Bangalore District Court
State By Central Bureau Of ... vs A1-Pradeep R.Hattangadi on 27 April, 2015
IN THE COURT OF THE XLVII ADDITIONAL CITY CIVIL AND
SESSIONS JUDGE AND SPECIAL JUDGE FOR C.B.I. CASES
(CCH-48), BANGALORE.
Dated this the 27th day of April, 2015
Present : Sri.R.K.TALIKOTI, B.Com.,LL.B.(Spl.)
XLVII Addl. CC & SJ & Spl. Judge for CBI
Cases, Bangalore.
SPECIAL (CORRUPTION) CASE No.61/2002
Complainant: State by Central Bureau of Investigation,
BS&FC, Bangalore.
/Vs./
Accused: A1-Pradeep R.Hattangadi,
S/o.H.V.Ramachandra Rao,
Formerly Branch Manager, SBI,
V.V.Puram Branch,
Bangalore.
R/o.No.15, Postal Colony,
2nd Cross, 3rd Main,
Sanjay Nagar,
Bangalore.
A2-Shrisha N. Nijagal,
S/o.B.R.Nagaraja Rao,
Partner, HRS Corrugators,
Bangalore.
r/o.No.203, 3rd Cross,
Vidyaranyanagaram, Andrahalli,
Vishvaneedam Post,
Bangalore-91.
A3-B.S.Bharadwaj,
S/o.B.N.Shamrao,
Proprietor,
M/s.Hallada Traders, Bangalore and
2 : Spl.C.C.61/2002 :
Partner in HRS Corrugators,
r/o.No.155, 3rd Cross,
Kempegowda Nagar,
Bangalore-19.
A4-K.Badarinatha,
S/o.K.V.Krishnamurthy,
Proprietor,
M/s.Raghavendra Commercials,
Bangalore.
r/o.No.64/1, Ground Floor, 5th Cross,
Sammerpura Main Road,
Chamarajapet,
Bangalore-18.
A5-D.H.Gururaja Rao,
S/o.Late K.B.Hanumanth Rao,
Proprietor,
M/s.Guru Traders,
Bangalore.
r/o.No.64/1, 5th Cross,
Sammerpura Main Road,
Bangalore-19.
A6-Chandrashekharaiah,
S/o.R.Savand,
Swami Nilaya,
8th Cross, Ashok Nagar,
Tumkur-572 102.
A7-Nagabhushan,
S/o.Chandrappa,
Partner,
M/s.S.N.Enterprises,
1st Main Road, 6th Cross,
Vijayanagar,
Tumkur-572 101.
3 : Spl.C.C.61/2002 :
1. Date of : From 21.6.1995 to 10.7.1998
Commission of
Offence
2. Date of Report : 4.1.2000
of Offence
3. Name of the : Shri S.Venugopal, DGM(V),
complainant SBI, LHO, Bangalore.
4. Date of : 12.07.2004
recording of
Evidence
5. Date of closing : 21.7.2008
Evidence
6. Offences : 120-B r/w.420, 421, 468, 471, 477-
complained of A IPC and Sec.13(2) r/w.13 (1)(d) of
Prevention of Corruption Act,1988.
7. Opinion of the : Accused Nos.2,3,6 & 7 are acquitted
Judge for the offences u/S.120-B, 420, 421,
468, 471 and 477A IPC.
Accused Nos.1,4 & 5 are acquitted
for the offence u/S.421 IPC.
Accused No.1 is convicted for the
offence u/S.120-B IPC r/w. Section
420, 468, 471 and 477A IPC and
u/S.13(2) r/w.S.13(1)(d) of P.C.Act.
Accused Nos.4 & 5 are convicted for
the offences u/S.120-B IPC r/w.
Section 420,468,471 & 477A IPC.
8. State : Public Prosecutor
represented by Smt.K.S.Hema
4 : Spl.C.C.61/2002 :
9. Accused : A-1 by Sri B.J.P., Adv.
defended by A-2, A-6 & A-7 by Sri P.S.M., Adv.
A-3 to A-5 by V.A.R.S., Adv.
(R.K.TALIKOTI)
XLVII Addl. CC & SJ & Spl. Judge
for CBI Cases, Bangalore.
:JUDGMENT:
The Inspector of Police CBI/BS&FC/Bangalore has filed the charge sheet against accused Nos.1 to 7 for the offences punishable u/S.120-B r/w.420, 421, 468, 471, 477-A IPC and Sec.13(2) r/w.13 (1)(d) of Prevention of Corruption Act,1988, showing other three accused B.S.Badrinarayana, Smt.Vimala and P.Shivaprasad as dead.
2. In brief, the facts leading to filing of this final report is as under:-
(i) The Inspector of Police has registered a F.I.R. in R.C.2(E)/2000, CBI/BS&FC/BLR based on a complaint lodged by Sri S.Venugopal, Dy.General Manager (Vigilance) of State Bank of India, Bangalore, which is marked as Ex.P93. The complaint is filed to the CBI on 24.12.1999 with a subject captioned 'Fraud committed in the accounts of HRS Group of Companies in State Bank of India, V.V.Puram Branch, Bangalore.'
(ii) It is alleged that accused No.1 - P.R.Hattangadi was Branch Manager in State Bank of India, V.V.Puram Branch between 21.6.1995 to 10.7.1998. M/s.HRS Packers was a 5 : Spl.C.C.61/2002 :
proprietary concern and Sri B.S.Badrinarayana was its proprietor. It has a Cash Credit Account No.SSI/4/87, new account No.1650032087 in State Bank of India, V.V.Puram Branch, Bangalore (hereinafter called as 'Bank' for the sake of brevity). On 19.1.1996, Branch Manager - accused No.1 has sanctioned cash credit limit of Rs.9.50 lakhs to M/s.HRS Packers, against raw materials, stocks in process and finished goods. The accused No.1 had marked the drawing power of the firm as Rs.19.50 lakhs in the account on 18.9.1996 even though the actual limit was only Rs.9.50 lakhs.
(iii) Again on 12.1.1997, A-1 has further sanctioned Rs.20-lakhs as documentary bills credit and he made the drawing power as Rs.29.50 lakhs. For this second loan of Rs.20-lakhs, no application, appraisal, assessment or sanction letter, security documents or collateral security is offered by accused No.1. This increase in drawing power was also not reported to the Controlling Authority. As on 14.8.1997, there was outstanding balance of Rs.24,81,814.60 in this account. On that day, there was inspection from the Department of Central office, SBI. To conceal the irregular sanctions allowed in the account of M/s.HRS Packers and to cover up the outstanding balance, accused No.1 has transferred the account to SBI, Mysore Branch, without actually transferring the account or the amount and debit advice was deliberately held back and not sent to Mysore Branch.
(iv) M/s.HRS Corrugators was a partnership firm consist of N.S.Sreesha and B.S.Bharadwaj as partners and had current account No.SIB/3/172 new number 01050032090 with the Bank 6 : Spl.C.C.61/2002 :
on 14.1.1996. Accused No.1 has sanctioned a term loan of Rs.4- lakhs on 15.3.1996 and cash credit limit of Rs.8-lakhs on 27.3.1996 to the said firm. There was no request from the party for the term loan of Rs.4-lakhs nor there were credit appraisal done by the Branch Manager and there was no sanction letter communicated to the party. The Branch Manager accused No.1 has not intimated to his Controlling Officer and no security is obtained from this firm. The term loan has to be treated as a clean advance since discretionary powers of Branch Manager for such loan was only Rs.50,000/-. The term loan sanctioned by the Branch Manager accused No.1 is shown in the respective ledger sheets in his own handwriting. During the inspection of the Branch on 14.8.1997, this account has been stated to be transferred to the SBI, Mysore Branch, without effecting any transfer, only to conceal the irregularities.
(v) One B.S.Bharadwaj was the Proprietor of M/s.Hallada Traders, Bhadrinath was the Proprietor of M/s.Raghavendra Commercial, deceased Smt.Vimala w/o.Badrinarayan was the Proprietrix of Ranganatha Enterprises and D.Gururaj was the proprietor of M/s.Guru Traders. These accounts were opened by accused No.1 without getting any introduction. The 1st accused has sanctioned Rs.7.50 lakhs to M/s.Hallada Traders as OD facility against TDRs for Rs.10-lakhs. So also, sanctioned Rs.8- lakhs to M/s.Raghavendra Commercial, Rs.7.20 lakhs to M/s.Ranganatha Enterprises and Rs.7.20 lakhs to M/s.Guru Traders on the basis of security of Rs.9-lakhs each. But however, there were no TDRs existing and the Branch Manager -
7 : Spl.C.C.61/2002 :
accused No.1 had given the genuine TDR numbers in the name of some other persons, who are no way concerned to the above mentioned four borrowers. To conceal the irregular sanctions and the outstanding balance, the amounts have been transferred to State Bank of India, Peenya Industrial Estate Branch. As on 14.8.1997, amount of Rs.4,93,857/-, Rs.5,78,835/-, Rs.6,58,847/- and Rs.4,66,370/- was outstanding balance in respect of M/s.Hallada Traders, Raghavendra Commercial, Ranganatha Enterprises and Guru Traders respectively.
(vi) Shri Bharadwaj, Sreesha and D.Gururaj had actively assisted Badrinarayan in withdrawing amounts illegally sanctioned to them. Said Badrinarayana was the main person behind those group of companies. The four cheques issued by Badrinarayan for Rs.2-lakhs each on Canara Bank, Baragur Branch, towards outstanding balances have been bounced and outstanding amount remained the same. The proceeds of the overdrafts sanctioned to the said four firms, in all Rs.20-lakhs were issued in the form of DD in favour of M/s.S.N.Enterprises, Tumkur. Thus, the outstanding balance is totally Rs.65,03,240.65. Badrinarayana, N.Sreesha and Gururaj of M/s.HRS Group of Companies have defrauded the Bank.
(vii) It is alleged in the complaint that 1st accused P.R.Hattangadi along with other accused persons had fraudulently with dishonest intention cheated the Bank to the tune of Rs.65.03 lakhs and Bank is put to loss.
3. The I.O. has investigated the matter, recorded the statements of witnesses, collected documents and after obtaining 8 : Spl.C.C.61/2002 :
sanction order for prosecution of accused No.1, has filed this charge sheet.
4. In the said charge sheet, it is alleged that:-
Accused Nos.1 to 7 along with deceased accused were parties to Criminal Conspiracy hatched during the period between 1996 and 1997 to cheat State Bank of India, V.V.Puram Branch , in the matter of sanctioning, disbursing, transferring the accounts, availing huge credit facility by dishonestly and fraudulently inducing the Bank to part with its funds in the form of term loans, cash credit and overdraft facilities increasing the drawing power and sanctioning the documentary bills credit without application and adequate security; willfully and deliberately transferred the outstanding debit balances to different branches without authority, causing misutilization and diversion of funds and wrongful loss to the extent of Rs.72,18,630/- to the Bank and they have also dishonestly received the defrauded money without any genuine trade transaction.
5. It is alleged in the charge sheet that in furtherance of criminal conspiracy, deceased B.S.Badrinarayana filed application for working capital facility of Rs.9.5 lakhs by offering plant and machinery as security said to be Rs.9-lakhs. The Corrugation machinery enlisted was never acquired or purchased and the other machinery was worth only Rs.3.5 lakhs. Accused No.1 has sanctioned a cash credit limit of Rs.9.5 lakhs to M/s.HRS Packers,
9 : Spl.C.C.61/2002 :
without making proper appraisal and without obtaining primary security.
6. It is also allegation that in furtherance of criminal conspiracy the accused No.1 has enhanced drawing power and cash credit limit facility to Rs.19.5 lakhs on 18.9.96. He has also sanctioned another credit facility - documentary bills credit to an extent of Rs.20-lakhs on 12.1.97, totally marking a drawing power of Rs.29-lakhs.
The accused No.1 by abuse of his official position as public servant, by corrupt or illegal means, obtained for himself caused wrongful loss to the Bank and said information is not reported to the Controlling Authority.
7. It is also the allegation in the charge sheet that accused No.1 has permitted deceased B.S.Badarinarayana to dishonestly and fraudulently to divert the Bank's funds for personal use and thus accused caused loss to the extent of Rs.31,50,746/- to the Bank. He has caused false entries by showing account was 'closed' and transferred the account to State Bank of Mysore, by transferring the debit voucher and falsified the accounts.
8. It is also the allegation of the prosecution that accused Srisha N. Nijigal and B.S.Bharadwaj, partners of HRS Corrugators conspired with accused No.1 and deceased B.S.Badarinarayana made an application dated 14.3.96 for sanction of term loan of Rs.4-lakhs and working capital limit to an extent of Rs.8-lakhs to the Bank. The 1st accused by corrupt or illegal means, without conducting any enquiry and without 10 : Spl.C.C.61/2002 :
taking sufficient security, sanctioned a term loan of Rs.4-lakhs on 15.3.96 and cash credit facility of Rs.8-lakhs on 27.3.96.
9. It is also the case of the prosecution that on 31.3.96, the bank funds were diverted by allowing Rs.7,01,726/- to be transferred from the Cash Credit Account to the Current Account of M/s.HRS Corrugators, basically to regularize the overdraft allowed in the current account of M/s.HRS Corrugators. No machinery was purchased as per the sanction condition. Thus an amount of Rs.18,23,522/- loss is caused on account of these fraudulent transactions.
10. It is also the case of the prosecution that on 14.8.97, A-1, with dishonest and fraudulent intention to conceal the irregularities, deliberately transferred the outstanding debit balance in the account of M/s.HRS Corrugators amounting to Rs.15.31 lakhs in the C C account and Rs.3.38 lakhs in the term loan account to SBI, Mysore Branch, through the Branch clearing general account, by falsifying the accounts, retaining deliberately the debit advice with him.
11. It is further case of the prosecution that in pursuance of criminal conspiracy, B.S.Bharadwaj - A3, deceased B.S.Badarinarayana and A-1, overdraft facility of Rs.7.5 lakhs for the purpose of trading in measuring instruments and allied items, has been sanctioned by accused No.1 by abusing his official position as public servant by corrupt or illegal means. The accused fraudulently utilized security term deposit No.034463 of one H.N.Bhanuprakash for Rs.10,000/- as security to this O.D. facility. In order to defraud the credit facility B.S.Bharadwaj has
11 : Spl.C.C.61/2002 :
issued cheque No.822902 dated 1.2.97 wherein B.S.Badrinarayana and accused No.2 purchased a DD for Rs.4,50,000/- dated 1.2.97 in favour of M/s.S.N. Enterprises, Tumkur, without effecting any transactions with them.
12. It is also further case of the prosecution that deceased B.S.Badarinarayana, K.Badarinatha - A-4 and P.R.Hattangadi - A-1, have conspired each other to establish a proprietary concern in the name and style of M/s.Raghavendra Commercials. A letter dated 29.1.97 for sanction of Adhoc limit of Rs.10-lakhs for undertaking fabrication of all steel and non-ferrous items was filed. The 1st accused, by abusing his official position and without making any appraisal, assessment, sanctioned an overdraft limit of Rs.8-lakhs by fraudulently utilizing as security term deposit receipt No.034473 dtd.28.1.97 for Rs.2-lakhs in the name of Smt.Sajida Begum and Kaleelulla Khan by showing the TDR for Rs.10-lakhs.
In furtherance of criminal conspiracy accused No.4 has issued cheque dated 1.2.97 for Rs.5,25,788/- favouring yourself for the purchase of a DD in the name of S.N.Enterprises payable at Tumkur.
13. It is also further case of the prosecution that deceased B.S.Badarinarayana and his wife deceased Vimala and accused No.1 have conspired to open a proprietary concern in the name and style of M/s.Ranganatha Enerprises. An account is opened in the name of proprietary concern seeking sanction working capital facility to an extent of Rs.10-lakhs for the purpose of manufacture of steel cart. Accused No.1 by abuse of his official 12 : Spl.C.C.61/2002 :
position has sanctioned OD of Rs.7.2 lakhs by dishonestly using TDR receipt bearing No.034448 dtd.19.1.97 for an amount of Rs.1,300/-in the name of J.C.Narahari. A cheque for Rs.6,00,900/- is issued by deceased Smt.Vimala with an intention to divert the credit facility for personal use. A DD for Rs.6-lakhs is issued in the name of M/s.S.N.Enterprises payable at Tumkur by deceased B.S.Badarinarayana
14. It is also the case of the prosecution that deceased B.S.Badarinarayana, accused No.5 - D.H.Gururaj and accused No.1 - P.R.Hattangadi conspired and have opened proprietary concern M/s.Guru Traders. A letter dated 28.1.97 seeking sanction loan of Rs.10-lakhs is filed and 1st accused by abusing his official position, by corrupt or illegal means, has sanctioned Rs.7.2 lakhs by dishonestly utilizing TDR receipt bearing No.034465 dated 24.1.97 for Rs.47,200/- standing in the name of Smt.Kamala and E.Narasimhan.
15. It is further case of the prosecution that accused No.5 with intent to divert the credit facility for his own use, issued cheque dated 1.2.97 for Rs.4,25,675/- and purchased a DD for Rs.4,25,000/- in the name of M/s.S.N.Enterprises, payable at Tumkur.
It is also the case of the prosecution that accused has falsely prepared a common debit voucher for transferring the accounts to State Bank of India, peenya Industrial Area Branch, Bangalore and fraudulently retained the debit advice.
16. It is further case of the prosecution that accused No.6 Chandrashekaraiah, A-7 - Nagabhushan and deceased 13 : Spl.C.C.61/2002 :
P.Shivaprasad, being the partners of S.N.Enterprises connived with deceased B.S.Badarinarayana, dishonestly and fraudulently received DDs., withdrew the proceeds from the Bank from IOB, Devarayanapatna Branch , Tumkur. Thus A1 to A7 have caused loss to a total extent of Rs.72,18,630/- to the Bank and they have committed offence punishable u/S.120-B r/w.420, 421, 468, 471, 477-A IPC and Sec.13(2) r/w.13 (1)(d) of Prevention of Corruption Act,1988.
Accused Nos.1 to 7 have appeared in this case and are on regular bail.
17. After filing of the charge-sheet, cognizance of the offences alleged against the accused was taken by the 21st Addl.City Civil and Sessions Judge and Spl.Judge for CBI Cases, Bangalore and the provisions of Section 207 of Cr.P.C. has been complied with by furnishing copy of charge-sheet and concerned documents to the accused. Thereafter, after hearing both sides and on going through the charge-sheet material, the charge against the accused for the offence punishable u/S.120-B r/w.
Section 420, 421, 468, 471 and 477-A IPC and Section 13(2) r/w.13(1) (d) of Prevention of Corruption Act, 1988 was framed. The accused have not pleaded guilty and claimed to be tried. Thereafter, the prosecution was called upon to adduce evidence of its witnesses to prove the guilt of the accused.
18. The Prosecution, in order to substantiate its case against the accused has examined 21 witnesses as P.Ws.1 to 21 and got marked Ex.P1 to Ex.P.164.
14 : Spl.C.C.61/2002 :
19. Thereafter, statement of the accused as required U/s.313 of Cr.P.C. came to be recorded by the 21st Addl.City Civil and Sessions Judge and Spl.Judge for CBI Cases, Bangalore, wherein the accused denied all the incriminating circumstances appearing against them as false. The defence of the accused is one of total denial of the prosecution case and has not chosen to adduce any evidence in their defence except getting marked Exs.D1 to D17 during the course of cross-examination of the prosecution witnesses. Further, the accused Nos.1 to 7 have filed their respective written statements.
20. Thereafter, when the case was posted for argument, the case was made over to this Court from 21st Additional Dist.
And Sessions Judge, Bangalore, as per Notification No.PSJ(CBI)/AOW/16/12 dtd.9.10.2013 for disposal according to law.
21. I have heard the arguments of the learned Public Prosecutor and the learned counsels for the accused. I have perused the oral and documentary evidence placed on record in the case and also have gone through the written arguments submitted for the parties and the decisions relied upon by the counsels on the defense.
22. In the light of the arguments and on the basis of the materials available on record, the following points arise for my determination:-
1) Whether the investigation carried out by the Investigating officer in this case is according to law?
15 : Spl.C.C.61/2002 :
2) Whether the prosecution proves that there is valid sanction to prosecute accused No.1 as per Section 19 of Prevention of Corruption Act, 1988?
3) Whether the prosecution proves beyond all reasonable doubt that A-1 to A-7 entered into a criminal conspiracy at Bangalore to cheat State Bank of India, V.V.Puram Branch, in the matter of sanctioning/disbursing/transferring the account by availing huge credit facilities by dishonest methods and fraudulently inducing the Bank to part with its funds in the form of term loans, cash credits and overdraft facilities, increasing drawing power and sanctioning the documentary bills credit, without application, appraisal, adequate security causing mis-
utilization, diversion of funds in the accounts of M/s.HRS Packers, HRS Corrugators, M/s.Hallada Traders, M/s.Raghavendra Commercials, M/s.Guru Traders and M/s.Ranganatha Enterprises and caused loss to the Bank to the tune of Rs.72,18,630/- to S.B.I., V.V.Puram Branch and thereby they have committed the offence punishable u/S.120B r/w. Sec.420, 421, 468, 471 and 477(A) of IPC and S.13(2) r/w.S.13(1)(d) of Prevention of Corruption Act, 1988?
4) Whether the prosecution proves beyond all reasonable doubt that accused No.1 in furtherance of criminal conspiracy with other accused, sanctioned 16 : Spl.C.C.61/2002 :
cash credit limit of Rs.9.5 lakhs to M/s.HRS Packers without making proper appraisal or assessment or need of such a facility that A-1 has enhanced the drawing power in cash credit facility to Rs.19.5 lakhs on 18.9.96 in violation of the instructions of State Bank of India and also sanctioned another credit facility, documentary bills credit to an extent of Rs.20- lakhs on 12.1.1997 by enhancing the power to Rs.29- lakhs and allowed deceased B.S.Badarinarayana to use funds for personal use and thereby caused wrongful loss to the tune of Rs.31,50,746/- to the Bank and thereby A-1 committed the offence punishable u/S.420 of I.P.C.?
5) Whether the prosecution proves beyond all reasonable doubt that in furtherance of criminal conspiracy between accused No.1 to 3, accused no.1 without making any appraisal and without conducting any credit enquiry or obtaining security has sanctioned Rs.8-lakhs cash credit facility to M/s.HRS Corrugators on 27.3.1996 and term loan of Rs.4-lakhs on 15.3.1996 by exceeding delegated financial powers and transferred the cash credit account to the current account of M/s.HRS Corrugators to regularize the overdraft allowed in the current account of M/s.HRS corrugators and thereby caused loss to the Bank to an extent of Rs.18,69,980/- and thereby accused no.1,2 and 3 committed an offence u/S.420 of I.P.C.?
17 : Spl.C.C.61/2002 :
6) Whether the prosecution proves beyond all reasonable doubt that in furtherance of criminal conspiracy between accused No.1 and 3, accused no.1 has sanctioned OD limit of Rs.7.5 lakhs to M/s.Hallada Traders, without making any appraisal, assessment and dishonestly utilized TDR No.034463 belonging to H.N.Bhanuprakash for Rs.10,000/- as security by falsely showing security as Rs.10-lakhs and that A-3 diverted the funds by issuing cheque dated 1.2.1997 and deceased B.S.Badrinarayana purchased and issued a DD dated 1.2.1997 for Rs.4.5 lakhs in favour of M/s.S.N.Enterprises, payable at Tumkur and thus caused wrongful loss to the Bank to an extent of Rs.4,93,857/- and thereby committed an offence u/S.420 of I.P.C.?
7) Whether the prosecution proves beyond all reasonable doubt that in furtherance of criminal conspiracy accused No.1 has sanctioned OD limit of Rs.8 lakhs to M/s.Raghavendra Commercials, a proprietary concern of accused no.4 without making any appraisal, assessment based on term deposit receipt bearing No.34473 dated 28.1.1997 standing in the name of Smt.Sajida Begam and Khaleelullakhan, without their consent and further purchased a DD for Rs.5,25,000/- by deceased B.S.Badarinarayana in favour of M/s.S.N.Enterprises, payable at Tumkur and thus caused wrongful loss to the Bank to an extent of
18 : Spl.C.C.61/2002 :
Rs.5,78,835/- and thereby committed an offence u/S.420 of I.P.C.?
