Kerala High Court
Kailash Gupta vs Superintendent Of Police on 10 November, 2025
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE A. BADHARUDEEN
MONDAY, THE 10TH DAY OF NOVEMBER 2025 / 19TH KARTHIKA, 1947
CRL.A NO. 2340 OF 2006
AGAINST THE JUDGMENT DATED 30.11.2006 IN C.C. NO.2 OF 2002 OF
SPECIAL COURT (SPE/CBI)-I, ERNAKULAM
APPELLANTS/ACCUSED NOS.2 AND 3:
1 KAILASH GUPTA
S/O.LATE SREELAL GUPTA, MANAGING PARTNER,, M/S.KVA BROTHERS,
MATTANCHERRY, COCHIN-2,, RESIDING AT 6/470, BAZAR ROAD,
MATTANCHERRRY, COCHIN-2.
2 VIKAS GUPTA AGED 34 YEARS
S/O.KAILASH GUPTA, PARTNER,, M/S.KVA BROTHERS, MATTANCHERRY,
COCHIN-2,, RESIDING AT 402, THAKKAR APARTMENTS, JUHU LANE,
ANDHERI WEST, MUMBAI-59.
ADDL A3 PUSHPA GUPTA
AGED 80 YEARS
W/O KAILASH GUPTA, RESIDING AT 402, THACKERS APARTMENT, JUHU
LANE, ANDHERI WEST, MUMBAI. (IMPLEADED AS PER ORDER DATED
29.01.2025 IN CRL.M.A.1/2025 IN CRL.A.2340/2006)
BY ADVS.
SHRI.A.MOHAMMED
SHRI.ASHIK K.MOHAMED ALI
SHRI.MUHAMMED RIFA P.M.
SMT.EHLAS HALEEMA C.K.
SHRI.SALMAN FARIS
SMT.GAYATHRI ASHISH NAIR
RESPONDENT/COMPLAINANT:
SUPERINTENDENT OF POLICE
SPE/CBI, KOCHI, THROUGH THE STANDING COUNSEL FOR, CBI, HIGH
COURT OF KERALA, ERNAKULAM.
BY ADVS.
PUBLIC PROSECUTOR
SHRI.SREELAL N.WARRIER - SPL.PUBLIC PROSECUTOR, CENTRAL
BUREAU OF INVESTIGATION (CBI)
THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 29.10.2025, THE
COURT ON 10.11.2025 DELIVERED THE FOLLOWING:
Crl.A. No. 2340 of 2006
2
"C.R"
JUDGMENT
Dated this the 10th day of November, 2025 Accused Nos.2 and 3 in C.C. No.2/2002 on the files of the Court of the Special Judge (SPE/CBI)-I, Ernakulam, have filed this appeal, under Section 374(2) of the Code of Criminal Procedure, 1973 [hereinafter referred as 'Cr.P.C.' for short], challenging the conviction and sentence imposed by the Special Judge, against them as per the judgment dated 30.11.2006. The Superintendent of Police, Central Bureau of Investigation (CBI), Kochi, represented by the Special Public Prosecutor is arrayed as the sole respondent herein.
2. During the pendency of this appeal, the 1 st appellant/2nd accused died and the wife of the 1st appellant got impleaded as the additional 3 rd appellant to continue with this appeal.
3. Heard the learned counsel for the appellants and the learned Special Public Prosecutor, in detail. Perused the verdict under challenge, the records of the Special Court as Crl.A. No. 2340 of 2006 3 well as the decision placed by the learned counsel for the appellants.
4. Parties in this appeal shall be referred as 'accused' and 'prosecution', hereafter.
5. In this matter, the prosecution case is that, the 1st accused functioned as Manager, Allahabad Bank, Mattancherry Branch, Kochi, during the period between January, 1996 and June, 1998. The 2 nd accused was the Managing Partner and the 3rd accused, who is the son of the 2nd accused, was the Partner of M/s.KVA Brothers, Mattancherry. They had been doing business relating to the trading of dried coconut for producing coconut oil at the factory of the 4th accused known as 'Jyothi Agro Industries, Akhola', in Maharashtra State. The 4th accused was the proprietor of M/s.Jyothi Agro Industries, Akhola. The case of the prosecution is that, accused Nos.1 to 4 hatched criminal conspiracy during the year 1997 at Mattancherry, Kochi and Akhola, Maharashtra and also other places for cheating Allahabad Bank, Mattancherry Branch, Kochi and criminal misconduct was done by the 1st accused in the matter of Crl.A. No. 2340 of 2006 4 discounting of bills for obtaining undue pecuniary advantage to accused Nos.2 to 4. In pursuance of the criminal conspiracy, accused Nos.2 and 3 submitted 13 numbers of IBDs (Inland Bill Discounted) during the period between 11.3.1997 and 9.6.1997 for discounting before the 1st accused showing sale of Copra to the 4 th accused. Further, in pursuance of the said conspiracy, accused Nos.2 and 3 submitted stale LRs along with the bills showing the consignee as Allahabad Bank after getting the LRs from the transporter without specifying the consignee Bank's name. Further, accused Nos.2 and 3 in pursuance of the conspiracy filed forged invalid open insurance forms along with the said 13 bills in order to make it appear that the said consignments were insured. The 1st accused, in pursuance of the conspiracy by abusing his official position as a public servant, by corrupt or illegal means discounted the said 13 bills totally disregarding the fact that the limit sanctioned under the IBD to M/s.KVA Brothers was already overdrawn and substantial amount was outstanding in the loan account. Further, the 1 st accused dishonestly accepted Crl.A. No. 2340 of 2006 5 those 13 bills irrespective of the fact that the LRs were stale and as such, he was not allowed such stale LRs. In pursuance of the said conspiracy, accused Nos.2 and 3, after discounting the bills, and on some occasions, even prior to the discounting sent the consignment directly to the 4th accused at Akola in order facilitate him to take delivery of the consignment without making payments against the discounted bills. In pursuance of the conspiracy, the 4th accused took delivery of the consignments directly sent to him by accused Nos.2 and 3 and did not make payment to the Allahabad Bank. These transactions resulted in the loss of primary security for the Bank against the discounted bills. The 1st accused, in furtherance of the conspiracy, did not inform the Lorry Companies, who transported the said goods about the lien of the Bank on the said goods. The said 13 discounted bills were pending with the consignee Bank due to non payment by the consignee and the 1st accused in pursuance of the conspiracy dishonestly intimated the collecting bank not to return the said bills in order to avoid further action of Crl.A. No. 2340 of 2006 6 claiming the bill amount from accused Nos.2 and 3 and instead requested the collecting bank to retain the same and re-present the same. On this premise, the prosecution alleges commission of offences punishable under Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988 [hereinafter referred as 'P.C. Act' for short] and under Sections 120B read with 420 of the Indian Penal Code [hereinafter referred 'IPC' for short], by the accused.
