Bangalore District Court
Central Bureau Of Investigation vs M/S Lokapur Cements Limited on 27 February, 2025
KABC010089622018
IN THE COURT OF THE XXI ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AND PRINCIPAL SPECIAL
JUDGE FOR CBI CASES, BENGALURU (CCH-4)
DATED THIS THE 27th DAY OF FEBRUARY, 2025.
PRESENT: SRI. SHRIDHAR GOPALAKRISHNA BHAT
XXI Addl. City Civil and Sessions Judge and
Prl. Special Judge for CBI Cases, Bengaluru.
Criminal Appeal No.530/2018
Appellant : Central Bureau of Investigation,
(Complainant) Through the Superintendent of Police,
CBI/EOW A Wing,
III Floor, Rajaji Bhavan,
Besant Nagar,
Chennai -90.
(By Ld. Sr. Public Prosecutor)
Vs.
Respondents 1 : M/s. Lokapur Cements Limited,
(Accused) Industrial Estate,
Yadvad Road,
Lokapur Village,
Mudhol, Bagalkot District.
Represented by A2.
2: Sri. Shivakumar Sangappa
Malghan @ Shivakumar S.
Malghan,
Aged about 56 years,
S/o Sri Sangappa Malghan,
Managing Director of A1,
R/o Anand Nagar,
Chandan Shiv Colony,
2 Crl.A.530/2018
Mudhol,
Bagalkot District.
3: Ningappa Tippanna Huggi,
Aged about 69 years,
S/o. Tippanna Ningappa Huggi,
Director of A1,
R/o Machakanur, Mudhol,
Bagalkot District.
4: Smt. Nirmala S. Malghan,
Aged about 44 years,
W/o. Shivakumar S. Malghan,
Director of A-1, R/o Anand
Nagar, Chandan Shiv Colony,
Mudhol, Bagalkot District.
(By Sri. Prasanna Kumar V.H.
Advocate)
Date of Filing of the Appeal 27.03.2018
Nature of the Appeal Appeal against acquittal under
Section 378 of the Cr.P.C.,
Date of commencement of 08.08.2023
argument
Date of conclusion of the 17.02.2025
argument
Total Duration 6 years 10 months 20 days
Opinion of the Judge Appeal dismissed
JUDGMENT
The Central Bureau of Investigation ('CBI in short), Economic Offences Wing, ('EOW' for short) Chennai, feeling aggrieved by the judgment dated 27.09.2017 in CC No.17676/2016 on the file of the learned 17 th Additional Chief Metropolitan Magistrate, Bengaluru, wherein, the accused persons were acquitted, filed the present appeal under Section 378 of the Cr.P.C., challenging the said judgment.
3 Crl.A.530/2018
2. The facts of the prosecution case in nutshell are as under;
The accused No.2 Sri. Shivakumar S. Malghan, being the Managing Director, accused No.3 Sri. Ningappa Thippanna Huggi and accused No.4 Smt. Nirmala S. Malghan, being the Directors of accused No.1 Company M/s. Lokapur Cements Ltd., conspired together to cheat the IDBI Bank and in pursuance of their conspiracy, knowing fully well about previous mortgage created over the property in favour of State Bank of Mysore and Union Bank of India and also execution of two Sale Deeds in favour of two buyers, by suppressing the same fraudulently applied to the IDBI Bank, City SME Center, Belgaum, on 29.07.2009 for take over the loan of Union Bank of India, Mudhol Branch by IDBI Bank, by offering the commercial building in the property bearing Sy.No.4026A/125 to 128 purchased by accused No.3 and the commercial properties bearing Sy. No.4026A/139, 140, 151 and 152. Believing the properties to be genuine and encumbrance free, the proposal given by the accused persons was processed by the IDBI Bank and sanctioned Rs.5.84 Crores on 02.11.2009 in favour of the accused No.1 Company which was conveyed by letter dated 04.11.2009 under acknowledgment. It is further case of the prosecution that after take over of the loan by IDBI Bank, the loan availed by accused No.1 company from Union Bank of India, Mudhol Branch was settled on 11.12.2009. The accused Nos.1 to 4 had executed all necessary loan documents in favour of IDBI Bank on 30.11.2009. The 4 Crl.A.530/2018 Title Deeds pledged with Union Bank of India, Mudhol Branch were also taken over by the IDBI Bank and after taking over the loan by IDBI, the mortgage was registered in respect of the above said properties on 11.01.2010 at Sub-Registrar Office, ('SRO' in short) Mudhol.
4. It is further case of the prosecution that, in pursuance of the criminal conspiracy, accused No.2 and 3 had prepared forged Re-conveyance Deed falsely showing that loan availed from IDBI Bank is repaid and mortgage is cancelled as if purported to have been issued by IDBI Bank, Belgaum Branch, by forging the signatures and seals of the IDBI Bank and its officials and witnesses and got it registered with SRO, Mudhol on 18.05.2010 for the purpose of availing more loans on the same properties from various banking and non-banking financial institutions. Thereafter, accused No.2 availed Rs.10 lakhs from Jamakhandi Minority Urban Co- operative Credit Society Ltd., Jamakhandi on mortgaging the property bearing Sy. No.4026A/128 on executing the registered Mortgage Deed dated 15.06.2010, for which, accused Nos.3 and 4 stood as guarantors. Similarly, accused No.3 availed Rs.20 lakhs from the Jamakhandi Minority Urban Co-operative Credit Society Ltd., Jamakhandi in June, 2010 by mortgaging the properties bearing Sy.No.4026A/125 and 4026A/126 on executing registered Mortgage Deed dated 15.06.2010, for which accused Nos.2 and 4 stood as guarantors. Further, accused No.4 availed loan of Rs.20 lakhs from the Jamakhandi Minority Urban Co-operative Credit Society 5 Crl.A.530/2018 Ltd., Jamakhandi in June, 2010 by mortgaging the property bearing Sy.No.4026A/127 on executing registered Mortgage Deed dated 15.06.2010, for which accused Nos.2 and 3 stood as guarantors.
5. In furtherance of the criminal conspiracy, accused No.3 availed loan of Rs.4 lakhs from Mudhol Co- operative Bank in July, 2010, which was thereafter enhanced to Rs.10 lakhs by mortgaging the properties bearing Sy.No.4026A/125 to 128 on executing the registered Mortgage Deed dated 22.06.2010. Further, accused No.3 also availed the loan of Rs.1.40 Crores from Sri. Beereshwara Co-operative Credit Society Ltd., Examba in August, 2010 by mortgaging the same properties on executing registered Mortgage Deed on 01.09.2010. After availing the loans from the various financial institutions as stated, accused Nos.2 and 3, in furtherance of their criminal conspiracy, decided to cancel the forged registered Re-conveyance Deed dated 18.05.2010 and accordingly they prepared another forged Re-conveyance Cancellation Deed by forging the signatures of the officials of the IDBI Bank and witnesses and fraudulently registered the same with SRO, Mudhol on 08.05.2012 canceling the earlier forged Re- conveyance Deed dated 18.05.2010. Further, to confirm the cancellation of forged Re-conveyance Deed dated 18.05.2010, accused Nos.2 and 3 had created another forged Re-conveyance Cancellation Deed by forging the signatures of the officials of the IDBI Bank, Belgaum 6 Crl.A.530/2018 Branch and fraudulently got it registered with SRO, Mudhol on 14.05.2012.
