Madras High Court
K.B.Sampath vs / on 31 July, 2023
Author: G.Jayachandran
Bench: G.Jayachandran
Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on :03.07.2023
Pronounced on :31.07.2023
Coram:
THE HONOURABLE DR.JUSTICE G.JAYACHANDRAN
Crl.A.Nos.811 & 831 of 2013 and Crl.A.No.481 of 2014
Crl.A.No.811 of 2013:-
K.B.Sampath .. .Appellant/Accused-3
/versus/
The Inspector of Police,
CBI/ACB, Chennai. ... Respondent/Complainant
Prayer: Criminal Appeal has been filed under Section 374 of the Cr.P.C., against the
judgment and conviction dated 26.11.2013 made in C.C.No.14 of 2008 on the file of
the XI Additional City Civil & Sessions Judge for CBI Cases Relating to Banks and
Financial Institutions, Chennai-1.
For Appellant :Mr.L.V.Rohith
For Respondent :Mr.K.Srinivasasan (SC)
Special Public Prosecutor (CBI)
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Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014
Crl.A.No.831 of 2013 :-
N.K.Ravindran .. Appellant/Accused No.1
/versus/
Union of India,
Rep. by Inspector of Police,
CBI/ACB, Chennai. ..Respondent/Complainant
Prayer: Criminal Appeal has been filed under Section 374 of the Cr.P.C., against the
judgment and conviction dated 26.11.2013 made in C.C.No.14 of 2008 on the file of
the XI Additional City Civil & Sessions Judge – CBI Cases Relating to Banks and
Financial Institutions, Chennai-1.
For Appellant :Mr.R.Thiagarajan
For Respondent :Mr.K.Srinivasasan(SC)
Special Public Prosecutor (CBI)
Crl.A.No.481 of 2014 :-
S.Thiyagarajan .. Appellant/Accused-2
/versus/
State by Inspector of Police,
CBI/ACB, Chennai. ..Respondent/Complainant
(R.C.No.MAI.2005(A)0055)
Prayer: Criminal Appeal has been filed under Section 374 of the Cr.P.C., to set
aside the judgment of the learned XI Additional City Civil & Sessions Judge for
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Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014
CBI Cases, Chennai 600 001 made in C.C.No.43 of 2013 dated 09.12.2013 and
acquit the appellant herein from the charges under Section 120(B) r/w Sections
420, 471 r/w 468 IPC and Section 13(2) r/w Section 13(1)(d) of PC Act, 1988 and
Section 420, 471 r/w 468 IPC.
For Appellant :Mr. A.G.Rajkumar
For Respondent :Mr.K.Srinivasan(SC)
Special Public Prosecutor (CBI)
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COMMON JUDGMENT
On 18.03.2003, during the regular inspection conducted by Mr.K.Lakshmanan, Senior Manager, Indian Bank, Inspection Centre, Chennai, it was found that in Royapuram Branch, Trade advances under MDL, powers were not judiciously used. Head Quarters guidelines are not complied in about 16 loans. Out of 16 such irregular loans, 15 were sanctioned by N.K.Ravindran, Manager who assumed charge on 09.09.2002. For all these 15 irregular loan accounts, a consolidated report for each individual loan and an exclusive report for the respective loan was submitted by Mr.K.Lakshmanan to the Deputy General Manager, Indian Bank, Inspection Centre, Chennai. _____________ Page No.3/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014
2. As per the report, the loan sanctioned to M/s Best Computers on 12/11/2002 is one among the 15 loans fell under the scanner. In the report of Mr. Lakshmanan, the following irregularities, while sanctioning loan were noticed:-
The panel lawyer has instructed to get the original documents from the owner the property situated at Peravalur Village owned by Krishnan given as collateral security. But, the Manager has not obtained the original mortgage deed, original receipt from the Co-operative Society, original planning permission and original permit for construction. The Assets and Liabilities of the borrower Mr.S.Thiyagarajan, Proprietor of M/s Best Computers discloses that the firm commenced business in Computer accessories only in the year 2002. The turn over for the six months is only Rs.4.09 lakhs. No stock found in the business premises. However, the account is always on the brim of the limit. While availing loan, the borrower has projected 6 months sale as Rs.60 lakhs for 2002-2003 and for 2003-2004 as Rs.120 lakhs. Without assessing the parties capacity, loan limit has been fixed. Working of the account needs improvement. The account should be closely monitored.
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3. About 30 months later, the Inspector of Police attached to SPE/CBI/ACB/Chennai, on 28.10.2005 registered the case based on source information for offences under Section 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988 and Sections 120-B r/w 420, 409, 467, 468, 471 IPC suspecting the following persons:-
(1)N.K.Ravindran(Manager Scale II), the then Branch Manager, Indian Bank, Royapuram Branch, Chennai.
(2)Shri Dinesh Kumar Mishra, No.13/6, Doulatkhan Street, Anna Salai, Chennai 600 002, Proprietor of M/s Steelex Impex India, chennai.
(3)Shri Andrews Thamba, No.1/90, Kannadasan Nagar, Chennai 600 118, Proprietor of M/s Imperial Corporation, Chennai.
(4)Shri.S.Thiagarajan, No.10-41, II Avenue, Anna Nagar, Chennai 600 040, Proprietor of M/s Best Computers, Chennai.
(5)Shri.V.Gopala Krishnan, No.48, 6th Main Road, Nanganallur, Chennai 600 061, Proprietor of M/s Vee Gee Kay Enterprises, Chennai.
(6)Shri.V.G.Krishnan, No.47, Selva Vinayagar Koil Street, Razack Garden, Chennai 600 106, Proprietor of M/s RSV Chemical Corporation, Chennai and others.
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4. Five specific instances of conspiracy, cheating, fabrication of documents and use of false documents as genuine were narrated in the FIR. One such instance is in respect of M/s Best Computers, No.10-41, II Avenue, Anna Nagar, Chennai. Proprietor, S.Thiyagarajan. The portion of the FIR which speaks about M/s Best Computer represented by Thiyagarajan reads as below:-
The Current Account was opened in the name of fictitious firm, M/s Best Computers with Indian Bank, Royapuram Branch. An open Cash Credit of Rs.15 lakhs was sanctioned by A1 on 11.11.2002 exceeding the discretionary powers. A4 Shri S.Thyagarajan created forged EM property in the name of Shri G.Krishnan by forging the documents. The mortgage deed executed by one Shri G.Krishnan and Smt.Govindammal on 13.05.1997 vide Document No.2807/97 is not appearing in the EC submitted (for the period 01.01.1985 to 19.02.2000) at the time of availing the loan. A1 Shri.Ravindran without conducting the proper EM verification, sanctioned the limits and allowed A4 to issue Bank Pay Orders for large amounts favouring the same beneficiary within a day of sanction of the limit violating the existing bank procedures and norms. After diverting the loan amount to A4, the account became inoperative. In this connection, the bank had lost an amount of Rs.17.45 lakhs and it is outstanding as of January, 2005. _____________ Page No.6/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014
5. On completion of Investigation, Final Report filed against;- (1)N.K.Ravindran (Bank Manager); (2) S.Thyagarajan (Prop. M/s Best Computers) and (3) K.B.Sampath (approved valuer).