8) Whether the prosecution proves beyond all reasonable doubt that in furtherance of criminal conspiracy accused No.1 has sanctioned OD limit of Rs.7.2 lakhs to M/s.Ranganatha Enterprises, a proprietary concern of Smt.Vimala, without making any appraisal, assessment and dishonestly utilized term deposit receipt bearing No.34448 dated
19.1.1997 for Rs.1,300/- which was in the name of J.C.Narahari as security without parties consent and the amount is defrauded by issuing cheque by deceased Smt.Vimala for Rs.6,00,900/- for purchase of DD and accordingly deceased B.S.Badarinarayana purchased a DD for Rs.6-lakh in favour of M/s.S.N.Enterprises, without effecting any trade transactions and thus caused wrongful loss to the Bank to an extent of Rs.6,58,842/- and thereby committed an offence u/S.420 of I.P.C.?
9) Whether the prosecution proves beyond all reasonable doubt that in furtherance of criminal conspiracy accused No.1 has sanctioned OD limit of Rs.7.2 lakhs to M/s.Guru Traders, a proprietary concern of D.H.Gururaj Rao, without making any appraisal, assessment and dishonestly utilized term deposit receipt bearing No.34465 dated 24.1.1997 for Rs.47,200/- belonging to Smt.Kamala and 19 : Spl.C.C.61/2002 :
E.Narasimhan, without their knowledge and consent and the loan is diverted by accused No.5 for personal use and issued cheque No.822977 dtd.1.2.1997 for Rs.4,25,675/- for purchase of DD and deceased B.S.Badarinarayana purchased a DD for Rs.4,25,000/- in favour of M/s.S.N.Enterprises, without effecting any trade transactions and thus caused wrongful loss to the Bank to an extent of Rs.4,66,370/- and thereby committed an offence u/S.420 of I.P.C.?
10) Whether the prosecution proves beyond all reasonable doubt that in pursuance to the above said criminal conspiracy, accused being public servant and Branch Manager, SBI, V.V.Puram Branch, Bangalore between June-1995 and July-1998, by corrupt or illegal means and by abusing his official position as public servant by flouting bank norms has sanctioned OD, credit facilities without any appraisal, assessment and without obtaining proper primary/collateral securities, with dishonest intention made wrongful gain in the name of others in the matter of sanction of loans to M/s.HRS Packers, M/s.HRS Corrugators, M/s.Hallada Traders, M/s.Raghavendra Commercials, M/s.Ranganatha Enterprises, M/s.Guru Traders by using TDR of different persons diverted funds made wrongful gain and caused loss to Bank and thereby committed the offence punishable under section 13(2)
20 : Spl.C.C.61/2002 :
r/w. S.13(1) & (d) of Prevention of Corruption Act, 1988?
11) Whether the prosecution proves beyond all reasonable doubt that in furtherance of criminal conspiracy accused Nos.6 and 7 being partners of M/s.S.N.Enterprises connived with deceased B.S.Badarinarayana, without effecting genuine business transactions enchased three DD Nos.795158, 795160, 795161 and thereby committed an offence u/S.420 of I.P.C.?
12) Whether the prosecution proves beyond all reasonable doubt that in furtherance of criminal conspiracy accused No.1 has fraudulently sanctioned credit facilities by using TDRs of different persons, without their consent and thereby dishonestly prevented the distribution of the amount to the depositors and thereby committed an offence u/S.421 of I.P.C.?
13) Whether the prosecution proves beyond all reasonable doubt that in furtherance of criminal conspiracy accused No.1 in order to conceal from inspecting officials the irregular sanctions of cash credit facility, term loan, pecuniary bills credit facility, unauthorisedly prepared false vouchers and used the same as genuine and transferred the outstanding account of M/s.HRS Packers and M/s.HRS Corrugators to the State Bank of India, Mysore Main Branch and
21 : Spl.C.C.61/2002 :
outstanding balance of M/s.Hallada Traders, M/s.Raghavendra Commercials, M/s.Ranganatha Enterprises and M/s.Guru Traders to State Bank of India, Peenya Industrial Area Branch and thereby committed the offence u/S.468 and 471 of I.P.C.?
14) Whether the prosecution proves beyond all reasonable doubt that in furtherance of criminal conspiracy accused No.1 has falsified the books of account by preparing false vouchers in respect of loans sanctioned and thereby committed an offence u/S.477A of I.P.C.?
15) What Order?
23. My answers to the above points are as below:-
Point No.1 - In the Affirmative Point No.2 - In the Affirmative Point No.3 - Partly in the Affirmative Partly in the Negative Point No.4 - In the Affirmative Point No.5 - Partly in the Affirmative Point No.6 - Partly in the Affirmative Partly in the Negative Point No.7 to 10 - In the Affirmative Point No.11 - In the Negative Point No.12 to 14 - In the Affirmative Point No.15 - As per final order for the following:-
:REASONS:
24. Point No.1:- A defence is raised on behalf of accused Nos.2, 6 and 7 to the effect that the process of taking 22 : Spl.C.C.61/2002 :
cognizance for the offences against accused is illegal and the investigation carried out by the Investigation Officers - PWs.20 and 21 is not in accordance with the provisions of Delhi Special Police Establishment Act, 1946 (hereinafter called as DSPE Act) regarding authorization to register the case and to take up further investigation.
25. The learned counsel for the accused Nos.2, 6 and 7 has filed written argument and has canvassed his argument that the investigation carried out by the Investigation Officers is illegal and they had no authority to do so as per the provisions of DSPE Act. The consent Notification dated 3.1.2000 accorded by the Government of Karnataka is attached to the F.I.R. It was further submitted that after taking consent Notification there has to be Notification issued by the Central Government as per Section 3 and 5 of DSPE Act, but in the case on hand, the Central Government has issued Notification in May-2002 as per Ex.D17, after about 2 years of registering F.I.R. on 4.1.2000. It is also further submitted that the I.O. has conducted illegal search based on only consent Notification of State Government and the investigation was started even before publishing official gazette of the consent Notification dated 3.1.2000.
26. In support of his argument, the learned counsel has relied upon the C.B.I. Crime Manual-2005 and 2007. He has also relied upon the decision reported in 2005 Crl.L.J. 180 -
Dharmendra Deo Mishra Vs. Central Bureau of Investigation. The said judgment is relating to the powers of the Central Government to confer authority on the members of 23 : Spl.C.C.61/2002 :
DSPE Act, to take up investigation, by taking prior consent from the State Government.
27. The learned counsel has further placed reliance on the decision reported in (2010) 3 Supreme Court Cases 571 -
State of West Bengal and others Vs. Committee for protection of Democratic Rights, West Bengal and others. It is also relating to the exercise of powers by the Central Government for extending the jurisdiction of Delhi Special Police force to the other areas and states wherein their members can exercise right by taking prior consent from the concerned State.
28. Further, reliance is placed by the learned counsel on the decision rendered by the Hon'ble Supreme court of India in Criminal Appeal No.1356/2004 - Union of India & Ors. Vs. Ramesh Gandhi. The learned counsel has submitted that Hon'ble Supreme Court has ruled that "suppression of vital information constitutes fraud played on the Courts and the orders, so obtained and the proceedings during which this happened have all become non-est.' It was submitted by the learned counsel stating that search made by the I.O. and the investigation carried out without issuance of Notification by Central Government is illegal and all these acts have become non-est.
29. The learned Counsel has further relied on another decision reported in AIR 1961 SC 838 - Chief Inspector of Mines and another Vs. Karam Chand Thapar and submitted that this decision stresses the importance of the General Clauses Act, with the words "whatever the General Clauses Act says, 24 : Spl.C.C.61/2002 :
'whether as regards the meaning of words or as regards legal principles has to be read into every statute to which it applies.'
30. The learned Counsel has also relied on the decision reported in 1996 AIR SCW 2934 - Central Bureau of Investigation Vs. State of Rajasthan and others, wherein the head note reads as under:-
"Foreign Exchange Regulation Act (of), Ss.56, 62
- Delhi Special Police Establishment Act (of 1946), Ss.3 and 5 - Investigation of offence falling under S.56 of FERA - Offence committed outside India - Notifications issued under Ss.3 and 5 of Delhi Act authorizing members of Delhi Special Police Establishment to investigate various offences including offences under FERA- No notification, however, issued by Central Govt. under FERA to confer on members of DSPE, power and authority to discharge such of the duties and functions under FERA as may be specified by it - Member of Delhi Police Force cannot investigate into offence in question."
31. The learned Public Prosecutor has submitted her oral argument as well as written argument. She has submitted that there is a Notification issued by the Central Government extending the powers of members of the Delhi Special Police Establishment force for carrying out investigation in State of Karnataka, even prior to the consent obtained by the State Government on 3.1.2000 in this case. It was submitted that the 25 : Spl.C.C.61/2002 :
said Notification of Central Government is not withdrawn and therefore, the investigation carried out is legal. She has further submitted the argument that there is no necessity of publishing State Government Notification in the official gazette before starting the investigation. Further, it is submitted that the Central Government Notification pointed out by the learned Counsel for the accused Nos.2, 6 and 7 said to be issued after taking cognizance will be only additional document but there was authorization even prior to it.
32. The learned counsel for accused Nos.3 to 5 has also submitted his written argument and contended that the investigation carried by the I.O. is illegal and there was no valid consent to take up the investigation. It is contended that the government of Karnataka in its notification No.HD 224 PCR 98 dated 15.12.1998 rescinded and withdrew prospectively the blanket consent given to CBI u/S.6 of DSPE Act. It is contended that at the time of registering FIR, there was no blanket consent by state government of Karnataka. He has also relied upon decision of Hon'ble High Court of Patna in case of Association of Protection of Public Rights and Interest Vs State of Bihar reported in 1990 Cri.L.J. 1928 regarding jurisdiction of powers of the Delhi Special Police Force. It is also submitted that there was no notification by the central government u/S.5 of DSPE Act, 1946.
A reliance is also placed on a case decided by Hon'ble High Court of Karnataka in C.R.P.654/2005 - Lam Hanumantha Rao Vs State of Karnataka and Siddanagowda Vs State of Karnataka reported in 1998 Crl.L.J. 2162. In C.R.P.654/2005, the proceedings were 26 : Spl.C.C.61/2002 :
quashed for want of consent by the state government and in Siddanagowda's case, the investigation conducted by the I.O in the non-cognizable offence u/S.155(2) Cr.P.C was held to be illegal. A reliance is also placed on decision reported in 1994 SCC (Cri) Page 1415 Vishnu Kondaji Jadhav Vs. State of Maharastra. The said decision of the Hon'ble Supreme Court is regarding obtaining of permission of Magistrate U/s.5(a) of Prevention of Corruption Act 1977 to investigate into offence and it is also laid down that separate permission has to be taken to investigate each demand of bribe as they constitute separate offence.
33. As far as arguments for Accused no.3 to 5 is concerned, there is a consent given by the Karnataka government for investigating this case and the said notification is attached to the FIR. Therefore, the decisions relied relating to obtaining prior consent of state government before taking up investigation do not apply to this case. As far as the argument relating to Central Government not publishing any notification authorizing the CBI for investigation is concerned, there is a prior notification issued by the central government and it has not been rescinded. Therefore, the question of issuing further notification will not arise. The decisions relied by the counsel for accused No.3 to 5 are not helpful to the defence of accused Nos.3 to 5.
34. I have perused the necessary documents and evidence placed in this case. Ex.P164 is the F.I.R. pertaining to this case, registered against accused No.1 and others on 4.1.2000, on the basis of complaint/report filed by S.Venugopal,
27 : Spl.C.C.61/2002 :
Dy.Manager of Vigilance, SBI. The Notification dated 3.1.2000 is issued by the Government of Karnataka under Section 6 of D.S.P.E.Act attached to FIR. This notification is issued consenting for CBI to take up investigation of this matter.
35. Ex.D17 is Notification dated 28.5.2002 wherein the Government of India has issued Notification extending powers of jurisdiction of members of DSPE to the State of Karnataka for investigation of the present case. During the course of cross-
examination to PW20, accused No.2 has elicited that during the course of investigation I.O. has seized documents marked Exs.P154 and 157 on 30.8.2001. It is also elicited that Exs.P74, 75 and 76 were not seized by him and some other investigation carried out by him. Similarly, PWs.20 and 21 have only stated about the investigation carried by them right from registering the case, seizing of documents, recording of statements of witnesses.
36. The learned PP has submitted her argument and contended that it is not necessary for Notification to be published in the official gazette before taking up investigation. In support of her case, she has placed reliance upon the decision rendered by Hon'ble High Court of Karnataka reported in N.Nagambikadevi Vs. Central Bureau of Investigation - ILR 2002 KAR 997. In para-17 of the Judgment, the Hon'ble High Court has held that:
'Central Government is required to empower or specify the offences or class of offences which are to be the subject-matters of investigation by the Delhi Special Police Establishment and this has to be done 28 : Spl.C.C.61/2002 :
only by publication of notification in the Official Gazette. But, no such mandatory requirement is there insofar as the extension of power under Section 5 or the consent of the State Government under Section 6 is concerned.'
37. By going through the ratio laid down in Smt.N.Nagambikadevi Vs CBI case, it is clear that it is not necessary for publication of Notification of State in Official Gazette, before the I.O. took up the investigation. The decision relied upon by the counsel for the accused Nos.2, 6 and 7 lay down that prior consent of the State is necessary for carrying investigation by the C.B.I. In the case on hand, the Government of Karnataka has given its consent by Notification dated 3.1.2000. Under the circumstances, the investigation officers were within their rights under the law to register the case on 4.1.2000 and then to take up further investigation. The decision relied upon by the counsel for Accused are not helpful to the case regarding contention that Notification has to be published in Official Gazette.
38. The learned PP has also pointed out at a copy of Order dtd.21.9.1994 available in records filed with a memo dtd.13.3.2004 and submitted that the jurisdiction of CBI/Bank Security Cell, Bank fraud cell having location at Bangalore will have jurisdiction through out India. It has been argued by the learned PP that the said Order has not been revoked and 29 : Spl.C.C.61/2002 :
therefore, there is no question of obtaining further authorization from the Central Government for investigation of the matter.
39. I have perused the said unmarked copy of Order dtd.21.9.1994. A judicial note is taken of this document. As per this, Order the IGP, DSPE New Delhi, has passed this order by exercising powers U/Sec.4 of the Act about the location of Bangalore Branch and extension of jurisdiction through out India. Under the circumstances, the I.O. has every right to commence the investigation after obtaining the consent Notification from the State Government, which is obtained in this case.
40. The second contention for the accused Nos.2, 6 and 7 is that there is no valid authorization by the Central Government as per Section 5(1) of the DSPE Act. The learned counsel for the accused Nos.2, 6 and 7 has submitted that the authorization of Central Government has to be made by making a Notification u/Section 5(1) of the DSPE Act after the consent of concerned State, is given as per Section 6(1) of the DSPE Act. It was submitted, in the case on hand, the said Notification is given after about 2 years as per Ex.D17 of the registration of case and as such, same is invalid. The learned Public Prosecutor has argued that there was prior consent and it was not revoked and therefore question of issuing Notification once again will not arise. It was also submitted that there is valid confer of powers for the I.O. to investigate in this case, in accordance with law.
41. In the decision relied upon by the counsel for the accused in 2005 Crl.L.J. 180 - Dharmendra Deo Mishra Vs.
30 : Spl.C.C.61/2002 :
Central Bureau of Investigation rendered by Hon'ble Allahabad High Court portion of para No.11, is reproduced below:
"In exercise of powers conferred by sub-section (1) of Section 5 of the Delhi Special Police Establishment Act, 1946 (XXV of 1946), and in super session of the order of the Govt. of India in the Ministry of Home Affairs Notification No.25/7/60 AVD dated 21st January, 1961 the Central Govt. hereby extends the powers and jurisdiction of members of the Delhi Special Police Establishment to the States of Andhra Pradesh, Assam, Bihar, Gujarat, Kerala, Madhya Pradesh, Madras, Maharashtra, Mysore, Orissa, Punjab, Rajasthan, Uttar Pradesh and West Bengal for the investigation of offences specified in the Schedule annexed thereto.' The above notification was amended vide notification dated 1.4.64 extending some more Sections in the powers and jurisdiction of the members of the Delhi Special Police Establishment."
42. The said extracted portion of the judgment of Dharmendra Deo Mishra case will reflect that in exercise of powers conferred by sub-section (1) of Section 5 of the Delhi Special Police Establishment Act, 1946, the powers and jurisdiction of members have been extended to the State of Mysore also. But no material is placed on the side of the accused 31 : Spl.C.C.61/2002 :
to show that the Notification issued by the Central Government as per section 5 (1) DSPE Act, Mysore State has been withdrawn. It may be a fact that Government of Karnataka has started issuing consent for extending powers to CBI for investigation u/S.6(1) of the Act on case-by-case basis. In such circumstances, we have to look into the fact as to decide whether State has accorded its consent. As far as this case is concerned, the State Government has given its consent Notification on 3.1.2000. In such circumstances, there will be automatic extension of powers of DSPE Act to this area in view of powers of its previous Notification by Central Government. Apart from that, Ex.D17 reflects that Notification is made by the Central Government for this case only.
43. The learned P.P has placed reliance upon a decision reported in Hon'ble High Court of Karnataka in Sri.Raghunathan Vs State by CBI wherein it was argued on behalf of the CBI that the consent of the state government has been obtained albeit subsequent to commencement of investigation and therefore, any want of consent or defect arising from want of consent stands cured and there can be no objections raised as to any such irregularity at that point of time. The Hon'ble High Court has held that the investigation had been commenced much prior to obtaining the consent of the state government, which infact has been granted, would water down the objections of petitioners' substantiary and it is also held that prior consent is not a condition precedent.
32 : Spl.C.C.61/2002 :
44. The learned P.P has placed further reliance upon a decision rendered by Hon'ble High Court of Karnataka reported in A.Narasimaiah and others Vs State of Karnataka and others reported in 2001 Cri.L.J.4293 and argued that the previous authorization by the central government regarding extension of jurisdiction of DSPE is not rescinded. A perusal of the judgment will reflect that the Hon'ble High Court has held in para no.6 as under;
6.--------------------------------
"We do not think that, that on the emergence of a fresh notification under Section 3 of the Act, the antecedent order under Section 5 will become extinct and will not survive. We cannot infer any such result either on the basis of language employed or scheme underlying the two provisions Sections 3 and 5. The purpose of Section 3 notification is to specify offences and the purpose of order envisaged by Section 5 is to extend the powers and jurisdiction of SPE to specify areas. When once the jurisdiction of SPE is extended to another state, it remains in force until and unless it is rescinded. The powers and jurisdiction of members of SPE can be exercised subject to the provisions of Section 6 with reference to the offences specified in a notification issued under Section 3, whenever it is or has been issued. It is not necessary that fresh order under Section 5 should be promulgated by the Central Government as and when the notification under
33 : Spl.C.C.61/2002 :
Section 3 is amended or altered. The language employed in Section 5 viz., 'for the investigation of any offences or classes of offences specified in a notification under Section 3' does not admit of the interpretation that the order under Section 5 should necessarily follow the notification under Section 3. Such an interpretation would go against the principle of 'Purposive construction of statutes'. There is no reason to think that the Parliament intended that with the change of notification under Section 3 adding or deleting the offences, the Central Government should every time issue a formal order under Section 5. It may, if it so chooses, having due regard to the offences added or deleted. But when it is not necessary to do so and when its extension to the areas of operation is intended to be kept intact despite the change in Section 3 notification, the insistence on a fresh order under Section 5 would be meaningless and does not in any way effectuate the purpose underlying the statute. We, therefore, reject this contention advanced by the learned counsel for the respondent. When once it is accepted that the order under Section 5 issued on 18.2.1963 is valid and applicable to the State of Karnataka (corresponding to the old State of Mysore), consent by the State Government under Section 6 should be up-held
34 : Spl.C.C.61/2002 :
subject to our findings on the other objections thereto."
45. The Notification Ex.D17 is in addition to the earlier existing Central Government Notification. The investigating officers have exercised their powers in accordance with law and have filed the charge sheet. There is no merit in the contention made by accused Nos.2, 6 and 7 to the effect that cognizance taken is improper. The investigation carried out by I.Os cannot be considered, do not hold good. Hence, point No.1 is answered in the 'affirmative.'
46. Point No.2:- The prosecution has to establish that there was valid sanction u/S.19 of the Prevention of Corruption Act, 1988 for prosecuting the accused No.1. In this regard, prosecution has examined PW1 - Smt.Mythili Rangarajan. She has stated in her evidence that she was working as Chief General Manager in S.B.I. Bangalore, she had received a requisition for sanction along with a copy of F.I.R., statements of witnesses and documentary evidence collected, she has gone through the history of the case and the statement of witnesses, FIR and investigation report and other connected documents, went through the provisions of law and after applying her mind, she has come to the conclusion that there is a prima-facie case against public servant accused No.1 and accorded sanction on 21.3.2002. The said sanction order is marked as Ex.P1.
35 : Spl.C.C.61/2002 :
47. PW1 is cross-examined on behalf of accused No.1. It is suggested on behalf of accused that sanctioning authority without applying mind and only on the basis of having discussion with the CBI officer and as per the report given by him, accorded the sanction. The said suggestion is denied.
48. The learned counsel for accused No.1 has submitted that there is no valid and legal sanction as per Section 19 of the Prevention of Corruption Act, 1988. The learned counsel has submitted that PW1 is not competent authority to accord sanction, she has not produced vital documents like resolution of powers and delegation of powers as stated by her and therefore, adverse inference has to be drawn. It is submitted during the cross-examination of PW1, she has stated that there is a resolution passed by the board of directors of Bank wherein the powers have been delegated and on such powers she has exercised her rights.' It is argued that in spite of sating so, no documentary proof is produced to show that powers have been delegated. Therefore, accused No.1 is entitled to be acquitted.
It is argued that when the defence has brought out the evidence in the cross-examination, the same is not challenged by prosecution and therefore, the cross-examination portion of defence has to be believed and benefit should be provided to the accused.
49. PW1 in her evidence has stated that she was working as Chief General Manager and she was competent to remove from service the persons who are serving under middle management Scale-III in SBI and therefore she was sanctioning 36 : Spl.C.C.61/2002 :
authority and she has accorded sanction as per Ex.P1. In the cross-examination, it is elicited on behalf of accused No.1, that by virtue delegation of powers given by the competent authorities in the Bank, the Chief General Manager is having power to appoint and remove middle management Scale-III in SBI. The delegation of powers was given by the Central Board of Directors of SBI and resolution is passed having delegated the powers. Thereafter, PW1 has stated that she does not remember the date of resolution. She has also stated that I.O. must have collected the copy of delegation of powers. She further states that the book of delegation of powers is circulated to all the local head offices by the Corporate Centre.
50. In the cross-examination, it is not denied on behalf of accused that there is no such resolution passed by the Board of Directors delegating the powers to Chief General Manager.
Further, it is not suggested that PW1 was not having power to appoint and remove Scale-III middle management SBI. It is only during the course of argument, the defence is taken on behalf of accused that the copy of resolution passed by the Board of Directors delegating powers to Chief General Manager is not produced. It is contended that PW1, Chief General Manager is not a competent person to accord sanction.
51. In the trial, it is for the prosecution to establish that there is a valid sanction. The said burden is tried to be discharged by the prosecution through the evidence of PW1 and producing Ex.P1 sanction order. Further, during the course of argument, the prosecution has produced a copy of resolution 37 : Spl.C.C.61/2002 :
wherein there are delegated powers to Chief General Manger for appointing and removing of Scale-III middle management in SBI. It has been argued for accused No.1 that the said copy of document cannot be looked into as it is not marked in the evidence. On the other hand, the Public Prosecutor has submitted that the Court can take judicial notice of the fact of such delegation of powers.
