Delhi District Court
On The Basis Of Information/Complaint ... vs . on 7 December, 2019
IN THE COURT OF MS. ANJU BAJAJ CHANDNA,
SPECIAL JUDGE, (PC ACT) (CBI)-02,
ROUSE AVENUE COURT COMPLEX, NEW DELHI
Presently Posted As : DISTRICT JUDGE (COMMERCIAL
COURT) EAST, KARKARDOOMA
CC No. 61/2019
RC NO. 13/(A)/2015
PS : CBI/ACB/ND
Central Bureau of Investigation (CBI)
Vs.
1. Pavan Arya (Accused No.1)
S/o Sh. Raghvendu Gaudu
R/o A-308, Avadh Apartments, Gomti Nagar,
Vishal Khand, Lucknow, Uttar Pradesh.
Permanent Address: Vill-26-14-178, PS Nagarpallam
Guntur, Andhra Pradesh.
2. Sharad Kumar Mishra (Accused No.2)
S/o Late Sh. Gauri Shankar Mishra
R/o 101, Sanjana Apptts. Bejai New Road,
Mangalore, Karnataka.
Permanent Address: 28A/8, Sarvodaya Nagar, Allapur,
Allahabad (UP).
3. Satpal Babbar (Accused No.3)
S/o Late Sh. Shankar Dass
R/o B-9/4, IInd Floor, Rajouri Garden,
New Delhi.
4. Shiv Kumar Verma (Accused No.4)
S/o Late Sh. Puran Chand
R/o Flat No.202, Tower No.-05, Grantfort Appts,
Sigma-04, Greater Noida, Uttar Pradesh
Permanent Address: C-150, Vikaspuri, New Delhi.
5. Rahul Babbar (Accused No.5)
S/o Satpal Babbar
R/o B-9/4, IInd Floor, Rajouri Garden,
New Delhi.
CBI Vs. Pavan Arya & ors. Page 1 out of 110
Instituted on : 19.09.2016
Charge framed : 18.02.2017 and 07.03.2017
Judgment reserved on : 20.11.2019 and 27.11.2019
Arguments concluded on : 04.12.2019
Judgment announced on : 07.12.2019
Appearances : Sh. V.K. Pathak, Ld. PP for CBI.
Sh. Akhand Pratap Singh, ld. Counsel for A-1 and A-4.
Sh. Surender Chauhan, ld. counsel for A-2.
Accused Pavan Kumar Arya (A-1), Sharad Kumar Mishra (A-2),
Shiv Kumar Verma (A-4) are on bail.
Accused Satpal Babbar (A-3) and Rahul Babbar (A-5) are
produced in judicial custody.
JUDGMENT
1. On the basis of information/complaint received from K. Nagaraja Shetty, DGM, Corporation Bank, Zonal Office, Delhi South, New Delhi, present RC has been registered by Central Bureau of Investigation (CBI). The matter relates to the credit sanction/working capital loan granted in favour of Satpal Babbar proprietor of M/s Uttam Builders, whereby Rs.5 Crores have been disbursed.
Facts:-
2. Accused Satpal Babbar (A-3) approached Corporation Bank along with co-accused Shiv Kumar Verma (A-4) (middle man) seeking working capital loan and the said limit was sanctioned by Zonal Level Credit Committee (ZLCC), Zonal Office, Delhi-South.
CBI Vs. Pavan Arya & ors. Page 2 out of 110 The application form dated 19.09.2012 was filed with Corporation Bank, Mayapuri SME Branch, whereby Satpal Babbar introduced himself as a businessman (with PAN card No. DMCPS8846F) having business of trading of marbles and his unit Uttam Builders (Regd) situated at B-10/1 Ring Road, Rajouri Garden, New Delhi. In the application form, the previous banker has been mentioned as Union Bank of India, Rajouri Garden, New Delhi. It has also been submitted in the application that applicant/borrower was not enjoying any credit facility prior thereto. The commercial property WZ-88, Ring Road, Raja Garden, New Delhi was offered as collateral security for the loan by the applicant/borrower.
3. Accused Shiv Kumar Verma (A-4) stood as guarantor vide his letter/signature dated 01.10.2012, [who himself availed housing loan (CHOME) of Rs.106 lakhs from the same branch earlier]. The loan application was submitted in the name of M/s Uttam Builders (Regd) whereas guarantor form filled by Shiv Kumar Verma (A-4) shows guarantee for M/s Uttam Builders only. The financial statement and net worth statements furnished by Satpal Babbar (A-
3) and Shiv Kumar Verma (A-4) of Chartered Accountant of M/s Uttam Builders S.K. Bidani & Co., without proper attestation by the CBI Vs. Pavan Arya & ors. Page 3 out of 110 concerned Chartered Accountant. The financial documents submitted were in the name of M/s Uttam Builders and not of M/s Uttam Builders (Regd) as mentioned on the application form. The account statement of State Bank of India, Mansarovar Garden Branch, New Delhi in the name of M/s Uttam Builders (Regd) was furnished despite the fact that in the loan application, previous banker has been mentioned as Union Bank of India, Rajouri Garden. The certificate of incorporation of the firm M/s Uttam Builders (Regd) was also not submitted with the loan application.
4. As per the banking procedure, the application for credit sanction is received at the branch and the branch head is responsible to conduct credit investigation of the borrower regarding integrity, honesty, reliability, credit worthiness, financial status, capacity, competence, experience etc. of prospective borrower and guarantor. This exercise includes interview/discussion with the borrower, taking overview of financial status through bank statements, pre-sanction visit to the concerned unit of borrower, report from CIBIL, due diligence report and legal opinion etc. The branch manager has to forward the same to Zonal Level Credit Committee (ZLCC), where screening is done by DGM and Zonal CBI Vs. Pavan Arya & ors. Page 4 out of 110 head and thereafter same is marked to Centralized Credit Processing Centre (CCPC). At CCPC, the incharge takes a view on the application and then marks it to any processing officer for examining the same. The incharge CCPC, advices the processing officer (who is obliged to scrutinize the proposal) about the short comings/observations by the branch manager. On receiving satisfactory reply from branch manager, processing officer prepares the appraisal note in the prescribed format. The appraisal note is placed before CCPC Incharge and after going through the same he can advise about additions/corrections/clarifications, if required, and further CCPC incharge signs the appraisal note and same is sent to Credit Approval Grid for further scrutiny by Grid members. The CCPC incharge is also the convener of Credit Approval Grid and the members of Grid, on scrutinizing the appraisal note/proposal, put their signatures along with their observations.
5. After the approval of Grid members, CCPC incharge places the appraisal note before Deputy Zonal Head and Zonal Head for administrative clearance and after obtaining formal clearance, the ZLCC on holding the meeting, grants approval of sanction of credit to the borrower. To conclude, CCPC incharge is fully responsible to CBI Vs. Pavan Arya & ors. Page 5 out of 110 study/examine the proposal minutely before submission of the same to Grid and ZLCC for final approval.
6. Accused Sharad Kumar Mishra (A-2), branch head of SME, Maya Puri branch sent the proposal to Zonal office on the same day of receiving the proposal, wherein he recommended and confirmed compliance to KYC norms. Accused Sharad Kumar Mishra (A-2) conducted unit visit on 01.10.2012 mentioning therein satisfactory operation of the unit through account operations in Union Bank of India and unit having sufficient stocks to meet its commitments. The borrower had infact submitted account statement of State Bank of India and not of Union Bank of India. It shows that loan application was forwarded prior to unit visit report and prior to collecting complete documents from the borrower and without taking guarantee of the loan from Shiv Kumar Verma (A-4).
7. It is further the case of prosecution that, at the Zonal office, loan application of M/s Uttam Builders was marked to Pavan Arya (A-1), Chief Manager, Incharge Centralized Credit Processing Centre (CCPC). The proposal was processed by Ajay Pathak, Processing Officer, whereas detailed scrutiny of the proposal was CBI Vs. Pavan Arya & ors. Page 6 out of 110 done by Pavan Arya. The credit memorandum dated 11.10.2012 was placed before Credit approval Grid for clearance of the proposal and before Zonal Level Credit Committee (ZLCC) for sanctioning of the proposal. The loopholes left by Sharad Kumar Mishra, Branch Head were not noted by Pavan Arya, even though name of borrower was mentioned as M/s Uttam Builders instead of M/s Uttam Builders (Regd). In the credit memorandum, in column No. 2(i), processing officer mentioned that CIBIL score of the borrower is minus one (-1), which means insufficient history, however, the said information was struck off by Pavan Arya without any cogent reason. Accused Pavan Arya recommended for sanctioning of Rs.5 Crores to the borrower M/s Uttam Builders and placed the credit memorandum to Credit Approval Grid by keeping his subordinate officers as members thereof. The proposal was approved by two Grid members without any observations, whereas third member Mohd. Khalique raised two observations ensuring quarterly visit to the unit of borrower and confidential opinion to be obtained from SBI. Accused Pavan Arya was also a member of ZLCC along with AGM and DGM of Corporation Bank and proposal was sanctioned to the tune of Rs.5 Crores to M/s Uttam Builders and the credit sanction was intimated to the branch head.
CBI Vs. Pavan Arya & ors. Page 7 out of 110
8. On receiving the said credit sanction, accused Sharad Kumar Mishra, branch head, called the borrower on 20.10.2012 and obtained some forms along with original sale deed of collateral security WZ-88, Rajouri Garden, New Delhi.
9. The legal opinion regarding the collateral security given by Vivek Jain, Panel Advocate vide his report dated 21.09.2012 mentioned different khasra number in the report (not as per the original sale deed) and corrected the same with his initials. Further, vide report dated 20.10.2012 legal audit report of Uttam Builders was submitted and an encumbrance certificate dated 10.05.2013 was submitted by Vivek Jain certifying that said property was free from all encumbrances. The due diligence of the borrower was conducted by Vikas Garg, Director of M/s Solomon Consulting Private Ltd. vide his report dated 15.10.2012, wherein he informed that current banker of the borrower is State Bank of India and there is nothing outstanding against him.
10. The valuation of the property (collateral security) was done by Bupesh Chandra Registered Valuer. Central Registry of CBI Vs. Pavan Arya & ors. Page 8 out of 110 Securitization Asset Reconstruction and Security Interest of India (CERSAI) report was obtained by Sharad Kumar Mishra branch head on 23.01.2014 i.e. after NPA of the loan. Accused Sharad Kumar Mishra being branch head disbursed the loan amount of Rs.5 Crores and subsequently loan account was declared NPA on 02.12.2013. The sum of Rs.2.58 Crores remained outstanding against the borrower.
11. It has been revealed through vigilance inquiry that collateral security property WZ-88, Raja Garden, New Delhi had already been mortgaged by borrower Satpal Babar while taking loan from SBI, Najafgarh Road Branch in the year 2007 for the sum of Rs.3.75 Crores. The said loan was already declared NPA and recovery proceedings were initiated before DRT where DRT on 26.12.2011 ordered for taking possession of the property by SBI. Accused was having 3 to 4 original sale deeds of the same property for the purposes of misleading and cheating the banks. It came to be revealed through investigation that borrower Satpal Babbar applied PAN Cards on two occasions and received two PAN cards on the basis of false information. The financial documents used by Satpal Babbar having stamp and signatures of S.K. Bidani, CBI Vs. Pavan Arya & ors. Page 9 out of 110 Chartered Accountants were also forged. The account statement furnished with the loan application was also a fabricated document.
12. It is also the case of the prosecution that accused Satpal Babbar withdrew Rs.39 lakhs on the very first date of disbursement of loan from the loan account, which was not permissible as borrower could only transfer funds to the parties/firms as per business requirements after submitting bills/hundis/purchase orders etc. The branch head was required to monitor these transactions. It has also been alleged that Satpal Babbar made transactions mainly with three firms SP Marbles, RB Marbels and PP Ceramics, the account of SP Marbles was opened by Satpal Babbar himself; RB Marbles was opened by his son Rahul Babbar and; P.P. Ceramics was also opened by his son Rahul Babbar (A-5) at Axis Bank. The purpose to open these accounts was to illegally deviate the loan funds for personal benefit and borrower Satpal Babbar (A-3), his son Rahul Babbar (A-5) managed to transfer Rs.3,23,53,340/- to the account of SP Marbles, Rs.2,40,05,700 to the account of RB Marbles. The funds were also transferred in the account of Rahul Marbles and Granites, which was opened by Reeta Babbar wife of Satpal Babbar and the purpose was only to cheat the Corporation bank.
CBI Vs. Pavan Arya & ors. Page 10 out of 110
13. The RTGS transaction of Rs.35,50,056/- was made by Satpal Babbar in the account of Aarti Enterprises which was opened by Shiv Kumar Verma (A-4). Aarti Enterprises deals in the business of Scientific And Pharmaceutical Plants and this transaction was not justified and infact benefit was obtained by Shiv Kumar Verma (A-4) for the service given by him as he played the role of loan facilitator.
14. The letters written by Shiv Kumar Verma (A-4) dated 01.11.2012 and 02.11.2012 would show that he was well aware about the motive of Satpal Babbar and he withdrew his guarantee only after getting the amount of Rs.35.5 lakhs. During the custodial interrogation, accused Satpal Babbar disclosed that forged documents were prepared by Shiv Kumar Verma (A-4) for which he charged Rs.35.5 lakhs for sanction of the loan.
15. The public servants, Pavan Arya (A-1), Chief Manager, Corporation Bank and Sharad Kumar Mishra (A-2), branch head, SME Mayapuri Branch, extended undue favour to the borrower Satpal Babbar (A-3) and middle man/guarantor Shiv Kumar Verma (A-4) and facilitated diversion of public funds of the bank for private CBI Vs. Pavan Arya & ors. Page 11 out of 110 gains. The loan application was not on the stipulated format of cash credit loan and the branch head forwarded it for the overdraft facility without observing the said discrepancy, Pavan Arya recommended for cash credit and also dishonestly reduced the credit sanction of M/s Uttam Builders from Rs.700 lakhs (as forwarded by branch head) to Rs.500 lakhs in order to protect borrower from separate credit investigation/audit as proposals exceeding Rs.500 lakhs are subject to separate credit audit. Accused Pavan Arya dishonestly changed the proposal of loan of cash credit instead of overdraft facility as forwarded by branch head and the record of CERSAI should have been checked online as per the standard banking procedure. The Grid members were not included as per the Corporation Bank circular no.640/2007.
16. It is alleged that with the above facts and evidence, it is established that accused persons entered into criminal conspiracy with each other and cheated the Corporation Bank.
17. It is asserted on behalf of CBI that on the basis of evidence and documents so submitted with the charge-sheet, offences of criminal conspiracy, cheating, forgery and criminal misconduct CBI Vs. Pavan Arya & ors. Page 12 out of 110 punishable u/s 120B IPC r/w Sections 420, 467, 468 and 471 IPC and u/s 13 (2) r/w 13 (1) (d) of Prevention of Corruption Act 1988 (PC Act) and substantive offences thereof are made out and accused persons be proceeded against accordingly. The accused persons Pavan Arya (A-1), Sharad Kumar Mishra (A-2), Satpal Babbar (A-3), Shiv Kumar Verma (A-4) and Rahul Babbar (A-5) have been sent for trial.
18. The sanction order has been issued for prosecution of accused Pavan Arya (A-1) and Sharad Kumar Mishra (A-2) being public servants.
19. The charge sheet was submitted on 19.09.2016 and on the basis of the same, cognizance was taken by the court on 25.10.2016.
Charge:-
20. Vide order on charge dated 13.02.2017, formal charges were framed against all the accused on 18.02.2017 and 07.03.2017 respectively as under:
• Accused Pavan Arya (A-1) has been charged for the offence punishable u/s 120 B IPC r/w Sections 420, 467, 468, 471 IPC and CBI Vs. Pavan Arya & ors. Page 13 out of 110 Section 13 (2) r/w Section 13 (1) (d) of PC Act, 1988 and substantive offence punishable u/s 13 (2) r/w Section 13 (1) (d) of PC Act, 1988.