6. It is further case of the prosecution that while sanctioning the loan, the IDBI Bank had created charges on the entire assets of the accused No.1 Company, but during 2013, accused No.2, in furtherance of the conspiracy, fraudulently and dishonestly sold the machineries in the form of scrap of the value of Rs.62,39,310/- weighing 297.110 mts under 24 invoices without obtaining permission from the IDBI Bank. Thereby, the accused Nos.1 to 4, in furtherance of their criminal conspiracy to cheat the IDBI Bank have created forged Re-conveyance Deeds and used the same as genuine for the purpose of cheating the IDBI Bank and the loan amount availed by them in the name of accused No.1 Company remained unpaid from June 2012 and the loan amount of accused No.1 Company was clarified as NPA on 30.09.2012 with outstanding of Rs.4,39,63,768/- and thereby, the accused persons have committed the offence punishable under Section 120B read with Sec.420, 468, 471 and the offence under Section 420, 468 and 471 of the IPC.
7. In this regard, on 09.07.2015, CW.1 Sri.Sreejith Shivaraman, the Deputy General Manager, IDBI Bank, Mission Road Branch, Bengaluru, had lodged First Information Statement as per Ex.P.35 to CW.38 the Superintendent of Police, CBI, EOW, Chennai. On the basis of the said First Information Statement, CW.38 has registered the case in RC3/E/2015-CBI-EOW Chennai, 7 Crl.A.530/2018 for the offences punishable under Section 120B read with Sections 420, 467, 468 and 471 of the IPC and for the offence punishable under Section 13(2) read with Section 13(1)(d) of the PC Act, 1988 against accused Nos.1 to 4 and also against one Dr.Sathish S. Malghan and unknown public servants and others. Thereafter, the investigation was entrusted to CW.39, the Inspector of Police, CBI/EOW Chennai, who after completion the investigation filed the charge sheet against Nos.1 to 4 only for the aforesaid offences.
8. After filing of the charge sheet, the Learned Magistrate was pleased to take cognizance of the offence against accused Nos.1 to 4 by order dated 04.08.2016 and presence of the accused Nos.2 to 4 was secured. Accused No.1 is a Company, represented by accused No.2. The accused Nos.2 to 4 were enlarged on bail and the requirement of Section 207 of the Cr.P.C., was complied. After hearing the accused persons before framing the charge, the learned Magistrate was pleased to frame the charges against the accused persons only with regard to the crime committed against IDBI Bank by order dated 02.02.2017 and the accused persons have not pleaded guilty and claimed to be tried.
9. In order to bring home the guilt of the accused persons, the prosecution has shown in all 39 witnesses in the charge sheet as CW.1 to CW.39 and out them examined in all 32 witnesses as PW.1 to PW.32 and got marked as many as 304 documents as per Ex.P.1 to P.304 and two material objects as per MO.1 and 2. After 8 Crl.A.530/2018 completion of the prosecution side evidence, statement of the accused under Section 313 of the Cr.P.C was recorded. The accused persons have denied the incriminating circumstances appearing against them in the prosecution side evidence. The accused have not opted to place evidence of any kind on their behalf and thereby, the trial was concluded.
10. The Learned Magistrate, after hearing the arguments of both sides, passed the judgment dated 27.09.2017 and thereby acquitted the accused Nos.1 to 4 of the alleged offences.
11. Being aggrieved by the said judgment of acquittal, the complainant CBI/EOW/Chennai has preferred the present appeal. The present appeal was filed after lapse of prescribed period for filing the appeal. Hence along with the appeal, the appellant CBI has also filed application under Section 5 of the Limitation Act seeking condonation of delay of 166 days in presenting the appeal. The respondents have filed their objection and after hearing on the said application, this court was pleased to allow the delay condonation application by order dated 05.03.2019 and thereby the delay in filing the appeal was condoned.
12. The appellant has challenged the judgment contending that the Learned Trial Court wrongly acquitted accused Nos.1 to 4 by ignoring the material facts placed by the prosecution and without appreciating oral and documentary evidence in its proper perspective.
9 Crl.A.530/2018 The Judgment passed by the Trial Court is contrary to the law, weight of evidence and probabilities of the case. The documents produced before the court clearly establish the creation of the documents by the accused persons for the purpose of cheating the Bank. The oral evidence of the witnesses also reveal that the accused had forged the signature of the Bank officials and of the witnesses and got registered the forged Re-conveyance Deed with dishonest intention to cheat the Bank. It is further contended that finding of the learned Magistrate that the prosecution has not proved the fact of forgery of the documents is not proper. The evidence placed before the court clearly reveal that the accused persons have cheated the Banks by producing the laminated colour zerox copies of the Sale Deeds in the guise of original Sale Deed in respect of the property offered as collateral security.
13. It is further contended in the appeal memo that the original title deeds were seized from the residential premises of accused No.2 during search by the CBI which reveals that intentionally, the accused persons had provided laminated colour zerox copies of the Sale Deed in favour of the Bank. Further, the evidence placed before the court also reveal that in violation of the loan sanction terms, the accused have sold the machineries in the form of scrap of worth Rs.62,39,310/- under 24 invoices and there is evidence of PW.21 to P.23 and PW.25 to PW.27. However, the learned Magistrate held that the accused need not take 10 Crl.A.530/2018 permission from the Bank to sell their stock to their customers, which is not proper. The learned Magistrate acquitted the accused holding that they have already paid the entire loan amount due to the Bank and therefore, there is no loss to the Bank by relying on the judgment reported in (2008) 9 SCC 677 and observed that once the due amount is paid by the party to the Bank, criminal liability absolves. However, the said finding of the court is not correct as criminal liability of the accused persons will not be absolved on making payment of the loan amount. Hence, the learned Magistrate should not have acquitted the accused persons. The over all evidence of the prosecution is sufficient to hold that the accused persons have committed the offence punishable under Section 120B read with Sections 420, 467 and 471 of the IPC and substantive offences. Accordingly, on these grounds, prayed for allowing the appeal and thereby to convict the accused persons for the said offence.
14. In pursuance of the notice issued on this appeal, the respondents/ accused Nos.1 to 4, have entered their appearance through their counsel and contested the appeal. The trial court record is secured.
15. Heard the argument of the learned Sr. Public Prosecutor for the appellant/complainant and the learned counsel for the respondents/accused Nos.1 to 4.