52. It is not disputed by accused No.1 that he was the Branch Manager of SBI, V.V.Puram branch i.e. Officer of Scale-III middle management in SBI. It is not disputed that PW1 -
Smt.Mythili Rangarajan was working as Chief General Manager in SBI. She has stated on oath about the delegation of powers and that she is the competent authority for sanction, then it should be either denied or else the accused should point out as to who else is the competent authority. The first accused is one of the Senior Officer of the Bank and PW1 has stated that all the Banks have received resolution copies mentioning the powers of the officers. Being an officer, accused No.1 has to be acquainted with such powers of their superior officers of the Bank. Accused has to point out at the materials elicited to hold that PW1 is not a competent authority to accord sanction or that there is no resolution. When certain facts have been elicited by the prosecution through the evidence of PW1 and by producing Ex.P1 sanction order, then it is for the accused to point out that the evidence cannot be believed on account of some other person being competent. Hence, contention and argument advanced regarding this point cannot be accepted.
38 : Spl.C.C.61/2002 :
53. The learned counsel for the accused No.1 has vehemently argued on merits of sanction order and contended that there is no application of mind by the authority, she has not applied her mind. It is elicited in the cross-examination that word 'it is alleged' is used in the sanction order. In respect of the allegations leveled by the Bank in its report and complaint given by the Bank to the CBI, the above said word is used in sanction order, in FIR and the charge sheet. It is argued that admission of PW1 clearly indicates that she was not at all satisfied with the prima facie material against accused and at no time she has stated accused had committed the offence.
54. It is also argued that, it is elicited in the cross-
examination of PW1 that she has not disclosed about names of the witnesses whose statements were referred by her and this shows that she was not provided with the statements of witnesses. She has also not mentioned about the documents referred by her at the time of according sanction, she has not mentioned nature of the documents referred to her in the sanction order.
55. It is also argued that PW1 has admitted that she has seen the relevant documents pertaining to the loan facilities provided by A-1 to the customer. She has also admitted that she has come across with the documents produced by the customers for availing loan facility. In such circumstances, there is no case made out for according sanction. It is also argued that PW1 has admitted in her cross-examination that she had discussion with CBI authorities who had brought the record and produced before 39 : Spl.C.C.61/2002 :
her and after discussion with said officer she has accorded sanction. The sanction officer is prohibited and restricted from discussions with the legal branch or with the investigating agency at the time of according sanction. Therefore, she has not applied her mind to the material facts of the case. It is also argument of the learned Counsel that PW1 has admitted in her cross- examination that she has received proforma of sanction order forwarded by the CBI authority along with the requisition. It is contended that sanction order Ex.P1 is got prepared by her on the on the basis of draft sanction placed by the CBI by incorporating her name and designation on it. The whole sanction order stands invalid and illegal.
Further argument is also canvassed by pointing out documents for sanction of loan and their existence. It is submitted that there was no material to accord sanction and as such said sanction is illegal. In support of these arguments, the learned counsel has placed reliance on the following decisions:-
56. The learned counsel for Accused no.1 in support of his arguments has placed reliance upon following decisions relating to sanction u/S.19 of Prevention of Corruption Act, 1988.
- 2002(2) Crimes 198 - Udai Narain Vs State of U.P through CBI.
- 1982 Cri.L.J page 720 - Dewanchand Vs State.
- AIR 1979 Supreme Court 677 - Mohammed Iqbal Ahmed Vs State of Andhra Pradesh.
- 2007 SAR (Criminal) 845 SC - State of Karnataka Vs Ameer Jan.
40 : Spl.C.C.61/2002 :
- 2000(5) Kar.L.J. page 17 - J.S.Sathyanarayana (deceased) by LRs and another Vs State by Inspector of Police, Karnataka Lokayukta, Madikeri.
- 1992 Cri.L.J page 1144 - Bhagwan Jathya Bhoir Vs State of Maharashtra.
- 2010(2) KCCR 1010 - Babappa Vs State of
Lokayuktha
police, Gulbarga.
- 2006 Cri.L.J page 4598 - State by Inspector of Police, Visakhapatnam Vs Surya Sankaram Karri.
- ILR 2007 Kar 559 - A.V.Sathish Vs State of Karnataka by Lokayuktha.
- 1988 Cri.L.J page 651 - M.Gopala Krishnaiah Vs State.
(1) In the decision laid down in Udai Narain Vs State of U.P through CBI, validity of sanction accorded therein was questioned and the said validity of sanction was set aside by holding that there was no application of mind by the concerned Minister.
(2) In another case between Deewanchand Vs State, the Hon'ble Alahabad High Court has held that the sanction was accorded in a mechanical manner by holding that the evidence showed that the entire body of sanction was prepared by the Head clerk or General Manager and it was sent to him only for signature, there was no application of mind to the facts of that case.
41 : Spl.C.C.61/2002 :
(3) In another case, Mohd. Iqbal Ahmed Vs State of A.P., the Hon'ble Supreme Court has held that the prosecution must prove that there was a valid sanction granted by the sanctioning authority by producing the original sanction containing the facts constituting the offence in the grounds of satisfaction and by adducing oral evidence to show that the facts were placed before the authority and sanctioning authority has accorded the sanction by applying mind. It is further laid down that the case instituted in the absence of proper sanction should fail.
(4) Similarly, in State of Karnataka Vs Ameer Jan, the Hon'ble Supreme Court has held that the record containing materials collected against the Accused has to placed before the sanctioning officer for according sanction. It is held in that case the order granting sanction must be demonstrative of the fact that there had been proper application of mind on the part of sanctioning authority. In that case, sanctioning authority had passed order of sanction solely on the basis of report made by the IGP, Karnataka Lokayukta and even that report has not brought on record. It is held that the entire records should be placed before the sanctioning authority before according sanction.
(5) In case of J.S.Sathyanarayana (deceased) Vs Karnataka Lokayuktha, Madikeri, it is laid down that even at the appellate stage, it is open to the parties to canvass a point of law for the first time. Therefore, the appellants therein cannot
42 : Spl.C.C.61/2002 :
be stopped from challenging sanction order at the appellate stage.
(6) In case of Bhagwan Jathya Bhoir Vs State of Maharashtra of Hon'ble Bombay High Court, the head note A and B are as under;
A - Prevention of Corruption Act (2 of 1947), S.6(1)(b) - Sanction for prosecution - validity - Investigating Officer forwarding draft sanction order to sanctioning authority after summarizing all evidence and requesting him to examine record and to accord sanction if satisfied - Held, procedure adopted was not improper.
B - Prevention of Corruption Act (2 of 1947), S.6
- Essentials of sanction - sanctioning authority forwarding draft sanction order received from Investigating Officer to his superior authority for opinion as to whether sanction should be accorded or not - superior authority on examination of record according sanction - sanctioning authority mechanically and without application of mind relaying sanction - held, procedure adopted was faulty.
(7) In case of Babappa Vs State by Lokayuktha Police, Gulbarga, it is held that sanction accorded without making reference to records would be nullity, being suffering from vice of total non-application of mind.
(8) In case of State by Inspector of Police, Vishakapatnam Vs Surya Sankaram Karri of Hon'ble Supreme Court, head note C is as under;
43 : Spl.C.C.61/2002 :
C - Prevention of Corruption Act (49 of 1988), S.19 - Sanction for prosecution -competent authority- respondent-Accused, Assistant Station Master tried for offence under S.13(1)(e) - sanction granted by Senior Divisional Operational Manager who was not competent to remove respondent from service - sanction being without jurisdiction is invalid.
(9) In case of State of Karnataka Lokayuktha Vs A.V.Sathish, the head note is as under;
Prevention of Corruption Act, 1988 - Ss.7, 13(1)(d) R/w.S.13(2) - Offences under- Order of Acquittal-appealed against-absence of a valid sanction-finding of the trial court-on facts, held- the sanction accorded by P.W-8 is not a valid sanction-in the absence of valid sanction, charge sheet filed by the Lokayuktha police against the respondent for an offence under Section 7, 13(1)(d) R/w.S.13(2) of the P.C.Act is liable to be set aside finding of the Trial Court is upheld.
(10) In case of M.Gopalakrishnaaiah Vs State of Respondent, Hon'ble High Court of Andhra Pradesh, the head note A is as under;
A - Criminal P.C. (2 of 1974), S.482 - Prevention of Corruption Act (2 of 1947), S.5(1)(d), 5(2), 6 -
Penal Code (45 of 1860), Ss.120B R/w.Ss.420,161,165 - Sanction for prosecution of bank officials - Board of Directors acting on the contents of letter from Addl. Secretary to the Ministry of Finance who himself was also a member of the Board and sanctioning prosecution - Board not applying its mind and looking into transactions wherein the Board itself had ratified the acts of 44 : Spl.C.C.61/2002 :
officials in sanctioning loans - Held, sanction was invalid and liable to be quashed.
57. The learned Public Prosecutor in support of her case has submitted that Ex.P1 sanction order reflects that it is prepared on application of mind and by going through the material. It is submitted that nothing is elicited in the cross-
examination of PW1 to show that there was no application of mind.
58. I have perused the evidence of PW1 and the sanction order produced at Ex.P1. PW1 has clearly stated that she had received requisition, copy of FIR, statement of witnesses and documents for according sanction and she has accorded sanction as per Ex.P1 by going through the statements and documents and by concluding that there is prima facie material. In the cross-examination PW1 has stated that she has used the word 'it is alleged' by referring to the allegation made by the Bank in its report and the complaint given by the Bank to the CBI. This cross-examination portion will not lead to inference that the order is prepared mechanically, because the complaint produced in this case has the complete details and allegation made against accused and refers to the documents regarding those allegations.
59. PW1 has also admitted that CBI Officer has brought requisition and connected documents directly to her and she had discussed with said Officer who brought records. She has further stated that she does not remember what are the discussions she had with the CBI Officer, but it was discussed for about half an 45 : Spl.C.C.61/2002 :
hour. She has clearly denied the suggestion that she has come to conclusion for according sanction after discussing with the CBI police. On the other hand, she has voluntarily stated that after going through the records and after applying her mind, she came to that conclusion.
60. In this regard, the learned Counsel for accused no1 has relied upon the decision reported in 1993 KAR 2878 in a case between M.G.Thatte Vs State of Maharashtra, it is held that sanctioning authority is required to independently apply its mind before according sanction. In that case, the sanctioning authority, the chief security officer of central railway did not know Marathi language, the Investigating Officer had explained what the record of case contained. After discussing with the I.O., the sanction had been accorded. It was held that possible conclusion is that there had been no independent consideration by holding that the sanctioning authority could have taken the help of translator or requested the other senior officer to examine the records.
61. The above-mentioned decision cannot be made applicable to the facts of this case because PW1 has clearly stated that she has looked into the documents and accorded sanction. She has clearly stated that she went through the complaint and allegation of the Bank and has accorded sanction.
She has clearly denied that after discussing with CBI Officer she has passed this order. Nothing is elicited in the cross- examination to reflect that PW1 was in not in a position to assess the material submitted to her. The sanction part would 46 : Spl.C.C.61/2002 :
come before filing of the charge sheet and based on the materials available the sanction Officer has to accord sanction. The evidence tendered by PW1 does not reflect that no statements or records were produced and she has given mechanical order by not applying her mind.
62. PW1 has admitted in her cross-examination that she was provided with proforma of sanction order along with other records. She has stated that she had discussion with CBI officer only to clarify regarding provision of law in the Cr.P.C. and P.C. Act regarding her power. In my view, if the CBI officer has pointed out the provision of law where the sanctioning authority draws powers, it cannot be said to be having discussed regarding the merits of sanction order. There is nothing on record to show that Ex.P1 copy of sanction order is exact copy of the draft order.
A perusal of Ex.P1 sanction order will reflect, that it refers to various allegations against the 1st accused, involvement of accused in various illegal transactions with their details and, the manner in which the forgery, cheating and falsification of banks documents are mentioned. I am of the view that sanctioning authority had details of the material, based upon which the sanction is accorded. Therefore, it cannot be said to be mechanical order and an order is passed without applying mind.
63. The other decisions relied upon by the Counsel for the accused are relating to the principle governing the sanction under Section 19 of Prevention of Corruption Act, 1988, wherein in majority of the cases it is laid down that all the materials 47 : Spl.C.C.61/2002 :
collected by the I.O., should be placed before the competent authority, thereafter sanctioning authority has to go through the documents and independently come to conclusion that there is case for according sanction by knowing object of Section 19 of Prevention of Corruption Act, 1988, to prevent vexatious case being filed against a Public servant. The evidence of PW1 and the contents of Ex.P1 sanction order adheres to the principal laid down in the decision relied upon by the Counsel for the accused. Therefore, those decisions are not helpful to the defence of the accused. Hence, it is held that prosecution has proved that there was valid sanction order. Accordingly, point No.2 is answered in the 'affirmative.'
64. Point No.3 to 14 :- The evidence is likely to overlap and the points are inter linked, therefore they are taken up for determination together.
65. The accused No.1 is the Branch Manager of SBI, V.V. Puram Branch, Bangalore. The allegation of the prosecution is that accused No.1 by entering into criminal conspiracy with accused Nos.2 to 7, has cheated State Bank of India in the matter of sanctioning disbursing and transferring the account, availing huge credit facility by dishonest and fraudulent methods, have cheated the Bank and caused loss to the extent of Rs.72,18,630/-. They have also forged the documents, falsified the accounts and used the forged documents as genuine.
66. It is not in dispute that accused No.1 was serving as Branch Manager of SBI, V.V. Puram Branch (herein after called
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as Bank for the sake of brevity) during the year 1995 to 1998. It is the case of prosecution that in furtherance of criminal conspiracy one deceased B.S.Badarinarayana of H.R.S Packers had filed an application with the Bank on 17.1.1996 for cash credit facility for Rs.9.5 lakhs for the purpose of manufacture and supply of corrugated box by offering plant and machinery as security. It is the further case of the prosecution that on 18.9.96, in gross violation of the laid down instructions of SBI the cash credit limit facility, drawing power is enhanced to 19.5 lakhs and again it is enhanced to 20 lakhs on 12.1.97 by accused No.1 sanctioning another credit facility documentary bills credit to the tune of Rs.20-lakhs and enhancing the drawing power to Rs.29-lakhs. There are further allegations against Accused no.1 and Accused no.2 to 7 that they have conspired and got sanctioned the loan illegally , cheated the bank and have made wrongful gain for themselves.
67. The main defence of Accused no.1 as contested and argued by the learned counsel is that the branch has instituted the original suit against the above mentioned firms and the liabilities with the interest are safe enough to be recovered from borrowers. The original documents have been filed in civil case.
The only inference that can be drawn is that all the relevant documents pertaining to loan were duly got executed in the branch and they were available in the branch itself. Thus the loan transactions are purely genuine in nature as provided, as per the existing norms of the bank and duly intimated to the branch higher authorities. The cumulative consideration of overall 49 : Spl.C.C.61/2002 :
oral and documentary evidence is that the said transaction is purely a civil transaction and the loan has been released by the bank in concurrence with higher authorities and first Accused cannot be tried.
68. The main defence and argument of Accused no.2 to 5 is that they have not opened any account with the bank and without their knowledge Sri.B.S.Badrinarayana has effected all these transactions. Accused no.2 to 5 are not involved in conspiracy or for availing the loan, on the other hand they have been cheated by B.S.Badrinarayana and therefore, Accused no.2 to 5 are not guilty of the alleged offence.
69. The arguments advanced on behalf of Accused no.6 and 7 is that they are in no-way concerned to the alleged loan transactions and they have no role to play in the conspiracy. The Accused are from Tumkur. The Accused no.6 and 7 have not visited the bank nor assisted anybody in withdrawal of the amount from the bank. Therefore, they are not responsible for any of the alleged acts.
70. There are in all about 6 transactions wherein there is an allegation that Accused no.1 to 7 along with deceased B.S.Badrinarayana, Vimala and Shivaprasad have entered into conspiracy and committed the alleged acts.
The prosecution is mainly relying upon the oral evidence of P.W-2 to 21 and documents Ex.P1 to P165 for proof of the charges. The prosecution has examined one Sri.S.Venugopal as P.W-10. He has lodged complaint on behalf of Bank. He has stated in his evidence that during 1999 to February, 2002, he 50 : Spl.C.C.61/2002 :
was working as DGM, Vigilance, SBI, Local Head Office, Bangalore. He has further stated that he was given authority to lodge a complaint in this case based on the internal audit report filed by Sri.Rajendrakumar, AGM. The complaint is marked as Ex.P93 and it contains the allegations against Accused no.1 to 5 herein and B.S.Badrinarayana, Vimala to the effect that they have all conspired, with dishonest and fraudulent intention, without making proper appraisal, processing have sanctioned the loan illegally and withdrew the amount to make wrongful gain and have caused loss to the bank.
71. In respect of M/s.HRS Packers loan transaction, Sri.Kodandaram is examined as PW2. He has stated in his evidence that he was working as Deputy Manager (Accounts) in the Bank between 30.6.1996 to 10.7.1997 and at the same time, first accused was also working as Branch Manager, therefore he was acquainted with the handwriting and signature of accused No.1. He further states that Badrinarayana (deceased) was having current account in the Bank and he used to visit Bank for operating the account. Thereafter, witness goes on to identify the loan application of HRS Packers dated 17.1.1996 for sanction of working capital limits of Rs.9-lakhs which is marked as Ex.P2, Ex.P3 the application for sanction of working capital and it is processed by accused No1 and contents of application are in the handwriting of the accused No.1. He has sanctioned cash credit hypothecation limit of Rs.9.5 lakhs, the sanction order is at Ex.P5. It is signed by accused no1. The agreement for grant of small industrial advances dated 19.1.1996 is marked at Ex.P6,
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the document relating to pledging of goods of movable is at Ex.P7. The current account information sheet pertaining to HRS Packers in respect of account No.4/87 is marked at Ex.P8.
72. PW2 has stated that accused No.1 has enhanced drawing power in the account from Rs.9.5 lakh to Rs.19.5 lakh, without any application or request from the party. He further states that on 12.1.1997 it was again raised to Rs.29.5 lakh by the Branch Manager A-1, without any request. The document Ex.P8 is in the handwriting of accused No.1 and it bears his signature as per Ex.P8(a). He has also stated that no report is sent to the Controlling Authority and it can be seen that from the report dated 20.1.1996 marked at Ex.P9. Thereafter, the witness has stated about the procedure to be adopted when cheque is presented to the Bank as to how and who will pass that cheque.
73. PW2 also identifies various cheques marked from Ex.P10 to 14 and P16 to 29. He has further stated that most of the cheques therein are passed by accused No.1. The witness has also spoken about Ex.P15 certified copy of extract of cheque, referred and returned register pertaining to the period 8.3.1996 to 17.3.1996. In the said register, the cheque No.542622 for Rs.5-lakh issued by M/s.HRS Packers is referred for the reasons exceeding the arrangement, the accused No.1 as Branch Manager has exercised his discretion and has made endorsement 'to pay'. The endorsement is marked at Ex.P15(a).
74. The witness has further referred to demand promissory note dated 11.8.1998 signed by Badrinarayan (deceased), prepared by accused No.1 Manager, marked at Ex.P30. The
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witness also refers to DP Note Delivery Letter dated 11.8.1998 marked at Ex.P31, computerized statement of accounts of HRS Packers for the period 15.3.1997 to 14.8.1997 marked at Ex.P32. There is an entry showing that the amount of Rs.31,50,746/- is transferred to Mysore Main Branch by making the account balance zero, the said entry is marked as Ex.P32(a).
75. One Y.S.Rajendra Kumar, who was working as Circle Investigating Officer at the grade of Asst. General Manager of SBI, Bangalore is examined as PW12. He has stated in his evidence that in the second week of August-1998, as per the direction of General Manager (development and personnel banking) of SBI, he conducted investigation relating to irregularities in the loan advances of V.V.Puram Branch and submitted his report, totally containing 761 pages. The report is marked at Ex.P98 subject to objections.
76. He has further stated in his evidence that with regard to the irregularities pertaining to HRS group, he has visited the Branch on 10.7.1998 and gone through all the relevant documents available at that time, but he could not lay hands to 7 loan files of the borrower account i.e. file of HRS group and he was told by Branch Manager that accused No.1 had taken away those files. Thereafter, PW12 has narrated the illegalities noted by him relating to the M/s.HRS Packers, M/s.HRS Corrugators, M/s.Hallada Traders, M/s.Raghavendra Commercials, M/s.Guru Traders and M/s.Ranganatha Enterprises.
77. He has also stated that accused No.1 in order to conceal the illegal grant of the loan and the overdue amount, has
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illegally mentioned that the account of HRS Packers and HRS Corragators was transferred to Mysore main Branch Code No.3130 for Rs.50,26,726/- by preparing debit voucher as per Ex.P41 and the outstanding loans of M/s.Hallada Traders, M/s.Raghavendra Commercials, M/s.Guru Traders and M/s.Ranganatha Enterprises were transferred to Peenya Bank as per Ex.P91 illegally, only to conceal, but no amounts were transferred.
78. Prosecution has examined one K.R.Gangadharappa as PW13. He has stated that he has worked as Manager to the Bank from August-2000 to June-2002. He further states that where account holder has cash credit facility, such account holder can issue self-cheque only for limited purpose for giving wages of the staff and sundry expenses and the maximum permitted amount for self cheque in a month is Rs.15,000/- and it should not cross Rs.1-lakh annually. He has also stated that in Ex.P8 information sheet and Ex.P9 loan application, there is no mention about maximum limit relating to monthly or annual self cheque limit. He has further stated that HRS Packers OD facilities was to the extent of Rs.9,50,000/- as per records and annual limit of self-cheque issued was Rs.1,00,000/-. He has further stated that except Ex.P27 cheque for Rs.39,500/- other cheques at Exs.P17 to 29 are not in order and have exceed maximum permitted limit for withdrawal by self-cheque. These 7 cheques have been passed by A-1 - P.R.Hattangadi and Exs.P11, 12 and 14 are issued in the name of Karnataka Financial Services Ltd. These cheques are not relating to payment made towards purchase of
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any material. The OD facility is given only for the purpose of manufacturing activities and the Karnataka Financial Services Ltd. was not having any business with HRS Packers.
79. In the cross-examination for accused No.1, PW13 has stated that it is not prescribed in rules and regulation that the maximum limit of self-cheque is Rs.1,00,000/-. He has further stated that circular issued by the H.O. also does not mention that maximum limit for self-cheque is Rs.1-lakh. He further states that he has not given statement as per Ex.D7 to the I.O. to the effect that "there is no limit on the amount which can be drawn through self-cheques." The witness has voluntarily stated that there is banking practice for issuing cheque only for payment towards wages and sundry expenses. He has further stated that the practice relating to maximum limit pertaining to using self-
cheque as 10% of the loan sanctioned, is followed in the other branches of S.B.I.
80. The investigating Officers of this case are examined as PWs.20 and 21. They have stated about recording of statements of witnesses, collection of documents and submission of charge sheet.
81. In the cross-examination of PW2 for accused Nos.2 and 3 it is elicited that PW2 has no personal knowledge in respect of fraudulently transaction of A-2 and A-3. But he says that he had seen accused Nos.2 and 3 along with accused No.1 in the Bank on two or three occasions. The witness has further stated that he has not personally seen accused Nos.2 and 3 forging the documents or using them.
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82. In the cross-examination o0f P.W. 2 conducted on behalf of accused No.4, it is elicited that deceased Bhadrinarayana used to come to the Bank regularly. He has further stated that he does not know if Bhadrinarayana used to attend the Bank to operate the accounts in respect of accused Nos.4 and 5 and that accused Nos.4 and 5 have not attended the Bank for any of the transactions. In the cross-examination for accused No.1, the witness has stated that the transactions question relate to advances and unsecured loans. The delegation of power letter is confronted to witness and got marked as Ex.D3.
83. The learned Counsel for accused No.1 in his oral argument as well as in the written argument has referred to the cross-examination portion of PW10 and contended that the evidence of PW10 is inadmissible as it amounts to hearsay evidence. PW10 in the cross-examination has stated that he has no personal knowledge about the transactions. As far as this argument is concerned, the evidence of PW10 is only relating to the lodging of complaint so as to set law into motion, the rest of the evidence spoken by him is as per the documents. The prosecution has examined other witnesses like PWs.2, 3 and 9, 12 and 13 who have spoken about the transaction. Therefore, the evidence of PW10 cannot be termed as hearsay but however, his evidentiary value will have to be considered for the lodging of complaint and read along with evidence of other Bank witness.
