Delhi District Court
Cb I vs . 1 O P Bhatia S/O Sh. Chunni Lal Bhatia on 30 October, 2009
1
IN THE COURT OF V .K .MAHESHWARI
SPECIAL JUDGE: (P C Act)-03 CBI DELHI
Corruption Case No.116/93
CB I Vs. 1 O P Bhatia s/o Sh. Chunni Lal Bhatia
r/o 250-A, Pocket-I, Mayur Vihar-I, Delhi
2 Ramesh Kumar Arora @ R K Arora
S/O Asha Nand.
r/o 9/27 Geeta Colony Delhi
Date of Institution 10.8.1993
R.C No. 2(S)/92/CBI/SCB/N.D Dated 1.1.92
Under Section U/s 120 B r/w 477A IPC and Sec.13
( 2) r/w 13 (i) ( d) of P C Act, of
1988.
Arguments concluded on 13.10.2009
Date of order 30.10.2009
JUDGMENT:
FACTS OF THE CASE .
1 Brief facts of the case, according to prosecution are that Sh O P Bhatia was working as Branch Manager of New Bank of India, East of Kailash, N Delhi from 26.7.87 to 11.5.90. He entered in a criminal conspiracy during the period April and May, 1990 with his co-accused Ramesh Kumar Arora @ R K Arora. In pursuance of that criminal conspiracy accused O P Bhatia unauthorizedly and fraudulently sanctioned 1/46 2 and disbursed eight loans amounting to Rs.8,47,675/-. These loans were sanctioned against pledge / security of fictitious/ non-existing life insurance policies of accused No.2. Sh O P Bhatia although had no powers to sanction any loan at all, sanctioned said loans without observing proper formalities and mandatory requirements of banking rules hence abused his official position as public servant.
2 As per procedure prescribed by the bank for obtaining loan against LIC policies, the borrower is required to apply in a prescribed loan application form or by a written request for the same along with financial papers besides credit reports of the borrower, purpose of loan is also to be mentioned. Pre sanction inspection is to be conducted for verification of financial as well as other information furnished by the borrower. Main securities in such loans were the pledge of LIC policies so that the branch Manager can effect recoveries in case of non-liquidation of loans. In this case bogus policies were mentioned and branch Manager did not get pre sanctioned inspection conducted either himself of by the accountant incharge of loan section.
3 Sh O P Bhatia was the branch Manager of Scale-II, his discretionary power for sanction of advances against security of LIC policies was to the extent of Rs.50,000/- for single party, but all his discretionary powers had been withdrawn vide the Assistant General Manager, Regional Office Delhi letter No. ROD/L/2441 dated 1.12.89 and Head office circuler 2/46 3 No.LD/116/89 dated 27.11.89. So all the discretionary powers for sanction of fresh credit facilities except 5 exempted categories had been withdrawn and advances against LIC policies are not in exempted categories. This circular was in force when all the aforesaid loans were sanctioned so A-1 was not empowered to sanction any fresh loan.
4 No Loan application or request for loan was obtained, loan document taken were not complete. Details of LIC policies were not recorded in loan documents as well as in LIC policies register in the branch.
The said register was destroyed by accused A-1 to avoid inspection of his fraudulent acts as he had sanctioned and disbursed these loans without any security of LIC policies . It has also been found that A-1 has falsely written on the back of Form -L-36 and L-36-A ,that details of policies recorded in LIC Register and he has also given a false note on file cover of some loan that LIC Policies were handed over to the borrower for assignment from LIC and in some files accused person A-2 has falsely written on the back of form L-57 for having received back different LICs for assignment from LIC of India.
5 In loan files, there is an office copy of Form L-13 which is a notice to LIC of India from New Bank of India, East of Kailash branch signed by accused A-1 for registration of assignment in favour of the bank by LIC of India but no details of LIC polices have been mentioned therein and unit Numbers 114 and 11-B have been mentioned . Accused No.1 has 3/46 4 falsely shown to have given these notices to the accused A-2 by hand whereas as per bank rules, the LIC policies in favour of the bank as security for loan should be sent by regd post to LIC of India for registration of assignment in favour of New Bank of India and policies once assigned should not be given back till the liquidation of loans.
6 LIC Unit Nos.114 and 11-B, had revealed that no LIC policies were received from New Bank of India , East of Kailash, New Delhi Branch for registration of assignments in favour of New Bank of India.
7 A-1 has manipulated ledger sheets of these terms loans by over writing / cutting in the column of securities from IVP i e Indira Vikas Patras to LIC policies . A-1 altered IVP i e Indira Vikas Patras to LIP i e Life Insurance Policies because he had already sanctioned these loans without having any securities, falsely showing pledge of IVPs but when he was all of sudden relieved on 11.5.90 from the Branch and he was to hand over the loan files with securities to his successor. He was not having any Indira Vikas Patras, so he changed the pledged of securities from IVP to LIC i e Life Insurance Policies to avoid the detection of unauthorisedly sanctioned loans.
He falsely fabricated records showing as if LIC policies were handed over to the borrowers for assignment from LIC of India. He has also written a false note on the ledger sheet that " not a fresh advance security changed as some new account opened, a account clubbed with old account" but these are all fresh advances and there was no change of security or clubbing with old 4/46 5 account because it had been case of change of security then there is no question of disbursement of loan amount.
8 A-1 had himself prepared/ verified all loan documents and corresponding vouchers, pay order and made entries in ledger sheet in his own hand writing and disbursed the loan amounts in a very fraudulent manner without having any authority from the loanee and also received cash payment in his cabin which he himself allowed. In four loan cases of Rs.85,000/ each, A-1 himself received cash payment amounting to Rs.3,40,000/- in the name of I. S Walia on 16.4.90 and later on changed name to Ramesh Kumar as it is evident from cash book entries and manipulation in the name in credit cash vouchers has also been confirmed by GEQD , Shimla . Thus, Rs.3,40,000/- was misappropriated by A-1 . The remaining payments of Rs.2,10,000/- in cash were received by Sh Ramesh Kumar @ R K Arora.
CHARGE 9 Copies as required U/S 207 Cr P C were supplied to accused.
My Ld. Predecessor after hearing both the parties vide his order dt. 9.2.2000 had framed a charge against the accused for the offences punishable U/s120 B IPC r/w Sections 477 A IPC & Sec. 13( 2) r/w 13 (1) ( d) of P C Act, of 1988 & substantive offence against accused O P Bhatia U/s 477 A IPC and 5/46 6 Sec. 13( 2) r/w 13 (1) ( d) of P C Act, of 1988. Both the accused pleaded not guilty to the charge and claimed trial. Hence, this trial.
EVIDENCE OF PROSECUTION 10 Prosecution, in order to prove its case, has produced following witnesses:
11 PW 1 KK Uppal has stated that he was working as an accountant in the NEW BANK OF INDIA, EAST OF KAILASH
BRANCH, NEW DELHI where Sh. O. P. Bhatia was posted on branch manager, he is familiar with his handwritings and signatures, as such can identify the same. A loan of Rs.50,000/- was sanctioned and disbursed to Sh.
Ramesh Kumar Arora the credit voucher Ex.PW-1/A is in the handwriting of accused O.P. Bhatia, pronote Ex.PW-1/B and the encircled writing at point A on the same is in the handwriting of O. P. Bhatia, the loan application Ex.PW-1/C is in the handwriting of O. P. Bhatia the letters Ex.PW-1/D and Ex.PW-1/E are also in the handwriting of O. P. Bhatia.
12 In the loan file Ex.P2, a loan of Rs.1.60 lakhs has been sanctioned and disbursed to Ramesh Kumar Arora on 04-04-90. The credit voucher Ex.PW-1/F, pronote Ex.PW-1/G alongwith encircled address A credit voucher Ex.PW-1/H, loan application Ex.PW-1/H1 alongwith encircled endorsement 'A' on its back are in the handwriting of O. P. Bhatia 6/46 7 and Carbon copies of letters Ex.PW-1/H2 and Ex.PW-1/H3 are in the handwriting of O.P.Bhatia.