16. On hearing the learned counsels and meticulously verifying the oral and documentary 11 Crl.A.530/2018 evidence including the judgment of the learned Magistrate, the point that would arise for consideration are ;
1. Whether the Judgment passed by the trial court acquitting the accused Nos.1 to 4 for the offences punishable under Section 120B read with Sections 420, 467 and 471 of the IPC and substantive offence punishable under Section 420, 467 and 471 of the IPC is erroneous and against the evidence on record ?
2. Whether the judgment of acquittal passed by the learned Magistrate requires any interference by this court ?
3. What order ?
17. The above points are answered as under;
Point No.1 : In the negative.
Point No.2 : In the negative.
Point No.3 : As per final order, for the following;
REASONS 18. Point Nos.1 and 2: Since point Nos.1 and 2 are inter-linked and to avoid repetition of facts and for the sake of brevity, they are taken together for consideration.
12 Crl.A.530/2018
19. The learned Senior Public Prosecutor Sri.Shivanand Perla, vehemently argued in terms of the contents of the appeal memo. The learned Senior Public Prosecutor, taking notice of this court on the oral and documentary evidence submitted that the accused persons have not disputed the availment of the loan from the State Bank of Mysore, Rabakavi Branch, from Union Bank of India, Mudhol Branch, taking over of the loan of the Union Bank of India, Mudhol Branch by IDBI Bank, Belgaum Branch and execution of the documents for availing the said loans. It is also submitted by him that the accused persons have not disputed the availment of the loan from the Jamakhandi Minority Urban Co- operative Credit Society Ltd., Mudhol Co-operative Bank, Sri. Beereshwara Co-operative Society Ltd., Examba, as put up by the prosecution and the documents relating to the said loan transactions and mortgaging of the properties.
20. It is further argued by the learned Senior Public Prosecutor that though in the charge sheet fraudulent transactions are referred in connection with availment of loan from State Bank of Mysore, from Union Bank of India, the present case is confined only with regard to the conspiracy to cheat the IDBI Bank and criminal acts committed in connection with the said conspiracy. The only fact to be determined is whether the Re-conveyance Deeds dated 18.05.2010, 08.05.2012 and 14.05.2012 are forged and the said forged documents are used as genuine for the purpose of 13 Crl.A.530/2018 cheating the IDBI Bank. The evidence of the officers of the IDBI Bank support the case of the prosecution in that regard and they have specifically stated that none of the officers of the Bank had executed the Re-conveyance Deeds. However, the learned Magistrate has not considered forged Re-conveyance Deed and subsequent conduct of the accused in availing the loan. The evidence placed before the court by the prosecution is sufficient to prove the guilt of the accused beyond all reasonable doubt. However, the learned Magistrate has not properly analyzed the evidence and reached at wrong conclusion. It is also submitted that subsequently, the accused have cleared the entire loan of the IDBI Bank, but on that ground, the accused cannot be exonerated from the offence committed. Accordingly, urged for allowing the appeal and thereby to convict the accused persons.
21. Per contra, Sri. Prasanna Kumar V.H., the learned counsel for the respondents/accused Nos.1 to 4, meticulously argued supporting the judgment passed by the trial court. He has drawn notice of this court on the entire judgment of the trial court contending that the judgment passed by the trial court reveals that the learned Magistrate has considered the entire evidence in proper perspectives and reached at right decision. It is vehemently submitted by him that the only fact to be considered is whether the prosecution has proved the forging of the Re-conveyance Deed and its Cancellation Deeds i.e., Ex.P.234 to P.236 and thereby cheating of the IDBI Bank and charge is also confined to it. The 14 Crl.A.530/2018 evidence on record clearly reveals that entire loan amount has been cleared by the accused persons. Further, it is also forthcoming from the evidence that no original Re-conveyance Deeds are produced and the signatures were not tested by the expert to hold that the signature of the Bank officials and that of the witnesses were forged as contended by the prosecution. Mere say of the Bank officials as to non-execution of any Re- conveyance Deeds that too registered Deeds itself will not prove the case of the prosecution in the absence of relevant material evidence. Even, the FSL Report is also not supporting the case of the prosecution as original Re-conveyance Deeds are secured for examination.
22. It is further vehemently argued by the learned counsel for the accused that though the prosecution has examined many number of witnesses and produced large number of documents, they are not much relevant to establish the case against the accused persons as there is no dispute with regard to the loans availed from State Bank of Mysore, Rabakavi, Union Bank of India, Mudhol Branch, IDBI Bank, City SME Center, Belgaum, Jamakhandi Minority Urban Co-operative Society Ltd., Mudhol Co-operative Bank and Sri. Beereshwara Co- operative Society Ltd., and documents relating to said loans. The prosecution has not placed any evidence to establish the forgery of the Re-conveyance Deeds. The certified copy of the Deeds produced before the court are analyzed, they clearly reveal that the said documents are executed by the representative of the Bank and even put 15 Crl.A.530/2018 the seal of the Bank. Absolutely, no evidence is placed to prove that the Re-conveyance Deeds and are forged by the accused persons. The Sub-Registrar, who registered the document is not examined before the court. Further, the person whose signature is stated to be forged is also not examined before the court. Hence, viewed from any angle, it cannot be held that the prosecution has proved forging of the Re-conveyance Deeds and thereby cheating of the IDBI Bank. It is also meticulously submitted by the learned counsel that even furnishing of laminated colour zerox copies of the Title Deeds was also well within the knowledge of the Bank after receipt of the same from Union Bank of India. The legal opinions produced as per Ex.P.17 and 18 makes it clear that there was no concealment of previous loan and charge created over the property by the accused persons. The IDBI Bank had obtained and scrutinized the legal opinions of its Panel Advocate. There is no sufficient evidence to prove either forging of the Re-conveyance Deed or making use of the said document for cheating the IDBI Bank or cheating of the IDBI Bank in availing the credit facility or the alleged conspiracy. The Bank officers got registered the case in collusion with CBI Officers to hush-up their fault and to convince their senior officers. The appellant has not made out any grounds so as to interfere with reasoned judgment passed by the learned trial court. Accordingly, urged for dismissal of the appeal and thereby to confirm the judgment passed by the trial court.
