No. 29 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 account facilitating the party to siphon off the banks money.
4. S/Sh. D. N. Upadhyay, the then AGM, H. O. Mehrotra, the then AGM and Ravinder Kapoor, the then Sr. Manager have facilitated the party to defraud the bank to the tune of Rs.90 lakhs approximately.
40. Sh. S. C. Sharma, Ld. Senior Public Prosecutor submitted that the above omissions/ commissions on the part of bank officers clearly shows their dishonest intention in enhancing the limits and releasing the property worth Rs.1,00,78,000/ kept as equitable mortgage. The said bank officers had not ensured the interest of the bank and rather facilitated the party to get the public money. The above circumstances, shows that the bank officers were in criminal conspiracy with private accused persons and in pursuance, they did above acts.
41. It is further submitted by Ld. Senior Public Prosecutor that in criminal conspiracy with Sh. ML Vij and Sh. SL Gupta, both directors of M/s Madhusudan International Pvt. Ltd., private persons Sh. Vijay Manchanda executed the forged/ fabricated sale deed, Sh. BR Bajaj CC No. 42/11 Page No. 30 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 mortgaged the said sale deed to the bank, Sh. VP Aneja, prepared forged/ fake, valuation report and Sh. Anil Sharma prepared fake search report regarding the title of the sale deed of the plot which does not exist and facilitated the accused persons to cheat the bank by submitting the forged/ fake documents prepared by them.
42. As per prosecution, from the above facts and circumstances, the accused persons D.N. Upadhyay, AGM, H. O. Mehrotra, AGM and Ravinder Kapoor, Senior Manager, all of Central Bank of India, Delhi along with Sh. ML Vij and SC Gupta, both directors of M/s Madhusudan International (P) Ltd., Sh. Vijay Manchanda, Sh. B. R. Bajaj both private persons, Sh. V. P. Aneja, Approved Valuer and Sh. Anil Sharma, Advocate committed an offence under Section1 20 B, 420 r/w Section 420, 468, 467. 471 IPC and Section 13 (2) r/w Section 13(1)(d) of PC Act and substantive offences thereof by the accused persons.
Charge
43. After hearing the parties, a charge was framed against all the accused persons under Section 120B/420/467/468/471 IPC read with Section 13 (2) read CC No. 42/11 Page No. 31 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 with 13 (1)(d) of Prevention of Corruption Act, 1988.
44. A separate charge was framed against A1 under Section 13 (2) read with Section 13 (1)(d) of PC Act.
45. A separate charge was framed against A3, A4, A 5 and A6 under Section 420/468/471 IPC.
46. A separate charge was framed against A7 under Section 420 IPC.
47. A separate charge was framed against A8 under Section 420 IPC.
Prosecution Evidence
48. Prosecution examined in all 33 witnesses and closed prosecution evidence.
Statement of A1 under Section 313 CrPC
49. A1 D. N. Upadhyay stated that till he was posted in the Janpath Branch, the account of M/s Madhusudan International Pvt. Ltd. was in operation in a regular manner and the value of collateral security accepted by bank from the CC No. 42/11 Page No. 32 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 borrower towards the loan was much more than the credit facility granted and the amounts sanctioned towards the loan was released in a faced manner considering the performance by the borrower.
Statement of A3 under Section 313 CrPC.
50. A3 M. L. Vij denied having any knowledge about the forgery in the sale deed in question, which was pledged as collateral security. (see question no.22 to 34) Statement of A4 under Section 313 CrPC.
51. A4 S. C. Gupta stated that he had resigned from the Directorship of M/s Madhusudan International Pvt. Ltd. and that he has no role in the arrangement of forged sale deed as collateral security on behalf of the company and the same was arranged by M. L. Vij and others. (see answer to question no.53, at page no. 159/internal page 17) Statement of A5 under Section 313 CrPC.
52. I would like to reproduce the relevant questions and answers of this accused as under :
CC No. 42/11 Page No. 33 of 85CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 Qns. It is in evidence of PW15 Sh. Tarun D. Balloch that his services as a professional Advocate were taken by you accused Vijay Manchanda for registration of sale deed dated 09.6.1998 Ex.PW 8/B at the office of SubRegistrar, Ghaziabad, UP. What have you to say?
Ans. I do not remember. Qns. It is evidence of PW15 Sh. Tarun D. Balloch and
PW16 Sh. Ajay Goel that after comparing the original sale deed Ex. PW8/B with certified copy Ex.PW15/A he testified that the area of the property mentioned as 25 Sq. Yard (20.903 Sq. Meter) at point D where in the original sale deed the said area was mentioned 925 Sq. YARD (773.420 Sq.
Meter). What have you to say?
Ans. The registration of documents of property at the Registrar's office was for an area of 25 Sq. Yards.
Qns. It is in evidence against you that at the time of execution of sale deed the property in question was measuring 25 Sq. Yard only and after taking the prevailing circle rate of Rs.10,500/ per Sq. Meter, the sale consideration would be much higher then the total sale consideration of CC No. 42/11 Page No. 34 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 Rs.2,19,500/ written in the sale deed. What have you to say?
Ans. The document itself was registered for an area of 25 Sq. Yards.
Qns. It is in evidence against you that digit '9' was added before the digit '25' at point Q491 and Q499 in the sale deed Ex.PW8/B. What have you to say?
Ans. As said, the documents was for 25 Sq. Yards. I do not know that digit '9' was added before digit '25'.
Qns. It is in evidence of PW16 Sh. Ajay Goel and PW 20 Sh. Madan Pal Rana that vide seizure memo dated 17.12.2005 he handed over the file of GDA relating to plot no. C1, Ambedkar Road, Ghazibad to CBI maintaining note at page N1 to N58 on the left side and on the correspondence side it contained documents 1 to 278 which file is Ex.PW16/A seized vide memo Ex.PW16/B. What have yo to say?
Ans. I do not know.
Qns. It is in evidence of PW16 Sh. Ajay Goel and PW
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20 Sh. Madan Pal Rana that as per file Ex. PW16/A the name of the allottee was changed to SFL Housing Company, Karol Bagh measuring 4050 Sq. Meter with total value of Rs.30,40,000/ as per letter dated 02.7.1986 in the file Ex.PW 16/A and the rate was increased by 50% vide communication dated 28.11.1989 in the file Ex. PW 16/A. What have you to say?
Ans. The property was earlier in the name of some other allottee which was transferred in favour of M/s SLF Housing Company. The area of the plot is correct. I do not remember whether the rate was increased by 50%.
Qns. It is in evidence against you that lease deed of the plot was executed in favour of M/s SLF Housing Company on 31.3.2003 with the condition in the agreement dated 02.7.1986 between DGA and the lessee vide clause B that allottee shall not be entitled to sale, transfer, assign or otherwise part with possession of the whole or any part of the plot, before or after the erection of the building without the previous consent in writing of the lessor. What have yo to say?
Ans. It is correct.
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Qns. It is in evidence against you that as per file
Ex.PW16/A no permission had been obtained by M/s SLF Housing Company for the sale/transfer from DGA and therefore sale deed dated 09.6.1998 Ex.PW8/B (certified copy of PW15/A was invalid). What have you to say?
Ans. As per the agreement with DGA the first sale was permissible so the sale deed dated 09.6.1998 is valid.
Qns. It is in evidence of PW17 sh. Dharmender Mohan that during the investigation he handed over certified copy of sale deed Ex.PW15/A from the office of sub Registrar, Loni Ghazibad in respect of property no. C1, Ambedkar Road, Loni, Ghaziabad to the CBI. What have you to say?
