Bangalore District Court
Cbi Acb vs Rani Venkata Satya Ramesh R.V.S.Ramesh on 21 November, 2024
KABC010000011995
IN THE COURT OF THE XXI ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AND PRINCIPAL SENIOR
JUDGE FOR CBI CASES, BENGALURU (CCC-4)
Dated this day of 21st NOVEMBER, 2024.
PRESENT: SRI. SHRIDHAR GOPALAKRISHNA BHAT
XXI Addl. City Civil and Sessions Judge and
Prl. Special Judge for CBI Cases, Bengaluru.
Spl.C.C.No.180/2013
Complainant : CBI/ACB, BENGALURU
By Senior Public Prosecutor
Vs
Accused 1: Sri. Rani Venkata Satya Ramesh @
R.V.S. Ramesh
S/o Sri. R.S. Sastry
Aged about 53 years,
The Then Chief Manager
Bank of India,
Whitefield Branch,
Bangalore.
Flat No.305, Golden Towers
B.S. Layout, Near 4th Town
Police Station,
Vishakapatnam - 530 013
Andhra Pradesh.
2: Dr. Badigantla Srinivasa Rao @
Srinivasa Rao,
S/o Badigantla Satyanarayana,
Aged about 38 years,
Proprietor, M/s. Swetha Exports, Plot
No.151 & 152, II Phase, Industrial
Development Area, Ramanayya Pete,
2 Spl.CC.180/2013
Kakinada - 533005 and Chief
Medical Officer (On Contract basis),
Government General Hospital,
Kakinada, Andhra Pradesh.
R/at Plot No.151 & 152, II Phase,
Industrial Development Area,
Ramanayya Pete,
Kakinada - 533005.
3: Sri. Nalli Venkata Ramana
S/o Sri. Nalli Venkat Rao
Aged about 41 years
Proprietor, M/s. Satyam Industries,
Plot No.120, 3rd Phase,
KIADB Industrial Area, Malur.
R/at No.10-664, Dandupuntha,
Ramanayya Pete, Kakinada,
Andhra Pradesh.
4: Sri. Pepakayala Venkateswara
Rao @ P. Venkateswara Rao,
S/o late Subba Rao,
Aged about 48 years
Proprietor, M/s. Mallikarjuna
Industries, Plot No.120, 3rd Phase,
KIADB Industrial Area, Malur.
R/at Muralidhar Nagar,
Door No.91, Ramanayyapeta,
Kakinada - 533 005,
Andhra Pradesh.
5: Sri. Ponnaganti Gangaraju @
P. Gangaraju,
S/o Late Lachanna,
Aged about 51 years,
Proprietor, M/s. Srinivasa
Industries, Shed No.SM-25,
KSSIDC Industrial Estate Malur
(Since Closed) Mulakothuru Village,
Gokivada Post, Rambilli Mandal,
Vishakapatnam District,
Andhra Pradesh.
3 Spl.CC.180/2013
6: Sri. Konuku Sridhar @ K. Sridhar
S/o K. Musalaiah,
(Abated as dead as per order dated
09.08.2017)
7: Sri. Sheik Mohammed Shafi @ S.M.
Shafi, S/o. Shaik Khadar Valli,
Aged about 31 years,
Proprietor, M/s. S.K. Valli
Industries,
Plot No. 120, KSSIDC Industrial
Estate Malur (Since Closed)
19/3/2G7, Old Srinivasapuram,
Renigunta Road, Tirupati.
8: Sri. Thota Munisankaraiah @
Munisankaraiah,
S/o Late Thota Krishnaiah,
Aged about 48 years,
Proprietor, M/s. Vinayaka
Enterprises, Plot No. 120, 3rd Phase,
KIADB Industrial Area, Malur (Since
Closed) Door No.13-6-603/A, P.K.
Layout, Tirupati. Sri. , Aed
A.1 By Sri.K.R.Krishna Murthy,
Advocate
A.2 to A.5, A.7 and A.8 By
Sri.T.Prakash Advocate
***
Date of commission of offence 2008-2009
Date of report of offence 03.02.2012
Date of arrest of accused Nos.1 Not arrested
to 8
Date of release of accused on -
bail
Total period of custody NIL
Name of the complainant Source Information
Date of commencement of 13.04.2015
recording evidence
Date of closing of evidence 08.11.2017
Offences complained of Sections 120B, 420, 467,
471 read with Section 120B
of the Indian Penal Code
and the Section 13(1)(d)
4 Spl.CC.180/2013
punishable under Section
13(2) of the Prevention of
Corruption Act, 1988
Opinion of the Judge The accused Nos.1 to 5, 7 and
8 are acquitted for the
offences punishable under
Section 467 and 471 of the
IPC and convicted for the
offences punishable under
Sections 420 R/w.120B of the
IPC and accused No.1 under
Section 13(1)(d) punishable
under Section 13(2) of the IPC.
JUDGMENT
The Deputy Superintendent of Police, Central Bureau of Investigation ('CBI' in short)/ACB/Bengaluru, has filed the charge-sheet against th me accused persons alleging the commission of the offences punishable under Sections 120B, 420, 467, 471 read with Section 120B of the Indian Penal Code ('IPC' in short) and the offence under Section 13(1)(d) punishable under Section 13(2) of the Prevention of Corruption Act, 1988 ('PC Act' in short.)
2. The facts of the prosecution case in brief, are that ;
During the years 2008 and 2009, the accused No.1 while working as a public servant in the capacity of the Chief Manager, in Bank of India, Whitefield Branch, Bengaluru, entered into criminal conspiracy with accused Nos.2 to 8 and by abusing his official position, sanctioned six cash credit facilities under Credit Guarantee Fund Trust for Micro and Small Enterprises Scheme (In short 'CGTMSE'), inspite of granting term 5 Spl.CC.180/2013 loan without any justification ranging from Rs.46 lakhs to Rs.48 lakhs in favour of accused Nos.3 to 8, the proprietors of M/s. Satyam Industries, M/s.Mallikarjuna Industries, M/s.Srinivasa Industries, M/s.Venkateswara Industries, M/s.S.K.Valli Industries and M/s.Vinayaka Enterprises, respectively, towards working capital for manufacturing of button blanks from Buffalo/ Ox horns in irregular manner without any project report, without giving importance to past records, experience in the business etc., only on the basis of the introduction given by accused No.2, who was in acquaintance with him and accused No.2 was the actual beneficiary of the said loan proceeds, granted to accused Nos.3 to 8. The accused No.1 had disbursed the credit facilities sanctioned to accused Nos.3 to 8 within 2-3 installments in cash contrary to the requirement of the borrowers as per records and failed to ensure creation of assets by borrowers out of the disbursed the loan amount. The accused No.1 failed to verify the end use of the released amount by conducting proper post-sanction inspection. The accused No.2, who was the actual beneficiary of the credit limits granted had submitted few stock statements on behalf of the borrowers i.e., accused Nos.3 to 8 through e-mail just to complete the formalities even though no stock was available at the site as found during internal investigation of the bank. Further, the accused No.1 has also created false pre-sanction inspection report and sanctioned the credit limits even though units of accused Nos.3 to 8 were non-existing or non-functioning. The accused No.2 issued cheques in 6 Spl.CC.180/2013 favour of accused Nos.3 to 8 in order to regularize their accounts and the said cheques were returned unpaid due to insufficient funds. The accused No.1 had also took the help of another bank employee Smt. Kalpana Nair in the matter to get the false report as per his desire, by abusing her official position. The accused No.1 had shown undue favour to accused No.2 by sanctioning and releasing the cash credit limits in favour of accused Nos.3 to 8 by accepting their false and fabricated stock statements with irregularities by using false and fabricated documents and thereby the accused persons cheated the bank and caused wrongful loss to the extent of Rs.2.82 Crores and obtained corresponding wrongful gain by themselves and thereby, the accused persons have committed the offences punishable under Section 120B, 420, 467, 471 read with Section 120B of the IPC and the offence punishable under Section 13(2) read with Section 13(1)(d) of the PC Act.
3. On the basis of the first information statement (complaint) lodged by one Sri. Charan Singh, the Zonal Manager of Bank of India (PW.1) as per Ex.P.1 to the Superintendent of Police, CBI/ACB, Bengaluru, the case was registered in RC3(A)/2022 on 23.02.2012 by the Superintend of Police as per Ex.P.269 as against accused Nos.1 to 8. Thereafter, the matter was entrusted to CW.31 for investigation. During the investigation, the IO after examination of PW.14 Smt. Kalpana Raaj Nair, on 30.10.2012 arrayed her as accused No.9 as per memo filed before this court on 08.03.2013. Subsequently, 7 Spl.CC.180/2013 accused No.9 was granted tender of pardon by order dated 08.07.2013 during investigation and thereby, she is made as a witness on behalf of the prosecution and not shown as accused in the charge sheet. After completing the investigation, CW.31 has filed the present charge sheet against the accused Nos.1 to 8 for the aforesaid offences. It is further stated in the charge sheet that accused No.1 was the public servant and since he was dismissed from the service, no sanction is required to prosecute against him.
4. After filing of the charge sheet, cognizance of the offences against accused Nos.1 to 8 was taken and summons were ordered to be issued to them. In pursuance of the summons issued, accused Nos.1 to 8 appeared before the Court and they were enlarged on bail. They are provided with copy of the charge sheet and its enclosures as required under Section 207 of the Cr.P.C.,
5. After hearing the learned counsels for the accused persons, charges were framed against accused Nos.1 to 8 and they pleaded not guilty and claimed to be tried. During the pendency of this case, accused No.6 is reported to be dead and case against accused No.6 is abated by order dated 09.08.2017.
6. Prosecution side evidence:
In order to establish the case of the prosecution and thereby to bring home the guilt of the accused persons, the prosecution has shown in all 31 witnesses as per 8 Spl.CC.180/2013 CW.1 to CW.31 in the Charge-Sheet and out of them, examined 24 witnesses as per PW.1 to PW.24 and got marked as many as 277 documents as Exs.P.1 to P.277 and concluded its evidence. The prosecution evidence in gist is described as under;
Prosec Charge Person Evidence regarding Exhibits ution Sheet examined marked.
Witnes witne-
s No. ss No. PW.1 CW.1 Sri.Charan Lodging of the First Ex.P.1, P.1(a) Singh, the Information Statement/ and Ex.D.1 to then Zonal complaint as per Ex.P.1 D.5. Manager, Bank of India, Whitefield Branch.
PW.2 CW.2 Sri. K.R. As to functioning of Ex.P.2, 2(a)
Jagannath, accused No.1 in Whitefield Ex.P.3
the then Sr. Branch and handing over
Manager, the personal file of
Bank of India, accused No.1 to CBI
Zonal Office, officer.
Bengaluru.
PW.3 CW.3 Smt. Lakshmi Production of certain Ex.P.4, P.4(a),
Chatra, the documents before the CBI Ex.P.5 to
then Manager Officer at Bengaluru and P.122. (Admin and banking procedure in the Ex.D.6 and Service, Bank matter of sanction of CC D.7 of India limits to Small and Medium Whitefield Enterprises.
Branch)
PW.4 CW.4 Sri. Mahazar dated 24.02.2012 Ex.P.123 and
M.G.Kumars conducted at Shed No.25 P.123(a)
wamy, and 26 of KSSIDC Malur
Branch and the use of the said
Manager sheds.
SBM,
Rojarpalli
Branch.
PW.5 CW.7 Sri. Ansar Production of certain Ex.P.125 to
Pasha, documents relating to 134 and
Officer issuance of EM Part I and P.125(a) to (c),
Superintende Part II by the Joint Director, P.134(a) to (c) nt o/o. Joint DIC, Kolar.
Director, DIC
PW.6 CW.8 Sri. M. Production of documents Ex.P.135,
Narayana before the IO. 135(a) and (b)
9 Spl.CC.180/2013
Swamy,
Enumerator,
o/o. Joint
Director, DIC,
Kolar.
PW.7 CW.9 Smt. Non-obtaining consent Ex.136 and
V.G..Karthike from the Pollution Control 136(a)
yan, Board by accused No.3 to
Environment accused No.8.
Officer,
Karnataka
State
Pollution
Control
Board.
PW.8 CW.10 Sri. A. Issuance of VAT Ex.P.137 to
Shivaprakash Registration Certificate in P.143 and
Retired favour of accused Nos.3 to P.137(a) to
Commercial 6 under KVAT Act and its 142(a) and
Tax Inspector cancellation and non- Ex.D.8
issuance of VAT
registration certificate in
favour of accused Nos.7
and 8 units due to
procedural lapses.
PW.9 CW.11 Sri.C.N.Vasu Non-providing electricity Ex.P.144, 145
deva, the supply in the name of and P144(a)
Asst. Exec. accused No.3 to 8 and and P.145(a) Engineer supply of electricity to Plot (Elec) No. 25 of KIADB, Industrial BESCOM, Area, in the name of M/s.
Bengaluru Shriram Industries and to
Plot No.120 in the name of
Smt. H.B.Nagamani.
PW.10 CW.14 Sri. Allotment of Plot No.120 in Ex.P.146 and
M.B.Dyamber KIADB Industrial Area to P.146(a) i, Retd. CEO Smt. Nagamani, the Ex.D.9 and Proprietrix of M/s.
Executive Venkatadri Enterprises and
Member of no provision for sub letting
KIADB the plot in favour of others.
PW.11 CW.15 Sri. T. Furnishing of documents Ex.P.147 to
Ramakrishna, pertaining to M/s. Deb 149 and
Retd. Sr. Fashions India Pvt. Ltd., P.147(a) and
Manager, and Account Opening form P.149(a)
Administratio and its Account Statement.
n and
Deposits,
Bank of India.
PW.12 CW.27 Sri.R.K. Providing assistance to the Ex.P123(b)
Shivanna, the IO during the search of the 10 Spl.CC.180/2013 Inspector of premises of the shed Police, CBI/ No.SM 25, SM 26, ACB, KSSIDC, Industrial Area, Bengaluru Malur and non-execution of the search warrant and preparing of mahazar at the spot.
PW.13 CW.26 Sri.Y.E.L. Search of the premises of Ex.P.150 to
Sudhakar accused No.2 situated at P.159 and
Rao Pujari, Kakinada, Andhra Pradesh P.151(a) to
then and seizure of the P.151 (d)
Inspector of documents from the
Police, CBI/ premises of accused No.2
ACB. and handing over the same
to the IO for further
investigation.
PW.14 CW.28 Smt. Kalpana Her work as an Officer in Ex.P.6(a),7(a), Raaj Nair, the the Whitefield Branch, 9(a)(b), 12(a) then Officer working of the accused to (d), 12(a-i) of the Bank of No.1, cash credit facilities (b-i) (c-i), (d-i), India, given to accused Nos.3 to 26(a) 28(a) Whitefield 8, identification of her and (b) 37(a) Branch. signature and signature of (b), 39(a) the accused No.1 in loan 48(a), P50(a) papers etc., sanction and (b), 56(a) to (d) disbursement of the cash (a-i) (b-i), (c-i), credit limit in favour of (d-i) 58(a), accused No.3 to 8, 60(a) 72(a), conducting of post- 75(a) (b), 80(a) sanction inspection of the to 80(d),(a-i) to units and submitting the (d-i) 82(a), report at the instruction of 84(a), 96(a), the accused No.1. 96(a-i) 97(a),
(b) 98(a), P100, 100(a) 109 (a), (a-i), 110(a), (b), 111(a), 113(a), 116(a), (b) and Ex.D.10, 11, 11(a)(b), Ex.D.12, P.276, P.277 PW.15 CW.12 Sri. D. Allotment of SM No.25 and Ex.P.160 to Krishnamurthy, 26 of KSSIDC Industrial 164, 160(a), Retd. Asst. Area to one 162(a), 163(a) General Munivenkatappa and non-
Manager, allotment of said shed to
KSSIDC Ltd., accused No.3 to 8, non-
Tumkur. allotment of shed No.28 to
accused No.3 and non-
existence of SM No.120-C
11 Spl.CC.180/2013
and non-allotment of shed
to accused No.7
PW.16 CW.16 Smt. Allotment of Industrial Plot Ex.P.165,
H.R.Nagama No.120 in her favour 165(a) and (b).
ni, the leasing the said plot to
allottee of the accused No.3, 4, 7 and 8
shed No.120 and use of the same by
of the KIADB them for 5 to 6 months,
Industrial inventory proceedings by
Area, Malur. the CBI.
PW.17 CW.18 Sri.S.T. Banking procedure in the Ex.P.166, 170
Doddamani, matter of sanction of cash and Ex.D.13 to Retd. Chief credit limits to the SMEs 19 Manager, and about Credit activities Bank of India, of accused Nos.3 to 8, identification of the file relating to loan transactions of accused No.3 to 8 and lapses committed and regarding audit report.
PW.18 CW.13 Sri.Y.V.S. Furnishing of documents Ex.P171 to Rao, Then Sr. pertaining to current 254, 171(a), Manager of account of M/s. Shweta 207(a), 217(a), Bank of India, Exports and payment 226.(a), Kakinada made by Shweta Exports 234(a), 244(a), Branch, in favour of accused No.3 254(a).
to 8 PW.19 CW.20 Sri. Steps taken to encash the Ex.P.255(a), to K.Chinnaswa post-dated cheques issued (c), 256(a) to my, the then by accused No.2 and also (c), 257 (a), (b) Chief to recover the dues of CC to 266(a)(b), Manager, accounts of accused No.3 Bank of India to 8 PW.20 CW.22 Sri. P.S. Identification of the Ex.P.11(a),14( Venkatesh. handwriting signature and a), 15(a) to (c) then Officer initials of accused No.1 35(a) 58(a), of Bank of and PW.14 on loan (b), 103(a) to India, documents, pre and post (e) 116(c) to Whitefield loan sanction reports etc., (e) and Branch. Ex.D.20 PW.21 CW.23 Sri. H. Furnishing of certain Ex.P.165 (c) Ravindra documents to CBI and P.267, 267(a) Kamath, then regarding inspection of Plot 268, 268(a) to Chief No.120 of KIADB, (d), and Manager of Industrial Area, Malur i.e., Ex.D.4(a) Bank of India Ex.P.165 mahazar.
PW.22 CW.25 Sri. K. Search of the premises of Ex.P.151 (c), Suryanaraya accused No.2 and seizure 152 (a) and (b) na Rao, of the documents and to 157(a) and 12 Spl.CC.180/2013 Retired identification of the (b).
Manager, signature and witness.
SBI, Regional
Business
Office.
PW.23 CW.31 Sri. K.Y. Registration of the case Ex.P.269,
Guruprasad, and entire investigation P.123(c), IO, conducted. 124(c), 135(c), 171(b), 270 to 274, 272(a) and (b), 165(d), P.275, and Ex.D.21 and D.4(b).
PW.24 CW.19 Sri. K. Internal investigation Ex.P.274 (a) Mohanan, Sr. conducted with regard to Manager, the loan account of Investigation, accused No.3 to 8 and Bank of India, submission of report as to fraud committed in the said transaction.
7. After prosecution side evidence, the statement of the accused persons was recorded as provided under Section 313 of the Cr.P.C. The accused persons have denied the incriminating circumstances found in the evidence of the prosecution and they have also filed written statement under Section 313(5) of the Cr.P.C., and accused No.2 to 5 and 7 have also filed additional statement on their behalf.
8. Defence Evidence:
The accused persons have not placed any oral evidence on their behalf, but got marked as many as 23 documents as per Ex.D.1 to D.21 and Ex.P.276 and P.277 during cross-examination of the prosecution witnesses by tendering the same.
13 Spl.CC.180/2013
9. Arguments:
Heard the argument of Smt. K.S.Hema, the learned Senior Public Prosecutor for CBI and the learned counsels Sri.K.R.Krishna Murthy for accused No.1 and Sri.T.Prakash for accused Nos.2 to 5, 7 and 8. The learned Sr Public Prosecutor has also filed calender of prosecution witnesses and evidence and written arguments with citations. The learned defence counsels have also filed detail written synopsis / arguments with citations.
10. Submission of the learned Senior Public Prosecutor is as under;
10(a) The learned Senior Public Prosecutor Smt.K.S. Hema, vehemently argued explaining the facts of the case. Relying on oral and documentary evidence, meticulously argued referring each accused as to how the criminal conspiracy between accused Nos.1 to 8 is to be gathered, how they cheated the Bank and caused wrongful loss to the Bank and obtained wrongful gain for themselves. She further argued as to creation of false pre-sanction inspection and post-sanction inspection reports, non-existence of the units of accused Nos.3 to 8, submission of false, highly inflated stock statements of accused Nos.3 to 8, procedural violation committed by accused No.1 in collusion with other accused persons, role of the accused No.2 in the matter of getting the cash credit limit sanctioned and disbursed, creating of false documents for the purpose of availing the cash credit and 14 Spl.CC.180/2013 using of the created documents as genuine and availing the cash credit limit under CGTMSE Scheme.
10(b) The learned Senior Public Prosecutor has relied upon the following citations in support of her arguments.
1. (2005) 9 SCC 15 Devendra Kumar Singla Vs. Baladev Krishna Singla
2. (2009) 8 SCC 1 Sudhir Shantilal Mehta Vs. CBI
3. AIR 1991 SC 40 Jahoor and Others Vs. State of UP 10(c) It is vehemently argued by her relying on the citations No.1 and 2 referred above that the said judgments clarified as to what are the ingredients of the offence under Section 420 and Section 120A of the IPC and how they are to be considered under the facts of the particular case. She has also referred to the facts of the present case contending that the evidence placed on record clearly reveals conspiracy between accused Nos.1 to 8 in the matter of granting and disbursing of the cash credit limit in favour of accused Nos.3 to 8 and also cheating of the Bank by non-payment of the same. The evidence on record reveals that from the inception itself, accused Nos.1 to 8 had planned to cheat the Bank and thereby to obtain wrongful gain for themselves. Relying on the last citation, she has submitted that mere delay in setting the criminal law into motion itself is not enough to reject the prosecution case.
15 Spl.CC.180/2013 10(d) It is also argued by her that just because the claim was placed before the CGTMSE and suit was filed for recovery of the due amount against accused Nos.3 to 8, that will not take away the case of the prosecution as the accused persons cannot claim their exoneration from the offence committed on the said basis. Added to that, even if the amount was reimbursed under CGTMSE Scheme, the amount so reimbursed has to be recovered and to be paid to the Government. The civil action taken by the Bank for recovery will not take away the prosecution for criminal offences against the accused persons. The evidence placed before the court clearly establish the conspiracy between accused Nos.1 to 8 to cheat the Bank and in furtherance of the conspiracy, the accused persons have cheated the Bank and caused loss to the tune of Rs.2.82 Crores. It is also submitted by her that the oral and documentary evidence placed before the Court clearly reveals as to creation of false documents particularly, Pre and Post Sanction Inspection Reports, Stock-Statements furnished and using the said documents as genuine to facilitate the sanction and disbursement of cash credit limits involved in this case. The evidence on record clinchingly establish that the accused No.1 being the Chief Manager of the Bank abused his official position to show the undue favour in favour of accused Nos.2 to 8 in the matter of sanction and release of the cash credit limits in favour of accused Nos.3 to 8 and in fact, accused No.2 is the beneficiary of the said cash credit limit.
16 Spl.CC.180/2013 10(e) The learned Senior Public Prosecutor has also brought to the notice of this court with regard to certain undisputed facts on the basis of the materials available on record. Accordingly, prayed for conviction of the accused persons for the charges leveled against them.
11. Argument of the learned counsel for accused No.1:
11(a) The learned counsel for accused No.1 Sri.KRK Advocate narrated the facts of the case and also the facts which are not in dispute. Relying on the oral and documentary evidence placed before this court, the sum and substance of his argument is that; the complaint is filed alleging only irregularity and unfairly fixing the staff responsibility solely on accused No.1, though the loan was sanctioned and disbursed as per the guidelines prescribed by the Bank and RBI. Apart from accused No.1, other employees of the Bank, working at the relevant point of time had also handled the files of accused Nos.3 to 8. There is no allegation of conspiracy against accused No.1 in the complaint. The mistakes/ irregularities occurred while discharging the official duty which would give rise only to civil consequences for which, criminal colour is given to recover the loan due amount.
11(b) It is further vehemently argued by him that, while sanctioning and disbursing the loan, the procedure prescribed by the Bank of India as well as RBI was followed. The sanction, disbursal and documentation relating to the cash credit limits were reported to the 17 Spl.CC.180/2013 credit department of Zonal Office immediately after each stage as per the post-sanction review system applicable and copies of the sanctioned proposals at Branch level were sent to the zonal office for personal review by the Zonal Manager. Apart from that, the Bank itself placed the claim before the CGTMSE as found in Ex.D.13 to 18, wherein, it is clearly declared that the Bank does not suspect any mala-fides or irregularity on the part of the officials handling the account or in the account. It is also brought to the notice of this court that such claim is placed before the authority after submission of the report by the internal investigator of the Bank -PW.24. Added to that, even the Bank has filed recovery suit before the Debt Recovery Tribunal ('DRT' in short), wherein also the Bank has not alleged any fraud against either accused No.1 or against other accused persons in the matter of sanction and disbursement of the loan amount. In this regard, he has drawn the notice of this court on Ex.D.19.
11(c) The learned counsel further vehemently argued that the case of the prosecution is based on the internal investigation report Ex.P.274 by PW.24, but the said report itself creates serious doubt. The said report is not produced along with the complaint. In the investigation report, there is no reference as to claim made before the CGTMSE and the declaration submitted to the Trust and also examination of the Zonal Manager working at the relevant point of time. Further, there is no reference as to examination of the Chief Manager, who had filed the suit before the DRT and also the responsible 18 Spl.CC.180/2013 officer in the Credit Department, who scrutinized the loan sanction and disbursement documents. Though there is a reference as to the examination of the four officers during the internal investigation, the statement given by such officers is not enclosed along with the report. There is no acceptable evidence as to visit of PW.24 to the industrial unit. Hence, Ex.P.274 report cannot be accepted.
11(d) It is further vehemently argued by him that the investigation conducted by the IO is also in prejudicial manner. He has not recorded the evidence of the key officers, who have supervised the loan transactions, who filed the claim before the CGTMSE, who filed the suit before the Debt Recovery Tribunal, one Mr. Sampath, who is said to have informed the Head Office about the irregularity and on whose instruction, internal investigation was initiated and also the auditors and thereby the great prejudice has been caused to the accused No.1.
11(e) The learned counsel by referring to the audit report available at Ex.P.166 to 168 contended that, even in the audit report also there is no any allegation against accused No.1 as to commission of fraud or cheating in the matter of sanctioning and disbursement of cash credit limit in favour of accused No.3 to 8. There is no material to hold that the accused No.1 had sanctioned the loan favouring accused No.2 at his instance. Just because accused No.2 is well known to the accused No.1, 19 Spl.CC.180/2013 being one of the long standing customers of the Bank of India as the (Large Borrowers Division) (LBD) that cannot be a ground for presuming the conspiracy between accused No.1 and 2. It is also argued by him that the non-obtaining VAT Registration Certificate cannot be made much as the products of accused Nos.3 to 8 i.e., button blanks do not attract VAT being the raw material to be supplied to the Export Oriented Unit of accused No.2.
11(f) The learned counsel has also vehemently argued that there is no clarity in the evidence of the prosecution about commencement of the production from the four units functioned in Shed No.120 and in the absence of such clarity, it cannot be inferred that Stock Statements are all bogus. The Bank has not placed e- mail through which Stock Statements were received at Bank. It was PW.14 who was handling the credit portfolio at the Branch and the Stock Statements received from all borrowers were actually handled by her as per the Bank norms and as such, accused No.1 cannot be made liable. The prosecution has not placed clear evidence as to when exactly the units were stopped/ non-functioning. The investigation materials reveal that the units were in existence and production took place. The prosecution has not produced any evidence to show that electricity meter was working through out. Therefore, solely on the meter reading as found in Ex.P.165, in the absence of evidence to show that meter was in working condition, it cannot be accepted that the units were non-existing.
20 Spl.CC.180/2013 Further, accused No.1 had only inspected the location of the proposed industry to be established and as such, it cannot be accepted that he had submitted false pre- sanction inspection report.
11(g) The learned counsel has further argued that there is inordinate delay in lodging the complaint as per Ex.P.1 and no explanation is given for for such inordinate delay even though the internal investigation report was submitted on 10.11.2010. The Bank has adopted double standard and made the accused No.1 as scapegoat for the failed business transaction by picking errors occurred here and there while doing the transaction. It is also submitted by him that the CBI investigation itself was not permissible as the loan sanctioned to accused No.3 to 8 each is within 1 Crore and thereby CBI has no jurisdiction to investigate the matter. In this regard, even he has drawn the notice of this court on the circular issued in that regard. All the six loans, though distinct and different, they are all clubbed only to induct the CBI investigation and thereby to coerce the recovery. Even, no preliminary enquiry was conducted by the CBI before registering the case, which is mandatory as per the CBI manual. It is also submitted by him that there is no sufficient materials and required evidence to establish the offences leveled against the accused No.1, who is already dismissed from the service. Accordingly, on these grounds, urged for acquittal of the accused No.1. In support of his arguments, he has also relied upon the following citations.
21 Spl.CC.180/2013
1. Subramanya Swamy Vs. A. Rajan (2012) 9 SCC 257
2. Desh Deepak Kumar Vihangam @ Deepak Kumar Vs. State of Bihar (2022) 7 SCC 721
3. Samir Sahay @ Sammer Sahay Vs. State of Uttar Pradesh and another (2018) 14 SCC 233
4. Adambhai Suleman Bhai Ajmeri and Others Vs. State of Gujarat (2014) 7 SCC 716
5. (2004) 11 SCC 576 A.S.Krishnan and Others Vs. State of Kerala.
12. Argument of the learned counsel for A.2 to 5 and 7 and 8:
12(a) Relying on the oral and documentary evidence placed before this court, Sri.T.Prakash Advocate meticulously argued as to various defences taken out by accused Nos.2 to 5, 7 and 8. The sum and substance of his argument is that the case of the accused No.2 has to be viewed separately from the case of the other accused persons as the accused No.2 is neither guarantor nor surety nor beneficiary of the cash credit advanced by the complainant-Bank. There is no liability on accused No.2 in favour of complainant Bank towards loan default committed by accused Nos.3 to 8 and he is falsely implicated in this case. Accused No.2 being the Exporter of the finished products of the buffalo and ox horn button blanks to various countries only introduced accused Nos.3 to 8 to the Bank and except that, there is no other role played by him. Further, prior to the loan sanction, accused No.2 had advanced Rs.6 lakhs, Rs.1 22 Spl.CC.180/2013 lakh and Rs.3 lakhs in favour of accused Nos.3 to 5 respectively, for buying the machineries and raw materials. The said amount was repaid by them after loan was released. But, the prosecution is objecting the same by stating that why the loanees had paid money to him being the purchaser of the finished goods from them. The prosecution has conveniently not stated anything about huge payments made by accused No.2 in favour of accused Nos.3 to 8 through various cheques produced before this court as per Ex.P.173, 175, 177, 179, 181, 183, 185, 187, 192, 194 and 196 and so also cash deposited as found in Ex.P.200 and P.254 towards purchasing of semi finished products from them.
12(b) It is further argued by him that accused No.2 had issued cheques in favour of accused Nos.3 to 8 for a sum of Rs.25 lakhs each to clear their bank loan dues but, he could not arrange the sufficient funds in his account. He wanted to help the accused Nos.3 to 8 to clear their loan dues and in that regard, he had issued cheques to them along with letter to the Bank with good intention. However, the prosecution is trying to implicate him in this case by taking the said fact. Further, though the prosecution has alleged that stock statement of the accused Nos.3 to 8 was sent through e-mail of the accused No.2, the prosecution has not produced any evidence to show that he had sent the stock statement through his e-mail. It is further argued that though the prosecution has contended as to seizing of the documents pertaining to accused Nos.3 to 8, as per 23 Spl.CC.180/2013 Ex.P.151, the prosecution has failed to prove the same. No local persons were made as panchas to the said seizure mahazar except the Bank officials which creates doubt and the said mahazar is created for the purpose of this case and hence, the said seizure mahazar loses its importance.
12(c) It is further argued by him that the materials placed before this court by the prosecution are not sufficient to show that accused No.2 had entered into criminal conspiracy either with accused No.1 or with accused Nos.3 to 8 to cheat the Bank as alleged. Accused No.2 had purchased the goods from accused Nos.3 to 8 and exported the same to various other countries, but due to recession in the year 2009-10, 2010-11, he did not get the payment and thereby suffered severe financial loss which also affected accused Nos.3 to 8 as well. Hence, accused No.2 has honestly tried to clear the loan accounts of accused Nos.3 to 8 by issuing cheque for Rs.25 lakhs each in their favour, but he could not arrange the funds. He has also made his best effort for one time settlement, but the Bank did not come forward to issue sanction letter for one time settlement. Hence, accused No.2 had no intention whatsoever to cheat the Bank and there was no criminal conspiracy. The evidence placed before this court by the prosecution does not prove the necessary ingredients of the alleged offences.
12(d) It is also vehemently argued by the learned counsel that since the loan granted to each unit is less than Rs.1 Crore and as per the evidence, each loan 24 Spl.CC.180/2013 transaction is separate and independent, the CBI has no jurisdiction to investigate the matter as per Circular dated 17.08.2010 or Circular dated 12.06.2012. The loans were clubbed only with an intention to confer jurisdiction to CBI and thereby to recover the due amount. Further, there is inordinate delay in filing the complaint and no reason was shown for an inordinate delay.
12(e) It is his further argument that the complainant-Bank had initiated separate proceedings before the DRT against the accused Nos.3 to 8 and in the said proceedings, the Bank had never made any allegation of the criminal conspiracy, fraud and causing wrongful financial loss to the complainant-Bank. He had also taken notice of this court on Ex.D.13 to D.18 contending that even the Bank had filed claim before the Government claiming 70% of the loan amount under CGTMSE Scheme, wherein also there was no allegation against any of the accused persons alleging the criminal conspiracy, fraud or collusion between them to cause financial loss to the complainant-Bank. On the other hand, it is specifically stated that there was no any fault or negligence on the part of the officers of the Bank in conducting the account. Therefore, the case of the prosecution cannot be accepted. It is also submitted by him that there are four layers of audit inspection and all the audit reports do not say anything about the illegalities, fraud, conspiracy etc., The Bank after exhausting all their remedies for recovery of the loan, as 25 Spl.CC.180/2013 a last resource, has initiated criminal proceedings against the accused persons by giving the colour of criminal nature to the civil proceedings in order to give reason to their senior officers.
12(f) It is further argued by him that the investigation conducted by the IO is also not in accordance with law. PW.14, who is stated to be an approver is also created for the purpose of prosecution of this case as there is no prima-facie material against any of the accused persons. In this regard, he has also drawn the notice of this court with regard to the evidence of PW.14 stating that she has given evidence that that she has not committed any mistake in recommending the loan and did not disown her inspection report. While considering her evidence, the court has to take most caution and her evidence cannot be accepted for any purpose. Further, the loanees had withdrawn the loan amount in cash as it is cash credit facility and utilized the same for buying the raw material and repaid the portion of the loan and they have repaid around Rs.60 to Rs.70 lakhs each in favour of the Bank as found in Ex.P.16, 38, 59, 83, 104 and 117. Further, there is no prima-facie evidence to prove the allegation of the prosecution that stock statements are inflated and they are false and evidence of PW.14 disprove the said allegation. The evidence placed before this court also show that the units were in existence and they were running the business.
26 Spl.CC.180/2013 12(g) It is further vehemently argued that the evidence placed before this court clearly shows that, accused Nos.3 to 5, 7, 8 and deceased accused No.6 had no intention whatsoever to cheat the bank. They were the bona-fide loanees and tried their level best to run their business, but could not continue the same and became defaulters. They are not willful defaulters. Each of them had paid Rs.6.5 lakhs towards one time settlement which shows the accused persons have tried their level best to close their loan account through one time settlement, but the Bank did not come forward to accept the same. The prosecution has not proved the necessary ingredients of the alleged offences against accused persons and thereby, failed to prove the charges framed against them. The prosecution has suppressed the evidence relevant to the determination of the guilt or innocence of the accused and even the prosecutor has failed to present the complete picture before the court being partial to the prosecution side. Accordingly, on these grounds, prayed for acquittal of accused Nos.2 to 5, 7 and 8.
12(h) The learned counsel has also relied upon the following citations in support of his arguments.
