Bangalore District Court
Cbi Ps vs N Satyababu on 18 March, 2024
1 Spl.C.No.482/2017
KABC010235872017
IN THE COURT OF XLVII ADDL. CITY CIVIL &
SESSIONS JUDGE AND SPECIAL JUDGE FOR CBI
CASES, BENGALURU (CCH-48)
DATED THIS THE 15th DAY OF MARCH, 2024
PRESENT
Sri Santhosh Gajanan Bhat, B.A.L., LL.B. ,
LXXXI Addl. City Civil & Sessions Judge,
Bengaluru City (CCH-82)
(Special Court exclusively to deal with criminal cases
related to elected former and sitting MPs/ MLAs
in the State of Karnataka)
C/c of XLVII Addl. City Civil and Sessions Judge and
Judge for CBI Cases, Bengaluru (CCH-48)
SPL.CC.NO.482/2017
COMPLAINANT: The State of Karnataka by
CBI, ACB
Bangalore
(By CBI Public Prosecutor)
Vs.
ACCUSED : 1. Sri. N. Satyababu
S/o. Late. Narayanappa Gownipally
Nagappa
Aged 51 years, R/at.No.306/1,
2nd Main, 3rd Cross,
Muniyappa Garden, K.R.Puram,
Bengaluru-560 036.
Smt. Bharathi Subramani
2 Spl.C.No.482/2017
2. Wife of Nandan P
Aged about 37 years
Propx M/s. Manjunath
Engineering Works,
R/at. No.122/A, 4th Cross,
40 Ft. Road, Manjunatha Nagar
Bengaluru - 560 010.
Smt. Nalinakshi H
3. W/o. Shivaram
Aged about 44 years
Propx M/s. Mahalaxmi Granites
R/at. No.122, 4th Cross,
40 Ft. Road, Manjunatha Nagar,
Rajajinagar,
Bengaluru - 560 010.
Sri. S. Ramesh
4. S/o. P. Sigamani
Aged about 45 years,
Prop. M/s. DJ Max Engineering Systems
R/at. No.2211, 12th Main,
A Block, Rajajinagar 2nd Stage,
Bengaluru - 560 010.
(A.1 by Sri.YBM, Advocate)
(A.2 to 4 by Sri. MVS/RA, Advocate)
1.Date of Commission of Offence : 16.06.2014 to
23.03.2015
2. Date of Report of Offence : 29.02.2016
3. Arrest of Accused Accused are on bail
4. Name of the complainant : Sri.G.C.Matolli
5. Date of recording of Evidence : 07.03.2022
6. Date of closing Evidence : 06.02.2024
3 Spl.C.No.482/2017
7. Offences complained of : Sec.120(B) R/w.
Sec.420 of IPC,
Sec.468, 471 of IPC
and Sec.13(2) R/w.
Sec.13(1) (d) of
Prevention of
Corruption Act, 1988
8. Opinion of the Judge : As per the final order
(Santhosh Gajanan Bhat)
LXXXI Addl. City Civil & Sessions
Judge, Bengaluru City (CCH-82)
C/c of XLVII Addl. City Civil and
Sessions Judge and Judge for CBI
Cases, Bengaluru (CCH-48)
*****
JUDGMENT
The Inspector of Police, CBI/ACB, Bengaluru, had filed the charge-sheet against the accused persons for the offences punishable under Sections Sec.120(B) R/w.Sec.420, 468, 471 of IPC and Sec.13(2) R/w. Sec.13(1) (d) of Prevention of Corruption Act, 1988.
2. It is the case of the prosecution that, accused No.1 N.Satya Babu, who was the then Manager of Syndicate Bank, Jalahalli Branch, Bengaluru, had entered into a criminal conspiracy with other accused 4 Spl.C.No.482/2017 persons who had fraudulently and dishonestly applied for a term loan under MSME Scheme, wherein, accused Nos.2 and 3 had applied loan in the name of their fake firms viz., M/s. Manjunatha Engineering Works and M/s. Mahalakshmi Granites, by submitting false and fabricated quotations, cash receipts with an intention to cheat the Bank and further, the accused No.4, who is the proprietor of M/s. D.J. Max Engineering System had entered into a conspiracy with other accused persons and had furnished forged and fabricated materials and documents stating that he had furnished necessary materials to the other accused persons and the accused Nos.2 and 3 had also opened current account at M/s. Arjun Souhardha Pathina Sahakari Niyamitha, Malleshwaram, Bengaluru and the loan proceeds were withdrawn by them without obtaining the machinery and the borrowers had utilized the loan amount for some other purpose and as such, they had caused loss to the Syndicate Bank to an extent of Rs.51,21,360.13. The aforesaid illegal activities of the accused persons had 5 Spl.C.No.482/2017 come into light during the course of internal investigation being conduced by the Bank and later on, it was directed to PW.1 G.C.Matolli to register a written complaint before the competent authority. Accordingly, PW.1 G.C.Matolli had filed a written information before the CBI Authorities and on the basis of the same, FIR came to be registered and numbered as RC3(A)/2016.
3. On the registration of the FIR, investigation of the case has been commenced and the Investigating Officer had collected necessary materials in order to prove the allegations leveled against the accused persons. During the course of investigation, the Investigating Officer had made visits to the premises of M/s. Manjunatha Engineering Works and also Mahalakshmi Granites, wherein accused Nos.2 and 3 had availed loan to obtain necessary machinery to run the units. However, it was noticed by the Investigating Officer that, no such units were in existence and also accused No.4 who was the proprietor of M/s. DJ Max Engineering System had not supplied any machinery as contended by him. It was 6 Spl.C.No.482/2017 also noticed that, all the bills, quotations and invoices which were furnished to the Bank were all forged and fabricated one and it was issued in order to cheat and defraud the Bank. The Investigating Officer had recorded the statement of the witnesses and also had collected all necessary circulars wherein it consisted of definite direction on the Manager to visit the premises of the unit prior to processing the loan and also subsequently after sanctioning the loan to inspect upon the machinery which was obtained through the finance availed from the Bank. The Investigating Officer on perusal of the entire materials and also on the basis of the statement of the witnesses recorded during the course of investigation had arrived at a conclusion that the allegations leveled against the accused persons were proved, accordingly, the charge-sheet came to be filed.
4. On the basis of the charge-sheet, the Court has perused the materials and since necessary materials were found to take cognizance for the aforesaid offences, my Predecessor in office had taken cognizance for the 7 Spl.C.No.482/2017 offences punishable under Sections Sec.120(B) R/w. Sec.420 of IPC, Sec.468, 471 of IPC and Sec.13(2) R/w. Sec.13(1) (d) of Prevention of Corruption Act, 1988, thereafter, the accused persons were summoned before the Court to appear. Subsequently, the Court had once again perused the materials available in the charge-sheet to ascertain whether a prima-facie case was made out for the purpose of framing the charges. The accused persons had also made their submissions seeking their discharge, which came to be rejected since there were sufficient materials to proceed against them. Accordingly, the necessary charges came to be framed against the accused persons on 22.10.2021. The accused had pleaded not guilty and claimed to be tried. However, during the course of trial, it was noticed that charge Nos.3 to 5 required to be altered and as such, necessary application came to be filed by the prosecution under Section 216 of Cr.P.C., which was allowed and later on, charge Nos.3 to 5 were altered, for which, the accused once again pleaded not guilty and had claimed to be tried.
8 Spl.C.No.482/2017
5. The prosecution, in order to prove their case had examined totally 22 witnesses as PW.1 to PW.22 and Ex.P.1 to P.106 were marked and Ex.D.1 to D.3 were marked during the course of cross-examination. On completion of the prosecution evidence, the statement of the accused came to be recorded as contemplated under Section 313 of Cr.P.C., The accused had denied all the incriminating materials available against them. The accused No.1 had stated that he had sanctioned loan as per the procedures and rules communicated through circulars and as per the credit policy of the Bank under MSME Scheme. He has also submitted that, due to verification of the units were made by him prior to sanction of loan and also he had shown the units to the concerned vigilance officials and higher officials subsequently. Likewise, accused No.2 Smt.Bharathi Subramani had stated that she had availed the loan and had established unit at Laggere and also the machinery which were purchased out of the loan proceeds were shown to the CBI authorities. Accused No.3 Smt. 9 Spl.C.No.482/2017 Nalinakshi H. has also stated that they had availed loan and were repaying the loan and the unit was in existence and later on, they had stopped the payment of loan since CBI advised them not to repay the loan. Accused No.4 S.Ramesh, has also stated that the machinery were shown to the CBI authorities and even mahazar was drawn. The accused had not preferred to lead any defence evidence.
6. Heard the arguments of both the counsel. The learned Public prosecutor in the above case has argued that, the entire case of the prosecution is succinctly established by them, wherein the witnesses have specifically deposed about the mala-fide intention of the accused persons right from its inception. The Ld. Public Prosecutor has also pointed out that the criminal law was set into motion on the basis of the Ex.P.1 complaint lodged by PW.1 G.C.Matolli, who had precisely narrated about the facts of the case. It is further submitted by the Ld. Public Prosecutor that the evidence of PW.2 Venkatesh and PW.3 Nagesh S.H. Who were the 10 Spl.C.No.482/2017 internal investigators had clearly established their case, wherein, it indicated that the accused No.1 had flouted the circulars and guidelines issued by the Reserve Bank of India and from Syndicate Bank from time to time. Likewise, the evidence of PW.4 Guruprasad and PW.5 A.N. Vasudevan who were the Bank officials, had visited the units also indicated that the units were not in existence during the course of visit by the officials of the Bank as well as the Investigating Officer. That apart, the Ld. Public Prosecutor has also taken this court through the loan application forms which were submitted by accused No.2 and 3 and also the quotations, invoices, receipts which were furnished by them. By pointing out the said aspects, he has vehemently argued that, it is mandatory for the Branch Manager to inspect and verify whether the units were in existence, whether the machinery were supplied as stipulated. Further, the Branch Manager was also required to look into the aspect of end usage of loan. Further, in the instant case, as noticed from the documents which were furnished by the 11 Spl.C.No.482/2017 Bank and also as per the report of the Investigating Officer, who had visited the alleged place of unit, it indicated that no such units were in existence. Lastly, the Ld. Public Prosecutor has highlighted about the mala-fide intention of the accused persons in availing the loan and also utilizing the loan amount for some other purpose other than the one for which it was borrowed. The Ld. Public Prosecutor has also argued that, in the above case, the case of the prosecution rests on circumstantial evidence since the allegations of conspiracy under Section 120-B of IPC was leveled against them. It is his contention that, in order to ascertain the existence of criminal conspiracy, the Court will have to appreciate the attending factors and in order to establish the same, the said principles of law as held by the Hon'ble Apex Court in (2002) 7 SCC 334 (Mohd. Khalid Vs. State of West Bengal), 2023 SCC Online SC 1261 (Balvir Singh Vs. State of Uttarakhand) has been relied upon by the Ld. Public Prosecutor. By relying upon both authorities, he has vehemently argued that the basis for extending 12 Spl.C.No.482/2017 criminal liability the scope of criminal conspiracy entered between the parties is to be appreciated and further the act in furtherance of the same by itself would be sufficient to establish the fact of conspiracy. By relying upon the aforesaid aspect, it is his submission that the conduct of the accused persons before the court would indicate that they had entered into conspiracy with an intention to cheat and defraud the Bank and as such, the overt act alleged against them was also established by the prosecution. In another authority of Hon'ble Apex Court, the concept of cheating has been discussed, which is relied upon by (2005) 9 SCC 15 (Devender Kumar Singla Vs. Baldev Krishan Singla). In the said authority, the Hon'ble Apex Court has also discussed that the essential ingredients for establishing the concept of cheating is to prove that the false representation made by the accused was under a pretense or with an intention not to act upon such representation. Further, the Ld. Public Prosecutor argued that the mens-rea plays very important role in establishing the cheating and also the dishonest intention 13 Spl.C.No.482/2017 to cheat other property in the form of money could be deciphered from the materials placed before the Court. As per their contention, the accused persons had allegedly availed loan to purchase machinery, the loan was availed for the said purpose, non-existence of units and also the standing circumstances would indicate that they had an intention to cheat and defraud the Bank from its inception. Lastly, the Ld. Public Prosecutor has relied upon the judgment of the Hon'ble Apex Court reported in (2020) 2 SCC 153 (SHO CBI/ACB Bengaluru Vs. B.A.Srinivasan) In the said authority, the Hon'ble Apex Court has succinctly discussed about obtaining of necessary sanction under Section 19 of the Prevention of Corruption Act. It is argued by the Ld. Public Prosecutor that, as per the evidence of PW.2, it was noticed that the accused No.1 N. Satya Babu was dismissed from the services on the basis of the findings rendered in the disciplinary authority. Under the circumstances, obtaining of necessary permission as contemplated under Section 19 of the Prevention of Corruption Act was not 14 Spl.C.No.482/2017 required. By pointing out the said aspects, it is his submission that the prosecution has proved their case beyond reasonable doubt and accordingly, sought for convicting the accused persons.
7. Per contra, Sri.VNN, learned counsel appearing for accused No.1 has vehemently argued that the accused No.1 was entrusted with higher responsibilities of a large Branch to be assisted with two Probationary Officers and as per the banking procedures, the Probationary Officers could not process the loan application. He has also contended that the accused No.1 had worked only for 9 months and had sanctioned 120 main loans, out of which only 13 loans were classified as irregular. The Learned Counsel for accused No.1 has also argued that, a thin line differentiates the criminal mis- conduct and misconduct which is committed by an employee. Admittedly, in the instant case, the Manager who was heading the responsibility of the Bank at the relevant point of time due to work pressure had sanctioned various loans, however, the KYC norms and 15 Spl.C.No.482/2017 other similar aspects which were allegedly not complied came to be complied subsequently. The Learned Counsel has pointed out to the evidence of PW.20 Rajendra Kumar S, who had categorically admitted that majority of the discrepancies as noted in the internal investigation report Ex.P.43 were rectified. The Learned Counsel has also argued that the documents were supplied by the borrowers themselves and even he had filed necessary application under Section 91 of Cr.P.C., to summon the documents which were with the Syndicate Bank. However, the Bank authorities have refused to hand over the said documents on the premises that they were not traceable. It is his submission that if the said documents were only to be summoned before the Court, it would have indicated that the accused No.1 had taken all relevant steps before granting of such loan. Further, he has also argued that the loans which were sanctioned were all under MSME Scheme and in the loan Mela. At the time of conducting Loan Mela, the higher officials of the Bank had not verified the credentials or veracity of 16 Spl.C.No.482/2017 the borrowers. Ultimately, it was the Manager who was required to face the burden of all these aspects. That apart, he has pointed out to the evidence of PW.3 who has admitted that he had not verified or collected the entire documents. The Learned Counsel has also pointed out to the valuation report at Ex.P.35 and also the report at Ex.P.39 and Ex.P.40 which would indicate that the accused No.1 had taken necessary steps and precautions prior to sanctioning of the loan and subsequently after disbursement of the loan. The Learned Counsel has also argued that as per Ex.D.1 Enquiry Report and in particularly, the question No.42 would only fortify the contention urged by accused No.1. Lastly, it is his submission that, no remarks were passed by the Regional office and only on the report of Internal Audit, the above case was filed. The Learned Counsel has also relied upon various authorities of the Hon'ble Apex Court in order to justify his contention. He has relied upon the judgment of the Hon'ble Apex Court reported in (2021) 18 SCC 70 (N.Raghavender Vs. State of A.P. CBI), in the aforesaid 17 Spl.C.No.482/2017 authority, the Hon'ble Apex Court has laid down the dictum that the essentials of cheating as held under Section 420 of IPC requires that a fraudulent or dishonest intention being entertained by a person and in order to prove the same it was required to deliver a property and also to misrepresent all the accused at the time of inducement played vital role. The Learned Counsel for accused No.1 has also relied upon another judgment of the Hon'ble Apex Court, reported in (2016) 12 SCC 273 in the case of K. Sivaprakash Vs. State of Kerala , wherein, the relevancy of Section 13(2) R/w. Sec.13(1)(d) of P.C.Act was discussed. Lastly, he has relied upon another judgment of the Hon'ble Apex Court reported in (1980) 3 SCC 110 in the case of (Abdulla Mohd. Pagarkar Vs. State (Union Territory of Goa, Daman and Diu) wherein, it has been specifically held by the Hon'ble Apex Court that, mere discrepancy of financial aspects would not be considered as attracting the rigors of Section 13(2) R/w. Sec.13(1)(d) of P.C. Act. Lastly, he has relied upon the judgment of the Hon'ble Apex Court, reported in (2007) 18 Spl.C.No.482/2017 13 SCC 410 (Radha Pisharassiar Amma vs State Of Kerala), wherein a similar contention has been held by the Hon'ble Apex Court. By relying upon the aforesaid authorities, the Learned Counsel has prayed for acquitting the accused persons.
8. Per contra, Sri.MVS, Advocate appearing for accused Nos.2 to 4 has vehemently argued that the prosecution has utterly failed to prove their case beyond reasonable doubt. It is his submission that the accused Nos.2 to 4 had indeed purchased the machinery before the Investigating Officer when they were summoned to the office. He has also contended that, no mahazars were drawn when the machinery were produced before the CBI authorities. That apart, it is his contention that the evidence of PW.9 who was the owner of the property would indicate that indeed, the unit was in existence and also Mahalakshmi Granites was in existence as per the evidence of PW.11 G.Muniyappa. He has further argued that no mahazars were drawn at the time of visit to the said plant. Lastly, it is argued that the document which 19 Spl.C.No.482/2017 was produced before the court as TIN and VAT certificate were not proved by the prosecution in its entirety. By pointing out the said aspects, the Learned Counsel for accused Nos.2 to 4 has vehemently argued that the prosecution has utterly failed to prove their case beyond reasonable doubt and hence he has sought for acquittal of accused persons.
9. Heard the arguments and perused the materials on record.
10. The points that would arise for my consideration are:
1. Whether the prosecution proves beyond reasonable doubt that any sanction as contemplated under Section 19 of the Prevention of Corruption Act, is required to be obtained to prosecute accused No.1 N. Satya Babu ?
2. Whether the prosecution proves beyond reasonable doubt that the accused No.1 N. Satya Babu who had entered into a criminal conspiracy with accused Nos.2 to 4 who were the proprietors of M/s.
Manjunatha Engineering Works, M/s.
