Delhi District Court
Cbi V. S P Manickam & Ors vs Kathi Kalu Oghad on 18 April, 2018
1
IN THE COURT OF SH. SANJIV JAIN: SPECIAL JUDGE (PC
ACT), CBI03, SOUTH DISTRICT, SAKET COURT,
NEW DELHI
CNR No. DLST010000062002
CC No. 26/12 (36/2016)
RC No. 1(S)/91SIU(X)/CBI/New Delhi
U/s 120 B r/w Section 420, 467, 468, 471 IPC &
and U/Sec. 13(2) r/w Section 13(1)(d) of P.C. Act, 1988
and substantive offences U/Sec. 420,467,468 IPC
and Section 13(2) r/w 13(1)(d) of PC Act, 1988
Central Bureau of Investigation
Versus
A1 S. P Manickam,
S/o Sh. S. Y. Subramanian
R/o 12, Kuttavellayan Street,
Devakottai, PMT District,
Tamil Nadu623302.
(Chief Manager, Indian Bank,R P Bagh Branch) Accused no. 1
A2 Ashok Sirpaul
S/o Sh. Ashok Lal Sirpaul
R/o 7/2, Old Rajinder Nagar,
New Delhi.
(Director, M/s Globarc & Alloys (P) Ltd) Accused no. 2
A3 M/s Globarc & Alloys (P) Ltd.
3993, Ajmeri Gate,
Delhi110006.
(Through Ashok Sirpaul, Director) Accused no. 3
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 1 of 207
CBI v. S P Manickam & ors
2
A4 Anil Sirpaul
S/o Amrit Lal Sirpaul
R/o 7/2, Old Rajinder Nagar, New Delhi.
(Director M/s Glorbarc & Alloys Pvt. Ltd.) Accused no. 4
(Proceedings abated in terms of order dated 20.12.1996)
A5 Amrit Lal Sirpaul
R/o 7/2, Old Rajinder Nagar, New Delhi
(Director M/s Glorbarc & Alloys Pvt. Ltd.) Accused no. 5
(Proceedings abated in terms of order dated 28.01.1997)
A6 Deepak Vinayak Pradhan
S/o Sh. Vinayak Krishnaji Pradhan
R/o 82C, Paschim Apartments,
8th Floor, K D Marg, Dadar,
Bombay.
(Prop. M/s Globe Industries, Bombay) Accused no. 6
(Proceedings abated in terms of order dated 28.04.2003)
A7 Smt. Prabha Pradhan
W/o Sh. Vinayak Krishnaji Pradhan
R/o 82C, Paschim Apartments,
8th Floor, K D Marg, Dadar,
Bombay.
(Director M/s Globarc & Alloys Pvt. Ltd) Accused no. 7
(Discharged in terms of order dated 22.11.1999)
A8 Har Govind Lalwani
S/o L. Bulchand
R/o B84, New Rajinder Nagar,
New Delhi 110 060.
(Director M/s Globarc & Alloys Pvt. Ltd) Accused no. 8
(Declared Proclaimed Offender vide order dated 28.01.1997)
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 2 of 207
CBI v. S P Manickam & ors
3
Date of FIR : 15.02.1991
Date of filing of Chargesheet : 18.04.2002
Arguments completed on : 31.03.2018
Date of judgment : 18.04.2018
JUDGMENT
BRIEF FACTS OF THE CASE
1. The quest in all criminal trials is to arrive at the truth and therefore, the role of the Judge is to cull out the true facts from the evidence led before him and ensure that guilty does not go scotfree and innocent's life and liberty is not jeopardised. This role of the Judge has been explained in the case of Zahira Habibulla H. Sheikh & Anr. v. State of Gujarat & Ors. AIR 2004 SC 345 thus:
A criminal trial is a judicial examination of the issues in the cases and its purpose is to arrive at judgment on an issue as a fact or relevant facts which may lead to the discovery of the fact in issue and obtain proof of such facts at which the prosecution and the accused have arrived by their pleadings, the controlling question being the guilt or innocence of the accused. Since the object is to meet out justice and to convict the guilty and protect the innocent, the trial should be a search for the truth and not a bout over technicalities, and must be conducted under such rules as will protect the innocent, and punish the guilty. The proof of charge which has to be beyond reasonable doubt must depend upon judicial evaluation of the totality of the evidence, oral and circumstantial and not be an isolated scrutiny.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 3 of 207 CBI v. S P Manickam & ors 4
2. This case vide RC No. 01(S)/91SIU(X)/CBI/ND was registered on a source information that Ashok Sirpaul (A2), Director of M/s Globarc & Alloys (P) Ltd in conspiracy with some unknown officials of Indian Bank, Rana Pratap Bagh branch, New Delhi cheated the bank branch by submitting bogus bills for discounting during the period from 1989 to June, 1990.
3. Briefly, the facts are that the Branch Manager(A1) opened an account of M/s Globarc & Alloys (P) Ltd (A3) and allowed it to avail credit facilities without assessing its operation of account. These facilities were required to be created by equitable mortgage. He also recommended for additional credit facilities. A3 availed Key Cash Credit limit (KCC) by pledging the goods. The chemical analysis of the materials pledged supposedly "Imported Ferro Nickel" disclosed that it did not contain any Nickel thereby indicating the spurious nature of the material pledged with the bank. During that period, A2 in connivance with the senior officials of the Bank Branch and Zonal Office of the bank raised bogus bills amounting to Rs.49,99,459.50 and got them discounted under the documentary bill purchase facility with the bank and fraudulently withdrew the amount. The inspection/testing of the consignments so forwarded revealed that they did not carry the articles covered under the railway receipts attached with the bills.
4. Investigation revealed that A3 opened a Current Account No. OCC63 on 12.08.1989 with the bank. The account opening form was jointly signed by the three directors, namely, Amrit Lal RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 4 of 207 CBI v. S P Manickam & ors 5 Sirpaul, Ashok Sirpaul (A2) and Anil Sirpaul. The resolution of the company was also submitted. The account opening form however did not have the signatures of the officer but the specimen signature cards of the above persons bear the signatures of S P Manickam (A1), the then Chief Manager. A3 was also issued cheque book bearing Serial No. 575101 to 575150.
5. Anil Sirpaul vide his letter dated 29.08.1989 intimated the Chief Manager (A1) regarding pledge of raw materials with the bank amounting to Rs.18,08,050.00 and also submitted photocopies of six invoices as a proof of purchase of these materials. S P Manickam (A1) marked this letter to the loan section after putting his initials. Out of the six invoices, two invoices were for purchase of Rutile Granule Powder and Titaniam Dioxide for Rs.6,57,883.20 and Rs.3,07,374.08 respectively from M/s Vikram International Calcutta. The bills were drawn on M/s Globarc & Alloys (P) Ltd (A3), 3 IDC Mehrauli Road, Gurgaon. Investigation revealed that M/s Vikram International did not supply any material nor had business dealing with A3. It had stopped functioning for about 78 years. One of the invoice was of M/s Krompton Alloys & Ores Manufacturing Co. Ltd, Yamuna Nagar for Rs.2,81,000/ drawn on A3. It was found that no such address as given on the invoice existed in the industrial area, Yamuna Nagar. One invoice was of M/s Industrial Alloys, Calcutta for Rs.4,13,400/ drawn on A3. It was found that M/s Industrial Alloys did not supply any material to A3. Another invoice was of M/s Shiv Shakti Metal Industries, Shalimar Bagh RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 5 of 207 CBI v. S P Manickam & ors 6 for Rs.4,38,984/ for supply of Aluminium notched bars to A3. It was found that no such firm existed at the address mentioned on the said invoice. One invoice was of M/s Ghardha Chemicals (P) Ltd, Bombay for supply of Molybdenum Oxide for Rs.3,90,000/ to A3. Investigation revealed that there was no such company as M/s Ghardha Chemicals (P) Ltd. It was Ghardha Chemicals Ltd which denied having any business dealing with A3. It was found that A3 availed KCC limit by submitting invoices of bogus firms or of the firms which had no business dealings with A3.
6. Investigation revealed that A1 immediately on pledge of material with the bank ordered for the release of money in the party's account. On 29.08.1989, Rs. 10 lacs were credited and subsequently a sum of Rs.3.5 lacs was released. These materials were subsequently replaced by A3 and the fresh materials were pledged with the bank.
7. Investigation revealed that A1 vide his letter dated 11.10.1989 to the Zonal Office recommended OCC limit of Rs.25 lacs, KCC limit of Rs.20 lacs and Bill purchase limit of Rs.20 lacs to A3. The Zonal Office sanctioned the limits as proposed by the branch. The securities agreed were :
i. Personal guarantee signed by the Directors of A3. ii. Equitable mortgage of factory, land and building at 3, IDC Mehrauli Road, Gurgaon.
iii. Equitable mortgage of godown at 226 Khasra Shakarpur. iv. Hypothecation of plant and machinery and other fixed assets of the unit.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 6 of 207 CBI v. S P Manickam & ors 7 The terms and conditions were communicated to A2 vide letter dated 26.10.1989 by A1. A3 deposited the title deed of Plot No. 3, IDC, Mehrauli Road, Gurgaon alongwith Non encumbrance Certificate issued by SubRegistrar Gurgaon. Investigation revealed that Anil Sirpaul had sworn an affidavit on 17.05.1989 falsely declaring that Plot No. 3 IDC Mehrauli Road, Gurgaon is free from all encumbrances on the basis of which the SubRegistrar Gurgaon issued the nonencumbrance certificate. It was found that the above property had already been mortgaged with Syndicate Bank, G B Road Branch by Amrit Lal Sirpaul, Ashok Sirpaul and Anil Sirpaul on behalf of M/s Amrit Refractories (P) Ltd on 30.10.1984. A1 took only the copies of the original title deed and got them entered into the equitable mortgage register of the bank as originals. He did not inform the Zonal Office about not taking the original title deeds of the property inspite of legal opinion.
8. Investigation revealed that A3 vide its letter dated 29.11.1989 requested the bank for grant of credit facilities on temporary basis of Rs.15.60 lacs for import of Ferro Nickel. A1 recommended its sanction as adhoc KCC to zonal office which vide dated 08.12.2009 sanctioned a limit of Rs.15 lacs. This limit was to be adjusted within 30 days. The material imported by A3 was pledged and Rs.15 lacs were disbursed to A3. A1 instead of getting the material cleared from the bank's clearing agent at Bombay got the material cleared through an agent of A3. Subsequently the material was got chemically analyzed by C RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 7 of 207 CBI v. S P Manickam & ors 8 Ravindra Babu, the next Chief Manager and it was found sub standard. A3 then replaced the material with Silicon Alloys lumps for which invoice No. 18579 dated 15.09.1990 of M/s Global Linkers in favour of A3 for Rs.24,10,770/ alongwith the photocopy of Invoice No. VI/C/13691 dated 29.08.1990 of M/s Vikram International, Calcutta for supply of Silicon Alloys Lumps for Rs.27,68,688/ was submitted which invoice on investigation was found forged and bogus as M/s Vikram International never supplied any such material to M/s Global Linkers, sister concern of A3. Even C Ravindra Babu despite knowing that earlier goods were substandard failed to ensure pledge of proper goods.
9. Investigation further revealed that A1 while forwarding the credit proposal of A3 to zonal office on 11.10.1989 mentioned in the credit report that the account of A3 with State Bank of India, Paharganj branch had been closed subsequently but it was found that only the outstanding with SBI was cleared by A3 and its account was not closed. It was found that A1 not only sent the wrong information to the zonal office but also did not ensure closure of account of A3 with SBI Paharganj before disbursal of credit limits.
10. Investigation revealed that under the documentary bill purchase facility (DBP), A3 submitted the bills for discounting in Indian Bank, Rana Pratap Bagh Branch. The bill OBC/DBP/720 for Rs.2,27,500/, OBC/DBP/721 for Rs.2,27,500/ drawn on Industrial Minerals and Metals, Cuttack for supply of Nickel RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 8 of 207 CBI v. S P Manickam & ors 9 Alloys SS Lumps bearing the signatures of A2 were sent for collection on 17.03.1990 and amount of Rs.2,04,750/ each was credited into the account of A3. The above bills were received as SIBC No. 1058 and 1059 in Central Bank of India, Cuttack and were returned unpaid as the payment of the bills were not made by M/s Industrial Minerals and Metals.
Similarly the bills DBP/222 and DBP/223 drawn on M/s Industrial Minerals and Metals for Rs.3,49,960/ and Rs.4,89,944/ bearing the signatures of A2 were credited in the account of A3 on 03.05.1990 but the above bills received as SIBC No. 100 and 99 in Central Bank of India, Cuttack were returned unpaid as M/s Industrial Minerals and Metals refused to make payment stating that no orders were placed on A3. The bills DBP/362 and DBP/529 for Rs.4,06,348.80 and Rs.2,70,400/ drawn on the Accounts Officer CFFP, BHEL, Haridwar were accepted in the bank on 13.05.1990 and 26.05.1990 and were credited into the account of A3. The above bills were received as LSC No. 7100 and 7106 in State Bank of India, Ranipur, Haridwar and presented to CFFP, BHEL for payment but CFFP, BHEL gave in writing that the material was wrongly booked to them. The bills were returned unpaid to the branch. Investigation revealed that the goods of these two bills were unloaded at Haridwar on 06.06.1990 and sent to Lost Property Office of Railway at Bareilly as no one claimed the goods.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 9 of 207 CBI v. S P Manickam & ors 10 Similarly, OBC/DBP539 and DBP841 for Rs.2,37,120/ and Rs. 5,28,320/ drawn on M/s Noble Alloys Manufacturer, Calcutta bearing the signatures of A2 and Hargovind Lalwani were credited into the account of A3 on 29.05.1990 and 21.06.1990. These two bills were received in State Bank of India, Calcutta and presented to M/s Noble Alloys Manufacturer, Calcutta which refused to retire the bills as they had not placed any order to A3.
Similarly, DBP763 and DBP764 for Rs.3,84,800/ each drawn on M/s Globe Industries, Bombay were credited into the account of A3 on 16.06.1990. These two bills were received in Bank of Baroda, Bombay and presented to M/s Globe Industries. M/s Globe Industries lodged cheques No. 611906 and 611907 drawn on ANZ Grindlays Bank, New Delhi with Bank of Baroda in lieu of payment of these bills. The cheques on presentation were returned unpaid on 26.07.1990 and 04.08.1990 to Indian Bank, R P Bagh branch.
Similarly, DBP883 and DBP839 for Rs.2,05,920/ and Rs. 2,47,000/ drawn on M/s Venus Metal Corporation, Bombay bearing the signatures of A2 were credited into the account of A3 on 21.06.1990. These two bills were received in Bank of Baroda, Bombay. The party was intimated by post by the bank but the bills were not retired by the party and were returned to Indian Bank, R P Bagh branch. It was found that no firm by the name of M/s Venus Metal Corporation existed at the given address.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 10 of 207 CBI v. S P Manickam & ors 11 Similarly, DBP477, DBP478 and DBP840 for Rs.5,28,320/, Rs.3,30,200/ and Rs.3,96,240/ drawn on M/s Industrial Alloys, Calcutta bearing the signatures of A2 and Hargovind Lalwani were credited into the account of A3. These three bills were received in Punjab National Bank, Calcutta and presented to M/s Industrial Alloys, Calcutta but M/s Industrial Alloys gave in writing to Punjab National Bank that they had not placed any order on A3 and all the three bills were returned unpaid to the Indian Bank, R P Bagh branch.
11. Investigation further revealed that A2 on behalf of A3 lodged cheque No.699344 dated 25.07.1990 for Rs.72,000/ issued by M/s K B Chemical Industries and requested for its discounting. It was credited into the account of A3. On 01.08.1990, another cheque bearing No. 699350 for Rs.53,431.50 issued by M/s K B Chemical Industries was presented for discounting. The same was credited into the account of A3. Both these cheques were sent for collection to the State Bank of Patiala, Gurgaon. They were returned unpaid on account of insufficient funds. It was found that the account of K B Chemical Industries was in the name of Babu Lal who was nonelse but Hukam Chand, employee of A2 in the factory of A3.
12. Investigation revealed that P. Valliappan was the Assistant General Manager with Indian Bank, Delhi Region during May, 1990 whereas K K Batra was officiating as Chief Manager, Indian Bank at Rana Pratap Bagh Branch. K K Batra vide his letters dated 26.04.1990 and 28.04.1990 written to A3,copies of which RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 11 of 207 CBI v. S P Manickam & ors 12 were marked to the Zonal Manager as well as AGM, Delhi Region refused to discount further bills of A3 even when DBP limit was not fully utilized. A2 on behalf of A3 then wrote a letter dated 30.04.1990 to the Zonal Manager stating that the Chief Manager has refused to discount further bills even when the limit of Rs.15 lacs was lying vacant. T. Valliappan, AGM then called a meeting on 02.05.1990 in the regional office where K. K. Batra, A2 and R Gopalan were present. In the meeting, adverse feature of the account and outstanding bills position were brought to the notice of T Valliappan but despite that he directed the Branch to purchase further bills of A3. Even when the bills amounting to Rs.4,09 lacs drawn on M/s Industrial Minerals and Metal were outstanding since 21.03.1990, T. Vallippan permitted the Branch to discount two bills of Rs.8.50 lacs drawn on M/s Industrial Mineral and Metals, Cuttack. These two bills were purchased on 03.05.1990 as DBP222 and DBP223 and were sent for collection to Central Bank of India, Jajpur road, Cuttack from where they were returned unpaid as the party refused to retire the bills stating that no orders were placed on A3. It was found that the copies of the above two letters written by K K Batra received in the zonal office were in the knowledge of B N Natrajan, the then Zonal Manager, Indian Bank.
13. Investigation revealed that subsequent to this, C Ravinder Babu was posted as Chief Manager, Indian Bank, Rana Pratap Bagh branch on 18.06.1990. He assumed the charge on 21.06.1990. On the same day, he purchased four bills drawn on M/s Industrial RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 12 of 207 CBI v. S P Manickam & ors 13 Alloys, Calcutta and M/s Venus Metal Corporation, Bombay total amounting to Rs.13,77,480/. He informed the Zonal Manager B. N. Natrajan about the purchase of the bills vide letter dated 21.06.1990 giving reference of personal discussions held with him and asked for its confirmation. Inspite of the adverse features in DBP and KCC account of A3, B N Natrajan allowed further purchase of the bills in the account of A3 through C Ravinder Babu who also purchased the bills despite knowing the adverse features of the account.
14. During investigation, statement of Hukam Chand, exemployee of A3 was recorded by the then Metropolitan Magistrate on 09.12.1994 wherein he revealed that the account of M/s K B Chemical Industries in State Bank of Patiala, Gurgaon was got opened through him by Anil Sirpaul after putting pressure on him and the blank cheques were signed and given to Anil Sirpaul by him. Hukam Chand was granted pardon by the then Metropolitan Magistrate vide order dated 22.12.1994.
15. Investigation further revealed that Mrs Prabha Pradhan was one the Directors of A3. Her husband Deepak V Pradhan was proprietor of M/s Globe Industries, Bombay which had lodged cheques of account of M/s Amrit Industries whose authorized signatories were Anil Sirpaul and A2 Ashok Sirpaul.
16. During investigation, specimen signature were taken and sent to GEQD, Simla. The opinion given by GEQD Simla proved the signatures and the writings of accused persons on the documents. Accused Hargovind Lalwani could not be traced as he was RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 13 of 207 CBI v. S P Manickam & ors 14 reportedly in USA. The samples of the materials sent through the bills discounted in Indian Bank, R P Bagh branch, Delhi to Bombay, Calcutta and Cuttack, which were brought back by the Indian Bank officials to Delhi and the material pledged with the bank by A3 were collected and got chemically analyzed through National Test House, Ghaziabad.
17. Investigation revealed that Ashok Sirpaul(A2) in conspiracy with other accused persons got discounted 17 documentary bills amounting to Rs. 46,99,459.50, availed Key Cash Credit Limit amounting to Rs. 13.50 Lacs and further availed adhoc KCC limit of Rs. 15 Lac from Indian Bank by pledging spurious goods, thereby causing loss of Rs. 75,49,459.50 to Indian Bank and corresponding gain to himself/themselves.
18. The facts disclosed the commission of offences by Ashok Sirpaul, M/s Globarc & Alloys (P) Ltd., Anil Sirpaul, Amrit Lal Sirpaul, Deepak Vinayak Pradhan, Smt. Prabha Pradhan, Hargovind Lalwani, S.P Manickam, T. Valliappan, B. N. Natrajan and C. Ravinder Babu U/s 120B r/w 420, IPC, 467,468,471 IPC and Section.13 (2) r/w 13 (1) (d) of PC Act. 1988.
19. The Authority, competent to remove the four Public Servants viz:
S.P. Manickam, T. Valliappan, B. N. Natrajan and C. Ravinder Babu, was approached for grant of sanction U/s 19(1) (c) of PC Act. 1988. The sanctioning authority declined to grant sanction for prosecution in respect of the public servants and hence it was decided to refer the matter to CVC. The chargesheet was filed against the private accused persons namely Ashok Sirpaul, M/s RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 14 of 207 CBI v. S P Manickam & ors 15 Globarc & Alloys (P) Ltd., Anil Sirpaul, Amrit Sirpaul, Deepak Vinayak Pradhan, Smt. Prabha Pradhan and Hargovind Lalwani in the Court of Metropolitan Magistrate, Karkardooma, Delhi. The names of four accused bank officials were mentioned in Col. No.2 of the Charge Sheet.
20. Subsequently, CVC decided for departmental action for major penalty against the bank officials namely T. Valliappan, B. Natrajan and C. Ravinder Babu and directed the bank to grant sanction for prosecution of accused S.P. Manickam. The sanction was accordingly granted by the bank.
21. During the course of proceedings, accused Anil Sirpaul and Amrit Lal Sirpaul expired and the proceedings against them were abated vide orders dated 20.12.1996 and 28.01.1997. Accused Prabha Pradhan was discharged by the court of Metropolitan Magistrate, Karkardooma Court in terms of the order dated 22.11.1999. Accused Deepak Vinayak Pradhan also expired and proceedings against him were abated vide order dated 28.04.2003. Accused Hargovind Lalwani was declared Proclaimed Offender vide order dated 28.01.1997.
CHARGE
22. Ld Predecessor of this court vide detailed order dated 13.02.2006 reached the conclusion that a prima facie case is made out against the accused persons viz. S P Manickam, Ashok Sirpaul and M/s Globarc & Alloys Pvt. Ltd through Ashok Sirpaul, Director.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 15 of 207 CBI v. S P Manickam & ors 16 Accordingly, on 28.02.2006, Accused S P Manickam (A1) was charged with the offence punishable U/Sec. 13(2) r/w Section 13(1) (d) of Prevention of Corruption Act,1988. Accused Ashok Sirpaul (A2) and M/s Globarc Alloys Pvt. Ltd. (A3) through accused Ashok Sirpaul (A2) were charged with the offence punishable U/Sec. 420,468 and 467 IPC. Accused persons S. P. Manickam (A1), Ashok Sirpaul (A2) and M/s Globarc & Alloys Pvt. Ltd (A3) through Ashok Sirpaul, Director were also charged with offences punishable U/Sec. 120B r/w Section 420, 467, 468, 471 of IPC and section 13(2) r/w Section 13(1)(d) of the Prevention of Corruption Act,1988. All the accused persons pleaded not guilty and claimed trial.
EVIDENCE
23. In order to prove its case, prosecution, examined as many as 57 witnesses. The gist of statements of witnesses is as under:
23.1 PW1 Arjun Kumar was posted as Assistant Manager in Indian Bank, Rana Pratap Bagh in the year 1989. He stated that N Ravi Kumar was Loan Officer at that time but he was on training. He stated that after processing and sanctioning of loan, the Loan Officer writes the equitable mortgage and signs the register.
Thereafter the incharge of the branch after verifying the documents makes an entry in the register and countersigns on the equitable mortgage register. Before sanctioning the loan, legal opinion and valuation report of the property are obtained from the bank approved Valuer and Advocate. He stated that since N Ravi RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 16 of 207 CBI v. S P Manickam & ors 17 Kumar was on training, he dealt with the equitable mortgage register in respect of M/s Globarc & Alloys Pvt. Ltd (A3). He was asked by the Chief Manager S P Manickam to enter the details. When he explained him that he is not conversant with the procedure to write in the register regarding equitable mortgage, he told him that he would dictate the entries. He was sitting just opposite to him and from a piece of paper, he dictated him the details of the entries to be filled in the register on 31.10.1989. He proved the relevant entries recorded on page 54 of the register Ex.PW1/1. He stated that K K Batra, Senior Manager also signed the register. He stated that S P Manickam told him that he would verify the details of the entries and sign afterwards. He stated that when he was writing Ex.PW1/1, M K Das, Assistant Manager also came in the cabin and in his presence the accused (A1) dictated him the details.
He stated that on the directions of C Ravinder Babu, Chief Manager he visited Bombay to rebook the goods sent by M/s Globarc & Alloys Pvt. Ltd. against the bills purchased by the Indian Bank because the bills were returned unpaid and the goods were lying unclaimed at Bombay. He stated that he brought the goods through railway and shifted them in the godown near Rana Pratap Bagh under the joint custody of M/s Globarc & Alloys Pvt. Ltd. and the bank.
On being further examined he proved the outward bill collection registers (OBC registers) for the period from 01.10.89 to 20.02.90 Ex.PW1/5, 20.02.90 to 15.07.90 Ex.PW1/6 and RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 17 of 207 CBI v. S P Manickam & ors 18 12.07.90 to 13.04.91 Ex.PW1/7 showing the record of the cheques/bills of the parties sent by the branch to other branches of different banks outside Delhi which also included the entries pertaining to the cheques/bills of M/s Globarc & Alloys Pvt. Ltd.
He stated that as per entry on page 213 Ex.PW1/7 pertaining to M/s Globarc & Alloys Pvt. Ltd., a cheque of Rs. 53,431.50 of M/s K. B. Chemicals with State Bank of Patiala, Gurgaon was deposited by M/s Globarc & Alloys Pvt. Ltd. in the branch which was returned unpaid. He also proved subsidiary limit register of bill purchase Ex.PW1/8 to Ex.PW1/11 of the above periods. He stated that on the basis of the proposal, sanction of limit in favour of the company was granted by the Zonal Office having the reference no. 46/89 dated 23.10.89. He stated that recommendation of additional limit of Rs. 15.60 lakh dated 17.12.89 in favour of the company was made to the Zonal Office Ex.PW1/21 which was sanctioned vide Ex.PW1/17. He also proved the letter dated 28.04.1990 addressed to the company by the Senior Manager K K Batra Ex.PW1/22. He stated that on few occasions, he had dealt with the accused Ashok Sirpaul (A2), Anil Sirpaul and Amrit Lal Sirpaul, Directors of the company and seen them signing and writing on the documents in relation with the transactions with the bank. He identified the signatures of Ashok Sirpaul on the letter Ex.PW1/23 dated 30.04.1990 to the Zonal Officer Manager, Indian Bank (D225 page 328329).
On being crossexamined, he stated that he worked in various banks in different sections and departments. He stated that RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 18 of 207 CBI v. S P Manickam & ors 19 the concerned clerk or the officer of the bank who deals with the bill purchases is responsible to maintain the sanction limit register and he countersigns it and the counter signature of the branch Manager is not required. He stated that the branch Manager is not required to sign the entries on bill purchase register and it is signed by the officer dealing with the bill purchase.
He was confronted with a document dated 02.11.89, draft of a letter from the party to the bank Ex.PW1/DA1 which he stated that it is in his handwriting but he had written at the instance of accused S P Manickam (A1) who was sitting before him and was dictating him the details from a paper. He denied that on 02.11.89 S P Manickam (A1) was on official duty away from the branch and was attending a conference from 02.11.1989 to 04.11.1989. He denied that he was not capable of identifying the signature of Ashok Sirpaul on any document. He stated that he can identify the signatures of the customers approaching the bank for discounting the bills and withdrawing the money through cheques. He stated that he can identify the signatures on the document even he is retired for almost 14 years.
23.2 PW2 C P Vanan was the Chief Manager in Indian Bank, Karol Bagh branch in 1989. He stated that partner of M/s Saree Palace namely Parvesh Kohli had an account with the bank. He had made endorsement on the account opening form dated 12.08.89 in the name of M/s Globarc & Alloys Pvt. Ltd. in respect of introducer. He had verified the signature of introducer at point C because the party was maintaining the account in his bank. He RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 19 of 207 CBI v. S P Manickam & ors 20 stated that as per the entry reflected, the first transaction in the account was made on 18.08.1989 when Rs. 8,000/ were deposited in the bank. The account number was OCC63. The account was already in operation as per the statement of OCC account No. 63 Ex.PW2/2 which was infact opened on 12.08.89. He stated that in normal practice, the account is first opened by the party and thereafter the operation begins but in this case, the OCC account was already in operation. He stated that the bank account actually operates when the first remittance is made. Sometimes party comes and asks for opening a new account being an auspicious day for him. It is possible that in the present case also, the party had approached the Manager for opening the account being auspicious day for it. He admitted that as per Ex.PW2/2, the first withdrawal was made on 29.08.89 i.e. after the introduction and verification of signature on 26.08.89.
23.3 PW3 N Ravi Kumar was Assistant General Manager in Indian Bank, Rana Pratap Bagh branch in the year 198990. He proved KCC debit slip and credit voucher dated 29.08.89 for Rs. 10 lakhs bearing the signature of the accused S P Manickam (A1) Ex.PW3/1 and Ex.PW3/2 relating to M/s Globarc & Alloys Pvt. Ltd. He stated that cash credit limit of Rs. 10 lacs was released to the company. He proved debit voucher and credit voucher on the basis of the particulars given by M/s Globarc & Alloys Pvt. Ltd Ex.PW3/3 and Ex.PW3/4 vide which Rs.3.5 lacs were released to M/s Globarc India. He proved debit and credit vouchers Ex.PW3/5 and Ex.PW3/6 vide which on 25.01.90 Rs. 15 lakhs RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 20 of 207 CBI v. S P Manickam & ors 21 were debited in KCCII account of the company. He also prepared the credit report of the company at the instance of accused S P Manickam (A1). He stated that the parties had deposited the goods in the godowns against KCC.
On being crossexamined, he stated that on the proposal form dated 11.10.89, he had made a remark "account closed subsequently" on the information given by the accused S P Manickam. He stated that a letter from SBI was received. 23.4 PW4 M K Das was Assistant Manager, Indian Bank in the year 1989. He was looking after the bill purchase section, clearing etc. He stated that entries on page 4560 on the equitable mortgage register are in the hand of Arjun Kumar (PW1). The endorsement in respect of account of Ashok Sirpaul was signed by K K Batra, Senior Manager. He stated that Ex.PW1/1 was prepared on the dictation of S P Manickam who was holding some papers and the said entry related to the title deed/properties of M/s Globarc & Alloys Pvt. Ltd. He stated that he remained in the cabin of the Chief Manager for about 40 minutes. He could not, however, see those papers as the Chief Manager was sitting across the table. He stated that it was not necessary that all the entries in the equitable mortgage register was written on the dictation of Chief Manager. He denied that he did not enter the room of Chief Manager nor A1 gave any dictation nor any entry in equitable mortgage register was made on the dictation of Chief Manager. 23.5 PW5 Harphool Singh was registration clerk in the office of Sub Registrar Gurgaon in the year 1989. He stated that non RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 21 of 207 CBI v. S P Manickam & ors 22 encumbrance certificate was issued by the SubRegistrar Data Ram under his signature on 17.05.89 in favour of M/s Globarc & Alloys Pvt. Ltd. in respect of plot no. 3 area 4889 Sq. Yds. at Industrial Development Colony, Mehrauli Road, Gurgaon on the application of Anil Sirpaul who also filed an affidavit in this regard. He proved the application Ex.PW5/1, the affidavit Ex.PW5/2 and nonencumbrance certificate Ex.PW5/3. He stated that photocopy of the property (transfer deed dated 20.01.1989) Ex.PW5/4 was filed by the party. He stated that he verified the authenticity of the document and made a note on the reverse of the application Ex.PW5/1 affirming that the said property was free from all encumbrances and the certificate was issued on the basis of affidavit given by Anil Sirpaul. He stated that at that time he had no knowledge that the property was mortgaged by the party as the office of G M District Industry Centre, never intimated them regarding mortgage of this property at some other place.
On being crossexamined, he stated that he did not make any independent inquiry as to the correctness of the contents of affidavit Ex.PW5/2.
23.6 PW6 Suhas Ganesh Navere was Special Assistant in Bank of Baroda, Fort University branch, Bombay in 1990. His duty was to look after the working of billing department including sending bills/cheques for collection i.e OBC (Outward Bills for Collection) and bill receipt from other banks or Inward Bill Collections. He proved the covering letters dated 29.08.1990 Ex. PW 6/1 and Ex. PW 6/2 addressed to Manager, Indian Bank, Rana Pratap Bagh RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 22 of 207 CBI v. S P Manickam & ors 23 branch in respect of return of OBC No. 236 and 237 of Globe Industries for Rs.3,84,800/ each. He stated that the bills were returned unpaid as "payment not forthcoming". He also proved letter dated 18.09.1990 Ex. PW 6/3 and Ex. PW 6/4 addressed to Manager, Indian Bank, Rana Pratap Bagh Branch in respect of return of DBP No. 839 and 838 of M/s Venus Metal Corporation for Rs.24,700/ and Rs.2,05,920/ respectively, which were returned unpaid for "payment not forthcoming". He also proved the voucher (IBC) No. 48209 Ex. PW6/5 in respect of payment of Bill No. 236 which was returned to the Indian Bank on 29.08.1990 for payment. He stated that M/s Globe Industries deposited two cheques bearing No. 48209 and 48210 for payment of bills which were returned unpaid. Another two cheques bearing No. 611906 and 611907 drawn on Grindlays Bank were also got dishonoured. After the return of cheques, the voucher Ex. PW 6/5 was prepared, the memos in this regard were Ex. PW 6/6 and Ex. PW6/8 vide which cheque bearing No. 611906 and 611907 were sent for collection by Bank of Baroda which were also returned unpaid. He proved voucher Ex. PW 6/7 in respect of Bill No. 237 which was returned unpaid. He stated that the bills were returned to Indian Bank on 29.08.1990. Vouchers Ex. PW 6/9 and Ex. PW 6/10 in respect of DBP No. 839 and 838 dated 18.09.1990 were also returned unpaid and then the bills were returned to Indian Bank.
23.7 PW7 K K Batra was Senior Manager in Indian Bank Rana Pratap Bagh branch in 198889. He proved the account opening RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 23 of 207 CBI v. S P Manickam & ors 24 form Ex.PW2/1 dated 12.08.89 in the name of M/s Globarc & Alloys Pvt. Ltd. He stated that the account was allowed to be opened by the accused S P Manickam (A1) who also signed on the specimen signature card Ex.PW7/1. He stated that there was a request of M/s Globarc & Alloys Pvt. Ltd. on a letter head dated 13.03.90 vide which the company requested the Manager to purchase two bills dated 13.03.90 for Rs. 2,27,500/ each and deliver the documents to Industrial Mineral and Metals at P.O. Jajpur road, Distt. Cuttack, Orissa through Central Bank of India branch, Jajpur road, Cuttack, Orissa. The bills were accompanied with invoices and drafts. After deducting 10% of the bill amount, on 21.03.90 vouchers were prepared for crediting the amount in OCC account no. 63 of the company Ex.PW7/2 and Ex.PW7/3. He stated that both the bills were returned unpaid by Central Bank of India vide return memo dated 04.10.90 for the reasons "payment not forthcoming". He stated that M/s Globarc & Alloys Pvt. Ltd. tendered similar bills on various dates in the branch alongwith invoices and demand drafts. The bills were sent for collection in the concerned branch of the banks which were returned unpaid for various reasons. He stated that by voucher dated 29.08.89 Ex.PW3/A Rs. 10 lacs were debited in the KCC account of the company and this voucher was passed by accused S. P. Manickam (A1). He also proved the cheques Ex.PW7/14 and Ex.PW7/16 issued by M/s Globarc & Alloys Pvt. Ltd. in favour of different parties. He stated that the cheques were paid to the debit of M/s Globarc & Alloys Pvt. Ltd., and were signed by RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 24 of 207 CBI v. S P Manickam & ors 25 Ashok Sirpaul and debited in the OCC account of the company. He proved various vouchers and bills and handed over the documents to the CBI vide memo Ex.PW7/84. He also proved the statement of cash credit account of M/s Globarc & Alloys Pvt. Ltd. Ex.PW7/45 to Ex.PW7/83. He stated that in case, bills are returned unpaid, it becomes the duty of the Chief Manager to debit the account of said unpaid bills in the account of the party to adjust the amount and inform the higher official in due course at the time of renewal of facilities. However, record shows that accused S P Manickam did not inform the higher authorities regarding the return of unpaid bills.
He then explained the procedure of KCC limit. He stated that there were instructions from the Higher Authorities to purchase the bills and there were many instances when the bill purchased during his tenure were returned unpaid. He admitted that there is no document on record that he had complained to Higher Authorities regarding return of bills purchased while he was officiating as Chief Manager, successor of accused S P Manickam. He admitted that a letter Ex.PW7/DA was written by S P Manickam to the Zonal Manager.
23.8 PW8 Sushil Kumar Rai was accountant in State Bank of India, India Exchange Extension branch. He stated that the bills received from the other banks for collection or payment were entered in the LSC Register ( Local Short Collection Register) and intimation was given to the drawee by the bank, so that, the drawee may retire the bill after making payment. He stated that the bills against RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 25 of 207 CBI v. S P Manickam & ors 26 the entries LSC 23/44 and 23/62 were returned unpaid on 24.11.1990 and 22.11.1990. He proved the letter dated 21.11.1990 Ex. PW 8/2 signed by the branch Manager regarding retirement of LSC No. 23/60, 23/61 and 23/62 for Rs.5,28,320/ each drawn by A3 whereby it was reminded to M/s Nobal Alloy Manufacturers, Calcutta but despite repeated intimation, no instructions were received in the bank in respect of retiring the bills. He proved the letter of M/s Nobal Alloy Manufacturers, Calcutta dated 22.11.1990 Ex. PW 8/3 wherein it was informed that they would not retire LSC no.23/60, 23/61 and 23/62 bills and requested the bank to return the bills.
