Delhi District Court
Cbi vs . R.K. Verma & Ors. 1/145 on 21 March, 2018
IN THE COURT OF SAVITA RAO, SPL. JUDGE, (PC ACT) CBI01,
(SOUTH) SAKET COURTS : NEW DELHI
CC No. 07/2016 (Old CC No. 18/2013)
RC No. : 2 (E)/2006
CBI/EOW1/N.DELHI
Unique Case ID No. : DLST010000402008
Under Sections 120B r/w sec. 420/467/468/471 IPC and sec. 13 (2) r/w 13
(1) (d) of PC Act,
C.B.I.
Vs.
1. Raj Kumar Verma
S/o Sh. Ramesh Chandra Verma
R/o W1/A, 2nd Floor, Green Park, New Delhi
2. Mukesh Khemka
S/o Late Sh. Sant Lal Khemka
R/o 1635, 2nd floor
Outram Lines, Kingsway Camp, Delhi - 09
3. Manoj Garg
S/o Sh. Jai Kishan Garg
R/o A63, Shankar Garden
Vikashpuri, New Delhi - 18
4. Vijay Kumar Gupta
S/o Sh. Munga Lal
CC No. 07/16 Digitally signed
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R/o 29 , Nawada Housing Complex,
Dwarka More, Uttam Nagar, New Delhi
5. Sanjiv Kumar Mendiratta
S/o Sh. Ram Kishan Mendiratta
R/o 821, Krishi Apartments, Vikaspuri, Delhi
6. P. Prakash Nayak
S/o Late Sh. P. Mukund Nayak
R/o Mukund Kutir, Kotekane,
Ist Cross, Ashok Nagar, Mangalore - 575006
7. Jagdeep Malik
S/o Late Sh. Manohar Lal Malik
R/o Nil - 52 B (T.F.), Malviya Nagar, New Delhi
Date of Institution: 25.03.2008
Date of Conclusion of Arguments : 14.03.2018 and 17.03.2018
Date of Judgment : 21.03.2018
Appearances :
Mr.Navin Giri, Ld. PP for CBI
Sh. Madhukar Pandey, Ld. Counsel for A1, A2, A5 and A7
Sh. Shri Singh, Ld. Counsel for A3
Sh. Rahul Lather, Ld. Counsel for A4
Sh. Vijay Kaundal, Ld. Counsel for A6
JUDGMENT
1. Instant case was registered on 13.7.2006 in CBI/EOW 1 Branch, New Delhi on the basis of complaint received from Dy. General Manager , Canara CC No. 07/16 CBI Vs. R.K. Verma & Ors. 2/145 SAVITA Digitally signed by SAVITA RAO RAO Date: 2018.03.27 11:15:50 +0530 Bank, Disciplinary Action Cell, Circle Office, New Delhi, in terms of which, accused Raj Kumar Verma, Prop. Of M/s Glints Global and M/s Sunrise Trading Company , in connivance with Mukesh Khemka, Parnter M/s Sunrise Trading Company, cheated Canara Bank , R.K. Puram Branch to the tune of Rs. 323.61 lacs in the matter of obtaining packing credit/foreign bills discounted/ foreign export bills limits on the basis of false/forged/ fabricated audited balance sheets and documents of the properties, one of which was subsequently pledged with Bank of India, Karol Bagh Branch, New Delhi by accused Raj Kumar Verma.
2. Investigation revealed that M/s Sunrise Trading Company was a partnership concern of Raj Kumar Verma and Smt. Saroj Garg which was constituted on 28.7.2001 having its registered office at New Friends Colony, New Delhi. The firm was engaged in export of rice. Initially, the firm approached Canara Bank, R.K. Puram Branch , New Delhi for issuance of the Bank Guarantee for Rs. 154 lakhs in favour of Food Corporation of India to perform their export obligation of export of rice, which was sanctioned by the bank against the primary security of hypothecation of stocks of rice procured from FCI and collateral security by way of mortgage of land and building situated at plot no. 7, Block N, Village Sikdarpur, Delhi , now known as West Jyoti Nagar, Shahdara, Delhi valued at Rs. 177.70 lacs and registered in the name of Sh. Maman Chand Bansal. However, the said Bank Guarantee was not used by the firm and at their request, the same was cancelled on 31.01.2002.
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3. M/s Sunrise Trading Company was reconstituted on 10.06.2002 and Mukesh Khemka was inducted as partner, whereas Smt. Saroj Garg was dropped. Raj Kumar Verma and Mukesh Khemka approached Canara Bank, R.K. Puram Branch, New Delhi on 21.6.2002 for sanction of a packing credit limit of Rs. 70 lacs and a projection report alongwith with the provisional balance sheet of the company was also submitted by them with their application, which was processed by Jagdeep Malik, the then Manager (Loans) on the same day and in the process note recorded by him, it was mentioned that the firm intended to export goods backed by Letter of Credit issued by the prime banks only. Jagdeep Malik also mentioned that since the exports were to be carried out under prime bank LCs exclusively and the limits were backed by a collateral security of adequate value, the firm did not propose to obtain ECGC Post Shipment Policy and thus recommended for the waiver of the said condition by the circle office.
4. Investigation further revealed that on the basis of the recommendations made by Jagdeep Malik, PC limit of Rs. 70 lacs was sanctioned by P. Prakash Nayak, the then Chief Manager on 9.7.2002 subject to the terms and conditions referred in the Appraisal Note. At the time of sanction, P. Prakash Nayak mentioned that before release of the limit, it should be ensured that the borrowers are not in the RBI defaulters list and ECGC Caution List. He also mentioned that the documents under Prime Bank LCs will be permitted to be negotiated to the extent of 25 % of the accepted turnover of Rs. 360 lacs i.e. Rs.
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90 lakhs.
5. Investigation further revealed that a plot of land measuring 1000 sq. yds at Khasra no. 389, Village Masudabad, New Delhi was offered as a collateral security to the bank, valuation of which had been conducted by one Sh. T.C. Mehra, approved valuer at Rs. 110.30 lacs on 28.6.2002. Legal Scrutiny Report in respect of said property had been submitted by one Sh. Ravinder Vasudev, an Empanelled Advocate of the Bank. In his legal search report dated 12.6.2002, Sh. Ravinder Vasudev had noted that Sh. Sudershan Kumar had sold the aforesaid property to Vijay Kumar Gupta and executed a General power of Attorney, Agreement to sell and will in his favour on 2.2.2002. He further mentioned that an affidavit from Vijay Kumar Gupta be taken to the effect that the GPA issued in his favour was in force as on 6.2.2002 i.e. the date of execution of the sale deed. Shri Ravinder Vasudev also mentioned that the bank should physically verify the possession of the said property by the borrower and obtain documents to show its possession.
6. General Power of Attorney purportedly executed between Sh. Sudershan Kumar and Vijay Kumar Gupta on 2.2.2002 was false/forged document in as much as Sudershan Kumar had denied to have executed the said Power of Attorney and has contended that his signatures had been forged by someone. It also came to light that Sh. Sudershan Kumar remained in possession of said property till 1992 and had sold off the same to one Sh. Surender Kumar Mangla and Smt. Bimla Rani. This fact has been corroborated SAVITA Digitally signed by CC No. 07/16 SAVITA RAO RAO Date: 2018.03.27 11:16:56 +0530 CBI Vs. R.K. Verma & Ors. 5/145 by Surender Kumar Mangla and it was conclusively proved that Sudershan Kumar was not in possession of said property in year 2002. In addition, two witnesses namely Ram Prakash and Govind Aggarwal , who had witnesses the aforesaid GPA could not be traced at their given addresses. Similarly, an agreement to sell dated 2.2.2002 purportedly executed between Sudershan Kumar and Vijay Kumar Gupta has also been established to be a forged document. Further, an affidavit dated 2.2.2002 , a receipt dated 2.2.2002 and will dated 2.2.2002 purportedly executed by Sudershan Kumar in favour of Vijay Kumar Gupta had also been found to be false/forged documents. GEQD had offered positive opinion on signatures/handwritings of Vijay Kumar Gupta on the various documents.
7. On the basis of false/forged GPA dated 2.2.2002, Vijay Kumar Gupta executed a sale deed dated 6.2.2002 in favour of Manoj Garg, who in turn sold the property to Raj Kumar Verma vide sale deed dated 6.5.2002. However, neither Manoj Garg nor Raj Kumar Verma paid for the said property nor took possession of the same. A part of said property continued to be in the possession of Vijay Kumar Gupta and even Manoj Garg never took possession of the said property nor paid for the same. GEQD confirmed that Sudershan Kumar had not signed GPA dated 2.2.2002. As such, Vijay Kumar Gupta has suo motto created the said GPA in his favour and subsequently sold off plot no. 3, land measuring 1000 sq. yds to Manoj Garg vide sale deed dated 6.2.2002.
8. Investigation further established that Vijay Kumar Gupta had already CC No. 07/16 Digitally signed CBI Vs. R.K. Verma & Ors. 6/145 SAVITA by SAVITA RAO Date:
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executed a sale deed in favour of one Rajiv Gupta regarding 1010 sq. yds of the part of the said land, who had further sold the said property on 6.6.2002 to one Sh. Jai Kishan Garg, father of Manoj Garg on the basis of a GPA, which proved that when the property had been purchased by Jai Kishan Garg, father of Manoj Garg in year 2001, then the question of purchase of the same by Manoj Garg on 6.2.2002 does not arise and this also proved acknowledgement on the part of Vijay Kumar Gupta and Manoj Gupta about the forged documents submitted to the bank.
9. Further, the certificate dated 11.6.2002 regarding the development of capital and another certificate dated 3.7.2002 regarding the unsecured loan raised by M/s Sunrise Trading Company, purportedly issued by M/s Sobti Arora & Grover, Chartered Accountants were also found to be forged. Pankaj Grover, CA , Partner of the said firm proved that these certificates have been forged by someone. One Sanjiv Kumar Mendiratta, who used to work as an Accountant with Manoj Garg admitted to have forged the said certificates and balance sheets of M/s Sunrise Trading Company for the year ending on 31.3.2002. GEQD gave positive opinion on his handwriting, meaning thereby that he had forged the audited balance sheets and certificate regarding development of capital and unsecured loan of M/s Sunrise Trading Company.
10. Investigation further revealed that Sh. Ravinder Vasudev, Advocate, in his legal search report dated 12.6.2002 had specifically advised the branch to obtain an affidavit from Vijay Kumar Gupta and also to verify the physical CC No. 07/16 SAVITA Digitally signed CBI Vs. R.K. Verma & Ors. 7/145 by SAVITA RAO RAO Date: 2018.03.27 11:17:20 +0530 possession of the property. However, in the check list for the scrutiny and approval of Legal Search Report prepared by Jagdeep Malik and approved by P Prakash Nayak on 1.7.2002, it was clearly mentioned that the property had been physically verified on 1.7.2002, document showing proof of possession to be obtained, affidavit in the format enclosed to the LSR to be obtained and boundaries of the property to be ascertained. P. Prakash Nayak (A6) had specifically mentioned that the requirements mentioned in item 20 to be complied with and affidavit that GPA was in force to be obtained as mentioned in the LSR. Both, Jagdeep Malik and P. Prakash Nayak have stated to have visited the plot and physically verified the possession. However, both of them submitted a false report about having visited the concerned plot and verified its possession. Further, they did not obtain any document showing proof of possession and affidavit in the format as suggested by Sh. Ravinder Vasudev, Advocate. They also did not ascertain the boundaries of the property as pointed out by P. Prakash Nayak himself. Both of them intentionally failed to comply with these conditions as pointed out by P. Prakash Nayak himself . Investigation further revealed that the PC Limit sanctioned to M/s Sunrise Trading Company had been renewed from time to time and some of the bills submitted to them were realised from the foreign buyer namely M/s Steelmet Pvt. Ltd. , Dubai, who had been dealing in steel. However, it has come to light that one of the bills dated 27.8.2003 for US$ 100716 (equivalent to Rs. 40 lakhs) drawn on M/s Steelmet Pvt. Ltd. Singapore was negotiated against a letter of credit dated 3.8.2003 issued by Bank of India,Singapore but the same CC No. 07/16 Digitally signed SAVITA by SAVITA RAO CBI Vs. R.K. Verma & Ors. 8/145 RAO Date:
2018.03.27 11:19:51 +0530 was rejected by the drawee on account of certain discrepancies.
11. However, Canara Bank sent the bill to an alternative buyer namely M/s Crown Trading and Marketing, UAE for onward collection to Habib Bank AG, Zurich without recovery of the liability from M/s Sunrise Trading Company. It also came to light that the said bills were accepted by the alternate buyer namely M/s Crown Trading and Marketing in which smt. Anjali Verma W/o Raj Kumar Verma was the Managing Director but the payment was refused on due date by the said company. It may be mentioned here that while negotiating the documents, P Prakash Nayak and Jagdeep Malik failed to scrutinize the documents properly which resulted in refusal of payment by the foreign buyer.
12. Investigation further revealed that Raj Kumar Verma on 17.6.2003 applied for an adhoc Packing Credit Limit of Rs. 40 lacs on the basis of confirmed order placed by their buyer namely M/s Crown Trading and Marketing, Ajman, UAE of which Smt. Anjali Verma W/o Raj Kumar Verma was the Managing Director. On receipt of the application, Jagdeep Malik against prepared a process note and an adhoc PC limit of Rs. 40 lacs was sanctioned by M. Jaysheelan on 17.6.2003 itself against the same collateral security earlier offered by the borrower. Since earlier foreign bills sent to Bank of India, Singapore had not been realized due to discrepancies, which were not rectified and the payment not realized, there was no question of sanction of another adhoc PCL of Rs. 40 lacs to the said firm. The said limit was renewed on 25.3.2004 and remained valid till 8.7.2004 , but the same was not utilized as Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:20:03 +0530 CBI Vs. R.K. Verma & Ors. 9/145 the party stopped its operation and the account became NPA on 12.5.2004 with total liability of Rs. 112.61 lacs . M. Jaysheelan, the then Chief Manager and Jagdeep Malik failed to exercise due care and caution in this regard. Thus it is clear that Raj Kumar Verma, Mukesh Khemka, Manoj Garg in connivance with Vijay Kumar Gupta, Sanjiv Kumar Mendiratta, P . Prakash Nayak and Jagdeep Malik, cheated the bank on the basis of false and forged documents.
13. During further investigation, it was revealed that M/s Glints Global was a proprietorship firm of Raj Kumar Verma having its registered office at New Friends Colony, New Delhi. The current account of M/s Glintz Global was opened by Raj Kumar Vema on19.4.2001 with Canara Bank , RK. Puram branch which was introduced by Manoj Garg, Director of M/s A to Z Apparels Pvt. Ltd., having its OD Account with Canara Bank, Connaught Circus , New Delhi. M/s Glints Global was engaged in export of readymade garments, leather goods and handicraft items etc.
14. Raj Kumar Verma applied for PC limit of Rs. 40 Lacs and Foreign Outward Bill Purchase Limit of Rs. 40 lakhs and Foreign Letter of Credit/CC Limit of Rs. 10 lacs on 27.4.2001. The proposal was processed by Jagdeep Malik, the then Manager (Credit/loan), Canara Bank, R.K. Puram branch, New Delhi. Jagdeep Malik in his process not stated that the firm had just switched over from domestic market to overseas market and were holding confirmed orders to the tune of US$ 339000, whereas some more orders were under negotiation. He further mentioned that the firm expected to achieve annual SAVITA Digitally signed by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:20:14 +0530 CBI Vs. R.K. Verma & Ors. 10/145 turnover of Rs. 503 lacs, which appeared to be on the higher side and that the export turnover of around Rs. 200 lacs could be assessed for Working Capital Requirements. He further recommended that the primary security would be the stocks in hand and a collateral security would be an equitable mortgage of property measuring 180 sqy. Yds out of Property no. 112 & 112A, Khasra no. 72, Village Bindapur near Uttam Nagar, New Delhi registered in the name of Vipin Garg and evaluated at Rs. 77.40 lacs by M/s SJA Industrial Consultants Pvt. Ltd. on 12.7.2001 and Personal Guarantee of Sh. Vipin Garg (younger brother of Manoj Garg) having a net worth of Rs. 89.40 lacs. On the basis of these recommendations, P. Prakash Nayak sanctioned a PC Limit of Rs. 30 lacs, FBD limit of Rs. 10 lacs against confirmed orders and the aforesaid securities. While sanctioning the limit, P. Prakash Nayak mentioned that Raj Kumar Verma was having wide exposure and good contacts in Dubai and they negotiated few documents on single transaction basis, for which the payment had been promptly realized. He further mentioned that the project turnover of Rs. 503 lacs appeared to be on the higher side but party may achieve the same. He also mentioned that as per the audited financial statement, the promoter had contributed a working capital of Rs. 22.52 lacs in the said business. In the approval accorded by him, he had also stated that opinion report for the buyer may be obtained.
15. It was also transpired that Vipin Garg, brother of Manoj Garg had pledged the aforesaid property with Canara Bank against the credit facilities CC No. 07/16 SAVITA Digitally signed by SAVITA RAO CBI Vs. R.K. Verma & Ors. 11/145 RAO Date: 2018.03.27 11:20:25 +0530 sanctioned to M/s Glints Global. He was also a guarantor to the said loan. On verification, the said property had been found to be genuine. The valuation report submitted by M/s SJA Industrial Consultant Pvt. Ltd. as well as the Legal Search Report submitted by Sh. Ravinder Vasudev, Empanelled Advocate of the Bank were found to be genuine. It also came to light that P. Prakash Nayak, Jagdeep Malik inspected the aforesaid property offered as collateral security at the time of sanction of loan. However, at a later stage, it came to the notice of the bank that Bank of India, Karol Bagh, New Delhi had sealed the entire property , which had already been mortgaged with Canara Bank for the limit sanctioned to M/s Fairever International Pvt. Ltd. of which Raj Kumar verma was the Partner.
16. Investigation established that the Books of account of M/s Glints Global for the year ending 31.3.2002 had been shown as audited by M/s Bhupinder Shah & Company , Chartered Accountant. It was also found that the said CA firm examined the balance sheet and the profit and loss account of M/s Glints Global for the year ending 31.3.2002. Investigation revealed that the aforesaid documents were false/forged in as much as Sh. Bhupinder Shah, CA denied auditing the Books of Accounts of M/s Glints Global and further denied having signed the balance sheet and claimed that his signatures had been forged by someone and that their seal was also fake. During investigation, Sanjiv Kumar Mendiratta, an employee/Accountant of Manoj Garg prepared the balance sheet and other related documents and forged the signatures of Sh.
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Bhupinder Shah, CA.
17. GEQD had given positive opinion on audited balance sheet of M/s Glints Global and it has been established that Sanjiv Mendiratta forged the signatures of Sh. Bhupinder Shah, CA on the said balance sheet and on other documents. Investigation further revealed that Raj Kumar Verma vide his application dated 2.11.2001 requested the bank to enhance the PCL from Rs. 30 lacs to Rs. 80 lacs and their foreign bill discounting limit against confirmed order from Rs. 10 lacs to Rs. 20 laccs. The enhancement proposal was processed byJagdeep Malik and recommended for sanction against the same primary and collateral securities. P. Prakash Nayak sanctioned the enhanced PC limit from Rs. 30 lacs to Rs. 80 lacs and FBD limit from Rs. 10 lacs to Rs. 20 lacs on 16.11.2001. Raj Kumar Verma submitted another application and requested for the enhancement of PCL from Rs. 80 lacs to Rs 110 lacs for a period of one year which was again processed and recommended by Jagdeep Malik. M. Jaysheelan sanctioned the enhanced PCL of Rs. 110 lacs on 15.10.2002 against an additional collateral security of a new recurring deposit account of Rs. 1 lac per month without any reverification of the collateral security of property earlier offered to them. Moreover, at the time of renewal/enhancement of said PC, the bills for Rs. 73,25,000/ had fallen overdue and there was no justification for its enhancement.
18. No export shipments were made by M/s Glints Global between 17.4.2003 to 20.10.2003 and its two export bills for Rs. 43.56 lacs and Rs.
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52.47 lacs had not been realized as the LC Opening Bank had refused payment on account of discrepancies in documents. These two bills were again sent on collection basis to Habib Bank, Deira, Dubai but the same were returned on account of non payment by the drawee. M. Jaysheelan and accused Jagdeep Malik failed to follow up the overdue packing credit in as much as no bills were submitted against the PC released on 29.8.2003. The account of M/s Glints Global was declared NPA on 12.5.2004 with total liability of Rs. 211.20 lacs.
19. Investigation further revealed that huge funds from the accounts of M/s Sunrise Trading Company and M/s Glints Global were diverted by either withdrawing in cash or byway of issuance of cheues in favour of M/s A to Z Apparels Pvt. Ltd. , a firm owned by Manoj Garg.
20. It was also revealed during further investigation that Prashant Nayak Son of accused P. Prakash Nayak was employed with Manoj Garg in his firm namely M/s A to Z Apparels Pvt. Ltd. on monthly salary of Rs. 10,000/. Prashant Nayak visited Afghanistan with Ankan Gupta S/o Vijay Kumar Gupta to attend an exhibition during the period 24.9.2002 to 20.10.2002 on behalf of M/s Ess Ess Trading Company , a partnership concern of Vijay Kumar Gupta and having account with Canara Bank, R.K. Puram Branch, New Delhi. There was documentary evidence about the payment of ticket of Prashant Nayak by Ankan Gupta S/o Vijay Kumar Gupta. P Prakash Nayak sanctioned credit facilities to aforesaid firm, in which Manoj Garg and Vijay Kumar Gupta had played a crucial role, in lieu of pecuniary advantage obtained by him in the Digitally signed SAVITA by SAVITA RAO Date: CC No. 07/16 RAO 2018.03.27 11:21:11 +0530 CBI Vs. R.K. Verma & Ors. 14/145 form of employment of his son as well as his tour abroad.