Ans. I do not know. Qns. It is in evidence against you that the above said
property as per Ex.PW15/A had been sold by M/s SLF Housing Company through you accused Vijay Manchanda to M/s SLF India Ltd. Through coaccused B. R. Bajaj. What have you to say?
Ans. It is correct.
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Qns. It is in evidence of PW17 sh. Dharmender Mohan
that the total area of plot no. C1, Ambedkar Road, Ghaziabad was 25 Sq. Yard and not 925 Sq. Yard due to deficiency of stamp duty and also in regard to the circle rates. What have you to say?
Ans. The total area of the plot of C1, Ambedkar Road, Ghaziabad is 4050 Sq. Meters. The sale deed was executed for only 25 Sq. Yards."
53. The accused was put the report of PW32 Mr. R. S. Rana A GEQDf, which was Ex.PW32/A, to which he replied that the report cannot be relied upon.
Statement of A6 under Section 313 CrPC.
54. A6 Balwant Rai Bajaj denied that he had deposited the aforesaid forged sale deed in the bank. He also denied his knowledge of creating charge by him of the plot no. C1, Ambedkar Road, Ghaziabad, UP under his signatures vide form no. 8 and 13 Ex.PW21/B10B and Ex.PW21/B10 A submitted on 6.8.1998 vide letter Ex.PW21/B10C. Rather he stated that he had never submitted for no.13 and 8 and had never submitted any affidavit.
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55. His specimen signatures and the report of hand writing expert (PW32) was put to the accused, who stated that this report cannot be relied upon.
Statement of A8 under Section 313 CrPC.
56. A8 Anil Kumar denied all the allegations but proceedings against him. However, his statement would not be relevant because the proceedings against him were quashed vide judgement dated 9.2.2015, Criminal M. C. No. 3302/2013 by Hon'ble Mr. Justice Ved Prakash Vaish.
Defence Witnesses
57. A3 examined DW1, DW2, DW3 & DW4.
58. A5 examined DW5.
59. Defence evidence was closed on 11.4.2014.
60. The evidence of defence witnesses would be discussed at appropriate places.
D. N. Upadhyay (A1)
61. Ms Sunita Tiwari, adv. for A1 has argued that on CC No. 42/11 Page No. 39 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 10.9.1997 the borrower requested for extending the limit of OD against book debits from 30 days to 60 days and reduce the margin on book debits from 50% to 25%. It also requested for allowing interchangeable limits against book debts and cash credit and convert their current account into CC account. There is nothing wrong in the said process as the same norm is followed in all banks including Central Bank of India. Considering the fact that the borrower M/s Madhusudan International P. Ltd. was repaying the amount to the bank satisfactorily, therefore, the accused no.1 sanctioned further credit facilities to them with clear instructions to monitor the account closely, which is evident from the bank records. He sanctioned the credit facilities as the same was within his lending powers and ensured that the collateral security offered towards the said credit facility was enough to meet the requirements. The credit limit sanctioned was not paid in one go but in a phased manner after considering the periodical performance of the borrower. Even the Letter of credit (L/C) facility was restricted.
62. It is further argued that D. N. Upadhyay CC No. 42/11 Page No. 40 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 bonafidely and honestly thought and acted in the interest of the bank and never favoured any party. He never facilitated the party to defraud the bank as during his tenure, the account of Madhusudan International P. Ltd. was regular and showed a balance of around Rs.14 lacs (out of Rs.25 lacs released towards Cash Credit). Although the sanctioned amount towards L/C was 100 lacs, but the same was not utilized by the borrower during the tenure of D. N. Upadhyay as AGM of the Janpath branch, and therefore, there is no question of his facilitating the party in any manner to defraud the bank. Accordingly to the bank statement w.r.t. Over Draft A/c and Cash Credit A/c, during his tenure the O/D Account was within limit and the CC A/c showed credit balance. The accounts were allowed to be operated subsequently after his transfer and the same can be verified from the statement of O/D A/c between 17.7.1998 and thereafter. During his tenure, the accounts never exceeded the limit of Rs.25 lacs classified as Standard Asset backed by genuine collateral security.
63. It is further argued by Ld. Defence Counsel that CC No. 42/11 Page No. 41 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 till such time that accused no.1 remained posted at Janpath Branch of Central Bank of India i.e. upto 16.7.1998, the original documents pertaining to the property of E1, Dairy Road, Adarsh Nagar, Delhi remained with the bank and the value of the collateral security accepted by him towards credit facility extended to the borrower was more than sufficient for recovering the loan amount from the borrower by the bank. It is further submitted that the genuineness of the Sale Deed was to be checked and verified by a legal person and not the bank officials.
64. It is further argued that the comparative position at the time when he was transferred from the bank on 16.7.1998 and when the account of the borrower became NPA/suit was filed before the Debts Recovery Tribunal, was as follows:
Position in July, 1998 Facility A/c position CC and OD combined limit allowed by CC No. 42/11 Page No. 42 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 DN Upadhyay 25 lakhs Drawing Power 25 lakhs 14,59,331.14 (classified as Standard Asset/Regular A/c backed by genuine collateral security with about Rs1.78 Cr.) Position as on 31.1.2001 (account became NPA on 30.9.2000 Facility A/c position CC Hyp (Cash Credit Limit) Rs.40 lacs Rs.25 lacs ODBD (Overdraft against Book debits 40 lacs Rs.64.57 lacs Total Rs.89.57 lacs
65. Subsequently suit was filed before DRT on
17.5.2002 for recovery of Rs.1,14,75,675/ plus further CC No. 42/11 Page No. 43 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 interest w.e.f. 16.5.2002.
66. It is further argued by Ld. Defence Counsel that the credit facilities were sanctioned/enhanced by accused no.1 in good faith and based upon the clarifications and explanation given by the borrower M/s Madhusudan International P. Ltd. and upon taking into consideration the market conditions prevalent at that particular time. The appraisal/review of accounts was subjective, however, taking into consideration the fact that the business was new and the borrower had problems initially, their requests were considered from time to time but with restrictions. The utilizations were allowed only in accordance with their achievements.
67. It is further argued by Ld. Defence Counsel that on 4.7.1998, only the credit facility was extended and there was no substitution of security, and this was also done considering the fact that the account of M/s Madhusudan International P. Ltd. was regular and upon consideration of marketing conditions, etc. The borrower/company wanted foreign imports and hence they had applied for removal of restrictions. Even the CC No. 42/11 Page No. 44 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 bank records show that every sanction allowed by the accused no.1 was subject to compliance of certain terms and conditions strictly. (Ref. Is made to sanction given in March, 1997, November 1997, 4th July 1998 and 15th July, 1998.
68. It is further argued that no valuation report dated 11.6.1998 pertaining to property no. C1 Ambedkar Nagar, Ghaziabad, was ever put up before accused no.1 and this is the reason that he gave instructions on 15.7.1998 for complete verification of the said property proposed by the borrower for substitution in place of the original/existing collateral security of property no. E1, Dairy Road, Adarsh Nagar, Delhi. Except the property of C1, Ambedkar Nagar, Ghaziabad, offered to be substituted in place of original collateral security of property no. E1, Dairy Road, Adarsh Nagar, Delhi, no other proposal was recommended and placed before him by the senior manager for consideration.
