Madras High Court
R.Prakash vs / on 10 October, 2023
Author: G.Jayachandran
Bench: G.Jayachandran
Crl.A.Nos.675,703,738 and 853 of 2018
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 11.09.2023
Pronounced on :10.10.2023
CORAM:
THE HONOURABLE DR.JUSTICE G.JAYACHANDRAN
Crl.A.Nos.675, 703, 738 and 853 of 2018
Crl.A.No.675 of 2018
R.Prakash
Salesman,
M/s Vijay Agro Agency,
S/o Ramasamy Udayar,
No.13, Oosambadi Village,
Thurinjapuram Post,
Tiruvannamalai Taluk & Dist. .. Appellant/Accused-2
/versus/
State rep.by
The Inspector of Police,
SPE/CBI/ACB/Chennai .. Respondent/Complainant
Criminal Appeal has been filed under Section 374(2) Cr.P.C., to set aside
the conviction and sentences passed by the lower Court in C.C.No.10 of 2012,
dated 23.10.2018 by the Court of XI Additional and Special Session Judge for
CBI Cases relating to Banks and Financial Institutions at Chennai and allow
this appeal with costs.
For Appellant :Mr.R.C.Paul Kanagaraj
For Respondent :Mr.K.Srinivasan, Spl.P.P.(CBI)
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Crl.A.Nos.675,703,738 and 853 of 2018
Crl.A.No.703 of 2018
P.Lakshmanan .. Appellant/Accused No.12
/versus/
State rep.by
The Inspector of Police,
Central Bureau of Investigation
CBI/ACB, Chennai.
(R.C.No.22/A/2010) .. Respondent/Complainant
Criminal Appeal has been filed under Section 374 (2) Cr.P.C., to allow
this appeal and set aside the conviction and sentence imposed on the
appellant/A12 by judgment dated 23.10.2018 in C.C.No.10 of 2012 passed by
the XI Additional Special Judge for CBI Cases, Chennai, against the appellant.
For Appellant :Mr.V.R.Appaswamee
For Respondent :Mr.K.Srinivasan, Spl.P.P.(CBI)
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Crl.A.No.738 of 2018:
V.Kannan ..Appellant/Accused-1
/versus/
State rep.by
The Inspector of Police,
Central Bureau of Investigation,
ACB/Chennai.
(R.C.No.22/A/2010) .. Respondent/Complainant
Criminal Appeal has been filed under Section 374 (2) Cr.P.C., to allow
the criminal appeal to set aside the judgment passed in C.C.No.10 of 2012
dated 23.10.2018 on the file of the XI Additional Special Session Court,
Chennai (Banks and Finance Industrial related CBI Cases).
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For Appellant :Mr.K.Selvamani
For Respondent :Mr.K.Srinivasan,Spl.PP for CBI Cases
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Crl.A.No.853 of 2018
1.K.Balaraman
2.G.Pichandi
3.R.Jayalakshmi
4.R.Natarajan
5.S.Dayalan
6.B.Kulandaivelu
7.M.Narayanasamy
8.R.Jayaprakash
9.P.Elumalai
10.R.Arul .. Appellants/Accused-3,4,6 to
9,11 and 13 to 15
/versus/
State rep.by
The Inspector of Police,
SPE/CBI/ACB, Chennai. .. Respondent/Complainant
Criminal Appeal has been filed under Section 374 (2) Cr.P.C., to set
aside the conviction and sentences passed by the lower Court in C.C.No.10 of
2012 dated 23.10.2018 by the Court of XI Additional & Special Judge for CBI
Cases relating to Banks and Finance Institutions at Chennai and allow this
appeal with costs.
For Appellant :Mr.T.Sivananthan
For Respondent :Mr.K.Srinivasan, Spl.P.P.(CBI)
-------
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Crl.A.Nos.675,703,738 and 853 of 2018
COMMON JUDGMENT
On 21.05.2010, based on the complaint received from the AGM, Union Bank of India, Regional Office, Salem, the Superintendent of Police, CBI at Chennai registered a case in Crime No.RC MA1 2010 A 0022 against 10 named accused and others for offences under Section 120B r/w 420, 409, 467, 468 r/w 471 IPC and Sections 13(2) r/w 13(1)(d) of PC Act.
2. The gist of the complaint was that during the period between 12.02.2008 and 14.12.2008, Shri V.Kannan while serving as Branch Manager, Union Bank of India, Thiruvannamalai, Shri R.Vijayan, an agent for tractor dealers and various firms with the connivance of each other entered into a criminal conspiracy with an intent to cheat the Union Bank of India, Thiruvannamalai Branch in the matter of sanctioning agricultural and crop loans etc. In pursuance of the conspiracy, Shri V.Kannan sanctioned and disbursed crop loans, pipe loans, etc., to an extent of Rs.101.38 lacs to the borrowers who were canvassed and brought by the agent and the dealers firm without adequate primary security and by accepting fake and fabricated documents. Thereby, they caused a wrongful loss to a tune of Rs.109.22 lacs to the bank including interest as on 31.03.2010.
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3. On completion of investigation, the Investigation Officer filed 8 separate final reports for each set of conspiracy and conspirators. The accused are the bank managers, traders/suppliers, facilitators and borrowers. These 8 final reports were taken cognizance by the Trial Court and assigned C.C.No.4 of 2012 to C.C.No.11 of 2012.
