Delhi District Court
In Case Titled As Pnb vs . Shri Ram Tyres And Settled The on 1 April, 2021
1
IN THE COURT OF AMIT KUMAR, SPECIAL JUDGE, PC
ACT (CBI) - 04, ROUSE AVENUE COURTS, DELHI.
CC No. 119/2019
R.C. No. 2E/06/CBI/EOW-II/ND
CNR No. DLCT11-000532-2019
CENTRAL BUREAU OF INVESTIGATION
VERSUS
1. SH. V.K. JOLLY
(PUBLIC SERVANT)
S/O LATE SH. DHARAM DEV JOLLY
THE THEN SR. MANAGER
PUNJAB NATIONAL BANK
AZADPUR BRANCH
NEW DELHI.
R/O B-457, MAJLIS PARK
DELHI - 33.
2. SH. D.K. MALHOTRA
(RETD. PUBLIC SERVANT)
R/O HOUSE NO. 58
SEC.-G, SANIK COLONY
JAMMU.
3. SH. SUMIT ARORA
S/O ASHOK KUMAR ARORA
R/O C-401, STREET NO. 10
MAJLIS PARK, NEAR ADARSH NAGAR,
DELHI
4. SH. CHANDER PRAKASH
(PROCLAIMED OFFENDER)
S/O SH. MEHAR CHAND
R/O D-94, YADAV NAGAR,
SAMAYPUR BADLI, DELHI
CC No.119/2019 Page 1 of 54
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Date of Institution : 04.06.2013
Date of Arguments : 24.03.2021
Date of Judgment : 01.04.2021
JUDGMENT
1. This case was registered by the CBI on 31.05.2006 against accused persons, namely, (1) V.K. Jolly, the then Sr. Manager, PNB, Azad Pur during the period May, 2001 to 08.07.2004, (2) D.K. Malhotra, the then Chief Manager, who succeeded V.K. Jolly w.e.f. July, 2004 till 10.11.2004 when his discretionary powers were withdrawn and (3) Sumit Arora, the private person, who had accounts with PNB, Azad Pur and (4) Chander Prakash, a private person, who had account in PNB, Azad Pur on the basis of a written complaint received from Sh. Ved Prakash Deputy Zonal Manager, Punjab National Bank, Zonal Office (North), Delhi. As per the prosecution case, accused V.K. Jolly and D.K. Malhotra acted in violation of the bank guidelines issued with regard to discounting of cheques and with regard to advance against unclear effects. As per investigation, the PNB vide circular no. 130 dated 31.01.2002 had given powers to the Sr. Manager and Chief Manager for discounting of cheques upto 3.75 lacs and 20 lacs respectively with instructions to exercise these discretionary powers only in respect of genuine trade transactions and not for accommodative transactions. As per investigation, the bank officials in connivance with private persons purchased cheques in borrowers accounts issued by CC No.119/2019 Page 2 of 54 3 Friends/associate/sister concerns having accounts with other banks despite the fact that cheques were issued without having sufficient funds. The credit so generated from purchase of cheque was withdrawn by the borrower through self drawn cheques and the same was repeated for 2-3 consecutive days and on the fourth consecutive date, the cash was deposited in the cheque issuing account of the other bank. This was done repeatedly and as a result, the party had cash in hand for 2-3 days. This modus operandi also known as cheque kitting whereby a false credit is obtained by exchange and passing of worthless cheques. As per investigation, this modus operandi started during the tenure of V.K. Jolly (A-1)and continued till the period of D.K. Malhotra (A-2). Both these accused accommodated various account holders including the accused Sumit Arora (A-3) and Chander Prakash (A-4) of this case. As per investigation, Sumit Arora, who was already having an account with PNB, Azad Pur opened account no. 21127725 on 29.03.2004 in the name of Shri Ram Tyres, he being the proprietor and introduced this account himself and Chander Prakash opened an account on 30.04.2004 bearing account no. 21127860, which was introduced by Sumit Arora. Several worthless cheques of fake trade transactions were purchased in the said accounts and proceeds withdrawn through self cheques. One more account in the name of Vijay Suri, a friend of Sumit Arora bearing account no. 3571 was opened with J&K Bank, Azad Pur and one CC No.119/2019 Page 3 of 54 4 more account in the name of VJ & Company bearing account no. 3675 was opened by Vijay Suri with J& K Bank, Azad Pur and cheques issued from these accounts were purchased in the account of Sumit Arora and Chander Parkash. The said Chander Parkash was an employee of Sumit Arora. After the withdrawl of the discretionary power of accused D.K. Malhotra, several cheques issued in aforesaid accounts were dishonoured and there was debit balance of several lacs of rupees in these accounts thereafter.
2. On the basis of this investigation, present charge sheet was filed on 04.06.2013 and my Ld. Predecessor took cognizance of the offence and vide detailed order on charge dated 15.12.2014, following charges were directed to be framed against accused persons:
Sl. No. Accused Charges Framed
1. V.K. Jolly U/s 120B IPC read with 13 (2) read with 13 (1) (d), (ii) and (iii) read with 409 IPC and substantive offence U/s 409 IPC.
2. D.K. Malhotra U/s 120B IPC read with 13 (2) read with 13 (1) (d), (ii) and (iii) read with 409 IPC and substantive offence U/s 409 IPC.
3. Sumit Arora U/s 120B IPC read with 13 (2) read with 13 (1) (d), (ii) and (iii) read with 409 IPC and substantive offence U/s 109 IPC read with 409 IPC and in the alternate U/s 420 IPC and substantive offence U/s 467/471 IPC and 109 IPC read with 13 (2) read with 13 (ii) (iii) PC Act.
4. Chander Prakash U/s 120B IPC read with 13 (2) read with 13 (1) (d), (ii) and (iii) read with 409 (Since P.O.) IPC and substantive offence U/s 409 IPC CC No.119/2019 Page 4 of 54 5
3. Accused 1, 2 and 3 pleaded not guilty to these charges and claimed trial whereas accused Chander Prakash was proclaimed offender, so the evidence was recorded against him U/s 299 Cr.P.C.
4. The prosecution to prove its case examined 25 witnesses, following which statements of accused were recorded. Accused V.K. Jolly and D.K. Malhotra did not examine any witness in defence whereas accused Sumit Arora examined two defence witnesses.
5. PW1 is Avinash Chander Aggarwal, the then Manager, PNB, Azad Pur from May, 2003 till 30.04.2004. He stated that the account of Shri Ram Tyres through Proprietor Sumit Arora was opened by him, which was introduced by Sumit Arora as Sumit Arora was old customer of the bank. He also opened the account of Chander Prakash, which was introduced by Sumit Arora and he proved on record account opening forms and specimen signature cards of both these accounts. In the cross examination, he stated that the account of Shri Ram Tyres was opened on 29.03.2004 whereas the account of Chander Prakash was opened on 30.04.2004 and he, being the Manager of the branch, had full powers to open the account and none of these account opening forms were signed by accused V.K. Jolly. He stated that if on the date of relieving of Branch Manager, an account is running in credit balance, then the Branch Manager has no responsibility towards any credit facility provided to that account.
6. PW2 is Ram Kumar Singhmar, retired Sr. Manager, PNB, CC No.119/2019 Page 5 of 54 6 Azad Pur from September, 2006 to 13.03.2010. He explained the procedure of presenting, purchasing, encashment and dishonour of cheques and stated that when a cheque is purchased, then after deducting the commission, the amount of the cheque is credited to the account of the party and that amount can be used by the party and the cheque is sent for clearing. In case of the dishonour of the purchased cheque, no further cheque is to be purchased and the account holder has to settle that account by deposit of cash or cheque. In the cross examination, he stated that the purchasing of the cheque is a genuine trade transaction and the bank earns interest on that. The power of discounting the cheques lies with the Manager and Chief Manager. There is a form, which is sort of undertaking, is taken from the account holder before purchasing the cheque. The mechanism of checking the genuine trade transaction regarding purchase of cheque is confidential report of the party. The data of sister concern of an account holder whose cheque is purchased may or may not be available with the bank. He has no idea regarding the bank guidelines for purchasing of cheques.
