Karnataka High Court
B Rami Reddy vs State Of Karnataka on 18 May, 2020
Author: K.Natarajan
Bench: K.Natarajan
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 18TH DAY OF MAY, 2020
BEFORE
THE HON'BLE MR. JUSTICE K.NATARAJAN
CRIMINAL REVISION PETITION No.804 of 2011
C/W
CRIMINAL REVISION PETITION No.805 of 2011,
CRIMINAL REVISION PETITION No.806 of 2011,
CRIMINAL REVISION PETITION No.807 of 2011,
CRIMINAL REVISION PETITION No.1056 of 2011,
&
CRIMINAL REVISION PETITION No.744 of 2011
IN CRL.R.P.No.804/2011:
BETWEEN
B.RAMI REDDY
AGED ABOUT 62 YEARS,
S/O. NARASA REDDY,
RESIDING AT No.165,
1ST FLOOR, 13TH MAIN,
'V' SECTOR, H.S.R. LAYOUT,
BANGALORE-560 102.
...PETITIONER
(BY SRI B.A.NANJA REDDY, ADV., FOR
SRI S.K.VENKATA REDDY, ADV.,)
AND
STATE OF KARNATAKA
BY CBI, BS & FC BANGALORE.
...RESPONDENT
(BY SRI P.PRASANNA KUMAR, SPL. COUNSEL)
THIS CRIMINAL REVISION PETITION IS FILED UNDER
SECTION 397 READ WITH 401 OF THE CODE OF CRIMINAL
PROCEDURE, 1973, PRAYING TO SET ASIDE THE ORDER DATED
2
27.04.2011 PASSED ON APPLICATION UNDER SECTION 227 OF
THE CODE OF CRIMINAL PROCEDURE, IN SPL.C.C.No.82 OF
2008 BY THE XLVI ADDITIONAL CITY CIVIL AND SESSIONS
JUDGE AND SPECIAL JUDGE FOR CBI CASES, BANGALORE CITY
IN MISC.CRL.No.4322 of 2011 FOR STAY.
IN CRL.R.P.No.805/2011:
BETWEEN
B.RAMI REDDY,
AGED ABOUT 62 YEARS,
S/O. NARASA REDDY,
RESIDING AT No.165,
1ST FLOOR, 13TH MAIN,
'V' SECTOR, HSR LAYOUT,
BANGALORE-560 102.
...PETITIONER
(BY SRI B.A.NANJA REDDY, ADV., FOR
SRI S.K.VENKATA REDDY, ADV.,)
AND
STATE OF KARNATAKA,
BY CBI, BS & FC,
BANGALORE.
...RESPONDENT
(BY SRI P.PRASANNA KUMAR,SPL. COUNSEL)
THIS CRIMINAL REVISION PETITION IS FILED UNDER
SECTION 397 READ WITH 401 OF THE CODE OF CRIMINAL
PROCEDURE, 1973, PRAYING TO SET ASIDE THE ORDER DATED
27.04.2011 PASSED ON APPLICATION UNDER SECTION 227 OF
THE CODE OF CRIMINAL PROCEDURE, IN SPL.C.C.No.83 of
2008 BY THE XLVI ADDITIONAL CITY CIVIL AND SESSIONS
JUDGE AND SPECIAL JUDGE FOR CBI CASES, BANGALORE CITY
MISC.CRL.4320 of 2011 FOR STAY.
IN CRL.R.P.No.806/2011:
BETWEEN
3
B.RAMI REDDY,
AGED ABOUT 62 YEARS,
S/O. NARASA REDDY,
RESIDING AT No.165,
1ST FLOOR, 13TH MAIN,
'V' SECTOR, HSR LAYOUT,
BANGALORE-560 102.
...PETITIONER
(BY SRI B.A.NANJA REDDY, ADV., FOR
SRI S.K.VENKATA REDDY, ADV.,)
AND
STATE OF KARNATAKA,
BY CBI, BS & FC,
BANGALORE.
...RESPONDENT
(BY SRI P.PRASANNA KUMAR, SPL. COUNSEL)
THIS CRIMINAL REVISION PETITION IS FILED UNDER
SECTION 397 READ WITH 401 OF THE CODE OF CRIMINAL
PROCEDURE, 1973, PRAYING TO SET ASIDE THE ORDER DATED
27.04.2011 PASSED ON APPLICATION UNDER SECTION 227 OF
THE CODE OF CRIMINAL PROCEDURE, IN SPL.C.C.No.121 of
2007 BY THE XLVI ADDITIONAL CITY CIVIL AND SESSIONS
JUDGE AND SPECIAL JUDGE FOR CBI CASES, BANGALORE CITY
MISC.CRL.4319 of 2011 FOR STAY.
IN CRL.R.P.No.807/2011:
BETWEEN
B.RAMI REDDY,
AGED ABOUT 62 YEARS,
S/O. NARASA REDDY,
RESIDING AT No.165,
1ST FLOOR, 13TH MAIN,
'V' SECTOR, HSR LAYOUT,
BANGALORE-560 102.
...PETITIONER
(BY SRI B.A.NANJA REDDY, ADV., FOR
SRI S.K.VENKATA REDDY, ADV.,)
4
AND
STATE OF KARNATAKA,
BY CBI, BS & FC,
BANGALORE.