23.9 PW9 Ram Singh was the employee of M/s Global Linkers, the firm owned by Ashok Sirpaul, Anil Sirpaul and Amrit Lal Sirpaul. He stated that on the instructions of Ashok Sirpaul, he went to Calcutta and Jajpur Road Cuttack and rebooked the goods to Delhi. He stated that when the goods reached Delhi, on the directions of Ashok Sirpaul, he assisted the officials of Indian Bank, R P Bagh branch to keep the goods in the godown near Indian Bank under lock and key of the bank. He stated that one of the key was with the bank and the other key was with their office. He stated that similarly the goods were brought back by the Indian Bank from Mumbai and he had assisted the bank officials in keeping the goods in the same godown. He stated that the goods were brought back as those were not claimed by the parties. 23.10 PW10 J R Sehgal proved the receipt memo Ex. PW 10/1 vide which he handed over documents as detailed in the memo. He RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 26 of 207 CBI v. S P Manickam & ors 27 proved the extract of unloading book of Haridwar Book Office dated 06.06.1990 and extract of Page No. 34 of Local Delivery book of goods office Haridwar Ex. PW 10/2 and Ex. PW 10/3. He stated that document Ex. PW 10/3 shows that the items described in the extract were sent to the Lost Property Office, Bareilly on 05.10.1991 vide RR No. 969788.
23.11 PW11 R C Samal was posted in Central Bank of India, Jajpur Road Branch, Orissa for the period from 1987 to January, 1992. He stated that the bills received for collection were entered in the SIBC register of the branch and presented to the concerned parties for collection. He proved the forwarding letter Ex. PW 11/A of Indian Bank dated 13.03.1990 alongwith the invoice of bills Ex. PW 11/B and draft bearing No. 0080 Ex. PW 11/C. He proved the returning memo Ex. PW 11/D ( mark F) whereby bills No. 1058 and 1059 were returned unpaid to Indian Bank, R P Bagh branch for the reasons 'payments not forthcoming'. He also proved forwarding letter dated 13.03.1990 Ex. PW 11/E in respect of bill No. 0081 received from Indian Bank for collection alongwith invoice Ex. PW 11/F and draft Ex. PW 11/G for Rs.2,27,500/. He stated that the bill was returned unpaid vide memo Ex. PW 11/H for the reasons 'payment not forthcoming'.
23.12 PW12 Anil Kumar Singh was posted as Clerk in Central Bank of India, Jajpur Road branch, Cuttack, Orissa during the year from 1989 to 1994. He deposed on the lines of PW11.
23.13 PW13 S Mariantony was posted as an officer in Indian Bank Rana Pratap Bagh in the year 199091. His duties included RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 27 of 207 CBI v. S P Manickam & ors 28 dealing in bill collections, bill purchase and passing of vouchers in savings bank etc. He explained the meaning of bill purchase.
He proved the covering letter Ex.PW11/B, received from the Central Bank of India, Jajpur road branch Cuttack intimating non receipt of payment to the bill purchased by the Indian Bank which was sent to them for collection. He proved the demand notices raised under the signature of accused Ashok Sirpaul. He stated that the documents were processed by him bearing his signature on the back in token of having purchased the bill and crediting the party account. He stated that after verifying the signatures of Ashok Sirpaul, the vouchers were prepared by the clerical staff. In their absence he prepared the vouchers. He denied that he wrongly identified the signatures of the accused Ashok Sirpaul on the documents at the instance of I.O.
23.14 PW14 Subhash Oberoi advocate was on the panel of Indian Bank in October, 1989. His duty was to give opinion, vetting of documents, filing of suits and giving legal advice to the bank. He stated that on 23.10.1989, he had given opinion Ex. PW 14/1(D
166) and on 22.09.1989 Ex. PW 14/2(D167) to the bank. 23.15 PW15 Hazari Singh was working as Clerk with M/s Global Linkers at 3992, Ajemeri Gate, Delhi of which Amrit Lal Sirpaul, Anil Sirpaul and A2 Ashok Sirpaul were the partners. He proved the signatures of Ashok Sirpaul and Anil Sirpaul on the account opening form Ex. PW 2/1, signatures of Ashok Sirpaul on the Specimen Signature Card Ex. PW 15/1 and on the documents Ex. PW 15/2 to Ex. PW 15/35.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 28 of 207 CBI v. S P Manickam & ors 29 23.16 PW16 Vijay Kumar Tekriwal was partner of M/s Vikram International, Calcutta in 19891990. He stated that bill mark X was not issued by their company and on 08.08.1990, their company did not have dealing with A3 Globarc & Alloys Pvt. Ltd and Global Linkers.
23.17 PW17 S Surya Narayanan was posted as Assistant General Manager incharge of Delhi Regional Office of Indian Bank during the year 199495. He stated that vide memo dated 10.10.94, certified true copy of the list of approved clearing and forwarding agents of Indian Bank alongwith circular dated 28.08.1991 was handed over to the I.O vide Ex.PW17/A. In the aforesaid list, name of M/s Dharamdas and Co., 26, Calicut street, Ballard Estate, Mumbai did not figure. He stated that vide sanction ticket no. 61/89 dated 08.12.89, sanction of adhoc KCC of Rs. 15 lakhs to M/s Globarc & Alloys Pvt. Ltd. was given by the Zonal Office of the bank. As per condition no.2, the facility was granted after getting cleared the goods through the approved clearing agent at Mumbai. He proved sanction ticket Ex.PW17/C. On seeing the letter dated 17.05.90 of the AGM, Indian Bank addressed to the Zonal Manager Ex.PW17/E, he stated that T. Valliappan was the AGM and vide this letter, the minutes of the meeting were forwarded to the Zonal Office. He stated that the letter Ex.PW17/B was addressed to the Zonal Manager only.
23.18 PW18 V. V. Narayanan was posted as Branch Manager, Syndicate Bank, G B Road, Delhi during the period from January, 1991 to October 1993. He proved the entries at Page No. 116117 RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 29 of 207 CBI v. S P Manickam & ors 30 Ex. PW 18/B in Equitable Mortgage Register Ex. PW 18/A vide which facilities were advanced to M/s Global Linkers, M/s Amrit Industries, M/s Amrit Refractories (Pvt) Ltd by his branch and by the Gurgaon Branch of the bank. He stated that M/s Amrit Refractories Pvt Ltd had deposited original Sale Deed dated 25.02.1981 executed by Kanta Luthra in favour of Amrit Lal Sirpaul and original Transfer Deed dated 15.03.1984 executed by Amrit Lal Sirpaul in favour of M/s Amrit Refractories Pvt. Ltd as per entry dated 30.10.1984.
23.19 PW19 Vitap Jain deposed that M/s Industrial Products, Industrial Area, Karnal was owned by his father and uncle. He was authorized signatory besides his father and uncle. The firm was manufacturing welding electrodes. It was closed in early 90s. He stated that the firm never produced or sold Molyoxide to any one. He stated that as per the photocopy of Sale Day Book for the month of January, 1991 mark X, no sale was made to M/s Globarc & Alloys Pvt. Ltd.
23.20 PW20 Sh. A K Malik was Deputy Chief Officer in the Regional Office of Indian Bank from January, 1989 to middle of July, 1993. He was working in the credit department. He stated that T. Valliappan was the AGM in the Regional Office. He handed over documents from the records to the I.O. on 30.04.91 vide memo Ex.PW55/3 i.e. a file D224 (pages 1336), Ex.PW20/F1 (Colly.), file D223 (pages 1151) Ex.PW20/F2 (Colly.), file D227 (pages 1411) Ex.PW20/F3 (Colly.) and file D225 (pages 1592) Ex.PW20/F4 (Colly.) which relate to the correspondence between RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 30 of 207 CBI v. S P Manickam & ors 31 the Regional Office and Rana Pratap branch office pertaining to the transactions with M/s Globarc & Alloys Pvt. Ltd.
On being crossexamined, he admitted that periodical inspection, annual inspection and surprise inspection of different branches used to be conducted by the Regional Office or the Zonal Office.
23.21 PW21 P M Jose was posted as Assistant General Manager, Indian Bank, Central Office, Madras in 1989. He stated that the list of approved,clearing and forwarding agents dated 28.08.1991, does not find mention of the name of M/s Dharam Dass & co., Bombay as clearing agent. He stated that the usual/normal procedure is to hand over the bill of lading to the clearing agent for clearance and they forward it for storage. When there is no approved list available in the branch, Branch Manager obtains the list of approved agents from the Controlling Office like regional/zonal office.
He proved the minutes of meeting Ex. PW 21/A held on 02.05.1990 in the regional office to discuss the conduct of account of M/s Globarc & Alloys Pvt. Ltd. He stated that in the meeting, AGM had permitted discounting of two bills amounting to Rs.8.50 Lacs drawn on Industrial Minerals & Metals. He proved the letter no. DBP/Globarc/2684 & 2926 dated 26.04.1990 of the then Chief Manager, Indian Bank,R P Bagh branch Ex. PW 21/B which was in response to the letter dated 25.04.1990 of M/s Globarc & Alloys Pvt. Ltd seeking clarification on the irregularities in the account and to consider additional credit facilities for the company. He RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 31 of 207 CBI v. S P Manickam & ors 32 stated that the letter stated that the irregularities in account still persisted, the credit reports of the buyers are yet to be received by the branch, in the absence of rectification of the above irregularities, the bank can not purchase further bills in the account. He stated that normally when the bills are returned unpaid, the party brings sufficient funds to clear the liability and no further discounting of fresh bills is done. Enhancement of limits is considered annually when the account is free from irregularities like nonpayment of bills, shortage of stocks etc. 23.22 PW 22 B S Chahal was posted as Branch Manager, State Bank of India, Paharganj branch in 1991. He proved the seizure memo dated 23.04.1991Ex. PW 22/A vide which documents were handed over to CBI.
23.23 PW 23 Ajit Singh was posted as Officer in Oriental Bank of Commerce, South ExtensionII branch. He on the direction of the Branch Manager, went to the CBI office, Lodhi Road where in his presence specimen signatures and handwriting of Ashok Sirpaul mark S1 to S21 Ex. PW 23/A1 to Ex. PW 23/A21 and of Anil Sirpaul mark S22 to S42 Ex. PW 23/B1 to Ex. PW 23/B21 were obtained. On being crossexamined, he admitted that these documents contain only the specimen signatures of Ashok Sirpaul and Anil Sirpaul but not their handwritings.
23.24 PW24 D R Kohli was posted as Senior Manager (Engineering/Technology) in Central Foundry forge Plant, Bharat Heavy Electricals Ltd. Haridwar. He explained the process of making steel by electric arc furnace method. He stated that the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 32 of 207 CBI v. S P Manickam & ors 33 scrap steel is purchased or collected from sister units of BHEL and melted in electric arc furnace. After removing the impurities, alloying elements are added as per the steel specifications required. Ferro Vanadium, Ferro Titanium and Ferro Boron are added in the liquid metal during tapping process. He stated that as per the test report Ex. PW 24/A, there was no Vanadium contents in the sample.
23.25 PW25 Muthu Jai Kumar was posted as officer in Indian Bank, regional office in 1994. He on the instructions of his superior, went to CBI office where in his presence, specimen handwriting and signatures of A1 S P Manickam Ex. PW 25/A1 to Ex. PW 25/A10 (D187, S43 to S52) and T Valiappan Ex. PW 25/B1 to Ex. PW 25/B5 (D186, S53 to S57) were taken.
23.26 PW26 Pawan Kumar Goel was posted in Indian Bank, R P Bagh Branch. He handed over documents to CBI vide memos Ex. PW 26/A (D196) and Ex. PW 26/B (D198). He also handed over documents Ex. PW 7/3 (D15) and Ex. PW 13/10 vide memos Ex. PW 26/C and Ex. PW 26/D (D63).
23.27 PW27 Udayan Marw was working as General Manager ( Finance) in M/s Gharda Chemicals in 1988. He stated that bill dated 23.07.1989 ( Page No. 279, D224) did not belong to M/s Gharda Chemicals. He was crossexamined by Ld. PP for CBI. He stated that material mentioned in the bill Ex. PW 27/A ( D224) i.e Molybdenum Oxide was not produced by their company and it was never sold to M/s Globarc & Alloys Pvt. Ltd. The said bill was not issued nor signed by any officer of their company.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 33 of 207 CBI v. S P Manickam & ors 34 23.28 PW 28 Jaidev was clerk in GM/DIC. He was maintaining record of Industrial area, Yamuna Nagar which comes under GM/DIC. He stated that the address as mentioned in Invoice No. KAO/152/89 Ex. PW 28/A never existed in the industrial area, Yamuna Nagar. The blocks in the industrial area were T, W, O, M, N and E and there was no A block.
23.29 PW29 Parvesh Kohli deposed on the lines of PW2 and stated that the Zonal Office of the Indian Bank had sanctioned his loan and during that period he had met R. Subramaniam. He had introduced the account of M/s Globarc & Alloys Pvt. Ltd. Ex.PW2/1 on the recommendations of R. Subramaniam. He, however, did not know the directors of M/s Globarc & Alloys Pvt. Ltd. He stated that the directors did not sign Ex.PW1/1 and Ex.PW15/1 in his presence.
23.30 PW30 Rakesh Jain deposed that in 1989, he had been living at AP9, Shalimar Bagh, New Delhi. His telephone bearing number 776442 was installed in his office at Sadar Bazar. He stated that invoice No. 465 dated 07.07.1989 Ex. PW 30/A bears his residential address as the address of registered office of Shiv Shakti Metal Industries. He stated that M/s Shiv Shakti Metal Industries was never started by him or his family members nor he ever rented his premises to any one. He does not know who got printed his address on the invoice. He was crossexamined by Ld. PP. On being crossexamined, he stated that M/s Shiv Shakti Metal Industries was the firm of Ashok Sirpaul who was known to him.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 34 of 207 CBI v. S P Manickam & ors 35 23.31 PW31 Y P S Chauhan was working as Senior Accounts Officer, Store Bills Section, BHEL, CFFP,Ranipur Haridwar. He proved the purchase order dated 16.04.1990 Ex. PW 31/A vide which an order of two metric tonnes of Ferro Vanadium (lumps) was placed on M/s Globarc & Alloys Pvt. Ltd. He stated that the payment was to be made against Store Receipt Voucher which was to be issued after receipt and inspection of material. He proved the copy of SRV bearing No. 6448 and 6445 Ex. PW 31/B and Ex. PW 31/C in respect of Way Bills No. 35539 and 9903 dated 21.07.1990 and 23.06.1990 vide which 0.720 and 1.281 metric tonnes of goods were received in the store on 04.08.1990. He also proved letter dated 13.08.1990 Ex. PW 26/A2 regarding LSC No. 7100 dated 29.05.1990 and 7106 dated 02.06.1990 vide which the LSCs were returned unretired as the party informed that the material was wrongly booked to CFFP.
23.32 PW32 Jayanti Lal Jain accorded the sanction for prosecution against S P Manickam. He proved the sanction order Ex. PW 32/A. 23.33 PW33 S P Singh was Chief Goods Superintendent, LPO, Bareilly in 1994. He stated that in his presence, the CBI officials had taken the sample of Nickel Boring Scraps vide memo Ex. PW 33/A (D
190).
23.34 PW34 Swadesh Kumar was working as Senior Executive Supervisor, Accounts Department, CFFP, BHEL in the year 1994. He proved the letter dated 26.12.1994 bearing the signature of V P Kulshreshtha, Senior Manager (Finance) Ex. PW 34/A and RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 35 of 207 CBI v. S P Manickam & ors 36 objection memo No. CFF/3FAX/SB/Bank/880 dated 31.05.1990 pertaining to LSC No. 7100 Ex. PW 34/B and C(D247). 23.35 PW35 S K Goel was the Branch Manager in State Bank of Patiala, Haryana from April, 1989 to August, 1990. He stated that M/s K. B. Chemicals Industries had opened an account with the bank vide account opening form marked Ex. PW 35/B. He also proved the specimen signature card marked Ex. PW 35/C. He stated that a cheque book was issued to M/s K B Chemicals. He proved the copy of entries dated 08.08.1990 Ex. CW 1/A in respect of cheques No. 699350 and 699344 for Rs.53,431.50 and Rs.72,000/ respectively issued by M/s K.B. Chemicals from current account No. 815 in favour of M/s Globarc & Alloys Pvt Ltd presented through Indian Bank which were returned unpaid due to insufficient funds.
23.36 PW36 S K Badani was posted in State Bank of India, Pahar Ganj Branch from March 1994 to April 1995. He proved the copy of Ledger B237 pertaining to account No. 60098 of M/s Globarc & Alloys Pvt. Ltd Ex. PW 36/A and its account opening form dated 31.10.1988 Ex. PW 36/B. He stated that the authorized signatories of M/s Globarc & Alloys Pvt. Ltd. were Amrit Sirpaul, Ashok Sirpaul and Anil Sirpaul.
23.37 PW37 S Rama Krishna Rao was posted as Branch Manager, Central Bank of India, Jajpur Road branch, Cuttack in 1994. He handed over documents Ex. PW 37/B to Ex. PW 37/L i.e Bill Collection Schedules (D150, D151 and D155), Bill intimations(D152 and D156), letters of Indian Bank (D153), RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 36 of 207 CBI v. S P Manickam & ors 37 Nonpayment advice (D154) and Ledger sheet (D158) to CBI vide memo Ex. PW 37/A. 23.38 PW38 R Gopalan was posted as Deputy Chief Officer (Credit) in the regional office of Indian Bank where T Valliappan was the AGM. He proved the minutes of the meeting dated 02.05.1990 Ex. PW 38/A bearing his signatures and that of T. Valliappan. He proved the forwarding letter dated 17.05.1990 Ex. PW 17/E addressed to Zonal Manager, Indian Bank written by T Valliappan bearing his signatures.
23.39 PW39 Dinesh Kapoor was partner in M/s Nobel Alloy Manufacturer, manufacturer of Ferro Alloys. He stated that he does not remember if his firm had placed an order for purchase of goods from M/s Globarc & Alloys Pvt. Ltd or bill was raised in this regard. On seeing letter Ex. PW 8/C dated 11.11.1990 addressed, to the Manager, SBI, India Exchange Extension branch, Calcutta and invoice No. 011 and 0120 dated 25.05.1990 and 28.05.1990 Ex. PW 15/28 and Ex. PW 26/A8 of M/s Globarc & Alloys Pvt. Ltd, he stated that he does not remember why he wrote the letter to SBI or whether the said invoices were raised towards M/s Nobel Alloys Manufacturers.
After seeing letters dated 25.05.1990 and 28.051990 of M/s Globarc & Alloy Pvt Ltd addressed to M/s Nobal Alloys Manufacturers Ex. PW 13/3 and Ex. PW 13/8 vide which request was made by M/s Globarc & Alloys Pvt. Ltd to pay to Indian Bank, R P Bagh branch through SBI, India Exchange Place Extension branch, Calcutta as mentioned in invoice No. 0116 and RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 37 of 207 CBI v. S P Manickam & ors 38 0120 dated 25.05.1990 and 28.05.1990 Ex. PW 15/28 and Ex. PW 26/A8, he stated that so far as he remembers, M/s Nobal Alloy Manufacturer could not have paid the amount to M/s Globarc & Alloys Pvt Ltd in view of his letter Ex. PW 8/3.
He admitted of having Current Account in the name of M/s Nobal Alloys Manufacturers with SBI, India Exchange Place Extension branch, Calcutta.
23.40 PW40 Lawrence Dias was working with M/s Globe Industries in 1990 on part time basis. He stated that Deepak Pradhan was the proprietor of the firm situated at Bombay. He (PW40) was looking after the accounts work of M/s Globe Industries. He does not know if M/s Globe Industries had placed an order for supply of material on M/s Globarc & Alloys Pvt. Ltd. On being cross examined by Public Prosecutor, he stated that while making statement to CBI, he was shown the Purchase Register of M/s Globe Industries for the year 199091, on the basis of which he had stated that no order for supply of goods was placed by M/s Globe Industries to M/s Globarc & Alloys Pvt. Ltd. 23.41 PW41 S C Kusumakar was posted as Senior Accounts Officer in BHEL, CFFP, Haridwar in 1990. He identified his signatures on letter No. CFF/3Fax/34/90 dated 13.08.1990 Ex. PW 26/A2 addressed to the Branch Manager, SBI Ranipur vide which he had informed that the LSCs were returned unretired as the material was wrongly booked to CFFP.
23.42 PW42 Yogesh Chander was Assistant Director (Chemical) National Test House, Ghaziabad. He proved the test reports Ex.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 38 of 207 CBI v. S P Manickam & ors 39 PW 24/A, Ex. PW 42/A and Ex.PW42/B. He stated that different value/proportion of the material/metals were found in different samples of alloys as mentioned in the reports. He stated that alongwith the samples, sample seal memos were sent by CBI Ex. PW 33/A, Ex. PW 45/A and Ex. PW 42/D. 23.43 PW43 Ramesh Lal Sahi was Assistant General Manager, Syndicate Bank, Asaf Ali Road branch. He stated that upto 1991, Asaf Ali Road Branch of Syndicate Bank was the designated branch in Delhi for creating equitable mortgage on behalf of all the branches of the Bank in Delhi and nearby areas. After 1991, different branches of Syndicate Bank were authorized to create equitable mortgages in respect of the equitable mortgages pertaining to the transactions of their respective branches. He proved the equitable mortgage register D165 maintained in the bank and the relevant entry on page no.116117 Ex.PW18/B. 23.44 PW44 Om Parkash was the registration clerk in the office of SubRegistrar Gurgaon in the year 1992. He handed over the documents from the record of the office to the Inspector CBI vide memo Ex.PW44/A which included letter of Anil Sirpaul, Director of M/s Globarc & Alloys Pvt. Ltd. addressed to the SubRegistrar for issuance of nonencumbrance certificate Ex.PW5/A, affidavit of Anil Sirpaul regarding the plot Ex.PW5/2, nonencumbrance certificate dated 17.05.1989 issued by SubRegistrar relating to the plot Ex.PW5/3, photocopy of the transfer deed dated 20.01.89 of plot no.3 Ex.PW5/4.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 39 of 207 CBI v. S P Manickam & ors 40 23.45 PW45 L Paneerselvam was Assistant Manager, Indian Bank, R P Bagh branch. He stated that on 14.05.1994, he along with Arjun Kumar, ScaleI officer and CBI Inspector went to the Godown of M/s Globarc & Alloys Pvt. Ltd in Gurgaon where Anil Sirpaul brought the keys of godown no.6, 7 and 8. The locks were opened. CBI Inspector took the samples of the materials from the godowns vide proceedings Ex.PW45/A (D191) bearing his signatures and that of Arjun Kumar. He stated that as per the memo Ex.PW45/A, samples of silicon metal, nickel boring scrap, aluminum scrap, manganese powder and silicon alloys lumps were taken by the IO.
23.46 PW46 B N Kapoor was posted as "back officer" in ANZ Grindlays Bank, Sansad Marg branch in 1993. He proved the account opening form Ex.PW46/A (D71) of M/s Amrit Industries pertaining to current account no. 01CBP0522100 as per which the account was opened in December, 1989. He also proved the attested photocopies of partnership deed of M/s Amrit Industries showing Ashok Sirpaul and Anil Sirpaul as partners Ex.PW46/B, attested photocopies of stamp paper signed by both the partners of M/s Amrit Industries for opening of the above current account in the name of M/s Amrit Industries Ex.PW46/C, issuance of cheque book on 18.12.1989 to M/s Amrit Industries vide Ex.PW46/D (D
72), debit voucher Ex.PW46/E(D73) through which cheque no. 611906 was returned on 26/07/1990 and the cheque returning memo Ex.PW46/F (D74) through which cheque no.611907 was returned on 04.08.1990.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 40 of 207 CBI v. S P Manickam & ors 41 23.47 PW 47 R S Thorat, was the Administrative Officer, Municipal Corporation of Mumbai. He stated that building No.57 at Sardar Vallabhbhai Patel Road (SVP Road), Dongri, Bombay400009 belongs to Mumbai Municipal Corporation. It has been let out to 41 tenants including 14 commercial organizations at ground floor and 27 residential tenants on the first floor. He stated that as per the office record, Gulab Rai Kanji Thakkar was tenant in room no.4 of the building from 01.01.1956 to 19.03.2001 and no room/premises/office/portion/room no.4 of building no.57 was let out to any firm by the name of M/s Venus Metal Corporation. 23.48 PW48 Rajavadivelu, was Assistant General Manager in Indian Bank, Madras during the period from 1988 to 1991. He explained the procedure for sanctioning the loan by the head office. He proved the credit proposal No. GAPL/1/89 of Indian Bank, R P Bagh branch forwarded to Zonal Office regarding M/s Globarc & Alloys Pvt. Ltd Ex. PW 48/A bearing the signatures of accused S. P. Manickam. He stated that it is not mentioned that the account with SBI, Paharganj has been closed subsequently. He also proved the sanction ticket bearing No. 46/89 dated 23.10.89 in favour of M/s Globarc & Alloys Pvt. Ltd allowed by the Zonal Manager. He stated that Ex. PW 1/1, photocopy of equitable mortgage register of Indian Bank does not bear his handwriting or signature. He stated that certified copy of transfer deed is not permissible for the purpose of mortgage as per bank norms and only original title deed is to be filed. He stated that the mortgage by deposit of title deed is governed by law where the requirement is the deposit of RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 41 of 207 CBI v. S P Manickam & ors 42 original title deeds to avoid any misuse or double mortgage, etc. He stated that in case of clearing of goods, charge of clearance is entrusted to the approved clearing agent and charge is also made by the bank. He stated that if the limit is sanctioned by an authority,it can be enhanced by the sanctioning authority or above. Before enhancement of limit, usually the bank insists for regularization of the account.
23.49 PW49 Ram Narain Jha was telephone attendant in M/s Globarc & Alloys Pvt Ltd in 19891990. His duty was to look after the work on the directions of his superiors. He denied that on the instructions of the company, he had gone to BHEL, Haridwar to inform that goods have been wrongly booked which need not be retired.
23.50 PW50 S P Sarkar was posted as Chief Manager, State Bank of India, India Exchange Place, Extension branch, Kolkata in 1994. He handed over records/documents Ex. PW 8/1 to Ex. PW 8/3(D 160 to D162) and letter dated 16.06.1990 of Indian Bank, R P Bagh branch, Delhi forwarding OBC No. 644 to SBI, Extension branch, Kolkata Ex. PW 50/B (D159) to CBI vide memo Ex. PW 50/A. 23.51 PW51 R K Roy was posted in Punjab National Bank, Kolkata as Senior Branch Manager. He proved letter dated 20.07.1990 (D
148) Ex. PW 51/A vide which he had intimated the Indian Bank, Rana Pratap Bagh branch regarding return of two bills BP No. 477 and 478 for Rs.5,28,320 and Rs.3,30,200/ and OBC No. 462 and 643 for Rs.3,96,240/ each received from Indian Bank, R P Bagh RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 42 of 207 CBI v. S P Manickam & ors 43 branch for collection drawn on Industrial Alloys Calcutta by M/s Globarc & Alloys Pvt. Ltd. He stated that the bills could not be collected due to refusal by M/s Industrial Alloys on the ground that no order was placed to the company. He proved the letter of M/s Industrial Alloys in respect of refusal of two bills is Ex. PW 51/C (D146). He stated that all the aforesaid four bills were returned vide covering schedule dated 20.07.1990 Ex. PW 51/E (D148). He also proved the covering letter of Indian Bank, R P Bagh Branch which was returned by them to the bank. He proved the letter dated 14.06.1990 Ex. PW 51/G(D144) regarding receipt of DBP No. 477 and 478 from Indian Bank. He identified his initials on Ex. PW 51/A and Ex. PW 51/D. 23.52 PW52 Laxman Mahipal was one of the owner of firm M/s Industrial Mineral & Metals. He stated that he alongwith his mother and two brothers had started the firm. After 1989, there was no transaction in the said firm as he opened his company M/s Kalinga Alloys Pvt. Ltd. His brother Krishan Lal Mahipal knew Ashok Sirpaul. He had met Ashok Sirpaul once or twice. He stated that M/s Industrial Minerals & Metals had no business dealings with the accused Ashok Sirpaul. He does not remember exactly if Ashok Sirpaul had one or two dealings with the firm. He identified the signatures of his brother Krishan Lal Mahipal on the letter dated 16.07.1990 issued by Industrial Alloys Ex. PW 51/C. He stated that in 1990, Central Bank of India had informed them that M/s Globarc & Alloys Pvt. Ltd had sent some bills for collection on the ground that the same were drawn on them on RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 43 of 207 CBI v. S P Manickam & ors 44 account of orders placed by M/s Industrial Minerals & Metals. He stated that they had informed the bank that they had not placed any order on M/s Globarc & Alloys Pvt. Ltd and they refused to clear the bills.
23.53 PW53 Santokh Singh, GEQD, Shimla on receipt of letter dated 19.05.1994 of SP,CBI Ex. PW 53/A (D188) with annexures containing specimen signatures writing and questioned documents, after carefully examining and comparing the questioned writings/signatures with the relevant specimen writings/signatures, gave report Ex. PW 53/B (D189). He stated that before giving report Ex. PW 53/B, he had examined the documents mark P2, Ex. PW 2/1, Ex. PW 5/1 and Ex. PW 5/2, Ex. PW 11/A to Ex. PW 11/C, Ex. PW 11/E to Ex. PW 11/G, Ex. PW 14/1, Ex. PW 14/2, Ex. PW 15/1 to Ex. PW 15/8, Ex. PW 13/2 to Ex. PW 13/7, Ex. PW 15/11 to Ex. PW 15/11 to Ex PW 15/33, Ex. PW 18/B, Ex. PW 23/A1, Ex. PW 23/B1, Ex. PW 25/A1 to A10, Ex. PW 25/B1 to B5, Ex. PW 28/A, Ex. PW 30/A and Ex. PW 53/D1 to Ex. PW 53/D22.
23.54 PW54 Hukum Chand was General Assistant in M/s Amrit Refractories during the period from 1984 to 1992. He stated that in 1986, he was transferred to M/s Globarc & Alloys Pvt Ltd. Anil Sirpaul, Amrit Lal Sirpaul and Ashok Sirpaul were the directors of the firm.
He stated that when he was in the service, Anil Sirpaul asked him to open an account in his own name which he refused. Anil Sirpaul then asked him to open an account in a fictitious name RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 44 of 207 CBI v. S P Manickam & ors 45 which he also refused. He was then threatened by Anil Sirpaul that if he would refuse to open the account, he would lose his job. When he was pressurized, he opened an account in State Bank of Patiala, Gurgaon in the name of M/s. K.B. Chemicals where he represented himself as Babu Lal, proprietor of M/s. K.B. Chemicals. At the time of opening the account, he had signed as Babu Lal, proprietor of M/s. K.B. Chemicals. He identified his signatures on the account opening form Ex. PW35/B D246(2) and specimen signature card Ex. PW 35/C D246(3) at point C. He identified the signatures of Ashok Sirpaul at Point A on the cheque deposit slips of Indian Bank, R P Bagh branch Ex. PW 54/A and Ex. PW 54/B through which cheques bearing no. 699344 and 6993509 of Rs. 72,000/ and Rs. 53,431.50 drawn on State Bank of Patiala, Gurgaon, Haryana were deposited. He stated that he was issued two cheque books which were taken by Ashok Sirpaul and Anil Sirpaul after obtaining his signatures in the name of Babu Lal and the cheques books were never returned to him. Later on, he came to know of fraud. He stated that on being asked by CBI, he disclosed all the facts to the IO. He was produced before the Magistrate in Karkardooma Courts, New Delhi where he had given his statement. He was granted pardon by the Magistrate vide his application. He identified the signatures of accused Ashok Sirpaul on the documents Ex. PW 36/A1, Ex. PW 2/1, Ex. PW 53/D2 to Ex. PW 53/D9.
23.55 PW55 Addl. SP, S Dagar was the investigating officer of the case. He deposed on the lines of the investigation and proved the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 45 of 207 CBI v. S P Manickam & ors 46 documents seized from the banks and the parties during the investigation. He seized the documents from the office of Sub Registrar, Gurgaon vide memo Ex. PW 44/A dated 13.02.1992 (D
197). He seized the equitable mortgage register of Syndicate Bank, Asaf Ali Road Branch for the year 19841985 vide memo Ex. PW 55/2. He seized the documents from Indian Bank Regional Office including memorandum and articles of association of M/s Globarc & Alloys Pvt Ltd. He also seized documents from State Bank of India, Paharganj Branch vide memo Ex. PW 22/A dated 23.04.1991 (D201) and documents from the office of Registrar of Companies vide memo Ex. PW 55/5.
He seized the photocopy of account opening form of K B Chemical Industries, Gurgaon Ex. PW 35/B in the name of Babu Lal and photocopy of the specimen signature card Ex. PW 35/C (D246,3).
He stated that during investigation, he visited LPO Bareilly and obtained sample of the material sent by M/s Globarc & Alloys Pvt. Ltd vide request dated 07.05.1994 Ex. PW 55/29 (D190) after seeking permission Ex. PW 33/B(D190) in the presence of S P Singh Chief Goods Superintendent and Sh. R K Saxena, Head Goods Clerk, LPO Bareilly. He also obtained samples of the materials pledged with Indian Bank, R P Bagh Branch by M/s Globarc & Alloys Pvt Ltd kept under lock and key in the factory premises at 3, IDC, Mehrauli Road, Gurgaon. He stated that at that time, L Paneerselvam, Assistant Manager and Arjun Kumar from Indian Bank, R P Bagh Branch had accompanied him and Anil RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 46 of 207 CBI v. S P Manickam & ors 47 Sirpaul was also present and Anil Sirpaul had arranged the keys of the godown. He stated that Anil Sirpaul had opened the godown and thereafter, five samples of material kept in two different godowns were drawn and sealed and seized vide memo Ex. PW 45/A. On 09.06.1994, he obtained the sample of the materials which were booked by M/s Globarc & Alloys Pvt Ltd to Cuttack, Bombay and Calcutta which the bank officials had brought back as the same were not claimed by the consignees. He stated that the said material was in the joint custody of the bank and M/s Globarc & Alloys Pvt Ltd and both the parties were having the keys of the godown. He stated that the godown was opened in the presence of Anil Sirpaul, his employee and two bank officials. Water in the godown was taken out and thereafter samples were taken vide memo Ex. PW 42/D (D192). He stated that he sent the samples to National Test House, Ghaziabad for examination and collected reports Ex. PW 42/A, Ex. PW 42/B and Ex. PW 24/A. He stated that during investigation, he obtained specimen signature/handwriting of Ashok Sirpaul S1 to S21 Ex. PW 23/A1 On 17.05.1994, he obtained the specimen signatures of Amrit Lal Sirpaul S75 to S87 Ex. PW 53/D1. He also obtained the specimen signatures/handwriting of Anil Sirpaul Ex. PW 23/B1 and S22 to S42 and S63 to S74 Ex. PW55/31 collectively. He obtained the specimen signatures of accused S P Manickam S43 to S52 Ex. PW 25/A1 to Ex. PW 25/A10 and of T Valliappan S53 to S57 Ex. PW 25/B1 to B5. He stated that the specimen signatures so obtained were sent alongwith the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 47 of 207 CBI v. S P Manickam & ors 48 questioned documents to GEQD, Shimla vide letter no. 1218 dated 19.05.1994 Ex. PW 53/A and he obtained opinion/report of GEQD, Shimla Ex. PW 53/B. He stated that during investigation, it was found that account of M/S K.B Chemicals was opened by Hukam Chand, employee of Ashok Sirpaul, in the name of Babu Lal. Hukam Chand had confessed in the court of Sh. G.P Mittal, the then MM, Karkardooma Courts on 09.12.94 and subsequently vide order dated 22.12.1994 of the court, he was granted pardon and was made approver. He stated that during trial, it was found that the original proceedings/statement of Hukam Chand were missing which could not be traced despite efforts. Even the carbon copy of the statement/proceedings could not be traced due to the accident of Holding IO Roby Jawahar and therefore, the same could not be produced before the court for reconstruction of record as secondary evidence. He stated that during investigation, he also recorded the statement of witnesses.
23.56 PW56 B K Pradhan was Inspector, CBI. He stated that after the investigation, sanction for prosecution in respect of four bank officials was requested by CBI from the competent authority but it was declined. The chargesheet was then filed in the court of Ld. MM, Karkardooma Court keeping the names of four bank officials in Column No. 2. He stated that in 2002, sanction for prosecution against accused S P Manickam was received. He filed the supplementary chargesheet in the Court of Special Judge, CBI, Patiala House Courts.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 48 of 207 CBI v. S P Manickam & ors 49 23.57 PW57 B. N. Natrajan was Zonal Manager in Indian Bank. He stated that as Zonal Manager, his duties were to look after the development of business (i.e procuring deposits and loans), and to oversee the loan transactions of the branches of the bank. He also dealt with the matters pertaining to loans as sanctioning authority. He stated that S.P Manickam was posted as Chief Manager in Rana Pratap Bagh Branch, Delhi. He explained the system of sanction of loan. He stated that in this case, the proposal of sanction of loan was sent by S.P Manickam to the Zonal office. The same was processed for consideration by Deputy Chief Officer and the Chief officer and it was put up before the Zonal Manager for sanction of loan. So far as he remembers, there were recommendations from the branch through accused S.P Manickam as well as from the officer of Zonal office for sanction of loan. He stated that on receiving the proposals /recommendations, he being Zonal officer went through the material placed before him. He stated that the office note for sanction of loan was approved by him but the sanction ticket was signed by R. Subramaniam, Chief Officer, Zonal office. He stated that no deviations were informed by the Branch in respect of sanctioned loan of M/S Globarc & Alloys Pvt Ltd. He proved credit report of the borrower M/S Globarc & Alloys Pvt Ltd. Ex. PW 1/20(D225) prepared by the branch and sent to the Zonal office bearing the signatures of accused S.P Manickam, the then Chief Manager.
