Madras High Court
B.Ramakrishna Prasad vs State By on 7 July, 2025
Author: D.Bharatha Chakravarthy
Bench: D.Bharatha Chakravarthy
Crl.A.Nos.757 and 750 of 2012
THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 07.07.2025
CORAM :
The Hon'ble MR.JUSTICE D.BHARATHA CHAKRAVARTHY
Crl.A.Nos.757 and 750 of 2012
Crl.A.No.757 of 2012
1. B.Ramakrishna Prasad
2. M/s.Vishunuvardhan Granites
35, Balaji Street, Kodambakkam,
Chennai 600 024,
Rep. by A1, B.Ramakrishna Prasad. .. Appellants/A1 & A3
-vs-
State by,
CBI ACB, Chennai
RC No.14(A)/2000 .. Respondent
Crl.A.No.750 of 2012
G.S.Subburaman .. Appellant/A-2
-vs-
State of Tamil Nadu
Rep. by Inspector of Police,
C.B.I., Chennai. .. Respondent
Page 1 of 42
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Crl.A.Nos.757 and 750 of 2012
Appeals filed under Section 374 of Code of Criminal Procedure
against the judgment dated 12.10.2012 passed in C.C.No.4 of 2002 on the
file of XI Additional Special Judge, (CBI Cases relating to Banks and
Financial Institutions), Chennai.
For Appellants/A-1 & A-3
in Crl.A.757/2012 : Mr.R.Bhagavat Krishna
and Ms.M.Anitha
in Crl.A.750/2012/A-2 : Mr.V.Karthic
Senior Counsel
Assisted by
Mr.S.Haroon-Al-Rasheed
for T.S.Gopalan & Co.
For Respondent
in both appeals : Mr.K.Srinivasan
Special Public Prosecutor
(CBI Cases)
*****
COMMON JUDGMENT
A. The appeals :
These two appeals are directed against the judgment dated 12.10.2012 passed in C.C.No.4 of 2002 by the learned II Additional Sub Judge (CBI cases relating to Banks and Financial Institutions), Chennai. By that judgment, the trial court found the appellants in Crl.A.No.757 of 2012, tried as Accused 1 and 3, and the appellant in Crl.A.No.750 of 2012, tried as Page 2 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 Accused No.2, guilty of the charges against them.
2. The appellants will hereinafter be referred to as A-1 to A-3 for convenience.
B. Details of Conviction & Sentence by the Trial Court:
3. After trial, the trial Court convicted and sentenced A-1 to A-3 as hereunder:
a.A-1 was convicted for the offences under Section 120-B IPC read with Sections 420, 467 read with 471, 468 read with 471 IPC and Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988 and was sentenced to undergo rigorous imprisonment for a period of seven years and to pay a fine of Rs.1,55,00,000/- (Rupees one crore and fifty five lakhs only), in default to undergo simple imprisonment for a period of six months.
Page 3 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 b.A-2 was also convicted for the same offences, namely, under Section 120-B IPC read with Sections 420, 467 read with 471, 468 read with 471 IPC and Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988 and sentenced to undergo rigorous imprisonment for a period of two years and to pay a fine of Rs.10,000/- (Rupees ten thousand only), in default to undergo simple imprisonment for a period of two months.
c.A-1 to A-3 were convicted for the offence under Section 420 IPC and sentenced to undergo rigorous imprisonment for a period of two years and to pay a fine of Rs.10,000/- (Rupees ten thousand only), in default to undergo simple imprisonment for a period of two months.
d.A-1 to A-3 were convicted for the offence under Section 467 read with 471 and sentenced to undergo rigorous imprisonment for a period of two years and to pay a fine of Rs.10,000/- (Rupees ten thousand only), in default to undergo simple imprisonment for Page 4 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 a period of two months.
e.A-1 to A-3 were convicted for the offence under Section 468 read with 471 IPC and sentenced to undergo rigorous imprisonment for a period of two years and to pay a fine of Rs.10,000/- (Rupees ten thousand only), in default to undergo simple imprisonment for a period of two months.
f.A-2 was convicted for the offence under Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988 and sentenced to undergo rigorous imprisonment for a period of two years and to pay a fine of Rs.10,000/- (Rupees ten thousand only), in default to undergo simple imprisonment for a period of two months.
g.A-3 being a firm, the trial Court directed A-1 to pay the fine amount imposed on A-3 and in default, A-1 to undergo the default sentence as awarded.
Page 5 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 h.The fine amount of Rs.1,55,00,000/- (Rupees one crore fifty five lakhs only) was directed to be paid as compensation to Indian Bank and the same to be debited towards the loan account of A-1 and A-3.
i.All the sentences of imprisonment were directed to run concurrently.