21. Thereby offences punishable u/s 120B r/w 420, 467, 468 and 471 IPC and section 13 (2) r/w 13 (1) (d) of PC Act, 1988 were committed by the accused persons. Sanction for prosecution under section 19 (1) (c) of Prevention of Corruption Act 1988 against accused P. Prakash Nayak, the then Chief Manager and accused Jagdeep Malik, the then Manager (credit/loan) in Canara Bank, R.K. Puram Branch was obtained from the competent authority.
22. For M/s Glints Global, Charge u/s 120B IPC, 420 r/w sec. 120B IPC, 468 r/w sec. 120B IPC, 471 r/w sec. 120B IPC and u/s 13 (2) r/w 13 (1) (d) of Prevention of Corruption Act, 1988 r/w sec. 120B IPC against A1, A5, A6 and A7 , charge u/s 13 (2) r/w section 13 (1) of Prevention of Corruption Act against A6 and A7, charge u/s 420 IPC, 471 IPC against A1 as well as charge u/s 468 IPC against A5 was framed, whereas for M/s Sunrise Trading Company, charge u/s 120B IPC, 420 r/w sec. 120B IPC, 468 r/w sec. 120B IPC, 471 r/w sec. 120B IPC and u/s 13 (2) r/w 13 (1) (d) of Prevention of Corruption Act, 1988 r/w sec. 120B IPC against A1, A2, A4, A5, A6 and A7, charge u/s 420 IPC r/w sec. 471 IPC against A1, A2 and A4, charge u/s 13 (2) r/w sec. 13 (1) (d) of Prevention of Corruption Act against A6 and A7 as well as charge u/s 468 IPC against A5 was framed.
23. Against A3 for M/s Sunrise Trading Company, charge u/s 120B IPC, 420 r/w sec. 120B IPC, 468 r/w sec. 120B IPC, 13 (2) r/w sec. 13 (1) (d) of POC Act r/w sec. 120B IPC, 420/471 IPC was framed , whereas for M/s Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:21:20 +0530 CBI Vs. R.K. Verma & Ors. 15/145 Glints Global, charge u/s 120B IPC , 420 r/w sec. 120B IPC, 468 r/w sec. 120B IPC, 471 r/w sec. 120 B IPC and u/s 13 (2) r/w sec. 13 (1) (d) of POC Act, r/w sec. 120 B IPC was framed.
24. Prosecution in support of its case, examined following witnesses:
25. PW1 is Sh. K. Gopalakrishnan , who was posted as Dy. General Manager (Administration) at Canara Bank Circle Office, Nehru Place, New Delhi and had given his complaint dated 2.5.2006 Ex. PW1/A to the CBI.
26. PW2 is Harish Kumar, Senior Manager, Canara Bank Circle office who was looking after the advances department as section head and deposed with respect to the formalities to be complied with by the bank before sanctioning the limit and discounting the bills.
27. PW3 is Sh. Ravinder Vasudev, Advocate who was on panel of Canara Bank from year 2000 to 2004 and had given legal search report dated 14.7.2001, 12.6.2002, Ex. PW3/A and Ex. PW3/C respectively.
28. PW4 is Sh. Sudershan Kumar Chopra who worked as Government Contractor and stated about execution of GPA dated 30.6.1992, Deed of Agreement, affidavit, receipt and will dated 30.06.1992 Ex. PW4/A to Ex. PW 4/E respectively in favour of Bimla Rani . He had purchased the said property vide Ex. PW4/F and denied execution of GPA Ex. PW4/G in favour of Vijay Kumar.
29. PW5 is Ashok Kumar Malhotra who proved the documents with respect to property purchased from Smt. Bimla Devi in year 1992 as Ex.
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PW5/A to Ex. PW5/E. As stated, he sold the same to one Dr. Surender Mangla vide documents Ex. PW5/F to Ex. PW5/I.
30. PW6 is Sh. Kuldeep Kumar who alongwith his friend Khub Chand had jointly purchased a plot in Musudabad in year 1992 from Sh. Subhash Bhatia vide documents mark PW6/A and had further sold the same to Sh. Surender Mangla vide documents Ex. PW6/B to Ex. PW6/F.
31. PW7 is Sh. Jagdish Chander Yadav, who remained posted as Senior Manger with Bank of India, Karol Bagh Branch, New Delhi from May 2004 till May 2008 and exhibited the letter D48 signed by Sh. Diwedi as Ex. PW7/A. In terms of his statement, property bearing no. 112A, Khasra no,. 65, Village Bindapur, Delhi, was mortgaged by accused Raj Kumar Verma with their bank as well as with Canara Bank, R.K. Puram Branch, documents of which property are Ex. PW7/B to Ex. PW7/K respectively.
32. PW8 is Tilak Chand Mehra who was valuer on panel of Canara Bank and prepared the valuation report dated 28.6.2002 Ex. PW8/A.
33. PW9 is Surender Kumar Mangla who vide documents Ex. PW6/B to Ex. PW6/F (Ex. PW9/A1 and Ex. PW9/A2) purchased a property situated at Main Najafgarh Road in year 1995 and sold the same in year 1999 vide documents Ex. PW9/B1 to Ex. PW9/B7.
34. PW10 is Sh. Pratap Singh who was posted as Senior Manager at Canara Bank, R.K. Puram Branch and exhibited the relevant documents handed over by him to CBI during investigation of the case.
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35. PW11 is Sh. Puran Chand and PW12 is Sh. Ashok Kumar Tyagi , Advocate who both identified their signatures on sale deed dated 6.2.2002 Ex. PW11/A executed by Sh. Vijay Kumar in favour of Manoj Garg as well as on sale deed dated 6.5.2002 Ex. PW11/B executed by Manoj Garg in favour of Raj Kumar Verma. PW12 further deposed that stamp papers for executing GPA , agreement to sell and affidavit, dated 2.2.2002 had been purchased from his wife who was a stamp vendor and proved the relevant pages of stamp vendor register as Ex. PW12/A.
36. PW13 is Sh. Bhupinder Shah, Chartered Accountant who deposed that forms 3 CB Ex. PW13/A (colly) and Ex. PW13/B (colly) were neither on their letter head nor bears seal of their firm nor his signatures.
37. PW14 is Pankaj Grover , Chartered Accountant who deposed that Ex. PW14/A (colly) which was audit report was neither given by his firm nor bears his signatures. As further deposed, documents Ex. PW14/C and Ex. PW14/D were forged and he never issued any such letter or certificate to Chief Manager, R.K. Puram Branch.
38. PW15 is Sh. Jai Kishan Garg , father of Manoj Garg who exhibited the documents vide which plot no. 17, measuring 1010 sqyds. had been purchased by him as Ex. PW15/A to Ex. PW15/C. As deposed, accused Vijay Gupta had taken the said plot on rent from him, who lateron sold the same plot to son of PW15 namely Manoj Garg vide documents Ex. PW11/A. As further deposed, Vijay Gupta had sold plot no.3 and not plot no. 17 to son of PW15 but CC No. 07/16 SAVITA Digitally signed CBI Vs. R.K. Verma & Ors. 18/145 by SAVITA RAO RAO Date: 2018.03.27 11:21:48 +0530 on papers it was shown as plot no. 17.
39. PW16 is Sh. N.S. Srinath, General Manager from Canara Bank, Head Office, Banglore who accorded sanction for prosecution of accused no.6 and 7 Ex. PW16/A and Ex. PW16/B respectively.
40. PW17 is Sh. Prashant Nayak who used to work in the company of Manoj Garg namely M/s A to Z Apparels Pvt. Ltd. and had gone abroad five times . As deposed, when he went to Afganistan sometimes between 2001 to 2002, he was accompanied by Mr. Ankan Gupta and his air ticket expenses and expenses for staying abroad were borne by Ankan Gupta. The witness proved the letter Ex. PW17/A which was written by him to CBI while submitting the self certified copies of passport bearing no. E1355005.
41. PW18 is Harender Kumar who had purchased the property no. 17, measuring 1685 square yards situated in Khasra no. 389/391, in village Masudabad, Najafgarh, Delhi from one Surinder Kumar Mangla and sold the same to Vijay Kumar in 2001. Documents of abovesaid property were exhibit PW18/A to PW18/D.
42. PW19 is Sh. Kailash Chander Mogha who was posted in Stamp Branch of Divisional Commissioner's Office and handed over the sale register of stamps for the period 20.12.2001 to 4.3.2002 Ex. PW19/B to CBI.
43. PW20 is Yashpal Arora, who was posted as Reader to SubRegistrar in office of SubResigtrarII, Janakpuri and handed over documents to CBI vide letter dated 15.11.2007.
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44. PW21 is Sh. Bitthal Das Shah , Director of M/s SJA Technical Consultant Pvt. Ltd. who exhibited the valuation report dated 12.7.2001 prepared in his office as Ex. PW21/A.
45. PW 22 is Sh. R.K. Dogra who exhibited the sale deed dated 6.2.2002 as Ex. PW12/A.
46. PW23 is Sh. Dal Chand and PW24 is R.K. Lamba who were posted as Deputy Manager in Punjab National Bank in May 2007 and took part in search of premises of accused Raj Kumar Verma .
47. PW25 is V.S. Rana who was posted as Field Vigilance Officer in Regional Office, UCO Bank, Parliament Street and took part in search proceedings of accused no.2 Mukesh Khemka.
48. PW26 is Sh. Parveen Kumar Goyal who exhibited GPA dated 23.10.1998 as Ex. PW26/A and stated that the sale deed dated 27.9.2000 between him and Vipin Garg was executed on the basis of GPA Ex. PW26/A.
49. PW27 is Ms. Urmila Tyagi who was working as stamp vendor with collector of stamps and exhibited the register of sale of nonjudicial stamp paper as Ex. PW19/B
50. PW28 is Sh. S.K. Punhani who is a witness to obtaining of specimen signatures and handwriting of Manoj Garg , Vijay Kumar, Raj Kumar Verma, Vipin Garg, Jagdeep Malik, M. Jayasheelan and Pankaj Grover.
51. PW29 is Sh. Bharat Bhushan Sagar and PW30 is Sh. Devender Kumar Gupta,who both were witnesses to search of premises of Smt. Saroj Garg.
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52. PW31 is Sh. Rupak Bhatnagar who is a witness to search of premises of Mukesh Khemka.
53. PW32 is Sh. Ajeet Singh, Inspector of Police, CBI, EOW1, New Delhi who alongwith two independent witnesses and sub ordinate CBI Officials conducted search at residential premises of accused Raj Kumar Verma and exhibited the search list as Ex. PW23/A.
54. PW33 is Sh. Rajeev Gupta who, as stated, had purchased the shop situated in Rajapuri, Uttam Nagar from one Jai Kishan Garg in June 2001 for sum of Rs. 60,000/ and had made the payment by cheque. As stated, he had not signed any document relating to payment of Rs. 1,60,000/.
55. PW34 is C.S. Prakash Narayanan who was posted as Inspector, CBI, EOW and on the instructions of IO of the case, had conducted search at residence of Smt. Saroj Garg .
56. PW35 is Dr. Ravindra Sharma , from CFSL unit, Shimla who examined the documents of this case and gave his detailed opinion vide Ex. PW35/H.
57. PW36 is Sh. Vishwa Mitter Bhagi who is a witness to obtaining of specimen signatures and writing of Sudershan Kumar, Mukesh Khemka, P. Prakash Naik, Bhupender Shah and Sanjeev Kumar.
58. PW37 is Ashok Kumar Gupta who was posted as Senior Manager , Canara Bank, Kamla Nagar Branch and was entrusted with the work of inquiring into the accounts of M/s Glintz Global and M/s Sunrise Trading SAVITA Digitally signed by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:22:33 +0530 CBI Vs. R.K. Verma & Ors. 21/145 Company , which were maintained in R.K. Puram Branch of Canara Bank .
59. PW38 is Sh. Hari Kishan Yadav who during the relevant period was posted at Canara Bank, Circle Office, Nehru Place as Senior Manager and identified the signatures of Sh. Vinod Goel on letter Ex. PW38/A, vide which, documents pertaining to the account of M/s A to Z Apparels Pvt. Ltd. were handed over to CBI.
60. PW39 is Sh. Vipin Gupta who identified his signatures on Ex. PW37/A, which document, as stated, was signed by him at the time of mortgaging his property. He further stated that Ex. PW28/D1 to Ex. PW28/D 5 are his specimen signature which were taken in CBI office.
61. PW40 is Anil Kumar Chaudhary who exhibited the certified copy of report pertaining to investigation of Sunrise Trading Company as Ex. PW40/1.
62. PW41 is Inspector Bodhraj Hans, IO of the case who conducted the investigation of the case and filed the charge sheet against the accused persons.
63. PW42 is Sh. Ajay Aggarwal who stood witness to execution of sale documents between Vijay Kumar Gupta and Rajiv Gupta Ex. PW42/A.
64. Statement of all the accused u/s 313 Cr.P.C was recorded wherein they stated that they are innocent and have been falsely implicated in the present case. Digitally signed SAVITA by SAVITA RAO RAO Date: 2018.03.27 11:22:50 +0530 Following witnesses were examined in defence by accused persons:
65. DW1 is Sh. Avnish Kushwaha who brought some manuals and CC No. 07/16 CBI Vs. R.K. Verma & Ors. 22/145 circulars of the bank and exhibited the same as DW1/A to Ex. DW1/G.
66. DW2 is Sh. Kushal Kumar from Canara Bank who brought the statement of RD account, Canmobile account and PC accounts pertaining to accused R.K. Verma as well as the EMT Book No. II and proved the relevant entries as Ex. DW2/A7/1 to Ex. DW2/A7/4 respectively.
67. DW3 is Sh. Syed Faizal Huda , Forensic Expert who examined the questioned and specimen signatures of A5 , Bhupinder Shah and Pankaj Grover and proved his report as Ex. DW3/A5/1.
68. DW4 is Sh. B.N. Srivastava, who is also the handwriting and finger print expert and examined the disputed signatures of Sudarshan Kumar and other persons upon the document Ex. PW4/G (D12) and gave his report Ex. DW4/A 4/1.
69. DW5 is Ashok Kumar Yadav from Canara Bank who brought the statement of account of M/s Sunrise Trading Company pertaining to its PC Account and FDB Account as well as statement of account of M/s Glints Global pertaining to FDB Account . The relevant documents are exhibited as Ex. DW5/A to Ex. DW5/C . This witness also brought the letter dated 26.2.2018 written by Chief Manager, Canara Bank , certificate of bankers book of evidence and certificate u/s 65B of Indian Evidence Act and exhibited the documents as Ex. DW5/D to Ex. DW5/F.
70. I have heard Ld . PP for CBI, counsel Sh. Madhukar Pandey for Accused no.1, 2, 5 and 7, Counsel Sh. Rahul Lather for Accused no. 4, counsel Sh. Shri Singh for Accused no. 3 and counsel Sh. Vijay CC No. 07/16 SAVITA SAVITA RAO Digitally signed by RAO Date: 2018.03.27 CBI Vs. R.K. Verma & Ors. 23/145 11:23:02 +0530 Kaundal for A6 and also gone through the written submission filed on record. Following is the discussion .
Allegations Regarding Cheating and Fraud committed by A1 and A2 in availing Packing Credit and Other facilities from Canara Bank
71. M/s Glints Global was proprietorship firm of A1. The current account of M/s Glints Global was opened by A1 on 19.4.2001 with Canara Bank, R.K. Puram Branch which was introduced by A3 Director of M/s A to Z Apparels having its OD Account with Canara Bank, Cannought Circus branch. A1 applied for PC Limit of Rs. 40 lacs and foreign outward bill of Rs. 10 lacs on 24.4.2001.
72. M/s Sunrise Trading Company was partnership firm of A1 and Smt. Saroj Garg constituted on 28.7.2001. This firm approached Canara Bank, R.K. Puram Branch for issuance of Bank Guarantee of Rs. 154 lacs in favour of Food Corporation of India to perform their obligation of rice export which was sanctioned by the bank against the primary security of hypothecation of stocks of rice procured from FCI and collateral security by way of mortgage of land and building situated at plot no. 7, Block N, Village Sikdarpur, Delhi , now known as West Jyoti Nagar, Shahdara, Delhi valued at Rs. 177.70 lacs . The said Bank Guarantee was not used by the firm and at their request, the same was cancelled on 31.01.2002. M/s Sunrise Trading Company was reconstituted on 10.06.2002 and A2 Mukesh Khemka was inducted as partner in place of CC No. 07/16 SAVITA Digitally signed by CBI Vs. R.K. Verma & Ors. 24/145 SAVITA RAO RAO Date: 2018.03.27 11:23:14 +0530 Saroj Garg. Reconstituted firm M/s Sunrise Trading Company approached Canara Bank, R.K. Puram Branch, New Delhi on 21.6.2002 for sanction of a packing credit limit of Rs. 70 lacs. Projection report alongwith the provisional balance sheet of the company was also submitted by them with their application which was processed by A7 Jagdeep Malik, the then Manager (Loans) on the same day.
73. In terms of record , credit report and office note was prepared on 8.7. 2002 . PW41 admitted that 'the application was processed on the same day' was a clerical mistake noted in the charge sheet .
74. Regarding intimation of frauds committed in the accounts of M/s Glints Global and Ms/ Sunrise Trading Company, the complaint was lodged. M/s Sunrise Trading Company had A1 as partner who was also proprietor of M/s Glints Global. Both the businesses were functioning from New Friends Colony and the other partner in M/s Sunrise Trading Company had nominal capital into the company. M/s Sunrise Trading Company in terms of deposition of PW37 was floated to deceive the bank officials as Glints Global was not eligible for further advance against the common trading activity. As both these firms were the group concerns, hence branch officials were not empowered to sanction the limit to M/s Sunrise Trading Company as well as the factum of both these firms being group concern was not informed to higher authorities/controlling office. PW41 stated that during investigation, he found that both the accounts were individual accounts and not the group accounts, thereby, demolished this SAVITA Digitally signed by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:23:24 +0530 CBI Vs. R.K. Verma & Ors. 25/145 accusation.
Sanction of PC limit and Foreign Demand Bills by A6 and A7 and Mortgage of Bindapur Property
75. For M/s Glints Global, A1 applied for PC limit of Rs. 40 lacs . With regard to application of A1 for PC limit and the other limits for M/s Glints Global, proposal was processed by A7 Jagdeep Malik , the then Manager Credit and Loan , Canara Bank, R.K. Puram Branch. The firm expected to achieve annual turnover of Rs. 503 lacs, which appeared to the bank to be on the higher side and the export turnover of around Rs. 200 lacs was taken as assessment for Working Capital Requirements. The other recommendation for processing sanction was to obtain the primary security as stocks in hand and collateral security as an equitable mortgage of property measuring 180 sqy. Yds out of Property no. 112 & 112A, Khasra no. 72, Village Bindapur near Uttam Nagar, New Delhi registered in the name of Vipin Garg and evaluated at Rs. 77.40 lacs.
76. On the basis of recommendation, limits were sanctioned in favour of M/s Glints Global by A6 vide order note signed by him i.e. Ex. PW10/K and the facilities sanctioned were packing credit of Rs. 30 lacs, foreign demand bills/foreign bill of exchange against commercial orders of Rs. 10 lacs. Both the limits were sanctioned against the hypothecation of stock of goods meant for CC No. 07/16 SAVITA Digitally signed by SAVITA RAO CBI Vs. R.K. Verma & Ors. 26/145 RAO Date: 2018.03.27 11:23:34 +0530 exports and receivables. These limits were collaterally secured by mortgage of property no. 112 and 112A, out of Khasra no. 72, Village Bindapur, New Uttam Nagar, Delhi measuring 180 sy. Yds and valued at Rs. 77.40 lacs.
77. M/s Glints Global had projected sale of Rs. 503 lacs and applied for limit of Rs. 90 lacs but Canara Bank only accepted the figures of Rs. 200 lacs as feasible and had sanctioned limit of Rs. 40 lacs. For M/s Sunrise Trading Company after the surrender of earlier limit of Rs. 154 lacs, M/s Sunrise Trading Company availed PC limit of Rs. 70 lacs against the primary security of stocks and debts. Collateral security was also taken. No flaw was found in grant of sanction to both these firms. PW37 also admitted regarding there being no negative observations by Circle Office pertaining to sanction of limits of these two accounts. PW41 also admitted that he did not find any adverse comments by the Circle Office regarding the said sanction by branch in favour of M/s Glints Global and M/s Sunrise Trading Company.
78. PW7 witness from Bank of India stated about property bearing no. 112, Khasra no. 65, Village Bindapur, Delhi also having been mortgaged with the Karol Bagh Branch of Bank of India by A1 Raj Kumar Verma. Their money was not paid by the borrower and therefore the bank had taken possession of the property under SARFAESI Act and when the property was visited by their branch officers for putting lock, it was seen that there was already lock of Canara Bank, R.K. Puram Branch. Upon inquiry, they were informed that same property had been mortgaged by A1 for availing credit facilities from Canara CC No. 07/16 SAVITA Digitally signed by SAVITA RAO CBI Vs. R.K. Verma & Ors. 27/145 RAO Date: 2018.03.27 11:23:45 +0530 Bank, R.K. Puram Branch and this fact was not revealed to them by A1 when credit facilities were sought from them . The said property was mortgaged with Karol Bagh Branch of Bank of India in the year 2004.
79. PW37 who was the inquiry officer also stated about the property offered by M/s Glints Global being fake as the same property was mortgaged to Bank of India, Karol Bagh Branch and was also mortgaged to Canara Bank, R.K Puram Branch. As stated, the property documents were also not executed properly.