...RESPONDENT
(BY SRI P.PRASANNA KUMAR, SPL. COUNSEL)
THIS CRIMINAL REVISION PETITION IS FILED UNDER
SECTION 397 READ WITH 401 OF THE CODE OF CRIMINAL
PROCEDURE, 1973, PRAYING TO SET ASIDE THE ORDER DATED
27.04.2011 PASSED ON APPLICATION UNDER SECTION 227 OF
THE CODE OF CRIMINAL PROCEDURE, IN SPL.C.C.No.122 of
2007 BY THE XLVI ADDITIONAL CITY CIVIL AND SESSIONS
JUDGE AND SPECIAL JUDGE FOR CBI CASES, BANGALORE CITY
MISC.CRL.4323 of 2011 FOR STAY.
IN CRL.R.P.No.1056/2011:
BETWEEN
M.B.ARUN KUMAR
AGED ABOUT 45 YEARS,
S/O. M.B.VARADARAJ,
RESIDING AT No.5,
2ND CROSS, SRIRAMAPURAM,
BANGALORE-560 021.
...PETITIONER
(BY SRI R.VIJAYAKUMAR, ADVOCATE)
AND
STATE BY C.B.I.,
A.C.B., BANGALORE.
...RESPONDENT
(BY SRI P.PRASANNA KUMAR, SPL. COUNSEL)
THIS CRIMINAL REVISION PETITION IS FILED UNDER
SECTION 397 READ WITH 401 OF THE CODE OF CRIMINAL
PROCEDURE, 1973, PRAYING TO QUASH THE ORDER DATED
04.03.2011 PASSED BY THE XLVII ADDITIONAL CITY CIVIL AND
SESSIONS JUDGE AND SPECIAL JUDGE FOR CBI CASES,
5
BANGALORE IN SPL.C.C.No.162 of 2005 REFUSING TO
DISCHARGE THE PETITIONER UNDER SECTION 227 OF THE
CRIMINAL PROCEDURE CODE AND CONSEQUENTLY QUASH THE
ENTIRE PROCEEDINGS, INCLUDING THE CHARGE SHEET FILED
THEREIN BY THE CBI AGAINST THE PETITIONER I.A.No.1 of
2011 FILED UNDER SECTION 389 CR.P.C., FOR STAY.
IN CRL.R.P.No.744/2011:
BETWEEN
1. SRI NARAYANA GOWDA,
S/O. LATE PUTTEGOWDA,
EX-PRESIDENT,
BANGALORE DISTRICT AND
RURAL DISTRICT CO-OPERATIVE
CENTRAL BANK LTD.,
5TH MAIN ROAD,
CHAMARAJPET, BANGALORE,
RESIDENT OF KERALALLASANDRA VILLAGE,
MALAGALA POST, KASABA HOBLI,
KANAKAPURA TALUK,
BANGALORE RURAL DISTRICT.
2. SRI BETTASWAMY GOWDA N.S.,
AGED ABOUT 46 YEARS,
S/O. SIDDEGOWDA,
SENIOR ASSISTANT,
BANGALORE DISTRICT & RURAL
DISTRICT CO-OPERATIVE CENTRAL
BANK LTD., CANTONMENT BRANCH,
KAMRAJ ROAD,
BANGALORE-560 042.
...PETITIONERS
(BY SRI K.C.SHANTHA KUMAR AND
SRI S.SHANKARAPPA AND ASSOCIATES, ADVOCATES)
AND
THE STATE BY
CENTRAL BUREAU OF
INVESTIGATION, BS & FC, No.36,
6
BELLARY ROAD,
BANGALORE-32,
REPRESENTED BY ITS
SUPERINTENDENT OF POLICE.
...RESPONDENT
(BY SRI P.PRASANNA KUMAR, SPL. COUNSEL)
THIS CRIMINAL REVISION PETITION IS FILED UNDER
SECTION 397 READ WITH 401 OF THE CODE OF CRIMINAL
PROCEDURE, 1973, PRAYING TO CALL FOR RECORDS TO
CONCERNING AND CONNECTED WITH SPL.C.C.No.162 of 2005
FROM THE COURT OF THE XLVII (47) ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AND SPECIAL JUDGE FOR CBI CASES,
BANGALORE, PERUSE THE SAME AND REVERSE THE ORDER
DATED 04.03.2011 PASSED BY THE SAID COURT IN THE SAID
CASE IN SO FAR AS THE SAME PERTAIN TO THE PETITIONERS
ONLY MISC.CRL.4025 of 2011 FOR STAY.
THESE CRIMINAL REVISION PETITIONs HAVING BEEN
HEARD AND RESERVED FOR ORDERS ON 04.02.2020 AND
COMING ON FOR PRONOUNCEMENT, THIS DAY THE COURT
PRONOUNCED THE FOLLOWING:
ORDER
The below named petitioners have filed their respective criminal revision petition as against the order passed by the Additional City Civil and Sessions Judge and Special Judge for CBI cases, Bengaluru (hereinafter 7 referred to as 'Special Court/Trial Court') vide order dated 27.04.2011:
Sl. Name of the Special Cases
Nos.