Mahalakshmi Granites and M/s. DJ Max Engineering Systems and in furtherance of the said conspiracy, accused Nos.2 to 4 had availed loan to 20 Spl.C.No.482/2017 an extent of Rs.51,20,360.13 during the period 2014-15 and the accused No.1, without verifying the credentials and veracity of the accused Nos.2 to 4 had processed, sanctioned and disbursed the loan amount without ascertaining that machinery were indeed supplied and as such, they had committed an offence punishable under Section 120-B of IPC ?
3. Whether the prosecution proves beyond reasonable doubt that during the aforesaid period, the accused No.1 N. Satya Babu by entering into the criminal conspiracy and with dishonest intention had sanctioned and disbursed loan to accused Nos.2 and 3 on the basis of the fake and fabricated quotations, cash receipts and without following the rules and procedures of the Bank and caused loss to the Bank and thereby committed the act of criminal mis-conduct as defined under Section 13(1) (d) R/w.
Sec.13(2) of the Prevention of Corruption Act ?
4. Whether the prosecution proves beyond reasonable doubt that, accused Nos.1 to 4 during the aforesaid period of time had entered into a criminal conspiracy of cheating and defrauded the Syndicate Bank and had taken the loan for purchasing of machinery and even though the loan was sanctioned, they had not purchased any machinery, the loan amount came to be disbursed to them and as such, they had cheated and defrauded the Bank to an extent of Rs.51,20,360.13 and thereby committed 21 Spl.C.No.482/2017 the offence punishable under Section 420 of IPC ?
5. Whether the prosecution proves beyond reasonable doubt that, accused Nos.2 to 4 during the aforesaid period of time had forged and flouted the quotations, cash receipts, VAT Certificate and other documents and had induced accused No.1 N. Satya Babu to sanction loan in favour of fake firms and the accused No.1 in furtherance of criminal conspiracy had extended credit facility to accused Nos.2 and 3 on the basis of forged documents and thereby committed an offence punishable under Section 468 of IPC ?
6. Whether the prosecution proves beyond reasonable doubt that, accused Nos.2 to 4 during the aforesaid period of time had entered into a criminal conspiracy of cheating and defrauded Bank on the basis of forged and fabricated documents which were purported to be genuine documents and thereby accused No.1 to 4 had committed an offence under Section 471 R/w. Sec.120-B IPC?
7. What order?
11. My answer to the above points are as under;
Point No.1 : In the Affirmative Point No.2 : In the Affirmative.
Point No.3 : In the Affirmative.
Point No.4 : In the Affirmative.
Point No.5: In the Affirmative.
22 Spl.C.No.482/2017
Point No.6: In the Affirmative.
Point No.7: As per Final Order, for the following;
REASONS
12. The entire case of the prosecution in a nut shell is that the accused No.1 N. Satya Babu was working as a Manager of Syndicate Bank, Jalahalli Branch during the period 2014-15. It is specifically contended that the accused No.1 who was required to adhere to the banking rules and procedures had flouted the same and without verifying the veracity of the contention urged by accused Nos.2 to 4, had agreed to disburse loan towards purchase of machinery by accused No.2 Manjunatha Engineering Works and accused No.3 Mahalakshmi Granites and also he had not conducted pre and post sanction visits towards the loan amount. It is also been submitted that the said units were not at all in existence and accused No.4 who was the proprietor of M/s. DJ Max Engineering Systems had not supplied the machinery, but had furnished forged and fabricated quotations, invoices indicating supply of 23 Spl.C.No.482/2017 machinery to the Bank. Though an internal investigation was conducted and also the internal audit had visited the place where allegedly the unit was to be in existence, it was noticed that the accused Nos.2 to 4 without purchasing any machinery had availed loan in derogation of the said principles of law which were enumerated by Reserve Bank of India through its guidelines and also by the Syndicate Bank. Hence, a complaint came to be registered and on the basis of the same, charge-sheet was led before this Court.
13. Before adumbrating to the facts of the case, the evidence which is led before the Court requires to be recapitulated for the purpose of convenience.
14. PW.1-G.C.Matolli, is the complainant who had deposed of lodging the complaint as per the directions issued by his higher authorities. He has deposed that, internal investigation was conducted wherein, it was found that the accused No.1 had cheated and defrauded the Bank by colluding with accused Nos.2 to 4 and hence, he had lodged the complaint as per 24 Spl.C.No.482/2017 Ex.P.1. During the course of cross-examination he has admitted of not knowing any other aspects other than of lodging the complaint.
15. PW.2 Venkatesh has deposed that, he had issued letters as per Ex.P.2 stating that, by the time the permission to prosecute accused No.1 was sought, he was removed from the services and accordingly there was no necessity to grant necessary permission.
16. PW.3-Nagesh S.H. has deposed that he is working as Senior Manager Vigilance at Syndicate Bank and he had collected all the relevant circulars of Reserve Bank of India and also the documents in the above said incident. He has deposed of conducting internal investigation and had found several discrepancies in the loan availed by accused Nos.2 and 3. He has identified the loan applications as per Ex.P.22, quotation as per Ex.P.23, receipts as per Ex.P.24 and 25. He has also identified the loan application of accused No.3 as per Ex.P.32 and other documents as per Ex.P.33 and 34. He has deposed that the valuation report is at Ex.P.35 25 Spl.C.No.482/2017 which indicated that the end usage of the loan was not proper. Accordingly, it is his evidence that he had furnished necessary details to the concerned authorities. Further, he has deposed that loan application filed by M/s Manjunatha Engineering Works consisted of several irregularities wherein the supplier was not in existence as per the TIN to be mentioned therein. That apart, it is his evidence that the concerned Bank has not verified the genuineness of the quotation nor obtained the undertaking letter from the borrower, machinery was not in existence, not verified the CIBIL detect Report nor referred the application to the second officer to process the same. Lastly, it has been submitted that with respect to DJ Max Engineering Works, the firm was not at all in existence. He has produced several circulars issued by the Reserve Bank of India and Syndicate Bank from time to time.
17. Sri.VNN, Advocate for accused No.1 has denied the irregularities existed in the loan application. He has also further admitted that during the course of 26 Spl.C.No.482/2017 internal investigation, he had not called upon any borrower for the said reasons and during his tenure he has also worked as Branch head. Subsequently, the witness was once again recalled and subjected to lengthy cross-examination. He has denied of producing any certificate or report at that point of time. He has deposed of visiting M/s. Mahalakshmi Granites at Gayathri Nagar, Bengaluru and that firm was not in existence. He has also verified the VAT registration certificate of Mahalakshmi Granites and he did not find CIBIL Report and other documents required for the purpose of sanctioning the loan.
18. During the course of cross-examination made on behalf of accused Nos.2 to 4, he has denied the suggestion of filing a false and biased report. However, he has specifically deposed of visiting Manjunatha Engineering Works and Mahalakshmi Granites as per the address mentioned in the loan application and noticed that the said units were not in existence. Apart from that, nothing has been elicited from him. 27 Spl.C.No.482/2017
19. PW.4 Guruprasad, who was the Assistant Manager of Syndicate Bank, Jalahalli Branch has deposed of submitting certain documents as per the request of the CBI Authorities and also deposed that he had accompanied the Investigating Officer. During the course of cross-examination, he has admitted that at the time of loan transaction he was not working in the said branch and he had handed over the documents which were available in the Bank. Apart from that, nothing much has been elicited from him.
20. Likewise, the Learned Counsel for the accused Nos.2 to 4 has also subjected him to lengthy cross-examination and has elucidated that loans were sanctioned in the name of Mahalakshmi Granites and Manjunatha Engineering Works under MSME Scheme.
21. PW.5 A.N.Vasudevan, was the Senior Manager at Syndicate Bank, Jalahalli branch and has deposed of producing the loan documents to CW.1. Apart from denial, nothing much has been elucidated from him.
28 Spl.C.No.482/2017
22. PW.6, S.P.Ramachandra, was the valuer of the Bank and has deposed that as valuation he had visited the premises of M/s Mahalakshmi Granites on 07.12.2015 and on visiting the said premises he had not found any machinery in the place and on enquiry by the officer Guru Prasad over the phone, accused No.4 Ramesh had informed that the machinery were shifted to Huliyurdurga. The signboard of the firm was also not in existence. Later on, he was called by the CBI to another office on 31.01.2017 and he along with Guru Prasad had visited M/s Manjunatha Engineering Works on 01.02.2017 and had noticed that a unit in the name and style is as S J Engineering Works was being operated from the said premises. During the course of cross- examination by accused No.1, he has feigned his ignorance with respect to pre-inspection and post inspection reports to be filed to the bank prior to sanctioning of the loan.
23. Accused Nos.2 to 4 have also cross-examined the witnesses by denying all the evidence which has been 29 Spl.C.No.482/2017 led by the witnesses during the course of his chief- examination.
24. PW.7 Amar Devendrappa Nasi, was the Manager at Regional Inspectorate of Syndicate Bank and he has deposed of producing necessary documents as per the request of the CBI Authorities.
25. PW.8 Anand is the photographer, who has deposed of accompanying the Investigating Officer to various units in order to inspect whether the units were in existence.
26. PW.9-Srinivasa, has deposed of purchasing the property at No.2, Outer Ring Road, Laggere, Bengaluru about 15 years back and he had constructed four shops and a small house in the said premises. It is his evidence that, in the year 2016-17, the CBI had called him for the purpose of enquiry with respect to M/s. Manjunatha Engineering Works and he had disclosed the information which was known to him. During the course of his cross-examination, nothing much has been elucidated.
30 Spl.C.No.482/2017
27. PW.10 A. Balasami, is the Deputy Director and Scientist in CFSL, Hyderabad since from 2010 and has deposed that he had verified the questioned documents and admitted documents of N. Satya Babu, Smt. S. Bharathi, Smt. Nalinakshi and S. Ramesh and had arrived at a conclusion that the questioned signatures and the admitted documents were all pertaining to them. Accordingly, he had furnished the reports in this regard. During the course of cross- examination, apart from denial, nothing has been elucidated.
28. PW.11 G.Muniyappa, has deposed that he was the tenant under Smt. Ningamma and was residing in the first floor of the same building where accused No.1 was also residing. It is his evidence that a display board with M/s. Mahalakshmi Granites was displayed in the said place, but at no point of time, the firm was opened. During the course of cross-examination, apart from denial, nothing much has been elucidated. 31 Spl.C.No.482/2017
29. PW.12 R. Bhaskar, has deposed that, during the year 2013, he had let out a portion of his house in the ground floor to accused No.4 S. Ramesh on monthly rent of Rs.13,000/-. However, he had noticed a board in the name of M/s. DJ Max Engineering Works and had instructed Ramesh to remove the said display board which was subsequently removed. During the course of cross-examination, he has deposed of renting out the house which was given to S. Ramesh, but, has deposed that none were residing in the said premises. He has deposed that, he did not know accused No.4 and tenant S. Ramesh about the fact of running a separate office by them. Apart from that, nothing has been elucidated from him.
30. PW.13 S. Nagaraj, is the retired officer of Punjab National Bank who had deposed that, it was his duty to receive cash receipts and issuing of accounts in the Bank and maintenance of ATM Machine. It is his evidence that he had provided information with respect 32 Spl.C.No.482/2017 to M/s. DJ Max Engineering System, for which, the proprietor was one S. Ramesh.
31. PW.14 A.B.Shamsudhin, was the additional Commissioner in-charge of GST Section during the period 2017 and has deposed of producing VAT Certificate as per Ex.P.97 and has specifically deposed that the TIN number mentioned in the loan application pertaining to M/s. DJ Max was not tallying with their records. He has clarified that there was no possibility of 2 TIN numbers being generated to a very same person on the very same address. During the course of cross- examination, nothing much has been elucidated from him.
32. PW.15 V.R.Shekar, has deposed to be the President of their Credit Co-operative Society and M/s DJ Max Engineering System, had approached them and also accused No.4 S.Ramesh was introduced through S. Ramesh. He has specifically deposed that in the year 2014, the account was opened as per Ex.P.84 and also accused No.4 had signed the account opening 33 Spl.C.No.482/2017 form in his presence and he has also identified the signature of the witness as Ex.P.84(a). Apart from that, nothing much has been elucidated.
33. PW.16 Yousuff Shariff, has deposed to be a Chief Ticket Inspector at Southern Railways, Bengaluru. He has deposed of being summoned by the CBI and at that time they had taken specimen signature of accused No.4 Ramesh, who had given the signatures voluntarily. He has identified his signature in the proceeding drawn by the CBI at Ex.P.82.
34. PW.17 A.A.Khan, has deposed that he was the Senior Divisional Manager at Oriental Insurance Company, Gulbarga and he was also summoned to the CBI office at the time when accused Nos.2 and 3 had given the specimen signatures which was a voluntary fact. Apart from denial, nothing much has been elucidated from him.
35. PW.18 Y.C.Shivakumar, who was the Additional Commissioner at Commercial Office had deposed of providing information and documents 34 Spl.C.No.482/2017 regarding VAT registration certificate in Form No.7 relating to Manjunatha Engineering Works and its proptrietorix Nalinakshi of M/s. Mahalakshmi Granites. On appreciation of the VAT certificate at Ex.P.65 and P.66, it indicated that the same were not original. He has deposed of issuing reply to CBI along with photographs mentioned supra.
36. PW.19 Natarajan Swamy, has deposed that he came in contact with Sri. Shivaji through Punjab National Bank Manager and he was introduced by accused No.4 S.Ramesh to open an account. He has identified his signature in account opening form and apart from that, nothing much has been elucidated from him.
37. PW.20 Rajendra Kumar S, is the Senior Manager, Inspection Department, Syndicate Bank, Bengaluru, wherein he has deposed that he had met the then Manager of Syndicate Bank on 21.01.2015 and had verified the loan documents. He has commented upon various infirmities found in the loan application and also 35 Spl.C.No.482/2017 in the documents which indicated or processing sanction and disbursal of the loan amount.
38. PW.21 R.K.Shivanna, is the Police Inspector, who had registered the case in RC3(A)/2016 as per Ex.P.60 on the basis of the written information at Ex.P.1. He has further deposed of conducting search at the residential premises of accused No.1 N. Satya Babu and on 05.04.2016 he had issued notices to the Chief Vigilance Officer of the Bank. He has also deposed of collecting documents from PW.3 and PW.5. Apart from denial, nothing much has been elucidated.
39. PW.22 Rakesh Ranjan, is the Investigating Officer who has deposed of visiting the place of unit and also conducting the thorough search with respect to the veracity of the quotations, bill and invoices, furnished by accused Nos.2 to 4. After collecting on the receipt of calculation of necessary materials, he had arrived at a conclusion that the guilt of the accused persons was proved and accordingly he had filed the charge-sheet. 36 Spl.C.No.482/2017
40. Point No.1:- In the instant case, it has been specifically contended that the accused No.1 N.Satya Babu at the time of commission of offence was working as Senior Manager at Jalahalli Branch of the then Syndicate Bank. It is not in dispute that the alleged incident had taken place during the period 2014-15. Under the circumstances, when the provision of Prevention of Corruption Act is invoked, it would be bounden duty of the prosecution to establish the fact that the question of obtaining sanction is not required in the instant case. The learned Public Prosecutor has vehemently argued that the evidence of PW2 Venkatesh would clarify the position of law in this regard. It is his contention that PW2 Venkatesh who had appeared before the court has specifically deposed that accused No.1 N.Satya Babu was dismissed from the service which is evident from the letter marked as Ex.P.2 in the instant case. On perusal of the said document, it indicates that the correspondence had taken place between the Investigating Agency and also with the competent 37 Spl.C.No.482/2017 authority of the Bank. It has been stated that upon initiation of Departmental proceedings against accused No.1, he was found guilty and accordingly, he was dismissed from the services as per the orders passed by the Disciplinary Authority in No.117/PD-IRD/DA-6 dated 22.3.2017. Hence, it is stated that the question of according sanction to prosecute him does not arise. The provision of law with respect to according of sanction under Sec.19 of Cr.P.C., is also very clear, which would indicate that only if the persons are in service, then necessary sanction is required. By considering the said aspect, it is crystal clear that no sanction is required to prosecute accused No.1 as he was already dismissed from the services. Accordingly, the Point No.1 is answered in the Affirmative.