84. It is also the argument on behalf of accused No.1 that it is elicited in the cross-examination of the witnesses that Exs.P1
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to P8 have emerged in the ordinary course of Banking transaction and therefore, the prosecution has failed to prove the allegations made against the 1st accused that the loan has been sanctioned illegally without appraisal and processing. It is the further argument that there were complete loan documents available in the Bank and with those documents only suits for recovery of loan is filed by the Bank.
85. I have perused Exs.P2 to P8. Ex.P2 is the letter dated 17.1.96 written by B.S.Bhadrinarayana as Proprietor of HRS Packers, praying to grant working capital to the Manager, State Bank of India, V.V.Puram Branch. Ex.P3 is the application form for small scale Industries requiring aggregate limits upto Rs.10-
lakhs and an amount of Rs.9,50,000/- subject to terms and conditions stipulated, has been sanctioned. In the evidence it is stated that sanction is made by accused No.1 and it is not disputed by accused No.1 by challenging writing portion in the document.
86. Ex.P5 is a general agreement for the grant of small industrial advance and hypothecation of movables books debts and other assets executed by B.S.Badrinarayana for HRS Packers. Ex.P6 another agreement for the grant of small industrial advances (working capital finance) executed by HRS Packers executed on 19.1.96. Further, the signature of accused No.1 on these documents as Branch Manger is also not disputed.
87. The main allegation against accused No.1 is that he has illegally enhanced drawing powers of Account No.SSI-87 belongs to M/s.HRS Packers. The prosecution has produced the 57 : Spl.C.C.61/2002 :
concerned current account operating instruction sheet of M/s.HRS Packers at Ex.P8. It is mentioned that B.S.Bhadrainarayana executed documents on 12.1.97 for Rs.20- lakhs in addition to cash credit limit of Rs.9,50,000/-.
88. PW2 has stated that the said writing is made by accused No.1 and signed by him. Similarly, on the overleaf of Ex.P8 on 18.9.96, the drawing powers has been mentioned as Rs.19.50 lakhs. On 12.1.97, the drawing powers is mentioned as Rs.29.50 lakhs. The said noting have been made by accused No.1 with his signature as per Ex.P8(a) and the 1st accused has not disputed his writing and signature by denial in cross examination.
89. The prosecution has examined one Vishnumurthy C.G. as PW8. He has stated that he has worked as Regional Manager, Zonal office during the period October-2000 to January-2002.
He also states that secured over draft means it is secured by the Fixed Deposit of the Banks as per Bank Resolution. He has mentioned about the seniority particulars and assignment particulars of accused No.1, which is marked as Ex.D2. As on 1.11.1994, accused No.1 was working as middle management grade-III. The witness has also identified Ex.P92 Circular No. ORG/2/95-96 relating to scheme of delegation of financial power, 1995 Advances and Allied matters. He has stated that the powers are fund based specified security of Rs.50-lakh, goods pledged/hypothecation including documents of title to goods and hypothecation of book debts Rs.10-lakh, term loan Rs.4-lakh, 58 : Spl.C.C.61/2002 :
advance against bills clean Rs.4-lakh, documentary Rs.30-lakh, unsecured loans Rs.2-lakh.
90. His evidence has not been disputed relating to the powers of middle management grade-III officer in the Bank. On the other hand, the accused has got marked the documents relating to the powers of the Office at Ex.D3. The contentions of accused No.1 is that the sanction of the loan has been made in accordance with law and has been informed to the Controller. It is also contended and argued that there are proper loan documents pertaining to these loans.
91. A perusal of Ex.P2 will reflect that application was filed by B.S.Badrinarayana on 17.1.96 for sanction of cash credit of Rs.10-lakhs and an amount of Rs.9,50,000/- is sanctioned, as seen from Ex.P4. There is allegation that the loan was sanctioned on the basis of pledge of certain machineries and stock. But it is the case of the prosecution that no such machineries was available and thus loan sanctioned was illegal.
In this regard, there is no clear evidence as to what were the machineries available and stocks found in the premises. Even in the loan application the particulars of machineries have not been mentioned. It is burden on the prosecution to prove that such machineries were mentioned. In this regard, the prosecution has placed reliance on the evidence of PW12, who has filed the interim audit report. But the documents produced is of only 71 pages whereas annexure attached to the report consisting of 761 pages are not produced. Therefore, to that extent the objections raised by defence in the evidence are sustained.
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Thus, there is evidence to show that an amount of Rs.9,50,000/- cash credit facility has been sanctioned to B.S.Badrinarayan by accused No.1 and it was below Rs.10-lakhs, which according to accused was within his limit of sanction. The allegation against accused No.1 is that the said sanction was not reported to the Controller. But same is denied by accused No.1 regarding reporting of the sanction of Rs.9,50,000/- to HRS Packers. It has been stated so by PW2. But when the other aspects of granting of loan are looked into, it has to be inferred that the sanction of this loan was not intimated to the Controller.
92. The document Ex.P8 is the current account operating instructions sheet. PW2 has stated in his evidence that the particulars of this sheet have been written by accused No.1 and it is not denied on behalf of accused No.1. The drawing power has been enhanced to Rs.19.5 lakh on 18.9.1996. The said particulars is written by accused No.1 and signed by him. This aspect is also not challenged. Similarly, credit loan of Rs.20-lakh is mentioned on 12.1.1997 and the drawing power is enhanced to Rs.29.5 lakh. This noting is also made by accused No.1 as per the evidence of PW2 and the same is not denied.
93. PW2 in his evidence has also stated that cheque Ex.P13, dated 3.3.1996 for a sum of Rs.12,50,000/- and Cheque Ex.P14, dated 12.3.1996 for a sum of Rs.5-lakh in respect of HRS Packers are issued in the name of Karnataka Financial Services Ltd. and they have been passed by accused No.1 and the same is not denied. It is the allegation of the prosecution that there were no dealings with M/s.Karnataka
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Financial Services and these amounts have been withdrawn for self benefit with connivance of accused No.1. There is no material in this case to show that M/s.HRS Packers had any business with M/s.Karnataka Financial Services.
94. PW11 - Nagaraja Rao has stated in his evidence that B.S.Badarinarayana was the partner of firm by name M/s.HRS Corrugators, the firm was not doing any good business and therefore he began to work as commission agent for another firm by name M/s.HRS Packers and he used to have his letter head leaves. As mentioned above, there is no material to show that there was any transaction between Karnataka Financial Services Ltd. and M/s.HRS Packers. But any how, accused No.2 is not alive to know whether there was any transaction with Karnataka Financial Services Ltd.
95. There are other cheques at Ex.P10 for Rs.1-lakh, Ex.P16 for Rs.3-lakh, Ex.P17 for Rs.2-lakh, Ex.P18 for Rs.3,50,000/-, Ex.P19 for Rs.2,25,000/- Ex.P20 for Rs.2-lakh, Ex.P21 for Rs.4,40,000/-, Ex.P22 for Rs.10-lakh, Ex.P23 for Rs.3,50,000/- Ex.P24 for Rs.2-lakh, Ex.P25 for Rs.1,05,000/-, Ex.P26 for Rs.50,000/-, Ex.P27 for Rs.39,500/-, Ex.P28 for Rs.40,000/- and Ex.P29 for Rs.1-lakh. The account extract of the M/s.HRS Packers is produced at Ex.P32 and at the foot of the statement the cash credit amount is shown as Rs.31,50,746/-, which is shown to be 'account transferred to Mysore Main Branch.' It can be seen that the entire amount as stated in Ex.P8 has been drawn and most of the cheques are self cheques.
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Thus, it is evident that the amount has been received for self by B.S.Badarinarayana.
PW2 has categorically stated that these cheques have been passed by A-1 and he has passed some cheques on the authorization of A-1.
96. Evidence is tendered on the side of the prosecution through P.W. 13 to the effect that the loan facilities for self-
cheque can be drawn upto Rs.15,000/- per month and Rs.1-lakh per annum. This is the banking practice. PW13 has stated that the account holder having credit facilities, monthly permitted amount for drawing self-cheque is Rs.15,000/- and annually Rs.1-lakh and it is the Banking practice. He has also stated that application in favour of M/s.Karnataka Financial Services are not for the purchase of material and they are also not in accordance with law. In the cross-examination it is elicited that there are no rules and regulation of the Bank regarding limit of drawing amount by self cheque. But witness has clearly stated about banking practice.
97. Whenever a cash credit loan is availed, the loan amount has to be utilized for the purpose for which the loan is granted as per the Banking norms. In the instant case, M/s.HRS Packers had applied initial loan as working capital and line of activity is shown as manufacture of corrugated boxes for packing.
98. The withdrawals by way of cheques from Exs.P10 to 29 will reflect that most of the cheques are for self and the amount involved is more than Rs.1-lakh, Rs.3-lakh and one cheque for 62 : Spl.C.C.61/2002 :
Rs.10-lakh. There is no material to show that for such amount of loan there was valid sanction and enhanced drawing powers. There is no material to show that there was some stock and machinery available, entire evidence will reflect that the loan amount has been misused by B.S.Bhadrinarayan and accused No.1 has assisted and helped to withdraw the amount. The natural inference is that both B.S.Badarinarayana and accused no1 have conspired each other. Ex.P8 will reflect that 1st accused has enhanced drawing power limit to Rs.9.5 lakh to Rs.29.5 lakh without any power and authority. The natural inference is that he has not reported said transaction to the controlling Officer.
99. In the cross-examination of many of the witnesses it has been tried to elicit that borrowings of loan have been ratified by taking additional documents like EX P30 31,44,45 and 54, from the borrowers. It is argued and cross-examination is made to the effect that on the basis of such documents suits have been filed by the Bank and there is no loss to the Bank. The learned counsel for the accused No.1 has also placed reliance upon the decision rendered by Hon'ble High Court of Karnataka reported in 1988 Cri.L.J. 651 (Andhra Pradesh High Court) - M.Gopala Krishnaiah and etc. Vs. The State., wherein the Head Note 'A' reads as under:-
"(A) Criminal P.C. (2 of 1974), S.482 - Prevention of Corruption Act (2 of 1947), S.5(1) (d), 5(2), 6 -
Penal Code (45 of 1860) Ss.120B r.w.Ss.420, 161, 165 - Sanction for prosecution of bank officials - Board of Directors acting on the contents of letter from Addl.Secretary to the Ministry of Finance who himself was also a member of the Board and sanctioning prosecution - Board not applying its mind 63 : Spl.C.C.61/2002 :
and looking into transactions wherein the Board itself had ratified the acts of officials in sanctioning loans - Held, sanction was invalid and liable to be quashed."
It is argued that the investigating Officer PW20 has admitted that loans borrowings have been ratified.
100. In my view, the decision relied upon by the Counsel for the accused is not applicable to the facts of the case.
Further, the statement given by PW20 I.O also does not actually reflect that loan accounts have been ratified. The evidence only discloses that some additional documents have been taken as per Ex.P30,31 44, 45 and 54 wherein the demand promissory note and take delivery letter are taken from B.S.Badrinarayana and other party on 11.8.98.
Similarly, documents have been taken from Proprietor of Raghavendra Commercials at Exs.P63 and 64 on 11.8.98. The proprietor of this Raghavendra Commercials has not admitted having executed all these documents.
101. There is nothing on record to show that the amount was recovered on the day of executing those documents or just subsequently to the execution of those documents i.e. taking some fresh documents. The evidence in this case reflects that only some Civil suits have been filed for recovery. It appears that some effort has been made to get persons to execute the documents on 11-8-98 after detecting illegality in sanction of loan, so that there are some documents for going through the process of law to recover the amount of the Bank. Such act of taking some additional documents as per Ex.P30, P31, 44,45 and 54 cannot be said to be to ratify the transaction or ratified all the 64 : Spl.C.C.61/2002 :
illegal acts that has been committed by accused No.1 or any other accused and therefore, the arguments advanced on behalf of the accused is not acceptable.
102. As mentioned above, the power limits of officers as per Ex.D3 will reflect that accused No.1 do not have any power to enhance the drawing power nor did he have any power to sanction those loan up to the limit of Rs.29,50,000/- as per Ex.P8 and permit B.S.Badarainarayana to withdraw the amount.
There is no application or request to raise limit. NO security is taken. Such act is done with deliberate attempt to gain by misuse of powers. Under such circumstances, I hold that prosecution has established that accused No.1 by misusing his powers, in conspiracy with B.S.Badarinarayana, has illegally sanctioned cash credit facility to M/s.HRS Packers and enhanced drawing power and caused wrongful loss to the tune of Rs.31,50,746/-.
103. The learned counsel for first Accused has argued that some of the documentary evidence produced by the prosecution cannot be relied and they are not proved in accordance with law. In the Cross examination to P.W-2, it is suggested that Ex.P-41 statement does not bear the certification of the officer of the bank. In support of his arguments, he has placed reliance upon decisions reported in 2010 (4) KCCR page 2677 H.Gopala Vs State of Karnataka. In the said decision, it is laid down that mere marking of document through Investigating Officer could not ipso facto amount to proving the contents. It is laid down 65 : Spl.C.C.61/2002 :
that author has to be examined to prove the contents of documents.
104. He has also relied upon another decision reported in 2010(4) KCCR page 2757 B.N.Sampathkumar Vs Rahmunissa Begum and 2010(4) KCCR page 2765 M.T.Siddashetty and another Vs P.H.Gowda and another. In both these two decisions, the principles with regard to laying foundation for leading secondary evidence are emphasized. It is also laid down how secondary evidence has to be dealt.
105. These decisions do not come to the aid of defence of first accused because the prosecution has examined the Deputy Manager of the bank, V.V.Puram branch, manager Kodandarama as P.W-2. He has worked along with Accused no.1 and has spoken about the documents produced before the court. So also, prosecution has examined P.W-14 Mr.Sawukar, System Administrator of the bank relating to transfer of accounts to Mysore and Peenya branch. Apart from that, prosecution has also examined P.W-9, 10 and 12. P.W-12 is the Manager of the V.V.Puram branch succeeding Accused no.1. He has spoken about the records. Similarly, other witnesses connected to the bank have spoken about the documents and therefore, there is proper proof of the documents. Apart from that, in most of the documents, there is the handwriting or signature of Accused no.1 and same is not disputed. As far as Ex.P-41 document is concerned, there is no certification by the bank at the foot of account statement, same cannot be treated as proper evidence as provisions of Bankers' Books Evidence Act 1891 but the
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document is marked and Accused no.1 contends that the account was transferred to Peenya branch. Under the circumstance, such document can be relied. Therefore, the decisions relating to leading secondary evidence and the decision of H.Gopala's case, facts are not helpful to the defence of accused no1. Thus, the prosecution has established that in M/s.HRS Packers account, accused no.1 by conspiring with B.S.Badrinarayana has illegally enhanced drawing powers and allowed the withdrawal and caused wrongful loss to the bank.
106. In respect of HRS Corrugators loan, the allegation against the accused are that in furtherance of criminal conspiracy accused Srisha N. Nijigal and B.S.Bharadwaj, partners of HRS Corrugators along with accused No.1 - Pradeep R.Hattangadi, deceased B.S.Badarinarayana, at the request of the partners, vide letter dtd.14.3.96 have sanctioned term loan of Rs.4-lakh and working capital limit to an extent of Rs.8-lakh. The 1st accused by abuse of his official powers, without making any appraisal, without conducting any enquiry and without obtaining sufficient security by illegal means sanctioned credit facility of Rs.8-lakhs on 27.3.96 and Rs.4-lakh on 15.3.96 illegally exceeding his financial powers, in favour of M/s.HRS Corrugators.
107. It is further alleged that accused No.1 has diverted funds by allowing a sum of Rs.7,01,726/- to be transferred from Cash Credit Account to the Current Account of M/s.HRS Corrugators, to regularize overdraft allowed in the current account of M/s.HRS Corrugators. No machinery was purchased as per the requirement of the loan.
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108. In order to substantiate the said charge, PW2 -
Kodandaram, Dy.Manager (Accounts) of the Bank, in para 13 of his evidence has stated about current account opening form bearing No.SIB-172 of HRS Corrugators marked as Ex.P74.He further states that partners have signed the account opening form and accused No.1 has authorized the said account and it bears his signature. A copy of partnership deed is also produced along with account opening form produced at Ex.P75. A letter of the partner authorizing operation of the account to B.S.Badarinarayana is marked as Ex.P76. Information sheet of M/s.HRS Corrugators current account is marked as Ex.P77. He further states that accused No.1 has permitted drawing power limit of Rs.8-lakhs and there is an entry dated 27.3.1996, marked as Ex.P77(a) and it is in the handwriting of accused No.1. There is also debit voucher in favour of M/s.HRS Corrugators bearing account No.MTL 95/25 wherein an amount of Rs.4-lakh is released for purchase of machineries, marked at Ex.P78 and it is also in the handwriting of accused No.1. The certified copy of statement of account MTL-95/25 is marked at Ex.P79. He has also stated that the amounts have been withdrawn by M/s.HRS Corrugators by issuing cheques marked Exs.P80 and 81 and the cheque Referred and Returned register is marked as Ex.P82. Thereafter, other cheques are marked as Ex.P83 and cheques Referred and Returned register is marked at Ex.P84. Similar entries are there upto Ex.P90, wherein amounts have been utilized by issuance of cheques.
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109. The investigating Officers PW20 and PW21 have also spoken about the illegal withdrawal of amounts .
110. In the cross-examination of PW2 it has been suggested on behalf of accused Nos.2 and 3 that B.S.Badarinarayana has signed the account opening form as well as other documents including the cheques without any authorisaton. It is argued that accused Nos.2 and 3 are not responsible for any of the transactions. Accused No.1 in the cross-examination to this witness has confronted copy of delegation of powers as per Ex.D3. It is elicited that PW2 had seen all the documents at the time of recording his statement before CBI. Earlier to that it is elicited that account opening forms and transaction sheets would be for operation purpose, relating to day to day transaction.
111. I have perused the evidence as well as the documents pertaining to the account of M/s.HRS Corrugators. Ex.P74 is the current account opening form of M/s.HRS Corrugators bearing No.SIB 172, it has signature column having witness of B.S.Badari Narayana. The I.O. has marked signatures of Srisha as Q75 and that of B.S.Bharadwaj as Q76. All the documents have been sent to Government Examiner of Questioned Document for examination. Similarly Xerox copy of partnership deed with certification true copy by State Bank of India is produced at Ex.P75. It is a partnership deed of M/s.HRS Corrugators with partners Srisha and B.S.Bharadwaj. The counsel for the accused Srisha and Bharadwaj have denied the execution of these documents and the signatures on that document.
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112. It is argued by the learned counsel for accused no 2 and 3 that I.O. has not sent partnership deed to Government Examiner for Questionnaire Document for knowing whether they are the signatures of Srisha and B.S.Bharadwaj and therefore the document has to be disbelieved. Further even otherwise it was argued that as per clause No.8 the borrowings of the firm have to be made with mutual written consent of parties and there is no such consent document. The learned Counsel for accused No.1 has submitted that the account has been opened in the regular course of banking transaction including the submission of the partnership deed which authorize B.S.Badrinarayana to operate the account and at during the trial accused Nos.2 and 3 have taken U turn and have started denying the documents as well as genuineness of the transaction.
113. Ex.P76 is Authorisation Letter executed by partners in favour of B.S.Badari Narayana to operate the account. The signatures of parners have been given markings Q65, Q66 and signature of B.S.Badari Narayana is marked as Q72. The body of the letter is marked Q73. On the other hand PW19 - Asst.GEQD has given his report that signatures are made by B.S.Badari Narayana in the account opening form Ex.P74 as well as the letter. The body portion writing is also that of B.S.Badari Narayana.
114. At this stage, it is relevant to examine the evidence of PW19 - Asst. Government Examiner of Questioned Document (hereinafter called as Asst.GEQD). He has stated in his evidence that Superintendent of Police, CBI, Bangalore has submitted
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specimen signatures, admitted signatures and questioned documents for giving opinion. He has stated that he has examined the Questioned documents by comparing with the specimen signature and the admitted signature and given opinion as per Ex.P121 and reasons as per EX 123.
115. In the cross-examination of Asst.GEQD, on behalf of accused No.1, nothing is elicited regarding the opinion given by the expert in respect of the questioned documents. On the other hand, general principles of expert's work is tried to be elicited.
Similarly, nothing is elicited on behalf of accused No.2. In the cross-examination of accused Nos.3, 6 and 7 witness has denied that the examination of document is not based on scientific examination and that stereo type reasoning is given.
116. In the cross-examination conducted by accused Nos.4 and 5, it is elicited that reasoning and opinion of the expert marked at Ex.P123 was dispatched from their office on 27.9.2002. It is elicited that at the time of preparing Ex.P123 reasoning the original documents, questioned documents, admitted writings and specimen writings were not with them and they were already sent to the I.O. The witness has stated that he had prepared notes. He has denied the suggestion that the reasons given by him are stereo type. Some suggestions have been made regarding considering alphabets and characteristics of succeeding letters both individual and general. He has admitted that he has not taken photographs enlargement of the questioned document, but he used scientific instruments like stereo scope, micro scope, video spectral comparator which 71 : Spl.C.C.61/2002 :
enables him to enlarge the handwriting. He has also denied that he cannot give opinion based on the photo copy Ex.P48, which is mentioned as Q-82 by the I.O. The other suggestions have been denied.
117. The learned counsel for accused Nos.4 and 5 has vehemently argued that the evidence of the expert cannot be relied, because it is not based on scientific method and photographic enlargement of the questioned document has not been done. It is also submitted that reasons given by the expert witness is improper and same is done mechanically in stereo type.
118. I have gone through the evidence of PW19 -
Asst.GEQD, His report Ex.P121 and the document which he has referred to in his opinion as well as the documents upon which he is not in a position to give any opinion.. Accused Nos.4 and 5 are not in a position to demonstrate as to why the evidence of opinion of this expert cannot be relied. PW19 has given reason in Ex.P123. Further, he was before the Court for cross- examination to elicit lacunas or latches in preparing the opinion and reasons. No particular instances have been brought out relating to the opinion given on questioned document in particular against accused Nos.4 and 5. Therefore, considering the entire evidence as a whole, the evidence of Asst.GEQD is reliable and it can be used as a piece of evidence to prove or disprove any fact in this case.
119. The investigating Officer PW20 - Vikram Kulkarni has stated in his evidence that he has collected the specimen 72 : Spl.C.C.61/2002 :
signatures of accused No.1 - Pradeep Hattangadi, K Bhadrinath, accused No.5 - Gururaj, accused No.5 - Gururaj, accused No.2 - Srisha marked as Ex.P116, Ex.P115, Ex.P118, and Ex.P119 respectively. He has also collected specimen signature of accused- B.S.Bharadwaj on 16.5.2001 marked as Ex.P117. He has collected cheqeus and other documents and sent to the Government Examiner for Questionnaire Document along with admitted signatures.
120. One S.N.Shibaraya, Chief Manager, Vijaya Bank is examined as PW18. He has stated in his evidence that on 15.5.2001 he had been to CBI Office where Dy.S.P. - Vikram Kulkarni introduced K.Bhadarinath to him and has taken his specimen signatures and he has attested the said signatures. He has further stated that the I.O. has taken specimen writing of accused No.1 Pradeep Hattangadi as per Ex.P116 in his presence and he has attested the same. So also he has attested the specimen writings of B.S.Bharadwaj marked as Ex.P117, Gururaj Rao as per Ex.p118, Srisa Nijagal as per Ex.P119 and Ex.P120.
121. It is suggested that there was no occasion for this witness to be in the CBI Office and same is denied by him. It is suggested that his signature has been taken later on and none of the persons have signed in his presence and it is denied. He has denied the suggestion that he was friendly to CBI Officer and at their request he has signed he documents as an attester, later on. Having regard to the evidence let in by the witness and the cross-examination, there is nothing on the record to show that PW18 has deposed to help the CBI. On the other hand, no
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material evidence is placed for accused to point out that any specimen signatures do not belong to particular accused or persons. The evidence of I.O. is corroborated by the evidence of PW18 and as such, prosecution has established that I.O. has taken specimen writings as well as admitted writings of the respective accused.