24. This court also examined Madan Singh Mehra, Ahlmad in the court of Special Judge, CBI, Karkardooma Courts as CW1.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 49 of 207 CBI v. S P Manickam & ors 50 He brought the judicial record of the case bearing No. RC6(S)/91 SIU(X) CBI, Delhi titled CBI v. Amrit Lal & ors and proved the copy of cheque book return register of State Bank of Patiala, Gurgaon Ex. CW 1/A. STATEMENT OF ACCUSED
25. Accused persons were examined u/s 313 CrPC wherein they denied all the incriminating evidence against them and pleaded their innocence.
26. Accused S. P. Manickam (A1) admitted that PW1 Arjun Kumar was posted as Assistant Manager in Indian Bank, Rana Pratap Bagh branch in the year 1989, but stated that N. Ravi Kumar, being Assistant Manager, was alloted loan Section. He stated that after processing and sanctioning of loan, loan officer writes the equitable mortgage register and signs it. The Branch Manager is not required to counter sign it. The manual of instructions Ex.PW48/X1 states that entries should be made in the register duly signed by the Officer in whose presence, the deposit of title deed is made. He stated that PW1 himself had made the entries in the equitable mortgage register and he never dictated the equitable mortgage details to PW1. He stated that PW4 has deposed falsely to this effect. He stated that he remained posted in the branch from 23.03.1988 to 22.04.1990. He stated that the bill purchase register Ex.PW1/9 was maintained by the officer of the bills department in the ordinary course of business. In case, a party is sanctioned with a limit for purchase of bills, the bills are RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 50 of 207 CBI v. S P Manickam & ors 51 purchased by the concerned officer as per sanction and Ex.PW1/9 was maintained by the concerned officer. The concerned officer of the Bills Department is responsible to follow up and obtain payment from the drawee.
He stated that the cheque of Rs.53,431.50 would have been purchased in the usual course of business by the concerned officer and Ex.PW1/9 does not bear his signature. Similar reply was given by the accused for the bills purchased vide Ex.PW1/10. He admitted the sanction orders and stated that outward bill collection registers Ex.PW1/5 and Ex.PW1/6 were maintained in the bank in the course of business by the department. It is usual practice in the bank that when a party has been sanctioned with a bill purchase limit and on a particular day when the party comes for discounting of further bills and if the sanctioned limit is not available, the branch normally sends the bill for collection to avoid delay. Whenever the limit becomes available due to retirement/payment of other bills purchased earlier, the bills which were sent on collection basis are taken in bills purchase by making relevant entries in the OBC register. He stated that A3 was sanctioned documentary bill purchase limit of Rs.20 Lacs and a sub limit for cheque purchase of Rs.3 Lacs vide sanction ticket no.46/89 dated 23.10.89 of Zonal Office. He stated that account No.OCC63 of A3 was opened on the instructions of the Zonal Office on 18.08.89 with an initial cash deposit of Rs.8,000/. The cheque book was issued on 26.08.89 and the first withdrawal was permitted only on 29.08.89 after the account was introduced. He RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 51 of 207 CBI v. S P Manickam & ors 52 admitted that PW2 had verified the signatures of the introducer of the account of A3.
He stated that he does not know about the application Ex.PW5/1 for issuance of nonencumbrance certificate and the Affidavit Ex.PW5/2 submitted by Anil Sirpaul but stated A3 had submitted non encumbrance certificate Ex.PW5/3 to the bank. He stated that the account was opened on the instructions of the Zonal Office after completion of all the formalities in the usual course of business. He admitted that the bills in favour of A3 were discounted and sent for collection to Industrial Minerals and Metals at Cuttack through Central Bank of India and he had put initials on it. He stated that except the two bills (D17 and D21), all the bills stated in question no.62 did not pertain to his tenure. He stated that whenever any bill purchased is returned unpaid, in usual course of business, the concerned department prepares the voucher debiting the party's running account (OCC in the present case) together with upto date interest and rounds off (adjusts) the bills liability in the BP register. He denied that he did not inform the higher authorities about the return of unpaid bills. He stated that he had sent letter dated 07.12.89 Ex.PW7/DA about the return of the unpaid bills to the higher authorities.
He denied about the other transactions and stated that the other transactions did not pertain to his period which was from 22.03.1988 to 22.04.1990.
He stated that opinion Ex.PW14/2 was sought by the Zonal Office from the penal lawyer directly and the opinion Ex.PW14/1 RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 52 of 207 CBI v. S P Manickam & ors 53 was the revised opinion given by the penal lawyer in response to the letter of the R P Bagh Branch asking for certain clarifications. The account of A3 was opened on the instructions of the Zonal Officer. Before opening of account in the branch, the Zonal office had forwarded the copy of the documents relating to A3 to the penal lawyer Subhash Oberoi on 16.08.89 asking for his opinion and in the letter, Zonal Office had mentioned that the bank intends to accept the title deed relating to A3 for the proposed facilities to be sanctioned. On the above letter, Subhash Oberoi sent his opinion to the Zonal Office directly which was forwarded to the branch. The party gave the original document relating to M/s Globarc & Alloys Pvt. Ltd. registered with SubRegistrar, Gurgaon Ex. PW 5/4 (D68) (alongwith two copies of documents and a paper cutting informing that those two documents are misplaced) to the concerned loan officer for creating equitable mortgage. This was referred to him by the concerned loan officer and immediately he wrote a letter to Subhash Oberoi asking for his clarification. Subhash Oberoi vide his revised opinion vide 23.10.1989 Ex.PW14/1 informed that the bank may take the original document of title deed relating to M/s Globarc & Alloys Pvt. Ltd Ex.PW5/4. Apart from this, nonencumbrance certificate, Ex.PW5/3 (D67) was taken, Director of Industries, Haryana had permitted the party M/s Globarc & Alloys Pvt. Ltd. to mortgage this property i.e. Plot NO.3D, IDC Gurgaon, with Nationalized Bank for raising loan alongwith structure thereon. In terms of the revised opinion of the penal lawyer, the requisite documents as RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 53 of 207 CBI v. S P Manickam & ors 54 stated in the revised opinion Ex.PW14/1 were taken by the concerned officer in the usual course of business.
He stated that the signatures on the exhibits/documents of Ashok Sirpaul and Anil Sirpaul appear to be correct. He stated that the approved list of clearing and forwarding agent of Indian Bank as on 15.07.88 was addressed to the Zonal Manager by the Head Office regarding deletion/suggestion of addition of approved clearing agents and the said circular was never supplied to the branches. Circular dated 28.08.91 is not of his period in the branch. He stated that Rana Pratap Bagh Branch was not authorized to deal in foreign exchange business so this circular never came in the branch and the officer acted in the usual course of business. He stated that he always followed the instructions as given by the superior authorities. He admitted that adhoc sanction limit of Rs.15 Lacs over and above the sanctioned limit was granted. As far as the chemical examination of the goods at the time of placing of the same by the party with the bank is concerned, he stated that the same was not required. As per manual of instructions, the concerned officer has to verify the apparent quality of brand name, package, price etc. as given in the invoice, submitted by the party. KCC (Key Cash Credit) is a running account wherein the goods are lodged by the concerned officer as and when the party requests and the goods are released as and when the party provides the funds in their account. He stated that the goods lodged during his tenure were replaced with some other goods of the equal value subsequently and the same RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 54 of 207 CBI v. S P Manickam & ors 55 were sent for chemical examination after his relieving from the branch, which was on 22.04.1990. He stated that normally the bills, which are returned unpaid are adjusted by the party. However, there is no rule/ practice, which prohibits the branch from discounting further bills after return of few bills. As far as the enhancement of limits is concerned, the same could even be done during the year depending on the exigencies of business. However, while recommending such enhancement, the branch was required to furnish all the relevant details of the borrower to the superior office, which was scrupulously done by him during his tenure in the branch. He stated that the signatures appearing on the documents Ex.PW23/A1 to Ex.PW23/A21 (D183) are of the accused Ashok Sirpaul. He admitted that he had given specimen signature to the IO. He also admitted that PW32 was the General Manager, Indian Bank, posted at Chennai. He stated that PW32 accorded the sanction without application of mind under the pressure of CBI. The mortgaged property was already auctioned by DRT and the liability of the India Bank was adjusted in full in 2000 itself.
He admitted that A3 was maintaining its account with State Bank of India, Paharganj and enjoying credit facilities before availing credit facilities from the Indian Bank. He stated that it is custom and practice prevailing in the banking industry to exchange credit information about the party who wishes to avail credit facilities from the other bank. In this case, he had written to State Bank of India, Paharganj Branch, asking for credit opinion RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 55 of 207 CBI v. S P Manickam & ors 56 of M/s Globarc & Alloys Pvt. Ltd. and the State Bank of India, Paharganj furnished a satisfactory report about M/s Globarc & Alloys Pvt. Ltd. and informed that the party had completely adjusted the liabilities as on date and thereafter the credit facilities for M/s Globarc & Alloys Pvt. Ltd. were recommended by Indian Bank, R P Bagh Branch to the Zonal Office. He stated that when a party which has been sanctioned the Bill Discounting Limit approaches the bank for purchase of a bill duly supported with the invoice and other necessary documents, such as railway receipt/approved lorry transport way bills etc., the concerned officer of the department after satisfying himself about the apparent quality of the material based on the invoice and price written therein, packing etc, discounts the bill and credits the proceeds to the party's account. At the time of discounting of bill, the officer only sees the apparent quality and is not expected to chemically examine the material already dispatched to the party. This procedure as contained in the manual of instructions issued by the bank is to be followed by all the branches. PW42 in his cross examination has stated that an ordinary person, who is not an expert cannot evaluate the quality of the material.
He stated that as per manual instructions Ex.PW48/X1, whenever any prospective borrower approaches the branch for availing certain credit facilities, the concerned loan officer does detailed conversation with the prospective borrower and makes extensive inquiries about the ownership, project etc. After the loan officer is satisfied about the prospective borrower, he discusses RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 56 of 207 CBI v. S P Manickam & ors 57 the matter with the Manager of the branch and subsequently the matter is also discussed with the Chief Manager of the Branch. The credit proposal and the relevant documents are prepared by the loan officer of the branch and the same are countersigned by the Manager/Chief Manager. Bank's panel lawyer gives his opinion about the documents to be obtained for creating a valid equitable mortgage as provided under the manual of instructions. In the present case, the panel lawyer Subhash Oberoi had given his opinion vide Ex.14/2 dated 22.09.1989. Incidentally, this opinion was sought by the Zonal Officer directly from panel lawyer which was in contravention of the rules contained in the manual of instructions. Subsequently, the party approached them and stated that they can submit only the original title deed in favour of M/s Globarc & Alloys Pvt. Ltd. Based on the representation of the party, the branch wrote a letter to panel lawyer and the panel lawyer vide his revised opinion dated 23.10.1989 Ex.PW14/1 stated that the original title deed in favour of M/s Globarc & Alloys Pvt. Ltd. may be taken to create a valid equitable mortgage. Accordingly, the concerned officer obtained the documents based on the revised opinion of the panel lawyer and created a valid equitable mortgage. He stated that the sanction letter contained a clause that the opinion of the Bank's panel lawyer may be obtained for the documents required for creating an equitable mortgage.
He stated that the document Ex.PW2/1 (D1) i.e. account opening form in the name of A3 bears the signature of the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 57 of 207 CBI v. S P Manickam & ors 58 accused Ashok Sirpaul (A2).
He stated that PW55 has admitted that the key of the godown from which the goods were seized was with Anil Sirpaul, who opened the godown for taking the samples This was clearly in violation of the rules and regulations of the bank as the keys of the godown, ought to have been with the bank only and therefore the entire seizure is vitiated.
As regards taking of samples of the goods kept in Rana Pratap Bagh Bank Branch godown near the bank, which were booked to Cuttak, Bombay and Calcutta, he stated that the above goods were returned from there due to non realization of the bills. The keys of the godown where such goods were kept should have been in the exclusive custody of the bank since the bank alone had the lien over the goods. In this case, the goods were in the custody of the party and the bank and the keys were held by both of them which was contrary to the rules. Moreover, lot of time elapsed from the booking of the goods and bringing back the same and the custody of goods during that period is unverifiable. Since the procedure for custody of goods, custody of keys was itself defective and irregular, the reports of the test house Ghaziabad Ex.PW24/A, Ex.PW42/A and Ex.PW42/B have no value.
He stated that he has put 41 years of service to this bank and took its salt from 1963 to 2004. During his service, except this case, nothing wrong was found out by his superiors and every time, he was given promotion from clerical cadre to officer Cadre ScaleI to ScaleIV. Moreover, prosecution sanction was delayed RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 58 of 207 CBI v. S P Manickam & ors 59 enormously and unexplained for more than eight years, which itself was an infirmity. The Zonal Office from the beginning was keen to extend facilities to M/s Globarc & Alloys Pvt. Ltd., which can be observed from the fact that the party had meetings/ discussion/ correspondence since July, 1989 before opening of the account at the branch. R P Bagh Branch is a ScaleIV branch having a business of around Rs.200 Crores. Chief Manager is responsible for the business development, public relation and solving customer grievance. The daytoday operation was handled by the ScaleIII Officer, who was next to him in the branch. The R P Bagh Branch was under concurrent audit by external auditors and daytoday transactions were verified by them every now and then. They did not find any single irregularity in this account. He was in the branch from 23.03.1988 to 22.04.1990 whereas the IO without knowing this basic information conducted the investigation and wrongly came to the conclusion that he was the Chief Manager for the whole period i.e. upto 1994. He stated that the irregularities, if any, as found out by the IO pertain to the period after his relieving from the branch.
27. Accused Ashok Sirpaul (A2) for himself and for accused M/s Globarc & Alloys Pvt. Ltd (A3) stated that the goods which were lying unclaimed were rebooked and brought to the bank's godown after a gap of 34 years. They were in very bad shape. The bags and drums were not sealed. Custody of the godown was not joint and it was under the lock and key of the bank only. The RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 59 of 207 CBI v. S P Manickam & ors 60 godown was full of water, due to which, the goods were completely destroyed as they got oxidized and lost their chemical properties as they contained iron, which got oxidized on contact with water and air.
A2 stated that he was just one of the several Directors of A3. The day to day affairs of A3 were managed and controlled by its Chairman cum Managing Director i.e. Amrit Lal Sirpaul.
He denied having knowledge of any documents. He also denied his signatures on the documents. He stated that the application Ex.PW5/1 and affidavit Ex.PW5/2 for issue of non encumbrance certificate were of Anil Sirpaul and not of his. To his knowledge, the property IDC, Gurgaon, which was equitably mortgaged with the bank was auctioned on 18.02.2000 during recovery proceedings and the proceeds thereof Rs.1.03 Crore were recovered by the bank against the total liability of about Rs.75 Lacs.
He stated that he had nothing to do with M/s. Globe Industries. He denied having tendered several bills for discounting. He stated that his duties were confined to engineering job, fabrication of plant and machinery as well as erection of different factory sheds only.
He denied having sent PW9 Ram Singh to Calcutta to assist the Bank Official in getting the goods from railway and keeping them in the godown to get the goods rebooked. He stated that PW9 might have been sent by Amrit Lal Sirpaul. He stated that all the documents including Ex.PW13/10 (D64) were RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 60 of 207 CBI v. S P Manickam & ors 61 signed by other Directors of the company (question no.102).
He admitted that PW15 Hazari Singh was working as Clerk in M/s Global Linkers which was a partnership firm distinct from M/s Globarc & Alloys Pvt. Ltd. He stated that PW15 was handling clerical matters in M/s Global Linkers and did not have access to any document of either M/s Global Linkers or any other company. He had no occasion to see the writings and signatures of the partners therein. He did not have access to the documents (Ex.PW2/1, Ex.PW15/1 to Ex.PW15/35).
He stated that he is not aware of internal functioning of the bank. He is not aware when and by whom, the title deeds were deposited with the Syndicate Bank as equitable mortgage. To his knowledge, the said mortgage against the small amount was released by repaying the amount to the Syndicate Bank and therefore this very property was later on auctioned by the Indian Bank. He placed on record the certified copy of the recovery proceedings before the DRTIII, Delhi in recovery case no.55/1998.
As to the test report showing the description of sample report as Ferro Nickel in which Nickel content is shown as Nil, he stated that he is not aware. He stated that perusal of the documents shows that there was considerable amount of 'vanadium' content in the sample 'Ferro vanadium' and there was presence of 'Nickel' content in the sample 'Nickel boring scrap'. There was considerable content of 'Manganese' in the sample 'Ferro Manganese Lumps'. He stated that document D69 (goods sold by RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 61 of 207 CBI v. S P Manickam & ors 62 M/s. Global Linkers for Silicon alloy lumps for Rs.24,10,770/) does not bear his signature but he stated that there was genuine sale between the two different legal entities (question no.128 to
130).
He stated that specimen signatures or handwriting of Anil Sirpaul were not taken in his presence. The documents D62 marked G3 Ex.PW26/C (D63), and Ex.PW26/D (D64) etc. revealed that they were signed by the different Directors of A3 (question no.147). He stated that sale to BHEL by A3 was genuine.
He denied that he was the authorized signatory in the account opening form of A3. He denied having signed the documents Ex.PW36/A (D237) and account opening form Ex.PW36/A01 (D238) dated 31.10.1988 qua the account with State Bank of India, Paharganj Branch. He stated that the documents Ex.PW15/28 (D46), Ex.PW13/3 (D47), Ex.PW26/A8 (D58) and Ex.PW13/8 (D59) show different signatures of Directors of M/s Globarc & Alloys Pvt. Ltd. He stated that the document Ex.PW26/A2 (D35) appears to be a genuine documents (question 170).
He stated that he does not know about the test reports Ex.PW24/A (D193), Ex.PW42/A (D194) and Ex.PW42/B (D
195) but stated that the samples were lifted from the torn bags and unsealed drums which were lying scattered in the bank's godown which was full of water. The goods were submerged in the rain water and were completely destroyed having lost their chemical RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 62 of 207 CBI v. S P Manickam & ors 63 properties. He also stated that the samples were not lifted in his presence.
He stated that a bare perusal of the Transfer Deed shows that there was interse transfer between Mr. Anil Sirpaul and Mr. Amrit Lal Sirpaul as representatives of M/s. Amrit Refractories Pvt. Ltd. and M/s Globarc & Alloys Pvt. Ltd. respectively. He was neither privy to any such document nor he is aware of the same. He denied that keys of the godown no.6, 7 and 8 were with Anil Sirpaul. He stated that keys were exclusively with the bank in K.C.C. i.e. Key Cash Credit and the pledged goods remained under the lock and key of Bank only. He stated that the business dealings with M/s Globarc & Alloys Pvt. Ltd. was through the CMD Amrit Lal Sirpaul.
He stated that PW54 Hukam Chand was one of the accused in this case. He was illegally made as witness by the prosecution without any legal document on record of tendering pardon to him. There are no original proceedings and statement under Section 164 Cr.P.C. of Hukam Chand on court record nor the prosecution produced any copy of the same as secondary evidence. The testimony of PW54 is illegal and it vitiates the trial. He stated that he (A2) has nothing to do with M/s K. B. Chemicals.
He stated that the original Transfer Deed Ex.PW55/7 (D
228) dated 25.02.1981 between Smt. Kanta Luthra and Sh. Amrit Lal Sirpaul in respect of factory site as explained in the schedule which is part of the Transfer Deed i.e. 3, IDC, Mehrauli Road, RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 63 of 207 CBI v. S P Manickam & ors 64 Gurgaon was the very property which was kept as equitable mortgage with the Indian Bank, which was later on auctioned on 18.02.2000.
He while answering the question no.253 and 255 stated that he was the only surviving Directors amongst the several Directors in M/s Globarc & Alloys Pvt. Ltd. His duties were confined only to engineering job and fabrication of plant and machinery as well as of erection of different factory sheds. He is being treated as a representative of the company. He was not the Incharge of the day to day affairs of M/s Globarc & Alloys Pvt. Ltd. and all its banking and business transactions were managed and controlled by its CMD Amrit Lal Sirpaul. He is absolutely innocent and not aware of any alleged cheating in the banking or business transactions of the company. In fact, the alleged loss to Indian Bank, Rana Pratap Bagh Branch was approximately Rs.75.50 Lacs and the bank has recovered much more through public auction dated 18.02.2000 of the company's property bearing no.3, IDC, Mehrauli Road, Gurgaon, which was kept as equitable mortgage with the Indian Bank.
DEFENCE EVIDENCE
28. Accused No. 1 S P Manickam adduced evidence in his defence.
He examined as many as five witnesses.
29. DW1 A R Ravichandran was Chief Manager, Indian Bank, Corporate Office, Chennai, He identified the specimen signatures RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 64 of 207 CBI v. S P Manickam & ors 65 of N Sundaresan in the specimen signature booklet Ex.DW1/1 which according to him has been circulated in the branches for verification of signatures. He also identified the signatures of S Gopalakrishnan, Assistant General Manager (HRM) on the letter Ex. DW2/2 dated 24.11.2017 addressed to Assistant General Manager, Indian Bank, Zonal office, New Delhi.
30. DW2 Panthena Venkata Subbarrao was the Assistant General Manager, Indian Bank, Zonal Office. He could not produce the record/attendance register of the tenure of accused S P Manickam with Indian Bank, Rana Pratap Bagh branch. He stated that as per the policy Ex. DW 2/3, the records are preserved with the bank in accordance with the documents handling and retention policy upto a maximum period of ten years. He stated that HRM department does not have any data whether Rana Pratap Bagh branch in the years 1988, 1989 and 1990 was not authorized to deal in foreign exchange. He proved his affidavit Ex. DW 2/5.
31. DW3 Rajiv Sharma, Junior Secretary Assistant DRAT brought the file bearing the Case No. 25/2016 of DRTIII. He proved the photocopy of Certificate of Sale dated 24.03.2000 mark DW 3/1 of Immovable Property Form No. ITCP20 in respect of property bearing No. 3, IDC, Mehrauli Road, Gurgaon, Haryana, certified by DRTIII Delhi, copy of the photocopy of Order of Confirmation of Sale of Immovable Property Form No. ITCP 18 dated 24.03.2000 in respect of the abovesaid property mark DW 3/2 and copy of photocopy of Sale Deed dated 25.07.2003 executed by the office of Recovery OfficerI, DRTIII, New Delhi RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 65 of 207 CBI v. S P Manickam & ors 66 in favour of M/s B S V Enterprises, a partnership firm having its office at 5236, Sadar Thana Road, Delhi6, in respect of the abovesaid property mark DW 3/3.
32. DW4 R K Saini was the Senior Technical Assistant in Registrar of Companies. He proved the report of the Assistant Registrar of Companies, NCT of Delhi and Haryana bearing the signature of the Assistant Registrar of Companies Dr Afsar Ali at point A Ex. DW 4/A. He stated that on the directions of this court, he went to the CBI office to find out if the record as called for was given to CBI or not. He stated that the CBI vide letter dated 15.12.2017 gave in writing that the documents of ROC regarding the charge created in favour of Indian Bank and modification of charge created in favour of Indian Bank in respect of company No. 55 27078 namely M/s Globarc & Alloys Pvt. Ltd were not provided to them. He stated that the Record Keeper posted at Manesar office had intimated the office that as per the Movement Register, the file was sent to CBI but the details of the address where the file was sent is not recorded in the Movement Register. He proved the report Ex. DW 4/D. He stated that diligent search was made by this office to search the records but it is not available.
33. DW5 K Amrithalingam was posted as an officer in Rana Pratap Bagh Branch from July 1987 to June, 1990. He stated that when he joined the branch, Mr. Shankar Narain was the Senior Manager. Subsequently, accused S.P. Manickam joined the Branch in March, 1988 as Manager, Incharge of the Branch till April, 1990. He proved the statement Ex. DW 5/A showing the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 66 of 207 CBI v. S P Manickam & ors 67 details of bills purchased during the period from 11.10.1989 to 18.02.1992 in respect of M/s Globarc & Alloys Pvt. Ltd bearing the signatures of K K Batra and S.P. Manickam at Point A and B. He also proved the statement showing the details of goods pledged under KCC (Key Cash Credit) from 29.08.1989 to 17.02.1992 in respect of M/s Globarc & Alloys Pvt Ltd Ex. DW 5/B bearing the signatures of K K Batra and S P Manickam at Point A and B. He also proved the attendance register of R.P. Bagh branch Ex. DW 5/C for the period from October 1989 to November,1989 bearing his initials.
ARGUMENTS ON BEHALF OF CBI
34. Sh. Vipin Kumar, Ld PP for CBI energetically argued that Ashok Sirpaul (A2), Director of M/s Globarc & Alloys Pvt. Ltd (A3) in conspiracy with the officials of Indian Bank cheated the bank by submitting bogus bills. He got them discounted under the documentary bills purchase facility (DBP) and fraudulently withdrew the amount. S. P. Manickam (A1) opened the account of A3, allowed it to avail credit facilities without accessing the operation of accounts of A3 and recommended for additional credit facilities without adjusting within a period of 30 days from the date of pledge of goods. A3 also availed Key Cash Credit limit (KCC) by pledging the goods. Chemical analysis of goods revealed that it did not contain any nickel thereby indicating the spurious nature of material pledged with the bank.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 67 of 207 CBI v. S P Manickam & ors 68
35. Ld PP further argued that the account opening form of A3 did not have the signatures of A1 however the specimen signature cards bear his signature. Vide letter dated 29.08.1989, coaccused Anil Sirpaul (Deceased) informed A1 regarding pledge of raw materials with the bank amounting to Rs.18,08,050/ alongwith the copy of six invoices as a proof of purchase of these materials which A1 marked to the Loan Section. On verification, it was found that A3 availed the limit by submitting invoices of bogus firms or of firms which did not have any business dealings with A3. A1 immediately on the pledge of the above materials ordered for the release of the money in the account of A3. On 29.08.1989, Rs. 10 lacs were credited which were withdrawn by A3. Subsequently, Rs.3.5 lacs were credited. Ld PP submitted that A2 subsequently replaced the material and pledged the fresh material with the bank. Vide letter dated 11.10.89 addressed to the Zonal Office, A1 recommended Open Cash Credit (OCC) limit of Rs.25 lacs, KCC limit of Rs.20 lacs and Bill Purchase Limit of Rs.20 lacs in favour of A3. Vide ticket No. 46/89, the Zonal Office sanctioned the limits against the securities i.e personal guarantee of Directors of A3, equitable mortgage of the factory land and building at 3, IDC, Mehrauli Road, Gurgaon, Equitable Mortgage of godown at 226, Shakarpur and hypothecation of plants and machinery and other fixed assets of A3. A1 communicated to A2 about the terms and conditions vide letter dated 26.10.89. On verification, it was found that A3 deposited copies of the Title Deeds of the above plot alongwith a Non RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 68 of 207 CBI v. S P Manickam & ors 69 encumbrance Certificate issued by the SubRegistrar Gurgaon which certificate the coaccused Anil Sirpaul obtained on the basis of an affidavit falsely declaring that the plot is free from all encumbrances though the property was already mortgaged with Syndicate Bank by M/s Amrit Industries in which firm Amrit Lal Sirpaul, Ashok Sirpaul (A2) and Anil Sirpaul were the directors. They had also signed the Equitable Mortgage Register maintained with the Syndicate Bank. A1 after taking the copies of the original Title Deeds, got them entered in the Equitable Mortgage Register of the Indian Bank as originals. He did not inform the Zonal Office about not taking the original Title Deeds of the property inspite of legal opinion.
36. Ld PP further contended that vide letter dated 29.11.89, A3 requested the bank for grant of credit facilities on temporary basis for Rs.15.60 lacs for import of Ferro Nickel. A1 recommended the sanction as an Adhoc KCC to the Zonal Office. The Zonal Office sanctioned it vide ticket No. 61/89 on 08.12.1989. The limit was to be adjusted within 30 days. Ld PP stated that the material imported by the party was pledged and Rs.15 lacs were released to A3. A1 instead of getting the material cleared from the bank's clearing agent at Bombay, got it cleared through the agent of A3. The material on chemical analysis was found sub standard. A3 then replaced the material with Silicon Alloys Lumps for which invoice dated 15.09.90 of M/s Global Linkers in favour of A3 for about Rs.27,40,037.00 alongwith the copy of forged and bogus invoice dated 29.08.1990 of M/s Vikram RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 69 of 207 CBI v. S P Manickam & ors 70 International, Calcutta was submitted. It was found that M/s Vikram International never supplied any material to Global Linkers, the sister concern of A3. Even the next Branch Manager C. Ravinder Babu despite knowing that the earlier goods were substandard failed to ensure the pledge of proper goods.
37. Ld PP further contended that A1 while forwarding the credit proposals of A3 to the Zonal Office on 11.10.89, wrongly mentioned in the report that account of A3 with the State Bank of India, Paharganj branch had been closed subsequently though the account was not closed. A1 did not ensure the closure of account of A3 with State Bank of India, Paharganj branch before disbursal of the credit limits.
38. Ld PP argued that under Documentary Bill Purchase facility, A3 submitted the bills for discounting in the bank under the signatures of A2. The bills were sent for collection after entering into the OBC register after crediting the amount into the account of A3. However, the bills remained unpaid as the payment against the bills were not made by the parties. Two cheques drawn on ANZ Grindlays Bank, New Delhi issued to the account of Amrit Industries bearing the signatures of A2 and Anil Sirpaul were also returned unpaid. Anil Sirpaul got opened an account in the name of M/s K B Chemicals Industries through his employee Hukum Chand @ Babu Lal and A2 availed the cheque discounting facilities.
39. Ld PP submitted that K K Batra, the next Chief Manager of the bank vide letters dated 26.4.90 and 28.04.90 wrote to A3 refusing RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 70 of 207 CBI v. S P Manickam & ors 71 to further discount the bills even when the DBP limit was not fully utilized. He also sent its copy to the Zonal Manager and AGM, Delhi Region. A2 then wrote a letter dated 30.04.1990 to the Zonal Manager stating that K K Batra refused to discount further bills even when the limit of Rs.15 lacs was lying vacant. On 02.05.,1990, the AGM T. Valliappan called a meeting with K K Batra, Ashok Sirpual (A2) and R. Gopalan where adverse features of the account and outstanding bills position were brought to his notice but despite that he directed the branch to further purchase the bills of A3. The bills were purchased. They were sent for collection of payment to the concerned banks but the same were returned unpaid as the party refused to retire the bills stating that no order was placed on A3. C. Ravinder Babu also purchased four bills on 21.06.1990 of M/s Venus Metal Corporation, Bombay. He informed the Zonal Manager B Natrajan and asked for the confirmation but despite adverse features in DBP and KCC account of A3, B Natrajan allowed further purchase of bills in the account through C. Ravinder Babu.
40. Ld PP submitted that the specimen signatures of the parties were taken and sent for opinion. The opinion given by GEQD, Shimla prove the signatures/writings of A2, coaccused Anil Sirpaul, Amrit Lal Sirpaul, A1 and T. Valliappan on the documents. The samples were also sent to the National Test House for chemical analysis and the reports show that the materials were sub standard.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 71 of 207 CBI v. S P Manickam & ors 72
41. Ld PP discussed the evidence of the witnesses at length and submitted that A1 by corrupt/illegal means abused his official position as public servant, in criminal conspiracy with A2, A3 and others unauthorisedly allowed to open the account on 12.08.89. He knowingly accepted the forged and bogus bills purported to be the valuable security of nonexisting firms. He dishonestly accepted the title deeds alongwith the Non Encumbrance Certificate of the plot at Mehrauli road, Gurgaon which had already been mortgaged with Syndicate Bank by Amrit Lal, A2, Anil Sirpaul on behalf of M/s Amrit Refractories (P) Ltd.. He after taking the copies of the original title deeds, got them entered in the equitable mortgage register of the bank as originals and deliberately did not inform the zonal office about not taking the originals inspite of legal opinion available. He while recommending the credit proposal to the zonal office, wrongly mentioned that the account of A3 with the State Bank of India had been closed though not closed. He granted credit facility under KCC limit of Rs.15 lacs without following the terms and conditions. He also recommended enhancement of documentary bill purchase limits of A3 on 16.01.90 from Rs.20 lacs to Rs.30 lacs without informing the zonal office regarding the two bills having been returned unpaid. He instead of getting the material cleared from the bank's clearing agent got it cleared through the agent of A3 not approved by the bank.
42. Qua the accused Ashok Sirpaul (A2) and M/s Globarc & Alloys Pvt. Ltd (A3), Ld PP contended that A2, in conspiracy with RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 72 of 207 CBI v. S P Manickam & ors 73 others being the director of A3, cheated the bank by fraudulently and dishonestly inducing the bank to deliver Rs.49,99,459.00 under discounted bills/cheques facilities by submitting forged invoices of bogus firms and the firms which had no business with A3. He availed the Key Cash Credit limit of Rs.13.50 lacs and adhoc KCC limit of Rs.15.0 lacs from the bank by pledging spurious goods thereby caused a wrongful loss of Rs.75.49,459.00 to the bank and corresponding wrongful gain to himself (A2) and A3.
43. Ld PP submitted that the prosecution has successfully proved its case beyond reasonable doubt and the accused persons are liable to be convicted.
44. In support of his contentions, Ld PP placed reliance on the case of Inspector of Police, CBI v. B Rajagopal & ors (2002) 9 SCC 533 and CBI v. Hari Shankar Raka & Ors decided by the Supreme Court in Crl. Appeal No. 1289 of 2017 dated 18.07.2017 to contend that it is not necessary for the prosecution to prove that the accused or the bank official/A1 got some pecuniary benefit from the said transactions. Even giving pecuniary benefits to the other party abusing his official position would amount to criminal misconduct. Ld PP submitted that although the amount was subsequently realized by the auction of the property pledged with the bank but the very act committed by the accused persons cannot be compounded as the accused A2 and A3 obtained the pecuniary benefits by producing the forged documents which is to be viewed seriously.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 73 of 207 CBI v. S P Manickam & ors 74 ARGUMENTS ON BEHALF OF S. P. MANICKAM (A1)
45. Sh. O. P. Gulabani, Ld counsel for A1, per contra, argued that the tenure of A1 as Chief Manager at the Rana Pratap Bagh branch was from 23.03.1988 to 22.04.1990. The branch was having a total business of about 200 crores. There were one Senior Manager and nine officers (Assistant Managers) apart from 25 clerks as per Ex DW5/C. It was impossible for one Chief Manager to oversee the entire operation of the branch. The duties were delegated to the officials as per the prescribed procedure.
46. Ld counsel submitted that the account was sponsored by the zonal office to the branch. Prior to the opening of the account at the branch on 18.08.89, A2 was in regular contact with the zonal office. Ld counsel referred the letter dated 07.08.89 addressed to the Branch which had the reference of the meeting of the Chief Officer, Zonal Office Mr. Subramaniam. He also referred the letters dated 03.08.89, May 1989, 19.07.89, 01.08.89 and 03.08.89 from A3 to the zonal office Ex. PW20/F4 (D225). Ld counsel submitted that normally the parties hand over the title deeds of the properties to be mortgaged to the branch which in turn sends to the panel lawyer for opinion whereas in this case the zonal office vide letter dated 16.08.89 Ex. PW20/F1 (Page 55 of D224) i.e prior to opening of the account at the branch, sent the copy of the documents to the panel lawyer Subhash Oberoi for opinion and asked him to forward the opinion alongwith his bill to the branch under copy to the zonal office. Ld counsel referred the Manual of Instructions Ex. PW 48/X1 in this regard. Ld counsel stated that RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 74 of 207 CBI v. S P Manickam & ors 75 in May/June, 1989, the party submitted various papers in the zonal office and had discussions with the Chief Officer and the Zonal Officer as evident from the record available in D225. The account was opened with the cash deposit of Rs.8,000/ on 18.08.89 with the authorization of A1 however the credit of loan amount by way of KCC and withdrawal of the amount was allowed only on 29.08.89. Statement of OCC account Ex. PW 2/2 shows that after the proper introduction from one of the customer of Indian Bank, Karol Bagh branch Ex. PW 2/1 on 26.08.89, the cheque book was issued on 26.08.89. Ld counsel referred the testimony of PW29 who has stated that he had introduced the account of A3 on the recommendation of R. Subramaniam. Ld counsel referred the Manual of Instructions Ex. PW 57/X1 to submit that introduction is not necessary for opening of the account of a limited company.