Nos. Petitioner
1 A-2-P.Rami Reddy Crl.R.P.804/2011 Spl.C.C.No.82/2008
2 A-3-P.Rami Reddy Crl.R.P.805/2011 Spl.C.C.No.83/2008
3 A-2-P.Rami Reddy Crl.R.P.806/2011 Spl.C.C.No.121/2008
4 A-2-P.Rami Reddy Crl.R.P.807/2011 Spl.C.C.No.122/2008
5 A-7-M.B.Arun Crl.R.P.1056/2011 Spl.C.C.No.162/2005
Kumar
6 A-1-Narayana Crl.R.P.744/2011 Spl.C.C.No.162/2005
Gowda
A-8-Bettaswamy
Gowda
2. Heard the arguments of the learned counsel for the petitioners as well as Sri P.Prasanna Kumar, Special Counsel, CBI.
3. The ranks of the parties before the Trial Court is retained for the sake of convenience.
4. The case of the petitioners in all these cases is that, in pursuance of the order of the High Court, the CBI registered a Preliminary Enquiry on 27.11.1998 against the President and other Office Bearers of Bengaluru District 8 and Bengaluru Rural District Co-operative Central Bank Limited (hereinafter referred to as 'BD and BRDCC Bank') for suspected abuse of position to show official favour with respect to sanctioning of loans to various persons. Based on the investigation, the respondent-CBI, BS and FC, Bengaluru has filed the charge-sheet against the petitioners and others for the offences punishable under Sections 120B read with Sections 409, 420 of Indian Penal Code (for short 'IPC') and Sections 13(2), 13(1)(c) and (d) of the Prevention of Corruption Act (hereinafter referred to as 'P.C.Act').
5. The facts of the case in Crl.R.P.No.804/2011 is that the petitioner-Rami Reddy is accused No.2 in Spl.C.C.No.82/2008 being the Managing Director of the BD and BRDCC Bank, while discharging his duty has sanctioned huge amount of loan in collusion with other accused and granted loan to the Kaveri Wineries and Distilleries (P) Ltd., by recommending/sanctioning/disbursing/availing the 9 enhanced cash credit limit without proper application/appraisal/diversion of funds resulting in wrongful loss to an extent of Rs.659.07 lakhs as on 31.03.2004 to the BD and BRDCC Bank, Bengaluru.
6. The facts of the case in Crl.R.P.805/2011 is that the petitioner-Rami Reddy is accused No.3 in Spl.C.C.No.83/2008. The petitioner along with accused Nos.1 and 11 Narayana Gowda and Venkate Gowda respectively, criminally conspired to cheat the above said Bank in the matter of recommending/sanctioning/disbursing/availing huge credit facilities and sanctioned loan of Rs.153.24 lakhs to M/s. Venkateshwara Brick Factory and the said fund has been misused and there was also default in re-payment. The accused also enhanced the additional loan of Rs.25 lakhs. The same was withdrawn and once again accused No.11 sought enhancement of loan for Rs.10 lakhs along with renewal application for Rs.50 lakhs. Thereby, the accused persons have committed the said offences, stated supra. 10
7. The petitioner-Rami Reddy in Crl.R.P.No.806/2011 is accused No.2 in Spl.C.C.No.121/2008. He has sanctioned loan of Rs.430 lakhs to Nava Karnataka Credit Co-operative Society though the said society was registered only on 16.03.1995. Even though the members of the society have enclosed bogus documents stating Rs.47,33,200/- as share capital, loan was disbursed for Rs.48.40 lakhs by showing the profit at Rs.1,34,276/- as on 4.4.1995.
8. The petitioner-Rami Reddy in Crl.R.P.No.807/2011 is accused No.2 in Spl.C.C.No.122/2008. Accused Nos.1 and 8 entered into criminal conspiracy with this petitioner and by violating the norms, have got sanctioned Rs.451.75 lakhs to Konark Credit Co-operative Society and permitted to disburse Rs.400 lakhs.
9. The petitioner-M.B.Arun Kumar in Crl.R.P.No.1056/2011 is accused No.7. The petitioners 11 Narayana Gowda and Bettaswamy Gowda in Crl.R.P.No.744/2011 are accused Nos.1 and 8 in Spl.C.C.No.162/2005. It is alleged that the accused persons criminally conspired and fraudulently got sanctioned a loan of Rs.200 lakhs to the Jawahar House Building Co-operative Society. Even though the sanction limit was only Rs.150 lakhs, they permitted to withdraw the amount by accused Nos.5, 6 and 9 and accused Nos.2 and 9 transferred Rs.80 lakhs to the account of accused No.7 maintained at Navodaya Sahakara Bank and accused Nos.7 and 9 entered into an agreement for the purpose of conversion of the land for the Society. They diverted the loan facility other than the purpose of its sanction.
10. Upon filing of charge-sheet, the accused persons entered their appearance before the trial Court and have filed an application under Section 227 read with Section 239 of Cr.P.C for discharge, which came to be dismissed by the Trial Court vide order dated 27.04.2011. 12 Being aggrieved by the same, the accused have filed the above said criminal revision petitions.