7. PW3 is the complainant Ved Parkash, who retired as Deputy Zonal Manager, PNB in 2009 and his duty was to see and control the development of branches under his zone. He made the complaint Ex. PW3/A dated 31.05.2006 to CBI, which was based on the basis of concurrent report of the auditors. As per his version, the CC No.119/2019 Page 6 of 54 7 fraud committed at PNB, Azad Pur branch resulted into a loss of Rs. 3.5 Crore to the bank. As per him, it was the duty of Incumbent Incharge at the relevant time i.e. A1 and A2 to see the genuineness of the trade transaction pertaining to the purchase of cheque. In the cross examination, he stated that name of accused Sumit Arora is not recorded in his complaint Ex. PW3/A nor in any other document annexed with the complaint. He admitted that in case of a default or bouncing of cheque if the amount is paid by the account holder, the same cannot be termed as fraud. He was not aware if the account of Sumit Arora or his firm was duly secured through group guarantee and against collateral security. He did not personally verify the credential of the parties to repay the amount before filing his complaint. After going through the record, he failed to show any verification arrived so by the investigation officer. He admitted that bank earns commission on purchase/discounting of cheque and if the amount is deposited the transaction is set off and no complaint is required to be made against the party. He failed to recollect, if another bank employee namely K.K. Gaur (PW11) also purchased one cheque worth Rs. 3.29 Lac. He showed his ignorance to the question that during the tenure of V.K. Jolly in Azad Pur branch, 37 monthly, 12 quarterly and 3 annual reports were submitted by auditors and inspectors of the bank to the head office. He admitted that there was no dishnoured cheque, which was purchased by V.K. Jolly during his tenure and there is no CC No.119/2019 Page 7 of 54 8 liability of the branch In-charge at the time of transfer, if no debit is created in the accounts thereafter. He also showed his ignorance, if any cheque purchased by D.K. Malhotra was beyond his powers. He admitted that purchasing cheques is a normal banking transaction, which is profitable to the bank.
8. PW4 is N.K. Niranwal, who is a retired General Manager of PNB and was posted at Head Office and granted sanction for prosecution of accused V.K. Jolly. There is nothing relevant in the cross examination except that he stated that he cannot say if he intentionally converted the charge of negligence against V.K. Jolly into a case of criminal conspiracy while granting sanction.
9. PW5 is Bharat Bhushan Chawla, who was the Chief Concurrent Auditor, PNB and joined the enquiry initially conducted by Sr. Inspector R.C. Ahuja (PW9). He stated that he was directed by the competent authority to enquire regarding purchase of high value cheques at PNB, Branch Azad Pur and during enquiry, he found violation of system and procedure for purchasing cheques. It was found that unauthorized cheques were purchased during the incumbency of V.K. Jolly and D.K. Malhotra and they found that DD received back unpaid, which were to be reported to the competent authority through form PNB 221 was not complied with, weekly statement in Form PNB 875 were not sent to the competent authority, the cheques beyond the value Rs. 2 lac to be purchased under the signatures of two officials of the bank was not CC No.119/2019 Page 8 of 54 9 complied with and the cheques were purchased frequently without setting up required limit. The branch was sending wrong certificates on account of genuine trade transactions. The signatures of the drawer of the cheque from the specimen signatures were not tallied. He proved his internal investigation report on record. In the cross examination, he stated that he has no knowledge about form PNB 222 and he did not verify this form of any party while preparing his report. He admitted that purchasing of cheque is a profitable business of the bank. There is no mechanism by which a branch manager can ascertain whether any sister concern of the account holder has any account in some other branch of the bank. His report is silent regarding PNB Form 222 as well as outwards demand draft (ODD) register. His report does not mention about the account of accused Sumit Arora. He was assigned duly as Concurrent Auditor only for particular accounts. He does not remember about the financial powers of A1 and A2 for purchasing the cheques. He did not see cheque returning memos, cheque returning register, ODD register and the cheque purchase orders before concluding his report. He simply found major lapses in procedure of discounting of cheques and nothing more.
10. PW6 is one private person Vijay Suri, who was known to Sumit Arora, being friend. He had an account with ICICI Bank and earlier with PNB, Azad Pur branch and 2-3 cheques after signing were given to Sumit Arora. He had CC No.119/2019 Page 9 of 54 10 an account with Union Bank of India. On persuasion of Sumit Arora, an account in the name of Vijay Suri & Company was opened in J&K Bank, Azad Pur and another account in the name of Vijay Suri was also opened. The said accounts were not operated by him and Sumit Arora used to operate these accounts and cheque book was also kept by Sumit Arora. He did not use to sign cheques of these accounts. He has no business transaction with Sumit Arora nor with Chander Prakash nor with Shri Ram Tyres. He denied his signature on cheque bearing no. 811548, 826607, 826503. He was declared hostile and cross examined by Ld. Prosecution where he stated that he has given blank signed cheques to Sumit Arora of his J&K Bank account. He stated that it might be possible that he is unable to identify signature on the cheques, being photocopy. In the cross examination, he stated that he did not intimate J&K Bank at the time of opening account that he already has account with PNB, Azad Pur nor he informed PNB, Azad Pur about the J&K Bank account and both these bankers were not aware about the other account. Father of Sumit Arora was a reputed transporter and financially sound. None of the cheques alleged to be filled by Sumit Arora was filled in his presence. He was told by the CBI that in case he refused to become a CBI witness and to depose accordingly, then he will be made an accused in this case. He never took any legal action against misuse of his cheque and account.
CC No.119/2019 Page 10 of 54 1111. PW7 is Harish Duggal, who is a transporter and knew Sumit Arora, being a neighbour and had no business dealings with Sumit Arora. In the cross examination, he was confronted with his statement given to IO where he stated that he had business dealings with Sumit Arora in Ex. PW7/DA. He stated that CBI did not tell him that his account has been misused.
12. PW8 is Chandji Kaul, an official from J&K Bank, Branch Chand Nagar, Jammu, who was posted at Azad Pur branch of this bank in 2008 and handed over account opening form and statement of account of one Vijay Suri and V.J. & Company to CBI. In the cross examination, he stated that there is no column in the account opening form seeking details of sister concern of the account holder and no inference can be drawn about the sister concern from the account opening form.
13. PW9 is R.C. Ahuja, Chief Manager, PNB, who was posted as Sr. Concurrent Auditor at PNB, Azad Pur branch during 2003 to 2005 and during inspection, found high value cheques purchased and returned unpaid and then adjusted by way of purchase of fresh cheques instead of deposit of cash by the party and prepared the special investigation report Mark PW3/D (part of D-89). In the detailed cross examination, he stated that purchasing of cheque is a normal banking transaction and bank earns more interest on this viz a viz normal rate of interest. During investigation, it revealed that there was violation of circulars issued by PNB. He admitted that there was CC No.119/2019 Page 11 of 54 12 not a single cheque of more than Rs. 20 lac being purchased by accused D.K. Malhotra. There was no bar for doing business with the allied sister concerns. The credits of the purchased cheques were drawn in the account of genuine account holder though he clarified that cheque should not be purchased in newly opened accounts i.e. an account opened within a period of 10-20 days. He could not comment regarding no pecuniary advantage being obtained by A-1 and A-2. He admitted that Concurrent Auditor has to submit daily reports to the branch regarding any irregularity. He has to submit monthly report to the Regional office and quarterly report to Zonal Audit Office and there would have been numerous reports submitted to these offices under a span of three years when A-1 was in office from May, 2001 to 07.07.2004. To the question that cheques were also purchased by other members namely V.K. Saini (PW20), A.C. Aggarwal, K.K. Gaur (PW11) but your investigation pertains only to A1 and A2, the witness answered that his job was to investigate high value purchase of cheques during the incumbency of A1 and A2 and not by any other official.
14. PW10 is Raj Pal, Computer Operator posted at PNB, Azad Pur during 2001 to October, 2005 and his duty was to make entry regarding voucher and cheques in the computer. In the cross examination, he stated that he used to audit the transactions of the branch everyday and sent the report to the regional and head office. Form No. PNB CC No.119/2019 Page 12 of 54 13 222 was taken from party whose cheque was to be discounted. The account of Shri Ram Tyres does not reflect any overdraft as on 09.07.2004. Same is the position of the account of Chander Prakash.
15. PW11 K.K. Gaur was Incharge of purchasing cheques and described the process of purchasing of cheques. He proved on record various cheques, credit vouchers bearing signatures of A1 and A2, which were purchased and credited during their tenure. In the cross examination, he stated that all the cheques purchased by A2 were within his financial powers. All the cheques referred by him in his examination in chief were genuinely passed by him. A departmental enquiry was conducted against him pertaining to purchase of cheque in Azad Pur branch and he was placed under suspension from 03.01.2005 till 04.04.2007 and was charge sheeted by the department after his suspension regarding non reporting of DD purchased by the Incumbent Incharge. His duty was to verify whether the amount has been credited in the right account or not.