41. Point Nos.2 to 7: With respect to appreciation of the facts, it is pertinent to note that the prosecution has contended that the accused No.1 N. Satya Babu had entered into a criminal conspiracy with accused No.2 i.e., Smt.S.Bharathi who is the proprietor of M/s. 38 Spl.C.No.482/2017 Manjunatha Engineering Works to cheat and defraud the Bank and in furtherance of the same, a loan application came to be filed by her intending to purchase machinery for her unit. It is the case of the prosecution that, in a similar manner, accused No.3 Smt. H. Nalinakshi, who is the proprietor of M/s. Mahalakshmi Granites had also proposed to avail loan towards purchasing of machinery wherein, she was into Earth Moving and Granite Business. In the instant case, both applicants i.e., accused No.2 and 3 which were the proprietorship firms had availed loan to purchase machinery from M/s. D J Max Engineering System, for which, accused No.4. S.Ramesh was the proprietor. Further, the prosecution has contended that the accused Nos.2 to 4 had colluded with each other and in furtherance of the criminal conspiracy which they had entered with accused No.1 Manager, had filed necessary application to the Bank seeking to avail loan. In the instant case, it is submitted that accused No.2 had availed loan to an extent of Rs.19.00 lakhs and whereas, accused No.3 had availed 39 Spl.C.No.482/2017 loan to an extent of Rs.20.00 lakhs by utilizing the fabricated quotations and invoices which were issued by M/s. D J Max Engineering System, for which accused No.4 was the proprietor. In order to appreciate the entering of criminal conspiracy between the parties, the law with respect to the same is required to be appreciated. The provisions of Sec.120-B of Indian Penal Code clearly stipulates that whenever an act is intended to be done in a manner which is illegal or which is legal in an illegal manner, the same attracts the rigors of Sec.120-B of IPC. It is the settled principles of law that the concept of criminal conspiracy cannot be proved in normal circumstances by way of direct evidence. However, the same may be proved by indicating the circumstances which would lead to draw inference that it was not a minor irregularity but indeed it was an act of criminal conspiracy. In the instant case as noticed above, many irregularities were being committed by accused No.1 who was the Branch Manager and it is alleged that the said irregularities cannot be considered 40 Spl.C.No.482/2017 as minor misnomer but it was committed in furtherance of criminal conspiracy entered between other accused persons. Under the circumstances, the moot aspect which is required to be determined is whether such irregularity amounts to entering into criminal conspiracy. In this regard, the authority which has been relied upon by the learned Public Prosecutor is required to be considered which is reported in (2002) 7 SCC 334 (Mohammed Khalid Vs. State of West Bengal) wherein the Hon'ble Apex Court has held as follows:
"17. It would be appropriate to deal with the question of conspiracy. Section 120B of IPC is the provision which provides for punishment for criminal conspiracy. Definition of 'criminal conspiracy' given in Section 120A reads as follows:
"120A-When two or more persons agree to do, or cause to be done,- (1) all 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.' The elements of a criminal conspiracy have been stated to be: (a) an object to be 41 Spl.C.No.482/2017 accomplished, (b) a plan or scheme embodying means to accomplish that object,
(c) an agreement or understanding between two or more of the accused persons whereby, they become definitely committed to co-operate for the accomplishment of the object by the means embodied in the agreement, or by any effectual means, (d) in the jurisdiction where the statute required an overt act. The essence of a criminal conspiracy is the unlawful combination and ordinarily the offence is complete when the combination is framed. From this, it necessarily follows that unless the statute so requires, no overt act need be done in furtherance of the conspiracy, and that the object of the combination need not be accomplished, in order to constitute an indictable offence. Law making conspiracy a crime, is designed to curb immoderate power to do mischief which is gained by a combination of the means. The encouragement and support which co-
conspirators give to one another rendering enterprises possible which, if left to individual effort, would have been impossible, furnish the ground for visiting conspirators and abettors with condign punishment. The conspiracy is held to be continued and renewed as to all its members wherever and whenever any member of the conspiracy acts in furtherance of the common design. (See: American Jurisprudence Vol. II Sec.23, p.559). For an offence punishable under section 120-B, prosecution need not necessarily prove that the perpetrators expressly agree to do or cause to be done illegal act; the agreement may be proved by necessary implication. Offence of criminal 42 Spl.C.No.482/2017 conspiracy has its foundation in an agreement to commit an offence. A conspiracy consists not merely in the intention of two or more, but in the agreement of two or more to do an unlawful act by unlawful means. So long as such a design rests in intention only, it is not indictable. When two agree to carry it into effect, the very plot is an act in itself, and an act of each of the parties, promise against promise, actus contra actum, capable of being enforced, if lawful, punishable if for a criminal object or for use of criminal means.
18. No doubt in the case of conspiracy there cannot be any direct evidence. The ingredients of offence are that there should be an agreement between persons who are alleged to conspire and the said agreement should be for doing an illegal act or for doing illegal means an act which itself may not be illegal, Therefore, the essence of criminal conspiracy is an agreement to do an illegal act and such an agreement can be proved either by direct evidence or by circumstantial evidence or by both, and it is a matter of common experience that direct evidence to prove conspiracy is rarely available. Therefore, the circumstances proved before, during and after the occurrence have to be considered to decide about the complicity of the accused."
42. On appreciating the above said dictum, it is clear that the prosecution is required to prove the circumstances under which an offence is committed 43 Spl.C.No.482/2017 which would be construed as conspiracy i.e., there should be an object to be accomplished, plan or scheme embodying means to accomplish the object, an agreement or understanding between 2 or more accused persons and in the juxtaposition where the statue is required to commit an overt act. In other words, the essence of criminal conspiracy is the unlawful combination and ordinarily the offence is complete when the combination is framed. In the instant case it requires to be considered that whether the sanctioning of the loan with irregularities would amount to conspiracy. Time and again it has been held by various dictums that the criminal conspiracy is an independent offence. Further the prosecution is required to prove the same by producing necessary materials to indicate criminal misconduct on the part of the accused. In other words, the acts, which have been committed by the accused persons, should be the one, wherein the accused has to take definite steps to an agreement which they had entered upon to do an illegal act or to do an act which is 44 Spl.C.No.482/2017 legal, but with illegal means. Hence, in simple manner the concept of conspiracy can be explained if it consists following ingredients.
a) that there should be an agreement between 2 or more persons
b) that the said agreement should be for doing of an illegal act or for doing by illegal means an act which by itself may not be illegal.
43. When the said ingredients are established, then only the prosecution may contend that the accused persons had entertained an intention to commit an offence. At this juncture it would be appropriate to appreciate and rely upon the passage of Russell on Crimes (12th Edition a Volume No.1) which reads as follows:
"The gist of the offence of conspiracy then lies, not in doing the act, or effecting the purpose for which the conspiracy is formed, nor in attempting to do them, nor in inciting others to do them, but in the forming of the scheme or agreement between the parties. Agreement is essential. Mere knowledge, or even discussion, of the plan is not, per se enough".45 Spl.C.No.482/2017
44. It is well settled principles of law that criminal conspiracy will be hatched up in darkness and will be executed for which there will not be any direct evidence. It is also relevant to appreciate that when criminal conspiracy is alleged, the same is required to be considered on the basis of the materials available on record and at times, the circumstantial evidence is also required to be looked into.
45. When this aforesaid postulate is appreciated, the allegations which have been leveled against the accused persons are of entering into criminal conspiracy for reason to cheat and defraud the bank. As such, necessary charges are leveled against accused Nos.1 to 4 for the offences punishable under Section 420 of IPC and with respect to accused Nos.2 to 4 necessary charges have been framed under Sections 468 and 471 of IPC and whereas, accused No.1 being the public servant during the period 2014-15 and working as the Manager of Syndicate Bank, Jalahalli Branch, Bengaluru had 46 Spl.C.No.482/2017 committed an act of criminal mis-conduct which would attract the provisions of Section 13(1)(d) R/w. Sec.13(2) of Prevention of Corruption Act. When the charges alleged against the accused person is carefully appreciated, the act of criminal conspiracy is alleged to have entered into between the parties for the reason of cheating and defrauding the bank by availing loan. As such, the aforesaid allegations are taken up for consideration jointly.
46. At the first instance, the settled principle of law with respect to appreciation of materials for the offence of criminal conspiracy is required to be looked into. It has been held in various dictum that the allegations of criminal conspiracy need not be proved by direct evidence and it can also be proved by looking into the attending circumstances and also on the basis of circumstantial evidence. The concept of criminal conspiracy would clearly indicate that always the conspiracy would be hatched in darkness and hence there would not be any direct materials to indicate about 47 Spl.C.No.482/2017 entering the same. In the instant case, when the allegations leveled against the accused No.2 Smt. S.Bharathi, the proprietor of M/s Manjunatha Engineering Works is appreciated, it indicates that she had filed necessary application with the Branch seeking to avail loan. Firstly, the loan application which has been filed at Ex.P.22 is required to be looked into. Ex.P.22, the loan application indicates that M/s. Manjunatha Engineering Works was situated at No.2, Outer Ring Road, Krishnappa Layout, Laggere, Bengaluru. Further, it has been stated that the said Engineering Works was into the fabrication work and also at Column No.14, end sales and profit for the last preceding 3 years were furnished. It is also relevant to note that the loan application came to be filed in the year 2014, however, at column No.14, the end sales and profit for the year 2013-14, 2014-15 has been specifically narrated and lastly the end capital is mentioned as Rs.6.52 lakhs and Rs.7.57 lakhs respectively. Further, the estimated projection for the year 2015-16 and 2016-17 has also 48 Spl.C.No.482/2017 been mentioned. However, it is not been forthcoming that on what basis the said estimate has been obtained. In order to better appreciate the same, I have also looked into project report which was submitted to the bank prior to sanctioning of the loan. The said project report was marked as Ex.P.66 wherein, the report was prepared for purchase of machinery with total cost of Rs.26.00 lakhs. In the said project report, they had contended that the term loan for Rs.19.50 lakhs was required to be obtained and remaining amount of Rs.6.5 lakhs would be the marginal amount as furnished by the applicant. On perusal of the said project report, it indicates that they had sought for availing of loan for purchasing machinery from M/s. D J Max Engineering System. In order to substantiate their contention, they have furnished balance sheet pertaining to their firm i.e., belonging to their proprietor and also the I.T. returns for the years 2012-13, 2013-14 and 2014-15. On careful appreciation of the I.T. Returns of the year 2012-13 indicate that the details furnished in the I.T. Returns 49 Spl.C.No.482/2017 and also in their statement of accounts annexed along with the I.T.Returns, does not tally with the details which they have mentioned in the loan application. That apart, the Form VAT 7 Certificate is also enclosed along with the project report and specifically the TIN Number has been mentioned as 29824409622. Further, it is pertinent to note that, as per the said document, the certificate was issued on 19.08.2011 and it would be valid till the same is to be cancelled. That apart, another certificate issued by the Directorate of Industries and Commerce has also been furnished which has been furnished indicating it to be executed by one Srinivas in favour of M/s. Manjunatha Engineering Works on 09.07.2014. With this document, the loan process which had taken place is required to be appreciated. Ex.P.26 is the quotation issued by M/s. D J Max Engineering System on 12.09.2014. It is pertinent to note that the loan application was filed on 10.09.2014 and immediately after 2 days, the quotation came to be issued indicating that they were intending to purchase 50 Spl.C.No.482/2017 about 9 machinery for a sum of Rs.22,63,650/- for which, VAT at 14% which comes to Rs.3,16,911/- was to be paid by the supplier and in total a sum of Rs.25,18,561/- was collected by M/s. D J Max Engineering System. Thereafter, the document at Ex.P.24 and EX.P.25 indicates of two receipts issued by the said firm towards a sum of Rs.23,80,501/- and Rs.2.00 lakhs on 19.09.2014 and 23.09.2014. Ex.P.26 is the confirmation of delivery of machinery issued by M/s. D J Max Engineering System. The confirmation letter issued on 23.09.2014 indicates of delivering 4 machineries to M/s Manjunatha Engineering Works i.e., bending machine, cutting machine, drilling machine and shearing machine. However, the quotation was issued for purchase of total 9 machineries, whereas, the confirmation letter issued by M/s D J Max Engineering System indicates of supplying only 4 machinery. Further, on perusal of the Loan Review Form at Ex.P.27, indicates that the loan was recommended on 22.09.2014, whereas the receipt which has been issued 51 Spl.C.No.482/2017 by M/s. D J Max Engineering System indicates of payment of Rs.2.00 lakhs being made on 19.09.2014 and remaining amount on 23.09.2014 and also the supply of machineries being supplied on 23.09.2014 itself. It is relevant to note at this juncture that as per the contention of the prosecution, the confirmation letter was issued without supplying any machinery to accused No.2. Once again, at the cost of repetition, the Loan Review Form indicates of reviewing the feasibility of extending loan on 22.09.2014 and further the document at Ex.P.28 which is business loan model indicates of providing gradation to various factors with respect to feasibility of loan and it is noticed that several columns were left unfilled in the said document. The process note at Ex.P.29 indicates that the account was a new account opened with the Bank and also it has been mentioned that the unit was inspected on 19.09.2019. As per column No.14, it was specifically mentioned that the security which were to be obtained was hypothecation of welding machine and its accessory costing Rs.19.00 52 Spl.C.No.482/2017 lakhs. If, for the sake of arguments it is accepted that the machineries were supplied, then, once again, the confirmation of delivery of machinery letter issued by M/s. DJ Max Engineering Systems in favour of M/s. Manjunatha Engineering Works which was furnished to the Bank by both of them would indicate of only supplying 4 machineries. Further, as per the process note, it was required to secure the loan by way of hypothecation of all the machineries. Admittedly, the processing had taken place on 19.09.2014 which has been mentioned erroneously as 19.09.2019. Once again, this indicates the manner in which the loan has been processed by the concerned Bank. It is also been stated in the process note that Smt. S.Bharathi has started own fabrication unit during the year 2011 and she was being assisted by her husband and unit was 3 years old and earning sufficient income for the last 3 years. Whereas, the project report at Ex.P.66 indicates that it was a new proprietorship concern established during the current year and was engaged in fabrication works. The said 53 Spl.C.No.482/2017 contention which has been mentioned in the project report is totally against the descriptions mentioned in the process note wherein it seems that in the process note it is mentioned that Smt. S.Bharathi was owning the said proprietorship Firm for the last 3 years and was getting good contractual works.
47. Lastly, it has been mentioned that Rs.19.50 lakhs was to be sanctioned and the term loan to be released specifically after collecting the margin money. With this aspect, the account extract which has been furnished in the above case is required to be looked into. As per Ex.P.50, on 23.09.2014, a sum of Rs.19.50 lakhs came to be debited through account to M/s. D J Max Engineering System. Further, the current account maintained by M/s. Manjunatha Engineering Works with Account No.04441010011463 indicates of debiting Rs.18,74,374/- to the account and prior to that on 22.09.2014 a sum of Rs.4,75,000/- was credited into the account, which indicates that the amount was transferred on 23.09.2014 and on the very same day, the 54 Spl.C.No.482/2017 machineries came to be supplied and also the confirmation letter came to be issued to the Branch on the very same day. All these aspects would cast serious doubt over the contention of the accused No.2. That apart, for the sake of arguments, if it is contended that a sum of Rs.4.75 lakhs was credited into the account as machinery amount, then once again, the receipt at Ex.P.25 would be falsified which indicates of payment of Rs.2.00 lakhs by M/s. Manjunatha Engineering Works on 19.09.2014. Admittedly, a sum of Rs.23,80,561/- was paid through account transfer by M/s Manjunatha Engineering Works on 23.09.2014. However, the records indicate that Rs.18,74,374/- was paid through transfer of amount into the account of M/s. D J Max Engineering System.
48. In order to appreciate whether M/s Manjunatha Engineering Works belonging to accused No.2 had indeed purchased machinery from M/s. D J Max Engineering System and running the unit as contended by them, it would be profitable to look into 55 Spl.C.No.482/2017 the evidence tendered by PW.9 Srinivas K, who is allegedly the owner of the place where the unit was working. PW.9 Srinivas K has specifically deposed that he was the owner of the shop property situated at No.2, Outer Ring Road, Krishnappa Layout, Laggere, Bengaluru, which he had purchased about 15 years back and had constructed 4 shops over the said property. It is his specific contention that a document came to be confronted to him by the CBI authorities and on perusing the same, he had specifically stated that he had not let out the premises to Smt. S.Bharathi or for M/s Manjunatha Engineering Works. It is the specific assertion that his signature was forged. During the course of cross-examination, he has admitted that his father was looking after the aforesaid property and though it was suggested that it was let out to accused No.2 by his father, he had denied the same. However, he has identified his premises in the photograph at Ex.P.31 and deposed that the building forthcoming in the photographs was belonging to him and it was taken on 56 Spl.C.No.482/2017 09.12.2014. Further, he has deposed of letting out the premises to one Nanda Kumar. The Learned Counsel for accused Nos.2 to 4 during the course of their arguments has specifically contended that, the suggestion which was admitted by the witness i.e., with respect to undertaking of a fabrication work by M/s. Manjunatha Engineering Works clinches the issue in their favour since he was deposing falsely. I have carefully appreciated the entire tenor of the cross-examination. It is the settled principle of law that the evidence has to be considered in-toto and it would not be appropriate to consider a stray admission. In the instant case, when the entire cross-examination as well as the examination-in- chief is appreciated, it would indicate that the witness had deposed unequivocally that he had not let out the premises to Smt.S.Bharathi or to M/s. Manjunatha Engineering Works. With this aspect, once again, the document which has been furnished by the accused No.2 at the time of availing of loan is required to be looked into. The Rent Agreement which is marked collectively 57 Spl.C.No.482/2017 with Ex.P.66 indicates to have entered between Mr. Srinivas K. and M/s. Manjunatha Engineering Works which was being represented by Smt.S.Bharathi on 09.07.2014. It is relevant to note at this juncture that the loan application came to be filed by the applicant to the Bank on 10.09.2014 i.e., about 2 months after entering into the alleged Rent Agreement. With this background, when the project report which has been submitted and also the other documents which has been produced is appreciated, it clearly indicates that the unit was not running in the aforesaid place. That apart, during the course of cross-examination, it was not brought out from PW.9 who is allegedly the owner of the premises with respect to existence of any animosity between him and accused No.1. In the absence of the same, the question which requires to be appreciated is why the owner of the premises would depose totally against his tenant. If only there was any animosity between the parties, then it would have been accepted that for aforesaid reason he was deposing against the 58 Spl.C.No.482/2017 interest of accused No.2. Even otherwise, with respect to the said aspect, the joint inspection which was conducted by PW.3 S.H.Nagesh is required to be looked into. As per the Joint Inspection Report as per Ex.P.30, the inspection was conducted by him in the aforesaid place. The report clearly indicates that the unit had not purchased any new machinery. That apart, the report also indicates that there was no machinery except some old small machinery functioning. Further, it has been contended that, the amount towards purchase of new machinery was diverted and also the valuation report which was conducted subsequently as per Ex.P.31 also indicates that the unit was door locked and it was informed to them that machineries were at a different place for fabrication work being undertaken and the information was given by one Mr. Ramesh who was said to be the owner's relative. It is relevant to note at this juncture that whenever the inspection team had visited the premises, it was Mr. Ramesh who is said to be the relative of the proprietor had given necessary information 59 Spl.C.No.482/2017 about the unit and also machinery belonging to accused No.2 Smt. S.Bharathi and also accused No.3 Smt. H.Nalinakshi. In this regard, the evidence of the Investigating Officer is required to be looked into.