6. After framing charge, the Special Court recorded evidence and completed trial. During trial, PWs 1 to 20 were examined and Exts.P1 to P57 were marked on the side of the prosecution. After questioning the accused under Section 313(1)(b) of Cr.P.C, DWs 1 to 3 were examined and Exts.D1 to D20 were marked on the side of accused as defence evidence.
7. On appreciation of evidence, the Special Court found that accused Nos.1 and 4 were not guilty for the offences alleged. Further, the Special Court found that accused Nos.2 and 3 were guilty for the offences punishable under Section 120-B read with 420 of IPC and under Section 420 of IPC. Accordingly, accused Nos.2 and 3 Crl.A. No. 2340 of 2006 7 were convicted for the said offences and sentenced as under:
In the result, A2 is sentenced to undergo Rigorous Imprisonment for 5 years and to pay a fine of Rs.1,00,000/-, in default, to undergo Rigorous Imprisonment for one year more under Section 120 B of the Indian Penal Code r/w Section 420 of the Indian Penal Code. A2 is further sentenced to undergo Rigorous Imprisonment for 5 years and to pay a fine of Rs.1,00,000/-, in default, to undergo Rigorous Imprisonment for one year more under Section 420 of the Indian Penal Code.
A3 is sentenced to undergo Rigorous Imprisonment for 5 years and to pay a fine of Rs. 1,00,000/-, in default, to undergo Rigorous Imprisonment for one year more under Section 120 B of the Indian Penal Code r/w Section 420 of the Indian Penal Code, A3 is further sentenced to undergo Rigorous Imprisonment for 5 years and to pay a fine of Rs.1,00,000/-, in default, to undergo Rigorous Imprisonment for one year more under Section 420 of the Indian Penal Code.
It is made clear that the substantive sentences of imprisonment shall run concurrently. A2 and A3 are entitled to set off, Crl.A. No. 2340 of 2006 8 of the period of detention if any undergone by them in connection with the investigation, inquiry and trial of this case, under Section 428 Cr.p.c.
8. While assailing the verdict impugned, it is pointed out by the learned counsel for accused Nos.2 and 3 that, in this case, the finding of the learned Special Judge in paragraph No.70 of the judgment that, accused Nos.2 and 3 had cheated the Allahabad Bank, Mattanchery Branch, after hatching conspiracy by producing 13 bills for Rs.24,53,820/- and thereby cheated and defrauded the Allahabad Bank, is without the support of sufficient evidence. According to him, 13 bills produced and discussed by the learned Special Judge in paragraph No.50 of the judgment as Exts.P4(c), P6(c), P7(c), P9(c), P10(c), P12(c), P14(c), P15(c), P17(c), P18(c), P20(c), P22(c) and P23(c) are genuine documents produced and kept by the consignors (accused Nos.2 and 3) for getting IBD deposit. Further, it is pointed out by the learned counsel for accused Nos.2 and 3 that, the allegation of the prosecution that, copies of the above bills proposed to be given to the Crl.A. No. 2340 of 2006 9 consignee was prepared without showing the name of Allahabad Bank, Mattanchery Branch, is not substantiated by any documentary evidence and mere oral evidence of PWs 2 to 5 and 12 were relied for proving the prosecution allegation. The non recovery of any of those documents would go to the root of the matter. Apart from that, the learned counsel for accused Nos.2 and 3 argued that, accused Nos.2 and 3 had IBD deposit in the Bank to the tune of Rs.30 Lakh, including that of their relatives, which carried interest also, as admitted by PW2, at the time of granting the amount. According to the learned counsel for accused Nos.2 and 3, there was default in repaying the amount and at this contingency, the Bank approached the Debt Recovery Tribunal (DRT) and the entire liability was settled. These aspects were not properly considered by the learned Special Judge, while finding that accused Nos.2 and 3 committed the offence punishable under Section 120-B read with 420 of IPC and under Section 420 of IPC. It is also pointed out by the learned counsel for accused Nos.2 and 3 that, the learned Special Judge had not shown any leniency Crl.A. No. 2340 of 2006 10 in the matter imposing sentence against accused Nos.2 and 3 on the above said grounds. The learned counsel for accused Nos.2 and 3 placed decision of this Court in Kanhayalal Baid v. Rajkumar Agarval reported in [1981 KHC 301 : 1981 KLT 427 : ILR 1981 (1) Ker. 408], with reference to paragraph Nos.5 and 6, wherein it has been held as under:
5. A careful reading of S.405 IPC will show that it takes in within its fold acts amounting to breach of contract or violation of law. Such an act may be an offence if it is done with the requisite mens rea. Such an act will not be an offence if the requisite mens rea is absent. The duty of the Carrier as per the contract between the parties was to deliver the goods to the consignee on presentation of the consignee copy of the lorry receipt, or in the alternative, return the goods to the consignor. It is alleged in the complaint that the accused have done neither of these acts.