11. The learned counsel appearing for the petitioner-Rami Reddy in Crl.R.P.Nos.804/2011 to 807/2011 has contended that the petitioner is only a Managing Director in the Bank. Even though the Committee has decided to sanction loan to various loan applicants, but accused No.2 has given dissent note to the meeting. He has not agreed to sanction. The Minutes of the Meeting has been mentioned in the records at Volume
387. In spite of the same, the Committee has decided and sanctioned the loan. Even otherwise, the entire loan amounts were already recovered. A Departmental Enquiry was also initiated against accused No.2 and the same was dropped subsequently. Absolutely, there is no criminal conspiracy. Therefore, he is entitled for discharge.
12. Learned counsel for the petitioner in Crl.R.P.No.1056/2011 has contended that accused No.7 is only an agreement holder with the society for the purpose 13 of procuring the land from the land owners and he has entered into an agreement of sale with many land owners and has paid the amount to various persons. Accused No.9 has borrowed loan from the Bank for the purpose of forming a layout. This petitioner has nothing to do with any affairs of the Bank. Therefore, the charges are groundless. Hence, he has prayed for discharging of accused No.7.
13. Whereas, the learned counsel for the petitioners in Crl.R.P.No.744/2011 who are accused Nos.1 and 8 has contended that there is no criminal conspiracy by accused Nos.1 and 8 in sanctioning of the loan. Accused No.1 is the President and Chairman of the Bank. Accused No.8 is Junior Assistant. He has put up the note as per the directions of the Committee and the power of sanctioning of loan is vested with the Committee. Such being the case, implicating accused No.8 and accused No.1 in the charge- sheet is not correct. The Trial Court has discharged accused No.8 in Spl.C.C.No.82/2008 as the sanction was 14 invalid. Therefore, the petitioner is entitled for discharge in this case also. Accused No.1 is facing trial in other cases and all the allegations are similar in nature and his power is only recommending to the Committee, but the collective decision was required to be taken by the Committee. Therefore, there is no specific allegation against him. Only the Board is responsible for sanctioning of the loan and hence, prayed for allowing the petition.
14. In support of his case, the learned counsel relied upon the following judgments of the Hon'ble Supreme Court:
"i) Girish Kumar Suneja vs. CBI reported in AIR 2017 SC 3620;
ii) P.S. Rajya vs. State of Bihar reported in (1996) 9 SCC 1;
iii) Baldev Singh vs. State of Punjab reported in (2009) AIR SCW 3730;
iv) Harmanpreet Singh Ahluwalia and Ors vs. State of Punjab and Others reported in 2009 AIR SCW 3976."15
15. Per contra, Sri P.Prasanna Kumar, learned Special Counsel appearing for CBI has contended that accused Nos.1 and 11 in all the charge-sheets have criminally conspired between 1992-1996 to cheat the Bank in the matter of recommending / sanctioning / disbursing / availing huge credit facilities by fraudulently inducing the Bank to part funds in the form of cash credit facilities and they have recommended/sanctioned/disbursed and availed enhanced cash credit limits without proper sanction or adequate security and caused wrongful loss to the tune of Rs.659.07 lakhs and accused No.9 submitted an application in a wrong format by seeking cash credit limit of Rs.1.75 lakhs for the purpose of working capital for production of Indian made foreign liquor by enclosing a false project report. Even the company was not fully established and accused 12-company was not eligible for sanction of loan, but a loan was recommended with a joint report. After sanctioning of the loan, accused Nos.10 and 11 have withdrawn most of the loan amount by way of self 16 cheques and they have not repaid the loan. Despite the default, accused No.3-Narasegowda filed an application seeking enhancement of loan for Rs.100 lakhs. Accused Nos. 5 and 7 recommended a joint report for enhancement of loan. Accused No.8 is the brother of accused No.3 and by putting up a note recommending the same, the Ad-hoc Committee consisting of accused Nos.1 to 3 have sanctioned the loan by violating the Rules of the Society and accused No.3 has withdrawn the amount. Thereby, accused No.2 being the Managing Director has recommended for loan and in other three cases, with the recommendation of these accused being the members of the Committee have sanctioned and permitted for disbursement of loans to various companies. The dissent note has been inserted by him by the end of the Minutes of the Meeting. But the same was not recorded at the time of Minutes of the Meeting when it was drafted. Subsequently, the same was stated by a witness before the Investigating Officer. There are witnesses who have stated about the sanction of loan by taking the agenda, 17 even though it was not in the agenda of the meeting when it was fixed. Even otherwise, if the Managing Director expressed any dissent towards the sanctioning of loan, he has to send the intimation to the State i.e., Registrar of Co-operative Society. There are witnesses who have clearly stated about violation of rules by these accused persons while sanctioning loan to various companies and in spite of default in repayment, the accused have enhanced the additional loans. Thereby, they have caused wrongful loss to the Bank and accused No.8-Bettaswamy Gowda in Crl.R.P.No.744/2011, the brother of accused No.3, has put-up a meeting note even though the company was a defaulter in repayment. The said accused was discharged in other case only based upon the invalid sanction as Managing Director has no power to issue any sanction order for prosecution as the Board, the Management of the Bank has the power to grant sanction for prosecution. There is sufficient material placed on record for framing of charges against the accused for having committed the alleged offences. Therefore, he prayed for dismissing the 18 petitions. In support of his arguments, he relied upon the following judgments of the Hon'ble Supreme Court and this High Court:
"1. Parbatbhai Aahir alias Parbatbhai Bhimsinhbhai Karmur and others vs. State of Gujarat and another reported in (2017) 9 SCC 641;
2. R.Venkatkrishnan vs. CBI reported in (2009) 11 SCC 737;
3. CBI vs. Anup Kumar Srivastava in Crl.A.No.1336/2017 (Arising out of Special Leave Petition (Crl.) No.10249/2014);
4. MIR Nagvi Askari vs. CBI reported in (2009) 15 SCC 643;
5. Hari Vishnu Kamath vs. Syed Ahmad Ishaque and others reported in (1955) 1 SCR 1104:AIR 1955 SC 233 : 10 ELR 216;
6. CBI vs. Bhutiani reported in (2009) 10 SCC 674;19
7. Asian Resurfacing of Road Agency Private Limited and another vs. CBI reported in (2018) 16 SCC 299;
8. A.M.R. Veeraiah and Another vs. CBI reported in 2019 SCC Online KAR 1654 : (2019) 4 AIR Kant R 821;
9. Sudhir Shantilal Mehta vs CBI reported in (2009) 8 SCC 1;
10.M/s.Kusum Alloys Limited vs. The Delhi Special Establishment by CBI in Crl.P.No.1274/2017 (High Court of Karnataka);"
16. Upon hearing the arguments of the learned counsel for both the parties, the points that arise for my consideration are:
"1. Whether the trial Court has committed any error in passing impugned order which requires interference by this Court?
2. Whether the petitioners are entitled for discharge?"20
17. Before considering the merits of the case on hand, it is worth to mention the principles laid down by the Hon'ble Supreme Court while considering the applications under Sections 227/239 of Cr.P.C. filed by the accused persons. The Hon'ble Supreme Court in the case of Asian Resurfacing stated supra has held as follows:
"37. Thus, we declare the law to be that order framing charge is not purely an interlocutory order nor a final order. Jurisdiction of the High Court is not barred irrespective of the label of the petition, be it under Sections 397 or 482 Cr.PC or Article 227 of the Constitution. However, the said jurisdiction is to be exercised consistent with the legislative policy to ensure expeditious disposal of a trial without the same being in any manner hampered. Thus considered, the challenge to an order of charge should be entertained in a rarest of rare case only to correct a patent error of jurisdiction and not to reappreciate the matter. Even where such challenge is entertained and stay is granted, the matter must be decided on day-to-day basis so that stay does not operate for an 21 unduly long period. Though no mandatory time-limit may be fixed, the decision may not exceed two-three months normally. If it remains pending longer, duration of stay should not exceed six months, unless extension is granted by a specific speaking order, as already indicated. Mandate of speedy justice applies to the PC Act cases as well as other cases where at trial stage proceedings are stayed by the higher court i.e., the High Court or a court below the High Court, as the case may be. In all pending matters before the High Courts or other courts relating to the PC Act or all other civil or criminal cases, where stay of proceedings in a pending trial is operating, stay will automatically lapse after six months from today unless extended by a speaking order on the above parameters. Same course may also be adopted by civil and criminal appellate/Revisional Courts under the jurisdiction of the High Courts. The trial courts may, on expiry of the above period, resume the proceedings without waiting for any other intimation unless express order extending stay is produced."22
18. In another judgment in the case of Hari Vishnu Kamath stated supra, the Hon'ble Supreme Court has considered the prepositions laid down in the case of T.C.Basappa vs. T.Nagappa reported in AIR 1954 SC 440 that the certiorari will be issued for correcting errors of jurisdiction as when an inferior Court or Tribunal acts without jurisdiction or in excess of it, or fails to exercise it or if it acts illegally in the exercise of its undoubted jurisdiction, as when it decides without giving an opportunity to the parties to be heard or violates the principles of natural justice, in exercise of supervisory jurisdiction and not appellate jurisdiction, then only the Superior Court can issue certiorari by invoking the jurisdiction under Articles 226 and 227 of Cr.P.C. In another judgment in the case of CBI vs. Anup Kumar Srivastava stated supra while dealing with the principles of framing of charges in respect of 120B of IPC in connection with Prevention of Corruption Act under Sections 7, 8, 10, 12, 13, read with 13(1)(d) has held that the effect of conspiracy is an agreement between two or 23 more persons to do an illegal act or an act which is not illegal by illegal means. The object behind the conspiracy is to achieve the ultimate aim of conspiracy. When the ultimate offence consists of a chain of actions, it would not be necessary for the prosecution to establish to bring home the charge of conspiracy that each of the conspirator had the knowledge of what the collaborator would do.