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23. In the light of the argument addressed, for the better understanding of the matter, before touching the merits of the appeal, it is appropriate to refer the undisputed facts which can be gathered from the argument addressed and materials placed before this court. The evidence on record and the argument addressed reveal the following undisputed facts.
a) The accused No.1 is the registered company, which manufactures and sells ordinary port-
land cement and allied products and accused No.2 is its Managing Director and accused Nos.3 and 4 are its Directors. The documents produced in that regard are not in dispute.
b) Accused No.2 is the son-in-law of accused No.3 and accused No.4 is the wife of accused No.2 and daughter of accused No.3.
c) Accused Nos.2 and 4 were the partners of M/s.Mahalakshmi Motors and on behalf of M/s. Mahalakshmi Motors, accused No.2, purchased the commercial property located in Sy.No.4026A/139 and 4026A/140 at Mudhol from Sri.Sandeep Vasant Punde and from Sri.Prakash Kalappa Patil, under registered Sale Deed dated 27.09.2006 and 17.03.2006 respectively. Further, the accused No.2 representing M/s. Mahalakshmi Motors, purchased the commercial property located in Sy.No.4026A/151 and 4026A/152 at Mudhol 17 Crl.A.530/2018 from Eraiah B. Bukitgar and Sri. Prakash Kallappa Patil under registered Sale Deeds dated 03.07.2006 and 17.03.2006 respectively. In this regard, the prosecution has placed the Title Deeds as per Ex.P.30 to 33 and the said documents are admitted.
d) The accused No.3 had purchased the commercial building in Sy.No.4026A/126, 4026A/128 at Mudhol from one Rajesh Subhan Talati, under the registered Sale Deed dated 21.11.1998 and commercial building in Sy.No.4026A/125 and 4026A/127 at Mudhol from Sri. Devendra Subhashchandra Talati under registered Sale Deed dated 20.11.1998. The prosecution has produced the Title Deeds as per Ex.P.28 and 29 and original Sale Deeds as per Ex.P.252 and P.253 and the said documents are not in dispute.
e) The accused Nos.2 and 4, as Partners of M/s. Mahalakshmi Motors, availed credit facility to the tune of Rs.50 lakhs from State Bank of Mysore, Rabakavi Branch, in the year 2007 and accused No.3 had offered the commercial buildings purchased by him in Sy.No.4026A/125 to 128 as collateral security for the said loan. At the time of registering the Mortgage Deed, on 28.08.2007 in favour of State Bank of Mysore, he had 18 Crl.A.530/2018 furnished the laminated colour zerox copy of his Sale Deeds in respect of the said properties. The prosecution has produced oral and documentary evidence in this regard and the same are not in dispute.
f) Availment of loan of Rs.1.50 Crores from Union Bank of India, Mudhol Branch, in the year 2007 by accused No.1 M/s. Lokapur Cements, represented by accused Nos.2 to 4 and enhancement of the said loan amount to the tune of Rs.2.46 Crores, in December, 2007 and Rs.4.83 Crores in January, 2009. In connection with the said loan transaction, the property purchased in the name of M/s. Mahalakshmi Motors i.e., commercial properties bearing Sy. No.4026A/139, 4026A/140, 4026A/151 and 4026A/152 and the commercial building belonging to accused No.3 in Sy.No.4026A/125 to 128 were given as collateral security and in that regard registered equitable Mortgage Deed was executed in favour of Union Bank of India on 02.02.2009. There also, the accused No.3 had produced only laminated colour zerox copy of the Title Deeds. The prosecution has produced oral evidence as well as various documents in this regard which are not disputed.
19 Crl.A.530/2018
g) Accused Nos.2 to 4 representing accused No.1 company, applied to the IDBI Bank, City SME Center, Belgaum, vide letter dated 29.07.2009 as per Ex.P.43 seeking take over of the loan of the Union Bank of India, Mudhol Branch by IDBI Bank and accordingly, the IDBI Bank, City SME Center, Belgaum had sanctioned Rs.5.84 Crores on 02.11.2009 in favour of accused No.1 Company and conveyed the same to the borrower on 04.11.2009 under acknowledgment.
h) After take over of the loan of the Union Bank of India, Mudhol Branch, by IDBIBank, the IDBI Bank had paid Rs.3,33,19,226/- for term loan-I, Rs.49,99,949 for term loan-
II and an amount of Rs.50 lakhs for cash
credit on 11.12.2009 to Union Bank of
India and thereby the loan of the accused persons with Union Bank of India, Mudhol Branch was settled. The oral and documentary evidence produced produced in that regard are not disputed.
i) The accused have not disputed the execution of Re-conveyance Deeds dated 18.05.2010 (Ex.P.234) by themselves and IDBI Bank in their favour and thereby releasing the Mortgage. They have also not disputed the execution of Re-conveyance 20 Crl.A.530/2018 Cancellation Deeds dated 08.05.2012 (Ex.P.235) and 14.05.2012 (Ex.P.236). They have not admitted that the said Re-
conveyance Deed and Re-conveyance Cancellation Deeds are forged for the purpose of cheating the IDBI Bank as contended by the prosecution.
j) That the accused accused No.2 availed loan of Rs.10 lakhs from Jamakhandi Minority Urban Co-operative Credit Society Ltd., by mortgaging the property No.4026A/128 by executing registered Mortgage Deed dated 15.06.2010 for which, the accused Nos.3 and 4 stood as guarantors. The oral and documentary evidence placed before this court in that regard is not in dispute.
k) The accused No.3 availed Rs.20 lakhs from the said Credit Co-operative Society Ltd., by mortgaging the properties bearing Nos.4026A/125 and 126, by executing registered Mortgage Deed dated 15.06.2010, for which, accused Nos.2 and 4 stood as guarantors. The documents produced in that regard is not in dispute.
l) Similarly, accused No.4 availed loan of Rs.20 lakhs from the said Credit Co-
operative Society Ltd., by mortgaging
property bearing No.4026A/127, by
executing registered Mortgage Deed dated 21 Crl.A.530/2018 15.06.2010, for which accused Nos.2 and 3 were the guarantors. Here also, the accused have not disputed the evidence placed by the prosecution in that regard.
m) Accused No.3 had availed credit facility of Rs.4 lakhs from Mudhol Co-operative Bank in July, 2010 which was later enhanced to Rs.10 lakhs by mortgaging the properties bearing No.4026A/125 to 128 by executing registered Mortgage Deed on 22.06.2010. The oral and documentary evidence placed by the prosecution in this regard is not disputed.
n) Accused No.3 availed loan of Rs.1.40 Crores from Sri. Beereshwara Co-operative Society Ltd., Examba in August 2010, on mortgaging the properties bearing Nos.4026A/125 to 128, by executing registered Mortgage Deed dated 01.09.2010. The evidence produced in that regard is not disputed.
o) The evidence also reveals that the entire loan availed by the accused persons from IDBI Bank as well as from other financial institutions as stated above are settled completely.
Since all these aspects are not in dispute, the oral and documentary evidence in that regard needs no much consideration.
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24. As already stated, the accused Nos.1 to 4 are acquitted for the offences punishable under Sections 120B read with Section 420, 468 and 471 of the IPC and substantive offences thereof by the learned Magistrate after appreciating the oral and documentary evidence placed before the Court. For better understanding and appreciation of the evidence placed before the Court, it is appropriate to refer the concerned provisions of law and its necessary ingredients. Section 120B of the IPC is concerned, it deals with punishment for committing criminal conspiracy. The definition of the offence of criminal conspiracy is provided under Section 120A of the IPC which reads as under;
When two or more persons agree to do or cause to be done,-
(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.