• Accused Sharad Kumar Mishra (A-2) has been charged for the offence punishable u/s 120 B IPC r/w Sections 420, 467, 468, 471 IPC and Section 13 (2) r/w Section 13 (1) (d) of PC Act, 1988 and substantive offence punishable u/s 13 (2) r/w Section 13 (1) (d) of PC Act, 1988.
• Accused Satpal Babbar (A-3) has been charged for the offence punishable u/s 120 B IPC r/w Sections 420, 467, 468, 471 IPC and Section 13 (2) r/w Section 13 (1) (d) of PC Act, 1988 and substantive offence punishable u/s 420, 467, 468, 471 IPC.
• Accused Shiv Kumar Verma (A-4) has been charged for the offence punishable u/s 120 B IPC r/w Sections 420, 467, 468, 471 IPC and Section 13 (2) r/w Section 13 (1) (d) of PC Act, 1988.
• Accused Rahul Babbar (A-5) has been charged for the offence punishable u/s 120 B IPC r/w Sections 420, 467, 468, 471 IPC and Section 13 (2) r/w Section 13 (1) (d) of PC Act, 1988.
21. All the accused persons pleaded not guilty and claimed trial.
Prosecution Evidence:-
22. During the trial, prosecution examined 45 witnesses. The sum and substance of prosecution evidence is as follows :-
22.1. PW1 Harjinder Singh posted as Senior Superintendent (HR), CBI Vs. Pavan Arya & ors. Page 14 out of 110 Airport Authority of India, Corporate (HQ) was summoned by CBI to witness the arrest of accused persons Satpal Babbar (A-3) and Shiv Kumar Verma (A-4). The witness has proved the arrest memo Ex.PW-1/A and Ex.P/67.
22.2. PW-2 Nagraj Shetty was Head Corporation Bank, Delhi South Zone from May 2014 to April 2015. He filed the complaint against borrower M/s Uttam Builders, Proprietor Satpal Babbar and the complaint dated 08.01.2015 has been proved as Ex.PW-2/A. 22.3. PW-3 Hukum Singh was posted as Officer in ICICI Bank, Janakpuri Branch, Delhi. During the investigation, witness has supplied documents pertaining to account of M/s Aarti Enterprises and proved the seizure memo Ex.PW-3/A and the documents Ex.P-
60 to P-63. The witness also deposed about letter Ex.PW-3/B, letter head of M/s Aarti Enterprises Ex.PW-3/C and certificate u/s 2(A) of Bankers Book of Evidence Act Ex.PW-3/D. 22.4. PW-4 Jayant Bidani, son of Sh. S. K. Bidani, deposed that his father S. K. Bidani was Chartered Accountant by profession having his company in the name of M/s S. K. Bidani & Company. His father expired on 10th January, 2008. The witness on seeing the CBI Vs. Pavan Arya & ors. Page 15 out of 110 documents Ex.PW-4/A, Ex.PW-4/B(colly) and Ex.PW-4/C(colly) stated that the same do not bear the genuine signatures of his father.
22.5. PW-5 Sanjeev Jindal was called by investigating officer during the investigation of the case. The witness identified the photograph of accused Satpal Babbar on driving license Ex.PW-5/A which bears the address of the witness and stated that both the floors of the property are in his possession and Satpal Babbar never resided therein. PW-5 has no knowledge as to how the driving license was got prepared by Satpal Babbar from this address.
22.6. PW-6 Lakshmi Nath Reddy, General Manager, Human Resources Department of Corporation Bank, Head Office, Manglore granted sanction to prosecute accused Pavan Arya and proved the same vide Ex.PW-6/A. 22.7. PW-7 Anup Aggarwal Senior Manager with NSDL, E-
Government Infrastructure Ltd. handed over the documents relating to PAN number of accused Satpal Babbar vide the production-cum- seizure memo Ex.PW-7/A. The witness also identified the signatures of Mantu Prasad on reply dated 18.11.2015 Ex.PW-7/B. The witness also deposed about relevant documents Ex.PW-7/C to Ex.PW-7/F. CBI Vs. Pavan Arya & ors. Page 16 out of 110 22.8. PW-8 Biswaranjan Sahoo was posted as Manager (Credit), Zonal Office, Corporation Bank, Delhi in credit division sanction and was nominated by Pavan Arya as Grid Member. The witness deposed about office memorandum Ex.PW-8/A, which he signed as Grid Member on the instructions of accused Pavan Arya. 22.9. PW-9 Krishan Kumar Gahlawat was posted as Senior Manager, Corporation Bank, Delhi South Branch. He handed over documents to investigating officer vide production-cum-seizure memo Ex.PW-9/A. The letter dated 10.08.2016 Ex.PW-9/B has also been proved by the witness. PW-9 also deposed about loan application of Parth Kumar Verma Ex.PW-9/C and current account opening form of M/s Winner Enterprises Pvt. Ltd. Ex.PW-9/D. 22.10. PW-10 Prashant Chhagan Lal Mahajan was posted as Deputy Manager with Forgery Detection Cell India Security Press, Nasik Road, Nasik. He was deputed to examine non-judicial stamp papers (Q1 to Q28) and on examining he found that some of them were tampered. The witness has given his detailed report Ex.PW- 10/A and covering letter Ex.PW-10/B vide which he forwarded the report to CBI. The witness also identified non-judicial stamp papers during his testimony.
CBI Vs. Pavan Arya & ors. Page 17 out of 110 22.11. PW-11 Ashutosh Padru, posted as Assistant General Manager (AGM), SBI Mansarover Garden Branch, Delhi has proved his letter sent to CBI Ex.PW-11/A. The witness testified that Ex.P-42 was never received in their branch nor letter Ex.PW-11/B was issued therefrom.
22.12. PW-12 Sudershan Kumar Mehta, Deputy General Manager (DGM), Personnel Administration Division, Corporation Bank, Head Office, Manglore granted sanction to prosecute Sharad Kumar Mishra (A-2) and sanction order has been proved as Ex.PW-12/A. 22.13. PW-13 Shri Chand, posted as Assistant Public Health Inspector in East Delhi Municipal Corporation (EDMC), Shahdara North, Delhi was deputed to attend CBI office on 12.06.2015 from where he joined the team for house search of accused Satpal Babbar (A-3). The witness deposed about search list Ex.P-10 bearing his signatures and also signed the seized documents Ex.PW-13/A, Ex.PW-13/B and Ex.PW-13/C (collectively). 22.14. PW-14 V.K. Saxena, posted as AGM in SBI Stressed Assets Management Branch, Connaught Place, New Delhi provided information to CBI vide letter Ex.PW-14/A. CBI Vs. Pavan Arya & ors. Page 18 out of 110 22.15. PW-15 Vivek Jain, practicing advocate on the panel of Corporation Bank, PNB etc. proved legal audit report dated 20.10.2012 Ex.P-30. Verification of title deeds Ex.P-31 report and legal opinion Ex.PW-15/A and verification to title deeds dated 10.05.2013 Ex.PW-15/B. 22.16. PW-16 Bhupesh Chandra, Registered valuer, had given valuation report of immovable property WZ-88, Raja Garden, New Delhi to the Corporation bank vide Ex.P-34.
22.17. PW-17 Vikas Garg, Chartered accountant and Director of company namely Solemn Consulting Private Ltd. has given due diligence in respect of M/s Uttam Builders Vide Ex.P-40. 22.18. PW-18 HC Prahlad Singh, visited India Security Press, Nasik Road, Nasik on the instructions of his senior with sealed envelop. The witness testified about letter dated 31.03.2016 original of which he carried along with envelop for handing over to General Manager India Security Press. He submitted the letter accordingly and copy thereof is Ex.PW-18/A. 22.19. PW-19 G. Balasubramanian, was posted as Assistant General Manager, Corporation Bank, Zonal Office, Delhi South. He CBI Vs. Pavan Arya & ors. Page 19 out of 110 deposed about process note Ex.PW-8/A. The witness also explained the banking procedure for approval of loan proposal. 22.20. PW-20 Ms. Rashi Gupta, Branch Operation Manager, Kotak Mahindra Bank, Punjabi Bagh, Delhi handed over relevant documents to CBI during the course of investigation. The witness identified those documents (D-63) Ex.PW-20/A (collectively). 22.21. PW-21 Amit Sharma, Assistant Manager, Kotak Mahindra Bank, Zor Bagh, Delhi was deputed to handover documents to CBI and accordingly he handed over the documents D-36, D-37 to CBI. 22.22. PW-22 Ajay Pathak, was posted with Centralized Credit Processing Centre (CCPC), Zonal Office, Delhi South as manager. The witness has been the processing officer in respect to proposal of M/s Uttam Builders. The processing note has been proved as Ex.PW-8/A. 22.23. PW-23 Surender Kumar posted with Kotak Mahindra Bank, Punjabi Bagh, Delhi handed over documents (Ex.PW-20/A (colly) to CBI in compliance of instructions.
22.24. PW-24 Suresh Chander Gambhir, Chief Manager, SBI, CBI Vs. Pavan Arya & ors. Page 20 out of 110 Mansarovar Garden Branch, New Delhi handed over statement of account of M/s Uttam Builders (Regd) to CBI during the investigation vide letter Ex.PW-24/A and documents are Ex.PW- 24/A-1 along with certificate Ex.PW-24/A-2.
22.25. PW-25 Mantu Prasad, Senior Manager, Income Tax Department, NSDL, E-Governance Infrastructure Ltd. handed over documents (D-23) Ex.PW-7/B (colly) and Ex.PW-7/C relating to the PAN cards of Satpal Kumar.
22.26. PW-26 Jaspal Singh handed over documents to investigating officer during the investigation of the case on behalf of SBI, Mansarovar Garden Branch. According to the witness statement of account Ex.PW-26/A (colly) is not a correct statement. 22.27. PW-27 Neeta Malik remained posted with Corporation Bank and dealt with the matter of M/s Uttam Builders (Regd). The witness opened the loan as well as current account of M/s Uttam Builders, proprietor Satpal Babbar and documents have been identified as Ex.PW-8/A (Colly) and sanction details received Ex.PW-27/A (Colly) and also identified signatures of Satpal Babbar on various documents Ex.PW-27/B to Ex.PW-27/K and Ex.PW-27/K-1 to Ex.PW-
CBI Vs. Pavan Arya & ors. Page 21 out of 110 27/K-59. These documents relate to the loan account of Satpal Babbar (A-3). The witness also explained the procedure. 22.28. PW-28 Rajender Sehdev has been running business in the name of M/s Delux Industries and is the owner of commercial property bearing No.A-54/2, Prashant Vihar, Sector-14, Rohini, Delhi. The above property was rented out to Krishan Gopal. According to the witness, he does not know Satpal Babbar (A-3) and never let out his property (No.A-54/2, Prashant Vihar, Sector-14, Rohini, Delhi) to Satpal Babbar nor the property was being used as residence being a commercial property.
22.29. PW-29 Varun Mohan, posted with Axis Bank, Rajouri Garden Branch, joined the investigation of the present case and visited CBI office to handover documents to investigating officer vide production-cum-seizure memo Ex.PW-29/A. The documents handed over to CBI has been identified as Ex.PW-29/A-1 to Ex.PW-29/A-17. 22.30. PW-30 Ravinder Prakash, Senior Manager with Corporation Bank SME Branch, Maya Puri, handed over documents relating to the account of M/s Uttam Builders to CBI. The documents have been identified by the witness Ex.PW-30/A, Ex.P-14, Ex.P-42, Ex.PW-
CBI Vs. Pavan Arya & ors. Page 22 out of 110 8/A (colly), Ex.PW-13/A and Ex.PW-30/B. 22.31. PW-31 Sahab Singh Sehrawat retired as Principal from Sarvodaya Bal Vidyalaya and denied having issued certificate in favour of Satpal Ex.PW-7/C. 22.32. PW-32 Umesh Chawla was posted as Branch Head, SBI, Najafgarh Road, Delhi. According to the witness Satpal Babbar approached for sanction of credit limit of Rs.3.75 Crores and submitted loan application in the bank. PW-32 processed the loan application and forwarded the same to Zonal office. The documents/letters have been identified by the witness as Ex.PW- 32/A to Ex.PW-32/I. 22.33. PW-33 Mohd. Khalique, Manager, CRMD, dealt with credit memorandum of M/s Uttam Builders as a Grid Member and identified the relevant documents.
22.34. PW-34 Parimal Kumar Singh, Senior Manager, CCPC, Zonal Office, Delhi South was nominated as Grid Member and identified his signatures on Ex.PW-8/A (colly).
22.35. PW-35 Avadhesh Mathur was posted with Zonal Office CBI Vs. Pavan Arya & ors. Page 23 out of 110 Corporation Bank, Delhi South as Chief Manager. His duties included looking after accounts which have become NPA. The file of M/s Uttam Builders was transferred to recovery department after it had become NPA. According to the witness he found several discrepancies at the branch as well as Zonal Level. He also handed over documents relating to the account of M/s Uttam Builders to CBI vide memo Ex.PW-30/A. The witness has deposed in detail about various relevant documents and also proved documents Ex.PW-35/A to Ex.PW-35/I. 22.36. PW-36 Vivek Yadav, Junior Assistant from office of E-Sub- Registrar-II, Basai Dara Pur has deposed about letter dated 26.08.2016 Ex.PW-36/A through which certified copy of sale deed in respect of property No. WZ-88, Khasra No.3988/2502/1935 situated in the area of Village Basai Dara Pur, Delhi was sent to investigating officer CBI. The witness stated that original record of the sale deed is maintained in their office and certified copy of sale deed is Ex.PW-36/B. 22.37. PW-37 Rajesh Kumar Gupta posted as UDC with East Delhi Municipal Corporation attended the CBI office on the instructions of his seniors and joined the investigation whereby house search of CBI Vs. Pavan Arya & ors. Page 24 out of 110 accused Satpal Babbar (A-3) was carried out and documents were taken into possession vide seizure memo Ex.PW-37/A. The files/documents so seized are Ex.PW-13/A to Ex.PW-13/C (colly). 22.38. PW-38 Sudhir Bhatia, Assistant Section Officer with Department of Women and Child Development, attended CBI office on the instructions of his senior officer on 22.06.2016. In the presence of the witness, the specimen writing and signatures of accused Satpal Babbar (A-3), Shiv Kumar Verma (A-4) and Rahul Babbar (A-5) were obtained. The witness further deposed that accused Satpal Babbar (A-3) made disclosure statement to CBI officers about his involvement in the case and the said disclosure was reduced into writing. The disclosure Statement (Ex.PW-38/B) was given by accused Satpal Babbar voluntarily. The specimen signatures have been identified by the witness vide Ex.P-66, Ex.P- 50 and Ex.PW-38/A (Colly).
22.39. PW-39 Batesh Thakur has been working with M/s Asset Reconstruction Company India Ltd. (ARCIL). ARCIL is involved in initiating/continuing legal proceedings for recovery of dues after acquisition of NPAs from banks and NBFCs as such legally steps into the shoes of creditors having all the rights to recover the dues from CBI Vs. Pavan Arya & ors. Page 25 out of 110 the defaulters. The ARCIL had acquired NPA portfolio from State Bank of India in May 2014 including account of M/s Uttam Builders. It was observed that original application was pending before Debt Recovery Tribunal and ARCIL sought substitution before DRT. In response to the notice u/s 91 CrPC, the documents were handed over to investigating officer CBI vide production-cum-seizure memo Ex.PW-39/A and the concerned documents are Ex.PW-32/B (colly), Ex.PW-32/D(colly), Ex.PW-32/E(colly), Ex.PW-32/F(colly), Ex.PW- 32/G(colly), Ex.PW-32/H(colly), Ex.PW-32/H1(colly) and Ex.PW-32/I (colly).
22.40. PW-40 N. Chandra Sekaran was working as Chief Manager, Centralized Credit Processing Centre, Zonal Office, Delhi South. During the course of investigation, statement of the witness was recorded whereby he explained the procedure with respect to credit sanction process. The witness also handed over documents to CBI vide letter Ex.P-1 and documents are Ex.P-2, Ex.PW-40/A, Ex.P-4, Ex.P-5, Ex.P-6, Ex.P-7, Ex.PW-40/B, Ex.PW-40/C and Ex.PW-40/D (Colly).