69. It is further argued that A1 regularly intimated the higher authorities regarding the sanction and renewal of facilities to borrowers and the accounts CC No. 42/11 Page No. 45 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 position. The branch was under concurrent audit and statutory audit every year and the accounts of M/s Madhusudan International P. Ltd. during the tenure of accused no.1 was fully secure and performing asset. It is further submitted by Ld. Defence Counsel that there was no dishonest intention on the part accused no.1 in any manner whatsoever in enhancing the limit and he never released the original genuine property valuing Rs.1.78 crore, kept as equitable mortgage towards collateral security with the bank in lieu of the credit facility granted to the borrower and that the existing collateral security was replaced after he was transferred from the branch on 16.7.1998.
70. Ld. Defence Counsel has drawn my attention to the testimony of Inspector Anil Kumar (PW33), the Investigating Officer, who had stated in his examination in chief recorded on 1.9.2012 (page 7) that "I had also obtained the certified copy of the recital register (Ex.PW6/G) showing the entry dated 29.07.1998 in respect of submitting the sale deed in respect of the property Ex.PW8/B (part of D40)..." It is submitted that this proves that the forged sale deed was presented CC No. 42/11 Page No. 46 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 to bank after his transfer.
71. During cross examination by counsel for accused M. L. Vij on 3.1.2013 the witness has stated (page 2) that "It is correct that as per the statement of account Ex.PW24/B, the amount borrowed has always been within the borrowing limits prior and w.e.f. 26.6.1999.
72. In his cross examination by counsel for accused no.1 D. N. Upadhyay, PW33 stated that "It is correct that at the time when the accounts of M/s Madhusudan International P. Ltd. became overdue and declared NPA, accused D. N. Upadhyay was not posted at the Janpath Branch. It is correct that he had been transferred out of that branch on 16.7.1998."
73. The witness PW33 has also stated that "It is correct that letter dated 6.7.1998 of the bank was only pertaining to review for enhancement of credit facilities given to M/s Madhusudan International P. Ltd. and for consideration of extending sanction limits." As regards the sanction given on 15.7.1998, the witness has said that "It is correct that the request letter by M/s Madhusudan International P. Ltd for change of CC No. 42/11 Page No. 47 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 collateral security was received with the bank on 15.7.1998 and the accused D. N. Upadhyay permitted the same subject to compliance of certain terms and conditions as reflected in the letter Ex.PW21/H." He further agrees by stating that "It is correct that M/s Madhusudan International P. Ltd. requested the bank to release the documents of the earlier collateral security on 28.7.1998, Ex.PW21/J. It is correct that the Form no.13 and 8 Ex.PW21/B10A and Ex.PW21/B10B were submitted by the borrower at the ROC on 6.8.1998 to create charge on the fresh collateral security. It is correct that documents pertaining to earlier collateral security were in the possession of the bank till 28.7.1998.
74. Ld. Defence Counsel has referred to the testimony of PW14 Anil Dutt Gupta, the Stock Inspecting Officer from May 1999 to June 2004, who testified as under :
"I have been shown documents D44 which is the inspection report which was prepared after perusal of record of M/s Madhusudan International P. Ltd. on 23.1.2001 on the direction of the Chief Internal Audit Officer of Delhi audit zone, same is Ex.PW14/A............. I had seen the sanction CC No. 42/11 Page No. 48 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 letter dated 4.7.1998 in the file which was sanctioned by Asstt. General Manager (AGM) of the branch and noted down that this party was sanctioned cash Credit Limit (CC Limit) against hypothecation of stock of Rs.40 lacs. The margin to be maintained by the party was 25 percent. On the date of inspection i.e. 23.1.2001 the net debit outstanding in the CCH Account of this party was Rs.25 lacs. The party was also sanctioned over draft against Book Debts (ODBD) (90 days) of 40 lacs sanctioned limit and margin to be maintained was 50 percent. In this account the outstanding as on 23.1.2001 was Rs.64.57 lacs. The party was also sanctioned Foreign Letter of Credit Limit (90 days) to the tune of Rs.90 lacs and the margin to be maintained was 25 percent. On the date of the inspection there was no outstanding on this account. The party was also sanctioned Letter of Guarantee Limit of Rs.30 lacs on the margin of 25 percent and on 23.1.2001 there was nil outstanding.
On the date of inspection, the account of the party was already declared NPA (non performing assets) as per RBI norms since September 2000.
As per the information available in the file of the party, which was inspected by me, the limits sanctioned to this party were against the collateral security of commercial plot C11, Ambedkar Road owned by M/s SLF India Ltd. And LIC policy having maturity value of Rs.14,35 lacs. The CC No. 42/11 Page No. 49 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 documents regarding availing of the above mentioned facilities were signed and executed on 14.7.1998 and the commercial plot mentioned above was mortgage on 29.7.1998. the value of the plot in question as per the valuation report was Rs.64.75 lacs."
75. Ld. Defence Counsel has further drawn my attention to the testimony of PW21 Rajneesh Arora, who was the Manager in Recovery Department of Central Bank of India from 4.2.2004 to 12.5.2007, who testified as under :
"...I have seen document D40 (page no.1) which is acknowledgement depositing title deeds of property situated at C1, ambedkar Road, Ghaziabad, against the advances made to M/s Madhusudan International (P) Ltd. dated 29.7.1998.... and the same are Ex.PW21/A46, Ex.PW21/A46A and Ex.PW21/A46B."
"I have seen document D40 (page no.6), which is a original sale deed dated 9.6.1998 of plot no. C1, Ambedkar Road, Loni, Ghaizabad..... which was deposited by the party vide Ex.PW21/A46A" (i.e. 29.7.1998).
As regard satisfaction of the bank before sanctioning credit facility (in February/march, 1997 when the accused CC No. 42/11 Page No. 50 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 no. D. N. Upadhyay was the AGM), the witness has testified on 26.11.2011 at page 3 of his evidence that "During the relevant period the bank used to prepare the credit monitoring arrangement data for the assessment of working capital requirement etc. in respect of the party, who sought credit facilities from the bank for over Rs.2 lakhs in the present case, accordingly the assessment was made in respect of M/s Madhusudan International P. Ltd."
76. Ld. Defence Counsel has drawn my attention to the testimony of PW24 H. K. Verma, the complainant, who has corroborated the testimony of PW21 Rajneesh Arora regarding letter no. 26.5.1998 vide which M/s Madhusudan International P. Ltd. had requested the bank for enhancement of renewal of credit facility already granted to them and also requested for reduction of margin. PW24 testified that the enhanced limits were allowed/sanctioned by A1 with certain conditions on 4.7.1998 and the same were conveyed to M/s Madhusudan International P. Ltd. on 6.7.1998 and that various documents (D36) including an undertaking were submitted by the borrower on 14.7.1998 to bank in terms of sanction in consideration, which are Ex.PW28/18A, Ex.PW21/A21, Ex.PW21/20, Ex.PW21/A28, Ex.PW21/A19, Ex.PW20/A17, Ex.PW21/A16 and Ex.PW21/A14.