16. PW12 is R.K. Chawla, who was Sr. Manager, PNB, Regional Office, New Delhi and proved on record seizure memo D-84 Ex. PW12/A vide which he handed over certain documents to the IO. He stated that he did not deal with the account of Shri Ram Tyres and was declared hostile by Ld. PP. Thereafter, he stated that he was interrogated by the IO and he stated that he has shown the statement of account of Shri Ram Tyres to the IO and CC No.119/2019 Page 13 of 54 14 there was overdraft balance in the account of Shri Ram Tyres and there were certain cheques vide which cash was withdrawn through self in the account of Chander Prakash, A4. In the cross examination, he stated that he was never posted at Azad Pur branch. There is no certificate U/s 65 B of the Evidence Act for the documents Ex. PW10/DA and PW10/DB, which were the statement of accounts of Shri Ram Tyres and Chander Prakash. All the parties whose cheques were purchased, were the genuine account holders. He never visited Azad Pur branch of PNB nor saw the original documents of this branch. He handed over the documents to IO after collecting it from the bank record of regional office of Delhi as he was the custodian of the documents. He does not know how the IO got the prints of PW10/DA and PW10/DB. During his tenure as Sr. Manager Audit, he used to receive monthly, quarterly, half yearly and yearly audit reports. He never checked ODD register of PNB, Azad Pur branch. Cheque purchasing facility is beneficial to bank as well as the customer and same is extended to the customers, who have good relations with the bank on the basis of their accounts. He has no knowledge if cheque purchasing facility was extended to Shri Ram Tyres and Sumit Arora on account of security provided by them as well as standings in their accounts.
17. PW13 is Suresh Kumar Gupta, who was Concurrent Auditor at PNB between 02.09.2004 to June, 2005 and during inspection, found that there was no party wise CC No.119/2019 Page 14 of 54 15 register of purchasing of DD nor there was any entry of returned DDs In any register of the branch. Number of cheques were returned unpaid due to insufficient funds and the accounts were adjusted by way of other cheque in clearing or purchase of DD. The witness proved on record his quarterly report Ex. PW13/A. He stated that when a purchased cheque is returned unpaid due to want of funds, then same cannot be adjusted by purchasing fresh cheque. In the cross examination, he stated that he did not verify any entry including that of Shri Ram Tyres in his report. He did not file any document with his report showing that cheque discounted and returned unpaid was accommodated by purchasing new cheque. He admitted that there is no irregularity if advance is given against the cheque as per the guidelines of the bank. He admitted that Ex. PW13/A (page 28 to 38) is an electronic record and there is no certificate U/s 65B of the Indian Evidence Act or Bankers Book Evidence Act.
18. PW14 is V.K. Aggarwal, who was posted as Deputy Manager, Azad Pur, PNB between February, 2002 to March, 2005 and just explained the process of purchasing and discounting of cheque. There is no cross examination to him.
19. PW15 is private person Satnam Singh doing the tyre business and knew accused Sumit Arora and stated that on request of Sumit Arora, he introduced the account of Vijay Suri in Jammu and Kashmir Bank. Sumit Arora told him that Vijay Suri is his brother. In the cross CC No.119/2019 Page 15 of 54 16 examination, he denied the suggestion that Sumit Arora did not introduce Vijay Suri as his brother or that he introduced Vijay Suri since he had an account with J&K Bank.
20. PW16 is Ashok Kumar Kapoor, who was working as Manager with PNB, Azad Pur and stated that vide seizure memo Ex. PW16/A, he handed over statement of demand drafts that remained unpaid, to the IO. In the cross examination, he stated that he was not the custodian of the records and some documents handed over by him to the IO were photocopies and some were carbon copies. The certificate U/s 2A of the Bankers Book of Evidence Act Ex. PW16/B and Ex. PW16/C are without any date and he cannot say on which date he signed these certificates. The certificates have also been signed by Chief Manager V.K. Gupta. He does not know who has written the words V.K. Gupta and Ashok Kapoor (on the certificates). He admitted that there is no 65 B Certificate to the statement of accounts. He was not In-charge of the computers of the bank.
21. PW17 is Ajay Malhotra, who was posted at PNB, Azad Pur from 2003 to April, 2006 as Deputy Manager, Loan and stated that cheque Ex. PW19/M (D-52) was passed by him. There is nothing relevant in his cross examination.
22. PW18 is S.C. Chadha, who was posted at Azad Pur branch between year 2002 to August, 2005. This witness was dropped by Ld. PP on 26.11.2016.
CC No.119/2019 Page 16 of 54 1723. PW19 is Ashwani Kumar Gupta, who was the computer operator at PNB, Azad Pur and made several entries in the computer regarding debit and credit of cheques and exhibited on record various entries of the cheques posted by him presented before him by private persons Mr. Jassi, Mr. Manoj, Mr. Ajay, Ms. Shelly, Ms. Simran, Ms. Anju and A3 Sumit Arora. In the cross examination, he stated that except of one cheque Ex. PW19/A, which was encashed by Mr. Manoj, none of the cheques bear the approval of Incumbent Incharge for making the payment by OD and except of Ex. PW19/A, all the cheques were passed and paid without involvement of Incumbent Incharge.
24. PW20 is V.K. Saini, who was posted as Manager, PNB, Azad Pur between February, 2003 to 03.01.2005 and was looking after the routine work of the branch like opening of bank accounts and passing of cheques which were within his power. He stated that payment of cheque Ex. PW19/A was passed by permitting overdraft. The cheques Ex. PW19/B to PW19/N and PW20/A to PW20/E were passed by him. In the cross examination, he stated that he was second in command during the tenure of A1 in the branch. He had two postings at this branch, first as concurrent auditor and the second as Manager and as concurrent auditor, he used to send weekly, monthly, quarterly and annual reports to the head office. There was no other guidelines for purchasing cheques except that the cheque should not be of cooperative bank, should not be CC No.119/2019 Page 17 of 54 18 of round figure and lastly, the account in which cheque is purchased should be properly introduced account. The customer has to submit undertaking in form PNB 222 to indemnify the bank from any loss for purchasing the cheque. When A1 was on leave and cheques were purchased by him, then the same must be submitted for confirmation to A1. The confirmation by A1 of the cheques purchased by him was given since same were duly supported by guarantee. The report of the concurrent auditor, who is working at the branch, has more value viz a viz the report of inspection and audit division of head office. There is no column in the account opening form seeking information about sister concern and there was no mechanism for branch manager to know about the details of the sister concern from the account opening form. While passing a cheque, it is not possible to see whether this cheque is of a genuine trade transaction or not and the bank official purchasing the cheque has to go by the goodwill of the account holder. If the cheque purchased is backed by proper guarantee, then it is a secured advance. If the cheque purchased is duly honoured, then there is no loss to the bank. No letter came to his knowledge being received at the branch from head office or any other authority claiming that the branch is not observing the instructions in purchase of cheques.
25. PW21 is M.C. Joshi, handwriting expert from CFSL, who proved on record his opinion Ex. PW21/C regarding signatures of accused Sumit Arora on certain cheques CC No.119/2019 Page 18 of 54 19 issued from the account of Chander Prakash. He gave his opinion that Sumit Arora signed for Chander Prakash on certain cheques presented in the account of Chander Prakash. In the cross examination, he stated that specimen handwriting and signature of Chander Prakash were not available to him and there is no reference of specimen handwriting and signatures of Chander Prakash in his report. He was not supplied admitted writing and signatures of Sumit Arora or Chander Prakash though he volunteered that specimen writing and signatures of Sumit Arora were supplied. He denied the suggestion that examination of the writing of one person made by other person is not possible without the admitted writing of the real person.
26. PW22, the IO Ajit Singh, proved on record the FIR Ex.
PW22/A and stated that during the course of investigation, he seized various documents vide different seizure memos and examined witnesses and suspects and recorded the statement U/s 161 CrPC and sent the questioned documents with specimen handwriting of the suspects and obtained the sanction for prosecution of the public servant and filed the charge sheet. He proved on record various seizure memos and the documents seized through those seizure memos. In the cross examination, he stated that none of the accounts referred in this case were opened by accused D.K. Malhotra and the cheques of the parties were being purchased by V.K. Jolly as Sr. Manager prior to accused D.K. Malhotra joining as CC No.119/2019 Page 19 of 54 20 Incumbent Incharge of Azad Pur PNB branch. Accused D.K. Malhotra did not purchase any cheque beyond his financial power of Rs. 20 lac. He did not seize any original cheque purchased by D.K. Malhotra. He admitted that purchasing of cheque is a normal banking transaction. Nothing came on record during investigation that D.K. Malhotra and V.K. Jolly obtained any pecuniary advantage in purchasing the cheques. He admitted that the statement of accounts, which are computer print outs, do not contain any certificate U/s 65 B of Indian Evidence Act. He did not inspect the original computers as the statement of accounts which were retrieved from the computer were accompanied with required certificate. He sent the account opening form having specimen admitted signatures of accused Chander Prakash to the Handwriting Expert. He did not find any document showing any connection of Chander Prakash being an employee of Sumit Arora or Shri Ram Tyres. He did not personally enquire about the whereabouts of Chander Prakash but got it done through some other officer but he does not remember the name of that officer. He did not issue any notice to Sumit Arora to give his specimen handwriting nor produced Sumit Arora before any court for purposes of obtaining his specimen handwriting or signature. He admitted that only one cheque purchased by V.K. Jolly returned unpaid on 09.06.2004 and rest of the cheques were honoured and even for this unpaid cheque, cash amount was deposited on 11.06.2004.