4. It is stated that A-2 had paid the fine amount, while A-1 and A-3 have not paid the fine.
C. The Case of the Prosecution :
5. The case of the prosecution, in brief, is as under: On 08.05.2000, upon receiving information from S. Radhakrishnan, General Manager (VC) and Chief Vigilance Officer of Indian Bank, regarding an allegation that M/s. Vishnuvardhan Granites, a partnership firm was granted certain loan facilities such as a Temporary Overdraft at the Indian Bank, Mylapore Branch, had deliberately cheated the bank by submitting false documents Page 6 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 with inflated values, and that the public servants at the branch at the time of sanction also abused their official positions, thereby causing a loss to the bank of Rs.142.73 lakhs, an F.I.R. was registered in RC.MA1.2000-A-0014 for alleged offences under Sections 120-B, 420 IPC, and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. Three persons, partners of the firm, and unknown public servants were named as accused.
6. P.W.49, Sub-Inspector of Police, took up the case for investigation and submitted the final report, which was taken on file as C.C.No.4 of 2002 by the trial Court. Summonses were issued to one B.Ramakrishna Prasad, who was one of the partners and entirely responsible for the firm's operations, naming him as A-1; to G.S. Subburaman, Chief Manager of Indian Bank during the relevant period, naming him as A-2; and to the partnership firm, represented by A-1 as its partner, naming it as A-3. D. The Charges:
7. The following five charges were framed against all three. Page 7 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 "Firstly, that you A1 B.Ramakrishna Prasad, Managing Partner, M/s.Vishnuvardhan Granites, Chennai, A-2 G.S.Subburaman, Chief Manager, Indian Bank, Mylapore Branch, Chennai, as M/s.Vishnuvardhan Granites, Chennai, represented by A1, during 1991 to 1998 at Chennai agreed with A2 to do an illegal act namely, getting of working capital and other credit facilities in the name of A3 (firm) on the strength of fabricated bogus documents such as equitable mortgage with inflated value and without title deeds and fabricated EC and Adangal, General Power of Attorney, Agreement of Sale, Receipt and delivery of possession etc., and thereby you A1 fraudulently borrowed Rs.142.73 lakhs from Indian Bank, Mylapore Branch, Chennai, with the connivance of A2 and beside the above said agreement that you did some acts in pursuance of the said agreement to commit the offence of cheating, forging the valuable documents and its use as genuine while using it, forgery for the purpose of cheating and criminal misconduct punishable with imprisonment and thereby A1 and A2 have committed an offence punishable u/s.120-B of IPC r/w.420, 467 r/w. 471, 468 r/w 471 IPC and 13(1)(d) r/w 13(2) of PC Act, 1988;
Secondly, that A1 representative of A3 and A2 during the period 1991 to 1993, at Chennai, cheated Indian Bank, Mylapore Branch, Chennai by dishonestly inducing to deliver the property belonging to the said bank namely, working capital and other credit facilities documents such as equitable mortgage with inflated value and without title deeds and fabricated EC and Adangal, fabricated Surveyor's Report, etc. and that you A2 have sanctioned the working capital of Rs.142.73 lakhs by misusing your official position by dishonestly processing the loan documents without following the procedure or guidelines and without field verification and thereby A1 to A3 committed an offence punishable u/s.420 IPC;
Page 8 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 Thirdly, that you A1, representative of A3 and A2 during 1991 to 1993 at Chennai, fraudulently used as genuine certain documents namely, equitable mortgage with inflated value and without title deeds and fabricated EC and Adangal etc., which you knew at the time when used it to be forged documents and thereby A1 to A3 committed an offence punishable u/s.467 r/w 471 IPC;
Fourthly, that you A1, representative of A3 and A2, during the period 1991 to 1993 at Chennai, fraudulently used as genuine certain documents namely, equitable mortgage with inflated value and without title deeds and fabricated EC and Adangal, application for loan, General Power of Attorney, Agreement of Sale, etc., which you knew at the time when used it to be forged documents and thereby A1 to A3 committed an offence punishable u/s.468 r/w 471 IPC; Fifthly, that you A2, being public servant employed in Indian Bank, Mylapore Branch, Chennai during the period 1991 to 1998 at Chennai by corrupt or illegal means or by abusing your official position as such public servant sanctioned working capital and other credit facilities to A3 represented by A1, pecuniary advantage to the extent of Rs.142.73 lakhs from Indian Bank, Mylapore Branch, Chennai and thereby A2 committed an offence specified in Section 13(1)(d) of PC Act, 1988, punishable u/s 13(2) of that Act."
E. The Trial:
8. The accused denied the charges and pleaded not guilty. The prosecution, in order to prove the charges, examined 49 witnesses and marked Exs.P.1 to P.211. Thereafter, upon questioning the accused under Page 9 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 Section 313 of the Code of Criminal Procedure regarding the incriminating evidence on record, the accused denied it as false. On the part of the defence, one Jaya Nageswari Paira was examined as D.W.1 and Exs.D-1 and D-2 were marked. The trial Court then considered the case of both the prosecution and the defence and found all three accused guilty of the relevant charges framed and sentenced them as above. Aggrieved by the same, the present appeals are filed.
