Madras High Court
B.Sundar Eswar Babu vs The State Represented By The on 24 January, 2014
Author: K.B.K.Vasuki
Bench: K.B.K.Vasuki
IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 24.01.2014 Coram THE HONOURABLE MS. JUSTICE K.B.K.VASUKI Crl.R.C.No.1421 of 2007 B.Sundar Eswar Babu .. Petitioner Vs. The State represented by the Inspector of Police, Central Crime Branch, Egmore, Chennai. .. Respondent Prayer:- Criminal Revision filed under Section 397 r/w 401 Cr.P.C. to set aside the conviction and sentence imposed by the XI Metropolitan Magistrate, Chennai in CC.No.101 of 2002 dated 21.3.2005 as confirmed by the Additional District and Sessions Judge, III Fast Track Court, Chennai in C.A.No.127 of 2005 dated 27.8.2007. For Petitioner : Mr.R.Saravana Kumar For Respondent : Mr.C.Iyyapparaj, GA (Crl. Side) O R D E R
The first accused in CC.No.101/2002 and the appellant in CA.No.127/2005 is the revision petitioner herein. The present revision is filed against the order of his conviction and sentence for the offences under sections 409 and 477A IPC made by the trial court as confirmed by the Appellate Court.
2.The case of the prosecution is that the first accused prior to 10.7.2000 at Madras, while was whole time Director of the firm 'Gayathiri Securities Limited' and in-charge of the entire operation of the firm, having dominion over the money transactions, opened trading secret account in the name of 'GAYT' and diverted the funds to it and caused loss to the firm to the tune of Rs.487.14 lakhs, thereby committed criminal breach of trust. The same accused fraudulently removed the shares deposited in the firm, by names Girija Reddy, B.H.Kothari, Arjun Kothari and Nayatara B.Kothari to the value of Rs.192.92 lakhs without the consent of the depositors to the trading activity unlawfully carried in the name of 'GAYT'. Likewise, the accused under the guise of automated lending and borrowing mechanism (ALBM) transactions, created loans from M/s.Kothari Safe Deposits Ltd., M/s.Bank of Madura and others to an extent of Rs.215.58 lakhs and the petitioner herein/A1, in order to cover his unauthorised acts by trading against the interest of GSL tampered with the computer and data base and A2 abetted the acts of commission and omission done by A1.
3.The prosecution, in support of their case, examined 17 witnesses and marked 9 documents. On the defence side, employees of Gayathiri Securities Ltd were examined as DW1 and DW2 and authorisation letter dated 14.8.2003 was marked as Ex.D1. The trial court on the basis of the materials available before it, accepted the prosecution case and convicted the accused for the offences under Sections 409 and 477-A IPC. On appeal by A1, the appellate authority confirmed the judgment of the trial court. Hence, this revision by A1 before this Court.
4.Heard the rival submissions made on both sides.
5.As already stated above, the petitioner was found guilty for the offences under sections 409 and 477A IPC. Before going into the merits of the case, the relevant provisions of law are to be looked into. For better appreciation, Criminal breach of trust by public servant or by banker, merchant or agent as defined under Section 409 IPC and Falsification of accounts under Section 477-A IPC read as follows:
"409.Criminal breach of trust by public servant or by banker, merchant or agent:-
Whoever, being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant, or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine."
"Section 477-A IPC :-Falsification of accounts -
Whoever, being a clerk, officer or servant or employed or acting in the capacity of a clerk, officer or servant, wilfully and with intent to defraud, destroys, alters, mutilates or falsifies any book, electronic record, paper, writing, valuable security or account, which belongs to or is in the possession of his employer or has been received by him for or on behalf of his employer or wilfully and with intent to defraud makes or abets the making of any false entry in, or omits or alter or abets the omission or alteration of any material particular from or in any such book, electronic record, paper, writing, valuable security or account, shall be punished with imprisonment of either description for a term which may extend to seven years, or with fine, or with both.