In file Ex.P3, demand pronote Ex.PW-1/J1, credit voucher Ex.PW-1/J2 and Ex.PW-1/J3, application Ex.PW-1/J4 alongwith endorsement A, letter Ex.PW-1/J5 letter Ex.PW-1/J6 alongwith encircled portion 'A' and endorsement on the file cover Ex.PW-1/J7 are in the handwriting of accused O.P.Bhatia.
Vouchers Ex.PW-1/K1, Ex.PW-1/K2, encircled point 'A' on the pronote Ex.PW-1/K3, loan application Ex.PW-1/K4 alongwith encircled endorsement 'A' and the letters Ex.PW-1/K5 and Ex.PW-1/K6 encircled endorsement Ex.PW-1/K7 on the file cover in the loan file Ex.P-4 are in handwriting of accused O.P. Bhatia.
Encircled handwriting at 'A' on the pronote Ex.PW-1/L1 vouchers Ex.PW-1/L2 and Ex.PW-1/L3 loan application Ex.PW-1/L4 alongwith encircled endorsement 'A', the letters Ex.PW-1/L5 and Ex.PW-
1/L6 in the file Ex.P5 are in the handwriting of accused O.P. Bhatia.
Voucher Ex.PW-1/M1 and Ex.PW-1/M2, encircled portion 'A' on the pronote Ex.PW-1/M3 loan application Ex.PW-1/M4 alongwith encircled portion 'A' the letters PW-1/M5 and Ex.PW-1/M6 are in the handwriting of accused O.P. Bhatia.
7/46 8Vouchers Ex.PW-1/N1 to Ex.PW-1/N10 bear the signatures of O.P. Bhatia, Ex.PW-1/N10 is in the handwriting of O.P. Bhatia, name Sh. Ramesh Kumar Arora in Ex.PW-1/N1 is in the handwriting of O.P. Bhatia vouchers Ex.PW-1/01 to Ex.PW-1/04 contain the signatures of O.P. Bhatia, the vouchers Ex.PW-1/02 and Ex.PW-1/03 were also filled in by O.P. Bhatia and the letter Ex.PW-1/05 and Ex.PW-1/06 were filled in the handwriting of O.P. Bhatia. The ledger sheets Ex.P-9 to Ex.P-16 the particulars as well as the entries of all the ledger sheets and encircled portion 'A' at Ex.P-9, P-10, P-
12, P-13, P-14, P-15, P-16 are in hand writing of Sh. O.P.Bhatia. Entries dated 23-04-90, bearing numbers 876/90 to 880/90 Ex.P-1 to P-5 in the pay order register Ex.P17 are in the handwriting of Sh. O. P. Bhatia. This pay order register and the relevant entries are supposed to be maintained by the clerical staff.
13 PW2 Ms Rama Madan has stated that in April-May, 1990 she was working as clerk-cum-typist with NEW BANK OF INDIA, EAST OF KAILASH BRANCH, NEW DELHI which later merged with PNB, credit slip Ex.PW-1/01 for Rs.47,199/- was filled in by her and signed by O.P.Bhatia at point 'A' credit slip Ex.PW-1/04 was filled in by her and signed by O.P. Bhatia at point 'A'. Transfer voucher Ex.PW-1/02 and Ex.PW-1/03 both dated 23-04-90 were filled in the handwriting of O.P. 8/46 9 Bhatia and signed by him, encircled portion on the ledger sheet marked A, B & C in ledger sheet Ex.P9 to P16 are in the handwriting of accused O.P. Bhatia encircled writing 'D' on the ledger sheets Ex.P12 to P16 are in the handwriting of Sh. O. P. Bhatia.
14 PW3 Gurbax Singh has stated that he was working as head cashier in NEW BANK OF INDIA, EAST OF KAILASH BRANCH, NEW DELHI where O.P. Bhaita was working as manager. Payment of Rs.50,000/- vide voucher PW-1/A and its duplicate copy PW-1/A was made in the cabin of O.P. Bhatia when the same was sent through peon. Payment of Rs.1.60 lakhs was made vide voucher Ex.PW-1/H to Ramesh Kumar Arora in the cabin of Sh. O.P.Bhatia and the payment was sent through peon. Payment of Rs.85,000/- vide voucher Ex.PW-1/J2 and the payment of Rs.85,000/- each vide vouchers Ex.PW-1/K1, Ex.PW-1/L2, Ex.PW-1/M1, were made to Ramesh Kumar Arora in the cabin of O.P. Bhatia vouchers were also made in the cabin of O.P. Bhatia.
15 PW4 Sh V P Gupta has stated that he was working as regional manager NEW BANK OF INDIA, EAST OF KAILASH BRANCH, NEW DELHI, under which the East of Kailash Branch was coming where Sh. O. P. Bhatia was working as manager during 1990. He has stated that procedure for sanctioning loan was that application was to be taken alongwith financial papers and in case of loan against the securities of LIC policies bonds were to be taken and sent to LIC office for registration of 9/46 10 assignment in favour of bank, when the bonds were received back from LIC, the loan was to be sanctioned upto certain percentage. The circular Ex.PW-
5/B had put restrictions on the credit facility to all functionaries of the bank.
16 PW 5 Sh O P Chopra has stated that he was working as an Asstt. General Manager, NEW BANK OF INDIA, EAST OF KAILASH BRANCH, NEW DELHI, where Sh. O. P. Bhatia was working as manager in NEW BANK OF INDIA, EAST OF KAILASH BRANCH, NEW DELHI which was under his region. As regards the loan against LIC policies, the borrower has to apply in the bank in a prescribed form alongwith credit report balance sheet and income tax return, the borrower has to surrender LIC policies duly assigned in favour of the bank, bank has to send the LIC policies for registration of assignment and after receiving the policy from LIC, loan has to be released. O.P. Bhatia could not have sanctioned the loan in view of the restrictions imposed as per Ex.PW-5/A and Ex.PW-5/B .
17 PW 6 R P Dangwal has stated that he was working as accountant in the loan section NEW BANK OF INDIA, EAST OF KAILASH BRANCH, NEW DELHI where Sh. O. P. Bhatia was working as manager. He has corroborated the statement of other witnesses regarding the procedure of sanctioning of loan and also identified the handwriting and signatures of O. P Bhatia on the relevant documents.
10/46 1118 PW7 A K Oberoi has stated that in the year 1990 he was working as cashier-cum-Clerk in NEW BANK OF INDIA, EAST OF KAILASH BRANCH, NEW DELHI where O.P. Bhatia was working as manager. He has corroborated the statement of other witnesses in respect of procedure and also identified the signatures and handwriting of Sh. O. P. Bhatia in all the loan documents of Ramesh Kumar Arora.
19 PW8 Sh R Mahadevan has stated that he was posted as Manager Vigilance, Head Office, NEW BANK OF INDIA, EAST OF KAILASH BRANCH, Rajendra Place, New Delhi. He had conducted surprise check in East of Kailash Branch, of New Bank of India in August, 1990. He had checked loan sanctioned against securities of pledge of LIPs and further stated that in files Ex.P1 to P8 loan application form were not obtained. Loan was sanctioned against the securities pledge of LIC policies details of which were not mentioned in the LIC register and even the LIC register was not maintained. LIPs were not available in the loan files, loans against the security of policies was sanctioned and released by O.P. Bhatia even after suspension of loaning power by competent authority. LIPs purported to have been pledged with the bank in this case were not got registered and assigned in favour of bank and there was no record to confirm that the LIC policies were even received and sent to LIC for the purpose of registration of assignments in favour of bank.
11/46 1220 PW 9 Sh A K Singhal has stated that during April-May, 1990 he was working as assistant in NEW BANK OF INDIA, EAST OF KAILASH BRANCH, NEW DELHI where Sh. O. P. Bhatia was manager, who was relieved on 11-05-1990 and handed over the documents and keys.
On 23-05-90 Sh. A. K. Jain had taken over the charge as manager to whom the keys and documents were given, by him.