F. The Arguments:
9. Heard Mr. Bhagavat Krishna, learned counsel appearing for the appellants in Crl.A.No.757 of 2012, i.e., A-1 and A-3. The learned counsel submitted that regarding the charges against A-1 and A-3, the prosecution has not proven that the accused forged the documents now alleged to be false. Secondly, he argued that the accused had executed an equitable mortgage based on a Power of Attorney granted to A-1 by the Power of Attorney agent of the original property owners. At that time, there was no dispute over the title. Although the prosecution claims that the Power of Attorney agent, Abdul Kareem, signed only in Urdu, it has not been proven Page 10 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 that the signatures on the Power of Attorney and Sale Agreement were not made by him. If Abdul Kareem chose to sign in different languages for reasons unknown, the accused cannot be held responsible. The accused, who were in the granite business, faced financial difficulties due to a business slump beyond their control, resulting in their inability to repay the loan. Therefore, the charges claiming they had an intention to cheat the bank from the outset are incorrect and unproven. Due process was followed, including processing the loan application, providing credit reports, obtaining legal opinions about the title and their right to create a mortgage, and valuation by experts. Merely because A-1 and A-3 defaulted does not mean they committed the offences, and thus, they are entitled to acquittal.
10. Alternatively, the learned counsel would argue that even if this Court concludes that A-1 and A-3 are guilty of the offences, it should consider that A-1, Ramakrishna Prasad, has suffered a paralytic stroke and is unwell. The counsel, supported by medical records, states that A-1, now 68 years old, is severely ill and therefore unable to continue the business or make arrangements to settle the loan, and thus does not warrant the Page 11 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 maximum punishment given by the trial Court.
11. Mr. Karthic, the learned senior counsel appearing on behalf of A- 2 (appellant in Crl.A.No.750 of 2012), explained to this Court, through the relevant witnesses—namely, P.W.33 - M.S. Parthasarathy, the Chief Manager on duty prior to A-2; P.W.17 - N. Sankaranarayanan, the Chief Manager succeeding A-2; P.W.36 - R. Venkatesan, the Senior Manager also on duty at the branch during the relevant period; and the evidence of the Investigating Officer, P.W.49—along with the entire loan files, that based on the review of these files and the testimony of the witnesses, it cannot be concluded that only A-2 abused his position as Manager of the bank or assisted in committing offences alongside A-1 and A-3. The counsel further emphasized that, regarding the forgery of documents, the Power of Attorney, the Sale Agreement, and the encumbrance certificates—all of which were presented to the panel lawyer for title verification—were entirely forged by A-1. Furthermore, it was not possible for A-2 to detect the forgery, especially after the documents had been carefully verified by the panel lawyer and supported by the title report he provided. Page 12 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012
12. Secondly, the learned senior counsel would submit that the transaction of creating an equitable mortgage by way of an unregistered document of Agreement of Sale with the registered Power of Attorney was held to be correct according to the legal opinion, Ex.P.68, and the subsequent reports and the evidence of the panel counsel, who was also examined as P.W.14, would confirm that A-2 did not act on his own. In fact, he had duly referred the documents for legal opinion and proceeded further only in accordance with that legal opinion.
13. It is the further contention of the learned senior counsel that the charge against A-2, as if he were responsible for the entire loss of the bank amounting to Rs . 142.73 lakhs, is factually incorrect. In fact, only the initial two tranches of the loan, totalling Rs. 24 lakhs, were disbursed by A-2; thereafter, the major amounts were disbursed solely by A-2's successor, who was examined as P.W. 17. There is no difference between A-2 and P.W. 17 regarding these transactions. The prosecution selectively prosecuted A-2 alone. There is also no direct evidence indicating that A-2 obtained any undue pecuniary advantage himself in the entire transaction. Additionally, Page 13 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 there is no direct evidence that A-2 had colluded with A-1 or conspired with him in any manner. The entire conspiracy charge is inferred by the trial Court solely based on A-1 obtaining the loan through forged documents. In reality, each transaction related to the sanction process was approved by the Zonal Officer, and only the follow-up actions and proposals were made by A-2. Therefore, he is not the primary person responsible for sanctioning the loan to A-1. In the absence of any other direct evidence of conspiracy or wrongful pecuniary gain, and merely because A-2 served as Chief Manager for a brief period from June 1991 to August 1992, the prosecution erred in charging A-2.
14. It is the further contention of the learned senior counsel that the relevant witnesses, namely P.W.17 - N. Sankaranarayanan and P.W.36 - Venkatesan, have also categorically and expressly admitted that the Zonal Manager, Natarajan, was interested in the transaction from the beginning, and every transaction took place only on his oral instructions. In fact, the investigating authority examined Natarajan during the investigation and recorded his statement. However, the prosecution neither prosecuted Page 14 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 Natarajan nor examined him as a witness, despite having recorded his statement. Therefore, it can be seen that the entire prosecution case regarding A-2 is untenable, and there is no evidence on record to convict A- 2 of the charges levelled against him.