1. (2019) 9 SCC 148 Satishchandra Ratanlal Shah Vs. State of Gujarat and another.
2. Crl.P.No.4346/2022 (Vilas Deore vs State of Karnataka) on the file of our Hon'ble High Court of Karnataka disposed of on 15.07.2022.
3. AIR 2021 SC 5298 (Mitesh Kumar J. Sha Vs. State of Karnataka and Others) 27 Spl.CC.180/2013
4. Crl.A.No.207/2011 C/W 203/2011 Sri. H.A.Seetharam Vs. State by Dy.SP.CBI ACB.(Un reported judgment of our Hon'ble High Court disposed of on 18.12.2020)
5. 2003 (11) SCC 527 (Suchand Pal Vs. Phani Pal and Another).
6. (2010) 10 SCC 439 (Paramjeet Singh @ Pamma Vs. State of Uttarakhand)
7. (2009) 10 SCC 401 (Dhanpal Vs. State)
8. (2004) 12 SCC 281 (Gilbert Periera Vs. State of Karnataka.)
9. AIR 2002 SC 1949 (Bijoy Singh and another Vs. State of Bihar.)
10. (2011) 11 Supreme Court Cases 724 (Mustkeem @ Sirajudeen Vs. State of Rajasthan)
11. AIR 1957 Supreme Court 389 (The State of Bijar Vs. Ram Naresh Pandey and another.)
12. 1986 Crl.L.J.383 (Prabhu Dayal Gupta Vs. State)
13. On bestowing the careful thought to the arguments addressed, rulings relied and on carefully scrutinizing the entire oral and documentary evidence placed before this court, the points that would arise for consideration are;
1. Whether the prosecution proves beyond all reasonable doubt that during the years 2008 and 2009, the accused Nos.1 to 5, 7 and 8 along with deceased accused No.6 had 28 Spl.CC.180/2013 conspired together to do an illegal act by corrupt and illegal means to avail cash credit limits ranging from Rs.46 lakhs to Rs.48 lakhs under CGTMSE Scheme in favour of accused Nos.3 to 8 by abusing the official position of accused No.1, who was a public servant and working as the Chief Manager of Bank of India, Whitefield Branch, Bengaluru during the said period, without any public interest by cheating the said Bank and also by committing an act of forging the documents and using the same as genuine and thereby committing the criminal mis-conduct with an intention to cause wrongful loss to the said Bank and corresponding pecuniary benefit for themselves and thereby committed the offence punishable under Section 120B Read With Section 420, 467, 471 of the IPC and Section 13(2) Read With Section 13(1)(d) of the PC Act ?
2. Whether the prosecution proves beyond all reasonable doubt that, during the above said period, the accused No.1 in furtherance of the conspiracy with accused Nos.2 to 5, 29 Spl.CC.180/2013 7, 8 and deceased accused No.6, by abusing his official position as Chief Manager of Bank of India, Whitefield Branch, Bengaluru, sanctioned cash credit limit under CGTMSE Scheme instead of granting the term loan in favour of non-existing units of accused Nos.3 to 8, ranging from Rs.46 lakhs to Rs.48 lakhs towards working capital for manufacturing the button blanks from buffalo/ ox horns in irregular manner without giving importance to their past records and experience in the business etc., only on the basis of the acquaintance of accused No.2 and disbursed the cash credit sanctioned to accused Nos.3 to 5, 7, 8 and deceased accused No.6 in 2 to 3 installments in cash, contrary to the requirements of the borrowers without ensuring the creation of assets by the borrowers out of the disbursed loan amount and without verifying the end use of the released amount by conducting proper post sanction inspection and further, he accepted the false inflated stock statement and created false pre-
sanction inspection report and
30 Spl.CC.180/2013
thereby the accused persons
dishonestly and fraudulently induced the said Bank to part with the money in favour of accused Nos.3 to 5, 7, 8 and deceased accused No.6 and cheated the bank and caused wrongful loss to the said bank to the tune of Rs.2.82 crores and thereby committed the offence punishable under Section 420 Read With Section 120B of the IPC ?
3. Whether the prosecution further proves beyond all reasonable doubt that, during the above said period, in furtherance of the conspiracy between the accused Nos.1 to 5, 7, 8 and deceased accused No.6 to cheat the Bank, the accused No.1 has given false pre-sanction inspection report in respect of the units of the accused Nos.3 to 8 and sanctioned cash credit limits in their favour and also directed Smt. Kalpana Raaj Nair (PW.14), the Manager of the Branch to give report favouring accused Nos.3 to 8 and accused Nos.3 to 8 had submitted false and highly inflated Stock Statement to the Bank to get loan sanctioned and released 31 Spl.CC.180/2013 and thereby accused Nos.1 to 5, 7, 8 and deceased accused No.6 had committed the offence punishable under Section 467 Read With Section 120B of the IPC ?
4. Whether the prosecution has further proves beyond all reasonable doubt that, in furtherance of the criminal conspiracy to cheat the Bank, the accused Nos.3 to 8 gave loan application to the Branch even though their units were not in existence and accused No.1, knowing fully well that the units of accused Nos.3 to 8 were not in existence, gave false pre-sanction inspection report as if the units were in existence and functioning and accused Nos.3 to 8 gave false and highly inflated stock statement through e-mail of accused No.2 in respect of their units knowing fully well that the same are false and accused No.1 knowing fully well and having reasons to believe that they are not genuine documents, used the said false documents as genuine and sanctioned and released the cash credit limits ranging from Rs.46 lakhs to Rs.48 lakhs in favour of 32 Spl.CC.180/2013 accused Nos.3 to 8 to cheat the bank and thereby accused Nos.1 to 5, 7, 8 and deceased accused No.6 had committed the offence punishable under Section 471 Read With Section 120B of the IPC ?
5. Whether the prosecution further proves beyond all reasonable doubt that, accused No.1, being the public servant, in his capacity of the Chief Manager of Bank of India, Whitefield Branch, Bengaluru, during the above said period, in conspiracy with accused No.2 to 5, 7, 8 and deceased accused No.6 by abusing his official position sanctioned and disbursed cash credit limit in favour of accused Nos.3 to 8 ranging from Rs.46 lakhs to Rs.48 lakhs under CGTMSE Scheme by corrupt and illegal manner and thereby caused wrongful loss to the Bank to the tune of Rs.2.82 Crores and corresponding pecuniary advantage to himself and accused Nos.2 to 8, without any public interest and thereby committed the offence of criminal misconduct as defined under Section 33 Spl.CC.180/2013 13(1)(d) and punishable under Section 13(2) of the PC Act ?
6. What order ?
14. The above points are answered as under;
Point No.1 : In the affirmative.
Point No.2 : In the affirmative.
Point No.3 : In the negative Point No.4 : In the negative.
Point No.5 : In the affirmative.
Point No.6 : As per the final order for the following;
REASONS
15. Point Nos.1 to 5 : Since these points are inter- linked, to avoid repetition and for the sake of brevity, they are taken together for consideration.
15(a) Before considering the rival contentions and facts in issue, it is appropriate to note down the undisputed facts which can be gathered from the material placed before the court, which will be more convenient and helpful in analysing and appreciating the evidence placed before this court with regard to the respective contentions of the parties.
16. Undisputed Facts:
a) The accused No.1 Sri. RVS Ramesh, was working as a Chief Manager of Bank of India Whitefield Branch, 34 Spl.CC.180/2013 Bengaluru from 09.06.2008 to 17.12.2009 and was a public servant.
b) The accused No.1 had worked in Bank of India Kakinada Branch from 05.06.2001 to 24.05.2003 and accused No.2 is well acquainted with accused No.1.
c) The accused No.1 was suspended from the service with effect from 10.08.2011 and thereafter, dismissed from the service on 01.10.2012 on the basis of the departmental enquiry held against him and thereby he was ceased to be a public servant as on the date of filing of the Charge-Sheet. Hence, the sanction under Section 19 of the PC Act to prosecute him is not required. The personal file or documents of accused No.1 produced before the court as per Ex.P.3 is not in dispute.
d) PW.14 Smt. Kalpana Raaj Nair was working as public servant in the capacity of the Manager at Bank of India Whitefield Branch from 07.08.20026 to 26.02.2010 and she was next to the Chief Manager and working under accused No.1 during the period from 09.06.2008 to 17.12.2009.
e) PW.14 Smt. Kalpana Raaj Nair was originally not shown as accused in the FIR filed, but she was added as accused No.9 in this case on 30.10.2012, during the investigation and thereafter, she was tendered pardon by order dated 08.07.2013 and thereby she is shown as prosecution witness (CW.28) in the Charge-Sheet filed on 08.08.2013.
35 Spl.CC.180/2013
f) CW.1 Sri. Charan Singh, the Chief Zonal Manager of Bank of India, Karnataka Zone filed the complaint/ First Information Statement as per Ex.P.1 before the CBI/ACB on 03.02.2012 on the basis of which, the case was registered against accused Nos.1 to 8 as per Ex.P.269 in RC No.3(A)/2012 on 23.02.2012.
g) Accused No.2 Dr. Badigantla Srinivasa Rao is from Kakinada, Andhra Pradesh and he is a Proprietor of M/s. Shweta Exports, Kakinada and Managing Director of M/s. Deb Fashion India Pvt Ltd., Visakapatnam and both companies were engaged in manufacturing and export of buffalo/ ox horn products. M/s. Swetha Exports had received Star Export House Certificate from the Director General of Foreign Trade (DGFT) Government of India. The Bank of India, Kakinada Branch had granted huge loan in favour of accused No.2 and he is one of the well known customers of the Bank of India since long period and belonged to Large Borrower Division (LBD). In this regard, the prosecution has examined the witness as per PW.11 and got marked the documents as per Ex.P.147 to P.149 which are not in dispute. The prosecution has also produced statement of Account relating to M/s. Swetha Enterprises, as per Ex.P.271 which was produced before the IO under Ex.P.270. The accused No.1 has produced Memorandum of Sanction as per Ex.D.1 and D.2 to show the huge amount of loan granted to the units of accused No.2.
h) The accused Nos.3 to 8 are from Andhra Pradesh and they were suppliers of the buffalo/ ox horns and 36 Spl.CC.180/2013 button blanks to the units of accused No.2, who in turn, exports the final products of the horns to the foreign countries.
i) The accused Nos.3 to 8 were the proprietors of M/s. Satyam Industries, M/s. Mallikarjuna Industries, M/s. Srinivasa Industries, M/s. Venkateswara Industries, M/s. S.K.Valli Industries and M/s. Vinayaka Enterprises respectively and they applied for cash credit limits towards working capital to the Bank of India Whitefield Branch, Bengaluru. In this regard, the prosecution has produced loan application filed by to each unit as per Ex.P.5, P.25, P.47, P.72, P.96 and P.109 which are not in dispute.
j) The accused No.2 is the introducer for accused Nos.3 to 8 to the Bank of India, Whitefield Branch, Bengaluru.
k) On the basis of the loan application of accused Nos.3 to 8, the accused No.1, being the Chief Manager of Whitefield Branch, sanctioned the cash credit limit of Rs.47 lakhs each in favour of accused Nos.3 and 4 on 10.12.2008, Rs.46 lakhs in favour of accused Nos.5 and 6 on 17.10.2008 and Rs.48 lakhs in favour of accused Nos.7 and 8 on 17.04.2009 under CGTMSE Scheme towards working capital and disbursed the said amount in their favour.
l) The accused Nos.3 to 8 had committed the default in return of the cash credit sanctioned and cash credit account of accused Nos.3 to 8 became NPA on 37 Spl.CC.180/2013 30.11.2011 as found under Ex.P.16, P.38, P.59, P.83, P.104, P.117 and P.268 account statements.
m) The button manufacturing activities comes under the SME Scheme and it is Priority Sector for the bank. As per the guidelines of the Central Government and RBI, the Bank has to perform well in the Priority Sector and minimum 40% lending should be towards Priority Sector. If there is any shortfall in the minimum percentage of lending to priority sector, it will attract penalty from RBI.
n) The accused No.2 through his company M/s. Swetha Exports paid huge amounts in favour of accused Nos.3 to 8 through cheques as well as by depositing amount through bank. In that regard, the prosecution has produced various cheques and bank challans as per Ex.P.173 to P.254 and there is no dispute in that regard.
o) Issuance of undated letter by accused No.2 in favour of complainant Bank and issue of cheques in favour of accused Nos.3 to 8 for various amounts towards payments to the outstanding balance amount of their account with complainant-Bank and dishonour of the said cheques for want of sufficient funds in his account. In this regard, the prosecution has produced undated letters written by accused No.2 and cheques and bank endorsements as per Ex.P.255(a) to(c), 256(a) to (c), 257(a) & (b) to 266(a) & (b).
p) Cash Credit Limit was granted to accused No.3 to 8 under CGTMSE Scheme and under the said scheme, 75% of the loan amount would be reimbursed by the 38 Spl.CC.180/2013 CGTMSE Authority and the said amount has to be repaid to the Authority after recovery of the loan amount by the Bank from the borrowers. In this regard, the prosecution has produced Master Circular issued by the Head Officer Bank of India dated 08.10.2001 as per Ex.P.121 and also two other Circulars as per Ex.P.120 and P.122.
q) The Bank of India, Whitefield Branch, had applied to CGTMSE Trust for reimbursement and 70% of the loan amount was reimbursed by CGTMSE in favour of the Bank. In this regard, the accused have produced the documents as per Ex.D.13 to D.18 i.e., Application with its enclosures filed by the Bank before CGTMSE for reimbursement of the 75% of the loan. Even, the account statement of the accused Nos.3 to 8 produced before the Court by the prosecution also reveal as to the receipt of certain amount from CGTMSE by the Bank.
r) The Bank of India had initiated recovery proceedings against accused Nos.3 to 8 before the DRT. In that regard, the accused have produced copy of the application dated 20.09.2010 filed by the Bank before DRT as against accused No.5 M/s. Srinivasa Industries as per Ex.D.19.
s) Plot No.120 in KIADB Industrial Area at Malur was allotted to Smt.Nagamani, the Proprietor of M/s. Venkatadri Enterprises and Sale Deed was executed by KIADB in respect of said plot in her favour. The prosecution has produced the copy of the said Sale Deed in Ex.P.156 file and the same is marked as Ex.D.9. In 39 Spl.CC.180/2013 that regard, the prosecution has examined the Chief Executive Officer of the KIADB as PW.10 and got marked the letter issued by him as per Ex.P.146. The prosecution has also examined the allottee of the said Plot Smt.Nagamani as PW.16 and allotment of the Plot No.120 in favour of PW.16 is not disputed by the accused persons. Accused Nos.3 to 5 and 7 and 8 claim that accused Nos.3, 4, 7 and 8 had taken the said shed on lease from Smt. Nagamani. The said plot or any portion of it was not allotted to accused Nos.3 to 8 by KIADB. In this regard, the prosecution has produced letter dated 27.03.2012 issued by KIADB as per Ex.P.146. Even, it is not the case of the accused Nos.3 to 8 that the said plot was allotted to them by KIADB. On the other hand, it is clear that the accused Nos.3, 4, 7 and 8 claims that the said shed was taken by them on lease and the copy of the said Lease Deeds are available in Ex.P.131 to P.134 and originals are found in Ex.P.153 and P.155 relating to accused Nos.3 and 4.
t) The Shed No. Super Mini (SM) 25 and SM 26situated at KSSIDC Industrial Area, Malur were allotted to one Sri. Munivenkatappa of Malur Taluk and no sheds were allotted to accused Nos.3 to 8. Similarly, Shed No.28 was not allotted to accused No.3 and SM No.120C was not in existence in KSSIDC Industrial Area, Malur Taluk. In this regard, there is evidence of PW.15 and the prosecution has produced the documents as per Ex.P.160 to 164, which are not disputed. It is also not the case of the accused Nos.3 to 5, 7 and 8 that they were allotted 40 Spl.CC.180/2013 with any sheds by KSSIDC in Industrial Area at Malur. It is also noticed that accused Nos.5 and 6 claimed the existence of their units in Shed No.SM 25 and 26 on Lease Agreement with one Sri. S. Prakash and copy of the Lease Deeds are found in Ex.P.140 and P.141. The original Lease Deeds are found in Ex.P.152 and P.154.
u) The accused Nos.3 to 8 had not obtained any consent from the Pollution Control Board to start their units in any of the plots of the KIADB or Sheds of KSSIDC. In that regard, there is evidence of PW.7 and the prosecution has produced the documents as per Ex.P.136. It is also not the case of the accused Nos.2 to 5, 7 and 8 that accused Nos. 3 to 8 had taken consent from the Pollution Control Board either prior or after commencement of their units.
v) That the accused Nos.3 to 8 have filed application for establishing their units/ industry in Form No.1 and 2 before the office of the Directorate of Industries and Commerce and they were given with Entrepreneurs Memorandum Part-I, Part-II acknowledgment by the Joint Director of District Industries Centre, Kolar District. In that regard, the prosecution has examined two witnesses i.e., PW.5 and PW.6, who are the Officers of the Office of the Joint Director, District Industries Centre, Kolar and produced the file with applications and acknowledgments issued by the Joint Director of District Industries Centre as per Ex.P.125 to P.134. The applications, acknowledgments and the signature of the Joint Director found in the acknowledgments are marked 41 Spl.CC.180/2013 as Ex.P.125(a) to (c) to Ex.P.134(a) to (c) respectively. The said documents are produced before the IO under Ex.P.135 and these documents are not in dispute.
w) The accused Nos.3 to 8 had applied for registration of their Proprietary concern under Karnataka Value Added Tax Act (KVAT Act) 2003 and the units of accused Nos.3 to 6 were registered and issued with VAT Certificate. The application submitted on behalf of accused No.7 M/s. S.K.Valli Industries and accused No.8 M/s. Vinayaka Enterprises were not registered under the KVAT Act, 2003 due to procedural lapse. Subsequently, since the units of accused Nos.3 to 6 were not functioning, by issuing notice, the Asst. Commissioner had cancelled the VAT registration of the said Units under KVAT Act, 2003. In this regard, the prosecution has placed the evidence of PW.8 and produced the documents as per Ex.P.138 to P.143, which are not disputed. Ex.P.137 is the letter under which, Ex.P.138 to P.143 were produced before the IO.
x) The accused Nos.3 to 8 have not taken any electric connection or supply in their names to plot No.33 or to shed No.25, 26 and 28 or in respect of Plot No.120. In that regard, the prosecution has placed evidence of PW.9 and also produced the documents as per Ex.P.144 and P.145 which are not in dispute. Further, it is not the case of the accused No.3 to 5, 7 and 8 that they have taken electric connection to the said sheds or plots in their names.
42 Spl.CC.180/2013 y) The accused have not disputed the pre-sanction inspection and post-sanction inspection conducted by accused No.1 and PW.14 and their report produced before the court as per Ex.P.7, P.26, P.48, P.73, P.97, P.110 (pre-sanction Inspection Reports) and Ex.P.12, P.56, P.80, P.100, P.113 (post-sanction Inspection Reports).
z) The accused have not disputed the contents of the loan applications, borrowers file in Form No.CBD 23, letter issued by accused Nos.3 to 8 to the Bank, the loan proposals, On Demand Promissory Notes issued in favour of the Bank, letter issued by the Bank to the accused Nos.3 to 8, loan amount drawn in cash through self- cheques by accused Nos.3 to 8, cheques issued by accused Nos.3 to 5 in favour of accused No.2 and accused No.6 for various amounts, amount paid by accused No.2 in favour of accused Nos.3 to 8 through cheques and bank deposits, the contents of the statement of the stock furnished to the Bank, account opening form relating to cash credit account of accused Nos.3 to 8, statement of account relating to loan account of accused Nos.3 to 8 and also the account statement relating to the unit of accused No.2. In that regard, the prosecution has produced numerous documents as exhibits before this court and all those documents are not disputed.
17. In view of the above undisputed facts, the evidence placed before this court relating to the said facts requires no much consideration.
43 Spl.CC.180/2013
18. With the above undisputed facts, now the case of the prosecution and contentions of the accused persons are to be analysed. As already stated, the prosecution has prosecuted the accused persons for the offences punishable under Section 120B, Sections 420, 467, 471 R/w. Sec.120B of the IPC and for the offence under Section 13(1)(d) punishable under Section 13(2) of the PC Act. It is noticed that major allegations are against accused Nos.1 and 2 to commit the offence alleged and accused No.2 is stated to be the actual beneficiary of the offence committed. It is needless to say that the burden of proving the guilt of the accused for the alleged offences beyond reasonable doubt is on the prosecution. It is the cardinal principle of criminal law that every person is presumed to be innocent until the contrary is proved. Therefore, it goes without saying that the entire burden is on the prosecution to prove the guilt of the accused persons for the alleged offences beyond all reasonable doubt.
19. The Hon'ble Supreme Court in the relied decision reported in (2003) 11 SCC 527 held that - "The prosecution can succeed by substantially proving the version it alleges. It must stand on its own legs and cannot take advantage of the weakness of the defence case". It is also held in the said decision "that the primary concern of the court should be to prevent the miscarriage of justice - if two views are possible, one which favours the accused should be preferred". The 44 Spl.CC.180/2013 same view is also taken in another relied decision reported in (2009) 10 SCC 401.
20. In another relied decision reported in (2010) 10 SCC 439, the Hon'ble Apex Court has held that, "the law does not permit the court to punish the accused on the basis of a moral conviction or suspicion alone. The burden of proof in criminal trial never shifts and it is always the burden of the prosecution to prove its case beyond reasonable doubt on the basis of the acceptable evidence. In fact, it is a settled principle of criminal jurisprudence that more serous offence, the stricter the degree of proof required, since a higher degree of assurance is required to convict the accused".
21. In order to prove the guilt of the accused persons, the prosecution has to prove all the necessary ingredients of the offences leveled against the accused persons beyond all reasonable doubt. Therefore, for better understanding and appreciation of the evidence on record, it is just and proper to refer the ingredients/ elements necessary to constitute the offence leveled against the accused persons.
22. Section 120A gives definition of criminal conspiracy and Section 120B of the IPC provides punishment for committing the criminal conspiracy. Under Section 120-A, the criminal conspiracy is defined as under;
When two or more persons agree to do or cause to be done,-
45 Spl.CC.180/2013 (1) An illegal act; or (2) an act which is not illegal, by illegal means, such an agreement is designated a criminal conspiracy.
Provided, no agreement except an agreement to commit an offence shall amount to a criminal conspiracy unless some act besides the agreement is done by one or more parties to such agreement in pursuant thereof.
23. On going through the above provision, it is clear that the following are the necessary ingredients to constitute the criminal conspiracy.
(i) There should be an agreement between the parties who are alleged to conspire.
(ii) Such agreement should be either for doing an illegal act or for doing an act by illegal means.
24. The above provision does not contemplate the agreement shall be in writing. Therefore, the agreement may be express or implied or in part express or implied. The agreement is the gist of the offence. In order to constitute a single general conspiracy, there must be a common design and common intention of all to work in furtherance of common design. It is also clear that the definition of the conspiracy under Section 120-A excludes 46 Spl.CC.180/2013 an agreement to commit the offence from the category of such conspiracy, in which it is necessary that the agreement should be followed by some act. The essence of the offence of criminal conspiracy is the fact of combination by agreement. The conspiracy arises and the offence is committed as soon as the agreement is made and the offence continues to be committed so long as the combination persists. It is clear that in a criminal conspiracy, meeting of mind of two or more persons for doing an illegal act is a sine-qua-non. In this regard, this court is also being guided by the decision of the Hon'ble Supreme Court reported in 2002 SCC (Cri) 1734 in the case of Mohd. Khalid Vs. State of West Bengal.
25. In this regard, the learned learned Senior Public Prosecutor has relied on the judgment of the Apex Court, reported in (2009) 8 SCC 1, wherein, the necessary ingredients of the offence under Section 120A of the IPC are clearly stated by referring the decision of K.R.Purushottam Vs. State of Kerala (2005) 12 SCC 631. Further, in the decision relied by the learned counsel for accused No.1 reported in (2022) 7 SCC 721, the Hon'ble Supreme Court has considered the ingredients and standard of proof for conviction under Section 120B of the IPC. In the said decision, the Hon'ble Supreme Court has also considered various other decisions including Mohd Khalid Vs. State of West Bengal and another decision reported in (2012) 9 SCC 512 and other cases. Further, in another relied decision, reported in (2012) 9 47 Spl.CC.180/2013 SCC 257, the Hon'ble Supreme Court has considered the provisions of Sections 120A and 120B of the IPC.
26. So far as Section 420 of the IPC is concerned, first we have to refer Sec.415 of the IPC, which provides definition of cheating and reads as under;
"Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat". Explanation : A dishonest concealment of fact is a deception with the meaning of this section.
27. On reading of the above provision, it is clear that, the necessary ingredients of cheating are ;
(1) deception of any person ;
(2)(a) fraudulently or dishonestly inducing that person to deliver any property to any person or to consent that any person shall retain any property ;
(b) intentionally inducing that person to do or omit to do anything which he would 48 Spl.CC.180/2013 not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property.
28. Now the provisions of Section 420 of the IPC are analysed, it provides as under:
"Whoever cheats and thereby dishonestly induces person deceived to deliver to any property to any person or to make alter or destroy the whole or any part of valuable security or any thing which signed or sealed, and which is capable of being converted into valuable security shall be punished with imprisonment of either description for a term which may extend to 7 years, and also shall also be liable to fine".
29. From the above provision, it is clear that, in order to constitute the offence punishable under section 420 of the IPC, the following ingredients has to be proved/complied.
a) there must be a deception i.e. the accused must have deceived someone.
b) that by the said deception, the accused must induce a person to deliver any property or to make, alter or destroy whole or part of the valuable security 49 Spl.CC.180/2013 or anything which is signed or sealed and which is capable of being converted into the valuable property.
c) that the accused did so dishonestly.
30. In this regard, this court is being guided by the decision relied by the learned Senior Public Prosecutor, reported in (2005) 9 SCC 15, wherein the Apex Court specifically discussed as to necessary ingredients of Section 415 and 420 of the IPC. In the said decision, Hon'ble Supreme Court has referred the observation made in Shivanarayana Kubra Vs. State of Madras, AIR 1967 SC 986 wherein, it is held that "it is not necessary that a false pretense should be made in express words by the accused. It may be inferred from all the circumstances including the conduct of the accused in obtaining the property. In the true nature of the things, it is not always possible to prove the dishonest intention by any direct evidence. It can be proved by number of circumstances from which, reasonable inference can be drawn."
31. Similarly, in the decision relied on by the learned counsel for accused No.1, reported in (2018) 14 SCC 233, the Apex Court has considered the necessary ingredients to constitute the offence under Section 420 and 415 of the IPC by referring various other decisions and this court is also being guided by the said decision as to necessary ingredients to constitute the offence under Section 415 and 420 of the IPC. As to ingredients 50 Spl.CC.180/2013 of the offence under Section 415 and 420 of the IPC are concerned, the learned counsel for the accused No.2 to 5, 7 and 8 has relied upon the order passed by our Hon'ble High Court in Crl.P.No.4346 of 2022 wherein, our Hon'ble High Court specifically discussed with regard to the necessary ingredients to constitute the offence under Section 415 and 420 of the IPC.
32. The offence punishable under Section 467 of the IPC is concerned, it has to be read along with Section 463 and 464 of the IPC. Section 463 of the IPC gives definition for the offence 'forgery', Section 464 of the IPC deals with making of false documents and Section 467 of the IPC deals with forgery of the valuable security, Will etc., The term 'forgery' is defined under Section 463 of the IPC as under;
"Section 463 : Whoever makes any false document or false electronic record or part of the document or part of the electronic record with an intention to cause damage or injury to the public or to any person or to support any claim or title or to cause any person to part with the property or to enter into any express or implied contract, or with an intent to commit fraud or that fraud may be committed, commits forgery.
Similarly, Section 464 of IPC deals with making a false document or electronic records which reads as under;
51 Spl.CC.180/2013 A person is said to make a false document or false electronic record--
First -- Who dishonestly or fradulently--
(a) makes, signs, seals or executes a document or part of a document;
(b) makes or transmits any electronic
record or part of any electronic
record;
c) affixes any electronic signature
on any electronic record;
(d) makes any mark denoting the
execution of a document or the
authenticity of the electronic
signature,with the intention of
causing it to be believed that such
document or part of document,
electronic record or electronic
signature was made, signed, sealed,
executed, transmitted or affixed by or by the authority of a person by whom or by whose authority he knows that it was not made, signed, sealed, executed or affixed; or Secondly -- Who, without lawful authority, dishonestly or fraudulently, by cancellation or otherwise, alters a document or an electronic record in any material part thereof, after it has been made, executed or affixed with electronic 52 Spl.CC.180/2013 signature either by himself or by any other person, whether such person be living or dead at the time of such alteration; or Thirdly -- Who dishonestly or fraudulently causes any person to sign, seal, execute or alter a document or an electronic record or to affix his electronic signature on any electronic record knowing that such person by reason of unsoundness of mind or intoxication cannot, or that by reason of deception practiced upon him, he does not know the contents of the document or electronic record or the nature of the alteration.
33. On going through the above provisions, it is clear that, in order to constitute the offence of forgery, there should be ;
1. Making of false document or electronic record or part of it.
2. Such making of the false document or electronic record or part of it is with an intention to a. (to cause damage or injury to (I) public or (ii) any person or b. to support any claim or title or c. to cause any person to part with the property or 53 Spl.CC.180/2013 d. to cause any person to enter into express or implied contract or e. to commit fraud or that fraud may be committed.
In order to prove the forgery, the prosecution has to prove the above elements in the crime.
34. The term 'making of the false documents' under Section 464 of the IPC implies that it must be a document or electronic record or part of it, dishonestly or fraudulently made and that should have been made, signed, sealed or executed with an intention of causing belief that it was made or executed by authority of a person who did not make or execute it and with the knowledge that it was not so made or executed.
35. Section 467 of the IPC deals with punishment for forgery of valuable security, Will etc., and it reads as under;
Section 467 : "whoever forges a document which purports to be a valuable security or a Will or an authority to adopt a son or which purports to give authority to any person to make or transfer any valuable security, or to receive the principal, interest or dividends thereon, or to receive or deliver any money, movable property or valuable security or any document purporting to be an acquittance or receipt acknowledging the payment of money or 54 Spl.CC.180/2013 an acquittance or receipt for the delivery of any movable property or valuable security, shall be punished with imprisonment for life or imprisonment for either description for the term which may extend to 10 years and shall also be liable to fine."
36. The above provision makes it clear that in order to constitute an offence under the above provision, there should be two elements. (1) that the accused committed the forgery (2) that such forgery was committed in relation to a document which purports to be, (a) a valuable security or (b) a Will or (c) an authority to adopt a son or (d) which purports to give authority to any person to make or transfer any valuable security or
(e) to receive the principal, interest or dividend thereon or to receive or deliver any money, movable property or valuable security or any document purporting to be an acquittance or receipt acknowledging the payment of money or an acquittance or receipt for the delivery of any movable property or valuable security. In order to bring home the offence under Section 467 of the IPC, the prosecution has to prove the following facts;
(a) that the document has been forged as contemplated in Section 463 of the IPC
(b) that the accused forged the said document
(c) that the accused did so for the purpose of cheating.
55 Spl.CC.180/2013
37. So far as the offence under Section 471 of the IPC is concerned, Section 471 of the IPC deals with using of the forged document or electronic records as genuine and punishment prescribed for it. It reads as under;
"Whoever fraudulently or dishonestly uses as genuine any [document or electronic record] which he knows or has reason to believe to be a forged [document or electronic record], shall be punished in the same manner as if he had forged such [document or electronic record]".
38. On going through the above provision, the necessary ingredients of the said offence are that ;
i) the document or electronic record concerned was forged one to the knowledge of the accused, or is having reason to believe it to be a forged document ; and
ii) the accused used such document/ electronic record as genuine fraudulently or dishonestly.
39. The forged document/ electronic record is defined under Section 470 as -
"a false document or electronic record made wholly or in part for forgery is designated 'a forged document or electronic record."
56 Spl.CC.180/2013
40. In this regard, this court is also being guided by the decision of the Hon'ble Supreme Court reported in (2004) 11 SCC 576, relied by the learned counsel for the accused, wherein, it was held that "the essential ingredients of Section 471 are (i) fraudulent or dishonest use of the document as genuine (ii) knowledge or reasonable belief on the part of the person using the document that it is forged one. The act need not be both dishonest and fraudulent. The use of the document as contemplated by Sec.471 must be voluntary."
41. So far as Section 13 of the PC Act is concerned, it deals with criminal misconduct by the public servant. Admittedly, the accused No.1 was the public servant at the time of the commission of the alleged offence. As already stated, the accused No.1 alleged to have committed the offence under Section13(1)
(d) of the PC Act. In order to bring home the guilt of the accused under Section 13(1)(d) of the PC Act, the prosecution has to establish that ;
(i) the accused being a public servant, by corrupt or illegal means obtains for himself, or for any other person any valuable thing or pecuniary advantage or
(ii) by abusing his official position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage or 57 Spl.CC.180/2013
(iii) while holding the office as public servant, obtains for any other person any valuable thing or pecuniary advantage without any public interest.
42. With the above aspects, now, the evidence on record is to be meticulously analysed so as to determine whether the prosecution has proved all the necessary ingredients of the offences alleged against the accused persons. On going through the prosecution case, it is clear that the major offence alleged against the accused persons is cheating of the Bank in the matter of availment of the loan under CGTMSE Scheme and in that connection the accused persons had also committed the offence of conspiracy, creating of false documents and using the same as genuine and accused No.1 has also committed criminal misconduct. The learned Senior Public Prosecutor has relied upon the evidence of PWs.3, 4, 7 to 10, 13 to 17, 19 to 22 and 24 in support of the case of the prosecution and the remaining witnesses are said to be formal witnesses.
43. The prosecution has examined the complainant / informant Sri.Charan Singh, as PW.1 with regard to lodging of the complaint/ First Information Statement by him. In his evidence, he has stated that accused No.1 was working as Chief Manager of the Whitefield Branch in the year 2008-2009. In the year 2010, the Credit Monitoring Department in the Zonal Office reported irregularities committed by accused No.1 58 Spl.CC.180/2013 in the year 2008-2009 in Whitefield Branch regarding financing of six units. One Sampath, who was the Zonal Manager in the year 2010 reported the matter to the Head Office, Vigilance Department, Mumbai and the Vigilance Department, Head Office Mumbai had ordered an enquiry into the matter by Sri.V.Mohanan against accused No.1 and all the six units financed by him. The said Mohanan had conducted enquiry and gave report and found many irregularities in financing the said units by accused No.1 in the year 2008-2009. He further stated that, on the basis of the said report, the Vigilance Department, Head Office, Mumbai ordered to declare it as fraud and to lodge complaint against accused No.1 and all six units financed by him and against accused No.2 who introduced the said six units to the Whitefield Branch, Bengaluru. Accordingly, he lodged the complaint on 03.02.2012. The complaint filed by him is marked as Ex.P.1 and his signature found therein as Ex.P.1(a). The said witness was thoroughly cross-examined in length with regard to the defence of the accused persons and even, the accused No.1 got marked five documents as per Ex.D.1 to D.5 by confronting the same. In the cross- examination, PW.1 has specifically denied the suggestion put to his mouth that he has filed a false complaint against accused persons since it is difficult to recover the loan amount from the accused persons and also denied that he filed the complaint without properly verifying and scrutinizing the documents. It is pertinent to note that this witness is examined by the prosecution only for the purpose of proving the factum of filing complaint with 59 Spl.CC.180/2013 regard to the crime and not with regard to other aspects. The evidence of PW.1 clearly establish the said fact. Further, even the accused persons have admitted the filing of the complaint by PW.1 on the basis of which, the case was registered. Therefore, the evidence of PW.1 clearly proves the factum of filing of the complaint by him as per Ex.P.1, on the basis of which the case is registered. PW.1 is found to be only a formal witness to say regarding filing of the First Information Statement before the CBI.
44. PW.2 Sri.K.R.Jagannath, was the Sr. Manager of Bank of India, Karnataka Zonal Office, Bengaluru from May, 2010 to July, 2013 and he was examined by the prosecution only with regard to handing over the personal file of the accused No.1 to the IO and through him, the personal file of accused No.2 was marked as Ex.P.3 and seizure memo of the said personal file as Ex.P.2. It is pertinent to note that the accused No.1 has not disputed Ex.P.3 and also handing over the same by PW.2 to the IO. Therefore, PW.2 is found to be a formal witness for handing over the personal file of accused No.1 to the IO and the said fact is proved by his evidence.