CC No.119/2019 Page 20 of 54 2127. PW23 is S.K. Punhani, who was working as Stenographer in diverted capacity in CBI and witnessed the specimen signatures of Sumit Arora being taken by the IO. He stated that signatures of Sumit Arora on D-92 Ex. PW21/A from point S53 to S67 were taken in his presence. In the cross examination, he stated that IO had asked him to sign the document during working hours at his typing seat and he cannot tell the date, month and year when his signatures were obtained and he was asked to sign the document, which he did.
28. PW24 is V.M. Baggi, who witnessed the specimen signatures of Sumit Arora taken on Ex. PW21/A from point S46 to S52. In the cross examination, he stated that he was posted in CBI in diverted capacity when the specimen signatures of Sumit Arora were obtained. He cannot tell whose specimen signatures were obtained as it was long time back. IO did not give any notice to him to witness those proceedings.
29. PW25 is witness from J&K Bank, Azad Pur branch and placed on record the statement of account of the account of Vijay Suri and M/s. V.J. & Co. alongwith Section 2A of the Bankers Book of Evidence Act certificate. In the cross examination, he stated that the Branch Manager Mohd. Ayub was the Manager when the print out of statement of these two accounts was taken from the computer by him. The certificates were issued by the Branch Manager, who signed the same. He does not have personal knowledge regarding the entries made in the computer system. The CC No.119/2019 Page 21 of 54 22 Branch Manager Mohd. Ayub is still working in this branch.
30. After completion of investigation, statement of accused persons were recorded U/s 313 CrPC.
31. Accused V.K. Jolly in his statement recorded U/s 313 Cr.PC stated that he remained posted at PNB, Azadpur Branch from May, 2001 to 09.07.2004 and during his posting purchased the cheques on merits within his financial powers and all the cheques were honoured on presentation. If any DD returned unpaid, it was adjusted by deposit of cash or fresh cheque by that party and none of the outstanding was adjusted by purchasing a fresh cheque. The cheques were purchased after mortgaging the valuable securities of the concerned parties and all the parties were known customers of the bank. The accounts of all the parties referred in the charge sheet had credit balance when he was relieved from the branch and no loss was caused to the bank due to his purchasing of cheques during his tenure. He never abused his position as public servant nor obtained any pecuniary advantage in purchasing of cheques and all such transactions were bonafide purchase within his financial powers.
32. Accused D.K. Malhotra in his such statement stated that he has been falsely implicated in this case by CBI and no loss was caused to the bank during his tenure and the cheques purchased by him is a normal banking procedure.
33. Accused Sumit Arora in his statement stated that he was a genuine customer of the bank and all the dealings with CC No.119/2019 Page 22 of 54 23 the bank were as per banking procedure. The CC limit provided to him was fully secured through collateral securities furnished by his father and the same was accepted after due verification and satisfaction. The bank compromised the dispute in DRD and issued NOC and returned all relevant documents pledged with the bank. He had no relationship with Chander Prakash nor operated his account and false allegations have been levelled against him by tagging him with Chander Prakash. He never dealt or operated the bank account of Vijay Suri.
34. The accused Sumit Arora also examined two defence witnesses. DW1 is V.K. Jain, who was posted at Zonal Audit Office of PNB and stated that while posted as Chief Manager, Assets recovery management branch of PNB he appeared before National Lok Adalat before DRT-3, Delhi in case titled as PNB Vs. Shri Ram Tyres and settled the matter vide settlement Ex. DW1/A and the entire amount of Sumit Arora of Shri Ram Tyres was settled. There is nothing relevant in his cross examination. DW2 is Mahesh Sharma, who did not produce the record of accounts of Shri Ram Tyres, Sumit Arora and Supreme Road Ways alongwith documents filed by the bank before DRT despite summons. He, however, produced the record of Saving accounts of Sumit Arora, Chander Prakash, Shri Ram Tyres and Supreme Road Ways.
35. Ld. PP for CBI argued that accused V.K. Jolly and D.K. Malhotra conspired with accused Sumit Arora and CC No.119/2019 Page 23 of 54 24 Chander Prakash to cheat the bank by purchasing several cheques, which were not issued for genuine trade transactions and were accommodative in nature. It was also argued that in the event of cheques returning unpaid, fresh cheques were purchased in the same account to adjust the debit balance. It was argued that A1 and A2 violated the banking norms under Circular No. 130 dated 31.12.2002 by purchasing cheques presented by accused Sumit Arora, which amounted to kite flying and in this manner, they both misused the cheque discounting facility to give undue favour to A3 and A4. Ld. PP argued that accused have conspired to cheat the bank and the discounting of cheques presented by A3 by A1 and A2 were done with malafide intention and cannot be said to be of genuine trade transactions. It was also submitted that non production of original cheques does not effect the prosecution case as the said transactions are not disputed by the accused. Ld. PP further argued that accused Sumit Arora opened some accounts for himself i.e. the account of M/s. Shri Ram Tyres and also for his employee A4 at PNB, Azadpur during the tenure of A1 and A2 and presented cheques issued by himself or through his known persons from some other bank accounts and got them purchased and withdrew the money immediately and thereafter, such cheques were dishonored. Ld. PP further argued that A1 and A2 provided pecuniary advantage to A3 by dishonest means. Further, the credit vouchers coupled with entries in the CC No.119/2019 Page 24 of 54 25 statement of accounts clearly proved the alleged transactions of cheque purchases. It was argued that this fraud was unearthed once the discretionary powers of A2 were withdrawn and the cycle broke and the cheques started returning unpaid by the drawer bank.
36. It was argued that A1 and A2 purchased cheques vide credit vouchers of A3, who used to withdraw and then deposit the amount in the account of the drawer bank for ungenuine business dealings. A3 used to collect blank signed cheques from PW6 without business transaction and the said cheques were presented as self drawn cheques and cash was withdrawn through A4 Chander Prakash and other individuals. All the cheques were without genuine transaction and were issued from the account of Vijay Suri and V.J. & Co., which were opened and controlled by A3. There was insufficient balance in the account of Vijay Suri and sometimes the cheques were issued in several lacs. The statement of account/confidential report from the drawers bank was not called by A1 and A2 to confirm or ensure the bonafide of the transactions while purchasing cheques and the banking guidelines were not followed. No confirmation was taken that the firms are not associate or allied concern. The cheques were purchased in newly opened account. Daily, Weekly and Monthly statement of account of DD purchased were not sent to the Head Office as per banking guidelines. The cheques and DDs which returned unpaid were adjusted by allowing CC No.119/2019 Page 25 of 54 26 overdrafts by A1 and A2. The FIR Ex. PW22/A proves that the accounts of Shri Ram Tyres, Sumit Arora and Chander Prakash were included in the concurrent auditor report. The account of Shri Ram Tyres was opened on 20.03.2004 and that of Chander Praksh on 30.04.2004 and cheques were purchased in these newly opened bank accounts, which was against the banking guidelines. The complaint Ex. PW3/A shows that the accounts of Shri Ram Tyres and Chander Prakash were included in the complaint and there were dues of Rs. 348.59 Lacs outstanding against these two accounts. The complaint clearly proves that A1 and A2 allowed huge amount against clearing and there is nothing on record to show the bona fide of the transaction. The fraud and cheating between November, 2003 to November, 2004 at PNB, Azad Pur was to the tune of Rs. 3.50 Crore and the modus operandi was purchasing cheques drawn on favouring self/firms under their proprietorship and other connected parties. The funds were generated wrongfully and withdrawn in connivance with the officials of the branch to the detriment of interest of banks. The cheques were purchased without verifying the capacity of the parties. The account of Vijay Suri at J&K Bank was opened at the instance of A3 mentioning the purpose of opening the account as business transactions but Vijay Suri appearing as PW6 clearly stated that he has no business transaction with A3 and A4. PW15 stated that he introduced the account of Vijay Suri at the behest of A3. Same is the CC No.119/2019 Page 26 of 54 27 position for the account of V.J. & Co. opened at J&K Bank, Azad Pur branch. The statement of accounts of Vijay Suri Ex. PW8/A and V.J & Co. Ex. PW8/B prove that by and large there had been no transactions in this account except of issuance of cheques and deposits made to avoid bouncing of cheques. The letter of Bank of Baroda Mark PW3/C proves that A2 was aware of returning of high value cheques, which was prevalent during the tenure of A1 as well. The copy of the opinion given by handwriting expert proves that A3 was the author who forged the signatures Chander Prakash A4 on the self drawn cheques issued from the account of Chander Prakash and committed the offence punishable U/s 465, 467 and 471 of IPC. There is nothing on record to confirm or ensure the bona fide of the transactions. The bills were purchased without following the guidelines of the bank to be followed while purchasing the cheques. The advance against clearing instruments were to be exercised only in respect of genuine trade transactions and should not be exercised for allied concerns but this guideline was never followed by A1 and A2. They never obtained market report about credit worthiness of the parties and the loaning power was not exercised judiciously. In case of dishonour of cheque, the debit entry cannot be credited by purchase of a fresh cheque in that account but that was not followed and cheques were frequently purchased in the same account in case of dishonour of cheque. The cheque of State Cooperative CC No.119/2019 Page 27 of 54 28 Bank was also purchased in violation of the banking circular. It was argued that prosecution has established beyond doubt that accounts of Shri Ram Tyres and Chander Prakash were opened with conspiracy to cheat the bank and these accounts were opened during the tenure of A1. A3 actually controlled the account of A4 and also forged signatures of A4 to withdraw money from this account. High Value cheques were purchased in the accounts of Shri Ram Tyres and Chander Prakash immediately after opening the account in violation of banking guidelines. Despite returning of high value cheques, A1 and A2 continued to purchase cheques with dishonest intention. Cheques of the account of Vijay Suri and VJ & Co. were purchased, which establish that there was no genuine trade transactions and as such, bank was deceived in conspiracy with A1 and A2 to get money generated from purchase of cheques and DDs of ungenuine trade transactions. The credit so generated in the account was immediately withdrawn, which established delivery of property for wrongful gain with dishonest intention. Cheques were purchased without genuine transactions by A1 and A2 and the same amounts to kite flying of cheques. A1 and A2 were party to this conspiracy with common object to cheat the bank. A1 and A2 did not report about the returned unpaid DDs, which establish their mala fide. Allowing advance against clearing tantamount to unauthorized accommodation given to the parties by A1 and A2, who did not ensure the CC No.119/2019 Page 28 of 54 29 genuineness of the trade transaction. From the evidence and documents on record, the prosecution has proved all the offences charged against all the accused persons and they are liable to be convicted. Ld. PP in support of his submissions has relied upon the following judgments :-