CC No. 42/11 Page No. 51 of 85CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016
77. Ld. Defence Counsel has drawn my attention to the testimony of Inspector Anil Kumar (PW33), the Investigating Officer, who admitted that at the time when accounts of M/s Madhusudan International Pvt. Ltd. became overdue and declared NPA, accused D. N. Upadhyay was not posted at Janpath Branch. PW33 also admitted that A1 had been transferred out of that branch on 29.7.1988. He also admitted that the letter dated 6.7.1998 of the bank was only pertaining to review of enhancement of credit facility given to M/s Madhusudan International Pvt. Ltd. and consideration of extending sanction limits. My attention has been drawn to D34, Ex.PW21/B12, which is an application in prescribed proforma and which specifically mentioned "review proposal" dated 26.5.1998. Ld. Defence Counsel has drawn my attention to the testimony of PW33 in cross examination, who has stated after seeing D34 that proposal was put before A1 on 4.7.1998 and it was accepted by him on the same day.
78. Ld. Defence Counsel submits that the enhanced facility, as per noting dated 4.7.1998 written by A1 was required to be released in faced manner as indicated in page 14 of the process note, which shows that due caution was CC No. 42/11 Page No. 52 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 taken by A1 in processing the said review proposal.
79. Ld. Defence Counsel has drawn my attention to the cross examination of PW33, who has testified that a request letter by M/s Madhusudan International Pvt. Ltd. for change of collateral security was received with the bank on 15.7.1998 and A1 permitted the same subject to compliance of certain terms and conditions as reflected in the letter Ex.PW21/H.
80. Ld. Defence Counsel has drawn my attention to the legal search papers, which were submitted with the bank on 21.7.1998.
81. Ld. Defence Counsel has drawn my attention to the testimony of PW33, who has admitted that when the account became inoperational and NPA, H. O. Mehrotra, R. N. Bhardwaj, V. N. Pathak and I. D. Sharma were posted in the branch and were responsible for loan and credit facility to borrowers.
82. In nutshell, it is argued that A1 had only allowed release of the original papers of security to Sh. Suraj Bhan Gupta on 15.7.1998 and he had not admitted any forged CC No. 42/11 Page No. 53 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 document as the substitute security because he was transferred on 16.7.1998. It is argued that the verification of the forged sale deed by accused Anil Sharma, adv. (A8) had taken place after 16.7.1998. Moreover, the security papers were released and fresh security documents, which were found out to be forged, were accepted after his transfer. Hence, it is argued that he has been falsely implicated in the present case, simply because he fell in the chain of official transaction. It is argued that CBI had not been able to properly appreciated that the act of A1 was a bonafide act.
83. On the other hand, Ld. Senior Public Prosecutor argued that the role of A1 should be seen in overall scenario, which has been specified in the charge sheet and can be summarized as under :
1. M/s Madhusudan International Pvt.
Ltd. had offered residential flat of M. L. Vij situated at 244, GH13, Pashchim Puri New Delhi in place of property earlier mortgaged. But no action was taken on this letter dated 26.5.1998.
2. A1 ignored all negative features of the account and sanctioned various credit facilities, though the proposal was not within the lending powers.
CC No. 42/11 Page No. 54 of 85CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016
3. A1 also diluted the collateral security by agreeing to release the property worth Rs.1,00,78,000/ with property of lesser value and LIC policies and shares without knowing their value. He also favoured the party by agreeing to take the property of SLF India Ltd. at C1, Ambedkar Road knowing fully well that the shop is commercial complex built on the same plot have already been mortgaged to the bank.
84. Ld. Senior Public Prosecutor has strongly argued that the criminal intention of accused is reflected from the fact that M. L. Vij (A3) in capacity of being a Director of M/s Madhusudan International Pvt. Ltd. filed an application on 15.7.1998 and A1 allowed the release of the security on that very day i.e. on 15.7.1998 i.e. just one day before his transfer on 16.7.1998, without ensuring as to what substitute security would be offered by A3.
85. In order to appreciate the rival submissions, I would like to reproduce this letter Ex.PW21/H (D38) by A3 in capacity of being a Director of M/s Madhusudan International Pvt. Ltd. as under :
CC No. 42/11 Page No. 55 of 85CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 Madhusudan International Pvt. Ltd.
REGD. OFFICE : A17, RAGHUVAR BHAWAN, KEWAL PART, AZADPUR, DELHI110033 PH : 7434215, 7212552 FAX : 91117212552 Asst. Genral Manager Central Bank of India, 10, Janpath, New Delhi110001 SUB : Release of Collateral Security Papers Dear Sir, This is the inform you that as per your sanction letter no. Adv:9899 :277 dated 6/7/98 we have complied with all the terms and conditions as stipulated by your goodself and have also submitted the original papers of collateral security and various other necessary documents with your bank.
You are requested to kindly release the original papers of the security belonging to Sh. Suraj Bhan Gupta, situated at EI, Diary Road, Adarsh Nagar Extension, Delhi 110 033, at the earliest.
Thanking you, Yours sincerely for Madhusudan International Pvt. Ltd.
Director.
Yes. However, proper valuation We have since obtained and title clearance of the compliance of terms & properties offered as conditions of sanction. We security should be ensured. may release the existing We should also explore property of Dairy Road Adarsh possibility of obtaining Nagar to Mr. Suraj Bhan Gupta who more collateral security. no longer remain guarantor.
SD SD
D. N. Upadhyay Ravinder Kapoor
15.7.98 15.7.98
CC No. 42/11 Page No. 56 of 85
CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016
86. Perusal of this letter shows that A3 has not mentioned as to what collateral security would be offered. A 1 has given a noting that the existing collateral security may be released but proper valuation and title clearance of properties offered as security should be ensured. Not only this, he has also mentioned in his noting that the bank should explore the possibility of obtaining more collateral security.
This noting shows that A1 had put a note of caution and requirement of additional collateral security, against release of the existing collateral security. It is true that he did so on the last date of his transfer. But it is not enough to draw a mense rea from this fact. Admittedly the forged sale deed as a collateral security was filed after his transfer. He had no role in accepting the same because he had already been transferred.
87. The prosecution allegation, that he had not accepted the proposal of A3 offering his own residential flat as collateral security and kept it pending, also does not show any mense rea in the sense that prosecution must show that the said application was put before A1. I would refer to the testimony of PW21 (dated 7.1.2012) that on 26.5.1998 M/s Madhusudan International Pvt. Ltd. vide letter Ex.PW6/F (D CC No. 42/11 Page No. 57 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016
30) made a request to AGM, Central Bank of India, Janpath for renewal of FLC limit and also requested for the change of collateral security from Adarsh Nagar property to GH13, Flat No. 244, Pashchim Puri, New Delhi.
88. I have perused this letter. This is quite a long letter in which main prayer of renewal is FCL limits. This letter is dated 26.5.1998 and if A1 did not allow the change of the collateral security with the flat of A3, it does not mean that A1 had rejected this offer. Rather he continued with the original collateral security, which was quite a good one. When he ordered change of collateral security on 15.7.1998, he permitted the release of the existing collateral security, with proper valuation and clearance as well as proposed more collateral security. In these circumstances, I do not find any substance in the submissions of Ld. Senior Public Prosecutor that nonaction by A1 on the letter Ex.PW6/F of A3 is a circumstance against A1.
89. I have perused the evidence on record and I am of the opinion that there is nothing to show that A1 acted beyond his lending powers. Even if he did so, it appears to be a mere irregularity because as per the testimony of PW24 H. CC No. 42/11 Page No. 58 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 K. Verma, the complainant, (AGM Janpath Branch of Central Bank of India), D. N. Upadhyay must have acted bonafied after seeking necessary clarification and undertaking from the borrower and bonafidely satisfying himself about the then prevailing market conditions while enhancing the credit limit of the borrower. PW24 admitted that OD & CC limits were released in faced manner. However, LC facility was restricted and PW24 "presumed that accused D. N. Upadhyay must have been duly reporting to higher ups in the bank about the line of credit sanctioned and enhanced in this case as well as in other cases. It is true that at least at the end of financial year, there is mandatory, statutory audit is conduct by chartered Accountants engaged from outside." PW24 also admitted that as per bank record every sanction allowed by D. N. Upadhyay was subject to strict compliance of certain terms and conditions.