6. A-2 [Thiyagarajan] failed to appear before the Court on the date of judgment. Hence, case against him was split up and assigned C.C.No.43/2013. Later, he was secured and separate judgment was passed on 09/12/2013.
7. The charges framed against the accused persons is as below:-
Charge No.1: A-1 to A-3, with dishonest and fraudulent intentions to cheat Indian Bank, Royapuram Branch, Chennai, entered into a criminal conspiracy, during the year 2002-2003 at Chennai, in the matter of sanctioning and release of Trade Well Loan in the name of M/s Best Computer, No.10/18, Muthu Mariamman Koil Nelvayal Nagar, Perambur, Chennai owned by you A-2 as Proprietor, by way of submitting false and fabricated documents like; fabricated sale deed, fabricated encumbrance certificate etc. and thereby induced the Bank to part with the Trade Well Loan / Open Cash Credit to the tune of Rs.15 lacs from the bank by way of committing criminal mis-conduct by you A-1 and by abusing _____________ Page No.7/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 the official position of you A-1 as Public Servant sanctioned and released the said loan by way of accepting the said fabricated documents and also you A-3 by issuing a false and fabricated valuation report to the Bank in support of the sanctioning of the loan and the acts of you A-1 to A-3 caused the Bank to suffer a loss to the tune of Rs.17,37,914/- and thereby you A-1 to A-3 have committed the offences punishable U/s. 120-B r/w 420, 471 r/w 468 of IPC and Sec.13(2) r/w 13(1)(d) of PC Act, 1988 and is within my cognizance.
Charge No.2: In pursuance of the aforesaid criminal conspiracy and in furtherance thereof, you A-2 as proprietor of M/s Best Computer, No.10/18, Muthu Mariamman Koll, Nelvayal Nagar, Perambur, Chennai, during the year 2002-2003 applied for Trade Well Loan / Cash Credit of Rs.15 lacs with Indian Bank, Royapuram Branch, Chennal, by way of submitting false and fabricated documents like fabricated sale deed / fabricated encumbrance certificates pertains to property bearing No.14, in Survey No.90/3, Gopalapuram 2nd Street, Perambur, Chennai-82. etc. and thereby induced the Bank to part with the Trade Well Loan/Open Cash Credit from the bank to the tune of Rs.15 Lakhs, with active connivance of A-1, the Bank Manager, and misappropriated the funds of the Bank by diverting the funds other than the business referred in your application and _____________ Page No.8/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 thereby committed the offences punishable U/s.420 IPC and is within my cognizance.
Charge No.3: In pursuance of the aforesaid criminal conspiracy and in furtherance thereof, you A-2 as proprietor of M/s Imperial Corporation, No. 129, I Floor, Thambu Chetty Street, Chennai, during the year 2002 dishonestly and fraudulently applied for Trade Well Loan / Cash Credit of Rs.15 lacs with Indian Bank, Royapuram Branch, Chennai, by way of using fabricated sale deed, fabricated encumbrance certificates pertains to property bearing No.14, in Survey No.90/3, Gopalapuram 2nd Street, Perambur, Chennai-82. etc. and induced the Bank to part with the Trade Well Loan/Open Cash Credit to the tune of Rs.15 Lakhs from the bank, with active connivance of A-1, the Bank Manager and misappropriated the funds of the Bank by diverting the funds other than the business referred in your application and thereby committed the offences punishable U/s.471 r/w 468 IPC and is within my cognizance.
Charge No.4: In pursuance of the aforesaid criminal conspiracy and in furtherance thereof, to cheat Indian Bank, Royapuram Branch, Chennai, you A-4, as an Approved Valuer of Indian Bank, Royapuram Branch, Chennai dishonestly and fraudulently prepared a false valuation report dated 29.10.2002 valuing the _____________ Page No.9/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 property to the extent of 3900.5 sq.ft. land in Survey No.90/3, Gopalapuram II Street, Perambur, Chennai in the name of G.Krishnan for Rs.18,86,000/- without visiting the property and identifying the same and thereby induced the Bank to sanction a Trade Well/Cash Credit of Rs.15 lakhs in favour of M/s Best Computers, Chennai, owned by A-2 and thereby committed the offences punishable Uls. 420 IPC and is within my cognizance.
Charge No.5: In pursuance of the aforesaid criminal conspiracy and in furtherance thereof, you A-1, as Branch Manager of Indian Bank, Royapuram Branch, Chennai, dishonestly and fraudulently sanctioned and Trade Well Loan/ Open Cash Credit of Rs.15 lakhs to M/s Best Computers, Perambur, Chennai owned by A-2 on 11.11.2002, by way of abusing your official position as a Public Servant, knowing fully well that the property documents offered as collateral securities are fabricated without verifying the real owner of the property and also by violating the specific instructions given by the Panel Lawyer to obtain Nil Encumbrance Certificate on the property and further without verifying the official premises of M/s Best Computers, Perambur, Chennai while sanctioning the loan as stipulated by the Bank Guidelines, without checking with the genuineness of the documents like; fabricated sale deed, fabricated encumbrance certificate etc offered _____________ Page No.10/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 by A-2 in support of the collateral securities and thereby caused a loss to the tune of Rs.17,37,914/- to the Bank and thereby you A-1 have committed the offences punishable U/s.13(2) r/w 13(1)(d) of PC Act, 1988 and is within my cognizance.