4. The final report in C.C.No.10/2012 filed in respect of 13 power tiller loans alleged to have been sanctioned to farmers, who are not eligible to get the loan or sanctioned, based on false and fabricated revenue certificates, like, Adangal, valuation certificates, extracts of FM sketches, Encumbrance Certificates etc. By floating the Banking norms, pursuant to the criminal conspiracy, loan was sanctioned. The supplier M/s Vijay Agro Agency a proprietary concern run by one Prakash, after issuing proforma invoice for the power tiller and getting the money from the Bank through the borrowers, did not supply the power tiller. Without mentioning the engine number or chassis number, pseudo bills were given to the Bank. The banking norms mandates that Power tillers should be registered at RTA and get insured, A-1 in breach of trust allowed the loan amount to be withdrawn without supply of power tiller. He failed to conduct post sanction inspection to ensure, the power tiller is duly https://www.mhc.tn.gov.in/judis 5/37 Crl.A.Nos.675,703,738 and 853 of 2018 registered and insured. He failed to ensure the power tiller display on its body that it is hypothecated to Union Bank, Tiruvannamalai Branch. Thereby the bank incurred wrongful loss of Rs.27,19,408/- and corresponding wrongful gain to the dealers and the borrowers. The dishonest act of cheating been carried by the accused persons in pursuant to conspiracy, they all were charged for conspiracy and other substantive IPC offences.
5. To understand the modus operandi, the 13 instances, where the loan sanctioned to the persons not eligible, but disbursed on fabricated documents are narrated below:-
Instance No. 1: Shri K.Balaraman has applied for a loan of Rs.1,49,000/- for purchase of Power tiller (Loan account No.604/21). There is no pre-sanction inspection report and the loan was recommended and sanctioned by Shri V. Kannan. There is no Memorandum of deposit of title deeds prepared by Shri V. Kannan. The loan was disbursed in cash to the borrower. No power tiller was supplied. Shri V. Kannan has not ensured the creation of both Primary and Collateral security for the advance sanctioned to the borrower.
https://www.mhc.tn.gov.in/judis 6/37 Crl.A.Nos.675,703,738 and 853 of 2018 The proceedings drawn by the Investigating Officer in the presence of witnesses such as Assistant Director (Agriculturer), the VAO concerned and the Chief Manager of the Bank proved that the Power Tiller was not purchased and supplied.
Instance No.2: Shri G. Pichandi has applied for a loan of Rs.1,49,000/- for purchase of power tiller (Loan account No.604/22). There is no pre-sanction Inspection report. Without completing the mortgage formalities, the loan was disbursed. No power tiller was supplied. Shri Kannan has not ensured the creation of both Primary and collateral security for the advance granted to him.
The proceedings drawn by the Investigating Officer in the presence of witnesses such as Assistant Director (Agriculture), the VAO concerned and the Chief Manager of the Bank proved that the Power Tiller was not purchased and supplied.
Instance No. 3: Shri R.Elumalai has applied for a power tiller loan of Rs.2,00,000/- (Loan account No.604/23). The sanction letter signed by the applicant was found blank. There is no pre-sanction inspection report available. Shri. Kannan has not compiled Credit Information and Credit report of the borrower and the guarantor. Shri. V. Kannan had failed to ensure the supply of the power tiller and accessories to the borrower by the dealer. Shri V. Kannan https://www.mhc.tn.gov.in/judis 7/37 Crl.A.Nos.675,703,738 and 853 of 2018 has sanctioned à crop loan of Rs.50,000/- and he has not verified the end use of the loan.
The proceedings drawn by the Investigating Officer in the presence of witnesses such as Assistant Director (Agriculturer), the VAO concerned and the Chief Manager of the Bank proved that the Power Tiller was not purchased and supplied.
Instance No. 4: Shri R. Jayalakshmi has applied for a loan of Rs.2,00,000/- for purchase of power tiller and plants (Loan account No.604/41). The loan was sanctioned and disbursed by Shri V. Kannan by flouting the norms. No power tiller was supplied. Shri V. Kannan has not ensured the supply of the power tiller and implements as per quotations. M/s Vijay Agro Services were not dealing with power tillers. The borrower also did not register the power tiller. There is no other record or proof that the power tiller was delivered to the borrower.
The proceedings drawn by the Investigating Officer in the presence of witnesses such as Assistant Director (Agriculturer), the VAO concerned and the Chief Marrager of the Bank proved that the Power Tiller was not purchased and supplied.
https://www.mhc.tn.gov.in/judis 8/37 Crl.A.Nos.675,703,738 and 853 of 2018 Instance No. 5: Shri R. Natarajan has applied for a loan of Rs.2,00,000/- for purchase of Power Tiller (Loan account No.604/59). The guarantor for the loan Shri S. Dhayalan who is also a borrower of Union Bank of India in Loan Account No.604/49 and signed on the Deed of Guarantee without any knowledge. But he denied having signed in the guarantor form. Shri V. Kannan has not ensured the creation of Collateral security as per the extant norms of the bank. Though the borrower has stated that he has taken delivery of the Power tiller, he has not produced for the physical verification. He has also not registered the power tiller.
The proceedings drawn by the Inverstigating Officer in the presence of witnesses such as Assistant Director (Agriculturer), the VAO concerned and the Chief Manager of the Bank proved that the Power Tiller was not purchased and supplied.
Instance No. 6: Shri S. Dayalan, who has applied for a loan of Rs.1,49,000- for purchase of power tiller and Tipper (Loan account No.604/49). Shri V Kannan has sanctioned the loan without ensuring minimum land holding of 3.00 acres of perennially irrigated land for financing the power tiller. The guarantor of the loan is Shri S. Vinayagam whose particulars are not available / verified. Though Shri Dayalan has stated that power tiller was delivered to him, https://www.mhc.tn.gov.in/judis 9/37 Crl.A.Nos.675,703,738 and 853 of 2018 he could neither produce the power tiller nor the registration details thereof. Moreover M/s Vijay Agro Agency were not dealing with power tillers as their dealership was terminated by the supplier M/s Southern Agro Engines Limited.