S.8 of the Carriers Act lays down that the common carrier will be liable for the criminal acts of its servants. That is not sufficient to show that the act alleged to have been committed by the accused cannot fall within Crl.A. No. 2340 of 2006 11 the definition of criminal breach of trust under S.405 IPC.
6. Till the Carriers Act of 1865 was passed, the law governing common carriers was the same as the Common Law of England.
The Act was enacted with the intention of enabling the common carriers to limit their liability for the loss or damage to the property delivered to them to be carried and also to declare their liability for loss or damage to such property occasioned by the neglect or criminal act of themselves, their servants or agents. Under the provisions of the Act, in particular of S.8 of the Act, a common carrier cannot be permitted to limit his liability for loss occasioned by the criminal acts of the carrier, his servant or agent. This is the only effect of the provisions of the Act regarding criminal acts. It only means that the Carriers Act recognises the liability of the Carrier for loss occasioned to the consignor on account of the criminal act of the Carrier or his servant or agent. That does not mean that the criminal act cannot be punished under the provisions of the Indian Penal Code if the necessary ingredients are brought out or established. Just as an act in breach of contract could also Crl.A. No. 2340 of 2006 12 be an offence under S.405 IPC, an act which would attract the provisions of S.8 of the Carriers Act could also come within the Scope of S.405 IPC., if the other ingredients exist. It is not correct to say that merely because the Carriers Act, 1865, declares the liability of a carrier for loss occasioned by criminal acts of himself or servant or agent, the criminal act cannot be dealt with under the provisions of the Indian Penal Code.
9. It is argued by the learned counsel for accused Nos.2 and 3 that, the ingredients to prove the offence punishable under Section 420 read with 120-B of IPC are not at all established in this case. According to him, when accused Nos.1 and 4 were acquitted, on finding no conspiracy between accused Nos.1 to 4, finding conspiracy in between accused Nos.2 and 3 in segregation also would not succeed. He also submitted that, the required mens rea to establish the said offence is otherwise not at all established.
10. Per contra, the learned Special Public Prosecutor appearing for the CBI vehemently opposed the contentions raised by the learned counsel for accused Nos.2 and 3, Crl.A. No. 2340 of 2006 13 mainly relying on the evidence of PWs 2 to 5 and 12 along with bill. According to the learned Special Public Prosecutor, in this matter, it is the primary duty of accused Nos.2 and 3 to prepare bills with one original and three copies. The original and all the copies, the name of the consignee and the name of the Bank of the consignee has to be shown so that on reaching the consignment in its delivery point, the consignor could pay the amount to the Bank directly to get release of the goods transported, since the goods are the primary security for the amount advanced by the Bank. In the instant case, copy to the consignee was prepared without showing the name of the Consignor's Bank and in turn the consignee could not pay the amount to the Allahabad Bank (consignor's bank). The amount was kept in arrears, though the same was realized after legal proceedings before the DRT. According to the learned Special Public Prosecutor, offences found by the learned Special Judge under Section 120-B read with 420 IPC by accused Nos.2 and 3 could be found from the evidence. Therefore, the verdict impugned does not require any Crl.A. No. 2340 of 2006 14 interference.
11. In view of the rival submissions, the questions arise for consideration are:
1. Whether the Special Court is justified in finding that the accused Nos.2 and 3 committed the offence punishable under Section 120-B read with 420 of IPC?
2. Whether the Special Court is justified in finding that accused Nos.2 and 3 committed the offence punishable under Section 420 of IPC?