25. On going through the above provision, it is clear that the following are the necessary ingredients to constitute the criminal conspiracy.
23 Crl.A.530/2018
(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.
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. 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. In the judgment of the Apex Court, reported in (2009) 8 SCC 1, 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 reported in (2022) 7 SCC 721, the Hon'ble Supreme Court has considered the 24 Crl.A.530/2018 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.
26. So far as the offence punishable under Section 420 of the IPC is concerned, first we have to refer Sec.415 of the IPC, which provides definition of cheating. Section 415 of the IPC, 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.
On reading of the above provision, it is clear that, the necessary ingredients of cheating are ;
25 Crl.A.530/2018
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 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.
27. Now, the provisions of Section 420 of the IPC are analyzed, it provides for punishment for cheating and dishonestly inducing delivery of property and the said Section reads 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".
28. From the above provision, it is clear that, in order to constitute the offence punishable under section 26 Crl.A.530/2018 420 of the IPC, the following ingredients have 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 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.
29. In this regard, this court is being guided by the decision reported in (2005) 9 SCC 15 in the case of Devender Kumar Singla vs Baldev Krishan Singla, 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."
27 Crl.A.530/2018
30. As to ingredients of the offence under Section 415 and 420 of the IPC are concerned, this court is also being guided by the decision of our Hon'ble High Court in Crl.P.No.4346 of 2022 (Sri.Vilas Deore Vs. State of Karnataka) disposed on 23.07.2022, wherein, the Hon'ble High Court specifically discussed with regard to the ingredients necessary to constitute the offences under Section 415 and 420 of the IPC.
31. To bring the case under the ambit of Section 420 of the IPC, it is not only cheating simplicitor, but also dishonest inducement to the person sought to be deceived to deliver any property etc., are required to be proved.
32. Section 468 of the IPC deals with punishment for forgery for the purpose of cheating. Section 468 of the IPC reads as follows ;
"Whoever commits forgery, intending that the document or electronic record forged shall be used for the purpose of cheating shall be punished with imprisonment of either description for a term which may extend to 7 years and shall also liable to fine".
33. In order to attract the above provision, the prosecution has to prove that ;
a. The accused committed the forgery.
28 Crl.A.530/2018 b. That he did so intending that the document or electronic record forged shall be used for the purpose of cheating.
34. Section 463 of the IPC gives definition of 'forgery' which reads as under;
"whoever makes any false document or false electronic record or part of a document or 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 intention to commit fraud or that fraud may be committed, commits forgery."
35. On going through the above definition of forgery, makes it clear that it involves making of false document or false electronic records or part of it with an intention to cause damage, commit fraud etc., The definition of making of false document is provided under Section 464 of the IPC, which reads as under;
"Making a false document.-- [A person is said to make a false document or false electronic record--
First.--Who dishonestly or fraudulently--
(a) makes, signs, seals or executes a document or part of a document;
29 Crl.A.530/2018
(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, singed, 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 signature] either by himself or by any other person, whether such person be living or dead at the time of such alteration; or 30 Crl.A.530/2018 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 practised upon him, he does not know the contents of the document or electronic record or the nature of the alteration.]
36. On conjoint reading of the above provisions, it is clear that in order to bring home the guilt punishable under Section 468 of the IPC, the prosecution has to establish that ;
i. the document has been forged as contemplated under Section 463 of the IPC.
ii. the accused forged the said
document and
iii. that the accused did so for the
purpose of cheating.
37. Section 471 of the IPC deals with using of forged document or electronic records as genuine and punishment prescribed for it. Section 471 of the IPC reads as under;
31 Crl.A.530/2018 "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."
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, wherein, it was held that " the essential ingredients of Section 471 are (i) fraudulent or 32 Crl.A.530/2018 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. With the above aspects, now the case of the prosecution as against accused Nos.1 to 4 is to be analyzed. It is needless to say that, 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 is needless to say that the burden of proving the guilt of the accused for the alleged offences beyond reasonable doubt is always on the prosecution. In order to prove the guilt of the accused persons, the prosecution has to prove all the necessary ingredients of the offences leveled against them beyond all reasonable doubt.
42. Now, the case of the prosecution with regard to the offence punishable under Sections 468 and 471 of the IPC is concerned, the prosecution has specifically alleged that in furtherance of the conspiracy to cheat the IDBI Bank, before repaying the loan availed from the IDBI Bank by mortgaging the commercial building in Sy.No.4026A/125 to 128 and commercial property in Sy.No.4026A/139, 140, 151 and 152 under Ex.P.24, the registered equitable mortgage, the accused Nos.2 and 3 had prepared forged Re-conveyance Deed forging the 33 Crl.A.530/2018 signature of the officials of the IDBI Bank and that of the witnesses and got registered the same on 18.05.2010 as per Ex.P.234 in respect of the properties bearing No.4026A/125 to 128, falsely showing that the loan availed from IDBI Bank is repayed and mortgage is cancelled and thereafter, by using the said forged Re- conveyance Deed, knowing fully well that the said properties were already encumbered with IDBI Bank, the accused No.2 had taken loan of Rs.10 lakhs, accused Nos.3 and 4 each had taken loan of Rs.20 lakhs from Jamakhandi Minority Urban Co-operative Society, Ltd., during June, 2010 by mortgaging the same properties under registered Mortgage Deeds dated 15.06.2010 and accused No.3 had availed loan of Rs.4 lakhs from Mudhol Co-operative Bank during July, 2010, which was enhanced to Rs.10 lakhs by mortgaging the same properties under registered Mortgage Deed dated 22.06.2010 and also availed loan to the tune of Rs.1.40 Crores from Sri. Beereshwar Co-operative Credit Society, Examba, during August, 2010 by again mortgaging the same properties and thereby cheated the IDBI Bank. It is further specific allegation of the prosecution that after availing the loan as aforesaid, the accused Nos.2 and 3 decided to cancel the forged Re-conveyance Deed dated 18.05.2010 and accordingly, created another forged Re- conveyance Cancellation Deed forging the signatures of the officials of the IDBI Bank and that of the witnesses and got registered the same on 08.05.2012 as per Ex.P.235 canceling the Re-conveyance Deed dated 18.05.2010 and they had also created another Re-
34 Crl.A.530/2018 conveyance Cancel Deed by forging the signature of the Bank officials of IDBI Bank and that of the witnesses and got registered the same on 14.05.2012 and thereby cheated the IDBI Bank.