80. Vide Ex. PW3/A dated 14.6.2001, report was submitted by empanelled lawyer Ravinder Vasudev with regard to clear title of the said property and Ex. PW21/A is the valuation report submitted by M/s SJA Industrial Consultants Pvt. Ltd. pertaining to property mortgaged with Canara Bank.
81. PW10 compared the location of the property with the one mortgaged with R.K. Puram Branch of Canara Bank from both the sale deeds of Bindapur property and after comparing the specifics in both the sale deeds, his answer regarding both the properties being the same was in " negative ".
82. PW7 himself stated that the boundaries were mentioned in the sale deeds and he had seen the area surrounded or bounded by the property and correlated the same from the sale deeds. Having seen the sale deeds of both the properties, his answer corroborated the statement of PW10 regarding the property mortgaged with Canara Bank and the other mortgaged with Karol Bagh Branch of Bank of India being different. He sought to clarify that they had Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:23:55 +0530 CBI Vs. R.K. Verma & Ors. 28/145 never examined the documents submitted to Canara Bank and on the basis of claim of Canara Bank on the property , opined that the same property had been mortgaged to them.
83. PW41 admitted that Canara Bank handed over photocopies of documents of Bindapur property mortgaged by M/s Glints Global to Bank of India on 23.12.2005. Vide letter dated 31.12.2005 Ex. PW10/M, Bank of India communicated to Canara Bank that 'as per title deeds deposited with them, the property was bounded differently as the property mortgaged to them was a corner plot, whereas the property reportedly mortgaged to Canara Bank, R.K. Puram Branch could not be a corner plot as per the boundaries shown in title deed '. The said letter was seized by IO but he was not able to recall whether he had examined PW10 or the then Chief Manager, M. Jayasheelan on said aspect and later on admitted that he had not examined any official from Bank of India regarding the said aspect. He himself had visited the property i.e. plot no. 112 and 112A, Khasra no. 72, Bindapur Village and admitted that the area of plot no. 112 was 360 sq. yds in terms of Ex. PW7/DA and property mortgaged with Canara Bank was measuring 180 sq. yds out of the said property.
84. IO was not aware of the fact if Bank of India sealed the property mortgaged with Canara Bank due to confusion and when the confusion was resolved, the seal of Bank of India was removed in the year 2006. He had not made any efforts to investigate about the mortgage of property bearing no. 112/112A out of Khasra no. 72 with Bank of India and the acceptance of SAVITA Digitally signed by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:24:05 +0530 CBI Vs. R.K. Verma & Ors. 29/145 settlement proposal moved by A1 which was accepted by Bank of India on 15.6.2006, though the proposal and acceptance were part of the documents seized by PW41 from Canara Bank on 11.1.2007. At the same time, PW41 admitted that in terms of legal search report as well as the valuation report of Bindapur property mortgaged by M/s Glints Global, the said property was found to be genuine and no anomaly was noticed. Accordingly, both the properties mortgaged with Karol Bagh branch of Bank of India and R.K Puram branch of Canara bank being different, the charge qua mortgage of the same property by A1 with two banks does not survive.
Grant of Sanction for Prosecution Qua A6 and A7
85. No issue was raised pertaining to the sanction against A6, whereas for A7, it was submitted that the trial was vitiated for want of sanction u/s 197 Cr.P.C. and for invalid sanction u/s 19 of PC Act. As argued sanction was necessary u/s 19 of PC Act as well as u/s 197 Cr.P.C., whereas CBI purportedly obtained sanction of prosecution u/s 19 of PC Act but no sanction u/s 197 Cr.P.C. was obtained which was also mandatory and cognizance could not have been taken in absence of such sanction. It was submitted that absence of sanction u/s 197 Cr.P.C. is fatal to the case of prosecution and divests this court of jurisdiction for it goes to the root of the matter. Reference was made to the decision of Hon'ble Supreme Court in R.Balakrishna Pillai Vs. State of CC No. 07/16 Digitally signed SAVITA by SAVITA RAO CBI Vs. R.K. Verma & Ors. 30/145 Date:
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Kerala & Ors (1996) 1 SCC 478 wherein the accused while serving as the Minister for Electricity, Government of Kerala was alleged to have entered into a criminal conspiracy to commit the illegal act of selling electricity to a private concern without approval of the State Government. The court rejected the argument that no prior sanction was required for charges of conspiracy as it is not part of official duties of the minister to enter into a conspiracy. It was observed that " there can be no general proposition that whenever there is a charge of criminal conspiracy levied against a public servant in or out of office, the bar of section 197 (1) of the Code would have no application. Such a view would render section 197 (1) of the Code specious. It was further observed that " the right approach , it was pointed out, was to see that the meaning of this expression lies between these two extremes. While on the one hand, it is not every offence committed by a public servant while engaged in the performance of his official duty, which is entitled to the protection. Only an act constituting an offence directly or reasonably connected with his official duty will require sanction for prosecution. To put it briefly, it is the quality of the act that is important and if it falls within the scope of the aforequoted words, the protection of section 197 will have to be extended to the concerned public servant. This decision , therefore, points out what approach the court should adopt while construing section 197 (1) of the code and its application to the facts of the case in hand"
86. Reliance was further placed upon State of Madhya Pradesh Vs. Digitally signed CC No. 07/16 SAVITA by SAVITA RAO RAO Date: 2018.03.27 CBI Vs. R.K. Verma & Ors. 31/145 11:24:33 +0530 Sheetla Sahai (2009) 8 SCC 617 wherein it was held that " even in the course of a prosecution under the Prevention of Corruption Act, if the prosecution is separately charging an accused who is public servant under section 120B IPC, such prosecution would be bad in law unless the same is accompanied with sanction under section 197 Cr.P.C. Sanction under section 19 of the PC Act is not a substitute for sanction under section 197 Cr.P.C. and both provisions operate in distinct and exclusive fields.
87. As further argued, it was open to the accused to raise the plea of lack of sanction at any stage after cognizance, as was held in Matajog Dubey Vs. H.C. Bhari AIR 1956 SC 44, P.K. Pradhan Vs. State of Sikkim (2001) 6 SCC 704 and Girdhari Lal Vs. Lal Chand AIR 1970 Raj. 145
88. It was also submitted that as per CBI the accused public servants were acting as public servants and therefore purportedly (according to the CBI) in discharge of their duty. Furthermore, since the CBI obtained sanction under section 19 of PC Act, it is clear that sanction under section 197 Cr.P.C. was mandatory and cognizance could not have been taken in absence of such sanction.
89. It may be noted that the protection by way of sanction under section 197 Cr.P.C. is not extendable to the officers of government companies or the public undertakings even when such public undertakings are " State" within the meaning of Article 12 of the Constitution on account of deep and pervasive control of the government, as was observed in (1998) 5 Supreme Court Cases SAVITA Digitally signed by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:24:43 +0530 CBI Vs. R.K. Verma & Ors. 32/145 91 Mohd. Hadi Raja Vs. State of Bihar & Anr.
90. It was noted in the authority (supra) that " although the instrumentality or agency with a corporate veil, for all intents and purposes may be held to be a third arm of the government and such instrumentality discharges the duties and functions which the state intends to do. As such instrumentality or agency is not the less a juridical person having a separate legal entity. Therefore must be held to have an independent status distinct from the State and cannot be treated as a government department for all purposes. Therefore, even if an officer of such instrumentality or agency takes or receives, keeps or expends any property or executes any contract, even though in interest of the state, such action cannot be construed, as of rule, an action of the government by its employees or by an authority empowered by the government".
.91. Accused no.6 & 7 were public servant as they were working in a nationalized bank which is under control of the Central Government. { (1995) 2 Supreme Court Cases 768 Union of India & Anr. Vs. Ashok Kumar Mitra . Nationalised banks have been held to be corporation owned and controlled by the Central Government and established by a central act and employees of a nationalized bank being 'public servants}. In terms of the authority (supra), despite the accused no. 6 & 7 being public servants, protection u/s 197 Cr.P.C. to them was not available, they being officers of the corporation which though is considered State within the meaning of Article 12 of the Constitution and public servant defined in section 21 IPC will also have SAVITA Digitally signed by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:24:53 +0530 CBI Vs. R.K. Verma & Ors. 33/145 the same meaning but protection u/s 197 Cr.P.C. is not available to such public servant. (Reference to Mohd. Hadi Raja Vs. State of Bihar & Anr.) Hence, prosecution against Accused no.7 & 6 is not vitiated for lack of sanction u/s 197 Cr.P.C.
92. The other plea was raised with regard to non application of mind by the sanctioning authority who, as stated, was forced into giving sanction u/s 19 of PC Act, on dotted lines without perusal of record of M/s Glints Global and M/s Sunrise Trading Company. It was submitted that PW16 had admitted that alongwith the request for grant of sanction for prosecution of accused, CBI had forwarded draft sanction order. The sanction order was found to be verbatim copy of the draft sanction which gives rise to inference that the competent authority had accorded sanction without referring to the incriminating material collected during investigation.
93. Ld. Counsel for defence also referred to some incorrect facts placed before the sanctioning authority and submitted that the sanctioning authority did not consider the acts of A7 prior to year 2002, though he was posted in the R.K. Puram Branch from year 2000 to 2004. It was also submitted that as noted in sanction order, adhoc PC limit of Rs. 40 lacs was sanctioned but no document was placed on judicial record to show that A7 ever prepared an office note for sanction of adhoc PC limit of Rs. 40 lacs and rather PW41 admitted that sanction of Rs. 40 lacs was not an adhoc limit.
94. It was also pointed out that name and signature of A7 were not on the Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:25:04 +0530 CBI Vs. R.K. Verma & Ors. 34/145 office note for proposal of enhancement of limit, which fact was also confirmed by PW41 and then reference was made to certain other set of documents upon which PW16 was confronted. It was further submitted that since sanctioning authority had accorded sanction either on the basis of draft sanction or without referring to the material collected during investigation , as such, sanction order was bad in law. Reliance was placed upon State of Karnataka Vs. Ameerjan (2007) 11 SCC 273 and GokulChand Dwarkadas Morarka Vs. Kind , AIR 1948 PC 82, wherein it was observed that " the object of the provision of sanction is that the authority giving it should be able to consider for itself the evidence, before it comes to a conclusion that the prosecution in the circumstances be sanctioned or forbidden".
95. PW16 before this court stated about sanction having been accorded after going through SP report, relevant documents , statements of witnesses and analysing the case thoroughly and applying his mind. While this witness admitted that the draft sanction order was received by him, however he denied that he had made only few clerical changes in the draft and signed the same without applying his mind. This witness clarified that he had not conducted any independent inquiry before according sanction but had gone through all the documents. It is also correct that this witness did not remember having seen some documents when the questions were put to him in cross examination but he clarified that he dictated the sanction order which was typed by Stenographer and thereafter was signed by him.
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96. With regard to the draft sanction alongwith SP report, he stated that in some cases, he has received draft sanction and as far as SP report was concerned, invariably it was received in all the cases. Although, he admitted that he did not get any report confirming that the property had been physically inspected and he had seen D25, according to which, the property was physically verified but since there were statements contradicting the said report, therefore he accorded sanction.
97. The job of sanctioning authority is to apply its mind after perusal of the material placed before him, however the sanctioning authority is not required to conduct detailed scrutiny and to decide the charges himself but is only to form the opinion whether the charges levelled warrant prosecution or not and thereafter order for grant of sanction or non grant of sanction is required to be passed. This witness has been able to show that he had applied his mind and had accorded the sanction after perusal of all the relevant documents. The contents of documents and evidence collected , whether supports the allegations levelled by the prosecution or not is a matter of trial and the sanctioning authority itself was not required to conduct trial. In these circumstances, the sanctioning authority having applied its independent mind with regard to the sanction accorded for prosecution of A7, no invalidity is found in the said sanction accorded and it cannot be inferred from the statement of this witness that the sanction was accorded by him under influence from anyone. Accordingly, the sanction granted for prosecution u/s 19 of PC Act Digitally signed SAVITA by SAVITA RAO RAO Date: 2018.03.27 11:25:37 +0530 CC No. 07/16 CBI Vs. R.K. Verma & Ors. 36/145 is held to be valid.
98. Reliance is placed upon MS Vijay Kumar Vs. Indian Overseas Bank WA No. 69/2010 of Madaras High Court while referring to Gokulchand Dwarkadas Morarka Vs. Kind AIR 1948 PC 82, it was observed that " the sanction to prosecute is an important matter. It constitutes a condition precedent to the institution of the prosecution and the government has an absolute discretion to grant or withhold the sanction. They are not , as the High Court seem to have thought, concerned merely to see that the evidence discloses a prima facie case against the person sought to be prosecuted. They can refuse sanction on any ground which commends itself to them, for example, that on political or economic grounds they regard a prosecution is inexpedient. It is plain that the government cannot adequacy discharge the obligation of deciding whether to give or withhold a sanction without knowledge of the facts of the case. As further observed, sanction lifts the bar for prosecution. The grant of sanction is not an idle formality or an acrimonious exercise but a solemn and sacrosanct act which affords protection to government servants against frivolous prosecution. Sanction is a weapon to ensure discouragement of frivolous and vexatious prosecution and is a safeguard for the innocent but not a shield for the guilty .
99. It was further observed that " the grant of sanction is only an administrative function, though it is true that the accused may be saddled with the liability to be prosecuted in a court of law. What is material at that time is SAVITA Digitally signed by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:25:50 +0530 CBI Vs. R.K. Verma & Ors. 37/145 that the necessary facts collected during investigation constituting the offence have to be placed before the sanctioning authority and it has to consider the material. Prima facie, the authority is required to reach the satisfaction that the relevant facts would constitute the offence and then either grant or refuse to grant sanction".
Diversion of Funds
100. With regard to allegations qua Diversion of Funds, PW37 deposed that huge funds amounting to lacs of rupees were diverted by way of self cheques or cheques issued in favour of the persons not connected with their business activities. As deposed, the bank officials had suppressed certain facts i.e. branch officials mentioned that eight cheques drawn by the borrower firms were returned for want of funds, in fact thirty cheques were returned for want of funds before enhancement of limit and thirty one cheques were returned even after grant of enhancement of limit, which could have given alarm to the bank officials regarding functioning of the company. PW37 elaborated that resume of account report of a particular borrower whose print out is generated from the bank's computer system reveals the gist of account i.e. total credits and debit made in the account , highest debit and highest credit balances, average debits and credits etc which also includes the total number of cheque returns.
101. As further deposed by PW37, packing credit is disbursed against the CC No. 07/16 SAVITA by SAVITA RAO Digitally signed RAO Date: 2018.03.27 11:26:03 +0530 CBI Vs. R.K. Verma & Ors. 38/145 confirmed orders from the customer which in the present case would be the foreign buyer or against the letter of credit opened by the overseas buyer with their banker. FDB/FBE limit is to be disbursed against the export bills submitted by the customer. M/s Glints Global maintained current account at R.K. Puram Branch and from this account, M/s Glintz Global could utilise the funds credited into the account pursuant to proceeds of packing credit and bills. The bank advanced credit in this account against packing credit and bills disbursement. M/s Glints Global was supposed to make payment to their suppliers of goods and day to day expenses and other than trader/commercial transactions pertaining to the business of M/s Glints Global, no other transactions were permitted in this account but M/s Glints Global had withdrawn huge amount by way of cheques in name of self or other individual persons/firms not related to the business. The amount so withdrawn was to the tune of more than Rs. 300 lacs.
102. As deposed by PW1, the total PC limit to both M/s Glints Global and M/s Sunrise Trading Company was Rs. 180 lacs and the total amount of withdrawal was Rs. 312 lacs. Rs. 43 lacs were also diverted by cheques from the account of M/s Sunrise Trading Company in terms of Ex. PW1/A, as deposed by this witness who further sought to clarify with regard to diversion of funds of Rs. 355 lacs out of limit of Rs. 180 lacs by stating that the total liabilities were Rs. 323.81 lacs including the TOD and the party had perhaps withdrawn all the liabilities, funds provided by the banks and their own SAVITA Digitally signed by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:26:10 +0530 CBI Vs. R.K. Verma & Ors. 39/145 contribution and therefore it was possible to divert Rs. 355 lacs out of the limit of Rs. 180 lacs. He admitted that there was cash withdrawal of Rs. 312 lacs and cash withdrawal is different from diversion of funds. At the same time, this witness stated that the total amount of Rs. 125.26 lacs was withdrawn through cheques which was included in the said amount of Rs. 312 lacs. He again said that it may or may not be included in the amount of Rs. 312 lacs but admitted that it was not mentioned specifically that the amount of Rs. 125.26 lacs was over and above the amount of Rs. 312 lacs.
103. PW1 stated that by the term 'diversion of funds', he meant that the short terms funds supplied for long terms usage and also siphoning of funds by borrowers. As deposed, if a firm or a borrower being the business entity gives money to another entity during the course of business transaction, it may not amount to siphoning of funds, but if the money is not given for the genuine business transaction for the finance entity, it may amount to siphoning of funds. It is not possible for a DGM to personally verify the dates of diversion of alleged amount of Rs. 43 lacs. PW1 had not personally verified whether there had been business transactions in routine between M/s Glints Global and M/s A to Z Apparels during the period 20022004. He did not know that a transaction of Rs. 27,50,000/ had already taken place between M/s Sunrise Trading Company and M/s A to Z Apparels prior to sanction of limit in July 2002. Though he stated that M/s Glints Global started financing in year 2001 but he had not personally verified if after the sanction in July 2001, there had been CC No. 07/16 SAVITA SAVITA RAO Digitally signed by RAO Date: 2018.03.27 CBI Vs. R.K. Verma & Ors. 40/145 11:26:18 +0530 transaction of Rs. 15.50 lacs between M/s Sunrise Trading Company and M/s A to Z Apparels.
104. PW1 further deposed that diversion means utilization of funds for the purposes other than it is granted. At the time of granting loan, the manner of its utilization is mentioned. In case of user of the fund for any other purpose than for which it was granted, it amounts to violation of terms of contract between the bank and borrower. Misutilization of fund is valid ground for recalling of loan. As further deposed, in the instant matter, bank had not recalled the loan even after knowing that the funds were being misutilized. He admitted that during the transaction period i.e. between 20012004, there was no ECS system and during that period, the local clearing of the cheques used to take 34 days and in case of interstate clearance, sometimes it used to take about seven days. He further deposed that if a borrower is already maintaining a current account and he is granted loan under head such as cash credit, then the current account will be converted into cash credit account with the cheque withdrawal facility. Packing credits are granted for specific periods and proceeds of the same are credited to the current account of the borrower and borrower is permitted to utilize the same subject to branch satisfying the end use of the fund while admitting that borrower can conduct his other business transaction through the same current account.
105. PW1 did not state about any flaw in grant of sanction in favour of M/s Glints Global and even for Sunrise Trading Company but stated that there were CC No. 07/16 Digitally signed SAVITA by SAVITA RAO RAO Date: 2018.03.27 CBI Vs. R.K. Verma & Ors. 41/145 11:26:29 +0530 some irregularities in the said two accounts which were cash withdrawals, cheques issued in favour of connected parties and in favour of introducer of the account, sister concerns and submission of forged documents and thereby misutilisation of funds.
106. PW10 made reference to seven cheques Ex. PW10/H1 to Ex. PW10/H 7 and stated that cash withdrawal in case of such type of credit facilities was not permitted except for meeting petty expenses and salary. The cheques were ranging from 2.25 lacs to 9.40 lacs and such cash withdrawals were not permitted and not in practice which had been permitted by the branch out of the way. While referring to cheques Ex. PW10/H8 and Ex. PW10/H9 which were in the name of A to Z Apparels issued by M/s Sunrise Trading Company for Rs. 7,13,550/ dated 7.12.2002 and Rs. 8,40,600/ dated 7.12.2002, he stated that he could not say from these cheques alone whether there was any diversion of funds. With regard to Cheque Ex. PW10/H10 for Rs.8 lacs dated 30.4.2002 favouring A3, which was the bearer cheque and was encashed, the witness deposed regarding issuance of such cheque being not correct which seemed to be cash payment.
107. However, in cross examination, while referring to all the cheques i.e. Ex. PW10/H1 to Ex. PW10/H10, he stated that on the basis of these cheques alone, he could not say whether there was diversion of funds. After going through all the documents, witness again stated that there might or might not be diversion of funds. According to him, if a cheque is issued by the party and Digitally signed CC No. 07/16 SAVITA by SAVITA RAO RAO Date: 2018.03.27 CBI Vs. R.K. Verma & Ors. 42/145 11:26:38 +0530 such cheque is of substantial amount then it is expected that such cheque would be presented for encashment by the person or firm in whose favour such cheque has been issued by the party and if the party itself sought presentation of such cheque for substantial amount it may give rise to suspicion that it was diversion of funds.
108. PW37 also stated about the diversion of funds from the accounts of M/s Glints Global into the account of M/s A to Z Apparels Pvt. Ltd. through abovesaid cheques, but was not able to recall regarding verifying whether the said transfers were business transactions or not. PW41 while stating about the diversion of funds i.e. the funds being used for the purposes other than for which the sanction is made, stated that it was not so specifically mentioned in the charge sheet if any funds were used by M/s Glints Global and M/s Sunrise Trading Company for any requirement other than the business activity. He admitted that Canara Bank had given PC limit in both the accounts for buying stock and that total limit sanctioned in both the accounts were PC limit of Rs. 180 lacs i.e. Rs. 110 lacs in Glints Global and Rs. 70 lacs in Sunrise Trading Company and also that as per the terms of sanction of limit in both the accounts, 25 % margin of stocks was to be provided by both these firms.