49. PW.22 Rakesh Ranjan, who is the Investigating Officer in the above case has specifically deposed that, on 23.11.2016 he had visited the place mentioned in the loan application and had found that the address was false and he was unable to trace the said entity. However, it is his evidence that he found one firm by name M/s. S.J. Enterprises in the said premises. Further, it is his contention that, again on 31.01.2017 he had visited the said premises with PW.4 Guru Prasad and PW.6 S.P.Ramachandra and once again, the entity shown in the address was not in function and accordingly, they had telephonically contacted the husband of accused No.2 Srinanda. It is his evidence that Mr. Srinanda had once again taken them to the place which they had visited on earlier occasion which was pertaining to the premises of M/s. S.J.Enterprises. 60 Spl.C.No.482/2017 On enquiry, it was narrated by Mr. Srinanda that he had shifted the machinery to Bidadi and Davanagere and two of their machinery were stolen. However, they have not lodged any complaint in this regard and the Investigating Officer had also requested him to furnish the details of the machinery which they had purchased. It is his evidence that on the very next day, he had brought one machine to his office which was an old one. The particular evidence which was led before the court would clearly indicate that, the contentions which was urged by accused No.2 Smt. S.Bharathi, the proprietor of M/s Manjunatha Engineering Works was indeed contrary to each other. That apart, it is also relevant to note that if the contention of the husband of accused No.2 is to be accepted that some of their machineries were stolen, then, it was their bounden duty to lodge a complaint before the concerned Police. Even otherwise, as per the evidence of the Investigating Officer, onlyone machinery was produced before them. During the course of cross-examination, it is pertinent to note that, they 61 Spl.C.No.482/2017 had not denied of producing of one machinery but it was submitted that they had produced all the machinery. Further, it is also relevant to note that, they had not denied the evidence of PW.22 Mr. Rakesh Ranjan with reference to the evidence tendered by him that the husband of accused No.2 had stated to him about some machinery being stolen. When the specific assertion is not denied by the defence, it leads to draw a presumption that the said portion of evidence is required to be accepted. Even otherwise, I have bestowed my anxious reading to the evidence of PW.6 S.P.Ramachandra, who was the evaluator of the aforesaid Bank. In his chief-examination, he has deposed that the proposal for valuation of machinery pertaining to M/s Manjunatha Engineering Works was entrusted to him and accordingly, on 08.12.2015 he had visited the premises along with PW.4 Guru Prasad and had noticed that the unit was locked. It is also deposed by him that one Ramesh had informed PW.4 Guru Prasad that the machineries were at a different location for the purpose 62 Spl.C.No.482/2017 of fabrication and he had not shown any machinery. He had furnished his report as per Ex.P.31. Indeed, the said evidence is required to be corroborated with the evidence of PW.22 Mr.Rakesh Ranjan. PW.22 Rakesh Ranjan, during the course of his chief-examination has also deposed that no machineries were found when he had visited the premises and also it is specific assertion that the husband of accused No.2 by name Srinanda had stated that the machineries were shifted to Bidadi and Davanagere. Even though, it is argued at length by the Learned Counsel for accused Nos.2 and 3, that no such discrepancies were found nor any deviations were made, however, it is required to be noted that, no where any material has been produced before the Court to indicate that the machineries were indeed purchased from M/s. D J Max Engineering System or it was supplied and the unit was working or in existence. With respect to the allegations leveled against accused No.4 M/s. D J Max Engineering System, the same will be dealt in the later part of my judgment. Even at this juncture, during the 63 Spl.C.No.482/2017 course of cross-examination, it has been specifically suggested that, the husband of accused No.2 by name Mr.Srinanda had produced the machineries before the Bank officials and also CBI authorities. However, the said suggestion has been denied by the witness. When the evidence of PW.22 is compared with the evidence of PW.6, it indicates that the telephonic calls made to the proprietor of M/s Manjunatha Engineering Works were answered by one Ramesh. Even during the course of his cross-examination, he has deposed that no machineries were found in the said premises and even at that point of time, Mr. Ramesh had informed that the machineries were being utilized at some other place and some of it was stolen. The undisputed fact which emerges from the evidence of PW.6 as well as from the evidence of PW.22 Mr. Rakesh Ranjan is that, some of the machineries were stolen. If for the sake of arguments, the contention is to be accepted, then also the preponderance of burden will be shifted upon the accused No.2 to justify the said contention. At the cost of repetition, it is made clear at 64 Spl.C.No.482/2017 this juncture that the burden upon the prosecution to prove and establish their case beyond reasonable doubt will never be shifted upon the accused person. However, the onus of proof will be oscillated towards the accused person. Even for the sake of arguments, the accused No.2 contends that some of the machinery were stolen, once again, at the cost of repetition, it is to be noted that why no Police complaint came to be lodged and which were the machineries that were stolen.
50. I have also bestowed my anxious reading to the evidence of the commercial tax officer i.e., PW.18 Y.C.Shivakumar who has deposed before the Court that in the year 2017 a request was made by the CBI authorities to verify VAT Form No.7 furnished by M/s. Manjunatha Engineering Works and also with respect to the Proprietorix of M/s Mahalakshmi Granites. He has specifically deposed that as per Ex.P.66 document, no such VAT registration Certificate were issued by their office and also the signatures of the Asst. Commissioner of Commercial Tax and the seal did not belong to them. 65 Spl.C.No.482/2017 The evidence has not been controverted in detail during the course of cross-examination. If for the sake of arguments it is to be accepted that M/s Manjunatha Engineering Works for which, accused No.2 was the proprietor had indeed got a registration Certificate obtained from the competent authorities, then they should have furnished the document. It is pertinent to note that the VAT Certificate came to be furnished by accused No.2 at the time of availing the loan from the Bank authorities. When the entire materials furnished by accused No.2 is carefully appreciated, the only inference which could be drawn is that, she had entertained an intention to cheat and defraud the Bank right from its inception. In order to cheat and defraud the Bank, the role played by accused No.1 is also required to be considered. The role of accused No.1 with respect to entering into a criminal conspiracy could only be ascertained on the basis of the attending circumstances which have been produced before the Court. As observed from the internal investigation report 66 Spl.C.No.482/2017 at Ex.P.4, it is relevant to note that the internal investigating authorities had specifically observed that the concerned Branch Manager i.e., accused No.1 had not obtained any undertaking letter from the borrower that the machineries supplied was in par with the quotation and it was genuine one as prescribed in the manual of instructions. It is also been observed that the concerned Manager had not verified the TIN number, VAT number furnished by the borrower as well as the supplier. The Report also indicates that the consumer and commercial CIBIL report reveals that the Firm had not obtained any liability with other Banks and also the lease agreement was obtained, it was not supported by any other documents i.e., copy of the latest tax paid receipt or copy of the Khata Extract or the copy of the Sale Deed from the lessor. The particular observation assumes importance for the reason that the owner of the property were allegedly accused No.2 was running the unit has deposed in his evidence that he had not at all leased out the premises to M/s. Manjunatha Engineering 67 Spl.C.No.482/2017 Works. If only the Manager had obtained supporting documents along with the other documents, then, truth would have been come out. Under the circumstances, the only presumption and inference that could be drawn at this juncture is that the accused No.1 had also conspired with the other accused persons to cheat and defraud the Bank.
51. The other allegation which has been leveled in the case is with respect to accused No.3 M/s. Mahalakshmi Granites. Even in the above case, accused No.3 had requested for necessary loan from the Syndicate Bank, Jalahalli Branch, where accused No.1 was functioning as a Manager. In the loan document which has been produced at Ex.P.32, it indicates that accused No.3 Smt.H.Nalinakshi was the proprietor of the said firm and she was into earth moving and granite business and she had intended to purchase machinery for a sum of Rs.26.00 lakhs, for which, a detailed project report was also enclosed. The said loan application came to be filed on 03.09.2014 and she had intended to 68 Spl.C.No.482/2017 purchase the machineries from the Company of accused No.4 i.e., M/s. D J Max Engineering System. The said firm belonging to accused No.4 had furnished a quotation on 26.09.2014 wherein, he had quoted a sum of Rs.22,47,400/- out of which, Rs.3,37,400/- was to be paid as 14% VAT to the Government. The receipt which has been furnished at Ex.P.34 by M/s. D J Max Engineering System indicates of receiving Rs.7.40 lakhs as an advance on 20.10.2014. At this juncture, the loan review form which is at Ex.P.36 is to be appreciated. In the Loan Reveiew Form, it has been stated that the turnover as contended by the borrower was achievable and also in the document at Ex.P.37, which is business loan model, indicates that the Manager had not adhered to the settled guidelines as issued by the Reserve Bank of India and the process note at Ex.P.38 indicates that the account which was opened by accused No.3 was a new account and she was intending to conduct business activity in granite as well as stone crushing. At Sl.No.12, of the said application a brief history of the unit has 69 Spl.C.No.482/2017 been narrated wherein it has been stated that she was into granite business for more than 10 years and she used to hire hydraulic drilling machine to the various quarry owners and make them into pieces. It is also been stated that she owns an office at the address mentioned I the loan application and work will be carried out manually at Tumakuru and other places. Accordingly, she was intending to purchase a earth moving machine costing Rs.30,60,500/-. It is relevant to note that in the very same column, it has been stated that the unit/shop inspection was conducted on 19.09.2015. The very said date of unit visit itself indicates the callus manner in which it was being furnished to the Bank. At the cost of repetition, the loan was sought in the month of September, 2014 and whereas, the process note indicates that the unit was inspected on 19.09.2015 i.e., after about one year. Even for the sake of arguments, the process note is to be accepted, then, it would indicate that the entire documents were filled up only to suit the needs of the borrowers with the active connivance of 70 Spl.C.No.482/2017 accused No.1 N. Satya Babu, who was the then Manager. At this juncture it would be relevant to recall that even with respect to the loan application of Accused No.2 the date of unit visit was mentioned as being done in the year 2019, wherein the loan was processed and disbursed in the year 2014. Though if it was accepted as typographical error in one application, but the entries made in other application also indicates that the same was not duly filed up or processed by the then Manager, accused No.1. As such the only inference which could be drawn is that the active connivance of Accused No.1 with other accused persons in availing of loan. It was vehemently argued by the learned counsel for accused No.1 that majority of the loan were sanctioned during a Loan Mela conducted by the Bank, and the documents which they had intended to be called under sectin 91 of Cr.P.C was not furnished by the Bank, would indicate that accused No.1 was not responsible for the act. Even if the said submission is accepted, the loan might have been processed in a Loan Mela, however the same will 71 Spl.C.No.482/2017 not absolve the duty of the Manager for discharging his duty diligently and efficiently in accordance with the procedures and guidelines of the RBI or the Bank. It is note that the court is relying upon only one application but all the documents which are furnished are being appreciated in order to ascertain the existing factual aspects of the case. I have also carefully appreciated the other documents which have been produced by the accused No.3 in this regard. The project report which has been furnished by accused No.3 is marked as Ex.P.65 indicates that a project report was submitted towards purchasing machinery and in the said project report, it has been specifically stated that the unit was situated at Gayathri Nagar, Bengaluru and at present, the factory shed was having power connection of 20 HP. The said project report itself is falsified when it is compared with the evidence of PW.11 G.Muniyappa, who has deposed in his evidence that he was residing in the premises i.e., No.3514, 7th Cross, Gayathri Nagar, Bengaluru, wherein, a very same address has been 72 Spl.C.No.482/2017 mentioned in the project report and also the loan application filed by accused No.3. The witness in an unequivocal manner has deposed that the said building belonged to one Ningamma and he was residing in the first floor and the owner was residing in the ground floor. It is his evidence that besides the room of the owner there was one shed in which a display board was maintained as Mahalakshmi Granites, it was not at all open at any point of time. He has also deposed of handing over the letters addressed to M/s. Mahalakshmi Granites to its owner Ningamma and also it is his evidence that the said area was a residential area. Further, he has deposed that, accused No.3 Nalinakshi was the daughter of Ningamma. During the course of cross-examination, he has deposed that Ningamma was having two daughters by name Jayalakshmi and accused No.3 Nalinakshi. It is his contention that Ningamma was residing in the same building till he had vacated the house and later on, he has deposed that he did not went to ascertain any act in the Mahalakshmi Granites. That 73 Spl.C.No.482/2017 apart, nothing much has been elucidated from him. With this evidence, the undisputed fact which emerges is that the said premises was situated in a residential area ant the address which was furnished by accused No.3 belonged to her mother Ningamma and also it is also relevant to note that a small shed was identified to be of a shop with a display board as M/s Mahalakshmi Granites which was never opened. That apart, when the project report is carefully looked into, it indicates that the proprietor of the firm i.e., accused No.3 was an income tax assessee and she had computed her Income Tax for the preceding years from 2011-12 to 2014-15. In this regard, she has also furnished the I.T. returns which she has placed before the Income Tax authorities. When the income tax return which has been filed by accused No.3 is meticulously appreciated, it indicates that she was a proprietor of M/s.Gangamma Granites. The fact of accused No.3 being proprietor of M/s Gangamma Granites also assumes importance for the simple reason that another document has been furnished along with 74 Spl.C.No.482/2017 the project report and loan application to the bank which is collectively marked along with Ex.P.65 that M/s Gangamma Granites had given a purchase order on 10.09.2014 to accused No.3 Nalinakshi who was the proprietor of M/s Mahalakshmi Granites fixing the amount at Rs.15,000/- per day towards crushing of stones for a period of 24 months started from October, 2014. If the said letter is meticulously appreciated with the I.T. returns, it indicates that Smt. Nalinakshi, the present accused No.3 who is the proprietor of M/s Mahalakshmi Granites was also the proprietor of M/s.Gangamma Granites and in turn M/s Gangamma Granites had given a work order in favour of accused No.3 and on the basis of the same, a detailed project report was prepared wherein, it was stated that the project was a feasible one and the intending purchase of machinery would bring huge profit to the proprietor. Based on the said project report and the purchase order issued by M/s.Gangamma Granines, the concerned Bank i.e., the accused No.1 had processed the loan 75 Spl.C.No.482/2017 application and necessary processing were carried out and conducted as discussed above. All the aforesaid aspects would clearly indicate that the act of accused no.3 in seeking for loan assistance itself was a deliberate one and also accused No.1 Manager had actively connived with her in this regard. That apart, I have also appreciated the VAT Form No.7 which has been furnished along with the loan application. The vat form no.7 is disclosed with the TIN No.296600653559 which was issued by the Assistant Commissioner of Commercial Tax on 21.07.2010. Even in the document it is forthcoming that, the VAT certificate was issued to M/s. Mahalakshmi Granites. Once again, at the cost of repetition if only the loan application is appreciated along with the project report at Ex.P.65, it would indicate that it was a new firm established by the accused No.3 who was the proprietor of M/s Mahalakshmi Granites. For instance, in the project report it has been mentioned that the proprietorship was established in the year 2010. If the said aspect is accepted, once again, in I.T. returns 76 Spl.C.No.482/2017 would indicate that she had filed the returns purporting to be the proprietor of M/s Gangamma Granites. Both the aspects cannot sail together and the accused cannot be permitted to blow hot and cold in one breath and it clearly indicates that it was nothing but a farrago. Though she may be a proprietor of M/s Gangamma Granites also, the same should have been explained by her at the time of filing necessary application before the Bank and if that is to be accepted, then, once again the issuance of letter on 10.09.2014 by M/s Gangamma Granites in favour of accused No.3 by handing over purchase order on the basis of which, the project report was prepared would be falsified. That apart, the VAT certificate which has been furnished along with the certificate issued by the Directorate of Industries and Commerce terming M/s Mahalakshmi Granites as a small scale tiny unit would indicate that, she was the proprietor of the firm and also the issuance of work order by M/s Gangamma Granites on 10.09.2014 was a forged document which was created for availing loan. It is also 77 Spl.C.No.482/2017 pertinent to note that the rent agreement was entered between M/s.Mahalakshmi Granites with one Mr.Gururaj on 09.07.2014. However, the Manager had not bothered to collect any materials which were ancillary to prove that indeed the said premises were let out to M/s Mahalakshmi Granites viz the katha extracts, electricity bills or tax paid receipts should have been obtained by the Accused No.1 to substantiate the contention of Accused No.3 in this regard. As per the evidence of PW.11 Muniyappa, Smt. Ningamma was the owner of the premises in which she was staying. The said aspect is also required to be appreciated with the evidence of PW.18 Y.C.Shivakumar, who has appeared before the Court to tender his evidence with respect to the veracity of the VAT Form No.7 issued in favour of Mahalakshmi Granites which was marked as Ex.P.65. In his evidence he has specifically deposed that the certificate was not issued by their department and also the signature of the Assistant Commissioner of Commercial Tax and the seal did not belong to them. He has specifically deposed that 78 Spl.C.No.482/2017 the documents were forged one and he had arrived at a conclusion after verifying the documents with the documents maintained in their office. During the course of cross-examination, nothing much was elucidated from his evidence. When the entire evidence is carefully appreciated, it clearly indicates that the establishing of the unit by accused No.3 Nalinakshi itself was doubtful one since there are no materials to indicate that she herself was the proprietor of the Firm or to put in another way she obtained necessary work order from some other firm so as to justify availing of loan towards earth moving and granite work. The document on which reliance is placed is marked along with the project report at Ex.P.65 indicating it to be issued by M/s Gangamma Granites. However, the Income Tax returns indicates that Smt. Nalinakshi herself was the proprietor of Gangamma Granites. Accordingly, accused No.3 herself could not have issued purchase order or work orders to herself and it clearly indicates that same were created for the purpose of availing loan. I have also considered the 79 Spl.C.No.482/2017 evidence of the valuation i.e., PW.6 S.P.Ramachandra. In his evidence, he has deposed that on 07.12.2015, he had collected the documents and on 08.12.2015 he had visited the premises and found that no machineries were available in the place where the unit was set up. Once again, it is relevant to note that on a telephonic call being made by him and PW.4 Guru Prasad, the same was received by Mr. Ramesh. Interestingly, Ramesh is the same person who had received the telephonic call of the aforesaid witnesses when they had visited M/s Manjunatha Engineering Works also. It is further narrated by Mr. Ramesh that the machineries was taken out to Huliyurudurga and other places, even the name board was not forthcoming in the said premises. He has deposed of furnishing the report as per Ex.P.35. During the course of cross-examination, he has feigned his ignorance with respect to the proprietors of both the firms and also nothing much has been elucidated from him with respect to M/s Mahalakshmi Granites. The evidence when appreciated with the evidence of the 80 Spl.C.No.482/2017 Investigating Officer, i.e., PW.22 it indicates that PW.22 Rakesh Ranjan had visited the premises on 31.01.2017 along with PW.4 Guru Prasad and PW.6 S.P.Ramachandra. It is his evidence that there he had met the brother of accused No.2 by name S. Ramesh. It is relevant to note that S. Ramesh is none other than the person who has been arrayed as accused No.4. In the above case, it is also been elucidated from him that the said Ramesh had stated that the machineries were shifted to Chittoor, Andhra Pradesh and had requested some time to produce the machineries. It has been deposed by him that no machineries were produced by accused No.3 Nalinakshi. When the entire evidence is carefully appreciated with the materials produced before the court, it would indicate that a false claim has been made by accused No.3 with respect to purchase of the machinery. The Vigilance report of the Bank which has been marked at Ex.P.37 also indicates that an inspection was conducted by PW.3 Nagesh on 5.8.2015 and it was noticed that he had visited the premises along with 81 Spl.C.No.482/2017 accused No.1 N. Satya Babu and at the said address, the unit was in the residential area with a small room which was closed and a sign board was hanging in the premises. For the sake of arguments, if it is to be accepted that, indeed a unit was being established in the said premises, once again, the Manager i.e., accused No.1 N. Satya Babu is required to answer that why he had processed and sanctioned loan to an entity which was doing a commercial transaction in a residential premises and that too in a small building. It is a common sense that the earth moving and granite crushing unit cannot be established in a residential area nor it can be run in a small room or a premises. Even for the sake of arguments, the accused contends that it was being taken out to various places, then also, the accused persons are duty bound to answer that why they had not disclosed the same before the Bank authorities. I have also appreciated the hypothecation documents which were furnished by accused No.3 Nalinakshi on behalf of M/s Mahalakshmi Granites. The said hypothecation 82 Spl.C.No.482/2017 agreement is marked as Ex.P.69 which indicates that a sum of Rs.20.00 lakhs was sanctioned on 25.10.2014 towards purchasing machinery. In the schedule part B, it has been stated that the machinery worth Rs.27.47 lakhs were hypothecated to the Bank. However, no description of the machinery has been mentioned in the document. At this juncture, it is relevant to note the accounts statement pertaining to Mahalakshmi Granites. As per the document at Ex.P.71, on 28.10.2014, a sum of Rs.20.00 lakhs were credited into the loan account of M/s. Mahalakshmi Granites and if the contention of the accused that they had produced necessary certificate with respect of purchasing of machinery is to be accepted, then, once again, the accused is required to answer that whether they had supplied the machinery prior to obtaining the loan or subsequently thereafter. The Bank Manager had not bothered to collect the document confirming the end usage or necessary documents from the supplier with respect to supplying the machinery. This clearly indicates of playing fraud for 83 Spl.C.No.482/2017 making false representation before the competent authorities. The question which arises at this juncture is whether any representations being made before the Bank authorities could be construed as amounting to fraud. In this regard, the court has relied upon the Judgment of the Hon'ble Apex Court reported in (2003) 8 SCC 311 (Ram Preeti Yadav vs U.P. Board of High School And Intermediate Education And Ors) wherein it has been held as:
13. Fraud is a conduct either by letter or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. Although negligence is not fraud but it can be evidence on fraud.