8. To prove these charges, the prosecution examined 12 witnesses, marked 103 documents.
9. The evidence for prosecution in nutshell:
N.K. Ravindran(AI), Manager, Indian Bank, Royapuram Branch, Chennai, S. Thiyagarajan, A2 (Ascending accused), Proprietor of M/s. Best Computers and K.B.Sampath(A3) an Approver of Indian Bank during 2002-2003, with dishonest and fraudulent intentions to cheat Indian Bank, Royapuram Branch, Chennai entered into criminal conspiracy, in the matter of sanctioning and release of Trade Well Loan in the name of M/s Best Computer owned by S. Thiyagarajan, by way of submitting Ex.P.23, which is a false and fabricated invalid Sale Deed, Ex.P36 forged Encumbrance Certificate and thereby induced the Bank to part with the Trade Well Loan/Open Cash Credit to the tune of Rs.15,00,000/- from the bank by the way of committing criminal misconduct. N.K. Ravindran(A1) by abusing his _____________ Page No.11/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 official position as Public Servant, sanctioned and released the said loan by way of accepting the above said forged documents and also K.B. Sampath (A3) by issuing a false and fabricated valuation report Ex.P5 to the Bank in support of sanctioning the loan and the act of N.K.Ravindran(AI), S.Thiagarajan(A2) (Absconding- accused) and K.B.Sampath (A3) caused the Indian Bank, Royapuram Branch, Chennai, a loss to the tune of Rs.17,19,246/- (Rupees Seventeen lakhs Nineteen Thousand Two hundred and forty six only).
10. PW-2, K.Lakshmanan, who conducted the regular inspection of the loan accounts, had noted the irregularities in the loan account of M/s Best Computers and given his report (Ex.P-88) which narrates the trade advance against stock and equitable mortgage of the third party sanctioned by A-1 not in tune with the bank guidelines. The failure to verify the stock, acceptance of third party security when the borrower had his own property to offer, release of credit facility without identifying the operation of the account, low turnover as against the project turn over while availing loan were some of the irregularities found in the report Ex.P-88 and it also been spoken by PW-2.
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11. PW-3 has identified the endorsement made by A-1 in the Trade Loan Appraisal Memorandum Ex.P-11. The schedule of the sale deed Ex.P-23 offered by Krishnan for collateral security is Survey No.90/2, Peravallur Village, whereas the Encumbrance certificate Ex.P-36 enclosed with loan application by A-3 is for S.No:90/3 of Peravallur Village. Though the title deed and the EC are for different property, A-1 had accepted the same and sanctioned loan to favour A-2 to obtain pecuniary gain dishonestly. The real owner of the property was PW-9 [Pushpa]. Neither Krishnan nor Pushpa know that the property offered as collateral security to sanction loan to A-2. A-1 to favour A-2 had accepted a lease deed of the godown in which A2 had his firm M/s Best Computer is a party. The loan account of M/s Best Computer became Non Performing Account (NPA) with total liability of Rs.17.38 lakhs.
12. PW-4 [Suhadev], Panel Lawyer of the Bank in his opinion Ex.P-40 instructed A-1 to obtain originals from the party and create equitable mortgage. Whereas, A-2 did not produce the original documents such as mortgage deed and receipts regarding redemption of mortgage and some of the documents such as EC, the sale deed [Ex.P-23] given as original were not a genuine documents. These _____________ Page No.13/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 facts are proved through PW-5 the Sub Registrar. The death certificates Ex.P-24 and Ex.P-25 of Gangan and Nagammal respectively, who are the parents of Krishnan and from whom it is claimed that inherited the property given to create EM, were fake and this has been spoken by PW-6 [Xavier Arulraj]. The certificate numbers found in the fake death certificate is in respect of 10 days old baby and 2 years old baby and the genuine death certificate is Ex.P-49 and Ex.P-50. PW-10 [N.Ravi] the handwriting expert had deposed that the writing and the signature in the agreement of guarantee, Ex.P19 in the name of Krishnan been a false document with signature forged by A-2. The valuation certificate Ex.P-5 given by A-3 for the property at S.No.90/3 is not the property of Krishnan, but the valuation certificate given by A-3 mentions it as the property of Krishnan. Without visiting the property, he had assessed the value of the property as Rs.18,86,000/- His valuation certificate has induced the Bank to advance the loan to A-2 [Thiyagarajan] owner of M/s Best Computers.
13. Accepting the case of the prosecution, the trial Court vide judgment dated 26/11/2013 convicted A1and A3 and sentenced them as below:
_____________ Page No.14/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 Rank of the Conviction Sentence accused A1 Sections 120-B r/w 420, and To undergo RI for 3 years and to 471 r/w 468 IPC and Sec 13(2) pay a fine of Rs.2,000/- in default r/w 13(1)(d) of PC Act. to undergo SI for six months.
A3 Sections 120-B r/w 420, 471 To undergo RI for one year and to r/w 468 of IPC and Section pay a fine of Rs.1,000/-, in default 13(2) r/w 13(1)(d) of PC Act, to undergo SI for three months. 1988
A3 Section 420 IPC To undergo RI for 1 year and to pay a fine of Rs.1000/- in default to undergo SI for 3 months A1 Section 13(2) r/w 13(1)(d) of To undergo RI for 3 years and to PC Act, 1988 pay a fine of Rs.2,000/-, in default to undergo SI for six months.
The sentence of imprisonment was ordered to run concurrently and the period of imprisonment already undergone as under trial prisoner was ordered to be set off. The sentence in default in fine was ordered run consecutively.
14. A-2 [Thiyagarajan] absconded on the date of judgment. His case was split up from the parent case C.C.No.14/2008 and assigned C.C.No.43/2013. On securing him later, the trial Court held him guilty in its judgment dated 09/12/2013 and sentenced as below:-
_____________ Page No.15/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 Rank of Conviction Sentence the accused A2 Sections 120-B r/w 420, 471 r/w 468 To undergo RI for 1 year and to pay of IPC and Section 13(2) r/w a fine of Rs.1,000/-, in default to 13(1)(d) of PC Act, 1988 undergo SI for three months. Section 420 IPC To undergo RI for 1 year and to pay a fine of Rs.1000/- in default to undergo SI for 3 months.
Section 471 r/w 468 IPC To undergo RI for 1 year and to pay a fine of Rs.1000/- in default to undergo SI for 3 months.
The sentence of imprisonment was ordered to run concurrently and the period of imprisonment already undergone as under trial prisoner was ordered to be set off. The sentence in default in fine was ordered run consecutively.
15. Being aggrieved, the convicted accused have preferred the Criminal Appeals as below:-
A-1[N.K.Ravindran] :C.A.No.831/2013
A-2[ S.Thyagarajan] :C.A.No.481/2014
A-3[K.B.Sampath] :C.A.No.811/2013.