19. In the case of MIR Nagvi Askari stated supra, it has been held as follows:
"A. Penal Code, 1860 - Ss. 120-A and 120-B - Criminal conspiracy - concept - Evidence for proving - Illegal advance credits by bank officials - Held, criminal conspiracy involves meeting of minds of two or more persons for doing or causing to be done an illegal act or an act which may not be illegal but by illegal means - The offence takes place with the meeting of minds even if nothing further is done - It is an offence independent of other offences and is punishable separately
- Criminal conspiracy is generally hatched in secrecy - Direct evidence is therefore difficult 24 to obtain or access - The offence can be proved by adducing circumstantial evidence and / or by necessary implication - Officials of a nationalized bank, in violation of departmental instructions, allowing advance credits on banker's cheques to the account of a customer dealing in securities - Advance credits allowed before the cheques were sent for clearance and in some cases even before the cheques were received - This allowed the customer to take pecuniary advantage by overdrawing money from his account which he was not entitled to - Public funds were thus misused - Held, criminal conspiracy between bank officials and customer stood proved - However, one of the officials (A-5) acquitted as conclusive evidence could not be found against him."
20. In the case of Sudhir Shantilal Mehta stated supra, it has been held as follows:
"E. Penal Code, 1860 - S.405 - Criminal breach of trust - Ingredients - Dishonest use or disposal of property in violation of direction of law - The expression "direction of law", held, even if given literal meaning, includes 25 direction issued by authorities in exercise of their statutory power as also power of supervision - Failure on the part of bank officials to follow instructions issued by RBI and provisions of a departmental manual, held, was violation of direction of law, resulting in criminal breach of trust - Banks - UCO Bank Manual of Instructions on Bill Discounting - Para 2.5(b) - Debt, Financial and Monetary Laws - Banks - RBI Circular.
G. Penal Code, 1860 - Ss. 120-A and 120-B - Criminal conspiracy - Ingredients and proof of - Circumstantial evidence, if enough - Ingredients of conspiracy, held, are: (i) an agreement between two or more persons, (ii) agreement should be to do or cause to be done an illegal act or an act which itself may not be illegal but by illegal means - Further held, criminal conspiracy is an independent offence - Conspiracy is ordinarily hatched in secrecy - The court in order to determine whether offence of criminal conspiracy has been committed, can take into consideration circumstantial evidence - Meeting of minds is 26 essential - Mere knowledge or discussion is not sufficient to constitute the offence."
21. In the case of R.Venkatkrishnan stated supra it has been held as under:
"A. Penal Code, 1860 - Ss. 120-B and 43
- Criminal conspiracy - Concept - Held, it is an offence which is independent of other offences
- It takes place when there is an agreement to do or cause to be done an illegal act, or an act which may not be illegal but by illegal means - In the absence of agreement, mere thought to commit a crime does not constitute offence - Conspiracy is generally hatched in secrecy - Direct evidence is therefore difficult to become available - Criminal conspiracy can be proved on the basis of circumstantial evidence and / or by necessary implication - Smaller conspiracy may be a part of larger conspiracy - On facts held, criminal conspiracy was established when officials of two public sector banks acted in such a way that transaction appeared to be an inter-banking transaction relating to call money which the borrowing bank was supposed to retain with itself but the transaction was in fat done to help a private 27 party to use public funds for private purpose - National Housing Bank Act, 1987 - S.2(d) - Debt, Financial and Monetary Laws - Banks - Criminal conspiracy - Securities, Markets and Exchanges - Securities cam."
D. Criminal Procedure Code, 1973 -
S.154 - Criminal law can be set in motion by anybody - Hence prosecution initiated by CBI instead of bank or financial institution whose money was subject-matter of offence, held, not improper."
22. In another judgment in the case of CBI vs. Bhutiani reported in (2009) 10 SCC 674, it has been held as follows:
"A. Criminal Procedure Code, 1973 - Ss. 397, 401 and 482 - Quashing of charges on the basis of report filed by Central Vigilance Commission (CVC) - Respondent, a Senior Bank Manager at the relevant time was charged with four other accused persons by Special Judge of defrauding/cheating Bank by resorting to cheating and forgery of documents in the nature of valuable securities and for 28 using those documents for getting loan facilities - Charges were extremely serious and included also the charge of conspiracy with a view to defraud the Bank - Revision petition preferred by respondent before the High Court on the ground that respondent was in fact exonerated by CVC and in its report, he was found to be innocent - High Court allowed revision quashing proceedings - On facts it was found that CVC had not given clean chit to the respondent - Held, report of CVC may be a relevant factor but it cannot be held to be the "be all or end all" when accused is being prosecuted for serious offences - Order of High Court set aside - Penal Code, 1860 - S. 120-B r/w Ss.420/467/468/471 - Prevention of Corruption Act, 1988 - S.13(2) r/w. S.13(1)(d)."
23. In another judgment in the case of Parbatbhai Aahir stated supra, the Hon'ble Supreme Court issued guidelines for quashing the criminal proceedings by invoking inherent power under Section 482 of Cr.P.C. In the case of CBI vs. Jagjith Singh reported in (2013) 10 SCC 686, the Hon'ble Supreme Court has 29 set aside the quashing of criminal proceedings by the High Court for the offences punishable under Sections 420/471 of IPC.