109. PW37 stated about the diversion from account of Glints Global by withdrawal by self cheques , payments not against business transaction and the withdrawals by bearer cheques, however , he failed to show on record any document to prove that such other concerns including A to Z Apparels were not CC No. 07/16 SAVITA Digitally signed by SAVITA RAO RAO Date: 2018.03.27 11:26:48 +0530 CBI Vs. R.K. Verma & Ors. 43/145 having any business relationship with Glints Global and Sunrise Trading Company while also conceding that he did not record statements of proprietor/partners of the firms/companies who received payment from Glints Global and Sunrise Trading company to know the nature of transaction and purpose of payment. PW37 also admitted regarding cheque payment of Rs. 13 lacs prior to sanction of bank limit to Sunrise Trading Company and also with regard to the cheque payment of 6.50 lacs to A3 Manoj Garg. PW41 had also not investigated the relationship between M/s A to Z apparels and Glints Global and Sunrise Trading Company. No evidence was brought on record to show that there could not be any business transaction between M/s A to Z Apparels and Glints Global and Sunrise Trading Company.
110. It was submitted by Ld. Counsel for defence that PW1 has admitted that a borrower could conduct his other business transaction through the same current account into which credit facilities such as packing credit etc. were made available to him by the bank, while admitting that Managers/Promoters of M/s Glints Global, M/s Sunrise Trading Company and M/s A to Z Apparels were different, who also confirmed that a firm or borrower being the business entity gives money to another entity during the course of business transaction, which may not amount to siphoning of funds. PW1 had not verified whether there had been business transactions in routine between M/s Glints Global and M/s A to Z Apparels, whereas cheque Ex. PW10/H10 dated 30.4.2002 was SAVITA Digitally signed by SAVITA RAO RAO Date: 2018.03.27 11:27:00 +0530 CC No. 07/16 CBI Vs. R.K. Verma & Ors. 44/145 issued prior to the date on which limit was sanctioned i.e. 9.7.2002. This court find substance in the submission made by Ld. Counsel for defence. Merely because A3 was the introducer of the account , this fact ipso facto cannot be the reason to draw conclusion with regard to siphoning and diversion of funds to A3 or M/s A to Z Apparels ie. the company being run by A3 without there being evidence on record with regard to lack of business transactions between these firms, coupled with testimony of PW10 that after considering all the documents of the case, there may or may not be diversion of funds in this case.
111. With regard to cash withdrawals, PW10 admitted that cash withdrawals were permitted in both Glints Global and Sunrise Trading Company for wages, cash purchases and for making payments to fabricators etc. who was not able to tell the cash requirement of both Glints Global and Sunrise Trading Company nor he was aware of total net cash withdrawal from Glints Global and Sunrise Trading Company while admitting that Glints Global and Sunrise Trading Company used to buy fabric, get it cut inside their premises and after that the cut pieces were given to various vendors for hand embroidery, the embroidered cut pieces were then given to various fabricators. After fabrication, the garments were subsequently given to various vendors for processes like button hole making, button fixing, collar making, cuff making, threading, bleaching, dyeing etc. as per requirement. After these processes, the garments were checked in house and then were sent to finishing. After finishing, in house, random check was carried out before packing for final SAVITA Digitally signed by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:27:13 +0530 CBI Vs. R.K. Verma & Ors. 45/145 dispatch to port.
112. This witness did not know how many people were employed by Glints Global and Sunrise Trading Company and accepted that he could not tell if more than 100 small time cutters, fabricators, hand embroiderers, button hold makers, button fixers, collar makers, cuff makers, bleachers, dyers, tie and dye artists etc. who were working on job basis from their homes for both these firms and they had to be paid money in cash on regular basis as advance/payment to sustain the business. Thereby this witness was not aware of the requirement for cash withdrawals by M/s Glints Global and M/s Sunrise Trading Company. Similarly PW37 did not investigate regarding the cash requirements of M/s Glints Global and M/s Sunrise Trading Company while admitting that he had also not checked with regard to the process involved in making garments /handicrafts by M/s Glints Global and M/s Sunrise Trading Company, the number of workers working for Glints Global and Sunrise Trading Company and the daily expenses which were being incurred for M/s Glints Global and M/s Sunrise Trading Company .
113. It is also from the record that at the time of grant of sanction, no condition or the limit was fixed for withdrawal of cash/bearer cheques/self withdrawals, while PW10 also admitted that cash withdrawal for genuine business need is not against business norms and while sanctioning the limit to Glints Global and Sunrise Trading Company, no limit for cash withdrawal was set by sanctioning authority. Therefore, without there being any verification CC No. 07/16 SAVITA Digitally signed by SAVITA RAO CBI Vs. R.K. Verma & Ors. 46/145 RAO Date: 2018.03.27 11:27:22 +0530 with regard to the requirement for cash in hand for business purposes with Glints Global and Sunrise Trading Company, besides no limit having been prescribed for cash withdrawal, the bank cannot be faulted with, in permitting the cash/self withdrawals. Further, according to PW1, bank verified diversion of funds when account became stagnant and there was no stock and money was out of system while admitting that as per the audit report, the closing stock of M/s Glints Global as on 30.11.2002 was Rs. 269.409 lacs against PC limit of Rs. 110 lacs.
114. In terms of Ex. PW41/DA1 & A2/Z22, M/s Chaturvedi Pandey and Company, were appointed by Circle office of Canara Bank on 1.11.2003 to conduct stock audit of both these firms and as per the audit report dated 3.2.2004, the total stock as evaluated was Rs. 269.40 lacs available with M/s Glints Global and Rs. 125.16 lacs available with M/s Sunrise Trading Company. As stated by IO, the said amount was shown before deducting sundry creditors of Rs. 98.15 lacs and Rs. 18.47 lacs respectively for both the firms, thereby leaving the drawing power at Rs. 128.44 lacs and Rs. 80.02 lacs respectively for both the firms. The deduction for sundry creditors was made for the purpose of calculation of drawing power and the combined value of stock as evaluated by M/s Chaturvedi Pandey & Company available with M/s Glints Global and M/s Sunrise Trading Company was Rs. 394.56 lacs. Thereby value of stock available for both these firms was more than the stock required as per PC limit sanctioned by Canara Bank to both these firms.
Digitally signed SAVITA by SAVITA RAO
CC No. 07/16 RAO
Date:
2018.03.27
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11:28:21 +0530
115. The security with regard to M/s Glints Global and M/s Sunrise Trading Company was stock and collateral security was in the form of mortgage properties. Availability of stock when both the accounts were declared NPA was more than the stock required as per PC limit sanctioned by Canara Bank to both these firms. The realization of funds in these circumstances could be from the availability of stock which was the security against the grant of limits. Despite the letter issued by A1 informing that M/s Glints Global and M/s Sunrise Trading Company had suffered loss of stocks worth more than Rs. 3 Crores as the stock maintained by M/s Glints Global and M/s Sunrise Trading Company had become stale due to restrain by Canara Bank, yet no corrective measure was taken either for realisation of funds from the stocks or even responding with regard to their proposal sent for revival of the business.
116. As further alleged, PC limit was wrongly granted as the party was not tendering the bills for negotiation for a long time and earlier packing credits were overdue. The bills were not scrutinized properly in terms of Letter of credit by the bank officials as in terms of the confidential report on the buyer through Dun and Brad, they submitted the report, stating that the risk is above average which means branch officials should have exercised more caution. The bills were drawn on M/s Steelmate Pte. Ltd. and Consigned to Crown Trading and Marketing LLC. The managing Director of M/s Crown Trading and Marketing LLC was Mrs. Anjali Verma, who was the wife of accused R.K. Verma. When the bills were returned by the letter of credit opening bank with Digitally signed SAVITA by SAVITA RAO RAO Date: 2018.03.27 11:28:30 +0530 CC No. 07/16 CBI Vs. R.K. Verma & Ors. 48/145 the reason 'rejected due to discrepancies already notified to you' , bills were resent on collection basis in favour of M/s Crown Trading and Marketing LLC through Habib Bank, Dubai and it was also done in contravention of bank rules that too without recovering the earlier liabilities/outstanding.
117. Further, as alleged, there were no export shipments by M/s Glints Global between 17.4.2003 to 20.10.2003 and its two export bills for Rs. 43.56 lacs and Rs. 52.47 lacs were not realized as the LC Opening Bank had refused payment on account of discrepancies in documents. These two bills were again sent on collection basis to Habib Bank, Deira, Dubai but same were returned on account of non payment by the drawee. The then Chief Manager Sh. M. Jaysheelan and A7 Jagdeep Malik failed to follow up the overdue packing credit in as much as no bills were submitted against the PC released on 29.8.2003 and the account of M/s Glints Global was declared NPA on 12.5.2004 with total liability of Rs. 211.20 lacs. .
118. PW37 admitted that payment of all the bills raised against total exports made by both the firms i.e. M/s Glints Global & M/s Sunrise Trading Company was duly realized except three bills of M/s Steelmet Pte Ltd. for shipments sent against Irrevocable Letter of Credit of a Prime Bank i.e. Bank of India, Singapore. He had not stated in his report Ex.PW40/A that he had observed from the branch computer that no bills were discounted from the period from 17.4.2003 to 27.8.2003 and between 29.8.2003 to 28.10.2003. This witness admitted regarding five shipments vide Invoices dated 13.05.2003, 22.07.2003 SAVITA Digitally signed by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:28:39 +0530 CBI Vs. R.K. Verma & Ors. 49/145 and 20.08.2003 worth nearly Rs.1.20 crores having actually been made between 17.04.2003 and 27.08.2003 though stated that he could not comment whether it was for an amount of Rs.1.20 crores. He again confirmed regarding four shipments vide Invoices dated 29.08.2003, 01.10.2003 made between 29.08.2003 and 20.10.2003 though again could not comment whether it was for an amount of Rs.1.10 crores as the invoices were raised in US dollars.
119. Apparently the shipments were made during the said period i.e. 17.42003 to 20.10.2003 and therefore PC 264 for Rs.10 lakhs as granted on 17.06.2003 for 90 days and PC 266 for Rs.20 lakhs granted on 19.06.2003 for 90 days could not be stated to be overdue as on 27.08.2003 contrary to the observation of PW37 in his report and the witness was also not able to comment on the same during his examination before the court.
120. Similarly for Sunrise Trading Company, this witness confirmed regarding four shipments vide Invoices dated 13.05.2003 and 07.08.2003 between 05.02.2003 and 27.08.2003 and though again this witness was not able to confirm regarding the amount of those invoices at Rs.100 lakhs as the invoices were raised in US dollars.
121. Two export bills for Rs. 43.56 lacs and Rs. 52.47 lacs which were not realized as the LC Opening Bank had refused payment on account of discrepancies in documents were again sent on collection basis to Habib Bank, Deira, Dubai but the same were returned on account of non payment by the drawee.
SAVITA Digitally signed by
SAVITA RAO
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CBI Vs. R.K. Verma & Ors. 50/145
122. PW10 did not remember that large number of documents drawn on M/s Crown Trading and Marketing, Dubai were discounted by the branch and payments were realised by the bank during the year 2001 to 2004 .He did not remember that branch, after rejection of bill by Bank of India, Singapore tried to discount the bill by sending them for onward collection to Habib Bank AG, Zuric on behalf of M/s Crown Trading and Marketing , nor did he know if these bills were sent for onward collection to alternate buyer pursuant to specific instructions by the then Chief Manager of Bank M. Jayasheelan.
123. Having seen Ex. DW10/A1 witness confirmed that these bills were sent for onward collection to alternative buyer pursuant to specific sanction by the then Chief Manager M. Jayasheelan . He did not state about any discrepancy detected in these bills by Canara Bank. He also admitted that if buyer bank does not report any discrepancy in LC documents within stipulated time, it is liable to pay. According to him, as per his experience discrepancy free documents are rare. Discrepancies in Ex PW10/01 and Ex PW10/02, according to this witness, were regarding documents.
124. PW10 also admitted that because of difficulty in realisation of bills from foreign buyers the Government of India established the body called Export Credit Guarantee Corporation of India which provides insurance covers for all facilities extended by bank to customer including Packing credit, bills discounting etc. and that all facilities, pre shipment and post shipment like bills discounted granted by bank are normally insured with ECGC until or unless Digitally signed SAVITA by SAVITA RAO RAO Date: 2018.03.27 11:28:58 +0530 CC No. 07/16 CBI Vs. R.K. Verma & Ors. 51/145 specifically exempted by sanctioning authority. This witness confirmed that for M/s Glints Global, no exemption was granted with regard to ECGC and as per the statement of account, premium of ECGC regarding Sunrise Trading Concern and M/s Glints Global was debited in both the accounts. He also admitted that although the premium is paid by the exporter, insurance cover is provided to the bank as beneficiary and any claim with ECGC can be filed by bank without exporter having any role to play. In the instant matter, also the claim was filed but it was rejected and the witness was not able to answer if the ground of rejection were technical lapses made by Canara Bank and this witness also did not know whether any protest was filed or any follow up was taken with ECGC qua rejection of the claim.
125. PW10 further admitted that all facilities granted to M/s Glints Global and M/s Sunrise Trading Company (including packing credit and bill discounting which if totalled up was equal to NPA amount), were insured with ECGC and both the claims were rejected by ECGC due to technical lapses by Canara Bank such as PC account being less credited and KD account being wrongly adjusted by branch as per letter of rejection Ex. PW10/DD. ECGC had sought several clarifications in writing which were not replied to by the branch and as such, the claim was rejected. The clarifications were sought by ECGC during the tenure of M. Jayasheelan which were not replied to by the branch, as brought on record. Against the rejection of ECGC claim, the bank could prefer an appeal but any appeal having been filed against said rejection of ECGC is CC No. 07/16 CBI Vs. R.K. Verma & Ors. 52/145 SAVITA by SAVITA RAO Digitally signed Date:
RAO 2018.03.27
11:29:06 +0530
also not part of court record.
126. This court finds substance in the submission of Ld. Counsel for defence that since M/s Glints Global and M/s Sunrise Trading Company regularly paid premiums of ECGC Insurance Cover and prosecution has not brought any evidence on record that ECGC claim by the bank was rejected on account of any act or omission on the part of M/s Glints Global and M/s Sunrise Trading Company, hence rejection of ECGC claim due to technical lapse of the bank during the tenure of M. Jayasheelan led to non relaisation of the amount due against M/s Sunrise Trading Company and M/s Glints Global. Had the ECGC claim been handled diligently by branch, then Canara Bank would have recovered the total outstanding amount from ECGC.
127. PW41 was not able to recall if he had asked Canara Bank to produce the remaining Foreign Discounted Bills of both the firms i.e. M/s Glints Global & M/s Sunrise Trading Company pertaining to all shipments from 16.07.2001 till 21.07.2003, though he had collected two bills of shipments for Rs. 52,57,126.00 and Rs. 43,46,026.00 respectively which were sent to M/s Stelmate Pte. Ltd and remained outstanding at the time of account of M/s Glints Global being termed as NPA i.e. as on 12.05.2004 .
128. In terms of Ex. PW37/D1A , 61 Invoices pertaining to shipments made by both these firms i.e. M/s Glints Global & M/s Sunrise Trading Company to M/s Crown Trading & Marketing LLC and M/s Al Makrani Fashion from 16.04.2001 till 22.07.2003 were not seen by PW41 during investigation.
Digitally signed by SAVITA RAO SAVITA Date:
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+0530
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Against said 61 invoices, payment amounting to Rs. 14.50 Crores was realized as per the Detailed Chart provided in Ex. PW37/D1A. The buyer as well as consignee for such invoices was either M/s Crown Trading & Marketing LLC or M/s Al Makrani Fashion and as per the documents pertaining to shipments against which payment remained outstanding as on 12.05.2004, was due to discrepancies pointed out by Bank of India, Singapore, buyer of which shipments was M/s Steelmet Pte. Ltd., through Bank of India, Singapore and the original documents of the said shipments were to be handed over to M/s Crown Trading & Marketing LLC by M/s Steelmet Pte. Ltd. so that delivery of goods from Dubai port/customs could be taken by M/s Crown Trading & Marketing LLC. One bill for USD 94,953.60 was discounted by Canara Bank, R K Puram Branch.
129. In terms of statement of Current Account of M/s Glints Global (D38), there was a Debit Balance of Rs. 14,40,969.30 as on 22.08.2003 and the balance amount Rs.18,46,026/ was credited to the Current Account of M/s Glints Global on 25.08.2003 after deducting the amount of Rs. 25 lacs towards PCST limit . Out of Rs. 43,46,026.00, an amount of Rs. 14,40,969.30/ was adjusted against the TOD amount leaving balance of Rs. 4,05,056.70 in the account of Glints Global as on 25.08.2003. Out of the said amount of Rs. 4,05,056.70, amount of Rs. 13,151.00, Rs. 43,240.00 and Rs. 36,269.00 was also adjusted simultaneously on the same day towards bank charges and Canmobile A/c as per the said statement of account of M/s GG thus leaving SAVITA Digitally signed by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:29:24 +0530 CBI Vs. R.K. Verma & Ors. 54/145 only Rs. 3,12,396.70 with M/s Glints Global.
130. The discrepancy pointed out in the documents cited by Bank of India, Singapore due to which the bills of shipments sent to M/s Steelmet Pte. Ltd. were returned unpaid, were not with regard to the quality of shipment including colour specifications, size specifications, quality of fabric, workmanship, etc. or any delay in dispatching the said shipments and it was admitted by PW41 that there was no issue with regard to quality aspect.
131. This court finds force in the defence put to PW41 that whenever shipment of any exporter is not taken delivery of, by a buyer for any reason whatsoever, the shipment worth a substantial amount is not just thrown away and efforts are made to find alternate buyer to sell that shipment anyhow, even at a price which could be lower than the original price which is the most logical/prudent and preferred option for an exporter and also for the bank. The original documents, sent to Bank of India, Singapore for shipments made by M/s Glints Global & M/s Sunrise Trading Company to M/s Steelmet Pte. Ltd., were returned unpaid due to discrepancies as on 07.11.2003 and vide order dated 13.11.2003 Ex. PW41/D/A1&A2/Z21 (colly). M/s Glints Global & M/s Sunrise Trading Company were asked by Sh. M. Jayasheelan, the then Chief Manager, to arrange alternate buyer for the shipments whose documents were returned unpaid by M/s Steelmet Pte. Ltd., Singapore. Thereafter Bills of Exchange dated 15.11.2003 in favour of the Alternate Buyer, M/s Crown Trading & Marketing LLC, Dubai, were handed over by M/s Glints Global & CC No. 07/16 Digitally signed SAVITA by SAVITA RAO CBI Vs. R.K. Verma & Ors. 55/145 Date:
RAO 2018.03.27
11:29:32 +0530
M/s Sunrise Trading Company to Canara Bank, R K Puram Branch .
132. Pertaining to Invoice No. GG/EX/03/161 of M/s Glints Global, goods were shipped on 18.8.2003. Pertaining to Invoice Nos. GG/164/200304 & GG/165/200304 of M/s Glints Global, the goods were shipped on 22.08.2003 whereas pertaining to Invoices No. SUN/EX/2003/06 & SUN/EX/2003/07 of M/s STC , the goods were shipped on 18.8.2003. The said shipments were lying at Dubai Port & Airport since August, 2003 for want of any delivery to be taken by buyer and IO responded in negative to the question that any goods lying at any international seaport or airport attract heavy demurrage on a daily basis and there is a steep hike in the rate of demurrage with each passing week and the amount of demurrage sometimes reaches such a level that it does not remain viable for an importer to take delivery of that shipment as the demurrage amount becomes much more than the value of the shipment . He was not able to recollect whether the then Chief Manager of R K Puram Branch of Canara Bank took nearly 3 months to decide and permit sending the document to Habib Bank AG Zurich, Dubai but having seen Ex. PW10/D/A1&A2/5 which is Office Note of Canara Bank dated 06.01.2004, he termed the same as matter of record . As per the said Office Note, it was only on 10.01.2004 that Sh. M. Jaysheelan, the then Chief Manager, permitted sending the bills of 3 shipments of M/s GG & M/s STC, which were earlier sent to M/s Steelmet Pte. Ltd., Singapore, then to Habib Bank AG Zurich, Dubai for getting the payment from the alternate buyer i.e. M/s Crown Trading & Marketing LLC, Dubai.
SAVITA Digitally signed by
SAVITA RAO
CC No. 07/16 RAO Date: 2018.03.27 11:29:41
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CBI Vs. R.K. Verma & Ors. 56/145
133. In terms of acknowledgment of Habib Bank, Dubai dated 11.01.2004, two Bills of M/s Glints Global and one Bill of M/s Sunrise Trading Concern , good were exempted from heavy demurrage by Customs Authorities, Dubai for a period of 15 days from the date of arrival of goods and if the delivery of goods was not taken and other charges were not paid within 6 months from the date of arrival of goods, the Director of Customs could sell the same through public auction. The documents of abovesaid three shipments of M/s Glints Global & M/s Sunrise Trading Company returned by Bank of India, Singapore were then sent to Habib Bank AG Zurich for M/s Crown Trading & Marketing LLC, Dubai which was the alternate buyer. Dr. Anjali Verma wife of A1 Raj Kumar Verma was the Managing Director of M/s Crown Trading & Marketing LLC, Dubai. Documents were returned to Canara Bank, R K Puram Branch on account of nonpayment by the Alternate Buyer, M/s Crown Trading & Marketing LLC, Dubai. According to PW41, since M/s Crown Trading & Marketing LLC, Dubai was the alternate buyer on request of A1 and since Dr. Anjali Verma, W/o A1 was Managing Director of the alternative buyer and the payment remained unrealized for these three shipments, hence the charge was so alleged against them . However, in terms of the letters dated 20.12.2003 part of D28 , Ex. PW37/R (Colly), M/s Crown Trading & Marketing LLC was willing to accept the documents of M/s Glints Global & M/s Sunrise Trading Company only if commission equivalent to 12% of the Invoice Value was undertaken to be remitted to M/s Crown Trading & Marketing LLC, Dubai Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:29:49 +0530 CBI Vs. R.K. Verma & Ors. 57/145 within 60 days from the date of acceptance of documents .