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Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014
16. Appeal grounds of A-1 [N.K.Ravindran] in C.A.No.831/2013:
The Learned Counsel for the appellant/first accused submitted that the scrutiny of the loan documents and verification of the borrowers credit worthiness has to be done by the loan officer, who is PW-1 in this case. The procedure to be followed before sanctioning loan is deposed by PW-1 to PW-3. They all admit that the loan was sanctioned by the appellant on the recommendation of PW-1, the loan officer and it was well within his pecuniary limits. Further, PW-3 admits that pre- sanction field inspection by the Manager was made mandatory only after the Head Office Circular dated 20/03/2003. Therefore, the omission to verify whether the documents given by the borrower is genuine or fake is not the responsibility of the Manager, it is is the duty of the loan officer and the panel lawyer, who gave the opinion about the title found in the documents or omission to make pre-sanction inspection by him may not even be a negligence or wilful negligence. Certainly, the material evidence does not bring home the charges of conspiracy or intentional and dishonesty to commit any of the crime mentioned in the charges. _____________ Page No.17/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014
17. In addition, the learned counsel for the appellant/A-1 reiterated the argument that A-1 is a public servant. Prior sanction ought to have been obtained for prosecuting as contemplated under Section 197 Cr.P.C and Section 19 of Prevention of Corruption Act. In the absence of valid sanction, the conviction and sentence imposed by the trial Court is liable to be set aside.
18. Appeal grounds of A-2 [Mr.Thyagarajan] in C.A.No.481 /2014:
The evidence for prosecution not satisfactorily proved the required ingredients of charges. By relying on the interested witnesses the trial Court erred in convicting the appellant. As a businessman based on the past experience, loan was obtained after proving adequate security both the stock in trade and immovable property. The primary security is the stock in trade. As collateral security, immovable property of third party was offered by the appellant. There is no bar in offering third party collateral security. The visit report of the Manager [A-1] as well as of the inspection report of PW-2 proves that M/s Best Computers is an existing firm and not fictitious as alleged. The expected turnover has not been achieved for various reasons. This could not be a reason to presume that the _____________ Page No.18/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 borrower had an intention to deceive the bank at the inception of availing loan. The documents produced by the third party Krishnan, who offered to stand as guarantor was subjected to scrutiny by the bank lawyer PW-4. On his opinion that the property is worth for taking as collateral security, same was accepted by the Bank. The prosecution has not examined Krishnan as witness. However, on presumption and assumption the trial Court has convicted this appellant as if he has offered false documents to create EM and cheated the bank.
19. There is no material to draw any inference that there was meeting of mind between the borrower and other accused namely the bank Manager and valuer. The entire transaction were transparent and borne by records. The prosecution has not placed any incriminating evidence before the Court to prove that they all joined together to do any illegal act.
20. Grounds of appeal filed by K.B.Sampath [A-3] in C.A.No.811/2013:
The learned counsel appearing for K.B.Sampath, (A-3) the approved valuer/ appellant submitted that the trial Court judgment suffers omission of proper application of law and appreciation of material evidence. The valuation certificate _____________ Page No.19/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 given by the appellant, which is marked as Ex.P-41 not been proved as over valued or a false certificate. The opinion of the panel lawyer about the ownership of the property is relied by the valuer. It is not the responsibility of the valuer to verify the ownership. There is no evidence to disprove the assertion of the valuer about his visit to the property in the name of Krishnan at S.No.90/3 Peravallur Village. The prosecution has also not examined the Lawyer and the Valuer both being professionals in their respective field are to be treated alike. The allegation of the prosecution is that the property of Pushpa been given as security by falsifying the documents as if the property belongs to Krishnan. Then, the panel lawyer PW-4 [Mr.Suhadev] who gave the opinion about the marketable title of the property has to be held guilty and not the valuer, who was sought to give his opinion only on the value of the property and not on the title of the property.
21. PW-11[V.D.Sebastian] who investigated the case admits that he was satisfied with the genuineness of the opinion given by the panel lawyer. If the legal opinion on title, which is apparently erroneous is believed to be genuine, there is no reason to suspect the genuineness of the valuation certificate given by this appellant. In the absence of any evidence to suspect the valuation of A-3 shown in _____________ Page No.20/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 Ex.P-41 dated 29/10/2002 is excessive or for a non-existing property, conviction of this appellant is baseless.
22. Submission by the Learned Special Public Prosecutor (CBI) for the Respondent:
Based on source information, FIR [Ex.P-95] was registered on 28/10/2005 and taken up for investigation. The investigation culminated in filing of 5 separate charge sheets. In each case, though the borrower name is different, the modus operandi is one and the same. For non-existing or non functioning firms loan was advanced. Pre-loan inspection was not conducted. The title deeds offered for EM were not genuine. The legal opinion and valuation certificates were accepted by A- 1 to sanction loan knowing well that they are not genuine. The title documents, death certificates and the encumbrance certificate produced by the borrower to create equitable mortgage ( EM) were found to be false. After availing loan, the amount had been withdrawn immediately and loan was not repaid. The persons, who were paid from the loan amount, had no business transactions with the borrowers. The loan, which is meant for improving the business of mid scale traders been misused for personal enrichment. The Manager of the Bank A-1, the _____________ Page No.21/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 Panel Lawyer, the Valuer along with the borrower and the guarantor with dishonest intention to cheat the bank conceived the design of offering 3 rd party property as security created false documents and used it as genuine to sanction loan.
23. A-1 as Manager did not verify the loan documents properly and his failure is a wilful omission and intentional. He cannot blame the panel lawyer who gave the opinion on title. The valuer who had ascertained the ownership of the property to Krishnan is liable for giving a misleading certificate and thereby induced the bank to sanction loan. After obtaining loan by producing fake documents and false documents the borrower A-2 withdrew the loan amount immediately through several cheques and then failed to repay the loan. The loan amount was not utilised for purchase of goods and material required for the trade. The inspection report of PW-2 marked as Ex.P-44 proves that A-3, who availed loan for trade had no sufficient turn over or stock in his godown neither he repaid the loan. The accused had no explanation as to the shortage. His dishonest intention clearly established by his conduct of not displaying the board in the godown about the hypothecation of the goods with Indian Bank, Royapuram Branch.
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24. Heard the the learned counsels. Records perused.
25. Al [N.K.Ravindran] a public servant working as Manager Indian Bank, Royapuram Branch during the year 2002-2003 entered into criminal conspiracy at Chennai and other places with private individuals and one K.B.Sampath, approved valuer to cheat the Indian Bank, Royapuram Branch, Chennai in the matter of sanctioning Trade Well Loan on the basis of forged and invalid documents offered by the individuals taken as collateral security for the loan. Out of 5 such cases, the loan sanctioned to M/s Best Computers owned by Mr.Thiyagarajan[A2] is one.