24. Keeping in view the principles laid down by the Hon'ble Supreme Court in the above said cases and coming to the case of the petitioners herein, the accused Rami Reddy in Crl.R.P.Nos.804/2011 to 807/2011 being the Managing Director of the BD and BRDCC Bank along with the other accused in the Ad-hoc Committee has granted huge loans to various companies i.e., Rs.459 Crore to Kaveri Wineries and Distilleries (P) Ltd., (KWD) and Venkateshwara Brick Factory and also sanctioned huge loan and caused wrongful loss of Rs.153.9 lakhs to the Bank, inspite of the Venkateshwara Brick Factory was a defaulter in repayment and accused No.11 is the brother of the accused No.1, Rs.430 lakhs to NKCC Society, Rs.400 lakhs to Konark Credit Co-operative Society. The only contention of accused No.2 is that he has not consented for sanctioning of loans to those companies and societies 30 and he has given a dissent note. Per contra, the same is denied by the prosecution on the ground that sanctioning of loan was not at all the item or agenda in the meeting held in the Bank. But sanctioning of loans were taken and considered and sanctions were held as additional agenda in the meeting. The dissent note was inserted by accused No.2 subsequently after the meetings were held. In the draft Minutes of the Meeting, there is no mention about the dissent note of accused no.2, but while preparing the fair copy of the Minutes of Meeting, there are some insertion of dissent note of accused No.2. That apart, the above said companies were defaulters in repayment of loans. Such being the case, sanctioning additional loan is not warranted. That apart, the accused person along with the other accused persons criminally conspired to sanction loans to the defaulters and also permitted the Directors of the Society, Members of the Society to withdraw the loan amounts by self cheques and also knowingly granted loan when the defaulters of the loan have misutilised the fund other than the purpose of sanctioning of the loan. Inspite 31 of submitting of bogus documents by the loan applicants, without considering the documents properly, the above said loans were sanctioned and subsequently, the borrowers become defaulters in repayment. Thereby caused wrongful loss of huge crores of amount to the BD and BRDCC Bank. There are witnesses who have given statements before the CBI namely, witness No.3- S.R.Nayak, witness No.4-Hucchachari, witness No.6- Narasimhaiah, witness No.7-Chennappa, witness No.10- Puttaswamy, witness No.11-M.N.Ashwathnarayana, witness No.17-Narayana Swamy against the petitioner, who is a Managing Director. In other cases also, there are witnesses speaking about the involvement of this petitioner while sanctioning loan to the persons who were not eligible for loan. There are sufficient materials placed on record that this accused hatched conspiracy with other accused and borrowers while sanctioning loans by violating all norms and rules and caused wrongful loss to the Bank. 32
25. That apart, if any member has given a dissent note in the meeting, the same shall be intimated to the State i.e., to the Registrar of Co-operative Societies. No such intimation has been sent by accused No.2 to the Registrar of Co-operative Societies and in all these cases, the loans were sanctioned by exceeding their limits. Therefore, without going to the trial and without giving an opportunity to the prosecution to prove its case by examining the prosecution witnesses, the Court cannot discharge the accused at the stage of framing of charge. The meeting of minds, criminal conspiracy of the accused from the inception was found prima-facie to frame the charges against these accused. Therefore, he is not entitled for discharge and there is no error committed by the trial Court while dismissing the applications in all these four petitions.
26. As regards to the accused persons in other two cases i.e., accused Nos.7, 1 and 8, accused No.1-Narayana Gowda, the President and Chairman of the BD and BRDCC 33 Bank criminally conspired with accused No.8-Bettaswamy Gowda, recommended for sanctioning of loan to Vyalikaval House Building Co-operative Society for Rs.200 lakhs. Accused Nos.3 and 4 namely, Lingaiah and Munne Gowda respectively by abusing their official position accepted an incomplete application dated 22.12.1992 submitted dishonestly and fraudulently by accused No.9-Jawahar Co- operative Society, even though the said Society is not eligible for huge loan. Further, accused Nos.3 and 4 have allowed the entire amount to be withdrawn by self cheques by accused No.5-Joseph Kaspar, Accused No.6- Chandrashekar and accused No.9-Society within 20 days. Subsequently, accused Nos.2 and 9 were transferred Rs.80 lakhs to accused No.7 owned by M.B.Arun Kumar. Accused No.1 not properly considered the eligibility of the borrower, but sanctioned the loan to accused No.9- Jawahar Co-operative Society and subsequently accused No.7-Arun Kumar entered into an agreement with the Jawahar Co-operative Society on 13.03.1992 and received huge amount under the guise of acquiring the land for the 34 purpose of forming the sites of the members of the Jawahar Co-operative Society. As per the norms of the Bank, no loan shall be sanctioned for the purpose of forming of sites for land developing and the said transactions were not completed while investigation, the CBI collected the materials, no amounts were paid to any of the land owners except paying some paltry amounts like Rs.1,500/-, Rs.5,000/-, Rs.2,000/- etc., as advance amounts and there are no lands acquired from any of the owners for forming the sites for the members of the Society and the said amount were mis-utilised and there was default in repayment, thereby caused huge amount of wrongful loss to the Bank. Therefore, accused Nos.1 and 7 were required to face the trial and they are not entitled for discharge.