The proceedings drawn by the Investigating Officer in the presence of witnesses such as Assistant Director (Agriculturer), the VAO concerned and the Chief Manager of the Bank proved that the Power Tiller was not purchased and supplied.
Instance No. 7: Shri B. Kulandaivelu who has applied for a loan of Rs.1,49,000/- for purchase of Power tiller and Tipper (Loan account No.604/52). Shri V. Kannan has sanctioned and disbursed the loan by flouting the norms. The detail of the guarantor of the loan was not available in the file. No Power tiller was supplied. Shri V. Kannan has not ensured the creation of Primary security for the advance financed to the borrower. The power tiller was also not registered with RTO concerned. Moreover, M/s Vijay Agro Agency were not dealing with the power tillers.
The proceedings drawn by the Investigating Officer in the presence of witnesses such as Assistant Director (Agriculturer), the VAO concerned and the Chief Manager of the Bank proved that the Power Tiller was not purchased and https://www.mhc.tn.gov.in/judis 10/37 Crl.A.Nos.675,703,738 and 853 of 2018 supplied.
Instance No. 8: Shri A. Sivalingam who applied for a loan of Rs.2,10,000/- for purchase of power tiller and tipper (Loan account No.604/65). A copy of adangal and valuation certificate in the name of Shri A. Sivalingam issued by the VAO, Thurinjapuram Group was denied by Shri M. Ramasamy, VAO, Thurinjapuram as the same were not issued by them. He stated that Shri P. Mani, the then VAO has not signed in the valuation certificate and copy of the Adangal and the seal of the office is also not genuine. No power tiller was supplied. Shri V. Kannan failed to ensure the supply of the power tiller and the creation of Primary security for the advance paid to the borrower. Shri A. Sivalingam was not holding power tiller and no particulars available with the RTO concerned for registration of this power tiller.
The proceedings drawn by the Investigating Officer in the presence of witnesses such as Assistant Director (Agriculturer), the VAO concerned and the Chief Manager of the Bank proved that the Power Tiller was not purchased and supplied.
Instance No. 9: Shri M. Narayanasamy has applied for a loan of Rs.2,10,000/- for purchase of power tiler and tipper (Loan account No.604/73). No power tiller was supplied. Shri V. Kannan has not ensured creation of https://www.mhc.tn.gov.in/judis 11/37 Crl.A.Nos.675,703,738 and 853 of 2018 Primary security for the advance made to the borrower. No registration particulars are available to ensure the delivery of the power tiller.
The proceedings drawn by the Investigating Officer in the presence of witnesses such as Assistant Director (Agriculturer), the VAO concerned and the Chief Manager of the Bank proved that the Power Tiller was not purchased and supplied.
Instance No. 10: Shri P. Lakshmanan has applied for a loan of Rs.2,10,000/- for purchase of Power tillers Loan account No.604/79. Shri V. Kannan has sanctioned and disbursed the loan amount. The loan is guaranteed by Smt. Kannammal, wife of Shri Pachamuthu who is otherwise guardian of two minor children and the interest of the minors in the property is involved. The power tiller was not supplied and hence not registered. Shri. Kannan has failed to ensure the creation of primary security to the The proceedings drawn by the Investigating Officer in the presence of witnesses such as Assistant Director (Agriculturer), the VAO concerned and the Chief Manager of the Bank proved that the Power Tiller was not purchased and supplied.
Instance No. 11: Shri R. Jayaprakash has applied for a loan of Rs.2,10,000/- (Loan account no.604/87). The loan application does not contain https://www.mhc.tn.gov.in/judis 12/37 Crl.A.Nos.675,703,738 and 853 of 2018 the purpose of the loan. The deed of guarantor is blank but, signed by Shri A.K. Ranganathan whose details are not available. Power tiller not purchased and no assets created out of the loan sanctioned by the bank.
The proceedings drawn by the Investigating Officer in the presence of witnesses such as Assistant Director (Agriculturer), the VAO concerned and the Chief Manager of the Bank proved that the Power Tiller was not purchased and supplied.
Instance No.12: Shri P. Elumalai has applied for a loan of Rs.2,10,000/- for purchase of power tiller (Loan account No.604/89). The loan should have been sanctioned jointly in the names of Shri P. Elumalai and Smt Rani. Shri V. Kannan has not verified the details given by the applicant and has not processed the application properly. However, he sanctioned and disbursed the loan. The loan has no guarantor. Power tiller was not supplied and no assets created out of the sanctioned loan. The loan amount was disbursed in cash to the borrower.
The proceedings drawn by the Investigating Officer in the presence of witnesses such as Assistant Director (Agriculturer), the VAO concerned and the Chief Manager of the Bank proved that the Power Tiller was not purchased and supplied.
https://www.mhc.tn.gov.in/judis 13/37 Crl.A.Nos.675,703,738 and 853 of 2018 Instance No.13: Shri R. Arul has applied for a loan of Rs.2,10,000/- for purchase of power tiller (Loan account No.604/93). He is having only 2.27½ acres of land but, the required area for getting loan as prescribed by the bank is 3.00 acres. However, Shri V. Kannan had sanctioned and disbursed the loan amount. Shri V. Kannan has also failed to create equitable mortgage by drawing the Memorandum for deposit of title deeds and thereby no assets created out of the sanctioned loan amount. Power tiller was not purchased. Borrower is a Village Assistant and he has sold the agriculture land to Shri Ravichandran of Karumarapatty with an endorsement on the sale deed to settle the power tiller loan out of the unsettled sale consideration, on behalf of the borrower. But the same was not fulfilled.
6. Before framing of charges, R.Elumalai (A-5) and Sivalingam (A-10) died. The trial Court, after perusing the matter placed along with the final report framed the following charges against the accused persons. Charge No.1 Sections 120B r/w Against A-1 to A-4, A-6 to A-9 and A11 409,420,467,468 and 471 r/w to A15 468 IPC and Section 13(2) r/w 13 (1)(d) of P.C. Act, 1988.
