Karnataka High Court
Sri J Kannan vs State By Cbi on 14 October, 2022
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
R
DATED THIS THE 14 T H DAY OF OCTOBER, 2022
BEFORE
THE HON'BLE MR. JUSTICE SREENIVAS HARISH KUMAR
CRIMINAL APPEAL NO.299 OF 2016
C/W
CRIMINAL APPEAL NO.64 OF 2016
IN CR IMINAL APPEAL N O.299 OF 2016
BETWEEN:
Sri.J.Kannan,
S/o S.Jothimurugan,
Aged about 32 years,
Plot No.32, Kamakshi Illam,
6 t h Cross Street,
Krishnap uram Colony,
Madurai-14
Tamil Nad u.
...Appellant
(By Sri. S.Nag amuthu, Senior Counsel for
Sri. Basavaraju T.A, Advocate)
AND:
State by C.B.I/ACB.,
Bang alore,
Gang anag ar,
Beng aluru- 560 032.
...Respondent
(By Sri.P. Prasanna Kumar, Advocate) ,
:: 2 ::
This Criminal Appeal is filed under Section 374(2)
Cr.P.C praying to set aside the judgment dated
16.12.2015 p assed by the XXI Addl. City Civil and S.J
and Prl.Spl Judge for CBI Cases (CCH-4), Beng aluru in
Spl.C.C.No.253/2013-convicting the appellant/accused
No.1 for the offence punishable under sections
120(B), 420, 409, 468, 471, 477(A) of IPC and
sec.13(1)(C) and sec.13(1)(d) r/w 13(2) of Prevention
of Corruption Act 1988.
IN CR IMINAL APPEAL N O.64 OF 2016
BETWEEN:
Sri.J.Muralidharan
S/o S.Jothimurg an
Aged about 28 years,
Plot No.32, Kamakshi Illam,
6 t h Cross Street,
Krishnap uram Colony,
Madurai-14,
Tamil Nad u.
...Appellant
(By Sri. Shankara M, Advocate)
AND:
State by C.B.I/ACB.,
Bang alore,
Gang anag ar,
Beng aluru- 75.
...Respondent
(By Sri.P.Prasanna Kumar, Advocate)
This Criminal Appeal is filed under Section 374(2)
Cr.P.C praying to set aside the judgment and order
dated 16.12.2015 passed by the XXI Addl. City Civil
and S.J And Prl.Sp l. Judge for CBI cases (CCH-4),
Bang alore in Spl.C.C.No.253/2013 - convicting the
:: 3 ::
app ellant/accused No.2 for the offence punishab le
und er sections 120(B), 420 of IPC.
These Criminal Appeals having been heard &
reserved on 07.09.2022, coming on for
pronouncement this d ay, the Court pronounced the
following:
JUDGMENT
The judgment dated 16.12.2015 of the XXI Additional City Civil and Sessions Judge and Principal Special Judge for CBI Cases, Bengaluru, has given rise to these two appeals by accused No.1 and 2. Apart from accused No.1 and 2, one S.G.Ram Naik also faced trial as accused No.3, but he was acquitted. The prosecution case is as follows :
2. Between the period August 2009 and 30.10.2012, accused No.1 worked as Assistant Manager at Syndicate Bank, Yeshwantpur Branch, Bengaluru. Accused No.3, Rama Naik was the Chief Manager of the branch at that time. Accused No. 2 is the brother of accused No.1.
:: 4 ::
3. As per the banking procedure, the policy guidelines covering the Drawee Bill Scheme (DBS) was given into effect in the year 2006. The branches of the bank were required to obtain documents as per Manual of Instruction on documentation in respect of DBS and also another scheme called BCAS (Bills Co-Acceptance Scheme).
When the banks migrated to Core Banking Solutions (CBS), each bill discounted under the scheme would come under sanctioned limit of the party i.e., the borrower. Whenever the drawee bills were tendered by the eligible borrower, the concerned Clerk/Maker would make the entries in the system in FCC Module (Flexi Cube Corporate) and the same would be authorized by the officer/checker after verifying the genuineness of the bill, due date of the bill, interest rate, charges validity of the limits and the sanction limit. If every thing was found correct, the bills would be debited and the net amount including the interest :: 5 ::
would be credited to the Over Draft account of the party. For processing the transaction, the Clerk/maker and the officer/checker had their log in IDs and passwords. There were several General Ledger Folios (GL Accounts) such as Remittance Parking GL, Online Suspense GL, Term Deposit (TD) renewal GL etc., with a provision to transfer the funds from various Parking GL heads to any party's accounts as per the wishes of the borrower. The Parking GL was the temporary media to route the transaction of the bank.