1. Mohd. Husain Umar Kochra vs. K. S. Dalip Singh, 1969 (93) SCC 429.
2. Devender Pal Singh vs. State of NCT of Delhi & Anr. (2002) 5 SCC 234.
3. Mohd. Khalid Vs. State of West Bangal (2002) 7 SCC 334
4. State of Maharastra vs. Somnath Thapa, AIR 1996 SC 1744
5. Bankhrawdor Lyngdoh vs. State of Meghalya & Ors. 2020 Crl. L. J. 655
6. Dr. Lakshman vs. State of Karnataka & Ors. 2020 Crl. J. 553
7. R. Venkatkrishan vs. CBI AIR 2010 SC 1812
8. Ram Narain Poply vs. CBI AIR 2003 SC 2748
9. Vimla vs. Delhi Administration AIR 1963 SC 1572
10. Mir Nagvi Askari Vs. CBI AIR 2010 SC 528
11. CBI vs. Coodli Ravi Kumar 2017 (2) Crimes (Bom)
12. Prem Singh Tawang vs. State of Sikkim 2018 LJ 25 (Sikkim)
13. V. N. Deosthali vs.CBI 2015 Crl. J. 1554
14. CR Rajendra Babu vs. State 2017 Crl. J. 1366 (Karnataka)
15. State of Orissa vs. Ananda Chandra Das 2016 Crl. L. J. 420 (Orissa)
37. On the other hand, it was argued for accused V.K. Jolly that during his tenure, no cheque purchased by him got dishonoured and all the cheque purchased by A1 are of CC No.119/2019 Page 29 of 54 30 genuine trade transactions and otherwise also, A1 had no means to ascertain whether the cheque purchased was of sister concern or not of genuine trade transactions. No loss was caused to the bank in purchase of cheques during the tenure of A1 and only six cheques were purchased by A1 during his tenure referred in this case and out of these six cheques, five cheques referred in the charges against A1 were honored on presentation and the sixth cheque, which was of A4 and was dishonoured, was settled by deposit of cash by A4. All the cheques were within the financial powers of A1 and none of the cheque was of a corporate bank and not even the banking circulars or regulations were violated by A1 during his tenure. Not even a single entry pertaining to the period of A1 referred in the complaint dated 31.05.2006 filed by PNB alleging loss of Rs. 3.5 Crores was filed in this case. Out of the seven cases filed in this court, A1 has been acquitted/discharged in four cases. He has relied upon the judgment of Hon'ble Supreme Court in Criminal Appeal No. 575 of 2020 dated 08.09.2020 titled as Ashoo Surendrnath Tewari vs. The Deputy Superintendent of Police.
38. On behalf of accused D.K. Malhotra, it was argued that he did not commit any offence while purchasing cheques by accused Sumit Arora and Chander Prakash. It was argued that when accused D.K. Malhotra took over as Incumbent In-charge in July, 2004, the account of Sumit Arora, Shri Ram Tyres and Chander Prakash were already CC No.119/2019 Page 30 of 54 31 operational and similar transactions in the said account have already taken place before his joining. The accounts of Shri Ram Tyres and Chander Prakash were opened by Avinash Chand Aggarwal, PW1 and no liability can be fastened for the same on A2. None of the cheques purchased during the tenure of A3 were of sister concern and the complaint Ex. PW3/A does not mention the names of A1 and A2 and CBI arbitrarily included their name only in the FIR without any verification or enquiry.
D.K. Malhotra has been acquitted in four charge sheets out of the seven slipped up charge sheets and the evidence and the allegations are identical in all the cases. It was argued that even if it is presumed only for the sake or arguments that there was a violation of guidelines under Circular no. 130, the same does not amount to any offence. It was argued that there is not even iota of evidence/material on record that accused D.K. Malhotra had received any pecuniary advantage for himself or any other person for purchasing the cheque in question. It was argued that accused A3 was a businessman having genuine trade transactions and encashed the cheques in his accounts in regular business proceedings. It was also argued that prosecution failed to bring on record original cheques, cheque returning memos etc. and also, failed to prove the case on this account.
39. It was further argued that all the cheques purchased by A2 were of nationalized bank and within his financial powers. IO did not seize even a single cheque purchased CC No.119/2019 Page 31 of 54 32 by A2 nor any notice under Section 91 Cr. P. C. to produce the original discounted cheques was issued. The certificate under Section 2A of the Bankers Book Evidence Act are on separate sheet, without any date and therefore is invalid. The statement of accounts are electronic record and there is no certificate under Section 65B of the Indian Evidence Act. The evidence of 25 prosecution witnesses read with the 2 defence witnesses and relied upon documents do not make out either the offence of criminal misconduct or criminal conspiracy or criminal breach of trust or cheating against A2. The evidence of prosecution witnesses does not make out any offence. The prosecution could not prove the statement of accounts in the absence of certificate U/s 65 B of the Indian Evidence Act and further even the certificates U/s 2A of the Bankers Book of Evidence Act cannot be relied upon as there are on separate sheets and without date. The IO did not seize even a single original purchase cheque, which are the primary documents and A2 is entitled to be acquitted.
40. In support of his contention, Ld. Counsel has relied upon the following judgments:-
1. S. V. I. Murthy & Ors. vs. State represented by CBI, 2009 AIR SC 2717
2. G. Subbaraman & Ors. vs. Statement of High Court of Madras, Crl. Appeal NO. 445, 448, 438 and 479 of 2010
3. Anvar P. V. vs. P. K. Basheer & Ors., VIII (2014) SLT 223
4. Arjun Pandit Rao Khotkar vs. Kailash Khushan Rao Gontriyal decided by Hon'ble Supreme Court on14.07.2020 CC No.119/2019 Page 32 of 54 33