134. In terms of page 38 of D33 i.e. Covering Schedule sent by Canara Bank, R K Puram Branch to Habib Bank AG Zurich, Dubai, the said bank ie. Habib Bank AG Zurich, Dubai was instructed by Canara Bank to only deliver documents of this shipment for USD 100716 to M/s Crown Trading & Marketing LLC, Dubai against payment . In terms of Page 141 of D34, Ex PW37/J (Colly) i.e. Covering Schedule sent by Canara Bank, R K Puram Branch to Habib Bank AG Zurich, Dubai, the said bank was instructed by Canara Bank to only deliver documents of this shipment for USD 114960.12 to M/s Crown Trading & Marketing LLC, Dubai against payment .
135. In terms of Page 60 of D34 Ex. PW37/J (Colly), i.e., Covering Schedule sent by Canara Bank, R K Puram Branch to Habib Bank AG Zurich, Dubai, the said bank was instructed by Canara Bank to only deliver documents of this shipment for USD 94953.60 to M/s Crown Trading & Marketing LLC, Dubai against payment .
136. It was submitted by Ld. Prosecutor for CBI that delivery was taken by M/s Crown Trading & Marketing LLC but the payment was not made. The documents sent by Canara Bank, R K Puram Branch to Habib Bank A G Zurich contained discrepancies in the Covering Schedule prepared and sent by Canara Bank, as old Bills of Exchange signed in November, 2003 were sent to Habib Bank AG Zurich and not the new Bills of Exchange bearing date of sending of shipment and since permission for sending documents to alternate buyer i.e. SAVITA Digitally signed by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:29:57 +0530 CBI Vs. R.K. Verma & Ors. 58/145 M/s Crown Trading & Marketing LLC was granted on 10.01.2004, any bills of exchange of any date prior to 10.01.2004 were invalid and not usable as suggested to PW41.
137. It was submitted by counsel for defence that in the swift message, which was sent, the credit period was 90 days and against the documents accepted on 16.2.2004 due dates of payments were 12.2.2004, 13.2.2004 and 17.2.2004 which was against the spirit of terms of settlement with the alternate buyer M/s Crown Trading & Marketing LLC. PW41 admitted the accepted procedure that the goods can only be released by shipping company to the importer if the original bill of lading, clearly in favour of that importer, is produced at the port of destination while taking the delivery. The bills of lading for the shipment in question was issued to the order of Bank of India, Singapore vide letter dated 24.12.2003 of M/s Sunrise Trading Company to R.K. Puram Branch and letter dated 24.12.2003 of M/s Glints Global to R.K. Puram Branch. The then Chief Manager, Mr. M. Jayasheelan was requested to release the original bills of lading/airway bill for the shipments sent to M/s Steelmet Pte. Ltd. Singapore by M/s Sunrise Trading Company and M/s Glints Global which were received back from Bank of India, Singapore. The amendment in favour of M/s Crown Trading and Marketing LLC was required since the original bills of lading /airway way bills for the shipment were sent to M/s Steelmet Pvt. Ltd., Singapore, therefore it was not possible for M/s Crown Trading & Marketing LLC to take physical delivery of the shipments lying at Dubai Port and Airport.
Digitally signed by SAVITA RAO SAVITA RAO Date: 2018.03.27 11:30:07
+0530
CC No. 07/16
CBI Vs. R.K. Verma & Ors. 59/145
IO was not able to show any such document of Canara Bank whereby said two bills of lading and one airway bills were released to M/s Glints Global and M/s Sunrise Trading Company for amendment .
138. Rectified bills of lading and rectified airway bills made to the order of M/s Crown Trading & Marketing LLC, Dubai/ made to the order of Habib Bank AG Zurich, Dubai were not on record as admitted by PW41, though he stated that invoices for buyer M/s Steelmet Pte. Ltd. and consignee M/s Crown Trading & Marketing LLC Dubai were on record but at the same time admitted that these invoices and packing list pertaining to shipments sent to M/s Steelmet Pte. Ltd. had not been amended for the alternate buyer. . This witness was not able to answer that the account could have been saved from being termed as NPA had the payment been released and if Canara Bank had stuck to the original terms and conditions settled with M/s Crown Trading & Marketing LLC as an alternate buyer and due to the delay on the part of Mr. M. Jayasheelan, the then Chief Manager in sending the amended documents , the same led to non release of original documents by Habib Bank AG Zuric and resulted into M/s Crown Trading and Marketing LLC not getting delivery of these three shipments of M/s Glints Global and M/s Sunrise Trading Company and not due to fault of A6 or A7.
139. MD of M/s Crown Trading and Marketing LLC, was wife of A1 holding 49% of voting capital and the local sponsor/partner holding 51% of voting capital. Mrs. Anjali Verma, wife of A1 as submitted by counsel for A1 CC No. 07/16 SAVITA by Digitally signed SAVITA RAO Date: CBI Vs. R.K. Verma & Ors. 60/145 RAO 2018.03.27 11:30:32 +0530 was highly qualified business woman, therefore, she was made the Managing Director despite having minority voting rights. PW41 admitted that no bank official told him that as per the report from M/s Dun and Brad Street, there were any reported complaints ever against M/s Crown Trading and Marketing LLC with regard to payments.
140. PW41 confirmed that the permission to send all the three bills to M/s Crown Trading and Marketing LLC was granted by M. Jayasheelan. A7 had neither prepared nor signed any of the export bills, while PW10 also confirmed that scaleI officer in Foreign Exchange Department of the branch used to deal with scrutiny and discounting of export documents, follow up of ECGC matters etc, whereas A7 was not in foreign exchange department of the branch and A6 had already been transferred from R.K. Puram Branch of Canara Bank. Payment in past were duly realized from M/s Crown Trading and Marketing LLC, therefore, merely because the wife of A1 was holding the post of Managing Director in M/s Crown Trading and Marketing LLC, no intention of cheating can be attributed when the lapses ,if any, were found due to non sending of the amended documents by the bank which was during the tenure of the then Chief Manager M. Jayasheelan who has not been charge sheeted in this matter.
141. Vide Ex. PW41/D/A1 & A2/Z4 i.e. the letter dated 7.9.2004 of M/s Glints Global addressed to Canara Bank, proposal/plan was submitted for revival of both the accounts of M/s Glints Global and Sunrise Trading CC No. 07/16 SAVITA Digitally signed by SAVITA RAO CBI Vs. R.K. Verma & Ors. 61/145 RAO Date: 2018.03.27 11:30:40 +0530 Company within three months without any further risk/exposure to Canara Bank. PW41 admitted that vide said letter , A1 and A2 proposed revival of the account and offered for withdrawal of claim with ECGC for period of three months, renewal of their limits with bank, New DA shipment documents to be discounted and adjusted against the overdue bill and packing credit , release of fresh packing credit equivalent to an amount that may be received as full/part payment inclusive of the overdue bill that will become due after 90 days, advance payments, if any from new buyers may be released and overdraft equivalent to 10% of the bill amount may be permitted in their account to meet all shipment related expenses.
142. PW41 admitted that the letter under the heading 'subject' reflects revival of credit account but was not able to recollect if he had made any inquiry regarding this proposal with the bank officials during his investigation.
143. Vide letters dated 13.12.2004 and 5.8.2005 Ex. PW41/D/A1&A2 /Z5 and Ex. PW41/D/A1 & A2/ Z6 , again request was made to the Chief Manager Canara Bank seeking revival of their credit account. M/s Glints Global and M/S Sunrise Trading Company had also sought permission from Canara Bank to send shipments under DA also alongwith L/C shipments with mention that shipments shall be made without disturbing the level of stocks required as DP for packing credit. It was also mentioned that if their stock level and Collateral security are kept in mind, the advances used by them are absolutely safe as far as bank is concerned and in view of this safety and their track record, recovery CC No. 07/16 Digitally signed SAVITA by SAVITA RAO CBI Vs. R.K. Verma & Ors. 62/145 RAO Date:
2018.03.27 11:30:49 +0530 at the cost of their survival could not be the priority of the bank.
144. As also put to PW41, it also finds mentioned in the letters that M/s Glints Global and M/s Sunrise Trading Company sought to reach to a reasonable settlement with the alternative buyer committing the payment within three months and also informed vide letter dated 5.8.2005 that buyer has agreed to start remitting the payment in parts starting from August 2005. The token cheque of Rs. 5 lacs to be used in case of default by the buyer was also enclosed with the said letter.
145. Vide Ex, PW41/D/A1 & A2/Z8 i.e. letter dated 27.12.2005, again proposal was given to settle the outstanding amount with the steps to be undertaken regarding the delay in payment, to generate local funds to take care of the repayment in case the buyer's commitment does not materialize. In view of the controversy with regard to property located at Uttam Nagar mortgaged by M/s Glints Global, vide letter dated 4.1.2005 Ex. PW41/D/A1&A2/Z9, A1 offered to furnish alternative collateral security without going into the details of the kind of lacuna found in the documents of collateral security and all available options to be forwarded to the bank within 15 days for the bank to choose the most suitable option. It was also informed that they had the required stocks, interested buyers, good intentions and capability to turn around their account within three months and after completing the legal formalities of the alternate collateral security, they would submit a detailed plan to get their account out of NPA if bank considers a mutually beneficial way to be out of Digitally signed SAVITA by SAVITA RAO Date: RAO 2018.03.27 CC No. 07/16 11:30:57 +0530 CBI Vs. R.K. Verma & Ors. 63/145 this situation.
146. Vide letters dated 15.6.2006 Ex. PW41/D/A1 & A2/Z11 and Ex. PW41/D/A1 & A2/Z12 , addressed to Deputy General Manager, Canara Bank, with copy to Chief Manager, Canara Bank, R.K. Puram, A1 & A2 again communicated their willingness to replace the collateral security by another property equivalent to the property already mortgaged within 30 days from the date of acceptance of proposal. It was also mentioned that as a financial institution dealing with priority sector, it was the duty of the bank to support them in crisis and it would not be fair on the part of bank to finish them totally to recover the money especially when safety in the form of ECGC, collateral security etc. was available with bank to safeguard the funds. Therefore request was made to regularize the overdue account.
147. Notice dated 5.8.2005 under SARFAESI Act was issued to both these firms i.e. M/s Glints Global and M/s Sunrise Trading Company but no response seems to have been given to the communication and requests made by M/s Glints Global and M/s Sunrise Trading Company to the bank vide abovenoted communications. IO, despite the record having been shown to him was unable to recollect or remember with regard to any investigation carried out on the said aspect of non responding of the repeated request letters sent by M/s Glints Global and M/s Sunrise Trading Company from the bank.
148. PW41 admitted that there was no wrong information including the address details, photographs etc. at the time of opening of the accounts of M/s Digitally signed CC No. 07/16 SAVITA by SAVITA RAO RAO Date: 2018.03.27 11:31:04 +0530 CBI Vs. R.K. Verma & Ors. 64/145 Glints Global or M/S sunrise Trading company or even at the time of reconstitution of M/s Sunrise Trading Company. Rather limit of Rs. 154 lacs obtained by M/s Sunrise Trading Company with Canara Bank was surrendered on 31.1.2002 and lesser limit for sum of Rs. 70 lacs was sought by M/s Sunrise Trading Company. As per the statement of current account of M/s Glints Global and M/s Sunrise Trading Company, more than Rs. 80 lacs had been debited towards interest and other bank charges by the branch from 26.4.2001 till 21.5.2004 in the accounts of M/s Glints Global and M/s Sunrise Trading Company. As suggested to PW41, the accounts of M/s Glints Global and M/s Sunrise Trading Company ran into problems due to return of bills sent to M/s Stelmet Pte Ltd.
149. PW1 admitted that the reason assigned for declaring both these accounts as NPA in present case was solely due to non payment of loan amount . He admitted that both these accounts were export finance account and in such type of accounts, prime security is taken into consideration while granting the limit. In case of both these accounts, prime security was stocks and book debts. It may also be noted that vide letter dated 15.2.2006 R.K. Puram Branch referred the matter to Legal Section , Circle Office suspecting the allegations of fraud with regard to mortgaged properties of various accounts at R.K. Puram Branch including M/s Glints Global and M/s Sunrise Trading Company. Report was called from the Panel Advocate for verification of genuineness of the title deeds of mortgaged properties. The said report anyways Digitally signed CC No. 07/16 SAVITA by SAVITA RAO RAO Date: 2018.03.27 CBI Vs. R.K. Verma & Ors. 65/145 11:31:14 +0530 is not brought on record.
150. Nevertheless, vide letter dated 4.3.2006, Ex. PW10/D/A7/X4 written by Canara Bank, Legal Section, Circle Office to R.K. Puram Branch it was informed that the loan accounts of M/s Glints Global and M/s Sunrise Trading Company were investigated and it was revealed that the parties had submitted fudged/fake financial statements for availing credit facilities. As informed, the property mortgaged to Canara Bank of M/s Glints Global was also mortgaged to Bank of India. The boundaries of the portion of property mortgaged to them in case of M/s Sunrise Trading Company were not ascertainable. Request was also made to report the matter to Fraud, R & R Section.
151. Vide letter dated 20.3.2006, request was again made by Canara Bank, Legal Section, Circle Office to R.K. Puram Branch to report both the accounts i.e. M/s Glints Global and M/s Sunrise Trading Company as Fraud to R& R section. R.K. Puram Branch in reply to those letters, vide letter dated 22.3.2006 informed that the report with regard to genuineness of the title of the property mortgaged by M/s Glints Global and M/s Sunrise Trading Company was still awaited.
152. Vide letter dated 28.3.2006, branch was again advised by Canara Bank, Legal Section, Circle Office to send fraud report in respect of both the subject accounts immediately. In letter dated 23.6.2006 Ex. PW10/D/A1 & A2/4, it was specifically mentioned that there was no fraud in Accounts of M/s Sunrise Trading Company and M/s Glints Global, hence branch was not reporting fraud CC No. 07/16 SAVITA Digitally SAVITA RAO signed by CBI Vs. R.K. Verma & Ors. 66/145 RAO Date: 2018.03.27 11:32:02 +0530 to R&R section and vide subsequent communication dated 29.6.2006, it was again reported that there was no fraud in the account but no repayment in the account.
153. Seemingly due to the pressure from the Legal section, Circle Office, branch was forced to report the matter as fraud despite the fact that there was no adverse report ever noted in all the audit reports conducted on regular basis.
154. The stock available with both the firms as on the date of declaring their accounts as NPA was 394.56 lacs. The restrain was imposed against the stock, collateral security in form of mortgaged property was taken in possession, request letters sent by A1 and A2 were not answered. Facts and evidence available on record direct towards no aspect of intention of cheating by A1 and A2 .
Forgery of Balance Sheets and Certificates regarding Development of Capital and Unsecured loan by A5.
155. It was submitted by Ld. Prosecutor that the credit limits were obtained by the accused persons with the deceitful means on basis of forged sale deed and by submitting forged balance sheets , therefore, the purpose may be to run genuine business but the mode was deceitful, warranting action against them.
156. In terms of the allegations of prosecution, A1 in connivance with A2 had furnished forged audited balance sheets with Canara Bank for obtaining CC No. 07/16 SAVITA Digitally signed by SAVITA RAO CBI Vs. R.K. Verma & Ors. 67/145 RAO Date: 2018.03.27 11:32:14 +0530 packing credit/foreign bills discounted/ foreign export bills limits and other credit facilities. Accused no.5 who was working as Accountant for A3 had forged the said balance sheets of M/s Sunrise Trading Company for the year ending on 31.3.2002 and certificate dated 11.6.2002 regarding the development of capital as well as another certificate dated 3.7.2002 regarding the unsecured loan.
157. The Books of account of M/s Sunrise Trading Company for the year ending 31.3.2002 have been shown as audited by M/s Sobti Arora and Grover, Chartered Accountant which, as alleged, are forged documents since Sh. Pankaj Grover, CA denied auditing the Books of Accounts of M/s Sunrise Trading Company and also denied having signed the balance sheet as well as claimed his signatures having been forged by someone and also that their seal was fake.
158. Similarly for M/s Glints Global, A5 Sanjiv Kumar Mendiratta was alleged to have prepared the balance sheet for M/s Glints Global as well and forging the signatures of Sh. Bhupinder Shah, CA. GEQD had given positive opinion on audited balance sheets of M/s Glints Global and in terms of case of prosecution, it was A5 who had forged the signatures of Sh. Bhupinder Shah, CA on the said balance sheet and other documents pertaining to M/s Glints Global and further having forged the signatures of Sh. Pankaj Grover, CA upon the forged audited balance sheet issued by M/s Sobti Arora & Grover, Chartered Accountants.
Digitally signed by SAVITA RAO CC No. 07/16 SAVITA Date:
RAO 2018.03.27
CBI Vs. R.K. Verma & Ors. 68/145
11:32:28
+0530
159. Ld. Counsel for defence made the following submissions:
(a) That PW13 was not trustworthy witness who was not even sure about the contents of the single rubber stamp of the firm as initially he stated that the rubber stamp hadthe following contents i.e. " Bhupinder Shah & Company" was written followed by Chartered Accountants and then firm's registration number and after space for signatures, Bhupinder Shah, B.Com (Hons.), FCA, DISA, and then ICAI membership number and then partner. But again said that in the round stamp only Bhupinder Shah and Company and Chartered Accountants is there.
(b) That PW13 being professional CA who also used to put rubber stamp himself for 6/7 years and kept the rubber stamp in his exclusive custody, yet did not remember the contents of his own rubber stamp.
(c) That there is no impression of rubber stamp of M/s Bhupinder Shah & Company even in the judicial records and no report by CFSL that the rubber stamp impression marked on the disputed documents and the impression of rubber stamp of M/s Bhupinder shah & Company purported to have been seized by CBI were found to be different on forensic analysis.
(d) That PW13 Bhupinder Shah stated that he used to singed as " B. Singh" and not as " B. Shah" which is the signature appearing in the allegedly forged documents and no documentary evidence was collected by CBI to show that PW13 had changed his signatures from B. Shah to B. Singh or even admitted signatures of Bhupinder Shah from his bank accounts or the other SAVITA Digitally signed by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:32:41 +0530 CBI Vs. R.K. Verma & Ors. 69/145 documents etc.
(e) That as per opinion Ex. PW35/G and Ex. PW35/H, disputed signatures of B. Shah were not found to be matching with the signatures S135 to S145 of A5 which proves that the disputed signatures of Bhupinder Shah at Q424 , Q425, Q427 and Q4298 on the balance sheet of M/s Glints Global were made by some other person. In view of the fact that there were two or more persons who allegedly forged the signatures of Bhupinder Shah, the involvement of partners/chartered accountants and other accountants of M/s Bhupinder Shah & Company who were familiar with his actual signatures and as such their signing the disputed documents by keeping the signatures of Bhupinder Shah in their mind cannot be ruled out.
(f) That IO did not ask PW13 to give his specimen signatures as 'B. Shah' who should also have taken his handwriting sample so as to compare the same with the disputed signatures. IO did not collect the signatures of the partners of M/s Bhupinder Shah & Company besides the fact that no comparison of signatures of specimen signatures of Bhupinder Shah with the disputed signatures of Bhupinder Shah was carried out.
(g) That Similarly pertaining to documents of M/s Sunrise Trading Company, the rubber stamp of M/s Sobti Arora & Grover was not seized. There is no impression of rubber stamp of M/s Sobti Arora & Associates in the judicial record. There is no report by CFSL that the rubber stamp impression marked on the disputed document and the impression of rubber stamp of M/s CC No. 07/16 SAVITA Digitally signed by SAVITA RAO RAO Date: 2018.03.27 11:32:50 +0530 CBI Vs. R.K. Verma & Ors. 70/145 Sobti Arora & Grover , purported to have been siezed by CBI were found to be different on forensic analysis. .
(h) That all the exhibits sent for examination were not examined by PW35 due to lack of time and the opinion was given without proper examination, since PW35 himself had stated that each exhibits should be examined for 10/15 minutes and at least 3 times at different intervals i.e. a gap of at least 4/5 days. He had to examine more than 700 exhibits including the questioned and specimen exhibits and the time needed for such examination for 15 minutes each was approximately 930 hours whereas the time consumed by PW35 was only 27 hours.
(i) That PW35 did not prepare or submit his reasoning or rough notes alongwith the opinion and according to him, he prepared reasoning on the basis of rough notes after he received the summons from the court which goes to show that the story of rough notes is just a story and the documents i.e. reasoning prepared after delay of six years is an after thought.
(j) That the perusal of questionnaire for examination of documents Ex. PW41/C, PW35/G and Ex. PW35/H show that the opinion Ex. PW35/G and reason for opinion Ex. PW35/H were incomplete and did not answer the questionnaire. Further the opinion on number of questions has been given without any reason for such opinion which goes to show that the opinion and reasons for opinion cannot be relied upon and have to be discarded.