45. PW.3 Smt. S. Lakshmi Chatra, who was the Manager (Administration and Service) Bank of India, Whitefield Branch, Bengaluru from June, 2011 to September, 2013. In her evidence, she has stated as to production of various documents before the IO under the instruction of zonal office and the prosecution has got 60 Spl.CC.180/2013 marked seizure memo of the documents as per Ex.P.4 and the documents produced by her relating to the loan transactions of accused Nos.3 to 8 and three circulars as per Ex.P.5 to P.122. Except production of the documents and identifying the same, she has not stated anything about factual aspects of the case in her examination-in- chief. Therefore, PW.3 is also found to be a formal witness on behalf of the prosecution. It is also pertinent to note that the accused persons have not disputed the documents marked by PW.3 during her evidence and it is noticed that the contents of the said documents are not disputed. However, the learned counsels for the accused persons cross-examined the said witnesses in support of their defence and got marked the portion of her statement given to the IO as per Ex.D.6 and D.7, which she has admitted.
46. PW.4 Sri. M.G.Kumar Swamy, who was the Asst. General Manager of State Bank of Mysore, Region II from 2011 to 2014 and the prosecution has examined the said witness in connection with the mahazar conducted by the IO with regard to Shed No.25 and 26 of KSSIDC, Malur and through him, got marked the mahazar as Ex.P.123 and his signature as per Ex.P.123(a). In his evidence, he has specifically stated as to his visit along with the CBI Officers to the shed No.25 and 26 of the KSSIDC, Malur and opening of the said sheds and the said sheds were used to store the horns of the buffaloes. He also deposed that there were no activities carried out in those sheds and drawing of the mahazar in that 61 Spl.CC.180/2013 regard. Though the learned counsel for accused Nos.2 to 8 has cross-examined the said witness, which was also adopted by accused No.1, nothing much was elicited from his mouth to disbelieve his evidence. PW.4 has specifically denied the suggestion that they have not gone to shed No.25 and 26 of the Industrial Area at Malur and not observed anything in the spot. He has also denied the suggestion that Ex.P.123 was written in SBM, Malur and their signatures were taken. He has specifically denied that activities were going on in two sheds.
47. PW.5 Sri. Ansar Pasha, is the Superintendent of the Office of the Joint Director, District Industries Centre and the prosecution has examined him with regard to the application filed by accused Nos.3 to 8 to DIC for issuance of Entrepreneurs Memorandum (EM) Part-I, Part-II and issuance of the same in favour of accused Nos.3 to 8. In fact, he is only a formal witness to produce the said documents at the direction of the Joint Director on the request of the IO. Through him, the prosecution has got marked the files relating to accused Nos.3 to 8 as per Ex.P.125 to P.134, which contains application, EM Part-I Part-II, issued in favour of accused Nos.3 to 8. The prosecution got marked the seizure memo of Ex.P.125 to P.134 as per Ex.P.124. It is noticed that only EM Part-I was issued in favour of M/s. Srinivas Industries and M/s. Venkateswara Industries and other four units were given with EM Part-I and Part- II. It is pertinent to note that these documents are not disputed by the accused persons and it is not their case 62 Spl.CC.180/2013 that they have not taken EM Part-I and Part-II from the Joint Director of the District Industries Centre as found in Ex.P.125 to P.134.
48. PW.6 Sri. M. Narayana Swamy, is the Enumerator of the office of the Joint Director, District Industries Centre, Kolar and is also a formal witness regarding production of the documents. In his evidence he has stated as to production of Ex.P.131 to P.134, which were produced before the IO under Ex.P.135 seizure memo. As already stated, Ex.P.131 to P.134 and its production before the IO are not in dispute.
49. PW.7 Smt. Viji Karthikeyan, is the Environmental Officer, Karnataka State Pollution Control Board, Regional Office, Bengaluru City East Division, Bengaluru, and the prosecution has examined her to prove that accused Nos.3 to 8 have not taken any consent from the Pollution Control Board to start their units. PW.7 in her evidence deposed that the 17 units mentioned in her letter have not obtained any consent from the Pollution Control Board for establishment or before trial production. The letter issued by her is marked as Ex.P.136 and Ex.P.136(a) is her signature. She has deposed that the accused Nos.3 to 8 had not obtained any consent from Pollution Control Board in any of the plots of KIADB or sheds of KSSIDC. The evidence of PW.7 shows that accused Nos.3 to 8 had not taken any consent from the Pollution Control Board at the time of establishment of their units or before trial 63 Spl.CC.180/2013 production. Further, it is not the case of the accused that accused Nos.3 to 8 had taken consent from the Pollution Control Board either at the time of establishment of their units or before the trial production. The said witness during cross-examination on behalf of the accused No.1 specifically denied that manufacturing of the button from the horns does not require consent from Pollution Control Board. Therefore, the evidence of PW.7 clinchingly show that accused Nos.3 to 8 had not taken any consent from the Pollution Control Board.
50. PW.8 Sri. A. Shivaprakash, who was Asst. Commercial Tax Inspector, office of the Asst. Commissioner, Commercial Taxes, LBO-180, Bindu Kolar from 2010 to 2012 June and the prosecution has examined the said witness with regard to the VAT registration of units of the accused Nos.3 to 8. In his evidence, he has stated that the units of accused Nos.3 to 8 had registered under Karnataka Value Added Tax Act, 2003 (KVAT Act). Through him, the prosecution got marked Ex.P.138 to P.143 and also notice issued by the then Asst. Commissioner as per Ex.P.138(a) to 141(a). PW.8 has deposed that VAT Certificate was issued in favour of M/s. Satyam Industries, M/s. Mallikarjuna Industries, M/s. Srinivasa Industries and M/s. Venkateswara Industries for the activity of button manufacturing from the horns of the buffaloes and oxes. He also deposed regarding filing of their returns from December, 2008 to September 2009 and non-granting of VAT certificate in favour of M/s. S.K.Valli Industries and 64 Spl.CC.180/2013 M/s. Vinayaka Enterprises, due to procedural lapses. It is pertinent to note that the documents produced as per Ex.P.138 to P.143 and P.138(a) to P.141(a) are not disputed by the accused persons. It is also not the case of the accused persons that they have not applied for VAT registration and their units were not registered under the Karnataka VAT Act, 2003. Though the said witness was cross-examined on behalf of accused Nos.2 to 8, nothing was elicited from her mouth. However, they have got marked the policy document issued by the Government of India, in respect of export of goods and supplier to the export oriented industries as per Ex.D.8. The said witness has admitted that VAT will not apply to the export goods as per KVAT Act, 2003.
51. PW.9 Sri. C.N. Vasudeva, the Asst. Executive Engineer (Electrical) BESCOM, is examined by the prosecution to show that no electricity supply connection was given in the name of accused Nos.3 to 8 to their units. In his evidence, PW.9 has stated that BESCOM has not provided any electricity connection or supply to accused Nos.3 to 8 in Plot No.33 of KIADB and the electricity supply to the said plot is in the name of M/s. Mothia Granites for Granite Industry. The BESCOM has not provided any electricity connection or supply to accused Nos.5 and 6 or others in plot No.25 or 26 of KIADB and electricity supply provided to plot No.25 is in the name of M/s. Sriram Industries for plastic industry. Further, the BESCOM has not provided electricity connection to Satyam Industries in plot No.SM 28 and 65 Spl.CC.180/2013 not provided electricity connection to SM 26 as it was locked and vacant. BESCOM has not provided electricity connection to the plot No.120 of KIADB Industrial Area, Malur in favour of accused Nos.3, 4, 7 and 8 and as per the records, electricity connection to Plot No.120 stands in the name of Smt. H.B.Nagamani, for M/s. Venkatadri Enterprises and its RR Number is 1958 and serviced on 29.08.2008. In this regard, the letter given to the IO is marked as Ex.P.144 and P.145 and her signature as P.144(a) and 145(a). Though the learned counsels for the accused cross-examined this witness, nothing is elicited from his mouth and even it is not the case of the accused persons that electricity connection was provided in their names in respect of Plot No.120 of KIADB or Shed No.SM 25 and 26 of KSSIDC, Industrial Area, Malur Taluk.
52. PW.10 Sri. M.B.Dyamberi, Retd. Chief Executive Officer and Executive Member of the KIADB is examined by the prosecution to show that Plot No.120 of KIADB has been allotted in favour of Smt.Nagamani, the Proprietrix of M/s. Venkatadri Enterprises. Through the said witness, the prosecution has got marked a letter issued by him as per Ex.P.146 and his signature as Ex.P.146(a). This fact is not disputed by the accused persons as they are claiming as a tenant under Smt. Nagamani, to whom, KIADB had executed the Sale Deed in respect of Plot No.120. The copy of the said Sale Deed is also produced and marked as Ex.D.9.
66 Spl.CC.180/2013
53. PW.11 Sri. T.Ramakrishna, Retd. Sr. Manager, (Administration and Deposits) Bank of India, Kakinada, Andhra Pradesh, is examined by the prosecution as to furnishing of Account Opening Form and statement of account pertaining to M/s. Deb Fashions India Pvt. Ltd., in Bank of India, Kakinada Branch and got marked his letter as per Ex.P.147 and the Account Opening Form of the M/s. Deb Fashions as per Ex.P.148 and its Account Statement with Certificate under Section 2(a) of the Bankers' Book of Evidence Act, as per Ex.P.149 and P.149(a). This witness is found to be a formal witness and Ex.P.147 to P.149 are not disputed by accused No.2.
54. PW.12 Sri.R.K.Shivanna, Inspector of Police, CBI/ACB, Bengaluru, is examined with regard to execution of the search warrant for search of premises of SM 25 and 26 of KSSIDC, Industrial Area, Malur, who in his evidence stated that on 22.04.2012, as per the direction of Head of CBI/ACB, Bengaluru, he accompanied the IO and other team members to Malur and assisted in execution of the search warrant issued for search of premises of SM 25 and SM 26 of KSSIDC, Industrial Area, Malur. He further stated that, when they reached the said premises, the firm named in the search warrant was not existing and in that regard, mahazar was drawn incorporating the factual position found in the spot. He identified the said mahazar as per Ex.P.123 and his signature as Ex.P.123(b). He further stated that, Shed No.SM 26 was locked and in vacant condition and Shed No.SM 25, one steel fabricating unit was 67 Spl.CC.180/2013 functioning. His evidence only reveals as to visit of the SM 25 and 26 of KSSIDC Industrial Area, Malur for execution of the search warrant, which could not be executed as stated by him. Though he is cross-examined on behalf of accused persons, nothing is elicited from his mouth to disbelieve his evidence.
55. PW.13 Sri.YEL Sudhakar Rao Pujari, who was the Inspector of Police, CBI/ACB, Visakapatnam from October, 2007 to October, 2012 and prosecution has examined him with regard to search conducted in the premises of accused No.2 and seizure of the documents. PW.13 in his evidence deposed that Sri. K.Y.Guruprasad, Dy.SP. CBI, endorsed search warrant to him to conduct the search of the premises of accused No.2 situated at Kakinada, Andhra Pradesh State. Accordingly, on 24.02.2012, he had conducted search of the premises of accused No.2 in between 7.00 AM to 3.30 PM in the presence of two independent witnesses viz., K. Suryanarayana Rao, Manager, SBI, Kakinada and Sri. P.S.R.V.S.E. Shastri, Administrative Officer, New India Assurance Co. Ltd., He further deposed that during the search, he had seized 20 documents and description of those documents were mentioned in the search list. Through the said witness, the prosecution has got marked the search warrant, search list and the seized files relating to units of accused Nos.3 to 8 and to accused No.2 and letter of Bank of India with cover as per Ex.P.152 to 159. The said witness has also identified his signature and signature of the witnesses and that of the 68 Spl.CC.180/2013 accused found in the search list as per Ex.P.151(a) to P.151(d). The accused No.1 has not disputed the evidence of this witness and the learned counsel for the accused No.1 submitted no cross-examination. Though the learned counsel for accused Nos.2 to 8 has cross- examined the said witness, nothing is elicited from his mouth so as to disbelieve his evidence as to search of the premises of accused No.2 and seizure of the documents as stated by him. He has specifically denied the suggestion put to his mouth denying seizure of the documents and signing the search list by the accused No.2 and preparing of the search list at Kakinada as per Ex.P.151.
56. PW.14 is Smt. Kalpana Raaj Nair, who was working at Bank of India, Whitefield Branch from August, 2006 till February, 2010. It is pertinent to note that as already stated, this witness was made as an accused during the investigation and she was given with tender of pardon and thereafter, she was made as a witness in the charge sheet and examined before the court as witness for the prosecution. In her evidence, she has deposed as to working of accused No.1 in the Whitefield Branch as Chief Manager, under whom, herself and others were working. She identified the handwriting and signature of the accused No.1 as she worked under him. In her evidence, she has specifically stated as to sanctioning of cash credit facilities to the units of accused Nos.3 to 8 i.e., M/s. Satyam Industries, M/s. Mallikarjuna Industries, M/s. Srinivasa Industries, M/s. Venkateswara 69 Spl.CC.180/2013 Industries, M/s. S.K.Valli Industries and M/s. Vinayaka Enterprises respectively and identified the various documents relating to the loan, pre and post sanction inspection reports and also identified her signature and the signature and initials of the accused No.1 found in the said documents.
57. PW.14 in her evidence further deposed that, the loan sanctioned to M/s. Venkateswara Industries was not processed by her, but all the process done by accused No.1. After all the process work was done by accused No.1, the proposal was given to her for recommendation and she has recommended as per instructions of accused No.1. It is further stated that she personally did not know anything about M/s. Venkateswara Industries and she was informed by accused No.1 about manufacturing activities of the said unit borrower, sale of the goods to the customer at Kakinada i.e., accused No.2. The proposal was computer printed by accused No.1 and signed by him and that was given to her for putting her signature. She further deposed that pre-sanction inspection report was not signed by accused No.1, but his name is mentioned in the said report. The accused No.1 had checked and attested the borrowers and guarantors profile. It is further deposed by her that after recommendation of the proposal, sanction letter was printed and filled by her and placed before the accused No.1 for signature. The accused No.1 had signed the sanction letter. Thereafter, all the security documents signed by the borrower were given to her for filling up the 70 Spl.CC.180/2013 blanks, she has filled up the blanks. After documentation, cash credit account was opened in the name of Venkateswara Industries. The cash credit account opening form did not bear the signature of any Bank officers. However, accused No.1 has attested the signature of the introducer by putting his initial. At the time of recommendation or at the time of sanction or at the time of documentation or at the time of opening of the cash credit account, the borrower was not present before her. She had done all the above said work as per the direction of accused No.1. It is also her evidence that, in a normal practice, only after filling up the documents, the borrower requires to sign, but the procedure being followed by the Branch was to take signature of the borrower in the blank form and them to fill up the blanks later on. She had in good faith, filled up all the documents at the instructions of the accused No.1.
58. PW.14 in her evidence identified the Cash Credit Account of M/s. Venkateswara Industries and further stated the cheque book was issued for credit account and cheques as per Ex.84 to 86, 89 and 91 bears the signature of accused No.1 and he had authorised the payment shown in the said cheques. Other cheques i.e., Ex.P.87, 88, 90, 92, P.94 and P.95 do not bear the signature of accused No.1 authorising payment under the said cheques. It is her further evidence that after disbursement, accused No.1 asked her to visit the unit of M/s.Venkateswara Industries for post-sanction inspection. She had conducted the post sanction 71 Spl.CC.180/2013 inspection of the said industry on 08.11.2008. The said unit was situated in Malur, KSSIDC Industrial Area. When she inspected the said unit, borrower was not present. There were two small sheds, both were locked. She found that there was no manufacturing activity happening in the said sheds. The two boys, who were present outside the shed told that they are the workers and through window they had shown some raw materials kept inside the shed. When she asked the said boys about the stock register, they told that they do not have any register, therefore, she was unable to verify the stock. She came back and submitted report to accused No.1 as per Ex.P.80(a) and identified her signature as per Ex.P.80(a-i).
59. It is her further evidence that again on 19.02.2009, she had conducted second post-sanction inspection of M/s. Venkateswara Industries. Before proceeding for inspection, she had noted down the stock from the stock statement, submitted by the borrower. When she visited the unit, nobody was there, there was no activity in the said industry. She was unable to verify the stock. There was no proper management and supervision. She had submitted report in that regard as per Ex.P.80(b) and identified her signature as per Ex.P.80(b-i). When she submitted the report to accused No.1, he asked her whether there is raw material present and whether production can be commenced with that raw material. She said yes. When she went to inspect the said shed, since both sheds were locked, she was unable 72 Spl.CC.180/2013 to verify whether there was installation of any manufacturing unit. It is her further evidence that she had conducted third post-sanction inspection of M/s. Venkateswara Industries on 17.04.2009. At that time, she was asked to visit the said unit specifically by accused No.1 to ensure herself whether manufacturing activity is happening in the said unit or not, since she had hesitated to recommend two more proposals of the similar activities in respect of M/s. Vinayaka Enterprises and M/s. S.K.Valli Industries. Therefore, she visited M/s. Venkateswara Industries third time on 17.04.2009. The borrower was there, stock register was produced before her. At that time, she found that the activity was happening in M/s. Vinayaka Enterprises and M/s. S.K.Valli Industries, by making two portion in one shed and the activity was also happening in M/s. Venkateswara Industries. Two boys were working on two machines in M/s. Venkateswara Industries, but the scale of activity in the said industry was not to the extent of the activity happening in M/s. Vinayaka Enterprises and M/s. S.K.Valli Industries. She had submitted the inspection report as per Ex.P.80(c) and identified her signature as per Ex.P.80(c-i). Thereafter, the accused No.1 inspected the said unit on 31.08.2009 and she identified the report of the accused No.1 as per Ex.P.80(d) and his signature as per Ex.P.80(d-i).
60. PW.14 in her evidence deposed in the similar line with regard to M/s. Srinivasa Industries, belonged to accused No.5 regarding loan sanction processed by 73 Spl.CC.180/2013 accused No.1, loan proposal, issuance of sanction letter, pre-sanction report by accused No.1, opening of the cash credit account, authorizing some payment by accused No.1 under cheques, regarding post-sanction inspection by her on 08.11.2008, 19.02.2009 and on 17.04.2009 and post inspection by accused No.1 on 31.08.2009 and identified the reports, her signature and also the signature of the accused No.1. She has also deposed in similar line with regard to M/s. Satyam Industries belonged to accused No.3 regarding loan sanction processed by accused No.1, loan proposal, pre-sanction inspection by accused No.1 and identified the report submitted by him, regarding opening of the cash credit account, authorizing some payment by accused No.1 under the cheques, regarding first post-inspection made by accused No.1 and identified his report. She further stated as to post-sanction inspection conducted by her on 19.02.2009 and on 17.04.2009 and report submitted by her and regarding post-sanction inspection conducted by accused No.1 on 31.08.2009 and identified the reports, her signature and also the signature of the accused No.1.
61. PW.14 further deposed in the same line with respect to M/s. Mallikarjuna Industries, belonged to accused No.4 regarding processing of the loan sanctioned by accused No.1, regarding loan proposal, recommendation made by her, issuance of sanction letter, pre-sanction inspection by accused No.1 and identified the report submitted by him, regarding opening of the 74 Spl.CC.180/2013 cash credit account, some payment authorized by accused No.1 under the cheques, regarding post-sanction inspection conducted by her on 19.02.2009 and on 17.04.2009 and report submitted by her. In her evidence, she has also deposed in similar line with regard to M/s. S.K.Valli Industries, belonged to accused No.7 regarding processing of the loan-sanction by accused No.1, non- recommending of the same by her, pre-sanction inspection conducted by accused No.1 and identified the report submitted by him, regarding opening of cash credit account, some payment authorized by accused No.1 under the cheques, post-sanction inspection conducted on 17.04.2009 along with concurrent auditor and report submitted by her and regarding post-sanction inspection conducted by by accused No.1 on 31.08.2009.
62. PW.14 in her evidence further deposed in similar line with regard to M/s. Vinayaka Enterprises, belonged to accused No.8 regarding processing of the loan-sanctioned by accused No.1, non-recommending of the same by her, regarding loan proposal, pre-sanction inspection conducted by accused No.1 and identified the report submitted by him, regarding opening of cash credit account, some payment authorized by accused No.1 under the cheques, post-sanction inspection conducted on 17.04.2009 along with concurrent auditor and report submitted by her and regarding post-sanction inspection conducted by accused No.1 on 31.08.2009. She has also stated that accused No.2 was the introducer for all the six accounts. The evidence of PW.14 reveals the process 75 Spl.CC.180/2013 adopted in sanctioning the loan and also the pre and post-sanction inspections conducted.
63. The learned counsel for the accused No.1 had thoroughly cross-examined this witness in length and the same is also adopted by accused Nos.2 to 8 with further cross-examination. During her cross-examination accused No.1 got marked the extract of the Proposal Register as per Ex.D.10 and her initials found in Ex.P.17, 39, 60, and P.84 as per Ex.P.17(a), 39(a), 60(a) and 84(a). Further, during her cross-examination, it is elicited that she had visited the six units in the month of January, 2010 after transfer of the accused No.1 with new Manager and the report of the new Manager is marked as Ex.D.11 and her signature and signature of the new Manager as per Ex.D.11(a) and 11(b). During her cross- examination she admitted that the credit officer has to maintain the list of sanctioned proposals and submit to the zonal office every month and the credit officer has to submit the statement to the zonal officer in respect of the advances and recoveries. It is also elicited that the loan proposals can be recommended by the officer working in the credit department or by the Manager. It is further elicited from her mouth that there is no threat of victimization by the head of the Branch since there is a machinery provided for independent verification for performance assessment by the employees of the zonal office, but there is possibility of victimization by the head of the Branch, since the zonal office will not take up the matter unless marks allotted to an employee is less than 76 Spl.CC.180/2013
60. It is also admitted by her that if an employee feels that he has been victimized, he can file representation to the zonal office and zonal office will look into the complaint. It is further admitted by her that in case a customer having cash credit facility wants to withdraw the cash, the payment of the cash has to be authorised either by the credit Manager or the head of the Branch.
64. During her cross-examination, she has admitted that revenue targets were given to each Branch and in order to reach the target, the Branch has to attract deposits, give advance and make recoveries. The performance of the Manager and other officers of the Branch will be assessed on the basis of how much business they have earned for the Branch. In order to perform better, the Manager and officers of the Branch have to maintain good relation with the customers and it is necessary to maintain good relationship with the past customers to earn new customer. She has also admitted that it is a matter of confidence building factor, a new customer is introduced by an existing customer in the matter of advance. During her cross-examination she has also admitted that the Government has flouted a scheme called CGTMSE and under the said scheme, if the business fails, the Government will reimburse arrears of loan to the extent of 70% provided, there is a valid sanction of loan. She has also admitted that the borrower need not be permanent resident of the locality of the Branch, but the unit should be situated within the locality of the Branch.
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65. It is further elicited from her mouth as to what are the factors to be mentioned in the relevant column of the Loan Proposal Form and the officer who fills up the form is not the recommending authority and the recommending officer will go through all the details of the proposal before recommending. It is admitted by her that in case of sanction of loan exceeding the limits of Rs.2 lakhs for business purpose, the copy of the sanction proposal will be submitted to the zonal office and all the sanctions will be scrutinized by the credit Branch in the zonal office. She has also admitted that the proposals of accused Nos.3 to 8 have been submitted to zonal office and the loan transactions in respect of accused Nos.3 to 8 have been subjected to concurrent audit and internal audit and also subjected to statutory audit in the year 2009. It is elicited from her mouth that all the loan transactions exceeding the limit of Rs.10 lakhs have to be scrutinized by the Credit Inspector, but she has stated that in some cases, the Credit Inspector may not examine all loan transactions exceeding Rs.10 lakhs. She has also admitted that if any defect is found in the sanction proposal, an inter office memo will be issued seeking clarification. During her cross-examination, she has denied that during her all visit to the units, the concurrent auditor was also present with her. It is further admitted by her that while sanctioning the loan to accused Nos.3 to 8, all procedures prescribed by the Bank have been followed and the Bank has got reimbursement of the loan of accused Nos.3 to 8 from CGTMSE Scheme.
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66. It is further elicited from the mouth of PW.14 that, there is no misleading or false contents regarding financial projection and material particulars in the proposal form at Ex.P.9, P.28, P.50, P.75, P.98, P.111 prepared by accused No.1 based on the projections given by accused Nos.3 to 8. It is further admitted by her that after reading the contents of the proposal form, she put her signature as recommending officer and she had no intention of cheating the Bank or showing undue favours to the borrowers or helping the accused No.1 by recommending the said proposals. She honestly believed that she has not committed any mis-conduct or offence in respect of these transactions. It is further admitted by her that the account opening, document signature, date of document, issuance of lose cheque leaves, withdrawal of the cash happened on the same day on 12.12.2008 in respect of M/s. Satyam Industries and M/s. Mallikarjuna Industries and on 17.10.2008 in respect of M/s. Venkateswara Industries and M/s. Srinivasa Industries and on 20.04.2009 in respect of M/s. S.K.Valli Industries and M/s. Vinayaka Enterprises. She has denied the suggestion that she had seen the borrowers at the time of opening the account or documentation or disbursement or at the time of withdrawal of the amount. It is also stated by her that the IO had told her that she had committed mistake in recommending the proposal and admitted the Departmental Enquiry conducted against her in respect of the transactions involved in this case and in the Departmental Enquiry also she has contended that she has not committed any mistake. During her 79 Spl.CC.180/2013 cross-examination, the accused have also got marked her statement recorded under Section 164 of the Cr.P.C., and the statement recorded under Section 306(4) of the Cr.P.C., R/w. Sec.5(2) of the PC Act for reference as per Ex.P.276 and P.277 and she has admitted the portion of the statement given by her as per Ex.P.276 and P.277 as read over to her by the learned counsel for accused No.1. She has also admitted that accused No.2 being the introducer of accused Nos.3 to 8 to Whitefield Branch is not liable for the liabilities of the borrowers and he is not the guarantor for them. She has denied the suggestion that the accused Nos.3 to 8 could not run the unit due to their difficulties and objections raised by local people and they were not willful defaulters. She has specifically denied that based from the promise of the IO, she has turned out to be an approver.
67. PW.15 D.Krishnamurthy, was the Asst. General Manager, KSSIDC Ltd., and he is examined by the prosecution with regard to allotment of SM Shed Nos.25 and 26 and to identify the documents produced by him in that regard. In his evidence, he has deposed that Super Mini Shed Nos.25 and 26 were allotted to Munivenkatappa S/o. Muniyappa, Kumbarpete, Malur and the said sheds were never allotted to any of the six units standing in the name of accused No.3 to 8. He further stated that Shed No.28 was never allotted to M/s. Satyam Industries and SM No.120-C was not at all in existence in KSSIDC Industrial Area, Malur. They have not allotted any sheds in KSSIDC Industrial Area, Malur 80 Spl.CC.180/2013 in the name of M/s. S.K.Valli Industries and M/s. Vinayaka Enterprises. Through him the prosecution has got marked the letters submitted by him and the documents produced along with the said letters as per Ex.P.160, 162, 163, 164 and his signatures as per Ex.P.160(a) and 162(a). Though the learned counsel for accused Nos.2 to 8 had cross-examined the said witness and the same was adopted by accused No.1 also, it is noticed that the said witness is only a formal witness and it is not the case of the accused persons that any of the sheds in KSSIDC Industrial Estate, Malur was allotted in their favour. On the other hand, it is clear that accused Nos.5 and 6 claimed their enjoyment over SM Shed Nos.25 and 26 under the Lease Deed from one S.Prakash and the original Lease Deed are also found in the documents seized from the premises of accused No.2 i.e., in Ex.P.152 and P.154. Therefore, the evidence of PW.15 clearly reveals that any of the sheds in KSSIDC Industrial Estate, Malur was not allotted in favour of accused Nos.3 to 8 at any point of time.
68. PW.16 Smt. H.R. Nagamani, is examined by the prosecution regarding allotment of Plot No.120 in 3 rd Phase, KIADB Industrial Area and regarding inventory conducted by the IO. She in her evidence stated as to allotment of Industrial Plot bearing No.120 in III Phase, KIADB Industrial Area, Malur and after allotment, she started with PCB assembly business in the said plot. It is further stated by her that since she did not get sufficient orders, she closed the units and gave the plot on rent.
81 Spl.CC.180/2013 Her husband dealt with one Shafi for giving plot on rent and she has signed on the document. It is also her evidence that she had given the said shed to 4 firms i.e., M/s. Satyam Industries, M/s. Mallikarjuna Industries, M/s. S.K.Valli Industries and M/s. Vinayaka Enterprises and they started manufacturing coat buttons with the help of horns, but after 5 to 6 months, they closed the unit and stopped paying rent. Further, one Shafi was the head of that group and he sent the key of the sheds through courier to her. She has also deposed as to opening of the said shed and conducting of the inventory by the CBI Police in her presence. She identified the said inventory as per Ex.P.165 and her signature as per Ex.P.165(a) and her husband's signature as per Ex.P.165(b). Though the learned counsel for accused Nos.2 to 8 has cross-examined the said witness, which is also adopted by accused No.1, nothing is elicited from her mouth. During cross-examination, she has stated that she had spoken to Shafi (accused No.7) and Dr.Srinivas (accused No.2) over phone and she had collected the rent from the employee working in the said industry for about six months when the firms were functioning. In this regard, it is pertinent to note that the accused Nos.3 to 8 have not claimed allotment of the Plot No.120 in their favour and on the other hand, they claimed the said shed as lessee under PW.16. Even, the accused have produced the copy of the Sale Deed of PW.16 as per Ex.D.9. Therefore, from the evidence of PW.16, it is clear that Plot No.120 of KIADB, Industrial Area, Malur was allotted to her and thereafter, it was sold to her and accused Nos.3, 82 Spl.CC.180/2013 4, 7 and 8 got the said shed from her under lease agreement. Even her evidence also reveals the inventory conducted by the IO in the said plot.
69. PW.17 S.T.Doddamani, was the Sr. Manager (Credits) Bank of India, Whitefield Branch Bengaluru, from 09.7.2012 to 20.12.2013 and the prosecution has examined him with regard to the credit activities of accused Nos.3 to 8, identification of the documents relating to the said six units and irregularities found in the said loan transactions. PW.17 in his evidence identified the documents relating to loan accounts of six units of accused Nos.3 to 8 at Ex.P.5 to P.24, Ex.P.25 to P.46, Ex.P.47 to P.71 and Ex.P.72 to P.95 and Ex.P.96 to P.108 and Ex.P.109 to P.119 respectively. In his evidence, he has also stated regarding irregularities found in these six loan transactions and also outstanding balance of the said six units of accused Nos.3 to 8 as on 07.03.2009. Further, the prosecution has also got marked concurrent audit reports for the month of October-2008, December- 2008 and April-2009, PSR Statements for the said months and Long Form Audit Report (LFAR)/Statutory Audit Report submitted by the statutory auditor as per Ex.P.166 to P.170 through the said witness. During cross-examination on behalf of accused No.1, he has admitted that the Bank of India is following financial inclusive policy of Central Government of India under MSME Scheme and CGTMSE is one of the schemes promulgated under MSME Scheme of the Central Government. It is elicited from his mouth that the 83 Spl.CC.180/2013 financial assistance can be extended to MSME upto limit of Rs.1 Crore without insisting for collateral security. It is admitted by him that the CTGMSE reimburses the Bank to the extent of 70% in case the business fails, subject to terms and conditions under CGTMSE in the absence of any fraud committed by the borrower and the Banks are duty bound to initiate the recovery proceedings against the borrower even after getting the reimbursement under the CGTMSE Scheme.
70. He has also admitted as to initiation of recovery proceedings against accused Nos.3 to 8 under six separate recovery proceedings before the DRT, Bengaluru and the loan accounts of accused Nos.3 to 8 are distinct and separate and all the six loan accounts are of less than Rs.3 Crores. He has also admitted that Bank of India got reimbursement of the part of the outstanding due under CGTMSE. Through him, the accused No.1 got marked the application submitted to CGTMSE along with declaration and undertaking in respect of six units as per Ex.D.13 to D.18 and the application filed before the DRT as against M/s. Srinivasa Industries as per Ex.D.19. He has admitted that in the declaration submitted before the CGTMSE, it is mentioned that there has been no fault or negligence on the part of the Money Lending Institute (MLI) or of its officers in conducting the account. It is also elicited from his mouth that if the project is new, there cannot be an audited balance sheet.
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71. PW.18 Sri.Y.V.S.Rao, was Sr. Manager, Bank of India, Kakinada Branch, A.P. and he has been examined by the prosecution regarding furnishing of certain documents to the IO pertaining to transactions of current account of M/s. Swetha Exports and through him, the prosecution has got marked the seizure memo under which, he has produced the documents before the IO as per Ex.P.171 and his signature as per Ex.P.171(a) and also got marked the account opening form of M/s. Swetha Exports belonging to accused No.2 and various cheques issued by M/s. Swetha Exports in favour of accused Nos.3 to 8 and also Bank challans for having deposited the amount in the account of accused Nos.3 to 8 as per Ex.P.172 to P.254 and also the signature of the accused No.2 in some of the Bank challans. The accused persons have cross-examined the said witness and it is elicited that the persons running the butcher's houses are from low income group and they will deal in cash and the button manufacturing activity comes under SME Scheme and it is a priority sector. It is also admitted by him that as per the guidelines of the Central Government and RBI, the Bank has to perform well in the priority sector and minimum 40% of the lending should be towards priority sector. If there is any shortfall in minimum percentage of lending to the priority sector, it will attract penalty from RBI. It is pertinent note that on going through the entire material placed before this court, the evidence of this witness is only formal and the documents marked by the said witness are not in dispute 85 Spl.CC.180/2013 and even accused Nos.2 to 8 admit the monetary transactions as found in Ex.P.173 to P.254.
72. PW-19 K.Chinna Swamy, was the Chief Manager of the Bank of India, Whitefield Branch, from April-2011 to March-2012 and the prosecution has examined him only with regard to production of certain documents before the IO and the said witness is found to be a formal witness. Through him, the prosecution has got marked the undated letters written by M/s. Swetha Exports to Bank of India, Whitefield Branch, cheques issued for payment towards balance loan amount of accused Nos.3 to 8 as per Ex.P.255(a) & (b) to P.266(a) and (b) and two bank and memos for dishonour of the cheques as per Ex.P.255(c) and P.256(c). Though the learned counsel for accused Nos.2 to 8 has cross- examined the said witness, nothing was elicited from his mouth. Apart from that, it is noticed that accused Nos.2 to 4, 7 and 8 have not disputed the said fact.
73. PW.20 Sri.P.S.Venkatesh, who had worked as an Officer in Bank of India, Whitefield Branch, from November-2007 to June-2010 and the prosecution has examined him to identify the handwritings, initials and signatures of accused No.1 and PW.14 relating to loan documents. In his evidence, he has identified the handwritings and initials of accused No.1 as well as PW.14 in the loan documents, cash credit account opening form and also the pre and post-inspection reports etc., Though he was cross-examined on behalf of 86 Spl.CC.180/2013 the accused persons, nothing much was elicited from his mouth so as to disbelieve his evidence for which, the prosecution has examined him.
74. PW.21 Sri.H.Ravindra Kamath, who was the Chief Manager, Bank of India, Whitefield Branch, Bengaluru, during 2012 and he is examined with regard to furnishing of certain documents to the IO relating to the units of accused Nos.3 to 8, for identification of the documents submitted by him and regarding his visit to the units of accused Nos. 3 to 8 along with the IO. Through him, the prosecution has got marked the statement of cash credit account pertaining to M/s.S.K.Valli Industries and debit and credit voucher together as per Ex.P.268 and covering letter as per Ex.P.267 and his signature as per Ex.P.267(a), P.268(a) to
(d). He has also stated as to furnishing of the concurrent audit report, monthly statement of advances and Long Form Audit Report (Ex.P.166 to P.170) under Ex.D.4 to the IO. He further deposed regarding his visit along with the IO to the place where the units of accused Nos.3 to 8 are located. He stated that when he visited the said units, he noticed that godowns were locked and when the IO opened the godown by securing the keys and found that the said units were at abandoned state. In one shed, four partitions were made and name of the M/s. Satyam Industries, M/s. Mallikarjun Industris, M/s. Vinayaka Enterprises and M/s. S.K.Valli Industries were found written on the wall. He found some raw materials, such as buffalo horns, unfinished buttons, drilling and 87 Spl.CC.180/2013 lathe machines and other materials and in that regard, the IO had drawn panchanama as per Ex.P.165. He identified his signature as per Ex.P.165(c). Though the learned counsels for the accused have cross-examined him, nothing much was elicited from his mouth so as to disbelieve his evidence. Even during cross-examination, he has specifically stated that he personally verified the materials found in the godown a the time of his visit along with the IO.