5. A. Shivaprakash vs. State of Kerala Crl. Appeal No. 131 of 2007
6. Abdulla Md. Pargarkar vs. State, 1980 AIR 493
7. H. Siddiqi vs. A. Ramalingham, 2011 (4) B SCC 240
8. G. Yashoda vs. K. Sobha Rani, 2007 AIR (SC) 1721
9. Sita Saran Srivastava & Other Vs. State of Bihar, 1984 Crl Law Journal 878.
41. For accused Sumit Arora, it was argued that Sumit Arora was and still is a reputed customer of the bank and the account of Sumit Arora is still operational with PNB, Azad Pur. The complaint Ex. PW25/A does not include the name of Sumit Arora or Shri Ram Tyres. Sumit Arora A3 was a known customer of the bank and he opened the account of Shri Ram Tyres without any introduction being an old customer, as confirmed by PW1 and this account was backed by the personal guarantee of Sh. Amrit Lal, who was the father of A3 and also with collateral security worth over Rs. 1 Crore. Sumit Arora was granted ODD facility for Rs. 9 Lac and bank got executed Form 222 from him which indemnifies the bank. Except of three cheques, no other cheque of Sumit Arora was dishonoured or adjusted by the bank. The bank filed a petition before DRT for recovery of the amount terming it as recoverable debt and that petition was settled and bank confirmed that there is nothing more to be recovered from A3. Surprisingly, the FIR was silent regarding this petition filed before DRT. If the due amount was a CC No.119/2019 Page 33 of 54 34 recoverable debt, then it cannot be termed as cheating. The documents were placed before this court with the charge sheet on 03.06.2013 but the prosecution agency concealed the documents and settlement before DRT deliberately. Prosecution witnesses during their testimonies admitted that there is nothing abnormal in purchasing and discounting of cheques. Even in the audit conducted by the Concurrent Auditors, there was no irregularity found as relevant for the present case. The statement of Vijay Suri, PW6 cannot be relied upon as he admitted that he was threatened and coerced by the IO to become a prosecution witness. The statement of handwriting expert, PW21 cannot be relied upon as the signatures and specimen handwriting of A4 Chander Prakash was not sent to PW21 despite being available. The account opening form and the specimen signature form signed by accused Chander Prakash at the time of opening his bank account was available with the Investigating Agency but same were deliberately not sent to handwriting expert and the opinion of the handwriting expert cannot be said to be conclusive because of not sending the admitted handwriting and signatures of Chander Prakash. The IO deliberately gave a false statement in this regard as he stated that the account opening form, admitted specimen signatures of Chander Prakash were sent to handwriting expert for giving his opinion. It is argued that in the event of IO making a false statement before this court, it can be inferred that CC No.119/2019 Page 34 of 54 35 prosecution has failed to prove its case. It was further argued that IO admitted that there is no document on record to show that A4 was an employee of A3 or Shri Ram Tyres and further IO did not make any effort to trace Chander Prakash which clearly shows that intentionally efforts were not made to trace Chander Prakash and an attempt was made to link him with A3 by alleging A4 to be an employee of A3. Further, the alleged specimen handwriting and signature of A3 were taken without any permission from any court/Magistrate and therefore, genuineness of the said specimen signatures of Sumit Arora in itself is doubtful. IO admitted that purchasing of cheques is a normal banking transaction. He did not seize a single discounted cheque nor he could trace on record any notice U/s 91 CrPC to substantiate his claim of issuing such notice. IO did not verify the account individually and coerced the witnesses to make statement as per his choice. The computer generated statement of bank accounts was without any certificate U/s 65 B and cannot be read. Both the witnesses PW23 and PW24 before whom A3 allegedly gave his specimen writing/signature were not independent witnesses and their testimonies cannot be relied upon. The defence witnesses clearly proved that there was settlement before the DRT and the accounts of Sumit Arora and Chander Prakash were closed and as such, a civil dispute was converted into a criminal case. Section 409 IPC cannot be made against Sumit Arora as he was not a public servant CC No.119/2019 Page 35 of 54 36 and charges against A1 and A2 are not made out as neither they exceed their financial powers nor obtained any illegal gratification. The prosecution could not prove the ingredients of charges U/s 420 IPC rather there is evidence, which is in favour of the accused. No question was put to A3 regarding alleged forging of cheques of A4 in his statement U/s 313 CrPC and as such, the same cannot be asserted against A3 and therefore, accused Sumit Arora deserve to be acquitted.
42. In support of his contention, Ld. Counsel has relied upon the following judgments:
1. Alchand Cheddilal Yadav Vs. The State of Maharashtra, (2000) BMLR 650
2. G. Subbaraman & Ors. Vs. State of Madras, Crl. Appeal No. 445, 448, 438 and 479 of 2010 decided on 05.02.2018
3. S.V.I. Murthy & Ors. Vs. State represented by CBI, 2009 AIR SC 2717
4. A. Shivaprakash Vs. State of Kerela, Crl. Appeal No. 131 of 2007
5. Abdulla Md. Pargarkar Vs. State, 1980 AIR 493
6. H. Siddiqi Vs. A. Ramalingham, 2011 (4) B SCC 240
7. G. Yashoda Vs. K. Sobha Rani, 2007 AIR SC 1721
8. Inder Mohan Goswami Vs. State of Uttarakhand, 2008 AIR (SC) 251
9. Gopal Reddy Vs. State of Andhra Pradesh, 1996 AIR (SC) 2184
10. State of Gujarat Vs. Shah Sanjaykumar K. And Others, 2000 Crl LR (Guj) 296
11. G. Narayanappa Vs. Ganne Lakshmamma, 2002 (SUP1) Andh LGD 588 CC No.119/2019 Page 36 of 54 37
12. State (Delhi Administration) Vs. Pali Ram, 1979 (92) SCC 158
13. Raj Kumar @ Raju Vs. State, 2014 (10) RCR (Criminal) 1370
14. Md Ibrahim & Ors. Vs. State of Bihar, 2009 (8) SCC 751
15. Inspector of Customs Akhnoor, J&K Vs. Yash Pal & Ors.
2009 (4) SCC 769
16. Anvar P.V. Vs. P.K. Basheer & Ors., VIII (2014) SLT 223
17. Arjun Pandit Rao Khotkar Vs. Kailash Khushan Rao Gontriyal (2020) SCC (7) 1
18. Padala Veera Reddy Vs. State of Andhra Pradesh, 1990 AIR (SC) 79
19. Rajeshbhai Muljibhai Patel and Others Etc. Vs. State of Gujarat and Another Etc., Crl. Appeal Nos. 251-252 of 2020 (Arising out of SLP (Crl.) Nos. 142-143 of 2019) FINDINGS:
43. The present investigation initiated on the written complaint of Zonal Manager, PNB i.e. Ex. PW3/A of PW3. As per PW3, an internal investigation was conducted in the PNB branch Azadpur and certain irregularities with regard to purchasing of cheques, discounting and overdraft were made out. As per this report, there were transactions, which were accommodative in nature regarding purchase of cheques and were not of the genuine trade transactions and in the event of cheques returning unpaid in certain accounts, the debit entry were adjusted by purchasing fresh cheques of similar nature. Admittedly, the purchasing of cheques is a usual banking practice and a customer approaches the bank for purchase of cheques and the Incumbent In-CC No.119/2019 Page 37 of 54 38
charge sanctions the same and gives a credit voucher for which some commission is charged by the bank. In the absence of Incumbent In-charge, the Second In-charge in the bank does this exercise. The circular no. 130 issued by PNB in the year 2003-2004 contains the guidelines for purchasing the cheques. As per these guidelines, the Sr. Manager has powers to purchase cheques up to Rs. 3.75 lac and Chief Manager up to Rs. 20 lacs. The prosecution case is that A1 and A2 entered into a conspiracy with A3 and in pursuance of that, several cheques of A3 were purchased, which caused loss to the bank.
44. As per record, in this case only one out of the six cheques purchased by A1 was dishonoured on presentation and even this one cheque was settled by depositing cash by A4, which was permissible under the banking guidelines. The other five cheques purchased by A1 pertaining to this case were honoured on presentation. It is also an admitted fact that all the cheques purchased by A1 and A2 were within their financial powers. Further none of the accounts were opened by V. K. Jolly/D.K.Malhotra and the account of Shri Ram Tyres and Chander Prakash were opened by PW1 A.C. Aggarwal. PW1 admitted in his cross examination that he, being the manager, had full powers to open the bank account in the branch and the signatures of Sr. Manager were required, if he has consented for opening the account. He also stated that the account of Shri Ram Tyres was introduced by Sumit Arora as he was known to bank, being an old customer. In CC No.119/2019 Page 38 of 54 39 facts, nothing can be attributed to A1 for opening the accounts of Shri Ram Tyres and Chander Prakash with PNB, Azad Pur on 29.03.2004 and 30.04.2004 respectively. Both the accounts were of genuine account holders.
45. Admittedly purchasing of cheques is a genuine banking transaction and bank earns interest on purchasing the cheques and the power of discounting cheques lies with the Manager and Chief Manager as per their financial powers. Also that, the interest charge on discounting on cheques is higher and than that of other loans as admitted by PW2, who was Manager, PNB, Azadpur. The burden of proving that the cheques purchased were not of genuine trade transaction was on the prosecution. It was to be proved beyond reasonable doubts that the cheques purchased by A1 and A2 of A3 or of A4 or the allied concern of A3 were of ungenuine trade transactions. Ld. PP has argued that the statement of private witnesses PW6, PW7 and PW15 prove that cheques purchased by A1 and A2 were not of genuine trade transactions. Let us examine these statements. PW6 is one Vijay Suri, who was running a coaching institute and was a known of Sumit Arora. As per his statement, his account at J&K Bank was opened on the persuasion of Sumit Arora and he gave two or three blank signed cheques of this account to Sumit Arora on good faith and he is not aware about Chander Prakash nor Shri Ram Tyres nor he had business transactions with Sumit Arora, Shri Ram Tyres and CC No.119/2019 Page 39 of 54 40 Chander Prakash. He also deposed that account of V. J. & Company was also opened at the instance of Sumit Arora. He was partially declared hostile by Ld. PP for CBI where he admitted that the accounts were opened at the instance of Sumit Arora and he gave blank signed cheques to Sumit Arora. In the cross examination by defence, he stated that he did not intimate J&K Bank that he is already having an account with PNB despite there being a column in the account opening form to provide existing account number and neither PNB nor J&K Bank were aware about his accounts in other bank. Further, he stated that he was told by the CBI that in case he refuses to become a CBI witness and depose accordingly, then he would be made an accused in this case. He did not take any legal action against the misuser of his cheques and account. His statement to the effect that he was coerced to give statement according to CBI case or else he will be made an accused is sufficient to disbelieve this witness and not to consider his statement for disposal of the case. How can the testimony of a witness be relied, if same is given under coercion. Otherwise also, it has come on record that A1 and A2 had no means to ascertain whether the transaction qua particular cheque is genuine trade transaction or not.