4. Referring to the above procedure, the prosecution came up with a case that accused No.1 entered into conspiracy with his brother i.e., accused No.2 and accused No.3 to cheat and cause loss to Syndicate Bank, and in furtherance of the same, misappropriated funds to the tune of Rs.12,22,94,260/- by falsification of records and unauthorized diversion of funds in order to derive :: 6 ::
pecuniary advantage to themselves. In the charge sheet details of numerous transactions made by accused No.1 are given, it is not necessary to give their details. The offences invoked in the charge sheet are punishable under section 120B read with sections 420, 409, 467, 468, 471 and 477A of Indian Penal Code (IPC) and section 13(2) read with 13(1)(c) and (d) of Prevention of Corruption Act (P.C Act).
5. The prosecution examined 46 witnesses, and relied on 222 documents (Exs.P1 to P222) in order to establish its case. Exs.D1 to D18 are the documents produced by the accused.
6. The trial court convicted and sentenced accused No.1 for the offences punishable under sections 120B, 420, 468, 471 and 477A IPC and sections 13(1)(c) and 13(1)(d) read with section 13(2) of Prevention of Corruption Act; and accused :: 7 ::
No.2 for the offence punishable under sections 120B and 420 IPC.
7. I have heard the arguments of Sri S.Nagamuthu, learned senior counsel who appeared on behalf of Sri Basavaraja, learned counsel for accused No.1, Sri Shankara M, learned counsel for accused No.2 and Sri P.Prasanna Kumar, learned standing counsel for respondent CBI in both the appeals.
8. I prefer to deal with the case put forward by Sri Shankara M first, for if conviction of accused No.2 for the offences punishable under sections 120B and 420 IPC is liable to be set aside on the basis of grounds taken on his behalf, the conviction of accused No.1 under section 120B automatically goes out of picture as involvement of a minimum of two persons is a must to constitute the offence of conspiracy. Sri Nagamuthu also highlighted the point that :: 8 ::
sustainability of conviction of accused No.1 for the offence of conspiracy is dependent on sustainability of conviction against accused No.2.
9. As against accused No.2, the trial court has recorded the following findings : -
10. Accused No.2 is an educated person. Accused No.1 transferred a huge sum of money from his bank account at Yeshwanthpur Branch of Syndicate Bank, Bengaluru, to the bank account of accused No.2. The evidence discloses that accused No.2 fully cooperated with accused No.1 for transfer of money to his bank account. He also issued cheques as per Exs.P172 to P185 for a total sum of Rs.2,00,50,000/- in favour of M/s Kedia Commodity and M/s Great Ventures. It cannot be said that he issued the cheques being unaware of actual transactions. Therefore there was meeting of minds between accused No.1 and 2 for doing an illegal act.
:: 9 ::
11. Assailing these findings, Sri Shankara M argued that the trial court erred in convicting accused No.2 for the offences punishable under sections 120B and 420 IPC as there is no evidence indicating his involvement. He argued that the trial court convicted accused No.2 merely because he was the brother of accused No.1 and the transactions were routed through his bank account. Accused No.2 was a student and he had no independent source of income. Accused No.1 used to send money to the bank account of accused No.2 for meeting the latter's educational expenses, and at the same time accused No.1 diverted the money from the bank account of accused No.2 for his trading in shares. All those transactions were made by accused No.1 forging the signature of accused No.2. He has taken the same stand when he was examined under section 313 Cr.P.C. He further argued that if evidence :: 10 ::
given by PW28, PW33 and PW46 had been properly assessed by the trial court, accused No.2 should have been acquitted.
12. Sri P.Prasanna Kumar replied that a clear conspiracy between accused Nos.1 and 2 can be inferred from the evidence placed before the court by the prosecution. No doubt accused No.2 was a student, but he cannot take total ignorance of the transaction, for the money transferred to his bank was not a small sum as it was around two crore.
He signed the withdrawal slips. He did not require a huge sum of money for his educational purpose. Therefore circumstances clearly indicate that there was meeting of minds between accused No. 1 and 2 to divert the funds of the bank for their personal gain. He argued for sustaining conviction against accused No.2.