21 PW 10 Sh O N Tuli has stated that he had taken over the charge as Chief Manager, NEW BANK OF INDIA, EAST OF KAILASH
BRANCH, NEW DELHI from 23-05-1992 . He has corroborated the statement of other witnesses regarding the procedure of sanction of loan against the security of LIP.
22 PW 11 Haridas Sharma has stated that during the period from 1984 to 1990, he was working as clerk in NEW BANK OF INDIA, EAST OF KAILASH BRANCH, NEW DELHI, where O.P. Bhatia was working as manager. He had identified the handwritings and signatures of O.P. Bhatia on all documents contain in files P1 to P8.
23 PW 12 Sh A K Jain has stated that he was working as Chief Manager, NEW BANK OF INDIA, EAST OF KAILASH BRANCH, NEW DELHI, where he joined on 23-05-1990. He has corroborated the statements of other witnesses regarding procedure of sanctioning of loan and also identified the handwriting and signatures of O. P. Bhatia on all the 12/46 13 documents in loan files of Sh. Ramesh Kumar Arora i.e. Ex.P-1 to P-8 and stated that in all the files last premium receipt was not filed, assignment letters LIC policies were not filed. The purpose of getting assignment of policy was if the borrower goes in default the amount may be recovered from LIC policies. He had handed over 45 cheques /vouchers and 122 instrument to I.O. of the case through seizure memo.
24 PW 13 Sh Ajay Malhotra has stated that NEW BANK OF INDIA, EAST OF KAILASH BRANCH, NEW DELHI merged with PNB in September, 1993. A.R. Sethi was General Manager, Credit and NEW BANK OF INDIA, EAST OF KAILASH BRANCH, NEW DELHI on 27- 11-89 he had brought the circular register of NEW BANK OF INDIA, EAST OF KAILASH BRANCH, NEW DELHI which contain all the circulars, the circular dated 27-11-89 original was in the register and copy was Ex. PW-5/A. 25 PW 14 Hari Krishan Jhand has stated that specimen writing of O.P. Bhatia were obtained by I.O. in his presence. PW15 Sh A S Chhabra has stated that he had noted down the balances and tallied and mentioned in the list Ex.PW15/A. 26 PW16 Sh A D Sharma has stated that he had produced assignment register pages 1 to 100 vide register No.01 dated 13-05-89 two register No.1157 dated 19-02-93.
13/46 1427 PW 17 Sh R K Batra has stated that he was working as Branch Manager Unit No.114 LIC, Chandni Chowk. He has stated that for the purpose of loan from bank against security LIC policy, borrower/policy holder has to execute an absolute assignment in favour of the lender and issue a notice of assignment to LIC. On the receipt of notice as well as assignment either on the separate page or on the back of the policy bond in favour of the assignee LIC sends back policy under register cover. Assignor has to give unique policy number on the notice without that the policy cannot be assigned. He has also stated that in file Ex P-1 letters Ex.PW1/D and EX.PW-1/E, in File P2 Ex.PW-1/H1 and 1/H3, in file P3 Ex.PW1/J5 and 1/J6 in file P4 Ex.PW-1/K5, Ex.PW-1/K6 in file P5 Ex.PW-1/l5, Ex.PW-1/l6 in file P-6 and Ex.PW-1/M5, Ex.PW-1/M6 in file P7 Ex.PW-8/E1, Ex.PW-
8/E5. P8 Ex.PW-8/B1, Ex.PW-8/B2 which are carbon copies of the notices u/s 38 of the Insurance Act, 1938 and the forwarding letters did not contain the unique policy numbers. He has also stated on a court question that on every notice for assignment original policy is sent. The policy contain the policy number and the sum assured, surrender value can be calculated on the basis of sum assured. They don't assign the policy even if the original policy is received but notice is incomplete.
28 PW18 Sh Harinder Singh has proved the certified copy of the circular dated 27-11-1989 which is Ex.PW-18/A. 14/46 15 29 PW 19 Satyavir Singh I.O. of the case, has stated that he had investigated the case and after completion of investigation filed charge-sheet.
DEFENCE OF ACCUSED U/S 313 CR P C 30 Thereafter statement of accused were recorded U/s 313 Cr. PC wherein accused O P Bhatia has admitted that at the relevant time he was posted as Manager Scale II, in New Bank of India, East of Kailash branch.
He had sanctioned the loan in dispute according to rules and as per guidelines of RBI after completing all the necessary formalities. He has denied all other allegations made against him and the evidence produced by prosecution against him. He has denied that he had sanctioned loan after withdrawal of his power. This case was foisted upon him due to official rivalry amongst the employees erstwhile New Bank of India since he was the Vice President of Delhi state Officers Association of New Bank of India. He has stated that he is innocent and has been falsely implicated in this case.
Borrower has paid the entire amount thus no loss has been caused to bank.
31 Accused Ramesh Kumar has stated that he had applied for the loan which was sanctioned against LIC policies the then enforced by the then Bank Manager Sh O P Bhatia as per rules. Loan amount was received by him as per rules which he has repaid to the bank in terms of compromise arrived between him and the bank. No monetary loss has been caused to the 15/46 16 bank. He is innocent. He has not committed any offence . He has been falsely implicated in this case.
DEFENCE EVIDENCE.
32 In their defence accused have produced DW1 Sh Prem Shanker Agnihotri Deputy Manager State bank of Maysore and has produced Ex.DW-1/A and Ex.DW-1/B. These documents show the details of debits from SB A/c of Ramesh Kumar of his bank to the A/c of Ramesh Kumar in PNB vide 13 cheques Ex.DW-1/C-1 Ex.DW-1/C-13, the first payment was vide DD dated 29.9.2003. DW 2 Sh G N Singh, Chief Manager has produced RBI circular 9/2002 dated 16-07-02, Ex.DW2/A, no due certificate Ex.DW 2/C and credit advise Ex.DW-2/B and stated that advance was adjusted by one time settlement as approved by letter dated 21-11-2002 and no due certificate dated 04-02-08 was issued. Payment has been made on account of compromise, interest has been waived.
ARGUMENTS OF S.P.P 33 It is argued by Ld SPP that accused O. P. Bhatia being a public servant while working as manager NEW BANK OF INDIA, EAST OF KAILASH BRANCH, NEW DELHI entered in a criminal conspiracy with co-accused Sh. Ramesh Kumar Arora, sanctioned and disbursed a loan of Rs.50,000/- on 02-04-90 and a loan of Rs.1.60 lakh on 04-04-90 and four loans of Rs.85,000/- each on 16-04-90 and a loan of Rs.2 lakhs on 08-04-90 16/46 17 and a loan of Rs.97,673/- on 23-04-90 against non-existent securities i.e. LIC policies without obtaining proper loan documents making false entries in the ledger sheets suggesting each loan advanced against IVP which entries were later on converted to LIC policies by converting the words IVP into LIP suggesting thereby that the loans were advanced against LIP but no LIP was taken on record. Six LIPs were shown to had been taken for the loan of Rs.50,000/- sanctioned on 02-04-90, 10 policies were shown to have been taken for a loan of Rs.1.60 lakh sanctioned on 04-04-90, 21 LIPs were shown to had been taken for the four loans of Rs.85,000/- each which was disbursed and sanctioned on 16-04-90 and no policy has been mentioned for a loan of Rs.2 lakhs sanctioned on 08-04-90 and loan of Rs.97673 sanctioned on 23- 04-90.
34 It is argued by Ld SPP that defence of accused has no legs to stand because none of the files contain any policy bond of LIC favouring Ramesh Kumar Arora. The procedure which has been proved by the evidence of witnesses is that policy holder has to make absolute assignment in favour of bank either on separate paper or on the back of the policy bond and submit the policy bond in the bank alongwith notice u/s 38 of the Insurance Act, 1938. The carbon copies of the notices in the respective files alongwith the forwarding letters are in the handwriting of accused O.P. Bhatia and signed by him but neither the notices nor the forwarding letters 17/46 18 contain the policy numbers. The procedure also speaks that the assignments are also registered in the assignment register of LIC. In this case the assignment register of LIC unit No.114 is available on the judicial record but there is no assignment on behalf of Ramesh Kumar Arora. Carbon copies of the notices are also incomplete as per statement of R. K. Batra PW-17 , even if these notices were received the assignments could not be registered because the notices are incomplete.