Ld counsel stated that the condition of equitable mortgage was stipulated in the zonal office sanction ticket dated 23.10.89. The equitable mortgage was created by PW1 and PW7. Ld counsel stated that the party had submitted the copies of the documents dated 25.02.81 (D228 i.e transfer deed between Smt. Kanta Luthra and Amril Lal Sirpaul),( D229 dated 15.03.84 i.e transfer deed between Amrit Lal Sirpaul and M/s Amrit Refractories Pvt Ltd alongwith a paper cutting about the loss of documents), (D68 Ex. PW 5/4 i.e original transfer deed dated 20.01.89 between M/s Amrit Refractories Pvt. Ltd and M/s Globarc & Alloys Pvt. Ltd). Ld counsel stated that as the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 75 of 207 CBI v. S P Manickam & ors 76 document D228 and D229 were the copies of the documents, A 1 had written a letter to Subhash Oberoi/PW14 asking for his opinion which was replied by PW14 vide his revised opinion Ex. PW 14/1 dated 23.10.89 stating that original title deed in favour of M/s Globarc & Alloys Pvt. Ltd may be obtained. Accordingly, the above documents were obtained and equitable mortgage was created by PW1 and PW7. Apart from the documents, non encumbrance certificate issued by the SubRegistrar Gurgaon dated 17.05.1989 Ex. PW 5/3 in respect of the aforesaid property was obtained. GM DIC Gurgaon vide his letter dated 08.11.89 to A3 which has reference of the letter dated 16.10.89 stated inter alia that the Director of Industries, Haryana has accorded permission in favour of A3 to mortgage the aforesaid plot alongwith the structure to a nationalized bank for raising loans. Another panel lawyer V K Nanda vide his letter dated 31.10.90 informed that his enquiries and search of the records of Sub Registrar and DIC office Gurgaon revealed that the documents of transfer deed dated 20.01.89 in favour of A3 and the permission letter dated 08.11.89 issued by the GM DIC Gurgaon are genuine and original. V K Nanda in his letter dated 06.09.90 (D225 Page
476) has also stated that the equitable mortgage as such created is valid, legal, binding and enforceable. Ld counsel stated that the entry in the equitable mortgage register was filled by PW1 and signed by PW7. It does not bear the signatures or initials of A1. Ld counsel referred the advanced manual of the bank Ex. PW 48/X1 which provides that the entry duly signed should be made RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 76 of 207 CBI v. S P Manickam & ors 77 in the register by the officer in whose presence the deposit of title deeds are made. Ld counsel stated that A1 never called PW1 in his cabin nor dictated the entries to be made in the register. PW4 never came in the cabin of A1 at that time. PW1 had written the entries after verification of documents. He has deposed falsely to implicate A1 and his version to the effect that he made the entries on the dictation of A1 cannot be accepted.
47. Ld counsel contended that the property was sold in auction and the sale proceeds amounting to Rs.1.03 crores were appropriated towards the loan of the party. This itself proves that the above property was mortgaged properly and that was why the bank could get it auctioned and recover the loan amount from the sale proceeds of the parties. Ld counsel stated that the falsity of the testimony of PW1 is evident from the fact that when he was shown a draft of a letter from the party to the bank for creation of equitable mortgage dated 02.11.89 Ex. PW 1/DA1, he stated that the same was filled up in his hand writing but it does not bear his signature and subsequently he stated that he had written this document at the instance of A1 who was sitting before him and dictating from a paper slip. He denied the suggestion of A1 that A1 was not present in the branch. The attendance register Ex. PW 5/C for November, 1989 falsifies this fact as A1 was on official duty from 02.11.89 to 04.11.89 as he had gone to attend a seminar. Ld counsel stated that PW1 in the year 1989 had put in 16 years of service out of which 8 years as clerk and 8 years as an officer. He had also cleared the departmental promotion RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 77 of 207 CBI v. S P Manickam & ors 78 examination in which loan was an important subject. All these documents and oral evidences show that A1 had not allowed/accepted dishonestly the copy of the title deeds and had not deliberately informed the zonal office of not having the original title deeds.
48. Ld counsel contended that in the process of KCC facilities, the credibility of the supplier of the goods or its existence is not verified since it is not feasible. The facility is extended by the bank in good faith. Ld counsel stated that the banker is not conversant with every material except the consumable items. The banker is layman so far as the knowledge of alloy material is concerned. Ld counsel also referred the Manual of Instructions Ex. PW 48/X1. Ld counsel stated that the prosecution is not in possession of any material/oral evidence to prove that A1 knowingly accepted the forged/bogus invoices purported to be valuable security of non existing firms. Ld counsel stated that the statement showing the details of the goods pledged/released under KCC during the period from 29.08.89 to 17.02.92 shows that out of the first seven items lodged during the tenure of A1, first six items were fully replaced on 30.06.90 and seventh item was partially replaced on 30.06.90. The advance value after deducting the margin comes to Rs.14,42,555/ for which the goods worth advance value of Rs.14,42,555/ were lodged on 30.06.90 by the successor of A1 thus there was no loss to the bank on account of the above items. Ld counsel submitted that PW55 has stated that the key of the godown was arranged by Anil Sirpaul who himself RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 78 of 207 CBI v. S P Manickam & ors 79 opened the godown. Further, the test reports Ex. PW 42/A and Ex. PW 42/B do not incriminate A1 since the goods were replaced i.e they were not the same goods which were pledged during the tenure of A1. Ld counsel stated that the manual of instructions Ex. PW 48/X1 nowhere states the requirement of testing the material.
49. Ld counsel stated that there were no distinctive marks on the materials brought from different places like Calcutta, Mumbai and Cuttack nor there is evidence that the goods were in the safe custody of anyone. The testimony of PW42 shows that an ordinary person who is not at expert cannot evaluate the quality of the material.
50. Ld counsel further argued that the imported Ferro Nickel alloy lodged during the tenure of A1 on 25.01.90 for an advance value of Rs.15 lacs was also replaced by the successor of A1 on 16.09.90 with Silicon Alloys Lumps for the same advance value. The items were got tested by C. Ravinder Babu, successor of A1 from a private test house by sending the samples on 01.09.90 after A1 was relieved from the branch. He got the report on 04.09.90 and released the items on 15/16.09.90 by pledging Silicon Alloys Lumps for the same advance value of Rs.15 lacs. This was done in a hurried manner to blame A1. The documents and the evidence show that the samples were not taken in the presence of A1.
51. Ld counsel stated that the Rana Pratap Bagh Branch is not an authorized branch to undertake foreign exchange business i.e. import/export. Hence, the list of approved clearing RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 79 of 207 CBI v. S P Manickam & ors 80 agents/circulars periodically issued by the Head Quarters was not provided to the branch. Testimony of PW 17 shows that the circulars Ex. PW 17/B dated 15.07.88 (D169) were sent to the Zonal Managers of the bank only. The circular Ex. PW 17/B (D
170) dated 28.01.91 is not relevant as the transaction took place in January, 1990.
52. As regards, falsely mentioning in the credit report dated 11.10.89 that the account of A3 with SBI, Paharganj branch had been closed, Ld counsel submitted that it is a usual practice amongst the bankers to exchange information about the credit worthiness of the parties to consider the credit facilities. SBI Paharganj branch vide its certificate dated 25.09.89 Ex. PW20/F54 (D225 Page 148) had informed that A3 has paid the entire outstanding in the cash credit account maintained with it and this account stood adjusted as on date. The said letter was forwarded to the zonal office by the R P Bagh branch alongwith the branch proposal dated 11.10.89 (D225 Page 231244) which fact was also admitted by PW55 in his crossexamination. This shows that A1 had forwarded the letter given by State Bank of India and it is incorrect to state that A1 had forwarded the incorrect report to the zonal office.
53. Ld counsel submitted that A1 had reported to the Zonal Office on 07.12.89 Ex. PW 1/21 and Ex. PW 7/DA about the two bills No. 1630 and 1631 purchased on 24.10.89 for Rs.1.90 lacs each drawn on Ferro Alloys, Bombay which were returned due to change of address of drawer at Bombay. The amounts were immediately RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 80 of 207 CBI v. S P Manickam & ors 81 adjusted by the party. Similarly A1 had reported to the zonal office vide letter dated 16.01.90 about the status of various accounts of the party. It was also reported that under documentary bills purchase, four bills amounting to Rs.13.6 lacs are pending for more than 45 days while recommending BP limit enhancement from Rs.20 lacs to Rs.30 lacs. So it cannot be said that A1 had not deliberately informed the zonal office regarding the two bills having returned unpaid. Ld counsel stated that A1 regularly informed the zonal office regarding the account of A3. He used to seek confirmation for any action done. The same used to be regularly approved by the zonal office.
54. Ld counsel stated that the tenure of A1 in the branch was from 23.01.88 to 22.04.90. As per the statement mark Ex. DW 5/A for the period from 11.10.89 to 18.02.92 total 36 documentary bills to the tune of Rs.94,53,697.40 were purchased. Out of the said bills, 23 bills were purchased during the tenure of A1 for a value of Rs.52,99,169/. Out of 23 bills, 16 bills were retired by the respective parties.
55. Ld counsel stated that out of the 15 bills purchased and returned leading to outstanding of Rs.46,99,459/, as per Ex. DW 5/A, only two bills were purchased during the period of A1 i.e Bill No. 720 and 721 dated 21.03.90 for an amount of Rs.4,09,500/. Rest of the 13 documentary bills were purchased by successor of A1. A1 had informed the zonal office about the return of the bills/adjustments. Ld counsel stated that as the regular facilities were sanctioned on 23.10.89 by the sanctioning authority, the next RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 81 of 207 CBI v. S P Manickam & ors 82 review of the facilities had to fall after six months i.e. in April, 1999 and the renewal had to fall in October, 1990 i.e after one year when the complete details were to be furnished. Testimony of PW7 shows that there were instructions from the higher authorities to purchase the bills. PW7 has quoted several instances when the bills purchased during his tenure were returned unpaid. This shows that A1 never suppressed the information relating to the return of two bills which were purchased during the tail end of his tenure which was upto 22.04.90. The rest of the bills to the tune of Rs.45,90,000/ were purchased by the successor of A1 after he was relieved from the branch. Further the amount of Rs.4,09,500/ was recovered from the auction of the mortgaged property.
56. Ld counsel stated that the charges of conspiracy are not proved against A1. There is no evidence to show that there was an agreement between the parties to do a particular act or there was meeting of mind which is an essential ingredient of criminal conspiracy. There is no documentary or oral evidence to show that A1 got any pecuniary advantage out of the loan transactions. His office/residence was never raided nor any incriminating documents was seized from him. He was not arrested at any time. The decisions were taken by him in regular banking business in good faith which were bonafide. Testimony of PW7 shows that zonal office was showing keen interest in extending the credit facilities to the party. There were instructions from the higher authorities to purchase the bills. The prosecution is not in RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 82 of 207 CBI v. S P Manickam & ors 83 possession of any evidence to show that the goods so lodged in KCC I were spurious/substandard in quality. All the six items were replaced/released on 30.06.90. KCC II i.e. imported item of Ferro Nickel was hurriedly got tested on 04.09.90 and were replaced by the successor of A1 on 16.09.90 with Silicon Alloy Lumps with the same advance value and there was no loss to the bank on account of this imported item.
57. Ld counsel stated that the CBI had approached the bank for sanction of prosecution against the four officers of the bank but the sanctioning authority declined to give sanction for prosecution and decided to refer the matter to Central Vigilance Commission (CVC) for opinion. CVC subsequently decided for departmental action for major penalty against T. Valliappan, B. Natrajan and C. Ravinder Babu and directed the bank to grant sanction for prosecution of A1. PW32 being the General Manager accorded the sanction for prosecution of A1 on 08.01.2002. Ld counsel stated that PW32 got only the seven days to ascertain all the relevant facts against A1, apply his mind and accord sanction. This implies that PW32 was directed/influenced by someone else and he did not apply his mind while according the sanction. Ld counsel stated that the mortgaged property was auctioned and the amount was appropriated towards the loan account of A3 in 2000 itself. PW32 has stated that he was not aware of the recovery of the loan amount by the sale of the mortgaged property. He did not go through the opinion of the panel lawyer V K Nanda dated 31.10.90 when he granted sanction. He also admitted that he was RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 83 of 207 CBI v. S P Manickam & ors 84 not aware that successor of A1 had replaced the material lodged during the period of A1 and for the same advance value, he had lodged Silicon Alloy Lumps, thus there was no loss to the bank. Ld counsel stated that all the facts show that the sanctioning authority did not apply its mind while granting sanction and gave the sanction on the directions of CVC, after the delay of about eight years.
58. Ld counsel for A1 in support of his contentions placed reliance on the cases Abdulla Mohammed Pagarkar v. State (1980) 3 SCC 110, A Sivaprakash v. State of Kerala AIR 2016 SC 2287, C Chengareddy v. State of Andhra Pradhesh (1996) 10 SCC 193, CBI v. K Narayana Rao 2012 9 Scale 25, Baliya v. State of M.P (2012) 9 SCC 696, N V Subba Rao v. State (2013) 2SCC 162, Chittaranjan Shetty v. State (2015) 15 SCC 569, B Sai Bharathi v. J Jayalalitha (2004) 2 SCC 9, Surinder Kaur v. State of Haryana (2014) 15 SCC 109, State of Karnataka v. Amerjan (2007) 11 SCC 273 and Dinesh Kumar v. Chairman AAI (2012) 1 SCC 532. Ld counsel also referred the case of SVL Murthy v. State represented by CBI Hyderabad JT 2009 (7) SC 385 to contend that the prosecution utterly failed to bring on record any evidence of conspiracy nor any evidence of wrongful gain by A1 so as to attract the provisions of the Prevention of Corruption Act, 1988 or otherwise. The case of Bodhraj v. State of J & K AIR 2002 SC 3164 was referred wherein it was held that all the circumstances should be fully proved and complete and there should be no gap left in the chain of evidence. If the evidence relied on is RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 84 of 207 CBI v. S P Manickam & ors 85 reasonably capable of two inferences, the one in favour of the accused must be accepted. The onus is on the prosecution to prove that the chain is complete and the infirmity or the lacunae in prosecution cannot be cured by false defence or plea. The prosecution has to prove its case beyond reasonable doubt. The suspicion however grave it may be cannot take the place of proof and there is a large difference between something that 'may be proved' and something that 'will be proved'.
ARGUMENTS ON BEHALF OF ACCUSED ASHOK SIRPAUL (A2) ABD M/S GLOBARC & ALLOYS PVT. LTD (A3)
59. For A2 and A3, Sh. Sumeet Verma, Ld counsel submitted that A2 was admittedly one of the several Directors in A3. As per the Memorandum of Articles of Association of A3 which is proved by PW55, Amrit Lal Sirpaul, Anil Sirpaul, Ashok Sirpaul/A2, Hargovind Lalwani, Mrs. Prabha Pradhan and Arun Kapoor were the Directors of A3. The documents Ex. PW 26/A7, A8 and Ex. PW 13/8 i.e request letter, invoice and demand draft of A3 pertaining to Nobel Alloys Manufacturer were signed by Hargovind Lalwani as Director /authorized signatory. Similarly, the documents Ex. PW 26/C, Ex. PW 26/D and Ex. PW 13/10 i.e. request letter, invoice and demand draft of A3 pertaining to Industrial Alloys were signed by Hargovind Lalwani as Director/authorized signatory.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 85 of 207 CBI v. S P Manickam & ors 86
60. Ld counsel contended that the categorical stand of A2 throughout the proceedings and in his statement u/s 313 CrPC was that the day to day affairs of the company including all its business and banking transactions were managed and controlled by its Chairman cum Managing Director Amrit Lal Sirpaul and the duties of A2 were confined to engineering job, fabrication of plant and machinery as well as erection of different factory sheds. He was treated as representative of A3 as he was the sole surviving Director of A3. The transfer deed Ex. PW 5/4 dated 20.01.89 (D68) reveals that Amrit Lal Sirpaul was the representative of A3 where as Anil Sirpaul was the representative of M/s Amrit Refractories Pvt Ltd. The partnership deed of M/s Amrit Industries dated 03.04.1982 Ex. PW 46/B endorses the stand of A2 that he used to look after the manufacturing side and not the commercial and banking transactions of the group of companies.
61. Ld counsel contended that the company's property i.e the factory premises i.e Plot No. 3 area 4889 Sq. Yards, Industrial Development Colony, Mehrauli road, Gurgaon was kept as equitable mortgage with the bank. It was auctioned on 18.02.2000 during the recovery proceedings by DRTIII and the proceeds thereof of Rs.1.03 crores were appropriated by the bank. The property which was mortgaged was worth more than Rs.15 crores. The loss allegedly suffered by the bank was approximately Rs.75.5 lacs on account of various transactions by A3.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 86 of 207 CBI v. S P Manickam & ors 87
62. Ld counsel argued that the nonencumbrance certificate was based on the application and the affidavit of Anil Sirpaul and A2 was not aware of it. Ld counsel stated that the prior mortgage for a small amount was released by repaying the amount and the bank received much more amount than the loss incurred by it on account of various transactions with A3.
63. Ld counsel stated that PW54 Hukum Chand who was initially the accused was illegally examined as witness by the prosecution without any legal document on record of tendering pardon to him. The prosecution did not produce the copy of the proceedings/statement u/s 164 CrPC nor led secondary evidence. Further only the Special Judge trying the case has jurisdiction to tender pardon to an accused u/s 5(2) of the Prevention of Corruption Act.
64. Ld counsel contended that A2 has denied his signatures on the documents sought to be proved by the prosecution. Although the prosecution has sought to prove the signatures of A2 through the handwriting expert opinion Ex. PW 53/B (D189) wherein the questioned writings/signatures were compared with the specimen writing/signatures obtained during the investigation but according to PW55/IO the specimen writing/signatures of A2 Ex. PW 23/A 1 (D183) were obtained during the investigation by him and not under the orders of the Court. Section 73 of the Evidence Act and the judgments of the Supreme Court as well the full bench of Delhi High Court provide that neither a police officer during investigation nor even a Magistrate (prior to incorporation of RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 87 of 207 CBI v. S P Manickam & ors 88 Section 311 A CrPC w.e.f 23.06.2006) can direct an accused to give his samples signatures or his handwriting sample and power thereof is only that of the concerned Trial Court. In support of his contentions, Ld counsel referred the case of Sukhvinder Singh & ors v. State of Punjab (1994) 5 SCC 152,, State of Haryana v. Jagbir Singh & anr AIR 2003 SC 4377, Sapan Haldar & anr v. State 191 (2012) DLT 225 (FB) . Ld counsel stated that even though the specimen signatures of the accused taken by the IO during investigation are contrary to law and are completely inadmissible in evidence, still as a matter of abundant caution, in order to counter the erroneous suggestion given by the defence counsel to PW23 Ajit Singh does not bind the accused. He placed reliance on the case Koli Trikam Jivraj & Anr v. The State of Gujrat AIR 1969 Guj 69.
65. Ld counsel stated that the evidence of the witnesses PW19, PW30, PW39 and PW52 demonstrate the veracity of the dealings with M/s Industrial Products, Shiv Shakti Metal Industries, M/s Nobel Alloy Manufacturer and M/s Industrial Minerals and Metal etc.
66. Ld counsel stated that the sample of the goods pledged with the Indian Bank sent to the National Test House for chemical examination, were lifted from the torn bags and unsealed drums which were lying scattered in the godown under the custody of the bank (KCC under lock and key of the bank) which was full of rain water. The goods were submerged in the rain water and were completely destroyed having lost their chemical properties. Ex. PW2/D and the testimony of the IO/PW55 show that there was RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 88 of 207 CBI v. S P Manickam & ors 89 about one feet of standing water in the godown where the goods were lying from which the samples were taken. Ld counsel stated that the report of Delhi Test House dated 04.09.90 shows considerable amount of Vanadium content in the sample Ferro Vanadium. There was presence of Nickel content in the sample Nickel boring scrap. There was considerable content of Manganese in the sample Ferro Manganese Lumps. The test report Ex. PW 24/A ( D193) dated 13.09.94 saying that there was no vanadium contents and therefore it was not Ferro Vanadium is contradicted by the Delhi Test House report dated 04.09.90 (D 225 Page 438) of the same material which showed considerable amount of vanadium in Ferro Vanadium sample.
67. Ld counsel stated that law is settled that there is no vicarious liability of any Director in case offences under Indian Penal Code are committed by a company. Ld counsel placed reliance on the case Keki Hormusji Gharda & ors v. Mehervan Rustom Irani & Anr AIR 2009 SC 2584, S K Alagh v. State of U.P & Ors AIR 2008 SC 1731 and Avnish Bajaj v. State 150 (2008) DLT 769.
68. Ld counsel submitted that the charges against the accusedA2 and A3 are not proved beyond reasonable doubt and they deserve to be acquitted.
ARGUMENTS IN REBUTTAL ON BEHALF OF CBI
69. In rebuttal, ld. PP submitted that PW45 and PW55 have deposed how the samples were taken. The samples were got tested from RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 89 of 207 CBI v. S P Manickam & ors 90 Delhi Test House and National Test Agency which are the Govt. approved laboratories. Ld. PP submitted that although the recovery was effected through DRT proceedings but it is not the ground to give benefit to the accused persons. Even if no departmental action was taken against the A1, he does not deserve to be acquitted. In the instant case, the competent authority had given sanction to prosecute A1. In support of his contentions, ld. PP placed reliance on the case of R. Venkatakakrishnan Vs. CBI, Crl. Appeal no. 76 of 2004 decided on 07.08.2009 and CBI vs. Jagjit Singh, Crl. Appeal no. 1580 of 2013 decided on 01.10.2013 to contend that even if the bank has not suffered any loss, the judgment of conviction and sentence of criminal breach of trust as wholly unsustainable cannot be accepted. Suffering of loss is not the sine qua non for recording the judgment of conviction. The offence when committed in relation with banking activities including offences u/s 420/471 IPC have harmful effect on the public and threaten the well being of the society. Ld. PP also referred the case of R. Gopalakrishnan vs. The State, 2002 Crl.L.J 47 to contend that the mere fact that the bank did not lose any money or the bank was able to recover the money from A3 through the Court proceedings, would not absolve the accused persons of their criminal liability. Ld PP submitted that every benefit obtained by public servant for himself or for any other person by abusing his position as a public servant falls within the mischief of the said clause. It does not mean that the public servant must receive the pecuniary advantage RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 90 of 207 CBI v. S P Manickam & ors 91 from third person and pass it on to the other person for his benefit. Ld. PP also referred the case of M. Narayanan Nambiar vs. State of Kerala, AIR 1963, SC 116 to contend that taking the phraseology used in the cause of a public servant causing wrongful loss to the Government by benefiting a third party squarely falls within it. The Act was brought in to purify public administration. Ld. PP also referred the case Ashok Tshering Bhutia vs. State of Sikkim AIR 2011 Supreme Court 1363 to contend that mere error, omission or irregularity in sanction is not fatal unless it has resulted in failure of justice.
70. Ld. PP submitted that the documents submitted by A1 in defence were the photocopies and perse inadmissible in evidence.
71. Ld. PP submitted that purpose to give sanction for prosecution is to apprise the Court to take cognizance of the offence against the public servant. It is an administrative order not under any quasi judicial proceedings. It has no effect on the merit of the case. The sanctioning authority has not to act as a Court. It has to form a satisfaction after applying its mind whether the sanction for prosecution should be granted or not. The sanction order and the testimony of PW32 show that PW32 had applied his mind and accorded the sanction after getting satisfied. Ld. PP also referred Section 465(2) Cr.P.C to contend that the objections as to the sanction should have be taken at the earliest opportunity which was not taken in the present case. Once the order of cognizance was passed, the Court cannot review its own order in the absence of any specific provision. Ld. PP stated that A1 himself has RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 91 of 207 CBI v. S P Manickam & ors 92 admitted to have discounted the two bills which were returned unpaid. Even then, he allowed further discounting of bills to give pecuniary benefit to the accused A2 and A3.
72. As to the taking specimen handwriting/signature of A2 and other accused persons, ld. PP referred the case of Rekha Sharma vs. Central Bureau of Investigation, Cril.Appeal no. 124/2013 and others decided on 05.03.2015 and submitted that report of the expert and analysis of handwriting and signature specimens of the accused persons cannot be rendered inadmissible on the ground that it was obtained in violation of prescribed procedure.
73. As regards criminal liability of A2, ld. PP referred the case of Sunil Bharti Mittal vs. CBI (2015) 4 SCC 609 and submitted that an individual who has perpetrated the commission of an offence on behalf of a company can be made accused along with the company, if there is sufficient evidence of his active role coupled with criminal intent.
74. Ld. PP stated that the account was jointly opened by A2 and other directors for A3. A2 and others had put their signatures on the specimen signature cards submitted at the time of opening of the account. A2 was also the party when the account with Syndicate Bank was opened and the original documents of the property were pledged/ mortgaged. Most of the correspondence with the Bank were made by A2 on behalf of A3. The Bank officials and the witnesses have proved the signatures of A2 on the documents. It is clear that A2 was party to the criminal conspiracy with the other directors to cheat the bank thereby RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 92 of 207 CBI v. S P Manickam & ors 93 obtaining pecuniary benefit. A fictitious company in the name of M/s K.B. Chemicals through PW54 Hukam Chand was got opened by A2 and others. Cheques were taken which were got discounted and they were received back unpaid. Ld. PP stated that the company was not doing any substantial production but on papers it was shown that substantial production was being done by the company. When the new Manager refused to retire the bills, A2 took up the matter with the Zonal Officer and availed further discounting facility. Loss of about Rs. 78 lacs was caused to the Bank due to frivolous transactions. A2 was very well aware that the non encumbrance certificate was obtained by giving false affidavit though the property was already pledged with Syndicate Bank. Ld. PP also referred the case of N.V. Subba Rao vs. State, 2013 Cri.L.J 953 and Badri Rai & Another vs. The State of Bihar 1958 AIR 953.
75. As to the evidence of PW54 Hukam Chand. Ld. PP admitted that the original documents as to tender of pardon to PW54 are not traceable. Even the photocopies are not traceable. Ld. PP stated that an enquiry in this regard was conducted. PW54 in his deposition has stated that on the threat given by Anil Sirpaul who was also the director of A3, he impersonated himself as Babu Lal and opened the account in the name of K.B. Chemicals. The account was introduced by Anil Sirpaul. He got issued a cheque book on which his blank signatures were taken on the basis of which A2 discounted the cheques and obtained the pecuniary benefit.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 93 of 207 CBI v. S P Manickam & ors 94
76. I have bestowed my thoughtful consideration to the rival contentions and gone through the entire material on record as well as the case laws (supra) as referred above.
77. The accused persons have been charged for committing the offence of criminal conspiracy, cheating, making forged documents, using forged documents as genuine and resorting to corrupt practics. Before adverting to the merits of the rival contentions, brief review of the offences invoked against accused persons would be necessary and relevant:
Section 120B IPC provides punishment for criminal conspiracy. Criminal conspiracy is defined u/s 120A IPC. To constitute the offence of criminal conspiracy, following ingredients must exist:
(1) There should be an agreement between two or more persons who are alleged to conspire;
(2) The agreement should be to do or cause to be done:
(i) an illegal act, or
(ii) an act which may not itself be illegal by illegal means.
Section 420 IPC defines cheating and dishonestly inducing delivery of property:
"Whoever cheats and thereby dishonestly induces the person deceived to delivery any property to any person or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed and which is capable of being converted into a valuable security shall be punished".
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 94 of 207 CBI v. S P Manickam & ors 95 To constitute the offence of cheating, following ingredients must exist:
1. That the representation made by the accused was false;
2. That the accused knew that the representation was false at the very time when he made it;
3. That the accused made the false representation with the dishonest intention of deceiving the person to whom it was made; and
4. That the accused thereby induced that person to deliver any property or to do or to omit to do something which he would otherwise not have done or omitted.
Section 467 IPC defines forgery of valuable security, will etc "whoever forges a document which purports to be a valuable security or a will or an authority to adopt a son etc which are considered to be the most serious types of forgery".
To invoke section 467, following ingredients must exist, viz:
1. The forged documents purports to:
(a) a valuable security; or
(b) a will, or
(c) an authority to adopt a son, or
2. To give authority to any person:
(a) to make or transfer any valuable security, or
(b) to receive the principal, interest or dividends on a valuable security or, RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 95 of 207 CBI v. S P Manickam & ors 96
(c) to receive or deliver any money, movable property, or valuable security.
3. To an acquittance or receipt:
(a) for acknowledging the payment of money, or
(b) for the delivery of any movable property or valuable security.
Section 468 IPC defines forgery for purpose of cheating. To invoke this section, following ingredients must exist:
1. The documents or electronic record is forged;
2. The accused forged the documents or electronic record;
3. The accused forged the document or electronic record intending that the forged document would be used for the purpose of cheating.
Section 471 IPC defines using any document or record as genuine fraudulently and dishonestly. To invoke this section, following ingredients must exist:
1. The document or electronic record is a forged one;
2. The accused used the document or electronic record as genuine;
3. The accused knew or had reason to believe that it was a forged document or electronic record;
4. The accused used it fraudulently or dishonestly, knowing or having reason to believe that it was a forged document or electronic record.
Section 13(1)(d) of the Prevention of Corruption Act, 1988 reads as follows:
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 96 of 207 CBI v. S P Manickam & ors 97 13 Criminal misconduct by a public servant: (1) A public servant is said to commit the offence of criminal misconduct
(d) if he,
(i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage; or
(ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or
(iii) while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest;
APPRECIATION OF EVIDENCE AND FINDINGS:
A Opening of Account of M/s. Globarc & Alloy Pvt. Ltd. (A3) with the Indian Bank, Rana Pratap Bagh Branch, Delhi.
78. It is an admitted case of the prosecution that M/s. Globarc & Alloy Pvt. Ltd. (A3) had opened an account with Indian Bank, Rana Pratap Bagh Branch, Delhi and the accused S P Manickam (A1) was the Chief Manager at that time. Although, the account opening form Ex.PW2/1 and the specimen signature cards Ex.PW15/2 to Ex.PW15/4 bear the date of 12.08.1989 but the statement of accounts Ex.PW2/2 shows that the first transaction in the account was made on 18.08.1989 qua the deposit of Rs. 8,000/ in the account No. OCC 63. The resolution of the Board of RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 97 of 207 CBI v. S P Manickam & ors 98 the Directors, Ex.PW15/5 was also submitted at the time of opening of account. Admittedly, by that time, the account holder was not introduced by any introducer. PW2, who was the Chief Manager in Indian Bank, Karol Bagh Branch has deposed that the bank account actually operates when the first remittance is made i.e. when the party makes deposit for the first time in the account. He stated that the documents reflect that the account was opened on 12.08.1989. He then explained that sometimes, party comes and asks for opening of a new account on the day, auspicious to party and it is quite possible that in the present case also, the party would have approached the Manager for opening the account on such day. PW2 further stated that the account was introduced by PW29, partner of the Saree Palace at Karol Bagh on 26.08.1989. He proved his endorsement on the account opening form Ex.PW2/1. PW29, who had introduced the account, has stated that he had an account with the Indian Bank at Karol Bagh Branch and he had introduced the account on the recommendation of R. Subramanium, Chief Officer of the Indian Bank. PW2 also verified the signature of PW29 on the account opening form Ex.PW2/1.
79. Although, the accused A1 has stated that the account was sponsored by the Zonal Office, Delhi, prior to the opening of the account at the branch on 18.08.1989, A2 Ashok Sirpaul, Director of A3 Globarc & Alloys Pvt. Ltd (A3) was in regular contact with the Zonal Office which fact can be seen from the various letters written by A3 to the Zonal Office having the reference of RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 98 of 207 CBI v. S P Manickam & ors 99 the meeting with Mr. Subramanium, Ex.PW20/F4 (colly.) (D225) but to my mind it does not carry any significance whether A3 had contacted the Branch Office itself for opening the account or the account was sponsored by the Zonal Office.
80. Perusal of the Statement of accounts Ex.PW2/2 would show that the credit of the loan amount by way of Key Cash Credit and withdrawals of the amount was allowed only on 29.08.1989 i.e. after the proper introduction obtained from PW29 on 26.08.1989. The cheque book was issued only on 26.08.1989 after the proper introduction of account. PW2 has clearly stated that the first withdrawal by the party was made on 29.08.1989 i.e. after the introduction and verification. Manual of Instructions Ex.PW57/X1 page 2.1 (c) provides that introduction is not necessary for opening of an account of a Limited Company. It is not in dispute that A3 M/s Globarc & Alloys Pvt. Ltd was a Private Limited Company.
81. I am, therefore, of the view that the account was properly opened after proper introduction and verification and no fault can be attributed on A1 on this count.
B. Availing Key Cash Credit limit by M/s Globarc & Alloys Pvt. Ltd (A3) against pledge of goods by submitting invoices of bogus firms or the firms which did not have any business dealings with M/s Globarc & Alloys Pvt. Ltd. (A3).
82. Anil Sirpaul, one of the Directors of M/s Globarc & Alloys Pvt.
Ltd, vide his letter dated 29.08.1989 Ex.PW53/D14 (D224 & RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 99 of 207 CBI v. S P Manickam & ors 100 page 87) had submitted the bills/invoices of the firms claiming that A3 had purchased the goods from the companies for an amount of Rs. 18,08,050/. The goods were lodged in the godown and pledged with the Bank to avail Key Cash Credit facility (KCC).
83. As per the system prevalent in the bank, in case of KCC account, whenever a party purchases the materials/goods and wishes to pledge them, the goods are lodged in the godown, the keys are held by the Bank and the Bank extends the credit facilities after deducting the margin money prescribed by the sanctioning authority. When the party informs about the goods to be pledged, the bank sends its staff either clerical or officer alongwith the keys of the godown. The staff after lodging the goods in the godown locks the same, brings the key for the bank's custody and reports to the branch about the quantity and the description of materials/goods lodged and thereafter the amount of loan is calculated at the purchase rate and after deducting the margin, KCC amount is debited and the amount, so debited, is credited in the OCC/current account as the case may be.
84. At the time of taking delivery of the goods so pledged, the party informs the bank about the quantity and the name of the material and also deposits the amount in its account so that it is debited to its OCC/current account and credited to the KCC account. Thereafter, the Bank staff either clerk or officer takes the godown keys, goes to the godown, releases the goods and reports to the branch.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 100 of 207 CBI v. S P Manickam & ors 101
85. Manual of Instructions Ex.PW48/X1 page 7.2, Para 4.1 (e) deals with the precautions to be taken for advances against goods which inter alia provides that care should be taken to ensure that the goods stated in the invoices (apparent qualities like branch name, packages, price etc, can be verified) are the same that are offered as security by way of pledge or hypothecation.
86. PW7 has deposed that KCC has two parts, one is approval part and other is the operational part. In the operational part, the goods pledged are kept in the lock and key and the key remains with the Bank. The amount is released after due margin. If the party wants to take the delivery of the goods, it has to deposit the amount and based on that, a part or entire goods are released depending upon their value.
87. As per the bills/invoices submitted by Anil Sirpaul, the following companies had supplied the goods/materials to M/s Globarc & Alloys Pvt. Ltd:
Sr. Name of the Description of Invoice/bill Amount (Rs.) No. company/Firm goods/ material no. and date
1. M/s Vikram Rutile Granules 7003 dated 6,57,883.20 International, 15, Powder 11.08.1989 Chitranjan Avenue, 5 th Mark X Floor, Calcutta.
2. M/s. Krompton Alloys 5000 kgs 000281 2,81,800.00 & Ores Manufacturing Manganese dated Co., 83A, Industrial Metal Powder 02.08.1989 Area, Yamuna Nagar, Ex.PW28/A Haryana RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 101 of 207 CBI v. S P Manickam & ors 102 Sr. Name of the Description of Invoice/bill Amount (Rs.) No. company/Firm goods/ material no. and date
3. M/s Vikram Titanium 7035 dated 3,07,374.08 International, 15, Dioxide TI 16.08.1989 Chitranjan Avenue, 5th Floor, Calcutta.
4. M/s Ghardha Chemicals 1000 kgs 000279 3,90,000.00 (P) Ltd, 48,Hill road, Molybdenum dated Bandra, Bombay Oxide 13.07.1989 Ex.PW27/A
5. Industrial Alloys, Vanadium 00278 dated 4,13,400.00 Calcutta Pentoxide 15.06.1989
6. Shiv Shakti Metal Aluminum 000277 4,38,984.00 Industries, AP9, Notched Bars dated Shalimar Bagh, Delhi 07.07.1989 Ex.PW30/A Total 18,08,050.00
88. PW16, partner of M/s Vikram International, at Calcutta has deposed that bills were not issued by Vikram International and their firm did not have any dealing with M/s Globarc & Alloys Pvt. Ltd and Global Linkers nor they knew any person by the name of Ashok Sirpaul and Anil Sirpaul. Testimony of PW16 remained unrebutted.
89. As regards supply of material by M/s Kromton Alloys and Ores Manufacturing Company Ltd, Yamuna Nagar, testimony of PW28 reveals that the address mentioned on the invoice no. KAO/152/89 dated 02.08.1989 did not exist at the relevant time in the Industrial Area, Yamuna Nagar nor there was any A Block as mentioned in the bill Ex.PW28/A. His testimony also remained unrebutted.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 102 of 207 CBI v. S P Manickam & ors 103
90. Prosecution did not examine any witness from M/s Industrial Alloys, Calcutta as to whether the company had supplied any material to M/s Globarc & Alloys Pvt. Ltd.
91. Regarding the invoice issued by Shiv Shakti Metals Industries, Shalimar Bagh, PW30 has stated that the address mentioned on the invoice i.e. AP9, Shalimar Bagh, New Delhi is his residential address and the phone mentioned in the bill was installed in his office at Sadar Bazar. He stated that M/s Shiv Shakti Metal Industries was never started by him nor his family members nor he had rented the premises to anyone. He does not know who got printed his residential address on the invoice Ex.PW30/A. He stated that M/s Shiv Shakti Metal Industries was the firm of Ashok Sirpaul and he knows Ashok Sirpaul for a long time.
92. Regarding the invoice of M/s Gharda Chemicals, Bombay, PW27 has stated that there is a company in the name of Gharda Chemical which manufactures Agro Chemicals. The bill dated 17.03.1989 Ex.PW27/A was never issued by his company as the material mentioned in the bill was never produced nor sold to M/s Globarc & Alloys Pvt. Ltd. Nothing material came in his cross examination.