3. Whether the verdict of the Special Court would require interference?
4. Order to be passed?
12. Point Nos.1 and 2:- In the instant case, the documents whereby the allegation of conspiracy and cheating alleged to be committed by accused Nos.2 and 3 has been tendered in evidence through PW1. PW1 was working as Manager of Allahabad Bank, Mattanchery Branch during the period from June, 1998 to January, 2002. The 1st accused was his immediate predecessor in office from whom he had taken charge of the bank. According to PW1, the customer availing bill discounting facility had to submit the bill containing hundi, invoice, lorry receipt and Crl.A. No. 2340 of 2006 15 insurance certificate with a covering letter or a pay-in-slip and the Manager or officer receiving the documents would scrutinize the same and if the same would be in order, the same would be given to the ledger clerk who would also scrutinize the documents. Further, according to PW1, if the bill amount were within the sanctioned limit, the ledger clerk would enter it in the ledger and prepare a transfer voucher for debiting the loan account and for transfer crediting the said amount to the party's current account. Then the set of documents along with the transfer voucher would be placed before the Manager or Officer and if the bill amount would be beyond the sanctioned limit, the Manager was the only person competent to exercise the discretion to purchase it and if it would exceed the sanctioned limit, bill purchases could not be made regularly and if such discretion was exercised by the Manager in a stray case, he had to report it to the controlling officer and in such a case it would be rectified or if not some other action would be taken. The Manager would pass the transfer voucher and then only it would be considered as Crl.A. No. 2340 of 2006 16 bill purchase. All the aforesaid facts narrated by PW1 are admitted by the 1st accused when examined under Section 313 Cr.P.C, as found by the Special Court.
13. PW1 testified further that, if one set of documents for bill purchase would be presented before the Manager, he would see whether it was in order or not and then he would sign in the pay-in-slip and send the same to the ledger clerk. Further, according to him, in the case of bill purchase above the sanctioned limit, no person in the bank other than the Manager could exercise the discretion and in the case of bill purchase, the entire bill amount less charges would be credited to the party's current account and from that account, the party could withdraw amount by cheques. According to PW1, the goods contained in the lorry receipts (hereinafter referred to as "LR") would be the primary security of the bank in the case of bill purchase (BP) and the bank would have the first lien on the consignment. All the aforesaid facts narrated by PW1 are also admitted by the 1st accused when examined under Section 313 Cr.P.C. and the Special Court specifically found Crl.A. No. 2340 of 2006 17 the same.
14. According to PW1, the bank would forward the documents discounted along with a covering letter to the branch of the bank at the destination with all the instructions and the said branch on receipt of the same would sent an intimation to the consignee regarding the arrival of the documents and the consignee had to remit the bill amount and the charges at the said bank and to take delivery of the documents. In such case, the lorry company would deliver the goods only on production of the consignee copy of the LR sent by the bank. Once the consignee remits the money, the same would be remitted to discounted bank and on receipt of that amount; credit would be made in the loan account of the party. If the consignee did not turn up to make the payment, the bank's branch at the destination would return the documents to the discounted bank and on the return of the said documents, the bank would immediately intimate the same to the consignor and demand payment. If again the consignor does not turn up, the bank would contact the Crl.A. No. 2340 of 2006 18 concerned lorry company and ask them not to part with the goods and the consignor's bank's name would be shown in the LR as the discounting bank and in that event without any intimation from the bank, the lorry company cannot part with the goods unless the consignee copy of the LR is discharged.
15. PW1 categorically deposed that, he handed over all the set of bills involved in this case and copies of ledgers to the CBI and as the bank filed a civil suit before the DRT, Ernakulam. All the original bills were produced before the DRT and certified copies of the documents obtained from DRT were produced in this case. He identified Ext.P.1 as the copy of inland bill purchase sanction order dated 13.8.1992 and it was sanctioned by the Regional Manager and terms and conditions are stipulated therein. As per Ext.P1, Rs.12 lakh was the limit sanctioned to M/s. KVA brothers. As per Ext.P2 sanction order dated 18.6.1994 by the Regional Manager, the said limit had been enhanced by Rs.5 lakh and later it was enhanced to Rs.20 lakh. Ext.P3 is the copy of operational review dated 24.2.1997 by which the limit Crl.A. No. 2340 of 2006 19 had been made as Rs.20 lakh.
16. PW1's version further is that, all the aforesaid bills were submitted by KVA brothers and the said bills were discounted and the amounts were credited into their current account. Further, PW1 testified that, the LR, which was more than the stimulated dates old, would be known as stale LRs, and that the LR would be the primary security of the consignment and LR beyond 21 days would not be treated as security. When he was cross-examined by the counsel for the 1st accused, PW1 deposed that KVA Brothers of accused Nos.2 and 3 was one of the oldest account holders of that Bank and the 2 nd accused and his family had large deposit in the Bank and such deposits amounted to Rs.30 lakh. When he was asked suggesting that the 2 nd accused was a esteemed, good, creditworthy customer of the Bank, he answered that the 2 nd accused was such a person. When it was put to him that from 1979 onwards excess of the limits in discounting facility had been given to KVA Brothers, he answered that he could not say without referring the ledger and that the ledger was in the Bank. It Crl.A. No. 2340 of 2006 20 is further admitted that when 13 bills were not honoured, the 1st accused had recalled the facility and the outstanding balance was Rs.31 lakh. He admitted that it was due to the effort of the 1st accused that the outstanding balance could be reduced to Rs.24 lakh. The LRs produced in this case were the copies of the consignee's copies. It had come out that only consignee copies were brought to the Bank for discounting. For discounting purpose, IBA approved LRs could be only used.