26. To establish its case, the prosecution examined PW1 to PW12. Marked documents Ex.P1 to Ex.P103. The evidence of the prosecution witnesses coupled with all the official documents produced on record and marked as exhibits before this Court tend to show that in pursuance of the aforesaid criminal conspiracy, A2 [Thiyagarajan], in his capacity as the sole proprietor of M/s Best Computers opened a Current Account in the Indian Bank, Royapuram Branch on _____________ Page No.23/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 16/10/2002. (Ex.P-1). He applied for Rs.15 lakhs Traders Advance mentioning, he has 14 years experience in the field of computers. However, from the Profit and Loss statement annexed to his application reveal, he is noticed to the field of computer trade. He was a partner in a sand quarry business. He had no TNGST or CST registration for his firm M/s Best Computers. Had applied and waiting for the registration. For the loan, Thiyagarajan offered third party property as collateral security. Mr.Krishnan, S/o Gangan as owner of the property bearing No.93/3, TS No.114, Door No.12, Gopalapuram II Street, Peravalur Village had offered his property for security of the loan. PW-4 [Mr.P.Suhadev], Panel Lawyer in his opinion Ex.P 40 had stated that the property in question is absolutely free from all encumbrances and Mr.G.Krishnan have a clear, valid and marketable title in the property. He has listed 9 out of the 13 documents to be obtained in original to create Equitable Mortgage. PW-2 during his regular inspection of the loan account of M/s Best Computer has found that A-1 had sanctioned loan ignoring the opinion of the panel lawyer. In his report Ex.P-44, PW-2 has observed that A-1 had failed to obtained the original documents of the mortgage deed, loan discharge receipt from the Co-operative Society, building plan permission and permit. The Assets and Liabilities of the borrower M/s Best Computers discloses that the firm _____________ Page No.24/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 commenced business in Computer accessories only in the 2002. The turn over for six months is only Rs.4.09 lakhs. No stock found in the business premises. However, the account is always on the brim of the limit. While availing loan, the borrower has projected the 6 months sale as Rs.60 lakhs in 2002-2003 and for 2003-004 as Rs.120 lakhs. Without assessing the parties capacity, loan limit fixed. The account should be closely monitored. PW-8 [Mr.Ganesan], Manager of Indian Bank, who served at Royapuram branch during the period 1999 to 2004, had deposed that the loan sanctioned to M/s Best Computers on 15/11/2002 was substantially withdrawn through cheques on the same day and next two days. Ex.P-59 to Ex.P-71 are marked to prove this fact.
27. A-1 had submitted the visit report Ex.P-10 dated 29/10/2002, in which he has stated that he visited the property given as collateral security bearing Door No.14, II Street Gopalapuram, TVK Nagar. The prosecution by examining Tmt.Pushpa, PW-9, had proved that the said property was sold away by Krishnan to Pushpa on 08/12/2004 under Doc.No.9686/2004. Thus, A-1 misconduct of not creating the EM properly for extraneous reasons found to be proved. PW-10, Mr.N.Ravi, the handwriting expert, had in his report [Ex.P-94] opined that the _____________ Page No.25/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 signatures found in the Agreement of Guarantee executed in the name of Krishnan (Ex.P-19) does not tally with the specimen signature of Krishnan. Ex.P-25 the death certificate in the name of Nagammal, who is the mother of Krishnan is also found to be fake and same is proved through PW-6[Xavier Arulraj] Health Inspector of Chennai Corporation. The Death certificate number found in Ex.P-25 is in fact related to a 10 days old female baby of Mrs. Thawlathbi.
28. A-1 had not obtained Encumbrance certificate for the relevant period and the encumbrance certificate produced by A-2 is not in respect of the property offered as collateral security. This fact is spoken by PW-3. Ex.P-23, sale deed in the name of Krishnan is in respect of S.No.90/3. Whereas, the Encumbrance Certificate[Ex.P-36] produced by the borrower is for S.No.90/2 showing ‘nil’ encumbrance. The EC obtained for S.No.90/3 by PW-3 is Ex.P-45 and it reflects multiple encumbrances. On enquiry with Krishnan, this witness had come to know that Krishnan has not offered his property as collateral security. It was contented by the Learned counsels for the 1st and 2nd accused / appellants in C.A.No.831/2013 and C.A.No.481/2014 that Krishnan not examined before the Court, therefore, the statement of PW-3 is not admissible being a hearsay _____________ Page No.26/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 statement. This contention is unsustainable, in view of the fact that PW-3 had referred about the statement of Krishnan made during the inspection. The documents and the testimony of Pushpa [PW-9] are before us to testify whether the statement made by Krishnan to PW-3 is true. The hand writing expert opinion Ex.P-94 is sufficient to hold that the Krishnan had not offered any of his property as security for the loan obtained by A-2.
29. It is the specific case of the prosecution that Al-Ravindran, having connived with A2 and A3 and by abusing his official position as Manager, Indian Bank, Royapuram Branch, had dishonestly sanctioned Trade well Loan/Open Cash Credit to the tune of Rs.15 lakhs (Rupees Fifteen lakhs only) to M/s. Best Computer on 11.11.2002. The evidences of P.W-1 to P.W-3 would go to show that though the entire loan papers were processed by P.W.3-Loan Officer, the loan sanctioning authority is Al and therefore, it is the case of the prosecution that Al ought to have been vigilant by verifying the genuineness of documents, existence of the property offered as collateral security and he should have adhered to the instructions given by the Panel Advocate, while creating EM. The evidences of the prosecution witnesses further go to prove that Al did not go to the property and _____________ Page No.27/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 verify the true owner of the property, on which equitable mortgage was created. Also he did not verify the difference in the survey number of the property offered as collateral security and the survey number mentioned in the EC given by the borrower.
30. N.K.Ravindran [A-1] while he was serving as the Manager of the Indian Bank, Mount Road Branch sanctioned the subject loan to M/s Best Computers. He was compulsorily retired from service before the filing of the final report. The Special Public Prosecutor submitted that prior sanction to prosecute him under Section 19 of Prevention of Corruption Act,1988 or under Section 197 Cr.P.C is not required. The Court took cognizance after he relieved on compulsory retirement. Though he falls under the meaning of public servant under Section 2(c) of Prevention of Corruption Act, the protection under Section 19 of Prevention of Corruption Act is only for serving public servant and not for retired public servant. The protection under Section 197 of Cr.P.C though applies to both serving as well as retired public servant, it applies only for the public servant who is or was employed in connection with the affairs of Union or State Government. An employee of a Nationalised Bank does not fall under these two categories. _____________ Page No.28/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 Therefore, prior sanction under Section 19 of Prevention of Corruption Act or Section 197 of Cr.P.C need to be obtained.