27. In the recent judgment, the Hon'ble Supreme Court in the case of State of Madhya Pradesh vs. Yogendra Singh Jadon and another in Criminal Appeal No.175/2020 (arising out of SLP (Criminal) 35 No.172/2017) in a similar facts and circumstances of the case on hand has held at para 5 as follows:
"5. We find that the High Court has examined the entire issue as to whether the offence under Sections 420 and 120-B is made out or not at pre trial stage. The respondents are beneficiary of the grant of cash credit limit when their father was the President of the Bank. The power under Section 482 of the Code of Criminal Procedure, 1973 cannot be exercised where the allegations are required to be proved in court of law. The manner in which loan was advanced without any proper documents and the fact that the respondents are beneficiary of benevolence of their father prima facie disclose an offence under Sections 420 and 120-B IPC. It may be stated that other officials of the Bank have been charge sheeted for an offence under Sections 13(1)(d) and 13(2) of the Act. The charge under Section 420 IPC is not an isolated offence but it has to be read along with the offences under the Act to which the respondents may be liable with the aid of Section 120-B of IPC."36
Here in this case, the accused persons in all these cases have hatched criminal conspiracy with the Bank officials and the Managing Director and the Administrative Committee of the Bank have violated all the norms while sanctioning loan to the companies and in spite of default in repayment and ineligibility, they have sanctioned additional loans without looking to the background and paying capacity of the loan applicants and thereby, caused huge wrongful loss to the BD and BRDDC Bank. Therefore, the petitioner-Rami Reddy in Criminal Revision Petition Nos.804, 805, 806, 807 of 2011 and the petitioner in Crl.R.P.No.1056/2011 and petitioner No.1-Narayana Gowda in Crl.R.P.No.744/2011 are required to face the trial and they are not entitled for any discharge. There is no illegality or error committed by the trial Court while passing the impugned order which does not call for interference. Therefore, the above said petitions are liable to be dismissed.
37
28. As regards accused No.8-Bettaswamy Gowda in Crl.R.P.No.744/2011, who is the Junior Assistant who placed the note for the meetings has also conspired with accused No.1 and other members of the Ad-hoc Committee facilitated to sanction huge loan to various above said borrowers and caused wrongful loss. The only contention of the leaned counsel for accused No.8 is that in order to prosecute against this accused, the CBI has obtained sanction for prosecution from Managing Director of the Bank who is not the proper authority to accord sanction. It is also brought to the notice of the Court that accused No.8 along with accused No.6-Rangappa were discharged and proceedings against the said accused were dropped on the ground that the sanction was invalid and the Managing Director who accorded sanction to prosecute the employees of the BD and BRDCC Bank is not the competent person. The copy of the order is also produced. The Special Counsel for the CBI also admitted the same and there is no document produced to show that the CBI has filed any appeal or revision against the discharged 38 accused No.8-Bettaswamy Gowda on the ground of invalid sanction. The trial Court had also given liberty to the CBI for obtaining proper sanction and to file separate charge- sheet. Till date, the CBI counsel has not produced any documents before this Court to show that they have obtained fresh sanction against accused No.8 from the competent authority. As per Bye-law 13 of the BD and BRDCC Bank, the Administrative Committee has vested with all the powers of the business and other activities of the Bank. As per Bye-law 13(24), the Administrative Committee has power to appoint any official and also to remove any official or to initiate disciplinary proceedings. Admittedly, the sanction was accorded by the Managing Director of the Bank for prosecuting the case against accused No.8. Per contra, the CBI counsel has stated that though oral sanction has been accorded on 26.11.2005 signed by K.Nagaraja, Managing Director, but subsequently, the Government of Karnataka, Home Department has issued sanction by according consent to extension of powers and jurisdictions to the members of 39 Delhi Special Police Establishment for registration and investigation of the case against those persons who are involved in the irregularities, by its Notification dated HD:PCR 97 dated 10.06.1997. But on perusal, admittedly, the sanction order dated 26.11.2005 issued by K.Nagaraj, who is the Managing Director of BD and BRDCC Bank has no authority or is the competent person to accord sanction except the Administrative Committee as per 13(24) of the Bye-law of the BD and BRDCC Bank. The trial court in the connected case in Spl.C.C.No.82/2008 has discharged accused No.8-Bettaswamy Gowda and dropped the case by granting liberty to the CBI for obtaining valid sanction from the competent authority. Therefore, without a valid sanction, the prosecution against accused No.8- Bettaswamy Gowda in Crl.R.P.No.744/2011 (Spl.C.C.No.162/2005) is liable to be dropped or he is entitled for discharge.
29. In view of my above findings, the petitions filed by Rami Reddy in Crl.R.P.Nos.804/2011, 805/2011, 40 806/2011 and 807/2011 and the petition filed by M.B.Arun Kumar in Crl.R.P.No.1056/2011 are dismissed.
The Crl.R.P.No.744/2011 is partly allowed. The petition filed by accused No.1-Narayana Gowda is hereby dismissed. However, the petition filed by accused no.8- Bettaswamy Gowda is allowed. Accused No.8 is discharged in Spl.C.C.No.162/2005 by partially setting aside the order of dismissal by the trial Court. However, the CBI is at liberty to file charge-sheet by obtaining fresh sanction from the Competent Authority.
Send back the trial Court records immediately. The trial shall be proceeded with to dispose of the cases as soon as possible as it is one of the oldest cases.
Sd/-
JUDGE GBB