90. The aforesaid testimony shows that in view of the evidence on record it cannot be said with certainty that A1 was a part of the conspiracy. I have perused the complaint Ex.PW24/A made by PW24 to SP CBI, which is the basis of the present investigation. In this complaint it is written that after transfer of D. N. Upadhyay, AGM, the genuine property CC No. 42/11 Page No. 59 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 was released by Sh. H. O. Mehrotra, AGM as per the recommendations dated 31.7.1998 and 6.8.1998 of Sh. Ravinder Kapoor (i.e. A2 herein). No other material against A1 has been pointed out. In these circumstances, I am of the considered opinion that A1 deserves benefit of doubt. Accordingly, I acquit him.
M. L. Vij (A3)
91. It is argued by Sh. A. K. Srivastava, adv. that the dispute was purely of civil nature. It is argued that there is no evidence on record to show that A3 had colluded with the bank officials in changing the original collateral security and thereafter furnishing the forged sale deed as collateral security. It is argued that had A3 been nurturing evil intentions, he would have exhausted the full sanctioned limits and he would not have made any efforts to settle the loan accounts. Ld. Defence Counsel submits that M. L. Vij never utilized full sanctioned limits, which proves the bonafides of A3 to repay the loan amount.
92. It is argued by Ld. Defence Counsel that M. L. Vij on his own initiative, wrote letter dated 4.7.2012 for settlement, however, the Central Bank of India did not pay heed and no CC No. 42/11 Page No. 60 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 action was initiated and subsequently M. L. Vij wrote letters dated 16.7.2012 and 18.8.2012 for settlement. The Central Bank of India issued a letter no. ARBDEL/F96201213/117 dated 11.9.2012, wherein the Central Bank of India has settled the dispute and in furtherance of the settlement, M. L. Vij has deposited the full amount with interest and the same has also been credited in the account of Central Bank of India. Central Bank of India has also issued a No Dues Certificate bearing no. ARBDEL/F112/201112/134 dated 29.10.2012.
93. Ld. Defence Counsel has drawn my attention to the testimony of DW1 Bhagat Singh, who brought the record form Debt Recovery Tribunal and who proved the certified copy of the petition titled "Central Bank of India Vs. M/s Madhusudan International Pvt. Ltd. & Ors." as well as order sheets and the other relevant documents as Ex.PW1/A collectively. Ld. Defence Counsel has drawn my attention to the order sheet dated 26.12.2012 which shows that the Central Bank of India had withdrawn the OA as the claim was satisfied. The order sheet dated 5.11.2012 shows that the bank had stated that matter had been settled and nothing is due from the defendant. Thus, it is argued that the one time CC No. 42/11 Page No. 61 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 settlement between bank and A3 stands proved by DW4 Satish Sharma, Manager Central Bank of India, Assets Recovery Branch, Janpath. DW4 has brought certified copy of No Due Certificate Ex.DW4/A dated 29.10.2012 issued by Assistant General Manager, Central Bank of India in favour of Madhusudan International Pvt. Ltd. pursuant to the compromise between the bank and the aforesaid company.
Ld. Defence Counsel has referred to :
(1) CBI ACM Mumbai Vs. Narender Lal Jain & Others CA No. 517 of 2014 decided on 28 February 2014. (2) Sanjay Bhandari and Anr. Vs. CBI CRL M. C.No. 65798/2014 and CRL M. A. No. 19744/2014 decided on 29.6.2015. (3) Joginder Singh Logani Vs. States CRL MC No. 3400/2015 decided on 4.9.2015. CC No. 42/11 Page No. 62 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016
94. Ld. Defence counsel had drawn my attention to the testimony of PW14 Sh. A. D. Gupta, Branch Manager, Central Bank of India, who testified on 09.02.2011 that on 23.01.2001 the debit outstanding in CCH was Rs.25 lacs against the sanctioned limits of CCH of Rs.40 lacs, which was within limits. Overdraft on book debts was Rs.64.7 lacs against the sanctioned ODBD limt of Rs.40 lacs. Ex.Pw22/D (50) shows that total debts of company i.e. due from different parties were Rs.86.73 lacs, meaning, thereby that on 31.03.2001 the amount of ODBD due to the bank was lesser than the amount which was to be received by Madhusudan International Pvt. Ltd. from the debtors.
95. Ld. Defence counsel had drawn my attention to D48 to show that the debit balance was Rs.19,68,719.14 as on 31.07.1998, which shows that account was running regular till 31.07.1998.
96. Ld. Defence counsel has drawn my attention to the testimony of PW21, who has testified that as per D47 and D48, the account was regular in May 1998, when the request was made for enhancement of credit limits. PW21 further testified that on 31.05.1998, the total book debts of company CC No. 42/11 Page No. 63 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 were Rs.55,65,436/ (Ex.PW21/B/25/B2). In July 1998, book debts of the company increased to Rs.61.24 lacs (Ex.PW21/B/25/B6). On 31.10.1999, the company had the stock of goods valued at Rs.40 lacs approximately (Ex.PW21/B/25/B3).
97. Thus, it is argued by Ld. Defence counsel that the accused was running the account properly to the best of his capacity and bonafides and the entire record of bank does not exhibit any mens rea to cheat the bank. It is further argued by the Ld. Defence counsel that real issue comes down to the question of furnishing collateral security. It is argued by Ld. Defence counsel that that prosecution has not alleged that A 3 had forged the said documents. It is further argued that there is no evidence on record that it was A3 who had submitted the said collateral security/ saledeed in the bank. Even if it is presumed that the said collateral security was furnished by A3, still it is submitted by Ld. Defence counsel that prosecution must show that the A3 knew the saledeed to be forged one.
98. It is argued by Ld. Defence counsel that at the time of pledging the saledeed with bank on 29.07.1998, CC No. 42/11 Page No. 64 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 substitution of collateral security was done by Balwant Rai Bajaj (A6) in presence of Sh. Ravinder Kapur (A2, since expired), as reflected in recital register of the bank (D53, Ex.PW6/G). It is submitted that the Form No. 8 and Form No. 13 were also filled in by Balwant Rai Bajaj and the bank officials and they also put their signatures in execution of the said forms. Thus, it is argued that there is no iota of evidence that on 29.07.1998, M. L. Vij (A3 ) was also present in the bank.
99. On the other hand, Ld. Senior Public Prosecutor has drawn my attention to the testimony of PW21 Rajneesh Arora, the Manager in Recovery Department of Central Bank of India, who has stated that Ex.PW21/A1 is a guarantee deed executed by Balwant Rai Bajaj, Director of M/s SLF India Ltd., whereby guarantee was undertaken for credit limit upto Rs.2 crores in favour of M/s Madhusudan International Pvt. Ltd. The signatures of Balwant Rai Bajaj (A6) are present on Q430, Q435, Q436 and Q438. His specimen signatures are from S51 to S55 collectively Ex.PW13/A, which were taken by Investigating Officer. As per the GEQD report Ex.PW32/A, Q430 to Q436 and Q438 match with the specimen signatures of Balwant Rai Bajaj. It is argued by CC No. 42/11 Page No. 65 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 Ld. Senior Public Prosecutor that why A6 would offer collateral security of such a huge amount unless asked by A3.