35 It is argued that accused O. P. Bhatia A-1 had no powers to sanction the loans on that date in view of the circulars Ex.PW-5/A and PW-
5/B. The defence of accused that he had not received the circular will not stand because there is a documentary evidence and also the evidence of O.P. Chopra who had issued one of the circular suspending the loaning powers of the accused. Evidence has also come on record that he being a scale-II officer of the bank had the powers only to sanction the loan up to Rs.50,000/-
, and the said power was also withdrawn.
36 It is argued that fact of sanctioning and disbursement of loan by accused No.1 against the non-existing policies of LIC and also the sanctioning of loan when the powers were withdrawn has been fully proved by the overwhelming evidence on record . Defence of A-2 is that entire loan has been repaid but that will not wash out the offence against the accused 18/46 19 because the loan had been sanctioned fraudulently and disbursed against non-existing securities which has been proved. The defence of the accused that policies were given is absolutely false and afterthought keeping in view the evidence of R. K. BATRA branch manager LIC Unit No.114, Chandni Chowk.
37 It is argued that it has been established that accused No.1 being a public servant abused his official position and obtained pecuniary advantage in favour of Ramesh Kumar Arora by sanctioning and disbursing these loans against the security of non-existing LIC policies, offence against A-2 is also established because he had not given any policy and did not write any unique policy number on all the six notices u/s 38 of the Insurance Act, 1938 and connived with accused no.1 in the falsification of documents .
Both the accused may be convicted.
ARGUMENTS OF A-1 38 It is argued on behalf of A-1 that initially RC 40 (A)/90 dated 06.09.2009 was registered by ACB/CBI, Delhi on source information. During investigation of that case, accused O P Bhatia was granted anticipatory bail by the Court even though that order was served upon CBI but accused O P Bhatia was deliberately arrested by Inspector R S Jaggi on 25.9.90. Accused was malafidely arrested just to harass and humiliate. He was bailed out on 1.10.90. Thereafter, the case was transferred to SCB, Delhi which registered a fresh case vide RC 2(S)/92. Registration of fresh RC was illegal and arbitrary. During the investigation of RC 40 (A)/DLI, 19/46 20 some documents were collected by IO but all those documents were not subsequently handed over to the IO of RC 2 (S)/92-SCB. Various documents including Document Index Register containing complete details of various LIC policies and connected documents, which were in favour of accused were deliberately concealed. Document Index Register has been deliberately concealed by the prosecution because it was an important defence document. No LIP register has been produced by the CBI during the trial. Hon'ble Supreme Court in S. D.Koli Vs. State of Maharashtra 2009 I AD (SC) 160 has held that prosecution cannot suppress any vital document from the court only because it would support the case of accused.
39 It is argued that O P Bhatia on 11.5.90 was asked to hand over the charge of the branch to next Senior Officer available vide letter No. AOO:PERS: 512. Accordingly, he had handed over the keys of his almirahas to Sh. A K Singhal. No handing over/taking over memo of the files was made at that time.
40 It is argued that PW12 Sh. A K Jain has deposed in his cross examination that all loan documents, including the file of case in hand, were handed over to him by Sh. A K Singhal, which shows that after the departure of accused O P Bhatia his almirahas were opened and various files were taken out but O P Bhatia was not called in the branch to witness the same or for preparation of list relating to such files. It was a deliberate and calculated move on the part of bank management to falsely implicate Accused O P Bhatia in this case, who was the then Vice President of Officers Union of Bank.
41 It is argued that PW 6 R P Dangwal in C C No.120/93 has deposed that when accused O P Bhatia was in custody of CBI, a bundle of 20/46 21 files was recovered in the branch which shows that large number of files were available in the branch even after relieving of O P Bhatia.
42 It is argued that all the details relating to LIC policies pledged by the borrowers in various cases alongwith the connected papers were available in the document Index Register and LIC Register etc. in the branch but the same were deliberately withheld by the prosecution.
43 It is argued that loan against LIC polices was considered as secured advance. In all such loans necessary applications were obtained from the borrowers. Notices for assignment etc. were also signed by the borrowers. Such loan could be paid in cash. In this case Borrower has admitted the receipt of loan by him.
44 It is argued that though the prosecution has alleged that Circular No. LD/Cr. No. 116/89 dt. 27.11.89 was issued by Sh. A R Sethi, G M putting restriction on the credit facility to be sanctioned by all functionaries of the bank was general circular addressed to all the branches. Its receipt in the East of Kailash Branch or by accused O P Bhatia has not been proved by the prosecution, hence the same cannot be read against accused O P Bhatia 45 It is argued that Sh. O P Chopra, the then AGM has stated about the letter dt. 1.12.89 issued by him regarding withdrawal of discretionary power of Branch Manager, O P Bhatia. According to him, he had personally and telephonically advised/informed accused O P Bhatia not to sanction any loan but he had not stated about his personally advising O P Bhatia in his statement recorded U/s 161 Cr PC. Dispatch of this letter has not been proved by the prosecution. Its receipt by accused O P Bhatia has also not 21/46 22 been proved. Oral statement about telephonically advising/personally informing accused is a feeble evidence to be acted upon by the court, particularly when loan in question was sanctioned much after the issuing of purported letter. As per procedure fortnight statements were sent by the branch to the Regional Office. Internal/external/statutory Auditors have periodically have inspected the branch and were in knowledge of sanction of loan in question by the accused. No lapse on the part of accused was pointed out by those inspecting officers.
46 According to prevalent procedure Bank Manager could have exceeded his powers but in all such cases the same was to be reflected in the statements sent to Senior Officers. It was accordingly done in this case also by accused O P Bhatia. Branch Manager, as an officer of the bank, can fill up the forms and even authenticate the cuttings. Conversion of IVP to LIP was duly authenticated by accused on ledger sheet in some cases. No adverse inference can be drawn against accused as he had authenticated the same. PW O P Chopra has stated that security in respect of any loan can be changed by the sanctioning authority or by the competent authority. Thus, accused could change the security if it was felt proper by him. Had there been no LIC policy and accused wanted to sanction the loan to the borrowers he could very well done so by sanctioning personal loans to them which did not require pledging of security. Many PWs have stated that loan were sanctioned by accused in an irregular manner. The alleged irregularities are curable, the Branch Manager could be proceeded departmentally for such lapses. Such irregularities cannot be termed as illegal, therefore, no criminal offence can be attributed to accused.
47 It is argued that PW R K Batra of LIC has stated in his cross examination that assignment has to be executed by the person who takes the 22/46 23 loan. The papers of assignment, policy bonds etc. were to be sent to LIC either by the assignor or by the assignee, therefore, the action of accused in giving the LIC polices and connected papers to the borrowers for assignment of policies was bonafide. In this case borrower has repaid the entire amount alongwith interest. Bank has not suffered any financial loss. It was only a civil/ commercial transaction. No criminal case made out against accused.
ARGUMENTS OF A-2 48 It is argued by Ld Defence counsel for A-2that accused Ramesh Kumar had obtained 8 loans total amounting to Rs.8,47,675/-. It was sanctioned against existing LIC policies. In respect of each loan borrower had submitted loan applications (L-36/36-A) as deposed by PW.1. Total number of LIC policies in each loan have been mentioned in application forms . The same were enclosed alongwith each application form. All notices addressed to LIC in respect of each loan were signed by borrower . It has come in the cross examination of PW4 Sh V P Gupta that " It is correct that after submission of application for loan, it is the discretion of the bank to sanction the loan or not. It is also correct that it is the duty of the Manager of Bank to tell about the requisite documents to the person who has applied for loan. It is also correct that the sufficiency of the documents is to be seen by the Bank. After submission of the required documents to the bank for sanctioning the loan, applicant has no role for sanction of the loan. It is correct that it is the duty of the bank to get the endorsement done from the LIC, on the LIC Policy. It is correct that unless the applicant is told in writing about the deficiencies in the papers, which he submitted for obtaining loan, he can not come to know about the deficiency".