(See Derry v. Peek [(1889) 14 AC 337 : (1886-90) All ER Rep 1 (HL)] .) In the aforesaid judgment the Hon'ble Apex Court has clearly held that the fraud is a conduct which could be construed of being committed either by letter or words which induces the other persons or authority to take a definite determinative stand as a response to the 84 Spl.C.No.482/2017 conduct of former either by words or letter. Further in a similar manner Hon'ble Apex Court in another authority reported in (1996) 3 SCC 310 (Gowri Shankar Vs. Joshi Amba Shankar Family Trust) has held as follows:-
8. By "fraud" is meant an intention to deceive; whether it is from any expectation of advantage to the party himself or from ill-will towards the other is immaterial. The expression "fraud"
involves two elements, deceit and injury to the person deceived. Injury is something other than economic loss, that is, deprivation of property, whether movable or immovable, or of money, and it will include any harm whatever caused to any person in body, mind, reputation or such others. In short, it is a non-economic or non-pecuniary loss.
A benefit or advantage to the deceiver, will almost always cause loss or detriment to the deceived. Even in those rare cases where there is a benefit or advantage to the deceiver, but no corresponding loss to the deceived, the second condition is satisfied. [SeeVimla (Dr.)v.Delhi Admn. [1963 Supp (2) SCR 585 : AIR 85 Spl.C.No.482/2017 1963 SC 1572 at pp. 1576-77 para 14 :
(1963) 2 Cri LJ 434] and Indian Bank v. Satyam Fibres (India) (P) Ltd. [(1996) 5 SCC 550] ]
9. A "fraud" is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. (See S.P. Chengalvaraya Naidu v. Jagannath [(1994) 1 SCC 1].)
10. "Fraud" as is well known vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either by letter or words, which includes the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by wilfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party 86 Spl.C.No.482/2017 makes representations, which he knows to be false, and injury enures therefrom although the motive from which the representations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata.
(See Ram Chandra Singh v. Savitri Devi [(2003) 8 SCC 319] .)
11. "Fraud" and collusion vitiate even the most solemn proceedings in any civilised system of jurisprudence. It is a concept descriptive of human conduct. Michael Levi likens a fraudster to Milton's sorcerer, Comus, who exulted in his ability to, 'wing me into the easy- hearted man and trap him into snares'.
It has been defined as an act of trickery or deceit. In Webster's Third New 87 Spl.C.No.482/2017 International Dictionary "fraud" in equity has been defined as an act or omission to act or concealment by which one person obtains an advantage against conscience over another or which equity or public policy forbids as being prejudicial to another. In Black's Law Dictionary, "fraud" is defined as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or surrender a legal right. A false representation of a matter of fact, whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury. In Concise Oxford Dictionary, it has been defined as criminal deception, use of false representation to gain unjust advantage; dishonest artifice or trick.
According to Halsbury's Laws of England, a representation is deemed to have been false, and therefore a misrepresentation, if it was at the material date false in substance and in 88 Spl.C.No.482/2017 fact. Section 17 of the Contract Act, 1872 defines "fraud" as an act committed by a party to a contract with the intent to deceive another. From dictionary meaning or even otherwise fraud arises out of a deliberate active role of the representator about a fact, which he knows to be untrue yet he succeeds in misleading the representee by making him believe it to be true. The representation to become fraudulent must be of fact with the knowledge that it was false. In a leading English case i.e. Derry v. Peek [(1886-90) All ER Rep 1 : (1889) 14 AC 337 (HL)] what constitutes "fraud" was described thus : (All ER p. 22 B-C) "[F]raud is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false."
But "fraud" in public law is not the same as "fraud" in private law. Nor can the ingredients, which establish "fraud"
in commercial transaction, be of assistance in determining fraud in administrative law. It has been aptly observed by Lord Bridge in Khawaja v.
89 Spl.C.No.482/2017Secy. of State for Home Deptt. [(1983) 1 All ER 765 : 1984 AC 74 : (1982) 1 WLR 948 (HL)] that it is dangerous to introduce maxims of common law as to effect of fraud while determining fraud in relation to statutory law. "Fraud" in relation to statute must be a colourable transaction to evade the provisions of a statute.
"'If a statute has been passed for some one particular purpose, a court of law will not countenance any attempt which may be made to extend the operation of the Act to something else which is quite foreign to its object and beyond its scope.' Present-day concept of fraud on statute has veered round abuse of power or mala fide exercise of power. It may arise due to overstepping the limits of power or defeating the provision of statute by adopting subterfuge or the power may be exercised for extraneous or irrelevant considerations. The colour of fraud in public law or administrative law, as it is developing, is assuming different shades. It arises from a deception committed by disclosure of incorrect facts knowingly and deliberately to invoke exercise of power 90 Spl.C.No.482/2017 and procure an order from an authority or tribunal. It must result in exercise of jurisdiction which otherwise would not have been exercised. That is misrepresentation must be in relation to the conditions provided in a section on existence or non-existence of which power can be exercised. But non-
disclosure of a fact not required by a statute to be disclosed may not amount to fraud. Even in commercial transactions non-disclosure of every fact does not vitiate the agreement. 'In a contract every person must look for himself and ensures that he acquires the information necessary to avoid bad bargain.' In public law the duty is not to deceive." (See Shrisht Dhawan v. Shaw Bros. [(1992) 1 SCC 534] SCC p. 554, para 20.)
14. Suppression of a material document would also amount to a fraud on the court. (See Gowrishankar v. Joshi Amba Shankar Family Trust [(1996) 3 SCC 310] and S.P. Chengalvaraya Naidu case [(1994) 1 SCC 1] .
15. "Fraud" is a conduct either by letter or words, which induces the other person or authority to take a definite 91 Spl.C.No.482/2017 determinative stand as a response to the conduct of the former either by words or letter. Although negligence is not fraud but it can be evidence on fraud; as observed in Ram Preeti Yadav case [(2003) 8 SCC 311] .
52. The dictum laid down in the aforesaid judgment is squarely applicable to the facts of the case and indeed the applications., project report, lease agreement, quotation and other documents were furnished to the Bank by Accused No.2 to 4 with active connivance of Accused No.1 without any intention of performing the same or with blatant intention to cheat and defraud the Bank. That apart, the account extract pertaining to accused No.3 Smt. Nalinakshi, with respect to M/s Mahalakshmi Granites is also required to be appreciated. The account extract has been produced at Ex.P.58 indicates that a sum of Rs.19.73 lakhs was transferred into their account towards purchase of machinery on 28.10.2014. Subsequently, on the very same day, a sum of Rs.20,07,400/- was transferred to 92 Spl.C.No.482/2017 the account of M/s D J Max Engineering System belonging to accused No.4. If, for the sake of arguments, if it is to be accepted that the loan account was transferred to the account of accused No.4, then also, it requires explanation for the simple reason that, how the margin amount was paid. Admittedly, the entire amount which was credited into the account of M/s Mahalakshmi Granites was not paid towards the machinery amount since the quotation which has been furnished by M/s D J Max Engineering System at Ex.P.33 indicates that the total value of the machinery which was intended to be purchased was for a sum of Rs.27,47,400/-. However, on 28.10.2014, only a sum of Rs.20,07,400/- was transferred. Even otherwise, if it is accepted that certain initial payment was made, then there are no materials to indicate that a sum of Rs.7.40 lakhs was transferred to the account of M/s. D J Max Engineering System through the account itself. The receipt dated 20.10.2014 indicates that a sum of Rs.7.40 lakhs was paid by cash to them by accused No.3. Even 93 Spl.C.No.482/2017 otherwise, when the entire aspect is carefully appreciated, the manner in which the amount was transferred and also the manner in which the machineries are allegedly supplied, it cast a serious cloud of doubt over the contentions of the accused persons. Last, but not the lease, the joint inspection report, which has been furnished by PW.3 Nagesh at Ex.P.39 is also looked into. Even in his report, it has been specifically stated that the unit was in a residential area with a small room and no new machinery was found. Under the circumstances, the entire contentions urged by the parties would clearly indicate of entertaining a mala-fide intention to cheat and defraud the bank right from the inception.
53. In the instant case, it is pertinent to note that accused Nos.2 and 3 who were the proprietors of M/s Manjunatha Engineering Works and M/s Mahalakshmi Granites respectively had purchased the machineries from the firm of accused No.4 i.e., M/s D J Max Engineering System. In the instant case, the 94 Spl.C.No.482/2017 specific allegation is that the accused No.1 being the Manager had entered into a criminal conspiracy and had processed the loan amount. In the earlier part of the judgment materials placed before the court is examined to determine the existence of M/s Manjunatha Engineering Works and also M/s Mahalakshmi Granites itself was doubtful. In both the instances, the supplier of machinery was M/s D J Max Engineering System. In order to ascertain whether the machineries were indeed supplied once again the materials furnished before the court is required to be considered alongwith the evidence which has been led is required to be looked into. PW.12 R.Bhaskar is the owner of the premises where allegedly the Engineering Works belonging to accused No.4 was established. PW.12 in his evidence has specifically deposed that in the year 2013 he had let out one portion of his house situated in the ground floor to one S.Ramesh on a monthly rent of Rs.13,000/-. Further, he has deposed that one day he had noticed a display board of M/s. D J Max Engineering System in his rented 95 Spl.C.No.482/2017 premises and accordingly he had directed Ramesh to remove the said board as it was a residential area. It is his specific evidence that he had later on removed the board also. The witness was confronted with a photograph affixed to the account opening form at Ex.P.83 and he has deposed that it was not belonging to the person whom he had rented out the premises. But it was the person who used to meet his tenant in the premises. Later on, the witness has identified accused No.4 who was present before the Court as the one who used to visit the said premises. With this factual background, the cross-examination of accused No.4 is required to be looked into. During the course of his cross examination, it is his specific assertion that no one resided in the said premises but it was frequented by two to three persons. At that point of time, it was suggested that accused No.4 used to regularly visit the place along with his tenant S.Ramesh. At this juncture the suggestion made by Accused No.4 is required to be considered and if for the sake of arguments, the 96 Spl.C.No.482/2017 suggestion is to be accepted, then, the account opening form at Ex.P.83 furnished by accused No.4 itself would be falsified as he has mentioned the aforesaid address as to be his official address. For instance, in the document at Ex.P.83 which is the account opening form, the residential address and also the office address has been specifically shown as the place which was rented out by PW.12. R.Bhaskar. The suggestion which has been made by the accused themselves would clearly indicate that the accused persons had indeed entertained mala-fide intention to cheat and defraud the Bank right from the inception. The account opening form at Ex.P.83 was filled by accused No.4 at an undisputed point of time.
That apart, I have also considered the other documents which have been produced by the investigating agencies with respect to maintaining another account by accused No.4 at Sri. Arjun Souhardha Pathina Sahakari Niyamitha. Even in that, the residential address of accused No.4 has been shown as No.154, 8 th Main, A Block, Rajajinagar Second Stage, Bengaluru and 97 Spl.C.No.482/2017 whereas, the official address has been shown as No.2 Gokula Nilaya, 2nd Cross, N. S Iyengar Street, Sheshadripuram, Bengaluru. The said loan account was opened in the month of July, 2014 and also a certificate issued by the Directorate of Industries and Commerce to D J Max Engineering System also bears the very same address and the certificate was issued on 11.06.2012.
The particular suggestion put forth by the Learned Counsel for accused would only indicate that the accused had tried to take advantage of similarity in the name of the tenant by name S.Ramesh. If the suggestion is accepted, then, it will lead to draw an inference that indeed, accused No.4 was not at all the tenant of the premises which was allegedly let out by PW.12. In the further portion of the cross-examination, it was suggested to him that he had not at all rented out the house to Ramesh at any point of time and the suggestion has been admitted by the witness. The admission itself fortifies the case of the prosecution rather than that of the accused person. Later on, it was suggested to him 98 Spl.C.No.482/2017 that he did not know that accused No.4 and tenant S. Ramesh were running office and M/s. D J Max Engineering System activities in his rented house. The aforesaid suggestion once again seriously casts a shadow of doubt over the manner in which the accounts are being managed. As per the records which has been furnished to the Bank authorities at Ex.P.83 as well as the document at Ex.P.84, it clearly indicates that the account of M/s. D J Max Engineering System was being operated by one Mr. S Ramesh and even his identity has been not disputed at any point of time. The aforesaid evidence would once again lead to a serious question mark that whether accused No.4 himself is the person who had opened the account with the then Syndicate Bank (now merged with Punjab National Bank and Sri.Arjun Souhardha Pathina Sahakari Niyamitha. In this regard, the evidence of PW.10 A. Balasami, is required to be looked into. PW.10 is a handwriting expert, who had joined CFSL, Hyderabad Government of India and was working as Deputy Director and Scientist 99 Spl.C.No.482/2017 at CFSL who was entrusted with examining of questioned documents coming under Ministry of Home Affairs. He has explained in detail about his education credentials and also his experience field of examination of questioned documents for last 33 years. He had specifically deposed that he was sent with a questioned document pertaining to one Mr. S.Ramesh. He has deposed that the questioned signatures of S.Ramesh were marked as Q.66 to Q.70 and Q.72 to 75 with the specimen signatures marked as S.208 to 205. He has in detail explained the manner in which he had examined the admitted signatures and also the questioned signatures and on careful appreciation of the same, he has stated that the questioned signatures at Q.66 to 69 which were on the account opening form of S.Ramesh at Ex.P.83 and also the questioned signatures on the account opening form of M/s. D J Max Engineering System at Arjun Souhardha Pathina Sahakari Niyamitha Ex.P.84 were similar and one and the same with respect to two vouchers marked at Ex.P.87 and P.88.100 Spl.C.No.482/2017
Admittedly, the accused No.4 cannot deny of withdrawing the amount through the vouchers at Ex.P.87 and P.88 from the Bank for a sum of Rs.10.00 lakhs and Rs.13.80 lakhs on 29.09.2018 and 01.10.2014. At the cost of repetition, the aforesaid amounts were credited into the account of accused No.4 from the account of M/s Manjunatha Engineering Works and M/s Mahalakshmi Granites at Syndicate Bank which was transferred to his account at Arjun Souhardha Pathina Sahakari Niyamitha. Based on the said transfers, he had proceeded to withdraw the amount. If the accused denies transfer and withdrawing of the amount, then, again, the case of accused Nos.2 and 3 would be falsified since in the absence of transfer of any transfer to the account of M/s. D J Max Engineering System the question of supplying with the machinery will not arise at all. It is their specific contention before the Court that they had indeed obtained the supply of machinery as per the quotation handed over by M/s. D J Max Engineering System.101 Spl.C.No.482/2017
54. When the accused himself admits of issuing quotation to M/s. Manjunatha Engineering Works and M/s. Mahalakshmi Granites then he cannot be permitted to take up a stand which is baselessly contrary to his earlier stand. That apart, the opinion which has been furnished by the handwriting expert at Ex.P.90 indicates that it was the very same person who had affixed his signature. During the course of cross-examination, nothing was suggested to him to cast aspersion on the evidence tendered by him. All these aspects would clearly indicate that accused No.4 S.Ramesh was the person who had opened account at Syndicate Bank through the application at Ex.P.83 and also another account at Arjun Souhardha Pathina Sahakari Niyamitha as per Ex.P.84 and he was the person who had affixed his signature to the vouchers at Ex.P.87 and P.88 and had withdrawn the amount. Under the circumstances, the evidence tendered by PW.12 clearly indicates that accused No.4 had played a fraud in furnishing a false address to the Bank authorities and indeed accused No.1 N. Satya 102 Spl.C.No.482/2017 Babu who was the custodian of the public fund and amount had failed to discharge his duty and had also failed to verify the veracity of the claim made by D J Max Engineering System. The evidence of PW.14 A.B.Shamshudin is also required to be considered at this juncture. PW.14 was the Additional Commissioner incharge of GST section, Commercial Tax Department, has deposed that the TIN number of M/s. D J Max Engineering System was mentioned as 29486443915.
On verification he had noticed that it was not a genuine number and a false claim has been made. Accordingly, he had issued a letter as per Ex.P.96 and also copy of the e-filing system with respect to verification was furnished by him as per Ex.P.97. He has also specifically deposed that there was no possibility of allotting two numbers for a same firm or a person of the same address. This clarifies the entire contention of the accused person that the said form was not at all in existence. It is also deposed that the form VAT 07 bearing the aforesaid number standing in the name of 103 Spl.C.No.482/2017 S.Ramesh was not issued by their department. During the course of cross-examination, some questions have been put forth to the witness stating that whether any action was initiated for furnishing the forged documents.