15. Per contra, Mr. K. Srinivasan, learned Special Public Prosecutor, submitted that, firstly, regarding the charges against A-1 and A-3, the Power of Attorney is produced only by the accused. The Power of Attorney is considered a registered document. The prosecution compared the fingerprint of the Power of Attorney agent, Abdul Kareem, with that of other registered documents, which are undisputed, and expert witnesses have stated that the fingerprint does not belong to Abdul Kareem. Therefore, it is proven beyond doubt that the Power of Attorney is forged. Since A-1 is a party to the document and has signed it, the offences related to forgery, use of forged documents, and obtaining pecuniary benefits from the bank are established beyond doubt. Furthermore, Abdul Kareem had always signed only in Urdu. All documents executed by Abdul Kareem at the same Sub- Registrar's office concerning the property were marked before the trial Page 15 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 court. The wife of Abdul Kareem was also examined and testified that the signatures on the Power of Attorney and the Sale Agreement do not belong to her husband. Moreover, the valuation report, marked as Ex.P.14, which was prepared after site inspection in 1998, clearly states that although 18 persons were originally the owners of the property, it was proved that they executed the Power of Attorney in favour of Abdul Kareem. After becoming the Power of Attorney agent, Abdul Kareem sold most of the property to various persons. By producing a completely forged encumbrance certificate, suggesting that none of the properties were dealt with, and forging the Power of Attorney as if Abdul Kareem executed it in favour of A-1, the security was submitted to the bank as an equitable mortgage.
16. Secondly, all the letters submitted by the accused, as if their license was expiring on a particular date, and all requests made by them for various other purposes, etc., which were marked as Exs.P.24, P.25, P.28, and P.30, have all proved to be false. There was no corresponding quarrying activity on the part of A-1 and A-3. The fraud committed by A-1 and A-3 is proven beyond doubt by the prosecution in this case. If the loan application Page 16 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 submitted by A-1 and A-3 is to be processed according to the due process of law and bank procedures, the authorities would inspect the site. To avoid this, while keeping the loan application pending since July 1991, they repeatedly obtained amounts for ad hoc purposes, such as an interim overdraft facility of Rs. 4 lakhs and other small tranches, withdrawing the entire amount periodically over time. Consequently, A-1 and A-3 intended to deceive the bank from the beginning, submitted forged security, took the money, and siphoned it off for personal and other benefits. None of the primary security, namely, the excavation and export of granite, materialized, as proved categorically beyond doubt by the prosecution. In fact, the amount remains unpaid to date; therefore, A-1 and A-3 do not deserve any sympathy regarding the quantum of the sentence.
17. Regarding A-2, the learned Special Public Prosecutor argues that although the subsequent Chief Manager (P.W.17) also issued certain loan amounts, it is clear that A-2 was the primary and recommending authority for the loan application finalized on 17.12.1991. The recommending authority plays a vital role and bears responsibility for the recommendation. Page 17 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 Merely because another loan manager or subordinate bank officials also helped prepare the proposal, and the zonal office later approved the sanction, does not exempt the recommending officer from liability. In this case, the prosecution, by presenting documents and examining relevant witnesses, has demonstrated the following acts by A-2:
i.Firstly, the account was opened without any recommendation, and A-2 played a significant role in its opening. ii.When the previous Manager had instructed the party to approach the Hyderabad branch, this accused No.2 then entertained Accused No.1 at the same Mylapore branch. iii.Being a Branch Manager, without insisting on the sale deed, he created an equitable mortgage solely based on the Power of Attorney and the Agreement to sell, which later proved to be forged.
iv.After the loan was granted and the equitable mortgage was executed, if the documents had been promptly examined carefully, the entire intention of A-1 and A-3 would have been revealed. Only because this Accused No. 2 recorded that an equitable Page 18 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 mortgage was created by depositing the documents, subsequent managers also followed suit by extending the same equitable mortgage.
v.Therefore, the acts of submitting the proposals, granting the initial loan, and accepting false documents for the equitable mortgage all occurred only when A-2 was in control of affairs. This conduct itself suggests that A-2 conspired with the other accused, abused his position, and the transactions resulted in A-1 and A-3 gaining undue pecuniary benefit at the bank's expense. In view of this, the trial court has rightly convicted the second accused as well and only imposed the minimum punishment of two years; therefore, it does not warrant any interference.
F. The Evidence on Record:
18. I have considered the arguments presented on both sides and reviewed the material records in the case. The charges framed in the instant case were extracted above. To establish the charges, Radhakrishnan, who filed the complaint Ex.P.1, was examined as P.W.1. M. Chandirasekaran, Page 19 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 who inspected the branch and submitted a report regarding the loan transaction vide Ex.P.2, was examined as P.W.2. V.B. Masilamani, the Assistant Manager working in 1997, who spoke about the accounts in the name of A-3 firm, M/s. Vishnuvaradhan Granites, was examined as P.W.3. M.V. Sankaran, the Manager, was examined as P.W.4 to discuss procedures for granting loans and all related transactions for the instant loan were conducted through him. Usha Natarajan was examined as P.W.5, explaining the opening of the bank account in the name of A-1. K. Ravi, examined as P.W.6, was the landlord who spoke about receiving two months' rent from A-3. Lakshmipathi Rao, examined as P.W.7, deposed about the business of cutting, polishing, and exporting granites with A-3. Similarly, Mariyappa, examined as P.W.8, spoke about transactions between A-1 and himself, including obtaining loans and letters of credit.