43. In order to prove the said allegations, the prosecution has examined the Bank officials of the IDBI Bank as PW.1 to 7, the Senior Sub-Registrar, Mudhol as PW.16, Deputy Director and Scientist, CFSL, Hyderabad as PW.28, Managers of Jamakhandi Minority Urban Co- operative Credit Society Ltd., Mudhol Co-operative Bank, Sri.Beereshwar Co-operative Credit Society as PW.13 to
15. However, on going through their evidence, it is clear that the evidence of PW.13 to 15 is no way helpful to the prosecution to establish the factum of forgery as alleged. Though, the officials of IDBI Bank are examined as aforesaid, on going through their evidence, it is noticed that only PW.2, 3 have stated regarding non-execution of the Re-conveyance Deeds by any of the Bank Officials. It is pertinent to note that except the evidence of PW.2 and PW.3 to the effect that none of the Bank officials had executed Re-conveyance Deeds stating that the entire amount due to them has been paid, no other oral evidence is available as to forging of the Re-conveyance and Re-conveyance Cancellation Deed as per Ex.P.234 to
236. It is also noticed that there is no any oral evidence supporting the case of the prosecution as to using of the forged Re-conveyance Deed as genuine. Though the prosecution has examined the Managers of the financial institutions who had sanctioned the loan in favour of 35 Crl.A.530/2018 accused Nos.2 to 4, they have not spoken anything as to using of the forged Re-conveyance Deed in the matter of availing the loan by accused Nos.2 to 4.
44. No doubt, as argued by the learned Senior Public Prosecutor, PW.2-Sri. Maddili Manohar the then Deputy General Manager and PW.3-Sri.Sanjay Kumar Mishra, the then AGM, IDBI Bank, City SME Center, Belgaum, in their evidence stated that none of the Bank officials had executed Re-conveyance Deed stating that amount due to the Bank has been paid. But only on that evidence, it cannot be held that the registered Re- conveyance Deed and Re-conveyance Cancellation Deeds i.e., Ex.P.234 to 236 are forged documents in the absence of any other material evidence in that regard.
45. In this case, it is pertinent to note that the prosecution has produced only certified copies of the Re- conveyance Deed and Re-conveyance Cancellation Deeds as per Ex.P.234 to 236 and original of the said documents are not placed before the court. No reasons are forthcoming as to non-production of originals of Ex.P.234 to P.236. At this juncture, it is appropriate to refer the evidence of PW.28, the Deputy Director and Scientist, CFSL, Hyderabad, who in his evidence stated that he could not examine and give his opinion as the documents produced were the photostatic reproductions. From his evidence, it is clear that though specimen signatures were taken and given to the expert, he could not examine the questioned signature for want of original documents. Therefore, though the prosecution has 36 Crl.A.530/2018 examined the said expert, it will not serve any purpose of the prosecution to prove the factum of forgery of Ex.P.234 to P.236.
46. At this stage, it is pertinent to note that the accused are not disputing the execution of Re- conveyance Deed and Re-conveyance Cancellation Deeds (Ex.P.234 to P.236) and they have not disputed their signature. Under such circumstances, the examination of the signature of the accused No.2 by taking his specimen signature as per Ex.P.283 and sending the same for expert opinion is not helpful to the prosecution. The IO has not taken the specimen signature of accused No.3 who is also party to the document. As per the evidence of the Bank employees, i.e., PW.2 and 3 the signature of the Bank employees and that of the witnesses were forged. It is not their evidence that the signature of the accused is forged. Therefore, the IO has to investigate as to forging of the signature of Bank officials, who executed the document on behalf of the Bank and that of the witnesses. But, in that regard, it appears that the IO has not made proper investigation. The IO should have examined the Sub-Registrar, by whom Ex.P.234 to P.236 were registered and before whom, the parties have executed the said documents as there is no details of the witnesses.
47. In order to establish the forgery, though the prosecution has examined the Senior Sub-Registrar of Mudhol Sub-Registrar Office as PW.16, his evidence reveals that he worked as Senior Sub-Registrar at 37 Crl.A.530/2018 Mudhol Sub-Registrar Office, from June 2014 to 2016. Therefore, if we look into the date of execution of Ex.P.234 to P.236, PW.16 was not the Sub-Registrar at the time of registering the documents. Therefore, the evidence of PW.16 is of no use to the prosecution to establish its case in this regard. Even, during cross- examination, PW.16 has specifically stated that he was not working as Sub-Registrar of Mudhol when the documents were executed and he had no personal knowledge as to the transaction took place as per the furnished documents. The prosecution has not examined the Sub-Registrar, in whose presence, Ex.P.234 to P.236 were executed so as to prove the forgery as alleged. But, for the reasons best known either the IO during his investigation or the prosecution at the time of trial of the case has not opted to examine the said Sub-Registrar to prove the case of the prosecution and thereby, the best evidence is withheld from the reach of the Court, which goes against the prosecution.
48. Added to the above aspect, it is pertinent to note that on going through the contents of Ex.P.234 to P.236, it is clear that there is seal of the IDBI Bank Ltd., with signature of the authorized signatory of the Bank in the said documents. The prosecution has not opted to examine the person whose signature is stated to be forged in the said documents. The said documents reveal that the authorized signatory of IDBI Bank, Belgaum Branch, executed the said Deeds. The authorized signatory at that relevant time should have been 38 Crl.A.530/2018 examined to prove the forging of his signature. It appears that no proper investigation is conducted in that regard.
49. Along with the above aspects, at this stage it is pertinent to refer the evidence of the Senior Sub- Registrar (PW.16), who in his evidence deposed that under Section 88(1) of the Registration Act, there is exemption for personal appearance of the Government Officials at the time of presenting the documents for registration. Then, a letter from the concerned office is to be issued seeking personal exemption from appearance before the Sub-Registrar. Under Section 73 of the Karnataka Registration Rules, 1965, the Sub-Registrar has to check the documents only for the purpose of identifying the proper valuation and the date of execution and the Sub-Registrar is not required to verify the legality or right of the parties to execute the Deed. The Sub- Registrar has to satisfy as to due execution of the document. This evidence of the Sub-Registrar reveals that, a letter has to be issued from the concerned office seeking exemption of the personal appearance before the Sub-Registrar and the Sub-Registrar has to satisfy himself as to due execution of the document. But in the present case, the letter issued by the concerned officer of the IDBI Bank is not secured and as already stated, the Sub-Registrar at the relevant time is also not examined, which goes against the prosecution.