122. PW19 - R.B.Bhosale, Asst.GEQD has stated in his report Ex.P121 that it is not possible for him to express any opinion in respect of the signatures of Srisa Nijagal and B.S.Bharadwaj marked as Q75 and Q76 in Ex.P74 account opening form. It may be noted that PW2 and other witnesses have stated that the account has been opened by Srisa Nijagal and B.S.Bharadwaj, but however, there is no corroboration from the handwriting expert to say that account opening form is signed by Srisa Nijagal and B.S.Bharadwaj. But it is reflected that the said account opening form is authenticated by accused No.1. Similarly, no effort is made by the I.O. to compare the signatures on the partnership deed Ex.P75 and to obtain a report as to whether it belongs to accused Srisa Nijagal and B.S.Bharadwaj. The Partnership deed is on Xerox page and no other person is examined to prove that such partnership deed came into existence. Thereafter, there is a letter dated 18.1.96 marked as Ex.P76, the said letter writing portion is marked as Q73 and Expert has given opinion that it is in the handwriting of the person whose admitted signatures are A-1 to A-64 i.e. they belong to deceased B.S.Badarinarayana. The Expert has also given opinion that Ex.P76 bears the signature of
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B.S.Badarinarayana as per Q69. Whereas, no opinion is given regarding markings Q65 and Q67. The prosecution is relying on this document through the evidence of PW2 and I.O saying that these two persons have authorized B.S.Badari Narayana to operate the account.. But their evidence is not corroborated by Asst.GEQD when the questioned signatures were sent to the expert along with specimen writings. Therefore, prosecution has failed to prove that EX 76 document was signed by accused Srisha Nijagal and B.S.Bharadwaj authorizing B.S.Badarinarayana to operate the account.
123. The learned Counsel for accused No.1 has argued that the accused have given authorization to B.S.Badarinarayana to operate the account and later on they have changed the version to escape from the Civil liability. The argument cannot be accepted. As mentioned above, there is no material to show that Srisha Nijagal and B.S.Bharadwaj have signed the document.
Even otherwise, the letter only describes that Partners authorized B.S.Badari Narayana to operate the account. But, however, there is no authorization to avail any loan as argued by the Counsel for accused Srisa Nijagal and Bharadwaj. The said argument is accepted, it is held that letter Ex.P76 does not authorize B.S.Badarinaryana to avail loan.
124. Now coming back to the main allegation. It can be seen that Rs.8-lakh amount has been sanctioned through Account No.95/25 in favour of HRS Corrugators on 27.3.96 and thereafter Rs.4-lakh amount has been released for the purchase 75 : Spl.C.C.61/2002 :
of machinery in MTL Account No.95/25. Ex.P80 to 90 are the cheques issued by HRS Corrugators and they have been referred under cheque referred and returned statement. All these cheques have been passed by accused No.1 as per the evidence of I.O. It is not disputed that these chqeues have been passed. It is noticed that without taking any security such loan has been sanctioned at the instance of B.S.Badarinarayana. The involvement of Srisa Nijagal and B.S.Bharadwaj is not shown regarding this loan amount. It has been contended that accused No.1 that proper documents have been taken and the transaction is done in the ordinary course of business. But however, procedure adopted for sanction of loans in favour of M/s.HRS Corrugators does not adhere to the Banking norms, especially when the firm M/s.HRS Corrugators is partnership firm and when the partners have not authorized B.S.Badarinarayana. This will clearly reflect that there was criminal conspiracy to make wrongful loss to the Bank and gain to accused No.1 and deceased B.S.Badarinarayana. Thus prosecution has proved the criminal conspiracy as well as intent to cheat and loss caused to the Bank.
125. PW12 has stated in his evidence that the cash credit account No.SSI 4/90 was opened without observing the procedure laid down. He has further stated that the amount of Rs.7,01,729/- is debited of SIB 3/172 with a view to bring down the outstanding balance
126. I have perused the Ex.P99 and P100 pertaining to the accounts of HRS Corrugators. There is clear violation of norms in
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debiting the amount to bring down the balance in current account. There is no request from the party to sanction the loan so as to bring down the balance. It is a clear case of conspiracy to cheat Bank for making wrongful gain.
127. There is allegation that A-1 allowed illegal withdrawal from the account and thereafter transferred the balance of Rs.50,26,726/- to debit of Branch Clearing General Account, Mysore Bank Circle 3130 by debit advice Ex.P41, which includes amount of Rs.31,51,746/- pertaining to M/s.HRS Packers.
128. In this regard, prosecution has examined PW12 -
Y.S.Rajendra Kumar and he has stated in his evidence that he was working as Circle Investigating Officer at the grade of Asst. General Manager of SBI in Bangalore local head office. In the 2nd week of August, 1998 as per the instruction of General Manager, he has conducted investigation in the Branch of V.V.Puram, regarding irregularities relating to loans and advances and submitted his report as per Ex.P98.
He has further stated that accused No.1 has fraudulently transferred the total outstanding amount in the account of HRS Packers accounts totally amounting to Rs.31,50,746/- to Mysore Branch through branch clearing general account and has wrongfully brought down the outstanding in the loan accounts to NIL of V.V.Puram Branch. He has further stated that this act has been done only to conceal the said irregularities from the purview of Central Office which he had arrived at the Branch for inspection on 14.8.1997.
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He has further stated that transfer is effected during night time on 14.8.1997 as per Ex.P41. He has further deposed that Ex.P41 debit advice is in the handwriting of accused No.1 and also another Officer by name Sahukar, who is the computer system administrator of the Branch. He further states that it is mandatory that along with corresponding transfer responding advice, list of originating debits and the connected schedules should be dispatched to the concerned Branch. This has not been complied with by accused No.1. Thus, he has stated that there is loss to an extent of Rs.30,48,153/- to the Bank.
129. PW12 has further stated in para 11 of his evidence that out of M/s.HRS Corrugators loan account, he has transferred outstanding loan amount of Rs.3,01,553/- and interest by debiting to Mysore Branch through branch clearing general account on 14.8.97. The said amount is included in Ex.P41, which also includes interest amount.
130. The prosecution has examined R.D.Sawukar as PW14.
He has stated in his evidence that he was working as system administrator in V.V.Puram Branch, SBI, between March 1997 and June 1999. He further states that on 14.8.1997 at 6.30 P.M. the inspectors of the zonal inspection office arrived at their Branch and the Manager accused No.1 had introduced him to the inspecting team. He further states that after the inspection team left chamber of accused No.1, he was called by the accused No.1 to Chamber and gave him two vouchers Ex.P41 and Ex.P91 and instructed to transfer to another two different branches. He has deposed that amount mentioned in Ex.P41 transferred to Mysore 78 : Spl.C.C.61/2002 :
main Branch Code No.3130 and the account of Ex.P91 was transferred to Peenya 3024 Branch. Lastly, he has stated that after H.R.Srinivas succeeded Mr.Hattangadi, he and Chief Manager Panduranga Rao asked him to reverse the entries made as per Ex.P41 and 91,accordingly he has reversed back the entries to V.V.Puram Branch.
131. PW3 - S.Ramaswamy has stated in his evidence that he was working as Chief Manager, SBI, Mysore Main Branch and he has further deposed that there has to be transfer responding advice whenever an account is transferred from one Branch to the another Branch. He further states that M/s.HRS Packers and M/s.HRS Corrugators were not having any account in Mysore main Branch, as per Ex.P41 and amount of Rs.50,26,726/- is not transferred to their Branch.
132. In the cross-examination of PW14, it is elicited that whenever transaction exceeds or is going to exceed Rs.25-lakh such account will be transferred to commercial unit. In accordance with such circular the amount mentioned in Ex.P41 is transferred to main Branch. Further it is argued that according to evidence of PW14 the accounts have been transferred and such transfer is done in normal banking business to comply the circular. Even PW12 has been cross-examined on this point and it is denied that accused No.1 has illegally transferred this amount during night hours to conceal the same from the inspecting team.
133. I have perused the document Ex.P41. It is not disputed that debit advice is in the handwriting of accused No.1
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and on the overleaf amount of Rs.31,50,746/- is mentioned. There is evidence of PW14 to the effect that the amount is transferred during night hours, after inspection team visited the Bank.
134. PW14 - R.D.Sawukar has clearly tendered his evidence that after about 6.30 P.M. on 14.8.1997, he was instructed to transfer two vouchers of HRS Corrugators to Main Branch. Though accused No.1 has taken defence that as per circular, he has transferred these accounts, but there are no other documents pertaining to this transaction. The Circle Investigating Officer, PW12, has stated that he did not come across this Ex.P41 document. PW3 Bank Manager Mysore Bank has deposed that they did not receive any transfer of amount as per Ex.P41 to their Branch.
135. It can be clearly seen that in order to bring down the loan amounts of HRS Packers, which was sanctioned against the Law and without taking proper security this amount is transferred to Mysore main Branch. It can also be clearly seen that an amount of Rs.3,38,086/- is also included in the said account.
This amount is also transferred to conceal the total amount. As on 14.8.1997, the loan amount of M/s.HRS Packers is shown as NIL whereas corresponding existence of loan is not shown in Mysore Branch. This only goes to show that this act has been done to conceal the irregular and illegal disbursement of loans to HRS Packers and it is held accordingly.
136. In respect of loan transaction of Hallada Traders, it is alleged that criminal conspiracy is hatched between accused 80 : Spl.C.C.61/2002 :
No.1, deceased B.S.Badarinarayana, accused No.3 B.S.Bharadwaj to establish the proprietor concern in the name of Hallada Traders and in furtherance of said conspiracy, OD facility is availed for Rs.10-lakh for the purpose of trading in measuring instruments and allied items based on orders on hand. The 1st accused by abuse of his official position as public servant by corrupt means without making any appraisal, assessment and without satisfying himself on the need for such a facility by the firm, in order to make a wrongful gain has sanctioned Rs.7.2 lakhs OD facility. The deceased Badrinarayana and other accused fraudulently and dishonestly utilized as security a term deposit receipt bearing No.034463 belonging to H.N.Bhanuprakash for Rs.10,000/- by falsely showing the same to be Rs.10-lakhs.
137. Further, in order to divert the credit facility for his own personal use, accused No.3 - B.S.Bharadwaj issued a cheque No.822902 dated 1.2.97 for self and deceased accused B.S.Badarinarayana purchased and issued a DD bearing No.795160 dated 1.2.97 for Rs.4,50,000/- in favour of S.N.Enterprises payable at Tumkur without effecting any trade transactions with them.
138. PW2 - Kodandaram, who was working as Deputy Manager (Accounts) in SBI, V.V.Puram Branch, has stated in his evidence that S.B. Current Account opening form of Hallada Traders is as per Ex.P33 and it is authenticated by A-1. The letter dated 29.1.1997 seeking O.D.facility is marked as Ex.P34.
A TDR in the name of H.N.Bhanu Prakash for Rs.10,000/- is marked as Ex.P35. The current account operating instructions 81 : Spl.C.C.61/2002 :
sheet in respect of SIB-3/196 of Hallada Traders is marked as Ex.P36. His evidence reflects that Rs.7.5 lakh OD limit is sanctioned against TDR No.34463 dtd.9.1.97. The endorsement mentions that TDR is for Rs.10,000/-. Further, he states that the cheque bearing No.822902 dated 1.2.1997 for Rs.4,50,675/- issued by Hallada Traders is marked as Ex.P37 and it is passed by accused No.1. The current account transaction sheet is marked as Ex.P38 and the DD dated 1.2.1997 for Rs.4,50,000/- is marked as Ex.P40.
139. In the account opening form Ex.P33, signature portion over the 'seal Proprietor' is marked as Q54 by the I.O. Similarly, the letter seeking OD facility is at Ex.P34 and the writing portion on letter is marked as Q78 and the signature portion is marked as Q77. The learned Counsel for the accused No.3/ B.S.Bharadwaj has submitted that the account opening form does not have the name of person who has signed the document.
So also the letter Ex.P34 does not have any name. He has argued that the letter writing portions are in the handwriting of deceased B.S.Badarinarayana and the entire transaction is made by B.S.Badarinarayana. The draft application form is marked as Ex.P39 and the writing portion mentioned Q13 and the writing portion of figure is marked Q14.
140. Even PW9 - H.R.Srinivas, who has worked as Manager by succeeding accused No.1 has stated about account opening form of M/s.Hallada Traders and giving OD facility of Rs.7.50 lakhs. In the cross-examination of PW9 it is suggested that by oversight amount is mentioned as Rs.10-lakh instead of 82 : Spl.C.C.61/2002 :
Rs.10,000/- and name is mentioned as Bharadwaj instead of Bhanuprakash in Ex.P36 and said suggestion is denied by PW9. It is argued on behalf of accused No.1 that there are several types of accounts in the Bank containing similar number and the Bank has not produced TDR register to prove the aspect that incorrect DTR is mentioned for availing loan.
141. The Asst.GEQD, who is examined as PW19 has stated in his evidence that he was unable to give opinion in respect of some of the questioned documents. Likewise, he has not given any opinion as to whose signature is found on Ex.P33 account opening form at Q54 and signature appearing on cheque Ex.P37 marked by I.O as Q56. On the other hand, expert witness has given opinion that Q78 portion is in the handwriting of B.S.Badrinarayana.
142. No other witness in this case has stated that he has seen accused no2 and 3 signing these 2 documents Ex.P32, P34 and Ex.P37. PW2 has only stated that he had seen them in Bank but nowhere has he stated that B.S.Bharadwaj has signed this document in his presence. It is argued on the side of accused No.1 that documents have been properly executed. But however, there is no material to support contention of accused No.1 to the effect that B.S.Bharadwaj has signed this document. On the other hand, even the expert's opinion could not confirm the signature pertaining to B.S.Bharadwaj. I am of the view that the prosecution has failed to prove that Bharadwaj accused No.3 has opened the account in the name of M/s.Hallada Traders. But there is material to show there is active participation of
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B.S.Badrinarayana in getting this loan sanctioned since the application is in his handwriting.
143. The prosecution has produced TDR bearing No.34463 for Rs.10,000/- standing in the name of H.N.Bhanuprakash as per Ex.P40. PW2 has stated that accused No.1 in his own handwriting has written on Ex.P36 current account information sheet that the OD limit of Rs.7.50 lakhs is made against TDR No.34463 dated 9.1.1997 in the name of Bharadwaj. It is not denied that the writing is made by accused No.1.
144. A suggestion is made for 1st accused that writings have been done incorrectly on the current account information sheet at Ex.P36. This would clearly reveal that accused No.1 has written this aspect and it is in respect of Ex.P35 TDR receipt but the FD amount is incorrectly shown as Rs.10-lakh. The account opening is not done by proper person B.S.Bharadwaj and this account opening letter is in the handwriting of B.S.Badrinarayana. From the material, it is held that B.S.Badrinarayana along with accused No.1 have misused the stamp of M/s.Hallada Traders and got sanctioned Rs.7.50 lakhs illegally and by creating documents.
Further, the TDR does not belong to Bharadwaj. On the other hand, it belongs to one Bhanuprakash. The said Bhanuprakash is examined in this case as PW4. He has clearly stated in his evidence that he has not offered TDR for security to anybody much less to M/s.Hallada Traders. Thus, it is crystal clear that accused No.1 and deceased Bhadrinarayana have 84 : Spl.C.C.61/2002 :
conspired in order to make wrongful gain, have cheated and have got opened this account with inflated fake TDR.
145. The prosecution has also produced the cheque dated 1.2.97 for Rs.4,50,675/- and the signature on cheque for M/s.Hallada Traders is marked as Q56, the writings on the cheque are marked as Q57 and Q58. Asst.GEQD has not given opinion with regard to Q56 and therefore, prosecution is unable to prove that this cheque was issued by B.S.Bharadwaj. On the other hand, the writings portion marked as Q57 & Q58 in that cheque is in the handwriting of B.S.Bhadrinarayana, as per the expert opinion. PW2 has stated that this cheque is passed by accused No.1. The statement account sheet at Ex.P38 reflects that an amount of Rs.4,50,675/- has been withdrawn through cheque No.822902 i.e. Ex.P37. Even the draft application form's writings are in the handwriting of deceased B.S.Badarinarayana.
The draft is produced at Ex.P40 in the name of S.N.Enterprises and the amount is withdrawn from the account illegally. But however, prosecution is unable to prove the role of B.S.Bharadwaj or accused no.2 Srisha- Nijagal in this case. On the other hand, there is clear proof of accused No.1 and deceased Badarinarayana conspiring to make wrongful gain out of transactions of Hallada Traders.
146. In respect of loan transaction of M/s.Raghavendra Commercials, it is alleged that in furtherance of criminal conspiracy between accused No.1, deceased Badarinarayana and accused No.4 - K.Badarinatha, conspired to establish a proprietary concern in the name and style of M/s.Raghavendra 85 : Spl.C.C.61/2002 :
Commercials. A letter dated 29.1.97 seeking sanction of adhoc limit of Rs.10-lakh for the purpose of undertaking fabrication of all steel and non-ferrous items. Accused No.1 by abusing his official position as public servant has sanctioned OD limit of Rs.8- lakhs against TDR No.034473 dated 28.1.97 for Rs.2-lakh. The said TDR was in the name of Smt.Sajjida Begum and Shri Kaleelulla Khan, without their knowledge and consent by falsely mentioning it as TDR for Rs.10-lakh.
147. It is the further allegation that in furtherance of criminal conspiracy with intent to divert the amount, A-4 -
K.Badrinatha has issued cheque No.822927 favouring self and thereafter B.S.Badarinarayana has taken a DD dated 1.2.97 for Rs.5,25,000/- and thus they have caused fraudulent acts.
148. In order to substantiate the said charge, PW2 - Kodandaram, Dy.Manager (Accounts), SBI, VV Puram Branch. At para 11 in page 14 has stated that the account opening form of Raghavendra Commercials bearing Account No.SIB 197 is as per Ex.P57, the application dated 29.1.97 for grant of OD is as per Ex.P58, FD Receipt for Rs.2-lakh in the name of PW6 - Khaleelulla Khan is at Ex.P43 and the current account information sheet is marked at Ex.P59. It is stated that OD facility entry of Rs.8-lakh is written in the handwriting of accused No.1 as per Ex.P59(a). Thereafter, he also states that Cheque No.822927 dtd.1.2.97 for a sum of Rs.5,25,788/- was issued for self. It is marked as Ex.P60, draft application form for Rs.5,25,000/- favouring S.N.Enterprises is marked as Ex.P61 and that amount has been enchased in SBI, Tumkur Branch. Similarly, PW9 has 86 : Spl.C.C.61/2002 :
also stated about the account of M/s.Ragahavendra Commercials and respective documents. So also, PW2 has also referred to transaction of M/s.Ragahavendra Commercials for sanction of Rs.8-lakh against TDR stating that security has been wrongly mentioned as Rs.9-lakh.
149. The account opening form is marked as Ex.P57. The signature portion of M/s.Raghavendra Commercials Proprietorship concern have been given marking as Q38, Q39 and Q40 by I.O. and document is sent to GEQD for comparing the signature with the specimen signature of K.Badrinath. So also, the cheque No.822927 marked as Ex.P60 is also sent to the GEQD. In that cheque the drawer's signature portion for Raghavendra Commercials is marked as Q21, the writings portion are marked as Q19 and Q20. So also, the draft application form writings are given markings Q11 and Q12. The Asst. GEQD has given opinion that signature portions mentioned as Q38, Q39 & Q40 have been made by the person whose handwriting is given on the admitted signatures as per A65 to A70 and A91 and specimen signature S1 to S14. The specimen writings are the specimen handwriting of K.S.Badarinarayana taken by I.O. in the presence of independent witnesses at Ex.P115.
150. PW2 has also stated that the account of Raghavenda Commercials is opened by the Proprietor. Even Q21, the drawers' portion in cheque is also made by K.Bhadrinath as per the report of the handwriting expert. Q11 and Q12 Draft cheque application forms are in the handwriting of B.S.Badarinarayan as per the expert opinion.
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151. The learned counsel for accused No.4 K.Badarinath argued that prosecution has not proved the signature of the accused on account opening form or on cheque. It is argued that there is no corroborative evidence. In the evidence of PW2 it is elicited that PW2 has not seen K.Badarinath signing the account opening form. It is argued that in all the transaction B.S.Badarinarayana is the main culprit and he has misused the names of all the persons. The learned Counsel has pointed out at the difference in address portion.
152. The Counsel for accused Nos.3 to 5 has submitted in the written argument that between the year 1996 and 1997 accused Nos.3 to 5 were deceived by deceased B.S.Badarinarayana conniving with accused No.1 by using their names as Proprietor or Partner by opening different accounts in V.V.Puram Branch, without the knowledge or consent, by forging the signature of accused Nos.3 to 5 and furnished fake securities in order to siphon off loan amount from the Bank.
It is also submitted that the evidence of PW19 - Asst. GEQD is not reliable and cannot be believed, because the I.O. has only marked some of the questioned signature of accused Nos.4 and 5, no opinion is sought by the I.O. on signatures available in Ex.P63, Ex.P64 and Ex.D15 said to be of accused No.4, no opinion is sought in respect of accused No.5 regarding documents Exs.P54 & 55 and Ex.D16. It is further submitted that PW19 has admitted that reasoning of the opinion Ex.P121 were prepared subsequently and that cannot be relied. It is contended that PW18 in his evidence has admitted that attested specimen 88 : Spl.C.C.61/2002 :
writings and signatures of A-2 to A-5 were obtained by making them to imitate certain alphabets, numbers and signatures while giving specimen handwriting. Therefore, the evidence of PW19 regarding Asst. GEQD cannot be believed and it is not corroborated by any other evidence. It is also submitted that the cheque amount of Rs.2-lakh each for the 4 loan account were issued by B.S.Badarinarayana. This will reflect that he was the person who has misused the names of accused Nos.3 to 5. Thereafter, the learned Counsel submitted that further documents are taken as collateral security to Guru Traders as per Ex.D1 and M/s.Raghavendra Commercials as per Ex.D14. Further it is pointed out that no other person has said that they have seen accused Nos.4 and 5 signing the documents.
153. A perusal of account opening form Ex.P57 will reflect that there are three signatures said to be that of Proprietor of M/s.Raghavendra Commercials - K.Badarinatha. It is the case of the Bank that the account holder has opened this account and in this regard, PWs.2, 9 and 12 are examined; the investigating Officer has also stated so. So also, the cheque Ex.P60 also bear the signature of K.Badarinatha as per the opinion of expert.
There are no worthwhile materials pointed out to disbelieve the evidence of Asst.GEQD. The said expert has given opinion about only some of the questioned documents and for rest of the documents he has stated that he is not in a position to do so. The specimen writings of K.Badarinatha have been taken in the presence of PW18. The other writing portion on the cheque and 89 : Spl.C.C.61/2002 :
draft application will also reflect that B.S.Badarinarayana has written those cheque and draft application. But nowhere the handwriting expert has stated that cheque and account opening form is signed by deceased B.S.Badarinarayana. Hence, it is established that K.Badrinatha has conspired with accused no.1 and B.S.Badrinarayana and caused wrongful loss to the bank.
154. Further, the documents also reveal that B.S.Badarinayana has taken this DD and it is got encashed by S.N.Enterprises at SBI, Tumkur.
155. In the cross-examination of PW2 made on behalf of accused No.4 and 5 it is suggested in page 31 that "I do not know if it is suggested to me that it is Badarinarayana who used to attend the Bank to operate the accounts in respect of A-4 and A-5 and A-4 and A-5 have not attended the bank in any of the transactions". This suggestion will reveal that accused Nos.4 and 5 at least knew that B.S.Badarinarayana is operating the account. In such a case, the only inference that can be drawn is that account opening form is signed by K.Badrinatha and so also cheque Ex.P57 and 60 are signed by him.
156. As regards contention of the learned Counsel for A-4 and A-5 that I.O. did not send Ex.P63, P64 and Ex.D15, Ex.P54, P55 and Ex.D16 to handwriting expert, one can notice that Ex.P63, P64, P54 & P55 on demand promissory note, confirmation letter & D.P. note delivery letter were subsequently taken on 11.8.1998 by the Bank only to safeguard their amount.