17. PW2, who worked as a 'booking clerk' in M/s Saraswathy Transport Ltd., at Cochin from February, 1995 to November 1997. PW15, P.D. Arora was the owner of M/s Saraswathy Transport Ltd. According to PW2, the said company used to transport consignment to other States and when customers approach for sending their consignment, LRs would be prepared on the basis of their invoice and consignment details. Further, PW2 stated that, LRs would be prepared as 1+3 and in case, if the consignor and consignee were the same, the original and one copy would be given to him, one copy would given to the lorry Crl.A. No. 2340 of 2006 21 and another copy would be kept as office copy. He had deposed that Exts.P6(b), P9 (b), P12 (b), P14 (b) and P17
(b) LRs are prepared and signed by him but the writings in the columns "consignee's bank name and address" in those LRs were not made by him and he did not know as to who had filled up the said columns in the said LRs. According to PW2, the same type of LRs are used in the said transporting company and no other format of LR was available there and further that the said LRs were prepared for KVA brothers and KVA brothers was functioning in the same compound where their office at Mattancherry was situated.
18. PW2 testified further that, accused Nos.2 and 3 were associated with KVA brothers. PW2 identified accused Nos.2 and 3. Further, according to PW2, the column for consignee's bank name and address had been left blank by him in the said LRs as the details of the bank were not available in the invoice and further that KVA brothers told him that they had not decided the bank and they would fill up the said column after deciding the bank. He deposed that, in fact, he did not know whether the same were to be Crl.A. No. 2340 of 2006 22 discounted in bank or not. According to him, the LR copies and invoices were sent to Alleppy branch of M/s Saraswathy Transport Ltd and the dispatch of the consignments were effected from Alleppy branch. PW2 had further testified that the said consignments were delivered to Akola as per the records available in the office; but he had no personal knowledge about it and he never knew that any bank had any connection with the said consignments of copra. His impression was that the said consignment were sent to Jyothi Agro Akola. He reiterated that the LRs were prepared in carbon process and the consignee's bank name and address were left blank in all the four copies of all the said LRs.
19. PW2's evidence further is that 50% of the freight charge would be collected here and the remaining freight charge would be collected from the consignee at the time of delivery. If no delivery would be taken at the destination, the consignment would be returned and in that case, the balance freight charges after deducting the advance had to be given to the lorry company. According to him, the Crl.A. No. 2340 of 2006 23 consignments sent as per the above LRs were not returned. Nothing has been brought out in the cross examination of PW2 in order to discredit or disbelieve his testimony.
20. Apart from the evidence of PW1 and PW2, PW3 who worked as a clerk in Standard Cargo Movers, a Transporting Company at Mattancherry since 1989 and the said company had got working arrangement with M/s South Assam Carriers Pvt. Ltd. and M/s South Assam Roadways. According him, they used to book consignments on behalf of M/s South Assam Carriers and South Assam Roadways and consignments to be sent to other states used to be sent by lorry and they used to issue lorry receipt. PW3 had deposed that LRs were prepared in 1+3 and the same are prepared on the basis of the invoice and delivery notes. Further according to him, the original of the LR along with the consignee copy would be given to the person who booked the consignment and from the remaining, one would be sent in the lorry and one would be retained in the file. According to PW3, he also used to prepare LRs and Exts.P18 (b), P20 (b), P22 (b) and P23 (b) LRs were Crl.A. No. 2340 of 2006 24 prepared by him and the same bore his signature. PW3 had further deposed that, as their company was the agent of M/s South Assam Carries Pvt. Ltd and M/S South Assam Road ways, LR forms of the said companies were available in their company and in the case of booking the consignment on behalf of them the LR forms of those companies would be used. PW3 had further deposed that in Exts.P18 (b), P20 (b), P22 (b) and P23 (b) the handwriting in the column for consignee's bank did belong to him and he did not know who had made the said entry and as the bank's name was not mentioned in the invoice the said column was left blank by him. He had testified further that he did not know that by using the above LRs the bill amount would be discounted from the bank. In the cases where there is discounting, if the banks names were mentioned to him, he would have entered the same in the concerned column. It is also his case that, had it been known to him that the said LRs would be used for discounting from the bank, he would not have left the consignee bank's column in the said LRs blank. According Crl.A. No. 2340 of 2006 25 to PW3, the consignors of the above bills were KVA brothers. He identified accused Nos.2 and 3 as persons who were running KVA brothers. He clearly deposed that the consignments booked as per the above LRs were sent to Jyothi Agro Industries, Akola and they had taken delivery of the consignments. PW3 had further deposed that if bank's name is mentioned as consignee bank in the LR, the delivery of the consignment would not have been given to the party. According to him, Ext. P18 (e) is the carbon copy of Ext P18 (b), Ext.P20 (e) is the carbon copy of Ext.P20 (b), Ext.P22 (d) is the carbon copy of Ext. P22 (b), Ext.P23 (d) is the carbon copy Ext. P23 (b) and the said carbon copies were kept in their office and in those carbon copies the columns for consignee's bank name and address are blank even now. Further, according to him, in the cases where he prepared the LR, he used to go along with the lorry to lift the consignment.
21. During cross-examination at the instance of the counsel for the 1st accused, he deposed that even though in the LR the name of the consignee was not entered, as per Crl.A. No. 2340 of 2006 26 the invoice, it was to be delivered to Jyothi Agro Industries, Akola. During cross examination, he admitted that Ext.D1 was the consignee's copy of an LR prepared by him on 30.5.1996 at the Standard Cargo Movers. There was no column in Ext.D1 for entering the Bank's name. According to him, the address of the delivery office was written in Exts.P18(b), P20(b), P22(b) and P23(b) as "54, Garova Maidan, Gandhi Bagh, Nagpur" and the same was their Agency office. According to him, the consignment was not delivered at the said address, whereas the same were delivered directly to the party. In the cross examination for the 4th accused, he deposed that the delivery note, invoice and LR copy would be given to the driver.