93. The testimonies of the above witnesses clearly prove that the goods which were pledged under KCC by M/s Globarc & Alloys Pvt. Ltd through Anil Sirpaul were never purchased from the companies from where they were purported to have been purchased and as such the aforesaid bills were false/bogus.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 103 of 207 CBI v. S P Manickam & ors 104
94. It is pertinent to mention that against the above goods, A1 released the KCC loan of Rs. 13.50 lacs in two stages i.e. Rs. 10 lacs on 29.08.1989 and Rs. 3.5 lacs on 01.09.1999. KCC loan was confirmed by the Zonal Office vide letter No. ZO:SSI:724:89 dated 20.09.1989 Ex.PW 20/F4 colly. (D225 page 178). It is true that A1 while releasing the KCC loan did not verify the credentials of the supplier or their existence nor sent the goods to the laboratory to ascertain their quality but it cannot be lost sight of the fact that the banker is not expected to be conversant with every material except the consumable items. The bankers are normally not expert so far as the knowledge of alloy materials are concerned and they extend this kind of facility in good faith. In that process, the supplier's credibility or existence is not verified. Further, every time, verification of each supplier's existence or credibility is not feasible and the facilities are extended to the customers by the bankers in good faith. This is, what was also done by A1 in good faith. In the instant case, the goods were kept in the godown under the lock and key of the bank. There is no oral or documentary evidence to show that A1 knowingly accepted the forged / bogus invoices purported to be the valuable security of the nonexisting firms.
95. It is pertinent to mention that A3 vide its letter dated 13.06.1990 Ex. PW20/F4 colly (page 392 D225) replaced the goods by taking the delivery of all the above six items amounting to Rs. 18,08,050/ in addition to 600 kg of Vanadium Manganese Alloy amounting to Rs. 3,18,540/. The company replaced those goods RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 104 of 207 CBI v. S P Manickam & ors 105 and pledged the following materials:
1. Silicon Metal 5 MT @ Rs. 163/ per kg. Rs. 8,47,600.00
2. Nickel Boring Scrap 3219 kgs @ 97/86 kgs Rs. 3,15,000.00
3. M.S. Wire (Electrode Gr.) 25 MT @ 11/40 kg. Rs. 2,85,000.00
4. Aluminum - imported 11.982 kg @ 46/ kg. Rs. 5,49,177.00
5.Vanadium Mg. Alloys Chips 1400 kgs Rs. 7,43,260.00 (7 drums) ============ Rs.27,40,037.00 ============
96. The successor of A1 accepted those goods and kept the same under the lock and key of the bank under KCC. It is pertinent to mention that neither A1 nor his successor got tested the goods which were pledged during the tenure of A1. The successor of A1 subsequently got tested the goods by sending their samples. The reports dated 04.09.1990 Ex. PW20/F4 colly (Page 436, 437, 438 and 439 D225) show the following results:
Ferro Manganese Lump (LC):
Carbon 0.08%
Silicon 5.8%
Manganese 60.0%
Phosphorus 0.10%
Aluminum 4.0%
Nickel Boring Scrap:
Nickel 12.2%
Iron 67.2%
Copper 4.3%
Aluminum 6.0%
Manganese 0.85%
Carbon 3.0
Ferro Nickel Under KCCII:
Silicon 4.6%
Iron 14.0%
Nickel Nil
Copper Nil.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 105 of 207
CBI v. S P Manickam & ors
106
Ferro Vanadium :
Silicon 4.6%
Vanadium 47.0%
Aluminum 0.8%
Carbon 0.2%
Manganese 0.7%
97. On perusal, I find that the above test reports are not in respect of the items / goods which were pledged during the tenure of A1 under KCC as the successor of A1 had allowed A3 to replace the goods. That being the position, the above reports do not incriminate or prove the complicity of A1 regarding pledging of goods under KCC. Further, it has come in the testimony of PW42 that an ordinary person who is not an expert cannot evaluate the quality of the material. It is to be noted that A1 was not a technical person. He had the commerce background and did not have the knowledge of chemical composition of the goods. Even the manual of the instructions of the Bank Ex.PW48/X1 Page 7.2 Para 4.1(e) provides that it is not necessary to insist for the quality check of the goods before allowing KCC by sending the goods to the laboratory. This is, what was done by A1 in this case.
98. Facts and circumstances emerging from evidence of the case clearly show that what the A1 did, was in good faith and it was not mandatory for A1 to get ascertained the quality of the material/goods or to verify the genuineness of the firms which had supplied the material before allowing them to be pledged under KCC. More so, there was no visible circumstance suggestive of any foul play done by A3 making A1 suspicious about the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 106 of 207 CBI v. S P Manickam & ors 107 credibility of A3 and the activities undertaken by it.
99. Facts & circumstances, however, show that Anil Sirpaul, Director of M/s Globarc & Alloys Pvt. Ltd knowingly submitted the bogus bills of the firms which were either not in existence or had not supplied the materials to M/s Globarc & Alloys Pvt. LtdA3 to avail the Key Cash Credit Limit from the Bank. He used those bills as genuine which he knew or had reasons to believe to be the forged bills.
C. S.P. Manickam (A1) dishonestly accepted the copy of the title deed with a non encumbrance certificate of plot no. 3, IDC, Mehrauli Road, Gurgaon and deliberately did not inform the Zonal Office regarding not taking the original title deed.
100. PW48 has stated that the mortgage by deposit of title deed is governed by the law where there is a requirement of deposit of original title deeds. Original Title Deeds are required to avoid any misuse or double use etc. According to PW1, after processing and sanctioning the loan, the Loan Officer writes the equitable mortgage. Thereafter, the incharge of the branch after verifying the documents makes an entry in the register and also counter signs in the equitable mortgage register. Before sanctioning the loan and making entry in the register, legal opinion and the valuation report of the property are obtained from the Panel Lawyer and approved valuer of the bank respectively.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 107 of 207 CBI v. S P Manickam & ors 108
101. In the instant case, the Zonal office while sanctioning the credit limit vide sanction ticket dated 23.10.1989, Ex.PW53/D22 (D 224 page 259) had stipulated the condition of creating equitable mortgage. The record reveals that the zonal office vide letter no. ZM:LEG:1068:89 dated 16.08.1989 (page 55 of D244 of Ex.PW20/F1 colly.) prior to opening of the account with the branch, had sent the copy of Transfer Deeds dated 20.01.89, 15.03.84 and 25.02.81 along with valuation report and non encumbrance Certificate in respect of the factory situated at plot no. 3, IDC Mehrauli Road, Gurgaon to PW14 Subhash Oberoi, Panel Lawyer of the bank to give his opinion and forward the same alongwith his bill to the Branch at Rana Pratap Bagh, Delhi. It was mentioned in the letter that the Bank intends to accept the said property as security for advance. Panel Lawyer was asked whether M/s Globarc & Alloys Pvt. Ltd has clear and marketable title to the property. PW14 after going through the documents sent his opinion to the branch vide Ex.PW14/2 which is reproduced as under:
22.09.1989 The Zonal Manager, Indian Bank, Zonal Office, New Delhi Reg: Opinion in the matter of M/s Globarc & Alloys (P) Ltd.
Sir, We thank you for your letter dated 16.8.1989, wherein you have requested us to give our opinion regarding the transfer deed in favour of M/s Globarc & Alloys (P) Ltd. Though the matter has been with us for sometime but the opinion could not be given earlier as certain queries were RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 108 of 207 CBI v. S P Manickam & ors 109 raised by us from the branch concerned so that detailed opinion could be given in the matter.
We had requested the branch officials to get in touch with the officials of the borrower company and give us the necessary clarifications. The concerned officials have approached us today alongwith the necessary queries and on a perusal of the letter and the documents forwarded by you, we have to say as under:
1) That Smt. Kanta Luthra had vide a transfer deed dated 25 Oct 81 (should be 25 Feb 81) transferred her right in respect of an industrial plot, which had been purchased by her on 24.8.1970. The said transfer deed was in favour of Shri Amrit Lal Sirpaul son of Shri Lachhman Dass, resident of 7/2 Old Rajender Nagar, New Delhi.
2) That vide a Deed of Transfer dated 19.8.1984 (should be 15.03.84), Shri Amrit Lal Sarpal had entered into a transfer deed with M/s Amrit Refractories Pvt. Ltd and the Governor of Haryana through the General Manager Industrial Centre, wherein the purchaser had purchased a factory site on 24 July 1981 for a sum of Rs. 61,405.84p. In terms of the said transfer deed, Shri Amrit Lal Sarpal had sought permission and did get the same to have the saaid transferred in favour of the Amrit Refractories Pvt. Ltd.
3) That vide another transfer deed dated 20.1.1989 M/s Amrit Refractories Pvt. Ltd. through their Director, Shri Anil Sarpal and M/s Globarc & Alloys (P) Ltd through Sh. Amrit Lal Sarpal and the Governor of Haryana through the General Manager, District Industries Centre, Gurgaon, agreed to enter in terms of the said transfer deed the rights in respect of the factory site for a sum of Rs. 61,405.84p. The said plot measures 4889 sq.yds being plot no. 3 Industrial Development Colony, Mehrauli Road, Gurgaon.
4) That the said transfer deed is registered in the office of the SubRegistrar, Gurgaon at Regn. No. 8776 Addl. Book No. 1, Volume no. 2739 at pages 2425 and at book no. 417 on page 152 on 20.1.1989
2. That from a perusal of the Transfer Deed and the Assignment Deed it is borne out that the State of Haryana has accepted and attorned to the said transfer deed and one of the authorized officials has signed the said transfer for RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 109 of 207 CBI v. S P Manickam & ors 110 and on behalf of the Governor of Haryana. In the transfer deed it has also been mentioned that the transferer (Globarc & Alloys (P) Ltd) will step into the shoes of the original transferee and shall be bound by the terms of the clauses of the original principal deed.
3. That as per the letter of allotment, originally issued by the Directorate of Industries, in the allotment of such plot some terms and conditions have been given therein. As per clause 2(f) the Director of Industries imposes a condition on the transferer that 'the plot cannot be transferred/sold by way of mortgage, sale or otherwise till such time as the full price of the land and the development charges etc with interest, if any, are not paid to the Government'. Further clause (g) says that 'sale/transfer of the plot shall not be effected till the factory building is complete'.
4. That from the perusal of the records it is clear that the factory land with building is unencumbered, marketable and mortgageable (subject to permission of the Directorate of Industries) and the papers can be taken by way of collateral security. Care must be taken to take all the original documents from the company i.e. the principal deed etc.
5. In view of the above discussion so as to safeguard the bank's interest, you may kindly ensure from the Director of the Company
a) that the factory building has been completed in all respects.,
b) that the full price of the plot with development charges and interest, if any, have been fully paid,
c) that the Directorate of Industries be informed about the proposed transfer.
d) that a proper resolution may be taken from the company in this regard.
e) an affidavit on the proforma annexed herewith be taken from the authorised Director of the Company. We hope that this shall clarify the position.
Note:
Our professional charges have been paid.
Thanking you, Yours faithfully, for R.S. Oberoi & Company RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 110 of 207 CBI v. S P Manickam & ors 111 Encls/Title deeds Sd/ (Subhash Oberoi) Advocate
102. There is another letter of PW14 Subhash Oberoi Ex.PW14/1 which finds reference of the letter of the Branch Manager (A1) who had sought opinion in the matter of M/s Globarc & Alloys Pvt. Ltd. For the sake of clarification, letter Ex.PW14/1 is reproduced here as under:
Dated: 23rd October, 1989 The Chief Manager, Indian Bank, Rana Pratap Bagh, Delhi.
Reg.: Opinion given in the matter of M/s Globarc & Alloys Pvt. Ltd.
Sir, This is with reference to your letter seeking opinion in the matter of the above named borrower. I had, as per your request, perused the various documents forwarded by you and had also opined and given suggestions to secure the interest of the Bank. This is to clarify that you may take the original of the latest assignment deed in favour of M/s Globarc & Alloys Pvt. Ltd. I am informed by Mr. Lalwani that all the charges payable to the Directorate of Industries have been paid in full and there are no dues which are payable. Accordingly, you may take the original title deed executed in favour of M/s Globarc & Alloys Pvt. Ltd. by way of collateral security. In case of any further query or clarification, you may contact the undersigned. Thanking you, Yours faithfully, For R.S. Oberoi & Co.
Sd/ (Subhash Oberoi) Advocate
103. This opinion of PW14, Ex.PW14/1 fortifies the claim of A1 that before allowing the equitable mortgage or extending the Credit RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 111 of 207 CBI v. S P Manickam & ors 112 Facilities sanctioned by the Zonal Office, further opinion was sought from the Panel Lawyer. A careful evaluation of this letter leads to an inference that A1 had informed the Panel Lawyer PW14 that the party has the original of the latest transfer deed in favour of M/s Globarc & Alloys Pvt. Ltd only. This opinion also has a reference of Mr. Lalwani who had informed PW14 that the charges payable to the Directorate of Industries have been paid in full and there are no dues payable.
104. A3 through its directors then approached the bank and PW1 made the following entires in the equitable mortgage register Ex.PW1/1 on 31.10.1989 :
Original Transfer deed dt. 25.10.81 (should be 25.02.81) executed by Smt. Kanta Luthra copy of transfer deed dt. 15.3.84 executed by Sh. Amrit Lal Sirpaul to M/s Amrit Refractories (P) Ltd enclosing copy of paper cutting.
Original transfer deed dt. 20.1.89 executed by M/s Amrit Refractories (P) Ltd in favour of M/s Globarc & Alloys (P) Ltd.
Legal opinion dt. 22.9.89 and dt. 23.10.89 from M/s R.S. Oberoi & Co.
Copy of nonencumbrance Certificate dt. 17.05.89. NOC to mortgage transfer deed with bank dt. 16.10.1989.
105. PW18 and PW43, the officials of Syndicate Bank proved the entries Ex.PW18/A and Ex.PW18/B on page 116 and 117 respectively in Equitable Mortgage Register pertaining to year 198485 maintained at Asaf Ali Road Branch of Syndicate Bank, which show that the credit facilities were extended to M/s Global Linkers, M/s Amrit Industries and M/s Amrit Refractories Pvt.
Ltd by the G.B Road Branch and Gurgaon Branch of the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 112 of 207 CBI v. S P Manickam & ors 113 Syndicate Bank. The entires show that original title deeds in respect of Amrit Refractories Pvt. Ltd were deposited with the Bank. Original Sale Deed dated 25.02.1981 was executed by Smt. Kanta in favour of Amrit Lal Sirpaul and the original Transfer Deed dated 15.03.1984 was executed by Amrit Lal Sirpaul in favour of Amrit Refractories Pvt. Ltd. Testimony of PW43 shows that upto 1991, Asaf Ali Road Branch of the Syndicate Bank was the only designated branch in Delhi for creating equitable mortgages on behalf of all the branches of the Bank and nearby areas.
106. The prosecution also examined PW5, clerk in the office of Sub Registrar, Gurgaon. PW5 has stated that nonencumbrance certificate Ex.PW5/3 was issued in favour of M/s Globarc & Alloys Pvt. Ltd in respect of plot no. 3 at IDC Mehrauli Road, Gurgaon on the application of Anil Sirpaul Ex.PW5/1 who had also submitted an affidavit Ex.PW5/2 along with declaration. A noting was made on the back of the application affirming that the property was free from all encumbrances and the certificate Ex.PW5/3 was issued on the basis of the affidavit given by Anil Sirpaul. PW5 further stated that when the endorsement was made, he had no knowledge that the property was already mortgaged as the office of GM, District Industry never intimated them regarding the mortgage. In the application Ex.PW5/1 and the affidavit Ex.PW5/2, it was affirmed by Anil Sirpaul that the property i.e. plot no. 3 at IDC, Mehrauli Road, Gurgaon is in the name of M/s Globarc & Alloys Pvt. Ltd and is free from all sorts of RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 113 of 207 CBI v. S P Manickam & ors 114 encumbrances such as Gift, Mortgage, Lien, Attachment, Sale etc.
107. It is important to note that the opinion of PW14, Ex.PW14/1 is of 23.10.1989 and the entry in the equitable mortgage register Ex.PW1/1 bears the date of 31.10.1989 i.e. after the opinion.
108. Although the Equitable Mortgage Register maintained in the office of Indian Bank, Rana Pratap Bagh Branch finds mention of an entry of original Transfer deed dt. 25.02.81 executed by Smt. Kanta Luthra which according to PW18 and PW43 was deposited with the Syndicate Bank and PW1 has stated that he had made the entry at the dictation of A1 in his cabin which fact has also been stated by PW4 in his testimony but on an evaluation of testimonies of PW1, PW4 and PW7, I find that PW1 was the Assistant Manager in the Bank and PW7 was the Loan Officer. PW1 was officiating as Loan Officer in the absence of PW7. He joined as Clerk in August, 1973 and worked on different posts in different departments/sections of the Bank. He also got promotion. So, it cannot be said that what he did was simply on the dictation of A1 being subordinate to him. His claim is falsified from the fact that in his testimony PW1 has stated that the document Ex.PW1/DA1 dated 02.11.1989 was written by him at the instance of A1 who was sitting before him and dictating him the details from a paper slip. The record and the testimony of DW5 would show that on 02.11.1989, A1 was not on duty in the Bank and had gone to attend a seminar somewhere else outside Delhi from 02.11.1989 to 04.11.1989.
109. Ld. PP has stated that the attendance register Ex.DW5/C is the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 114 of 207 CBI v. S P Manickam & ors 115 photocopy and cannot be relied upon. A1 in his defence has also relied on some of the documents without producing their originals which cannot be read in evidence.
110. Perusal of the record reveals that on 16.11.2017, an application u/s 207 Cr.P.C r/w section 91 Cr.P.C was moved by A1 for directing the IO/Malkhana incharge to produce the documents stating that during investigation vide memo D198 Ex.PW26/B number of documents were seized by the CBI which were not filed in the Court including the documents at Srl. no. 47 and 48 (M1420/92 and 1421/92). The application was allowed by this Court vide order dated 16.11.2017.
111. Proceedings of the date 25.11.2017 reveal that Rajinder Singh, Officer of the Indian Bank had appeared and stated that the record is not traceable. In his deposition dated 18.12.2017, DW1 had stated that S. Gopalakrishnan, Asstt. General Manager (HRM) had issued the letter Ex.DW2/2. Though the objection was taken by the public prosecutor but it was overruled. The said Proceedings further reveal that CBI vide letter dated 06.10.2017 and 12.10.2017 had expressed its inability to produce the above documents stating that they have been misplaced by the earlier IO. It was submitted on behalf of accused that he is in possession of copy of the said documents which he intends to prove by leading secondary evidence i.e. annexure A, B and C forming part of the application. It was responded by the CBI vide proceedings dated 10.01.2018 that the documents marked D141, D171 and D172 are not traceable. The original documents annexureC i.e. copy of RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 115 of 207 CBI v. S P Manickam & ors 116 attendance register of Indian Bank, R.P Bagh Branch, Delhi is not available with CBI and the same cannot be supplied. This Court vide order dated 10.01.2018 allowed the request of the accused (A1) who was in possession of photocopy of the attested true copy of the attendance register of the Indian Bank by leading secondary evidence. The witnesses on 22.01.2018 were examined and the documents were exhibited.
112. I do not find any force in the contention of ld. PP that in the absence of original documents, the photocopies of the documents cannot be read in evidence. The order of the Court clearly shows that the Court had allowed A1 to lead secondary evidence in respect of the photocopy of the documents and this order was never challenged by the CBI which has now become absolute.
113. Thus, it cannot be said that A1 with dishonest intention got entered original Transfer deed dt. 25.02.81, executed by Smt. Kanta Luthra, in the equitable mortgage register Ex.PW1/1. The record and the testimony of the witnesses show that his action was transparent and he had taken all due care and caution before allowing the credit facilities sanctioned by the Zonal Office and getting created equitable mortgage in favour of the bank.
114. It is true that the originals of chain of documents should have been insisted before allowing equitable mortgage in respect of the property but since in the instant case, M/s Globarc & Alloys Pvt. Ltd (A3) had submitted the latest original Transfer Deed dated 20.01.1989 executed by Amrit Refractories Pvt. Ltd in favour of M/s Globarc & Alloys Pvt. Ltd along with non encumbrance RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 116 of 207 CBI v. S P Manickam & ors 117 certificate issued by the office of the SubRegistrar, Gurgaon dated 17.05.1989 Ex.PW5/3 coupled with the facts that the entries made in the register Ex.PW1/1 find mention about a report/paper cutting and that the opinion from the Penal Lawyer PW14 was taken, A1 had valid reasons not to insist for the original chain of previous documents.
115. It is also to be mentioned that when the account of A3 became irregular and recovery proceedings were initiated before the DRT III, the bank could lay its claim as to the recovery of the amount on the basis of the documents submitted by A3 when it availed various credit facilities from the Bank. Opinion of V.K. Nanda, Advocate was taken when the recovery proceedings were initiated. He, in his letter Ex PW 20/F4 (Page 476 D225) dated 06.09.1990 addressed to the Chief Manager had mentioned that he has examined the documents executed by Ashok Sirpaul on behalf of A3 for creating equitable mortgage of the property bearing no. 3, IDA Gurgaon comprising of transfer deeds of the property, form 32 regarding deposit of title deeds, form 8 and 13 of the Companies Act for registration of charge of the bank on the mortgaged property to ascertain the enforceability of the mortgage. He stated that equitable mortgage as such created is valid, legal, binding and enforceable and the security can be legally enforced. He opined that on the basis of the documents pledged with the bank, the recovery proceedings could be initiated against the company.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 117 of 207 CBI v. S P Manickam & ors 118
116. It is also seen from the testimony of DW3 that the property in question was auctioned and an amount of Rs. 1.04 crores was realized. The accused persons A2 and A3 in their statements u/s 313 Cr.P.C have stated that the property situated at IDC, Gurgaon, which was equitably mortgaged with the Indian Bank, was auctioned on 18.02.2000 during the recovery proceedings by DRTIII, Delhi and the proceeds thereof Rs. 1.03 crore were recovered by the Indian Bank, Rana Pratap Bagh Branch against the total liability of approximately Rs. 75 lacs. A2 has stated that to his knowledge, the prior mortgage for a small amount was released by repaying the amount to the concerned bank and therefore, the very property was auctioned by the Indian Bank, Rana Pratap Bagh Branch during the recovery proceedings.
D. S. P. Manickam (A1) while forwarding the credit proposal of M/s Globarc & Alloys Pvt Ltd (A3) to zonal office on 11.10.1989 mentioned therein that the account of A3 with State Bank of India, Paharganj Branch, Delhi had been closed subsequently but it was found that only the outstanding amount with SBI was cleared by A3 and its account was not closed. It was found that A1 not only sent the wrong information to the zonal office but also did not ensure closer of account of A3 with SBI Paharganj before disbursal of credit limits.
117. As per the case of the prosecution, A2 had informed the Zonal RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 118 of 207 CBI v. S P Manickam & ors 119 Office before recommending various credit limits to the Zonal Office that account of A3 with State Bank of India, Paharganj Branch had been closed by A3, but on perusal of record, I do not find any such correspondence. It was rather PW3, who had made a remark on the proposal form dated 11.10.1989 that 'account closed subsequently'. When he was cross examined, he stated that he had written it at the instance of A1. A1 has denied this fact. The documents of the Bank at Paharganj Branch also do not substantiate this fact.
118. State Bank of India Paharganj Branch in its letter dated 25.09.1989 Ex.PW1/20 (Page 231 D225) had certified that M/s Globarc & Alloys Pvt. Ltd has paid the entire outstanding in this Cash Credit Account maintained with them and the account stands adjusted as on date. Hence, there is no liability in any account with the said company.
119. There is another letter of the State Bank of India, Paharganj Branch dated 14.09.1989 (Page 172 D225) Ex. PW20/F4 (Colly.) whereby it was certified that M/s Globarc & Alloys Pvt. Ltd are enjoying temporary credit facilities with them to the tune of Rs. 10 Lacs, keeping pending the sanction of their final credit facilities to be sanctioned by them as their regular proposal is under consideration. The temporary facilities given to them are not called back till date. Amrit Lal Sirpaul, Ashok Sirpaul and Anil Sirpaul are the main directors of the company. Their dealings with them are satisfactory as per bank's procedure. They are having substantial work and good reputation in the market.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 119 of 207 CBI v. S P Manickam & ors 120
120. There is another letter of State Bank of India, Paharganj Branch dated 15.04.1989 (Page 46 D225) Ex. PW 20/F4 (Colly.) wherein it was certified that A3 has been maintaining Cash Credit Account with them and enjoying certain credit facilities. The conduct of the account was satisfactory and that the Directors of the company were the men of repute having good credit in the market. Anil Sirpaul was the key director of the company having good reputation in the market.
121. There is also a letter of A3 dated 25.09.1989 Ex.PW53/D13 (Page 149 D225) addressed to the Chief Manager whereby A3 had informed that they have paid the entire outstanding to the State Bank of India, Parharganj Branch and their account with them stood fully adjusted as of that day i.e. 25.09.1989. There was no liability on them from State Bank of India, Paharganj Branch, New Delhi. With this letter, they had submitted the original certificate dated 25.09.1989 issued by the Branch Manager, State Bank of India, Paharganj Branch. A3 also sent its copy to the Zonal Manager alongwith the enclosures.
122. The accused A1 in his statement u/s 313 Cr.P.C has admitted that A3 M/s Globarc & Alloys Pvt. Ltd was maintaining its account with State Bank of India, Paharganj and enjoying credit facilities before availing credit facilities from the Indian Bank. He stated that it is custom and practice prevailing in the banking industry to exchange credit information about the party who wishes to avail credit facilities from other bank. In this case, he had written to State Bank of India, Paharganj Branch, asking for credit opinion RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 120 of 207 CBI v. S P Manickam & ors 121 of M/s. Globarc & Alloy Pvt. Ltd. and the State Bank of India, Paharganj furnished a satisfactory report about M/s. Globarc & Alloy Pvt. Ltd. and informed that the party had completely adjusted the liabilities as on date and thereafter the credit facilities for M/s. Globarc & Alloy Pvt. Ltd. were recommended by the Branch to the Zonal Office.
123. In the instant case, PW22, the Branch Manager of the State Bank of India, Paharganj Branch had given the documents i.e. current account opening form to the IO vide memo Ex.PW22/A dated 23.04.1991 and PW36 proved the certified copy of the ledger pertaining to the account of M/s Globarc & Alloys Pvt. Ltd Ex.PW36/A and stated that M/s Globarc & Alloys Pvt. Ltd had opened the account in Paharganj Branch on 31.10.1988 Ex.PW36/A01 (D178) and the authorized signatories of the account were Amrit Sirpaul, Ashok Sirpaul and Anil Sirpaul.
124. The documents and the testimonies of the above witnesses go to show that A1 never informed the Zonal Office or the Regional Office that the account of A3 with the State Bank of India Paharganj Branch had been closed before recommending the various credit facilities in favour of M/s Globarc & Alloys Pvt. Ltd to the Zonal Office as alleged. Further, the prosecution did not bring any document/rule/order to show that any subsequent/second bank before recommending credit facilities to any company was required to ensure the closing of OCC account of that company in the previous bank. It appears that it was misinterpreted by the investigating agency that A1 while RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 121 of 207 CBI v. S P Manickam & ors 122 recommending various credit facilities in favour of A3 to the Zonal Office had mentioned that the account of M/s Globarc & Alloys Pvt. Ltd with State Bank of India Parharganj had already been closed as there is no document to show that A1 or A3 had informed this fact at any time to the Zonal Office or the Regional Office of Indian Bank.
E. M/s Globarc & Alloys Pvt. Ltd (A3) vide its letter dated 29.11.1989 requested the Indian bank to grant credit facilities of Rs.15.60 lacs on temporary basis for import of Ferro Nickel. S. P. Manickam (A1) recommended its sanction as an adhoc KCC to Zonal Office which sanctioned the credit limit of Rs.15 lacs on 08.12.2009. The material imported by A3 was pledged and Rs.15 lacs were disbursed to A3. A1 instead of getting the material cleared through the bank's clearing agent at Bombay, got it cleared through an agent of A3. Subsequently, the material was got chemically analyzed by C Ravindra Babu, the next Chief Manager and it was found substandard. A3 then got the said material replaced with Silicon Alloys lumps for which invoice No. 18579 dated 15.09.1990 of M/s Global Linkers in favour of A3 for Rs.24,10,770/ alongwith the photocopy of Invoice No. VI/C/13691 dated 29.08.1990 of M/s Vikram International, Calcutta for supply of Silicon Alloys Lumps for RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 122 of 207 CBI v. S P Manickam & ors 123 Rs.27,68,688/ was submitted which was found forged and bogus by investigating agency as M/s Vikram International denied to have supplied any such material to M/s Global Linkers, sister concern of A3.
125. Perusal of the documents would reveal that on 11.09.1989 M/s Marvi Industries Services Pvt. Ltd had sent sale confirmation no. TCW/1265 to M/s Globarc & Alloys Pvt. Ltd regarding import of Ferro Nickel TFN 1/40 with its specifications: NI - 38 - 43%, CU
- 0.5%, C - 0.04%, S - 0.05%, P - 0.025%, SI - 0.6%, CO - 1/50 NI, Size - 230 MM. It was stated that the documents are to be drawn on New Bank of India, Tolstoy Marg, New Delhi. M/s Globarc & Alloys Pvt. Ltd approached the Chief Manager, Indian Bank vide letter dated 29.11.1989 stating therein that they have opened an overseas letter of credit and placed an order with M/s Trelbacher Chemische Works AG Austria sometime in September 1989 for supply of 40 MT Ferro Nickel in two consignments, one each of 20 MT. The first consignment of 20 MT packed in 80 drums was dispatched on 06.10.1989 from Trieste/Austria to Bombay. They had requested the local shipping agency at Bombay to dispatch the material from Bombay for ultimate delivery at ICD, Delhi. The documents which were to be retired by New Bank of India were received by them. The value of the material was about Rs. 15,58,000/. It was stated that they shall arrange to make the payment within thirty days from the date of pledging the goods and get these goods released from the Indian RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 123 of 207 CBI v. S P Manickam & ors 124 Bank. The copy of this letter was also sent to the Zonal Manager, Indian Bank. The proposal was processed by the Chief Manager/A1.
126. The Branch office vide letter Ex.PW1/21 dated 07.12.1989 explained the limit positions that the company / A3 vide letter dated 29.11.1989 had informed that the company was importing from M/s Triebacher Chemische works Ag, Austria, 40 MT of Ferro Nickal under OGL and that the goods would be dispatched in two lots and that one lot of 20 MT had already been dispatched and the documents were with New Bank of India, Tolstoy Marg. The second lot was stated to be arriving during the month's time and according to the party, the total value of 20 MT of Ferro Nickel would be approximately Rs. 23 lacs. Against the said value of Ferro Nickel, A3 has requested for a temporary advance of Rs. 15.60 lacs for clearing the consignment by pledging the goods promising to clear the advance within 30 days from the day the goods would be pledged. It was recommended that temporary advance of Rs. 15.60 lacs against the goods to be imported be sanctioned under trust limit and the securities given for the other facilities shall be the additional securities to this adhoc advance. It was also submitted that regarding second lot of 20 MT, the party has informed that they would make their own arrangement for clearing the consignment.
127. The proposal was approved by the Zonal Office for Rs. 15 lacs vide ticket no. 61/89 dated 08.12.1989, Ex.PW17/C. This fact has been proved by PW17. He has deposed that the adhoc limit of RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 124 of 207 CBI v. S P Manickam & ors 125 Rs. 15 lacs was sanctioned to A3 M/s Globarc & Alloys Pvt. Ltd by the Zonal Office subject to the certain conditions and as per condition no. 2, the goods were to be got cleared through the approved clearing agent at Bombay.
128. PW17 has also deposed that there was a list of approved clearing and forwarding agents of Indian Bank. It was circulated to the regional and zonal office of the bank along with the covering letter dated 15.07.1988. The list of the clearing and the forwarding agents was also circulated vide circular dated 28.08.1991. PW21 has stated that the list of the approved clearing and forwarding agents dated 28.08.1991 does not find mention the name of M/s Dharam Dass & Co. based in Bombay as clearing agent. He stated that usual/normal procedure was to hand over the bill of lading to the clearing agent for clearance and he would forward it for storage. When there is no approved list available in the branch, the Branch Manager obtains the list of approved agents from the controlling office like regional / Zonal Office.
129. It is true that the goods imported were not got cleared by A1 by any clearing agent, approved by the Bank rather they were got cleared through M/s Dharam Dass & Co, an agent of A3 but the prosecution failed to explain what prejudice had caused to the Bank for not getting the above goods cleared through the approved agent of the Bank.
130. It is pertinent to note that in the instant case, the goods were imported in September, 1989 i.e. well before 28.08.1991 the day on which the list of approved/clearing agents was circulated in the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 125 of 207 CBI v. S P Manickam & ors 126 Regional/Zonal Office. The accused/A1 has given an explanation that the approved list of clearing and forwarding agent of Indian Bank as on 15.07.88, addressed to the Zonal Manager by the Head Office was regarding suggestion qua deletion/addition of approved clearing agents and that the said circular was never sent to the branches. Circular dated 28.08.91 was not of his period in the branch. A1 has further stated that Rana Pratap Bagh Branch was not authorized to deal in foreign exchange business and for this reason, the circular was never sent to his branch of the bank and that he acted in the usual course of business. A1 further stated that he always followed the instructions as given by the Superior Authorities. I find that the explanation given by the accused A1 is plausible and appeals to the reason in the absence of any evidence or material contrary to it.
131. In the instant case, after A1 was relieved from the bank, his successor got the material under the adhoc KCC tested from the laboratory after taking the samples and the report in respect of Ferro Nickel under adhoc KCC Ex. PW 20/F4 colly (Page 439 D
225) is as under :
Silicon 4.6%
Iron 14.0%
Nickel Nil
Copper Nil.
132. Question arises why the necessity arose to take the samples and get them tested? Who drew the samples? Whether the samples were taken in the presence of the Directors of the Company or RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 126 of 207 CBI v. S P Manickam & ors 127 not? Who took the samples to the laboratory? No witness in this regard was examined by the prosecution. Even the test report has not been proved in accordance with the prescribed procedure of law nor it was tendered in evidence. Testimony of PW42 shows that an ordinary person who is not an expert cannot evaluate the quality of the material. A1 was not a technical person. He is from the commerce background. He did not have the knowledge of chemical composition of the goods. Even otherwise as per manual of the instructions of the Bank, Ex. PW48/X1, it was not incumbent upon A1 to insist for the quality check of the goods to be kept under the KCC before allowing the KCC by sending the goods to the laboratory. The Bank Manager was obliged to verify the aforesaid quality, brand name, packing, price etc as given in the invoice submitted by the party and then allow the limit and the same was also done by A1 in this case. KCC (Key Cash Credit) is a running account where the goods are lodged by the concerned officer as and when a party requests. The goods are released as and when the party provides the funds in their account.
133. The facts & circumstances of the case show that what A1 did, was in good faith and it was not mandatory for A1 to get the quality of the material/goods ascertained or to verify the genuineness of the firms which had supplied the material before allowing them to be pledged under adhoc KCC. More so, A1 had no reason to be suspicious about the credibility of A3 at that time.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 127 of 207 CBI v. S P Manickam & ors 128
134. It is relevant to mention that when the factum of failing of sample of Ferro Nickel was brought to the notice of M/s Globarc & Alloys Pvt. Ltd, A3 immediately replaced the material with Silicon Alloy Lumps which it claimed to have purchased from Global Linkers vide challan/ Invoice No.18579 dated 15.09.90 amounting Rs. 24,10,270/ and Global Linkers claimed to have purchased it from Vikram International, Calcutta vide Invoice No. 13691 dated 29.08.90 mark 'X" (D70). Testimony of PW16 reveals that Vikram International, did not have any dealings with M/s Globarc & Alloys Pvt. Ltd nor with Global Linkers, Bombay and they did not supply any material to M/s Global Linkers, Bombay.
135. The Chief Manager in his letter dated 20.09.1990 Ex.PW20/F3 colly. (D227 page 311) addressed to the Zonal Office had stated that since the Nickel content in the stock of Ferro Nickel kept under KCCII was Nil and the consequent value of the stock was not sufficient to cover the liability under KCC, after obtaining permission from zonal office orally, bank got replaced Ferro Nickel with Silicon Alloy Lumps on 15.09.1990. The total weight of the material pledged was 14.688 MT worth of Rs. 23,37,000/. The goods of Ferro Nickel earlier pledged were released to the company after taking Silicon Alloy Lumps which were purchased from Global Linkers, a sister concern of M/s Globarc & Alloys Pvt. Ltd on an unsecured loan basis.
136. It is pertinent to mention that successor of A1 did not get the Silicon Alloy Lumps tested from the laboratory when the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 128 of 207 CBI v. S P Manickam & ors 129 company replaced Ferro Nickel with Silicon Alloy Lumps.
137. It is strange that the sanction for prosecution was accorded only against A1 and not against his successors for the same act. Question arises when successor of A1 got tested the previous material, what had prevented him from getting tested the subsequent material when the doubt had already arisen as to the quality of goods pledged by M/s Globarc & Alloys Pvt. Ltd with the Indian Bank against which the Credit facilities were released under adhoc KCC.
138. It is to be mentioned that the goods under KCC were replaced with new goods. Further, when the facility under adhoc KCC was released, M/s Globarc & Alloys Pvt. Ltd had already mortgaged the property with the Bank in addition to other securities. That being the position, no criminal liability can be fastened upon A1 on this count.
139. The documents, however show that M/s Global Linkers was the sister concern of M/s Globarc & Alloys Pvt. Ltd. PW9 and PW15, the employees of M/s Globarc & Alloys Pvt. Ltd and its sister concern also substantiated this fact.
140. It is thus proved that A3 had submitted the false/bogus bill purported to be related with the purchase of Silicon Alloy Lumps from Vikram International by M/s Global Linkers, a sister concern of M/s Globarc & Alloys Pvt. Ltd with which the earlier material was replaced by M/s Globarc & Alloys Pvt. Ltd under adhoc KCC.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 129 of 207 CBI v. S P Manickam & ors 130 (F) (i) Under the documentary bill purchase facility (DBP), A3 M/s Globarc & Alloys Pvt. Ltd submitted various bills for discounting in Indian Bank, Rana Pratap Bagh Branch. The bills drawn for supply of different materials bearing the signatures of A2 were sent to the companies for collection and the amounts were credited into the account of A3. The bills were received in the Banks of the respective companies and were returned unpaid as the payment of the bills were not made by the companies.