75. PW.22 Sri.K.Suryanarayana Rao, is one of the witnesses for the search of the premises of the accused No.2 and the prosecution has examined him in that regard. He in his evidence stated as to conducting of the search of the premises belonging to accused No.2 and seizing of the 20 documents, preparing of the search list, presence of another witness as well as accused No.2 during the search. He has also identified his signature as well as the signature of the another witness found in the search list as well as the other documents seized during the search. Though the learned counsel for accused Nos.2 to 5, 7 and 8 had cross-examined the said witness, nothing much was elicited from his mouth so as to disbelieve his evidence. He has specifically denied the suggestion put to his mouth that the IO has not seized any documents in his presence and he put his signature on the search list and on the other documents in the CBI Office.
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76. PW.23 Sri.K.Y.Guruprasad, is the IO, who conducted the entire investigation in the matter and the prosecution has examined the said witness to establish the investigation conducted. PW.23 in his evidence stated as to registration of FIR as per Ex.P.269 by Sri.Dr.A.Subramanyeshwar Rao, SP, CBI/ACB, Bengaluru and as to seizure of the documents and entire investigation conducted in this case in detail. The said witness is thoroughly cross-examined on behalf of the accused persons regarding investigation conducted.
77. PW.24 Sri.K.Mohanan, is the Internal Investigation Officer of the Bank, who conducted the internal investigation with regard to the loan transactions involved in this case and submitted the report. The prosecution has examined the said witness in support of the report submitted by him as per Ex.P.274 and got marked his signature found in the report as per Ex.P.274(a). PW.24 in his evidence stated that, in July- 2010 after getting the information from the Head Office, he came to Karnataka Zonal Office of Bank of India and then went to Whitefield Branch to conduct the investigation. In his evidence he has stated as to examination of the documents relating to cash credit accounts of the units of accused Nos.3 to 8 and spot inspection made by him and also as to investigation conducted by him and filing of the final report as per Ex.P.274 after due enquiry. The learned counsels for accused persons have thoroughly cross-examined the said witness with regard to his report, investigation 89 Spl.CC.180/2013 conducted, procedure adopted by him, the witnesses examined, documents collected during his investigation. During his cross-examination, the witness has denied the suggestion put to him that the units belonging to accused Nos.3 to 8 were running properly and also denied the suggestion that he had not visited the units belonging to accused Nos.3 to 8 and only on the basis of documents available in the Bank, he had prepared his report as per Ex.P.274.
78. With the oral evidence of the witnesses, now the documents placed before the court are analyzed, it is noticed that in fact, there is no dispute as to the documents produced before this court either by the prosecution or by the accused except the mahazars stated to have been conducted. The entire loan documents, pre and post-sanction inspection reports and sanction and disbursement of the cash credit loan in favour of accused Nos.3 to 8 are not in dispute. In order to determine the charges leveled against the accused persons, now the oral and documentary evidence have to be read conjointly and to be analyzed as to its effect.
79. Now, the evidence on record relating to M/s. Satyam Industries of accused No.3 is analyzed, admittedly, accused No.3 has filed application for credit facility for Rs.46 lakhs as per Ex.P.5 and his undated request letter is also found as per Ex.P.8. If we analyze the contents of Ex.P.5 loan application, it reveals that accused No.3 had given business address as 90 Spl.CC.180/2013 'N.Venkataramana, Prop. M/s. Satyam Industries, KSSIDC, IDA, SM 28 Malur, Kolar District, Karnataka' as found in 3.1 of the said application. Further, the accused No.3 in the loan application has stated that the clearance has been obtained from the Pollution control authority [12.4-(v)]. Further, in the loan application the manufacturing unit is stated to be existing in the leased premises, but description and extent of the leased premises are not stated in the loan application as required in 12.5 of the application. However, the copy of the Lease Deed is stated to be enclosed as found in 12.6-
(a). Further, in the loan application, power contracted load and connected load is stated to be 10 Hp and future power consumption per month is stated to be 100 units as found in 13.1 of the loan application. Further, water is stated to be available near to the industry as found in 13.2 of the loan application and bore-well arrangement for the water is also stated in 18.10(f) of the application. It is further noticed from the loan application that in
18.(a), the acquisition of the land is stated through lease and it is well developed. In 18.(c) regarding civil works, factory building, machinery foundation and administrative building are stated to be completed. Further, erection of equipment, commissioning, initial procurement of the raw material, trial run are stated to be in the month of November 2008 and commercial production in the month of December 2008 (18.(g) to (k) of the loan application). But, in this regard, it is pertinent to note that the evidence on record reveals that Shed SM No.28 of KSSIDC Industrial Area, Malur, Kolar 91 Spl.CC.180/2013 District was not allotted to the accused No.3 by KSSIDC at any point of time. In this regard, there is oral evidence of PW.15 Sri. D.Krishnamurthy, the Asst. General Manager, KSSIDC Ltd., who has specifically stated that Super Mini Shed No.28 was never allotted to M/s. Satyam Industries. Further, it is not the case of the accused No.3 that the said shed was either allotted to him or he had taken the same under lease. Therefore, prima-facie it is clear that the address given in the loan application is false.
80. As stated supra, in the loan application, accused No.3 has stated that he had obtained clearance from the Pollution Control Authority, but in this regard, there is evidence of PW.7 Smt.V.G.Karthikeyan, the Environmental Officer, Karnataka State Pollution Control Board to the contrary. She in her evidence has specifically stated that accused Nos.3 to 8 have not taken any consent from the Pollution Control Board to start their unit and in that regard the prosecution has also produced the document as per Ex.P.136 issued by PW.7, wherein it is clearly stated that accused No.3 to 8 had not taken any consent from the Pollution Control Board. Further, it is not the case of the accused No.3 that he had obtained the consent from the Pollution Control Board except stating that clearance has been obtained from the Pollution Control Authority in the loan application. Therefore, from the evidence of PW.7 and Ex.P.136, it is crystal clear that, the accused No.3 had not taken any consent from the Pollution Control Board either before 92 Spl.CC.180/2013 establishing the unit or even after. Hence, it is certain that in the loan application, the accused No.3 had given false information in that regard for the reasons best known to him.
81. Now with regard to leased premises as stated in 12.5 of the loan application is concerned, the accused No.3 has not specified anything as to description and area of the leased premises. In this regard, it is pertinent to note that as admitted by accused No.3, the unit is established in the leased premises and in that regard, the copy of the Lease Deed is available in Ex.P.134 and the original Lease Deed is available in Ex.P.153. On going through the said Lease Deed, it is clear that accused No.3 entered into lease agreement with Smt.H.R.Nagamani, on 04.12.2008 with regard to Shed No.1, Plot No.120, 3 rd Phase, KIADB Industrial Area, with regard to 900 sq. ft. out of 3600 sq.ft. for 11 months and monthly rent was fixed at Rs.5000/-. Therefore, it is clear that the accused No.3 had not taken entire plot No.120 situated in 3 rd Phase, KIADB Industrial Area, Malur, but had taken only 900 sq.ft out of total area of 3600 sq.ft. It is interesting to note that the Lease Agreement was entered into on 04.12.2008, whereas, the loan application was submitted on 22.11.2008. Therefore, it is clear that as on the date of filing of the loan application, the land was not at all leased in favour of accused No.3. Therefore, it appears that intentionally, in the loan application, the description of the leased premises is not mentioned. When the Lease Deed itself was not entered into as on the date of filing of 93 Spl.CC.180/2013 the loan application, it is clear that whatever stated by accused No.3 in the loan application in that regard are totally false. As already stated, in the loan application, the lease deed is stated to be enclosed. But, as on the date of filing of the loan application, there was no lease agreement in existence. Hence, the question of enclosing the Lease Deed as stated in the loan application does not arise and what is stated in the loan application is false.
82. Further, so far as the power as mentioned in 13.1 of the loan application is concerned, it is stated that contracted and connected load are 10 Hp, but in this regard there is evidence of PW.9 Sri. C.N.Vasudeva, the Asst. Executive Engineer, BESCOM to the contrary. PW.9 in his evidence specifically stated that the BESCOM has not provided any electricity connection to the plot No.120 of KIADB industrial Area in favour of accused Nos.3, 4, 7 and 8 and as per the record, electricity connection for plot No.120 stands in the name of Smt. H.R.Nagamani, for Venkatadri Enterprises and in R.R. Number is 1958 and serviced on 29.08.2008. Therefore, it is clear that no electricity connection was taken by accused No.3 in respect of M/s. Satyam Industries as stated in the loan application. At this stage, on going though the Lease Deed available in the file (Ex.P.132 and P.155 relates to M/s. Mallikarjuna Industries), it is noticed that electricity connection with regard to Shed No.120 was only 5 Hp. It is also noticed from the admitted documents available in the file that the Plot No.120 totally measuring 3600 sq. ft was divided into 4 portions as four sheds measuring 900 94 Spl.CC.180/2013 sq.ft equally and 1 portion i.e., shed No.1 was taken on lease by accused No.3 and remaining 3 portions (shed Nos.2 to 4) by accused Nos.4, 7 and 8. Such being the case, the information given in the loan application with regard to power is also false to the knowledge of the applicant himself.
83. It is also noticed that in the loan application, water facility is stated to be available near to the industry (13.2) and water arrangement is made through bore-well (18.(f)). But in this regard, the evidence of PW.24 during cross-examination is analyzed, it is suggested that the accused Nos.3 to 8 were purchasing the water from local water suppliers required for their factories. The suggestion so put on behalf of accused No.3 to this effect reveals that there was no water facility through bore-well as stated in the loan application. Therefore, what is stated in the application regarding supply of the water is also false.
84. As stated earlier, in the loan application in 18.
(c) with regard to civil work is concerned, it is stated that factory building, machinery foundation and administrative building completed. But, as discussed supra, the Lease Agreement in respect of the leased premises in which the industry is stated to be established was entered into only on 04.12.2008 and possession was given under the said lease deed. Such being the case, putting up of factory building, machinery foundation and administrative building as on the date of filing the loan application does not arise. Even, in the Lease Deed, the 95 Spl.CC.180/2013 said fact is not found. Hence, there remains no doubt that whatever stated by the accused No.3 with regard to civil work in the loan application is also prima-facie false. Therefore, it is clear that major components of the loan application are false to the knowledge of the applicant accused No.3 and false informations are provided only with an ulterior intention to avail the loan facility from the Bank. Accused No.3 has executed the loan application containing the false information which is within his knowledge so as to avail loan from the Bank under particular scheme, with fraudulent intention.
85. Now, Ex.P.7 pre-sanction inspection report submitted by accused No.1 is looked into, it is not disputed that the said report is prepared by accused No.1 in connection with the loan transaction. In the said report, it is stated that the unit established by accused No.3 is situated at Malur about 25 kms. from the branch. The unit is engaged into manufacturing of button blanks from buffalo/ ox horns. The horns are available in plenty in Kadiri, Kolar, in and around Bengaluru city from butchers, slaughter houses. The account is being referred by Mr. B. Srinivasa Rao, the proprietor of M/s. Swetha Exports, who is one of the big and good LBD borrowers of Kakinada Branch. In the pre-sanction inspection report in para 1, the accused No.1 has not given the description as to in which place the unit was established. In his report further stated that the unit has obtained registrations from DIC and from Sales Tax Authorities. The unit will be established in plot No.120, Industrial 96 Spl.CC.180/2013 Area Phase III, Malur. Four entrepreneurs have entered into Lease Agreements with the owner of the shed. The shed is of about 3600 sq.ft and each unit is taking up 900 sq.ft for their proposed activities. There is adequate storage space in front and back of the shed and the shed is constructed in an area of ½ acre. It is pertinent to note that in the first paragraph of his report, accused No.1 without specifying the particular place where the unit was established, noted that the unit established by accused No.3 is about 25 kms. away from the Branch, but in another paragraph, he has stated that the unit will be established in plot No.120, Industrial Area, Phase-III, Malur. This version reveals that as on 08.12.2008, the unit was not established. It is also noticed that in the pre-sanction inspection report, accused No.1 has stated that 4 entrepreneurs entered into Lease Agreements with the owners of the shed. But the documents available in Ex.P.133 and 131, the Lease Agreements by accused No.7 and 8 with regard to two portions of Plot No.120 were found to be entered into on 03.02.2009. Such being the case, it is not understood, on what basis accused No.1 has stated in his report as to Lease Agreement of four entrepreneurs with regard to Plot No.120 as on 08.12.2008. It is also to be noted that in the report, accused No.1 falsely stated that the shed is constructed in an area of ½ acre as it is totally measuring only 3,600 sq.ft and what was leased is also stated to be only 3,600 sq.ft in all and not 21,790 sq.ft (½ acre).
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86. It is pertinent to note that in Ex.P.7 pre- sanction inspection report, accused No.1 has stated that the unit has obtained registration from the DIC and from Sales Tax Authorities. In this regard, there is evidence of PW.5 Sri.Ansar Pasha, the Superintendent, Office of the Joint Director, District Industries Centre, who in his evidence stated as to application filed by the accused Nos.3 to 8 to DIC as on 08.12.2008 and grant of Entrepreneur Memorandum Part I and II in their favour. So far as the accused No.3 is concerned, Ex.P.128 and Ex.P.11(a) are the EM Part-I and Ex.P.134 is EM Part-II, issued by the DIC. On going through the said documents, it is clear that on the basis of the application filed by accused No.3, DIC had granted EM Part-I on 15.12.2008 and EM Part-II on 03.04.2009. Therefore, it is clear that the unit has not obtained the registration from the DIC as on 08.12.2008 and the accused No.1 has falsely stated that the unit has obtained registration from the DIC for the reason best known to him.
87. Further, the registration from the Sales Tax Authorities is concerned, there is evidence of PW.8 Sri.A. Shivaprakash, the Assistant Commercial Tax Inspector, Office of the Assistant Commissioner, Commercial Taxes, Kolar, in his evidence he has stated that accused Nos.3 to 8 had registered under the KVAT Act, 2003. In this regard, the VAT Registration Certificate relating to accused No.3 is found in Ex.P.138, which contains application, check memo, VAT Registration Certificate, notice, Form No.H etc., From Ex.P.138, it is clear that 98 Spl.CC.180/2013 accused No.3 was issued with VAT Registration Certificate on 08.12.2008 and the spot was also visited on the same date as found in the check memo found in Ex.P.138. Therefore, it is clear that only on 08.12.2008, accused No.3 had taken VAT registration from Sales Tax Authorities. But the report of the accused No.1 denotes that the unit has obtained the registration from the Sales Tax Authorities. In the pre-sanction inspection report, there is no details as to at what time accused No.1 conducted the pre-sanction inspection.
88. In the pre-sanction inspection report, it is also stated that the proponent has an experience of about 15 years in the activity at Andhra Pradesh. But, if the contents of Ex.P.6 Borrower's Profile furnished along with the loan application is analyzed, there is no mentioning about the said fact. It is not understood on what basis such statement is made in the report when it is not found in the Borrower's Profile which is filed along with the loan application. But, it is noticed that in Ex.P.9, Borrower's Profile dated 10.12.2008 subsequent to the pre-sanction inspection report in para 32, it is stated that the proprietor of the firm has been associated with buffalo horn button manufacturing unit in A.P. last few years and has gained adequate experience in the field. If the contents of the loan application and contents of the pre- sanction report of accused No.1 are analyzed, they are not tallying with each other. In Ex.P.7 report, the accused No.1 had not at all stated anything as to the details given in the loan application with regard to the 99 Spl.CC.180/2013 civil work, power/ electricity connection, clearance from the Pollution Control Board, power and water arrangement, erection of equipments, commissioning, initial procurement of the raw materials, trial run and even with regard to the registered office as shown in the loan application. On going though Ex.P.7 pre-sanction inspection report, prima-facie it appears that it is not prepared after inspecting the spot, but prepared to facilitate the sanctioning of the loan even without looking into the available furnished documents. Therefore, it clearly appears that Ex.P.7 is intentionally created by accused No.1 for the purpose of complying the formalities for sanctioning the loan.
89. It is also noticed that on 12.12.2008, the accused No.3 had executed documents in connection with the loan transaction as to handing over the DP Note in favour of the Bank and the said document is not properly filled up. Further, the contents of the Hypothecation Agreement dated 12.12.2008 executed by accused No.3 reveals that the schedule II, Part A of the Hypothecation-cum-Loan Agreement is kept blank. Therefore, if the entire loan documents are verified, it is clear that the loan application, pre-sanction inspection reports are all falsely created for the purpose of availing and sanctioning the loan and to fulfill the formalities.
90. Ex.P.12(a) is the post-sanction inspection report, conducted by accused No.1 in the unit of accused No.3 i.e., M/s. Satyam Industries on 11.01.2009. In the 100 Spl.CC.180/2013 said report he has observed as to establishment of four units in the larger shed and two units have commenced operation, separating walls are to be properly aligned/ demarcated. He has also observed that borrower has adequate space for storage of horns and finished products of button blanks and monitoring has to be done in the initial months. He has also observed that production was in progress, adequate stocks are available to cover drawings in the account, the production will be about 300 kgs of blanks per day. Therefore, this report reveals as to production progress and availability of the adequate stock. However, on 19.02.2009, PW.14 had conducted post-sanction inspection and her report is marked as Ex.P.12(b). In the said report, she has not stated the location of the unit and stock, but she has stated that raw materials of the value of Rs.80 lakhs is available. It is further reported that the principal person was unavailable for discussion and there is no production happening, despite adequate stock of the raw materials. Workers were absent and those present were not engaged in the work. It is also observed by her that immediate deputing of the responsible persons to manage and oversee the activities is required. Therefore, Ex.P.12(b) report reveals that in the unit of accused No.3, production activity was not happening inspite of presence of adequate stock of raw materials.
91. PW.14 had also given another post-sanction report dated 17.04.2017 as per Ex.P.12(c), wherein also, 101 Spl.CC.180/2013 she has not mentioned location of the unit and stock and stated as to availability of the raw materials of the value of Rs.80.59 lakhs. Perusal of the records show average daily production of 110 to 120 kgs and last consignment was sent on 10.04.2009 as per Sales Invoice. Mr.Shafi (accused No.7), who was in-charge of overall supervision of the units was present and production is taking place and satisfactory. This report revealed the production activity. But, if her evidence in para 26 and 27 are analysed, it is clear that at the time of her visit, there was no production activity at all in the said unit.
92. Ex.P.12(d) is the post-sanction inspection report dated 31.08.2009, by accused No.1 and in the said report, he has not mentioned the Plot Number, Shed Number and location of the stock. However, he has stated that stock approximately worth of Rs.95 lakhs was available, but records are not upto date. He further stated that adequate stocks available to cover the drawings in the account. Sales realisation are reported delayed due to delay in receipt of funds by M/s. Swetha Exports, their principal buyer. It is also stated that the matter discussed over phone with the borrower and M/s. Swetha Exports. Advised them to root all transactions through account. Thus, his report is silent as to whether the production was taking place in the unit at the time of his inspection. Therefore, Ex.P.12(d) does not reveal as to functioning of M/s. Satyam Industries and the report prima-facie appears to be very shabby. At this juncture, the evidence of PW.16 Smt. H.R.Nagamani, the owner of 102 Spl.CC.180/2013 the shed is analyzed, she has specifically stated in her evidence that she had leased the Plot No.120 to 4 firms of accused Nos.3, 4, 7 and 8 and they started manufacturing coat buttons with the help of horns, but after 5 to 6 months, they closed the unit and stopped paying rent. Her evidence also reveals that the key has been handed over to her by Sri. Shafi (accused No.7). This evidence of PW.16 is not subjected to cross- examination and even, it is not the case of the accused No.3, 4, 7 and 8 that they have not handed over the key as stated by her and they continued the production in the said shed and paid the rent for subsequent period. Therefore, the evidence of PW.16 makes it clear that the units established in Plot No.120 by accused No.3, 4, 7 and 8 was closed. As found from the Lease Deed, the Lease Agreement was entered into on 04.12.2008 and functioning of the unit was closed after 5 to 6 months from the date of the lease agreement. Such being the case, as on 31.08.2009, there is no chance of running of the unit. Therefore, it appears that accused No.1 conveniently has not stated anything as to running of the unit.
93. It is also to be noted that as already stated, admittedly, VAT Registration Certificate was taken by accused No.3 as per Ex.P.138 on 08.12.2008 and Ex.P.138(a) notice reveals that notice has been issued by the Assistant Commissioner, Commercial Tax on 07.01.2010 under Section 72 of the KVAT Act, for cancellation of the VAT Registration for failure of the 103 Spl.CC.180/2013 accused No.3 to furnish the returns for November, 2009. All the documents available in Ex.P.138 are analyzed, it appears that the returns were submitted to the Authorities upto September 2009 regarding transaction and Form No.H also reveals the same. Therefore, it clearly appears that the unit of the accused No.3 was functioning for a limited period only.
94. Ex.P.13 is the copy of the statement of stock from January-2009 to March-2009 and May-2009 to September-2009 and for November-2009. The original of the said stock statement found in Ex.P.153 which was seized from the custody of accused No.2. It is noticed that the stock statement for the months January-2009 to March-2009 is not signed by accused No.3 on behalf of his unit, but signed by one K.Sridhar, who was the Proprietor of M/s. Venkateswara Industries (accused No.6). The remaining stock statements are found to be signed by authorised signatory. As already stated, the evidence on record reveals that M/s. Satyam Industries functioned only for a limited period for 5 to 6 months from 04.12.2008, on which, the shed was taken on lease. It is not understood how this stock statement was furnished for the subsequent months when the unit was not functioning. Even the accused No.3 has not produced any document to show that the unit was working even after 5-6 months from the date of lease agreement.
95. Ex.P.14 is the letter dated 18.02.2009, issued by accused No.1 to M/s. Satyam Industries, to furnish Registration Certificate issued by DIC with actual address 104 Spl.CC.180/2013 which was not mentioned in the Certificate dated 15.12.2008 and this is not much relevant. Ex.P.15 is the account opening form, executed by accused No.3 and the said document is not authorized by any of the Bank Officers. Ex.P.16 is the account statement, relating to Cash Credit Loan Account of accused No.3 and Ex.P.16(a) is the Certificate under Sec.2(A) of the Banker's Book of Evidence Act, which reveals the disbursement of the loan amount, the transaction till 05.01.2012 and due amount. Ex.P.17 to P.20, P.23, P.24 are the cheques issued by accused No.3 and they reveal that the accused No.3 had taken the loan amount of Rs.42,50,000 through self cheque and paid Rs.6 lakhs to the accused No.2, Rs.2,70,000/- to accused No.6 Sri.K.Sridhar. Ex.P.21 and P.22 are the pay-in-slips, reveal the deposit of amount to the loan account of the M/s. Satyam Industries. Therefore, from Ex.P.16 to P.24, it is clear that the loan amount was withdrawn by accused No.3 through self-cheque and he has paid Rs.6 lakhs to accused No.2 and Rs.2,70,000/- to accused No.6.
96. Now, the evidence on record relating to M/s. Mallikarjuna Industries of accused No.4 are looked into, admittedly, accused No.4 had filed application for credit facility for Rs.46 lakhs as per Ex.P.25 and his undated request letter is also found as per Ex.P.27. Now, the contents of Ex.P.25 loan application are analysed, it reveals that accused No.4 had given business address as 'P. Venkateswara Rao Prop. Mallikarjuna Industries, KSSIDC, IDA, SM 26 Malur, Kolar District, Karnataka as 105 Spl.CC.180/2013 found in 3.1 of the said application [12.4-(v)]. Further, the accused No.4 in the loan application has stated that the clearance has been obtained from the Pollution Control Authority. Further, in the loan application the manufacturing unit is stated to be existing in the leased premises, but description, extent of the leased premises are not stated in the loan application as required in 12.5 of the application. However, the copy of the Lease Deed is stated to be enclosed as found in 12.6-(a). Further, in the loan application, power contracted load and connected load is stated to be 10 Hp and future power consumption per month is stated to be 100 units as found in 13.1 of the loan application. Further, water is stated to be available near to the industry as found in 13.2 of the loan application and bore-well arrangement for the water is also stated in 18-(f) of the application. It is further noticed from the loan application that in
18.(a), the acquisition of the land is stated through lease and it is well developed. In 18.(c) regarding civil works for factory building, machinery foundation and administrative building are stated to be completed. Further, erection of equipment, commissioning, initial procurement of the raw material, trial run are stated to be in the month of November-2008 and commercial production in the month of December-2008 (18.(g) to (k) of the loan application). But, in this regard, it is pertinent to note that the evidence on record reveals that Shed SM No.26 of KSSIDC Industrial Area, Malur, Kolar District was not allotted to the accused No.4 by KSSIDC at any point of time. In this regard, there is oral evidence of 106 Spl.CC.180/2013 PW.15 Sri.D.Krishnamurthy, the Asst. General Manager, KSSIDC Ltd., who has specifically stated that Super Mini Shed No.25 and 26 were never allotted to any of the six units standing in the name of accused Nos.3 to 8. The said Super Mini Sheds were allotted to Munivenkatappa S/o. Muniyappa, Kumbarpete, Malur. Further, it is not the case of the accused No.4 that shed was either allotted to him or he had taken the said shed under lease. Therefore, prima-facie it is clear that the address given in the loan application is false.
97. As stated supra, in the loan application, accused No.4 has stated that he had obtained clearance from the Pollution Control Authority, but in this regard, there is evidence of PW.7 Smt.V.G.Karthikeyan, the Environmental Officer, Karnataka State Pollution Control Board to the contrary. She in her evidence has specifically stated that accused Nos.3 to 8 have not taken any consent from the Pollution Control Board to start their unit and in that regard the prosecution has also produced the document as per Ex.P.136 issued by PW.7, wherein, it is clearly stated that accused No.3 to 8 had not taken any consent from the Pollution Control Board. Further, it is not the case of the accused No.4 that he had obtained the consent from the Pollution Control Board except stating that clearance has been obtained from Pollution Control Authority in the loan application. Therefore, from the evidence of PW.7 and Ex.P.136, it is crystal clear that, the accused No.4 had not taken any consent from the Pollution Control Board either before 107 Spl.CC.180/2013 establishing the unit or even after. Hence, it is certain that in the loan application, the accused No.4 had given false information in that regard for the reasons best known to him.
98. Now the loan application with regard to leased premises as stated in 12.5 of the loan application is concerned, the accused No.4 has not specified anything as to description and area of the leased premises. In this regard, it is pertinent to note that as admitted by accused No.4, the unit is established in the leased premises and in that regard, the copy of the Lease Deed is available in Ex.P.132 and the original Lease Deed is available in Ex.P.155. On going through the said Lease Deed, it is clear that accused No.4 entered into lease agreement with Smt.H.R.Nagamani, on 04.12.2008 with regard to Shed No.2, Plot No.120, 3rd Phase, KIADB Industrial Area, with regard to 900 sq. ft. out of 3600 sq.ft. for 11 months and monthly rent was fixed at Rs.5000/-. Therefore, it is clear that the accused No.4 had not taken entire plot No.120 situated in 3rd Phase, KIADB Industrial Area, Malur, but had taken only 900 sq.ft out of total area of 3600 sq.ft. It is interesting to note that the Lease Agreement was entered into on 04.12.2008, whereas, the loan application was filed on 22.11.2008. Therefore, it is clear that as on the date of filing of the loan application, the land was not at all leased in favour of accused No.3. Therefore, it appears that intentionally, in the loan application, the description of the leased premises is not mentioned. When the Lease Deed itself was not entered 108 Spl.CC.180/2013 into as on the date of filing of the loan application, it is clear that whatever stated by accused No.4 in the loan application in that regard is false. As already stated, in the loan application, the lease deed is stated to be enclosed. But, as on the date of filing of the loan application, there was no lease agreement in existence. Hence, the question of enclosing the Lease Deed as stated in the loan application does not arise and what is stated in the loan application is false.
99. Further, so far as the power as mentioned in 13.1 of the loan application is concerned, it is stated that contracted and connected load are 10 Hp, but in this regard there is evidence of PW.9 Sri.C.N.Vasudeva, the Asst. Executive Engineer, BESCOM to the contrary. PW.9 in his evidence specifically stated that the BESCOM has not provided any electricity connection to the plot No.120 of KIADB industrial Area in favour of accused Nos.3, 4, 7 and 8 and as per the record, electricity connection for plot No.120 stands in the name of Smt.H.R.Nagamani, for Venkatadri Enterprises and its R.R.No.1958 and serviced on 29.08.2008. Therefore, it is clear that no elctricity connection was taken by accused No.4 in respect of M/s. Mallikarjuna Industries as stated in the loan application. At this stage, on going though the Lease Deed available in the file (Ex.P.132 and P.155) it is noticed that electricity connection with regard to Shed No.120 was only 5 Hp. It is also noticed from the admitted documents available in the file that the Plot No.120 totally measuring 3600 sq. ft was divided into 4 portions as four sheds, measuring 900 109 Spl.CC.180/2013 sq.ft equally and 1 portion i.e., Shed No.2 was taken on lease by accused No.4 and remaining 3 portions (shed No.1,3 and 4) by accused Nos.3, 7 and 8. Such being the case, the information given in the loan application with regard to power is also false to the knowledge of the applicant himself.
100. It is also noticed that in the loan application, water facility is stated to be available near to the industry (13.2) and water arrangement is made through bore-well (18.(f)). But in this regard, the evidence of PW.24 during cross-examination is analyzed, it is suggested that the accused Nos.3 to 8 were purchasing the water from local water suppliers required for their factories. The suggestion so put on behalf of accused No.4 to this effect reveals that there was no water facility through bore-well as stated in the loan application. Therefore, what is stated in the application regarding supply of the water is also false.
101. As stated earlier, in the loan application in 18.
(c) with regard to civil work is concerned, it is stated that factory building, machinery foundation and administrative building are completed. But, as discussed supra, the Lease Agreement in respect of the leased premises in which the industry is stated to be established was entered into only on 04.12.2008 and possession was given under the said Lease Deed. Such being the case, putting up of factory building, machinery foundation and administrative building as on the date of filing the loan application does not arise. Even, in the Lease Deed, the 110 Spl.CC.180/2013 said fact is not found. Hence, there remains no doubt that whatever stated by the accused No.4 with regard to civil work in the loan application is also prima-facie false. Therefore, it is clear that major components of the loan application are false to the knowledge of the applicant/ accused No.4 and false informations are provided only with an ulterior intention to avail the loan facility from the Bank. Accused No.4 has executed the loan application containing the false information to his knowledge to avail loan from the Bank under particular scheme, with fraudulent intention.
102. Now, Ex.P.26 pre-sanction inspection report submitted by accused No.1 is looked into, it is not disputed that the said report is prepared by accused No.1 in connection with the loan transaction. In the said report, it is stated that the unit established by accused No.4 is situated at Malur about 25 kms. from the branch. The unit is engaged into manufacturing of button blanks from buffalo/ ox horns. The horns are available in plenty in Kadiri, Kolar, in and around Bengaluru city from butchers, slaughter houses. The account is being referred by Mr.B.Srinivasa Rao, the proprietor of M/s.Swetha Exports, who is one of the big and good LBD borrowers of Kakinada Branch. In the pre-sanction inspection report in para 1, the accused No.1 has not given the description as to in which place the unit was established. In his report further stated that the unit has obtained registrations from DIC and from Sales Tax Authorities. The unit will be established in plot No.120, Industrial 111 Spl.CC.180/2013 Area Phase III, Malur. Four entrepreneurs have entered into Lease Agreements with the owner of the shed. The shed is of about 3600 sq.ft and each unit is taking up 900 sq.ft for their proposed activities. There is adequate storage space in front and back of the shed and the shed is constructed in an area of ½ acre.
103. It is pertinent to note that in the first paragraph of his report, accused No.1 without specifying the particular place where the unit was established, noted that the unit established by accused No.3 is about 25 kms. away from the Branch, but in another paragraph, he has stated that the unit will be established in plot No.120, Industrial Area, Phase-III, Malur. This version reveals that as on 08.12.2008, the unit was not established. It is also noticed that in the pre-sanction inspection report, accused No.1 has stated that 4 entrepreneurs entered into Lease Agreements with the owners of the shed. But the documents available in Ex.P.133 and 131, the Lease Agreements by accused No.7 and 8 with regard to two portions of Plot No.120 were found to be entered into on 03.02.2009. Such being the case, it is not understood, on what basis accused No.1 has stated in his report as to Lease Agreement of four entrepreneurs with regard to Plot No.120 as on 08.12.2008. It is also to be noted that in the report, the accused No.1 falsely stated that the shed is constructed in an area of ½ acre, as it is totally measuring only 3600 sq.ft and what was leased is also stated to be only 3600 sq.ft in all and not 21,780 sq.ft (½ acre).
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104. It is pertinent to note that in Ex.P.26 pre- sanction inspection report, accused No.1 has stated that the unit has obtained registration from the DIC and Sales Tax Authorities. In this regard, there is evidence of PW.5 Sri.Ansar Pasha, the Superintendent, Office of the Joint Director, District Industries Centre, who in his evidence stated as to application filed by the accused Nos.3 to 8 to DIC and grant of Entrepreneur Memorandum Part I and II in their favour. So far as the accused No.4 is concerned, Ex.P.31 and Ex.P.127 are the EM Part-I and Ex.P.36 and P.132 are EM Part-II, issued by the DIC. On going through the said documents, it is clear that on the basis of the application filed by accused No.4, DIC had granted EM Part-I on 15.12.2008 and EM Part-II on 03.04.2009. Therefore, it is clear that the unit has not obtained the registration from the DIC as on 08.12.2008 and the accused No.1 has falsely stated that the unit has obtained registration from the DIC for the reason best known to him.
105. Further, the registration from the Sales Tax Authorities is concerned, there is evidence of PW.8 Sri.A. Shivaprakash, the Assistant Commercial Tax Inspector, Office of the Assistant Commissioner, Commercial Taxes, Kolar, in his evidence he has stated that accused Nos.3 to 8 had registered under the KVAT Act, 2003. In this regard, the VAT Registration Certificate relating to accused No.4 is found in Ex.P.139, which contains application, check memo, VAT Registration Certificate, notice, Form No.H etc., From Ex.P.139, it is clear that 113 Spl.CC.180/2013 accused No.4 was issued with VAT Registration Certificate on 08.12.2008 and the spot was also visited on the same date as found in the check memo. Therefore, it is clear that only on 08.12.2008, accused No.4 had taken VAT registration from Sales Tax Authorities. But the report of the accused No.1 denotes that the unit has obtained the registration from the Sales Tax Authorities. In the pre-sanction inspection report, there is no details as to at what time accused No.1 conducted the pre- sanction inspection.
106. In the pre-sanction inspection report, it is also stated that the proponent has an experience of about 20 years in the activity at Andhra Pradesh. But, if the contents of the Borrower's Profile found along with the loan application is analyzed, there is no mentioning about the said fact. It is not understood on what basis such statement is made in the report when it is not found in the Borrower's Profile which is filed along with the loan application. But, it is noticed that in Ex.P.28, Borrower's Profile dated 10.12.2008 subsequent to the pre-sanction inspection report in para 32, it is stated that the proprietor of the firm has been associated with buffalo horn button manufacturing unit in A.P. last 8 years and gained adequate experience in the field. If the contents of the loan application and contents of the pre-sanction report of accused No.1 are analyzed, they are not tallying with each other. In Ex.P.26 report, the accused No.1 had not at all stated anything as to the details given in the loan application with regard to the civil work, power/ 114 Spl.CC.180/2013 electricity connection, clearance from the Pollution Control Board, power and water arrangement, erection of equipments, commissioning, initial procurement of the raw materials, trial run and even with regard to the registered office as shown in the loan application. On going though Ex.P.26 pre-sanction inspection report, prima-facie it appears that it is not prepared after inspecting the spot, but prepared to facilitate the sanctioning of the loan even without looking into the available furnished documents. Therefore, it clearly appears that Ex.P.26 is intentionally created by accused No.1 for the purpose of complying the formalities for sanctioning the loan.