22. PW4 examined in this case is the typist during 1997-1998 in M/s KVA brothers at Mattanchery, a partnership firm of which the 2nd accused was the Managing partner and the 3rd accused was the partner and the firm was doing the business of oil and copra and they used to consign the said items to other States also. PW4 identified accused Nos.2 and 3. She testified that, while working so, Crl.A. No. 2340 of 2006 27 she had done the writing and typing works pertaining to the business of accused Nos.2 and 3. According to PW4, Exts.P4
(a), P9 (a), P10 (a), P14 (a), P15 (a), P17 (a), P20 (a), P6 (a), P7 (a), P12 (a), P22 (a), P18 (a), P23 (a), were prepared by her while working so. Likewise, Exts. P4, P4 (c), P6, P6 (c), P7, P7 (c), P9, P9 (c), P10, P10(c), P12, P12(c), P14, P14(c), P15, P15 (c), P20, P20 (c), P22, P22 (c), P18, P18 (c), P23, P23 (c) were typed by her while working so. According to her, it was she who wrote the word "Allahabad Bank" in the consignee bank column in Exts. P6 (b), P7 (b), P9 (b), P10
(b), P12 (b), P18 (b), P20, P20 (c). In addition to that, she deposed that, it was the 3 rd accused, who signed for KVA Brothers on Exts. P6, P6 (a), P6 (c), P7, P7 (a), P7 (c), P12, P12 (a), P12 (c), P18, P18 (a), P18 (c), P22, P22 (a), P22 (c), P23, P23 (a), P23 (c) and on the reverse of Exts. P6 (b), P7 (b), P12 (b), P18 (b) and P23 (b). In addition to that, she deposed that, it was the 2 nd accused, who signed for KVA Brothers on Exts.P4, P4 (a), P4 (c), P9, P9 (a), P9 (c), P10, P10 (a), P10 (c), P14, P14 (a), P14 (c), P15, P15 (a), P15 (c), P17, P17 (a), P17 (c), P20, P20 (a), P20 (c), and on the reverse of Exts. P4 Crl.A. No. 2340 of 2006 28
(b), P9 (b), P10 (b), P14 (b), P15 (b), P17 217 (b), P20 (b) and P22 (b).
23. PW4 testified further that, the above documents were prepared by her as directed by the 2nd accused and the details for the same were furnished by the 2 nd accused. The 3rd accused also used to provide the details in the absence of the 2nd accused, and the documents would be signed by either the 2nd accused or the 3rd accused as per their availability at that time in the office. PW4 had deposed that she did not know any more details except that the same were for sending copra and it was as per the direction of the 2nd accused that she had written the column for consignee bank as "Allahabad bank" and she did not know as to why it was so written. According to PW4, the pay-in-slips forms were available in their office and the same were prepared by the 2nd accused and in the absence of the 2nd accused, as directed by the 3 rd accused, she would prepare the same. She identified that Exts.P4 (d), P9
(d), P10 (d), P17 (d), and P18 (d) were prepared by her and signed by A2. Further, Exts. P6 (d), P7 (d), P12 (d), P20 (d) Crl.A. No. 2340 of 2006 29 and P24 were prepared by her and signed by the 3 rd accused.
24. During cross examination for accused Nos.2 and 3, PW4 was asked whether the consignee Bank's column in the LR was being kept blank for the purpose of incorporating the name of the Bank subsequently in it after deciding the Bank at which it should be presented for discounting, she answered that she did not know the same. She was asked whether she was dismissed from service finding malpractice, she answered that she was not dismissed, whereas she relinquished the job on her own, as the salary was low. In fact, nothing has been brought out in the cross examination of PW4 in order to discredit or disbelieve her testimony, which would support the prosecution case.
25. PW5 was working as clerk in M/s.KVA brothers during 1996-1998. According to him, it was he who wrote the term "Allahabad bank" in the column for consignee bank in Exts. P4 (b), P14 (b), P15 (b), P17 (b), P20 (b), and P23 (b) and the same were written as per the directions of Crl.A. No. 2340 of 2006 30 the owners accused Nos.2 and 3. Не identified accused Nos.2 and 3. Further, according to him, accused Nos.2 and 3 made him to write so in order to discount the amount from the bank and the bills were discounted, the consignments were sent, and the party took delivery of the same. PW5 had further deposed that Ext.P14 (d) and P15
(d) were prepared by him and signed by the 2nd accused. PW5 had further deposed that it was the decision of accused Nos.2 and 3 not to disclose the bank's name to the transporting company at the time of writing LRs and if the bank's name is mentioned in the LR copy of the transporting company the consignment would not be given to the party at any cost and it would be given only to the bank. In the cross examination for the 2 nd accused, a question was asked to him as to who would inform the transporting company the name of the Bank after incorporating the consignee's Bank name in the LR, he answered that the people from the transporting company would come to KVA Brothers and then it would be made known to them. On this point, he was declared hostile and Crl.A. No. 2340 of 2006 31 the prosecution put questions that could be put in cross- examination to him.