19. Periyasamy, Manager of Dharmapuri District Central Co- operative Bank, was examined as P.W.9 to verify transactions with N. Kumar and the accused. Sahakireddy, Additional Commissioner, Hyderabad, was examined as P.W.10, stating that Door No.76-1-44 in Page 20 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 Panchakutta does not exist. Nagarajan, Manager of Syndicate Bank, examined as P.W.11, discussed A-1's bank account and transactions. Ravikumar, Advocate, who provided an opinion via Ex.P.66, was examined as P.W.12. Gangireddy, Assistant District Registrar, examined as P.W.13, confirmed that Ex.P.48 is the Power of Attorney, executed in favor of A-1 and registered as Document No.1406/90. K. Srinivasan, a panel advocate, who gave an opinion via Ex.P.68, was examined as P.W.14. R. A. Paul, examined as P.W.15, proved that the premises at No.10, Banjara Hills, Hyderabad, was occupied by others and Syed Khan was not occupying.
20. N. Kumar, a Consultant Geologist, examined as P.W.16, who confirmed that granite excavation transactions did not materialise, and A-1 was seeking the return of paid amounts. Sankaranarayanan, the Chief Manager succeeding A-2, was examined as P.W.17 to discuss subsequent transactions after A-2's transfer in August 1992. He testified extensively about other loans granted by him and facilities extended to A-1 and A-3, with relevant documents marked through him. P.Ws.18 to 27 are original buyers of land from Abdul Kareem, part of the security for the current loan, Page 21 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 and all testified that Abdul Kareem sold properties periodically, signing only in Urdu, and that the identity document's picture did not match Abdul Kareem’s but was manipulated. The engineer who issued the valuation report Ex.P.44 was examined as P.W.28. P.W.29, Aigaz Khan, the attesting witness for the forged Power of Attorney, testified he did not witness Abdul Kareem signing. P.W.30, the advocate who drafted the Power of Attorney, testified that he never saw Abdul Kareem sign during the process. K.M. Omer, Postal Assistant, examined as P.W.31, confirmed the execution of the Power of Attorney and Abdul Kareem's sale of the entire property, identifying his signature, which was always in Urdu.
21. Razia Sultana, Abdul Kareem's wife, examined as P.W.32, stated that the signatures on the Power of Attorney and Sale Agreement do not belong to her husband, who died in 1997. M.S. Parthasarathy, the Chief Manager before A-2, examined as P.W.33, stated that even during his tenure, A-1 approached the Mylapore Branch but was directed to the Hyderabad Branch. He denied knowledge of any legal opinion obtained. P. Basheer, a doctor, examined as P.W.34, testified about his dealings with A- Page 22 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012
1. M.V. Balasubramaniyam, from the Vigilance Department of Indian Bank, examined as P.W.35, described how they uncovered the forged Power of Attorney and identified Abdul Kareem’s genuine photograph. P.W.36, R. Venkatesan, worked with A-2 and handled loan files as Assistant Manager, testified about his role and how transactions followed oral instructions from the Zonal Manager, Natarajan. M.B. Sampathkumar, Senior Manager at Mylapore, examined as P.W.37, described documents related to A-1’s other company, Vishnuvardhan Granites Pvt. Ltd.
22. V. Narayanan, Senior Manager, explained procedures for sanctioning working capital. Nazeer Ahamed, retired Superintendent, examined as P.W.39, authenticated the registration of the Power of Attorney. Sriram Narayana Prasad discussed A-1’s business operations. Usha Natarajan of the Bank of Maharashtra, examined as P.W.41, described banking transactions involving A-1. Vengareddy, Assistant Geologist of Varangal, examined as P.W.42, stated no mining activity occurred under A- 1’s lease. R. Ponnanna, A-1’s business associate, examined as P.W.43, testified about failed transactions and invoice discrepancies. Page 23 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 Balasubramanian, the subsequent Zonal Manager, examined as P.W.44, discussed follow-up loans. Sathiyanarayanan, a retired Sub Registrar, examined as P.W.45, proved that the properties and encumbrance certificates provided by A-1 and A-3 were forged. Sunkara Anilkumar, examined as P.W.46, confirmed that no mining was conducted and the money was returned. Banumathi, Sub Registrar, examined as P.W.47, verified the proper registration of lands sold before forgery. S.K. Chada, Senior Scientific Officer, examined as P.W.48, compared thumb impressions and identified forgery in the Power of Attorney. His report was marked as Ex.P.203. P.W.49, the Investigating Officer, testified about FIR registration, investigation, and final report.
23. Voluminous documents, including the entire loan and transaction files, including all the loan documents, forged documents produced for creating an equitable mortgage, other sale deeds and documents executed by Abdul Kareem, the forensic expert opinion, besides the documents during investigation, were all marked as exhibits, which will be referred to at the relevant discussion.