31. Section 197(1)(a)(b) of Cr.P.C, 1973 reads as below:
197. Prosecution of Judges and public servants (1) When any person who is or was a Judge or Magistrate or a public servant not removable from his office save by or with the sanction of the Government is accused of any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty, no Court shall take cognizance of such offence except with the previous sanction-
(a) in the case of a person who is employed or, as the case may be, was at the time of commission of the alleged offence employed, in connection with the affairs of the Union, of the Central Government;
(b) in the case of a person who is employed or, as the case may be, was at the time of commission of the alleged offence employed, in connection with the affairs of a State, of the State Government: 1 Provided that where the alleged offence was committed by a person referred to in clause (b) during the period while a Proclamation issued under clause (1) of article 356 of the Constitution was in force in a State, clause (b) will apply as if for the expression" State Government"
occurring therein, the expression" Central Government"
were substituted.
32. Section 19 of Prevention of Corruption Act, 1988:
19. Previous sanction necessary for prosecution.— (1) No court shall take cognizance of an offence punishable under sections 7, 10, 11, 13 and 15 alleged to have been committed by a public servant, except with the previous sanction,— _____________ Page No.29/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014
(a) in the case of a person who is employed in connection with the affairs of the Union and is not removable from his office save by or with the sanction of the Central Government, of that Government;
(b) in the case of a person who is employed in connection with the affairs of a State and is not removable from his office save by or with the sanction of the State Government, of that Government;
(c) in the case of any other person, of the authority competent to remove him from his office.
(2) Where for any reason whatsoever any doubt arises as to whether the previous sanction as required under sub-section (1) should be given by the Central Government or the State Government or any other authority, such sanction shall be given by that Government or authority which would have been competent to remove the public servant from his office at the time when the offence was alleged to have been committed.
(3) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),—
(a) no finding, sentence or order passed by a special Judge shall be reversed or altered by a court in appeal, confirmation or revision on the ground of the absence of, or any error, omission or irregularity in, the sanction required under sub-section (1), unless in the opinion of that court, a failure of justice has in fact been occasioned thereby;
(b) no court shall stay the proceedings under this Act on the ground of any error, omission or irregularity in the sanction granted by the authority, unless it is satisfied that such error, omission or irregularity has resulted in a failure of justice;
(c) no court shall stay the proceedings under this Act on any other ground and no court shall exercise the powers of revision in relation to any interlocutory order passed in any inquiry, trial, appeal or other proceedings.
(4) In determining under sub-section (3) whether the absence of, or any error, omission or irregularity in, such sanction has occasioned or resulted in a failure of justice the court shall have regard to the fact whether the objection could and should have been raised at any earlier stage in the proceedings.
_____________ Page No.30/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 Explanation.—For the purposes of this section,—
(a) error includes competency of the authority to grant sanction;
(b) a sanction required for prosecution includes reference to any requirement that the prosecution shall be at the instance of a specified authority or with the sanction of a specified person or any requirement of a similar nature.
33. As far as offence under Prevention of Corruption Act, 1988, to take cognizance of offence committed by a public servant, prior sanction is required if he is in service at the time of taking cognizance. In respect of other offences, whether he is or was a public servant, prior sanction of the respective government is required provided the said public servant must have been employed in connection with the affairs of the Union or State. In this case, A-1 was not an employee under the State or Union. Hence, though he fall under the definition of Public Servant as per the definition under Section 2 (c) of Prevention of Corruption Act, 1988, he will not come under the definition of Public Servant under Section 21 of Indian Penal Code.
(i)The Hon'ble Supreme Court in K.Ch.Prasad –vs- Vanalatha _____________ Page No.31/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 Devi:[(1987) 2 SCC 52], at paras 6 and 7 observed as below:-
“6.It is very clear from this provision that this section is attracted only in cases where the public servant is such who is not removable from his office save by or with the sanction of the Government. It is not disputed that the appellant is not holding a post where he could not be removed from service except by or with the sanction of the government. In this view of the matter even if it is held that appellant is a public servant still provisions of Section 197 are not attracted at all.
7.It was contended by the learned counsel that the competent authority who can remove the appellant from service derives his power under regulations and those regulations ultimately derive their authority from the Act of Parliament and therefore it was contended that the regulations are framed with the approval of the Central Government but it does not mean that the appellant cannot be removed from his service by anyone except the Government or with the sanction of the Government. Under these circumstances on plain reading of Section 197 the view taken by the courts below could not be said to be erroneous. We therefore see no reason to entertain this appeal. It is therefore dismissed.”
(ii)The Hon'ble Supreme Court in Md. Hadi Raja –vs- State of Bihar reported in [(1998) 5 SCC 91] has held:-
“19.“Public servant” has not been defined in the Code of Criminal Procedure but Section 2(y) of the Code of Criminal Procedure provides that the words used in the Criminal Procedure Code but not defined in the Criminal Procedure Code but defined in the Penal Code, 1860 shall be deemed to have the same meaning attributed to them in the Penal Code, 1860. Section 21 of the Penal Code, 1860 defines “public servant” and therefore the expression “public servant” will have the same meaning in the _____________ Page No.32/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 Criminal Procedure Code. It will be appropriate to refer to clauses 9 and 12 of Section 21 IPC.
“21.Ninth.—Every officer whose duty it is, as such officer, to take, receive, keep or expend any property on behalf of the government, or to make any survey, assessment or contract on behalf of the government or to execute any revenue process, or to investigate, or to report, on any matter affecting the pecuniary interests of the government, or to make, authenticate or keep any document relating to the pecuniary interests of the government or to prevent the infraction of any law for the protection of the pecuniary interests of the government.
Twelfth.—Every person—
(a) in the service or pay of the government or remunerated by fees or commission for the performance of any public duty by the government;
(b) in the service or pay of a local authority, a corporation established by or under a Central, Provincial or State Act or a government company as defined in Section 617 of the Companies Act, 1956 (1 of 1956).”