22.41. PW-41 Chanderketu Kumar posted as Senior Manager with Corporation Bank Vigilance Cell, handed over documents to CBI CBI Vs. Pavan Arya & ors. Page 26 out of 110 vide production-cum-seizure memo Ex.PW-41/A. The documents so handed over have been proved as Ex.PW-41/B, Ex.P-68, Ex.P-69, P- 70, P-71, Ex.PW-41/C to Ex.PW-41/P. The documents have been duly certified by witness.
22.42. PW-42 Sh. Amit Sharma deposed that during the investigation of the case, he handed over documents to the investigating officer vide production-cum-seizure memo Ex.PW-21/A and the documents so handed over are Ex.PW-21/B, Ex.PW-21/C, Ex.PW-42/A to Ex.PW-42/D. 22.43. PW-43 Dinesh Kumar, Motor Licensing Officer with District Centre, Janakpuri, Delhi-18 deposed about letter dated 01.08.2016 by which the office had furnished information relating to driving license no. P05022002295097. The letter is proved as Ex.PW-43/A. 22.44. PW-44 S. Vishwanathan, was posted with Vigilance Cell, Circle Office, Chennai and thereafter transferred to Vigilance Cell, Banglore. During February 2014, he was instructed by his senior officer K.S. Somayaji to investigate into irregularities in the sanction and disbursement of credit limits sanctioned by Zonal Office Delhi and by branches Mayapuri SME, Vasant Vihar, Vasant Kunj, Aali CBI Vs. Pavan Arya & ors. Page 27 out of 110 Gaon, Jaitpur etc. The witness conducted investigation into the irregularities with respect to credit sanction in favour of M/s Uttam Builders (Regd), Proprietor Satpal Babbar at Mayapuri SME Branch. The witness scrutinized entire record/documents pertaining to account of M/s Uttam Builders. During inquiry, the witness found the shop/godown premises of Satpal Babbar having different sign boards of M/s Rahul Marble and Granites and Satpal Babbar admitted having committed mistake by depositing mirror set of title deed document under Equitable Mortgage (EMG) with Corporation Bank, Mayapuri SME branch and had actually deposited the original property title deeds documents with State Bank of India. PW-44 was denied access to any purchase/sales/godown by accused Satpal Babbar. The witness also met guarantor Shiv Kumar Verma (A-4).
The branch head S.K. Mishra obtained valuation report on 21.09.2012 in respect of EMG property and value mentioned in the report was overvalued. Also during the investigation, fresh valuation report was obtained from M/s H.B. Valuers on 03.03.2014 and value came out to be Rs.900 lakhs only. During scrutiny of loan documents, PW-44 also observed discrepancies/irregularities in pre- sanction legal scrutiny report obtained by branch-head from Vivek Jain, Advocate dated 21.09.2012 and the documents of property CBI Vs. Pavan Arya & ors. Page 28 out of 110 having different Khasra numbers thereby it was not clear whether it was Khasra No.3988 or 3980. The branch-head Sharad Kumar Mishra (A-2) deviated from the guidelines while seeking legal opinion from the bank's panel advocate by not formally writing a letter to panel advocate under his seal and signatures enclosing therewith bank attested copies of the title documents. The witness also found that branch head submitted one unit visit report dated 01.10.2012 along with pre printed check list whereas on 19.09.2012 itself, the credit proposal papers were forwarded to Zonal Office recommending sanction of full credit limit of Rs.700 lakhs. The value of securities has been mentioned as Rs.1800 lakhs in the recommendation without furnishing breakup of primary security of stock in rate and collateral security of EMG property. S.K. Mishra did not ensure procedurally to comply with the pre-sanction requirements of banks Group Credit Policy (GCP) guidelines. The name of borrower was also differently mentioned as M/s Uttam Builders whereas loan application was submitted on behalf of M/s Uttam Builders (Regd). The net worth of the borrower in the specified column was not mentioned in the due diligence report and the same was not on the appropriate format.
The Zonal office received the credit proposal at CCPC headed CBI Vs. Pavan Arya & ors. Page 29 out of 110 by accused Pavan Arya and he approved credit sanction/appraisal note on 18.10.2012 approving sanctioning of cash credit limit of Rs.500 lakhs to M/s Uttam Builders, although loan papers were having different legal entity M/s Uttam Builders (Regd) and also details of previous bankers of the borrower were not scrutinized properly. Also, terms and conditions for KYC compliance by Mayapuri SME branch before disbursement of Credit Limits to M/s Uttam Builders, such as obtaining satisfactory confidential opinions from previous bankers (State Bank of India and Union Bank of India) were not proper and in this way accused Pavan Arya did not ensure compliance to pre-sanction requirement as per GCP guidelines. Accused Pavan Arya without seeking clarification from Mayapuri SME Branch regarding discrepancies approved the credit sanction. It was also revealed that copies of State Bank of India account statements enclosed with loan proposal were not actually issued by the concerned bank. The witness also pointed out deficiencies with CIBIL Score generated for borrower's firm as it was minus one (-1) meaning thereby insufficient credit history. 22.45. PW-45 Nikesh Kumar Upadhyay, Inspector CBI, conducted Investigation of the present case which was registered on the complaint vide FIR Ex.PW-15/DA. The investigating officer deposed CBI Vs. Pavan Arya & ors. Page 30 out of 110 about house search of accused Satpal Babbar (A-3), vide search list Ex.PW-37/A. PW-45 collected relevant documents from different banks and authorities, examined witnesses, obtained specimen signatures and handwritings, sought opinion about forged sale deeds from India Security Press, sought CFSL report and collected circumstantial evidence and filed the charge sheet. The witness also deposed about searches conducted during the investigation and about process of seeking sanction. The witness also proved documents Ex.PW-45/1, Ex.PW-45/2 and Ex.PW-45/3.
The above witnesses have been cross examined at length on behalf of defence/accused persons.
Statements u/s 313 CrPC.
23. After closure of prosecution evidence, statements of accused persons have been recorded u/s 313 CrPC by putting across incriminating evidence to each of them separately in question answer form to seek their explanation.
24. In his statement, accused Pavan Arya (A-1) admitted that he has been CCPC incharge with Corporation Bank during the relevant period and he dealt with the credit proposal of M/s Uttam CBI Vs. Pavan Arya & ors. Page 31 out of 110 Builders and sanctioned the same. The sanction for prosecution given against him by PW-6 Laxmi Nath Reddy has been termed as having been given without application of mind. The relevant documents of the case were not sent to the sanctioning authority. The complaint Ex.PW-2/A and handing over of various related documents of the case by the witnesses of the prosecution is not disputed being matter of record. According to Pavan Arya, PW-8 Biswaranjan Sahoo was not nominated as Grid member by him as he was nominated by DGM as per circular D-15 nor he instructed PW-8 to sign the proposal as a Grid member. Accused stated that no objections either oral or written were raised by PW-8 in respect of office memorandum Ex.PW-8/A (colly). The report Ex.PW-10/A is not disputed being matter of record. Accused further claimed having no knowledge about letters dated 15.10.2012 and 17.10.2012 sent by branch manager and by SBI to branch manager respectively. The reports of PW-15 Vivek Jain, PW-16 Bhupesh Chandra and PW-17 Vikas Garg are not disputed being matter of record. The process note Ex.PW-8/A was prepared by Ajay Pathak (PW-22), but according to the accused he prepared the same with his independent mind and no guidance was given by him. The loan proposal was cleared by all the members of Grid Committee and CBI Vs. Pavan Arya & ors. Page 32 out of 110 thereafter by Zonal Level Credit Committee (ZLCC). Accused denied having struck out the CIBIL score obtained by PW-22 Ajay Pathak on process note.
25. Accused further denied that he used to meet Satpal Babbar (A-3) and Shiv Kumar Verma (A-4) while credit memorandum was in process at CCPC. Accused has no knowledge about statement of account Ex.PW-26/A being a forged document. Opening of loan and current account of M/s Uttam Builders is a matter of record. The banking record has not been disputed with respect to account of M/s Uttam Builders. Accused Pavan Arya claimed that he never met accused Shiv Kumar Verma (A-4). Accused has no knowledge about the sanction of credit limit of Rs.3.75 Crores by SBI, Najafgarh Road Branch, in favour of M/s Uttam Builders. Accused admitted that PW-33 Mohd. Khalique was the Grid Member and he made two observations on Ex.PW-8/A. According to accused (A-1), PW-34 Parimal Kumar Singh was nominated as Grid Member by the then DGM. Accused further claimed that members of the Grid are nominated by DGM and there is no marketing department. The sanctioning authorities at head office and Zonal unit may re-constitute the approval Grid depending CBI Vs. Pavan Arya & ors. Page 33 out of 110 upon the exigencies. Accused denied that he asked PW-34 Parimal Kumar Singh to sign the credit memorandum in good faith. Accused denied that there were discrepancies in the sanction proposal at the branch and Zonal level and that the case of M/s Uttam Builders had fallen in NPA Category.
26. It is however not disputed that documents were handed over by PW-35 Avadesh Mathur vide memo Ex.PW-30/A. Accused has not specifically disputed that loan application was not in the prescribed format but stated that in the situation of non-availability of one form, format of other loan form is used. Accused denied that guarantee from co-accused Shiv Kumar Verma (A-4) was obtained subsequent to loan application dated 19.09.2012 and also that loan was applied in the name of M/s Uttam Builders (Regd), whereas loan was sanctioned in the name of M/s Uttam Builders. The entire documents were received on 08.10.2012 along with loan application including legal opinion, due diligence report and valuation report and thereafter credit memorandum was placed on 11.10.2012 before ZLCC. Accused has no knowledge about obtaining of specimen handwriting and signatures during investigation from Satpal Babbar (A-3), Shiv Kumar Verma (A-4) and CBI Vs. Pavan Arya & ors. Page 34 out of 110 Rahul Babbar (A-5) or about recording of disclosure statement of accused Satpal Babbar (A-3). Accused (A-1) denied that he violated GCP guidelines as per the investigation of PW-44 S. Vishwanathan.
27. According to Pavan Arya (A-1) he is innocent and falsely implicated in the matter. Due Diligence Report was submitted by Branch Manager and the external Agencies on the request of Branch Manager. Legal opinion was given by empaneled advocate which was approved by law officer in the present case who is the competent person. The value of the property was also enquired by branch manager vide his recommendation letter. It is the duty of the branch manager for verification of KYC and other related documents and to certify the same.
28. Accused claims to have followed all the guidelines and circulars issued by the bank while processing the credit memorandum in the present case. The CBI has deliberately not placed the relevant circulars and guidelines which could prove his innocence. The CBI deliberately did not make the then DGM ARK Prasad a witness in the present case with a view to not bring the true facts on record. CBI deliberately did not procure the zonal office file on record.
CBI Vs. Pavan Arya & ors. Page 35 out of 110
29. In his statement, accused Sharad Kumar Mishra (A-2) admitted that he was the branch head of SME and he forwarded the proposal of M/s Uttam Builders with his recommendation. Accused however denied that he forwarded loan application without having legal opinion, due diligence report, valuation report or that same was not in the prescribed format and the guarantee of guarantor was taken after the sanction of credit limit and in this way guidelines were violated. Accused claims that he forwarded the recommendation as per check-list dated 01.10.2012 in the bank format and the branch followed the prescribed rules and directions of the bank in respect of release of funds. Guarantee was taken on 01.10.2012 on the direction of Zonal head before sanction of credit limit. The complaint Ex.PW-2/A is a matter of record.
Accused further stated that CCPC carries out its functions independently and branch is not involved in the composition of Grid. The banking documents have not been disputed being matter of record and also handing over of documents by various prosecution witnesses to CBI. The report Ex.PW-10/A is termed as matter of record. With respect to letters dated 15.10.2012 and CBI Vs. Pavan Arya & ors. Page 36 out of 110 17.10.2012, accused Sharad Kumar Mishra (A-2) stated that branch used to prepare two copies of any letter (there was no photocopy provision for the branch). Ex.P-42 is the office copy of letter dated 15.10.2012 retained with the branch and the letter was personally handed over by accused to the then branch head of SBI, Mansarovar Garden Branch. The letter dated 17.10.2012 was delivered to the branch by the borrower in sealed envelop. There was nothing suspicious in the report. Accused further stated that sanction for his prosecution was granted without perusing the relevant documents and on the basis of draft sanction letter sent by CBI. The legal opinion, valuation report and due diligence report are admitted. The branch had nothing to do with the functioning of CCPC and Zonal office and therefore, accused has not disputed the procedure and documents processed and placed before CCPC and ZLCC.
30. Accused (A-2) has no knowledge about Ex.PW-26/A (statement of account) being a forged document. Accused admitted that Neeta Malik (PW-27) was posted as officer with SME Maya Puri Branch, Corporation Bank and she opened loan and current account of M/s Uttam Builders and also the execution of loan papers and CBI Vs. Pavan Arya & ors. Page 37 out of 110 related documents is admitted. Accused was second passing officer with respect to cheques for RTGS. Accused has no knowledge about the loan sanctioned in favour of M/s Uttam Builders on behalf of SBI, Najafgarh Road Branch to the tune of Rs.3.75 Crores. The constitution of Grid Committee and the signing by some of its members in good faith is termed as matter of record. Accused denied that there were discrepancies with the account of M/s Uttam Builders as stated by PW-35 Avadhesh Mathur. According to the accused, format of Corp.Vyapar is similar as per over draft facility/demand loan facility. No concealment of any information was there and overdraft facility was recommended. Accused further stated that M/s Uttam Builders (Regd) and M/s Uttam Builders was inter-changeably used at various places and guarantee agreement was signed by Shiv Kumar Verma (A-4) and borrower Satpal Babbar (A-3) and same was obtained on the directions of Zonal head. Accused has no knowledge about the details of investigation as deposed by investigating officer (PW-45) in his testimony. Accused stated that, CBI has filed a wrong case against him ignoring the banking law and practice, circulars and guidelines. The prosecution witnesses have deposed under the pressure of CBI.
CBI Vs. Pavan Arya & ors. Page 38 out of 110
31. In his statement, accused Satpal Babbar (A-3) admitted that he has been the proprietor of M/s Uttam Builders and approached SME Maya Puri Branch with Shiv Kumar Verma (A-4) (co-accused) for sanction of working capital loan of Rs.700 lakhs and cash credit limit of Rs.500 lakhs was sanctioned. The accused however, claimed having no knowledge about the complaint Ex.PW- 2/A, incorrect particulars of driving license Ex.PW-5/A, handing over of record relating to PAN Cards by PW-7 Anoop Aggarwal and signing of office memorandum Ex.PW-8/A by PW-8 on the instructions of co-accused Pavan Arya. Accused further claimed having no knowledge about the documents handed over by various witnesses during the investigation and also about letters dated 15.10.2012 and 17.12.2012 and report Ex.PW-10/A. According to accused (A-3), he does not remember about the search conducted at his house and documents seized therefrom. Accused admitted report by registered valuer PW-16 Bhupesh Chandra and due diligence report of PW-17 Vikas Garg but denied having any knowledge about legal opinion given by PW-18 Vivek Jain. Accused further claimed having no knowledge or idea about the procedure or banking record whereby credit limit was sanctioned.