Charge No.2 Section 420 IPC. Against A-1 to A-3, A4, A-6 to A-9 and A11 to A-15.
https://www.mhc.tn.gov.in/judis 14/37 Crl.A.Nos.675,703,738 and 853 of 2018 Charge No.3 Section 467 IPC. Against A-2 to A-4, A-6 to A-9 and A-11 to A-15 Charge No.4 Section 468 IPC. Against A-2 to A-4, A-6 to A-9 and A-11 to A-15 Charge No.5 Section 471 r/w 468 IPC. Against A-2 to A-4, A-6 to A-9 and A-11 to A-15 Charge No.6 Section 13(2) r/w 13(1)(d) of Against A-1 PC Act, 1988.
Charge No.7 Section 409 IPC. Against A-1.
7. To prove the above charges, the prosecution examined 14 witnesses. Through them marked 102 exhibits. On the side of defence, one witness by name DW-1 Kalicharan Das was examined as DW-1. 8 exhibits marked. The bank statement of accounts of the borrowers summoned and on production marked as Court Exhibit C-1 to Ex.C4
8. The sum and substance of the prosecution witnesses and exhibits is that, A-1, while serving as Branch Manager of Union Bank of India, Thiruvannamalai Branch, between February 2008 and December 2008, while sanctioning loan to the farmers A-3 to A-15 for purchase of power tillers through M/s Vijay Agro Agency, failed to follow the procedure and norms of the Bank. PW-3, who had deposed about the general procedure to be adopted while sanction loans, had explained that, before advancing the loan, as a branch https://www.mhc.tn.gov.in/judis 15/37 Crl.A.Nos.675,703,738 and 853 of 2018 manage, A-1 should have processed the loan applications diligently. He should have verified the dealership of the trader, who had given the quotation and the quotation should have been acknowledged by the applicant/borrower. For power tiller loan, the borrower should possess at least 3 acres of cultivable land. Before disbursement, all necessary documentation must have been completed and loan should be disbursed, after taking 15% margin money. The Branch Manager has to conduct post disbursement inspection by making physical verification of the power tiller by identifying engine number and chassis number with the bills. The copy of the RC book and insurance cover note should be obtained and kept in the file. He should ensure, Bank lien marked in the RC Book. The bank name and hypothecation of the power tiller should be displayed on the power tiller.
9. PW-3 had from the loan files of A-3 to A-15, which are marked as Ex.P12 to Ex.P 24 pointed out the following omissions by A-1.
(i) In the proforma invoice given by M/s Vijay Agro Agency, the borrower has not signed.
(ii) The process note prepared by A-1 without mentioning the guarantors particulars.
(iii) The Adangal and income certificates issued by VAO instead of Deputy Tahsildar.
(iv) No cash receipts or Bills to prove sale and delivery of power tiller.
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(v) The post inspection report does not contain the engine number and the chassis number of the power tiller.
(vi) The memorandum of deposit of title deeds were not registered to indicate the charge over the property offered as collateral security.
10. PW-13[T.Mohan], who succeeded A1 as Branch Manager, had produced the statement of accounts of the borrowers A-3 to A-15 to show that the loan money was transferred to M/s Vijay Agro Agency, but no proof for corresponding delivery of power tillers to the borrowers. Ex.P-43 to Ex.P-85 disclose, how the loan money has been diverted to the account of M/s Vijay Agro Agency.
11. Before launching of the criminal complaint, the Bank had conducted internal investigation regarding the irregularities in sanctioning the crop loans, tractor/power tiller loans to the farmers of Tiruvannamalai District by Union Bank of India, while A-1 [V.Kannan] and his immediate successor Mr.Kasinathan were the Branch Managers. The investigation report is marked as Ex.P-28 (with objection by the defence). PW-5 [Mr.T.Saravanan], AGM had deposed about his investigation and the report.
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12. To prove the fabrication of documents, the prosecution has examined PW-12, the Hand writing expert attached to Central Forensic Lab. His opinion and reasoning are marked as Ex.P-41 and Ex.P-42. According to his report, writings in some of the loan documents tallies with the writings of A- 2 Prakash.
13. PW-6 [Mr.Shanmugam] VAO admits, the signature found in the Ex.P-23 Adangal in the name of Elumalai was given by him. Whereas, PW-10 Mani VAO, had deposed that adangal in the name of the borrower Sivalingam ( deceased) is not issued by him.
14. The trial Court after appreciating these evidence has acquitted the accused from the charges of forgery and using the forged documents as genuine. However, held that these accused conspired to cheat the bank and pursuant to the conspiracy, A-1 sanctioned loan for power tiller, which never sold by A-2. Thereby, the Bank Manager had committed substantive offences like, breach of trust and misconduct to obtain pecuniary advantage for the trader and the borrower. The second accused as trader to cheat the bank had furnished proforma invoice and documents as if he sold power tillers to the borrowers A-3 https://www.mhc.tn.gov.in/judis 18/37 Crl.A.Nos.675,703,738 and 853 of 2018 to A-15. The borrowers had drawn the loan amount and shared with the traders without purchasing the power tiller.
15. The trial Court convicted and sentenced them as below:-
Rank of the Conviction under Section Sentence imposed by the trial Court accused A-1 (V.Kannan) Section 120B r/w 409, To undergo 4 Years RI and to pay fine of 420,467,468 and 471 IPC Rs.10,000/- i/d 1 year S.I and Section 13(2) r/w13(1)(d) of PC Act.