20.Although the instrumentality or agency with a corporate veil, for all intents and purposes may be held to be a third arm of the Government and such instrumentality discharges the duties and functions which the State intends to do as indicated in Ajay Hasia case [(1981) 1 SCC 712 :
1981 SCC (L&S) 258] such instrumentality or agency is none the less a juridical person having a separate legal entity. Therefore, such instrumentality must be held to have an independent status distinct from the State and cannot be treated as a government department for all purposes. Therefore, even if an officer of such instrumentality or agency takes or receives, keeps or expends any property or executes any contract, such acts even though in ultimate analysis may be held to have been done in the interest of the State, such action cannot be construed, as of rule, an action of the Government by its employees or by an authority empowered by the Government. It may be indicated here that it is not necessary that persons falling under any of the descriptions given in various clauses under Section 21 of IPC need to be appointed by the Government. If such person _____________ Page No.33/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 falls under any of the descriptions as contained in various clauses of Section 21 of the Penal Code, 1860, such person must be held to be a public servant. Explanation 1 of Section 21 indicates that persons falling under any of the above descriptions are public servants whether appointed by the Government or not. Explanation 2 indicates that wherever the words “public servant” occur, they shall be understood of every person who is in actual possession of the situation of a public servant, whatever legal defect there may be in his right to hold that situation. Sub-clause (b) of clause twelve of Section 21 expressly makes the officers of local authority and corporation established by or under a Central, Provincial or State Act or a government-owned company as defined in Section 617 of the Companies Act, 1956, public servants. But protection under Section 197 CrPC is not available to a public servant unless other conditions indicated in that section are fulfilled.
21.It is to be noted that though through the contrivance or mechanism of corporate structure, some of the public undertakings are performing the functions which are intended to be performed by the State, ex facie, such instrumentality or agency being a juridical person has an independent status and the action taken by them, however important the same may be in the interest of the State cannot be held to be an action taken by or on behalf of the Government as such within the meaning of Section 197 CrPC.
25.It will be appropriate to notice that whenever there was a felt need to include other functionaries within the definition of “public servant”, they have been declared to be “public servants” under several special and local acts. If the legislature had intended to include officers of an instrumentality or agency for bringing such officers under the protective umbrella of Section 197 CrPC, it would have done so expressly.
26.Therefore, it will not be just and proper to bring _____________ Page No.34/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 such persons within the ambit of Section 197 by liberally construing the provisions of Section 197. Such exercise of liberal construction will not be confined to the permissible limit of interpretation of a statute by a court of law but will amount to legislation by court.
27.Therefore, in our considered opinion, the protection by way of sanction under Section 197 of the Code of Criminal Procedure is not applicable to the officers of government companies or the public undertakings even when such public undertakings are “State” within the meaning of Article 12 of the Constitution on account of deep and pervasive control of the Government. The appeals are disposed of accordingly.”
(iii) In K.Veeraswami v. Union of India and others reported in [(1991) SCC (cri) 734], the Hon'ble Supreme Court held:-
“107.Clauses (a), (b) and (c) in sub-section (1) of Section 6 exhaustively provide for the competent authority to grant sanction for prosecution in case of all the public servants falling within the purview of the Act. Admittedly, such previous sanction is a condition precedent for taking cognizance of an offence punishable under the Act, of a public servant who is prosecuted during his continuance in the office. It follows that the public servant falling within the purview of the Act must invariably fall within one of the three clauses in sub- section (1) of Section 6. It follows that the holder of an office, even though a ‘public servant’ according to the definition in the Act, who does not fall within any of the clauses (a), (b) or (c) of sub-section (1) of Section 6 must be held to be outside the purview of the Act since this special enactment was not enacted to cover that category of public servants in spite of the wide definition of ‘public servant’ in the Act. This is the only manner in which these provisions of the Act can be harmonized and given _____________ Page No.35/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 full effect. The scheme of the Act is that a public servant who commits the offence of criminal misconduct, as defined in the several clauses of sub-section (1) of Section 5, can be punished in accordance with sub-section (2) of Section 5, after investigation of the offence in the manner prescribed and with the previous sanction of the competent authority obtained under Section 6 of the Act, in a trial conducted according to the prescribed procedure. The grant of previous sanction under Section 6 being a condition precedent for the prosecution of a public servant covered by the Act, it must follow that the holder of an office who may be a public servant according to the wide definition of the expression in the Act but whose category for the grant of sanction for prosecution is not envisaged by Section 6 of the Act, is outside the purview of the Act, not intended to be covered by the Act. This is the only manner in which a harmonious construction of the provisions of the Act can be made for the purpose of achieving the object of that enactment. This appears to be the obvious conclusion even for a case like the present where no such sanction for prosecution is necessary on the view taken in Antulay [(1984) 2 SCC 183 : 1984 SCC (Cri) 172 : (1984) 2 SCR 495] , and not challenged before us, that the sanction for prosecution under Section 6 is not necessary when cognizance of the offence is taken after the accused has ceased to hold the office in question.”
(iv)The Hon'ble Supreme Court judgment in Abhay Singh Chautala –vs- CBI [(2011) 7 SCC (cri) 141] said:-
“41.It is in the light of this that the Court did not have to specify as to under what circumstances would a duty arise for locating the authority to give sanction. The doubt could arise in more manners than one and in more situations than one, but to base the interpretation of Section 19(1) of the Act on the basis of Section 19(2) would be putting the cart before the horse. The two sections would _____________ Page No.36/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 have to be interpreted in a rational manner. Once the interpretation is that the prosecution of a public servant holding a different capacity than the one which he is alleged to have abused, there is no question of going to Sections 6(2)/19(2) at all in which case there will be no question of any doubt. It will be seen that this interpretation of Section 6(1) or, as the case may be, Section 19(1), is on the basis of the expression “office” in three sub-clauses of Section 6(1), or as the case may be, Section 19(1). For all these reasons, therefore, we are not persuaded to accept the contention that Antulay case [(1984) 2 SCC 183 : 1984 SCC (Cri) 172] was decided per incuriam of Section 6(2). In our opinion, the decision in K. Veeraswami v. Union of India [(1991) 3 SCC 655 : 1991 SCC (Cri) 734] or, as the case may be, P.V. Narasimha Rao case [(1998) 4 SCC 626 :
1998 SCC (Cri) 1108] are not apposite nor do they support the contention raised by the learned Senior Counsel as regards Antulay case [(1984) 2 SCC 183 : 1984 SCC (Cri) 172] being per incuriam of Section 6(2).
54.The learned Senior Counsel tried to support their argument on the basis of the theory of “legal fiction”. We do not see as to how the theory of “legal fiction” can work in this case. It may be that the appellants in this case held more than one offices during the check period which they are alleged to have abused; however, there will be no question of any doubt if on the date when the cognizance is taken, they are not continuing to hold that very office. The relevant time, as held in S.A. Venkataraman v. State[AIR 1958 SC 107 : 1958 Cri LJ 254] , is the date on which the cognizance is taken. If on that date, the appellant is not a public servant, there will be no question of any sanction. If he continues to be a public servant but in a different capacity or holding a different office than the one which is alleged to have been abused, still there will be no question of sanction and in that case, there will also be no question of any doubt arising because the doubt can arise only when the sanction is necessary. In case of the present appellants, there was no question of there being any doubt because basically there was no question of the appellants' getting any protection by a sanction.” _____________ Page No.37/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014
34. In the light of the above judgments, it could be safely concluded in this case prior sanction for prosecution either under Section 19 of IPC or under Section 197 of Cr.P.C., will not arise.