(ii) S. P. Manickam (A1) recommended enhancement of documentary bill purchase limits of M/s Globarc & Alloys Pvt. Ltd on 16.01.90 from Rs. 20 lacs to Rs. 30 lacs and deliberately did not inform the Zonal Office regarding the two bills having been returned unpaid with the account of M/s Globarc & Alloys Pvt. Ltd and thereby caused / obtained pecuniary advantage and causing loss to the bank and corresponding gain to himself/themselves or coaccused persons.
(iii) Ashok Sirpaul (A2) on behalf of M/s Globarc & Alloys Pvt. Ltd lodged cheques issued by K.B. Chemicals and got them discounted which were returned unpaid on account of 'insufficient funds'. M/s K.B. Chemicals was in the name of RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 130 of 207 CBI v. S P Manickam & ors 131 Babu Lal who was noneelse but Hukam Chand, employee of A2 in the company of M/s Globarc & Alloys Pvt. Ltd.
141. In the instant case, PW1 has explained the procedure of discounting of bills. He has stated that if the outward bill for collection is purchased by the Bank, marking is made 'reverse and taken' in BP (bill purchase) with date. If the payment is received later from the outward bank, the relevant credit and debit entry is made in the account of the party and not in the register. Whenever the bill is not purchased by the Bank, on receipt of payment from the outside bank against the outward bill, the entry is rounded off with the date of payment. On receipt of payment, the postage expense and commission is deducted by the bank and the relevant entry is made in the register. Where the bill is not purchased by the bank before the receipt of payment against the bill and payment is not ultimately received from the outward bank against the bill/cheque, the entry is reversed in BP register and relevant debit entry is made in the account of the party and the party is instructed to make the payment against the unpaid bill/cheque. As per the normal procedure, when the bills of the parties exceed their sanctioned limits, the bills are not purchased by the bank but the same are sent by the Bank for collection. As and when, the payments are received against the bills of the outwards cheques, the same are credited in the account of the party. The limit of the party is a running account which is adjusted with the debit and credit entries of the parties. For example, if the payment against a RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 131 of 207 CBI v. S P Manickam & ors 132 particular bill is received, that bill will be adjusted in the credit limit. If the limit of the party is Rs. 20 lacs which is exhausted on a particular day and thereafter payment of Rs. 5 lacs is received against a particular cheque, the limit of Rs. 5 lacs will have a space and another bill to the extent of maximum limit can be purchased by the bank again. The clerk/officer of the bank who deals with the bank purchases are responsible to maintain the register and it is counter signed by the concerned office but it does not require the counter signature of the Branch Manager.
142. According to PW7, in case, the bills of the parties are returned unpaid, it becomes the duty of the Chief Manager to debit the amount of the said unpaid bill in the account of the party to adjust the amount and inform the higher official in due course at the time of renewal of facilities. He stated that there are several instances when the bills purchased during his tenure were returned unpaid and he had not complained to the higher authorities regarding the return of the bills purchased.
143. According to PW13, bill purchase means the party is sanctioned a Bill Purchase Limit by the higher Authority. When the party submits the bill to the bank, the bank purchases the bill after verifying the genuineness of the documents to the extent of the limit available and credits the amount in the account of the party after deducting the margin amount and other charges.
144. According to PW17, powers are delegated for sanction of advances/facilities to the various sanctioning authority vide Ex.PW17/D which provides that if the Head Office/Zonal Office RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 132 of 207 CBI v. S P Manickam & ors 133 or the regional office has sanctioned advance facility to a party, on the second time, advance facility cannot be sanctioned by the lower authority on the basis of earlier sanction. For the second time, the party is required to submit fresh application for the loan facility to the same authority which has sanctioned the advance loan facility. In case, where the party seeks enhancement in the advance facility, the Branch Manager processes the application and submits it to the sanctioning authority for approval. He admitted that letter Ex.PW17/B regarding enhancement of facility was addressed by the Branch Manager to the Zonal Office.
145. PW20 has stated that periodical inspection, annual inspections or surprise inspections of different branches of the Bank used to be conducted by the Regional Office or the Zonal Office.
146. According to PW21, when the bills are returned as unpaid, normally the party brings sufficient funds to clear the liability. Further discounting should not be done. Enhancement of limits are normally considered annually when the account is free from irregularity like non payment of bills, shortage of goods etc.
147. PW48 explained the procedure of sanction of loan prevalent during the period from 19881992. He stated that the loan proposal used to be submitted in the branches by the parties. After scrutiny, recommendations used to be made by the branch to the Regional Office. The proposal used to be accompanied by credit report, project report and the opinion of the branch. The credit report contains the details of the parties. In the head office, all the details used to check along with the documents and in case all the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 133 of 207 CBI v. S P Manickam & ors 134 conditions were fulfilled, the sanctioning authority at the head office used to sanction the loan. In case of any deficiency, the details used to be asked from the branch or the Zonal Office or the Regional Office. He proved the manual of instructions in respect of the working of the bank including loans and advances and the circular / standing orders issued from time to time Ex.PW48/X1.
148. In the instant case, as per the documents Ex.PW11/A and Ex.PW11/E, A3 got discounted the bills from the Indian Bank in respect of supply of materials to Industrial Minerals and Metals at Jajpur Road, District Cuttak, Orissa on 13.03.1990. The bills were sent to Central Bank of India, Jajpur Road and as per the endorsement of the Central Bank of India Ex.PW11/D dated 04.10.1990, the bills were returned unpaid with the remarks 'payments not forthcoming'. The aforesaid bills were in respect of supply of Nickel Alloy for Rs. 2,27,500/ respectively.
149. As per the documents Ex.PW15/12 and Ex.PW15/14, A3 got discounted the bills from Indian Bank in respect of supply of materials i.e. Ni. Cr.SSAlloy to Globe Industries, Bombay on 17.04.1990. The bills were sent to Bank of Baroda, Bombay and as per the endorsement of Bank of Baroda Ex.PW6/1 and Ex.PW6/2 dated 19.08.1990 and 18.09.1990, the bills were returned unpaid with the remarks 'payments not forthcoming'. The bills were of Rs. 3,84,800/ and 3,49,960/ respectively.
150. As per the documents Ex.PW15/16 and Ex.PW15/18, A3 got discounted the bills from Central Bank in respect of supply of materials to Industrial Minerals and Metals at Jajpur Road, RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 134 of 207 CBI v. S P Manickam & ors 135 District Cuttak, Orissa on 26.04.1990. The bills were sent to Central Bank of India, Jajpur Road and as per the endorsement of the Central Bank of India Ex.PW26/A1 dated 04.09.1990, the bills were returned unpaid with the remarks 'payments not forthcoming'. The aforesaid bills were in respect of supply of Nickel Moly SS Alloy for Rs. 3,49,960/ and 4,89,944/ respectively.
151. As per the documents Ex.PW15/20 and Ex.PW15/22, A3 got discounted the bills from the Indian Bank in respect of supply of materials to BHEL Haridwar on 11.05.1990 and 25.05.1990. The bills were sent to BHEL (Bank State Bank of India) but they were returned unpaid vide letter dated 13.08.1990 with the remarks that the party visited on them and informed them that material was wrongly booked to CFFP. The aforesaid bills were in respect of supply of Ferro Vanadium Lumps for Rs. 4,06,348/ and Rs. 2,70,400/ respectively.
152. As per the documents Ex.PW15/24 and Ex.PW15/26, A3 got discounted the bills from the Indian Bank in respect of supply of materials to Industrial Alloys, Calcutta on 21.05.1990. The bills were sent to Punjab National Bank, Calcutta and as per the endorsement of the Punjab National Bank Ex.PW26/A4 dated 18.08.1990, the bills were returned unpaid with the remarks 'party refused to take the bills'. The aforesaid bills were in respect of supply of Nickel Moly S.S. Alloy for Rs. 5,28,320/ and Rs. 3,30,200/ respectively.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 135 of 207 CBI v. S P Manickam & ors 136
153. As per the documents Ex.PW15/28 and Ex.PW26/A7, A3 got discounted the bills from the Indian Bank in respect of supply of materials (NI Tungston Alloy) and Nickel Moly to Nobal Alloys Manufacturer Calcutta for Rs. 2,37,120/ and Rs. 5,28,320/ on 25.05.1990 and 28.05.1990 respectively. The bills were sent to State Bank of India, Calcutta and as per the endorsement of the State Bank of India Ex.PW26/A6 and Ex.PW13/9 dated 24.11.1990 and 22.11.1990, the bills were returned unpaid with the remarks 'payments not forthcoming'.
154. As per the documents Ex.PW15/30 and Ex.PW15/32, A3 got discounted the bills from the Indian Bank in respect of supply of materials to Venus Metal Corporation, Bombay on 18.06.1990. The bills were sent to Bank of Baroda, Bombay and as per the endorsement of the Bank of Baroda Ex.PW6/3 and Ex.PW6/4 dated 18.09.1990, the bills were returned unpaid with the remarks 'payments not forthcoming'. The aforesaid bills were in respect of supply of Nickel Chrome SS Alloy and Nickel Titanium for Rs. 2,05,920/ and Rs. 2,47,000/ respectively.
155. As per the documents Ex.PW26/6, A3 got discounted the bills from the Indian Bank in respect of supply of materials to Industrial Alloys, Calcutta on 28.05.1990. The bills were sent to Punjab National Bank and as per the endorsement of the Punjab National Bank, the bills were returned unpaid. The aforesaid bills were in respect of supply of NI Moly Alloy for Rs. 3,96,240/.
156. Testimonies of PW6, PW8, PW50, PW11, PW12, PW37 and PW51, the officials of the Bank of Baroda, Bombay, State Bank RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 136 of 207 CBI v. S P Manickam & ors 137 of India, Indian Exchange Branch, Calcutta, Central Bank of India, Jajpur Road, Cuttak and Punjab National Bank, Calcutta reveal that the bills were received in their respective banks but the parties did not retire / refused to retire the bills and the bills were returned unpaid to the Indian Bank, R.P. Bagh Branch. Testimonies of PW10, PW24, PW31, PW33, PW34, PW41 and PW49 also show that the bills were submitted by A3 with the Indian Bank qua the supply of Ferro Vanadium to Bharat Heavy Electrical Ltd. (BHEL) at their site at Haridwar which A3 later informed the BHEL that the goods were wrongly booked. Since A3 did not lift the material from Haridwar, the goods were transported through Railway at Bareilly. Testimony of PW1 also shows that A3 was extended bill purchase facility. However, the bills sent to the collecting banks were received back unpaid as the parties did not claim the goods nor retired the bills.
157. The accused A1 in his statement u/s 313 Cr.P.C has stated that his tenure in Rana Pratap Bagh Branch was from 23.03.1988 to 22.04.1990. This fact is also substantiated by DW2, Assistant General Manager posted in Indian Bank, Zonal Office, New Delhi. He also proved the copy of the letter Ex.DW2/2. DW5 has stated that A1 joined the branch in March, 1988 and worked as Manager Incharge of the Branch till April, 1990. He also proved the attendance register being maintained in the Branch during the period from October, 1989 to November, 1989 Ex.DW5/C. He stated that PW7 K.K. Batra was next to A1. This witness also proved the following statement EXDW5/A showing the details of RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 137 of 207 CBI v. S P Manickam & ors 138 bills purchased during the period from 11.10.1989 to 18.02.1992 qua M/s Globarc & Alloys Pvt. Ltd (A3):
S Date of B.P. Amount Bill drawn on Reversed Remarks No Purchase No. Purchased on
1. 11.10.89 DBP 2,00,000.00 M/s Globe Industries 31.12.89 Payment 1437 through proper channel
2. 11.10.89 1438 2,00,000.00 M/s Globe Industries 12.12.89 Payment through proper channel
3. 12.10.89 1489A 94,008.00 M/s Globe Industries 14.12.89 Payment through proper channel
4. 12.10.89 1489B 94,008.00 M/s Globe Industries 31.12.89 Payment through proper channel
5. 13.10.89 1499 23,660.00 Sri Rama Krishna Rings 09.01.90 Payment through proper channel.
6. 24.10.89 1630 1,89,987.20 Ferro Alloys 16.11.89 Returned
7. 24.10.89 1631 1,89,987.20 Ferro Alloys 16.11.89 Returned
8. 23.11.89 2071 93,879.00 Rama Krishna Steels, 31.03.90 Reversed Coimbatore
9. 24.11.89 2077 5,40,849.60 M/s Globe Industries 06.02.90 Payment through proper channel 10 29.11.89 2168 3,65,190.40 Noble Alloys 21.03.90 Reversed 11 29.11.89 2169 3,65,190.40 Noble Alloys 29.05.90 Payment through proper channel 12 14.12.89 2364 3,00,000.00 M/s Globe Industries 16.03.90 Payment through proper channel 13 03.01.90 2684 2,69,194.00 M/s Globe Industries 26.04.90 Returned 14 03.01.90 2685 2,69,194.00 M/s Globe Industries 16.03.90 Payment through proper channel 15 10.01.90 2800 20,124.00 Sri Ramkishan Rings 17.02.90 Payment through proper channel RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 138 of 207 CBI v. S P Manickam & ors 139 S Date of B.P. Amount Bill drawn on Reversed Remarks No Purchase No. Purchased on 16 19.01.90 2926 3,72,229.20 P.D.Aggarwal & Co. 26.04.90 Returned 17 20.01.90 2987 3,49,297.20 Globe Industries 06.04.90 Payment through proper channel 18 06.02.90 3242 3,44,149.20 P.D.Aggarwal & Co. 19.06.90 Returned 19 11.02.90 DBP 2,50,000.00 Globe Industries 24.05.90 Payment 3323 through proper channel.
20 21.03.90 OBC 89,622.00 Viswarya Steel Ltd 09.06.90 Payment 719 through proper channel 21 21.03.90 OBC 2,04,750.00 Ind. Minerals & Metals 17.10.90 Returned 720 22 21.03.90 OBC 2,04,750.00 Ind. Minerals & Metals 17.10.90 Returned 721 23 23.03.90 OBC 2,69,100.00 Globe Industries 24.05.90 Payment 766 through proper channel 24 03.05.90 222 3,14,964.00 Ind. Minerals & Metals 13.09.90 Returned 25 03.05.90 223 4,40,950.00 Ind. Minerals & Metals 19.09.90 Returned 26 13.05.90 362 3,65,714.00 BHEL 02.09.90 Returned 27 23.05.90 477 3,96,240.00 Ind. Alloys 18.08.90 Returned 28 23.05.90 478 2,47,650.00 Ind. Alloys 18.08.90 Returned 29 26.05.90 529 2,43,360.00 BHEL 02.09.90 Returned 30 16.06.90 763 3,46,300.00 Globe Industries 22.09.90 Returned 31 16.06.90 764 3,46,300.00 Globe Industries 22.09.90 Returned 32 21.06.90 838 1,85,330.00 Venus Metal 22.09.90 Returned Corporation 33 21.06.90 839 2,22,300.00 Venus Metal 22.09.90 Returned Corporation 34 21.06.90 840 3,56,610.00 Industrial Alloys 19.08.90 Returned 35 21.06.90 841 4,75,490.00 Noble Alloys 28.11.90 Returned 36 29.05.90 539 2,13,320.00 Nobel Alloys 30.11.90 Returned
158. The statement Ex. DW 5/A shows that total 36 documentary bills to the tune of Rs.94,53,697.40 were purchased. Out of the said RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 139 of 207 CBI v. S P Manickam & ors 140 bills, 23 bills were purchased during the tenure of A1 for a value of Rs.52,99,169/. Out of 23 bills, 16 bills were retired by the respective parties. Out of the 15 bills purchased and returned leading to outstanding of Rs.46,99,459/, only two bills were purchased during the tenure of A1 i.e Bill No. 720 and 721 dated 21.03.90 for an amount of Rs.4,09,500/. Rest of the 13 documentary bills were purchased by the successors of A1 which fact is also evident from the testimony of PW7. Record shows that A1 had informed the zonal office regarding the return of the bills/adjustments.
159. I agree with the submissions of ld. defence counsel that as the regular facilities were sanctioned on 23.10.89, the next review of the facilities was to be done after six months i.e. in April, 1990 and the renewal was to be carried in October, 1990 i.e after one year when the complete details were to be furnished.
160. PW7 has stated that in case, the bills are returned unpaid, it becomes the duty of the Chief Manager to debit the amount of unpaid bills in the account of the party to adjust the amount and inform the higher authority in due course at the time of renewal of facilities. PW7 also has stated that there were instructions from the higher authorities to purchase the bills. He quoted several instances when the bills purchased during his tenure were returned unpaid. He also admitted that he did not complain to the higher authority in this regard. This shows that A1 never suppressed the information relating to the return of bills which were purchased during his tenure. He had rather informed the Zonal Office about RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 140 of 207 CBI v. S P Manickam & ors 141 the return of bills for payments.
161. As per the chargesheet, A1 had discounted two bills each amounting to Rs. 2,27,500/ of Industrial Mineral and Metals. The bills were sent to the Central Bank of India, Jajpur Road, Cuttack which were returned unpaid with the remarks 'payment not forthcoming'. It is not the case that A3 did not have any business dealings with Industrial Mineral and Metals as the said firm had earlier discounted the bills. It is worth mentioning that when the bills were allowed to be discounted, A3 had already created equitable mortgage by pledging the properties. It is also to be mentioned that subsequent to the relieving of A1, PW7 and Ravinder Babu also discounted the bills which were returned unpaid.
162. The record and the correspondence show that the Branch Manager (A1 from time to time had updated the position of A3 M/s Globarc & Alloys Pvt. Ltd and his actions/decisions were ratified by the Zonal Office. It is relevant to quote some of the instances:
(i) The Zonal Manager vide letter dated 16.10.89 to the Chief Manager confirmed the action of the Chief Manager for having opened the inland LC in favour of Madan Lal Agencies, Calcutta for Rs. 16,64,208/ for purchase of 45 MT of SS Steals on 05.11.1989.
(ii) Vide sanction letter 57/89 dated 07.11.1989, the Zonal Office sanctioned the import LC of Rs. 20 lacs and inland LC of Rs. 20 lacs for a period of one year pursuant to the proposal dated 26.10.1989 sent by the Branch Office.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 141 of 207 CBI v. S P Manickam & ors 142
(iii) Vide letter dated 11.10.1989 Ex.PW1/19, the Chief Manager had submitted to the Zonal Office, the fresh proposal of A3 for sanction of working capital facilities. It was stated that A3 was formed by taking over the assets of M/s Amrit Refractories (P) Ltd on 16.11.1989. The unit is engaged in the manufacture of Ferro Alloys, Aluminum Powder and Welding Electrode having its office at 3 IDC, Gurgaon. Till A3 was enjoying temporary credit facilities upto Rs. 10 lacs from State Bank of India Paharganj Branch and the liability was fully adjusted as of 25.09.1989 vide SBI Paharganj Branch Letter dated 25.09.1989. It was stated that the company had proposed to change the name of the company from Amrit Refractories Pvt. Ltd to M/s Globarc & Alloys Pvt. Ltd. It was also stated in the letter that while this proposal was being processed, due to urgency expressed by the party, the Branch Office had released KCC loan of Rs. 13.50 lacs in two stages i.e. Rs. 10 lacs on 29.08.1989 and Rs. 3.5 lacs on 01.09.1989 and purchased one Doc. BP for Rs. 6,28,893/ vide letter dated 06.09.1989 which transactions were confirmed by the Zonal Office vide ZO:SSI:724:89 dated 20.09.1989.
(iv) The Zonal Office vide sanction 46/89 dated 23.10.1989 sanctioned OCC limit of Rs. 25 lacs, KCC limit of 20 lacs, DOC:BP of Rs. 20 lacs , sub limit of cheque BP of Rs. 3 lacs pursuant to the proposal dated 26.10.1989.
(v) The Zonal office vide sanction 61/89 dated 08.12.1989 sanctioned the adhoc KCC interest facility for Rs. 15 lacs for a period of 30 days pursuant to the proposal dated 07.12.1989.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 142 of 207 CBI v. S P Manickam & ors 143
163. It was contended that A1, without mentioning the two bills being returned unpaid, recommended for the enhancement of OCC limit from Rs. 20 lacs to Rs.30 lacs. The correspondence shows that A 1 from time to time had informed the Zonal Office about the transactions and the operation of the account of A3. He had reported to the zonal office on 07.12.1989 vide Ex.PW1/21 and Ex.PW7/DA about the two bills purchased on 24.10.1989 for Rs. 1.90 lac each drawn on Ferro Alloys Bombay which were returned due to change of address of drawer at Bombay. Similarly, he had reported to the zonal office vide letter dated 16.01.1990 about the status of various accounts of the party. He had also reported that under the documentary bill purchase, four bills amounting to Rs. 13.60 lacs were pending for more than 45 days while recommending the BP limit enhancement. The zonal office vide letter dated 18.01.1990 giving the sanction vide ticket no. 2/90 dated 16.01.1990 had sought clarification regarding the overdue bills amounting to Rs. 13.65 lacs as on 16.01.1990. This itself shows that A1 had updated the zonal office regarding over due bills. Nothing can be inferred from the documents that he concealed any information from the Zonal Office. So it cannot be said that A1 had not deliberately informed the zonal office regarding the two bills having returned unpaid. Facts & circumstances show that the A1 regularly informed the zonal office regarding the account of A3. He used to seek confirmation from any action done. He furnished all the relevant details of the borrower to the zonal office.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 143 of 207 CBI v. S P Manickam & ors 144
164. In the instant case, after A1 was relieved from the Bank, his successor PW7 vide his letters addressed M/s Globarc & Alloys Pvt. Ltd dated 26.04.1990 and 28.04.1990 (Ex.PW20/C) pointed out various deficiencies in the stocks / working of the company and directed the company to make good the deficiencies and the position of the outstanding bills in the various limits granted by the Bank. PW7 also asked M/s Globarc & Alloys Pvt. Ltd (A3) to submit information relating to the Stock position duly audited. In response thereto, A2 being the Director of A3 M/s Globarc & Alloys Pvt. Ltd vide letter dated 30.04.1990 Ex.PW20/B wrote to the Zonal Manager asking him to look into the matter and give instructions to the Branch not to stop further purchasing of their bills drawn on the parties pending receipt of the credit reports. The copy of the letter was also sent to the Asstt. General Manager and pursuant thereof, a meeting was held at the Zonal Office which was presided over by T. Valliappan. The matter was discussed in detail. It is relevant to reproduce the minutes of the meeting held on 02.05.1990:
Present:
Sh. T. Valliappan Asstt. General Manager, Sh. Gopalan - DCO (Credit) RO Sh. K.K. Batra - Manager R.P. Bagh Branch Sh. Ashok Sirpaul - Director, Globarc & Alloys (P) Ltd. Following are the minutes of the meeting:
1. The conduct of doc. BP a/c was discussed and the following observations were made:
A. 23 bills amounting to Rs. 58.65 lakh have been discounted by the branch during the period Sept 89 to March 90.
B. 5 bills amounting to Rs. 11.15 lakh have been returned since the payments have n ot been forthcoming.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 144 of 207 CBI v. S P Manickam & ors 145 Besides one bill of Rs. 3.65 lakh was reversed to the debit of OCC a/c and payment of this bill is still outstanding. C. One bill for Rs. 2.69 lakh is outstanding in BP returned unpaid a/c.
D. 7 bills amounting to Rs. 17.27 lakh were outstanding as on date. Of the outstanding bills, 3 bills totalling to 9.5 lakh were more than 60 days old and one bill amounting to Rs. 3.65 lakh was more than 90 days old. It was informed by Mr. Ashok Sirpaul that this bill has since been paid and bank will be receiving payment anytime.
D. The average period of realization of demand bill has been 75 days.
E. (i) The branch does not hold on record credit opinion of the drawees though the branch has written to the drawee bank. The branch has not complied with the sanction stipulation of obtaining credit opinion about the drawee before discounting bills. The same has to be now expedited by the branch by taking up with the drawee's Bank.
(ii) EM of property at Shakarpur has not been created by the branch since that was not possible in the absence of registered deed which is likely to take uncertain time.
F. (i) Since fulfilling these conditions now before discounting further bills will inconvenience the company, AGM permitted to discount 2 bills amounting to Rs. 8.5 lakh drawn on M/s Industrial Minerals and Metals without insisting for the condition of billing credit opinion of the drawee on record. At this time, 2 bills amounting to Rs. 4.09 lakh drawn on this party are outstanding since 21.03.1990.
A part amount of this bill i.e. 2.69 lakh is to be utilized in adjusting Rs. 2.69 lakh, the liability in BPs returned unpaid a/c.
(ii) The company is having an order of 6.5 lakh from M/s BHEL Haridwar. Bills drawn under this order is permitted by AGM to be discounted outside the overall limit of 30 lakhs advance amount not to exceed 5 lakhs.
(iii) Branch is permitted to allow cheq BP from 3 to 5 lakhs within overall limit of 30 lakh.
(iv) Bills on Globe Industries at present lying with the branch to be sent for collection under OBC.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 145 of 207 CBI v. S P Manickam & ors 146 No bill on this party to be purchased till the bank is satisfied with its credit worthiness.
2. The company to liquidate advance bill liability before the month end.
3. AGM agreed in principle for conversion of IInd KCC into OCC in due course. As regards Ist KCC, company promised movement of stocks immediately and to regularize this a/c by month end by retiring entire KCC stocks. The company to furnish all the financial statements before May end.
165. The minutes of the meeting were communicated to the Branch Manager, Rana Pratap Bagh Branch vide letter dated 17.05.1990 Ex.PW21/C. The Branch Manager, in compliance of the directions contained in the minutes of the meeting vide letter dated 03.05.1990 wrote to the AGM, Regional office giving the reference of the minutes of the meeting that they have discounted two bills of Rs. 8.38 lacs drawn on M/s Industrial Minerals and Metals as permitted by them in the absence of the credit opinion of the drawee. They have also allowed cheque BP upto 5 lac as per their permission. The documents and the record show that bills were further discounted even when some of the bills were returned unpaid. This was done in the tenure of PW7 and C. Ravinder Babu, successors of A1. The correspondence clearly show that the Senior Officers were informed from time to time as to the discounting of bills. It is not the case that A1 alone had discounted the bills. The bills were also discounted by the successors of A1 i.e PW7 K K Batra and C. Ravinder Babu.
166. It is pertinent to mention that neither K.K. Batra nor C. Ravinder Babu were sought to be prosecuted and everything was blamed on RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 146 of 207 CBI v. S P Manickam & ors 147 A1. Facts & circumstances brought on record show that A1 performed his duties with due diligence and he never had dishonest intention to favour A3 M/s Globarc & Alloys Pvt. Ltd.
G. EVIDENCE OF PW54 HUKUM CHAND WHO
EARLIER WAS ACCUSED BUT LATER MADE
APPROVER
167. As per the case of the prosecution, PW54 Hukum Chand was earlier the accused. During the investigation, an application was moved for making him approver which application was allowed by the then Ld. MM after recording his statement u/s 164 CrPC. He was granted pardon. In the instant case, the prosecution did not place on record any document either original or photocopy in this regard. An inquiry was conducted but no such record could be traced/retrieved.
168. PW54 in his deposition has stated that on the threat given by Anil Sirpaul, Director of A3, he impersonated himself as Babu Lal and opened an account in the name of M/s K B Chemicals. The account was introduced by Anil Sirpaul. He got issued a cheque book on which his blank signatures were taken on the basis of which A2 discounted the cheques. PW35, who was posted as Branch Manager in State Bank of Patiala, Gurgaon, Haryana, has stated that M/s K. B. Chemicals Industries had opened an account with the bank vide account opening form marked Ex. PW 35/B. He also proved the specimen signature card marked Ex. PW 35/C. RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 147 of 207 CBI v. S P Manickam & ors 148 He stated that a cheque book was issued to M/s K B Chemicals. He proved the entries dated 08.08.1990 in respect of cheques No. 699350 and 699344 for Rs.53,431.50 and Rs.72,000/ respectively issued by M/s K.B. Chemicals from current account No. 815 in favour of M/s Globarc & Alloys Pvt Ltd (A3) presented through Indian Bank which were returned unpaid due to insufficient funds as the balance was Rs.1569.39.
169. PW55/IO has stated that PW54 was produced before the Court of Ld. M.M and his statement was recorded on 09.12.1994. Vide order dated 22.12.1994, he was granted pardon. PW55 also stated that the documents/copy of the documents could not be traced despite efforts since the holding IO Ms. Rubi Jawahar had met with an accident and for that reason, the record could not be reconstructed.
170. Records of the Indian Bank and the testimony of the bank officials would show that both the cheques were presented by A2 against which cheque discounting facility was availed from the Indian Bank. PW54 has stated that he was the employee of A3 and the account was opened at the instance of Anil Sirpaul, Director of A 3 and at his instance, he impersonated himself as Babu Lal, proprietor of M/s K B Chemicals.
171. Admittedly, the documents as to making PW54 as approver are not available but the testimonies of PW54 and PW35 would show that he had impersonated himself as Babu Lal and opened the account in the name of M/s K.B. Chemicals. Ashok Sirpaul A2 got signed the two cheques from him and availed cheque RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 148 of 207 CBI v. S P Manickam & ors 149 discounting facility from the Indian Bank against those two cheques. The documentary evidence given by PW35 and the bank records corroborate the testimony of PW54. I do not agree with the contention of ld. Defence counsel that no reliance can be placed on the testimony of PW54. PW54 Hukam Chand has been examined as a prosecution witness and his testimony cannot be overlooked on the ground raised by the defence counsel. His testimony can be availed to the extent, it finds corroboration from the testimony of other witnesses and the material relied upon by the prosecution. I am of the view that his evidence would have corroborative value.
TAKING/TESTING OF SAMPLES
172. It has come in the testimony of PW31 that an order of 2 MT of Ferro Vanadium (Lumps) was placed by BHEL with M/s Globarc & Alloys Pvt. Ltd. The payment was to be made against the store receipt voucher. The party was not allowed to send the documents through the Bank. PW31 proved the vouchers / bills Ex.PW31/B and Ex.PW31/C vide which M/s Globarc & Alloys Pvt. Ltd had supplied 0.720 and 1.281 MT of Ferro Vanadium to BHEL. He also proved the letter dated 13.08.1990 Ex.PW26/A2 as per which the LCs were returned unretired as the party who had visited BHEL had informed that the material was wrongly booked to CFFP. PW10 placed on record the copy of local delivery book of goods, Haridwar Ex.PW10/3 as per which the items were sent to the lost property office at Barreli on 05.10.1991 vide RR No. RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 149 of 207 CBI v. S P Manickam & ors 150 969788.
173. PW55/IO has stated that during investigation, he had gone to LPO Bareilly and collected the sample of material (Ferro Vanadium) sent by M/s Globarc & Alloys Pvt. Ltd (A3) after seeking permission from the Sr. DCS, Northern Railway, Muradabad vide Ex.PW33/B (part of D190). He stated that S.P. Singh (PW33) and R.K. Saxena, Head Goods Clerk, Barelli were present at that time and the proceedings Ex.PW33/A (D190) were drawn.
174. PW33 confirmed this fact and stated that IO had taken sample in his presence and sealed it. He proved the memo Ex. PW33/A. PW33 stated that the samples were of Nickel Boring Scraps and there were 4 drums of material from which the samples were taken, the drums were packed (closed with lid) but not sealed.
175. In the instant case, IO/PW55 did not state anything with regard to the seal with which he sealed the sample and the place where he kept the samples after seizure. No one from the Malkhana has been examined. Even the prosecution did not examine the person who had allegedly taken the sample to the laboratory.
176. According to PW10, supplied material was Ferro Vanadium but testimony of PW33 reveals that samples of Nickel Boring Scrap were taken. Question arises, how the material got changed? No explanation came from the side of prosecution whether Nickel Boring Scrap and Ferro Vanadium are one and the same material.
177. In the report given by PW42, Asstt. Director (Chemical) National Test House, Ghaziabad, Ex.PW24/A (D93), the Vanadium was RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 150 of 207 CBI v. S P Manickam & ors 151 found practically Nil and Iron was found as 17.73%.
178. Since the prosecution did not examine the link witnesses to prove that the material allegedly sent by M/s Globarc & Alloys Pvt. Ltd to BHEL, Haridwar remained intact and no one tampered with it and the report and the testimony of PW33 show variation in the description of the material taken for testing, the veracity of test report Ex.PW24/A becomes doubtful.
179. Testimony of PW55 further shows that he had taken samples of the material pledged with the Indian Bank by M/s Globarc & Alloys Pvt. Ltd in the presence of PW45 and PW1, Officers of the Bank and Anil Sirpaul, Director of the Company. The material was kept under the lock and key in the factory premises at 3, IDC, Mehrauli Road, Gurgaon. The keys of the godowns were arranged by Anil Sirpaul who himself opened the locks. He then drew the five samples from the material kept in the godowns, sealed them and drew the proceedings vide Ex.PW45/A.
180. As per the seizure memo, the samples of the following materials were taken from godown no. 6, 7 and 8:
(1) cloth bag marked (B), material kept in godown no. 7 and reported to be silicon metal.
(2) Cloth bag marked (C) material kept in godown no. 7 and reported to be Nickel Boring Scrap.
(3)Cloth Bag marked (D) - material kept in godown no. 7 and reported to be Aluminum scrap.
(4) Cloth bag marked (E) - Material kept in godown no. 7 and reported to be Vanadium Manganese Powder. (5) Cloth bag marked (G) - Material kept in godown no. 6 and reported to be silicon Alloy Lumps. This material was pledged under KCCII with the Bank.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 151 of 207 CBI v. S P Manickam & ors 152
181. PW1 is silent on the aspect of taking samples by PW55 from the godown at Gurgaon in his presence. According to PW45,on 14.05.94, he alongwith PW1 and PW55 had gone to the godown where Anil Sirpaul was present. He admitted that Anil Sirpaul had brought the keys of the godown no. 6,7 and 8, with the help of which, the locks of the godowns were opened and samples of the material were taken. He admitted that the goods lying in the godowns were pledged with the bank. He denied that the lock and keys of the godowns were in the custody of the bank. He, however, admitted that in normal course, locks and keys of the pledged movable goods should have been with the bank. It is pertinent to mention that the goods kept in the above godowns were under KCC and the keys of the godown should have been with the officials of the Bank. It is beyond comprehension how the keys came in the hand of Anil Sirpaul and why the keys were not kept by the Bank.
182. Testimony of PW55 further shows that he had collected samples of the materials kept by the Bank in its godown near the bank. The materials were booked by M/s Globarc & Alloys Pvt. Ltd to Cuttak, Bombay and Calcutta which were brought back by the Bank as the same were not claimed by the consignee(s). He stated that the material was in the joint custody of the bank and A3 and both the parties were having the keys of the godown. PW55 stated that the godown was opened on 09.06.1994 in the presence of Anil Sirpaul, PW1 and PW4. He stated that water in the godown was taken out and thereafter the samples were taken. A memo of RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 152 of 207 CBI v. S P Manickam & ors 153 the proceedings Ex.PW42/B was drawn on 10.06.1994. The specimen of the seal was also obtained vide impression Ex.PW55/30 (D192) and signature of PW1 and PW4 were obtained on the specimen seal impression. PW1 is silent as to the taking of samples by PW55 from the godown of the bank in his presence. Even PW4 did not utter a single word as to the taking of the samples in his presence.
183. PW55 has stated that the samples of the materials were sent for examination to National Test House, Ghaziabad. In the instant case, the samples were examined by PW42 and he gave his reports Ex.PW42/A and Ex.PW42/B. As per report Ex.PW42/A, in Sample B, silicon was found as 0.20%, in Sample C, Nickel was found as 12.52%, in Sample D, the Aluminum was found as 1.52.64%, 2.98.98% and 3.88.71% respectively, in Sample E, Vanadium was found to be practically Nil and Manganese was 2.53%, in Sample G, silicon was found as 6.30%. As per the report Ex.PW42/B, Molybdenum and Nickel were found practically Nil in Sample H, Chromium 1.66%, Nickel Practically Nil and Titanium as 0.065% were found in Sample I and Molybdenum and Nickel were found practically Nil and Tungstun 'trace' in Sample J.
184. It is an admitted case of the prosecution that when the consignments were sent to the consignees, no sample were preserved from the materials. Indisputably, when the samples were taken from the godown of the bank, the water was standing in the portion of godown.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 153 of 207 CBI v. S P Manickam & ors 154
185. In this case, prosecution neither examined the MHC(M), incharge of the Malkhana where the samples were allegedly deposited nor the person who had allegedly taken the samples to the laboratory. No explanation came from the side of the prosecution.
186. I am in agreement with the submission of ld. defence counsel that since the goods were submerged in the water, the possibility of their getting oxidised and losing their chemical properties cannot be ruled out. It is beyond comprehension, why the samples were taken in the year 1994 though the CBI had come in motion in 1991 itself. Further, in view of nonexamination of link witnesses, chances of tampering with the samples cannot be ruled out. In these circumstances, no much credence can be given to the Test reports Ex.PW24/A, Ex.PW42/A and Ex.PW42/B. HANDWRITING AND SPECIMEN SIGNATURES
187. The account opening form Ex.PW2/1 and specimen signature cards Ex.PW15/2 to Ex. PW15/4 show that A3 had opened account No. OCC 63 with the Indian Bank at Rana Pratap Bagh Branch in August, 1989. At that time, A1 was the Chief Manager. Ashok Sirpaul (A2) did not dispute that he was one of the directors of A3 and that A3 had opened the account with the Indian Bank, Rana Pratap Bagh Branch in August, 1989.
188. Although A2 has denied his handwriting and signatures on the documents forming part of the evidence but he did not dispute that he was also the director in Amrit Refractories which had account RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 154 of 207 CBI v. S P Manickam & ors 155 with Syndicate Bank. A2 did not dispute that the above company had availed credit facilities from the Syndicate Bank by pledging the documents in respect of plot no. 3 Mehrauli Gurgaon Road, New Delhi and the company had to clear the dues of the Syndicate Bank.