(k) That Q424, Q425, Q427 and Q429 are the signatures of B. Shah Digitally signed SAVITA by SAVITA RAO Date: CC No. 07/16 RAO 2018.03.27 11:32:59 +0530 CBI Vs. R.K. Verma & Ors. 71/145 on Audited balance sheet and profit and loss account as on 31.3.2003 of M/s Glints Global. No positive identification/matching of disputed signatures with speciment signatures S130 to S145 came on record suggesting that these disputed signatures were not made by the person who signed the disputed signatures on A75, Q230, Q231, Q233, Q235 , Q236, Q238, Q471 and Q473 implying thereby that there were two set of persons who have signed as ' B.Shah'. Thereby disputed signatures of 'B. Shah' at A424, Q425, Q427 and Q429 on the balance sheet of M/s Glints Global as on 31.3.2002 were made by some other person. Investigation of the fact that there were two or more persons who allegedly forged the signatures of Bhupinder Shah, the involvement of partners/Chartered Accountants and other accountants of M/s Bhupinder Shah & Company who were familiar with the actual signatures cannot be ruled out.
(L) That GEQD report Ex. PW35/G is contrary to the text/reference books of Science of Handwriting Examination. The GEQD report nowhere hold that the questioned signatures Q75, Q235, Q236, Q238, Q471, Q473 and Q481 and the questioned signatures A230, Q0231, Q233, Q424 reflect two opposite and divergent writing habits because only in such type of forgery i.e. in case of forgery by impersonation, it is possible to identify the signatory of the forged signatures as he injects/introduced his writing habit while making the said forged signature with his own imagination.
(m) That the questioned signatures and the specimen signatures show features of forgery by memory which are temporary memorising of some Digitally signed SAVITA by SAVITA RAO Date: CC No. 07/16 RAO 2018.03.27 11:33:05 +0530 CBI Vs. R.K. Verma & Ors. 72/145 features/character of the admitted signatures by forger while putting the disputed signatures on the documents but PW35 did not describe even a single point of similarity in the questioned signatures and the specimen signatures despite the presence of the similarities and also did not describe of any single point on dissimilarity in the disputed signatures and specimen signatures of A5 despite the presence of various dissimilarities.
(n) that the opinion of handwriting expert is the weakest and the least reliable evidence and no conviction be based upon the opinion of handwriting expert alone without corroboration . Reliance was also placed upon Magan Bihari Lal Vs. State of Punjab AIR 1977 SC 1091, S. Gopal Reddy Vs. State of Andhra Pradesh MANU/SC/1096/2016 and S.P.S. Rathore Vs. CBI & Anr. AIR 2016 SC 4486 wherein interalia it was observed that " expert evidence is a weak type of evidence, therefore court should not consider it as conclusive and the conviction cannot rest on the sole opinion of handwriting expert without availability of substantive corroboration".
(O) Ld. Counsel for defence also referred to the defence evidence of DW3 who was also the handwriting expert and made the comparison of questioned signatures with specimen signatures. In terms of his report, questioned signatures marked Q75, Q235, Q236, Q238, Q471, Q473 and Q481 and the other set of questioned signatures mark Q230 to Q233 and Q 424 as well as Q75, Q235, Q236, Q238, Q471, Q473 and Q481 were forged and memorised signatures and had not been written/signed by the same Digitally signed CC No. 07/16 SAVITA Date: by SAVITA RAO RAO 2018.03.27 CBI Vs. R.K. Verma & Ors. 73/145 11:33:13 +0530 or one person who had given the specimen signatures mark S130 to S141, S 125 to S129 and S122 to S124 respectively. Ld. Counsel for defence submitted that the deposition of DW3 has remained unrebutted in so far as contents of opinion Ex. DW3/A5/1 (Colly) are concerned and it should be treated at par with the prosecution witnesses while relying upon Dudh Nath Pandey Vs. The State of U.P. AIR 1981 SC 911, State of Haryana Vs. Ram Singh (2002) 2 SCC 426 and Aher Raja Khima Vs. State of Saurashtra AIR 1956 SC 217 wherein interalia it was observed that " defence witnesses are entitled to equal treatment with those of the prosecution and courts ought to overcome their traditional, instinctive disbelief in defence witnesses".
(p) That since the alleged forgery in the instant matter was falling in the category of forgery by memory and to create memorised forged signatures, it is necessary for the forger to be familiar with the signatures of actual writer, whereas it is not the case of prosecution that A5 ever worked with M/s Bhupinder Shah & Company or with M/s Sobti Arora & Associates so as to memorise their signatures in his mind, whereas the other partners/Chartered Accountants and other accountants of the said firm due to their proximity were in better position to be familiar with their actual signatures. Even otherwise, it is normal practice adopted by the CA firms to sign the document by any partner of the firm on behalf of other partner or CA and report is handed over to the representative of client. Ld. Counsel for defence also put plea regarding there being no purpose for forgery as financial figures available with the bank Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date:
2018.03.27 11:33:27 +0530 CBI Vs. R.K. Verma & Ors. 74/145 matched with the financial figures on the purported forged documents. As submitted, the PC/Bills limit of Rs 42 lacs to M/s Glints Global was sanctioned on 16.7.2001 on the basis of audited balance sheet as on 31.3.2001 by Ashok Shyam and Associates, Chartered Accountants regarding which there are no allegations of forgery.
(R) It was also submitted that based on the past performance and future accepted projections, the PC/Bills limit granted to M/s Glints Global was enhanced to Rs. 100 lacs on 16.11.2001 by the branch. Since M/s Glints Global was already having PC/Bills limit of Rs. 100 lacs and over and above this PC/Bill limit of Rs. 100 lacs, M/s Glints Global had already been sanctioned Adhoc limit of Rs. 25 lacs on 5.4.2002 and as such there was no need for M/s Glints Global to submit any purportedly forged balance sheet and profit and loss account for a small enhancement of Rs. 10 lacs i.e. from Rs. 100 lacs to Rs.
110 lacs. Pertaining to M/s Sunrise Trading Company, PC/Bills limit of Rs. 70 lacs was sanctioned on 9.7.2002 on the basis of provisional balance sheet as on 31.3.2002 regarding which there are no allegations of forgery. The PC/Bills limit granted to M/s Sunrise Trading Company was never enhanced till the accounts became NPA on 12.5.2004. In view of the fact that financial figures of M/s Glints Global and M/s Sunrise Trading Company available with the bank matched with the financial figures of balance sheets/deployment of capital certificate/unsecured loan certificate, there was no need for forgery of the audited balance sheet and there was no motive for M/s Glints Global or M/s SAVITA Digitally signed by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:33:34 +0530 CBI Vs. R.K. Verma & Ors. 75/145 Sunrise Trading Company to submit any purportedly forged balance sheet.
160. Ld. Counsel for A5 placed reliance upon Radha Pisharassiar Amma Vs. State of Kerala (2007) 13 SCC 410, wherein it was observed that " For the offence under section 409,467 and 471, the existence of mens rea (guilty mind) must be proved. The evidence must show that the accused dishonestly misappropriated or converted to his own use the property in question or dishonestly used it in violation of any direction of law prescribing the mode in which such trust is to be discharged, besides the fact that accused was also not proved to be beneficiary of the misappropriated amount.
161. Reliance was further placed upon Chatt Ram Vs. State of Haryana1980 Bih. Cr. C. 61 wherein some ticket claiming prize was alleged to be forged, it was observed that " even if it is assumed for the sake of argument that the number of ticket had been forged, that by itself would not show that accused forged it or participated in its forgery. Nor would the mere fact that accused presented this ticket before the officers concerned and claimed the Special Prize on its basis, necessarily stamp him with the knowledge or belief of its forged character. The circumstances on record should unerringly raise an inference that the accused possessed the mens rea requisite for offence under section 471 IPC when he presented the ticket to the officers concerned for claiming the prize. It is immaterial if at any subsequent point of time, he came to know of its forged character".
162. Per contra, Ld. Public prosecutor submitted that even if the financial Digitally signed CC No. 07/16 SAVITA by SAVITA RAO RAO Date: 2018.03.27 11:33:40 +0530 CBI Vs. R.K. Verma & Ors. 76/145 figures of M/s Glints Global and Sunrise Trading Company were found to be correct, the factum of commission of forgery itself is not undone.
163. PW13 is Bhupinder Shah, Chatered Accountant who stated about audit reports D28 Ex. PW13/A (colly) and D26 Ex. PW13/B (colly) having not been signed by him nor on the letter head of his firm. He stated about rather not having even heard about these two firms i.e. M/s Glints Global and M/s Sunrise Trading Company or about their proprietors and categorically denied having prepared any reports i.e. Balance sheets or analysis of balance sheets etc. for the said firms. According to this witness, the entire firm uses one rubber stamp only and he used to put the stamp on the audit reports himself and stamp used to remain in his custody, though his other partners were also authorized to use the stamp. He denied that the accountants of his firm used to put the seal of the firm and they used to put the signatures on payments. The rubber stamp used by his firm before self inking stamps used, according to him, were more or less identical and they did not maintain any particular record/register of the rubber stamp. He stated that he was not in position to tell the year of the use of stamp merely on showing the impression and can state only after going through the record. He denied that the audit reports were issued from his office and also denied that during his absence in the office, his other partners used to put his stamp and sign on his behalf on the audited balance sheets. His company used to conduct audit for around 40/45 firms and upon all the reports, he used to put his signatures.
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164. PW14 was put questions regarding the audit reports of M/s Sunrise Trading Company who also stated about the said documents being forged which were neither on their letter heads nor were bearing their seal or signatures.
165. PW41 i.e. IO reiterated the allegations of prosecution regarding A1 proprietor of M/s Glints Global having submitted audited balance sheet for the year ending 31.3.2002 furnished by Sh. Bhupinder Shah on behalf of Bhupinder Shah and Company on 25.8.2003 while Bhupinder Shah during investigation denied having carried out audit of M/s Glints Global and also denied signatures on the said balance sheet, therefore after obtaining specimen signatures with the specimen signatures of Accused no.5, questioned documents alongwith the specimen signatures were sent to GEQD for comparison and expert opinion. Similarly, the audited balance sheet for the year ending 31.3.2002 was submitted by M/s Sunrise Trading Company with the Canara Bank prepared by Sh. Pankaj Grover, CA on behalf of M/s Sobti Arora and Grovers, Chartered Accountants. The certificate dated 3.7.2002 qua unsecured loan in respect of M/s Sunrise Trading Company purportedly was issued by M/s Sobti Arora & Grover, Chartered Accountants . The certificate dated 11.6.2002 qua development of capital in respect of M/s Sunrise Trading Company was also submitted with the bank upon which Pankaj Grover, CA denied his signatures and also denied having issued the same by the partners of M/s Sunrise Trading Company. The specimen signatures/handwriting of accused Digitally signed by SAVITA SAVITA RAO Date:
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Sanjiv Mehndiratta A5 besides other accused persons were obtained by IO and sent to GEQD alongwith the questioned documents.
166. The said documents and balance sheets were submitted by A1 for availing credit facility for the account of M/s Sunrise Trading Company and M/s Glints Global and by A1 and A2. GEQD opined that the said documents were forged by accused no.5. Sanjiv Mehandiratta. The previous balance sheets of M/s Glints Global for the financial year 19981999, 19992000 and 2000 2001 were prepared by M/s Ashok Shyam and Associates, Chartered Accountants and as there was no dispute with regard to audited balance sheet of M/s Glints Global audited by M/s Ashok Shyam & Associates, CA, IO did not send those balance sheets to GEQD and also did not examine the concerned CA. The only audited balance sheet of M/s Glints Global for the year ending 31.3.2002 was claimed to be forged purportedly prepared by M/s Bhupinder Shah & Company. While IO PW41 admitted that sanction of first bank limit of Rs. 40 lacs to M/s Glints Global by Canara Bank was made on 16.7.2001 and reliance was placed on auditor's report as at 31.3.2000 and 31.3.2001 for the grant of said sanction. The auditors report dated 14.6.2000 and 20.4.2001 alongwith all the relevant documents i.e. statement of taxable income, audited balance sheet, audited profit and loss account, audited schedule of fixed assets and audited schedule of depreciation as on 31.3.2000 and 31.3.2001 respectively were prepared /audited by Ashok Shyam and Associates, Chartered Accountants . The documents submitted alongwith the application as admitted Digitally signed by SAVITA RAO SAVITA Date:
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by IO were the provisional balance sheet, provisional profit and loss account, schedule of fixed assets, Sundry creditors, expenses payable and sundry debtors as on 30.9.2001 were as per the requirement at the time of seeking enhancement of bank limit from 40 lacs to 100 lacs vide application dated 2.11.2001 of M/s Glints Global. The said bank limit of Rs. 40 lacs was enhanced to Rs. 100 lacs by Canara Bank on 16.11.2001 and for the said enhancement also the reliance on audited balance sheet of Glints Global for the year ending 31.3.2002 and other documents purportedly issued by Bhupender Shah & Company were not placed for the sanction made on 16.11.2001, hence the reliance on audited balance sheet of Glints Global for the year ending 31.3.2002 of Bhupinder Shah & Company could not have been placed for the sanction granted on 16.7.2001.
167. Similarly there was only one audited balance sheet of Sunrise Trading Company for the year ending 31.3.2002 issued by M/s Sobti Arora & Grover, Chartered Accountants M/s Bhupinder Shah & Company which are claimed to be forged by the prosecution. With application dated 13.11.2011 submitted by M/s Sunrise Trading Company for BG limit of Rs. 154 lacs, no audited balance sheet was submitted. PW41 sought to clarify that in the comments from bank, it was mentioned that CA certificate shall be obtained for raising of capital and unsecured loan to continue as a long term source till the transaction is completed and BG is reversed. However, PW41 did not investigate if M/s Sunrise Trading Company raised any capital or unsecured loan pursuant to the sanction of BG limit of Rs. 154 lacs on 13.11.2001 and prior to cancellation of CC No. 07/16 SAVITA Digitally signed by SAVITA RAO CBI Vs. R.K. Verma & Ors. 80/145 RAO Date: 2018.03.27 11:34:06 +0530 BG limit by circle office on 9.2.2002 but again sought to clarify that in pursuance to sanction of BG limit dated 13.11.2001, the party had submitted details of unsecured loan duly verified by CA vide letter dated 03.07.2002 addressed to Chief Manager of R.K. Puram Branch and certificate of development of capital dated 11.6.2002. At the same time, he admitted that BG limit of Rs. 154 lacs was canceled on 9.2.2002 by circle office and that documents D25 page 141 and D25 page 138 were not in existence during the period i.e. from November 2001 to February 2002.
168. Apparently there was no requirement for filing of CA certificate as the BG limit of Rs. 154 lacs was never used and cancelled by circle office on 9.2.2002, as per the defence. As per defence, since sanction was accorded to Sunrise Trading Company for BG limit of Rs. 154 lacs by circle office of Canara Bank on 18.12.2001 which was cancelled on 9.2.2002 therefore no reliance on audited balance sheet of Sunrise Trading Company for the year ending 31.3.2002 of M/s Sobti Arora and Grover was placed for the sanction made on 18.12.2001.
169. Sanction of PC limit of Rs. 70 lacs to M/s Sunrise Trading Company as admitted by PW41 was on the basis of credit report Ex. PW10/D which was never enhanced and remained the same till the account turned NPA as on 12.5.2004. Though PW41 stated that the balance sheet for the year 31.3.2002 was relied upon for the grant of sanction/extension of bank limit of M/s Sunrise Trading Company and PW41 also seized the audited balance sheet as on Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:34:13 +0530 CBI Vs. R.K. Verma & Ors. 81/145 31.3.2002 from the bank however provisional balance sheet of M/s sunrise Trading Company as on 31.3.2002 filed alongwith the application for PC limit of Rs. 70 lacs was not seized by IO and according to him since he was not having any doubt regarding figures of audited balance sheet as at 31.3.2002 alongwith the provisional balance sheet as at 11.6.2002 which were available on record, therefore there was no question to ask any official of Canara Bank as to why complete set of documents including the provisional balance sheet as on 31.3.2002 on the basis of which Canara Bank sanctioned PC limit of Rs. 70 lacs were not made available to him.
170. The sales/turnover amount of M/s Sunrise Trading Company as on 31.3.2002 was Rs. 600 lacs which was the estimated figure for sales for the financial year 20022003 but this estimated figure of sales was not mentioned in the audited balance sheet as on 31.3.2002 whereby defence sought substantiation of the arguments that allegedly audited balance sheet as on 31.3.2002 was never the basis nor relied upon for grant/extension of sanction. The word audited balance sheet "ABS" were not found written on D25, Ex. PW14/A (colly), though PW41 stated that in the document analysis of balance sheet of Sunrise Trading Company word ".INDICATE AUDTD./UNAUDTD. OR PROVL" and " LIABILITIES AS ON' AND ASSETS AS ON " is written. PW41 admitted that the word "Audited" was not written however again sought to clarify that this was the proforma for analysis of balance sheet and the figures were also given as per the audited balance sheets in the first column and denied Digitally signed by SAVITA RAO SAVITA Date:
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that the figures in the first column were from the provisional balance sheet as at 31.3.2002 of Sunrise Trading Company which were not seized by him. The defence that Provisional Balance sheet as on 31.3.2002 was submitted with the bank finds substantiation from the credit report alongwith D28, page 171 to 181 Ex PW37/R (Colly). It was acknowledged by PW41 that the bank officials had mentioned the words "PBS 31.3.2002" and "PBS 11.6.2002" while sanctioning the PC limit of Rs. 70 lacs alongwith mention in the heading regarding the latest statement available as on ......" There was mention with regard to availability of two PBS i.e. PBS 31.3.2002 and PBS 11.6.2002, besides the mention that "inclusive of provisional balance sheet" under the heading " Comment on Current Trends" upon page 181 of D25" Ex PW10/D(Colly).
171. Apparently the grant of sanction was on the basis of the provisional balance sheets as on 312.3.2002 and 11.6.2002 and with the allegations of prosecution with regard to the audited balance sheet as at 31.3.20021 having been forged, it was incumbent upon the investigating agency to at least compare the audited balance sheet as on 31.3.2002 with the provisional balance sheet as on 31.3.2002 to find out the reason and benefit being accrued to the person/company committing the alleged forgery of audited balance sheet. However, the investigating agency did not make any such comparison simply believing the allegations that audited balance sheets were forged documents. IO also did not try to compare the audited balance sheets with the provisional Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:34:25 +0530 CBI Vs. R.K. Verma & Ors. 83/145 balance sheets, the income tax returns and account statements etc. of M/s Glints Global and Sunrise Trading Company to analyze whether the said balance tallied with the financial data already available with the bank or not. No efforts were even made to find out any difference in the accounting figures of audited balance sheet with the figures available with the bank to come to the conclusion regarding the benefit accrued to accused persons with change of figures in the balance sheets and IO had not asked any bank officials regarding the same during the entire investigation. Merely because the balance sheets were alleged to be not prepared by M/s Bhupinder Shah & Company and M/s Sobtri Arora & Grover, no investigation regarding the details of financial data and Income Tax Returns available with the Canara Bank was made by the IO.
172. The certificate dated 3.7.2002 regarding the unsecured loan raised by Sunrise Trading Company was allegedly the forged document. Though it was admitted by PW41 that the capital deployed by Sunrise Trading Company as per the provisional balance sheet was Rs. 1419808.25/. No bank official told IO that the financial figures/contents of the deployment of capital certificate were not correct and no investigation was conducted by IO regarding the financial figures/contents of the development of capital certificate as the certificate was allegedly forged. At the same time, IO admitted that the amount mentioned in the unsecured loan certificate and the provisional balance sheet were found to be same. PW41 admitted that the figures in the provisional balance sheets found mentioned in the forged balance sheets pertaining to stock SAVITA Digitally signed by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:34:33 +0530 CBI Vs. R.K. Verma & Ors. 84/145 in hand, cash in hand etc.
173. Further, pertaining to the allegations of forgery, PW41 did not record statement of any employee of M/s Sobti Arora and Grover firm as well as from Bhupinder Shah & Company to show that the accounts of M/s Glints Global and Sunrise Trading Company were audited or not audited by them nor did he seize the cash book register, bank statement, audited balance sheet or other relevant documents to substantiate that they did not audit the balance sheet of M/s Glints Global and M/s Sunrise Trading Company. Since the partner of Bhupinder Shah & Company as well as M/s Sobti Arora & Grover , CA firms denied having audited the books of accounts of M/s Glints Global and M/s Sunrise Trading Company, PW41 believing their version did not conduct any search in the office of both the CA firms. He did not seize any balance sheet or other documents signed and issued by these two CA firms for comparison with questioned balance sheets and other documents nor did he ascertain as to who was the custodian of letter heads and official seals of these two CA firms nor sought any opinion from GEQD about the authenticity of letter heads and the seal used upon the disputed documents. He did not even seize the admitted signatures of Bhupinder shah and Pankaj Grover from the record of ICAI for comparison with disputed signatures. Though he denied the suggestion that the balance sheet of M/s Glints Global and M/s Sunrise Trading Company were issued by Bhupinder Shah and Company and M/s sunrise Trading Company, CA firms respectively and on their coming to know about case from CBI, they Digitally signed CC No. 07/16 SAVITA Date:
by SAVITA RAO RAO 2018.03.27 CBI Vs. R.K. Verma & Ors. 85/145 11:34:44 +0530 denied the same. But at the same time, seemingly acted upon the denial by them without making any further inquiry with regard to truthfulness of their version.
174. It is not explained on record, what led the investigating agency to believe that the audited balance sheets available with the Canara Bank were forged documents when no discrepancies were noted in the contents of provisional balance sheets and those of audited balance sheets or brought to the notice of the investigating agency. Upon the denial by Bhupinder Shah and Pankaj Grover company, the documents i.e. specimen writings etc. were sent to GEQD including the signatures and writing of A5. There is no evidence on record with regard to employment of A5 with M/s A to Z Apparels Pvt. Ltd. , nor of him preparing the balance sheet or other documents. On what basis did the needle of suspicion turned towards A5 with regard to preparation of forged balance sheet is again neither clear nor explained on record.