CBI Vs. Pavan Arya & ors. Page 39 out of 110
32. Accused denied having submitted application for PAN in respect of PAN No. DMCPS8846F and another application for PAN Number DNDPK6669A. Accused admitted having opened loan and current account with Mayapuri SME Branch in the name of M/s Uttam Builders and admitted documents Ex.PW-27/A to Ex.PW-27/G and memorandum of deposit of title deeds Ex.PW-27/H. Accused stated that he has no idea about the process of RTGS and about the letting out of the property A-54/2 Prashant Vihar, Sector 14, Rohini. Accused admitted handing over of documents by PW-30 Ravinder Prakash vide Ex.PW-30/A and about availing of loan from SBI Najafgarh Branch amounting to Rs.3.75 Crores. Accused claimed having no knowledge about the Grid Members or the process for approval of the credit sanction. It is also admitted that loan was applied in the name of M/s Uttam Builders (Regd) whereas loan was sanctioned in the name of M/s Uttam Builders. The factum of giving specimen handwriting and signatures during the investigation, has been admitted and also recording of his disclosure statement Ex.PW-38/B. Accused has no knowledge about the findings of PW-44 S. Vishwanathan about violation of GCP guidelines by the officers of the bank in granting sanction and disbursement of credit limit pertaining to M/s Uttam Builders. Accused admitted that he was CBI Vs. Pavan Arya & ors. Page 40 out of 110 arrested in the case along with co-accused Shiv Kumar Verma (A-4) but stated that witnesses have deposed under the fear of CBI and it is a false case.
33. Statement of Accused Shiv Kumar Verma (A-4) was also recorded wherein he has not disputed that he stood as guarantor to the loan advanced to M/s Uttam Builders, but denied having helped proprietor Satpal Babbar (A-3) in diversion of funds. Complaint Ex.PW-2/A is stated to be a matter of record. Accused claimed having no knowledge about driving license Ex.PW-5/A, record of PAN numbers and applications if preferred by Satpal Babbar (A-3) and signing of office memorandum by PW-8. According to the accused, evidence relating to the letters dated 15.10.2012 and 17.10.2012 is not pertaining to him and he has no knowledge about the report Ex.PW-10/A. To most of the questions accused has answered in the fashion that it (evidence) is matter of record and some of the evidence do not pertain to him and also claimed having no knowledge about the banking procedure etc. Accused claimed having no knowledge about the record Ex.PW-32/A to Ex.PW-32/F and Ex.PW-32/H1, although admitted handing over of documents by PW-35 vide memo Ex.PW-30/A stating that it is a matter of record.
CBI Vs. Pavan Arya & ors. Page 41 out of 110 Accused admitted that loan application was submitted in the name of M/s Uttam Builders (Regd) whereas the loan was sanctioned in the name of M/s Uttam Builders. Accused denied that he gave guarantee subsequent to loan application dated 19.09.2012. Accused has denied about the disclosure statement of accused Satpal Babbar, but has not specifically denied giving of specimen handwritings and signatures. Accused admitted transfer of funds in favour of Aarti Enterprises, but according to him it is a refund of loan amount taken by Satpal Babbar (A-3). Accused admitted that he was arrested in the presence of PW-1 Harjinder Singh but according to him the witnesses have deposed under the pressure of CBI and he has been falsely implicated. The documents favouring him have not been placed on record.
34. Further, according to accused Shiv Kumar Verma, he had given personal loan to the tune of Rs.35.5 lakhs to Satpal Babbar in the year 2011-12 and the money transferred by Satpal Babbar, is the refund of said loan.
35. Accused Rahul Babbar (A-5) has admitted maintaining account of P.P. Ceramics at Axis Bank, Rajouri Garden but claimed CBI Vs. Pavan Arya & ors. Page 42 out of 110 having no knowledge about the diversion of money from the account of M/s Uttam Builders. Accused claimed having no knowledge to the banking procedure and to most of the questions based on evidence. Accused further stated that he does not remember about the house search but admitted opening of loan and current account of M/s Uttam Builders through PW-27 Neeta Malik and records Ex.PW-27/A to Ex.PW-27/G and Ex,PW-27/H and Ex.PW-27/H1 and also the handing over of documents vide memo Ex.PW-30/A relating to transactions of M/s P.P. Ceramics. The loan of Rs.3.75 Crores from SBI Najafgarh Road Branch has been admitted. It is also admitted that loan application was preferred in the name of M/s Uttam Builders (Regd), whereas the loan was sanctioned in the name of M/s Uttam Builders. The accused admitted having given specimen handwriting and signatures during the investigation and that he was arrested in the presence of PW-1 Harjinder Singh. Accused stated that witnesses have deposed under the fear of CBI and it is a false case.
36. All the accused preferred to lead evidence in their defence. Defence Evidence 36.1. DW-1 Accused Shiv Kumar Verma examined himself as DW-
1. He deposed that he came to know Satpal Babbar (A-3) through CBI Vs. Pavan Arya & ors. Page 43 out of 110 Mahesh Parwal in the year 2010 and thereafter they used to meet occasionally. Accused claimed to have given loan to Satpal Babbar amounting to Rs. 20 lakhs. The loan was given in four installments of Rs.4 lakhs, Rs.6 lakhs and two installments of Rs.5 lakhs each. Again in October 2012, loan of Rs.15.5 lakhs was given in two installments of Rs.8 lakhs and Rs.7.50 lakhs to Satpal Babbar. The amount was withdrawn from the account of Aarti Enterprises for extending loan to Satpal Babbar. On the request of Satpal Babbar (A-3), accused became guarantor for his loan account but when Satpal Babbar was not regularly paying debt, he wrote a letter to bank seeking to withdraw his guarantee but again on the request of Satpal Babbar, he acceded and wrote another letter to the bank continuing with the guarantee. The loan of Rs.35.50 was repaid by Satpal Babbar.
During cross-examination accused admitted that no documents were prepared about the loan transactions nor the entries were made in the account of Aarti Enterprises. The entry about loan was not reflected even in the income tax returns. Accused denied the suggestion that no loan was given by him to Satpal Babbar or that he has been deposing falsely. Accused also CBI Vs. Pavan Arya & ors. Page 44 out of 110 denied that money received by him is the share of crime proceeds. 36.2. Accused Pavan Arya (A-1) examined himself as DW-2, wherein he relied upon circular no. 590/2007 Ex.P-4, with respect to his job profile as Chief Manager at CCPC. According to the accused his role was confined only to vet and forward the proposal to the sanctioning authority. He had no say with respect to grant or refusal of sanction of proposal. Due diligence report was submitted by branch manager and other reports were also annexed with the proposal. The irregularities pointed out in the charge-sheet relating to CERSAI was the responsibility of branch manager. The borrower with CIBIL score minus one (-1) is eligible. Referring to E-mail dated 10.10.2012, accused stated that borrower was not enjoying credit facility from anywhere and discrepancy about the name of the bank was also cleared. There was no impediment for forwarding the proposal to sanctioning authority. The handwriting appearing on internal page 3 of Ex.PW-8/A (colly) is stated to be that of A.R.K. Prasad, Dy. General Manager. Accused further stated that he did not nominate any Grid member as power to nominate Grid member was in the domain of DGM as per circular D-15.
CBI Vs. Pavan Arya & ors. Page 45 out of 110 Accused explained the entries of Rs.8.81 lakhs into his account stating that in December 2012, he borrowed Rs.3 lakhs from his mother and he disposed of gold on two occasions in the month of February and April 2013 and received cash of Rs.1,96,470/- and Rs.2,80,908/-. The purchase vouchers are Ex.DW- 2/A and Ex.DW-2/B respectively. The amount of Rs.80,000/- was withdrawn from Karol Bagh Branch and deposited in the account. The entries into the bank account are stated to be justified and allegations made in the charge-sheet are false.
During cross-examination, accused (A-1) admitted that he was terminated from his services in the year 2017 after departmental inquiry on account of misconduct. Priorly, he resigned from Oriental bank of Commerce. It is admitted that before forwarding the application-cum-appraisal to CCPC, the branch manager is required to obtain legal opinion, due diligence report, CIBIL reports etc. Accused admitted that legal opinion might have been received subsequent to forwarding of proposal by branch manager. It is also admitted that accused was member of ZLCC, which sanctioned the proposal on 11.10.2012. Accused admitted that for overdraft facility there was a different format prescribed but he could not recollect CBI Vs. Pavan Arya & ors. Page 46 out of 110 whether he pointed out the said irregularity. Accused further admitted the discrepancies about the name of the bank of the borrower but clarification was sought and the fact was clarified through E-mail dated 10.10.2012. Accused could not show that any communication seeking clarification about statement of account Ex.PW-26/A and unit visit report dated 01.10.2012 was made. The credit sanction was granted for Rs.5 Crores although it was applied for Rs.7 crores. According to the accused, the DGM decided to reduce the loan amount. It is admitted that proposal was forwarded under the supervision of the accused for Rs.5 Crores to sanctioning authority i.e. ZLCC.
Accused denied that purchase vouchers are fabricated or that no such transaction took place. Accused denied that no transaction of loan from his mother had taken place. Accused denied the suggestion that in conspiracy and collusion with other accused he facilitated the approval of credit facility in favour of M/s Uttam Builders despite shortcomings and fabrication of documents. 36.3. DW-3 Sneha Mishra, Branch Manager, ICICI Bank, Vikas Puri, brought the accounts statements of Aarti Enterprises for the CBI Vs. Pavan Arya & ors. Page 47 out of 110 period 01.04.2011 to 31.10.2012, Ex.DW3/A. 36.4. DW-4 Subhash Kumar, Chief Manager, Corporation Bank, Mayapuri Branch, brought the record of letter dated 13.02.2014 Ex.DW4/A (colly) and receipt of Proposal at Zonal office Ex.DW4/B (colly). The witness further produced the following record :
◦ original certificate of verification of title deeds dated 20.10.2012 Ex.DW4/C. ◦ Certified copy of order dated 13.03.2014 by CMM court of Ms. Sugandha Aggarwal, allowing Corporation Bank to take physical possession of stock and vehicle in M/s. Uttam Builders case, Ex.DW4/D. ◦ Certified copy of latest CERSAI report Ex.DW4/E. ◦ Certified copy of electronic record in the computer of the entry of stock statement in Uttam Builders CC limit on various dates during financial year 2012 to 2014, Ex.DW4/F. ◦ Certificate u/s 2 A of Banker's Books of Evidence Act, Ex.DW4/G. ◦ Certificate u/s 65 B of the Evidence Act for the computer generated records, Ex.DW4/H. ◦ Certified copy of order dated 11.02.2014 by DRT-III, Delhi in CBI Vs. Pavan Arya & ors. Page 48 out of 110 S.A. No. 43 of 2014 titled as SBI Vs. Corporation Bank, Ex.
DW4/J. ◦ certified copy of Revision Petition No. 36/14 dated 09.05.2014 titled as Corporation Bank Vs. State and Others, Ex. DW4/K. ◦ certified copy of order in Crl. No. 35/1/2015 dated 03.05.2017 passed by Hon'ble Court of Sh. Devendra Kumar Jangla, Ld. Addl. Sessions Judge-04 (West), Ex. DW4/L. 36.5. DW-5 P. V. Hemachandra Rao, Astt. General Manager, Corporation Bank, Head Office, Mangalore, produced the following record:
• Certified copy of letter no. OR/1256/98A/2013-14 dated 20.02.2014 addressed to Deputy General Manager, Corporation Bank, Zonal Office, Delhi, South, K. G. Marg, New Delhi, by Sh. S.K. Mishra, Branch Manager, E. No. 11300, Mayapuri, SME, Delhi, Ex.DW5/A. • Certified copy of letter dated 28.02.2014 addressed to Sh. S. Vishwanathan, Sr. Manager- Vigilance, camp at Mayapuri SME, Delhi by Sh. S. K. Mishra, branch Manager, Ex.DW5/B. CBI Vs. Pavan Arya & ors. Page 49 out of 110 • Certified copy of clarification dated 26.06.2014 submitted details by Sh. S. K. Mishra, Branch Manager, Delhi, Mayapuri, SME Branch to Sh. S. Vishwanathan, Vigilance, CO- Chennai along with SBI, Mansarover Garden, New Delhi, letter dated 21.04.2014 (statement of account of Uttam Builders (Regd.) Ex.DW5/C (colly).
36.6. DW-6 Abhishek Srivastava, Senior Manager, (Computer), Zonal Office, Delhi South, has brought Copy of the E-mail dated 10.10.2012 addressed to ZO Delhi South advances Ex.DW6/A and Certificate u/s 65-B Indian Evidence Act, 1872, dated 30.08.2019, Ex.DW6/B. 36.7. DW-7 Raghu Narayan Swain, Chief Manager, (Credit Division) CPPS, Head Office, Mangalore, brought the certified copies of different circulars of Head office and copy of manuals Ex.DW7/A to Ex.DW7/K. 36.8. DW-8 Chandraketu Kumar (also earlier examined prosecution witness-41), Senior Manager, Vigilance Cell, New Delhi has brought the certified copies of different circulars, letter etc. as Ex.DW-8/A to Ex.DW8/N. CBI Vs. Pavan Arya & ors. Page 50 out of 110 On Arguments
37. Arguing for the prosecution Sh. V. K. Pathak, ld. prosecutor for CBI, submitted that sufficient evidence have been brought on record to prove the case in the form of oral and documentary evidence. The matter pertains to working capital loan to the tune of Rs.500 lakhs granted in favour of M/s Uttam Builders on behalf of Corporation Bank and the officers of the bank (accused public servants) violated the procedural aspects and guidelines of the bank and thereby misused their official position and extended pecuniary advantage to the borrower. Accused Satpal Babbar on behalf of M/s Uttam Builders (Regd) submitted loan application on 19.09.2012 and his intentions were dishonest from the very beginning as he disclosed incorrect particulars in the application and submitted forged documents. Accused Sharad Kumar Mishra (A-
2) in conspiracy and collusion hurriedly recommended the proposal on the same day for sanction, ignoring serious discrepancies and in this way facilitated the sanction of working capital loan in favour of M/s Uttam Builders. Even post-sanction disbursement has not been properly monitored and on the very first day withdrawal of Rs.39 lakhs was allowed without seeking justification as to where the said amount was being utilized. Also, accused Sharad Kumar Mishra (A-
CBI Vs. Pavan Arya & ors. Page 51 out of 110
2) allowed transfer of funds through RTGS without making any inquiry as to whether the funds were transferred for the purposes they were sanctioned.
38. Accused Pavan Arya (A-1) being CCPC incharge and member of ZLCC was under obligation to make proper scrutiny of the proposal and documents before forwarding the proposal to Grid Approval Committee and thereafter to ZLCC, but Pavan Arya has failed to discharge his obligations. The discrepancies were apparent in the proposal such as name of the borrower, bank statements of previous banker, non obtaining credentials of the borrower, forged bank statement Ex.PW-26/A, forged financial statements and balance sheet of M/s Uttam Builders etc. but without taking note of the same and by violating the rules and guidelines of Corporation Bank, accused Pavan Arya facilitated the sanction of the proposal. Ld. Prosecutor further pointed out that accused Pavan Arya nominated his junior officers in Grid Approval Committee and got their signatures in good faith. The witnesses of the prosecution are consistent in their statements and all the necessary facts have been proved by them to show the commission of offences by the accused persons in conspiracy.
CBI Vs. Pavan Arya & ors. Page 52 out of 110
39. On pointing out the role of accused Shiv Kumar Verma (A-
4), ld. Prosecutor submitted that he has been the key conspirator with accused Satpal Babbar (A-3) and was associated with the officers of the Corporation Bank prior to the initiation of proposal of M/s Uttam Builders. It has also proved on record that an amount of Rs.35.50 lakhs has been received by accused Shiv Kumar Verma (being proprietor of Aarti Enterprises) from the loan account of M/s Uttam Builders on 22.10.2012, which he availed in lieu of helping accused Satpal Babbar by liaisoning with the officers of the Corporation Bank and by signing the guarantee agreement. No plausible defence has been brought on record to justify the transfer of huge amount of Rs.35.50 lakhs.
40. Accused Rahul Babbar (A-5) also indulged into conspiracy with his father to divert the loan funds through his accounts opened in the name of PP Ceramics and RB Marbles and the relevant bank documents have been brought on record to prove this diversion of funds.