That apart, I have also appreciated the evidence of PW.22 Rakesh Ranjan who is the Investigating Officer in the above case. In his evidence he has deposed of collecting the letters from the Commercial Tax Department as per Ex.P.96 to P.98 and also the VAT certificate. It is relevant to note at this juncture that the accused has suggested that they had never furnished the TIN number and it was furnished to suit the needs of the prosecution. At this juncture, once again, the quotation which has been furnished is required to be looked into. The quotation which has been furnished at Ex.P.23 to M/s Manjunatha Engineering Works on 12.09.2014 consists of TIN number mentioned as 29240800845. However, the quotation which has been furnished in the same month to M/s Mahalakshmi Granites consists of the TIN number 29486443915. When the evidence of PW.14 104 Spl.C.No.482/2017 B.A.Shamsudin is revisited, it clearly establishes that two TIN numbers would not be given to a firm or to a person wherein a similar address has been given. When the said aspect is once again compared with the report which has been furnished as Ex.P.103 which is the letter issued by competent authority i.e., from the Assistant Commissioner of Commercial Tax, Government of Karnataka, it indicates that the firms were not at all in existence and also TIN numbers were all forged and fabricated. Even otherwise, if for the sake of arguments, the document at Ex.P.23 is compared with the other quotation at Ex.P.33 which were also issued within a span of 14 days would clearly indicate that it was a concocted and created document. The unerring fact which could be clearly ascertained and noticed from the records when appreciated with the evidence would clearly indicate that the submission of the learned counsel for accused No.1 that his act of not verifying the records cannot be termed as minor misnomer and it is to be held that the same was done intentionally since the 105 Spl.C.No.482/2017 prosecution are able to establish their case that they had indeed developed malafide intention right from the beginning, hence the submission made by the learned counsel for accused does not holds water. By looking into the entire averments and contentions which has been urged before the Court, it is crystal clear that an inference can be drawn that M/s. D J Max Engineering System was also not in existence. Even otherwise, as per their own document, a VAT at the rate of 14% was required to be paid to the Government whenever machinery was supplied. However, it is the specific assertion and evidence of the Assistant Commissioner of Commercial Tax that no such taxes were paid by accused No.4. If the accused No.4 makes the claim of supply of machinery then he is liable to answer that how he has made the payment of tax i.e., at the rate of 14% VAT to the Government of Karnataka and that too through the TIN and VAT Form No.7 which is found to be forged document. That apart if the Accused No.4 takes up an contention that he had remitted necessary tax to 106 Spl.C.No.482/2017 the Government through some other account, then he has to offer an explanation in this regard. The particular aspect is only within the knowledge of accused No.4 and as per the provisions of Sec.106 of Indian Evidence Act he is bound to answer the fact. The Accused is the only person who has to offer an explanation, since the said fact was within his knowledge. In this regard the court has relied upon the judgment of the Hon'ble Apex court reported in 2023 SCC Onlince SC 1261 (Balvir Singh V State of Uttarkhand) wherein it is held as:
34. Section 106 of the Evidence Act re-
ferred to above provides that when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. The word "especially" means facts that are pre-eminently or ex- ceptionally within the knowledge of the accused. The ordinary rule that applies to the criminal trials that the onus lies on the prosecution to prove the guilt of the accused is not in any way modified by the rule of facts embodied in Section 106 of the Evidence Act. Section 106 of the Evidence Act is an exception to Section 107 Spl.C.No.482/2017 101 of the Evidence Act. Section 101 with its illustration (a) lays down the general rule that in a criminal case the burden of proof is on the prosecution and Section 106 is certainly not intended to relieve it of that duty. On the contrary, it is de-
signed to meet certain exceptional cases in which it would be impossible or at any rate disproportionately difficult for the prosecution to establish the facts which are, "especially within the knowledge of the accused and which, he can prove without difficulty or inconvenience".
35. In Shambhu Nath Mehra v. The State of Ajmer, AIR 1956 SC 404, this Court while considering the word "especially" employed in Section 106 of the Evidence Act speaking through Vivian Bose, J., observed as under:
"11. ...The word "especially" stresses that. It means facts that are pre-emi- nently or exceptionally within his knowl- edge. If the section were to be interpreted otherwise, it would lead to the very star- tling conclusion that in a murder case the burden lies on the accused to prove that he did not commit the murder because who could know better than he whether he did or did not.108 Spl.C.No.482/2017
It is evident that that cannot be the inten- tion & the Privy Council has twice re- fused to construe this section, as repro- duced in certain other Acts outside India, to mean that the burden lies on an ac- cused person to show that he did not commit the crime for which he is tried.
These cases are Attygalle v. The King, AIR 1936 PC 169 (AIR V 23) (A) and Seneviratne v. R, [1936] 3 All ER 36 at p. 49 (B)."
36. The aforesaid decision of Shambhu Nath (supra) has been referred to and re- lied upon in Nagendra Sah v. State of Bi- har, (2021) 10 SCC 725, wherein this Court observed as under:
"22. Thus, Section 106 of the Evidence Act will apply to those cases where the prosecution has succeeded in establish- ing the facts from which a reasonable in- ference can be drawn regarding the exis- tence of certain other facts which are within the special knowledge of the ac- cused. When the accused fails to offer proper explanation about the existence of said other facts, the court can always draw an appropriate inference.109 Spl.C.No.482/2017
23. When a case is resting on circumstan- tial evidence, if the accused fails to offer a reasonable explanation in discharge of burden placed on him by virtue of Section 106 of the Evidence Act, such a failure may provide an additional link to the chain of circumstances. In a case gov- erned by circumstantial evidence, if the chain of circumstances which is required to be established by the prosecution is not established, the failure of the accused to discharge the burden under Section 106 of the Evidence Act is not relevant at all. When the chain is not complete, fal- sity of the defence is no ground to convict the accused."
37. In Tulshiram Sahadu Suryawan-
shi v. State of Maharashtra, (2012) 10 SCC 373, this Court observed as under:
"23. It is settled law that presumption of fact is a rule in law of evidence that a fact otherwise doubtful may be inferred from certain other proved facts. When in- ferring the existence of a fact from other set of proved facts, the court exercises a process of reasoning and reaches a logi- cal conclusion as the most probable posi- tion. The above position is strengthened 110 Spl.C.No.482/2017 in view of Section 114 of the Evidence Act, 1872. It empowers the court to pre- sume the existence of any fact which it thinks likely to have happened. In that process, the courts shall have regard to the common course of natural events, hu- man conduct, etc. in addition to the facts of the case. In these circumstances, the principles embodied in Section 106 of the Evidence Act can also be utilised. We make it clear that this section is not in- tended to relieve the prosecution of its burden to prove the guilt of the accused beyond reasonable doubt, but it would apply to cases where the prosecution has succeeded in proving facts from which a reasonable inference can be drawn re- garding the existence of certain other facts, unless the accused by virtue of his special knowledge regarding such facts, failed to offer any explanation which might drive the court to draw a different inference. It is useful to quote the follow- ing observation in State of W.B. v. Mir Mo- hammad Omar [(2000) 8 SCC 382 : 2000 SCC (Cri) 1516] : (SCC p. 393, para 38)
"38. Vivian Bose, J., had observed that Section 106 of the Evidence Act is de-
111 Spl.C.No.482/2017signed to meet certain exceptional cases in which it would be impossible for the prosecution to establish certain facts which are particularly within the knowl- edge of the accused. In Shambu Nath Mehra v. State of Ajmer [AIR 1956 SC 404 : 1956 Cri LJ 794] the learned Judge has stated the legal principle thus : (AIR p. 406, para 11) '11. This lays down the general rule that in a criminal case the burden of proof is on the prosecution and Section 106 is cer- tainly not intended to relieve it of that duty. On the contrary, it is designed to meet certain exceptional cases in which it would be impossible, or at any rate dis- proportionately difficult for the prosecu- tion to establish facts which are "espe- cially" within the knowledge of the ac- cused and which he could prove without difficulty or inconvenience.
The word "especially" stresses that. It means facts that are pre-eminently or ex- ceptionally within his knowledge.'""
(Emphasis supplied)
42. Section 106 cannot be invoked to make up the inability of the prosecution to produce evidence of circumstances pointing 112 Spl.C.No.482/2017 to the guilt of the accused. This section can- not be used to support a conviction unless the prosecution has discharged the onus by proving all the elements necessary to estab- lish the offence. It does not absolve the prosecution from the duty of proving that a crime was committed even though it is a matter specifically within the knowledge of the accused and it does not throw the bur- den of the accused to show that no crime was committed. To infer the guilt of the ac- cused from absence of reasonable explana- tion in a case where the other circum- stances are not by themselves enough to call for his explanation is to relieve the prosecution of its legitimate burden. So, un- til a prima facie case is established by such evidence, the onus does not shift to the ac- cused.
43. Section 106 obviously refers to cases where the guilt of the accused is established on the evidence produced by the prosecution unless the accused is able to prove some other facts especially within his knowledge which would ren- der the evidence of the prosecution nuga- tory. If in such a situation, the accused gives an explanation which may be rea-113 Spl.C.No.482/2017
sonably true in the proved circumstances, the accused gets the benefit of reason- able doubt though he may not be able to prove beyond reasonable doubt the truth of the explanation. But if the accused in such a case does not give any explana- tion at all or gives a false or unacceptable explanation, this by itself is a circum- stance which may well turn the scale against him. In the language of Prof. Glanville Williams:
"All that the shifting of the eviden- tial burden does at the final stage of the case is to allow the jury (Court) to take into account the silence of the accused or the absence of satisfactory explanation appearing from his evidence."
44. To recapitulate the foregoing :
What lies at the bottom of the various rules shifting the evidential burden or burden of introducing evidence in proof of one's case as opposed to the persuasive burden or burden of proof, i.e., of proving all the issues remaining with the prosecu- tion and which never shift is the idea that it is impossible for the prosecution to give wholly convincing evidence on certain is- sues from its own hand and it is there-114 Spl.C.No.482/2017
fore for the accused to give evidence on them if he wishes to escape. Positive facts must always be proved by the pros- ecution. But the same rule cannot always apply to negative facts. It is not for the prosecution to anticipate and eliminate all possible defences or circumstances which may exonerate an accused. Again, when a person does not act with some intention other than that which the character and circumstances of the act suggest, it is not for the prosecution to eliminate all the other possible intentions. If the accused had a different intention that is a fact es- pecially within his knowledge and which he must prove (see Professor Glanville Williams--Proof of Guilt, Ch. 7, page 127 and following) and the interesting discus- sion--para 527 negative averments and para 528--"require affirmative counter-
evidence" at page 438 and foil,
of Kenny's outlines of Criminal Law,
17th Edn. 1958.
46. A manifest distinction exists
between the burden of proof and the bur- den of going forward with the evidence. Generally, the burden of proof upon any affirmative proposition necessary to be 115 Spl.C.No.482/2017 established as the foundation of an issue does not shift, but the burden of evidence or the burden of explanation may shift from one side to the other according to the testimony. Thus, if the prosecution has offered evidence which if believed by the court would convince them of the ac- cused's guilt beyond a reasonable doubt, the accused is in a position where he should go forward with counter-vailing evidence if he has such evidence. When facts are peculiarly within the knowledge of the accused, the burden is on him to present evidence of such facts, whether the proposition is an affirmative or nega- tive one. He is not required to do so even though a prima facie case has been estab- lished, for the court must still find that he is guilty beyond a reasonable doubt before it can convict. However, the accused's failure to present evidence on his behalf may be re- garded by the court as confirming the conclu- sion indicated by the evidence presented by the prosecution or as confirming presump- tions which might have been rebutted. Al- though not legally required to produce evi- dence on his own behalf, the accused may therefore as a practical matter find it essen- tial to go forward with proof. This does not al- ter the burden of proof resting upon the pros-116 Spl.C.No.482/2017
ecution (Wharton's Criminal Evidence, th 12 Edn. 1955, Vol. 1, Ch. 2 p. 37 and foil). Leland v. State, 343 US 790 (1952) : 96 L.Ed. 1302, Raffel v. U.S., 271 US 494 (1926) : 70 L.Ed. 1054.
55. The above said dictum of the Hon'ble Apex court would indicate that the normal rule of proving a fact beyond reasonable will always be on the prosecution. In other words generally, the burden of proof upon any affirmative proposition is required to be established as the foundation of an issue does not shift, but the burden of evidence or the burden of explanation may shift from one side to the other according to the testimony. Thus, if the prosecution has offered evidence which if believed by the court would convince them of the guilt of the accused beyond a reasonable doubt and if the accused is in a position to clarify by leading with counter-veiling evidence if any, then it is required by the accused to disclose the same. When facts are peculiarly within the knowledge of the accused, the burden is on him to present evidence of such facts, whether the proposition is an affirmative or negative one. The said 117 Spl.C.No.482/2017 aspect is required to be appreciated with the facts of the case on hand wherein he is required to make disclosures about the payment of VAT and GST to the Government if at all he had possessed necessary certificate. When the prosecution are able to establish before the court that the document in the form of VAT certificate issued are forged and not proper and when it is positively asserted by the Accused No.4 of supplying machinery, then it would be his bounden duty to explain about the certificates if he had possessed.
56. When the postulate is appreciated with the facts of the case, the inference that could be drawn that, accused No.4 has failed to pay any VAT to the Government authorities nor he has explained the said circumstances at the time of recording his statement u/Sec.313 of Cr.P.C., The provisions of recording the statement of 313 of Cr.P.C., is not a bald formality and it is the stage, wherein an opportunity has been given to the accused person to explain the incriminating materials available against him, though the non- 118 Spl.C.No.482/2017 explanation rendered by the accused cannot be a sole ground for conviction. At the same time, the non- explanation of the fact which was within his special knowledge can also be considered as an additional link to the circumstances which are pointed against him. By looking into the aforesaid aspects, the facts which has been placed before the Court is clearly proved by the prosecution.
57. With respect to the act of accused No.1 the court has to appreciate whether the same can be construed as minor misnomer which would attract the disciplinary proceedings as contended by the learned counsel for Accused No.1. The learned counsel for accused No.1 has relied upon the judgments of Hon'ble Apex Court as follows:-
1) (2021) 18 SCC 70 ( N.Raghavendra Vs. State of A.P.)
2) (2016) 12 SCC 273 ( A.Siva Prakash Vs. state of Kerala)
3) (2007) 13 SCC 410 (Radha Pisharassiar Amma vs State Of Kerala)
4) (1980) 3 SCC 110 (Abdulla Mohammed Pagarkar vs State (Union Territory Of Goa, Daman And Diu) 119 Spl.C.No.482/2017 The sum and substance of these aforesaid judgments is that the accused cannot be contemplated to have committed offence amounting to a fraudulent one just because there was some sort of minor irregularities.
However, in the instant case when the entire fact and circumstances of the case is conjointly read and appreciated, it does not indicate that it was only a minor misnomer which could be construed as the one attracting a Departmental Enquiry. In this regard, the court has relied upon the judgment of Hon'ble Apex Court in reported in (2009) 15 SCC 643 (Mir Nagvi Askari vs C.B.I) wherein it is held as:
62. The courts, however, while drawing an inference from the materials brought on record to arrive at a finding as to whether the charges of the criminal conspiracy have been proved or not, must always bear in mind that a conspiracy is hatched in secrecy and it is difficult, if not impossible, to obtain direct evidence to establish the same.
The manner and circumstances in which the offences have been committed and the accused persons took part are relevant. For the said purpose, it is necessary to prove that the 120 Spl.C.No.482/2017 propounders had expressly agreed to it or caused it to be done, and it may also be proved by adduction of circumstantial evidence and/or by necessary implication. (See Mohd. Usman Mohammad Hussain Maniyar v. State of Maharashtra [(1981) 2 SCC 443 : 1981 SCC (Cri) 477] .)
64. In some cases, intent of unlawful use being made of the goods or services in question may be inferred from the knowledge itself.
65. This Court in State of Maharashtra v. Som Nath Thapa [(1996) 4 SCC 659 : 1996 SCC (Cri) 820] opined that it is necessary for the prosecution to establish that a particular unlawful use was intended, so long as the goods or services in question could not be put to any lawful use, stating: (SCC p. 668, para 24) "24. The aforesaid decisions, weighty as they are, lead us to conclude that to establish a charge of conspiracy knowledge about indulgence in either an illegal act or a legal act by illegal means is necessary. In some cases, intent of unlawful use being made of the goods or services in question may be inferred from the knowledge itself. This apart, the prosecution has not to establish that a particular unlawful use was intended, so long as the goods or service in question could not be put to any lawful use. Finally, when the ultimate offence consists of a chain of actions, it would not be necessary for the prosecution to establish, to bring home the charge of conspiracy, that each of the conspirators 121 Spl.C.No.482/2017 had the knowledge of what the collaborator would do, so long as it is known that the collaborator would put the goods or service to an unlawful use."
(emphasis in original) And also another judgment of Hon'ble Apex Court reported in (2009) 11 SCC 737 (R.Venkatakrishna Vs. CBI) wherein it is held as:
162. The ingredients of sub-clause (iii) of Section 13(1)(d) contemplate that a public servant who while holding office obtains for any person any valuable thing or pecuniary advantage without any public interest would be guilty of criminal misconduct. Sub-section (2) of Section 13 provides for the punishment for such criminal misconduct. Minimum sentence is prescribed under Section 13(2) of the 1988 Act and a public servant who abuses his position as such for obtaining for himself or for any other person any valuable thing or pecuniary advantage cannot be punished for a term of imprisonment, which is less than for the duration of one year.
163. For convicting the person under Section 13(1)(d)(iii), there must be evidence on record that the accused "obtained" for any other person any valuable thing or pecuniary 122 Spl.C.No.482/2017 advantage without any public advantage.
164. In Dalpat Singh v. State of Rajasthan [AIR 1969 SC 17] , while interpreting an analogous provision in the unamended Prevention of Corruption Act, this (sic Court) opined:
(AIR p. 18) "The ingredients of the offence under Section 5(1)(d) are: (1) that the accused should be a public servant, (2) that he should use some corrupt or illegal means or otherwise abuse his position as a public servant, (3) that he should have obtained a valuable thing or pecuniary advantage, and (4) for himself or any other person."