23/46 2449 Same version has been given by PW 6 & 7 namely S/Sh R P Dangwal, Officer, PNB, East of Kailash and Ashok Kumar Oberoi, cashier- cum-clerk, PNB Connaught Circus, New Delhi . Accused Ramesh Kumar Arora was never communicated about any deficiency in the papers/ policies submitted by him for obtaining the above said loans.
FACTUAL AND LEGAL ANALYSIS OF THE ARGUMENTS 50 It is admitted case of both the parties that accused O P Bhatia was posted as Manager, Scale II, in the erstwhile New Bank of India, East of Kailash Branch, New Delhi at the relevant time. Accused Ramesh Kumar had applied for 8 loans total amounting to Rs.8,47,675/- wef 2.4.90 to 23.4.90 which were sanctioned by accused O P Bhatia.
51 According to prosecution discretionary power to sanction a loan of a Scale II Manager was upto Rs. 50,000/- but in this case O P Bhatia had sanctioned loans of more than Rs.50,000/- in favour of A-2. PW8 Sh R Mahadevan , PW5 O P Chopra , PW12 A K Jain and PW10 O N Tuli have specifically deposed that Power of O P Bhatia as Manager Scale -II for sanctioning loan was upto Rs.50,000/- . These witnesses have not been cross examined on behalf of A-1 on this aspect. Even during the course of argument this aspect has not been disputed. In these circumstances, this Court is of opinion that prosecution has proved this fact beyond reasonable doubts.
52 According to prosecution even this power of accused O P Bhatia was withdrawn vide circular dt. 27.11.89 Ex PW5/B and letter dt.
24/46 251.12.89 Ex PW5/A. Thus, A-1 was not competent to grant any loan however, the fact of withdrawal of power has been denied by A-1. According to him, he had sanctioned these loans as per rules after keeping 37 LIC Policies as security.
53 It is argued on behalf of A-1 that he had not received any such letter suspending his powers. PW5 O P Chopra has specifically deposed that he had suspended the discretionary powers of O P Bhatia vide letter dated 1.12.89 Ex PW5/A. This letter was sent by regd post to the concerned branch, as per law, it can be presumed that a regd letter must have reached to its destination within 30 days. In this case loans were sanctioned by A-1 during 2.4.90 to 23.4.90 i e after about four months of issuing of this letter. Even otherwise PW5 has categorically stated, as quoted below, that he had telephonically conveyed this fact to A-1. He had also conveyed it to A-1 by calling him personally. This witness has been cross examined at length, however nothing such has come on record to disbelieve him on this aspect.
54 PW5 Sh O P Chopra has specifically deposed that he had suspended the discretionary powers of O P Bhatia for sanctioning loan and had conveyed it to him on telephone as well as by calling him personally and vide letter dt. 1.12.89 Ex PW5/A. In this regard, relevant portion of his statement is as under:
"I have seen letter dated 1.12.89, which was issued under my signatures regarding withdrawal of discretionary power of Branch Manager. The letter was addressed to Sh O P Bhatia, Manager, East of Kailash Branch . Photocopy of the same is Ex PW5/A. Mr Bhatia was also advised on telephone not to sanctioned any further facilities of credit as his power has been withdrawn with immediate effect. His explanation was also called in 25/46 26 this letter. I called Mr Bhatia in my office and was advised that your powers had been withdrawn .
I have seen Head office circular No.LD/Cir. No.116/89 dated 27.11.89 issued to all the branches. I identify the signatures of Sh A R Sethi General Manager, ( credit ) at point A on circular Ex PW5/B . Cyclostyled copy of circular is in file CC No.115/93 . This circular was putting restrictions on the credit facilities to all functionaries of the banks .
I have seen loan file Ex P-1 to P-8 . The loan file is incomplete . The procedure as per bank Manual has not been adopted in the loan file."
In these circumstances, this Court is of opinion that prosecution has proved the fact of suspension of discretionary power of A-1 of sanctioning of loan.
55 According to prosecution A-1 had sanctioned 8 loans total amounting to Rs.8, 47,675/- in favour of A-2 against the security of non existing 37 LIC policies. Initially it was written on Ex P-9 to P-16 "against pledging of IVP" but later on A-1 had converted it in "LIP" by cutting/ over writing . No IVP or LIC policies were actually taken on record. This fact has been denied on behalf of A-1 and A-2. According to them loan was sanctioned as per rules after obtaining LIC policies.
56 PW8 R Mahadevan, who was posted as Manager Vigilance Section in the Head office of the then New Bank of India during the year 1990, has stated that he had conducted surprise check in the East of Kailash Branch in August 1990 and found various irregularities. Relevant portion of his statement in this regard is as under :
26/46 27" I conducted surprise check in East of Kailash Branch in August 1990. On the first day, I checked the loan sanctioned against securities of pledge of LIC Policies in 45 cases."
He has further stated in his statement in this regard as follows:
" File Ex P-8 containing documents Ex PW1/1 to Ex PW1/6, does not bears my initials . Ex PW7/C to Ex PW7/E bears my initials . I have seen sanctioned memorandum Ex PW8/A, and letter for assignment of policies , which are blank and same is Ex PW8/B-1 and Ex PW8/B-2. These bears my initial . Letter Ex PW8/C bears my initials . Form L-36-A relating to assignment of policies Ex PW8/D bears my initials.
In all these files Ex P-1 to P-9 loan application form was not obtained, since the loan was sanctioned against security of pledge of LIC policy the details of the same were not mentioned in the LIC policy register. Even the LIC policies were not obtained in these case. The LIC policies were not available in the loan files. Mr O P Bhatia, accused present in the Court was the Branch Manager at that time.
In loan files Ex. P1 to Ex.P6, surrender value is mentioned in respect form Nos L-36 of the LIC policies pledge to the Branch . However the face value of the policy was not known, premium paid receipt were not available. In file Ex P-7 the form Ex PW8/E1 to E5 bears my initials. All these forms are blank and having signatures of borrower at point A on all the forms Ex PW8/E1 to E-5. In file Ex P-8 the forms Ex PW8/B-1 and Ex PW8/B-2 are blank, having the signatures of borrower only at point A. 27/46 28 In all these files, loan was sanctioned against LIC policies, but no LIC policy number is mentioned and no LIC policy is on the loan files. The discretionary powers of the Manager was Rs.50,000/- during the period . Loans were sanctioned and paid to borrower Ramesh Kumar.
I have seen seizure memo Ex PW8/F. Vide this seizure memo the statement of accounts/ ledger sheets Ex P9 to Ex P16 were seized . The ledger sheets bears my initials on the top. Ex PW8/F is the photocopy .
The loan against security of pledge of LIC policies were sanctioned and released by Sh O P Bhatia even after suspension of his loaning power by the competent authority. The LIC policies reported to have been pledged with the bank in this case were not got registered and assigned with LIC of India . There was no record at the branch level to confirm that the LIC policies were ever received and sent to LIC of India for the purpose of registration and assignment.
In file Ex P.1 , on the back of the document Ex PW1/D, there is mentioned in encircled portion that policies were received back for assignment from LIC. Said hand writing in encircled portion is in the handwriting of accused which also bears the signatures of borrowers at point A. The encircled portion is Ex PW8/G. In file Ex P-2 there is encircled portion on the file cover, mentioning " Policies handed over to borrower for assignment from LIC", which is Ex PW8/H, which bears the signatures of accused O P Bhatia.28/46 29
In file Ex P-3, there is remark of handing over the policies to the borrowers for assignment vide Ex PW1/J7, in the hand writing of accused O P Bhatia.
In file Ex P-4 there is remark of handing over policies to borrower for assignment vide Ex PW1/K-7, in the hand writing of accused O P Bhatia.