46. PW7 is Harish Duggal, who knew Sumit Arora, being neighbour, but has no business dealings with Sumit Arora.In the cross examination he was confronted with his statement given to the IO Ex. PW7/DA where it was CC No.119/2019 Page 40 of 54 41 recorded that he had financial dealings with Sumit Arora. In facts, this witness does not help the prosecution as he is not reliable witness as he gave different statement to IO vis a vis the one given in the court and no explanation came in this regard. The last private witness PW15 simply stated that he introduced the account of Vijay Suri at J&K Bank at the request of Sumit Arora. This witness also does not throw any light on the charges framed against the accused in this case as introducing an account at the request of Sumit Arora is no offence. Otherwise also, it was for the prosecution to prove that the fact that account of Vijay Suri was introduced by PW15 at the instance of Sumit Arora was in the knowledge of A1 and A2 or they had means to ascertain this fact. So, there is no force in the contention of Ld. PP that prosecution has proved that A1 and A2 were aware that the cheques purchased by them were not of genuine trade transactions. In this regard, statement of PW20 is relevant who in his cross examination, stated that there is no column in the account opening form for giving information about sister concern or accounts of sister concern in other banks and it is not possible for Branch Manager or any bank official opening the account to know about the details of sister concerns from the account opening form. He also stated that one has to go by the goodwill of the customer while purchasing the cheque and on the face of the cheque, it is not possible to ascertain whether this is a genuine trade transaction or not. In view of the same, it cannot be said CC No.119/2019 Page 41 of 54 42 that A1 and A2 purchased cheques of ungenuine trade transactions or that they had any means to ascertain that the transaction was not genuine.
47. Further as far as the business with the sister or allied concern is concerned, there was no bar regarding business with the allied concern. PW9 R. C. Ahuja, who was the Concurrent Auditor admitted in his cross examination that there is no bar regarding business with the allied concern but he clarified that there should be actual business with the allied concern. Further, PW9 admitted in the cross examination that purchasing of cheque is normal banking transaction and bank earns more interest on this than the normal rate of interest. He stated that it was revealed that there was violation of circular issued by PNB. Even if for the sake of arguments, it is presumed that there was violation of circular but does that violation makes it a criminal offence. The answer in my opinion is in the negative. It can utmost be said to be violation of certain guidelines, which does not amount to a criminal offence unless the prosecution proves all the ingredients of the offence including mens rea on the part of accused. Further, PW9 stated that cheques should not have been purchased in the newly opened account i.e. within period of 10-20 days or so. This also appears to be only a violation of guideline and not a criminal offence. This witness further stated that the concurrent auditor has to submit daily irregularity report to the branch and monthly irregularity report to the regional office and quarterly CC No.119/2019 Page 42 of 54 43 report to Zonal audit office. In the present case, no irregularity was mentioned in any such report nor any such report has been placed on record by the prosecution to prove that irregularities at the PNB branch Azad Pur were reported to the branch office, regional office or zonal office on daily, monthly or quarterly basis. The witness also stated that he did not conduct enquiry regarding the cheques purchased by other bank officials namely K.K. Gaur (PW11), A.C. Aggarwal (PW1) and VK. Saini (PW20) as he was assigned the job to investigate high value unauthorized cheques purchased during the incumbency of A1 and A2 and if cheques were purchased by any other officer, then it was the responsibility of the Incumbent Incharge alone to take care of the affairs of the branch. This also appears absurd on face of it. How A1/A2 can be responsible for cheques purchased by other bank officers.
48. As far as pecuniary advantage obtained by A1 and A2 is concerned, there is no material on record nor it is the case of the prosecution that A1 and A2 obtained any pecuniary advantage by purchasing cheques of A3 and A4. The IO PW22 admitted in his cross examination that it did not reveal during investigation that A1 and A2 got any pecuniary advantage for themselves. It has to be kept in mind that purchasing of cheques is a genuine banking transaction and the bank earned higher interest on it and therefore, is a profitable business for bank. The IO also admitted in the cross examination that none of the CC No.119/2019 Page 43 of 54 44 accounts referred in this case were opened by A2 D.K. Malhotra. None of the cheques purchased by A1 and A2 were beyond their financial powers. He did not seize even a single original discounted cheque. There is no material on record to show that A4 was an employee of A3 or Shri Ram Tyres. There is no material to confer any financial advantage by A1 and A2 for themselves.
49. Coming to the contention regarding admissibilities of photocopies of discounting cheques. Admittedly, none of the original discounted cheque was seized by the IO. He admitted in his cross examination that he did not seize even a single original discounted cheque. Ld. PP in this regard argued that since the transaction itself is undisputed and further the said discounting of cheques is proved through the credit vouchers, there was no requirement to produce the original discounted cheques. Ld. Defence counsel(s) on the other hand strongly argued that there is no admission on the part of the accused persons and it was for the prosecution to prove the documents as per law and merely by exhibiting the photocopies or even the documents the same does not stand admitted. I have considered the rival submissions. It is settled law that merely by putting an exhibit mark on the document, the same does not stand prove. The secondary evidence can be admitted only if the conditions laid down in Section 65 of the Indian Evidence Act, stands proved. The prosecution failed to show that why the original discounted cheques were not seized or placed CC No.119/2019 Page 44 of 54 45 on record during trial. IO PW22 stated in his cross examination that he served notice under Section 91 Cr. P. C to the concerned bankers to produce the original cheques, but surprisingly he could not place or trace on record any such notice. As a matter of fact, no investigation qua seizing the original discounted cheques was done by the IO and the prosecution could not prove the discounted cheques. As far as the statements of accounts are concerned, admittedly there is no 65B of the Evidence Act certificate filed on record by the prosecution and the prosecution has only relied upon certificate under Section 2A of Bankers Books of Evidence Act. These certificates Ex. PW16/B and Ex. PW16/C were proved by PW16 Ashok Kumar Kapoor, who identified his signatures and that of V. K. Gupta the Chief Manager. Admittedly, these certificates are without any date and it can not be ascertained as to when the certificates were issued. Further the witness in the cross examination stated that he does not remember the name of the Chief Manager, who verbally asked him to deliver these documents to the IO Certain documents mentioned in the seizure memo Ex. PW16/A are photocopies and some are carbon copies and no original record was available in the branch office. He cannot say on which date he signed the certificates Ex. PW16/B and Ex. PW16/C as they are undated. He did not write the words V.K. Gupta below Chief Manager on Ex. PW16/B and Ex. PW16/C and nor he knows that who wrote the same.
CC No.119/2019 Page 45 of 54 46He cannot tell the date on which Mr. V.K. Gupta signed Ex. PW16/B and PW16/C. He was not the In-charge of the computers in the bank. In view of this cross examination, the certificates U/s 2A of the Bankers Book of Evidence Act Ex. PW16/B and Ex. PW16/C cannot be considered, more so when most of the documents seized vide seizure memo Ex. PW16/A were photocopies or carbon copies.
50. Further, the prosecution case is based upon the audit report Ex. PW13/A. The contents of this report not only demolishes the prosecution case but also supports the version of the accused that all the transactions of purchasing cheques was done bonafidely and there was no criminality attached to it and it can only be utmost a case of violation of guidelines. This report mentions as under :-
1. Whether loaning powers have been exercised within command, area of branch - yes.
2. Irregularities observed are available at Annexure
-nil.
3. Whether loaning powers are being exercised with due diligence / judiciary - yes.
4. Whether clean overdraft allowed by the Incumbent In-charge within his discretionary powers are adjusted within reasonable time - yes.
5. Whether frequent overdrawings are allowed to certain borrowers - yes.
6. Whether overdrawings allowed beyond limits but CC No.119/2019 Page 46 of 54 47 not reported to higher authorities for seeking confirmations - No.
7. Whether any unauthorized exercise of loaning power has taken place - nil.
8. Branch had allowed drawing beyond powers against uncleared cheques - No.
9. Interest at the prescribed rate has been recovered -
yes.
51. These observations in this audit report clearly shows that nothing was found against the Incumbent In-charge during the audit report except that huge amount was given against clearing and returning of cheque is also very high with remarks "insufficient funds" "accounts closed" etc. and there is nothing to confirm or ensure the bonafide of transaction. As already discussed it was for the prosecution to prove that there was no bonafide transaction as noted in this Audit Report and the prosecution simply failed to prove the same. This Audit Report clearly shows that A1 and A2 purchased cheques within their discretionary powers and did not allow drawings beyond powers against uncleared cheques and also charged and recovered the interest at prescribed rates. In view of this report, there can not be any criminality attached to the acts of A1 and A2 in purchasing the cheques.