26. PW12, who worked as clerk in M/s Standard Cargo Movers at Mattancherry from July, 1993 to February, 2000 and that M/s Standard Cargo Movers had working arrangements with M/s South Assam Carriers Pvt. Ltd., and South Assam Roadways and that M/s Standard Cargo were the agents of the said transporting companies. PW12 is the son of the Proprietor of M/s Standard Cargo Movers and according to him, on the non-availability of staff, he also used to prepare LRs. PW12 testified further that, for booking consignments on behalf of M/s South Assam Carriers or South Assam Road ways one book each containing LR forms were issued to them by the said companies and only one type of such forms were issued by them and the said LR forms were being used by M/s Standard Cargo Movers for all such purposes. PW12 had further deposed that Exts.P4 (b), P7 (b), P10 (b) and P15 (b) are LR forms prepared by him and the same bore his signature, but in those LRs the consignee's bank names Crl.A. No. 2340 of 2006 32 were not written by him and the entries in the said column were not in his handwriting. PW12 identified Ext. P38 as the carbon copy of P4 (b), P39 as the carbon copy of P7 (b), Ext.P40 as the carbon copy of P10 (b), and Ext.P41 as the carbon copy of P15 (b) and in those carbon copies the column for consignees bank remain blank. Further, according to him, Exts. P4 (b), P7 (b), P10 (b) and P15 (b) were prepared for consignor M/s KVA brothers and the delivery note and invoice produced by KVA brothers were the documents used by him to prepare those LRs. PW12 testified further that the invoice and delivery note were not routed through bank and KVA brothers had told him that it was not through bank and wanted him to leave the consignee bank's column blank. It was kept blank because, if Jyothi Agro Industries would not take delivery of it, the consignor could sell it to some other person. PW12 deposed further that, if it were known to him that it was through bank, he would not have kept it blank. PW12 had deposed that 6 copies of the LRs (including the original) would be prepared by carbon process and one is the consignor copy, Crl.A. No. 2340 of 2006 33 one is consignee copy one is driver copy, one is destination copy, one is accounts copy and one is the file copy and after the despatch of the material, they would give the consignor and consignee copy to the consignor.
27. PW12 had further deposed that Exts.P38 to P41 were destination copies and such destination copy would be sent only when they have office at destination and if not they would keep it in their files and further that they have kept Exts.P38 to P41 in their files as they had no office at Akola.
28. According to PW12, if the consignment was through bank they would sent the same to any of their godowns near the destination and would release the goods only if they get the consignee copy attested by the bank and in other cases the goods would directly go to the party. Further, according to him, the consignment sent through Exts. P4 (b), P7 (b), P10 (b) and P15 (b) were directly delivered to the consignee M/s Jyothi Agro Industries, Akola and after delivery the driver had informed them that the consignment was delivered and the balance lorry freight Crl.A. No. 2340 of 2006 34 was received and the same was confirmed by the consignor also. PW12 had further deposed that Jyothi Agro Industries Akola had sent letter regarding the consignments to the consignor complaining of short delivery of 40 to 50 Kgs and M/s KVA brothers gave those letters to them and they took photocopies of the same, got it notarised and then gave back the original to M/s KVA brothers.
29. During cross examination for the 1 st accused, PW12 deposed that when it was regular private parties the consignment could be delivered through driver copy itself. Consignee copy would be given to the consignor and they would send it by courier. He identified Ext.D5 as the consignor copy of LR dated 26.4.1996, Ext.D6 as the consignor copy of LR dated 30.4.1996, Ext.D7 as the copy of LR dated 2.5.1996 of South Assam Roadways. According to him, Exts.D5 to D7 were prepared and signed by their employee, PW3. According to him, in the case of South Assam Roadways they had only one type of LRs for both dealings, whether private or through Bank.
30. At this juncture, it is apposite to refer Sections Crl.A. No. 2340 of 2006 35 420 and 120-B of the IPC. Section 420 of IPC reads as under:
420. Cheating and dishonestly inducing delivery of property.--Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.
Classification of Offence. - The offence under this section is cognizable, non-bailable, compoundable with permission of the Court before which any prosecution of such offence is pending and triable by Magistrate of the first class.
31. In the decision reported in [2002 SCC (Cri) 129] S.W. Palanitkar v. State of Bihar, the Apex Court observed the ingredients of offence of cheating as under:
The ingredients of an offence of cheating are:
(i) there should be fraudulent or dishonest inducement of a person by deceiving him, (ii)(a) the person so deceived should be induced to deliver any property to any person, or to consent that any person shall retain any property; or (b) the person so deceived should be intentionally induced to do or Crl.A. No. 2340 of 2006 36 omit to do anything which he would not do or omit if he were not so deceived; and (iii) in cases covered by (ii)(b), the act of omission should be one which causes or is likely to cause damage or harm to the person induced in body, mind, reputation or property.
32. Section 415 of IPC defines cheating and the same read as under:
415. Cheating.--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 facts is a deception within the meaning of this section.