In file Ex P-8 there is remark in the hand writing of accused Ramesh Kumar on the back of document Ex PW8/C regarding receiving back LIC policies by borrower for assignment from LIC of India, which bears the signatures of borrower.
In file Ex P-7 there is remark in encircled portion in the hand writing of accused Ramesh Kumar on the back side of document Ex PW8/E-4 regarding receiving back different policies of different persons for assignment from LIC of India, and it also bears the signatures of borrower Ramesh Kumar ."
57 In this regard PW 12A K Jain has stated as follows:
" I have seen file Ex P-1 pertaining to this case. In his particular case, an amount of Rs.50,000/- was sanctioned against 6 LIC policies having surrendered value of about Rs.65,000/- on 2.4.90 . The said policies are not in this file.
I have seen file Ex P-2 and document Ex PW1/G it shows that an amount of Rs. 1.6 lac was sanctioned to Ramesh Kumar Arora against 10 29/46 30 LIC policies having surrendered value of about Rs. 1.78 on 4.4.90 . The said policies are not in this file.
I have seen file Ex P-3 and document Ex PW1/J4 it shows that an amount of Rs. 85,000/- was sanctioned to Ramesh Kumar Arora against 4 LIC policies having surrendered value of about Rs. 94,500/- on 16.4.90 . The said policies are not in this file.
I have seen file Ex P-4 and document Ex PW1/K3 it shows that an amount of Rs. 85,000/- was sanctioned to Ramesh Kumar Arora against 7 LIC policies having surrendered value of about Rs. 94,700/- on 16.4.90 . The said policies are not in this file.
I have seen file Ex P-5 and document Ex PW1/L-1. It shows that an amount of Rs. 85,000/- was sanctioned to Ramesh Kumar Arora against 3 LIC policies having surrendered value of about Rs. 96,000/- on 16.4.90 . The said policies are not in this file.
I have seen file Ex P-6and document Ex PW1/M-3 it shows that an amount of Rs. 85,000/- was sanctioned to Ramesh Kumar Arora against 7LIC policies having surrendered value of about Rs. 95,100/- on 16.4.90 . The said policies are not in this file.
I have seen file Ex P-7 and document Ex PW7/E it shows that an amount of Rs. two lacs was sanctioned to Ramesh Kumar Arora against LIC policies but the number of policies and surrendered value is not mentioned. The said policies are not in this file.
58 In this regard PW10 Sh. O N Tuli has stated as follows:
30/46 31"I have seen loan file Ex P-1 of Shri R K Arora. I have also seen files Ex P-2 to P-8. In all these files, loan application form was not obtained. Since the loan was sanctioned against the security of pledge of LIC Police , the details of the same were not mentioned in the LIC policies Register. Even the LIC policies were not obtained in these cases. The LIC policies were not available in the loan files. Mr O P Bhatia accused was the branch Manager at that time . In all these files, last premium receipt and undertaking from the borrower to repay loan are also not there .
Duly assigned LIC policies in favour of bank are kept alongwith the loan document "
59 On Ex P-9 to P-16, which are the ledger sheets, of all the aforesaid loan accounts in the column of details of security, A-1intially had written " pledge of dep. of IVP " showing that advances were made against the security of IVPs but later on he had altered it by cutting / over writing LIP over IVP, suggesting that loans were sanctioned against the security of LIC policies .
60 It is argued on behalf of A-1 that being Manager he had power to change the security. He had also put his signatures on the cutting authenticating the same hence no adverse inference can be drawn against him. There is no merit in this argument firstly because there is no evidence that A-1 had initially taken on record IVP before the sanctioning of loans, secondly A-1 has not mentioned any reason for change of security from IVP to LIP.
31/46 3261 Here it is worth important to mention that five more cases are pending against A-1 in this Court beside the present one, all titled CBI Vs O P Bhatia, Vide CC No.115/93, 119/93, CC No.118/93, CC No.120/93 and CC No.121/93, having similar allegations. In all these cases A-1 had altered IVP to LIP by making cutting and over writing. Even in this case such alteration has been made in all the 8 ledger sheet. There can be similar mistake in one case or two how in all these cases it has been done, has not been explained on behalf of A-1. In all these cases loan was sanctioned in first week of April 1990. This Court can take judicial notice of this fact. Sanction of loan in these cases in a span of a week also reflects mens era of abuse of official position of A-1 to favour private person.
62 There is no evidence that 37 LIP policies were obtained by A-1 . No unique Number of LIP has been mentioned . There is no reliable explanation on behalf of A-1, if the LIPs were taken why the same were not kept in the file after getting the same assigned from LIC office. A-1 was the Branch Manager, his duty was to maintained LIP Register and document index Register but he had not maintained the same as deposed by various witnesses.
63 According to the accused 37 LIPs had been deposited in the bank but there was not even a single LIP either available on the file or was in the bank assigned in favour of bank by borrower Ramesh Kumar or was sent for assignment to LIC Office or was received back from LIC office.
64 In case of loan against the security of LIP borrower had to make an absolute assignment in favour of bank. He had to surrender the policy bond alongwith the last premium paid receipt and to give a notice to LIC U/s 38 of Insurance Act. Unique policies numbers were to be mentioned 32/46 33 in the notice U/s 38 of Insurance Act as well as on the forwarding letter. Bank had to send the notice and policy bond to LIC for registration of assignment in favour of bank. LIC after registration of assignment had to return the policy bond to the bank, only then the loan can be sanctioned and disbursed, so that in case of default bank can encash the policy. Policy bond cannot be returned before the liquidation of loan but in this case loan had been disbursed without the compliance of all these conditions.
65 In this regard PW7 Ashok Kumar Oberai has stated as follows:
" The loan was sanctioned against the policy on the same date i.e 8.4.90 . At the time of filling of the documents, I had not seen the LIC policy. Ex P-1 to P-7 i e loan files of accused Ramesh Kumar were with accused O P Bhatia .
I have seen the statement of accounts Ex P-9 to P-16 of R K Arora this was written by me. The name of party was written by me on the directions of accused O P Bhatia. On these documents, I had written "
Pledge of IVP," at Point A, which was later on changed to " LIP". This was not changed in my presence. The entry dated 2.4.90 on Ex P-9 and entry dated 4.4.90 on Ex P-10 and Entry dated 8.4.90 on Ex P-11, entry dated 16.4.90 on Ex P-12, entry dated 16.4.90 on Ex P-13, entry dated 16.4.90 on Ex P-14, entry dated 16.4.90 on Ex P-15, entry dated 23.4.90 on Ex P-16, are in my hand. The dates mentioned vide entries in my hand on Ex P-9 to P- 16 are the dates of advance made . The name of party in that column in Ex P- 11 , Ex P-12, Ex P-13, Ex P-14 and Ex P-15 as Ramesh Kumar are not in my handwriting. The addressed on Ex P-9 to Ex P-16 are in the handwriting of 33/46 34 accused O P Bhatia. Whatever written by me on Ex P-9 to P-16 are on the instructions of accused O P Bhatia, in his cabin."
66 Had any LIP were taken on record numbers of same would have been mentioned on the notices U/s 38 of Insurance Act. ExPW1/D and ExPW1/M-2, PW1/J-6, PW1/K-5, PW8/E-3, PW8/C are the carbon copies of notices signed by accused Ramesh Kumar and Ex PW1/M-6 and Ex PW1/L- 6 are unsigned carbon copies of notices U/s 38 of Insurance Act and Ex PW1/E , Ex PW1/M-5, Ex PW1/J-5 , Ex PW1/K-6, Ex PW1/L-5, Ex PW1/M-5 are the carbon copies of forwarding letters signed by accused O P Bhatia vide which notices U/S 38 of Insurance Act were allegedly sent to LIC office addressed to Unit No.11-B and 114 of LIC wherein no unique numbers of policies have been mentioned . From the above discussion it is clear that in this case no LIP was taken on record as security while sanctioning and disbursing of loan.