13. If the evidence is reassessed, it is found that accused No.2 does not dispute transfer of :: 11 ::
money to his bank account at Madurai from the bank account of accused No.1. The oral testimony of PW28 shows that accused No.2 issued 13 cheques in favour of Kedia Commodity and one cheque in favour of Great Ventures, and of course, all the cheques were drawn for higher amounts. Evidence of PW33 shows that on 16.5.2012, a sum of Rs.7 lakh was debited to the account of accused No.1 towards payment to accused No.2. She has also stated about another debit entry to the account of accused No.1 in regard to payment made to Krishna Murthy and a payment made to Smt. Nirmala on the basis of a bearer cheque issued by accused No.1. The evidence of PW33 does not throw light on the involvement of accused No.2.
14. The evidence given by PW41, a handwriting expert assumes importance. The writings marked S1 to S30, and S61 to S79 are the :: 12 ::
standard writings of accused No.1. PW41 stated that the standard writings S1 to S30 and S61 to S79 matched with the questioned writings Q1 to Q3 and Q5 to Q9. I have extracted two sentences from the evidence given by PW41. Last sentence in para 7 -
"Q6 is the signature signed as Muralidharan is now marked at Ex.P169
(b) Para 9 of last sentence "Now I see S25 to S30 which are the signatures as Muralidharan signed by J.Kannan and also contain the signature of J.Kannan which is already marked at Ex.P205".
15. The evidence given by PW41 leads to infer that accused No.1 might have forged the signature of accused No.2. Now if evidence of PW33 and PW41 is considered together, it is possible to infer that though accused No.2 issued :: 13 ::
many cheques, probably he might have issued them at the instance of accused No.1, but not in furtherance of conspiracy. The second inference is that accused No.1 might have forged the signatures of his own brother. In fact the trial court, in para 506 of its judgment has observed that Ex.P169(b) appears to be the forged signature of accused No.2. Having observed so, the trial court should have doubted the prosecution case concerning accused No.2.
16. PW46 was the investigating officer. His evidence appears to be very routine; he has simply given the different dates of interrogating the witnesses and collection of documents. His evidence does not indicate as to on what basis he could arrive at a conclusion that accused No.2 had conspired with accused No.1. He might have entangled accused No.2 merely for the reason that a huge amount of money had flown into his :: 14 ::
account from the account of accused No.1. Before filing charge sheet against accused No.2, the investigating officer ought to have applied his mind to the report of the handwriting expert. All that the evidence discloses is that probably accused No.2 had the knowledge of transactions being carried on by his elder brother, but it is not enough; in order to establish the offence of conspiracy, agreement between the parties to do an unlawful act is necessary. If there was an agreement between accused No.1 and 2, there was no need for accused No.1 to forge the signature of accused No.2. This is the doubt that arises and has remained unanswered. This being a reasonable doubt, its benefit must go to accused No.2. Therefore conviction of accused No.2 is not sustainable.
:: 15 ::
17. Now the case of accused No.1 is to be examined. The argument of Sri Nagamuthu, learned senior counsel is;
(i) There are no materials to convict accused No.1 for the offence punishable under section 120B IPC.
(ii) The offence under sections 409 and 420
IPC do not go together; they are
mutually exclusive. In the case on hand, accused No.1 has not committed the offence of cheating as the bank was not deceived, however conviction for the offence under Section 409 is sustainable.
(iii) Offences under sections 468 and 471 IPC are also not made out and conviction for these two offences must be set aside. The prosecution has failed to prove forgery of any document for the purpose of cheating. If there are no materials to hold that accused No.1 is guilty of :: 16 ::
offence under section 420 IPC, he cannot also be held guilty of offence under section 468 IPC. In order to record conviction for the offence under section 471 IPC, the evidence must indicate that a false document was used as genuine;
but there is no evidence to that effect. However conviction under Section 477A IPC can be sustained.
(iv) The offence under section 13(1)(c) of P.C Act is proved, not the offence under section 13(1)(d) as the offence under this section is in relation to obtaining of bribe, which is not the case of prosecution.
(v) Accused No.1 could not have been sentenced for both the offences under section 409 IPC and section 13(1)(c) of P.C Act. Section 26 of the General Clauses Act is to be applied while :: 17 ::
imposing sentence. Conviction for offence under section 13(1)(d) read with section 13(2) of P.C Act is also bad.