107. Ex.P.29 is a sanction letter issued by accused No.1 in favour of accused No.4 granting loan of Rs.47 lakhs in his favour. It is also noticed that on 12.12.2008, the accused No.4 had executed the documents in connection with the loan transaction as to handing over the DP Note in favour of the Bank as per Ex.P.30 which is not properly filled up. Further, Ex.P.30 also includes the certified copy of the Hypothecation-cum-Loan Agreement dated 12.12.2008 executed by accused No.4 reveals that the schedule II, Part A of the Hypothecation-cum-Loan Agreement is kept blank. Therefore, if the entire loan documents are verified, it is clear that the loan application, pre-sanction inspection reports are all falsely created for the purpose of availing and sanctioning the loan and to fulfill the formalities.
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108. In this case, the prosecution has not produced the post-sanction inspection reports. However, there is evidence of PW.14 in that regard. In her evidence, she has stated that, after disbursement, accused No.1 asked her to visit the unit M/s. Mallikarjuna Industries for post-sanction inspection and she had conducted the post-sanction inspection of the said unit on 19.02.2009. The said unit was situated in Malur, KSSIDC Industrial Area. When she inspected the said unit, the borrower was not present and there was one small shed and that was locked. She found that there was no manufacturing activity happening in the shed. It is further stated by her that, again on 17.04.2009 she had conducted second post-sanction inspection of M/s. Mallikarjuna Industries. Before proceeding for inspection, she had noted down the stock from the stock statement submitted by the borrower. No production activity was happening in the said shed meant for M/s. Mallikarjuna Industries. This evidence of PW.14 remained un-challenged. Therefore, it is clear that as on the dates of post-inspection report, there was no production activity in the unit of accused No.4. At this juncture, the evidence of PW.16 Smt. H.R.Nagamani, the owner of the shed is analyzed, she has specifically stated in her evidence that she had leased the Plot No.120 to 4 firms of accused Nos.3, 4, 7 and 8 and they started manufacturing coat buttons with the help of horns, but after 5 to 6 months, they closed the unit and stopped paying rent. Her evidence also reveals that the key has been handed over to her by Sri. Shafi (accused No.7). This evidence of PW.16 is not 116 Spl.CC.180/2013 subjected to cross-examination and even, it is not the case of the accused No.3, 4, 7 and 8 that they have not handed over the key as stated by her and they continued the production in the said shed and paid the rent for subsequent period. Therefore, the conjoint reading of the evidence of PW.14 and PW.16 makes it clear that the unit established in Plot No.120 by accused No.4 was not functioning and it was closed.
109. Ex.P.34 is the copy of the statement of stock from January-2009 to March-2009, May-2009 to September-2009, November-2009 and for January-2010. The original of the said stock statement found in Ex.P.155 which was seized from the custody of accused No.2. It is noticed that the stock statement for the months January-2009 to March-2009 is not signed by accused No.4 on behalf of his unit, but signed by one K.Sridhar, who was the Proprietor of M/s. Venkateswara Industries (accused No.6). The remaining stock statements are found to be signed by authorised signatory. As already stated, the evidence on record reveals that M/s. Mallikarjuna Industries was functioned only for a limited period for 5 to 6 months from 04.12.2008, on which, the shed was taken on lease. It is not understood how this stock statement was furnished for the subsequent months when the unit was not functioning. Even the accused No.4 has not produced any document to show that the unit was working even after 5-6 months from the date of lease agreement.
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110. Ex.P.35 is the letter dated 18.02.2009, issued by accused No.1 to M/s. Mallikarjuna Industries, to furnish Registration Certificate issued by DIC with actual address which was not mentioned in the Certificate dated 15.12.2008 and this is not much relevant. Ex.P.37 is the account opening form, executed by accused No.4 and the said document is authorised by accused No.1. Ex.P.38 is the account statement, relating to Cash Credit Loan Account of accused No.4 and Ex.P.38(a) is the Certificate under Sec.2(A) of the Banker's Book of Evidence Act, which reveals the disbursement of the loan amount the transaction till 05.01.2012 and due amount. Ex.P.39 to P.42, P.45 and P.46 are the cheques issued by accused No.4 and they reveal that the accused No.4 had taken the loan amount of Rs.45 lalkhs through self cheque and paid Rs.1 lakh to the accused No.2 and Rs.6,10,000/- to Sri.K.Sridhar (accused No.6). Ex.P.43 and P.44 are the pay-in-slips, reveal the deposit of amount to the loan account of the M/s. Mallikarjuna Industries. Therefore, from Ex.P.39 to P.44, it is clear that the loan amount was withdrawn by accused No.4 through self-cheque and he had paid Rs.1 lakh to accused No.2 and Rs.6,10,000/- to accused No.6.
111. Now, the evidence on record relating to M/s. Srinivasa Industries of accused No.5 is analyzed, admittedly, accused No.5 has filed application for credit facility for Rs.46 lakhs as per Ex.P.47 and his request letter dated 10.10.2008 is also found as per Ex.P.49 under which, the estimated and projected profitability 118 Spl.CC.180/2013 statement, balance-sheet and CMA data were stated to be furnished. Now, the contents of Ex.P.47 loan application, which is undated are analysed, it reveals that accused No.5 had given business address as 'P. Gangaraju, Prop. M/s. Srinivasa Industries, KSSIDC, IDA, SM 25 Malur, Kolar District, Karnataka' as found in 3.1 of the said application. Further, the accused No.5 in the loan application has stated that the clearance has been obtained from the Pollution control authority 12.4-(v). Further, in the loan application the manufacturing unit is stated to be existing in the leased premises, but description, extent of the leased premises are not stated in the loan application as required in 12.5 of the said application. However, the copy of the Lease Deed is stated to be enclosed as found in 12.6-(a). Further, in the loan application, power contracted load and connected load is stated to be 10 Hp and future power consumption per month is stated to be 100 units as found in 13.1 of the loan application. Further, water is stated to be available near to the industry as found in 13.2 of the loan application and bore-well arrangement for the water is also stated in 18.(f) of the application. It is further noticed from the loan application that in 18.(a), the acquisition of the land is stated through lease and it is well developed. In 18.(c) regarding civil works for factory building, machinery foundation and administrative building are stated to be completed. Further, erection of equipment, commissioning, initial procurement of the raw material, trial run and commercial production are stated to be in the month of October 2008 (18.(g) to (k) of the loan 119 Spl.CC.180/2013 application). But, in this regard, it is pertinent to note that the evidence on record reveals that Shed SM No.25 of KSSIDC Industrial Area, Malur, Kolar District was not allotted to the accused No.5 by KSSIDC at any point of time. In this regard, there is oral evidence of PW.15 Sri. D.Krishnamurthy, the Asst. General Manager, KSSIDC Ltd., who has specifically stated that Super Mini Shed No.25 and 26 were allotted to Sri. Munivenkatappa S/o. Muniyappa, Kumbarpete, Malur Taluk and the said sheds never allotted to any of the 6 units standing in the name of accused Nos. 3 to 8. In that regard, there is document as per Ex.P.161, which reveals that Shed Nos.25 and 26 were allotted to Sri.Munivenkatappa and possession was handed over to him in connection with running of M/s. Sriram Industries. Therefore, it is clear that Shed No.25 was not allotted to M/s.Srinivasa Industries. Further, it is not the case of the accused No.5 that the said shed was allotted to him.
112. As already stated, the loan application is undated. However, the loan was found to be sanctioned on 17.10.2008 as found in Ex.P.51 sanction letter. Ex.P.48 is pre-sanction inspection report of accused No.1, dated 21.09.2008. Therefore, it is certain that the loan application was given as per Ex.P.47 prior to that date i.e., 21.09.2008. As contended by accused No.5, the Shed No.25 of the KSSIDC Industrial Area, Malur was taken on lease by him on 09.10.2008 and possession of the said shed was taken under the said Lease Agreement. The copy of the said Lease Deed is found in Ex.P.140 and 120 Spl.CC.180/2013 the original of the same is found in Ex.P.152 seized from the possession of accused No.2. Therefore, as on the date of filing of the loan application as well as on the date of pre-sanction inspection, accused No.5 was not in possession of the shed No.25 of the KSSIDC Industrial Area, Malur as shown in the loan application. Such being the case, the address shown in the loan application is false.
113. As stated supra, in the loan application, accused No.5 has stated that he had obtained clearance from the Pollution Control Authority, but in this regard, there is evidence of PW.7 Smt.V.G.Karthikeyan, the Environmental Officer, Karnataka State Pollution Control Board to the contrary. She in her evidence has specifically stated that accused Nos.3 to 8 have not taken any consent from the Pollution Control Board to start their unit and in that regard the prosecution has also produced the document as per Ex.P.136 issued by PW.7, wherein, it is clearly stated that accused No.3 to 8 had not taken any consent from the Pollution Control Board. Further, it is not the case of the accused No.5 that he had obtained the consent from the Pollution Control Board except stating that clearance has been obtained from the Pollution Control Authority in the loan application. Therefore, from the evidence of PW.7 and Ex.P.136, it is crystal clear that, the accused No.5 had not taken any consent from the Pollution Control Board either before establishing the unit or even after. Hence, it is certain that in the loan application, the accused No.5 had given 121 Spl.CC.180/2013 false information in that regard for the reasons best known to him.
114. Now the loan application with regard to leased premises as stated in 12.5 of the loan application is concerned, the accused No.5 has not specified anything as to description and area of the leased premises. In this regard, it is pertinent to note that as admitted by accused No.5, the unit is established in the leased premises and in that regard, the copy of the Lease Deed is available in Ex.P.140 and the original Lease Deed is available in Ex.P.152. On going through the said Lease Deed, it is clear that accused No.5 entered into lease agreement with one Sri. S.Prakash S/o. Sri. Y. Seenappa on 09.10.2008 with regard to Shed No.25 of KSSIDC Industrial Area, which is measuring only 500 sq.ft for 11 months and monthly rent was fixed at Rs.4,500/-. It is interesting to note that the Lease Agreement was entered into on 09.10.2008, whereas, the loan application was filed prior to 21.09.2008. Therefore, it is clear that as on the date of filing of the loan application, the shed was not leased in favour of accused No.5. Therefore, it appears that intentionally, in the loan application, the description of the leased premises is not mentioned. When the Lease Deed itself was not entered into as on the date of filing of the loan application, it is clear that whatever stated by accused No.5 in the loan application in that regard is false. As already stated, in the loan application, the lease deed is stated to be enclosed. But, as on the date of filing of the loan application, there was no lease agreement in 122 Spl.CC.180/2013 existence. Hence, the question of enclosing the Lease Deed as stated in the loan application does not arise and what is stated in the loan application is false.
115. Further, so far as the power as mentioned in 13.1 of the loan application is concerned, it is stated that contracted and connected load are 10 Hp, but in this regard, there is evidence of PW.9 Sri.C.N.Vasudeva, the Asst. Executive Engineer, BESCOM to the contrary. PW.9 in his evidence specifically stated that the BESCOM has provided electricity connection to plot No.25 of KIADB industrial Area, Malur in the name of M/s. Sriram Industries. BESCOM has not provided electricity connection/ supply to accused Nos.5 and 6 and others in plot Nos.25 or 26. Therefore, it is clear that no electricity connection was taken by accused No.5 in respect of M/s.Srinivasa Industries as stated in the loan application. At this stage, it is also pertinent to note that, as deposed by PW.15, the shed No.25 was allotted to Sri.Munivenkatappa S/o.Muniyappa of Kumbarpete, Malur Taluk and not to Sri.S.Prakash S/o.Y.Seenappa with whom, the accused No.5 entered into Lease Agreement. Under such circumstances, the Lease Agreement also creates serious doubt so as to claim the said shed by accused No.5 and the electricity connection to the unit of the accused No.5. Such being the case, the information given in the loan application with regard to power is also false to the knowledge of the applicant himself.
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116. It is also noticed that in the loan application, water facility is stated to be available near to the industry (13.2) and water arrangement is made through bore-well (18.(f)). But in this regard, the evidence of PW.24 during cross-examination is analyzed, it is suggested that the accused Nos.3 to 8 were purchasing the water from local water suppliers required for their factories. The suggestion so put on behalf of accused No.5 to this effect reveals that there was no water facility through bore-well as stated in the loan application. Therefore, what is stated in the application regarding supply of the water is also false.
117. As stated earlier, in the loan application in 18.
(c) with regard to civil work is concerned, it is stated that factory building, machinery foundation and administrative building completed. But, as discussed supra, the Lease Agreement in respect of the leased premises in which the industry is stated to be established was entered into only on 09.10.2008 and taking possession of the said shed under the said lease agreement is also very doubtful as lessor was not the allottee of the said shed. Such being the case, putting up of factory building, machinery foundation and administrative building as on the date of filing the loan application does not arise. Even in the Lease Deed, the said fact is not found. Hence, there remains no doubt that whatever stated by the accused No.5 with regard to civil work in the loan application is also prima-facie false. Therefore, it is clear that major components of the loan 124 Spl.CC.180/2013 application are false to the knowledge of the applicant and false informations are provided only with an ulterior motive to avail the loan facility from the Bank. Accused No.5 has executed the loan application containing the false information to his knowledge to avail loan from the Bank under particular scheme with fraudulent intention.
118. Now, Ex.P.48 pre-sanction inspection report submitted by accused No.1 is looked into, it is not disputed that the said report is prepared by accused No.1 in connection with the loan transaction. In the said report, it is stated that the accused No.5 is in the process of establishing the buffalo/cow horn button manufacturing unit in the Industrial Area, Malur. He hails from A.P. and is introduced to the Branch by Mr.B. Srinivas Rao, Principal person of M/s. Swetha Exports, a LBD Account of Kakinada Branch in Visakapatnam Zone. In the pre-sanction inspection report, there is nothing with regard to the unit of the accused No.5. If the contents of the said report are analysed, one cannot accept that it is the pre-sanction inspection report. Further, the contents of the loan application and contents of the pre-sanction report of accused No.1 are analyzed, they are not tallying with each other. In Ex.P.48 report, the accused No.1 had not at all stated anything as to the details given in the loan application with regard to the civil work, power/ electricity connection, clearance from the Pollution Control Board, power and water arrangement, erection of equipments, commissioning, initial procurement of the raw materials, trial run and 125 Spl.CC.180/2013 even with regard to the registered office as shown in the loan application. On going though Ex.P.48 pre-sanction inspection report, prima-facie it appears that it is not prepared after inspecting the spot, but created to facilitate the sanctioning of the loan, even without looking into the available furnished documents. Therefore, it clearly appears that Ex.P.48 is created by accused No.1 for the purpose of complying the formalities for sanctioning the loan.
119. Ex.P.50 is the Borrower's Profile, wherein, para 32 Management Column, it is stated that the Proprietor of the Firm has been with some of the buffalo horn button manufacturing unit in A.P. and it is not understood on what basis the said entry is made in the borrower's profile. Ex.P.51 is the certified copy of the sanction letter dated 17.10.2008 issued by Bank of India in favour of accused No.5 and Ex.P.52 contains DP Note and other loan documents including Hypothecation-cum- Loan Agreement. On going through the said documents, it is noticed that the said documents are not properly filled up and even Schedule-II of the Hypothecation Agreement is kept blank. Therefore, it clearly appears that only for the compliance of the formalities such documents are found to be taken without any seriousness. Hence, if the entire loan documents are verified, it is clear that the loan application, pre-sanction inspection reports are all falsely created for the purpose of availing and sanctioning the loan.
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120. Ex.P.53 is the copy of the EM Part-I and it is also marked in Ex.P.125, which is not in dispute and not much relevant. Ex.P.56(a) is post-sanction inspection report, dated 08.11.2008 conducted by PW.14 in the unit of accused No.5 i.e., M/s. Srinivasa Industries. In the said report, she has not stated the location of the unit and stock, but only stated that this is the new unit just commenced production and has good scope. She has not stated anything about running of the said unit in her report. Ex.P.56(b), is the second post-sanction inspection report dated 19.02.2009, submitted by PW.14, wherein also she has not stated the location of the unit as well as the stock, but stated as to the stock of the raw materials of worth Rs.80.19 lakhs and further observed that despite of the presence of huge stock of raw materials, the finished product was less in comparison. There was no activity taking place, there were less number of workers, it was informed that due to death of the worker's relative, they have all gone to their native place. She has also stated that it is necessary to appoint a respectable person to manage and over see the activities. The said report reveals that no activity was taking place at the time of her second inspection also.
121. Ex.P.56(c) is the third post-sanction inspection report dated 17.04.2009 conducted by PW.14. In the said report also, she has not stated location of the unit and stock and stated only stock of raw materials and finished goods of worth Rs.82.78 lakhs. She has also observed that continuous production is taking place and 127 Spl.CC.180/2013 stocks present and over all observation is satisfactory, however, close monitoring is required. But in this regard, her evidence in para 17, 18 and 19 are looked into, wherein she has specifically stated that no production activity in the said industry. Ex.P.56(d) is the fourth post- sanction inspection report dated 31.08.2009 by accused No.1. In the said report, he has not mentioned the precise location of the unit and stock, however stated that adequate stock of raw materials are available. Due to slow down of exports, realisation are extended affecting remittances sack to the unit.
122. Ex.P.57 is the copy of the statement of stock from October-2008 to March-2009, May-2009 to September-2009 and for the month of January-2010. But the stock statements of October-2008 to March-2009 and of January-2010 were signed by K. Sridhar (accused No.6) and the stock statements from May-2009 to September-2009 were signed by accused No.5. The said stock statement is found in Ex.P.152 which was seized from the custody of accused No.2. Ex.P.58 is the account opening form and the said account opening form is not authorized by any of the Bank officers. It is accompanied with copy of the KYC documents.
123. Ex.P.59 is the account statement, relating to Cash Credit Loan Account of accused No.5 and Ex.P.59(a) is the Certificate under Sec.2(A) of the Banker's Book of Evidence Act, which reveals the disbursement of the loan amount and the transaction till 05.01.2012 and also due amount. Ex.P.60 to P.67, P.70, P.71 are the cheques 128 Spl.CC.180/2013 issued by accused No.5 and they reveal that the accused No.5 had withdrawn the amount from the account to the tune of Rs.46,10,000 through self cheque and paid Rs.3 lakhs to the accused No.2 and Rs.6,55,000/- to Sri. K.Sridhar (accused No.6). Ex.P.68 and P.69 are the pay- in-slips, reveal the deposit of amount to the loan account of the M/s. Srinivasa Industries. Therefore, from Ex.P.59 to P.71, it is clear that the loan amount was withdrawn by accused No.5 through self-cheque and he has paid Rs.3 lakhs to accused No.2 and Rs.6,55,000/- to Sri.K.Sridhar (accused No.6).
124. The evidence relating to M/s. Venkateswara Industries is analyzed, admittedly, accused No.6 has filed application for credit facility for Rs.46 lakhs as per Ex.P.72 and his request letter dated 10.10.2008 is also found as per Ex.P.74. Now, the contents of Ex.P.72 loan application are analyzed, they reveal that the accused No.6 in the loan application has stated that the clearance has been obtained from the Pollution control authority as mentioned in 12.4-(v) of the said application. Further, in the loan application the manufacturing unit is stated to be existing in the leased premises, but description, extent of the leased premises are not stated in the loan application as required in 12.5 of the application. However, the copy of the Lease Deed is stated to be enclosed as found in 12.6-(a). Further, in the loan application, power contracted load and connected load is stated to be 10 Hp and future power consumption per month is stated to be 100 units as found in 13.1 of the 129 Spl.CC.180/2013 application. Further, water is stated to be available near to the industry as found in 13.2 of the application and bore-well arrangement for the water is also stated in 18.
(f) of the application. It is further noticed from the loan application that in 18.(a), the acquisition of the land is stated through lease and it is well developed. In 18.(c) regarding civil works for factory building, machinery foundation and administrative building is stated to be completed. Further, erection of equipment, commissioning, initial procurement of the raw material, trial run and commercial production are stated to be in the month of October 2008 (18.(g) to (k) of the loan application). But, in this regard, it is pertinent to note that the evidence on record reveals that Shed SM No.26 of KSSIDC Industrial Area, Malur, Kolar District was not allotted to the accused No.6 by KSSIDC at any point of time. In this regard, there is oral evidence of PW.15 Sri. D.Krishnamurthy, the Asst. General Manager, KSSIDC Ltd., who has specifically stated that Super Mini Shed No.25 and 26 were allotted to Sri. Munivenkatappa S/o. Muniyappa, Kumbarpete, Malur Taluk and the said sheds were never allotted to any of the 6 units standing in the name of accused Nos. 3 to 8. In that regard, there is document as per Ex.P.161, which reveals that Shed Nos.25 and 26 were allotted to Sri.Munivenkatappa and possession was handed over to him in connection with running of M/s. Sriram Industries. Therefore, it is clear that Shed No.26 was not allotted to M/s. Venkateswara Industries. Further, it is not the case of the accused No.6 that the said shed was allotted to him. On the other 130 Spl.CC.180/2013 hand, he claims the possession of the said shed under the Lease Deed dated 09.10.2008, the copy of which is found in Ex.P.141 and the original of the said Lease Agreement is found in Ex.P.154 seized from the custody of accused No.2.
125. As stated supra, in the loan application, accused No.6 has stated that he had obtained clearance from the Pollution Control Authority, but in this regard, there is evidence of PW.7 Smt.V.G.Karthikeyan, the Environmental Officer, Karnataka State Pollution Control Board to the contrary. She in her evidence has specifically stated that accused Nos.3 to 8 have not taken any consent from the Pollution Control Board to start their unit and in that regard the prosecution has also produced the document as per Ex.P.136 issued by PW.7, wherein, it is clearly stated that accused No.3 to 8 had not taken any consent from the Pollution Control Board. Further, it is not the case of the accused No.6 that he had obtained the consent from the Pollution Control Board except stating that clearance has been obtained from the Pollution Control Authority in the loan application. Therefore, from the evidence of PW.7 and Ex.P.136, it is crystal clear that, the accused No.6 had not taken any consent from the Pollution Control Board either before establishing the unit or even after. Hence, it is certain that in the loan application, the accused No.6 had given false information in that regard for the reasons best known to him.
131 Spl.CC.180/2013
126. Now the loan application with regard to leased premises as stated in 12.5 of the loan application is concerned, the accused No.6 has not specified anything as to description and area of the leased premises. On going through the Lease Deed available in the file, it is clear that accused No.6 entered into lease agreement with one Sri. S.Prakash S/o. Sri.Y.Seenappa on 09.10.2008 with regard to Shed No.26 of KSSIDC Industrial Area, which is measuring only 500 sq.ft for 11 months and monthly rent was fixed at Rs.4,500/-. It is not understood for what reason, the description of the leased premises is not given in the loan application.
127. Further, so far as the power as mentioned in 13.1 of the loan application is concerned, it is stated that contracted and connected load are 10 Hp, but in this regard, there is evidence of PW.9 Sri.C.N.Vasudeva, the Asst. Executive Engineer, BESCOM to the contrary. PW.9 in his evidence specifically stated that the BESCOM has not provided electricity connection to SM 26 Plot as it was locked and vacant and in that regard, the prosecution has also got marked Ex.P.145, the letter issued by PW.9, wherein it is stated that for plot No.26, KSSIDC Industrial Area, there is no power connection and it was in locked condition during his visit on 15.03.2012. It is not the case of accused No.6 that he had taken electricity connection in his name. Therefore, it is clear that no electricity connection was taken by accused No.6 in respect of M/s. Venkateswara Industries as stated in the loan application. At this stage, it is also 132 Spl.CC.180/2013 pertinent to note that, as deposed by PW.15, the shed No.26 was allotted to Sri.Munivenkatappa S/o.Muniyappa of Kumbarpete, Malur Taluk and not to Sri.S.Prakash S/o.Y.Seenappa with whom, the accused No.6 entered into Lease Agreement. Under such circumstances, the Lease Agreement also creates serious doubt so as to claim the said shed by accused No.6 and the electricity connection to the unit of the accused No.6. Such being the case, the information given in the loan application with regard to power is also false to the knowledge of accused No.6 himself.
128. It is also noticed that in the loan application, water facility is stated to be available near to the industry (13.2) and water arrangement is made through bore-well (18.(f)). But in this regard, the evidence of PW.24 during cross-examination is analyzed, it is suggested that the accused Nos.3 to 8 were purchasing the water from local water suppliers required for their factories. The suggestion so put on behalf of accused No.6 to this effect reveals that there was no water facility through bore-well as stated in the loan application. Therefore, what is stated in the application regarding supply of the water is also false.
129. As stated earlier, in the loan application in 18.
(c) with regard to civil work is concerned, it is stated that factory building, machinery foundation and administrative building completed. But, as discussed supra, the Lease Agreement in respect of the leased premises in which the industry is stated to be established 133 Spl.CC.180/2013 was entered into only on 09.10.2008 and taking possession of the said shed under the said lease agreement is also very doubtful as lessor was not the allottee of the said shed. Such being the case, putting up of factory building, machinery foundation and administrative building as on the date of filing the loan application cannot be accepted. Even in the Lease agreement, the said fact is not found. Hence, there remains no doubt that whatever stated by the accused No.6 with regard to civil work in the loan application is also prima-facie false. Therefore, it is clear that major components of the loan application are false to the knowledge of the applicant and false informations are provided only with an ulterior intention to avail the loan facility from the Bank. Accused No.6 has executed the loan document containing the false information to his knowledge to avail loan from the Bank under particular scheme, with fraudulent intention.
130. Now, Ex.P.73 pre-sanction inspection report submitted by accused No.1 is looked into, it is not disputed that the said report is prepared by accused No.1 in connection with the loan transaction. The said pre- sanction Inspection is dated 21.09.2008 and even it is not signed by accused No.1. At this stage, it is pertinent to note that the loan application was filed on 10.10.2008 and whereas, the pre-sanction inspection report is on 21.09.2008 i.e., to say, before filing the loan application, the pre-sanction inspection report is prepared which cannot be accepted. In said report, it is stated that the 134 Spl.CC.180/2013 accused No.6 is in the process of establishing the buffalo/cow horn button manufacturing unit in the Industrial Area, Malur. He hails from A.P. and is introduced to the Branch by Mr.B.Srinivas Rao, Principal person of M/s. Swetha Exports, a LBD Account of Kakinada Branch in Visakapatnam Zone. In the pre- sanction inspection report, there is nothing with regard to the unit of the accused No.6. If the contents of the said report are analyzed, one cannot accept that it is the pre- sanction inspection report after inspecting the unit. In Ex.P.73 report, the accused No.1 had not at all stated anything as to the details given in the loan application with regard to the civil work, power/ electricity connection, clearance from the Pollution Control Board, power and water arrangement, erection of equipments, commissioning, initial procurement of the raw materials, trial run etc., On going though Ex.P.73 pre-sanction inspection report, prima-facie it appears that it is prepared without inspecting the spot to facilitate the sanctioning of the loan and to comply the formalities for sanctioning the loan.
131. Ex.P.75 is the Borrower's Profile, wherein, para 32 Management Column, it is stated that the Proprietor of the Firm has been with some of the buffalo horn button manufacturing unit in A.P. and has gained sufficient knowledge to carry on the activity on his own. It is not understood on what basis the said entry is made in the borrower's profile. Ex.P.76 is the DP Note dated 17.10.2008, executed by accused No.6 in favour of the 135 Spl.CC.180/2013 Bank and it is accompanied with documents including Hypothecation-cum-Loan Agreement. The said documents are found to be not properly filled up. Therefore, it clearly appears that only for the compliance of the formalities such documents are found to be taken without any seriousness. Hence, if the entire loan documents are verified, it is clear that the loan application, pre-sanction inspection reports are all falsely created for the purpose of availing and sanctioning the loan.
132. Ex.P.77 is the copy of the EM Part-I and it is also marked in Ex.P.126, which is not in dispute and not much relevant. Ex.P.80(a) is post-sanction inspection report, dated 08.11.2008 conducted by PW.14 in the unit of accused No.6 i.e., M/s. Venkateswara Industries. In the said report, she has not stated the location of the unit and stock, but only stated that this is the new unit just to commence the manufacturing and has got good scope for growth. She has not stated anything about running of the said unit in her report. Ex.P.80(b), is the second post-sanction inspection report dated 19.02.2009, submitted by PW.14, wherein also she has not stated the location of the unit as well as the stock, but stated that there was a stock of raw materials of worth Rs.86.45 lakhs and further stated that despite of the presence of adequate stock of raw materials, no production is taking place, no proper management and supervision and there were no workers at the place of production. She has also 136 Spl.CC.180/2013 stated that there is an immediate need to depute a responsible person to oversee the activity.
133. Ex.P.80(c) is the third post-sanction inspection report dated 17.04.2009 conducted by PW.14. In the said report also, she has not stated location of the unit and stock and stated only as to stock of raw materials and finished goods of worth Rs.87.05 lakhs. She has also observed that continuous production is taking place and stocks present and over all observed that with proper supervision, the activity is taking place at the unit. The unit is going on satisfactorily. Ex.P.80(d) is the fourth post-sanction inspection report dated 31.08.2009 by accused No.1. In the said report, he has not mentioned the precise location of the unit and stock, however stated that adequate stock to cover the account drawings available and turnover in the account is poor, to be improved and account to be monitored regularly.
134. Ex.P.81 is the copy of the statement of stock from October-2008 to March-2009, May-2009 to September-2009 and for the month of November-2009 January-2010. The original stock statement is found in Ex.P.154 which was seized from the custody of accused No.2. Ex.P.82 is the account opening form and the said account opening form is not authorized by any of the Bank officers. It is accompanied with copy of the KYC documents.
135. Ex.P.83 is the account statement, relating to Cash Credit Loan Account of accused No.6 and Ex.P.83(a) 137 Spl.CC.180/2013 is the Certificate under Sec.2(A) of the Banker's Book of Evidence Act, which reveals the disbursement of the loan amount and the transaction till 23.02.2012 and also due amount. Ex.P.84 to P.92, P.94, P.95 are the self-cheques issued by accused No.6 and they reveal that the accused No.6 had withdrawn the amount from the account as found in Ex.P.83. Ex.P.93 is the pay-in-slip, which reveals the deposit of amount to the loan account of the M/s. Venkateswara Industries. Therefore, from Ex.P.83 to P.95, it is clear that the loan amount was withdrawn by accused No.6 through self-cheque and the transaction made.
136. The evidence relating to M/s. S.K.Valli Industries is analyzed, admittedly, accused No.7 has filed application for credit facility of Rs.48 lakhs as per Ex.P.96. Now, the contents of Ex.P.96 loan application are analysed, it reveals that the accused No.7 in the loan application has given business address as "Sheik Mohammed Shafi, Prop. Of S.K.Valli Industries, KSSIDC, IDA Shed No.120-C, Malur, Kolar District' as found in 3.1 of the said application. Further, the accused No.7 in the loan application 12.4-(v) has stated that clearance has been obtained from Pollution Control Authority. Further, it is stated that manufacturing unit is existing in leased premises, but the description and extent of the leased premises are not stated in the loan application as required in 12.5 of the application. However, the copy of the Lease Deed is stated to be enclosed as found in 12.6-
(a). Further, in the loan application, power contracted 138 Spl.CC.180/2013 load and connected load is stated to be 10 Hp and future power consumption per month is stated to be 110 units as found in 13.1 of the application. Further, water is stated to be available near to the industry as found in 13.2 of the application and bore-well arrangement for the water is also stated in 18.(f) of the application. It is further noticed from the loan application that in 18.(a), the acquisition of the land is stated through lease and it is well developed. In 18.(c) regarding civil works for factory building, machinery foundation and administrative building is stated to be completed. Further, erection of equipment, commissioning, initial procurement of the raw material, trial run in the month of January-2009 and commercial production is stated to be in the month of February-2009 (18.(g) to (k) of the loan application). But, in this regard, it is pertinent to note that the evidence on record reveals that Shed SM No.120-C of KSSIDC Industrial Area, Malur, Kolar District was not at all in existence and not allotted to the unit of accused No.7 at any point of time. In this regard, there is oral evidence of PW.15 Sri. D.Krishnamurthy, the Asst. General Manager, KSSIDC Ltd., who has specifically stated that SM No.120-C is not at all in existence in KSSIDC Industrial Estate, Malur and they have not allotted any shed in KSSIDC Indistrial Estate Malur in the name of M/s. S.K.Valli Industries and M/s. Vinayaka Enterprises. Further, it is not the case of the accused No.7 that the said shed was allotted to him or he had taken the same under lease. The said shed itself is not in existence as per the evidence of PW.15, who is the 139 Spl.CC.180/2013 competent witness to say in that regard. Therefore, prima-facie it is clear that the address given in the loan application is false.
137. As stated supra, in the loan application, accused No.7 has stated that he had obtained clearance from the Pollution Control Authority, but in this regard, there is evidence of PW.7 Smt.V.G.Karthikeyan, the Environmental Officer, Karnataka State Pollution Control Board to the contrary. She in her evidence has specifically stated that accused Nos.3 to 8 have not taken any consent from the Pollution Control Board to start their unit and in that regard, the prosecution has also produced the document as per Ex.P.136 issued by PW.7, wherein, it is clearly stated that accused No.3 to 8 had not taken any consent from the Pollution Control Board. Further, it is not the case of the accused No.7 that he had obtained the consent from the Pollution Control Board, except stating in the loan application as to clearance obtained from the Pollution Control Authority. Therefore, from the evidence of PW.7 and Ex.P.136, it is crystal clear that, the accused No.7 had not taken any consent from the Pollution Control Board either before establishing the unit or even after. Hence, it is certain that in the loan application, the accused No.7 had given false information in that regard for the reasons best known to him.
138. The loan application with regard to leased premises as stated in 12.5 of the loan application is looked into, the accused No.7 has not specified anything as to description and area of the leased premises. On 140 Spl.CC.180/2013 going through copy of the Lease Deed available in Ex.P.103(d) and in Ex.P.133 file, it is clear that accused No.7 entered into lease agreement with one Smt.H.R.Nagamani on 03.02.2009 in respect of Shed No.3 in Plot No.120, III Phase, KIADB Industrial Area, measuring 900 sq.ft out of 3,600 sq.ft for 11 months and monthly rent was fixed at Rs.5,000/-. Therefore, it is clear that accused No.7 has not taken entire plot No.120 situated in III Phase, KIADB Industrial Area, but he had taken only 900 sq.ft out of total area of 3600 sq.ft.
139. Further, so far as the power as mentioned in 13.1 of the loan application is concerned, it is stated that contracted and connected load are 10 Hp, but in this regard, there is evidence of PW.9 Sri.C.N.Vasudeva, the Asst. Executive Engineer, BESCOM to the contrary. PW.9 in his evidence specifically stated that the BESCOM has not provided electricity connection to Plot No.120 of KIADB Industrial Area, Malur in favour of accused Nos.3, 4, 7 and 8 and as per the records, electrity connection for plot No.120 stands in the name of Smt.H.R.Nagamani for Venkatadri Enterprises and its RR No.1958 and serviced on 29.08.2008. Therefore, it is clear that no electricity connection was taken by accused No.7 in respect of M/s. S.K.Valli Industries as stated in the loan application. At this stage, on going through the Lease Deed available in the file (Ex.P.132 and P.155 relating to M/s.Mallikarjuna Industries) it is noticed that the electricity connection with regard to Shed No.120 was only 5 Hp. It is also noticed from the admitted documents available in the file 141 Spl.CC.180/2013 that Plot No.120 is totally measuring 3600 sq.ft was divided into 4 portions as 4 sheds measuring 900 sq.ft equally and one portion i.e., shed No.3 was taken on lease by accused No.7 and remaining 3 portions i.e., Shed No.1, 2 and 4 by accused No.3, 4 and 8. Such being the case, the information given in the loan application with regard to power is also false to the knowledge of the accused No.7.
140. It is also noticed that in the loan application, water facility is stated to be available near to the industry (13.2) and water arrangement is made through bore-well (18.(f)). But in this regard, the evidence of PW.24 during cross-examination is analyzed, it is suggested that the accused Nos.3 to 8 were purchasing the water from local water suppliers required for their factories. The suggestion so put on behalf of accused No.7 to this effect reveals that there was no water facility through bore-well as stated in the loan application. Therefore, what is stated in the application regarding supply of the water is also false.