67 It is argued on behalf of A-2 that he had applied for 8 loans which were sanctioned to him as per rules against the security of 37 LIC policies pledged by him with the bank. He had executed various necessary documents . Prosecution has not produced any evidence to prove that there was agreement between A-1 and A-2 to conspire.
68 Conspiracy consists in a combination or agreement between two or more person do an unlawful act or to do a lawful act by unlawful mean. A conspiracy is an inference drawn from the circumstances. There cannot always be much direct evidence about it. Conspiracy can be inferred even from the circumstances giving rise to a conclusive or 34/46 35 irresistible inference of an agreement between two or more persons to commit an offence. Since Conspiracy is often hatched up in utmost secrecy, it is most impossible to prove conspiracy by direct evidence. It has to be inferred from the acts, statements and conduct of parties to the conspiracy. Thus, if it is proved that the accused pursued, by their acts, the same object often by the same means, one performing one part of the act and the other another part of the same act so as to complete it with a view to attainment of the object which they were pursuing, the court is at liberty to draw the inference that they conspired together to effect that object. Conspiracy has to be treated as a continuing offence and whosoever is a party to the conspiracy, during the period for which he is charged, is liable under this section.
69 It is not an ingredient of the offence under this section that all the parties should agree to do a single illegal act. It may comprise the commission of a number of acts. The entire agreement must be viewed as a whole and it has to be ascertain as to what in fact the conspirators intended to do or the object they want to achieve. It is not necessary that each member of conspiracy must know each other or all the details of the conspiracy. It is also not necessary that every conspirator must have taken place in each and every act done in pursuance of a conspiracy.
70 Though to establish the charge of conspiracy there must be agreement, there need not be proof of direct meeting or combination , nor need the parties be brought into each other's presence; the agreement may be inferred from the circumstances raising presumption of a common concerted 35/46 36 plan to carry out the unlawful design. So again it is not necessary that all should have joined in the scheme from the first; those who come in at a later stage are equally guilty.
71 Conspiracy hatched in secrecy and executed in darkness. In a case of conspiracy, it is not expected from the prosecution that it will produce evidence to show that conspirators executed agreement to commit crime before the witnesses to prove the existence of conspiracy. Conspirators take all precautions to keep their plan secret hence prosecution cannot produce direct evidence to prove agreement to commit conspiracy.
72 The agreement to conspire may be inferred from circumstances, which raised a presumption of a concerted plan to carryout an unlawful design / act . Conspiracy need not be established by proof which actually brings the party together; but may be shown like any other fact, by circumstantial evidence.
73 In Kher Singh Vs State AIR 1988 SC 1883 it is observed as follows:
" Generally, a conspiracy is hitched in secrecy and it may be difficult to adduce direct evidence of the same. The prosecution will often rely on th evidence of acts of various parties to infer that they were done in reference to their common intention. The prosecution will also more often rely upon the circumstantial evidence. The conspiracy can be undoubtedly proved by such evidence direct or circumstantial. But the Court must require whether the two persons are independently pursuing the same end or they have come together to the pursuit of the unlawful object. The 36/46 37 former does not render them conspirators, but the later does. It is however, essential that the offence of conspiracy required some kind of physical manifestation or agreement the express agreement however need not be proved. Nor mutual meetings of the two persons is necessary. Nor it is necessary to prove the actual words of communication. The evidence as to transmission of thoughts sharing the unlawful design may be sufficient. Conspiracy can be proved by circumstances and other material."
74 It is also argued on behalf of both the accused that loan transaction was a civil transaction at the most leading to a breach of contract, no criminal offence made out against them.
75 The distinction between mere breach of contract and a criminal offence is a fine one. It depends upon the intention of the accused at the beginning which may be judged by his subsequent conduct also. Mere breach of contract cannot give rise to criminal offence, unless fraudulent or dishonest intention is shown right at the beginning of the transaction i.e. the time when the offence is said to have been committed.
76 Criminal intention means the purpose or design of doing an act forbidden by the criminal law . Intention of the accused to produce a particular consequences shows his intention to do that act. An act is intentional if it exists in idea before it exists in fact . Usually intention is inferred from the conduct of a person . As a General rule every sain man presumed to know the necessary or the natural and probable consequences of his acts, this presumption of law will prevail unless from a consideration of all the evidence the Court entertains a reasonable doubt whether such intention existed.
37/46 3877 Intention is an internal state of mind. Sometime it may be expressed sometime it may be implied. Implied intention is to be inferred from the acts and conducts of the parties . Sometimes the intention is imputed from the act or the consequences. If a particular act has been done, the law will presume that the person doing it has the intention to do it without the enquiry as to whether actually he had the intention or not.
78 It can be well inferred from the evidence produced by the prosecution on the judicial file that A-1 and A-2 were involved in a criminal conspiracy and having dishonest intention from the very beginning. From the above discussion it is proved beyond reasonable doubts that 8 loans total amounting to Rs.8,47,675/- were sanctioned by A-1 in favour of A-2 against the security of 37 non existing LIC policies. A-1 had made endorsements on the file covers stating that policies were handed over to borrower for assignment from LIC under his signatures. A-2 had also made endorsements on the back of notices U/S 38 of Insurance Act with regard to receiving back of LIPs for assignment from LICs.
79 There is an endorsement on the file cover Ex PW8/H( D-4) written by A-1 stating policies handed over for assignment of LIPs from LIC having signatures of accused O P Bhatia underneath the same. Similar endorsement is also on the file cover Ex PW1/J-7 ( D-5) and Ex PW1/K-7 ( D-6) . Accused O P Bhatia in his statement U/S 313 Cr PC in reply to question No.9 has also stated that all the LIC policies were given to borrowers for getting the same assigned from the LIC.
38/46 3980 On the back of Ex PW8/G there is an endorsement with regard to receiving back of LIPs for assignment from LIC having signatures of A-2 underneath the same which is as follows:-
" Received back policies for assignment from LIC"
Sd/-
( Ramesh ) On the back of Ex PW8/E-4 there is an endorsement with regard to receiving back of different Policies of different persons for assignment from LIC having signatures of A-2 underneath the endorsement is as follows:-
" Received back different policies of different persons for assignment from LIC"
Sd/-
( Ramesh ) On the back of Ex PW8/C there is an endorsement with regard to receiving back of LIPs for assignment from LIC having signatures of A-2 underneath the same which is as follows:-
" Received back policies for assignment from LIC"
Sd/-
39/46 40( Ramesh ) 81 When there were no 37 LIP policies in existence how can A-1 handed over the same to A-2 vide endorsement Ex PW8/H, PW1/J-7, PW1/K-7 and how can A-2 received back LIPs for assignment from LIC vide endorsement on the back of Ex PW8/G-1, PW8/C and PW8/E-4. This very fact has proved beyond reasonable doubts that A-1 and A-2 were involved in a criminal conspiracy with a dishonest / criminal intention from the very beginning i e at the time of sanctioning of loan. If A-2 had taken back the LIPs, onus of proof was on him to prove that he had taken back LIPs and having the same with him, he should have proved this fact by producing substantive evidence either by appearing himself in the witness box U/S 315 Cr P C or by summoning relevant witness from the LIC office to prove that LIPs were purchased by him in his name but he has not done so, hence adverse inference has to be drawn against him.
82 It is also proved on the file beyond reasonable doubt that all the documents with regard to sanctioning of 8 loans were in the hand writing of A-1 and not in the hand writing of concerned clerks who were appointed for doing that job. It is argued that being Manager A-1 can fill up the documents. In the peculiar facts and circumstances of this case wherein A-1 had sanction 8 loans against the security of non existing 37 LIPs inspite of withdrawal of his discretionary powers to sanction a loan upto 50,000/- , the fact of executing all the documents by A-1 with regard to aforesaid 8 loans also proves the existence of conspiracy between A-1 and A-2. Not mentioning of Unique Nos of LIC policies in Notices U/S 38 of Insurance Act having signatures of A-1 and forwarding letter having signature of A-2 also proves that they were acting in furtherance of a criminal conspiracy.