41. Written arguments have been submitted on behalf of accused Pavan Arya (A-1). Also, arguing on behalf of accused Pavan CBI Vs. Pavan Arya & ors. Page 53 out of 110 Arya (A-1), his counsel Sh.Akhand Pratap Singh submitted that accused Pavan Arya has been CCPC incharge and dealt with the proposal of M/s Uttam Builders, but the processing officer has been PW-22 Ajay Pathak, who prepared the positive appraisal note. The functions of CCPC are detailed in Ex.P-4 and also terms and conditions of sanction are mentioned in the office memorandum Ex.PW-8/A. Accused Pavan Arya was required only to assist in proper appraisal of the proposal, whereas interaction with the borrower was optional. The proposal is received by ZLCC from the branch and only after screening the proposal same is sent to CCPC for taking quick view. Referring to Ex.DW-4/A, ld. counsel contended that meeting was held between the officers of the branch and ZLCC and the amount was reduced to Rs.500 lakhs by DGM at ZLCC. Referring to the E-mail Ex.DW-6/A, it is contended that clarifications were sought from branch head. It is also submitted that Grid members were not selected by Pavan Arya and there is no evidence brought by prosecution on this aspect. Accused Pavan Arya had no independent authority or discretion to sanction the proposal and he has been lowest in rank in ZLCC whereby the proposal was approved. The responsibility has been of the branch manager to take note of the lapses and CCPC Incahrge was only required to vet CBI Vs. Pavan Arya & ors. Page 54 out of 110 and forward the proposal to ZLCC. Pavan Arya was a diligent and competent employee of Corporation Bank and every allegation raised on him has a valid and legal explanation backed by the documents on record and circulars issued by the corporation bank. Accused Pavan Arya performed all the necessary duties within the scope of his responsibilities with due diligence and does not deserve to be punished for a crime that he never committed.
42. As per testimony of PW-33 Mohd. Khalique minus one is not an impediment to grant loan. There is no circular says that borrowers with insufficient credit history are ineligible for loan and that CIBIL score is no benchmark in appraisal of loans for borrowers with insufficient credit history. The title deeds of the EMG property WZ-88, Raja Garden, New Delhi-15 was verified by external agency Panel Advocate Vivek Jain (PW-15) and as per his report (which was approved by the law officer stationed at Zonal Office), Satpal Babbar (A-3) was the actual and absolute owner of the property and has clear, valid and marketable claim over the same. As per circular No.590/2007, it is the responsibility of the branch manager to ensure proper/error free documentation. Sharad Kumar Mishra (A-2) is the responsible for credit investigation of the securities and obtaining the CERSAI record of EMG property.
CBI Vs. Pavan Arya & ors. Page 55 out of 110
43. The confidential opinion from SBI Mansarovar Garden was sought by branch manager vide letter dated 17.10.2012 (Ex.P-42) and the requirement of branch to ensure quarterly visit to the unit was a post disbursal requirement and was not the responsibility of A-1. After completing all necessary requirements, the sanction was placed before ZLCC, headed by DGM ARK Prasad, AGM Balasubramanian (PW-19) and Pavan Arya. DGM ARK Prasad is the sanctioning and final authority granting sanction to the proposal. A- 1 took all due care in the appraisal of the records presented before CCPC and in verifying, if the loan proposal was worthy of sanction.
44. Prosecution has failed to bring any evidence to indicate that any money was transferred by Satpal Babbar to Pavan Arya and also no question was put to accused in his statement u/s 313 CrPC with regard to illegal gratification. The amount of Rs.8.81 lakhs deposited in various accounts of Pavan Arya are not tainted as he has sold gold twice amounting to Rs.4,77,378/-and had borrowed cash worth Rs.3 lakhs from his mother. It is prayed that Pavan Arya be given a benefit of doubt in the present matter.
CBI Vs. Pavan Arya & ors. Page 56 out of 110
45. In support of his submissions ld. counsel has relied upon:
• Sherimon Vs. State of Kerala1;
• Arvind Balashanker Joshi Vs. State of Gujarat 2; • S.R. Ramaraj Vs. Special Court, Bombay 3;
• Rajeevan Vs. Superintendent of Police4;
• Life Insurance Corporation of India and Another Vs. Ram Pal Singh Bisen 5 and;
• Harbans Lal and others Vs. Charanjit Singh and others 6.
46. Arguing on behalf of Sharad Kumar Mishra (A-2), ld. counsel Sh. Surender Chauhan argued that prosecution has failed to prove its case against accused Sharad Kumar Mishra. There is no material on record to suggest that there has been any meeting of minds or mens-rea to commit the offences. Accused has been the branch manager of SME, Mayapuri Branch of Corporation bank and one of his important obligation has been to advance loans. It would be incorrect to say that proposal of M/s Uttam Builders was hurriedly recommended. Referring to Ex.DW-4/B (colly), counsel pointed out that same was received at Zonal Level Credit Committee on 24.09.2012 as per the stamp appearing thereon. Accused being branch manager was concerned only to forward the 1 (2011) 10 SCC 768 2 1991 Cri LJ 2241 3 (2003) 7 SCC 175 4 2011 Cri LJ 2801 5 (2010) 4 SCC 491 6 AIR 1994 J&K 12 CBI Vs. Pavan Arya & ors. Page 57 out of 110 proposal and he had no control over the approval of sanction. The legal opinion and due diligence reports were given by the concerned agencies where accused had no role and the reports were duly forwarded to ZLCC. The terms and conditions of the sanction were duly complied with. Referring to the statement of PW- 12 Sudershan Kumar Mehta, ld. counsel pointed out that there has been no bar on disbursement of cash amount nor there was any requirement of obtaining vouchers, bills, hundies etc. while clearing the cheques of loan account. Ld. counsel further submitted that accused in his capacity as branch manager has taken all steps to get the collateral security attached and to get the recovery effected from the borrower through legal proceedings initiated before DRT. Referring to the orders Ex.PW-4/J and Ex.PW-4/D (colly), ld. counsel contended that chain of conspiracy is completely broken and in the face of clear evidence that accused has taken strong steps against the borrower, the charge of conspiracy cannot be taken as proved. Even if, there are some lapses in the proposal of M/s Uttam Builders, they are insignificant and should have been taken care of at CCPC and ZLCC levels. Accused Sharad Kumar Mishra (A-2) has not been in a position to influence the outcome of the proposal and therefore, his acts cannot be brought within the ambit of criminal CBI Vs. Pavan Arya & ors. Page 58 out of 110 misconduct as punishable under the provisions of Prevention of Corruption Act. There is no evidence to show involvement of accused Sharad Kumar Mishra (A-2) and therefore, he deserves to be acquitted. Written arguments have also been submitted on record on behalf of accused No.2.
47. Arguing on behalf of Shiv Kumar Verma (A-4), ld. counsel Sh.Akhand Pratap Singh has argued that he has been the guarantor to the credit proposal of M/s Uttam Builders, however, prosecution has failed to prove its case against accused Shiv Kumar Verma. Even the complaint (Ex.PW-2/A), on the basis of which FIR was registered does not mention the name of accused Shiv Kumar Verma. The legal opinion about the EMG/Collateral security was given by Vivek Jain (PW-15) and there has been transfer of money in his favour from the loan account. The prosecution has failed to show any link between the officers of the bank and Shiv Kumar Verma. It is admitted that amount of Rs.35.50 lakhs was transferred to the account of Aarti Enterprises from the account of M/s Uttam Builders, but the same has been justified by Shiv Kumar Verma in his testimony as DW-1 and it stands proved that a loan was advanced by Shiv Kumar Verma to Satpal Babbar, prior to loan CBI Vs. Pavan Arya & ors. Page 59 out of 110 account in question and the same was refunded. The charge against Shiv Kumar Verma (A-4) has not been proved.
48. Despite various opportunities, case has not been argued on behalf of accused Satpal Babbar (A-3) and Rahul Babbar (A-5).
49. I have given my due consideration to the written arguments and compilation of judgments relied upon by the defence.
Findings
50. The Corporation bank has sanctioned working capital loan/credit limit to the tune of Rs.5 crores in favour of M/s Uttam Builders and it is the case of prosecution that Satpal Babbar (A-3) (Proprietor of M/s Uttam Builders) in conspiracy with officers of the bank, submitted forged documents and furnished false information in order to deceive the bank and thereby caused wrongful losses by not repaying the debt. The officers of the bank (public servants) overlooked various irregularities and discrepancies appearing in the proposal and misused their official positions and wrongfully extended pecuniary benefits in favour of Satpal Babbar (A-3).
CBI Vs. Pavan Arya & ors. Page 60 out of 110
51. It is important to understand the banking procedure prescribed for sanction of credit facility. As evident from statement of PW-19 G. Balasubramanian, who has been one of the member of ZLCC, the proposal is initiated at branch level and branch manager is required to verify the credentials of the proposed borrower and to obtain due diligence report, legal opinion and valuation report with respect to the borrower as well as with respect to the collateral security and after the branch manager is satisfied with the proposal, he would forward/submit the same to CCPC. Secondly, CCPC is required to examine the proposal as forwarded by the branch and prepare the process note and in the process may seek verification of the documents and also other clarifications, if required, and thereafter submit the proposal to Grid members for approval. Thirdly, the Grid member on going through the process note, may also seek any clarification, if required, from CCPC or otherwise may give their observations and approval. After approval from the Grid, the proposal is placed before ZLCC.
52. Grid Committee has to be constituted in accordance with the guidelines and circular no.640/2007 (Ex.P-5), which provides as CBI Vs. Pavan Arya & ors. Page 61 out of 110 follows:
"2.2 The Approval Grid system shall be applicable to all sanctions where the aggregate exposure is Rs.25 lakhs and above i.e., to all proposals processed at the CCPCs irrespective of the rank of the sanctioning authority. In other words, the Approval Grid system shall be extended to sanction of such proposals (Rs.25 lakhs and above) by Branch Managers in charge of Large Branches, VLBs and ELBs as well as SMs and CMs at Zonal Offices and second line executives of CM's rank at ELBs, besides the sanctions of AGMs & above at the ZOs and HOs.
2.3 The operationalisation of CCPCs at all ZOs where all credit proposals (other than those under Corp Schemes except Corp Rentals) with exposures of Rs.25 lakhs and above, are being processed, facilitates the coverage of sanctions mentioned above under approval grid system.
The proposals shall be subjected to scrutiny by Approval Grids immediately after appraisal at the CCPCs itself and the proposal/appraisal note along with the minutes/observations of the Approval Grid shall be forwarded by the CCPCs to the respective sanctioning authority for decision.
2.4 The members of the Grids for Zonal Office and Branch level sanctions shall be drawn from ZOs. Retail Hubs and supporting set ups like Marketing, Govt./Insurance business, etc. attached to ZOs and only in case of need, from the local branches. Official representing CRMD shall invariably be a member of the Grid.
53. The Zonal Level Credit Committee (ZLCC) is the final sanctioning authority.
CBI Vs. Pavan Arya & ors. Page 62 out of 110
54. PW-40 N. Chandra Sekaran, Chief Manager (CCPC Zonal Office, Delhi South) also explained the procedure and steps to be followed in terms of Ex.P-2 (Loan process flow of the bank). The witness also deposed about Group Credit Policy of Corporation Bank Ex.PW-40/A which elaborates broad guidelines with regard to sanction of new credit proposals to be followed by sanctioning authority at all levels of the bank. The guidelines for credit approval grid system of Corporation Bank are explained in Ex.P-4 (circular No.590/2007 dated 14.08.2007), where the loan proposal exceeds Rs.1 Crore. It is also important to mention relevant contents of Ex.P-4, which provides as follows: .
"1.0...
2.0 As yet another measure, with a view to improve the quality of processing and to quicken the sanctioning process, Bank has transferred the work relating to appraisal of credit proposals to the proposed Centralised Credit Processing Centres (CCPC) established at all the Zonal Offices. The CCPCs will assist the branches under its jurisdiction with pre- sanction appraisal of all corporate\commercial credit proposals of Rs.25 lakhs and above the preparation of Office Memorandum for sanction of credit facilities coming under branch powers, ZO powers and HO powers.
3.0 As the specialized branches such as IFBs, overseas Branches, Large Corporate Branch and SME Branches have already been provided with sufficient number of trained Credit officers, they have been kept out of this new dispensation. While the due diligence, adherence to KYC principles, collection of data, ensuring error-free documentation and recommendation of the proposal rests with the branches from where the CBI Vs. Pavan Arya & ors. Page 63 out of 110 proposals have originated, the CCPC will assist in the proper appraisal of the proposal and preparation of the office memorandum for sanction."
55. The witness (PW-40) also testified about post-sanction follow up to be done by the branch with respect to utilization of funds released under the credit facility and end use thereof. The document has been proved as Ex.PW-40/C, according to which periodical inspection of stock-in-trade, scrutiny of stock statements submitted by the borrowers, calculation of drawing power and physical verification of stock/books of accounts by the bank officials, is to be done. The monitoring of operations in the borrower's account is also required to be done. Ex.PW-40/D (colly) is the document (extract of bank manual) prescribing supervision and follow up of working capital advances including inspection of stock- in-trade (godown inspection) by branch officers, verification of books of accounts, scrutiny of stock statements submitted by borrower, valuation and inspection of stock/book debts by outside agencies and remedial steps to be taken in case discrepancies observed.
56. In the background of above mentioned procedure, I have examined the proposal originated at Corporation Bank, Mayapuri, SME Branch, vide Ex.P-14. The proposal has been applied by CBI Vs. Pavan Arya & ors. Page 64 out of 110 proprietor Satpal Babbar (A-3) on 19.09.2012 giving the required details including PAN No., details of present banker i.e. Union Bank of India, Rajouri Garden, New Delhi and details of property offered as security WZ-88, Ring Road, Raja Garden, New Delhi. The complaint Ex.PW-2/A forwarded by Senior and responsible officer of Corporation Bank K. Nagraj Shetty (examined as PW-2) contains details of discrepancies and irregularities so committed by the borrower and also at the branch level and CCPC level. PW-35 Avadhesh Mathur also looked into the discrepancies being senior and responsible officer of Corporation Bank after the account of M/s Uttam Builders turned NPA (non-performing asset). He pointed out the following discrepancies:
• The loan application was not in the prescribed format of cash credit facility of Corporation Bank and the prescribed format was more elaborated.
• The guarantee from guarantor Shiv Kumar Verma (A-4) was obtained on 01.10.2012 subsequent to loan application dated 19.09.2012.
• The loan was applied in the name of M/s Uttam Builders (Regd), whereas the loan was sanctioned in the name of M/s Uttam Builders.
CBI Vs. Pavan Arya & ors. Page 65 out of 110 • The guarantor put his signature on 01.10.2012 subsequent to forwarding of loan application by the branch to zonal office. • The guarantee of Shiv Kumar Verma (A-4) was for Rs.500 lakhs whereas loan application was for 700 lakhs and also the guarantee is being given in the name of M/s Uttam Builders. • The loan application was forwarded by branch head Sharad Kumar Mishra (A-2) on the same date i.e. 19.09.2012. • The legal opinion, due diligence report and valuation report were not accompanying the loan application.
• Pre-sanction report should have been submitted at the time of forwarding the loan application.
• The loan application was submitted in a hurry without proper compliance of rules and guidelines.
• The net worth statement (Ex.PW-35/A) of proprietor Satpal Babbar (A-3) was not forwarded on the letterhead of chartered accountant as per banking norms and proper verification of details by chartered accountants were not mentioned. • M/s Uttam Builders (Regd) had not submitted any financial statement for sanction of loan yet the loan proposal was entertained nor the financial statement (Ex.PW-35/C) was signed by the borrower.
CBI Vs. Pavan Arya & ors. Page 66 out of 110 • The income-tax records have been in the name of M/s Uttam Builders and not M/s Uttam Builders (Regd) which has been the name of applicant/borrower.
• The lapses and discrepancies were material and were not noted by the bank officers.
There has been no cross-examination on behalf of accused Satpal Babbar to this witness.