(vi) The default imprisonment is not a sentence; it is only a penalty for not paying the fine and therefore default imprisonment should not be imposed arbitrarily. Here accused No.1 has already spent seven years in the jail, and if he is made to remain in jail for not paying the fine, he has to spend 10 more years, which is against sentencing policy.
(vii) Fine imposed in also arbitrary.
18. Sri P.Prasanna Kumar argued that the evidence produced by the prosecution shows all the offences being committed by the accused. Evidence given by PW25 shows that he was induced to sign withdrawal slips for the purpose of cheating the bank. In paras 31, 32 and 37 of the :: 18 ::
charge sheet, there are allegations against accused No.1 as to how he cheated the bank. Therefore he has rightly been convicted for the offences under sections 409 and 420 IPC. He argued that these two offences cannot be said to be mutually exclusive. Offence of forgery is also proved. Hence conviction of accused No.1 has to be sustained.
19. With regard to the first point of argument of Sri Nagamuthu, it is to be stated that the conviction of accused No.1 for the offence of conspiracy is not sustainable because of acquittal of accused No.3 which is not challenged by the CBI and that accused No.2 is found to have not committed the said offence.
20. The next point to be examined is whether conviction of accused No.1 for offence under section 420 IPC is sustainable and whether offences under sections 409 and Section 420 go :: 19 ::
together. Before that one judgment of Supreme Court in the case of N.Raghavender vs State of Andhra Pradesh [AIR 2022 SC 826], cited by Sri Nagamuthu requires to be referred to here. It is observed :
"68. We may at this stage, briefly note that learned Senior Counsel for the Appellant had raised another contention, namely, that the charges under Section 409 and Section 420 IPC cannot go together. He eloquently argued that the essential ingredients of the two offences are conflicting in nature. Section 409 (or 405) IPC deals with offences where the accused has been 'entrusted' with the property and Section 420 IPC deals with offences where the accused has 'dishonestly induced' the victim/complainant to depart with the property in question. It was, therefore, argued that an accused cannot be charged under both the sections simultaneously. This contention, however, has been rendered academic in the light of the afore-stated discussion and conclusion(s).
:: 20 ::
We thus do not express any opinion and leave this question open for adjudication in an appropriate case."
21. As this aspect has not been cleared, analysis of two sections is necessary to answer this point of argument. Entrustment of property or having dominion over a property in the capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent is the essential ingredient of section 409 which has its origin in section 405 IPC which requires proof of dishonest misappropriation or conversion or dishonest use of property entrusted to him or over which he has dominion, or disposal of property in violation of any direction of law prescribing the mode in which such trust is to be discharged.
22. The ingredients of section 420 IPC are cheating in order to dishonestly induce a person deceived to deliver any property to any person or :: 21 ::
to make, alter or destroy the whole or any part of a valuable security or any thing which is signed or sealed and which is capable of being converted into a valuable security. Section 415 IPC deals with the meaning of cheating. That means the essential ingredients of section 415 IPC must be present if an offence under section 420 IPC is to constitute.
23. Now a comparison of sections 409 and 420 IPC makes it amply clear that offences covered under them are distinct and independent, they are mutually exclusive and do not go together. But it does not mean that a person cannot be charged together for these two offences. The same transaction must disclose these two offences being committed, and the prosecution must produce independent evidence for the said offences. Independent evidence does not mean that a witness should not tender evidence in :: 22 ::
relation to two offences, but it cannot be said that if one offence is proved, the other also stands proved.
24. Here in this case, accused No.1 is a public servant working in the capacity of Assistant Manager of Syndicate Bank, Yeshwantpur Branch, Bengaluru. It is not in dispute that he in the capacity of Assistant Manager had dominion over funds of the bank. All the transactions that led to his inculpation only indicate diversion of funds to his benefit. The diversion might have resulted in causing loss to the bank, but there is no evidence which shows that he deceived the bank in order to induce it to deliver property within the meaning of section 415 IPC. Though element of fraud is there in the acts committed by accused No.1, it cannot be brought within the scope of sections 415 and 420 IPC. It is a clear case of misappropriation or diversion of the funds of the bank. Evidence of :: 23 ::
PW25 shows that he was asked to sign on withdrawal slips. It is not his evidence that the money withdrawn by accused No.1 by using the withdrawal slips belonged to him. It was a misrepresentation to PW25 for diversion of funds of the bank. The trial court appears to have proceeded on the footing that misappropriation or diversion of the funds also resulted in bank being cheated. Common parlance thinking may indicate two offences being committed, but given a legal analysis, only offence that stands proved is the one punishable under section 409 IPC. There is no separate proof for the offence under section 420 IPC.