50. Therefore, in the light of the above aspects, there remains no doubt that the prosecution has absolutely failed to prove the forging of Ex.P.234 to P.236 39 Crl.A.530/2018 by accused Nos.2 and 3 as contended. Merely because the bank officials have denied the execution of Re- conveyance Deed, that alone is not sufficient to prove the forgery as contended. When the forgery is not proved by the prosecution with convincing, cogent, reliable and acceptable evidence, even if such documents are used, the same cannot be fitted within the ambit of Section 471 of the IPC. Apart from that, as already stated, the Managers of the Jamakhandi Minority Urban Co- operative Credit Society Ltd., Mudhol Co-operative Bank and Beereshwar Credit Co-operative Society Ltd., have not stated anything in that regard. Therefore, on the basis of the evidence made available by the prosecution, it cannot be held that the prosecution has proved forging of the Re-conveyance Deed and Re-conveyance Cancellation Deeds by accused Nos.2 and 3 as contended. On going through the judgment passed by the learned Magistrate in this regard, this court is of the considered view that the learned Magistrate has rightly appreciated the oral and documentary evidence in this regard and rightly held Point No.3 in the Negative.
51. So far as the offence of cheating as put up by the prosecution is concerned, the prosecution has contended that the accused persons, in furtherance of their criminal conspiracy to cheat the IDBI Bank with dishonest and fraudulent intention, concealed the mortgaging of the property in favour of State Bank of Mysore, Rabakavi Branch and in favour of Union Bank of India and also sale of the property in favour of PW.19 40 Crl.A.530/2018 Sri.Venkatesh S. Malali and PW.20 Smt. Lakshmi S. Malali, applied to IDBI Bank, City SME Center, Belgaum to take over the loan of Union Bank of India, Mudhol Branch vide letter dated 29.07.2009 and induced the Bank to believe that the properties to be genuine and encumbrance free and to sanction the credit limit and thereby, the IDBI Bank City SME Center, Belgaum sanctioned Rs.5.84 Crores on 02.11.2009 and took over the loan availed by accused No.1 Company from the Union Bank of India and cleared the loan of the accused No.1 Company with Union Bank of India on 11.12.2009. It is also alleged that though the charge was created on the entire assets of the accused No.1 company in favour of IDBI Bank, during June, 2013, the accused No.2 fraudulently and dishonestly sold the machineries to the extent of Rs.297.110 mts. in the form of scrap, valued at Rs.62,39,310/- without obtaining the permission from the IDBI Bank and the loan availed by the accused No.1 Company remained unpaid and declared as NPA on 30.09.2012 with outstanding of Rs.4,39,63,768/- and thereby cheated and caused wrongful loss to the IDBI Bank.
52. As already stated, it is not in dispute that accused No.1, represented by accused No.2 to 4, applied to the IDBI Bank, City SME Center, Belgaum on 29.07.2009 for take over of the loan of the Union Bank of India, Mudhol Branch as found in Ex.P.43 and the IDBI Branch, City SME Center processed the same and sanctioned the term loan of Rs.3.84 Crores and cash 41 Crl.A.530/2018 credit of Rs.2 Crores on 02.11.2009 which includes take over of the outstanding Term Loan and Cash Credit of Rs.50 lakhs of the Union Bank of India, Mudhol Branch. The loan sanctioned was communicated to the borrowers on 04.11.2009. It is also evident that the loan of the accused No.1 Company with Union Bank of India was cleared on 11.02.2009 and Union Bank of India had handed over all the Title Deeds of the mortgaged property in favour of IDBI Bank and executed Deed of Redemption of Mortgage. Admittedly, the loan documents were executed in favour of IDBI Bank on 30.11.2009 and the registered Mortgage Deed was executed as per Ex.P.24 on 11.01.2010.
53. Now, the evidence available on file is analyzed, the prosecution has got marked the legal opinion/ Title Investigation Report given by the Panel Advocate of IDBI Bank as per Ex.P.17 and P.18 and even the said Panel Advocate is examined before the Court as PW.10. Now, the contents of Ex.P.17 and P.18 are analyzed, it is clear that, in Ex.P.17, there is clear averment as to existence of the charge in favour of Union Bank of India, Mudhol Branch, in respect of the property bearing CTS No.4026A/139, 140, 151 and 152 and in Ex.P.18, there is specific averments as to existence of charge of the Union Bank of India, Mudhol Branch and State Bank of Mysore, Rabakavi Branch, in respect of the property No.4026A/125 to 128. The said legal opinion was given on 27.11.2009 i.e., before executing the loan documents. Therefore, it is clear that the IDBI Bank, City SME 42 Crl.A.530/2018 Center, Belgaum was well aware of the existence of the charge of the Union Bank of India as well as State Bank of Mysore, Rabakavi Branch over the property given as collaterals. In this regard, even, evidence of PW.4 is looked into, in her evidence, she has specifically stated that in Ex.P.17 legal opinion, there is mentioning of charge of Union Bank of India, Mudhol Branch and in Ex.P.18 opinion, there is reference as to existence of the charge of the Union Bank of India, Mudhol and State Bank of Mysore, Rabakavi with regard to property No.4026A/125 to 128. Therefore, it is clear that before executing the loan documents and Mortgage Deed as per Ex.P.24, the IDBI Bank was well aware of the existence of charge of the Union Bank of India, Mudhol Branch as well as State Bank of Mysore, Rabakavi Branch on the property mortgaged. Therefore, the question of concealing the said fact by the accused does not arise and that cannot be accepted.
54. At this stage, it is pertinent to note that the evidence of PW.4 reveals that the Title Deeds i.e., Ex.P.28 to 33 deposited by accused persons with Union Bank of India were handed over to the IDBI Bank and out of them, Ex.P.28 and P.29 i.e., the Title Deeds of accused No.3 were laminated copies and Ex.P.30 to 33 are originals. It is the evidence of PW.4 that when she processed the said documents, she was of the opinion that even Ex.P.28 and P.29 were the original and she had not intimated the same to the higher officials. Therefore, it is clear that there was no role of the accused persons 43 Crl.A.530/2018 in processing the loan application by the IDBI Bank. Added to that, even prior to the getting of the documents from the Union Bank of India, the IDBI Bank had sanctioned the loan and cleared the loan of the Union Bank of India and thereafter got executed the registered Mortgage Deed as per Ex.P.24. Therefore, it cannot be said that the accused persons had concealed the existence of charge of State Bank of Mysore, Rabakavi Branch and Union Bank of India, Mudhol Branch over the properties offered as collateral security. Interestingly, the application itself was to take over the loan of the Union Bank of India by IDBI Bank with property mortgaged. Under these attending circumstances, it clearly appears that the IDBI Bank, City SME Center Branch, while sanctioning the loan has not properly considered the matter and took proper documents with proper verification. It appears that only on the basis of application submitted by the accused No.1 Company, the IDBI Bank proceeded to grant the loan by complying certain procedures. It is clear that at the time of sanctioning the loan by the IDBI Bank, there was no original Title Deeds before it and the same was not at all considered. Therefore, the evidence placed before this court are not sufficient to hold that the accused persons have concealed the existence of previous charge over the properties mortgaged as contended.