141. As stated earlier, in the loan application in 18.
(c) with regard to civil work is concerned, it is stated that factory building, machinery foundation and administrative building completed. But, as discussed supra, the Lease Agreement in respect of the leased premises in which the industry is stated to be established was entered into only on 03.02.2009 and possession of the said shed was taken under the said lease agreement. The Lease Agreement does not disclose the existence of 142 Spl.CC.180/2013 factory building, machinery foundation and administrative building as stated in the loan application. Therefore, it is clear that the accused No.7 had given false information with regard to civil work in the loan application. Even in the loan application, it is stated that the erection of the equipment, commissioning, initial procurement of the raw materials, trial run in the month of January-2009 and commercial production in February-2009. But, the possession of the shed was taken on 03.02.2009 only as found in the lease agreement. Such being the case, the information given in the loan application in that regard is also false. Therefore, it is clear that major components of the loan application are false to the knowledge of the accused No.7 and false informations are provided only with an ulterior intention to avail the loan facility from the Bank. Accused No.7 had executed the loan application containing false information to his knowledge, with fraudulent intention to avail loan from the Bank under particular scheme, by inducing the bank.
142. Ex.P.96(a) is Borrower's/ Guarantor's Profile, submitted to the Bank and verified by accused No.1, which is not much relevant. Ex.P.97 the pre-sanction inspection report dated 13.04.2009 submitted by accused No.1 is looked into, it is not disputed that the said report is prepared by accused No.1 in connection with the loan transaction. But on going through the said pre-sanction Inspection Report, one cannot accept that the said report is after inspecting the unit. In the said report, the 143 Spl.CC.180/2013 accused No.1 had not at all stated anything as to the details given in the loan application with regard to the civil work, power/ electricity connection, clearance from the Pollution Control Board, power and water arrangement, erection of equipments, commissioning, initial procurement of the raw materials, trial run etc., On going though Ex.P.73 pre-sanction inspection report, prima-facie it appears that it is prepared without inspecting the spot to facilitate the sanctioning of the loan and to comply the formalities for sanctioning the loan. Ex.P.97 also contains post-sanction inspection report of PW.14 on 17.04.2009 as per Ex.P.97(b), wherein it is stated that the machines are installed and there are four employed, production has commenced. The said report also reveals visit of PW.14 along with concurrent auditor.
143. Ex.P.98 is the Borrower's Profile, prepared by the accused No.1 which is not recommended by any other officer of the Bank. In Management Column of para 32, it is stated that the Proprietor of the Firm has been with some of the buffalo horn button manufacturing units in A.P. over the last decades and has gained adequate experience in the field. But the said fact is not found in the borrower's profile submitted by accused No.7 as per Ex.P.96(a). Ex.P.99 is the DP Note dated 20.04.2009, executed by accused No.7 in favour of the Bank and it is accompanied with documents including Hypothecation- cum-Loan Agreement. The said documents are found to be not properly filled up. Even in the Hypothecation-cum-
144 Spl.CC.180/2013 Loan Agreement, Schedule-II Part A kept blank. Therefore, it clearly appears that only for the compliance of the formalities such documents are found to be taken without any seriousness.
144. Ex.P.100 is the post-sanction inspection report dated 31.08.2009of accused No.1. In the said report, he has not given clear description of the location of the stock and unit, except stating that KIADB Industrial Area, Malur. In his report, he has stated that adequate stock available to cover drawing in the account.
145. Ex.P.101 is the copy of the statement of stock from May-2009 to September-2009 and January-2010. The original stock statement is found in Ex.P.156 which was seized from the custody of accused No.2. Ex.P.103 is the account opening form and the said account opening form is not authorized by any of the Bank officers and it is undated and even which kind of account is to be opened is also not stated. Ex.P.103(a) to 103(e) are the KYC documents including the lease agreement and EM Part-II issued by DIC, which are not much relevant.
146. Ex.P.104 is the account statement, relating to Cash Credit Loan Account of accused No.7 and Ex.P.104(a) is the Certificate under Sec.2(A) of the Banker's Book of Evidence Act, which reveals the disbursement of the loan amount and the transaction till 05.01.2012 and also due amount. Ex.P.105 to P.108 are the self-cheque issued by accused No.7 and they reveal that the accused No.7 had withdrawn the amount from 145 Spl.CC.180/2013 the account as found in Ex.P.104. Therefore, from Ex.P.104 to P.108, it is clear that the loan amount was withdrawn by accused No.7 through self-cheque and the transaction made.
147. The evidence relating to M/s. Vinayaka Enterprises is analyzed, admittedly, accused No.8 has filed application for credit facility for Rs.48 lakhs as per Ex.P.109. Now, the contents of Ex.P.109 loan application are analysed, it is revealed that the accused No.8 in the loan application has given business address as "Thota Muni Shankaraiah, Prop. of Vinayaka Enterprises, KSSIDC, IDA SM.120-C, Malur, Kolar District, Karnataka' as found in 3.1 of the said application. Further, the accused No.8 in the loan application 12.4-(v) has stated that clearance has been obtained from Pollution Control Authority. Further, it is stated that manufacturing unit is existing in leased premises, but the description and extent of the leased premises are not stated in the loan application as required in 12.5 of the application. However, the copy of the Lease Deed is stated to be enclosed as found in 12.6-(a). Further, in the loan application, power contracted load and connected load is stated to be 10 Hp and future power consumption per month is stated to be 110 units as found in 13.1 of the application. Further, water is stated to be available near to the industry as found in 13.2 of the application and bore-well arrangement for the water is also stated in
18.(f) of the application. It is further noticed from the loan application that in 18.(a), the acquisition of the land is 146 Spl.CC.180/2013 stated through lease and it is well developed. In 18.(c) regarding civil works for factory building, machinery foundation and administrative building is stated to be completed. Further, erection of equipment, commissioning, initial procurement of the raw material, trial run in the month of January-2009 and commercial production is stated to be in the month of February-2009 (18.(g) to (k) of the loan application). But, in this regard, it is pertinent to note that the evidence on record reveals that Shed SM No.120-C of KSSIDC Industrial Area, Malur, Kolar District was not at all in existence and not allotted to the unit of accused No.8 at any point of time. In this regard, there is oral evidence of PW.15 Sri. D.Krishnamurthy, the Asst. General Manager, KSSIDC Ltd., who has specifically stated that SM No.120-C is not at all in existence in KSSIDC Industrial Estate, Malur and they have not allotted any shed in KSSIDC Indistrial Estate Malur in the name of M/s. S.K.Valli Industries and M/s. Vinayaka Enterprises. Further, it is not the case of the accused No.8 that the said shed was allotted to him or he had taken the same under lease. The said shed itself is not in existence as per the evidence of PW.15, who is the competent witness to say in that regard. Therefore, prima-facie it is clear that the address given in the loan application is false.
148. As stated supra, in the loan application, accused No.8 has stated that he had obtained clearance from the Pollution Control Authority, but in this regard, there is evidence of PW.7 Smt.V.G.Karthikeyan, the 147 Spl.CC.180/2013 Environmental Officer, Karnataka State Pollution Control Board to the contrary. She in her evidence has specifically stated that accused Nos.3 to 8 have not taken any consent from the Pollution Control Board to start their unit and in that regard, the prosecution has also produced the document as per Ex.P.136 issued by PW.7, wherein, it is clearly stated that accused No.3 to 8 had not taken any consent from the Pollution Control Board. Further, it is not the case of the accused No.8 that he had obtained the consent from the Pollution Control Board, except stating in the loan application as to clearance obtained from the Pollution Control Authority. Therefore, from the evidence of PW.7 and Ex.P.136, it is crystal clear that, the accused No.8 had not taken any consent from the Pollution Control Board either before establishing the unit or even after. Hence, it is certain that in the loan application, the accused No.8 had given false information in that regard for the reasons best known to him.
149. The loan application with regard to leased premises as stated in 12.5 of the loan application is looked into, the accused No.8 has not specified anything as to description and area of the leased premises. On going through copy of the Lease Agreement available as per Ex.P.116(e) which is also found in Ex.P.131 file, it is clear that accused No.8 entered into lease agreement with Smt.H.R.Nagamani on 03.02.2009 in respect of Shed No.4 in Plot No.120, III Phase, KIADB Industrial Area, measuring 900 sq.ft out of 3,600 sq.ft for 11 months and monthly rent was fixed at Rs.5,000/-.
148 Spl.CC.180/2013 Therefore, it is clear that accused No.8 has not taken entire plot No.120 situated in III Phase, KIADB Industrial Area, but he had taken only 900 sq.ft out of total area of 3600 sq.ft.
150. Further, so far as the power as mentioned in 13.1 of the loan application is concerned, it is stated that contracted and connected load are 10 Hp, but in this regard, there is evidence of PW.9 Sri.C.N.Vasudeva, the Asst. Executive Engineer, BESCOM to the contrary. PW.9 in his evidence specifically stated that the BESCOM has not provided electricity connection to Plot No.120 of KIADB Industrial Area, Malur in favour of accused Nos.3, 4, 7 and 8 and as per the records, electricity connection for plot No.120 stands in the name of Smt.H.R.Nagamani for Venkatadri Enterprises and its RR No.1958 and serviced on 29.08.2008. Therefore, it is clear that no electricity connection was taken by accused No.8 in respect of M/s. Vinayaka Enterprises, as stated in the loan application. At this stage, on going through the Lease Agreement available in the file (Ex.P.132 and P.155 relating to M/s.Mallikarjuna Industries) it is noticed that the electricity connection with regard to Shed No.120 was only 5 Hp. It is also noticed from the admitted documents available in the file that Plot No.120 is totally measuring 3600 sq.ft was divided into 4 portions as 4 sheds measuring 900 sq.ft equally and one portion i.e., shed No.4 was taken on lease by accused No.8 and remaining 3 portions i.e., Shed No.1 to 3 by accused No.3, 4 and 7. Such being the case, the information given in the loan 149 Spl.CC.180/2013 application with regard to power is also false to the knowledge of the accused No.8.
151. It is also noticed that in the loan application, water facility is stated to be available near to the industry (13.2) and water arrangement is made through bore-well (18.(f)). But in this regard, the evidence of PW.24 during cross-examination is analyzed, it is suggested that the accused Nos.3 to 8 were purchasing the water from local water suppliers required for their factories. The suggestion so put on behalf of accused No.8 to this effect reveals that there was no water facility through bore-well as stated in the loan application. Therefore, what is stated in the application regarding supply of the water is also false.
152. As stated earlier, in the loan application in
18.(c) with regard to civil work is concerned, it is stated that factory building, machinery foundation and administrative building completed. But, as discussed supra, the Lease Agreement in respect of the leased premises in which the industry is stated to be established was entered into only on 03.02.2009 and possession of the said shed was taken under the said lease agreement. The Lease Agreement does not disclose the existence of factory building, machinery foundation and administrative building as stated in the loan application. Therefore, it is clear that the accused No.8 had given false information with regard to civil work in the loan application. Even in the loan application, it is stated that the erection of the equipment, commissioning, initial 150 Spl.CC.180/2013 procurement of the raw materials, trial run in the month of January-2009 and commercial production in February-2009. But, the possession of the shed was taken only on 03.02.2009 as found in the lease agreement. Such being the case, the information given in the loan application in that regard is also false. Therefore, it is clear that major components of the loan application contains false information to the knowledge of the accused No.8 and such false informations are provided only with an ulterior intention to avail the loan facility from the Bank. Accused No.8 had executed the loan application containing false information to his knowledge with fraudulent intention to avail loan from the Bank under particular scheme, by inducing the bank.
153. Ex.P.109(a) is Borrower's/ Guarantor's Profile, submitted to the Bank and verified by accused No.1, which is not much relevant. Ex.P.110 the pre-sanction inspection report dated 13.04.2009 submitted by accused No.1 is looked into, it is not disputed that the said report is prepared by accused No.1 in connection with the loan transaction. But on going through the said pre-sanction Inspection Report, one cannot accept that the said report is after inspecting the unit. In the said report, the accused No.1 had not at all stated anything as to the details given in the loan application with regard to the civil work, power/ electricity connection, clearance from the Pollution Control Board, power and water arrangement, erection of equipments, commissioning, initial procurement of the raw materials, trial run etc., 151 Spl.CC.180/2013 On going though Ex.P.110 pre-sanction inspection report, prima-facie it appears that it is prepared without inspecting the spot to facilitate the sanctioning of the loan and to comply the formalities for sanctioning the loan. Ex.P.110 also contains post-sanction inspection report of PW.14 on 17.04.2009 as per Ex.P.110(b), wherein it is stated that the machines are installed and there are four people employed, production has commenced. The said report also reveals visit of PW.14 along with concurrent auditor.
154. Ex.P.111 is the Borrower's Profile, prepared by the accused No.1 which is not recommended by any other officer of the Bank. In Management Column of para 32, it is stated that the Proprietor of the Firm has been with some of the buffalo horn button manufacturing units in A.P. over the last decades and has gained adequate experience in the field. But the said fact is not found in the borrower's profile submitted by accused No.8 as per Ex.P.109(a). Ex.P.112 is the DP Note dated 20.04.2009, executed by accused No.8 in favour of the Bank and it is accompanied with documents including Hypothecation- cum-Loan Agreement. The said documents are found to be not properly filled up. Even in the Hypothecation-cum- Loan Agreement, Schedule-II Part A kept blank. Therefore, it clearly appears that only for the compliance of the formalities such documents are found to be taken without any seriousness.
155. Ex.P.113 is the post-sanction inspection report dated 31.08.2009 of accused No.1, in which he 152 Spl.CC.180/2013 has stated that activity was on low. Adequate stocks were available, turnover in the account to be improved. Borrower advised to regularize the account immediately and with other observations. Ex.P.114 is the copy of the statement of stock from May-2009 to September-2009 and for the month of November-2009 and January-2010. The original stock statement is found in Ex.P.157 which was seized from the custody of accused No.2. Ex.P.116 is the account opening form and Ex.P.116(c) to (e) are the KYC documents produced along with account opening from, which are not much relevant.
156. Ex.P.117 is the account statement, relating to Cash Credit Loan Account of accused No.8 and Ex.P.117(a) is the Certificate under Sec.2(A) of the Banker's Book of Evidence Act, which reveals the disbursement of the loan amount and the transaction till 05.01.2012 and also due amount. Ex.P.118 and 119 are the self-cheques issued by accused No.8 and they reveal that the accused No.8 had withdrawn the amount from the account as found in Ex.P.117. Therefore, from Ex.P.117 to P.119, it is clear that the loan amount was withdrawn by accused No.8 through self-cheque and the transaction made.
157. Thus, on going through the entire oral and documentary evidence in connection with the loan transaction and its disbursement meticulously, it is clear that the accused Nos.3 to 8 have given false information to the Bank to their own knowledge for availment of loan from Bank of India, Whitefield Branch and accused No.1, 153 Spl.CC.180/2013 being the Chief Manager of the Branch has also prepared false pre-sanction inspection report to facilitate the sanction and disbursement of the loan in favour of accused Nos.3 to 8 by furnishing the false pre-sanction inspection report and thereby parted with the money of the Bank in favour of accused Nos.3 to 8. The loan documents as discussed above with all details are undisputed. The said undisputed documents are analysed, the circumstances which would be gathered from the same support the case of the prosecution.
158. In addition to the above aspects, admittedly, the loan amount was disbursed by accused No.1 in cash through self-cheques in favour of accused Nos.3 to 8 without taking any document as to purchase of raw materials by them within short time and at short installments. Units of accused Nos.3 to 8 were new and yet to be commenced. Such being the case, in the normal course of business and as per the Bank norms, accused No.1 should have considered the loan application of accused Nos.3 to 8 for grant of term loan and not cash credit loan. Therefore, the admitted facts and documents are analysed, they establish the conspiracy between accused No.1 and accused Nos.3 to 8 in the matter of obtaining the loan from Bank of India, Whitefield Branch under CGTMSE Scheme wherein, 75% guarantee will be provided by CGTMSE.
159. Further, at this stage, if the evidence of PW.14, 17, 24 are analysed, their evidence once again 154 Spl.CC.180/2013 support the case of the prosecution and reveal the active participation of accused No.1 along with accused Nos.3 to 8 in the matter of granting and disbursing the loan amount in their favour. PW.14 has specifically stated that all process were done by accused No.1 in the matter of sanctioning the loan to the units of accused Nos.3 to 8 and thereafter, the proposal was given to her for recommendation and she had recommended the same only with regard to units of accused Nos.3 to 6 and not recommended the proposal of accused No.7 and 8. It is noticed that in the absence of recommendation also, accused No.1 granted the loan in their favour. The evidence of PW.14 reveals that everything was done by accused No.1 himself in processing the loans and it was given to her only for filling the documents. It also emanates from her evidence that at the time of recommendation, sanction, documentation or at the time of opening the cash credit accounts, the borrowers were not present before her and she had done all the works as per the direction of accused No.1, who was the Branch Head under whom she was working. It is also clear from her evidence that at the instruction of accused No.1 only, in good faith, she filled up all the documents in the absence of the borrowers and the spot inspections conducted by her were also at the instruction of the accused No.1 himself. Therefore, the evidence of PW.14 clearly reveals the active participation of the accused No.1 in the matter of sanctioning and disbursing the loan in favour of accused Nos.3 to 8.
155 Spl.CC.180/2013
160. At this stage, even, the evidence of PW.17 and 24 are analysed, their evidence also support the irregularities committed in the process of sanctioning the cash credit limit in favour of accused Nos.3 to 8 by accused No.1. The report of PW.24 as per Ex.P.264 support the case of the prosecution and the undisputed documents as discussed above support the irregularties committed as stated in Ex.P.264. Therefore, on conjoint reading of evidence of PW.14, 17 and 24 along with undisputed documents, it is found that they support the version of the prosecution as stated against accused Nos.1 and 3 to 8.
161. Now, the case of the prosecution with regard to accused No.2 is analysed, the prosecution has contended that the accused No.2 was the actual beneficiary of the credit limits granted in favour of accused Nos.3 to 8 and he had submitted few stock statements on behalf of them through e-mail just to complete the formalities even though no stock was available at the site as found during internal investigation of the bank and he issued cheques in favour of accused Nos.3 to 8 in order to regularize their account and said cheques were returned unpaid due to insufficient fund and thereby he was also one of the conspirators in the matter of availment of the loan by accused Nos.3 to 8. Admittedly, accused No.2 is the introducer of accused Nos.3 to 8 to Bank of India, Whitefield Branch, Bengaluru, to avail the loan. As already stated, it is also admitted fact that accused No.2 156 Spl.CC.180/2013 was the LBD customer of Bank of India, Kakinada Branch and he is well-known to accused No.1, who also worked at Kakinada Branch for sometime.
162. Now, the evidence available on file is analysed, admittedly, copy of the stock statement was furnished to the Bank and the prosecution has produced the said copy of the stock statements as per Ex.P.13, P.34, P.57, P.81, P.101, P.114 belonging to units of accused Nos.3 to 8 respectively. The prosecution has contended that the said copy of the stock statements were sent by accused No.2 through e-mail just to complete the formalities. But, as submitted by the learned counsel for accused No.2, the prosecution has not produced any material before this court to show that the said stock statements were sent through e-mail by accused No.2. However, it is noticed that the premises belonging to accused No.2, situated at Kakinada, Andhra Pradesh was searched by PW.13 under the Ex.P.150 search warrant on 24.02.2012 and seized 20 documents from his custody as stated in Ex.P.151 search list. The seized files include the files relating to the units of accused Nos.3 to 8 and the said files are marked as Ex.P.152 to P.157. During the search, letter dated 20.04.2009 issued by accused No.1 was also seized and the same is marked as Ex.P.159. The seized files contain the original stock statement relating to the units of accused Nos.3 to 8, copies of which were furnished to the Bank. But, as already stated, there is no required evidence to show that the 157 Spl.CC.180/2013 copy of the stock statements were furnished by accused No.2 through e-mail as put up by the prosecution.
163. So far as the search and seizure of the documents as stated in Ex.P.150 and P.151 are concerned, there is no dispute as the accused No.2 himself admitted the search and seizure during his examination under Section 313 Cr.P.C., (Question Nos.152 to 161, 398 and 399). Now the contents of seized files which are marked as Ex.P.152 to 157 are verified, it contains original documents relating to the units of accused Nos.3 to 8. The said file contains all original documents like Sale Ledger, Stock Statement, Audit Report, Account Statement, VAT Certificate, Sanction Letter, Lease Agreement etc., It is not understood why accused No.2 had all these files in his custody. It is very strange approach of the accused No.2 to keep all the original documents with him relating to units of accused Nos.3 to 8.
164. Added to the above aspects, now Ex.P.159 the general letter/ certificate dated 20.04.2009, issued by accused No.1 in favour of accused No.2 is analysed, it denotes that accused No.2 had received Rs.55 lakhs in cash being payment received from M/s. Vinayaka Enterprises and M/s. S.K.Valli Industries towards business of button manufacturing from buffalo horns i.e., for purchase of raw materials. The said document is stated to be issued by accused No.1 at the specific request of the accused No.2 to show the same to the concerned authority at the time of checking. Therefore, 158 Spl.CC.180/2013 on going through the said document, there remains no doubt that accused No.2 had received Rs.55 lakhs from loan account of M/s. Vinayaka Enterprises and M/s. S.K.Valli Industries. At this stage, if the account statement and self cheque relating to M/s. Vinayaka Enterprises and M/s. S.K.Valli Industries (Self-cheques Ex.P.118 and P.105) are analysed, it is clear that accused Nos.7 and 8 had withdrawn total amount of Rs.70 lakhs (Rs.35 lakhs + Rs.35 lakhs each) through self-cheque in cash on 20.04.2009 and on the same day, an amount of Rs.55 lakhs was received by accused No.2 from them.
165. It is also noticed that admittedly, the accused No.2 had received Rs.6 lakhs, Rs.1 lakh and Rs.3 lakhs on 12.01.2009 from accused No.3 to 5 respectively as found in Ex.P.19, P.41 and P.66 cheques dated 12.01.2009, which are also reflected in Ex.P.16, P.38 and P.59, the Account Statement. It is also noticed that some amount of the loan account had also been transferred by accused Nos.3 to 5 in favour of accused No.6. Therefore, it is clear that accused No.2 had received huge amount from the loan account of accused Nos.3 to 8 and as such, it cannot be said that he is mere introducer to the accused Nos.3 to 8 to the Bank for availing the loan, but definitely, he is beneficiary of the loan and received huge amount from the loan account in his favour. If at all accused No.2 is only the purchaser of the raw material or the finished goods from accused Nos.3 to 8, there was no question of he receiving the amount from accused Nos.3 to 8. If these aspects are analyzed, they clearly indicate 159 Spl.CC.180/2013 the conspiracy between accused No.1 to 8 in the matter of loan transactions.
166. Along with the above aspects, it is also noticed that, admittedly, the loan accounts of accused Nos.3 to 8 became due and in order to make payment towards due amount of the loan account, accused No.2 issued 12 post-dated cheques in favour of accused Nos.3 to 8 as per Ex.P.255(b) to 266(b) with undated letters to the Bank as found in Ex.P.255(a) to 266(a) assuring the payment to the loan account of accused Nos.3 to 8. If at all the accused No.2 was only an introducer, there was no need for accused No.2 to issue such undated letters to the Bank of India, to assure the commitment as stated in the said letters. The contents of the said letters are meticulously analysed, they clearly denote that accused Nos.2 to 8 are all together in the matter of availment and payment of the loan, in favour of the Bank. Therefore, if these documents are meticulously analysed, there remains no doubt that accused No.2 is not only mere introducer, but he is also beneficiary of the loan availed by accused Nos.3 to 8 and they are all together in the matter of availment of the loan from the bank. These facts clearly support the case of the prosecution as against accused No.2 also as to his involvement and active participation in the commission of the alleged offence.
167. Now the defence of the accused persons are analysed, as already stated, the accused Nos.1 to 5 and 7 and 8 have denied the charges leveled against them and 160 Spl.CC.180/2013 also denied the incriminating circumstances found in the evidence of prosecution witnesses. The accused Nos.1 to 5, 7 and 8 have filed their written statements under Section 313(5) of the Cr.P.C., and accused No.2 to 5 and 7 have also filed their additional written statements. Further, as already stated, they got marked 21 documents as per Ex.D.1 to D.21 in support of their defence.
168. The accused No.1 in his written statement stated as to his working as Chief Manager in Whitefield Branch of Bank of India during the relevant period and also the working of PW.14. He further stated as to approach of accused Nos.3 to 8 for availing the loan in connection with starting of small scale manufacturing unit, to manufacture semi-finished button blanks from buffalo/ ox horns. He has denied all the allegations made against him in the matter of processing their loan applications, sanction and disbursement of the loan amount in their favour. It is also stated by him that as per the Government/RBI guidelines, 40% of the lending resources should be utilized towards priority sectors and one of the priority sectors is SME Finance. There is target to reach on the Branch Managers and if they fail to accomplish the target, the Branch Manager will be held responsible and remarks will be made in the Annual Performance Review which will adversely affect the carrier progress of the Branch Manager and hence he had granted the loan in accordance with law in favour of accused Nos.3 to 8 whose units fall within the purview of 161 Spl.CC.180/2013 priority sector. He has also stated as to conducting of pre-sanction inspection of the premises of the proposed units, follow-up of the accounts constantly, verification of the end use of the funds based on the post-sanction inspection report. Further, cash disbursements in the account were permitted as per request of the borrowers and as per the terms of sanction mentioned in the proposal of all accounts. The proposal were scrutinized by concurrent auditors, credit inspection official from the other Branch, Credit Department of Zonal Office and finally approved by Zonal Manager Mr. A.A. Badshah.
169. It is further stated by him that the credits made into others accounts at the request of the borrowers after getting necessary explanations before disbursing the amounts. All the officers have handled the accounts in the normal way. Further, as the borrowers are the beginners and were not in the position to offer any security, the request for financial assistance was considered under CGTMSE, a Scheme promulgated by the Central Government, wherein the interest of the Bank is also protected. The units were reported to be closed, due to sales tax related problems as per the inspection report of the Bank Officials dated 25.01.2010. However, the Bank has made a claim to CGTMSE and declaration was also given stating that there was no suspected fraud in handling the transaction by the officers of the Bank. The Bank has also initiated recovery proceedings against the borrowers and in the plaint, there was no allegations of fraud. The credit department 162 Spl.CC.180/2013 scrutinized the entire transaction from time to time and there was no objections raised by Zonal Office or internal audit of the Branch towards sanctioning the loan or the procedure adopted in the process of sanctioning the loan. It is further stated by him that he has not committed any offence or misconduct in discharging of his duty in connection with the loan accounts of accused Nos.3 to 8. There is no nexus between himself and borrowers in any manner. He had no intentions to show any favour to accused Nos.2 to 8 in any manner and he had not shown any favour to them. Accordingly, prayed for the acquittal.
170. Accused No.2 in his written statement denied the commission of the offence alleged against him, his conspiracy with accused Nos.1 and 3 to 8 to cause loss to the Bank. It is further stated by him that he is the proprietor of M/s. Swetha Exports, started in the year 2001, which is manufacturing and exporting the buffalo / ox horns buttons to the foreign countries and the said firm has received Star Export House Certificate from Director General of Foreign Trade (DGFT) Government of India. He further stated that he is the LBD customer of Bank of India and accused Nos.3 to 8 are known to him, who are having good expertise in horn button manufacturing and he agreed to buy the horn button blanks from them. Hence, he had helped them financially during their initial stage of setting up of the industry. It is further stated that M/s. Swetha Exports had bought button blanks from accused Nos.3 to 8 and exported the same abroad. Accused Nos.3 to 8 have 163 Spl.CC.180/2013 repaid the financial assistance rendered by him once they got income from the factory production.
171. It is stated by accused No.2 in his written statement that since accused Nos.3 to 8 were small time factory owners, they had no specialized accountant for them. Therefore, they all requested him to give assistance of his office Accountant for preparing the stock statements and sending the same to the Bank. Therefore, the documents which were seized by CBI were available at his office. He being a Doctor, out of humanitarian consideration and to help poor and hard working people, he helped the accused Nos.3 to 8 to open the Bank Accounts as introducer. Since the quality of the horns available in Kolar Area are more superior and shiny, the accused Nos.3 to 8 set up their factories in Malur KIADB Industrial Area. Accused Nos.3 to 8 could not repay the loan and they approached him saying that he may purchase entire stock in one lot and pay their loan amounts directly to the Bank by way of cheques into their loan accounts and therefore, he issued cheques in their company names. He has not committed any offence.
172. He has also filed additional written statement stating that he is only a introducer to the accused Nos.3 to 8 to the Bank and he is neither guarantor nor surety nor beneficiary of the loan availed by accused Nos.3 to 8. Accused Nos.3 to 8 are alone liable for loans borrowed. The Bank has unnecessarily dragged him to this case with an intention to see that loans of accused Nos.3 to 8 164 Spl.CC.180/2013 are cleared by him. Further, he had made some advance payments of Rs.6 lakhs to accused No.3, Rs.1 lakh to accused No.4 and Rs.3 lakhs to accused No.5 for buying the raw materials prior to the loan sanction and disbursement and after disbursement of the loan by the Bank, they had repaid the said amount to him. After availing the loan, accused Nos.3 to 8 had utilized the loan amount for purchasing the raw materials from various local suppliers and converted the said raw materials into semi-finished products and supplied the same to him. He made payment to the accused Nos.3 to 8 through cheques as well as cash deposits as found in Ex.P.173, P.175, P.177, P.179, P.181, P.183, P.185, P.187, P.192, P.194, P.196 and Ex.P.200 to P.254. However, due to sudden international financial recession in the year 2009-10, 2010-11, he did not get the payments from the persons who received the materials from him in the other countries, due to which he could not make some payments to the accused Nos.3 to 8. Due to said reason, they have suffered financial loss in the business. Accused Nos.3 to 8 have also faced objection from the local people as they are getting stinky smell due to storage and manufacturing activities of the horns in the shed. Due to these reasons, accused Nos.3 to 8 could not run the business and thereby could not repay the loan to the Bank and thereby all accounts became NPA. Hence, he tried to help them and issued cheques as per Ex.P.255 to P.266 to them for discharge of their loan dues. But, unfortunately, he could not arrange the funds to honour the cheques. Hence, he cannot be connected 165 Spl.CC.180/2013 with the loan defaults committed by accused Nos.3 to 8 and he had not given any cheques to the Bank to hold him as guilty.
173. It is also stated by him that accused Nos.3 to 8 tried to settle all the loan accounts by requesting the Bank to give one time settlement offer. Though in the year 2013 Bank came forward to issue OTS letter, did not honour them subsequently. In the year 2013, accused Nos.3 to 8 had deposited an amount of Rs.5 lakhs each in all the six accounts towards OTS proposal and in the year 2020, the accused persons had also deposited a sum of Rs.1,50,000/- each towards OTS. But, the Bank after receiving the said OTS amount did not honour their commitment and closed the issue. It is further stated that he had no intention whatsoever to cheat the Bank and he is not the instrumental in getting the loan sanctioned and disbursement in favour of accused Nos. 3 to 8. The Bank, after satisfying all parameters for sanctioning the loan, sanctioned and disbursed the loan. Since accused Nos.3 to 8 became defaulters, the Bank is trying to collect the money from him, by fixing him into this case. The Bank tried to mis-intreprete some payment made to him by canvassing that he is the beneficiary of the loan disbursed. The Bank has also created false mahazar regarding seizing of documents relating to units of accused Nos.3 to 8 though no documents have been seized from his office. He is innocent and not committed any offence alleged and he 166 Spl.CC.180/2013 has not caused any loss to the complainant Bank. Accordingly, on these grounds, prayed for his acquittal.
174. Accused Nos.3 to 5, 7 and 8 though filed separate written statement and additional written statement (excluding accused No.8), their contention are found to be common. In their written statements, they have denied the allegations made against them contending that they have not committed any offence alleged against them. They admitted the approach to the Bank for financial assistance and contended that before sanctioning the loan, pre-sanction inspection was carried out and after completion loan was sanctioned. They have not played fraud or forged any documents for obtaining the loan. Initially, they had availed financial assistance from accused No.2 and repaid the same after getting the income from the production. Since they are not much educated and small time factory owners, they had no specialized Accountant and office of their own. Therefore, they requested accused No.2 to give assistance of his Accountant in Kakinada, for preparing the stock statements and sending the same to the Bank. Hence, the said documents were there at his office and it was seized by CBI. It is further stated that since they could not repay the loan, they requested accused No.2 to purchase the entire stock in one lot and pay the loan amount directly to the Bank through cheques to their loan accounts. The Bank had filed recovery proceedings and in that proceeding, the Bank had not contended any 167 Spl.CC.180/2013 fraud, cheating or forgery. They have not committed any offence.
175. In the additional written statement, the accused Nos. 3 to 5 and 7 have further stated as to formalities of required documents to the Bank, as to conducting of pre and post-sanction inspection, furnishing of stock statement through e-mail. Accused Nos.3 to 5 have also stated as to availment of Rs.6 lakhs, Rs.1 lakh and Rs.3 lakhs respectively from accused No.2 for purchasing the raw materials prior to sanction and disbursement of the loan and payment of the said amount to the accused No.2, after the loan was disbursed. They have also stated reason for their financial difficulties as stated by accused No.2. They have also stated as to receipt of 70% of the loan amount from CGTMSE by the Bank and also stated as to payment made by them towards OTS as stated by accused No.2. It is further stated that they are innocent and have not committed any offence as alleged. It is the case of availing the loan and committing default and not the case of cheating or fraudulent transaction to attract the alleged offences. Even now also, they are willing to settle the loan amount through OTS, but the Bank is not coming forward to issue OTS Sanction Letter. Accordingly, prayed for their acquittal from this case.
176. As already stated, the learned counsels for the accused Nos.1 to 5, 7 and 8 vehemently argued as to the defence taken by them as referred earlier in para No.11 and 12 above. Though it was argued that there was no 168 Spl.CC.180/2013 allegation of conspiracy against accused No.1 in complaint and only mistake or irregularity occurred while discharging the official duty, which would give rise only to civil consequences, for which criminal colour is given to recover the loan due amount, that cannot be accepted because as discussed earlier, the documentary evidence coupled with oral evidence placed before this court clinchingly establish not only mere mistake or irregularity but intentional irregularities and creating of documents with false information in the matter of sanctioning and disbursing the loan. The entire process of loan was handled by accused No.1 alone. Though he had taken assistance of his officers in the matter, there is no proof as to commission of intentional irregularity on their part. On the other hand, as discussed in detail, the material placed before this court clearly establish intentional and fraudulent act on the part of accused No.1 in the matter of sanctioning and disbursing the loan in favour of accused Nos.3 to 8 by colluding with them. Therefore, the irregularities and violation of the Bank norms found in the loan transaction involved in this case cannot be considered as mere irregularity giving rise only to civil consequence and not criminal action. It is needles to say that the First Information Statement need not be an encyclopedia of all the facts and allegations. Just because in First Information Statement, there is no allegation as to conspiracy, it cannot be said that the case of the prosecution for conspiracy cannot be accepted. The conspiracy has to be determined from the circumstances as there will be no direct evidence as it 169 Spl.CC.180/2013 will be hatched in secrecy. Therefore, considering the entire oral and documentary evidence and the role played by each accused persons, this court did not find any grounds to accept the said argument of the learned counsels.
177. Though the learned counsels have argued as to compliance of procedure and guidelines prescribed by the Bank of India as well as the RBI in the matter of sanction and disbursement of the loan to the priority sector, as discussed earlier, it is found that there was total deviation from banking norms in the matter of sanctioning and disbursing the loan amount in favour of accused Nos.3 to 8, who have filed the loan application with false information and the same were not verified by accused No.1 as required. Even, the pre-sanction inspection report is also found to be created to facilitate the loan in favour of accused Nos.3 to 8. Since the units are yet to be established, the accused No.1 should have granted term loan instead of cash credit limit in favour of accused Nos.3 to 8. Apart from that, accused No.1 had released the loan amount in cash in favour of accused Nos.3 to 8, without getting any documents for having purchased the raw materials by them. As discussed in detail, even the loan amount was found to be paid to accused No.2, who is neither loanee nor supplier of the raw materials to accused Nos.3 to 8. Therefore, viewed from any angles, it cannot be accepted that the procedure prescribed by the Bank as well as RBI was followed in the 170 Spl.CC.180/2013 mater of sanctioning and disbursement of loan amount in favour of accused Nos.3 to 8.