175. The science of handwriting, as admitted by PW35, is not a perfect science though is progressive science and definite opinion can be expressed if suitable data is available for comparison.
176. It is borne out of record that the sanction/extension in favour of M/s Glints Global and M/s Sunrise Trading Company were not based on the alleged forged audited balance sheets. Further, no discrepancies have been brought on record in the contents of provisional balance sheet and the allegedly forged audited balance sheet to draw the conclusion for any benefit having been accrued to the erring party with forgery of the balance sheets. The requisite Digitally signed by SAVITA SAVITA RAO CC No. 07/16 RAO Date:
2018.03.27 11:34:52 CBI Vs. R.K. Verma & Ors. 86/145 +0530 documents and evidence has not been collected from the office of Bhupinder Shah and M/s Sobti Arora & Grover firms except for their denial of having not audited the accounts of M/s Glints Global and M/s Sunrise Trading Company. Further, no concrete evidence with regard to involvement of A5 or even the reason and purpose for him to commit such forgery which led to the conclusion by investigating agency regarding his involvement and regarding the documents being forged is available on record, particularly when the figures in the alleged forged document were not found incorrect. Hence, the accusation against A5 does not stand proved nor regarding the forgery of the audited balance sheet and other documents.
Enhancement of PC Limit By A6 and A7 and Failure on their Part to Scrutinize the Documents.
177. The ehnahcement in the PC limit was sought vide application dated 2.11.2001 moved by A1 from Rs. 30 lacs to Rs. 80 lacs and for foreign bill discounting bill limit against confirmed order from Rs. 10 lacs to Rs. 20 lacs. The enhancement proposal was processed by A1 who recommended for sanction against some primary and collateral security. A6 sanctioned PC limit from Rs. 30 lacs to Rs. 80 lacs and FBD limit from Rs. 10 lacs to Rs. 20 lacs.
178. PW37 admitted that the ehnancement of limit is granted to the borrower on the basis of its performance and on the basis of data submitted by the CC No. 07/16 SAVITA Digitally signed CBI Vs. R.K. Verma & Ors. 87/145 by SAVITA RAO RAO Date: 2018.03.27 11:34:59 +0530 borrower the limits were enhanced. This witness admitted that the first rejection pertaining to foreign discounting bills was conveyed by Bank of India on 5.11.2002 which was received by Canara Bank, R.K. Puram Branch on 7.11.2003 and the same was not during the tenure of A6 who had been transferred from the said branch as on 10.8.2002.
179. Further according to PW37, the borrower was granted one more enhancement after November 2001 which enhancement was granted by the bank in SeptemberOctober 2002. Enhancement is granted by the bank only when the account is performing satisfactorily and only on the basis of quality of data and genuineness of data submitted by the borrower, the enhancement is permitted. The account was categorized Non Performing Asset (NPA) on 12.5.2004 when the advances became overdue and got sticky for recovery as per banking norms. He admitted that the account was performing satisfactorily during the tenure of A6 from 13.9.2000 to 10.8.2002.
180. Subsequent to the enhancement of the said limit, another application dated 25.9.2002 was put by A1 seeking enhancement of PC limit from Rs. 80 lacs to Rs. 100 lacs for period of one year. By that time, A6 had already been transferred from the said branch and Mr. M. Jayasheelan had taken over the charge as Chief Manager of the said branch. Mr. M. Jaysheelan, the then Chief Manager sanctioned the enhanced PCL of Rs. 110 lacs on 15.10.2002 against an additional collateral security of a new recurring deposit account of Rs. 1 lac per month without any reverification of the collateral security of property earlier Digitally signed SAVITA by SAVITA RAO Date: CC No. 07/16 RAO 2018.03.27 11:35:06 +0530 CBI Vs. R.K. Verma & Ors. 88/145 offered to them. This allegation is against the then Chief Manager Mr. M. Jayasheelan who has not been made an accused nor has been charge sheeted in the present proceedings.
181. Further in terms of record, collateral security of new recurring deposit account of Rs. 1 lacs per month was obtained during the tenure of A6 in the said branch and not by Chief Manager M. Jayasheelan.
182. In terms of record, A7 in his office note, proposed collateral security of fresh recurring deposit for one year with monthly installments of Rs. 1 lacs each to be pledged to Canara Bank to strengthen the further collateral security. The said collateral security was taken on 18.4.2002, thereby collateral security of recurring deposit account of Rs. 1 lacs per month existed as furnished on behalf of M/s Glints Global prior to taking over of charge by Mr. M. Jayasheelan in R.K. Puram Branch in September 2002 and cannot be constituted as additional security taken by him while permitting the enhancement of limit to M/s Glints Global from Rs. 80 lacs to Rs. 110 Lacs.
183. PW1 deposed that the limit was enhanced by Mr. M. Jayasheelan, the then Chief Manager but the same was done by taking the additional collateral security in the form of monthly RD of Rs. 1 lacs by Mr. M. Jayasheelan. Mr. M. Jayasheelan, therefore, was exonerated by IO who deposed that M. Jayasheelan had ensured obtaining the collateral security in the form of RD of one lac per month while enhancing the PC limit from Rs. 80 lacs to Rs. 110 lacs, that is why he was not made an accused, while also admitting that the office note dated SAVITA Digitally signed by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:35:13 +0530 CBI Vs. R.K. Verma & Ors. 89/145 5.4.2002 was prepared and processed by A7 proposing PC/ST limit of Rs. 25 lacs and sanctioned by A6 and also that it was not upon the proposal of M. Jayasheelan but upon the proposal of A7 that the collateral security of fresh RD was obtained by A6 who had stipulated the said RD as collateral security mentioning that this security is equal to one percent of the monthly projected turnover. Surprisingly the investigating officer of the case missed out this aspect while exonerating M. Jayasheelan and putting the blame upon A6 and A7, who rather seemed to have taken precaution for obtaining the additional security to secure the interest of bank.
184. As deposed by PW10, the concurrent audit involves total review of the loan account , deposit account and other activities such as liabilities, assets, expenses etc. and it is also within the scope of concurrent auditors to physically visit securities such as movable and immovable properties mortgaged by the party. According to this witness, such concurrent audit report is important and he had handed over all the important documents to CBI which were available with the bank . He was not in position to comment whether concurrent audit report was not available with the bank though stated that invariably such report should be with the bank.
185. None of the concurrent audit reports were available on record. As stated by this witness, no instructions were given to him by any authorities or their officers for not making available the said reports to CBI. As per banking norms, all such reports and documents must be in the custody and possession of Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date:
2018.03.27 CBI Vs. R.K. Verma & Ors. 90/145 11:35:21 +0530 concerned branch and office. This witness did not remember of having seen any adverse noting by auditors in pre NPA period in the files maintained by R.K. Puram Branch , Canara Bank by the external/internal auditors or RBI auditors. however, admitted that there was no adverse remarks on Ex. PW10/E which is the letter issued from Canara Bank to Sunrise Trading Concern with regard to scrutiny of loan papers.
186. PW37 admitted that review report is sent by branch after sanction of limits/loans for review. After scrutinizing the review report for sanction of limits, the said review report is duly scrutinized by the Circle office and in the event of adverse observation, a separate letter is sent to the branch containing such adverse/negative observation. Though this witness stated about having seen the negative observation by circle office in the file of M/s Glints Global and M/s Sunrise Trading Company which were sent by way of letters to R.K. Puram branch after receipt of review report but was unable to locate any such document. He then admitted that concurrent audit is conducted in the branch every month for all the sanction of limits of loan granted in the previous month . He admitted that concurrent audit is an important document regarding the sanction of limits by the branch but had not seen any concurrent audit report in the documents perused by him during investigation as inquiry officer. He had seen the regular inspection report and did not consider the utility of going through or asking for the concurrent audit report.
187. As deposed, the designated branch inspection audit report and RBI Digitally signed SAVITA by SAVITA RAO Date:
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inspection report are maintained in separate files. He did not remember if he had seen the inspection file, designated branch inspection report or RBI inspection report during his investigation. he did not remember if he had asked the branch manager to provide him with the designated branch inspection file and RBI inspection file although stated that branch Manager must have given him the concurrent audit report for these two accounts and he must have perused the said reports. At the same time, he did not remember if there was any negative/adverse comment in those reports for these two accounts. According to him, if there was any adverse comment in the concurrent audit report, the branch is supposed to rectify that observation or take up the matter with circle office. Chief Manager then directs the Credit Manager/Officer to rectify the negative/adverse comments or take up the matter to circle office but he had not seen any directions from Chief Manager to Credit Manager to rectify any adverse comments or taken up the matter with circle office as these directions, as stated, are usually not given in writing.
188. He stated that the concurrent audit report is submitted to the circle office by the inspection department and is not sent directly by the branch therefore if there is negative or adverse comment in the Concurrent Audit Report then the circle office follows up in writing with the branch for rectification of such observation and on receipt of such follow up, branch sends its report having rectified the such observation or take up the matter with circle office for their ratification or guidance.
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189. This witness initially stated about having seen letter from Circle office to Branch regarding its directions for rectification of negative comments but failed to locate any such letter from record and then stated that he did not remember if he had seen any reply from branch to circle office regarding rectification of the comments made in concurrent audit report while denying that he had not been able to locate the documents as no such document is in existence.
190. This witness himself had conducted the concurrent audit report of R.K. Puram Branch which was prior to the investigation conducted by him as inquiry officer of the accounts of Sunrise Trading Company and M/s Glints Global but he was not able to recall if he had pointed out any discrepancy in the sanction of limits pertaining to both these accounts while admitting that audit is conducted by team of qualified and experienced Chartered Accountants empanneled by Canara Bank. Despite the audit report being important documents, this witness did not find any relevance to refer to those report in connection with his duties as inquiry officer, while trying to clarify that since had he had verified all the documents from starting to end concerning these two accounts specifically.
191. The fact remains, as deposed by witnesses of prosecution, that the audit reports are the important documents and in case of any discrepancy , irregularities, as noted by Audit team, such adverse or negative report is conveyed to the branch/person concerned for rectification or for taking the appropriate steps.
Digitally signed SAVITA by SAVITA RAO
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CBI Vs. R.K. Verma & Ors. 93/145
192. This witness admitted that on receipt of Review report from the branch, if there is any discrepancy or deviation from banking norms/rules, the circle office would definitely send a letter containing adverse observation/comment to the branch asking it to rectify the said discrepancy or deviation. He was unable to say whether the letter was received by the branch or the said letter was available in the credit file. Rather he did not find any letter from the circle office regarding review of the sanction limits to Sunrise Trading company or M/s Glints Global . He did not remember if IO had shown him any adverse observation by the circle office. He was not able to comment as to the reasons for absence of any adverse comments by the circle office on receipt of review report from the branch while admitting that circle office will not give any negative or adverse observation/comment on receipt of review report if all the banking norms/rules and regulations are duly complied with while granting sanction limit by the branch.
193. As admitted, Concurrent audit is conducted in next month for the sanction made in previous month, regular audit is conducted once in a years and statutory audit is conducted annually. As deposed, on grant of PC limit sanction or enhancement or on renewal of limit, the concurrent audit is conducted in the very next month. In total there would be about fifteen audit reports of the two accounts i.e. M/s Glints Global and Sunrise Trading Company. DB, Regular and concurrent are internal audits, whereas the balance sheet/statutory audit is conducted by chartered accountants nominated by RBI.
Digitally signed by SAVITA RAO CC No. 07/16 SAVITA Date:
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He admitted that all the audits are conducted to ensure that the business of the bank is conducted as per banking norms and there is no discrepancy or deviation from banking norms in the grant of PC limit or enhancement or renewal thereof.
194. As also deposed by PW37, during the audits, auditors/inspectors check the necessary compliance of the banking norms/rules/regulations in all the accounts of the bank. The stock, as well as the records of the account including the grant of sanction, renewal of sanction and enhancement of limit are also checked, whereas during the concurrent audit, the auditors also visit and verify the property kept as equitable mortgage in borrower's accounts, including various PC accounts. During the course of audit, the auditors /inspectors review the operation of PC/Current account/OD Account. He also admitted that he had not mentioned in his report Ex. PW40/A regarding any adverse or negative observation made by the auditors/inspectors during concurrent audit, regular audit, annual statutory audit and designated branch audit regarding any suppression of full facts while sending the review report by the Chief Manager . He himself had not visited the circle office during investigation to verify any document pertaining to accounts of Sunrise Trading Company and M/s Glints Global.
195. PW41 also admitted regarding concurrent audit/regular audit/annual statutory audit being important/relevant documents to find out if the accounts had been functioning properly as per banking rules and norms but he had not Digitally signed CC No. 07/16 by SAVITA RAO SAVITA Date:
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seized any audit report by external/internal auditors for the accounts of M/s Glints Global and M/s Sunrise Trading Company. PW41 at the same time was also not able to show any adverse comments by the auditors conducting concurrent audit/designated branch audit/regular and annual statutory audit of the branch regarding any improper conduct by the branch officials.
196. There being allegations of glaring lapses amounting to cheating, obtaining undue pecuniary advantages, reference to the contents of review reports/ audit reports gets more significance but in instant matter, neither PW37 nor PW41 tried to find out regarding any noting of such lapses noted in audit reports and rather the record speaks of no such communication to concerned branch/official of the bank regarding any adverse comment, if so committed by bank officials. PW1 rather confirmed regarding no adverse comments made in Concurrent Audit Report for the Canara Bank, R.K. Puram Branch. Not only this, bank itself has given clean chit to its officials by virtue of documents for settlement submitted by bank dated 21.7.2006, part of D28 Ex. PW37/R (colly) at page 414 where against the details of lapses by officials of bank in handling/follow up of account, the remark was made as " NIL".
197. Pertaining to the accusations against A6 besides the bank's own clean chit given to its employees/officers, the accounts were stated to be performing satisfactorily during the tenure of A6 and the allegations levelled against him are also pertaining to year 2003 while A6 had already been transferred from R.K. Puram Branch in August 2002 itself . No lapses were found in opening of Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:36:02 +0530 CBI Vs. R.K. Verma & Ors. 96/145 accounts, in granting the limits for both concerns i.e. M/s glints Global and M/s Sunrise Trading Company. The additional collateral security had also been obtained by A6 at the time of enhancement of PC limit.
198. The point for consideration for A6 remains with regard to the involvement of his son and the pecuniary advantages allegedly having been obtained by A6.
199. As alleged, Prashant Nayak, Son of A6 P. Prakash Nayak was employed with Manoj Garg in his firm namely M/s A to Z Apparels on monthly salary of Rs. 10,000/. Prashant Nayak visited Afghanistan with Ankan Gupta S/o Vijay Kumar Gupta to attend an exhibition during the period 24.9.2002 to 20.10.2002 on behalf of M/s Ess Trading Company , a partnership concern of Vijay Kumar Gupta and having account with Canara Bank, R.K. Puram Branch, New Delhi and there is stated to be documentary evidence about the payment of ticket of Prashant Nayak by Ankan Gupta S/o Vijay Kumar Gupta. As alleged, A6 P Prakash Nayak sanctioned credit facilities to aforesaid firm, in which Manoj Garg and Vijay Kumar Gupta had played a crucial role, in lieu of pecuniary advantage obtained by him in the form of employment of his son as well as his tour abroad.
200. So far as the factum of employment of son of A6 with the firm of A3 i.e. M/s A to Z Apparels is concerned, the said fact is established on record and is not disputed by A6 as well. However, A6 stated that he was not even aware that his son had joined M/s A to Z Apparels. As stated, his son had completed Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date:
2018.03.27 CBI Vs. R.K. Verma & Ors. 97/145 11:36:19 +0530 his engineering and was looking for the job who was not under control and power of A6.
201. PW15 i.e. father of A3 stated about the employment of Prashant i.e. son of A6 in firm M/s A to Z Apparels . According to him, he was learning work and was appointed as Store Incharge. He worked for one and half months and as deposed, PW15 had never met A6.
202. Prashant Nayak himself was examined as PW17 who stated about having served in the company M/s A to Z Apparels of A3. He was qualified engineer and was getting Rs. 10,000/ salary. As deposed, office of Ankan Gupta was located adjacent to their office and PW17 was known to Ankan Gupta , though in terms of charge sheet, the allegations regarding abroad visit of PW17 are for the one occasion , however this witness was fair enough who himself stated about his visit to abroad five times, twice to US, once to Malaysia, once to Thailand and once to Afghanistan. He went to Afghanistan sometime between 2001 to 2002 when he was accompanied by Ankan Gupta and his air ticket expenses and expenses for staying abroad were borne by Ankan Gupta.
203. He had worked with A to Z Apparels for three/four months in year 20012002. After completing his Engineering, he came to his parents at Delhi . His friend took him to place in Karol Bagh where he met A3 who offered him job and he accepted it for the reason that he was unemployed at that time. He stated that he went to Afghanistan at the instance of Ankan Gupta and the Digitally signed by SAVITA RAO SAVITA Date:
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CBI Vs. R.K. Verma & Ors. 98/145
expenses were also borne by Ankan Gupta and not by A3. He had met A3 through one of his friends. A3 had never visited his house.
204. It may be noted that in terms of the evidence brought on record, neither A3 nor A4 are beneficiary to the limits sanctioned by the bank. PW17 had visited Afghanistan at the instance of Ankan Gupta, son of A4 and his expenses were also borne by Ankan Gupta. He visited Afghanistan between the period 18.9.2002 to 24.9.2002, whereas A6 had already been transferred from R.K. Puram Branch as on 8.8.2002. A4 also stated in his statement recorded u/s 313 Cr.P.C. that PW17 had been receiving salary from A3 and no evidence is there on record with regard to any pecuniary advantage having been accrued to A6 from the said employment of his son with the firm belonging to A3 besides the fact that even expenses of the trip of son of A6 were not borne by the beneficiary of the credit limits i.e. A1 or A2 or even A3 who had introduced A1 for opening of the account in R.K. Puram Branch.
Allegation of Forgery Of Property Documents by Accused4 Vijay Kumar Gupta and Subsequent Execution of Sale Deeds in favour of A3 and A1
205. M/s Sunrise Trading Company after its reconstitution on 10.06.2002 had applied for sanction of packing credit limit of Rs. 70 lacs to R.K. Puram Branch, Canara Bank vide application dated 21.6.2002. PC limit of Rs. 70 lacs CC No. 07/16 SAVITA by Digitally signed SAVITA RAO CBI Vs. R.K. Verma & Ors. 99/145 RAO Date:
2018.03.27 11:36:36 +0530 was sanctioned on 9.7.2002 against the security of stock and collateral security against plot no.3, measuring 1000 sq. yds out of Khasra no. 389, Village Masudabad, New Delhi. The said property was in name of A1 having purchased it from A3 Manoj Garg. A3 in turn had purchased the said property from A4 Vijay Gupta vide registered sale deed on basis of GPA dated 2.2.2002 in favour of A4 executed by one Sudershan Kumar who himself had purchased the said property vide registered sale deed from one Chander Mohan.
206. As per investigation, the GPA with regard to said property executed between Sudershan Kumar and A4 dated 2.2.2002 was found to be forged document. As alleged, GEQD had also offered positive opinion on signatures/handwriting of Vijay Gupta on various documents . On the basis of said forged GPA dated 2.2.2002, Vijay gupta had executed sale deed dated 6.2.2002 in favour of A3 who then sold the property to A1 vide sale deed dated 6.5.2002 but neither A3 nor A1 paid for the said property nor took possession of the same and the part of said property continued to be in possession of A4 . GEQD confirmed that Sudershan Kumar had not signed GPA dated 2.2.2002. As such, Vijay Kumar Gupta suo moto created the said GPA in his favour and subsequently sold off the said property to A3.
207. It was revealed that A4 had already executed a sale deed in favour of one Rajiv Gupta regarding 1010 sq. yds of the said land, who had further sold the said property on 6.6.2002 to one Sh. Jai Kishan Garg, father of Manoj Garg on the basis of GPA. Since property had already been purchased by Jai Kishan CC No. 07/16 SAVITA Digitally signed by SAVITA RAO CBI Vs. R.K. Verma & Ors. 100/145 RAO Date: 2018.03.27 11:36:44 +0530 Garg, father of Manoj Garg in year 2001, there was no question of purchase of the same by Manoj Garg on 6.2.2002 which was substantiating the charge against Vijay Gupta A4 and Manoj Garg A3 about the forged documents submitted to the bank.
208. Vide registered sale deed Ex. PW11/A , property bearing plot no. 3, land measuring 1000 sq. yds out of khasra no. 389, village Masudabad was sold by A4 in favour of A3. The sale deed was executed by A4 as GPA holder of Sudershan Kumar who was the owner of the property by virtue of registered sale deed dated 16.8.1988. Registered sale deed dated 16.8.1998 is Ex. PW4/F executed by Chandra Mohan Singh in favour of Sudershan Kumar with regard to land measuring one Bigha out of Khasra no. 389 situated at Village Masudabad. The said registered sale deed Ex. PW4/F was found to be genuine, however GPA on the basis of which sale deed was executed by A4 in favour of A3 was found to be forged document as Sudershan kumar denied his signatures over the GPA and other documents i.e. agreement to sell, affidavit, receipt etc. Ex . PW4/G (colly).
209. Sudershan Kumar was examined as PW4 who stated that he sold his property measuring 500 sq. yds out of land measuring one Bigha 1000 out of khasra no. 389, situated at Village Masudabad vide Ex.PW4/A in favour of Bimla Rani which documents were bearing his signatures. This witness was recalled for further examination in chief u/s 311 Cr.P.C. when he stated that he sold his property measuring 500 sq. yds out of total land measuring one Bigha Digitally signed by SAVITA RAO SAVITA CC No. 07/16 RAO Date:
2018.03.27 11:36:53 CBI Vs. R.K. Verma & Ors. 101/145 +0530 out of khasra no. 389. This plot was measuring 1785 sq. yds and was sold to Surender Kumar Mangla vide mark PW41/X2.