Page 24 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 G. The Discussion & Findings:
24. Upon careful examination of the above documents and the oral evidence, the prosecution has clearly established that the equitable mortgage created by A-1 and A-3 is based on the authority given to A-1 as per Ex.P.48. Ex.P.48 has been proven beyond doubt through oral and documentary evidence to be a forged document. The thumb impression found on the Power of Attorney, which is claimed to be Abdul Kareem's, was compared with the admitted thumb impression on other sale deeds executed by Abdul Kareem, and it was found not to be his. Furthermore, the prosecution also proved that Abdul Kareem was signing only in Urdu and not in English. The wife of Abdul Kareem herself has testified that the signature on Ex.P.48 does not belong to Abdul Kareem. Therefore, it is clear that the Power of Attorney produced by A-1, along with the Sale Agreement in which he is a signatory and party to the document, have been conclusively proven to be forged. Having forged the document, A-1, acting as the partner of A-3, used these false documents to obtain a loan in the name of the A-3 firm..
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25. Apart from examining the relevant witnesses, the requests made by the A-3 firm represented by A1, vide Ex.P.24, dated 17.12.1991, suggest that the IDBI bank stopped issuing DPG loans, and they approached the Indian Bank solely because of this. On the same day, they sent another letter stating that their licence was expiring and that they needed sanction for a term loan. There was also a request in Ex.P.28 to remit funds to the Government of Andhra Pradesh for a permit. Additionally, they made a request in Ex.P.30 for sanction of Rs . 4 lakhs for incidental expenses. All other subsequent requests were also made with false purposes, and the funds were ultimately siphoned off by A-1 and A-3. On repeated occasions, they received several tranches of loan amounts, which were never repaid. Evidence from official witnesses in Andhra Pradesh also proved that no quarrying activities occurred at the site as claimed by them, until the licence expired. Therefore, they made false promises, executed an equitable mortgage using forged documents, obtained loans, and have not repaid them to date. Their intention from the inception of the transaction was thus dishonest and with a view to cheat the bank. All these facts have been Page 26 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 proven beyond any doubt by the prosecution. Accordingly, I hold that the charges under Sections 420, 467 read with 471, and 468 read with 471 are proved against A-1 and A-3.
26. Now, the next aspect is to consider whether there was any conspiracy with A-2. In this case, the conspiracy is to be proved by circumstantial evidence, and there is no direct evidence of conspiracy or A- 2 receiving any pecuniary benefit by cash or otherwise. Therefore, to consider the charge against A-1 and A-3 under Section 120-B and all charges against A-2, it is relevant to examine the nature of transactions that occurred in this case.
27. The learned senior counsel for the appellant/A-2 would bring to the notice of this Court certain portions of cross-examination of P.W.17, the subsequent Manager, and P.W.36, Venkatesan, who is the other Senior Manager who dealt with the same loan file, wherein they expressly admit that every tranche of the loan was disbursed only on the directive of the Zonal Manager and that, subsequently, in writing, sanction was also granted Page 27 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 for each transaction. Be that as it may, the transactions made from the beginning concerning the loan can be considered to determine whether there was any misconduct on the part of A-2, and if so, whether it would amount to criminal misconduct.
28. The predecessor of A-2, namely, one M.S.Parthasarathy was examined as P.W.33. From his evidence, it can be seen that the very same accused had approached the bank even during his tenure. However, he deposed that he never entertained them and asked them to approach the Hyderabad branch, though it is contestable as to whether he did the same, after sending the parties through the panel lawyers for title verification or at the threshold itself. Be that as it may, the instant transaction commenced with Ex.P.8 on 30 July 1991. P.W.36, Venkatesan, admits that Ex.P.8 proposal was prepared in the branch, and P.W.36, as the Senior Manager in the branch and one Seshadri, the Loan Manager and A-2, the Chief Manager, had only prepared the said proposal, and all three of them signed in the said document. Once the proposal was sent, it was not immediately approved by the Regional Office. It is seen that the matter was kept Page 28 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 pending in the Regional Office.
29. While so, disbursement of the amount was first made on 13.11.1991, and it can be seen that pending finalisation of the loan proposal, which was for a higher amount, a sum of Rs. .4 lakhs was disbursed as an overdraft facility to A-1 and A-3. According to Ex.P.10, the transaction was confirmed by the Assistant General Manager at the Regional Office. The corresponding document, Ex.P.22, which is a letter written on the same day by A-2, categorically states that the parties have requested for release of a sum of Rs.4 lakhs to meet the urgent expenses for the granite project and it categorically puts on record that only after obtaining permission from the Assistant General Manager over phone, they had permitted the parties to draw Rs.4 lakhs from the Current Account. The very action of A-2 then and there putting it on writing that he is acting only on the instructions of the Assistant General Manager is the first important circumstance that goes against any conspiracy of A2 with A1 and A3.
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30.Similarly, it can be seen that the second tranche of the loan was disbursed on 17.12.1991. When the Special Public Prosecutor would pinpoint the liability on A-2 only by virtue of Ex.P.23, which is said to be the sanction/recommendation for sanction as the Recommending Officer, it can be seen that the letter itself categorically refers to the letter of the Zonal office on the same day, that is, it is reported in the said letter that the EXIM bank has consented to refinance and the company has requested to release sanction advice on the same day. The corresponding letter that is written by the Regional Office to the branch on the same day, that is, 17.12.1991, though marked as Ex.P.26, is the communication which happens first, which is referred in the subsequent document in Ex.P.23. In Ex.P.26, it is the Assistant General Manager of the Regional Office who permits the issue of 'in-principle' sanction. Though the word is couched as if it is allowing the Branch Manager to grant 'in-principle' sanction, the tone and tenor in which the letter is written is as if they have met the EXIM bank officials on 16.12.1991 and that 100% re-finance is agreed and therefore, it is almost a directive to the Branch manager to grant the 'in-principle' sanction. It is only subsequent to that letter, pursuant to the action of the Assistant General Page 30 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 Manager of the Regional Office, the 'in-principle' sanction is granted by A- 2, which is said to be the primary document fixing the liability on behalf of the prosecution.