178. No doubt, as argued by the learned counsels for the accused, it is noticed that the Bank of India had placed its separate claims before the CGTMSE as found in Ex.D.13 to D.18 on 01.02.2011 in respect of all six loans involved in this case. The said claims are accompanied with the declaration/undertaking by MLI (Bank/ Institution). The Bank of India, Whitefield Branch, represented by the Chief Manager, Whitefield Branch had filed a declaration along with the claims. In the said declaration, it is declared that 'there has been no fault or negligence on the part of the MLI or any of its officers conducting the account'. It is further declared that 'no fault or negligence has been pointed out by internal / external auditors, Inspectors of CGTMSE or its agency in respect of the account (s) for which claim is being preferred'. Admittedly, these claims were placed subsequent to the report dated 10.11.2010 submitted by PW.24, the Zonal Investigation Officer. Added to this, as submitted by the learned defence counsels, the evidence on record also reveal that even the Bank of India had filed applications under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 before Debt Recovery Tribunal on 22.09.2010. The certified copy of the application filed against accused No.5 is produced as per Ex.D.19. On going through the Ex.D.19, it is clear that there is no any allegation as to fraud involved in the loan transaction.
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179. On going through Ex.D.13 to 19, it is clear that the complainant/ Bank has not alleged any fraud either before CGTMSE or before the Debt Recovery Tribunal. However, in the First Information Statement, the complainant / Bank has alleged the fraud in the loan transactions involved in this case. Hence, it appears that there is dual version on the part of the complainant - Bank. In this regard, it is pertinent to note that the recovery proceedings before Debt Recovery Tribunal were initiated prior to the filing of the report by the Zonal Investigating Officer, but the claim before the CGTMSE was made subsequent to the report of the Zonal Investigating Officer. But only on that ground, it cannot be said that the case of the prosecution is doubtful as admitted facts, as discussed earlier reveal fraudulent act on the part of accused Nos.1 to 8 in the matter of availment of cash credit loan from the Bank. The fault on the part of the Chief Manager while placing the claim before the CGTMSE will not take away the fraudulent acts done by the accused persons in the matter of availment of the loan. It appears that the subsequent Manager, with an intention to get the guarantee amount from the CGTMSE has filed such declaration which will neither exonerate the accused persons from the acts committed nor create any doubt in the mind of the court with regard to the charge leveled against the accused persons. Therefore, this court did not find much merit in the submission of the learned defence counsels. It appears that it is an attempt to escape from the clutches 172 Spl.CC.180/2013 of the law by taking undue advantage of the subsequent event.
180. As argued by the learned counsels for the accused persons, the loan transactions were undergone verification by different authorities like Credit Monitoring Department Auditors and also by Zonal Office, but none of them have reported any fraud in the loan transaction involved in this case. In this regard, the accused persons have secured Inter Office Memorandum, issued by the Zonal Manager, Karnataka Zone, to the Branch Manager, Whitefield Branch, as per Ex.D.3 and the said document is also enclosed with review note for the months of December-2008, March-2009 and April-2009, relating to the transactions of Bank of India, Whitefield Branch issued by the Zonal Manager. The said review note does not reveal any fraud in the transaction for the month of December-2008, March-2009 and April-2009. As found in Ex.P.169, the Post-Sanction Review Report (PSRS), the loan sanctioned in favour of accused Nos.3 to 8 were reported to the Zonal Office by accused No.1. As submitted by the learned defence counsels, the review note as referred above does not disclose any fraud involved in the loan transactions of the accused Nos.3 to accused No.8.
181. Similarly, the Concurrent Audit Reports of the Bank of India, Whitefield Branch, for the months of October-2008, December-2008 and April-2009 available in file as per Ex.P.166 to P.168 are analysed, in the said Concurrent Audit Reports, nothing is stated as to any 173 Spl.CC.180/2013 fraud in the loan transactions of accused Nos.3 to 8. On the other hand, the Auditor's Certificate reveal that, they have not noticed any matter susceptible to be fraud or fraudulent activity or any foul play in any transactions to report by way of special letter or special observation report and they have not noticed during their audit any instance of violation of laid down system and procedures which may put the Bank's interest in jeopardy. Further, the prosecution has produced Long Form Audit Report (LFAR) of the Bank of India, Whitefield Branch, for the years 2008-2009 and 2009-10, under Ex.P.170. In the said LFAR for the year 2008-2009, there is nothing as to any fraud in respect of the loan account of accused Nos.3 to 6 and in LFAR for the year 2009-2010, there is reference of units of the accused Nos.3 to 8 under the column "FRAUD" and it was noted that "the securities to be checked before the loan". But, no fraud is specifically observed in the said Audit Report also. But it is pertinent to note that just because the fraud was not observed by them in their reports that will not take away the fraud committed by accused Nos.1 to 8 in the matter of availment and disbursement of the loan, in favour of accused Nos.3 to 8, which prima-facie found from admitted documents itself. Further, only on the basis of the Audit Reports or review note, it cannot be concluded that there was no fraud in the loan transaction of the accused Nos.3 to 8 and that will not create any suspicion in the case of the prosecution. Therefore, this court is of the considered view that just because the fraud is not mentioned in the audit reports or review note of the Zonal 174 Spl.CC.180/2013 Office will neither defeat the case of the prosecution nor create any doubt in the mind of the court.
182. As argued by the learned counsel for accused Nos.2 to 5 and 6, if the statement of accounts relating to the units of accused Nos.3 to 8 are analysed, they denote various transactions including the amount repaid by the accused Nos.3 to 8. On the basis of the said fact, the learned counsel has submitted that there was no intention of cheating the Bank but due to financial constraints and other reasons, the accused Nos.3 to 8 could not continue the business and their loan account has become NPA and hence criminal prosecution against them is not sustainable. But, this court did not find any such grounds to accept the said argument. On the other hand, as discussed supra in detail, it is clear that there was intentional suppression of the real facts from the stage of giving loan application and also in the process of sanction and disbursement of the loan. Therefore, the subsequent transaction or part payment made will not exonerate the accused persons from the offence already committed. Hence, the argument of the learned defence counsel that there was no intention to defraud the Bank from the inception cannot be accepted. The entire admitted facts and documents are meticulously analyzed, they reveal intentional suppression of the real fact and giving false information for the purpose of obtaining the loan and also in the process of sanction and disbursement of the loan.
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183. The another contention of the learned defence counsels is that, there is inordinate delay in lodging the complaint and there is no any explanation for the inordinate delay caused and thereby the case of the prosecution cannot be accepted. The learned counsel for accused Nos.2 to 5, 7 and 8 has also referred the decision of Hon'ble Supreme Court reported in AIR 2002 SC, 1949 wherein, it was held that "immediate sending of the report mentioned in Section 157 Cr.P.C., is the mandate of law. Delay whenever found is required to be explained by the prosecution. If the delay is reasonably explained, no adverse inference can be drawn, but failure to explain the delay would require the court to minutely examine the prosecution version for ensurng itself as to whether any innocent person has been implicated in the crime or not". The Hon'ble Apex Court has further observed that, "the delay in sending the copy of the FIR may by itself not render the whole of the case of the prosecution as doubtful but shall put the court on guard to find out as to whether the version stated in the court was same version as earlier reported in the FIR or was the result of deliberations involving some other persons who were actually not involved in the commission of the crime".
184. In this regard, it is pertinent to note that, as stated earlier, the Internal Investigating Officer had filed his report on 10.11.2010, whereas First Information Statement was lodged as per Ex.P.1 on 03.02.2012 and thereafter, the case was registered on 23.02.2012. As submitted by the learned counsels, in the First 176 Spl.CC.180/2013 Information Statement, the complainant has not assigned any reason as to delay caused in lodging the complaint. Admittedly, the loan transaction was in the years 2008- 09 and 2009-10 and fraud was detected in the year 2010 as per the report of PW.24, whereas the complaint was lodged in the month of February, 2012. Hence there is inordinate delay in setting the criminal law into motion by the complainant Bank.
185. As argued by the learned defence counsels, the delay in lodging the First Information Statement give rise to scope for improvement and fabrication and creates doubt. But, it depends upon the facts of each case. In all the cases, just because there is delay, one cannot doubt the case of the prosecution. In the relied decision of the Hon'ble Supreme Court reported in AIR 1991 SC 40, the Apex Court observed that "at any rate, mere delay by itself is not enough to reject the prosecution case unless there are clear indications of fabrication". Further, the similar view is also found in the decision of the Hon'ble Apex Court referred supra. In the present case on hand, though there is delay on the part of the complainant Bank in setting the criminal law into motion, under the facts and circumstances of the case, this court is of the considered view that the delay in lodging the complaint is not fatal to the prosecution case and there is no any indication of fabrication by virtue of delay. The entire case of the prosecution is based on the documents and there is no scope for any creation or fabrication. The admitted documents itself support the 177 Spl.CC.180/2013 version of the prosecution. Therefore, the delay in lodging the First Information Statement cannot be made much and that will not create any suspicion in the case of the prosecution. Hence, the contention of the defence side in this regard cannot be acceptable.
186. The another limb of the argument of the learned defence counsels is with regard to jurisdiction of the CBI to investigate the matter is concerned, as found from the evidence on record, the loan transactions of accused Nos.3 to 8 are different and the loan sanctioned to each of them was also within Rs.50 lakhs. It is also noticed that even the Bank has placed its claim before the CGTMSE separately as per Ex.D.13 to D.18 claiming the guaranteed amount and even, recovery proceedings are separately instituted against the accused Nos.3 to 8. In this regard, the copy of the Circular No.30/08/2010 dated 17.08.2010 and Circular No. 12/06/2012 dated 12.06.2012 are placed before the court. As per the Circular No.30/08/2010, the cases involving the Bank fraud to the extent of Rs.1 Crore and upto 7.5 Crores could be referred to the CBI and the cases involving less than Rs.1 Crore has to be referred to the local / State Police. As per Circular No.12/06/2012, the Bank fraud cases involving Rs.3 Crores and upto Rs.15 Crores, could be referred to CBI and the cases involving below Rs.3 Crores that could be referred to Local/ State Police. In the present case, the First Information Statement was lodged on 03.02.2012. Therefore, the Circular No.30.08.2010 dated 17.08.2010 was applicable and not 178 Spl.CC.180/2013 the Circular dated 12.06.2012 as the said Circular was not in force as on the date of registering the case.
187. With the above circulars, now the facts of the present case are concerned, though the loan transactions are found to be different, for the purpose of fraud, the said transactions are found to be common and single. On going through the evidence on record, it is noticed that there was a common conspiracy between accused Nos.1 to 8 in the matter of availment and disbursement of the loan under CGTMSE Scheme and the beneficiary of the loan is stated to be accused No.2. All loan transactions were out of the common conspiracy with common design and common intention. The said transactions are nothing but part of the single common transaction, which is the result / outcome of the common conspiracy between all the accused persons. The total amount of the alleged fraud from the six transactions is more than Rs.1 Crore. Under these circumstances, as per Circular dated 17.08.2010, the CBI gets jurisdiction to investigate the matter. Therefore, in the light of the said circular and facts of the present case, this court is of the considered view that the CBI had got jurisdiction to investigate the matter and the contention of the accused in this regard is not acceptable.
188. The learned defence counsels have argued that no proper investigation was conducted by the IO and key witnesses who supervised the loan transaction, who filed the claim before CGTMSE and application before the DRT, who informed the Head Office about the irregularity 179 Spl.CC.180/2013 and the auditors etc., were not examined by the IO, which caused great prejudice. Further, the prosecution has suppressed the evidence relevant to the determination to the guilt or innocence of the accused and even, the Prosecutor has failed to present the complete picture before the court being partial to the prosecution. The learned counsel for the accused Nos.2 to 5, 7 and 8 has also relied upon two decisions, reported in AIR 1957 SC 389 and 1986 Crl.L.J. 383 in this regard. However, on going through the entire evidence made available before the court, this court did not find much substance in the argument addressed. The entire case of the prosecution is commission of the fraud at the time of availment and disbursement of the loan in favour of accused Nos.3 to 8. Such being the case, the evidence collected by the IO and evidence placed before the court by the prosecution are found to be sufficient. There are no such ground to hold that the prosecution has suppressed the evidence of relevant witnesses and the Prosecutor has not revealed the entire picture before the Court. The rulings relied by the learned counsel for accused Nos.2 to 5, 7 and 8 in this regard are found to be not applicable to the facts of the present case.
189. The learned defence counsels have also addressed that the CBI has not conducted preliminary enquiry before registering the case which is mandatory as per the CBI Manual and they have also attacked on the report of the Vigilance Investigation Officer (PW.24) and also the evidence of PW.14. The learned counsel for 180 Spl.CC.180/2013 accused No.1 has also furnished the copy of the Chapter 9 and 10 of the CBI Manual and referred para 9.1, 9.2, 10.11 and 10.12 of the said Chapters. This court has meticulously perused the same. No doubt, the Chapter 9 of the CBI Manual deals with Preliminary Enquiry. But, it is noticed that in all cases there is no need of Preliminary Enquiry before registering the case. It is noticed that when information available is adequate to indicate the commission of the cognizable offence or its discrete verification leads to similar conclusion, a regular case must be registered instead of preliminary enquiry. Therefore, it is clear that in all the cases, preliminary enquiry before registering the case is not mandatory. If the Superintendent of Police, on going through the complaint, is satisfied that adequate information is available to indicate the cognizable offence, a regular case must have to be registered instead of conducting preliminary enquiry. In the present case also, PW.1 has lodged the written complaint, based on which, Superintendent of Police, CBI/ACB, Bengaluru has registered the case as per Ex.P.269, having satisfied as to adequate information indicating the commission of the cognizable offence. Therefore, this court is of the considered view that just because preliminary enquiry was not conducted, that cannot be a ground for suspecting the case of the prosecution in any manner and this court did not find any defect in registering the case in the absence of preliminary enquiry as submitted by the learned defence counsel.
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190. The accused persons have also attacked the report submitted by PW.24 as per Ex.P.274. In support of the said report, the prosecution has examined PW.24, who is the author of the said report. Though the accused persons disputed the said report, on going through the admitted documents, this court did not find any such ground to accept the contention of the accused so as to disregard the report. The contents of the admitted documents support the contents of the report.
191. So far as the evidence of PW.14 is concerned, admittedly, she was added as accused No.9 during the course of investigation, but she was given with tender of pardon and she was made as witness in the charge sheet filed on behalf of the prosecution. In this regard, the accused persons have also produced the certified copy of the application filed by the IO under Section 5(2) of the PC Act, 1988 R/w. Section 306 Cr.P.C., 1973 for grant of pardon to PW.14 as per Ex.D.21 and also produced the certified copy of the Order Sheet relating to Crl.Misc.Case No.2697/2013, Memorandum of Criminal Petition filed under Section 438 of the Cr.P.C., by PW.14, Order passed in the said petition as per Ex.D.12.
192. It is needless to say that the court has to take caution while reading and appreciating the evidence of the approver. On going through the evidence of PW.14 meticulously, it is noticed that her evidence supports the case of the prosecution. No doubt, as argued by the learned defence counsels during cross-examination, 182 Spl.CC.180/2013 PW.14 has stated that she had no intention of cheating the Bank or showing undue favours to the borrowers or helping the accused No.1 by recommending the proposals. She honestly believed that she has not committed any misconduct or offence in respect of the transactions involved in this case and thereby she did not admit the mistake committed by her. But, only on that account, her evidence cannot be discarded. On entire reading of her evidence, this court is of the considered view that her evidence supports the case of the prosecution as to active participation of the accused No.1 and the act done by him as well as herself in the loan transactions involved in this case. This court did not find any such ground to disbelieve her evidence.
193. Thus, for the reasons discussed above in detail, this court did not find much substance in the submission made on behalf of the accused persons, so as to accept the contention of the accused persons. As already discussed, the materials placed before this court clearly establish that during the year 2008-09, the accused Nos.1 to 5, 7 and 8 along with deceased accused No.6 had conspired together in the matter of availment, sanction and disbursement of the cash credit limits ranging from Rs.46 lakhs to Rs.48 lakhs under CGTMSE Scheme in favour of accused Nos.3 to 8 by abusing the official position of accused No.1 and thereby caused financial loss to the Bank as put up by the prosecution.
194. As discussed, the accused Nos.3 to 5, 7 and 8 and deceased accused No.6 had given the false 183 Spl.CC.180/2013 information to the Bank to their knowledge to obtain the cash credit limit in their favour and accused No.1 assisted them in sanctioning and disbursing the loan amount under CGTMSE Scheme at the instance of accused No.2. The contents of the admitted documents are meticulously analysed, they clearly establish the circumstances which will prove the conspiracy between accused Nos.1 to 5, 7 and 8 and deceased accused No.6 in the matter of availing the loan as put up by the prosecution. It is needless to say that there will be no direct evidence to prove the conspiracy and it has to be gathered from the circumstances made out from the evidence on record. In this case, as already discussed in detail, the evidence on record clinchingly establish the conspiracy between the accused persons in the matter of availment, sanction and disbursement of the cash credit limit in favour of accused No.3 to 5, 7 and 8 and deceased accused No.6 as contended by the prosecution, thereby the prosecution has proved the offence punishable under Section 120B of the IPC.
195. It is clear from the evidence on record that the accused Nos.3 to 5, 7 and 8 and deceased accused No.6 had given false information to the Bank with dishonest and fraudulent intention to induce the Bank to grant the loan in their favour and thereby to part with the money of the Bank. Similarly, the accused No.1, being the Chief Manager and Head of the Branch, fraudulently and dishonestly prepared pre-sanction inspection reports and also got the post-sanction inspection reports, so as to 184 Spl.CC.180/2013 induce the Bank to grant the loan in favour of accused Nos.3 to 5, 7 and 8 and deceased accused No.6 and disbursed the loan amount without observing the Bank norms. The loan sanctioned had become NPA and thereby, the Bank has suffered financial loss. Therefore, it is clear that the material placed before this court clearly establish the necessary ingredients of the offence punishable under Section 420 of the IPC, as against the accused persons as put up by the prosecution.
196. The accused persons are also charge sheeted for the offences punishable under Section 467 and 471 of the IPC. But in this regard, the evidence on record are analysed, the existence of the ingredients of the offence of forgery itself is not proved by the prosecution. The prosecution has contended that the accused No.1 had given false pre-sanction inspection report in respect of the units of accused Nos.3 to 8 and got the post-sanction inspection report favouring accused Nos.3 to 8 and accused Nos.3 to 8 had submitted false and highly inflated stock statements through e-mail of accused No.2 in respect of their unit and knowing fully well and having reasons to believe that they are not genuine documents, used the said false documents as genuine in sanction and disbursement of the loan in favour of accused Nos.3 to 8 and thereby committed the offence under Section 467, 471 R/w. Sec.120B of the IPC. In this regard, it is pertinent to note that in order to attract the offence under Section 467 and 471 of the IPC, the prosecution has to establish the forgery of the document. If the 185 Spl.CC.180/2013 contention of the prosecution are analysed, there is no forgery as defined under Section 463 of the IPC. It is not the case of the prosecution that the forged pre-sanction inspection report is prepared by accused No.1 and forged and highly inflated stock statements were furnished by the accused Nos.3 to 8 and such forged documents are used as genuine for availment and sanction of the loan. It is only the case of the prosecution that the documents containing false information are used for the purpose of cheating the Bank. Therefore, the case of the prosecution that the accused persons have committed the offence punishable under Section 467 and 471 of the IPC cannot be accepted. At the most, the case of the prosecution comes within the purview of Section 420 of the IPC as false information is provided to induce the Bank to part with the money. Therefore, the prosecution has failed to prove the necessary ingredients of the said offences as against the accused persons and the case of the prosecution does not come within the purview of either Section 467 or Section 471 of the IPC. Therefore, the case of the prosecution as against the accused persons for the offence punishable under Section 467 and 471 of the IPC cannot be accepted.
197. The accused No.1 is also charge sheeted for the offence under Section 13(1)(d) punishable under Section 13(2) of the PC Act. As already stated, the accused No.1 was the public servant as on the date of commission of the offence. As discussed earlier, the evidence on record clearly establish that the accused 186 Spl.CC.180/2013 No.1, being the Chief Manager of the Bank of India, abused his official position and favoured the accused No.2 to 5, 7 and 8 and deceased accused No.6 in the matter of sanction and disbursement of the cash credit limit under CGTMSE Scheme and obtained pecuniary advantage in their favour without any public interest and thereby committed the offence under Section 13(1)(d) of the PC Act which is punishable under Section 13(2) of the PC Act. The evidence on record clearly establish all the ingredients of the offence under Section 13(1)(d) of the PC Act, as against accused No.1.
198. Thus, on going through the entire oral and documentary evidence and materials placed before this court meticulously, this court is of the considered view that the prosecution has established the necessary ingredients of the offence punishable under Section 120B of the IPC, under Section 420 R/w. Section 120B of the IPC as against accused Nos.1 to 5, 7 and 8 and the necessary ingredients of the offence under Section 13(1)
(d) of the PC Act, punishable under Section 13(2) of the said Act, as against accused No.1 beyond all reasonable doubt. The evidence on record clinchingly establish the commission of the offence punishable under Sections 120B, 420 R/w. Sec.120B of the IPC and Section 13(1)(d) R/w. Section 13(2) of the PC Act in the matter of sanction and disbursement of the cash credit limit in favour of the accused Nos.3 to 5, 7, 8 and deceased accused No.6. The evidence on record clearly establish the dishonest intention on the part of the accused persons at the very 187 Spl.CC.180/2013 inception from the stage of filing of the loan applications till disbursement of the loan under CGTMSE Scheme. In this regard, the evidence on record established clear circumstances against the accused persons forming complete chain of circumstances which is consistent only with the hypothesis of the guilt of the accused persons. In this regard, no two views are possible. This court has also perused the other rulings cited by the learned defence counsels, but this court is of the firm view that the said decisions are not applicable to the facts of the present case, so as to give clean chit to the accused persons. Therefore, this court is of the considered view that the prosecution has proved Point Nos.1 and 2 beyond all reasonable doubt as against the accused persons and Point No.5 against accused No.1 and failed to prove Point Nos.3 and 4 as against the accused persons. Accordingly, Point Nos.1, 2 and 5 are answered in the Affirmative, and Point Nos.3 and 4 in the Negative.
199. Point No.6: For the reasons discussed in connection with point Nos.1 to 5 and findings given thereon, this court proceeds to pass the following;
ORDER Acting under Section 235(2) of the Cr.P.C., the accused Nos.1 to 5, 7 and 8 are convicted for the offence punishable under Sections 120B and 420 R/w. Section 120B of the IPC.
188 Spl.CC.180/2013 Acting under Section 235(2) of the Cr.P.C., the accused No.1 is convicted for the offence under Section 13(1)(d) punishable under Section 13(2) of the PC Act, 1988.
Acting under Section 235(1) of the Cr.P.C., the accused Nos.1 to 5, 7 and 8 are acquitted of the offences punishable under Sections 467 and 471 Read With Section 120B of the Indian Penal Code.
The bail bonds of the accused Nos.1 to 5, 7 and 8 and their sureties stand canceled.
To hear regarding sentence.
(Dictated to the Stenographer Gr.I directly on the computer, corrected and then pronounced by me in the Open Court on this the 21st day of November, 2024) (Shridhar Gopalakrishna Bhat) XXI Addl. City Civil and Sessions Judge, & Prl. Special Judge for CBI Cases, Bengaluru.
ORDERS REGARDING SENTENCE In this case, the accused Nos.1 to 5, 7 8 are convicted for the offences punishable under Section 120B and under Section 420 R/w.120B of the IPC and accused No.1 is also convicted for the offence under Section 13(1)
(d) punishable under Section 13(2) of the PC Act.
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2. Heard the learned counsels for the accused Nos.1 to 5 and 7, accused persons and the learned Senior Public Prosecutor regarding sentence.
3. The learned counsel for accused No.1 has humbly submitted that accused No.1 is already dismissed from the service and he is the bread earner of his family. Further, his wife is suffering from cancer and underwent surgeries. His children are in abroad in connection with their employment and he is the only person to look after his wife and aged parents. Further, accused No.1 is a senior citizen and the offence alleged against him is not punishable with capital sentence and the PC Act applicable to him is also prior to the amendment of 2014. There is no any criminal antecedent against him and he is not involved in any other case. Further, he has fully co-operated for investigation as well as during the trial. Accordingly, prayed for exercising sympathetical jurisdiction of this court by taking lenient view in the matter of sentence and for awarding minimum sentence as permissible under law.
4. The learned counsel for accused Nos.2 to 5and 7 meticulously submitted that the accused Nos.3 to 5 and 7 are bona-fide loanees and they made effort for one time settlement and paid more than Rs.60 lakhs as found in the account statement available on the court record. Still they are making their effort to settle the matter by one time settlement with the Bank. Accused No.2 is a Doctor by profession and he has to look after his aged parents as his only brother is also no more. The 190 Spl.CC.180/2013 accused Nos.3 to 5 and 7 are poor persons and bread- earner of the family. The accused No.4 is suffering from BP as well as Asthama. They have not intentionally committed any offence, but due to circumstances, they could not repay the loan amount. Accordingly, prayed for lenient view in their favour in the matter of awarding sentence.
5. The learned counsel for accused Nos.2 to 5and 7 has also relied upon the Judgment of our Hon'ble High Court, reported in 2012 (4) Crimes 730 (S. Chandrashekhar Vs. State), Judgment of the Hon'ble Supreme Court, reported in AIR 2011 SC 3025 (Munilal Mochi Vs. State of Bihar and Others), the order dated 21.02.2024 passed by our Hon'ble High Court in Crl.R.P.No.100279/2016 with other two clubbed matters, order dated 23.10.2020, 26.04.2019 and 15.10.2024 passed in Crl.R.P.No.906/2011, Crl.R.P.No.210/2011 and Crl.R.P.No.538/2015 on the file of our Hon'ble High Court of Karnataka, Bengaluru, contending that leniency has been shown in the matter of punishment in favour of the accused persons alleged with the commission of the similar offences.
6. The accused persons who are before the court also submitted in the same way as submitted by their learned counsels and prayed for lenient approach in their favour.
7. On the other hand, the learned Public Prosecutor has submitted that the offences against the 191 Spl.CC.180/2013 accused persons are proved beyond reasonable doubt and the court has to consider the conduct of the accused, nature and gravity of the offence committed by them and also the effect of the offence on the economic system of the society. The sentence which is to be imposed by the court should be appropriate with the offence and it should not act as a plea bite sentence and it should serve the purpose for which the punishment to be imposed. It is further submitted by him that the accused No.1 being the Head and the Chief Manager of the Branch, committed serious offence against the Bank itself and his act is nothing but grazing the field by fence itself and he is not entitled for any leniency. The accused persons have caused huge loss to the Bank and considering the nature of the offence, stringent view is to be taken against the accused persons in awarding sentence. Accordingly, prayed for convicting the accused by imposing maximum imprisonment and fine permissible under law.
8. It is well settled law that, in the matter of imposing the sentence on the accused, this court has to hear the accused persons on the sentence, consider the aggravating and mitigating circumstances, gravity of the offence, amount involved, the purpose of the punishment being imposed, effect of the offence committed on the society, the facts and circumstances of the case under which the offence took place etc., The important aspect of socio-economic offence is also to be emphasized with the gravity of the harm caused to the society. In the present case on hand, the accused persons having conspired with 192 Spl.CC.180/2013 each other, availed the loan facility from the Bank and caused huge loss to the Bank as the loan accounts became NPA. The act of the accused persons is having effect on the public money kept in the Bank. Further, the accused No.1, being the Head and Chief Manager of the Bank, he himself involved in the matter of cheating of his own employer. The accused persons tried to abuse the prevailing system for their benefit which also affects the Government.
9. Section 120B of the IPC, provides that whoever party to a criminal conspiracy to commit offence punishable with death, imprisonment for life or rigorous imprisonment for a term of 2 years or upwards shall, where no express provision is made under the Code for punishment of such conspiracy, be punished in the same manner as if he had abetted the such offence. Section 109 of the IPC, provides for punishment for abetment, if the abetted act is committed in consequence and where no express provision is made for its punishment. As per the said provision, abetment is punishable with the punishment provided for the offence. In the Code, there is no express provision for punishment of conspiracy to commit the offence under Section 420 of the IPC.
10. Section 420 of the IPC provides for punishment for cheating and the said offence is punishable with imprisonment of either description for the term, which may extend to 7 years and also liable to pay fine.
193 Spl.CC.180/2013
11. Similarly, the offence under Section 13(1)(d) &
(d) which is punishable under Section 13(2) of the PC Act, with imprisonment which shall not be less than 1 year but which may extend to 7 years and shall also liable for fine. However, by virtue of the amendment Act, 2018 (16 of 2018 w.e.f. 26.07.2018), the minimum imprisonment was increased to 4 years and maximum to 10 years. In this case, the offence took place in the years 2008-09 and 2009-10, hence the law prevailing earlier to 2014 amendment is applicable. Section 16 of the PC Act also provides as to matters to be taken into consideration for fixing the fine.
12. Having said so, it is needless to say that the Court has to consider the mitigating factors which are in favour of the accused persons. In this regard, this court has also considered the mitigating circumstances expressed by the learned counsels for accused persons. It is admitted fact that accused No.1 is already dismissed from service. It is also noticed that some amount has been paid by accused Nos.3 to 5 and 7 towards loan account and some effort is also made for settling the loan amount. Further, there is no material to show that the accused No.1 to 5 and 7 are having any criminal antecedents. As submitted by the learned counsels, they have appeared before the court to face the trial of this case for long years and the offence leveled against them are not punishable with capital punishment. However, the submission made by the learned Public Prosecutor is also to be taken into consideration. This court has also 194 Spl.CC.180/2013 meticulously went through the various decisions relied by the learned counsel for accused Nos.2 to 5 and 7. Thus, having considered the facts and circumstances of the case, nature and gravity of the offences, its effect on the society, the purpose of the punishment, aggravating and mitigating circumstance of the case etc., this court proceed to pass the following ;
ORDER The accused Nos.1 to 5 and 7 are convicted for the offence punishable under Section 120B R/w. Sec.420 of the IPC and they are sentenced to undergo rigorous imprisonment for a period of 3 years and to pay the fine amount of Rs.50,000/- each and in default of payment of fine amount, they shall undergo simple imprisonment for a period of six months.
The accused Nos.1 to 5 and 7 are hereby convicted for the offence punishable under Section 420 R/w. Sec.120B of the IPC and sentenced to undergo rigorous imprisonment for a period of 3 years and to pay a fine amount of Rs.2 lakhs each and in default of payment of fine amount, they shall undergo simple imprisonment for a period of nine months.
The accused No.1 is hereby convicted for the offence punishable under Section 13(1)(d) 195 Spl.CC.180/2013 R/w. Sec.13(2) of the PC Act and is sentenced to undergo rigorous imprisonment for a period of 3 years and to pay a fine amount of Rs.3 lakhs and in default of payment of fine amount, he shall undergo simple imprisonment for a period of nine months.
The sentences ordered shall run concurrently and accused Nos.1 to 5 and 7 shall be entitled for set off as contemplated under Section 428 of the Cr.P.C., for the period of detention they have already undergone, if any.
Office to supply the copy of the judgment to accused persons forthwith.
(Dictated to the Stenographer Gr.I directly on the computer, corrected and then pronounced by me in the Open Court on this the 22nd day of November, 2024) (Shridhar Gopalakrishna Bhat) XXI Addl. City Civil and Sessions Judge, & Prl. Special Judge for CBI Cases, Bengaluru.
ANNEXURE LIST OF WITNESSES EXAMINED FOR THE PROSECUTION:
PW-1: Charan Singh PW-2: K.R. Jagannatha PW-3: Smt. S. Lakshmi Chithra PW-4: M.G. Kumara Swamy PW-5: Ansar Pasha PW-6: M. Narayana Swamy
196 Spl.CC.180/2013 PW-7: Smt. Viji Karthikeyan PW-8: A. Shivaprakash PW-9: C.N. Vasudeva PW-10: M.B. Dhyamberi PW-11: T. Ramakrishna PW-12: R.K. Shivanna PW-13: Y.E.L. Sudhakar Rao Pujari PW-14: Smt. Kalpana Raaj Nair PW-15: D. Krishnamurthy PW-16: Smt. H.R. Nagamani PW-17: S.T. Doddamani PW-18: Y.V.S. Rao PW-19: K. Chinnaswamy PW-20: P.S. Venkatesh PW-21: H.Ravindra Kamath PW-22: K. Suryanarayana Rao PW-23: K.Y. Guruprasad PW-24: K. Mohanan LIST OF DOCUMENTS EXHIBITED FOR THE PROSECUTION:
Ex.P1 Original complaint dated 3.12.2012 - 4 sheets Ex.P1(a) Ex.P2 Ex.P2(a) Signature of PW.2 Ex.P3 Personal file of A1 Ex.P4 Seizure memo dated 16.3.2012 - 10 sheets Ex.P4(a) Signature of PW.3 Ex.P4(b) Signature of witness Ex.P5 Application dt. 22.11.2008 for credit facilities and enclosures of M/s. Satyam Industries - 29 sheets Ex.P6 Borrowers/Guarantors profile in the prescribed format - 3 sheets Ex.P6(a) Signature of A1 Ex.P7 Pre-sanction inspection report dt. 18.2.2008 - 2 sheets Ex.P7(a) Signature of A1
197 Spl.CC.180/2013 Ex.P8 Undated letter of M/s. Satyam Industries signed by A3 Ex.P9 Proposal dated 10.12.2008 of Bank of India along with enclosures - 19 sheets Ex.P9(a) Signature of PW.14 Ex.P9(b) Signature of A1 Ex.P10 DPN dt. 12.12.2008 for Rs.47 lakhs executed by Satyam Industries etc., - 15 sheets Ex.P11 Letter dt. 15.12.2008 of M/s. Swetha Exports and enclosure - 2 sheets Ex.P11(a) Signature of A1 Ex.P12 Post-sanction Inspection Reports dt. 11.1.2009, 19.2.2009, 17.4.2009 and 31.8.2009-4 sheets Ex.P12(a) Post sanction Inspection Report dt. 11.1.2009 P12(a-1) Signature of A1 Ex.P12(b) Post sanction Inspection Report dt. 19.2.2009 P12(b-1) Signature of PW.14 Ex.P12(c) Post sanction Inspection Report dt. 17.4.2009 P12(c-1) Signature of PW.14 Ex.P12(d) Post sanction Inspection Report dt. 31.8.2009 P12(d-1) Signature of A1 Ex.P13 Email copies of Stock Statements of M/s.
Satyam Industries - 9 sheets Ex.P14 Letter dt. 18.2.2009 of Bank of India to M/s.
Satyam Industries Ex.P14(a) Signature of A1 Ex.P15 Cash Credit Account Opening Form and enclosures of M/s. Satyam Industries - 9 sheets Ex.P15(a) Handwriting and Initials of A1 to (c) Ex.P16 Statement of CC A/c. of M/s. Satyam for the period from 12.12.2008 to 17.3.2012 along with certificate - 4 sheets P16(a) Certificate u/s 2-A of BBE Act.
Ex.P17 Self cheque dt. 12.12.2008 for Rs.25,00,000/- of 198 Spl.CC.180/2013 Satyam Industries.
Ex.P17(a) Initials of PW.14 Ex.P18 Self cheque dt. 14.12.2008 for Rs.15,00,000/- of Satyam Industries.
Ex.P19 Cheque dt. 12.1.2009 for Rs.6,00,000/- of Satyam Industries issued in favour of A2.
Ex.P20 Cheque dt. 09.02.2009 for Rs.1,80,000/- of Satyam Industries issued in favour of A6.
Ex.P21 Pay-in-slip dt. 20.04.2009 for Rs.33,000/-
favouring Satyam Industries.
Ex.P22 Pay-in-slip dt. 28.04.2009 for Rs.62,000/-
favouring Satyam Industries.
Ex.P23 Cheque dt. 20.06.2009 for Rs.1,90,000/- of Satyam Industries issued in favour of A6.
Ex.P24 Self cheque dt. 22.06.2009 for Rs.2,50,000/- of Satyam Industries.