165. The Madras High Court in B. Ramachandran and S.S. Abdul Hameed v. State [ Criminal Appeal No. 553 of 2000 decided on 23-3- 2007] noted thus:
"Section 13(1)(d) of the said Act also deals with the criminal misconduct by a public servant by means of corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage; or by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest."
166. In the light of the provisions already enumerated by us we as per 123 Spl.C.No.482/2017 the law laid down therefore hold that the accused, A-1 to A-3 (officials of UCO Bank) and A-6 (official of NHB) are guilty of criminal misconduct under the Prevention of Corruption Act. For the reasons already mentioned by us we do not find sufficient evidence to bring in the involvement of A-7 Suresh Babu within the fold of the said transaction.
167. All the accused were at the relevant time public servants. Each one of them played a specific role in diversion of funds from NHB to the account of Harshad Mehta, all ostensibly under a call money transaction. They thereby in our opinion facilitated Harshad Mehta to obtain pecuniary advantage within the meaning of the section. The acts were anything but intended to be in public interest. On the contrary the public loss and suffering occasioned thereby was immeasurable. Though it is true, as has been argued before us that all the funds diverted have subsequently been returned to NHB and no actual loss has been occasioned thereby either to UCO Bank or NHB. But it must not be forgotten that white collar crimes of such a nature affect the whole society even though they may not have any immediate victims. We, accordingly, hold accused A-1 to A-3 and A-6 guilty of criminal misconduct under Section 13(1)(d)(iii) of the Prevention of Corruption Act.
58. The allegations which has been leveled against accused No.1 Manager N. Satya Babu is of 124 Spl.C.No.482/2017 committing the criminal misconduct as contemplated under Section 13(1)(d) R/w. Sec.13(2) of Prevention of Corruption Act. In the instant case, the act which has been committed by accused No.1 cannot be considered as a misnomer which would attract the rigors of disciplinary action. As already discussed in detail, the accused No.1 being the custodian of the public fund was required to look into the fact that the loan application which was filed by accused No.2 and 3 seeking for loan assistance was devoid of merits. That apart, it is crystal clear that the accused No.1 had not made any pre- sanction visit and also post-sanction visit to the units. If he had made any such visits to the entities, he would have been come to know that the same were not in existence. The manner in which the entire transaction has been carried out would clearly indicate that the processing of loan and also its disbursement had taken place with the active connivance of accused No.1. It is also relevant to note that the supply of machinery i.e., M/s. D J Max Engineering System were also by the very 125 Spl.C.No.482/2017 same supplier who had come forward and issued quotation for supply of machinery to both accused Nos.2 and 3. The person who is at the helm of the affairs in normal parlance would act in a prudent manner to ascertain that how the very same company would supply machinery pertaining to various branded companies. It is also relevant to note that the unit which was alleged to have been run was described to be situated in the residential layout and also the supply of machinery i.e., accused No.4 D J Max Engineering System was alleged to have supplied the machinery immediately on the day when the amount was transferred. The machineries which were alleged to have been supplied were not small instruments, but the instruments which were utilized for the purpose of fabrication, earth moving and crushing of granite stones. As such, the storage of such bulk machineries in their premises could not have been possible since it was a residential layout and also a small rented house. Even for the sake of arguments, it is contended that the accused No.1 had followed all the 126 Spl.C.No.482/2017 principles and guidelines issued by the RBI, it would clearly indicate that he had not verified the documents properly. The sole act of accused No.1 would only indicate of entering into a criminal conspiracy with other accused persons and hence, the act committed by him would attract the rigors of Sec.13(1)(d) R/w. Sec.13(2) of Prevention of Corruption act.
59. Last but not the least; I have traversed with the authorities which have been relied upon by the Learned Counsel for accused in this regard. In all the aforesaid authorities, it has been stated by the authorities furnished by the accused persons i.e., reported in 2019 (9) SCC 148, which has been held that the very inability to return the loan amount cannot give rise to a criminal case for cheating unless fraudulent or dishonest intention is shown right from the beginning of the transaction. The same authority was relied upon in another judgment of the Hon'ble High Court reported in Crl.P.No.4346/2022. As already discussed above, the court has pointed the materials which would indicate 127 Spl.C.No.482/2017 that the accused persons had indeed entertained a criminal and fraudulent intention to cheat and defraud the bank right from its inception. In the earlier part of my judgment, I have discussed in detail about the manner in which the units were established by making false representation and also the quotations, transfer of amounts into the account of M/s D J Max Engineering System, which was not at all in existence as per the report of the Commercial Tax Department and furnishing of false and forged VAT Form No.7 Certificate would indicate about entertaining of dishonest intention. That apart, the other authority relied upon by the Learned Counsel for the accused in AIR 2021 SC 5298, it has been held that the intention is the gist of offences and in order to attract the provisions of cheating, fraudulent and dishonest intention at the time of making the promise, it is required to be established. That apart, the other two authorities relied upon with respect to Crl.A.No.207/2011 in the case of H.A.Seetharam Vs. State of Hyderabad / ACB, it has been held that, when a 128 Spl.C.No.482/2017 lonee offers immovable property as a collateral security, it cannot be considered as a criminal conspiracy. However, the manner in which the criminal conspiracy has been entered between the parties is already discussed and accordingly, the authorities relied upon by accused No.2 to 4 is not applicable to the case on hand.
60. Whereas, the authorities relied upon by the Learned Counsel for accused No.1 in (2021) 18 SCC 70 (N.Raghavender Vs. State of A.P. CBI), also discussed about the ingredients to prove the concept of cheating and in another judgment reported in (2016) 12 SCC 273 (K. Sivaprakash Vs. State of Kerala), indicates that, in order to attract the provisions of Sec.13(2) R/w. Sec.13(1)(d) of the Prevention of Corruption Act, the mandatory ingredients were to prove that the public servant had obtained pecuniary advantage for himself. In the instant case, the authority of the Hon'ble Apex Court can be distinguished since the Hon'ble Apex Court was discussing about Sec.13(1)(d) and in the case on hand, it is established by the prosecution that the 129 Spl.C.No.482/2017 accused No.1 had committed an act which can be termed as criminal misconduct and whereas in the instant case, the facts and circumstances are entirely different. The other authority of the Hon'ble Apex Court relied upon in (1980) 3 SCC 110 (Abdulla Mohd. Pagarkar Vs. State (Union Territory of Goa, Daman and Diu) is not applicable to the facts and circumstances of the case and also the last judgment of the Hon'ble Apex Court reported in (2007) 13 SCC 410 (Radha Pisharassiar Amma vs State Of Kerala). Hence, the contention of the accused persons cannot be accepted.
SUMMATION
61. In the instant case, the accused No.1 N. Satya Babu was working as the Manager of Syndicate Bank, Jalahalli Branch, Bengaluru and he had entered into a criminal conspiracy with accused No.2 Smt. S.Bharathi, who was the proprietor of M/s. Manjunatha Engineering Works towards purchasing of machinery worth Rs.25,80,561/- and accordingly, the necessary application as per Ex.P.23 came to be filed by her. 130 Spl.C.No.482/2017 However, without verifying the credentials of the existence of the unit, he had processed and sanctioned the loan amount. He had also not bothered to verify that whether the unit was in existence and subsequently after crediting of the aforesaid amount, it was transferred to the supplier i.e., accused No.4 who was the proprietor of M/s. D J Max Engineering System which was also not in existence. The accused No.1 Manager had also sanctioned loan to M/s. Mahalakshmi Granites belonging to accused No.3 Smt.H.Nalinakshi wherein, it is specifically noticed from the entire materials that the unit was not in existence. The accused No.3 had availed loan from the Bank to an extent of Rs.20.00 lakhs wherein she had intended to purchase machineries worth Rs.27,47,400/- from accused No.4 who was the proprietor of M/s D J Max Engineering System and even without supplying the machinery, the documents were created and the records which have been produced before the court would indicate that both the units were not in existence. The address of the units which were 131 Spl.C.No.482/2017 mentioned would indicate that they were in residential premises and since it was commercial activity, it was established during the course of evidence that false details was furnished. The accused No.3 who had claimed to be the proprietor of M/s. Mahalakshmi Granites had furnished a project report and also the work order allegedly given by M/s Gangamma Granites. In fact, as per her own records and I.T. Returns, she was the proprietor of M/s. Gangamma Granites also. By suppressing the said aspect, she had furnished in all claims claiming to be proprietor of M/s Mahalakshmi Granites for which a work order was given by M/s.Gangamma Granites. The Manager had not verified the said aspect and also his silence in this regard coupled with the evidence of the Assistant Commissioner of Commercial Tax, the VAT certificate and also the registration certificates issued by the Department of Industries and Commerce, would clearly indicates that no such units were registered by the firm and also the VAT certificate furnished by M/s Manjunatha 132 Spl.C.No.482/2017 Engineering Works, M/s Mahalakshmi Granites and M/s D J Max Engineering System were all forged, fabricated and created documents which were utilized by them to cheat and defraud the Bank. The aforesaid acts could not have been successfully completed without the connivance, help and support by accused No.1. Accordingly, the allegations leveled against them have been proved beyond reasonable doubt. Under the circumstances, the prosecution has successfully established their case beyond reasonable doubt. Accordingly the points for consideration are answered in the Affirmative.
62. Point No.4 : In view of the observations made on Point Nos.1 to 6, I proceed to pass the following;
ORDER Acting u/Sec.235(2) of Cr.P.C., the accused No.1 Sri.N Sathya Babu is hereby convicted for the offences punishable under Section 120-B and 420 of IPC and Sec.13(1)
(d) R/w Sec.13(2) of the Prevention of Corruption Act, 1988, Accused No.2 Smt. Bharathi S, Accused No.3 Smt.H. Nalinakshi and Accused No.4 Sri. S.Ramesh are hereby 133 Spl.C.No.482/2017 convicted for the offences punishable under Section 120-B, 420, 468, 471 of IPC.
Bail bonds and surety bonds stands cancelled.
To hear regarding sentence, call on 16.3.2024.
(Dictated to Stenographer Grade-I,transcribed by and typed by her, revised by me and then pronounced in open court on 15 th day of March, 2024) (Santhosh Gajanan Bhat) LXXXI Addl. City Civil & Sessions Judge, Bengaluru City (CCH-82) C/c of XLVII Addl. City Civil and Sessions Judge and Judge for CBI Cases, Bengaluru (CCH-48) ORDER REGARDING QUANTUM OF SENTENCE ON 18.3.2024 Heard the Learned Public Prosecutor on behalf of CBI authorities and also the Learned Counsel for accused persons.
The Ld. Public Prosecutor has vehemently argued that accused No.1 N. Satya Babu, who was the then 134 Spl.C.No.482/2017 Manager of Syndicate Bank, Jalahalli Branch, Bengaluru, during the period 2014-16 had entered into a criminal conspiracy with accused Nos.2 to 4 respectively in order to cheat and defraud the bank. In furtherance of the same, the accused No.1 had intentionally processed and sanctioned the loan application filed by other accused persons ignoring and flouting the directions and guidelines of the Reserve Bank of India and also the Syndicate Bank. It has been submitted by the Ld. Public Prosecutor that the fraudulent act of accused No.1 by entering into a criminal conspiracy with other accused persons has been established by the prosecution and the malice has been proved right from its inception. It is also been vehemently argued by the Ld. Public Prosecutor that, due to the act of accused Nos.1 to 4, the bank had incurred loss. It is also been submitted at length that the act of the accused persons have to be considered as a white collared offence, which bleed economy of the nation. Lastly, he has submitted that the accused No.1 being the custodian of the public 135 Spl.C.No.482/2017 funds should have taken care and protection and in derogation of the same, he had committed an act which is not befitting his status. Even otherwise, the other accused persons knowing fully well that no such units were in existence had filed loan applications along with forged and fabricated documents in order to cheat and defraud the Bank. Accordingly, he has sought that the sentence imposed upon by the accused persons should be proportional to the act committed by them. As such, he has sought for maximum sentence and also imposition of suitable fine as provided under the various provisions of law on the accused persons.
The Learned Counsel for the accused No.1 Sri.VNN, had vehemently argued that the allegation which is made against the accused No.1 N. Satya Babu was with respect to ignoring the guidelines, circulars and directions of the Reserve Bank of India as well as the Syndicate Bank. It has been submitted that N. Satya Babu though out his career had put in unblemished service except for the aforesaid allegations. It is also 136 Spl.C.No.482/2017 been contended that, various citations were awarded to him by the Bank for the achievement made by him in his career. He has also contended that the accused No.1 was dismissed from service in the month of March 2017 and his entire benefits including his gratuity was denied by the bank authorities. Further, the learned counsel for accused No.1 has also submitted that accused No.1 is suffering from various heart ailments and his son who is aged 25 years is required to undergo brain surgery. It has also been submitted that his wife is also suffering from various other health issues and he is the sole bread earner in his family.
Lastly, the learned counsel for accused has argued that there are no materials to indicate of obtaining any wrongful gain by the accused No.1 and the allegations which has been proved is of committing criminal misconduct. Accordingly, he has sought for taking a lenient view.
The Learned Counsel appearing for accused Nos.2 to 4 Sri. MVS, has submitted that, accused Nos.2 and 3 137 Spl.C.No.482/2017 are the women entrepreneurs and though the allegations against them are proved, it is to be kept in mind that, they were running a Proprietorship Unit for the first time in their life and had not entertained any mala-fide intention right from the beginning. It is also submitted that accused Nos.2 and 3 being the women entrepreneurs are required to take care of their family and due to the fact that they were not highly educated, they have affixed the signatures to the documents under the premises that the same would not be a tangible act under the eye of law. That apart, they have also submitted that accused Nos.2 to 4 are sole bread earners of their family and in particularly, accused Nos.2 and 3 being women are required to take care of their family and also they are suffering from various ailments and age related problems. By pointing out all the said aspects, they have sought for taking a lenient view and to impose minimum sentence as contemplated under the provisions of law.
138 Spl.C.No.482/2017
Heard the parties and the accused have reiterated the submissions of their counsels and the point that requires to be considered is what would be the appropriate sentence that could be imposed on the accused persons.
Time and again, it has been reiterated by the Hon'ble Apex Court that in the matters pertaining to awarding sentence, the court should be cautious and sift and weigh the factors which are relevant for arriving at a just conclusion. It is also the cardinal principle of law that the nature and gravity of the crime is important than the criminality. The court at the time of passing an order on quantum of sentence has to look in to the materials in a different manner than that of the appreciating evidence for passing of judgment. The court is not against the criminal but against the criminal act and at the time of considering the quantum of sentence, the court is required to look in to the manner in which the crime is committed. There are no specific legislations with respect to passing of quantum of sentence. 139 Spl.C.No.482/2017 However, the parameter which is required to be considered is based on the case laws which are required to be looked in to. Apart from that the Hon'ble Apex Court has also held that at the time of passing of sentence, an exercise has to be made by the court by pointing the aggravating and mitigating factors and balance has to be secured in order to appreciate the appropriate sentence that could be imposed upon the parties. In the aforesaid authorities, the Hon'ble Apex Court has also held that the economic offences have to be considered as a class apart, which cannot be equated with any other ordinary criminal case. Though the allegations may not look severe, in terms of physical harm being made, at the same time, the matters pertaining to economic offences would have a deep socio- economic effect on the society at large. By keeping in mind, I have bestowed my anxious reading to the submissions made by the Learned Counsel for the accused, Ld. Public Prosecutor and also the submissions 140 Spl.C.No.482/2017 of the accused persons. The following aggravating factors can be noticed in the instant case. Aggravating Factors:
1. The accused No.1 N. Satya Babu being the Manager of the Bank and custodian of public trust has failed to discharge his duty and has entered into a criminal conspiracy with other accused persons to cheat ah defraud the bank.
2. The accused No.1 who was entrusted with the domain of the public property had failed in discharge of his public duty and due to his act, the Bank had incurred loss of Rs.51,21,360.13.
3. The accused Nos.2 to 4 had entered into a criminal conspiracy with accused No.1 and had created and forged the documents in order to avail loan which was deviated to other purpose than for which it was availed.
4. The act of accused Nos.1 to 4 erodes the faith and belief of general public in the financial transaction.
5. The Accused No.2 and 3 had availed loan on the basis of the unites which were not in existence and the fact that Accused No.4 was also not in existence indicates of the malafide intention being entertained by the Accused No.2 to 4 from the inception.
6. If any lenient view is to be taken, the act would further erode the faith and may lead to draw an 141 Spl.C.No.482/2017 inference that the economic offences would be dealt liberally.
Mitigating Factors:
a. The accused persons are not habitual offenders. b. The accused persons could not have any criminal antecedents.
c. The accused persons had to take care of their family and they are suffering from various ailments. d. The accused persons are having deep roots in the society and had enjoyed good reputation in the society.
By looking into the aforesaid aggravating and mitigating factors and also on consideration of the materials which has been produced before the Court, it indicates that the act of accused persons could be construed as a economic offence which leads to economy of the nation. Further, the maxim "Nullum crimen sine lege" which means, the principle of legality in the rule of construing criminal statute is to be in favour of citizens and also the approach towards the social welfare. The important aspect of socio-economic offence is to be emphasized with the gravity of the harm caused to the society and also the nature of the offences themselves.142 Spl.C.No.482/2017
In many instances, the gravity of the offence cannot be easily deciphered and same requires to be considered in a manner which would indicate the mode of execution in secrecy by shrewd and snollygoster person with sophisticated means. Time and again, it has been held by the Hon'ble Apex Court that the cry of the victim is also to be appreciated at the time of imposing punishment. In the instant case, the society at large is to be considered as the main victim due to the fraudulent act of the accused person. I have bestowed my anxious reading to the judgment of the Hon'ble Apex Court reported in (2012) SCC 384 (State of Maharashtra through CBI Vs. Balakrishna Dattatreya Kumbar) wherein, Hon'ble Apex Court has held as follows:
"The aforesaid order is therefore, certainly not sustainable in law if examined in light of the aforementioned judgments of this Court. Corruption is not only a punishable offence but also undermines human rights, indirectly violating them, and systematic 143 Spl.C.No.482/2017 corruption, is a human rights' violation in itself, as it leads to systematic economic crimes. Thus, in the aforesaid backdrop, the High Court should not have passed the said order of suspension of sentence in a case involving corruption. It was certainly not the case where damage if done, could not be undone as the employee/respondent if ultimately succeeds, could claim all consequential benefits. The submission made on behalf of the respondent, that this Court should not interfere with the impugned order at such a belated stage, has no merit for the reason that this Court, vide order dated 9.7.2009 has already stayed the operation of the said impugned order."