Section 420 IPC To undergo 4 Years RI and to pay fine of Rs.10,000/- i/d 1 year S.I Section 13(2) r/w 13(1)(d) of To undergo 4 Years RI and to pay fine of PC Act Rs.10,000/- i/d 1 year S.I Section 409 IPC To undergo 4 Years RI and to pay fine of Rs.10,000/- i/d 1 year S.I A-2 (R.Prakash) Section 120B r/w 409, To undergo 4 Years RI and fine of 420,467,468 and 471 IPC Rs.10,000/- i/d 1 year S.I and Section 13(2) r/w13(1)(d) of PC Act.
Section 420 IPC To undergo 4 Years RI and fine of Rs.10,000/- i/d 1 year S.I Section 467 IPC To undergo 4 Years RI and fine of Rs.10,000/- i/d 1 year S.I Section 468 IPC To undergo 4 Years RI and fine of Rs.10,000/- i/d 1 year S.I Section 471 r/w 468 IPC To undergo 4 Years RI and fine of Rs.10,000/- i/d 1 year S.I
A-3, A-4, A-6 to Section 120B r/w 409 and To undergo 1 year RI and fine of A-9, A-11 to A- 420 IPC and Section 13(2) Rs.1000/- i/d 3 months SI. 15 r/w13(1)(d) of PC Act.
Section 420 IPC To undergo 1 year RI and fine of Rs.1000/- i/d 3 months SI.
https://www.mhc.tn.gov.in/judis 19/37 Crl.A.Nos.675,703,738 and 853 of 2018 A-3,4,6,7,8,9,11,12,13,14 and 15 were acquitted from the charges under Sections 467,468 and 471 r/w 468 IPC. For A-1 (V.Kannan), the period of sentence ordered to run concurrently along with the sentence imposed in C.C.No.4/2012, C.C.No.5/2012, C.C.No.6/2012, C.C.No.7/2012, C.C.No.9/2012. For A-2 (Prakash), the period of sentence ordered to run concurrently along with the sentence imposed in C.C.No.6/2012. The period of sentence already undergone ordered to be set off.
16. Being aggrieved, the appeals filed and the learned counsels for the respective appellants canvassed the merit of their appeal as under:-
Crl.A.No.675/ 2018: ( R.Prakash-A 2) The learned counsel for A-2 submitted that, A-2 is not the proprietor of M/s Vijay Agro Agency as alleged by the prosecution. Smt. Vijaya, W/o Mr.Krishnamoorthy is the sole proprietor of M/s Vijay Agro Agency. There is no evidence to prove conspiracy, which requires meeting of mind to do any illegal act. Between A-2 and A-1 or with the borrowers there is no criminal intention to cheat the bank. As Salesman of M/s Vijay Agro Agency, who is the approved dealer of power tiller manufactured by M/s Southern Agro Engine Pvt Ltd, he canvassed the prospective buyers and gave the proforma invoice. On https://www.mhc.tn.gov.in/judis 20/37 Crl.A.Nos.675,703,738 and 853 of 2018 sanction of loan, those farmers were supplied power tillers. The bills were paid into the account of M/s Vijay Agro Agency. The investigating officer PW-14 Ponnalagan had gone by the investigation report prepared by PW-5 T.Saravanan and he had not done any independent investigation even to find out, who is the owner of M/s Vijay Agro Agency, whether the power tillers were supplied to the borrowers or not. The registration of power tiller with RTA is not required, if it is used exclusively for agricultural purpose. PW-1, PW-3, PW- 4, PW-5, PW-7 the witnesses from the bank as well as RTO office have uniformly deposed that the registration of power tiller is not mandatory.
17. For preparing the proforma invoice, A-2 is wrongly held guilty of forgery and use of forged document as genuine to cheat. There is no evidence against A-2 to hold him guilty of inducing the bank or the borrower to part away any property by deception. Neither the borrowers had any intention to cheat the bank. They all have availed loan by mortgaging the title deeds of their property as security. The Investigating Officer admits that the title documents are genuine and it is fact proved through Ex.C-1, that the borrowers have repaid the loan and the bank had issued 'No Due Certificates' to them.
https://www.mhc.tn.gov.in/judis 21/37 Crl.A.Nos.675,703,738 and 853 of 2018
18. Crl.A.No.738/2018 ( V.Kannan, A-1) Aggrieved by the conviction and sentence, V.Kannan (A1) has preferred Criminal Appeal No.738 of 2018, wherein it is contended that based on the proforma invoices given by M/s Vijay Agro Agency and the legal opinion, loans were sanctioned to A-3 to A-15. It is incorrect to say that the Bank Manager failed to conduct pre and post sanction inspection. The prosecution has not proved that the borrowers had no intention to purchase Power Tiller or he did not purchase any Power Tiller from M/s Vijay Agro Agency. Merely because the Power Tiller was not registered in the RTA Office and Insurance not obtained, the Trial Court has presumed that the Power Tiller was not purchased from out of the loan sanctioned. For the said purpose, Ex.P-28, the investigation report of PW-5 is relied. The statements recorded during the said proceedings in the presence of the Investigation Officer after registering FIR is inadmissible in law. Contrary to the law of evidence, the statement given to police is relied by the trial Court to convict the accused.