Further, these documents are certified copies. Those documents are now part of civil litigation as per the emerging evidence.
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The pay-in-slip Ex.D15 & D16 are of earlier period. It is not demonstrated that prejudice is caused to defence of A-4 and A-5 by not sending these documents to handwriting expert. Whatever evidence is available, it reflects that B.S.Badarinarayana also took part in filing Draft application form and application for loans. But there is clear evidence that K.Badarinath and Gururaraja Rao signed the account opening form and most importantly cheque. Therefore, the criminal conspiracy is established between accused No.1, deceased B.S.Badarinarayana, K.Badarinath and Gururaja rao.
157. In respect of loan transaction of M/s.Ranganath Enterprises, it is alleged that deceased B.S.Badrinarayana and his wife deceased Smt.Vimala conspired along with Accused no.1 to establish a proprietary concern in the name and style M/s.Ranganath Enterprises and opened an account in the name of Vimala as Proprietorship. An application was moved seeking working capital facility for Rs.10 lakh for the purpose of manufacturing steel cart on major orders placed. First Accused B.R.Hattangadi by abusing his official position in order to show undue official favors to B.S.Badrinarayana and Smt.Vimala, without making any appraisal assessment has sanctioned OD for Rs.7.2 lakhs by using a term deposit receipt bearing No.034448 dated 19.1.1997 for an amount of Rs.1,300/- by falsely stating the deposit value as Rs.9 lakhs. Further, with an intention to divert the credit facility, self cheque No.822952 dated 1.2.1997 for Rs.6,00,900/- is issued and B.S.Badrinarayana has purchased
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a DD for Rs.6 lakhs in favor of M/s.S.N.Enterprises, payable at Tumkur.
158. In order to prove the allegations, P.W-2 Kodandarama, Deputy Manager of the bank has stated in his evidence at page no.17 to the effect that Vimala filed an application on 29.1.1997 seeking working capital facility of Rs.10 lakh and the application is marked as Ex.P-66. Account in the name of M/s.Ranganatha Enterprises bearing No.SIB-198 is marked as Ex.P-67 and it is authorized by Accused no.1. He further says that a working capital facility to an extent of Rs.7,000/- was endorsed against TDR No.34448 dated 9.1.1997 for Rs.9 lakh. The account information sheet is marked as Ex.P-
68. TDR is marked as Ex.P-69. He has also stated that a cheque for Rs.6,00,900/- is issued as per Ex.P-70 and demand draft in the name of S.N.Enterprises is marked as Ex.P-72. He also states that the amount of Rs.6,58,842/- is transferred to SBI, Peenya Branch.
159. I have perused the account opening form Ex.P-67 in the name of Ranganatha Enterprises said to be signed by Smt.Vimala as Proprietor. Ex.P-66 is the letter addressed to the Manager, SBI, V.V.Puram branch seeking working capital of Rs.10 lakh. Ex.P-68 is the current account information sheet.
P.W-2 has stated that the OD limit of Rs.7,20,000/- is recorded by Accused no.1 against TDR NO.034448. TDR No.034448 is at Ex.P-69, it stands in the name of one Jayasimha Narahari and it is for only Rs.1,300/- whereas in Ex.P-68 current account information sheet, the TDR value is shown as Rs.9 lakh. The 92 : Spl.C.C.61/2002 :
draft application form is at Ex.P-71 and the writing portions are assigned marking Q.9 and Q.10 by I.O. P.W-19 handwriting expert has given opinion that Q.9 and 10 are written by deceased B.S.Badrinarayana, the DD for Rs.6 lakh payable to S.N.Enterprises is at Ex.P-72.
It is submitted on behalf of Accused no.1 that the party has executed proper documents and availed the loan. Hence, the prosecution has not proved the allegations.
160. In this case, Smt.Vimala as well as B.S.Badrinarayana who are husband and wife have died and signature on account form as well as application have not been denied but it can be seen that first Accused has sanctioned this loan without taking adequate security. The TDR furnished at Ex.P-69 is not of value of Rs.9 lakh. The defence of Accused no.1 regarding this TDR is not consistent. It is argued that there will be several TDRs with same number and the TDR register is not produced to prove the allegation. In my view, the said defence cannot be accepted.
There is clear writing on the current account information sheet about the TDR of some other person. It establishes that the first Accused has conspired with the deceased B.S.Badrinarayana and defrauded the bank by withdrawing the amount of Rs.6 lakh. Under the circumstances, the prosecution has established that Accused no.1 has misused his official position to sanction the loan and to withdraw the same to make wrongful gain and to cause loss to the bank.
161. In respect of loan transaction of M/s.Guru Traders, it is alleged that deceased B.S.Badrinarayana, D.H.Gururaj -
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Accused no.5 and 1st Accused Hattangadi conspired with each other to establish proprietary concern M/s.Guru Traders. A letter dated 20.1.1997 is filed with bank seeking sanction of loan of Rs.10 lakh for the purpose of supply of fixographs used in sign boards, display boards against major orders. The first Accused by misusing his official position and by corrupt or any other means without making any appraisal, assessment, has sanctioned over draft limit of Rs.7.2 lakhs. Further Gururaj Accused no.7 has fraudulently and dishonestly utilized security a TDR No.034465 dated 24.1.1997 for Rs.47,200/- standing in the name of Kamala and E.Narasimhan without their knowledge and have falsely issued the TDR for Rs.9 lakhs. Further a self cheque No.82297 dated 1.2.1997 for Rs.4,25,675/- is issued by D.H.Gururaj for purchase of DD by B.S.Badrinarayana and accordingly, a DD for Rs.4,25,000/- in favor of S.N.Enterprises was taken.
162. In order to prove the allegation, P.W-2 Kodandarama, the Deputy Manager of the bank has stated in his evidence at page no.12 that Ex.P-47 is the account No.SIB-199 in the name of Guru Traders, it is authorized by Accused no.1 and signed by him. The application for loan is marked as Ex.P-48. The current account information sheet of M/s.Guru Traders is marked as Ex.P-49. The cheque bearing No.82297 for Rs.4,25,675/- is marked as Ex.P-50. A DD issued in favor of S.N.Enterprises for Rs.4,25,000/- is at Ex.P-53.
163. I have perused the oral and documentary evidence. The account opening form of Guru Traders is at Ex.P-47. Gururaj
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is said to have signed the said account opening form of Guru Traders as proprietor. The signature portion is assigned Q.44 by the I.O. Similarly, in the application filed for grant of loan at Ex.P-48, the signature portion is assigned marking Q.82 and the letter writing portion is marked as Q.81. The signature on cheque Ex.P-50 is assigned marking Q53 by the I.O.
164. The Asst. GEQD has given his opinion that the person who wrote S39, S42 to 46, S56, S57, S83 and S84, A93, A95, A96, A98 and A99 also wrote Q.44, Q.53 as well as Q.82. These are the specimen signatures and admitted signatures of Gururaj Rao. It has been contended and argued on behalf of Accused no.5 to the effect that deceased B.S.Badrinarayana and Accused no.1 have misused their name to withdraw the amount and they have not gone to the bank and not signed the documents. The learned counsel for Accused No.5 has also argued that the evidence of handwriting expert cannot be relied because he has not sent other document of Accused no.5 for comparison. The reasons given by him are not accompanied along with the opinion and his evidence does not satisfactorily prove that Accused no.5 has signed.
165. I have perused the evidence of handwriting expert as well as the oral evidence. In the Cross examination to P.W-2, it is suggested on behalf of Accused no.4 and 5 that B.S.Badrinarayana has operated the bank account for them and they have not gone to the bank. This suggestion will reflect that Accused Gururaj Rao was aware that an account is opened in his name. Further, he has issued a cheque for withdrawal of an
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amount by taking a DD. Though the role of B.S.Badrinarayana is seen in all the transactions but there is an important role of Accused Gururaj Rao in signing the account opening form and issuing a cheque. Therefore, the defence submitted on behalf of Accused no.5 do not hold good. The prosecution has established that Accused no.1, deceased B.S.Badrinarayana and Accused no.5 Gururaj Rao have conspired and opened account and withdrawn the amount.
166. The OD limit of Rs.7.2 lakh is shown against TDR No.34465 dated 24.1.1997 for Rs.9 lakh and it is in the handwriting of Accused no.1. TDR of E.Narasimhan and Kamala for Rs.47,200/- is produced at Ex.P-42. E.Narasimhan is examined as P.W-5. He has clearly stated that he has not handed over his TDR as security to any person. It can be seen that Accused no.1 has misused the TDR number by quoting wrong amount of Rs.9 lakh for sanctioning Rs.7.2 lakh. Thus, Accused no.1 along with deceased B.S.Badrinarayana and Accused No.5 Gururaj Rao have conspired to open the account and withdrawn the said amount by causing wrongful loss to the bank and making wrongful gain.
167. It is further case of the prosecution that on 14.8.97, when the inspection squad visited Branch, the 1st accused by using corrupt or illegal means, to obtain for himself and other accused for taking pecuniary advantage, has falsely prepared a common debit advice for the four proprietary concerns i.e. M/s.Hallada Traders for Rs.4,93,857/-, M/s.Raghavendra Commercials for Rs.5,78,835/-, M/s.Ranganatha Enterprises for
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Rs.6,58,842/- and M/s.Guru Traders for Rs.4,66,370/- for transferring these accounts to State Bank of India, Peenya Industrial Area Branch without adequate consideration and without knowledge of the account holders, by making false entries in the Branch Clearing General Accounts and posting entries in the computer and as such, caused wrongful loss to the tune of Rs.21,97,904/- and corresponding gain to them.
168. To substantiate this aspect one B.S.R.Sharma is examined as PW7. He has stated in his evidence that he was working as Deputy Manager (Accounts) at SBI, Peenya II Stage, SSI Branch during the year 1998. He has verified transfer of accounts of Hallada Group of entity and there was no transfer of account or amount in that Branch to the tune of Rs.21,97,904/- as seen from Ex.P91.
169. PW10 - S.Venugopal has stated in his evidence that he has worked as DGM, Vigilance, SBI local head Office, between Jan-1999 to Feb-2002 and he has lodged complaint regarding illegality committed in V.V.Puram branch as per Ex.P93. He has further stated about debit voucher marked as Ex.P91 relating to the accounts of M/s.Hallada Traders, M/s.Raghavendra Commercials, M/s.Ranganatha Enterprises and M/s.Guru Traders.
170. PW12 - Y.S.Rajendra Kumar has stated in his evidence that he has worked as Circle Investigating Officer in the year 1998 and he has conducted inspection in V.V.Puram Branch.
He has stated that he was informed that accused No.1 has taken away all the loan files pertaining to M/s.HRS Group firms. He has further stated that on 14.8.1997 in order to conceal the 97 : Spl.C.C.61/2002 :
irregularity from the purview of Central Office squad, the 1st accused has transferred an amount of Rs.50,26,726/- to Mysore Main Branch as per EX p 41 and 1st accused has transferred loan sanctioned to these accounts to the tune of Rs.21,97,904/- to Peenya Industrial Estate Branch by debit voucher Ex.P91.
171. In the cross-examination to this witness it is suggested that accused No.1 has not carried any file to the place where he was transferred. It is also suggested that there is circular which requires the Branch to transfer the account where transaction is above Rs.25-lakh to the Commercial Unit and accordingly the accounts have been transferred to Peenya Industrial Estate Branch. All along PW14 - R.D.Sawukar, computer system administrator has admitted in his evidence that whenever the amount crossed Rs.25-lakh the amounts are transferred to the Commercial Unit.
172. It is argued by the Counsel for accused No.1 that the transfers have been effected in accordance with banking 'norms and circular' and it is admitted by PW12 and PW14.
173. I have gone through the records Ex.P41 and Ex.P91.
PW7- Dy.Manager (Accounts), Peenya Branch, SBI, has clearly stated that no account was transferred to their Branch. PW14 - R.D.Sawukar, System Administrator of the Branch has stated in his evidence that when the inspection team came to their Branch on 14.8.1997 the 1st accused had instructed him to transfer the amount by debit advice. If the amount and account had been transferred, there has to be amount outstanding balance shown in any of the account. In the case on hand, after making 98 : Spl.C.C.61/2002 :
unlawful withdrawals and when there is chance of noticing illegal withdrawal by inspection team, these accounts have been transferred to the Peenya Industrial Branch. In fact, though there is allegation that all these four entity are HRS Group firms, but there is no document evidencing that they are all HRS group firms. Therefore, the only inference that can be drawn is that these four accounts have been shown to be transferred to Peenya Industrial Estate Branch only to conceal the said transactions from the inspection team.
174. There is no documentary material in this case to show that circular was issued relating to transactions above Rs.25-
lakhs have to be transferred to Commercial Unit. Further, even if circular is taken as existing, there is no material to show that 1st accused has adopted any procedure in informing account holders to transfer them. The individual accounts of these firms do not come to the tune of Rs.25-lakh required to be transferred as per the circular. Therefore, the contention of the accused cannot be accepted. Thus, the accused has falsified the books of accounts of the Branch in order to make wrongful gain and has caused loss to the Bank.
175. At the cost of some repetition, coming back to the important arguments made by Advocate for accused no.1,3 to 5 and accused Nos.2, 6 and 7, the reasonings and conclusions are as under:
For accused no.1, it is contended that in the Cross examination of P.W-10, it is elicited that said complainant had not carried the investigation report filed by P.W-12 nor it was 99 : Spl.C.C.61/2002 :
attached to the report and said report was not shown to P.W-10 while recording evidence by the CBI officer. Further, it is also elicited that the four entities are not connected with HRS Packers and they are independent firms and all the four firms are managed by Badrinarayana who was the relative of proprietor of above said firms. It is also contended that Smt.Vimala, Badrinath, Bharadwaj, Srisha and Gururaj had actively assisted Badrinarayana to withdraw the amounts sanctioned to them by the bank. Thus, it is submitted that all the transactions of the respective firms have been dealt by Badrinarayana as per the existing Banking Rules and Regulations.
176. The counsel for accused no.1 has drawn the attention of the court to the cross examination of P.W-10 and contended that Ex.P-75 is confronted to the said witness and it reveals that transactions were in accordance with banking norms. It is also contended that the cumulative consideration of cross examination of P.W-10 would reveal that at no point of time, accused no.2,3,4 and 5 have denied the transactions of B.S.Badarinarayana.
It is also argued that P.W-12 has suppressed in his evidence that he has worked as Manager of Mysore branch during the relevant period when he prepared internal inspection report as per Ex.P-98 and it was only admitted in the cross examination. It is also argued that P.W-12 Y.S.Rajendrakumar with malafide intention has prepared the report Ex.P-98. P.W-10 has lodged the complaint without knowing the facts of the case and with bias attitude.
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It is further submitted that the evidence let in by P.W-12 regarding the transactions has been destroyed in the cross examination by the defence. It is pointed out that witness has stated that as per Ex.P-76, Sri.Badrinarayana was duly authorized to operate the account of HRS Corrugators. The evidence of P.W-12 in the Cross examination that Sri.Badrinarayana was authorized to operate the account and not to raise any loan is inconsistent and contrary to the Ex.P-76. A close look of Ex.P-76 will clearly reveal that Badrinarayana authorized his partners to release the loan amount.
177. The counsel for accused no.1 has also drawn attention of the court towards the evidence of P.W-20, 21 relating to obtaining of specimen signatures of the accused persons and the evidence of P.W-19 handwriting expert as well as P.W-18. This will reflect that borrowers had executed the bank documents.
It is also submitted that P.W-9 H.R.Srinivas was the Manager of the bank when additional documents were got executed on 11.8.1998. Accused no.1 has not got executed these documents as he was working at Bijapur at that time.
178. It is also submitted that a circular has been confronted to P.Ws.9,12,20 and 21 and it is elicited that borrowers' accounts have been transferred to Mysore and Peenya branch in view of the circular of the head office relating to transactions of the group of account for more than 25 years.
It is also argued that in the cross examination of P.W-12, it is elicited that accused no.1 was having discretionary powers to accord sanction to the tune of Rs.10 lakh for documentary bill 101 : Spl.C.C.61/2002 :
facilities loan on confrontation of Ex.P-92. He has also admitted that accused no.1 had the powers for sanctioning Rs.10 lakhs on hypothecation of goods, documents of title to goods and book debts and Rs.30 lakhs in respect of advances against documentary bills.
179. It is argued that in the cross examination of P.W-8, he has admitted having sent the reports to the head office which contained the transactions of firms. It reflects that P.W-8 is not trustworthy witness wherein he has deposed against the admitted facts. It is also argued that P.W-12 has admitted in his evidence that a suit for recovery has been filed and during his inspection, he has not come across with any sort of adverse remarks either by the capital or from the borrowers. It is submitted that no wrongful loss is caused to the bank.
It is also argued that the Investigating Officer has failed to secure the real owners of the TDRs mentioned in the information sheet and failed to enquire them and therefore, it has to be presumed that they are genuine transactions.
180. Most of the above contention has been already dealt while considering respective evidence. The evidence available in this case will reveal that the four entities are different. There was no authorization by the proprietors of HRS Corrugators, Hallada Traders, Ranganatha Enterprises to operate account. Therefore, the argument of accused no.1 that all the transactions are done in accordance with law do not hold good. Ex.P-76 also do not authorize Sri.B.S.Badrinarayana to avail loan for the firm. The cross examination of P.W-12 is regarding the documentary 102 : Spl.C.C.61/2002 :
evidence and it is established from the documents that accused no.1 has authorized opening of the accounts and permitted withdrawal of the amount. There is fraud in opening the accounts of Hallada Traders, Raghavendra Commercials and Guru Traders. The argument regarding power of the bank manager to sanction the loan also will not regularize the accounts because the accounts have been opened by violation of banking norms and without proper appraisal and processing of the accounts.
181. There is clear evidence to show that the accounts have been transferred to Mysore and Peenya Branch only for the sake of concealing the same from the inspections called. Therefore, the argument that those accounts have been transferred in consonance with circular cannot be accepted.
182. Further, there is no evidence to show that accused no.2 and 3 have entered into any agreement for conspiracy and taken participation in the opening of account or withdrawal of amount. Under the circumstances, the argument that transactions are valid and loan is availed by the parties cannot be accepted. But however, there is evidence to show that accused no.4 and 5 have opened the account by signing account opening form. The further arguments for counsel for accused that there was appreciation of the work of first accused and there were no adverse remarks do not come to the aid of first accused because the case against accused no.1 is conspiracy and it is very difficult to unearth a conspiracy. There is ample evidence to show the involvement of accused no.1 in causing wrongful loss to the bank by entering into criminal conspiracy.
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183. As far as TDRs are concerned, the argument for accused no.1 do not hold good because there is clear writing in the current account information sheet about the TDRs in the handwriting of accused no.1. No material is placed to show that there are other account holders having such TDRs. Therefore, there was no occasion for the Investigating Officer to know about the other FDRs other than mentioned in the sheet.
184. In support of his arguments, learned counsel for accused no.1 has placed reliance upon decisions reported in 2010 AIAR (Crl.) page 11 Supreme Court, Parminder Kaur Vs State of U.P and another. The head note A is as under;
Indian Penal Code, 1860, Secs. 420, 467, 468, 471
- offences under - Affidavit filed by plaintiff in civil suit filed on 27.5.2002 alleging that she came to know of the sale deeds sought to be cancelled on 16.5.2002 and obtained a certified copy thereof on 17.5.2002 - Such actual dates, however were 6.5.2002 instead of 16.5.2002 and 7.5.2002 instead of 17.5.2002 and 27.5.2002 and such were alleged complainant to have been altered in such copies - Even if such changes were assumed to have been made, no offences under Secs.420, 467, 468, 471 IPC of cheating, forgery or using as genuine a forged document etc. can be said to have been committed by accused.
This decision is not applicable to the facts of case on hand. There is clear documentary and oral evidence relating to exceeding of powers to sanction loan, sanctioning loan without taking proper security, opening some accounts fraudulently, using some other FD receipts fraudulently as security to the loans sanctioned by Accused no.1. Whereas in the above mentioned decision, there was an allegation of altering the date in the 104 : Spl.C.C.61/2002 :
document, a civil suit was filed by swearing a false affidavit. In that case, the Hon'ble Supreme Court has held that no offence has been committed by Accused.
185. The learned counsel for Accused no.1 has also placed reliance upon decision reported in 2012 (2) KCCR 1513 Ismail Khan Shah @ I.K.Shah and others Vs State by CBI, Bangalore.
Head note B is as under;
Penal Code, 1860 - Section 420 - Offence under - In order to attract Sec. 420 of the IPC, it is incumbent on the part of the prosecution to establish that the accused had deceived the bank while taking loan or that they had acted dishonestly or fraudulently. When the trial Court, itself did not find any convincing material being placed by the prosecution to show that the accused had either given wrong addresses or that the units in question were not in existence, the question of the appellants deceiving the bank when they made the applications for cash credit facility, therefore, does not arise. The intention on the part of the appellants to cheat the bank had to be established and the prosecution fails in its attempt to prove this and consequently - Mere non-payment of the loan amount itself cannot be construed as satisfying the ingredients of Section 420 of the IPC - Merely because the accused had not repaid the loan amount, the court, therefore, inferred from this act that the accused had committed the offence of cheating. The said reasoning of he trial court cannot be accepted as the essential ingredient of Sec. 420 of the IPC, to cheat, was found missing in the instant case.
186. A reliance is also placed by counsel for first Accused on decision rendered by Hon'ble Supreme Court of India reported in 2009 AIAR (Crl.) page 574 S.V.L.Murthy Vs State represented by CBI, Hyderabad. This decision is also regarding 105 : Spl.C.C.61/2002 :
the principles and proof of the ingredients for offences u/S.405, 409, 420 IPC, Sec.13(1)(d) of P.C. Act and Sec.120B IPC.
187. The said decisions cannot be made applicable to the case on hand. In this case, all the amounts lent by way of loan have not been recovered by the bank from all the six accounts.
There is ample evidence in the form of oral and documentary evidence to show that Accused no.1 in order to make a favor to deceased B.S.Badrinarayana has sanctioned these loans under question. Right from the day of sanction, there is clear evidence to show that the loans have been advanced without power, without security and they have been transferred to some other bank to conceal the same from the team of Inspectors. The element to cheat the bank by dishonest and fraudulent method is established and loss is caused to the bank because there is no proper documentation.
188. The counsel for Accused has also relied upon decision reported in ILR 2000 Kar 1018 J.Alexander Vs CBI. In the said decision, the Hon'ble High Court of Karnataka has discharged the petitioner of the alleged offences u/S.13(1)(d) and 13(2) of P.C. Act and Sec.120-B IPC. The head note is as under;
PREVENTION OF CORRUPTION ACT, 1947 (CENTRAL ACT NO.2 OF 1947) - SECTIONS 13(1)(d) and 13(2) AND INDIAN PENAL CODE, 1860 (CENTRAL ACT NO.45 OF 1860) - SECTION 120-B - Framing of charge as against the petitioner who was then Additional Chief Secretary and Finance Commissioner to the Government of Karnataka, in M/s.Classic Computer Systems case by the Special Judge set aside accepting his contention that after receiving the proposal from the company, as per the official norms and procedure, he had put up the same before the Chief Minister for consideration and in turn, 106 : Spl.C.C.61/2002 :
the matter was placed before the Cabinet and after due consideration the cabinet gave its approval and was in no way responsible for the final decision.
The said decision is not applicable to the case on hand because there is primary role of first Accused in conspiracy to sanction loan and to siphon of the amount of the bank.
189. Advocate for accused no.1 has relied on decision reported in AIR 1969 Allahabad page 189 Vivekanand Nand Kishore Vs State. In para 9, it is held as under;
"Applying the aforesaid test to the present case, we find that the main offence is the one under section 471 IPC namely, the offence of using a forged document as a genuine document. The other offences all flow from it, in the sense that if the charge under Section 471 IPC fails the charges for the other offences would also fail. In addition, none of those offences can 'in truth and substance' be said to be of a distinct nature. I am therefore, satisfied, that the mere fact that sections 406, 467 and 420 IPC are also tacked on to the offence under Section 471 IPC would not serve to take the case out of the scope and ambit of Section 195(1)(c) Cr.P.C."