189. The prosecution has examined as many as five witnesses including the employee of A2 in the sister concern of A3. They have stated that they had seen A2 writing and signing the documents. They identified the signatures of A2 on the documents / correspondence made by A2 with the Authorities.
190. PW13 identified the signature of Ashok Sirpaul A2 on the invoice Ex.PW13/4. PW13 has stated that after verifying the signature of Ashok Sirpaul A2, he had prepared the voucher. PW13 denied the suggestions that he wrongly identified the signatures of Ashok Sirpaul on the documents at the instance of the IO.
191. PW15, who was clerk with Global Linker in 198990, deposed that he had seen Ashok Sirpaul (A2), Amrit Lal and Anil Sirpaul writing and signing and as such, he is conversant with their handwriting and signatures. PW15 has deposed that the account opening form Ex.PW2/1/Ex.PW15/1, specimen signature card Ex.PW15/2 and the documents Ex.PW15/4 to Ex. PW 15/33 bear the signatures of Ashok Sirpaul at point A. Although PW15 admitted that none of the signatures on the above documents were put in his presence but he denied that he wrongly identified the signatures of Ashok Sirpaul A2. Rather, he stated that he can RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 155 of 207 CBI v. S P Manickam & ors 156 identify his signatures.
192. PW1 has stated that on few occasions, he had dealt with the accused persons Ashok Sirpaul, Anil Sirpaul and Amrit Lal Sirpaul, Directors of the company (A3) and seen them signing and writing the documents in relation to the transactions with the bank. He identified the signature of Ashok Sirpaul on the letter Ex.PW1/23 dated 30.04.1990 addressed to the Zonal Officer Manager, Indian Bank (D225 page 329). PW1 denied the suggestion that he was not capable of identifying the signatures of Ashok Sirpaul on any document. PW1 stated that he can identify the signatures of the customers approaching the bank for discounting the bills and withdrawing the money through cheques. He stated that he can identify the signatures on the relevant documents even after 14 years of his retirement.
193. In the instant case, PW55 had taken the specimen signatures of the accused persons including that of A2. PW23 who was the officer in Oriental Bank of Commerce, South Extension branch, was joined in that process. He has deposed before the Court that specimen signatures of A2 were obtained in his presence by PW55 and the documents marked S1 to S21 Ex. PW 23/A1 to Ex. PW 23/A21 bear his signatures at Point A. PW23 also deposed that specimen signatures of Anil Sirpaul mark S22 to S 42 Ex. PW 23/B1 to Ex. PW 23/B21 were taken by PW55 in his presence. PW25 who was the officer in the Regional Office of Indian Bank corroborated this fact and stated that he too had attended the CBI office and in his presence, specimen signatures RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 156 of 207 CBI v. S P Manickam & ors 157 of S.P. Manickam (A1) S43 to S52 Ex. PW 25/A1 to Ex. PW 25/A10 and T. Valliappan mark S53 to S57 Ex. PW 25/B1 to Ex. PW25/B5 were taken by PW55. A1 never disputed the factum of taking his specimen signatures by the IO/PW55 in the presence of PW25.
194. Following questioned documents were sent for comparison with the specimen signatures:
S.No Document Q No. Exhibit no. Remarks, if any no.
1 D1 Q1,Q2,Q48,Q Ex PW2/1 ; PW Q1, Q2 (A2 Ashok
55,Q80 15/1 Sirpaul) Q48 Amrit,
Q55, Q80 Anil
2 D2 Q3 Ex PW 15/2 Ashok
3 D3 Q49,Q50 Ex PW 15/2 Amrit
4 D4 Q56,Q57 Ex PW 15/3 Anil
5 D5 Q4,Q51,Q58 Ex15/4 Q4, Q5 Ashok, Q51,
Q52 Amrit, Q58
6 D6 Q5,Q52,Q59 EX PW 15/5
Q59 Anil
7 D7 Q6 Ex PW 15/6,Ex PW Ashok
11/A
8 D8 Q7 Ex PW 15/7,Ex Ashok
PW11/B
9 D9 Q8 Ex PW 15/8,Ex PW Ashok
11/C
10 D12 Q9 Ex PW11/E Ashok
11 D13 Q10 Ex PW 11/F Ashok
12 D14 Q11 ExPW Ashok
15/11,ExPW11/G
13 D17 Q12 ExPW15/12 Ashok
14 D18 Q13 ExPW 15/13 Ashok
15 D21 Q14 ExPW 15/14 Ashok
16 D22 Q15 ExPW 15/15 Ashok
17 D24 Q17 ExPW 15/16 Ashok
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 157 of 207
CBI v. S P Manickam & ors
158
S.No Document Q No. Exhibit no. Remarks, if any
no.
18 D25 Q18 ExPW 15/17 Ashok
19 D27 Q20 ExPW 15/18 Ashok
20 D28 Q21 ExPW 15/19 Ashok
21 D31 Q23 ExPW 15/20 Ashok
22 D32 Q24 ExPW 15/21 Ashok
23 D33 Q25 ExPW15/22 Ashok
24 D34 Q26 Ex PW15/23 Ashok
25 D39 Q28 Ex PW 15/24 Ashok
26 D40 Q29 Ex PW 15/25 Ashok
27 D41 Q31 Ex PW 15/26 Ashok
28 D42 Q32 ExPW Ashok
13/2,ExPW15/27
29 D46 Q30 A ExPW 15/28 Ashok
30 D47 Q31 A ExPW 15/29,ExPW Ashok
13/3
31 D50 Q34 ExPW Ashok
15/30,ExPW13/4
32 D51 Q35 ExPW 15/31,ExPW Ashok
13/5
33 D52 Q37 ExPW 15/32,ExPW Ashok
13/6
34 D53 Q38 ExPW 15/33,ExPW Ashok
13/7
35 D65 Q60 ExPW5/1 Anil
36 D66 Q61,Q62 ExPW5/2 Anil
37 D69 Q39 Mark P2 Ashok
38 D166 Q78 ExPW14/1 Manickam
39 D167 Q79 ExPW14/2 Manickam
40 D183 S1 to S21 ExPW23/A1 to Specimen signature of
Ex.PW23/A21 Ashok
41 D184 S75 to S87 Ex.PW53/D1 specimen signatures
of Sh.Amrit Lal
Sirpaul (S75 to S87)
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 158 of 207
CBI v. S P Manickam & ors
159
S.No Document Q No. Exhibit no. Remarks, if any
no.
42 D185 S22 to S74 ExPW23/B1 to Specimen signature of
Ex.PW23/B21 Anil
43 D187 S43 to S52 ExPW25/A1 to A10 Specimen signature of
Manickam
44 D186 S53 to S57 ExPW25/B1 to B5 Specimen signature of
Valliappan
45 D223(pg Q32(A) Ex.PW53/D2 Ashok
97)
46 D223(pg Q36 Ex.PW53/D3 Ashok
95)
47 D Q33 Ex.PW53/D4 Ashok
223(pg90)
48 D Q27 Ex.PW53/D5 Ashok
223(pg61)
49 D Q30 Ex.PW53/D6 Ashok
223(pg56)
50 D223(pg Q22 Ex.PW53/D7 Ashok
49)
51 D Q19 Ex.PW53/D8 Ashok
223(pg31)
52 D Q16 Ex.PW53/D9 Ashok
223(pg27)
53 D Q68,Q41 Ex.PW53/D10 Q68 Manickam,
224(pg271) Q41, Q42, Q44, Q
45, Q46 and Q47
54 D Q64,Q42,Q53A Ex.PW53/D11
Ashok, Q53A Amrit,
224(pg270)
Q65 Anil, Q54
55 D Q65,Q44,Q54 Ex.PW53/D12 Amrit, Q70
2249pg214) Manickam, Q66 Anil
56 D Q45 Ex.PW53/D13
224(pg163)
57 D224(pg87) Q70 Ex.PW53/D14
58 D224 Q46,Q66 Ex.PW53/D15
(pg86)
59 D Q71 Ex.PW53/D16 Manickam
224(pg85)
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 159 of 207
CBI v. S P Manickam & ors
160
S.No Document Q No. Exhibit no. Remarks, if any
no.
60 D Q72 ExPW28/A Manickam
224(pg84)
61 D Q73 Ex.PW53/D17 Manickam
224(pg83)
62 D224(pg Q74 Ex.PW53/D18 Manickam
82)
63 D Q75 Ex.PW53/D19 Manickam
224(pg81)
64 D Q76 ExPW30/A Manickam
224(pg80)
65 D Q77 Ex.PW53/D20 Manickam
224(pg62)
66 D Q47 Ex.PW53/D21 Ashok
224(pg61)
67 D165 Q53,Q40,Q63 ExPw18/B Q53 Amrit, Q40
Syndicate Ashok and Q63 Anil
Bank ledger
68 D Q43,Q69 Ex.PW53/D22 Q43 Ashok and Q69
224(pg259) Manickam
195. PW53, the handwriting expert examined the questioned documents with the specimen signature documents provided to him and gave his report dated 17.06.1994 Ex.PW53/B (D189) as under:
The person i.e. A2 who wrote the enclosed signatures stamped and marked S1 to S21 of this case, A1 to A31 and A59 to A125 also wrote the red enclosed signatures similarly stamped and marked Q1 to Q30, Q30A, Q31, Q31A, Q32, Q32A and Q33 to Q47.
The person who wrote the enclosed signatures stamped and marked S22 to S42 and S63 to S74; A32 to A58, A126 and A127 also wrote the red enclosed signatures similarly stamped and marked Q55 to Q66 and Q80.
The person who wrote the blue enclosed signatures stamped and marked S43 to S47 also wrote the red RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 160 of 207 CBI v. S P Manickam & ors 161 enclosed signature similarly stamped and marked Q69. The initials in the red enclosed portions stamped and marked Q68 and Q70 to Q79 agree in model and design with the initials in the blue enclosed portions similarly stamped and marked S48 to S52.
The person who wrote the blue enclosed signatures stamped and marked S53 to S57 also wrote the red enclosed signature similarly stamped and marked Q67. The person who wrote the blue enclosed signatures stamped and marked S75 to S87 also wrote the red enclosed signatures similarly stamped and marked Q48 to Q53, Q53A and Q54.
196. Although A2 has stated that he was just one of the several Directors of A3, he did not have any knowledge of the documents, the documents do not bear his signature, he did not tender any bill for discounting, he did not sign any demand notice or credit voucher, PW15 did not have any occasion to see his handwriting and signatures on the documents but he did not dispute that M/s Globarc & Alloys Pvt. Ltd (A3) had opened the account with the Indian Bank, Rana Pratap Bagh branch. The testimony of PW7 shows that the account opening form Ex. PW 2/1 and the specimen signature cards Ex PW 15/3 bear the signature of A2. PW1 identified his signatures on the documents pertaining to the correspondence made by A2 with the bank.
PW13 also identified the signatures of A2 on the documents and his testimony on this aspect remained unrebutted.
197. Ld defence counsel vehemently argued that the specimen writing/signatures of A2 Ex. PW 23/A1 to Ex. PW 23/A21 (D
183) were obtained during the investigation by PW55/IO in the office of CBI and it were not taken under the orders of the Court.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 161 of 207 CBI v. S P Manickam & ors 162 As per section 73 of the Evidence Act and the judgments of the Supreme Court as well the Full Bench of Delhi High Court on the subject, neither a police officer during investigation nor even a Magistrate, (prior to incorporation of Section 311 A CrPC w.e.f 23.06.2006) could direct an accused to give his sample signatures or his handwriting sample. In support of his contentions, Ld counsel referred the case of Sukhvinder Singh & ors v. State of Punjab (1994) 5 SCC 152,, State of Haryana v. Jagbir Singh & anr AIR 2003 SC 4377, Sapan Haldar & anr v. State 191 (2012) DLT 225 (FB) and State of Uttar Pradesh v. Ram Babu Misra AIR 1980 SCC 791. Ld counsel stated that even though the specimen signatures of the accused taken by the IO during investigation are contrary to law and are completely inadmissible in evidence, still as a matter of abundant caution, in order to counter the erroneous suggestion, given by the defence counsel to PW23, does not bind the accused. He placed reliance on the case Koli Trikam Jivraj & Anr v. The State of Gujrat AIR 1969 Guj 69.
198. Ld. defence counsel further argued that since the sample signatures of the accused were taken at the office of CBI, such specimen signatures are inadmissible in evidence and, therefore, opinion of handwriting expert based on such specimen signature is also inadmissible. Ld. Counsel further argued that as per the prevalent law, during the period 1993, the investigating officer had no power to collect the specimen signatures of the accused persons on his own and even the Court had no power to issue such a direction u/s 73 of the Indian Evidence Act while the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 162 of 207 CBI v. S P Manickam & ors 163 investigation was in progress and no proceeding was pending before any Court at that time. Ld. Defence counsel also argued that such specimen signatures could also not have been collected u/s 4 and 5 of the Identification of Prisoners Act, 1920.
199. Ld. counsel argued that from 1980 till June 2006, law laid down in Ram Babu Misra's case supra was the law of the land and it was reiterated in Sapan Haldar's case supra. It was only with the introduction of Section 311 A Cr.P.C that the issue of investiture of Magistrates with the power to issue directions to any person, including an accused person, to give specimen signatures and writings was taken care of.
200. Ld. PP per contra referred the case of Rekha Sharma vs. Central Bureau of Investigation, Crl.Appeal no. 124/2013 and others decided on 05.03.2015 to contend that report of the expert and analysis of handwriting and signature specimens of the accused persons cannot be rendered inadmissible on the ground that it were obtained in violation of prescribed procedure.
201. I have considered the submissions made by both the parties and gone through the case laws on this subject.
202. Section 45 of Indian Evidence Act lays down that when the court has to form an opinion as to the identity of handwriting or finger impression, the opinions of an expert in that science is a relevant fact. If in the opinion of an expert, the two handwritings match with each other, this perse attains the color of conclusive evidence as per the Indian Evidence Act. To say it differently, the matching of two handwritings is itself a conclusive evidence u/s RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 163 of 207 CBI v. S P Manickam & ors 164 45 of Indian Evidence Act if the Court is convinced from the report of an expert in this regard and the opinion of the handwriting expert is sought only to facilitate the Court to form an opinion on this point. The appropriate interpretation of Section 45 of Indian Evidence Act coupled with section 73 of the Evidence Act is that court is competent to form its own opinion on the point of identity of handwriting and for that purpose the court may call for the report of an handwriting expert. Therefore, the relevant fact before this court is the matching or non matching of the handwriting. The Supreme Court in Murari Lal v. State of M.P., AIR 1980 SC 531 has held that handwriting expert is not an accomplice and there is no justification for condemning his opinion evidence. It was held that if the Court is convinced from the report of an expert that the questioned handwriting was of the accused, there is no difficulty in relying upon the expert's opinion without any corroboration.
203. In Sukhvinder Singh's case supra, the specimen writings of the appellant were taken under the directions of Tehsildar/Executive Magistrate even though no inquiry or trial was pending in his Court. It was held that where the case was still under investigation and no proceedings were pending in any Court in which it might be necessary to compare the two writings, the person (Accused) could not be compelled to give his specimen writing. It was also held that failure of the Accused to raise objection when called upon to give specimen writing was immaterial. In Ram Babu Misra's case supra and Sapan Haldar's case supra, the Court RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 164 of 207 CBI v. S P Manickam & ors 165 discussed the case of State of Bombay vs. Kathi Kalu Oghad, AIR 1961 SC 1808. The issue in Ram Babu Misra's case supra was whether the Magistrate was empowered u/s 73 of the Indian Evidence Act, 1872 to direct the Accused to give his specimen writing when the case was still under investigation. It was held that the Section 73 of the Evidence Act contemplated pendency of some proceedings before a Court and it does not permit a Court to give a direction to the Accused to give specimen writings for anticipated necessity for comparison in a proceeding which may later be instituted in the Court. While discussing Kathi Kalu Oghad's case supra, it was observed that the question whether such a direction u/s 73 of the Evidence Act could be given when the matter was still under investigation and there was no proceeding before the Court was expressly left open and this question was not considered in the said case. It was further observed that the question that was actually decided by the Supreme Court in Kathi Kalu Oghad's case supra was that no testimonial compulsion under Article 20(3) of the Constitution of India was involved in a direction to give specimen signature and handwriting for the purpose of comparison. In Sapan Haldar's case supra, the High Court while deciding a reference held that it was apparent that neither section 4 nor section 5 of the Identification of Prisoners Act, 1920 would encompass a handwriting. Thus, neither a police officer during investigation, nor even a Magistrate can direct a person accused of having committed an offence to give his sample signature or handwriting RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 165 of 207 CBI v. S P Manickam & ors 166 sample, the former u/s 4 and the latter U/Sec. 5. It was further held that the power is that of the Court concerned and is to be found in section 73 of the Indian Evidence Act.
204. In the State of Bombay vs. Kathi Kalu Oghad and Ors., 1961 AIR 1808, it was held:
"We agree therefore with the conclusion reached by the majority of the Bench that there is no infringement of Art. 20 (3) of the Constitution by compelling an accused person to give his specimen handwriting or signature; or impressions of his fingers, palm or foot to the investigating officer or under orders of a court for the purpose of comparison under the provisions of section 73 of the Indian Evidence Act..."
205. The issue as law laid down in Ram Babu Misra's case supra and in Sapan Haldar's case supra on one hand and law laid down in Kathi Kalu Oghad's case supra on the other hand came up before the High Court of Delhi in Rekha Sharma vs. CBI, Crl. Appeal no. 124/2013 and other decided on 05.03.2015 wherein cases of Sapan Halder (supra), The State of Bombay vs. Kathi Kalu Oghad and Others, 1961 AIR 1808, Ravinder Kumar Pal alias Dara Singh vs. Republic of India reported as (2011) 2 SCC 490, State (NCT of Delhi) vs. Navjot Sandhu @ Afsan Guru (2005) 11 SCC 600, Selvi vs. State of Karnataka (2010) 7 SCC 263, State of U.P. vs. Ram Babu Mishra 1980 2 SCC 343, State of Orissa vs. Sudhansu Sekhar Misra, (1970) ILLJ 662 SC and Orient Paper and Industries Ltd & Anr vs. State of Orissa and Ors. (1991) RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 166 of 207 CBI v. S P Manickam & ors 167 Supp. 1. SCC 81 were discussed. Vide judgment dated 05.03.2015, High Court of Delhi held:
"306 ...It has been repeatedly held by the Apex Court that judicial discipline obliges the High Courts of the land to follow the judgments of the Supreme Court and the mere fact that a particular provision or argument was not considered by the Supreme Court while deciding a case would not denude its precedential value. 307 Strong reliance is placed on a judgment of a Three Judge Bench of this High Court in Sapan Haldar (supra). As a matter of fact the judgment in Sapan Haldar case (supra) rightly recognizes the fact that the Magistrate could not have been approached by the investigating agency in terms of Section 5 of the Identification of Prisoners Act, 1920 for obtaining handwriting exemplars.
The Court rightly opined in Para 31(i) that handwriting and signatures are not measurements and, therefore, do not fall within the ambit of the Identification of the Prisoners Act, 1920. However, it is submitted that in para 19, it was erroneously concluded that the police officer during investigation could not have obtained such signatures on his own. It would be pertinent to highlight that the said conclusion is sans any reasoning or discuss whatsoever; 308 The High Court in Sapan Haldar's case (supra) did not advert its precious consideration to the definition of the term investigation prescribed under Section 2(h) of Cr.P.C., which has also been subject matter of interpretation in catena of judgments of the Supreme Court which have held it to have a broad and inclusive connotation. The High Court lost sight of the fact that the Supreme Court in its judgment in the case of Selvi vs. State of Karnataka reported as (2010) 7 SCC 263 has held that the term investigation includes steps which are not exhaustively and expressly enumerated.
448 The decision in Sapan Haldar (Supra) again has considered the question whether handwriting and signature specimens are obtainable under Section 4 and 5 of the Identification of Prisoners Act, 1920 and the Court observed that since both handwriting and signature of a person are not a mark of identification, the same cannot be "measurement" as defined under Section 2(a) of the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 167 of 207 CBI v. S P Manickam & ors 168 Identification of Prisoners Act. However, the very next line which declares that an investigating officer, during investigation, cannot obtain a handwriting sample or a signature sample from a person accused of having committed an offence is in teeth with the view adopted by the Supreme Court in Navjot Sandhu (supra) and Dara Singh (supra) .
449 In view of the aforesaid discussion, I am of the opinion that the report of the expert and analysis of handwriting and signature specimens of the accused persons cannot be rendered inadmissible on the ground that it was obtained in violation of prescribed procedure.
206. It is true that in the instant case, the specimen signatures of A2 were taken during the course of investigation and permission of the Court was not sought for the same but the report of the expert clearly proves that the questioned documents as mentioned in the preceding para bear the signature of A2. It is pertinent to mention that apart from the said report of the expert qua signatures of A2, PW1, PW13 and PW15 have also identified the signatures of Ashok Sirpaul on some of the questioned documents as discussed above. Comparison of these questioned documents with the other questioned documents as well as the documents forming part of report Ex.PW53/B unerringly leads to inevitable conclusion that the signature of A2 on the questioned documents identified by PW1, PW13 and PW15 match with the specimen signatures of A
2. The signatures on other questioned documents also match with the specimen signatures of A2 meaning thereby that the signatures on questioned documents identified by PW1, PW13 and PW15 would also match with the signatures of A2 on the other questioned documents. It has been held in catena of RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 168 of 207 CBI v. S P Manickam & ors 169 judgments that u/s 73 of the Indian Evidence Act, 1872, the Court is entitled to make comparison of disputed and admitted signatures for a just conclusion more so in such a peculiar situation as described above.
207. In view of the proposition of law laid down in the case of Kathi Kalu Oghad's case supra and Rekha Sharma case supra coupled with the above discussions, this Court has no hesitation in holding that the report of the expert and analysis of signature specimen of the accused A2 cannot be rendered inadmissible. Further, there is nothing on record to suggest that accused A2 was subjected to any constraint or coercion in taking his specimen signatures. As has been discussed in Kathi Kalu Oghad's case supra, mere asking by a police officer investigating a crime against a certain individual to do a certain thing is not compulsion within the meaning of Art. 20(3) of the Constitution of India.
208. I may usefully refer the case of Munna Kumar Upadhyaya v. State of Andhra Pradesh, 2012 III AD (CRI) (S.C) 269 and Crl. Appeal No. 1316 of 2008 wherein Supreme Court has held that if accused gives false defence in his statement u/s 313 CrPC, Court can draw an adverse inference against him. In the present case, the accused (A2) has taken a false defence that he did not sign any document. Certainly such conduct of the accused would also tilt the case in favour of the prosecution.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 169 of 207 CBI v. S P Manickam & ors 170 SANCTION TO PROSECUTE ACCUSED S. P. MANICKAM (A1) U/S 19 OF THE PREVENTION OF CORRUPTION ACT, 1988.
209. In the instant case, after the investigation, CBI requested the Competent Authority to accord sanction for prosecution against the bank officials but the Competent Authority declined the sanction against B. Natrajan, T. Valliappan, C. Ravinder Babu and S.P. Manickam (A1). Then the matter was referred to the Central Vigilance Commission(CVC). The chargesheet was thereafter filed without invoking the provisions under Prevention of Corruption Act. PW56 has deposed that in 2002, on the recommendations of CVC, sanction for prosecution was received from the competent authority against the accused S.P.Manickam (A1) and he thereafter filed the supplementary chargesheet before the Special Judge, CBI.
210. In the instant case, the sanction was accorded by PW32 who was posted in the Head Quarter of Indian Bank at Chennai as General Manager. He stated that he had received the investigation report through the Vigilance department against the accused S.P. Manickam (A1). After going through the report and thorough application of mind, he accorded the sanction for prosecution against S.P. Manickam (A1) being the competent authority to remove him from the service vide Ex.PW32/A. He stated that he was approached by the CBI in 2002 for grant of sanction. PW32, however, admitted that when he accorded the sanction, he was not RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 170 of 207 CBI v. S P Manickam & ors 171 aware about the sale of the property through auction and the sale proceeds amounting Rs. 1.03 crores were appropriated towards the liability with the Indian Bank. PW32 has stated that the property was equitably mortgaged with the bank against the loan raised. He stated that he was not aware if V.K. Nanda, the panel advocate had opined in his report dated 31.10.1990 that the documents relating to the aforesaid property submitted with the bank for creating equitable mortgage were original and genuine. PW32 stated that Ravinder Babu was the successor of S.P. Manickam but he was not aware if Ravinder Babu had replaced the imported Ferro Nickel by Silicon Alloy Lumps. He, however, admitted that he was aware that the goods were pledged with the bank against the loan raised. PW32 has stated that he was aware that the samples of the goods were sent for testing but he was not aware if they were sent on 14.06.1994. PW32 denied that he accorded the sanction without application of mind under the pressure of CVC.
211. It is not disputed that the then General Manager, Indian Bank PW 32 Sh. Jayanti Lal Jain was the competent authority to accord sanction u/s 19 of the PC Act. He has stated that as per general procedure, matter used to be referred to CVC as the accused was in ScaleIV.
212. Ld defence counsel submitted that PW32 got only the seven days to ascertain all the relevant facts against A1, apply his mind and accord the sanction. This implies that PW32 was directed/influenced by someone else and did not apply his mind RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 171 of 207 CBI v. S P Manickam & ors 172 while according the sanction. Ld counsel stated that although the mortgaged property was auctioned and the sale proceed was appropriated towards the loan account of A3 on 18.02.2000 itself, but the testimony of PW32 reveals that he was not aware of the recovery of the loan amount by the sale of the mortgaged property. This indicates that PW32 had not applied his mind while giving sanction. Even he did not go through the opinion of the panel lawyer V K Nanda dated 31.10.90 when he granted the sanction. He also admitted that he was not aware that successor of A1 had replaced the material lodged during the period of A1 and for the same advance value, he had lodged Silicon Alloy Lumps, thus there was no loss to the bank. Ld counsel stated that the aforesaid circumstances show that the sanctioning authority did not apply his mind while granting the sanction and gave the sanction on the directions of CVC, after delay of about eight years.
213. Ld. counsel referred the case of State of Karnataka vs. Ameerjan (2007)11 SCC 273, wherein it was held :
Indisputably, application of mind on the part of the sanctioning authority is imperative. The order granting sanction must be demonstrative of the fact that there had been proper application of mind on the part of the sanctioning authority. Ordinarily, before passing an order of sanction, the entire records containing the materials collected against the accused should be placed before the sanctioning authority. The object of the provision for sanction is that the authority giving it should be able to consider for itself the evidence before it comes to a conclusion that the prosecution in the circumstances be sanctioned or forbidden. The sanction to prosecute is an important matter, it constitutes a condition precedent to the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 172 of 207 CBI v. S P Manickam & ors 173 institution of the prosecution and the Government has an absolute discretion to grant or withhold their sanction.
214. Ld. counsel also referred the case of Dinesh Kumar vs. Chairman AAI, (2012)1 SCC 532, wherein it was held :
9. While drawing a distinction between the absence of sanction and invalidity of the sanction, this Court in Parkash Singh Badal expressed in no uncertain terms that the question of absence of sanction could be raised at the inception and threshold by an aggrieved person. However, where sanction order exists, but its legality and validity is put in question, such issue has to be raised in the course of trial. Of course in Parkash Singh Badal, this Court referred to invalidity of sanction on account of nonapplication of mind.
10. In our view, invalidity of sanction where sanction order exists, can be raised on diverse grounds like non availability of material before the sanctioning authority or the order of sanction having been passed by an authority not authorized or competent to grant such sanction. The above grounds are only illustrative and not exhaustive. All such grounds of invalidity or illegality of sanction would fall in the same category like the ground of invalidity of sanction on account of nonapplication of mind - a category carved out by this Court in Parkash Singh Badal, the challenge to which can always be raised in the course of trial.
215. Ld. PP per contra submitted that purpose to give sanction for prosecution is to apprise the Court to take cognizance of the offence against the public servant. It is an administrative order not passed under any quasi judicial proceedings. It has no effect on the merit of the case. The sanctioning authority has not to act as a Court. It has to form a satisfaction after applying its mind whether the sanction for prosecution should be granted or not. The sanction order and the testimony of PW32 show that he had RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 173 of 207 CBI v. S P Manickam & ors 174 applied his mind and accorded the sanction after getting satisfied. Ld. PP also referred Section 465(2) Cr.P.C to contend that the objection as to the sanction should have be taken at the earliest opportunity which was not done in the present case. Once the order of cognizance was passed, the Court cannot review its own order in the absence of any specific provision. Ld. PP submitted that under section 19 of the Act, previous sanction is mandatory for taking cognizance. Ld. PP referred the case of R. Venkatakakrishnan Vs. CBI, Crl. Appeal no. 76 of 2004 decided on 07.08.2009 to contend that as per the section, a finding or a sentence shall not be reversed by a Court of appeal on the ground of any error, omission or irregularity in the sanction order unless a failure of justice has been occasioned thereby. The sanctioning authority had nothing to do with the recovery even if it was effected after the sanction. Ld. PP also referred the case of Gurbachan Singh vs. Satpal Singh and Ors. 1990 AIR 2009 wherein it was held that the Court must strictly be satisfied that no innocent person, (innocent in the sense of not being guilty of the offence of which he is charged) is convicted even at the risk of letting of some guilty persons. Exaggerated devotion to the rule of benefit of doubt must not nurture fanciful doubts or lingering suspicions and thereby destroy social defence. Justice cannot be made sterile on the plea that it is better to let hundred guilty escape than punish an innocent. Letting guilty escape is not doing justice, according to law. Ld. PP stated that A1 himself has admitted to have discounted the bills which were returned unpaid.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 174 of 207 CBI v. S P Manickam & ors 175 Even then, he recommended enhancement of bill discounting limit from Rs.20 lacs to Rs. 30 lacs just to give pecuniary benefit to A
3.
216. I have considered the aforesaid submissions made on behalf of the parties on the said aspect of the matter.
217. In the case of CBI vs. Ashok Kumar Aggarwal, 2014 Crl.LJ 930, it was held that the order of sanction should make it evident that the authority had been aware of all or relevant facts/materials and had applied its mind to all the relevant material. The power to grant sanction is to be exercised strictly keeping in mind the public interest and the protection available to the accused against whom the sanction is sought.
218. In the instant case, the sanction order Ex.PW32/A was passed on 08.01.2002. PW32 was examined and cross examined on 11.01.2011. In the sanction order, PW32 has mentioned all the allegations against Accused no. 1 which shows that he was aware of all the relevant facts of the case at the time of according sanction to prosecute A1. He has mentioned in the order that he has fully and carefully examined the material placed before him. In his testimony as PW32, he has stated that he had examined the investigation report and the report sent by the SP, CBI, statement of witnesses and other related documents. After careful perusal and application of mind, he found that it was a fit case for according the sanction to prosecute the accused(A1).
219. Admittedly, the report of V.K. Nanda, the Panel Lawyer was available, the proceeds were also realized through DRT and there RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 175 of 207 CBI v. S P Manickam & ors 176 was no loss to the bank but in the instant case, there were other charges against A1 as evident from the chargesheet which had made PW32 to accord the sanction. It cannot be said that he did not apply his mind and accorded the sanction in a mechanical manner. As regards delay, since the sanction was earlier declined and the matter was referred to CVC, it led to delay as the CVC after examining the matter, recommended for grant of sanction against A1 only. The recommendation was received in the year 2002 only. The time of seven days taken by PW32, to my mind, was sufficient enough to form an opinion whether sanction was to be granted or not. I do not find any force in the contentions of Ld. Defence counsel that the sanction was accorded without the application of mind.
220. In State of Maharashtra through CBI vs. Mahesh G. Jain, (2013) 8 SCC 119, it was held by the Supreme Court that while sanctity attached to an order of sanction should never be forgotten but simultaneously the rampant corruption in society has to be kept in view. The Supreme Court considered various case laws on this issue and crystallized the following principles "14.1. It is incumbent on the prosecution to prove that the valid sanction has been granted by the sanctioning authority after being satisfied that a case for sanction has been made out.
14.2. The sanction order may expressly show that the sanctioning authority has perused the material placed before it and, after consideration of the circumstances has granted sanction of prosecution.
14.3. The prosecution may prove by adducing the evidence that the material was placed before the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 176 of 207 CBI v. S P Manickam & ors 177 sanctioning authority and its satisfaction was arrived at upon perusal of the material placed before it. 14.4. Grant of sanction is only an administrative function and the sanctioning authority is required to prima facie reach the satisfaction that relevant facts would constitute the offence.
14.5. The adequacy of material placed before the sanctioning authority cannot be gone into by the court as it does not sit in appeal over the sanction order. 14.6. If the sanctioning authority has perused all the materials placed before it and some of them have not been proved that would not vitiate the order of sanction. 4.7. The order of sanction is a prerequisite as it is intended to provide a safeguard to a public servant against frivolous and vexatious litigants, but simultaneously an order of sanction should not be construed in a pedantic manner and there should not be a hypertechnical approach to test its validity".
221. In the instant case the prosecution has placed the original sanction order before this Court and has also examined the sanctioning authority as a witness. In view of the above discussion as well as the principles reiterated by the Supreme Court in Mahesh G. Jain's case supra, a hypertechnical view of the sanction order cannot be taken. It should also not be lost sight of that the sanctioning authority is not required to conduct a parallel investigation into the offences at the time of grant of sanction. I am of the view that the sanction vide Ex. PW 32/A to prosecute the Accused no. 1 was a valid sanction order.
CRIMINAL CONSPIRACY
222. An agreement to commit an offence or an illegal act between two persons or more is the essence of conspiracy. Such an agreement RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 177 of 207 CBI v. S P Manickam & ors 178 is designated as criminal conspiracy. In Kehar Singh v. State (Delhi Administration) AIR 1988 SC 1883 (known as Indira Gandhi murder case) it was held:
Generally, a conspiracy is hatched in secrecy and it may be difficult to adduce direct evidence of the same. The prosecution often relies on evidence of acts of various parties to infer that they were done in reference to their common intention. The prosecution will also more often rely upon circumstantial evidence. The conspiracy can undoubtedly be proved by such evidence direct or circumstantial. But the Court must enquire whether the two persons are independently pursuing the same end or they have come together in the pursuit of the unlawful object. The former does not render them conspirators, but the latter does. It is, however, essential that the offence of conspiracy requires some kind of physical manifestation of agreement. The express agreement, however, need not be proved. Nor actual meeting of two persons is necessary. Nor it is necessary to prove the actual words of communication. The evidence as to transmission of thoughts sharing the unlawful design may be sufficient. It is unnecessary to prove that the parties "actually came together and agreed in terms" to pursue the unlawful object; their need never have been an express verbal agreement, it being sufficient that there was a "tacit understanding between the conspirators as to what should be done".
223. In the case of State of Maharashtra & ors v. Somnath Thapa & Ors. (1996) 4 SCC 659, the Supreme Court observed that for a person to conspire with another, he must have knowledge of what the conspirators wanted to achieve and thereafter having the intend to further the illegal act takes recourse to a course of conduct to achieve end or facilitate its accomplishment.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 178 of 207 CBI v. S P Manickam & ors 179
224. In the case of Baliya vs. State of MP (2012) 9 SCC 696, it was held:
15..........The foundation of the offence of criminal conspiracy is an agreement between two or more persons to cooperate for the accomplishment/ performance of an illegal act or an act which is not illegal by itself, through illegal means. Such agreement or meeting of minds create the offence of criminal conspiracy and regardless of proof or otherwise of the main offence to commit which the conspiracy may have been hatched once the unlawful combination of minds is complete, the offence of criminal conspiracy stands committed....
17. The offence of criminal conspiracy has its foundation in an agreement to commit an offence or to achieve a lawful object through unlawful means. Such a conspiracy would rarely be hatched in the open and, therefore, direct evidence to establish the same may not be always forthcoming. Proof or otherwise of such conspiracy is a matter of inference and the court in drawing such an inference must consider whether the basic facts i.e. circumstances from which the inference is to be drawn have been proved beyond all reasonable doubt, and thereafter, whether from such proved and established circumstances no other conclusion except that the accused had agreed to commit an offence can be drawn. Naturally, in evaluating the proved circumstances for the purposes of drawing any inference adverse to the accused, the benefit of any doubt that may creep in must go to the accused.
225. In the case of CBI vs. K. Narayana Rao (2012)9 Scale 25), it was held:
24. The ingredients of the offence of criminal conspiracy are that there should be an agreement between the persons who are alleged to conspire and the said agreement should be for doing of an illegal act or for doing, by illegal means, an act which by itself may not be illegal. In other words, the essence of criminal conspiracy is an agreement to do an illegal act and such an agreement can be proved either by direct evidence or by circumstantial evidence or by RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 179 of 207 CBI v. S P Manickam & ors 180 both and in the matter of common experience that direct evidence to prove conspiracy is rarely available.
Accordingly, the circumstances proved before and after the occurrence have to be considered to decide about the complicity of the accused. Even if some acts are proved to have been committed, it must be clear that they were so committed in pursuance of an agreement made between the accused persons who were parties to the alleged conspiracy. Inferences from such proved circumstances regarding the guilt may be drawn only when such circumstances are incapable of any other reasonable explanation. In other words, an offence of conspiracy cannot be deemed to have been established on mere suspicion and surmises or inference which are not supported by cogent and acceptable evidence.
226. From the proposition of law laid down in the aforesaid judgments, it comes out that in order to prove the conspiracy, prosecution is not required to prove the agreement and to adduce the direct evidence of conspiracy that the parties came together, agreed to pursue the unlawful object. It is not necessary to prove that there was an express verbal agreement but what is necessary to show is that there was some sort of tacit understanding between the conspirators as to what should be done.