Explanation:- It shall be sufficient in any charge under this section to allege a general intent to defraud without naming any particular person intended to be defrauded or specifying any particular sum of money intended to be the subject of the fraud or any particular day on which the offence was committed."
6.Insofar as the first offence is concerned, in order to sustain conviction under this provision, two ingredients to be proved are (i)entrustment of property of which the accused is duty bound to account for; and (ii)committal of criminal breach of trust. For constituting a criminal breach of trust, the ingredients are (i)entrusting a person with property or with any dominion over property, (ii)that person entrusted (a)dishonestly misappropriating or converting that property to his own use; or (b)dishonestly using or disposing of that property or wilfully suffering any other person so to do in violation (i)of any direction of law prescribing the mode in which such trust is to be discharged, (ii)of any legal contract made, touching the discharge of such trust. In short, in order to bring home the offence of criminal breach of trust, the proof of entrustment and dishonestly misappropriated or disposed the property entrusted are essential.
7.Next offence to be taken into consideration is falsification of accounts. This provision is attracted, when any clerk, officer or servant or employed or acting in such capacity, makes or abets the making of any false entry in or omits or alters or abets the omission or alteration of any material particular from or in any book, electronic record, paper, writing, valuable security or account, wilfully and with intent to defraud, destroys, alters, mutilates or falsifies such valuable security or account, which belongs to or is in the possession of his employer or has been received by him for or on behalf of his employer.
8.The reading of the judgments of the courts below would reveal that both the offences were in the present case held to be proved against the petitioner/A1 on the basis of Ex.P2 letter of admission purportedly given by the petitioner to PW3 and the oral evidence of PW9-auditor appointed by the Special Officer of Gayathiri Securities Limited and Ex.P7 auditor's report. Both the courts below have rendered their findings entirely based on the oral evidence of PW9 and Exs.P2 and P7 documents. While doing so, the courts below have omitted to consider various factors, which are likely to have greater bearing on the findings of the courts below and are discussed hereunder.
9.As stated above, the petitioner was the whole time Director of the firm 'Gayathiri Securities Limited', which leads to the presumption that he was in-charge of entire operation of the firm and have domain over the money transactions of the firm. However, there is no single document produced before the courts below to prove that the petitioner during the relevant point of time, was in entire management and affairs of men and matters including financial transactions relating to the firm.
10.Next comes the opening of secret trading account in the name of GAYT. It is the specific case of the prosecution that the accused diverted all the funds to the secret account and caused loss to the tune of Rs.487.14 lakhs. However, the prosecution has not furnished any particulars regarding the source of funds and the manner in which, it was diverted and converted to the personal use of the accused. As a matter of fact, the case of the prosecution as if the account so opened was secret one, is falsified on the basis of the evidence of PW4, who is one of the prosecution side witnesses. It is his definite case in the course of his cross examination that Vikram Software was used in his company and in that software, it was not possible to conceal one particular account and the balance sheet cannot be prepared by concealing one particular account. In this context, none of the persons attached to Vikram software is examined to explain the manner in which the software was used and peculiar features relating to the same.
11.Further, the evidence of PW5, PW10, PW11 and PW12 are also to the same effect that GAYT account was known to all in the company and the accounts were transparent in the computer data base and the entire transactions of the account can be viewed by the customers in net and GAYT account was the company's own account and there were regular transactions carried on in the GAYT account on behalf of the company. The same is also supported by the evidence of DW1 and DW2, who are the employees of 'Gayathiri Securities Ltd' and M/s.Kothari and Kothari belonging to PW3 respectively. Thus, the specific statement of the prosecution as well as defence side to that effect as stated above would render the prosecution theory that GAYT was a secret account personally opened by A1 for the purpose of effecting trade movement secretly to be highly improbable. It is relevant to point out at this juncture that the competent material witnesses i.e, the regular and statutory auditor of the company are not brought into the witness box to speak about the trading movement and internal and external affairs of Gayathiri Securities Limited and as to how the trading movement were effected through secret account and as to how the funds were diverted for the personal use of the petitioner so as to cause loss to the company.