The said decision is not applicable to the case on hand as there are substantial materials against first Accused regarding the offences. The counsel has also placed another decision reported in 2006 Cri.L.J.1851 T.K.Sriramappa Vs State of Karnataka. In this case, it is held that prosecution has to establish that Accused committed forgery and that he did so with intention that document forged shall be used for purpose of cheating. The principles governing S.468 IPC have been dealt with.
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190. The learned counsel has also placed reliance upon decision reported in 2012 AIAR (Crl.) page 299 Sampathkumar Vs Inspector of Police, Krishnagiri. In this case, the Hon'ble Supreme Court has laid down the principles relating to appreciation of evidence/circumstantial evidence and three category of witnesses namely i)those wholly reliable, ii)those who are wholly unreliable and iii)those who are neither wholly reliable nor wholly unreliable.
191. Further reliance is placed upon decision reported in 2012(5) KLJ 681 State by Chickpet police station Vs Suresh James. The head note is as under;
INDIAN PENAL CODE, 1860, Sections 408 and 477A - Charge of misappropriation of funds - Validity - Accused - Manager in a shoe showroom allegedly misappropriated the funds of company - No evidence showing that accused has received any amount of cash - Inventory Report of misappropriation of funds found defective as its starting point was wrongly taken - Such a report cannot be sole basis of conviction - Actual misappropriation, not proved - Acquittal of accused, upheld.
192. Further reliance is placed upon decision reported in 2015 SAR (Crl.) 136 Surinder Kaur Vs State of Haryana. In this case, Hon'ble Supreme Court has laid down that standard of proof required is the proof beyond doubt regarding the pecuniary advantage obtained by Accused to prove the charge u/S.13(1)(d) of P.C. Act.
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193. Further reliance is placed upon decision reported in 2013 SAR page 195 Surjit Sarkar Vs State of West Bengal.
Head note D is as under;
Criminal Procedure Code, 1973 - Sec.156 -
Investigation - Defective or shoddy investigation - Effect
- Stand taken by prosecution that in no case can defective or shoddy investigations lead to an acquittal - cannot be accepted as broad proposition of law - It would depend on defect pointed out - If investigation results in real culprit of an offence not being identified, then acquittal of accused must follow - It would not be permissible to ignore the defects in an investigation and hold an innocent person guilty of an offence which he has not committed - Investigation must be precise and focused and must lead to inevitable conclusion that accused has committed the crime - If investigating officer leaves glaring loopholes in investigation, the defence would be fully entitled to exploit the lacunae - In such a situation, it would not be correct for prosecution to argue that court should gloss over the gaps and find the accused person guilty - If this were permitted in law, prosecution could have an innocent person put behind bars on trumped up charges.
194. All these decisions are not helpful to the defence of Accused no.1 because there is ample documentary and oral evidence to show that Accused no.1 had unlawfully opened the account without proper documents and permitted for withdrawal of amounts to make wrongful gain and to cause loss to the bank. As far as Surjit Sarkar's case is concerned, the Accused no.1 has not been able to show that there is any defect in the investigation. Further, there are no lacunas in the case on hand. Hence, these decisions are not helpful to the case of Accused no.1.
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195. At the cost of repetition to some extent, the argument of accused Nos.3 to 5 is dealt as under:
It has been argued that B.S.Badarinarayana is the main person who was responsible to cheat SBI, V.V.Puram Branch. There is allegation that B.S.Badarinarayana tried to service the loan accounts of M/s.Hallada Traders, M/s.Raghavendra Commercials, M/s.Ranganatha Enterprises and M/s.Guru Traders by issuing 4 cheques by him for Rs.2-lakh each drawn on Canara Bank, Baragur Branch, towards outstanding balances. This would reveal that B.S.Badarinarayana was himself responsible for these frauds in connivance with accused No.1. It is submitted and argued regarding accused No.3 not being in part of conspiracy regarding the alleged loan transaction granted in favour of M/s.HRS Corrugators by referring to documents. In earlier part of judgment the documents have been considered and it is held that only B.S.Badarinarayana has opened that account and prosecution has failed to prove the involvement of accused No.3. So also, as regards M/s.Hallada Traders transaction, in earlier part of judgment it is held that the role of accused No.3 - B.S.Bharadwaj is not established.
196. The learned Counsel has submitted his argument regarding alleged involvement of accused Nos.4 and 5 relating to loan transaction of M/s.Raghavendra Commercials and M/s.Guru Traders. It has been argued that none of the witnesses have stated about having seen these persons signing the documents.
Further it has been argued that evidence of PW19 - Asst.GEQD cannot be relied on the ground that investigating agency has only 110 : Spl.C.C.61/2002 :
marked some of the questioned signatures of accused No.4 and 5 which are available in the documents related respectively to them.
197. The learned Counsel has placed reliance on the decision rendered by the Hon'ble High Court of Karnataka in Criminal Appeal No.23/2008 connected with Criminal Appeal No.134/08 in between Sri K.Varadaraja Pai and another Vs. State by CBI and Sri Krishnaswamy Sridhar Vs. State of Karnataka through CBI, and submitted that the evidence of handwriting expert cannot be relied. In the said decision the Hon'ble High Court of Karnataka has held that 'a forgery matches a specimen signature of a third person, reproduced by A-3, does not appear to be a rational or scientific conclusion.' In the said case, the actual signatures of Karani and his wife were taken and A-3 has imitated the original signatures of those people and they were almost similar to the admitted signatures of Karani and his wife.
198. The ratio laid down in the said decision is not applicable to the case on hand, because there are ample admitted signatures collected by the I.O. pertaining to accused Nos.4 and 5. Thereafter specimen signatures have been taken.
The handwriting expert has compared the questioned documents with these materials and has come to conclusion by giving finding that the signatures of disputed questioned documents, account opening form and cheques are that of accused Nos.4 and 5.
This matter has been dealt while dealing with the evidence and documents of those cases and there is ample evidence to 111 : Spl.C.C.61/2002 :
show that accused No.4 - K.Badarinatha has signed account opening form and further signed cheque for withdrawal of the amount and there was involvement of B.S.Badarinarayana in that transaction. Similarly, Gururaja Rao has also signed the account opening form relating to M/s.Guru Traders. Therefore, the argument of learned counsel that no case is made out against accused Nos.4 and 5 is not acceptable.
199. As far as argument of accused Nos.2, 6 and 7 is concerned, it has been argued that accused Nos.2, 6 and 7 are no way concerned to any of the borrowings of the loan and no evidence or material is available against them. In the earlier part of the judgment it has been held that prosecution has failed to prove there is involvement of accused Nos.2, 6 and 7 in the alleged conspiracy.
200. In respect of M/s.S.N.Enterprises, it is alleged that partners accused Chandrashekaraiah, accused Nagabhushan and deceased Shivaprasad, connived with deceased B.S.Badarinarayana, dishonestly and fraudulently received four demand drafts drawn through the account of M/s.Hallada Traders, M/s.Ranganatha Enterprises, M/s.Raghavendra Commercials and M/s.Guru Traders, without effecting any genuine business transaction and encashed the DD through the Bank account from Indian Overseas Bank, Devarayapatna Branch, Tumkur, with criminal intention to deceive the State Bank of India, V.V. Puram Branch and thus the acts of accused Nos.1 to 7 and deceased accused have caused wrongful loss to an extent of R.72,18,630/- to the Bank.
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201. In order to prove the charges against accused No.6 -
Chandrashekaraiah and accused No.7 - Nagabhushan, prosecution has examined PW15 - D.S.Radhakrishna, Sr.Manager, Indian Overseas Bank who worked at Devarayapatna Branch of Tumkur between 1997 to 2001. He has stated in his evidence that he knows accused No.7 - Nagabhushan and he has signed the account opening form marked Ex.P101 consisting account No.4504, the original statement of account is marked as Ex.P102, specimen signature of accused No.7 is marked as Ex.P103. He has stated that one M/s.S.N.Enterprises was having account in their Branch and the current account marked as Ex.P104. He has also stated that DDs. marked Exs.P40, P53, P62 and P72 were presented to their Branch and they bear seal of their Branch and the amount of the DDs. have been encashed. He has stated that Nagabhushan has several F.D. in the Branch.
202. PW20 - Investigating Officer, Vikram Kulkarni has stated in his evidence that he had collected four DDs. from State Bank of India, Tumkur, drawn in favour of M/s.S.N.Enterprises on 16.5.2001, through letter Ex.P163. He has also received the statement of account from Indian Overseas Bank as per Ex.P104 and stated that Cheques marked Exs.P106 to P109 have also been received from the Manager, IO Bank.
203. PW2 - Kodandaram, Dy.Manager (Accounts), SBI, VV Puram Branch has stated in his evidence that DD for Rs.4,50,000/- was taken by deceased B.S.Badarinarayana in favour of M/s.S.N.Enerprises marked as Ex.P40. So also he has 113 : Spl.C.C.61/2002 :
stated in his evidence that from M/s.Guru Traders account, the amount is withdrawn and draft for Rs.4,25,000/- dtd.1.2.1997 marked as Ex.P53 is signed by him and accused No.1. The said DD is in favour of M/s.S.N.Enterprises. Similarly, he has further stated that in respect of M/s.Raghavendra Commercials another DD Ex.P62 in favour of M/s.S.N.Enterprises for Rs.5,25,000/-was taken by deceased B.S.Badarinarayana. As far as Ranganatha Enterprises is concerned, DD as per Ex.P72 for Rs.6-lakh received in the name of M/s.S.N.Enterprises through deceased B.S.Badarinarayana.
204. Further, prosecution has examined one G.H.Seetharam Rao as PW16. He has stated in his evidence that he knows accused No.6 - Chandrashekaraiah and accused No.7 -
Nagabhushan, he has also joined as Partner in M/s.S.N.Enterprises consisting Nagabhushan, Chandrashekaraiah and Shivaprasad as Partners. He has also stated that Badarinarayana did not have any transaction with M/s.S.N.Enterprises, but had given four DDs. and they were got encashed by cheques Exs.P106 to P109.
205. In the cross-examination conducted on behalf of accused Nos.6 and 7 it is contended that they have not conspired in any alleged transaction and they have not visited the V.V.Puram Branch, SBI, nor gained any amount by them.
The learned Counsel for accused Nos.6 and 7 has submitted that nowhere the witnesses have identified the accused Nos.6 and 7 having visited the SBI at V.V.Puram Branch. It was submitted that there is no linking evidence to connect accused 114 : Spl.C.C.61/2002 :
Nos.6 and 7 to the alleged conspiracy. It is further submitted that evidence of PW16 clearly reflects that deceased B.S.Badarinarayana had some transaction with one Mr.Ibrahim of Usman Enterprises to purchase press shop and the DDs. amount was brought for payment to Mr.Ibrahim, but since the transaction could not be completed the cheque amounts have been paid in the hands of wife of B.S.Badarinarayana. In this regard, the learned Counsel has placed reliance on decision reported in AIR 1978 SC 1096 - Keshoram Bora Vs. The State of Assam, wherein the Head Note B is as under:-
"(B) Penal Code (45 of 1860), S.300 - Murder trial - Infirmities in prosecution evidence - Duty of Court. (Evidence Act (1872), S.3).
It is now well settled that the principle falsus in uno falsus in omnibus does not apply to criminal trials and it is the duty of the court to disengage the truth from falsehood, to sift the grain from the chaff instead of taking an easy course of rejecting the prosecution case in its entirely merely on the basis of a few infirmities."
206. The leaned Public Prosecutor in her argument has submitted that there is no business with four firms but the amounts have been encashed from M/s.S.N.Enterprises, of which accused Nos.6 and 7 are the Partners and the Bank is put to loss. It is submitted that accused Nos.6 and 7 are also guilty of the alleged offences.
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207. The charge framed against accused Nos.6 and 7 are u/S.120B r/w.420, 421, 468 and 477-A of I.P.C.
208. The Cheque Ex.P37 reflects that an amount of Rs.4,50,675/- is drawn from M/s.Hallada Traders and D.D. for the said amount i.e. Rs.4,50,000/- is taken in the name of S.N.Enterprises. Similarly, in respect of Guru Traders a self-
cheque is given as per Ex.P50 for Rs.4,25,675/- and DD for Rs.4,25,000/- is taken as per Ex.P53. So also in respect of M/s.Raghavenda Commercials, a cheque is issued for self amounting to Rs.5,25,788/- as per Ex.P60 and DD is issued in the name of M/s.S.N.Enterprises for Rs.5,25,000/- as per Ex.P62. Similarly in case of Ranganatha Enterprises a cheque for Rs.6,00,900/- is issued as per Ex.P70 and DD for Rs.6-lakh is taken as per Ex.P72. Exs.P106 to P109 cheques clearly reveal that these amounts have been withdrawn and it is signed by Nagabhushan as one of the Partners.
209. So also, PW15 - D.S.Radhakrishna, Manager of Indian Overseas Bank, Devarayapatna Branch has also stated that amount has been withdrawn. It is not disputed by accused Nos.6 and 7 that they are the Partners of S.N.Enterprises.
In the cross-examination to PW16 it is elicited that deceased B.S.Badarinarayana wanted to do some business and therefore, he had agreed to purchase one Press Shop belongs to Ibrahim of Usman Enterprises. He has stated that Ibrahim later on quoted price at Rs.22-lakh, therefore, the deal did not materialize and thereafter amount of B.S.Badarinarayana was paid back in the hands of Badarinarayana's wife. PW16 has been 116 : Spl.C.C.61/2002 :
treated as hostile by the prosecution to certain extent by sating that he has deviated from the original statement.
210. Basically it is for the prosecution to prove the alleged charges by linking every chain in the case. It is admitted that accused Nos.6 and 7 are from Tumkur and deceased B.S.Badarinarayana and other accused in this case are from Bangalore. The documentary evidence is in the form of cheques drawn by one of the Partners by name Nagabhushan. It is the case of the prosecution that these four forms did not have any transaction with M/s.S.N.Enterprises. On the side of M/s.S.N.Enterprises, no material is placed to show that there was any transaction with them. Even according to them the amount was brought by B.S.Badarinarayana for his own business and that amount has been repaid.
211. From the materials Ex.P101 - account opening form of Nagabooshana in Indian Overseas Bank, Ex.P102 - statement of account, Ex.P103 - specimen signature, Ex.P104 - statement of account of M/s.S.N.Enterprises, Ex.P106 to P109 - cheques, the prosecution has established that total amount of Rs.20,00,000/-
was credited to the account by clearance and thereafter, the said amounts were withdrawn. The accused no.6 and 7 have not been able to dislodge the piece of evidence placed by prosecution.
212. Whether the evidence and material available against accused no.6 and 7 is sufficient proof of the alleged conspiracy, cheating and other allegation of making wrongful gain and causing loss to the Bank.
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213. Sec.120B IPC requires prosecution to prove that alleged act was illegal or done by illegal means, the accused agreed to do or caused to be done an act and that overt act was done by one of the accused in pursuance of agreement. Like other crimes, conspiracy requires an act (actus reas) and accompanying mental state (mens rea).
214. The above mentioned evidence would prove that amount of Rs.5,25,000/-, Rs.4,25,000/-, Rs.4,50,000/- and Rs.6,00,000/- were withdrawn from SBM, V.V.Puram branch from four accounts of M/s.Hallad Traders, M/s.Raghavendra Commercials, M/s.Ranganatha Enterprises and M/s.Guru Traders.
There is also proof that amount was illegally withdrawn to make wrongful gain. The evidence discussed above will reflect that there was active participation of accused no.1, deceased Badrinarayana in opening accounts illegally against Banking Norms and there is participation of accused no.4 Sri.Badrinath and accused no.5 Sri.Guru by issuing cheques for withdrawing the amounts. Therefore, the conspiracy is established between A1 - deceased Badrinarayana, Badrinath and Guru.
215. Whereas prosecution has not proved that accused no.2 and 3, 6 and 7 had agreed to the act nor there is any evidence to show that these accused no.2,3,6 and 7 had any knowledge of accounts being opened and amount withdrawn. This is a case mostly based on documentary evidence. There is no proof that accused no.2 and 3 have signed bank account 118 : Spl.C.C.61/2002 :
opening form and have issued any cheque for withdrawal of amount.
216. There is no linking evidence to show how the seal of these firms were used in the loan request form. No such seal is seized by prosecution to show that accused no.2 and 3 were using such seals of their business. Under the circumstances, the oral evidence of P.W-2. P.W-9 to P.W-12 against accused no.2 and 3 has no corroboration documentary evidence. Thus, the prosecution has failed to prove conspiracy or involvement of accused no.2 and 3 in the acts.
217. Similarly, in respect of accused no.6 and 7, there is no evidence of bank official to the effect that accused no.6 and 7 were involved in the act. The only link established is that amount of Rs.20,00,000/- is withdrawn from the account of M/s.S.N.Enterprises and where accused no.6 and 7 were partners. There is defence of accused no.6 and 7 to the effect that deceased Badrinarayana wanted to invest in business of S.N.Enterprises and thereafter, he wanted to purchase press machines for involving in manufacture of wrist watches from Sri.Ibrahim, the owner of Usman Industries. The cross examination by prosecutor to P.W-16 would reflect that Badrinarayana had discussed with Ibrahim for purchase of factory.
218. When such evidence is available in the form of P.W-
16, it was necessary for prosecution to prove that accused no.6 and 7 had been benefited from the amount lost by bank. There is no material in this regard. Further, there is no material to 119 : Spl.C.C.61/2002 :
show that accused no.6 and 7 were aware that B.S.Badrinarayana had illegally conspired with accused no.1 and had brought these four DDs. No doubt, there is evidence to show that M/s.S.N.Enterprises did not have business dealing with four firms but P.W-16 says amount is returned to wife of B.S.Badrinarayana. The question would be why would B.S.Badrinarayana give so much amount to M/s.S.N.Enterprises and their partners. There is no satisfactory answer to the question. There is no material to show that accused no.6 and 7 entered into an agreement with B.S.Badrinarayana and conspired to cause loss to the bank. P.W-15 - Indian Overseas Bank Manager in his evidence has stated that there were no adverse remarks regarding M/s.S.N.Enterprieses account. Thus, the criminal intention mens rea on the part of accused no.6 and 7 is not established. Mere evidence showing withdrawing of amount from M/s.S.N.Enterprises does not prove conspiracy.
219. A charge is also framed against the accused u/S.420 IPC for unauthorisedly enhancing the drawing power in cash credit facility of the account holder, permitting withdrawal of the amount and causing loss to the bank to the tune of Rs.31,50,746/- and Rs.21,97,904/- by diverting the amount to Mysore and Peenya branch.
220. The prosecution has to prove that the accused has cheated complainant bank dishonestly and induced the bank to disburse the loan amount and thereby caused wrongful loss. In the instant case on hand, the prosecution has established that
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the accused no.1 - Bank Manager deceased B.S.Badrinarayana, accused no.4 - K.Badrinath and accused no.5 - Guru have conspired with each other and got the loan sanctioned without obtaining security and the loans have been advanced against fake inflated TDRs. The amount has been withdrawn by Sri.B.S.Badrinarayana and there is a loss to the bank. As far as accused no.2 and 3 are concerned, the prosecution is unable to connect evidence to show that they had opened any account and received the amount. So also, as against accused no.6 and 7, no evidence is available to show that these two accused have conspired and they had been part of cheating from the initial stage. The offence of S.420 IPC is not established against accused no.2,3,6 and 7. The accused no.1,4 and 5 have conspired with each other. Thus, the offence of cheating the bank is established as against accused no.1, accused no.4 and accused no.5.
221. One another charge framed against accused is u/S.421 IPC. S.421 IPC is as under;
Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors - Whoever dishonestly or fraudulently removes, conceals or delivers to any person, or transfers or causes to be transferred to any person, without adequate consideration, any property intending thereby to prevent, or knowing it to be likely that he will thereby prevent, the distribution of that property according to law among his creditors or he creditor of any other persons, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.
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The ingredients of the section to be proved by prosecution is that the accused has concealed or delivered the property and the property is transferred to someone without consideration and that act has prevented distribution of the property according to law among the creditors.
222. In the case on hand, the said section cannot be applied. The ingredients of the section are that the act should be to prevent the transfer of amount from distribution among the creditors. In the case on hand, there is no such fact of creditor and there is no situation of distribution of the amount. In my view, none of the accused can be convicted under this section.
Therefore, the prosecution has failed to prove the charges u/S.421 IPC.
223. The accused are also charged for offence u/S.468 and 471 IPC i.e., forgery for the purpose of cheating. To prove this allegation, prosecution has to prove the documents that are forged by the accused and in doing so, he intended that it shall be used for cheating. Further prove that accused used the forged documents as genuine fraudulently. Sec.463 IPC relates to forgery. It is reproduced as under;
Forgery - [Whoever makes any false documents or false electronic record or part of a document or electronic record with intent to cause damage or injury], to the public or to any person, or to support any claim or title, or to cause any person to part with property, or to enter into any express or implied contract, or with intent to commit fraud or that fraud may be committed, commits forgery.
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224. In the instant case on hand, the loan of Hallad Traders, Raghavendra Commercials, Ranganatha Enterprises and Guru Traders are all made against fake TDRs as security.
Further, with conspiracy the amounts have been withdrawn by noting down incorrect description of TDR on the current account information sheet. Thus, the accused no.1 has committed the act of forgery and accused no.4 and 5 have conspired and abetted the offence and thus accused no.1,4 and 5 have committed offence u/S.468 IPC. There is no evidence against accused Nos.2,3,6 and 7 and therefore, the charge is not proved against them. Thus, the charge is proved against accused no.1,4 and 5 for the offence u/S.468 and 471 IPC.
225. The accused are also charged u/S.477A IPC for falsification of accounts. The prosecution has established that first accused has transferred the loan accounts of HRS packers and Corrugators to Mysore branch and other four firms' accounts to Peenya branch, to conceal these loan accounts from being inspected by Inspection team. It is established that only Ex.P-41 and P-91 debit advice have been prepared and account is shown as closed but no such amount and account are transferred to the Mysore and Peenya branch. Apart from that, the prosecution has established that in all the accounts, there is no proper documentation. Further, the drawing power enhancement is written on the ledger sheet without proper appraisal and processing. Thus, there is falsification of accounts by accused no.1. Accused Nos.4 and 5 have conspired and abetted accused 123 : Spl.C.C.61/2002 :
no.1 in falsification of accounts. There is no evidence against accused Nos.2,3,6 and 7 relating to offence u/S.477A IPC. The prosecution has established the offence u/S.477A IPC against accused Nos.1,4 and 5.
226. The first accused being the public servant, has committed offence u/S.13(2) R/w.S.13(1)(d) of P.C.Act. He has also committed offence u/S.420, 468, 471 and 477A IPC and Sec.120-B for achieving the other offences.
227. Accused no.4 and 5 have committed offence u/S.120B IPC to commit offence u/S.420, 468, 471 and 477A IPC by conspiring with first accused. In view of the aforesaid reasoning and findings, Point No.3 is answered Partly in the Affirmative-
Partly in the Negative, Point No.4 in the Affirmative, Point No.5 Partly in the Affirmative, Point No.6 Partly in the Affirmative- Partly in the Negative, Point Nos.7 to 10 in the Affirmative, Point No.11 in the Negative and Point Nos.12 to 14 in the Affirmative. Accordingly, I proceed to pass the following:-
ORDER Acting u/S.235(1) Cr.P.C., accused Nos.2,3,6 and 7 (namely Shrisha N.Nijagal, B.S.Bharadwaj Chandrashekaraiah and Nagabhushan) are acquitted for the offences u/S.120-B, 420, 421, 468, 471 and 477A IPC.
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Acting u/S.235(1) Cr.P.C., accused No.1, 4 and 5 (namely Pradeep.R.Hattangadi,
K.Badrinatha and D.H.Gururaja Rao) are
acquitted for the offence u/S.421 IPC.
Acting u/S.235(2) Cr.P.C. accused no.1 is convicted for the offence u/S.120-B IPC r/w. Section 420, 468, 471 and 477A IPC and u/S.13(2) R/w.S.13(1)(d) of P.C.Act.