19. The learned counsel appearing for A1 also submitted that while sanctioning the loan, the hypothecation letter has been obtained from the https://www.mhc.tn.gov.in/judis 22/37 Crl.A.Nos.675,703,738 and 853 of 2018 borrower and title deed of his property has been taken as collateral security. Therefore, it is incorrect to hold that A-1 had committed breach of trust by appropriating the property over which he had dominion or control. A-1 had no dishonest intention to cheat the bank or sanctioned loan to A-3 to A-15 was illegal. Only after due scrutiny and diligence, the loans were sanctioned. None of the prosecution witness had said, A-1 obtained pecuniary advantage by sanctioning these loans. In fact, the witnesses from the bank had appreciated and acknowledged the improvement. He brought to the Bank business during his tenure as branch manager. Solely based on the complaint motivated by the General Manager Mr.P.Y.Nagar, CBI had taken up the complaint of R.S.Raghavan and the Trial Court erred in holding that the loan sanctioned for a Power Tiller was not supplied. The trial Court failed to appreciate that the prosecution witnesses admit that the registration of Power Tiller at RTO office is not a mandatory requirement under the Motor Vehicles Act. The Trial Court failed to appreciate the fact that, the loan application along with promissory note and hypothecation deed is in a booklet form. However, the Investigation Officer has segregated the booklet and filed only selected documents before the Court. The Trial Court failed to take note of the fact that the property of the borrowers, after getting the legal opinion being taken as a collateral security and https://www.mhc.tn.gov.in/judis 23/37 Crl.A.Nos.675,703,738 and 853 of 2018 the loan amount is well secured. Even after his transfer and initiation of criminal prosecution, A-1 had made all endeavour to recover the loans and due to his effects the borrowers have repaid the loan and obtained dues certificate issued by the Union Bank of India, which is marked as Ex.C1. Therefore, he submitted that it is a misconception on the part of the Trial Court to hold that A1 has caused loss to the Bank pursuant to the conspiracy with other accused persons.
20. Crl.A.No.853 of 2018: (A3,A4,A6 to A9, A11and A-13 to A15) and Crl.A.No.703 of 2018:(A-12) These two appeals are by the borrowers. It is contented by them that, they never conspired with others to cheat or to do any illegal act. They did not produce any false documents for availing loan. They with intention to purchase power tiller applied for loan and furnished their title deeds as security. On availing the loan, they purchased power tillers from M/s Vijay Agro Agency. They never had any intention to cheat the bank and before judgment, they all have cleared the loan and the bank has issued no dues certificate and the same is marked as Ex.C-1. The letters in Ex.P101 file are not given voluntarily. In the presence of police, the statement was obtained. The transparent and genuine loan transaction has been converted into a criminal prosecution, since there was https://www.mhc.tn.gov.in/judis 24/37 Crl.A.Nos.675,703,738 and 853 of 2018 misunderstanding between the Branch Manager and the General Manager, who visited Thiruvanamalai branch during odd hours and not received properly. In the internal fight between Bank officials, the borrowers are made scapegoats. Some of the appellants enclosing the photograph of the power tiller and no due certificate issued by the Bank submitted that the trial Court failed to take note of these material evidence, which are very relevant to the case in hand.
21. Respondent contention:
The learned Special Public Prosecutor (CBI) appearing for the respondent submitted that the process of loan applications and sanction of loans done with the dishonest intention knowing well that the accused A-3 to A-15 had no intention to purchase Power Tiller, but only to misappropriate the loan amount. The payment of loan amount subsequently after registration of the complaint and pending trial, without proving the purchase of Power Tiller is a fact to draw adverse inference against the borrowers. The omission to mention Engine number and Chassis number in the loan document, the omission to insure the vehicle and omission to register the vehicle at RTA, non payment of due prove beyond doubt that there was dishonest intention and meeting of mind between the Bank Manager, the borrowers and the trader to create fabricated invoice to https://www.mhc.tn.gov.in/judis 25/37 Crl.A.Nos.675,703,738 and 853 of 2018 avail the loan. The act of cheating proved through the invoices in the name of M/s Vijay Agro Agency without any detail about the engine number and chassis number. During the inspection conducted by PW-5, the borrowers were not able to show the power tillers. They also admitted during the investigation that from the loan amount, they did not purchase power tiller. The omission to register the vehicle, which is mandatory under the bank loan policy and failure to the loan document process properly are the reasons to hold them guilty by the trial Court. The photographs, which are shown to the Court in the appeal were not produced before the Court during trial. The photographs now shown are not proof that they were purchased by the borrowers from out of the loan amount sanctioned in the year 2008. The repayment of the loan amount after initiating the criminal prosecution cannot be taken as proof of their honesty. At the most, it can only mitigate the punishment. The trial Court has taken note of the repayment and the status of the borrowers and awarded lesser sentence. Therefore, the judgement of the trial Court which is based on material evidence to be confirmed.
22. Heard the Learned Counsel for the appellants. Records perused. The submission made by the Learned Special Public Prosecutor appearing for https://www.mhc.tn.gov.in/judis 26/37 Crl.A.Nos.675,703,738 and 853 of 2018 the respondent/C.B.I taken into consideration.
23. The sum and substance of the prosecution witnesses and exhibits is that, A-1 while serving as Branch Manager of Union Bank of India, Thiruvannamalai Branch between February 2008 and December 2008, while sanctioning loan to the farmers A-3 to A-15 for purchase of power tillers through M/s Vijay Agro Agency, failed to follow the procedure and norms of the Bank. PW-3, who had deposed about the general procedure to be adopted while sanction loans, had explained that, before advancing the loan, as a branch Manager A-1 should have processed the loan applications diligently. He should have verified the dealership of the trader, who had given the quotation and the quotation should have been acknowledged by the applicant/borrower. To be eligible for power tiller loan, the borrower should possess at least 3 acres of cultivable land. Before disbursement, all necessary documentation must have been completed and loan should be disbursed after taking 15% margin money. The Branch Manager has to conduct post disbursement inspection by making physical verification of the power tiller by identifying engine number and chassis number with the bills. The copy of the RC book and insurance cover note should be obtained and kept in the file. He should ensure, the Bank lien https://www.mhc.tn.gov.in/judis 27/37 Crl.A.Nos.675,703,738 and 853 of 2018 marked in the RC Book. The Bank name and hypothecation of the power tiller should be displayed on the power tiller.
24. PW-3 had from the loan files of A-3 to A-15, which are marked as Ex.P12 to Ex.P24 pointed out the following omissions by A-1.