Ex.P25 Application dt. 22.11.2008 for credit facilities and enclosures of M/s. Mallikarjuna Industries - 30 sheets Ex.P26 Pre-sanction inspection report dt. 08.12.2008 Ex.P26(a) Signature of A1 Ex.P27 Undated letter of M/s. Mallikarjuna Industries signed by A4 - 2 sheets Ex.P28 Proposal dated 10.12.2008 along with enclosures of Bank of India - 19 sheets P28(a) Signature of PW.14 P28(b) Signature of A1 Ex.P29 Notarized copy of sanction letter dated 12.12.2008 of Bank of India - 8 sheets Ex.P30 Notarized Copies of DPN dated 12.12.2008 for Rs.47,00,000/- favouring Bank of India executed by M/s. Mallikarjuna Industries etc., - 15 sheets 199 Spl.CC.180/2013 Ex.P31 Xerox copy of DIC Certificate dt. 15.12.2008 Ex.P32 Letter dt. 15.12.2008 of M/s. Swetha Exports and enclosure Ex.P33 Xerox copy of certificate of recognition as Export House issued to M/s. Swetha Exports - 10 sheets Ex.P34 Email copies of Stock Statements in 9 sheets of M/s. Mallikarjuna Industries - 10 sheets Ex.P35 Letter dt. 18.2.2009 of Chief Manager, Bank of India to M/s. Mallikarjuna Industries Ex.P.35(a) Signature of A1 Ex.P36 Xerox copy of DIC Certificate dt. 3.4.2009 of Mallikarjuna.
Ex.P37 Cash Credit Account Opening Form and enclosures of M/s. Mallikarjuna Industries-11 sheets Ex.P37(a) Signature of PW.14 Ex.P37(b) Signature of A1 Ex.P38 Statement of CC A/c. of M/s. Mallikarjuna for the period from 12.12.2008 to 7.3.2012 along with certificate - 3 sheets Ex.P38(a) Certificate u/s 2-A of BBE Act.
Ex.P39 Self cheque dt. 12.12.2008 for Rs.25,00,000/- of M/s. Mallikarjuna Industries.
Ex.P39(a) Initials of PW.14
Ex.P40 Self cheque dt. 22.12.2008 for Rs.20,00,000/- of
M/s. Mallikarjuna Industries.
Ex.P41 Cheque dt. 12.1.2009 for Rs.1,00,000/- of M/s.
Mallikarjuna Industries issued in favour of A2.
Ex.P42 Cheque dt. 09.02.2009 for Rs.1,70,000/- of M/s.
Mallikarjuna Industries issued in favour of A6.
Ex.P43 Pay-in-slip dt. 20.04.2009 for Rs.35,000/-
favouring M/s. Mallikarjuna Industries.
200 Spl.CC.180/2013 Ex.P44 Pay-in-slip dt. 28.04.2009 for Rs.62,000/-
favouring M/s. Mallikarjuna Industries.
Ex.P45 Cheque dt. 20.06.2009 for Rs.1,90,000/- of M/s.
Mallikarjuna Industries issued in favour of A6.
Ex.P46 Cheque dt. 22.06.2009 for Rs.2,50,000/- of M/s.
Mallikarjuna Industries issued in favour of A6.
Ex.P47 Application dt. Nil for credit facilities and enclosures of M/s. Srinivasa Industries - 25 sheets Ex.P48 Pre-sanction inspection report dt. 21.09.2008 Ex.P48(a) Signature of A1 Ex.P49 Letter dt. 10.10.2008 of M/s. Srinivasa Industries signed by A5 - 2 sheets Ex.P50 Proposal dated 17.10.2008 along with enclosures of Bank of India - 14 sheets Ex.P50(a) Signature of PW.14 Ex.P50(b) Signature of A1 Ex.P51 Notarized copy of sanction letter dated 17.10.2008 of Bank of India - 4 sheets Ex.P52 Notarized copy of DPN for Rs.46,00,000/-
favouring Bank of India executed by M/s. Srinivasa Industries etc., Ex.P53 Xerox copy of DIC Certificate dt. 16.10.2008 of M/s. Srinivasa Industries.
Ex.P54 Letter dt. 15.11.2008 of M/s. Swetha Exports.
Ex.P55 Xerox copy of certificate of recognition as Export House issued to M/s. Swetha Exports.
Ex.P56 Post-sanction Inspection Reports dated 8.11.2008, 19.2.2009, 31.8.2009 and 17.4.2009. Ex.P56(a) Post-sanction Inspection Report dated 8.11.2008 P56(a-1) Signature of PW.14 Ex.P56(b) Post-sanction Inspection Report dated 19.2.2008 P56(b-1) Signature of PW.14 Ex.P56(c) Post-sanction Inspection Report dated 17.4.2009 201 Spl.CC.180/2013 P56(c-1) Signature of PW.14 Ex.P56(d) Post-sanction Inspection Report dated 31.8.2009 P56(d-1) Signature of A1 Ex.P57 Stock Statements of M/s. Srinivasa Industries -
12 sheets Ex.P58 Cash Credit Account Opening Form and enclosures of M/s. Srinivasa Industries - 13 sheets Ex.P58(a) Initial of A1 Ex.P58(b) Initials of A1 & (c) Ex.P59 Statement of account of CC A/c. of M/s.
Mallikarjuna Industries for the period 12.12.2008 to 7.3.2012 along with certificate - 4 sheets P59(a) Certificate u/s 2-A of BBE Act.
Ex.P60 Self cheque dt. 17.10.2008 for Rs.5,00,000/- of M/s. Srinivasa Industries.
Ex.P60(a) Initials of PW.14 Ex.P61 Self cheque dt. 18.10.2008 for Rs.15,00,000/- of M/s. Srinivasa Industries.
Ex.P62 Self cheque dt. 31.10.2008 for Rs.20,00,000/- of M/s. Srinivasa Industries.
Ex.P63 Self Cheque dt. 13.11.2008 for Rs.10,50,000/-
of M/s. Srinivasa Industries.
Ex.P64 Self Cheque dt. 29.11.2008 for Rs.9,60,000/- of M/s. Srinivasa Industries.
Ex.P65 Self Cheque dt. 30.12.2008 for Rs.16,00,000/-
of M/s. Srinivasa Industries.
Ex.P66 Cheque dt. 12.01.2009 for Rs.3,00,000/- of M/s.
Srinivasa Industries issued in favour of A2.
Ex.P67 Cheque dt. 09.02.2009 for Rs.1,50,000/- of M/s.
Srinivasa Industries issued in favour of A6.
Ex.P68 Pay-in-slip dt. 20.04.2009 for Rs.37,000/-
favouring M/s. Srinivasa Industries.
202 Spl.CC.180/2013 Ex.P69 Pay-in-slip dt. 28.04.2009 for Rs.60,000/-
favouring M/s. Srinivasa Industries.
Ex.P70 Cheque dt. 20.06.2009 for Rs.2,55,000/- of M/s.
Srinivasa Industries issued in favour of A6.
Ex.P71 Cheque dt. 22.06.2009 for Rs.2,50,000/- of M/s.
Srinivasa Industries issued in favour of A6.
Ex.P72 Application dt. 10.10.2008 for credit facilities and enclosures of M/s. Venkateswara Industries.- 28 sheets Ex.P72(a) Signature of A1 Ex.P73 Pre-sanction inspection report dt. 21.09.2008 -
2 sheets Ex.P74 Letter dt. 10.10.2008 of M/s. Venkateswara Industries signed by A6 - 2 sheets Ex.P75 Proposal dated 17.10.2008 along with enclosures of Bank of India - 19 sheets Ex.P75(a) Signature of PW.14 Ex.P75(b) Signature of A1 Ex.P76 Original DPN for Rs.46,00,000/- favouring Bank of India executed by M/s. Venkateswara Industries etc., - 15 sheets Ex.P77 Xerox copy of DIC Certificate dt. 16.10.2008 of M/s. Venkateswara Industries.
Ex.P78 Letter dt. 15.11.2008 of M/s. Swetha Exports. Ex.P79 Xerox copy of certificate of recognition as Export House issued to M/s. Swetha Exports.
Ex.P80 Post-sanction Inspection Reports dated 8.11.2008, 19.2.2009, 31.8.2009 and 17.4.2009
- 4 sheets.
Ex.P80(a) Post-sanction Inspection Report dated 8.11.2008 P80(a-1) Signature of PW.14 Ex.P80(b) Post-sanction Inspection Report dated 19.2.2009 P80(b-1) Signature of PW.14 Ex.P80(c) Post-sanction Inspection Report dated 17.4.2009 P80(c-1) Signature of PW.14 203 Spl.CC.180/2013 Ex.P80(d) Post-sanction Inspection Report dated 31.8.2009 P80(d-1) Signature of A1 Ex.P81 Stock Statements in 13 sheets of M/s.
Venkateswara Industries.
Ex.P82 Cash Credit Account Opening Form and enclosures of M/s. Venkateswara Industries - 10 sheets Ex.P82(a) Initial of A1 Ex.P83 Statement of CC A/c. of M/s. Venkateswara for the period from 17.10.2008 to 7.3.2012 along with certificate - 4 sheets Ex.P83(a) Certificate u/s 2-A of BBE Act. Ex.P84 Self cheque dt. 17.10.2008 for Rs.5,00,000/- of M/s. Venkateswara Industries.
Ex.P.84(a) Initials of PW.14 Ex.P85 Self cheque dt. 18.10.2008 for Rs.15,00,000/- of M/s. Venkateswara Industries.
Ex.P86 Self cheque dt. 22.10.2008 for Rs.20,00,000/- of M/s. Venkateswara Industries.
Ex.P87 Self Cheque dt. 31.10.2008 for Rs.5,00,000/- of M/s. Venkateswara Industries.
Ex.P88 Self Cheque dt. 13.11.2008 for Rs.5,50,000/- of M/s. Venkateswara Industries.
Ex.P89 Self Cheque dt. 29.11.2008 for Rs.7,40,000/- of M/s. Venkateswara Industries.
Ex.P90 Self Cheque dt. 24.12.2008 for Rs.15,00,000/-
of M/s. Venkateswara Industries.
Ex.P91 Self Cheque dt. 30.12.2008 for Rs.9,00,000/- of M/s. Venkateswara Industries.
Ex.P92 Self Cheque dt. 09.02.2009 for Rs.1,40,000/- of M/s. Venkateswara Industries.
Ex.P93 Pay-in-slip dt. 28.04.2009 for Rs.60,000/-
favouring M/s. Venkateswara Industries.
204 Spl.CC.180/2013 Ex.P94 Self Cheque dt. 20.06.2009 for Rs.2,20,000/- of M/s. Venkateswara Industries.
Ex.P95 Self Cheque dt. 22.06.2009 for Rs.2,50,000/- of M/s. Venkateswara Industries.
Ex.P96 Application dt. 06.04.2009 for credit facilities and enclosures of M/s. S.K. Valli Industries - 31 sheets.
Ex.P96(a) Borrower/Guarantor profile P96(a-1) Signature of A1 Ex.P97 Pre-sanction inspection report of A1 and CW-28
dt. 13.04.2009 and 17.4.2009 in one sheet.
Ex.P97(a) Signature of A1
Ex.P97(b) Note
Ex.P98 Proposal dated 15.04.2009 along with
enclosures of Bank of India - 19 sheets
Ex.P98(a) Signature of A1
Ex.P99 Original DPN for Rs.48,00,000/- favouring Bank
of India executed by M/s. S.K. Valli Industries etc., Ex.P100 Post-sanction Inspection Report dated 31.8.2009.
Ex.P100(a) Signature of A1 Ex.P101 Email copies of Stock Statements in 6 sheets of M/s. S.K.Valli Industries.
Ex.P102 Xerox copy of certificate of recognition as Export House issued to M/s. Swetha Exports.
Ex.P103 Cash Credit Account Opening Form and enclosures of M/s. S.K.Valli Industries - 16 sheets.
Ex.P103(a) Initials of A1 to (e) Ex.P104 Statement of CC A/c. of M/s. S.K.Valli for the period from 20.04.2009 to 7.3.2012 along with certificate - 3 sheets.
Ex.P104(a) Certificate u/s 2-A of BBE Act.
Ex.P105 Self cheque dt. 20.04.2009 for Rs.35,00,000/- of 205 Spl.CC.180/2013 M/s. S.K.Valli Industries.
Ex.P106 Self cheque dt. 28.04.2009 for Rs.12,75,000/- of M/s. S.K.Valli Industries.
Ex.P107 Self cheque dt. 17.12.2009 for Rs.1,43,000/- of M/s. S.K.Valli Industries.
Ex.P108 Cheque dt. 09.02.2010 for Rs.50,000/- issued in favour of M/s. S.K.Valli Industries with corresponding credit voucher - 2 sheets.
Ex.P109 Application dt. 06.04.2009 for credit facilities and enclosures of M/s. Vinayaka Enterprises - 29 sheets.
Ex.P109(a) Borrowers/Guarantors Profile Ex.109(a-1) Signature of A1 Ex.P110 Pre-sanction inspection report dt. 13.04.2009 and 17.4.2009 of A1 and CW-28 in one sheet.
Ex.P110(a) Signature of A1
Ex.P110(b) Note on Pre-sanction Inspection of PW14
Ex.110(a- Note of PW.14
1)
Ex.P111 Proposal dated 15.04.2009 along with
enclosures of Bank of India - 14 sheets
Ex.111(a) Signature of A1
Ex.P112 Original DPN for Rs.48,00,000/- favouring Bank
of India executed by M/s. Vinayaka Enterprises etc., - 16 sheets Ex.P113 Post-sanction Inspection Report dated 31.8.2009.
Ex.P113(a) Signature of A1
Ex.P114 Email copies of Stock Statements in 7 sheets of
M/s. Vinayaka Enterprises.
Ex.P115 Xerox copy of certificate of recognition as Export
House issued to M/s. Swetha Exports.
Ex.P116 Cash Credit Account Opening Form and
enclosures of M/s. Vinayaka Enterprises -13 sheets.
Ex.P116(a) Signature of PW.14
206 Spl.CC.180/2013
Ex.P116(b) Signature of A1
Ex.P116(c) Initials of A1
to (e)
Ex.P117 Statement of CC A/c. of M/s. Vinayaka
Enterprises for the period from 20.04.2009 to 7.3.2012 along with certificate - 3 sheets. Ex.P117(a) Certificate u/s 2-A of BBE Act.
Ex.P118 Self cheque dt. 20.04.2009 for Rs.35,00,000/- of M/s. Vinayaka Enterprises.
Ex.P119 Self cheque dt. 28.04.2009 for Rs.12,75,000/- of M/s. Vinayaka Enterprises.
Ex.P120 Certified true copy of Circular No. 95/87 dt.
3.10.2001 of Bank of India regarding lending powers to the Managers according to their scale.
Ex.P121 Certified true copy of Circular No. 101/129 dt.
8.10.2007 of Bank of India regarding guarantee scheme of the Credit Guarantee Fund Trust for Micro and Small Enterprises.
Ex.P122 Certified true copy of Circular No.98/89 dt.
7.8.2004 of Bank of India regarding credit guarantee fund scheme for Small Industries, absorption of 50% of guarantee fee by the bank.
Ex.P123 Original Mahazar dt. 24.2.2012 drawn at the premises of Shed Nos. 25 & 26 of KSSIDC Industrial Area, Malur - 3 sheets.
Ex.P123(a) Signature of PW.4 Ex.P123(b) Signature of PW.12 Ex.P123(c) Signature of PW.23 Ex.P124 Original seizure memo dt.20.3.2012 Ex.P124(a) Signature of PW.5 Ex.P124(b) Signature of Intiaz-Ulla-Sharief Ex.P124(c) Signature of PW.23 Ex.P125 File containing E.M. Part-I application of A5 and acknowledgment Ex.P125(a) Original E.M. Part-I application Ex.P125(b) E.M. Part-I acknowledgment A5 Ex.P125(c) Signature of Joint Director.
207 Spl.CC.180/2013 Ex.P126 File containing E.M. Part-I application and acknowledgment of A6 Ex.P126(a) Original E.M. Part-I application of A6 Ex.P126(b) E.M. Part-I acknowledgment Ex.P126(c) Signature of Joint Director.
Ex.P127 File containing E.M. Part-I application of A4 and acknowledgment Ex.P127(a) E.M. Part-I application of A4 Ex.P127(b) E.M. Part-I acknowledgment Ex.P127(c) Signature of Joint Director.
Ex.P128 File containing E.M. Part-I application and acknowledgment Ex.P128(a) Original E.M. Part-I application of A3 Ex.P128(b) E.M. Part-I acknowledgment Ex.P128(c) Signature of Joint Director.
Ex.P129 File containing E.M. Part-I application of A7 and acknowledgment Ex.P129(a) E.M. Part-I application of A7 Ex.P129(b) E.M. Part-I acknowledgment Ex.P129(c) Signature of Joint Director.
Ex.P130 File containing E.M. Part-I application and acknowledgment in respect of A8 Ex.P130(a) E.M. Part-I application of A8 Ex.P130(b) E.M. Part-I acknowledgment Ex.P130(c) Signature of Joint Director.
Ex.P131 File containing E.M. Part-I application and acknowledgment in respect of A8 Ex.P131(a) E.M. Part-II application in respect of A8 Ex.P131(b) E.M. Part-II acknowledgment Ex.P131(c) Signature of Joint Director.
Ex.P132 One file contains E.M. Part-II application and enclosure with EM-II and acknowledgment in respect of Mallikarjuna Industries Ex.P132(a) E.M. Part-II application and enclosure Ex.P132(b) E.M. Part-II acknowledgment Ex.P132(c) Signature of Joint Director.
Ex.P133 One file containing E.M. Part-II application and 208 Spl.CC.180/2013 enclosure of S.K. Valli Industries and acknowledgment Ex.P133(a) E.M. Part-II application and enclosure Ex.P133(b) E.M. Part-II acknowledgment Ex.P133(c) Signature of Joint Director.
Ex.P134 One file containing E.M. Part-II application of Sathyam Industries and enclosure with acknowledgment Ex.P134(a) E.M. Part-II application and enclosures Ex.P134(b) E.M. Part-II acknowledgment Ex.P134(c) Signature of Joint Director.
Ex.P135 Seizure Memo dt. 20.3.2012
Ex.P135(a) Signature of PW.6
Ex.P135(b) Signature of Imtiaz Ulla Sharief (Another
witness)
Ex.P136 Letter dt. 17.3.2012 of Environmental Officer to
CBI
Ex.P136(a) Signature of PW.7
Ex.P137 Letter dt. 19.3.2012 of PW.8 to CBI
Ex.P137(a) Signature of PW.8
Ex.P138 Application for registration under VAT Act, 2003
with enclosure of Satyam Industries (A3) - 94 pages Ex.P138(a) Notice dt. 30.11.2009 Ex.P139 Application for registration under VAT Act, 2003 with enclosure of P. Venkateswara Rao of Mallikarjuna Industries - 102 pages Ex.P139(a) Notice dt. 30.11.2009 Ex.P140 Application for registration under VAT Act, 2003 with enclosure of P. Gangaraju of Srinivasa Industries - 104 pages Ex.P140(a) Notice dt. 30.11.2009 Ex.P141 Application for registration under VAT Act, 2003 with enclosure of P. Venkateswara Industries- 82 pages Ex.P141(a) Notice dt. 30.11.2009 209 Spl.CC.180/2013 Ex.P142 Application for registration under KVAT Act, along with enclosure of S.K. Valli Industries- 34 pages Ex.P143 Application for registration under VAT Act, of Vinayaka Enterprises with enclosures - 33 pages Ex.P144 Letter dt. 29.3.2012 of AEE, BESCOM to CBI. Ex.P144(a) Signature of PW.9 Ex.P145 Letter dt. 29.3.2012 of AEE, BESCOM to CBI Ex.P145(a) Signature of PW.9 Ex.P146 Letter dt. 27.3.2012 of CEO & Executive Member, KIADB, Nrupathunga Road, Bengaluru and enclosures - 23 sheets Ex.P146(a) Signature of PW.10 Ex.P147 Letter dt. 13.6.2012 of Bank of India, Kakinada Branch to CBI Ex.P147(a) Signature of the Chief Manager Ex.P148 Original account opening form and enclosure of the M/s. Deb Fashions with bank of India, Kakinada Branch - 13 sheets Ex.P149 Statement of account for the period 1.4.2011 to 8.12.2011 of M/s. Deb Fashions with certificate Ex.P149(a) Certificate under 2-A of BBE Act.
Ex.P150 Original search warrant issued from the court endorsed to PW.13 Ex.P151 Original search list dt. 24.2.2012 Ex.P151(a) Signature of PW.13 Ex.P151(b) Signature of PSRVS Ex.P151(c) Signature of K. Suryanarayana Rao Ex.P151(d) Signature of Dr. B. Srinivasa Rao (A2) Ex.P152 One file pertaining to M/s. Srinivasa Industries seized during search operations (76 sheets) Ex.P152(a) Signature of PW.22 Ex.P152(b) Signature of Mr. Shastry Ex.P153 One file pertaining to M/s. Satyam Industries 210 Spl.CC.180/2013 seized during search operations (59 sheets) Ex.P153(a) Signature of PW.22 Ex.P153(b) Signature of Mr. Shastry Ex.P154 One file pertaining to M/s. Venkateswara Industries seized during search operations (73 sheets) Ex.P154(a) Signature of PW.22 Ex.P154(b) Signature of Mr. Shastry Ex.P155 One file pertaining to M/s. Mallikarjuna Industries seized during search operations (66 sheets) Ex.P155(a) Signature of PW.22 Ex.P155(b) Signature of Mr. Shastry Ex.P156 One file pertaining to M/s. S.K. Valli Industries seized during search operations (33 sheets) Ex.P156(a) Signature of PW.22 Ex.P156(b) Signature of Mr. Shastry Ex.P157 One file pertaining to M/s. Vinayaka Enterprises seized during search operations (26 sheets) Ex.P157(a) Signature of PW.22 Ex.P157(b) Signature of Mr. Shastry Ex.P158 One file pertaining to Sri. Konaku Sridhar seized during search operations (3 sheets) Ex.P159 Certificate dt. 20.4.2009 issued by A1 along with envelop Ex.P160 Letter No. IES:TMK.Malur:SM.25 & 26 :2015 dt.
9.3.12 from KSSIDCH to CBI Ex.P160(a) Signature of the witness/PW.15 on covering letter.
Ex.P161 Letter SM 25 & 26-2004-05 from KSSIDC to Munivenkatappa Ex.P162 Letter IES:TMK:MALUR:SM 28:12 dt. 30.3.12 from KSSIDC to CBI Ex.P162(a) Signature of PW.15 Ex.P163 Letter IES TIMK MALUR:SM.28/12/12 dt.
211 Spl.CC.180/2013 17.5.12 from KSSIDC to CBI Ex.P163(a) Signature of PW.15 Ex.P164 Copy of mahazar letter - Service Certificate 13 shts Ex.P164(a) Signature of PW.15 Ex.P165 Proceedings drawn on 6.7.12 at Malur in connection with the Inspection of Plot No.120. Ex.P165(a) Signature of PW.16 Ex.P165(b) Signature of V. Krishna Ex.P165(c) Signature of witness Ex.P165(d) Signature of witness Ex.P166 Concurrent Audit Report for the month of 10/2008 given by A.R. Vishwanathan & Co., Chartered Accountants to Bank of India (73 sheets) Ex.P167 Concurrent Audit Report for the month of 12/2008 given to Bank of India by A.R. Vishwanathan & Co., Chartered Accountants (70 sheets) Ex.P168 Concurrent Audit Report for the month of April 2009 given to Bank of India (68 sheets) Ex.P169 Post Sanction Review Statement for the month 10/2008, 12/2008 and 4/2009 - 3 sheets Ex.P170 Long Form Audit Report (LFAR) submitted by the statutory auditors to Bank of India (31 sheets) Ex.P171 Seizure Memo dt. 25.4.2012 - 9 sheets Ex.P171(a) Signature of PW.18 Ex.P171(b) Signature of PW.23 Ex.P172 Original Current account opening form of M/s.
Swetha Exports with Bank of India, Kakinada Branch Ex.P173 Cheque dtd: 27.11.2008 for Rs. 10 Lakhs given by M/s. Swetha Exports in favour of M/s. Srinivasa Industries.
212 Spl.CC.180/2013 Ex.P174 Pay-in-slip dtd: 27.11.2008 of Bank of India pertaining to Ex.P.173.
Ex.P175 Cheque dated: 27.11.2008 for Rs. 10 Lakhs given by M/s. Swetha Exports in favour of M/s. Venkateswara Industries.
Ex.P176 Pay-in-slip dtd: 27.11.2008 of Bank of India pertaining to Ex.P.175.
Ex.P177 Cheque dated: 27.12.2008 for Rs. 10 Lakhs given by M/s. Swetha Exports in favour of M/s. Srinivasa Industries.
Ex.P178 Pay-in-slip dtd: 27.12.2008 of Bank of India pertaining to Ex.P.177.
Ex.P179 Cheque dated: 27.12.2008 for Rs. 5 Lakhs given by M/s. Swetha Exports in favour of M/s. Venkateswara Industries.
Ex.P180 Pay-in-slip dtd: 27.12.2008 of Bank of India pertaining to Ex.P.179.
Ex.P181 Cheque dated: 30.12.2008 for Rs. 5 Lakhs given by M/s. Swetha Exports in favour of M/s. Venkateswara Industries.
Ex.P182 Pay-in-slip dtd: 30.12.2008 of Bank of India pertaining to Ex.P.181.
Ex.P183 Cheque dated: 4.2.2009 for Rs. 2 Lakhs given by M/s. Swetha Exports in favour of M/s. Sathyam Industries.
Ex.P184 Pay-in-slip dtd: 4.2.2009 of Bank of India pertaining to Ex.P.183.
Ex.P185 Cheque dated: 4.2.2009 for Rs. 2 Lakhs given by M/s. Swetha Exports in favour of M/s.
Mallikarjuna Industries.
Ex.P186 Pay-in-slip dtd: 4.2.2009 of Bank of India pertaining to Ex.P.185.
Ex.P.187 Cheque dated:13.4.2009 for Rs.2,37,000/- given by M/s. Swetha Exports.
213 Spl.CC.180/2013 Ex.P.188 Four bank challans pertaining to M/s. to 191 Venkateswara Industries, Sathym Industries, Srinivasa Industries and Mallikarjuna Industries. Connected to Ex.P.187 Ex.P192 Cheque dated: 29.1.2010 for Rs. 50,000/- given by M/s. Swetha Exports in favour of M/s. Srinivasa Industries.
Ex.P193 Pay-in-slip dtd: 29.1.2010 of Bank of India pertaining to Ex.P.192.
Ex.P194 Cheque dated: 29.1.2010 for Rs. 50,000/- given by M/s. Swetha Exports in favour of M/s. Venkateswara Industries.
Ex.P195 Pay-in-slip dtd: 29.1.2010 of Bank of India pertaining to Ex.P.194.
Ex.P196 Cheque dated: 29.1.2010 for Rs. 50,000/- given by M/s. Swetha Exports in favour of M/s. Mallikarjuna Industries.
Ex.P197 Pay-in-slip dtd: 29.1.2010 of Bank of India pertaining to Ex.P.196.
Ex.P198 to 10 Original pay-in-slips of Bank of India, 207 Kakinada Branch, pertaining to Account No.--------0028 of M/s Srinivasa Industries. Ex.P207(a) Signature of Accused No.2 Ex.P208 to 10 Original pay-in-slips of Bank of India, 217 Kakinada Branch, pertaining to Account No.--------0042 of M/s SK. Valli Industries. Ex.P217(a) Signature of Accused No.2 Ex.P218 to 9 Original pay-in-slips of Bank of India, 226 Kakinada Branch, pertaining to Account No.--------0031 of M/s Sathyam Industries. Ex.P226(a) Signature of Accused No.2 Ex.P227 to 8 Original pay-in-slips of Bank of India, 234 Kakinada Branch, pertaining to Account No.--------0032 of M/s Mallikarjuna Industries.
214 Spl.CC.180/2013 Ex.P234(a) Signature of Accused No.2 Ex.P235 to 10 Original pay-in-slips of Bank of India, 244 Kakinada Branch, pertaining to Account No.--------0027 of M/s Venkateswara Industries. Ex.P244(a) Signature of Accused No.2 Ex.P245 to 10 Original pay-in-slips of Bank of India, 254 Kakinada Branch, pertaining to Account No.--------0041 of M/s Vinayaka Enterprises. Ex.P254(a) Signature of Accused No.2 Ex.P255 Ex.P255(a) Undated letter of M/s. Swetha Exports addressed to Bank of India, Whitefield Branch, Ex.P255(b) Cheque for Rs.25 lakhs dated 14.4.2011 issued by M/s. Swetha Exports favouring M/s.
Venkateswara Industries.
Ex.P255(c) Cheque return memo dt. 21.4.2011 Ex.P256 Ex.P256(a) Undated letter of M/s. Swetha Exports addressed to Bank of India, Whitefield Branch, Ex.P256(b) Cheque for Rs.25 lakhs dated 21.4.2011 issued by M/s. Swetha Exports favouring M/s.
Venkateswara Industries.
Ex.P256(c) Cheque return memo dt. 23.4.2011 Ex.P257 Ex.P257(a) Undated letter of M/s. Swetha Exports addressed to Bank of India, Whitefield Branch, Ex.P257(b) Cheque for Rs.25 lakhs dated 24.8.2011 issued by M/s. Swetha Exports favouring M/s. S.K. Valli Industries.
Ex.P258 Ex.P258(a) Undated letter of M/s. Swetha Exports addressed to Bank of India, Whitefield Branch, Ex.P258(b) Cheque for Rs.26 lakhs dated 17.8.2011 issued by M/s. Swetha Exports favouring M/s. S.K. Valli Industries.
Ex.P259 215 Spl.CC.180/2013 Ex.P259(a) Undated letter of M/s. Swetha Exports addressed to Bank of India, Whitefield Branch, Ex.P259(b) Cheque for Rs.25 lakhs dated 25.5.2011 issued by M/s. Swetha Exports favouring M/s.
Srinivasa Industries.
Ex.P260 Ex.P260(a) Undated letter of M/s. Swetha Exports addressed to Bank of India, Whitefield Branch, Ex.P260(b) Cheque for Rs.25 lakhs dated 11.5.2011 issued by M/s. Swetha Exports favouring M/s.
Srinivasa Industries.
Ex.P261 Ex.P261(a) Undated letter of M/s. Swetha Exports addressed to Bank of India, Whitefield Branch, Ex.P261(b) Cheque for Rs.25,50,000/- dated 28.9.2011 issued by M/s. Swetha Exports favouring M/s. Vinayaka Enterprises.
Ex.P262 Ex.P262(a) Undated letter of M/s. Swetha Exports addressed to Bank of India, Whitefield Branch, Ex.P262(b) Cheque for Rs.26 lakhs dated 14.9.2011 issued by M/s. Swetha Exports favouring M/s.
Vinayaka Enterprises.
Ex.P263 Ex.P263(a) Undated letter of M/s. Swetha Exports addressed to Bank of India, Whitefield Branch, Ex.P263(b) Cheque for Rs.25 lakhs dated 27.7.2011 issued by M/s. Swetha Exports favouring M/s.
Mallikarjuna Industries.
Ex.P264 Ex.P264(a) Undated letter of M/s. Swetha Exports addressed to Bank of India, Whitefield Branch, Ex.P264(b) Cheque for Rs.26 lakhs dated 13.7.2011 issued by M/s. Swetha Exports favouring M/s.
Mallikarjuna Industries.
Ex.P265 Ex.P265(a) Undated letter of M/s. Swetha Exports addressed to Bank of India, Whitefield Branch, Ex.P265(b) Cheque for Rs.25 lakhs dated 15.6.2011 issued by M/s. Swetha Exports favouring M/s.
216 Spl.CC.180/2013 Sathyam Industries.
Ex.P266 Ex.P266(a) Undated letter of M/s. Swetha Exports addressed to Bank of India, Whitefield Branch, Ex.P266(b) Cheque for Rs.26 lakhs dated 22.6.2011 issued by M/s. Swetha Exports favouring M/s.
Sathyam Industries.
Ex.P267 Letter dtd. 1.1.2013 of PW.21 to CBI Ex.P267(a) Signature of PW.21 Ex.P268 Statement of account in respect of M/s. S.K. Valli Industries with debit and credit vouchers and certificate u/s. 2A of B.B.E. Act.(6 sheets) Ex.P268(a) Signatures of PW.21 to (d) Ex.P269 F.I.R.
Ex.P270 Covering letter dtd. 27.4.2012 of Chief Manager, BOI, Kakinada to CBI Ex.P271 Statement of a/c. of M/s. Swetha Exports along with certificate u/s. 2A of B.B.E. Act maintained with BOI, Kakinada branch(44 sheets) Ex.P272 Seizure memo dtd.8.5.2012 Ex.P272(a) Signature of PW.23 Ex.P272(b) Signature of PW.3 Ex.P273 Covering letter dtd. 12.5.2012 of Zonal Manager, BOI to CBI Ex.P274 Internal investigation report dtd. 10.11.2010(30 sheets) submitted by Sri K. Mohanan Ex.P274(a) Signature of witness on page No.25 of the report.
Ex.P275 Letter dtd. 29.4.2013 written by Smt. Kalpana Nair to CBI.
Ex.P276 Statement under Section 164 of the Cr.P.C. given by PW.14 before 17th ACMM.
Ex.P277 Statement recorded by this court containing 5 sheets.
217 Spl.CC.180/2013 LIST OF MATERAIL OBJECTS MARKED FOR PROSECUTION: -
-NIL -
LIST OF DOCUMENTS MARKED FOR THE DEFENCE:
Ex.D1 Attested copy of Memorandum for sanction of Zonal manager No.U.Z.01 Credit/AFD/ 09.10.01 dt. 24.04.2009 (28 sheets).
Ex.D2 Attested copy of Memorandum for sanction of GM. For sanction of Active Export V.Z.01/ Credit/09-10/ 607 dt. 8.1.2010 (10 sheets).
Ex.D3 Copy of post sanction review system & inter Officer Memo dt. 18.5.2009 (7 sheets) Ex.D4 Letter dt. 13.3.2013 of H.R. Kannan, Chief Manager, Bank of India to the CBI.
Ex.D4(a) Signature of PW.21
Ex.D4(b) The portion in Ex.D4
Ex.D5 Certified true copy of the Master Circular
No.101/70 dt. 23.7.2007 along with
annexures (28 sheets)
Ex.D6 & 7 Relevant portion of 161 statement of
PW.3/CW.3
Ex.D8 Copy of the Chapter 8 of Foreign Trading
Policy issued by Govt. of India.
Ex.D9 Copy of the sale deed executed by KIADB in
favour of Smt. Nagamani in respect of Plot No. 120 OD 13.6.2008 (Available in Ex.P156) Ex.D10 Xerox copies of extract of proposal register - 9 sheets (produced by defence) Ex.D11 Inspection Report of Bank of India Ex.D11(a) Signature of PW.14 Ex.D11(b) Signature of PW.14 Ex.D12 O/S, petition, obj. order in Crl. Mis. 2697/13 218 Spl.CC.180/2013 Ex.D13 Application dt. 1.2.2011 filed before C.G.T.M.S.E along with declaration and undertaking by Bank of India (13 sheets) in respect of M/s. Sathyam Industries.
Ex.D14 Application dt. 1.2.2011 filed before C.G.T.M.S.E. along with declaration and undertaking by Bank of India in respect of M/s. Mallikarjuna Industries - 4 sheets.
Ex.D15 Application dt. 1.2.2011 filed before C.G.T.M.S.E. Bank of India along with declaration and undertaking etc., M/s. S.K. Valli Industries - 5 sheets.
Ex.D16 Application dt. 1.2.2011 filed before C.G.T.M.S.E. by Bank of India along with declaration and undertaking in respect of M/s. Srinivasa Industries - 5 sheets.
Ex.D17 Application dt. 1.2.2011 filed before C.G.T.M.S.E. by Bank of India along with declaration and undertaking etc., in respect of M/s. Vinayaka Industries - 8 sheets.
Ex.D18 Application dt. 1.2.2011 filed before C.G.T.M.S.E. by Bank of India along with declaration and undertaking in respect of M/s. Venkateswara Industries - 5 sheets. Ex.D19 Certified copy of the application dt. 20.9.2010 filed by Bank of India against M/s. Srinivasa Industries before D.R.T. - 14 sheets Ex.D20 Covering letter dt. 12.1.2007 of CBI enclosed with Audit trial in respect of Accounts. Ex.D21 Pardon Application under Section 5(2) of PC Act R/w. Section 306 of Cr.P.C., (Four Sheets) (Shridhar Gopalakrishna Bhat) XXI Addl. City Civil and Sessions Judge, & Prl. Special Judge for CBI Cases, Bengaluru.