ROLE OF M/S GLOBARC & ALLOYS PVT. LTD (A3) AND ASHOK SIRPAUL (A2)
227. Ld. counsel for the accused A2 and A3 vehemently argued that A2 was just one of the several Directors of A3 and day to day affairs of A3 were managed and controlled by its Chairman cum Managing Director i.e Amrit Lal Sirpaul. Ld. Counsel further argued that A2 did not have any knowledge of the documents, the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 180 of 207 CBI v. S P Manickam & ors 181 documents do not bear his signature, he did not tender any bill for discounting, his duties were confined to engineering job, fabrication of plant and machinery as well as erection of different factory sheds etc and he did not sign any demand notice nor any credit voucher. Ld. Counsel further argued that PW15 did not have any occasion to see his (A2) handwriting and signatures on the documents. Further A2 was not aware of the internal functioning of the bank.
228. Ld. counsel contended that law is settled that there is no vicarious liability of any Director, in case, the offences under Indian Penal Code are committed by a company.
229. Ld counsel further argued that accused A2 and A3 cannot be held liable for the offence of criminal conspiracy u/s 120B IPC r/w Section 420, 467,468 and 471 IPC and u/s 13(2) r/w 13(1)(d) P.C. Act in case A1 is acquitted. Ld counsel contended that the charges against the accused A2 and A3 are not proved beyond reasonable doubt and they deserve to be acquitted.
230. Ld. PP on the contrary argued that an individual who has perpetrated the commission of an offence on behalf of a company can be made accused along with the company, if there is sufficient evidence of his active role coupled with criminal intent.
231. Ld. PP argued that facts & circumstances brought on record clearly establish that A2 had actively participated in the criminal conspiracy with the other directors. Ld. PP referred the case of N.V. Subba Rao vs. State, 2013 Cri.L.J 953 and Badri Rai & Another vs. The State of Bihar 1958 AIR 953 to contend that RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 181 of 207 CBI v. S P Manickam & ors 182 conspiracy is hatched in secrecy and for proving the said offence, substantial direct evidence may not be possible to be obtained. An offence of criminal conspiracy can also be proved by circumstantial evidence. In this case, there is enough direct and circumstantial evidence to prove the complicity of A2 and A3 in the commission of the alleged offences.
232. I have considered the submissions made by both the parties and gone through the case laws on this subject cited by them.
233. It is settled principle of law that the acts of an individual, who is in control of the affairs of the company and is a directing mind, are attributed to the company, in as much as whenever such a person, who is controlling the affairs of the company, is made an accused, on the application of the principle "alter ego", the company can also be implicated as accused person. It is on the well recognized principle that company does not act of its own but through its directors/officers and when such directors/officers act on behalf of the company, the company is also liable for those acts on the application of "principal agent" principle.
234. As a general accepted rule, except for such crime as a corporation is held incapable of committing by reason of the fact that they involve personal malicious intent, a Corporation may be subject to indictment or other criminal process, although the criminal intent is committed through its agent. The criminal intent of the "alter ego" of the company, i.e. the personal group of persons that guide the business of the company, would be imputed to the company/corporation. If the person or a group persons who RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 182 of 207 CBI v. S P Manickam & ors 183 controls the affairs of the company commits an offence with criminal intent, their criminality can be imputed to the company as well as they are "alter ego" of the company.
235. In the case of Sunil Bharti Mittal supra, the cases of S.K. Alagh vs. State of UP and Ors supra, Keki Hormusji Gharda vs. Mehervan Rustom Irani supra were discussed and it was held:
"No doubt, a corporate entity is an artificial person which acts through its officers directors, managing director, chairman etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made accused along with the company, if there is sufficient evidence of his active role coupled with criminal intent."
236. In the instant case, the account with the Indian Bank, Rana Pratap Bagh Branch was jointly opened by A2 and other directors of A
3. As per the resolution Ex.PW1/5 dated 12.08.1989 (D6), it was resolved to open the account of the company M/s Globarc & Alloys Pvt. Ltd with the Indian Bank, Rana Pratap Bagh. Its directors Amrit Lal Sirpaul, Ashok Sirpaul and Anil Sirpaul were authorized to operate the account relating to the transactions of the company. They had put their signatures on the specimen signature RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 183 of 207 CBI v. S P Manickam & ors 184 cards at the time of opening of the account. Ashok Sirpaul (A2) was also the director of M/s Amrit Refractories Pvt. Ltd when the account with Syndicate Bank was opened and the original documents of the property bearing no. 3, IDC, Mehrauli Gurgaon Road were pledged/ mortgaged. Record shows that most of the correspondence with the Indian Bank was done by A2 on behalf of A3. The Bank officials and the witnesses have proved the signatures of A2 on the documents as elaborated in the preceding paras. The handwriting expert opinion Ex.PW43/B also establishes that it was A2 who had signed the questioned documents.
237. The documents of A3 dated 22.10.1989 Ex.PW53/D1 (D224 page 270) also show that the Board of Directors in its meeting held on 22.10.1989 had resolved that A2 would be fully authorized on behalf of company to sign all the documents whatsoever concerning the release of sanction limits and documents of any nature which the Indian Bank may deem fit and essential to be executed and signed. A2 would be empowered to sign the documents pertaining to the mortgage of the factory property i.e. land and building, plant and machinery, also sign all the related papers creating equitable mortgage in favour of the bank and file them with the Registrar of the companies and that he would also be authorized to apply for additional limit of Letter of credit for Rs. 50 lacs and get the same sanctioned from the bank and sign the relevant documents on behalf of A3. The aforesaid resolution bears the signatures of the directors i.e. Anil Sirpaul, RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 184 of 207 CBI v. S P Manickam & ors 185 Ashok Sirpaul (A2) and Amrit Sirpaul. There was a declaration Ex.PW53/D10 (D224 page 271) by A2 that the factory under the name of A3 is fully owned by the company duly registered in its name, purchased from Amrit Refractories Pvt. Ltd. The full price of the factory property was paid to Amrit Refractories Pvt. Ltd and there is no liability of any kind payable by the company to the Director of Industries Gurgaon and that the title of the land and building of the factory is free from all sorts of liens and encumbrances and nothing is due to any government department. Resolution dated 07.10.1989 Ex.PW53/D2 (D224 page 214) was also passed by the company A3, whereby A2 was authorized to hand over the title deed of the property towards the collateral security and sign the relevant documents on behalf of A3.
238. Testimony of PW5 shows that Anil Sirpaul, brother of A2 (since died) on 10.05.89 had contacted the SubRegistrar office, Gurgaon for issuance of nonencumbrance certificate in respect of the factory situated on Plot No. 3 IDC, Mehrauli Road, Gurgaon. He had given a false affidavit that the property was free from encumbrance on the basis of which certificate Ex. PW 5/3 was issued by the office of the subregistrar.
239. Anil Sirpaul then approached the bank for availing Key Cash Credit facility in August, 1989 itself, immediately after opening the account and submitted the bills of the firms which were either non existent or did not have any business dealings with M/s Globarc & Alloys Pvt. Ltd (A3). In the presence of Anil Sirpaul, samples of the goods kept in the godown at Gurgaon and bank RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 185 of 207 CBI v. S P Manickam & ors 186 were taken. Anil Sirpaul was the person who had brought the keys of the godown.
240. The correspondence made by A1 shows that vide letter dated 11.10.1989 Ex.PW1/19, A2 had submitted the proposal on behalf of A3 for sanction of working capital facilities in the zonal office. It was mentioned in that letter that A3 was formed by taking over the assets of M/s Amrit Refractories (P) Ltd on 16.11.1989. The unit is engaged in the manufacture of Ferro Alloys, Aluminum Powder and Welding Electrode etc. Till A3 was enjoying temporary credit facilities upto Rs. 10.0 lacs from State Bank of India Paharganj Branch and the liability was fully adjusted as of 25.09.1989 vide State Bank of India letter dated 25.09.1989. It was stated in the said letter that the company had proposed to change its name from Amrit Refractories Pvt. Ltd to M/s Globarc & Alloys Pvt. Ltd. It was also stated in the letter that while this proposal was being processed, due to urgency expressed by the party, the Branch Office had released KCC loan of Rs. 13.50 lacs in two stages i.e. Rs. 10 lacs on 29.08.1989 and Rs. 3.5 lacs on 01.09.1989 and purchased one Doc. BP for Rs. 6,28,893/ vide letter dated 06.09.1989 which transactions were confirmed by the Zonal Office vide ZO:SSI:724:89 dated 20.09.1989.
241. Substandard Ferro Nickel was pledged with the bank against which adhoc Key Cash Credit Limit was availed. A fictitious company in the name of M/s K.B. Chemicals through PW54 Hukam Chand was got opened. Cheques taken from PW54 were RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 186 of 207 CBI v. S P Manickam & ors 187 got discounted by A2 which were returned unpaid due to insufficient funds.
242. Letter of PW7 dated 28.04.1990 shows that the company was not doing substantial production but on papers it was shown that substantial production was being done by the company. When PW7 refused to further retire the bills, A2 took up the matter with the Zonal Officer and further availed the discounting facility. Loss of about Rs. 75.5 lacs was caused to the Bank due to the frivolous transactions. A2 was very well aware that the non encumbrance certificate was obtained by giving false affidavit by Anil Sirpaul as the property was already mortgaged with the Syndicate Bank by M/s Amrit Refractories Pvt. Ltd in which A2 was one of the directors.
243. Facts and circumstances brought on record by the prosecution in the present case also prove that A2 was aware of all the transactions made by Anil Sirpaul (since died), with the bank which he never objected and he was party to the criminal conspiracy with Anil Sirpaul, the director of the company to cheat the bank who with dishonest intention cheated the bank by submitting false nonencumbrance certificate and the bills of the companies for availing Key Cash Credit facility which were either non existent or had not supplied the material to A3. The authorization and documents show that A2 was fully authorized by A3 to deal with the banks in relation to the transactions made by A3. A2 got discounted the bills which were returned unpaid as the consignee(s) refused to retire the bills since they had not RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 187 of 207 CBI v. S P Manickam & ors 188 placed any order to A3. The Ferro Nickel pledged under adhoc KCC did not test positive for the presence of Nickel.
244. The documents and the testimonies of the witnesses clearly show that A2 was party to the criminal conspiracy with the other directors to cheat the bank and obtain the pecuniary benefits.
245. In the case of Sunil Bharti Mittal vs. CBI (2015) 4 SCC 609, it was held that no doubt, a corporate entity is an artificial person which acts through its officers, directors managing director, chairman etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made accused along with the company, if there is sufficient evidence of his active role coupled with criminal intent.
246. Facts and circumstances emanating from evidence brought on record by prosecution prove that Ashok Sirpaul A2 was the director of M/s Globarc & Alloys Pvt. Ltd A3. He was in control of the affairs of the company. He in conspiracy with Anil Sirpaul and others, cheated the bank by getting the bills discounted under documentary bill purchase facility with the bank and fraudulently withdrew the amount. The bills were returned unpaid as the consignees refused to retire the bills stating that they did not place any order to A3. M/s Globarc & Alloys Pvt. Ltd (A3) availed key cash credit limit amounting to Rs. 13.50 lacs and further RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 188 of 207 CBI v. S P Manickam & ors 189 availed adhoc KCC limit of Rs. 15 lacs from the Indian Bank by pledging spurious goods thereby causing loss to the bank and corresponding gain for himself/company. While availing the KCC limit of Rs. 13.50 lacs, the bills of the companies from which A3 had claimed to have purchased the goods were submitted which were either not in existence or had not supplied the goods to A3. Anil Sirpaul who being the director in the company on the basis of the false affidavit obtained non encumbrance certificate from the office of the SubRegistrar in respect of the plot 3, IDC, Mehrauli Gurgaon Road, which was mortgaged with the Indian Bank though in fact the property had already been mortgaged with the Syndicate Bank which fact A2 was very well aware but he never disclosed this fact to Indian Bank while availing the credit facilities. The material pledged under adhoc KCC was found sub standard. It was replaced with the material claimed to have purchased from M/s Global Linkers which was the sister concern of M/s Globarc & Alloys Pvt. Ltd which M/s Global Linkers had claimed to have purchased from M/s Vikram International but in fact M/s Vikram International did not supply any material to M/s Global Linkers. Coaccused Anil Sirpaul (since died) got opened an account in the name of M/s K.B. Chemicals through PW54, his employee who impersonated as Babu Lal and A2 obtained the two cheques from PW54 which A2 very well knew that the same would be dishonoured and A2 got discounted the cheques from the Indian Bank and availed the cheque discounting facility.
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 189 of 207 CBI v. S P Manickam & ors 190
247. In this view of the matter, I am of the opinion that the prosecution has duly proved the malicious/criminal intent on the part of A2 to run the business of the company. Criminality can also be imputed to the company A3 as well as A2, the 'alter ego' of the company. It is not the case that the offence was committed by the company only, rather, it was the intent and action of A2 and other directors who had acted on behalf of the company (A3).
248. It is true that there was no proper authorization u/s 305 Cr.P.C on behalf of A3 in favour of A2 but the record shows that throughout the trial, it was Ashok Sirpaul (A2) who represented M/s Globarc & Alloys Pvt. Ltd (A3). It was A2 who answered all the incriminating circumstances put to the company A3, A2 also crossexamined the prosecution witnesses for M/s Globarc & Alloys Pvt Ltd (A3). I do not find force in the contention of ld. defence counsel that the day to day affairs of the company including all its business and banking transactions were managed and controlled by its chairman cum Managing Director Amrit Lal Sirpaul and the duties of Ashok Sirpaul (A2) were confined to engineering job, fabrication of plant and machinery as well as erection of different factory sheds or that he was treated as the representative of A3 as he was the sole surviving director of M/s Globarc & Alloys Pvt Ltd (A3). Record shows that most of the correspondence related to the above transactions were made by A 2 on behalf of A3. Fact and circumstances also show that he was controlling the affairs of the company and was responsible for the acts / deeds committed by M/s Globarc & Alloys Pvt Ltd (A3).
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 190 of 207 CBI v. S P Manickam & ors 191
249. The facts & circumstances clearly prove the complicity of Ashok Sirpaul (A2). He not only cheated the bank but was also the party to the criminal conspiracy with Anil Sirpaul to defraud the bank. It cannot be said that M/s Globarc & Alloys Pvt. Ltd A3 alone is liable. The documents prove the active involvement of Ashok Sirpaul A2 in defrauding the bank for having wrongful gain. Though he denied his signatures on various documents but the testimonies of the witnesses and the questioned documents sent to the laboratory with the specimen signature documents clearly prove his signatures on the documents and his complicity to defraud the bank.
250. For the aforesaid reasons, I am of the view that both Ashok Sirpaul (A2) and M/s Globarc & Alloys Pvt. Ltd (A3) through Ashok Sirpaul (A2) were party to the criminal conspiracy with the other directors and they in pursuant thereto cheated the bank and thereby dishonestly induced the bank to part with the amount against the various credit limits availed by M/s Globarc & Alloys Pvt Ltd (A3) which they converted for their own use. Both A2 and A3 being party to the criminal conspiracy with coaccused Anil Sirpaul allowed Anil Sirpaul to submit nonencumbrance certificate which he fraudulently obtained by submitting false affidavit before the SubRegistrar Gurgaon. They were also party to the criminal conspiracy with the coaccused Anil Sirpaul when he submitted the bills of the companies which were either non existent or had not supplied the goods for availing the KCC facilities which they knew or had reasons to believe to be the false RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 191 of 207 CBI v. S P Manickam & ors 192 bills/documents.
Sale proceeds effected through DRTIII towards the realization of amount:
251. It was contended by ld. counsel for A2 and A3 that there was no loss to the bank as the property in question was sold in auction and the sale proceeds amounting Rs. 1.03 crores were appropriated towards the loss of the party. The property which was mortgaged was worth more than Rs. 15 crores. The loss allegedly suffered by the bank was approximately Rs. 75.5 lacs on account of various transactions by A3.
252. Ld. PP on the contrary argued that suffering of loss is not sine qua non for recording the conviction.
253. I have considered the submissions.
254. In the case of CBI vs. Jagjit Singh, Crl. Appeal no. 1580 of 2013 decided on 01.10.2013 it was held:
"The debt which was due to the bank was recovered by the Bank pursuant to an order passed by Debt Recovery Tribunal. Therefore, it cannot be said that there is compromise between the offender and the victim. The offences when committed in relation with banking activities including offences u/s 420/471 IPC have harmful effect on the public and threaten the well being of the society. These offences fall under the category of offences involving Moral Turpitude committed by Public Servant while working in that capacity. Prima facie, one may state that the bank as the victim in such cases but in fact the society in general including customers of the bank is the sufferer".
255. In the case of R. Gopalakrishnan vs. The State, 2002 Crl.L.J 47, it was held that the mere fact that the bank did not lose any money RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 192 of 207 CBI v. S P Manickam & ors 193 or the company was able to recover the money from A3 through the court proceedings, would not absolve the appellant of his criminal liability.
256. In the case of R. Venkatakrishnan Vs. CBI, Crl. Appeal no. 76 of 2004 decided on 07.08.2009, it was held that the submission of the ld. Counsel that the banks have not initiated any proceedings and suffered any loss and thus the judgment of conviction and sentence of criminal breach of trust is wholly unsustainable cannot be accepted. It is not the law that suffering of loss is a sine qua non for recording the judgment of conviction.
257. It is true that in the recovery proceedings initiated by the bank, the amount was realized by sale of the mortgaged property but it cannot be lost sight of the fact that this offence was committed in relation of the banking activities and this offence falls under the category of offences involving moral turpitude. Relying on the cases as referred above, I am of the view that although the bank did not lose any money or the bank was able to recover the money from A3 through the recovery proceedings but this would not absolve the accused persons A2 and A3 of their criminal liability. That being the position, no benefit can be given to the accused A2 and A3 on this count.
ROLE OF ACCUSED S.P. MANICKAM (A1)
258. Facts and circumstances of the present case show that A1 from time to time had informed the Zonal Office about the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 193 of 207 CBI v. S P Manickam & ors 194 loans/transactions in respect of A3 and his action was approved by the Zonal Office as evident from the letters and the correspondences. The accounts used to be audited regularly and the audit team never raised any objection on any count. Facts and circumstances further show that A1 never acted or worked prejudicial or detrimental to the interest of the bank so as to facilitate or give pecuniary benefit to A2 and A3. A1 discharged his duties diligently with utmost care and caution. It cannot be said that what A1 did was with dishonest intention to cause wrongful gain to A2 and A3. It was only when A3 started defaulting in clearing the dues/limits sanctioned by the bank, the bank came into action and reported the matter to the authority concerned. There is no material or evidence to indicate that A1 acted dishonestly nor there is any material to show or suggest that he derived any pecuniary benefit out of the alleged transactions. Nothing can be inferred from the facts and circumstances that he favoured A3 to give pecuniary benefit to it making him liable for the offence u/s 13(1)(d) of the Prevention of Corruption Act, 1988. There may be some procedural lapses on the part of A1 but these lapses at the best can be said to be irregularities and not illegalities warranting any criminal action against him.
259. In the case of Abdulla Mohammed Pagarkar vs. State (1980) 3SCC110, it was held that the onus of proof of the existence of every ingredient of the charge always rests on the prosecution and never shifts. The irregularities no doubt furnish a circumstance giving rise to a strong suspicion in regard to the bonafides of the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 194 of 207 CBI v. S P Manickam & ors 195 appellants in the matter of the execution of the work but suspicion, however strong, cannot be a substitute for proof. It is certainly not permissible to place the burden of proof of innocence on the person accused of a criminal charge. But those findings merely make out that the appellants proceeded to execute the work in flagrant disregard of the relevant rules of the G.F.R and even of ordinary norms of procedural behaviour of government officials and contractors in the matter of execution of works undertaken by the government. Such disregard however has not been shown to us to amount to any of the offences of which the appellants have been convicted. The said findings no doubt make the suspicion to which we have above adverted still stronger but that is where the matter rests and it cannot be said that any of the ingredients of the charge have been made out.
260. In the case titled as A. Sivaprakash vs. State of Kerala AIR 2016 SC2287, it was held:
18. It was not even the case set up by the prosecution that appellant had taken that money from some person and had obtained any pecuniary advantage thereby. It was the obligation of the prosecution to satisfy the aforesaid mandatory ingredients which could implicate the appellant under the provisions of Section 13(1)(d)(ii). The attempt of the prosecution was to bring the case within the fold of clause (ii) alleging that he misused his official position in issuing the certificate utterly fails as it is not even alleged in the chargesheet and not even iota of evidence is led as to what kind of pecuniary advantage was obtained by the appellant in issuing the said letter.
19. In C. Chenga Reddy & Ors. vs. State of A.P., (1996) 10 SCC 1993: the Supreme Court held that even when codal violations were established and it was also proved that there were irregularities committed by allotting/awarding the work RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 195 of 207 CBI v. S P Manickam & ors 196 in violation of circulars, that by itself was not sufficient to prove that a criminal case was made out The Supreme Court went on to hold:
"22. On a careful consideration of the material on the record, we are of the opinion that though the prosecution has established that the appellants have committed not only codal violations but also irregularities by ignoring various circulars and departmental orders issued from time to time in the matter of allotment of work of jungle clearance on nomination basis and have committed departmental lapse yet, none of the circumstances relied upon by the prosecution are of any conclusive nature and all the circumstances put together do not lead to the irresistible conclusion that the said circumstances are compatible only with the hypothesis of the guilt of the appellants and wholly incompatible with their innocence. In Abdulla Mohd. Pagarkar vs. State (Union Territor of Goa, Daman and Diu), (1980) 3 SCC 110: (AIR 1980 SC 499), under somewhat similar circumstances, this Court opined that mere disregard of relevant provisions of the Financial code as well as ordinary norms of procedural behaviour of Government officials and contractors, without conclusively establishing, beyond a reasonable doubt, the guilt of the officials and contractors concerned, may give rise to a strong suspicion but that cannot be held to establish the guilt of the accused. The established circumstances in this case also do not establish criminality of the appellants beyond the realm of suspicion and, in our opinion, the approach of the trial Court and the High Court to the requirements of proof in relation to a criminal charge was not proper........"
20. We, therefore, are of the opinion that the prosecution has miserably failed to prove the charge beyond reasonable doubt and the Courts below have not looked into the matter in a proper perspective. We, thus, allow this appeal and set aside the conviction of the appellant. The appellant is already on bail. His bail bonds shall stand discharged."
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 196 of 207 CBI v. S P Manickam & ors 197
261. In the case titled as C. Chenga Reddy vs. State of A.P 1996 (10) SCC 193, it was held:
21. In a case based on circumstantial evidence, the settled law is that the circumstances from which the conclusion of guilt is drawn should be fully proved and such circumstance must be conclusive in nature. Moreover, all the circumstances should be complete and there should be no gap left in the chain of evidence. Further, the proved circumstances must be consistent only with the hypothesis of the guilt of the accused and totally inconsistent with his innocence. In the present case the courts below have overlooked these settled principles and allowed suspicion to take the place of proof besides relying upon some inadmissible evidence.
22. On a careful consideration of the material on the record, we are of the opinion that though the prosecution has established that the appellants have committed not only codal violations but also irregularities by ignoring various circulars and departmental orders issued from time to time in the matter of allotment of work of jungle clearance on nomination basis and have committed departmental lapse yet, none of the circumstances relied upon by the prosecution are of any conclusive nature and all the circumstances put together do not lead to the irresistible conclusion that the said circumstances are compatible only with the hypothesis of the guilt of the appellants and wholly incompatible with their innocence. In Abdulla Mohd. Pagarkar v. State (Union Territory of Goa, Daman and Diu) under somewhat similar circumstances this Court opined that mere disregard of relevant provisions of the Financial Code as well as ordinary norms of procedural behaviour of government officials and contractors, without conclusively establishing, beyond a reasonable doubt, the guilt of the officials and contractors concerned, may give rise to a strong suspicion but that cannot be held to establish the guilt of the accused. The established circumstances in this case also do not establish criminality of the appellants beyond the realm of suspicion and in our opinion, the approach of the trial court and the High Court to the requirements of proof in relation to a criminal charge was not proper. That because of the actions of the appellants, in breach of codal provisions instructions and procedural safeguards, the State may have suffered financially, RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 197 of 207 CBI v. S P Manickam & ors 198 particularly by allotment of work on nomination basis without inviting tenders but those acts of omission and commission by themselves do not establish the commission of criminal offences alleged against them.
37. .....................The maximum that can be said against the appellants is that they committed some indiscretion in the matter of allotment of jungle clearance work on nomination basis and also violated codal provisions in the matter of preparation of estimate, drawing up of the agreements and making payments. These acts of omission and commission do give rise to a strong suspicion that the appellants so acted with a view to misappropriate government funds but suspicion, howsoever strong, cannot take the place of proof.
The prosecution has in our opinion failed to establish the case against the appellants beyond a reasonable doubt. The conviction and sentence imposed upon the appellants, under the circumstances, cannot be sustained.
52.............................There have been some irregularities committed in the matter of allotment of work to the appellant or breach of codal provisions, circulars and departmental instructions, for preparation of estimates etc and those irregularities give rise to a strong suspicion in regard to the bona fides of the officials of the department and their link with the appellant, but that suspicion cannot be a substitute of proof. The court below appear to have drawn inferences by placing the burden of proving innocence on the appellant which is an impermissible course. In our opinion none of the circumstances relied upon by the prosecution against the appellant can be said to have been proved satisfactorily and all those circumstances which are not of any clinching nature, even if held to be proved do not complete the chain of evidence so complete as to lead to an irresistible conclusion consistent only with the hypothesis of the guilt of the appellant and wholly inconsistent with his innocence. The prosecution has not established the case against the appellant beyond a reasonable doubt. This appeal, therefore, succeeds and is allowed. The conviction and sentence of the appellant is hereby set aside
262. In the case of Chittaranjan Shetty vs. State 2015 15 SCC 569, it was held:
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 198 of 207 CBI v. S P Manickam & ors 199
22. On a perusal of the abovementioned judgments, it can be concluded that in order to prove the offence under Section 13(1)(d)(ii) of the Act, it must be established that a public servant has abused his position in order to obtain for himself or for any other person any valuable thing or pecuniary advantage and that in this context the "abuse" of position must involve a dishonest intention.
263. In the case of Surender Kaur vs. State of Haryana 2014 (15) SCC
109), it was held:
16. ..............The standard of proof required in a criminal trial is not of mere preponderance of probabilities but of proof beyond doubt. Applying the above standard, the other appellants are entitled to benefit of doubt. We also find that there is no evidence of taking of pecuniary advantage by Dr. Ravinder Kaur which is necessary for charge under Section 13(1)(d). Presumption under Section 20 has been wrongly invoked as the same does not apply in respect of the said clause. Thus, her conviction and sentence under the Prevention of Corruption Act cannot be sustained.
CONCLUSION
264. On a careful consideration of the evidence adduced by the prosecution, I find that Anil Sirpaul (since died), Ashok Sirpaul (A2) and Amrit Lal Sirpaul (since died) were the directors in M/s Globarc & Alloys Pvt. Ltd (A3). A3 had authorized A2 to deal with the bank and the transactions relating thereto. It was Anil Sirpaul who with an intention to defraud the bank obtained the nonencumbrance certificate from the SubRegistrar office, Gurgaon on the basis of false affidavit to the effect that the property at Plot No. 3, IDC, Mehrauli Road, Gurgaon was not encumbered with any bank nor there was any lien on the property RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 199 of 207 CBI v. S P Manickam & ors 200 though, in fact, the property was encumbered with the Syndicate Bank, G B Road branch. As per the chain of documents, the property was purchased in the name of Smt. Kanta Luthra who inturn transferred the same in the name of Amrit Lal Sirpaul and thereafter he transferred it in favour of M/s Amrit Refractories Pvt Ltd which later transferred it to M/s Globarc & Alloys Pvt. Ltd. (A3). A3 applied for various credit limits to Indian Bank and offered to mortgage the aforesaid property. A3 falsely disclosed to the Bank that the property was free from any encumbrance though, in fact, it was already mortgaged with the Syndicate Bank. A3 intentionally submitted the photocopies of the originals of the earlier chain of documents fully knowing that the property was already mortgaged by M/s Amrit Refractories Pvt. Ltd. with the Syndicate Bank when the loan was taken. Anil Sirpaul, Ashok Sirpaul (A2) and Amrit Lal Sirpaul were also the directors in the company M/s Amrit Refractories Pvt. Ltd. M/s Globarc & Alloys Pvt. Ltd had a sister concern in the name of Global Linkers at Mumbai which had been shown to have purchased the material/goods from Vikram International at Calcutta though in fact Vikram Internationals did not have any business dealing either with A3 or with Global Linkers. Anil Sirpaul while availing the Key Cash Credit limit for M/s Globarc & Alloys Pvt. Ltd from the Indian Bank submitted the bills of the companies which were either nonexistent or had not supplied the materials against the bills to M/s Globarc & Alloys Pvt. Ltd. (A3). The credit facilities of Rs. 13.60 lacs were availed. A3 availed adhoc RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 200 of 207 CBI v. S P Manickam & ors 201 KCC facility of Rs.15 lacs by pledging Ferro Nickel which A3 had claimed to have imported and got them cleared through its clearing agents M/s Dharam Das & Co. Ferro Nickel was got tested and the result turned out to be negative qua the presence of Nickel. A3 then replaced Ferro Nickel with Silicon Alloys Lumps which A3 had claimed to have purchased from M/s Global Linkers. M/s Global Linkers was shown to have purchased from M/s Vikram International, Calcutta while Vikram International never had any business dealings with M/s Global Linkers. A3 (through A2) also availed Bill Purchase facility by getting the bills discounted of the different companies by placing the invoices and the orders etc. When the bank sent those bills to the bankers of the companies, the companies refused to retire those bills as they had not placed the orders to A3. The account of A3 became irregular. When PW7 wrote letter to A3 to make good the deficiencies and clear the liabilities, A3 through A2 approached the Zonal office and got the instructions issued from the Zonal Office to the Branch Manager to further discount their bills. For sixteen bills discounted, payments were not received by the bank resulting into outstanding to the tune of about Rs.49 lacs. Anil Sirpaul pressurized his employee Hukum Chand PW54 to open an account in the name of M/s K B Chemicals with State Bank of Patiala, Gurgaon impersonating him as Babu Lal. He got issued a cheque book. Most of the correspondence was made by A2 and the bank suffered the loss of about Rs.75.5 lacs, the payment of which was later realized by the bank by auctioning the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 201 of 207 CBI v. S P Manickam & ors 202 land/property pursuant to an order passed by the Debt Recovery TribunalIII, Delhi.
265. In view of the aforesaid discussions on the oral and documentary evidences brought on record by the prosecution, it can safely be held that A2 was aware of the fact that non encumbrance certificate submitted on behalf of company A3 was false. It is further evident from the evidence that has come on record that the bills submitted for availing KCC on behalf of A3 were false as the same were generated from the non existent companies or the companies which had not supplied the goods to A3. The aforesaid evidence clearly proves the complicity of A2 in the commission of the offence that he used the false documents as genuine to defraud the bank so as to cause wrongful gain to A3 and wrongful loss to the bank. The prosecution on the basis of testimony of PW54 Hukam Chand and other evidence available on record unerringly established that A2 had got an account opened through his employee PW54. Having done that, A2 obtained two cheques from PW54 which he knew being without consideration and without any statutory liability of PW54. A2 was also aware that this cheque would never be honoured and thus were the false cheques but the same were used as genuine for getting them discounted from the bank so as to cheat the bank.
266. All these transactions show that there was criminal conspiracy between Anil Sirpaul and Ashok Sirpaul (A2) and other directors of M/s Globarc & Alloys Pvt Ltd (A3) to defraud the bank to have wrongful gain. Anil Sirpaul in pursuance to the criminal RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 202 of 207 CBI v. S P Manickam & ors 203 conspiracy got issued the false nonencumbrance certificate from the SubRegistrar Gurgaon, submitted false bills of the firms which were either not existent or did not have business dealings with A3. Credit limits were obtained and the property was hypothecated with the bank. A2 also managed the whole affairs of the company and made correspondence with the bank for availing further credit limits under Bill Purchase or Key Cash Credit or Open Cash Credit limit by submitting the bills of the companies which refused to retire the bills saying that they did not place any order with A3. A2 fully knew that Hukum Chand was the employee of A3 and he impersonated himself as Babu Lal to open the account in the name of M/s K B Chemicals. He received the cheques of M/s K B Chemicals, got them discounted and availed the cheque discounting facility. When the cheques were sent for collection, they were returned unpaid as there was no sufficient balance in the account of M/s K B Chemicals. As per the resolution of the company, he was fully authorized to represent his company in dealing with the banks and other related matters. Most of the correspondence was made by A2. As it was a closely held company of father and sons, it flows from the evidence on record that it was in the knowledge of A2 that the property in question was already subject to loan but he deliberately withheld it from the bank with dishonest intention for wrongful gain.
267. It further emanates from the evidence on record that A2 in conspiracy with other directors of the company had cheated the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 203 of 207 CBI v. S P Manickam & ors 204 bank more particularly A1, the then Branch Manager as the evidence on record falls short of proving the complicity of A1 with A2 and other directors of A3 company.
268. As far as the role of A1 is concerned, he may have committed some procedural irregularities by ignoring various circulars and departmental orders issued from time to time in the matter of opening of account of M/s Globarc & Alloys Pvt. Ltd (A3), not getting the goods cleared from the approved list of clearing agents circulated by the bank of the goods/materials purchased under adhoc KCC and recommending for enhancement of limit of OCC without insisting for clearing of outstanding bills purchased under OCC etc. but these procedural irregularities, however, do not prove any complicity of A1 in the commission of the offence charged against him beyond the realm of suspicion. Admittedly, the bank suffered loss but nothing can be inferred from the evidence that A1 acted dishonestly or he he did some act to give pecuniary benefit to A3. There is nothing to show or indicate that A1 derived any pecuniary benefit out of the alleged transactions. What he did was in good faith in the interest of the business of the bank and his action was never questioned by the Audit Team who audited the account of the bank from time to time. A1 always informed the zonal office about the action taken in the matter and never concealed any information from it to give benefit to A3. Even his successors discounted the bills, though some of the earlier bills were returned unpaid. His superiors also permitted the successors of A1 to discount the bills even when there was a RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 204 of 207 CBI v. S P Manickam & ors 205 report that the account of A3 became irregular. Accused A1 was from a commerce background. He was not a technical person to evaluate the quality of the alloys/chemicals which were brought by A3 against which credit facilities were availed. A1 acted in good faith believing the transactions to be genuinely made by A
3. A1 had also called the credit report of A3 from State Bank of India, Paharganj branch which was satisfactory. The manual of instructions issued by the bank also provides that it was not mandatory for the Branch Manager to get the quality of the goods/material pledged ascertained. Only the physical verification was required to be made qua the stock and the bills. This is, what was also done by his successors who despite knowing that some goods were not upto the desired quality, did not insist for the quality check of the goods which were brought as replacement of the goods earlier pledged under KCC but they were not made accused. Most of the bills purchased under BP limit in his tenure got cleared except the two bills. Although the bank suffered the loss but it cannot be said that A1 intentionally and dishonestly caused loss to the bank and wrongful gain to A3.
269. It was held in State of UP v. M. K. Anthony, AIR 1985 SC 48 as follows: "While appreciating the evidence of a witness, the approach must be whether the evidence of the witness read as a whole appears to have a ring of of truth. Once that impression is formed, it is undoubtedly necessary for the court to scrutinize the evidence more particularly keeping in view the deficiencies, drawbacks and infirmities pointed out in the evidence as a whole and evaluate them to find out whether it is against the RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 205 of 207 CBI v. S P Manickam & ors 206 general tenor of the evidence given by the witness and whether the earlier evaluation of evidence is shaken as to render it unworthy of belief."
270. Upon consideration of all the facts & circumstances of the case enumerated herein above, this Court is of the considered opinion that the prosecution has succeeded to prove its case to the hilt against the accused persons Ashok Sirpual (A2) and M/s Globarc & Alloys Pvt Ltd (A3) for their having committed the offences punishable u/s 420 IPC and u/s 120B r/w section 420 and 471 IPC. The offences punishable u/s 468, 467 and section 120B r/w section 467, 468 IPC and section 13(2) r/w section 13(1)(d) of the Prevention of Corruption Act, 1988 are not proved against the accused Ashok Sirpaul (A2) and M/s Globarc & Alloys Pvt. Ltd (A3).
271. I hold the accused Ashok Sirpaul (A2) and M/s Globarc & Alloys Pvt. Ltd (A3) guilty of the offences punishable u/s 420 IPC and u/s 120B r/w section 420 and 471 IPC and convict them thereunder.
272. This Court is also of the considered opinion that the charges against the accused S.P. Manickam (A1) for his having committed the offences punishable u/s 13(2) r/w section 13(1)(d) of the Prevention of Corruption Act, 1988 and u/s 120B r/w section 420, 467, 468, 471 IPC and section 13(2) r/w section 13(1)
(d) of the Prevention of Corruption Act, 1988 are not proved.
273. I acquit the accused S.P. Manickam (A1) of the offences punishable u/s 13(2) r/w section 13(1)(d) of the Prevention of RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 206 of 207 CBI v. S P Manickam & ors 207 Corruption Act, 1988 and u/s 120B r/w section 420, 467, 468, 471 IPC and section 13(2) r/w section 13(1)(d) of the Prevention of Corruption Act, 1988. His bail bond be cancelled. His surety be discharged. He is, however, directed to furnish bail bond in the sum of Rs. 25,000/ with one surety in the like amount u/s 437A Cr.P.C.
Announced in the Open Court.
18.04.2018. (Sanjiv Jain) Special Judge (PC Act) (CBI3), South, Saket Court New Delhi Digitally signed by SANJIV JAIN SANJIV Date:
JAIN 2018.04.19
16:11:17
+0530
RC No. 01(S)/91SIU(X)/CBI/ND 18.04.2018 207 of 207
CBI v. S P Manickam & ors