12.As far as the charge regarding transfer of shares without the consent of clients, the prosecution case is lacking in material particulars. The only witness examined in this regard is PW3, who is one of the directors of Kothari and Kothari. Though the shares are said to be belonging to different persons by names Girija Reddy, Arjun Kothari and Nayanthara Kothari, they were not brought into the witness box for the reasons known to them. Even there is no written complaint by the persons above named. Though H.C.Kothari was brought into witness box, no complaint was lodged in this regard by him. There is absolutely no particulars furnished herein regarding the number of shares, period during which, account to which and account in which, the shares were transferred etc. As a matter of fact, PW2 Usha Srinivasan, who is delivery in charge says that she transferred the shares to the account of Gayathiri Securities, at the instance of the petitioner, but no evidence was produced to substantiate the same. Her oral evidence was simply accepted by the courts below without any supporting evidence in this regard.
13.It is to be recollected at this juncture that the shares movement, if any would have been reflected in the relevant documents pertaining to the petitioner's company. However, except relying on Ex.P7 auditor's report, no other document pertaining to the firm Gayathiri Securities Ltd is produced before the courts below to substantiate the charges levelled against the petitioner. The same is the position with regard to so called loan transaction with Kothari and others. Though the present case is required to be proved through documentary evidence, the same is sought to be made on the basis of oral evidence and two documents viz., Exs.P2 and P7. Ex.P2 is purported to be the letter, in and under which, the petitioner alleged to have admitted the act of commission and omission as alleged in the complaint. Ex.P2 is admittedly not filed along with the complaint. It was neither collected by the IO during investigation and it was produced for the first time through PW2 in the course of trial without seeking permission of the court to adduce additional evidence. The courts below were inclined to rely on this document on the ground that the same was not denied by the accused forgetting for the moment the right of silence available to the accused. In the criminal case, the burden is always on the prosecution to prove the allegations made against the accused beyond reasonable doubt. Merely the accused failed to deny the document that by itself does not render the contents in such document as admissible evidence. Even otherwise, as rightly argued by the learned counsel for the petitioner, Ex.P2 being the so called letter of admission, is more in the nature of confession statement and the same ought to have been proved by the prosecution in the manner known to law and the same ought to have been supported by corroborative evidence. Ex.P7 is the auditor's report having similar evidentiary value like that of any other prosecution side document. Though the voluntary nature and genuineness of the same need not be doubted, the contents of the same ought to have been proved through corroborative evidence. Except these two documents, there is no other document to prove the offence charged against the accused.
14.As already pointed out, the internal auditing and annual reports of the company are not produced before this Court for ascertaining truth of the prosecution case. The very fact that GAYT account is not secret one and is viewed by all the employees and the transaction in the same is transparent, as confirmed by the witnesses, is sufficient enough to disprove and shatter the entire foundation of the prosecution case. On the other hand, the prosecution failed to examine the material witnesses and failed to produce relevant documents and the entire evidence adduced on the prosecution side are lacking in particulars to constitute the main offence under Sections 409 and 477-A IPC. However, the courts below without appreciating the oral and documentary evidence adduced on the prosecution side in proper perspective have simply on the basis of oral evidence of PW9 and Exs.P2 and P7 accepted the prosecution case. In my considered view, the judgment of the Courts below for the reasons discussed above, suffers from serious infirmity and warrants interference by this Court.
15.In the result, this criminal revision is allowed by setting aside the orders of the courts below. The petitioner/A1 is acquitted from the charges. The bail bond, if any executed by the petitioner shall stand cancelled and the fine amount if any is ordered to be refunded forthwith.
rk 24.01.2014 Index:Yes/No Internet:Yes/No To 1.The XI Metropolitan Magistrate, Chennai.
2.The Additional District and Sessions Judge, III Fast Track Court, Chennai.
3.Inspector of Police, Central Crime Branch, Egmore, Chennai.
4.The Public Prosecutor, High court, Madras-104.
K.B.K.VASUKI, J.
rk Crl.R.C.No.1421 of 2007 24.01.2014