Acting u/S.235(2) Cr.P.C., accused no.4 and 5 are convicted for offences u/S.120-B IPC r/w. Section 420, 468, 471 and 477A IPC .
The bail bonds and surety bonds of accused Nos.1 to 7 stands cancelled.
Sentence will be passed on hearing the accused No.1,4 and 5.
(Dictated to Judgment Writer, transcribed and computerized by him, revised by me personally and incorporated additional paragraphs directly on computer, corrected and then pronounced by me in the open court on this the 27th day of April, 2015.) (R.K.TALIKOTI) XLVII Addl. CC & SJ & Spl. Judge for CBI Cases, Bangalore.
125 : Spl.C.C.61/2002 :
27.4.2015 ORDER REGARDING SENTENCE Heard accused No.1 on sentence. Accused No.1 submits that he is a heart patient and he has already suffered heart attack during the pendency of this trial. He also submits that he has mother aged about 75 years and he has to look after her.
Further he submits that he has to look after his widow sister, who is depending on him. He also submits that he is terminated from the services of the Bank without getting any benefits and right now he is earning his livelihood by conducting part time classes to B.Com., & BBM students. Therefore, prays that lenient view may be taken.
The Counsel for accused No.1 Sri VSN for BJP submits that accused No.1 has faced similar trial in other Court and this is a 15 years old case. Accused is almost Senior Citizen. He is the only earning person to look after his family, he has less earnings from doing part time job and no benefits are issued from the Bank and pray that lenient view may be taken.
The learned PP submits that accused No.1 is also convicted in other 3 cases namely Spl.CC No.65/02 to Spl.CC No.67/02. He is a public servant and his duty was to protect the interest of the Bank and Nation and he is habitual offender. He is also involved in defrauding the amount to more than of Rs.65/-lakhs. Hence prays for imposing maximum punishment.
In reply, the learned Counsel for accused No.1 submits that sentence passed in Spl.CC No.65/02 to Spl.CC No.67/02 are suspended by the trial court itself and appeals are pending and 126 : Spl.C.C.61/2002 :
accused is on bail by the Hon'ble High Court of Karnataka, in those 3 cases and in those cases he was convicted for the offence u/s.120B IPC r/w Section.13(2) r/w.13(1) (d) of Prevention of Corruption Act, 1988. The leaned Counsel further submits that there is no charge of habitual offender and such offences cannot be classified as habitual offences and this accused cannot be classified as habitual offender.
Accused No.4 K.Badrinath submits that he is the only bread earner of the family and he has a nursery going child, He has aged and ailing mother and mother-in-law, depending on him and both of them are aged 75 years and prays for taking lenient view. He also submits that he has been attending this case since long time and present on all hearing dates. Hence, prays to take lenient view and to impose minimum sentence.
Accused No.5 Sri D.H.Gururaja Rao submits that he has aged and ailing mother of about 85 years and he has to maintain her. Further submits that his earnings are also less as he is undertaking some small works. He also submits that he has been attending Court regularly since long time and prays for taking lenient view.
The advocate for accused Nos.4 and 5 submits that, accused No.4 has been attending Court regularly and has faced hostility of other members of the family due to long pending trial. Accused No.4 has to maintain 3 ladies and a small kid. The leaned Advocate further submits that because of this case accused No.4 could not take up any other job and therefore, prays for taking lenient view.
127 : Spl.C.C.61/2002 :
In respect of accused No.5, the leaned Counsel Submits that because of this case, accused No.5 did not go for his marriage and still he is a bachelor. A-5 has to look after his mother and hence prays for taking lenient view.
The submission of accused no.1 that he is suffering from heart ailment seems to be a fact and said submission can be accepted. The trial of this case has started from the year 2002 and the accused has attended the case almost regularly. It is not in dispute that the sentence passed in the other three cases in Spl.C.C.65/2002 to 67/2002 is suspended by XLVI Addl. C.C & S.J & Spl. Judge for CBI cases, Bangalore and appeal is pending before Hon'ble High Court of Karnataka. It is also not disputed that accused has to maintain his mother and widow sister.
Similarly, the submissions made by accused no.4 and 5 regarding their personal difficulties and that they have to look after the family can be accepted.
As far as accused no.1 is concerned, he is a public servant and was a custodian of the money and reputation of the bank. By committing such act, the accused no.1 has allowed the loss being caused to the bank by disbursing the amount. Therefore, punishment has to be in consonance with the act committed by him. As far as, the fine amount is concerned, it is submitted by the accused no.1 as well as Advocate for accused no.1 that the accused no.1 is removed from the service without receiving any benefits. This aspect will have to be taken into consideration while imposing fine.
128 : Spl.C.C.61/2002 :
As far as accused no.4 and 5 are concerned, their role is conspiracy to the commission of offence resulting in completion of the offence punishable u/S.120-B IPC R/w.S.420,468,471 and 477A IPC. Accused Nos.4 and 5 are involved in the act pertaining to M/s.Raghavendra Commercials and M/s.Guru Traders respectively.
Taking into consideration, the submission made by the P.P and learned counsel for accused no.1 and the accused no.1, I am of the view that a sentence of simple imprisonment for 2 years 9 months each for the offence u/S.420, 468 and 477A IPC and u/S.13(2) R/w.S.13(1)(d) of P.C. Act with a fine amount of Rs.15,000/- for each offence and simple imprisonment for 2 years for offence u/S.471 IPC with a fine amount of Rs.10,000/- would suffice the sentencing policy. No separate sentence is passed u/S.120B IPC as the sentence is passed on main offence.
As far as accused no.4 and 5 are concerned, a sentence of simple imprisonment for a period of one year with fine of Rs.10,000/- for each offence u/S.420, 468, 471 and 477A IPC, would suffice the sentencing policy. No sentence is passed u/s.120B IPC as the conspired offences are completed and sentence is passed on main completed offence. Hence, I proceed to pass the following;
: ORDER :
Acting U/s.235(2) of Cr.P.C. the accused No.1 is hereby convicted for the offence punishable u/S.120-B IPC r/w. 420, 468 and 477A IPC and u/S.13(2) R/w.S.13(1)(d) of P.C. Act and
129 : Spl.C.C.61/2002 :
sentenced to undergo simple imprisonment for a period of 2 years 9 months for each offence u/S.420, 468 and 477A IPC and Section 13(2) R/w.S.13(1)(d) of P.C. Act with a fine amount of Rs.15,000/- for each offence and A-1 is convicted for the offence u/S.471 IPC and sentenced to undergo simple imprisonment for a period of 2 years and to pay a fine of Rs.10,000/- and in default in payment of the fine amounts, the accused No.1 shall undergo simple imprisonment for a further period of six months for each offence.
Acting U/s.235(2) of Cr.P.C. the accused No.4 and 5 are hereby convicted for the offence punishable u/S.120-B IPC r/w. 420, 468, 471 and 477A IPC and sentenced to undergo simple imprisonment for a period of one year each with fine of Rs.5,000/- for each offence and in default in payment of the fine amount, the accused Nos.4 and 5 shall undergo simple imprisonment for a further period of six months each for each offence.
No separate sentence is passed for the offence u/S.120-B IPC as sentence is passed on main offence.
In all, the accused No.1 shall pay fine of Rs.70,000/- and accused Nos.4 and 5 shall pay a fine of Rs.20,000/- each.
The sentence of imprisonment shall run concurrently and the default sentence of imprisonment shall run consecutively.
The period of detention undergone by the accused, during the trial is given set off U/s.428 of Cr.P.C.
Supply a free copy of the judgment to the accused forthwith. (Dictated to Judgment Writer, transcribed and computerized by him, revised by me personally and incorporated additional paragraphs directly on
130 : Spl.C.C.61/2002 :
computer, corrected and then pronounced by me in the open court on this the 27th day of April, 2015.) (R.K.TALIKOTI) XLVII Addl. CC & SJ & Spl. Judge For CBI Cases, Bangalore.
: ANNEXURE :
1) List of witnesses examined on behalf of Prosecution:-
Sl.No. Name of the witnesses CWs. Date
PW1 Smt. Mythili Rangarajan CW44 12.07.04
PW2 Kodandaram CW1 -"-
PW3 S. Ramaswamy CW2 13.7.04
PW4 H.N. Bhanuprakash CW6 -"-
PW5 E. Narasimhan CW5 -"-
PW6 Khaleelulla Khan CW7 -"-
PW7 B.S.R. Sharma CW3 23.9.04
PW8 Vishnumurthy G.G. CW9 25.3.06
PW9 H.R. Srinivas CW10 -"-
PW10 S. Venugopal CW20 27.3.06
PW11 Nagaraja Rao CW11 12.07.06
PW12 Y.S. Rajendra Kumar CW31 20.09.06
PW13 K.R. Gangadharappa CW34 25.9.06
PW14 R.D. Sawukar CW36 -"-
PW15 D.S. Radhakrishna CW32 26.9.06
PW16 G.H. Seetharam Rao CW38 -"-
PW17 Vishnusa Arjunsa CW37 21.10.06
Bharadwaj
PW18 S.N. Shibaraya Addl. 3.1.07
witness
PW19 R.B. Bhosle CW43 8.6.07
PW20 Vikram Kulkarni CW45 4.3.08
PW21 Miss Prema Logan CW46 21.7.08
2) List of Exhibits marked on behalf of Prosecution side:-
131 : Spl.C.C.61/2002 :
Exhibits Documents
Ex.P1 Sanction Order
Ex.P1(a) Signature of PW1
Ex.P2 Letter dated 17.1.96
Ex.P2(a) Signature
Ex.P3 Sanction of working limits
Ex.P4 Credit Facilities sanction letter 19.1.96
Ex.P4(a) Signature of A1
Ex.P5 General Agreement
Ex.P5(a) Signature of A1
Ex.P6 Agreement for Grant of small industrial advances
Ex.P6(a) Signature of A1
Ex.P7 Agreement for grant of small industrial advances
dt 19.1.96
Ex.P7(a) Signature of A1
Ex.P8 Current Account Operating Instructions Sheet
Ex.P8(a) Signature of A1
Ex.P9 Controlling Report
Ex.P9(a) Signature of A1
Ex.P10 Cheque
Ex.P11 Cheque dt 22.9.96 for Rs.77,468/-
Ex.P12 Cheque dated 30.7.97 for Rs.8,50,000/-
Ex.P13 Cheque dt 3.3.96 for Rs.12,50,000/-
Ex.P14 Cheque dated 12.3.96 for Rs.12,00,000/-
Ex.P15 Extract of cheque Referred and Returned Register
Ex.P15(a) Relevant Entry
Ex.P15(b) -"-
Ex.P16 Cheque dated 17.9.96 for a sum of Rs.3 lakhs
Ex.P17 Cheque dated 9.7.96 for Rs.2,00,000/-
132 : Spl.C.C.61/2002 :
Ex.P18 Cheque dt 31.7.96 for Rs.3,50,000/-
Ex.P19 Cheque dated 3.12.96 for Rs.3,25,000/-
Ex.P20 Cheque dated 17.1.97 for Rs.2 lakhs
Ex.P21 Cheque dated 24.12.96 for Rs.4,40,000/-
Ex.P22 Cheque dated 13.9.96 for Rs.10,00,000/-
Ex.P22(a) Signature of A1
Ex.P23 Cheque dated 21.9.96 for Rs.3,50,000/-
Ex.P23(a) Signature of A1
Ex.P24 Cheque dated 8.10.96 for Rs.2 lakhs
Ex.P24(a) Signature of A1
Ex.P25 Cheque dated 5.11.96 for Rs.1,05,000/-
Ex.P25(a) Signature of A1
Ex.P26 Cheque dated 10.8.96 for Rs.50,00,000/-
Ex.P26(a) Signature of A1
Ex.P27 Cheque dated 7.8.96 for Rs.39,500/-
Ex.P27(a) Signature of A1
Ex.P28 Cheque dated 5.12.96 for Rs.40,000/-
Ex.P28(a) Signature of A1
Ex.P29 Cheque dated 17.3.96 for Rs. 1 lakh
Ex.P29(a) Signature of A1
Ex.P30 Demand Promissory Note dated 11.8.98
Ex.P31 D.P. Note Delivery letter dated 11.8.98
Ex.P32 Statement of Account
Ex.P32(a) Relevant Entry
Ex.P33 Account Opening Form in respect of Hallada
Traders
Ex.P33(a) Signature of A1
Ex.P34 Copy of Letter dated 29.1.97
133 : Spl.C.C.61/2002 :
Ex.P35 Term Deposit Receipt for Rs.10,000/- dated
22.1.97
Ex.P35(a) Endorsement and Signature
Ex.P36 Current Account operating instruction sheet
Ex.P36(a) Relevant Entry
Ex.P36(b) Signature of A1
Ex.P37 Cheque dated 1.2.97 for Rs.4,50,675/-
Ex.P37(a) Initial of A1
Ex.P38 Ledger Sheet
Ex.P39 Draft Requisitions Form
Ex.P40 Draft
Ex.P41 Debit Voucher dated 14.8.97
Ex.P41(a) Corrected portion
Ex.P41(b) Corrected portion
Ex.P41(c) Signature of A1
Ex.P42 FD receipt
Ex.P42(a) Endorsement and Signature
Ex.P43 FD Receipt for Rs.2 lakhs
Ex.P43(a) Endorsement
Ex.P44 Certified copies of Balance Confirmation Letter
Ex.P45 D.P. Note Delivery Letter dated 11.8.98
Ex.P46 Statement of Account
Ex.P46(a) Relevant Entry
Ex.P47 Account Opening Form SIB-199
Ex.P47(a) Signature of A1
Ex.P48 Application Form for Sanction of letter
Ex.P49 Current Account Instructions Sheet
Ex.P49(a) Signature of A1
Ex.P49(b) Endorsement of A1
134 : Spl.C.C.61/2002 :
Ex.P50 Cheque dt 1.2.97 for Rs.4,25,675/-
Ex.P51 Original Transaction Sheet of M/s Guru Traders
Ex.P52 Draft Application Form dated 1.2.97
Ex.P53 Demand Draft for Rs.4,25,000/-
Ex.P54 Certified copy of Balance Confirmation
Ex.P55 C.C. of Demand Promissory Note executed by
Gururaj for Rs.5,57,740/-
Ex.P56 Certified copy of Statement of Account
Ex.P57 Account Opening Form
Ex.P57(a) Signature of A1
Ex.P58 Certified copy of letter dated 29.1.97
Ex.P59 Current Account Instruction Sheet
Ex.P59(a) Signature and Handwriting of A1 Ex.P60 Cheque dated 1.2.97 for Rs.5,25,788/-
Ex.P61 Draft Application Form
Ex.P61(a) Initial of A1
Ex.P62 Demand Draft
Ex.P63 Certified copy of Balance Confirmation Letter
Ex.P64 Certified copy of D.P. Note
Ex.P65 Certified copy of Statement of Account
Ex.P65(a) Relevant Entry
Ex.P66 Certified copy of the letter dated 29.1.97 M/s
Ranganatha Enterprises
Ex.P67 Account Opening Form of M/s Ranganatha
Enterprises
Ex.P67(a) Identification of Signature of A1 Ex.P68 Account Information Sheet Ex.P69 Term Deposit Receipt Ex.P70 Cheque dated 1.2.97 for Rs.6,00,900/-
Ex.P71 Draft Application
Ex.P71(a) Initial of A1
135 : Spl.C.C.61/2002 :
Ex.P72 Demand Draft
Ex.P72(a) Signature of A1
Ex.P73 Certified copy of Statement of Account
Ex.P73(a) Relevant Entry
Ex.P74 Current Account Opening Form
Ex.P74(a) Signature of A1
Ex.P75 Certified copy of Partnership Deed
Ex.P76 C/A Information Sheet of HRS Corrugators
Ex.P77 Current Account Opening Information Sheet (3
sheets)
Ex.P77(a) Relevant Entry
Ex.P78 Debit Voucher
Ex.P78(a) Signature of A1
Ex.P79 Certified copy of Statement of Account
Ex.P79(a) Relevant Entry
Ex.P80 Cheque bearing No.271106 for Rs.54,154/-
Ex.P81 Cheque bearing No.271116 for Rs.99,540/-
Ex.P82 Cheque referred and returned register extract
Ex.P82(a) Initial of A1
Ex.P83 Cheque bearing No.271119 for Rs.99,540/-
Ex.P84 Cheque Referred and Returned Register
Ex.P84(a) Relevant Entry
Ex.P85 Cheque bearing No.271120 for Rs.99,540/-
Ex.P86 Cheque Referred and Cheque Returned Register
Ex.P86(a) Initial of A1
Ex.P87 Cheque bearing No.271122 dated 20.9.96 for a
sum of Rs.99,540/-
136 : Spl.C.C.61/2002 :
Ex.P88 Cheque Referred and Returned Register
Ex.P88(a) Relevant Entry
Ex.P89 Certified copy of Statement of Account
Ex.P89(a) Relevant Entry
Ex.P90 Certified copy of Statement of Account pertaining
of M/s HRS Corrugators
Ex.P90(a) Relevant Entry
Ex.P91 Debit Slip
Ex.P91(a) Corrected portion
Ex.P91(b) -"-
Ex.P91(c) Signature of A1
Ex.P92 Circular Letter
Ex.P92(a) Powers of Manager Page No.3
Ex.P93 Complaint
Ex.P93(a) Signature of PW10
Ex.P94 Debit Voucher
Ex.P95 Account Opening Form
Ex.P95(a) & Signatures and identification
(b)
Ex.P96 Specimen Signature Card
Ex.P97 Certified Account Extract 4 sheets
Ex.P97(a) to Relevant Entries
(c)
Ex.P98 Investigation Report (Xerox copy 71 pages)
Ex.P99 Ledger Transaction Sheet A/c SIB/3/172
Ex.P100 Ledger Transaction Sheet HRs Corrugators A/c
SIB-3-122
Ex.P100(a) Debit Entry
Ex.P101 Account Opening Form of A7
Ex.P101(a) to Signature of A7
137 : Spl.C.C.61/2002 :
Ex.P101(d)
Ex.P102 Statement of Accounts
Ex.P103 Specimen Signature of A7
Ex.P104 True Extract of Account of S.N. Enterprises
Ex.P104(a) to Relevant Entries
(e)
Ex.P105 Letter dated 23.5.2001
Ex.P106 Cheque
Ex.P106(a) Signature of Nagabhushan A7
Ex.P106(b) Signature of A6
Ex.P107 Cheque
Ex.P107(a) Signature of A7
Ex.P107(b) Signature of A6
Ex.P108 Cheque
Ex.P108(a) Signature of A7
Ex.P109 Cheque
Ex.P109(a) Signature of A7
Ex.P109(b) Signature of A6
Ex.P110 Letter dt 2.6.2001
Ex.P111 Enclosure
Ex.P111(a) Signature of A7
Ex.P112 Portion of Statement of PW16
Ex.P113 -"-
Ex.P114 -"-
Ex.P115 to Specimen handwritings and signatures of Sri
Ex.P115(1) to Bhadrinath
(6)
Ex.P115(1a) Signatures of PW18
to (6a)
Ex.P115(6b) Signature of PW20
Ex.P116 (1) Specimen Handwritings and Signatures of Sri
to (12) Pradeep Hattangudi
138 : Spl.C.C.61/2002 :
Ex.P116(1a) Signatures of PW18
to (12a)
Ex.P116(12b) Signature of PW20
Ex.P117 Specimen Handwriting of Sri Bharadwaj (6
sheets)
Ex.P117(1) to -"-
(6)
Ex.P117(1a) Signature of PW18
to
Ex.P117(6a)
Ex.P117(6b) Signature of PW20
Ex.P118 Specimen Handwritings of Sri Gururaja Rao 4
sheets
Ex.P118(1) to -"-
(4)
Ex.P118(1a) Signature of PW18
to Ex.P118
(4a)
Ex.P118(4b) Signature of PW20
Ex.P119 Specimen Handwriting and signatures of Shrisha
Nijagul (10 sheets)
Ex.P119(1a) -"-
to
Ex.P119(10)
Ex.P119(1a) Signatures of PW18
to
Ex.P119(10a)
Ex.P119(7b) Signature of PW20
Ex.P120 Specimen Handwritings of Shrisha Nijagul
Ex.P120(1) to
Ex.P120(7)
Ex.P120(1a) Signatures of PW18
to
Ex.P120(7a)
Ex.P121 GEQD opinion dt 29.11.01
Ex.P121(a) Signature
139 : Spl.C.C.61/2002 :
Ex.P121(b) Signature
Ex.P122 Letter dt 29.11.2001, 5.12.2001
Ex.P123 Reasons for opinion
Ex.P123(a) Signature of R.B. Bhosale
Ex.P124 Letter dated 20.2.97
Ex.P125 Letter dated 20.2.97
Ex.P126 Letter dated 29.1.97 from HRS Packers
Ex.P127 Letter from HRS packers
Ex.P128 Letter from HRS Packers
Ex.P129 Letter from HRS Packers
Ex.P130 Letter from HRS Packers
Ex.P131 Letter from HRS Packers
Ex.P132 Letter from HRS Packers
Ex.P133 Letter from HRS Packers
Ex.P134 Letter from HRS Packers
Ex.P135 Letter from HRS Packers dated 20.1.96
Ex.P136 Current Account Opening Form
Ex.P137 Specimen signature card of Badrinarayana
Ex.P138 Specimen Signature card Bhadrinath
Ex.P139 -"-
Ex.P140 Account Opening form of Badrinath
Ex.P141 Payment Voucher
Ex.P142 -"-
Ex.P143 Letter dated 29.6.01 by Badrinath
Ex.P144 Tour Report
Ex.P145 Letter dated 1.10.01
Ex.P146 Specimen Signature card of Gururaja Rao
Ex.P147 Account Opening Form of Gururaja Rao
Ex.P148 Membership Application
Ex.P149 Challan of Gururaja Rao
Ex.P150 Challan dated 18.9.99
Ex.P151 Specimen signature card of S.N. Nijagal
Ex.P152 Account Opening Form of S.N. Nijagal
Ex.P153 Letter dated 1.8.01
Ex.P154 Letter dated 6.10.01
Ex.P155 Partnership Letter dated 20.1.97
Ex.P156 Account opening form
Ex.P157 Specimen Signature of Badrinath 6 sheets
140 : Spl.C.C.61/2002 :
Ex.P158 Specimen writings of Badrinath 11 sheets
Ex.P159 Specimen signature of Gururaja Rao 6 sheets
Ex.P160 Specimen signature of B.S. Bharadwaj 6 sheets
Ex.P161 Specimen signature of Nagabhushan 5 sheets
Ex.P162 Specimen signature of Chandrashekaraiah
Ex.P163 Letter dated 15.5.01
Ex.P164 FIR
Ex.P164(a) Signature of G.B. Rao
3) List of Mos. marked on behalf of Prosecution:-
- Nil -
4) List of witnesses examined on behalf of Defence side:-
- Nil -
5) List of Documents marked on behalf of Defence side:-
Exhibits Documents
Ex.D1 Letter dated 11.8.98
Ex.D2 Bio-data
Ex.D3 Xerox copy of delegation of financial powers 1995
advances and allied matters
Ex.D4 Xerox copy of Letter of AGM to A1 dated 18.12.97
Ex.D5 Xerox copy of letter dated 8.12.97
Ex.D6 Xerox copy of letter dated 18.12.97
Ex.D7 Portion of the Statement of PW13 (CW34)
Ex.D8 Notes made by PW19
Ex.D9 Letter dated 23.10.2001
Ex.D9(a) Signature of PW20
Ex.D9(a) Copies of Annexures to Ex.D9
to D9(e)
Ex.D9(Aa Signatures of PW20
to Ea)
Ex.D10 to Term Loan Circulars
Ex.D12
Ex.D13 Xerox copy of letter dated 11.8.98
Ex.D14 Xerox copy of letter dated 11.8.98
141 : Spl.C.C.61/2002 :
Ex.D15 Attested copies of Challans
and D16
Ex.D17 Copy of Notification
(R.K.TALIKOTI)
XLVII Addl. CC & SJ & Spl. Judge
For CBI Cases, Bangalore.