31. Further, a perusal of Ex.P.24, which is written by A-1 and A-3 categorically makes a mention of the Assistant General Manager in their very request itself and they pressurised the Manager by Ex.P.25 to grant the sanction on the same day. Only pursuant to the said request and the communications on the same day, that is, on 17.12.1991 itself, the sanction proposal was sent. But, however, a careful reading of the detailed sanction proposal shows that several apprehensions are also expressed by A-2 and it is stated that those details should be obtained from A-1 and A-3 before the actual disbursement of the loan. As a matter of fact, the subsequent conduct can be ascertained from the Regional Office when they issued Ex.P.9 on 18.01.1992 requesting to arrange to submit a full-fledged proposal with details. While doing so, the communication itself says that the full-fledged proposal should be submitted to AGM South ‘early’. Therefore, the Court can clearly see the urgency demonstrated in every transaction, as it is Page 31 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 initiated by the Regional Office/Zonal Office, and the transaction is pushed through at every stage. It is in this regard, the categorical admission of P.W.36 in the cross-examination is to be noted, and it is as follows:
"... In Ex.P.26 there was a reference about Mr.Natarajan. ExP.27 is the inprinciple sanction dt.17.12.91. Ex.P.24, 26 and Ex.P.27 are dt.17.12.91. It is correct to state that the said Natarajan was having interested in the proposal show that only Ex.P.27 in-principle sanction was granted. After sending Ex.P.8 subsequently during Nov.1991 we received a communication from the ZO to the RO asking us submit a full fledged proposal that was also sent by our branch. All the payment released to Vishnuvaradan Granites were made on the instructions of ZO, they were all oral instructions only. Subsequently the release of funds act of the branch was ratified by the ZO also. ..."
32. Similarly, P.W.17 who was the subsequent Manager and who also sanctioned subsequent tranches, categorically states that even during his tenure, he had oral instructions from the higher authorities to grant facilities to the parties. He has further stated that at that time the concerned AGM was Mr.B.Natarajan. It is in this connection the cross-examination of P.W.49, the Investigating Officer, becomes relevant. In his cross- Page 32 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 examination, he categorically admits as follows:
"... I have examined Assistant General Manager Natarajan and recorded the statement. I have not cited him as a listed witness in this case."
33. Coupled with the above evidence, it can be seen from the records on behalf of the prosecution that the entire loan transaction was dealt with in the office by three officers, Natarajan, the Assistant General Manager, A- 2, the Chief Manager and one Seshadri, who was the Loan Manager. In fact, credit report is admittedly prepared by the said Seshadri. P.W.49 categorically admits that he never examined the said Seshadri. Therefore, Natarajan, who was the Assistant General Manager, who was pushing things from above and Seshadri, who was the Loan Manager, were never examined before the Court. As a matter of fact, the most important person is the said Natarajan, whose statement was recorded by the Investigating Officer, however, for reasons best known to him, he was neither made as an accused nor was listed as a witness.
34. In this regard, it can be further noted that the entire loan grant was Page 33 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 made on requests that are in the nature of ad hoc purposes to meet the urgent needs. The modus operandi adopted by A-1 and A-3 is to categorically prevent the Branch Manager from conducting a clear-cut inspection and completing procedures before the actual sanction and distribution of the loan. A-2 was deprived of the opportunity all along, as initially he only released two tranches of loans, and by August 1992, he was also transferred. Even P.W.17, who was his successor, was also met with the same modus operandi. He also never got an opportunity to inspect the facility or to check the veracity of the business proposals, etc. As all these loan transactions are repeatedly pushed from the Regional Office/Zonal Office, and by dividing them into smaller amounts, money is continuously credited into the accounts of A-1 and A-3, much to the disadvantage of the bank. In the entire process of dealing with the file, I do not see any egregious or fraudulent conduct on the part of A-2, as he was also like any other officer/employee who dealt with the file, such as P.W.17 or P.W.36 or the other Loan Manager, Seshadri or the Assistant General Manager, Natarajan. There is no special reason for picking up A-2 and prosecuting him alone.