100. I fully agree with the submissions of Ld. Senior Public Prosecutor.
101. I may point out here that the there is no allegation nor any evidence that A3 prepare the forged sale deed. Nor there is evidence that A3 himself tendered the said forged sale deed to bank. Therefore, A3 cannot be convicted for 467 IPC or 471 IPC. The material on record i.e. Ex.PW21/A6 shows that it was A6, who undertook the guarantee for the credit limit upto Rs.2 crores in favour of M/s Madhusudan International Pvt. Ltd. Of course A6 must have done so at the instance of A3, but prosecution must prove that A3 had the knowledge of this sale deed pledged by A6 to be forged. Perusal of the forged sale deed Ex.PW8/B shows the area of the plot to be 925 square yards, which was sold through this sale deed by A5 in favour of A6. Testimony of PW8 Jai Prakash Verma, Government approved architect and valuer testified that he went to the plot in question i.e. C1, Ambedkar Road, Pargana Loni, Tehsil & District Ghaziabad and gave his valuation report Ex.PW8/A dated 23.2.2001. He CC No. 42/11 Page No. 66 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 stated that he did not find a plot of the size shown in the sale deed Ex.PW8/B and that there was an open space in the complex. I have seen this report and it has shown the value of the property to be nil because the plot mentioned in the sale deed does not exist at site of the aforesaid plot is part of plot no. C1, which has an area of around 5200 square yards, which stands for the Sucheta Commercial Complex, which has already been sold by vendor. In cross examination, PW8 admitted that the area of the site was 5200 square yards and that it was a commercial plot. In such a situation, it cannot be said that land was not available, though PW8 could not identify the plot of 925 square yards. Therefore, land exists through it may not correspond to the area shown in the sale deed.
102. I would discuss later on as to how the saledeed Ex.PW8/B is a forged document. However, at the same time there must be specific evidence on record to show that A3 had an opportunity to see carefully this saledeed. The sale deed is on a proper stamp paper. It bears proper stamping of the office of SubRegistrar. This shows the area of the plot as 925 square yards. It is difficult to find out the forgery unless the deed is seen carefully. Possibility cannot be ruled out that CC No. 42/11 Page No. 67 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 A3 simply believed A5 and believing the same to be a genuine document, A3 asked A5 to tender the same as collateral security.
103. PW21 has proved the minutes of meeting of Board of Directors of M/s Madhusudan International Pvt. Ltd. held on 07.07.1998, in which M/s SLF India Ltd. was requested to offer their property as collateral security.
104. PW21 has further proved D40, which is minutes of meeting held on 07.07.1998 of the Board of Directors of M/s SLF India Ltd., which is Ex.PW21/A47. It bears the signatures of A6 at Q482. As per handwriting expert's report, Q482 matches with the specimen signatures of A6. As per these minutes, A6 had signed certifying it to be true copy in capacity of being a director of M/s SLF India Ltd. As per these minutes, M/s SLF India Ltd. has agreed to offer as collateral security its property situated at C1, Ambedkar Road, Ghaziabad, by way of equitable collateral security in favour of Central Bank of India to secure the credit limits / facilities granted to M/s Madhusudan International Pvt. Ltd.
105. All these proceedings do not rule out the possibility that A3 was acting genuinely and might not be having any CC No. 42/11 Page No. 68 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 knowledge of the saledeed Ex.PW8/B being forged documents. Needless to say that one time settlement with bank also shows bonafides of A3. In these circumstances, I am of the opinion that prosecution has not been able to prove its case beyond reasonable doubt against A3. I, therefore, give benefit of doubt to A3 and acquit him.
S. C. Gupta (A4)
106. The allegation against him is that he was a director of M/s Madhusudan International Pvt. Ltd. However, I find no evidence on record that he actively participated in any of the transactions. It was A3, who was interacting with the bank officials. It was A3 who was interacting with A6. A4 appears to be a sleeping and unconcerned director. There being no material against him, he requires to be acquitted.
Vijay Manchanda (A5) and Balwant Rai Bajaj (A6)
107. The allegation against A5 and A6 have been described in the chargesheet. As per prosecution, it was A6, who had tendered the saledeed Ex.PW8/B to Central Bank of India as collateral security to support M/s Madhusudan International Pvt. Ltd. Perusal of this saledeed would show CC No. 42/11 Page No. 69 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 that the plot in question was sold by A5 in favour of A6.
108. In this regard, Ld. Senior Public Prosecutor has pointed out that the saledeed Ex.PW8/B placed at page no. 1391 consisting of 28 pages shows the measurement as 925 sq. yds. i.e. 773.402 sq. meters. Ld. Senior Public Prosecutor has drawn my attention to testimony of PW32 Sh. R.S. Rana, Assistant Government Examiner of Question Documents, who has mentioned at points 11 and 12 of his opinion/ report Ex.PW32/A (Colly.), which is reproduced as under :
"11. There are marks of erasure in the red enclosed portion marked Q492. The remnants of the original typewritten strokes which could be deciphered appear to read as '2' between the existing figures '7' at tens place and '3' at units place.
12. There are marks of erasure in the red enclosed portion marked Q500. The remnants of the original typewritten strokes which could be deciphered appear to read as figure '2' below the existing figure reading as '3' at units place and figure '3' after the existing figures reading as '773.420'."
109. It is further argued by Ld. Senior Public Prosecutor that initially the measurement was shown as 20.903 square meter, which was altered to 773.420 square CC No. 42/11 Page No. 70 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 meter, which would be clear from the darkness of these figures at Q492 and Q500 as compared to other remaining part of the body of sale deed. Expert has testified that there was interpolation of this figure.
110. Prosecution has examined PW15 Tarun D. Balloch, Advocate, practicing in Ghaziabad District Courts. He perused the saledeed Ex.PW8/B and testified that his services were taken for getting the said saledeed registered at the office of SubRegistrar, Ghaziabad. He testified that saledeed Ex.PW8/B was executed by A5, whose photograph is placed at point 'A' on the saledeed. On last page, he has signed at points 'B' and 'C' and had also placed his rubber stamp. He testified that the certified copy of the sale deed (D
41) also bears his signatures at the point of attestation of photograph of A5 at point 'A' and the said certified copy is Ex.PW15/A. On comparing the saledeed Ex.PW8/B and certified copy Ex.PW15/A, he testified that in certified copy Ex.PW15/A, the area of property was mentioned as 25 square yards i.e. 20.903 square meters, whereas, in the saledeed Ex.PW8/B, the said area is mentioned at 925 square yards (773.420 square meters). He testified that at the time of execution of the saledeed the area of property was CC No. 42/11 Page No. 71 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 mentioned as 25 square yards (20.903 square meters). He further testified that if actual area of property was 925 square yards (773.420 square meters), then after multiplying the same with the prevailing circle rates of Rs.10,500/ per square meter, the total consideration of saledeed should have been much higher than mentioned in the first page of sale deed as Rs.2,19,500/ and stamp duty must have been much more than the actually paid. He testified that "the digit '9' before the digit '25' at point Q291 and Q499 were added later on. Similarly, area already mentioned in sq. meters was rubbed off and '773.420' was mentioned later on in place of '20.903' at point Q492 and Q500.".