(i)In the proforma invoice given by M/s Vijay Agro Agency, the borrower has not signed.
(ii)The process note prepared by A-1, without mentioning the guarantors particulars.
(iii)The Adangal and income certificates issued by VAO, instead of Deputy Tahsildar.
(iv)No cash receipts or Bills to prove sale and delivery of power tiller.
(v)The post inspection report does not contain the engine number and the chassis number of the power tiller.
(vi)The memorandum of deposit of title deeds were not registered to indicate the charge over the property offered as collateral security.
25. PW-13 [T.Mohan], who succeeded A1 as Branch Manager had produced the statement of accounts of the borrowers A-3 to A-15 to show that https://www.mhc.tn.gov.in/judis 28/37 Crl.A.Nos.675,703,738 and 853 of 2018 the loan money was transferred to M/s Vijay Agro Agency, but no proof for corresponding delivery of power tillers to the borrowers. Ex.P-43 to Ex.P-85 discloses how the loan money been diverted to the account of M/s Vijay Agro Agency.
26. Before launching of the criminal complaint, the Bank had conducted internal investigation regarding the irregularities in sanctioning the crop loans, tractor/power tiller loans to the farmers of Tiruvannamalai District by Union Bank of India, while A-1 [V.Kannan] and his immediate successor Mr.Kasinathan were the Branch Manager. The investigation report is marked as Ex.P-28 (with objection by the defence). PW-5 Mr.T.Saravanan, AGM had deposed about his investigation and the report.
27. To prove the fabrication of documents, the prosecution has examined PW-12, the Hand writing expert attached to Central Forensic Lab. His opinion and reasoning are marked as Ex.P41 and Ex.P-42. According to his report, the writings in the proforma invoices in the name of M/s Vijay Agro Agency tallies with the writings of A-2 [Prakash]. https://www.mhc.tn.gov.in/judis 29/37 Crl.A.Nos.675,703,738 and 853 of 2018
28. PW-6[Shanmugam[, VAO admits the signature found in the Ex.P- 23 Adangal in he name of Elumalai was given by him. Whereas, PW-11[Mani] VAO, had deposed that the adangal in the name of the borrower Sivalingam ( deceased) is not issued by him.
29. On behalf of the accused, Kalicharan Das, the Branch Manager of Union Bank of India, Thiruvannamalai summoned to produce the loan statement of accounts of the borrowers A-3 to A-15 and through him, the Court documents Ex.C-1 to Ex.C- 4 were marked. This witness had deposed to the effect that the some of the borrowers have settled the dues under OTS and for Dayalan (A-8) and Arul (A-15) the OTS proposal is pending.
30. As far as A-1 the Bank Manager, the violation and omission to carry out the guidelines issued by the bank scrupulously is admitted. The reason and excuse not satisfactory, in view of fact that these violations are not isolated incidents but several in number and grave in nature. Even though PW-14 admits that there was some misunderstanding between A-1 and the then General Manager, the animosity cannot be taken as malicious or malafide prosecution, when overwhelming evidence placed by the prosecution substantiating the fact https://www.mhc.tn.gov.in/judis 30/37 Crl.A.Nos.675,703,738 and 853 of 2018 that, A-1 had intentionally omitted to ensure the real sale and delivery of power tillers, but only created documents as if the power tillers were sold by M/s Vijay Agro Agency to the borrowers. The omissions pointed out by the witnesses are very grave in nature and had caused loss to the Bank. The subsequent realization on the part of the loan amount under OTS is to be viewed as a policy decision by the bank to realize as far as possible instead of leaving the account NPA and incur loss in entirety.
31. The Second accused, Mr. R.Prakash is prosecuted as the representative of M/s Vijay Agro Agency. The incriminating material against him is Ex.P-32 the list of authorized Dealers for M/s Southern Agro Engine Pvt Ltd. In which M/s Vijay Agro Agency is mentioned as authorized dealer for Thiruvannamali District and the name of A-2 R.Prakash and his phone number is given as person to contact. M/s Southern Agro Engine Pvt. Ltd. is the manufacturer of Manam Power tiller. PW-9, Mr. Senthil, who retired as Superintending Engineer from Tamilnadu Agricultural Engineering Department had deposed that to encourage modernization in agriculture, the Central Government provide subsidy for purchase of Power tiller and had approved certain manufacturers for supply of power tillers. The farmers can choose https://www.mhc.tn.gov.in/judis 31/37 Crl.A.Nos.675,703,738 and 853 of 2018 among the make and model approved and avail subsidy. This witness admits that no power tiller was sold by M/s Vijay Agro Agency under the Central Government subsidiary Scheme, which mean that the loan advanced by the Union Bank is not under the subsidiary scheme and the rigor of the central scheme will not apply to the loans sanctioned to the accused A-3 to A-15. Yet another incriminating evidence against A-2 is the hand writing experts opinion saying the hand writing in the proforma invoices found in the loan files of A-3 to A-15 tallies with the admitted writing of A-2.
32. The prosecution case is that Prakash as representative of M/s Vijay Agro Agency, produced false invoices and obtained pecuniary advantage by encashing the loan amount sanctioned for the borrowers. The statement of accounts in the name of M/sVijay Agro Agency and the borrowers prove the fact, the loan amount been encashed by M/s Vijay Agro Agency a proprietary concern. Ex.P84 and Ex.P85 are the account opening form in the name of Parameshwari, W/o Prakash. The statement of account discloses the fact that the cheques issued by M/s Vijay Agro Agency is encashed through the account of Parameshwwari, the wife of R.Prakash (A-2). No satisfactory explanation from R.Prakash (A-2) for transfer of money from M/s Vijay Agro Agency which https://www.mhc.tn.gov.in/judis 32/37 Crl.A.Nos.675,703,738 and 853 of 2018 is corresponding to the loan amount sanctioned by A-1 to A-3 to A-15. The accounts of all these accused are in the Union Bank of India Thiruvannamalai branch in which A-1 was the working as Branch Manager.