33. To hold a person guilty of cheating as defined under Section 415 of the IPC, it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise with an intention to retain the property. In other words, Section 415 of the IPC which defines Crl.A. No. 2340 of 2006 37 cheating, requires deception of any person (a) inducing that person to: (i) to deliver any property to any person, or (ii) to consent that any person shall retain any property, or (b) intentionally inducing that person 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, anybody's mind, reputation or property. The second class of acts set forth in the section is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases, the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest. [Decisions reported in Hira Lal Hari Lal Bhagwati v CBI (2003 SCC (Cri) 1121) ; State of Kerala v K. Vareed Pillai (AIR 1973 SC 426) ; Indian Oil Corporation v NEPC India Ltd. AIR 2006 SC 2780].
34. Section 415 of the IPC, which defines cheating requires: (1) deception of any person; (2)(a) fraudulently or dishonestly inducing that person; (i) to deliver any property Crl.A. No. 2340 of 2006 38 to any person; or (ii) to consent that any person shall retain any property; or (b) intentionally inducing that person 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 [Decision reported in Hridaya Ranjan Prasad Verma v State of Bihar AIR 2000 SC 2341: (2000) 4 SCC 168: 2000 SCC (Cri) 786: 2000 Cr LJ 2983].
35. Section 120-B provides punishment for hatching conspiracy. The same reads as under:
120B. Punishment of criminal conspiracy.
--(1) Whoever is a party to a criminal conspiracy to commit an offence punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards, shall, where no express provision is made in this Code for the punishment of such a conspiracy, be punished in the same manner as if he had abetted such offence.
(2) Whoever is a party to a criminal conspiracy other than a criminal conspiracy to commit an offence punishable as aforesaid shall be punished with imprisonment of either description for a term not exceeding six months, or with fine or with both.Crl.A. No. 2340 of 2006 39
36. Section 120A of IPC deals with the definition of criminal conspiracy. The same read as under:
120A. Definition of criminal conspiracy.-- 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 that 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 pursuance thereof.
Explanation.--It is immaterial whether the illegal act is the ultimate object of such agreement, or is merely incidental to that object.
37. Therefore, one of the most essential ingredients to find Section 420 of IPC is dishonest intention to be gathered at the very inception. It is necessary to analyze the evidence discussed to find as to whether the dishonest intention at the very inception along with other ingredients for the offences have been proved by the prosecution, taking note of the fact that the Bank moved before the DRT and finally, the accused repaid the amount Crl.A. No. 2340 of 2006 40 and settled the liability.
38. On summarizing the evidence discussed herein above, it could be gathered that, 2 nd and 3rd accused produced 13 bills viz. Exts.P4(c), P6(c), P7(c), P9(c), P10(c), P12(c), P14(c), P15(c), P17(c), P18(c), P19(c), P22(c) and P23(c) for discounting the amount covered by the same and after the delivery of the consignment covered by the same to Jyothi Agro Industries, Akhola. If accused Nos.2 and 3 had no intention to cheat the Allahabad Bank at the very inception, they should not have produced the said bills for encashment much after the delivery of the consignments. Further, they should not have omitted to show the name of Allahabad Bank in all copies of the LRs, so that the delivery of goods, which is the primary security could be released only on payment to the Allahabad Bank. Therefore, the criminal conspiracy in between accused Nos.2 and 3 to cheat the Allahabad Bank to be found from this aspect.
39. The learned Special Judge acquitted the 1st accused on finding that he, as the Manager of Allahabad Bank believed accused Nos.2 and 3 as good customers by Crl.A. No. 2340 of 2006 41 discounting the bill and the bank officials could notice cheating only when the account became NPA. Be it so, it could not be held that the learned Special Judge went wrong in finding that accused Nos.2 and 3 committed the offence punishable under Sections 120-B read with 420 of IPC. Therefore, the conviction entered into by the learned Special Judge is only to be confirmed.
40. Coming to the sentence, the same appears to be on very much higher side, particularly when considering the factual aspects involved, including the settlement of the whole amount by accused Nos.2 and 3, without any loss to the Bank. Therefore, I am inclined to modify the sentence.
41. Point Nos.3 and 4:- In the result, this appeal stands allowed in part. The conviction imposed by the learned Special Judge stands confirmed. Indubitably, for the offence punishable under Section 420 of IPC, no minimum punishment is provided, though the same can be extended to seven years. Having noticed the facts of this case that, the 2nd accused/1st appellant is no more, the sentence of fine imposed by the learned Special Judge to the tune of Crl.A. No. 2340 of 2006 42 Rs.1 Lakh to be confirmed and the same shall be realized from the additional 3rd appellant and other legal heirs of the 2nd accused/1st appellant, if property, if any, inherited by them as that of the 2nd accused/1st appellant.
42. Coming to the sentence imposed against the 3 rd accused is concerned, I am inclined to modify the same for the period of sentence already undergone by the 3 rd accused and pay fine of Rs.1 Lakh and in default of payment of fine to undergo simple default imprisonment for four months. No separate sentence imposed for the offence under Section 120-B of IPC.
43. The order suspending sentence and granting bail to the 3rd accused stands vacated, with direction to the 3 rd accused to appear before the Special Court, forthwith, to undergo the modified sentence, failing which, the Special Court is directed to execute the modified sentence, without fail, including realization of fine from the legal heirs of the 2nd accused/1st appellant.
Registry is directed to forward a copy of this judgment to the Special Court, forthwith, for information and Crl.A. No. 2340 of 2006 43 compliance.
Sd/-
A. BADHARUDEEN SK JUDGE