111. PW17 Dharmender Mohan, who was an official in the office of SubRegistrar, Ghaziabad, proved D41 as Ex.PW15/A, which is the true attested copy of the sale deed placed in the records of Sub RegistrarII, Ghaziabad, which shows the area of 25 square yard i.e. 20.903 square meter. Ld. Senior Public Prosecutor has drawn my attention of the circle rate as reflected in the sale deed was Rs.10,500/ per squire meter, according to which the property was valued at Rs.2,19,500/ upon which a stamp duty of Rs.22,000/ was paid. It is submitted that forgery failed to correct the CC No. 42/11 Page No. 72 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 valuation of the property inadvertently. Therefore the valuation of the property amounting to Rs.2,19,500/ is same as in the copy of sale deed available in the office of Sub RegistrarII, Ghaziabad. Had it been the area of 773.420 square meter, the valuation of property would have gone more than Rs.80 lacs, if counted at the rate of Rs.10,500/ per square meter as mentioned in the sale deed as Ex.PW8/B itself.
112. Sh. Raman Gandhi, adv. argues that in the office of SubRegistrar, the copies of the sale deed used to be typed separately and it appears that there was only a typographical mistake in the dimension of property in the copy of sale deed filed in the office of Sub Registrar and typed might have forgotten to type the figure 9 in the same. I disagree with his submission. The dimension in the copy of the sale deed proved by the office of Sub Registrar depict the are of plot not only in square yard but also in square meter is match with each other. Had the typist mistakenly forgot to type figure "9" before the figure "25", the dimensions in square meter must have corresponded to the measurement in square yards. But the certified copy of the sale deed Ex.PW15/A shows the dimensions of the area to be 20.903 square meters, which is CC No. 42/11 Page No. 73 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 equivalent to 25 square yards. Therefore, the certified copy is the correct copy of the original as testified by PW15 and PW
17.
113. Moreover, A5 has taken a contrary stand in his statement under Section 313 Cr.PC., who has stated that the sale deed was executed only for 25 square yards. This portion of his statement under Section 313 Cr.PC has already been reproduced by me in earlier portion of the judgement. Therefore, the argument that the typist might have missed typing figure '9' in Ex.PW15/A is only an after thought.
114. It is further argued by Sh. Raman Gandhi, Advocate that actually A5 had sold the plot measuring 925 square yards but it was typed in Ex.PW15/A as 25 square yard with a view to save the stamp duty. I am of the opinion that the argument is far fetched. If a person is purchasing a bigger plot of land, he would never put lesser area of the land in the copy given to Sub Registrar Office, just for sake of saving stamp duty because if he does so, he would be making the title of large portion of the plot in doubtful. A person of ordinary prudence will never do so. Therefore, I am convinced that the sale deed Ex.PW8/B is a forged document.
CC No. 42/11 Page No. 74 of 85CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016
115. Now the question is as to who made forgery in the said sale deed. This sale deed bears the photographs of Vijay Manchanda and it bears his signatures on each page as the seller of the property in favour of B. R. Bajaj (A6). A5 is finally arguing that the area of the plot was 925 square yards only and not 25 square yards as mentioned in Ex.PW15/A. This leads to an inference that forgery from 25 square yards to 925 square yards was done by A5 himself and by no one else.
116. Ld. Defence counsel has cited various authorities to draw home the point that if alteration in a document is done without any intention to cheat, the same would not make out an offence of forgery. I reproduce the said authorities as under :
(i) AIR 2003 SC 282,titled as Alamgir versus State of NCT of Delhi.
(ii) AIR 1991 SC 983 (iii) AIR 1979 SC 1890
(iv) Hon'ble High court of Allahabad in Criminal Revision CC No. 42/11 Page No. 75 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 Number 751 of 1969 namely Shesh Narain Vs. State
(v) AIR 2004 SC 3229 titled as A. S. Krishnan and Anr.
Versus State of Kerala
(vi) AIR 2010 SC 840 titled as Parminder Kaur versus State of Uttar Pradesh
(vii) Dr. S. Dutt v. State of Uttar Pradesh, AIR 1996 SC 523;
1966 CRLJ 459
117. I have considered the case laws and I am of the opinion that the aforesaid judgements are applicable to specific facts as appearing before Hon'ble High Courts and Supreme Court in the said cases. However, I would agree with Ld. Defence counsel that the essential ingredients of forgery under Section 467 IPC is intention to defraud. Such intention can be seen from the attending circumstances. It is pertinent to note that the saledeed Ex.PW8/B was registered on 09.06.1998. A6 agreed to M/s SLF India Ltd. agreed to offer this sale deed as collateral security to the bank vide its minutes dated 07.07.1998. Thus, sale deed was actually pledged by A6 to the bank on 29.07.1998, as reflected from D36, Ex.PW21/A1, which is a guarantee form filled by A6.
CC No. 42/11 Page No. 76 of 85CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 A6 has denied his signatures on this form. Perusal of this form would show that his signatures are placed at Q430, Q 431, Q432, Q433, Q435 and Q436. The same match with his specimen handwritings S51 to S55 as per report of handwriting expert (PW32). It must not be forgotten that A 5 had executed the sale deed Ex.PW8/B in favour of A6 and it was A6, who created a equitable mortgage of unidentified plot with the bank on the basis of this forged saledeed. This shows that forgery was done with dishonest and fraudulent intention to defraud the bank. Grievance of A3 is that A6 had defrauded A3 by pledging a forged collateral security to the bank. Therefore, these circumstances show that it was A 5, who had forged the sale deed Ex.PW8/B.
118. Needless to say that saledeed is a valuable security and forgery of the same is punishable under Section 467 IPC. I convict A5 under Section 467 IPC. Since he has given this saledeed to A6 for pledging the same with bank as standing collateral security for M/s Madhusudan International Pvt. Ltd., I hold that A5 and A6 were in conspiracy with each other.
119. A6 has denied having ever tendered the sale CC No. 42/11 Page No. 77 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 deed Ex.PW8/B as a collateral security to the bank. I have already dealt with in earlier part of the judgement as to how the guarantee form Ex.PW21/A1 bears the signatures of A 6, which is duly proved by the report of handwriting expert (PW32).
PW21 Rajneesh Arora has testified as under :
"When he property is mortgaged against the loan advanced to a company and/or stock is hypothecated to the bank, it is mandatory for the company to file Form No.8 and Form No.13 with the Registrar of Companies for the purpose of creation of charge. In the present case, in view of the sanction granted to Madhusudan International (P) Ltd., vide sanction order dated 06.07.1998 the party submitted Form No. 13 and Form No. 8 duly filled up and registered with ROC for the purpose of creating charge on property. As in the present case, the property i.e. plot No. C1, Ambedkar Road, Ghaziabad which was mortgaged by M/s. SLF (India) Limited as a corporate guarantor, charge has been created in this case vide Form nos.13 and 8 and the same are exhibited as Ex.PW21/B10A and Ex.PW21/B10B respectively. Ex.PW10/B10A i.e. Form 13 bears the signatures of Shri Balwant Rai, Director of M/s SLF (India) Limited at point Q525 and signatures of Shri Ravinder Kapoor are at Q524. Ex.PW10/B10B i.e. Form 8 bears the signatures of Shri Balwant Rai, Director of M/s SLF(India) Limited at point Q527 and signatures of Shri Ravinder Kapoor are at Q526. The Form nos. 13 and 8 Ex.PW21/B10A and Ex.PW21/B10B were submitted by M/s. Madhusudan International CC No. 42/11 Page No. 78 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 (P) Ltd., vide letter dated 06.08.1998 and the same is Ex.PW21/B10C.