55. So far as selling of the machineries in the form of scrap by accused No.2 to the extent of 297.110 mts of worth Rs.62,39,310/- under 24 invoices without 44 Crl.A.530/2018 obtaining the prior permission of the IDBI Bank is concerned, in order to prove the said fact, the prosecution has examined 7 witnesses as PW.20 to 23, 25 to 27 and also got marked 24 invoices, statement of accounts etc., In this regard, it is pertinent to note that Ex.P.24 Indenture of Mortgage dated 08.01.2010 executed on behalf of accused No.1 Company by accused No.2 reveals as to the properties mortgaged to the IDBI Bank. As per the said Mortgage Deed, the general assets of the accused No.1 Company was also hypothecated apart from mortgaging the immovable properties. Even , the Loan-cum-Hypothecation agreement is produced as per Ex.P.11. But, on going through the said document, it is not clear as to what machineries were hypothecated. The description of the machineries are not mentioned either in the Mortgage Deed or Loan-cum-Hypothecation Agreement. Though the prosecution has contended that accused No.2 sold the machineries in the form of scrap, there is no clarity as to what are the machines sold as scrap. Even, the invoices produced as per Ex.P.258 and P.259 do not disclose as to the machineries sold as scrap. Therefore, there is no convincing and acceptable evidence as to what are the machineries of accused No.1 Company were hypothecated and sold as scrap. There is no clarity in the case of the prosecution in that regard. Such being the case, the case of the prosecution that accused No.2 had sold the machineries of the accused No.1 Company as scrap which were subject to the charge of the IDBI Bank cannot be accepted. The prosecution has failed to 45 Crl.A.530/2018 prove the said fact with clear, convincing, acceptable evidence.
56. Thus, on considering the entire oral and documentary evidence placed before the court and on re- appreciating the same, this court is of the considered view that the prosecution has failed to prove the offence of cheating against the accused persons in the matter of availment of the loan from the IDBI Bank beyond all reasonable doubt as contended. Therefore, the finding of the learned Magistrate on Point No.2 in the Negative is found to be just and proper and is based on the evidence placed.
57. So far as the offence of criminal conspiracy is concerned, the prosecution has alleged that the accused persons have conspired to cheat the IDBI Bank and in pursuance of the said conspiracy, they have committed offences punishable under Sections 420, 468 and 471 of the IPC. However, as discussed above in detail, the prosecution has failed to prove the substantive offences punishable under Section 420, 468 and 471 of the IPC as against the accused persons beyond all reasonable doubt. Added to that, there is no convincing and acceptable evidence to hold that there was a criminal conspiracy between accused Nos.1 to 4 to cheat the IDBI Bank in the matter of availing the Term Loan as well as Credit Facility by taking over the loan of the Union Bank of India. The evidence placed before the court are not sufficient to establish an acceptable circumstances to infer the criminal conspiracy as put up by the 46 Crl.A.530/2018 prosecution. On the other hand, it appears that the Bank itself, without collecting and verifying the documents sanctioned the loan and when it became NPA, they started legal action alleging the commission of the offence by the accused persons, which is not proved beyond all reasonable doubt. Therefore, this court also found that there are no such circumstances made out by the prosecution to hold that the accused persons have conspired to cheat the IDBI Bank as contended.
58. Added to the above aspects, admittedly, the loan amount of the IDBI Bank was settled in its entirety. No doubt, as submitted by the learned Senior Public Prosecutor, mere repayment of the loan amount will not vanish the offence committed and that cannot be treated as a ground for exonerating the accused persons from the offence committed. But, in this case, the prosecution has failed to prove the commission of any of the offences alleged against the accused persons beyond all reasonable doubt and the benefit of which shall go in their favour. Therefore, this court is of the considered view that the trial court has rightly negated the case of the prosecution and thereby acquitted the accused persons of the offences charged against them.
59. In Muralidhar Vs. State of Karnataka, reported in AIR 2014 SC 2200, the Hon'ble Supreme Court has culled out the principles relating to the appeals from the Judgment of acquittal. The Supreme Court has consistently held that in dealing with the appeal against 47 Crl.A.530/2018 the acquittal, the appellate court must bear in mind the following ;
"(i)There is a presumption of innocence in favour of the accused persons and such presumption is strengthened by order of acquittal passed in his favour by the trial court, (ii) the accused person is entitled to the benefit of reasonable doubt when it deals with the merit of the appeal against acquittal, (iii) though the power of appellate court in considering the appeal against the acquittal are as extensive as its power in appeal against the convictions but the appellate court is generally loath in disturbing in finding of the fact recorded by the trial court. It is so because, the trial court had an advantage of seeing the demeanor of the witnesses. If the trial court takes a reasonable view of the fact of the case, interference by the appellate court with the judgment of acquittal is not justified. Unless, the conclusions reached by the trial court are culpably wrong or based on erroneous view of the laws or if such conclusions are allowed to stand, they are likely to result in grave injustice, the reluctance on the part of the appellate court in interfering with such conclusions is fully justified, and (iv) merely because the appellate court on re-appreciation and re-
48 Crl.A.530/2018 evaluation of the evidence is inclined to take a different view, interference with the judgment of the acquittal is not justified, if the view taken by the trial court is the possible view. The evenly balanced view of the evidence must not result in interference by the appellate court in the judgment of trial court."
60. It is needless to say that in order to interfere with the judgment of acquittal, there should be a compelling and substantial reasons for doing so. The paramount consideration is to ensure that mis-carriage of justice is prevented. Keeping these principles in mind, after re-appreciation of the entire evidence, in the light of the judgment rendered by the learned Magistrate, this court is of the considered view that the judgment of acquittal passed by the learned Magistrate is based on the proper appreciation of the evidence placed before the court and there are no such compelling and substantial reasons to interfere with the judgment passed. The learned Magistrate has considered the evidence in its proper perspective and reached at the just decision. Absolutely, there are no reasons to uphold any of the contentions of the appellant so as to interfere with the reasoned judgment passed by the learned Magistrate. Therefore, this court is of the considered view that the judgment of acquittal passed by the trial judge is proper and is based on the evidence on record and there are no reasons to interfere with the judgment passed by the 49 Crl.A.530/2018 learned trial judge. Therefore, Point Nos.1 and 2 are required to be answered in the negative and answered accordingly.
61. Point No.3 : For the reasons discussed in connection with point Nos.1 and 2 and the findings given thereon, this court is proceed to pass the following;
ORDER
The Appeal filed by complainant-CBI
under Section 378 of the Cr.P.C is
dismissed.
Consequently, the judgment of acquittal passed by the 17th ACMM, Bengaluru dated 27.09.2017 in C.C.No.17676/2016 is hereby confirmed.
Send the copy of the Judgment to the trial court along with the trial court records.
(Dictated to the Stenographer Gr.I directly on the computer, corrected and then pronounced by me in the Open Court on this the 27th day of February, 2025) (Shridhar Gopalakrishna Bhat) XXI Addl. City Civil and Sessions Judge, & Prl. Special Judge for CBI Cases, Bengaluru.