25. Third point is as to conviction for which of three offences namely 468, 471 and 477A is sustainable. Section 468 IPC is the penal provision for committing forgery for the purpose of cheating.
That means forged document must be used for the :: 24 ::
purpose of cheating. This takes further meaning that section 420 IPC should also be proved. Indeed there is evidence of PW41 that accused No.1 had forged the signature of accused No.2 on one cheque and also the signatures of P.Krishna Murthy and Nirmala. Forged signatures are found in Ex.P169, P170 and Ex.P171. P.Krishna Murthy has adduced evidence as PW39 and stated that he had not drawn the amount mentioned in Ex.P170 and the signature on the back of the cheque is not his signature. PW39 was not cross examined by accused. Therefore even though evidence for forgery is available, it does not constitute an offence under section 468, for the forged documents were not used for cheating. However the forgery thus proved constitutes an offence under section 471 IPC. The reason being that all the forged documents were dishonestly or fraudulently used by accused No.1 as genuine for misappropriation or diversion of the funds of the :: 25 ::
bank. The argument of Sri Nagamuthu that accused No.1 should not have been held guilty of offence under section 471 IPC cannot be accepted.
26. Then there remains the offence under section 477A IPC. All the transactions made by accused No.1 clearly indicate falsification of accounts in his capacity as officer of the bank. Sri Nagamuthu fairly submitted that the conviction of accused No.1 for this offence is sustainable.
27. Point No.(v) is in regard to conviction of accused No. 1 for the offences under section 13(2) read with sections 13(1)(c) and 13(1)(d). As rightly argued by Sri Nagamuthu section 13(1)(d) is not at all applicable to the facts and circumstances. This section is applicable to a situation where a public servant obtains for himself or any other person any valuable thing or pecuniary advantage by corrupt or illegal means, or abusing his position as a public servant or :: 26 ::
without any public interest. This section can be invoked in relation to section 7 of P.C Act, which prescribes punishment for obtaining or receiving illegal gratification. Therefore conviction for the offence under section 13(1)(d) is not sustainable. However conviction under section 13(1)(c) read with section 13(2) of P.C. Act stands, and Sri Nagamuthu also conceded for maintaining conviction. But what he argued was that accused No. 1 should be sentenced for either of the two offences i.e., section 409 IPC or section 13(1)(c) read with section 13(2) in view of section 26 of General Clause Act. This point requires elucidation. Section 26 of the General Clauses Act reads as below :
"26. Provision as to offences punishable under two or more enactments. --Where an act or omission constitutes an offence under two or more enactments, then the offender shall be liable to be prosecuted :: 27 ::
and punished under either or any of those enactments, but shall not be liable to be punished twice for the same offence."
28. The purport of section 26 of General Clauses Act is that an offender can be punished for only one offence which falls within the definition of two or more laws. Here, first accused is found guilty of section 409 IPC and also section 13(2) read with section 13 (1)(c) of P.C. Act. In order to decide as to in respect of which offence he can be sentenced, it is necessary to trace the changes in law. In the Prevention of Corruption Act, 1947, section 5 (1) (c) was the provision analogous to section 13(1)(c) under the Prevention of Corruption Act, 1988. An amendment was brought to Prevention of Corruption Act, 1947 in the year 1952 (with effect from 12 t h August 1952) enacting sub-section (4) to section 5 which reads as follows:
:: 28 ::
"The provision of this section shall be in addition to, and not in derogation of, any other law for time being in force, and nothing contained herein shall exempt any public servant from any proceeding which might, apart from this section, be instituted against him."
29. Till the amendment came into force, view taken by the High Court of Punjab in State vs Gurcharan Singh [AIR 1952 Punjab 89] was, "As long as section 5 of P.C Act remained in force, the provision of section 409 IPC (so far as they concerned offences by public servants) were pro tanto repealed by clause (c) of this Act. So a public servant who committed an offence triable under section 409 IPC would be tried not under section 409 IPC but clause (c) of this Act for which sanction as provided in section 6 of the Act would be necessary before the court could take cognizance of the offence."