A copy of the minutes of the meeting of Board of Directors of M/s. Madhusudan International (P) Ltd., held on 07.07.1998 wherein it was resolved that M/s SLF (India ) Limited be requested to offer their property as collateral security by way of equitable mortgage in favour of Central Bank of India, Janpath Branch, New Delhi to cover the revised credit facilities granted by the bank to M/s. Madhusudan International (P) Ltd. and Shri ML Vij and Shri Shiv Charan Gupta were authorised to file modifications of charge with ROC. The same is Ex.PW21/A47A. Subsequently, the borrower submitted modifications of charge in respect of the mortgaged properties, therefore, Form 8 and 13 were filed with ROC and copy was submitted to the bank.
Form nos.13 and 8 are exhibited as Ex.PW21/B10D and Ex.PW21/B10E respectively. Ex.Pw10/B10D i.e. Form 13 bears the signatures of Shri ML Vij, Director of M/s. Madhusudan International (P) Limited at point Q461 and signatures of Shri Ravinder Kapoor are at Q460. Ex.PW10/B10E i.e. Form 8 bears the signatures of Shri ML Vij, Director of M/s. Madhusudan International (P) Limited at point Q459 and signatures of Shri Ravinder Kapoor are at Q458. The photocopy of the affidavit executed by Shri Balwant Rai, Director of M/s SLF (India) Ld., is Ex.PW21/B10F."
CC No. 42/11 Page No. 79 of 85CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016
120. From this testimony, the record proves that it is A 6, who had filled the form 8 and 13 in presence of officials of Central Bank of India showing equitable mortgage property in favour of bank. A6 has denied his signatures on these documents. However, the hand writing expert's report is categorical in this regard. A6 has also not brought any material to show as to why the testimony of hand writing expert should be disbelieved. PW32 R. S. Rana, the Assistant GEQD, Shimla was cross examined by Ld. Counsel for A5 and A6 but nothing material has come on record to reject the opinion of hand writing expert.
121. I have perused Ex.PW6/G (D53), which is certified copy of recital register, page no. 49, as proved by PW6. This does not bear the signatures of Balwant Rai Bajaj. However, Ex.Pw21/B/10B and Ex.PW21/B/10A, have been perused by me. These are forms of charges submitted by the company showing the equitable mortgage of plot measuring 925 sq. yds., situated at C1, Ambedkar Road, Ghaziabad, U.P. in the name of SLF India Ltd. Both the documents bear signatures of Balwant Rai Bajaj (A6) at Q525 and Q527. During arguments, A6 had denied his signatures on both the documents. Therefore, it is necessary to see the report of CC No. 42/11 Page No. 80 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 handwriting expert, who is PW32, Sh. R.S. Rana. Specimen signatures of A6 are S51 to S55 taken by Investigating Officer, which are Ex.PW13/A, who has opined the signatures of A6 at Q525 at Form No. 13 and Q527 at Form No. 8, submitted to ROC in presence of an official of Central Bank of India, whose stamp is affixed on these forms.
122. Therefore, the collective testimony of PW21 and PW32 fixes the identity of A6, who had tendered the sale deed Ex.PW8/B to bank as collateral security and created a charge of equitable mortgage of the plot in question. Therefore, I hold that the defence of A6 that he did not pledge the sale deed Ex.PW8/B with bank is false. I have already stated that in a very clever manner A5 and A6 had conspired to create a forged sale deed, which is a valuable security and in conspiracy thereof A6 tendered the same with the bank to defraud it.
Summary
123. In view of above discussion, I acquit D. N. Upadhyay (A1), M.L. Vij (A3) and S. C. Gupta (A4). However, Vijay Manchanda (A5) is convicted under Section 467 IPC. Balwant Rai Bajaj (A6) is convicted under Section CC No. 42/11 Page No. 81 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 471 IPC for using a forged valuable security as genuine knowing the same to be a forged document.
124. Both of them are also convicted under Section 120B IPC read with Section 467/471 IPC.
125. However, offence under Section 13 of Prevention of Corruption Act, 1988 could not be proved by the prosecution beyond reasonable doubt. Hence, all accused persons are acquitted under Section 13 of Prevention of Corruption Act, 1988 Announced in the open court on this 30th day of April, 2016 (Vinod Kumar) Special Judge03 (PC Act)/ CBI/ PHC / ND CC No. 42/11 Page No. 82 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 IN THE COURT OF SPECIAL JUDGE03 (P. C. ACT) (CBI), PATIALA HOUSE COURTS, NEW DELHI Case ID : 02403R0188072006 CC No. 42/11 RC No. 49A/2003/ACB/CBI/ND Central Bureau of Investigation Versus (1) Vijay Manchanda, S/o late Sh. Des Raj Manchanda, R/o. 6, Sehgal Colony, Court Lane, Civil Lines, Delhi.
(2) Balwant Rai Bajaj, S/o Sh. Amrit Lal Bajaj, R/o C6C, DDA Janta Flats, Tagore Garden Extn., New Delhi.
ORDER ON SENTENCE 30.4.2016 Present: Sh. Manoj Shukla, Ld. Senior Public Prosecutor for CBI.
Both the convicts on bail with Sh. Raman Gandhi, adv.
Arguments on sentence heard.
It is argued by Sh. Raman Gandhi, Ld. Defence Counsel that this is first conviction of both the convicts and that they have not been convicted under Prevention of Corruption Act.
CC No. 42/11 Page No. 83 of 85CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 It is further argued that it is not a case of total non existence of the land, which is subject matter of the sale deed Ex.PW8/B. In fact, it is argued that land does exist, though separate plot is not demarcated. It is further argued that there is no evidence on record to show that the convicts had obtained any pecuniary advantage. Moreover, the convicts are well settled in the societies and the Central Bank of India had reached one time settlement with the actual borrowers, who have been acquitted by this court.
On the other hand Ld. Senior Public Prosecutor has argued for full doze of sentence on the ground that forgery of valuable securities and tendering them in the banks for availing loans has become so rampant that a lenient view would be unwarranted.
I have considered all facts and circumstances and I sentence the convicts as under :
1. Convict Vijay Manchanda (A5) is sentenced to rigorous imprisonment for three years and a fine in the sum of Rs.1,00,000/ under section 467 IPC. In default of payment of fine, he shall further undergo CC No. 42/11 Page No. 84 of 85 CBI Vs. D. N. Upadhyay etc. Judgement Dated : 30.04.2016 simple imprisonment for 6 months.
2. Convict Balwant Rai Bajaj (A6) is sentenced to rigorous imprisonment for three years and a fine in the sum of Rs.1,00,000/ under section 471 IPC. In default of payment of fine, he shall further undergo simple imprisonment for 6 months.
3. Both the convicts are sentenced to rigorous imprisonment for three years and a fine in the sum of Rs.1,00,000/ under section 120B IPC read with Section 467 IPC and Section 471 IPC. In default of payment of fine, he shall further undergo simple imprisonment for 6 months.
All the sentences shall run concurrently. Copy of judgement be supplied free of cost to both the convicts.
File be consigned to Record Room.
Announced in the open court on this 30th day of April, 2016 (Vinod Kumar) Special Judge03 (PC Act)/ CBI/ PHC / ND CC No. 42/11 Page No. 85 of 85