57. PW-44 S.Vishwanathan another senior officer of Corporation bank was deputed to investigate into the matter. During this process, the witness scrutinized the entire record pertaining to the account of M/s Uttam Builders and even visited the business place of the borrower accused Satpal Babbar (A-3). He could find that sign board displayed on the shop and godown premises was not that of M/s Uttam Builders and it was revealed that signboard of M/s Rahul Marble and Granite, under the proprietorship firm of wife of Satpal Babbar was existing. Accused Satpal Babbar (A-3) met S.Vishwanathan and admitted having deposited mirror set of title deed documents with Corporation bank while the original stood deposited with State Bank of India, CBI Vs. Pavan Arya & ors. Page 67 out of 110 Najafgarh Branch. The branch head Sharad Kumar Mishra (A-2) submitted unit visit report dated 01.10.2012 whereas on 19.09.2012 itself the proposal had been forwarded to Zonal office recommending sanction of full credit limit. The branch head did not ensure bank's guidelines for positive compliance. The witness has elaborated on various discrepancies and lapses, he could find in the proposal, its sanction and post-sanction disbursement.
58. It is clear on examining the statements of above witnesses and the papers submitted by accused Satpal Babbar (A-3) that the intention of accused has been dishonest from the very inception and he furnished false and fabricated particulars and got credit facility sanctioned through deceitful means. It stands proved that accused Satpal Babbar (A-3) falsely mentioned Union Bank of India as its banker whereas submitted bank statement of State Bank of India Ex.PW-26/A which is a forged document as per the statement of PW-26 Jaspal Singh. Accused also gave misleading information about previous credit facility by mentioning in the concerned column "Nil", although he had taken loan in the year 2007 from SBI Najafgarh Branch to the tune of Rs.3.75 Crores and was declared NPA and recovery proceedings started as proved by PW-32 Umesh CBI Vs. Pavan Arya & ors. Page 68 out of 110 Chawla, branch head (SBI, Najafgarh Road, Delhi). The loan from SBI, Najafgarh Branch was obtained on the basis of same property i.e. WZ-88, Raja Garden, Delhi. It is also proved through the evidence of PW-10 Prashant Chhagan Lal Mahajan that title documents Ex.PW-10/C (Colly) submitted with the bank to secure the loan are forged and stamp papers thereof are tampered. Ex.PW- 10/C (Colly) also bears the photograph and signatures of Satpal Babbar (A-3). It has also emerged in evidence that accused Satpal Babbar applied and obtained two PAN cards by giving false information and it shows that intention of Satpal Babbar had been to cheat the authorities. PW-4 Jayant Bidani has also proved on record that financial statements submitted with the proposal are not genuine. Accused Satpal Babbar availed the credit facility by violating the terms and conditions of sanction and got the funds deviated through guarantor Shiv Kumar Verma (A-4) and his son Rahul Babbar (co-accused A-5) without their being any genuine business transactions for which the loan was sanctioned.
59. It is evident from account opening form Ex.PW-21/E and related documents and statement of account Ex.PW-42/B that on various occasions during the period from 22.10.2012 to 25.02.2013, CBI Vs. Pavan Arya & ors. Page 69 out of 110 funds amounting to Rs.3,23,53,340/- (Rupees three crores twenty three lakhs fifty three thousand three hundred and forty) were transferred from M/s Uttam Builders to the account of SP Marbles which has been maintained by Satpal Babbar himself being proprietor of SP Marbles and in this way the loan funds were deviated for personal benefit instead of using the same for business purposes.
60. On behalf of accused Satpal Babbar (A-3) there has been no cross-examination of material witnesses of the prosecution leading to the conclusion that accused has no plausible defence. Infact accused Satpal Babbar has not controverted the prosecution evidence and rather admitted his guilt during his statement u/s 313 CrPC. Accused has admitted about his confession made during the investigation Ex.PW-38/B (although same is inadmissible u/s 25 of Indian Evidence Act, 1872).
61. It stands proved on record that accused Satpal Babbar (A-
3) knowingly annexed forged documents with the loan application. The expert report Ex.PW-10/A proves that property papers were drawn on tampered non-judicial stamp papers. Accused Satpal CBI Vs. Pavan Arya & ors. Page 70 out of 110 Babbar (A-3) by signing and affixing his photograph on Ex.PW10/C (colly) has committed forgery within the definition of Section 464 IPC.
62. The relevant provision reads as follows:
"464 Making a false document. -- [A person is said to make a false document or false electronic record-- First --Who dishonestly or fradulently--
(a) makes, signs, seals or executes a document or part of a document;
(b) makes or transmits any electronic record or part of any electronic record;
(c) affixes any [electronic signature] on any electronic record;
(d) makes any mark denoting the execution of a document or the authenticity of the [electronic signature], with the intention of causing it to be believed that such document or part of document, electronic record or [electronic signature] was made, signed, sealed, executed, transmitted or affixed by or by the authority of a person by whom or by whose authority he knows that it was not made, signed, sealed, executed or affixed; or Secondly --Who, without lawful authority, dishonestly or fraudulently, by cancellation or otherwise, alters a document or an electronic record in any material part thereof, after it has been made, executed or affixed with [electronic signature] either by himself or by any other person, whether such person be living or dead at the time of such alteration; or Thirdly --Who dishonestly or fraudulently causes any person to sign, seal, execute or alter a document or an electronic record or to affix his [electronic signature] on any electronic record knowing CBI Vs. Pavan Arya & ors. Page 71 out of 110 that such person by reason of unsoundness of mind or intoxication cannot, or that by reason of deception practised upon him, he does not know the contents of the document or electronic record or the nature of the alteration.] Illustrations
a)...........
b)...........
c)...........
d)...........
e)...........
f)...........
g)...........
h)...........
i)...........
j)...........
k)...........
Explanation 1. --A man's signature of his own name may amount to forgery.
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63. On the aspect of Section 467 IPC, the important judgment is Bank of India Vs. Yeturi Meredi Shanker Rao 7, wherein on the basis of drawn inference, the appellant/accused was convicted for the offences punishable u/s 467 r/w Section 109 and 471 IPC. The exact observations of the court are as follows:
"It is no doubt true that so far as the evidence about the forgery of the signatures of P.W. 1 on the withdrawal form is concerned there is no evidence except the fact that the signatures are forged and the further fact that this withdrawal form was in the 7 1987 AIR 821 CBI Vs. Pavan Arya & ors. Page 72 out of 110 possession of respondent-accused who presented it in the Bank and obtained money therefrom and pocketed the same. From these facts an inference could safely be drawn that it was the respondent-accused who got signatures of P.W. 1 forged on this document as it was he who used it to obtain money from the Bank from the account of P.W. 1 and pocketed the same It is no doubt true that there is no evidence as to who forged the signatures of the withdrawal form but the circumstances indicated above will lead to the only inference that it was the accused-respondent who got the signatures of P.W. 1 forged on the withdrawal form. In this view of the matter therefore the acquittal of the respondent for an offence under Section 467 read with Sec. 109 also could not be justified. It is unfortunate that the State did not prefer an appeal against the acquittal of the respondent under Section 408 and also under Section 420, even before this Court it is first the Bank which came by way of special leave but later on the State has chosen to prefer an appeal. In the light of the discussions above, in our opinion, the appeal deserves to be allowed. It is therefore allowed and the acquittal of the respondent for offence under Sec- tion 467 read with Section 109 and Section 471 of the Indian Penal Code is set aside. Instead he is convicted for these two offences.
In case of Hema Vs. State, through Inspector of Police 8, the Supreme court dismissed the appeal by holding the accused guilty for filling up pass-port applications with bogus particulars and 8 Crl.No.31 of 2013 decided on 07.01.2013 CBI Vs. Pavan Arya & ors. Page 73 out of 110 it is held that false documents were made for the purpose of cheating and the conviction for the offences u/s 465 IPC and u/s 471 IPC was upheld.
64. In the case in hand, on close scrutiny of facts and evidence available on record and after applying ratio of abovesaid judgments, I am of the opinion that accused Satpal Babbar is liable for forging the documents, being maker of false documents. The photograph and signatures of Satpal Babbar are appearing on tampered non-judicial stamp papers [Ex.PW-10/C (Colly)] and drawing of this document falls within the ambit of Section 467 IPC. Also, it is to the benefit of accused Satpal Babbar (A-3), the offence of forgery is attributable to him.
65. To conclude the charges for the offence punishable u/s 120 B IPC r/w Sections 420, 467, 468, 471 IPC and Section 13 (2) r/w Section 13 (1) (d) of PC Act, 1988 and for substantive offences punishable u/s 420, 467, 468, 471 IPC has been proved beyond reasonable doubt against the accused Satpal Babbar (A-3). Specific Role of Accused Persons
66. Having concluded that accused Satpal Babbar (A-3) being CBI Vs. Pavan Arya & ors. Page 74 out of 110 proprietor of M/s Uttam Builders by way of mis-representation and by submitting forged documents, cheated Corporation Bank by availing credit facility of Rs.5 Crores and thereby committed offences (as detailed above), the question now arises about the individual role played by each accused by way of conspiracy and by committing substantive offences.
67. Conspiracy is the main offence attributed to the accused persons and therefore it is essential to reproduce the concept of conspiracy.
Criminal Conspiracy (concept)
68. The relevant legal position as regards, what constitutes conspiracy may be noted at the outset. Section 120-A defines criminal conspiracy as under:-
"When two or more person agree to do, or cause to be done, (1) An illegal act, or (2) An act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy:
Provided that no agreement except an agreement to commit an offence shall amount to a criminal conspiracy unless some act besides the agreement is done by one or more parties to such agreement in pursuance thereof.
CBI Vs. Pavan Arya & ors. Page 75 out of 110 Explanation:-It is immaterial whether the illegal act is the ultimate object of such agreement, or is merely incidental to that object."
69. Thus, ingredients of the offence of criminal conspiracy are:
(i) an agreement between two or more persons;
(ii) an agreement must relate to doing or causing to be done either
(a) an illegal act;
(b) Act which is not illegal in itself but is done by illegal means.
70. To establish a charge of conspiracy, indulgence in either an illegal act or a legal act by illegal means is necessary. The definition of 'illegal' is provided for in section 43 of the Indian Penal Code.
"43. The word 'illegal' is applicable to everything which is an offence or which is prohibited by law, or which furnishes ground for a civil action; and a person is said to be 'legally bound to do' whatever it is illegal in him to omit."
71. The word 'illegal' as defined u/s 43 of Indian Penal Code has been given a very wide meaning. It consists of three ingredients:
a) everything which is an offence or ;
b) everything which is prohibited by law; or
c) everything which furnishes ground for civil action.
72. With regard to conspiracy, Section 10 of the Indian Evidence Act comes into play which reads as under:-
"10. Where there is reasonable ground to believe that two or more CBI Vs. Pavan Arya & ors. Page 76 out of 110 persons have conspired together to commit an offence or an actionable wrong, anything said, done or written by any one of such persons in reference to their common intention, after the time when such intention was first entertained by any one of them, is a relevant fact as against each of the persons believed to so conspiring, as well for the purpose of proving the existence of the conspiracy as for the purpose of showing that any such person was a party to it."
73. Analysis of Section 10 of Indian Evidence Act would show that it envisages:
(1) prima facie evidence affording a reasonable ground for a court to believe that two or more persons are members of a conspiracy; (2) if the said condition is fulfilled, anything said, done or written by any one of them in reference to their common intention shall be evidence against the other;
(3) anything said, done or written by the alleged conspirators should have been said, done or written after the intention was formed by any one of them;
(4) it would also be relevant for the said purpose against another who entered the conspiracy, whether it was said, done or written before he entered the conspiracy or after he left it, and it can only be used against a co-conspirator and not in his favour."
74. Four well known fundamental requirements for proving conspiracy by way of circumstantial evidence are:
(I) circumstances from which the conclusion is drawn be fully established;
(II) all the facts should be consistent with the hypothesis of guilt; (III) circumstances should be of a conclusive nature and tendency; (IV) circumstances should, by a moral certainty, actually exclude CBI Vs. Pavan Arya & ors. Page 77 out of 110 every hypothesis but the one proposed to be proved;
75. It may be noted that criminal conspiracy in terms of Section 120B of the Code is an independent offence which is punishable separately. Conspiracy requires an act (actus reas) and an accompanying mental state (mens rea).
76. Legal position is well settled that in order to constitute a single general conspiracy there must be a common design. The evil scheme may be promoted by few, some may drop out and some may join at a later stage, but the conspiracy continues until it is broken up. The conspiracy may develop in successive stages. There may be general plan to accomplish the common design by such means as may from time to time be found expedient. When the ultimate offence consists of a chain of actions, it would not be necessary for the prosecution to establish to bring home the charge of conspiracy, that each of the conspirators had the knowledge of what the other collaborator would do, so long as it is known that the collaborator would put the goods or service to an unlawful use.
77. Direct independent evidence of criminal conspiracy is generally not available and its existence is a matter of inference, CBI Vs. Pavan Arya & ors. Page 78 out of 110 are normally deduced from acts of parties in pursuance of a purpose in common between the conspirators. It is not always possible to give affirmative evidence about the date of the formation of the criminal conspiracy, about the persons who took part in the formation of the conspiracy, about the object, which the conspirators set before themselves as the object of conspiracy, and about the manner in which the object of conspiracy is to be carried out, all is necessarily a matter of inference.
78. Meeting of minds of two or more persons for doing an illegal act or an act by illegal means is sine qua non of the criminal conspiracy but it may not be necessary prove the agreement between them. The existence of conspiracy and its objectives can be inferred from the surrounding circumstances and the conduct of the accused involved. Incriminating circumstances must form a chain of events from which a conclusion about the guilt of the accused could be drawn. A conspiracy may further be a general one and a separate one. A smaller conspiracy may be a part of a larger conspiracy.
79. Court while drawing an inference from the materials brought on record to arrive at a finding as to whether the charges of CBI Vs. Pavan Arya & ors. Page 79 out of 110 the criminal conspiracy have been proved or not, bears in mind that a conspiracy is hatched in secrecy and it is, thus, difficult, if not impossible, to obtain direct evidence to establish the same. The manner and circumstances in which the offences have been committed and the level of involvement of the accused persons therein are relevant factors. For the said purpose, it is necessary to prove that the pro-pounders had expressly agreed to or caused to be done the illegal act but it may also be proved otherwise by adducing circumstantial evidence and/ or by necessary implication. To establish an offence of criminal conspiracy, it is not required that a single agreement should be entered into by all the conspirators at one time. Each conspirator plays his separate part in one integrated and united effort to achieve the common purpose. Each one is aware that he has a part to play in a general conspiracy though he may not know all its secrets or the means by which the common purpose is to be accomplished.
80. Cumulative effect of the proved circumstances has to be taken into account in determining the guilt of the accused rather than adopting an isolated approach to each of the circumstances and each one of the circumstances has to be proved beyond reasonable doubt, while appreciating evidence relating to the CBI Vs. Pavan Arya & ors. Page 80 out of 110 conspiracy, Court takes care to see that the acts or conduct of the parties must be conscious and clear enough to infer their concurrence as to the common design and its execution.
81. (As regards the afore noted legal position, following precedents are referred : Mohammad Usman Mohammad Hussain Maniyar & Ors. v. State of Maharashtra 9, Jagannatha Shetty, J in Kehar Singh and Ors. v. State (Delhi Administration10, State of Maharashtra v. Som Nath Thapa 11, K.R. Purushothaman v. State of Kerala 12, State (NCT) of Delhi v. Navjot Sandhu @ Afsal Guru 13, Ram Narayan Popli Vs. CBI14, Yogesh @ Sachin Jagdish Joshi v. State of Maharashtra15, Nirmal Singh Kahlon v. State of Punjab and Others16)
82. In the background of aforesaid legal positions, I proceed to analyse the prosecution evidence to find out the specific role by other accused(s) in conspiracy with Satpal Babbar (A-3). 9 (1981) 2 SCC 443] 10 1988 (3) SCC 609 at 731 11 (1996) 4 SCC 659 12 (2005) 12 SCC 631 13 (2005) 11 SCC 600 14 (2003) 3 SCC 641 15 (2008) 6 SCALE 469 16 2008 (14) SCALE 639 CBI Vs. Pavan Arya & ors. Page 81 out of 110 Role of Shiv Kumar Verma (A-4)
83. It is the case of the prosecution that accused Shiv Kumar Verma (A-4) in conspiracy facilitated the obtaining of credit facility from Corporation Bank in favour of accused Satpal Babbar (A-3).