:: 29 ::
30. In Puran Mal vs State [AIR 1953 Punjab 249] it was held that the decision in Gurcharan Singh was a good law for the period between 11 t h March 1947 (the date of commencement of Prevention of Corruption Act, 1947) till 12 t h August 1952 (the date amendment coming into force). But the High Court of Madras did not accept the ratio in Gurcharan Singh and held in re V.V.Satyanarayanamurthy [AIR 1953 Madras 137] as follows:
"3. The substantial point of law taken before me is the contention based upon the decision of the Punjab High Court in
- 'The State v. Gurcharan Singh [AIR 1952 Punj 89], wherein it was held that section 5(1)(c) of the Act II of 1947 repealed 'pro tanto' section 409 IPC. But with greatest respect for the decision, I find no reasons whatsoever for holding that section 5(1) (c) of the Prevention of Corruption Act repeals section 409 IPC".
:: 30 ::
31. With effect from 9 t h September 1988, the Prevention of Corruption Act, 1988 was given into effect by repealing the Prevention of Corruption Act, 1947 and Criminal Law Amendment Act 1952. In the new Act, section identical to section 5 (4) introduced in the Amendment Act of 1952 is not there in section 13. Now the position is as before amendment was brought to P.C Act in the year 1952. In this view section 26 of General Clauses Act is applicable. Section 409 IPC and section 13(1)(c) concern a public servant; and when a public servant is held guilty of both, he can be punished for either of them. Since sanction as envisaged in section 19 of P.C Act has been obtained, while imposing sentence, section 13(2) of P.C Act may be followed. Therefore I find force in the argument of Sri Nagamuthu that accused No.1 could not have been punished for both the :: 31 ::
offences. To this extent sentence imposed by the trial court requires modification.
32. The last two points are in regard to default sentence and fine imposed by the trial court. Sri Nagamuthu, learned senior counsel, cited some decisions in support of his arguments on these two points and they are to be referred now. On the point of argument that default imprisonment period is not a sentence, he has relied on the judgment of the Supreme Court in the case of Shahejadkhan Mahebubkhan Pathan vs State of Gujarat [(2013) 1 SCC 570] where it is held, "12. It is clear and reiterated that the term of imprisonment in default of payment of fine is not a sentence. To put it clear, it is a penalty which a person incurs on account of non- payment of fine. On the other hand, if sentence is imposed, undoubtedly, an offender must undergo unless it is :: 32 ::
modified or varied in part or whole in the judicial proceedings. However, the imprisonment ordered in default of payment of fine stands on a different footing. When such default sentence is imposed, a person is required to undergo imprisonment either because he is unable to pay the amount of fine or refuses to pay such amount.
Accordingly, he can always avoid to undergo imprisonment in default of payment of fine by paying such an amount. In such circumstance, we are of the view that it is the duty of the Court to keep in view the nature of offence, circumstances in which it was committed, the position of the offender and other relevant considerations such as pecuniary circumstances of the accused person as to character and magnitude of the offence before ordering the offender to suffer imprisonment in default of payment of fine. The provisions of Sections 63 to 70 of IPC make it clear that an amount of fine should not be harsh or excessive. We :: 33 ::
also reiterate that where a substantial term of imprisonment is inflicted, an excessive fine should not be imposed except in exceptional cases."
33. Another judgment referred to on the very same point is in the case of Shantilal vs State of M.P [(2007) 11 SCC 243] where it is held, "39. We are mindful and conscious that the present case is under the NDPS Act.
Section 18 quoted above provides penalty for certain offences in relation to opium poppy and opium. Minimum fine contemplated by the said provision is rupees one lakh fine which shall not be less than one lakh rupees. It is also true that the appellant has been ordered to undergo substantive sentence of rigorous imprisonment for ten years which is minimum. It is equally true that maximum sentence imposable on the appellant is twenty years. The learned counsel for the State again is right in submitting that clause (b) of sub-section (1) of Section 30 CrPC authorizes the :: 34 ::
Court to award imprisonment in default of payment of fine up to one-fourth term of imprisonment which the Court is competent to inflict as punishment for the offence. But considering the circumstances placed before us on behalf of the appellant-accused that he is very poor; he is merely a carrier; he has to maintain his family; it was his first offence; because of his poverty, he could not pay the heavy amount of fine (rupees one lakh) and if he is ordered to remain in jail even after the period of substantive sentence is over only because of his inability to pay fine, serious prejudice will be caused not only to him, but also to his family members who are innocent. We are, therefore, of the view that though an amount of payment of fine of rupees one lakh which is minimum as specified in Section 18 of the Act cannot be reduced in view of the legislative mandate, ends of justice would be met if we retain that part of the direction, but order that in default of payment of fine of rupees one :: 35 ::
lakh, the appellant shall undergo rigorous imprisonment for six months instead of three years as ordered by the trial court and confirmed by the High Court."