35. The dishonest intention shared between the Bank Manager (A-1) and the borrower (A-2) clearly established by the prosecution from the fact that the current account opened in the name of M/s Best Computer showing Thyagarajan as it proprietor. In Ex.P-1 the application date is 16/10/2002. But a day before ie 15/10/2002 (Ex.P-2) application for advance for Rs.15 lakhs sought by A-2.
Along with the loan application Ex.P-2, a letter by A-2 addressed to A-1 the Branch Manager seeking release of loan urgently is given. In this letter marked as Ex.P-3, A-2 had stated that there was previous discussion on the request of loan for Rs.15 lakhs OCC limit for the company Best Computers. Therefore, the meeting of mind between A-1, the Manager and the borrower A-2 even prior to receipt of loan application and opening of account is admittedly seen from the Ex.P-1 to Ex.P-3. The title documents and EC for creating EM as discussed above are fake and false. A-2 had produced it and A-1without due diligence had accepted _____________ Page No.38/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 it and sanctioned loan. He had ignored the instruction of the panel lawyer. The contention of the learned Counsel appearing for the first accused N.K.Ravindran that he gone by the Panel Lawyer opinion is in correct. The prosecution has established, he failed to get the original documents like mortgage deed and redemption receipts. Ignored to verify he survey numbers in the EC produced by A-2 and the survey number mentioned in the title document before creating EM.
36. These incriminating evidence are adequately enough to hold A-1 and A-2 guilty of conspiracy to cheat the Bank, making false evidence, using those false evidence as genuine to cheat the bank.
37. In the result, Crl.A.No.831 of 2013 stand dismissed. The judgment of conviction passed by the learned XI Additional city Civil & Sessions Judge for CBI Cases Relating to Banks and Financial Institutions, Chennai-1, made in C.C.No.14 of 2008, dated 26.11.2013, is hereby confirmed. The period of substantive sentence shall run concurrently. The period of sentence shall also run concurrently with the period of substantive sentence imposed in C.C.No.13 of 2008. The period of sentence already undergone by the accused is _____________ Page No.39/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 set off. Bail bond if any executed by the accused shall be cancelled. The respondent police shall secure the accused and remand HIM to the judicial custody to undergo the remaining period of sentence imposed by the trial Court, if any.
38. Crl.A.No.481/2014 stands dismissed. The judgment of conviction passed by the learned XI Additional city Civil & Sessions Judge for CBI Cases Relating to Banks and Financial Institutions, Chennai-1 made in C.C.No.43 of 2013 dated 09.12.2013 ( case split up from C.C.No.14/2008) is hereby confirmed. The period of substantive sentence shall run concurrently. The period of sentence already undergone by the accused is set off. Bail bond if any executed by the accused shall be cancelled. The respondent police shall secure the accused and remand him to the judicial custody to undergo the remaining period of sentence imposed by the trial Court, if any.
39. Crl.A.No.811/2013:-
The valuer (K.B.Sampath), who had assessed the property and given his valuation report marked as Ex.P-5. The existence of the property at S.No. 90/3 is not disputed. The ownership according to the panel lawyer opinion, is _____________ Page No.40/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 Mr.Krishnan. As per the evidence of PW-9, the said property belongs to her and she purchased it from Krishnan in the year 2004 for a sale consideration of Rs.2,62,700/- The sale deed document No.9686/2004, SRO Chembiam is reflected in the EC marked as Ex.P-45. Therefore, the property for which A-3 gave valuation report is a property in existence. To contradict his opinion on value there is no other opinion relied by the prosecution.
40. In the judgment of this Court in L.N.Rajagopalan –vs- State reported in [CDJ 2009 MHC 3754], para 11 and12 reads as below:-
“11. Firstly, the Valuer is not associated with the business transaction when the application for loan is submitted by the borrower. Therefore, there is no occasion for the Valuer to see the persons who appear before the bank. Some of the properties might have been Government properties. It is not the duty of the Valuer to go to the Registrar's Office to verify whether the lands belong to the Government or private individuals.
12. The next allegation is that the petitioner violated the guidelines of the bank and submitted valuation reports of properties which do not exist. The prosecution has not produced any documents to show that there are specific guidelines issued to the Valuers for valuing the property”.
_____________ Page No.41/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014
41. The dictum laid by this Court cited supra regarding the role of valuer wholly applies to the facts of the case. Hence, when the prosecution has failed to prove that the valuer had some extraneous interest in the loan transaction or had any meeting of mind to act dishonestly along with A-1 and A-2, the professional act of valuing the property identified by the person apparently to be the owner of the property will not attract the ingredients of offences charged. When there is no apparent error or dishonesty in the valuation report, valuer cannot be hauled for prosecution. Therefore, there is no adequate evidence to hold that this appellant had conspired with the other accused to cheat the bank.
42. Hence, the Criminal Appeal No.811/2013 stands allowed. The judgment of conviction passed by the learned XI Additional city Civil & Sessions Judge for CBI Cases Relating to Banks and Financial Institutions, Chennai-1 made in C.C.No.14 of 2008, dated 26.11.2013 is hereby set aside. Bail bond if any executed by the accused shall be cancelled. Fine amount if any paid by the accused shall be refunded to him. The appellant is at liberty forthwith unless his presence is not required in connection with any other criminal case. _____________ Page No.42/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 In sum,
(i) Crl.A.No.811 of 2013(K.B.Sampath) is allowed.
(ii) Crl.A.No.831 of 2013(N.K.Ravindaran) is dismissed.
(iii) Crl.A.No.481 of 2014(S.Thiyagarajan) is dismissed.
31.07.2023 Index:yes/no speaking order/non speaking order ari To:
1.The XI Additional City Civil & Sessions Judge for CBI Cases, Chennai.
2.The Inspector of Police, CBI/ACB/Chennai.
3.The Special Public Prosecutor CBI Cases, High Court, Madras.
_____________ Page No.43/44 https://www.mhc.tn.gov.in/judis Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 DR.G.JAYACHANDRAN,J.
ari delivery Common judgment made in Crl.A.Nos.811 and 831 of 2013 and Crl.A.No.481 of 2014 31.07.2023 _____________ Page No.44/44 https://www.mhc.tn.gov.in/judis