52. Another important aspect which requires discussions is that cheques in the similar manner were purchased by other bank officials as well but surprising no action was CC No.119/2019 Page 47 of 54 48 taken against them. PW20 in his cross examination admitted that cheques mentioned in his examination in chief were purchased by him. He further admitted that he purchased the cheques when A1 was on leave and submitted the register of purchase of cheques for confirmation to A1 and the confirmation was given by A1 because the cheques purchased by PW20 were duly supported by group guarantee either by fixed deposit or by collateral security. He further stated that while purchasing a cheque, one has to go by the goodwill of the person and from the face of the cheque, it is not possible to see whether this is a genuine trade transaction or not. He also stated that if purchasing of cheque is backed by some group guarantee, then it is a secured advance. It has already come on record that the account of Sumit Arora was fully secured through the guarantee of his father. He also stated that no letter to his knowledge was received from the head office or any other authority alleging that the guidelines of the circular regarding purchase of the cheques is not observed at PNB branch Azad Pur though he admitted that daily, monthly and quarterly reports were sent to the concerned authorities of bank. Witness PW11 Mr. K.K. Gaur in this regard also admitted that he was also placed under suspension from 03.01.2005 to 04.04.2007 in the departmental enquiry constituted pertaining to purchase of cheques at Azad Pur PNB branch. Surprisingly, no criminal action was taken against PW11 and PW20 despite that they purchased certain CC No.119/2019 Page 48 of 54 49 cheques of the parties involved and no explanation has been given by the Investigating Agency as to why they were spared out.
53. As far as the genuineness of the accounts of A3 and A4 and other accounts is concerned, PW1 admitted in his cross examination that all the parties were the genuine parties and were having genuine accounts in the bank.
54. There is absolutely no evidence or document on record to show that no genuine trade transaction was conducted by A3 as mentioned in the charge sheet. Admittedly the amount credited to the account of A3 by purchasing cheques was used for business purposes and the bank earned commission on it. The violation of guidelines as mentioned in Circular 130 if any, can not be said to be done with a criminal intention to cheat the bank. The guidelines laid down in this Circular Mark PW12/A are relevant to note. As per these guidelines, the Incumbent In-charge should use the powers of purchase of cheques / bills only in respect of (1) genuine trade transactions and should not be of allied concern (2) the powers should be exercised after obtaining credit worthiness of the party and ensuring that the past conduct of the account is satisfactory (3) advance should not be allowed of the cheque issued by Co-operative banks. In the present case, none of the cheques except one was of Co-operative bank nor any of the cheque exceeds the financial powers of the bankers. There was no mechanism to check the credit worthiness of the party or whether the party is CC No.119/2019 Page 49 of 54 50 having any sister concern account in the bank. It came in evidence that there was no software or mechanism available upto the year 2004 by which it can be ascertained whether that party is having any other account with other bank or is having sister concern account in other bank or that bank.
55. Coming to the charges against accused Sumit Arora (A3) regarding forging the signatures of A4 on the cheques of the account of A4. The handwriting expert PW21 in his report stated that the specimen signatures of Sumit Arora and the signatures on the questioned documents i.e. cheques drawn on account of A4 are by the same person. The argument of Ld. PP that prosecution has proved beyond reasonable doubt that A3 forged and fabricated the signatures of A4 is not sustainable for two reasons. The first being that the signatures of A3 were obtained without permission of the court. Full bench of Hon'ble Delhi High Court in case titled as Sapan Haldar and Anr. Vs. State in Crl. Appeal No. 804 of 2001 decided on 25.05.2012 held that specimen signatures cannot be obtained without permission of Magistrate/Court and in this regard, the Hon'ble Delhi High Court relied upon the judgement of Hon'ble Supreme Court given in Sukhvinder Singh and Others Vs. State of Punjab, (1994) 5 SCC 152. It was held that the FSL report has to be excluded from the arena of admissible evidence for the reason, no orders were obtained from the competent court to obtain the specimen writing of the accused. Secondly, CC No.119/2019 Page 50 of 54 51 the specimen signatures of Sumit Arora in Hindi (since cheques of A4 were signed in Hindi) were obtained on S62 to S67 purported to be taken in the presence of independent witness PW23 Mr. S.K. Punhani. PW23 in his cross examination stated that he cannot tell the name of the IO, who told him to sign on this document nor he can tell the date on which specimen writing/signature were taken and most importantly the IO asked him to sign the document during working hours at his typing seat. It clearly shows that PW23 did not actually witness A3 giving his specimen signatures in Hindi but he simply signed the document while sitting at his typing seat. Further, he was working as stenographer in CBI at the relevant date and by no stretch can be said to be an independent witness. Hence, the alleged specimen signatures of A3 on S62 to S67 on Ex. PW21/A (colly) are of no help to the prosecution for the above mentioned two grounds.
56. Further coming to the aspect of Sumit Arora operating the accounts of Vijay Suri or V.J. & Co. or Chander Prakash is concerned, though prosecution could not prove that A3 was doing so or that there was no business transactions between them, even it is presumed only for the sake of argument that A3 did so but even then the same does not amount to any offence. It only amounts to violation of banking guidelines, which in my considered opinion, were not applicable to the customers of the bank but were applicable only to the bank officials. As already said bank CC No.119/2019 Page 51 of 54 52 officials had no means to ascertain whether the cheque purchased is of genuine trade transaction or not. For the customer, no such guidelines exist and A3 committed no illegality if he used the account of Vijay Suri or V.J. & Co. or Chander Prakash for his business requirements as presumed, though prosecution could not prove it. PW-6 stated in his cross examination that he gave statement to IO under duress. The circumstances as pointed out by Ld. PP that cheques started dishonouring after withdrawal of powers of A2 is only a circumstance which creates suspicion. Suspicion, however, grave cannot take place of proof. There is no legally admissible evidence, which proves commission of offence beyond reasonable doubt. There is no defect in purchasing of cheques by A1 and A2 and statement of accounts do not concretely prove that there was no business transaction. This is apart from the fact that statement of accounts were not proved in accordance with the provisions of Section 2A of Banker's Book of Evidence Act.
57. There is no dispute to the legal proposition laid down in the judgments relied upon by all the parties to this case. However, it is also settled law that every case has to be decided on its own facts. The Hon'ble Supreme Court in catena of judgments has held that if any work is executed in disregard of relevant rules, then such disregard does not amount to any offence. The onus to prove the existence of every ingredient of the charge is on the prosecution and never shifts. The suspicion how so ever CC No.119/2019 Page 52 of 54 53 strong could not be a substitute for proof. The decision of the court must rest upon legal grounds and not upon on mere suspicion. The distance between what "may be true"
to "must be true" has to be covered by prosecution by relying upon legal, reliable and unimpeachable evidence, which I am of the view that prosecution has failed to cover in this case. Reliance in this regard can be placed upon the judgments of Hon'ble Supreme Court as under:-
1. Sivaprakash Vs. State of Kerela, 2016 AIR (SC) 2287
2. S.V.L Murthy & Ors. Vs. State represented by CBI, Hyderabad & Ors., 2009 AIR (SC) 2717
3. Abdulla Mohd. Pagarkar Vs. State, 1980 (3) SCC 110
4. G.Subbaraman & Ors. Vs. State, 2018 Cr.L.J. 2377 (Madras High Court)
5. Narender Singh Vs. State of M.P., (2004) 10 SCC 699
6. Ramreddy Rajesh Khanna Reddy Vs. State of Andhra Pradesh, 2006 III AD (SC) 425
58. In view of above discussion, there is no legally admissible evidence which proves the commission of any offence beyond reasonable doubts. In view of the material available on record and the testimonies of the witnesses, the prosecution has not been able to prove any of the offences for which accused V. K. Jolly, D. K. Malhotra and Sumit Arora were charged. Accordingly, these three accused persons are acquitted for all the charges. Accused Chander Prakash is P.O. and will face the trial as and when produced before the Court. The Bail bonds of the accused are cancelled and their sureties are CC No.119/2019 Page 53 of 54 54 discharged. Documents, if any, of sureties be returned forthwith. All the accused are directed to furnish personal Bonds in sum of Rs. 25,000/- each with one surety of the like amount as required under sec. 437-A of Cr. P. C.
59. File be consigned to Record Room.
Digitally signed by ANNOUNCED IN THE OPEN COURT AMIT AMIT KUMAR Date:
TODAY i.e. ON 01.04.2021 KUMAR 2021.04.05 10:02:30 +0530 (AMIT KUMAR) SPECIAL JUDGE, PC ACT, CBI-04, ROUSE AVENUE COURTS, NEW DELHI CC No.119/2019 Page 54 of 54