34. As to the imposition of fine, it is held in the case of Palaniappa Gounder vs State of Tamil Nadu and Others [(1977) 2 SCC 634] that, "11. It appears to us that the High Court first considered what compensation ought to be awarded to the heirs of the deceased and then imposed by way of fine an amount which was higher than the compensation because the compensation has to come out of the amount of fine. Apart from the fact that even the compensation was not fixed on any reliable data, the High Court, with respect, put the cart before the horse in leaving the propriety of fine to depend upon the amount of compensation. The first concern of the Court, after recording an order of conviction, ought to be to :: 36 ::
determine the proper sentence to pass. The sentence must be proportionate to the nature of the offence and the sentence, including the sentence of fine, must not be unduly excessive. In fact, the primary object of imposing a fine is not to ensure that the offender will undergo the sentence in default of payment of fine but to see that the fine is realized, which can happen only when the fine is not unduly excessive having regard to all the circumstances of the case, including the means of the offender."
35. Earlier judgment on this point is in the case of Adamji Umar Dalal vs State of Bombay [AIR 1952 SC 14]. In para 5 it is held as below, "5. The determination of the right measure of punishment is often a point of great difficulty and no hard and fast rule can be laid down, it being a matter of discretion which is to be guided by a variety of considerations, but the court has always to bear in mind the necessity :: 37 ::
of proportion between an offence and the penalty. In imposing a fine it is necessary to have as much regard to the pecuniary circumstances of the accused persons as to the character and magnitude of the offence, and where a substantial term of imprisonment is inflicted, an excessive fine should not accompany it except in exceptional cases. It seems to us that due regard has not been paid to these consideration in these cases and the zeal to crush the evil of black marketing and free the common man from this plague has perturbed the judicial mind in the determination of the measure of punishment."
36. Keeping in mind the above principles, the sentence imposed on the first accused is to be examined. It is better to extract the sentence imposed by the trial court on accused No.1.
"For an offence punishable u/s 120B of IPC, Accused No.1 J. Kannan and Accused No.2 J. Muralidharan are sentenced to undergo Rigorous :: 38 ::
Imprisonment for a period of 3 (three) years each and shall also pay a fine of Rs.2,00,000/- (Rs. Two Lakhs only) each and in default of payment of fine to undergo Simple Imprisonment for a period of 9 (Nine) months each.
Further, for an offence punishable u/s 420 of IPC, Accused No.1 J. Kannan is sentenced to undergo Rigorous Imprisonment for a period of 5 (five) years and shall also pay a fine of Rs.6,00,000/- (Rs. Six Lakhs only) and in default of payment of fine to undergo Simple Imprisonment for a period of 1 (One) year.
................
Further, for an offence punishable u/s 409 of IPC, accused No.1 J. Kannan is sentenced to undergo Rigorous Imprisonment for a period of 10 (ten) years and shall also pay a fine of Rs.15,00,000/- (Rs. Fifteen lakhs only) and in default of payment of fine to undergo simple imprisonment for a period of two years.
:: 39 ::
Further, for an offence punishable u/s 468 of IPC, accused No.1 J. Kannan is sentenced to undergo Rigorous Imprisonment for a period of 5 (five) years and shall also pay a fine of Rs.5,00,000/- (Rs. Five lakhs only) and in default of payment of fine to undergo simple imprisonment for a period of one year.
Further, for an offence punishable u/s 471 of IPC, accused No.1 J. Kannan is sentenced to undergo Rigorous Imprisonment for a period of 1 (one) year and shall also pay a fine of Rs.1,00,000/- (Rs. One lakh only) and in default of payment of fine to undergo simple imprisonment for a period of three months.
Further, for an offence punishable u/s 477A of IPC, accused No.1 J. Kannan is sentenced to undergo Rigorous Imprisonment for a period of 5 (five) years and shall also pay a fine of Rs.1,00,000/- (Rs. One lakh only) and in default of payment of fine to undergo :: 40 ::
simple imprisonment for a period of one year.
Further, for an offence punishable u/s 13(1)(c) r/w 13(2) of Prevention of Corruption Act, 1988, accused No.1 J.