When the said principles are applied to the facts of the case on hand, it indicates that accused No.1 N. Satya Babu has entered into a criminal conspiracy which is punishable under Section 120-B of IPC to cheat and defraud the Bank. Wherein, the other accused persons had created various documents purporting to be genuine for which it was availed. Though it has been argued by 144 Spl.C.No.482/2017 the Learned Counsel for accused No.1 that the act of the accused No.1 is to be looked into with respect to the attending circumstances, it indicates that accused No.1 being the Branch Manager and also the custodian of the public funds was required act in a manner which would befitting his status. With respect to other accused persons, the court has also exercised with respect to the criminality and fraudulent manner in which the documents were created; project reports were prepared and submitted to the Bank for the purpose of availing the loan. All the said aspects had lead to a situation indicating that they had entered into a criminal conspiracy to cheat and defraud the Bank, which is proved during the course of evidence. Though the accused persons at this juncture claim to be suffering from various ailments, the same will not be a mitigating factor. In this regard, the court has relied upon the judgment of Hon'ble Apex Court reported in AIR 1996 SC 361 A. Wati Ao vs The State Of Manipur, wherein it has been held as follows:
145 Spl.C.No.482/2017
"This takes us to the question of the sentence. A perusal of the trial court's judgment shows that the sentence of imprisonment till rising of the court was awarded because of : (1) the appellant being a senior IAS Officer and holding of different high posts, which showed that he is a very respectable person; (2) the appellant having a number of dependents; (3) the certainty of appellant's losing his job and requiring him to earn a living for himself and his family members; (4) the present being first offence committed by him; and (5) the spectre of the incident hanging on his head for about half a decade. According to us, none of these factors (except the last, to some extent) make out a case for awarding sentence less than the minimum prescribed by the aforesaid Act - the same being imprisonment for one year. The fact that the appellant is a senior IAS Officer really requires a serious view of the matter to be taken, instead of soft dealing. The fact that he has a number of dependents and is going to lose his job are irrelevant considerations inasmuch as in almost every case a person found guilty would have 146 Spl.C.No.482/2017 dependents and if he be a public servant, he would lose his job. The present being the first offence is also an irrelevant consideration. Though the delay has some relevance, but as in cases of the present nature, investigation itself takes time and then the trial is prolonged, because of the type of evidence to be adduced and number of the witnesses to be examined, we do not think that the fact of delay of about five years could have been a ground to award the sentence of imprisonment till rising of the court, which really makes a mockery of the whole exercise. We, however, think that the delay does require some reduction from the minimum prescribed; and on the facts of this case, ends of justice would be met, according to us, if at this length of time, pursuant to notice of enhancement issued by this Court, a sentence of imprisonment for six months is awarded."
In the above said judgment, Hon'ble Apex Court has held that the conviction of IAS Officer charged with misuse of office could not be let of leniently since it would give an 147 Spl.C.No.482/2017 wrong message to the society at large. Even in the instant case, the act of the accused No.1 to 4 is to be viewed seriously, since the availing of loan with malafide intention had precluded an eligible person from making a valid claim of loan from the bank. After all the bank consists of funds which it has collected from the general public and on false pretext, if the loan is availed and subsequently, even if it is claimed to be settled by the accused persons, thus an impression will be given to the society at large that deviation of funds could be made by furnishing false and forged documents and the same is not the intention of the legislature nor the intention of the various constitutional authorities. Even otherwise, the loan account though settled by the accused persons, will not be a mitigating factor and the usage of the loan and its deviation for some other purpose would clearly indicate of meddling with the public funds, which cannot not be construed as a minor misnomer. Under the circumstances, the act of misconduct against accused No.1 would be viewed seriously. By considering the said 148 Spl.C.No.482/2017 aspect, it is crystal clear that the court cannot take lenient view towards the act committed by accused No.1 and it has to be strictly viewed as contemplated under Section 13(1)(d) R/w. Sec.13(2) of the Prevention of Corruption Act. The act of other accused persons in a way squarely makes an attempt to bleed the economic condition of the country and also the act of creating and forging the documents and also by making mis- representation with an intention to cheat and defraud the Bank right from the inception has to be viewed seriously and in that event, the submissions made by the Learned Counsel for the accused persons with respect to taking a lenient view cannot be accepted. The court has also taken into account the loan availed by accused No.2 to 4 has not been repaid till this date. The learned counsel for accused No.2 to 4 had submitted that they were ready to repay the loan amount much prior to commencement of trial. Though such submission is made, the same will not absolve the liability or criminality on the part of the accused persons. 149 Spl.C.No.482/2017 Admittedly in the above case the accused No.2 to 4 had availed loan wherein a sum of 51,20, 360/- was pending at the time of filing of charge sheet. The same is required to be compensated to the Bank. Accordingly, I proceed to pass the following;
ORDER The accused No.1 Sri.N. Satya Babu, accused No.2 Smt.S.Bharathi, accused No.3 Smt. H.Nalinakshi and accused No.4 Sri.S.Ramesh are hereby convicted for the offence under Section 120-B of IPC., and hereby sentenced to undergo Rigorous Imprisonment for a period of FIVE years and imposed with a fine of Rs.20,000/- each (Rupees Twenty Thousand only) and in default of payment of fine, they shall undergo a Simple Imprisonment for a period of ONE month.
The accused No.1 Sri. N. Satya Babu, accused No.2 Smt.S.Bharathi, accused No.3 Smt. H.Nalinakshi and accused No.4 Sri.S.Ramesh are hereby convicted for the offence punishable under Section 420 of IPC 150 Spl.C.No.482/2017 and they are sentenced to undergo a Rigorous Imprisonment for a period of FIVE years and imposed with a fine of Rs.12.50 lakhs each (Rupees Twelve Lakh Fifty Thousand Only) and in default of payment of fine, they shall undergo a Simple Imprisonment for a period of ONE year.
The accused No.1 Sri. N. Satya Babu is hereby convicted for the offence punishable under Section 13(1)(d) R/w. Sec.13(2) of Prevention of Corruption Act and sentenced to undergo Rigorous Imprisonment for a period of FIVE years and with a fine of Rs.50,000/- (Rupees Fifty Thousand only) and in default of payment of fine, he shall undergo Simple Imprisonment for a period of ONE year.
The accused No.2 Smt.S.Bharathi, accused No.3 Smt. H.Nalinakshi and accused No.4 Sri.S.Ramesh are hereby
convicted for the offence punishable under Section 468 of IPC and sentenced to undergo Rigorous Imprisonment for a period of THREE years and fine of Rs.50,000/- each (Rupees Fifty Thousand only) and in default 151 Spl.C.No.482/2017 of payment of fine, they are sentenced to undergo Simple Imprisonment for a period of SIX months.
The accused No.2 Smt.S.Bharathi, accused No.3 Smt. H.Nalinakshi and accused No.4 Sri.S.Ramesh are hereby convicted for the offence punishable under Section 471 of IPC and sentenced to undergo Rigorous Imprisonment for a period of THREE years and fine of Rs.50,000/- each (Rupees Fifty Thousand only) and in default of payment of fine, they are sentenced to undergo Simple Imprisonment for a period of SIX months.
The sentences ordered shall run concurrently and accused Nos.1 to 4 shall be entitled for the period of set off as contemplated under Section 428 of Cr.P.C., for the period of detention they have already undergone, if any as Under Trial Prisoners in the above case.
Acting under Section 357(A) of Cr.P.C., suitable compensation requires to be ordered to the victim i.e., Syndicate Bank (Now, Punjab National Bank), Jalahalli Branch, Bengaluru. Out of the total fine amount, a 152 Spl.C.No.482/2017 compensation of Rs.54.00 lakhs (Rupees Fifty four lakhs only) is awarded and the remaining amount is ordered to be forfeited to the State.
Office is hereby directed to furnish the copy of the Judgments to the accused Nos.1 to 4 forthwith.
The bail bonds and surety bonds executed by the accused Nos.1 to 4 shall stand cancelled.
(Dictated to Stenographer Grade-I, transcribed by her, revised and corrected by me and then pronounced in open court on 18th March, 2024) (Santhosh Gajanan Bhat) LXXXI Addl. City Civil & Sessions Judge, Bengaluru City (CCH-82) C/c of XLVII Addl. City Civil and Sessions Judge and Judge forCBI Cases, Bengaluru (CCH-48) ANNEXURE LIST OF WITNESSES EXAMINED ON BEHALF OF PROSECUTION :
PW.1 : G.C.Matolli
PW.2 : Venkatesh
PW.3 : Nagesh S.H.
153 Spl.C.No.482/2017
PW.4 : Guruprasad
PW.5 : A.N.Vasudevan
PW.6 : S.P.Ramachandra
PW.7 : Amar Devendrappa Nasi
PW.8 : Anand
PW.9 : Srinivas
PW.10 : A. Balasami
PW.11 : G. Muniyappa
PW.12 : R. Bhaskar
PW.13 : S. Nagaraj
PW.14 : A.B.Shamsudhin
PW.15 : V.R.Shekar
PW.16 : Yousuff Shariff
PW.17 : A.A.Khan
PW.18 : Y.C.Shivakumar
PW.19 : Natarajan Swamy
PW.20 : Rajendra Kumar S
PW.21 : R.K.Shivanna
PW.22 : Rakesh Ranjan
List of Exhibits marked through Prosecution :
Ex.P.1 : Complaint Ex.P.1(a) : Signature of PW.1 Ex.P.2 : Reply Letter. Ex.P.2(a) : Signature of PW.2. Ex.P.3 : Seizure Memo Ex.P.3(a) : Signature of PW.3. Ex.P.4 : Report-inspected Ex.P.4(a) : Signature of PW.3. Ex.P.5 : Seizure Memo dated 3.8.2015. Ex.P.5(a) : Signature of PW.3 Ex.P.6 : Seizure Memo dated 14.08.2015. Ex.P.6(a) : Signature of PW.3. Ex.P.7-13 : Circulars of the Bank. Ex.P.7(a) to 13(a) : Signatures of PW.3. Ex.P.7(b) to 13(b) : Certificates issued under Sec.65(B) of 154 Spl.C.No.482/2017 Evidence Act. Ex.P.7(b-i) to 13(b-i) : Signature of PW.3. Ex.P.14-16 : Circulars Ex.P.14(a) : Signatures of PW.3. P.16(a) :
Ex.P.14(b) : Certificates issued under Sec.65(B) of to 16(b) : Evidence Act.
Ex.P14(b-i) : Signatures of PW.3 16(b-i) Ex.P.17-21 : Circulars.
P.17(a) : Signatures of PW.3. to 21 :
Ex.P.17(b) : Certificates issued under Sec.65(B) of to 21(b) : Evidence Act.
Ex.P17(b-i) : Signatures of PW.3 21(b-i) Ex.P.22 : Loan Application Ex.P.23 : Quotation. Ex.P.24,25 : Receipts Ex.P.26 : Confirmation Letter Ex.P.27 : Loan Review Format Ex.P.28 : Business Loan Model. Ex.P.29 : Process Note Ex.P.30 : Bank Inspection Report. Ex.P.30(a) : Signature of PW.3 Ex.P.31 : Valuation Report Ex.P.31(a) : Signature of PW.6
Ex.P.31(b) : Certificate issued under Sec.65(B) of Evidence Act.
Ex.P.31(c) : Signature.
Ex.P.32 : Loan Application.
Ex.P.33 : Qutation
Ex.P.34 : Receipt.
Ex.P.35 : Valuation Report
Ex.P.35(a) : Signature of PW.6
Ex.P.36 : Loan Review Format
Ex.P.37 : Business Loan Model
Ex.P.38 : Process Note
155 Spl.C.No.482/2017
Ex.P.39 : Joint Inspection Report-inspected
Ex.P.39(a) : Signature of PW.3
Ex.P.40 : Report.
Ex.P.40(a) : Signature of PW.3.
Ex.P.41 : Circular dated 2.1.2013.
Ex.P.41(a) : Signature of witnesses
Ex.P.41(b) : Certificate issued under Sec.65(B) of Evidence Act.
Ex.P.41(b-i): Signature of PW.3
Ex.P.42 : Receipt Memo
Ex.P.42(a) : Signature of PW.4.
Ex.P.43 : Circular for financing Synd MSE Scheme.
Ex.P.43(a) : Signature of PW.4.
Ex.P.44 : Receipt Memo
Ex.P.44(a) : Signature of PW.4.
Ex.P.45 : Loan Account of M/s. Mahalakshmi
Granites.
Ex.P.46 : Credit Voucher dated 28.10.2014.
Ex.P.47 : Debit Voucher dated 23.09.2014.
Ex.P.48 : Credit Voucher.
Ex.P.49 : Receipt Memo
Ex.P.49(a) : Signature of PW.4.
Ex.P.50 : The Statement of Account pertaining to
Sri.Manjunatha Engineering Works.
Ex.P.50(a) : Signature of PW.4.
Ex.P.51 : Certificate U/Sec.2(A) of Banker's Book of
Evidence Act.
Ex.P.51(a) : Signature of PW.4.
Ex.P.52 : Statement of Account pertaining to Current
Account of Sri.Manjunatha Engineering Works.
Ex.P.52(a) : Signature.
Ex.P.53 : Certificate U/Sec.2(A) of Banker's Book of Evidence Act.
Ex.P.53(a) : Signature of PW.4.
Ex.P.54 : Certificate U/Sec.2(A) of Banker's Book of Evidence Act.
Ex.P.54(a) : Signature of PW.4 Ex.P.55 : The Statement of Account pertaining to 156 Spl.C.No.482/2017 Mahalakshmi Granites.
Ex.P.55(a) : Signature of PW.4.
Ex.P.56 : Certificate U/Sec.2(A) of Banker's Book of Evidence Act.
Ex.P.56(a) : Signature of PW.4.
Ex.P.57 : Certificate U/Sec.2(A) of Banker's Book of Evidence Act.
Ex.P.57(a) : Signature Ex.P.58 : The Statement of Account pertaining to Current Account of Mahalakshmi Granites. Ex.P.58(a) : Signature.
Ex.P.59 : Certificate U/Sec.2(A) of Banker's Book of Evidence Act.
Ex.P.59(a) : Signature.
Ex.P.60 : Certificate U/Sec.2(A) of Banker's Book of Evidence Act.
Ex.P.60a) : Signature.
Ex.P.61 : Receipt Memo Ex.P.61(a) : Signature.
Ex.P.62 : Letter written to Inspector of Police by Syndicate Bank Sr. Manager.
Ex.P.63 : Copy of NPA Ex.P.63(a) : Signature.
Ex.P.64 : Receipt Memo Ex.P.64(a) : Signature.
Ex.P.65,66 : Loan Account papers of Mahalakshmi Granites Ex.P.67 : Receipt Memo Ex.P.67(a) : Signature Ex.P.68,69 : Hypothecation Agreements Ex.P.70,71 : Statements of Accounts Ex.P.72 : The Document dated 31.01.2017. Ex.P.72(a) : Signature of PW.6 Ex.P.73,74 : Valuation Reports dated 1.2.2017. Ex.P.73(a) :
P.74(a) : Signatures of PW.6.
Ex.P.75 : Receipt Memo
Ex.P.75(a) : Signature of PW.6
157 Spl.C.No.482/2017
Ex.P.76 : Risk Base Internal Audit Report dated
14.2.2015
Ex.P.77,78 : Photos.
Ex.P.77(a) :
P.78(a) : Signatures.
Ex.P.79 : The Certificate.
Ex.P.79(a) : Signature.
Ex.P.80 : Specimen signatures of accused No.2.
Ex.P.80(a) : Signature.
Ex.P.81 : Specimen signatures of accused No.3.
Ex.P.81(a) : Signature.
Ex.P.82 : Specimen signatures of accused No.4.
Ex.P.82(a) : Signature.
Ex.P.83 : Account opening form of accused No.4.
Ex.P.83(a) : Signature of A.4 on A/c. Opening Form. Ex.P.83(b) : Signature of A.4.
Ex.P.83(c) : Signature of A.4. on Form VAT-07 Ex.P.84 : The questioned signature.
Ex.P.84(a) : Signature of accused No.4 on A/c. Opening Form.
Ex.P.85 : Specimen signature of the Proprietor of DJ Max Engineering Systems.
Ex.P.85(a) : Specimen signature.
Ex.P.86 : SB Account opening form of A.4. Ex.P.87,88 : Two vouchers.
Ex.P.89 : Cash Deposit Challan Ex.P.90 : Opinion Ex.P.90(a) : Relevant Sl.No.24 Ex.P.90(b) : Relevant Sl.No.26 Ex.P.90(c) : Relevant Sl.No.27 Ex.P.90(d) : Paras of 24, 26 and 27 90(e),90(f) : Ex.P.90(g) : Signature of PW.10. Ex.P.91 : Receipt Memo Ex.P.91(a) : Signature. Ex.P.92 : Information Letter. Ex.P.93 : Statement. Ex.P.94 : Certificate. Ex.P.94(a) : Signature. 158 Spl.C.No.482/2017 Ex.P.95 : Certificate issued under Sec.65(B) of Evidence Act. Ex.P.95(a) : Signature. Ex.P.96 : Covering Letter. Ex.P.97 : Copy of e-filing system Ex.P.98 : Certificate issued under Sec.65(B) of Evidence Act. Ex.P.98(a) : Signature Ex.P.99 : Receipt Memo Ex.P.99(a) : Signature Ex.P.100 : Statement Ex.P.101,
Ex.P.102 : Certificates issued under Sec.65(B) of Evidence Act.
Ex.P.101(a):
P.102(a) : Signatures.
Ex.P.103 : Letter.
Ex.P.103(a): Signature.
Ex.P.104 &: C/c of the Manual Instructions No.1 and 2. Ex.P.105 :
Ex.P.106 : C/c of FIR in RC3(A)/2016 List of Material Objects marked through Prosecution:
NIL List Of Witnesses Examined On Behalf Of Defence:
NIL List of documents marked through Defence Side :
Ex.D.1 : Copy of the evidence
Ex.D.2 : Zerox copy of the DD bearing No.226581.
Ex.D.3 : Zerox copy of the statement of account-
Manjunatha Engineering Works.
(Santhosh Gajanan Bhat)
LXXXI Addl. City Civil & Sessions Judge, Bengaluru City (CCH-82) C/c of XLVII Addl. City Civil and Sessions Judge and Judge forCBI Cases, Bengaluru (CCH-48)