84. It is not in dispute that Shiv Kumar Verma (A-4) stood as guarantor to the loan by signing the relevant papers on 01.10.2012 and executed guarantee agreement Ex.PW-27/E (Colly).
85. On analysing the prosecution evidence, it is clear that accused Shiv Kumar Verma (A-4) was associated with the Satpal Babbar (A-3) from the very beginning in the transaction of obtaining working capital loan from Corporation Bank and he has been knowing about the cheating and forgery and submissions of false information before the bank. He signed guarantee to M/s Uttam Builders to the tune of Rs.5 Crore subsequent to submission of loan proposal, which was in the name of M/s Uttam Builders (Regd) and was for Rs.7 Crores.
86. There are two letters dated 01.11.2012 and 02.11.2012 both written by Shiv Kumar Verma (A-4) to the Branch Manager CBI Vs. Pavan Arya & ors. Page 82 out of 110 Corporation Bank. Vide letter dated 01.11.2012, accused Shiv Kumar Verma (A-4) requested the branch manager to stop all operations in the account of M/s Uttam Builders on account of serious differences. Vide letter dated 02.11.2012, accused Shiv Kumar Verma (A-4) withdrew the notice about stopping all operations in the account. Both the above letters have been admitted by accused Shiv Kumar Verma (A-4). It is also an admitted fact that Shiv Kumar Verma is the proprietor of Aarti Enterprises and the account of Aarti Enterprises was credited through RTGS to the tune of Rs.35.5 lakhs from the loan account of M/s Uttam Builders.
87. The credit facility from Corporation bank was availed for working capital but no business transaction between M/s Uttam Builders and Aarti Enterprises has been shown. Even otherwise, Aarti Enterprises has been dealing in scientific and pharmaceuticals plants. Immediately after sanction of loan, the payment of Rs.35.50 lakhs was received by Shiv Kumar Verma (A-4). The conduct of both the accused in making the transaction of Rs.35.50 lakhs further corroborates that both the accused persons (Satpal Babbar and Shiv Kumar Verma) were acting in complicity and conspiracy. The CBI Vs. Pavan Arya & ors. Page 83 out of 110 above letters dated (01.11.2012 & 02.11.2012) further show that there has been monetary issues between both the accused(s).
88. In defence, accused Shiv Kumar Verma (A-4) has pleaded that he advanced a sum of Rs.35.50 lakhs as loan to Satpal Babbar (A-3) and the said loan was refunded by Satpal Babbar (A-3) by ways of RTGS from the loan account. However, no document has been brought on record to show any such loan transaction nor such loan transaction is reflected in the account books or income tax records of Shiv Kumar Verma. It is difficult to believe that huge sum of Rs.35.50 lakhs was advanced by Shiv Kumar Verma (A-4) to Satpal Babbar (A-3) without any documentation. It is also improbable that by withdrawing cash from his account, account Shiv Kumar Verma (A-4) would advance loan in cash as loan could have given directly through cheques to Satpal Babbar. The only conclusion comes out that accused Shiv Kumar Verma (A-4) is taking false pleas in order to save himself from the charge of conspiracy.
89. On careful reading of statements of prosecution witnesses and documents brought on record, I am convinced that accused CBI Vs. Pavan Arya & ors. Page 84 out of 110 Shiv Kumar Verma (A-4), has been actively involved with Satpal Babbar in obtaining the credit facility from Corporation Bank through cheating and forgery.
Role of accused Rahul Babbar
90. Accused Rahul Babbar (A-5) is the son of accused Satpal Babbar (A-3) and it is evident from the material appearing on record that accused Rahul Babbar conspired with his father and facilitated diversion of funds from the loan account of M/s Uttam Builders.
91. It has emerged in evidence that funds have been diverted in the fashion that from loan account of M/s Uttam Builders huge amounts were transferred to the account controlled by accused Rahul Babbar. The account of R.B. Marbles and Minerals at Kotak Mahindra Bank, Rajsmand, Rajasthan was opened by accused Rahul Babbar and the relevant documents have been proved through PW-
42. It is evident on analysing these documents that on various occasions during the period 22.10.2012 to 27.02.2013 funds amounting to Rs.2,44,55,700/- (Rupees two crores forty four lakhs fifty five thousand and seven hundred) were credited into this account of Rahul Babbar from the account of M/s Uttam Builders. It CBI Vs. Pavan Arya & ors. Page 85 out of 110 is evident from the account of M/s P.P. Ceramics an amount of Rs.89,70,000/- (Rupees Eighty Nine lakhs seventy thousand) was transferred from the account of S.P. Marbels to the account of M/s P.P. Ceramics and an amount of Rs.35,50,600 (Rupees thirty five lakhs fifty thousand six hundred) was transferred from R.B. Marbles to the account of M/s P.P. Cermics. It is further evident from the account of M/s P.P. Ceramics, which account has also been opened by Rahul Babbar that a sum of Rs.2,05,65,960/- (Rupees Two Crores Five lakhs sixty five thousand nine hundred sixty only) during the period 27.11.2012 to 05.03.2013 was transferred into the account of M/s Uttam Builders to give the impression of business transaction. In this way, the loan amount was not utilized as per the banking guidelines and rotated within the family itself for personal gains.
92. In view of strong documentary evidence, the clear conclusion comes out that accused Rahul Babbar acted in conspiracy with his father Satpal Babbar (A-3), got the loan funds transferred without there being any genuine business transaction and facilitated the end use in violation of the banking guidelines.
CBI Vs. Pavan Arya & ors. Page 86 out of 110
Role of Public Servants:-
93. Accused Sharad Kumar Mishra (A-2), (Branch head,
Mayapuri SME Branch) and Pavan Arya (Chief Manager, Incharge CCPC) have been the officers of the Corporation Bank and dealt with the matter of M/s Uttam Builders in their official capacity. According to the prosecution version, both the above mentioned public servants acted in conspiracy with other accused persons and misused their official position by extending undue pecuniary benefits in favour of M/s Uttam Builders.
Criminal misconduct
94. In so far as the charge under Section 13 (1) (d) read with Section 13 (2) of the PC Act is concerned, the ingredients are:-
• that the accused should be a public servant;
• that he should use some corrupt or illegal means
or otherwise abuse his position as a public
servant;
• he should not have obtained a valuable thing or
pecuniary advantage; and
• for himself or any other person and we have
already noted the materials placed by the
prosecution to substantiate for the abovesaid offence.
CBI Vs. Pavan Arya & ors. Page 87 out of 110
95. Section 13(1)(c) & (d) of Prevention of Corruption Act deal with the criminal misconduct by a public servant by allowing any other person to convert for his own use any property entrusted to him and by means of corrupt or illegal means, obtains for himself of for any other person any valuable thing or pecuniary advantage; or by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest.
96. In the light of above said legal position, evidence brought on record, is required to be considered to find out whether prosecution has established necessary facts and circumstances to prove charge of conspiracy as well as substantive offences.
97. The first question in context with public servants needs to be decided is of Sanction u/s 19 of Prevention of Corruption Act.
98. The law on the question of sanction has been deliberated by the Apex Court in State of Maharashtra through CBI Vs. Pavan Arya & ors. Page 88 out of 110 CBI Vs. Mahesh G.Jain17 and the court culled out the principles of law relating to sanction. The relevant portion of the said judgment is reproduced hereunder:
i. It is incumbent on the prosecution to prove that the valid sanction has been granted by the sanctioning authority after being satisfied that a case for sanction has been made out.
ii. The sanction order may expressly show that the sanctioning authority has perused the material placed before him and, after consideration of the circumstances, has granted sanction for prosecution. iii. The prosecution may prove by adducing the evidence that the material was placed before the sanctioning authority and his satisfaction was arrived at upon perusal of the material placed before him.
iv. Grant of sanction is only an administrative function and the sanctioning authority is required to prima facie reach the satisfaction that relevant facts would constitute the offence.
v. The adequacy of material placed before the sanctioning authority cannot be gone into by the court as it does not sit in appeal over the sanction order. vi. If the sanctioning authority has perused all the materials placed before him and some of them have not been proved that would not vitiate the order of sanction.
vii. The order of sanction is a pre-requisite as it is intended to provide a safeguard to public servant against frivolous and vexatious litigants, but simultaneously an order of sanction should not be construed in a pedantic manner and there should not be a hyper-technical approach to test its validity.
99. In the present case, PW-6 Lakshmi Nath Reddy, General Manager, Human Resources Department of Corporation Bank, has 17 (2013) 8 SCC 119 CBI Vs. Pavan Arya & ors. Page 89 out of 110 granted sanction for prosecution against accused Pavan Arya (A-1). There is no issue as to the competence of PW-6 for granting sanction for prosecution against accused Pavan Arya. It is apparent that relevant sanction order Ex.PW-6/A has been passed with proper application of mind. During cross-examination, PW-6 clearly spelled out the basic points on which sanction was accorded for prosecution of Pavan Arya. Interestingly, no suggestion has been put to PW-6 that he accorded sanction without application of mind or without consideration of relevant record.
100. PW-12 Sudershan Kumar Mehta, Deputy General Manager, Personnel Administration Division, Corporation Bank, Head Office, Manglore, granted sanction against accused Sharad Kumar Mishra (A-2). The sanction order has been proved as Ex.PW-12/A. According to the witness, the sanction was granted on being satisfied about prima-facie material against the accused. During cross- examination, PW-12 confirmed that he had considered all documents in the light of role and responsibilities of branch manager while granting sanction. He had gone through the relevant documents and material including the financial statements of the borrower. According to the witness, the loan was disbursed by CBI Vs. Pavan Arya & ors. Page 90 out of 110 branch head without verification of title deeds. The correspondence exchanged vide letters Ex.PW-12/DA and Mark PW-12/D1, is admitted. According to PW-12, sanction order was dictated by him and no draft sanction order was sent by CBI. The specific suggestion has been denied by the witness that he did not apply his mind while granting the sanction.
101. It is clear that sanction orders have been passed by PW-6 Lakshmi Nath Reddy and PW-12 Sudershan Kumar Mehta, (who were competent authorities) on the basis of documents received by them. The sufficient material was placed before the sanctioning authorities to properly evaluate the issue of grant of sanction. The sanction orders itself show that they were passed with due application of mind and therefore, I conclude that sanction has been properly granted against both the accused(s). I do not find any meaningful defence taken by accused(s) in this regard.
102. Accused Sharad Kumar Mishra (A-2) has been the branch head of SME Mayapuri Branch of Corporation Bank. On examining the statements of prosecution witnesses and relevant documents, I find sufficient evidence on record indicating the active involvement of accused in the sequence of events.
CBI Vs. Pavan Arya & ors. Page 91 out of 110
103. The role and responsibility of branch head comes at the first level as the proposal for loan originates from the branch. Accused Satpal Babbar (A-3) submitted loan application along with documents on 19.09.2012 as evident from Ex.P-14. Accused Sharad Kumar Mishra forwarded the proposal to Deputy General Manager, Corporation Bank, Zonal Office on the same day i.e. 19.09.2012 with the observations that:-
"KYC compliance and original documents have been verified and proposal is recommended for sanction".
104. In accordance with Ex.P-4 (circular No.590/2007 dated 14.08.2007), role and responsibilities of branches are:
1. Marketing of Credit Proposals shall continue to be done by the Branches with the support from the zonal marketing team.
2. Booking/forwarding the proposals along with their recommendations to the CCPC by duly collecting the required data from the customers. The detailed check list furnished shall be made use of.
3. Adherence to the KYC principles/Proper conduct of due diligence.
4. On receipt of Office Memorandum from CCPC, sanction the limits as per the "Scheme of Delegation of Landing powers'.
5. Before release of the limits, branches shall ensure proper documentation and compliance of all sanction terms.
6. Follow up of the advances by exercising effective post sanction supervision/credit administration at the branches.
CBI Vs. Pavan Arya & ors. Page 92 out of 110
105. In this case, from the fact that proposal was forwarded on the same date, it is clear that no proper scrutiny of proposal and documents was done by Sharad Kumar Mishra (A-2) in compliance to guidelines of banking procedure. Ex.P-18 which is unit visit report shows that accused Sharad Kumar Mishra (A-2) visited the unit of M/s Uttam Builders on 18.09.2012 i.e. even prior to submission of loan application. The date on which unit visit report has been drawn is 01.10.2012, wherein it is specifically mentioned that:-
"The a/c operations in Union Bank of India reveals satisfactory operation of the unit. The unit has sufficient stock to meet it commitment of supply".
It is evident that no confidential opinion from Union Bank of India was ever sought nor any such account statement was ever furnished by the borrower in the bank. The clear conclusion comes out that the both observations about account operations in Union Bank of India and about sufficient stock have been falsely recorded by branch head Sharad Kumar Mishra (A-2) and same was not sent along with proposal which was forwarded on 19.09.2012. The arguments raised by ld. defence counsel that proposal was sent to ZLCC on 24.09.2012 is not acceptable. The stamp appearing on Ex.DW-4/B is about receiving the proposal at Zonal office, this cannot be taken as the date of forwarding the proposal by the CBI Vs. Pavan Arya & ors. Page 93 out of 110 branch manager. It is further evident from Ex.DW-8/L, which is leave record of accused Sharad Kumar Mishra (A-2) that accused was on leave on 21.09.2012, 22.09.2012 and 24.09.2012 for personal work and therefore, the proposal could not have been forwarded on 24.09.2012.
106. There is a check-list Ex.P-15 sent by branch manager on 01.10.2012 mentioning therein that due diligence report, credit investigation report and KYC confirmation by branch manager has been complied with. The check-list and observations made therein, are apparently false as no opinion about the bank statements of borrower were obtained. Ex.PW-26/A is the statement of account from SBI, Mansarovar Garden Branch and it has been proved that same is false and forged document. This statement of account does not even bear the stamp and seal of SBI. It could have been easily ascertained that the statement of account is not genuinely issued. There are two letters brought on record dated 15.10.2012 and 17.10.2012 (Ex.P-42 and Ex.PW-11/B) to show that through these letters confidential opinion from State Bank of India, Mansarovar Garden Branch was obtained. However, PW-11 Ashutosh Padru, Assistant General Manager, from SBI Mansarovar Garden Branch CBI Vs. Pavan Arya & ors. Page 94 out of 110 has clearly testified that no communication through these letters were exchanged between Corporation Bank and SBI Mansarovar Garden Branch. During cross-examination, PW-11 stated that he checked the bank records and replied the queries of CBI raised vide letter Ex.PW-11/DA during the investigation. He admitted that M/s Uttam Builders was having current account in their bank at the relevant time, but denied the suggestion that Ex.P-42 was received by them from Sharad Kumar Mishra (A-2) or that letter Ex.PW-11/A was issued by them under pressure of CBI. PW-11 is an official and neutral witness and his version could not be impeached despite lengthy cross-examination by defence. PW-26 Jaspal Singh, another witness from SBI, Mansarovar Garden Branch has also testified about letter Ex.PW-11/A and about the fact that it was confirmed to CBI that letters dated 15.10.2012 and 17.10.2012 were not issued and received. The witness has identified the signatures of Ashutosh Padru (PW-11) on the letter (Ex.PW-11/A).
107. Accused Sharad Kumar Mishra (A-2) has pleaded that these letters were actually exchanged with SBI Mansarovar Garden Branch and in his statement u/s 313 CrPC he stated that he personally handed over the letter Ex.P-42 to the branch head of SBI CBI Vs. Pavan Arya & ors. Page 95 out of 110 Mansarovar Garden Branch and letter dated 17.10.2012 (Ex.PW- 11/B) was delivered to him by the borrower in sealed envelop. Accused Sharad Kumar Mishra (A-2) has failed to give the name of branch head to whom he had personally handed over the letter Ex.P-42 (seeking report about the borrower from its previous banker). Even no such suggestions were given to important witnesses (PW-11 and PW-26) on this issue. The letter Ex.PW-11/B could not have been delivered to borrower Satpal Babbar (A-3) as it was confidential communication from bank to bank and as per the procedure, it could not have been handed over to the concerned party. There is no mention in the letter dated 17.10.2012 that same is sent by hand through the borrower. These pleas clearly are an afterthought and are being taken to avoid logical consequences. The CBI has seized the letters Ex.P-42 and Ex.PW-11/B from the records of Corporation Bank but no such letters have been actually exchanged with SBI Mansarovar Garden Branch. The pleas of Sharad Kumar Mishra (A-2) on this aspect are therefore false and there is no explanation about the serious lapse committed by him.