Kannan is sentenced to undergo Rigorous Imprisonment for a period of 7 (seven) years and shall also pay a fine of Rs.20,00,000/- (Rs. Twenty lakhs only) and in default of payment of fine to undergo simple imprisonment for a period of one and half years.
Further, for an offence punishable u/s 13(1)(d) r/w 13(2) of Prevention of Corruption Act, 1988, accused No.1 J.
Kannan is sentenced to undergo Rigorous Imprisonment for a period of 7 (seven) years and shall also pay a fine of Rs.10,00,000/- (Rs. Ten lakhs only) and in default of payment of fine to undergo simple imprisonment for a period of one and half years.
All substantive sentences imposed to accused No.1 and both substantive sentences imposed to accused No.2 shall :: 41 ::
run concurrently and the sentence of fine imposed to accused No.1 and 2 shall run consecutively.
Acting u/s 428 Cr.P.C., the days spent by accused No.1 and 2 in judicial custody during investigation and trial of this case is given set off towards the imprisonment ordered.
........................."
37. For imposing the sentence as above, the trial court has assigned the reasons that in view of decisions of the Supreme Court in the cases of Raj Bala vs State of Haryana [2015 AIR SCW 4774], State of U.P. vs Kishan [AIR 2005 SC 1250] and Dhananjoy Chatterjee vs State of W.B [(1994) 2 SCC 220], and section 16 of the P.C Act, since accused No.1 misappropriated a sum of Rs.12,22,94,260/- by doing fraudulent transactions, there are no mitigating circumstances favouring him.
38. I do not think the trial court has erred in imposing sentence of imprisonment and fine in the context :: 42 ::
of gravity of the offence. But where it has erred is in imposing imprisonment for committing default in payment of fine. As has been rightly argued by Sri Nagamuthu, imprisonment to be imposed for non-payment of fine is not a sentence, it is a penalty. This position is made clear by the Supreme Court in the case of Shahejadkhan (supra). Section 65 of IPC states that default sentence should not exceed one fourth of maximum imprisonment period fixed for the offence. It means default sentence is extendable up to one fourth of maximum period. The word 'extendable' implies the meaning that default imprisonment period can be for a period less than one fourth of maximum imprisonment period that can be imposed as sentence. Here it is found that the default imprisonment is really excessive, and it requires modification. And as regards fine, accused No.1 is entitled to be acquitted of the offences punishable under sections 120B, 420 and 468 IPC and he is to be punished for the offence under section 13(2) read with section 13 (1) (c) of the P.C Act instead of section 409 IPC though he :: 43 ::
is convicted for both the offences. For all the offences, the total amount of fine imposed by the trial court is Rs.60,00,000/-. Now that accused No.1 is entitled to be acquitted of some of the offences and modification of sentence as stated above, the fine amount gets reduced to Rs.22,00,000/-. Considering the amount of misappropriation to the tune of Rs.12,22,94,260/-, the fine imposed by the trial court appears to be less, but the respondent has not preferred appeal seeking enhancement. Hence the fine amount in respect of offences for which conviction is retained cannot be modified.
39. Therefore from the above discussion, the following : -
ORDER
(i) Criminal Appeal 64/2016 is allowed.
The judgment of the trial court
concerning accused No.2-
J.Muralidharan is set aside. He is
acquitted of the offences punishable :: 44 ::
under sections 120B and 420 IPC. His bail bond is cancelled.
(ii) Criminal Appeal 299/2016 is partly allowed. Judgment of the trial court is modified concerning accused No.1. He is acquitted of the offences under sections 120B, 420 and 468 IPC and section 13 (2) read with section 13(1)
(d) of P.C Act. His conviction for the offences under section 409 IPC and section 13(2) r/w section 13 (1)(c) is retained, but sentence for the offence under section 13(2) read with section 13(1)(c) is retained and sentence for the offence under section 409 is set aside.
(iii) The sentence of imprisonment and fine imposed on accused No.1 in relation to offences under sections 471 :: 45 ::
and 477A IPC and section 13(2) read with section 13(1)(c) is retained, but default imprisonment is reduced to two months for the offence under section 471 IPC, six months for the offence under section 477A IPC and nine months for the offence under section 13(2) read with section 13(1)(c) of P.C Act.
The substantive sentence of imprisonment shall run concurrently and the period he has already spent in jail is set off. The default imprisonment shall run consecutively.
Sd/-
JUDGE ckl/-