40/46 41These facts also proves beyond reasonable doubt that it was not merely a civil transaction resulting in the breach of contract but a criminal offence. It is also proved that A-1 being the Branch Manager had not maintained LIP Register and document index register . Inspite of having knowledge of this fact he had written on the back of documents that particular of LIPs recorded in LIP Register, also proves his malafide and dishonest intention from the very beginning.
It is correct that A-2 has ultimately compromised the matter with the bank and paid the loan amount without interest. Mere payment of loan amount with interest does not wash away the criminal offence committed by A-1 and A-2. There is substantive evidence against both the accused that they were conspired with each other, in furtherance of criminal conspiracy A-1 had sanctioned eight loans of Rs.8,47,675/- in favour of A-2 by abusing his official position and by falsifying the bank record against the security of 37 non existing LIC policies and A-2 had also facilitated A-1 in this conspiracy as discussed above. A-1 has also filed a criminal Crl M.C No. 559/2009 & Crl M .A 2150/2009 titled O P Bhatia Vs CBI & Ors for quashing the present proceeding on the ground that A-2 has repaid the entire amount along with interest but the same was dismissed by Our Hon'ble High Court vide order dated 3.8.2009.
83 Hon'ble Supreme Court in Inspector of Police, CBI Vs B. Raja Gopal 2003 SCC- 1238 in this regard has held as follows:
" Criminal Procedure Code, 1973- S.482 - Quashing of criminal proceedings - Accused charged under Ss.420, 468, 471 IPC for defrauding bank- Merely for the reason that a compromise had been reached between 41/46 42 the bank officials and the accused and accused paid the disputed amount found due to the bank, held , High Court was not justified in quashing the trial which had reached almost the pen ultimate stage"
84 Hon'ble High Court of Delhi in Dhanpat Bothra Vs State of Delhi Govt of NCT of Delhi & Ans. 2008 IX AD ( Delhi) 495 has observed as follows:
" Merely because the accused has made good the complainant's loss after he was caught, does not automatically wipe out the offence committed- Existence of yet another FIR filed by an independent complainant- Within a period of seven days, two FIRs came to be lodged against the petitioner, with similar allegations, by different complainants with whom the petitioner was working on a commission basis- This raises more than a suspicion against the conduct of the petitioner- Also, both the FIRs are under investigation - Although dispute can be termed as, 'private' in nature but offences, which are non- compoundable, are treated as crimes against society and, therefore, normally the consent of the victim to compound those offences may not be of any use- Petition dismissed ."
85 Hon'ble Delhi High Court in Shyam Babu Gupta & Ans Vs State ( Govt of NCT) Delhi & Ans 2008 Crl L J 951 has observed as follows:
" Criminal P C ( 2 of 1974) S. 482 - Quashing of FIR-
Petitioner alleged to have forcibly seized vehicles of complainant - Act of petitioner in illegally taking possession of three-wheeler was nothing but sheer display of muscle power which cannot be tolerated - It is an offence 42/46 43 against society- Merely because parties have reached a settlement and money has been paid to complainant- Cannot be a ground for quashing FIR."
86 It is correct that while deposing in the Court various witnesses have stated that loan was sanctioned irregularly. It is argued on behalf of accused hence there is no illegality committed by accused while sanctioning of loan in view of above statement of witnesses. It is argued that irregularity is curable. Bank should have taken steps to get the irregularity cured. There is no merits in this argument because witnesses are not legal expert, they hardly understand difference between irregularity and illegality. There is no estopple against statue . If a witness innocently has used a particular word while deposing in the Court without understanding the legal meaning of the same, accused cannot be allowed to take advantage of the ignorance of such witness. From the above discussion of the facts of this case and the evidence produced by the prosecution it is well proved that both the accused in connivance and conspiracy with each other had obtained pecuniary advantage illegally and by corrupt means. Thus they cannot avoid the legal consequences only because the witnesses have used word irregularly.
87 Hon'ble Supreme Court in Inder Singh Vs State ( Delhi Administration) AIR 1978 Supreme Court 1091 has held as follows:
"Credibility of testimony, oral circumstantial depends considerably on a judicial evaluation of the totality, not isolated scrutiny. While it is necessary that proof beyond reasonable doubt should be adduced in all criminal cases, it is not necessary that it should be perfect, If a case is proved too perfectly, it is argued that it is artificial; if a case has some flaws, inevitable because human beings are prone to err, it is argued that 43/46 44 it is too imperfect. One wonders whether in the meticulous hypersensitivity to eliminate a rare innocent from being punished, many guilty men must be callously allowed to escape. Proof beyond reasonable doubt is a guideline, not a fetish and guilty man cannot get away with it because truth suffers some infirmity when projected through human processes. Judicial quest for perfect proof often accounts for police presentation of fool-proof concoction. Why fake up? Because the Court asks for manufacture to make truth look true? No, we must be realistic".
88 Prevention of Corruption Act is a social legislation enacted with the object to curb illegal activities of public servants, in these circumstances according to the law of interpretation of Statute, its provision should be interpreted so as to achieve its object. Our Hon'ble Supreme Court in Ram Singh Vs. State of MP (2000) 5 Supreme Court Cases-88 has held as follows:
"Prevention of Corruption Act, 1988 - Nature and interpretation of -Held is a social legislation to curb illegal activities of public servant and should be liberally construed so as to advance its object and not liberally in favour of the accused - interpretation of Statutes -Particular statutes or provisions - Penal statute - Social Legislation - Interpretation of".
89 Our Hon'ble Supreme Court in State of Punjab Vs. Pohla Singh, 2003 (3) CCC 75 has held as follows:
"Appreciation of evidence - The prosecution is not supposed to meet every hypothetical question raised by the defence -If crime is to be punished in a glosseme way niceities must yield to realistic appraisal."44/46 45
90 In case U/S 13 (1) (d) of P C Act 1988 prosecution has to prove that :
i) That accused should be a public servant.
ii) That he should used some corrupt or illegal means or otherwise abused his position as a public servant,
iii) That the accused should have thereby obtained a valuable thing or pecuniary advantage.
iv) Such benefit for himself or for any other person.
91 In case U/S 477-A of IPC prosecution has to prove that :-
1 The person coming within its purview must be a clerk, an officer, or a servant, or acting in the capacity of a clerk, an officer, or a servant.
2 He must wilfully and with intent to defraud ----
i) destroy, alter, mutilate, or falsify, any book, electronic record, paper, writing, valuable security, or account which
(a)belongs to or is in the possession of his employer; or
(b)has been received by him for or on behalf of his employer;
ii) make or abet the making of any false entry in or omit or alter or abet the omission or alteration of any material particular from or in any such book, paper, writing, valuable security or account.
92 All that is necessary to bring a person within the purview of this section is that he would have altered or falsified any book or paper, etc., wilfully and with intent to defraud. If the intention with which a false document is made is to conceal a fraudulent or dishonest act which had been 45/46 46 previously committed, the intention cannot be other than an intention to defraud.
93 In view of above discussion it is proved beyond reasonable doubt from the evidence produced by the prosecution that accused O P Bhatia, who was working as Branch Manager Scale-II in the erstwhile New Bank of India, was a public servant, who by abusing his official position, in connivance and conspiracy, of his co-accused obtained pecuniary advantage illegally or by corrupt means to Ramesh Kumar , by illegally sanctioning loans total amounting to Rs.8,47,675/-- against the security of 37 non existing LIC policies by falsifying the bank record / account. Therefore accused O P Bhatia is convicted for the offences punishable U/s 13 (2) r/w 13 (1 )(d) of P C Act, 1988 and U/S 477 -A IPC and U/S 120-B of IPC and Section 13 (2) r/w Section 13 (1 )(d) of P C Act and Section 477-A of IPC .
94 Accused Ramesh Kumar is convicted U/S 120-B of IPC r/w Section 13 (2), 13 (1 )(d) of P C Act, 1988 , U/S 477-A IPC.
Announced in open court ( V. K. Maheshwari)
ON 30TH DAY OF,OCT . 2009 SPECIAL JUDGE: (P C ACT)-
03 CBI: DELHI
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