108. The necessary conclusion comes out that accused Sharad Kumar Mishra (A-2) forwarded the proposal of M/s Uttam Builders CBI Vs. Pavan Arya & ors. Page 96 out of 110 without proper compliance of banking procedure and guidelines. Accused has shown undue haste in forwarding the proposal to the higher authority and did not wait for important reports about credentials of borrower. The inevitable inference is that it has been done due to the conspiracy and complicity with the borrower Satpal Babbar (A-3).
109. Accused Sharad Kumar Mishra (A-2) has also committed serious irregularities by not monitoring the disbursement of loan amount. As per the banking procedure, accused Sharad Kumar Mishra (A-2) being the branch head was required to monitor the operations of loan account to ensure genuine end use of the funds. PW-40 N. Chandra Sekaran stated that according to bank manual (PW-40/C), branch is required to follow up the utilization of funds so released after the sanction which includes periodical inspection and scrutiny of stock statements and other verifications. Also, according to the procedure, bank manager was empowered to reduce drawing power of credit facility in case value of stock of the borrower was less than the prescribed limit.
110. It is evident from account opening form Ex.PW-21/E and related documents and statement of account Ex.PW-42/B that on CBI Vs. Pavan Arya & ors. Page 97 out of 110 various occasions during the period from 22.10.2012 to 25.02.2013, funds amounting to Rs.3,23,53,340/- (Rupees three crores twenty three lakhs fifty three thousand three hundred and forty) were transferred from M/s Uttam Builders to the account of SP Marbles which has been maintained by Satpal Babbar himself being proprietor of SP Marbles and in this way the loan funds were deviated for personal benefit instead of using the same for business purposes. Accused Sharad Kumar Mishra failed to monitor and control post sanction disbursement and failed to discharge his official obligations diligently and only inference can be drawn is that accused has played his part in larger conspiracy.
111. In defence, accused Sharad Kumar Mishra (A-2) has failed to show that post-sanction, he conducted any visit to the business place of the accused to find out sufficiency of stock. Also, accused allowed liberal transfer of funds without investigating into the genuineness of the transactions. The funds were being transferred within the family of Satpal Babbar (A-3) and were not being utilized for running of the business of M/s Uttam Builders.
112. As discussed earlier, PW-35 Avadhesh Mathur and PW-44 S. CBI Vs. Pavan Arya & ors. Page 98 out of 110 Vishwanathan pointed out specific discrepancies and lapses in the proposal and its sanction. On behalf of Sharad Kumar Mishra (A-2), no suggestion has been put to PW-35 that discrepancies pointed out by him are incorrect. The strong testimony of PW-35 could not be demolished during his cross-examination. Similarly, the strong testimony of PW-44 S.Vishwanathan could not be shaken on behalf of defence. The serious lapses were committed only owing to conspiracy and the conduct of accused Sharad Kumar Mishra (A-2) amounts to misuse of his official position. The role and responsibility of branch manager has not been properly discharged.
113. The job of recommendation of proposal is not a mechanical job and great responsibility is attached to the same. The misleading information furnished by borrower as well as forgery of documents could have been detected if proper exercise of KYC norms was carried out at the branch level. Proposal was not worth for recommendation at any stage and the conduct of accused Sharad Kumar Mishra (A-2) in recommending the proposal on the same day of receiving of the same, is the clear indication of deep conspiracy. Also post disbursement, accused Sharad Kumar Mishra (A-2) did not keep any control over transfer of funds from the loan account and CBI Vs. Pavan Arya & ors. Page 99 out of 110 did not ensure proper use of capital advance. The arguments of ld. defence counsel to the effect that there was no bar of disbursal of cash amount or requirement of vouchers, bills, hundies etc., is not acceptable. The ingredients of the offence u/s 13 (1) (d) of PC Act are properly fulfilled qua accused Sharad Kumar Mishra.
114. To conclude, the charges for the offence punishable u/s 120 B IPC r/w Sections 420, 467, 468, 471 IPC and Section 13 (2) r/w Section 13 (1) (d) of PC Act, 1988 and substantive offence punishable u/s 13 (2) r/w Section 13 (1) (d) of PC Act, 1988 has been proved beyond reasonable doubt against the accused Sharad Kumar Mishra (A-2).
115. Accused Pavan Arya (A-1), Chief Manager, Corporation Bank was working as incharge, Centralized Credit Processing Centre (CCPC), Corporation Bank and dealt with credit proposal of M/s Uttam Builders. According to the banking procedure, on receipt of proposal from branch, the matter is marked to CCPC through Zonal Office, Corporation bank.
116. In accordance with Ex.P-4, role and responsibilities of CBI Vs. Pavan Arya & ors. Page 100 out of 110 Centralised Credit Processing Centre are:
1. On receipt of completed set of papers from the branches, to process the proposals expeditiously.
2. If any clarification/additional information is needed, the same shall be sought within a specific time frame.
3. Interaction with the clients for better understanding of the proposals-a meeting can be organised through the branch head.
4. Send the duly Processed Note (in variably processed in RAM Package) back to the branches for sanction, if the same falls with their powers. If the powers to sanction the proposal fall within the powers of ZO/HO, the duly processed notes shall be sent to these offices directly for sanction.
5. CCPC shall maintain a copy of all documents/papers/calculations and process note etc., which formed the basis for arriving at the credit decision on each proposal.
6. Keep a close watch on the developments in the industry/economy.
117. The responsibility of incharge CCPC is to scrutinize the proposal in detail and prepare the office memorandum/appraisal note. The same is placed before Grid Approval Committee and after the committee records its observations, matter is placed before ZLCC for final sanction. Accused Pavan Arya (A-1) has been associated at CCPC level (being incharge) and he also constituted the Grid Approval Committee and was also member of ZLCC whereby the sanction of M/s Uttam Builders was finally approved.
118. As discussed earlier, there have been number of lapses on the part of Sharad Kumar Mishra (A-2) (Branch manager) while CBI Vs. Pavan Arya & ors. Page 101 out of 110 recommending the proposal of M/s Uttam Builders and it is the case of the prosecution that such lapses and irregularities should have been noted at CCPC level. According to the evidence of PW-35 Awdesh Mathur, he scrutinized the documents of the present case and found that there has been serious lapses (in addition to the lapses left by branch manager) on the part of competent authority and they have failed to take note of the same such as:
• Loan was sanctioned in favour of M/s Uttam Builders despite loan application having been moved in the name of M/s Uttam Builders (Regd.) • CIBIL Score of borrower has been minus one (-1) meaning thereby he had insufficient exposure to credit facilities and he should not have been granted a loan of Rs.5 crores.
• The officers of Grid Approval Committee signed without making any comments, normally the Grid proposal should go to other senior officers of the bank as members should not be from the same division i.e. Credit Division.
• Observations made by third Grid member Mohd. Khalique, Manager, CRMD were not complied with by the sanctioning authority before passing of the credit intimation to the branch.
CBI Vs. Pavan Arya & ors. Page 102 out of 110 During cross-examination on behalf of Pavan Arya, PW-
35 Avadesh Mathur admitted that processing officer placed positive appraisal note in favour of M/s Uttam Builders before Pavan Arya. It is also admitted that no objection or query was raised by DGM/AGM to the appraisal and that Approval Grid can be constituted depending upon the exigencies to ensure smooth function and speedy clearance of proposals. Witness denied that for all legal purposes M/s Uttam Builders and M/s Uttam Builders (Regd.) are the same. It is admitted that as per circular Ex.P-5, DGM is competent authority to appoint the Credit Approval Grid. The suggestion has been denied that it is not the mandatory duty of CCPC incharge to have a unit visit and prepare a report.
119. PW-44 S. Vishwanathan investigated into the matter on behalf of Corporation Bank after the account of M/s Uttam Builders turned NPA (non-performing asset) and according to his assessment, accused Pavan Arya abused his official position by not ensuring pre-sanction requirements in accordance with banking procedure. The clarifications were not sought by Pavan Arya from Maya Puri, SME branch regarding borrower and discrepancies appearing in banking details. The GCP guidelines have been violated by Pavan Arya (A-1) by not ensuring confidential opinion CBI Vs. Pavan Arya & ors. Page 103 out of 110 from previous bankers. The witness also deposed about CIBIL score of borrower which was showing insufficient credit history. During cross-examination, PW-44 stated that he submitted vigilance report in connection with the present matter. Witness further stated that insufficient information submitted by the branch should be taken care of before starting the appraisal. Member of Credit Approval Grid Mohd. Khaliq made dissent observations which were required to be completed before placing the proposal to ZLCC. According to the witness, guarantee should be obtained before sending loan application to higher authority. It is admitted that processing officer Ajay Pathak processed the loan proposal. The witness strongly stated that in view of minus one (-1) CIBIL score the proposal was not worth consideration for sanction. The witness denied the suggestion that no investigation report was submitted by him.
120. Other important witnesses are members of Grid Approval Committee, PW-8 Biswarajan Sahoo, PW-33 Mohd. Khaliq and PW-34 Parimal Kumar Singh. According to the statements of these prosecution witnesses, they have been nominated by Pavan Arya (A-1) as Grid Member. No cross-examination on this point was conducted on behalf of Pavan Arya.
CBI Vs. Pavan Arya & ors. Page 104 out of 110
121. PW-8 Biswaranjan Sahoo specifically stated that he signed the office memorandum Ex.PW-8/A on the instructions of Pavan Arya (A-1), who insisted that proposal was good and he signed the same in good faith. No contrary suggestion has been given to PW-8 to counter his statement. PW-34 Parimal Kumar Singh also stated that he signed the loan proposal as Grid Member in good faith as per the discussion with accused Pavan Arya, although he noticed some discrepancies. Nothing favourable to the defence could be brought out during cross-examination of this witness. PW-33 Mohd. Khaliq was a Grid member from CRMD. He also scrutinized the appraisal note/office memorandum for sanctioning of Rs.5 Crores to M/s Uttam Builders and made his observations on the same.
122. On examining the testimony of above witnesses, it is clear that accused Pavan Arya has been associated actively with the credit proposal of M/s Uttam Builders and he facilitated the final sanction of the same and did not ensure compliance to important guidelines of the bank. Pavan Arya (A-1) has been supervisory officer to the processing officer Ajay Pathak and under his guidance the office memorandum Ex.PW-8/A was prepared. The Grid CBI Vs. Pavan Arya & ors. Page 105 out of 110 members have been nominated by Pavan Arya in violation of guidelines issued by circular 640/2007 Ex.P-5 as he included the officers from his own branch (CCPC).
123. Most importantly, the credit history of borrower and confidential opinion from previous bankers were not properly ensured. Later it came to be revealed that borrower already availed credit facility from SBI, Najafgarh branch and recovery proceedings were initiated against him. The bank statement of SBI Mansarover Garden Branch was also found to be forged.
124. With the submissions of forged documents and incorrect particulars, the proposal should not have been cleared but the branch manager Sharad Kumar Mishra (A-2) and Chief manager Pavan Arya (A-1) in violation of banking guidelines got the sanction cleared.
125. The prosecution witnesses have remained consistent and cogent in their statements. The witnesses are official and independent employees of the Corporation Bank and there is no justification to discard their testimony. Even, defence has not been CBI Vs. Pavan Arya & ors. Page 106 out of 110 able to impeach their credibility. No strong motive could be attributed to the prosecution witnesses to depose incorrectly. All the relevant documents/official records have also been duly proved from genuine sources.
126. In his defence, accused Pavan Arya (A-1) pleaded that his role was confined only to vet and forward the proposal to the sanctioning authority. Accused also relied upon E-mail Ex.DW-6/A to show that he had raised queries to the branch manager with respect to the discrepancies. Accused also tried to shift the entire burden on branch manager by stating that irregularities pointed out in the charge-sheet should have been the responsibility of branch manager. Accused also denied having constituted Grid committee.
127. However, I find no justification in the defence pleas taken by accused Pavan Arya (A-1). He has been working as CCPC incharge and was responsible to take note of the irregularities committed by branch manager. The responsibilities attached to the post of accused Pavan Arya (A-1) has been greater and significant. 'Vetting' is the process of performing a background check, intelligence gathering of facts and to investigate thoroughly to CBI Vs. Pavan Arya & ors. Page 107 out of 110 ascertain the suitability of the proposal. Accused Pavan Arya (A-1) clearly failed in discharging his responsibilities and it is clear that he in collusion with the borrower, overlooked the important lapses, which were apparent and could be easily noticed. Even after sending E-mail (as reflected from Ex.DW-6/A), the proper compliance to discrepancies were not ensured. The element of conspiracy is clearly discernible from the conduct of accused persons.
128. The account of M/s Uttam Builders was declared non- performing asset and recovery proceedings were initiated before DRT. Huge losses have resulted to the bank from the loan account of M/s Uttam Builders.
129. To conclude, the charges for the offences punishable u/s 120 B IPC r/w Sections 420, 467, 468, 471 IPC and Section 13 (2) r/w Section 13 (1) (d) of PC Act, 1988 and substantive offence punishable u/s 13 (2) r/w Section 13 (1) (d) of PC Act, 1988 are proved beyond reasonable doubt against accused Pavan Arya (A-1). Conclusion:-
130. In view of my aforesaid observations, I conclude that CBI Vs. Pavan Arya & ors. Page 108 out of 110 prosecution has successfully proved its case against accused Pavan Arya (A-1) and Sharad Kumar Mishra (A-2) (public servants) and also against accused Satpal Babbar (A-3), Shiv Kumar Verma (A-4) and Rahul Babbar (A-5) beyond reasonable doubt.
131. I accordingly hold them guilty and record their conviction in the following manner:
• Accused Pavan Arya (A-1) is convicted for the offence punishable u/s 120 B IPC r/w Sections 420, 467, 468, 471 IPC and Section 13 (2) r/w Section 13 (1) (d) of PC Act, 1988 and substantive offence punishable u/s 13 (2) r/w Section 13 (1) (d) of PC Act, 1988.
• Accused Sharad Kumar Mishra (A-2) is convicted for the offence punishable u/s 120 B IPC r/w Sections 420, 467, 468, 471 IPC and Section 13 (2) r/w Section 13 (1) (d) of PC Act, 1988 and substantive offence punishable u/s 13 (2) r/w Section 13 (1) (d) of PC Act, 1988.
• Accused Satpal Babbar (A-3) is convicted for the offence punishable u/s 120 B IPC r/w Sections 420, 467, 468, 471 IPC and Section 13 (2) r/w Section 13 (1) (d) of PC Act, 1988 and substantive offence punishable u/s 420, 467, 468, 471 IPC.
• Accused Shiv Kumar Verma (A-4) is convicted for the offence punishable u/s 120 B IPC r/w Sections 420, 467, 468, 471 IPC and Section 13 (2) r/w Section 13 (1) (d) of PC Act, 1988.
CBI Vs. Pavan Arya & ors. Page 109 out of 110
• Accused Rahul Babbar (A-5) is convicted for the offence punishable
u/s 120 B IPC r/w Sections 420, 467, 468, 471 IPC and Section 13 (2) r/w Section 13 (1) (d) of PC Act, 1988.
132. Let the convicts be heard on the point of sentence. Digitally signed
ANJU by ANJU BAJAJ
BAJAJ CHANDNA
Date: 2019.12.09
CHANDNA 14:21:43 +0530
ANNOUNCED IN THE OPEN COURT ANJU BAJAJ CHANDNA
on 7 December 2019
th
Special Judge (PC Act) CBI-02,
Rouse Avenue Court Complex
New Delhi
Presently posted as: District Judge
(Commercial Court) East, Karkardooma.
CBI Vs. Pavan Arya & ors. Page 110 out of 110