33. As far as the borrowers, it s a clear case proved beyond doubt that they have not purchased power tiller from the loan amount. They have produced their title documents, created EM over the property and executed pro-note. They all have aided A-1 and A-2 to cheat the Bank and also taken their share in the booty. Since there was criminal prosecution and arrest, they all have come forward to settle the due under OTS.
34. The trial Court after fair assessment of evidence rightly held them guilty and convicted them. The only point which needs consideration is the period of sentence, in view of repayment of the loan by most of the borrowers, the period of sentence in respect of A-1 and A-2 alone is modified as below:
Name and Conviction under Sentence imposed by Sentence modified by this rank of the Section the trial Court Court accused A-1 Sections 120B r/w To undergo 4 Years RI To undergo two Years SI (V.Kannan) 409, 420,467,468 and and to pay a fine of and to pay a fine of https://www.mhc.tn.gov.in/judis 33/37 Crl.A.Nos.675,703,738 and 853 of 2018 Name and Conviction under Sentence imposed by Sentence modified by this rank of the Section the trial Court Court accused 471 IPC and Section Rs.10,000/- in default to Rs.10,000/- i/d 1 year S.I 13(2) r/w13(1)(d) of undergo 1 year S.I PC Act.
Section 420 of IPC To undergo 4 years RI To undergo two Years SI and to pay a fine of and to pay a fine of Rs.10,000/- in default to Rs.10,000/- i/d 1 year S.I undergo 1 year SI Section 13(2) r/w To undergo 4 years RI To undergo two Years SI 13(1)(d) of PC Act and to pay a fine of and to pay a fine of Rs.10,000/- in default to Rs.10,000/- i/d 1 year S.I undergo 1 year SI Section 409 of IPC To undergo 4 years RI To undergo two Years SI and to pay a fine of and to pay a fine of Rs.10,000/- in default to Rs.10,000/- i/d 1 year S.I undergo 1 year SI A-2 Sections 120B r/w To undergo 4 years RI To undergo two Years SI (R.Prakash) 409, 420,467,468 and and to pay a fine of and to pay a fine of 471 IPC and Section Rs.10,000/- in default to Rs.10,000/- i/d 1 year S.I 13(2) r/w13(1)(d) of undergo 1 year SI PC Act.
Section 420 of IPC To undergo 4 years RI To undergo two Years SI and to pay a fine of and to pay a fine of Rs.10,000/- in default to Rs.10,000/- i/d 1 year S.I undergo 1 year SI Section 467 of IPC To undergo 4 years RI To undergo two Years SI and to pay a fine of and to pay a fine of Rs.10,000/- in default to Rs.10,000/- i/d 1 year S.I https://www.mhc.tn.gov.in/judis 34/37 Crl.A.Nos.675,703,738 and 853 of 2018 Name and Conviction under Sentence imposed by Sentence modified by this rank of the Section the trial Court Court accused undergo 1 year SI Section 468 of IPC To undergo 4 years RI To undergo two Years SI and to pay a fine of and to pay a fine of Rs.10,000/- in default to Rs.10,000/- i/d 1 year S.I undergo 1 year SI Section 471 r/w 468 To undergo 4 years RI To undergo two Years SI of IPC and to pay a fine of and to pay a fine of Rs.10,000/- in default to Rs.10,000/- i/d 1 year S.I undergo 1 year SI (Totally 50,000/-) A-3, A-4, A- Sections 120B r/w To undergo 1 year RI for To undergo 1 year SI for 6 to A-9, A- 409 and 420 IPC and each of the accused and each of the accused and to 11 to A-15 Section 13(2) fine of Rs.1000/ for each pay a fine of Rs.1000/- for r/w13(1)(d) of PC of the accused- i/d 3 each of the accused i/d 3 Act. months SI. months SI.
Section 420 IPC To undergo 1 year RI for To undergo 1 year SI for each of the accused and each of the accused and to fine of Rs.1000/ for each pay a fine of Rs.1000/- for of the accused- i/d 3 each of the accused i/d 3 months SI. months SI.
35. In the result, these Criminal Appeals are partly allowed. The https://www.mhc.tn.gov.in/judis 35/37 Crl.A.Nos.675,703,738 and 853 of 2018 judgment of conviction passed by the learned XI Additional and Special Session Judge for CBI Cases relating to Banks and Financial Institutions at Chennai, in C.C.No. 10 of 2012, dated 23.10.2018 is confirmed. The period of sentence imposed to A1(V.Kannan) shall run concurrently with the sentence imposed in C.C.No.4 of 2012 as modified in Crl.A.No.740 of 2018. The period of sentence imposed to A2 (R.Prakash) shall run concurrently along with the sentence imposed in C.C.No.6 of 2012 as modified in Crl.A.No.659 of 2018. The period of sentence already undergone shall stands set off. The trial Court is directed to arrest the appellants and remand them to judicial custody to undergo the remaining period of sentence.
10.10.2023 Index:yes/no Speaking order/non speaking order ari To:
1.XI Additional Special Court (CBI Cases Relating to Banks and Financial Institutions), Chennai.
2.The Inspector of Police, CBI/ACB/Chennai.
3.The Special Public Prosecutor for CBI, High Court, Madras.
Dr.G.JAYACHANDRAN, J.
https://www.mhc.tn.gov.in/judis 36/37 Crl.A.Nos.675,703,738 and 853 of 2018 ari common judgment made in Crl.A.Nos.675,703,738 and 853 of 2018 10.10.2023 https://www.mhc.tn.gov.in/judis 37/37