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35. The second conduct put forth against A-2 on behalf of the prosecution is the nature of security that is taken. Though common sense would prevail on any Manager of the bank from accepting such an equitable mortgage which is created only through Power of Attorney and also by placing only an Agreement of Sale, firstly, it can be seen that the additional legal opinion that is given by the panel counsel vide Ex.P.68 categorically mentions that such an equitable mortgage can be created, as 18 persons possess title and the Power of Attorney enables the Power of Attorney agent to delegate the power and such delegation has already been granted. In the teeth of the same, it is not a legally impossible thing to create an equitable mortgage on the basis of such an Agreement of sale, etc. The question was recently decided by the Hon'ble Supreme Court of India in Cosmos Co- operative Bank vs. Central Bank of India and others, reported in 2025 SCC OnLine 352. It is useful to extract the relevant portions, which read as under:
"36. Having understood the concept of ‘equitable mortgage’, it would now be apposite to understand the ways in which an Page 35 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 equitable mortgage may be created and its nature. Under the English Law, the two primary ways for creating an ‘equitable mortgage’ is either (i) by deposit of the original title deeds to the subject property with the lender or where the original title deeds are retained by the borrower then (ii) by way of a memorandum of understanding or an agreement simpliciter recording the intention of the parties to create a charge over the subject property.
……
43. Thus, where ‘equitable mortgages’ have been created based on deposit of part-deeds or documents purporting title or evincing intention of parties to create an interest, all such deposits will be a valid mortgage in equity and the charge that might have been created prior in time will assume priority over any subsequent charges or mortgagor..."
(Emphasis supplied)
36. Therefore, although the transaction of creating the equitable mortgage with only a Power of Attorney and Agreement of Sale warrants scrutiny of A-2's conduct, who is the Chief Manager, it may not be entirely prudent, especially given the legal opinion and the legal position stated above. When considering the plea that A-2 was in office not for the entire Page 36 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 loan amount requested, but it was taken as security considering the initial Rs.4 lakhs sanctioned, I do not believe that the acceptance of the equitable mortgage by the documents presented by A-1 and A-3 alone constitutes egregious misconduct that would suggest A-2 conspired with A-1 and A-3 to accept the mortgage.
37. The standard procedure of verifying documents through the panel counsel and evaluating them via an approved valuer was followed. If, at that time, the parties created fake documents wholesale by forging the Power of Attorney and also the encumbrance certificate—documents seen by the panel counsel—then, no knowledge could be attributed at the stage of sanctioning by A-2. In the absence of any connivance or knowledge of forgery, A-2 cannot be accused of criminal misconduct or abuse of his position to get undue pecuniary benefits to A1 and A3. There is no other evidence suggesting A-2 received any other pecuniary advantage. Therefore, I believe the prosecution erred in targeting A-2, especially since, upon reviewing the case, there is a more serious suspicion directed towards officials in the Regional Office. The prosecution failed to prove conspiracy Page 37 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 or criminal misconduct beyond a reasonable doubt against A-2, and he is entitled to the benefit of the doubt on all charges framed against him.
38. Now, regarding the conviction and sentence imposed on A-1 and A-3 concerning conspiracy, since the other partners were not implicated and A2 being found not guilty as above, A1 and A3 cannot also be found guilty of the first charge, that is, the offence under Sections 120-B, 420, 467 read with 471 IPC and Section 13(1)(d) read with 13(2) of the Prevention of Corruption Act, 1988. Therefore, A-1 & A3 are also entitled to acquittal on that charge. However, the convictions of A1 & A3 with reference to the other charges are confirmed for the findings made supra.
39. Regarding the question of the sentence, it can be seen that to date, the amount due to the bank has not been repaid by A-1 and A-3. The fine of Rs. 1,55,00,000/- also remains unpaid. Given these circumstances, A-1 and A-3 cannot be shown any leniency in punishment. However, it is pleaded that A-1 is now 68 years old and has suffered a paralytic stroke, for which he is undergoing treatment with a neurologist; the medical records are Page 38 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 produced before this court. But for the charges in which the conviction is sustained, the maximum sentence imposed is only rigorous imprisonment for two years. Considering that the trial court imposed only a maximum sentence of two years to run concurrently and that the entire loan amount remains unpaid, no further leniency can be granted to A-1 and A-3. Therefore, the conviction and sentence for A-1 and A-3 on the other charges shall remain confirmed. Additionally, the sum of Rs. 1,55,00,000/- shall be recovered from A-1 and A-3 as compensation and paid to Indian Bank, Mylapore Branch.
H. The Result:
40. In the result, a. Crl. A. No. 757 of 2012 filed by A-1 and A-3 is allowed in part. The conviction and sentence imposed on A-1 and A- 3 for the charge under Section 120-B read with Sections 420, 467, read with 471, 468 read with 471 IPC, and Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988, are set aside. The convictions and Page 39 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 sentences imposed on A-1 and A-3, including the fine amounts, for other offences, stand confirmed.
b. Crl.A.No.750 of 2012 filed by A-2 is allowed, and the fine amount paid shall be refunded.
c. The Accused Nos. 1 and 3 shall pay a compensation of Rs. 1,55,00,000/- to the Indian Bank, Mylapore Branch, Chennai.
07.07.2025 Neutral Citation: Yes/No sra Page 40 of 42 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/07/2025 07:49:37 pm ) Crl.A.Nos.757 and 750 of 2012 To
1. The XI Additional Judge (CBI Cases Relating to Banks & Financial Institutions), City Civil Court, Chennai.
2. The Public Prosecutor, Madras High Court, Chennai.
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