210. Perusal of mark PW41/X2 reveals the execution of documents for piece of land measuring 500 sq. yds and not of 1785 sq. yds, as stated by this witness. In cross examination with reference to mark PW41/X2, he stated that it was measuring 1685 sq. yds and not 1785 sq. yds while admitting that the said document did not contain mention regarding the plot measuring 1785 or 1685 sq. yds. Contrary to the mention in mark PW41/X2, this witness denied the suggestion that plot was measuring only 500 sq. yds and not 1685 sq. yds or 1785 sq. yds. He volunteered to state that there were two plots measuring 1685 sq. yds and 315 sq. yds falling in Khasra no. 389 and 391 respectively and he had sold500 sq. yds to Mangla Hospital, Mahavir Nagar. On the same breath, he stated that the plot which was sold to Bimla Rani was measuring 1685 sq. yds . The entire plot of 1685 sq. yds was covered with boundary wall without any partition. He had executed transfer documents on the asking of Dr. Mangla in favour of one person or in favour of more than one person but he did not remember the same due to lapse of time.
211. This witness gave different counts of the measurements of the plot and number sold to different persons but he denied his signatures over Ex. PW4/G which was the GPA executed in favour of A4 which has been alleged to be forged document by prosecution.
212. PW5 Ashok Kumar Malhotra had purchased the property no.17, Digitally signed CC No. 07/16 by SAVITA RAO SAVITA Date:
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situated at village Masudabad, Najafgarh Road from Smt. Bimla Devi in 1992 and then sold it to Dr. Surender Mangla vide documents Ex. PW5/F, Ex. PW5/G, Ex. PW5/H and Ex. PW5/I.
213. PW6 Kuldeep Kumar had purchased the plot in Masudabad vide documents Ex. PW6/A which was sold by him to Sh. Surender Mangla in 1995 vide documents Ex. PW6/B to Ex. PW6/F. He did not know what was the size of khasra in which the plot purchased by him was situated. As deposed by him, the plot purchased by him was not demarcated. It was a big plot probably of size of 13001400 sq. yds. As deposed, he had purchased the said plot in partnership with Mr. K.C. Sharma
214. PW9 Dr. Surender Kumar Mangla had purchased the said property vide documents Ex. PW9/A1 to Ex. PW9/A2 which was sold by him in year 1992 itself. He had sold the said property vide documents Ex. PW9/B1 to Ex. PW9/B7 to PW18 Harender Kumar. As stated, when he had purchased the said plot, there was boundary wall and he sold the same in that very condition.
215. The witnesses as examined by the prosecution as referred above are not sure of the property having been demarcated , having boundary wall or even with regard to the correct measurement of the property. So much so PW4 is not even sure of the measurement and the persons to whom property had been sold. However, from the documents available on record and prosecution as well as A4 having placed on record the chain and sequence of purchase and sales of said property, following can be considered.
CC No. 07/16 Digitally signed
SAVITA by SAVITA RAO
CBI Vs. R.K. Verma & Ors. 103/145
Date:
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216. Chander Mohan Singh was the owner of land situated at Village Masudabad, Delhi, comprising khasra no. 389 and 391 . One Bigha out of Khasra no. 389 was sold by him in favour of Sudershan Kumar who in turn sold 500 sq. yds each in favour of Surender Kumar mangla and Bimla Rani. Bimla Rani sold her 500 sq. yds to Ashok Kumar, PW5 in 1992 and then PW5 sold it to Dr. Surender Mangla vide documents Ex. PW5/F, Ex. PW5/G, Ex. PW5/H and Ex. PW5/I, thereby Surender Kumar Mangla became owner of the entire plot of 1000 sq. yds out of Khasra no. 389 .
217. With regard to one bigha out of khasra no. 391, Chander Mohan sold the same in favour of Subhash Bhatia who sold 342 and half sy. yds in favour of Khoob Chand Sharma and Kuldeep sharma PW6 and another portion of 342 and half sq. yds in favour of S.K. mangla. Kuldeep Sharma and K.C. Sharma sold their property measuring 342 and half sq. yds in favour of S.K. Mangla, thereby S.K. Mangla became owner of 685 sq. yds out of khasra no. 391 and became owner of total land measuring 1685 sq. yds out of khasra no. 389 and 391, village Masudabad.
218. The said plot measuring 1685 sq. yds was sold by S.K. mangla in favour of Harinder Kumar who in turn sold the said property in favour of A4 Vijay Gupta Vide documents dated 23.5.2000. However, by the time, the property reached in hands of A4, it was now termed as plot bearing no. 17. A4 executed GPA in favour of Rajeev Kumar dated 3.2.2001 with regard to the plot measuring 1010 sq yds. Here comes the twist since A4 claims to have Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:37:15 +0530 CBI Vs. R.K. Verma & Ors. 104/145 repurchased the said property from Rajeev Kumar vide GPA dated 1.5.2001, whereas PW15 Jai Kishan Garg claims to have purchased the said plot measuring 1010 sq. yds from Rajeev Kumar vide GPA and other documents dated 6.6.2001. A4 alleged to have sold the property measuring 1000 sq. yds which was termed as plot no. 3 out of Khasra no. 389 on the basis of GPA executed in his favour by Sudershan Kumar who in turn sold the property in favour of A3 vide registered sale deed. Vijay Kumar A4 was admittedly owner of property measuring 1685 sq. yds out of khasra no. 389 and 391, out of which 1010 had been sold by him in favour of Rajeev Kumar, though he claims to have repurchased the same from him.
219. PW15 Jai Kishan Garg, as deposed by him, had purchased plot no.17 vide GPA and other documents Ex. PW15/A to Ex. PW15/C executed by Rajeev Gupta and against sale consideration of said plot, he had paid Rs. 1.60 lacs to Rajiv Gupta apart from one shop which he had in Raja Puri. Said property was then rented out by him to A4 Vijay Gupta who installed some machine in that plot due to which dispute arose between them. PW15 even lodged the complaint with P.S. Uttam Nagar. Later on A4 vacated the plot and thereafter PW15 learnt that A4 had also sold the same plot to his son Manoj Garg. A4 had sold plot no.3 and not plot no.17 to his son Manoj Garg though on papers it was shown that he had sold plot no.17. A4 according to him vacated the plot soon after the complaint was lodged against him .
220. The rent deed 11.8.2002 Ex. PW15/DB was also executed by this Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date:
2018.03.27 CBI Vs. R.K. Verma & Ors. 105/145 11:37:22 +0530 witness . This witness denied that neither he had taken physical possession of plot no.17 nor his son A3 ever took the possession of plot no.17 or plot no.3 as he could not arrange for the consideration. However, as admitted, he had not filed any suit either against A3 Manoj Garg i.e. his son or Vijay Gupta for cancellation of documents of subsequent sale, however he volunteered to state that A3 had already sold the same further, thereby admitted at least regarding both the plots being same.
221. PW33 Rajiv Gupta stated about his deal with PW15 regarding purchase of shop as he had purchased this shop situated in Rajapuri from Jai Kishan Garg in June 2001 for sum of Rs. 60,000/. He had made the payment by cheque and he had not signed any document relating to payment of Rs. 1.60 lacs. He came to know about the cheating only in year 2006 but he also did not lodge any complaint with any authority. He admitted his signatures upon the copies of the document mark PW33/DA. Mark P33/DA is the GPA executed by Rajeev Gupta in favour of Vijay Kumar Gupta vide which property measuring 1010 sq. yds , portion of property no.17 was retransferred in favour of A4 which substantiated the contention of A4 that he had repurchased the said property from Rajeev Gupta.
222. Neither this witness i.e. PW33 stated about the execution of GPA in favour of Jai Kishan Garg nor about the receipt of Rs. 1.60 lacs from Jai Kishan Garg and only stated about the purchase of one shop from Jai Kishan Garg . Besides that, vide Ex. PW42/A, portion of plot no.17, measuring 1010 sq. yds CC No. 07/16 Digitally CBI Vs. R.K. Verma & Ors. 106/145 signed by SAVITA SAVITA Date:
RAO RAO 2018.03.27 11:37:29 +0530 was stated to have been sold by A4 in favour of Rajeev Gupta with boundaries as: East - Land of Executant, West: Main Shivaji Road, South : Plot no. 16 and North: Land of Executant. The executant was A4 who was owner of property measuring 1685 sq. yds out of Khasra no. 389 and 391. Vide GPA Ex. PW15/A, the said property of 1010 sq. yds as portion of plot no.17 was allegedly sold in favour of PW15 with the same boundaries i.e. East - Land of Executant, West:
Main Shivaji Road, South : Plot no. 16 and North: Land of Executant. Now the executant i.e. Rajiv Gupta was not the owner of the property located on East or North of said property but the previous executant Vijay Kumar was . Thereby genenuity of contents of GPA itself becomes doubtful. A4 having repurchased the said property from Rajeev Gupta which fact was corroborated by testimony of PW33 himself coupled with the contents of Ex. PW15/A, claim of PW15 with regard to purchase of property i.e. portion of plot no.17, land measuring 1010 sq. yds out of khasra no. 389 and 391 itself becomes doubtful.
223. Further, complaint Ex. PW15/DA, as stated by PW15, was lodged with the police as A4 was rented out the property bearing no.17 who installed machines without the permission of PW15 and had also threatened them and refused to pay rent. In terms of deposition of PW15, the said plot was vacated by A4 after the lodging of police complaint. The complaint Ex. PW15/DA is dated 29.7.2003. PW15 also talked about the rent agreement executed between himself and A4 i.e. Ex. PW15/DB. Surprisingly the said rent deed whereby the tenancy was effected between the parties w.e.f. 1.8.2004 upto 11 months Digitally signed by SAVITA SAVITA RAO CC No. 07/16 RAO Date:
2018.03.27 11:37:34 CBI Vs. R.K. Verma & Ors. 107/145 +0530 pertaining to property measuring 1010 sq. yds out of khasra no. 389 and 391, Village Masudabad, Shivaji Road, Delhi is dated 11.8.2004. The date of execution of rent agreement is after the date of lodging of complaint Ex. PW15/DA i.e. 29.7.2003, wheras A4 had vacated the said premises after lodging of the said complaint dated 29.7.2003, as deposed by PW15. In these circumstances, how the question arose for the execution of rent deed dated 11.8.2004, is open to make guess or to draw conclusion with regard to falsity of statement of PW15 .
224. It may also be noted that in the rent agreement Ex. PW15/DB there is no mention of property number though the measurement of the property as 1010 sq. yds and the same being part of khasra no. 389 is mentioned. Considering the abovestated, the purchase of 1010 sq. yds out of Khasra no. 389 itself comes under cloud and thereby in terms of evidence available on record, A4 continued to be owner of 1685 sq. yds of Khasra no. 389 and 391 situated at Masudabad Village, Delhi.
225. As far as bank is concerned, the property documents in form of registered sale deed in favour of A1 alongwith the previous chain of documents were submitted as collateral security for grant of sanction of credit limits in favour of firm Sunrise Trading Company which was the partnership firm of A1 and A2. The property documents were in name of A1.
226. Legal Search Report was obtained by the bank. PW3 submitted the LSR before the bank. He was practicing lawyer and being on the panel of CC No. 07/16 Digitally signed by CBI Vs. R.K. Verma & Ors. 108/145 SAVITA SAVITA Date:
RAO RAO 2018.03.27 11:37:40 +0530 Canara Bank, vide legal search report dated 12.6.2002 Ex.PW3/C PW3 reported about the property bearing plot no.3, falling in Khasra no.389, measuring 1000 sq. yds situated within the Revenue Estate of Masudabad village being in name of R.K. Verma. The original receipts issued by the office of Sub Registrar were exhibited on record by him. Vide his report, he reported the bank regarding title of the said property being clear which could be taken as security from intending borrower, though he issued certain advices before taking the said property as collateral security. He admitted that title of the said property was clear ,thus the same was verified by him also in the report submitted to the bank but subject to the conditions mentioned in LSR while admitting that those conditions had nothing to do with the title, therefore he could say that title of the property was absolutely clear.
227. After submitting the LSR to the bank ,PW 3 had advised bank to take affidavit from the owner of the property with regard to the possession and also that no court case was pending with regard to said property. Copy of proforma of affidavit mark PW3/F was also given to the bank by him and he had advised through his LSR to the bank to obtain documents in original mentioned at serial no. 1 to 7 at page 150 of D25 and also advised the bank to obtain house tax documents etc. of the property in question. The original documents were available with bank and were shown to him in the bank by A7, as deposed by him. He also stated that the bank officials showed him all the requisite documents which were required for preparation of LSR. The proforma of Digitally signed CC No. 07/16 SAVITA by SAVITA RAO Date:
RAO CBI Vs. R.K. Verma & Ors. 109/145 2018.03.27 11:37:48 +0530 affidavit which was yet to be obtained by the bank was attached with the LSR as given to the bank mark PW3/F. Check list for scrutiny and approval of LSR by branch was prepared, wherein it was noted by A6 , that the property was physically verified on 1.7.2002, that the documents showing proof of his possession to be obtained, that affidavit in the format enclosed in LSR to be obtained and that boundaries of the property to be ascertained.
228. It was submitted by ld. Prosecutor that the bank was advised to obtain affidavit of attorney holder which was not taken despite advise of PW3. Though it is correct that it was noted by PW3 in LSR at point 2 that the affidavit from Vijay Kumar be also taken to be kept on record affirming that the GPA executed in his favour was in force on the date of execution of sale deed dated 6.2.2002, however the proforma affidavit attached with the LSR was to be obtained from the owner of the property and to confirm that he was in possession of the said property and that no court case was pending regarding the said property.
229. It was submitted by Ld. Counsel for defence that LSR laid down for valid creation of equitable mortgage and charge in favour of bank and the basis requirement was to obtain original documents which were duly obtained by the branch. LSR only provided proforma of one affidavit which was duly obtained. The other affidavit as advised by the LSR was also obtained since it is only thereafter that the 'Certificate of loan paper obtained' was given by the then Chief Manager A6 noting that " all papers required have been obtained CC No. 07/16 SAVITA by Digitally signed SAVITA RAO CBI Vs. R.K. Verma & Ors. 110/145 RAO Date:
2018.03.27 11:37:55 +0530 and they have not deviated from terms of sanction". It was further submitted that IO had deliberately removed both the affidavits from A1 and A4 alongwith the original house tax receipt from record obtained by him so as to create suspicious circumstances against the accused persons, though obtaining or non obtaining of affidavit from V.K. Gupta did not vitiate the title of the property as certified by PW3 who stated that the title of the property was clear, thus the same was verified by him and that the conditions put by him in the LSR had nothing to do with the title.
230. Ld. Counsel for defence also referred to the loan documents on record pertaining to accounts of M/s Glints Global and M/s Sunrise Trading Company which were available in the branch but had not been placed by the IO on record alongwith charge sheet, like Departmental inquiry report, Concurrent Audit Report/regular inspection report/statutory audit report/DB audit report, observations/comments of circle office on view of the sanctions, enhancements report sent by the branch, reports from the branch confirming names of officials permitting/authorizing the transactions in these accounts, valuation report of TC Mehra, Statement of RD Account of A1 taken as collateral security, complete statement of PC accounts of GG & STC from July 2001 to May 2004, Report of Sunita Sharma to whom property documents were handed over vide letter dated 7.3.2006, statements of branch officials who were working in the Canara Bank during the relevant period when the accounts were operational and valuation of property in the account of M/s Singla Automobiles.
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231. PW41 stated that the format of original affidavit to be obtained was on record and there was also mention regarding the original affidavit dated 9.7.2002 in the list of documents but no affidavit as advised by PW3 in LSR was found to be in the list of documents during his investigation. This witness was shown mark PW41/D/A1/X1/X which was the affidavit mentioned by the bank officials and PW41 admitted that it was in the same format however he stated that PW3 had advised to take the affidavit from Vijay Gupta but no such affidavit was taken from Vijay Gupta. He admitted that Ravinder Vasudev i.e.PW3 in his LSR did not provide proforma of any other affidavit apart from the proforma provided at page 149 of D25 Ex. PW41/D/A1 & A2/22, yet A6 seems to have taken care of this aspect who noted on the check list that the affidavit regarding GPA in force to be obtained as mentioned in LSR. No such affidavit is on record. A4 himself denied existence of GPA Ex. PW4/G in his favour. Had the same been furnished by A4, his involvement in preparation of forged document would have been confirmed. Albeit, irrespective of the availability of said affidavit on record of the bank, in terms of LSR, title to the said property was clear, registered sale deeds were on record alongwith the proof of possession and identification of property. The bank officials, in these circumstances, sufficiently observed the precautions before advancement of limits.
232. Further, valuation of the said property was conducted by PW8 Tilak Chand Mehra who was empanelled with Canara Bank and submitted the Digitally signed by SAVITA RAO CC No. 07/16 SAVITA Date:
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valuation report dated 28.6.2002 Ex. PW8/A. According to him, he himself had visited the property and checked the auction rate of DDA to ascertain its valuation. He was accompanied by A1 to the said property. Site plan Ex.PW8/B was provided to him by A1and the identification of the property was made by A1.Since, as per practice, the owner of the property accompanies the valuer so that there is no confusion regarding the identification of the property, therefore, as stated, there was nothing unusal in accused Raj Kumar Verma accompanying him to the property.
233. It was submitted by counsel for A1 that PW8 had filed the valuation report Ex.PW8/A alongwith its attachments as mentioned in the valuation report itself namely house tax receipt mark PW8/DA and site plan Ex.PW8/B, which confirmed the possession of the borrower R.K.Verma . The original house tax receipt no. 3133 dated 24.6.2002 in the name of borrower is recorded at S.no.10 , page no.3 of D31 Ex. PW10/F as one of the documents taken by R.K.Puram Branch regarding proof of possession. The original electricity bill issued by Vidyut Jal Board mark PW41/DA/A1/3 and the original water bill for the duration 1.2.2002 to 31.3.2002 issued by Delhi Jal Board mark PW41/DA/A1/4 alongwith the original property tax receipt dated 24.6.2002 Ex.PW8/DA coupled with the registered sale deed in favour of A1 proved ownership and possession of the said property with A1 which was mortgaged with Canara Bank. Reliance was placed upon Hari Ram Vs. State of Rajasthan (2009) 13 SCC 21 and Dama S/o Sakharam Gongale & Ors.
CC No. 07/16 Digitally
signed by
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Vs. Bija S/o Dharma Khobragade 2006 (2) ALLMR 47 to substantiate his submission that court should accept the documents which are antelite mortem in nature as their evidentiary value is unimpeachable in nature.
234. Further A3 had given him possession of land with the original registered documents of the property. Original Electricity bill dated 30.01.2002 issued by Delhi Vidyut Board Mark PW41/DA/A1/3 and original water bill issued by Delhi Jal Board Mark PW41/DA/A1/4 were also handed over to A1 and since there is presumption about the correctness of the Registered documents and all the original title documents were duly received by A1 , as such there was no reason for A1 to suspect any wrong doing.
235. It was also submitted that the IO had malafidely removed various documents as were obtained from bank to create suspicious circumstances against the accused persons and to strengthen its case. The original documents which were taken in possession from the bank were replaced with the photocopies at page 159 to 161, part of D26 Ex. PW37/T (colly), to justify that no proof of possession was given and the boundaries of the plot were also not ascertained, however PW8 when was examined before this court, report submitted by him was not found in the judicial file subsequent to which application u/s 311 Cr.P.C. was moved by prosecution placing the valuation report of PW8 alongwith the attached documents.
236. PW8 stated that he himself had not measured the property and had given the description about the area of the property on the basis of the Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:38:27 +0530 CBI Vs. R.K. Verma & Ors. 114/145 information given by A1 nor he had ascertained whether any house tax or property tax was leviable in that area and he was never given any house tax receipt Ex. PW8/DA which was alleged to be the part of his report .According to him, there existed a factory which he had mentioned in his report on the basis of information given to him by one or two persons who were working there though he himself found dilapidated structure in the middle of the property and he denied that there were and are 5 shops in the property in question or that there was no factory in the property in question. He reiterated that he was never given any house tax receipt nor he gave the same to bank or CBI. There was electricity connection in the property and some manufacturing activity was also going on but he did not try to ascertain as to who was having the possession of the property. Contrary to deposition of PW8 himself, in his report Ex.PW8/A, there is specific mention of house tax receipt having been enclosed against the point " As the land freehold or leasehold" for which he also reported that the land was free hold and was falling in MCD area.
237. Besides that , as admitted by PW37, there would be about fifteen audit reports of the two accounts of Sunrise Trading Company and M/s Glints Global and during the concurrent audit,as deposed by him, auditors/inspectors also visit and verify the property kept as equitable mortgage in borrowers account. Another inspection report by JBR Engineers dated 3.11.2005 is also on record being part of (D26) Ex.PW37/7 (colly) vide which physical inspection of the property in question was carried out ,boundaries were ascertained and as Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:38:35 +0530 CBI Vs. R.K. Verma & Ors. 115/145 noted in the report, property was inspected on 22.10.2005 in presence of the then Chief Manager Canara Bank, R.K.Puram Branch and company's representative. Though the number of title deed/documents available for the property in the report of SJB were stated to be two but with regard to the location and identification of the property, same was verified vide this report as well. Reverification of the abovesaid property was called from Panel Advocate Ms. Sunita Sharma, vide letter dated 7.3.2006 , forming part of D26 Ex. PW10/D/A7/X5, however no such report submitted by advocate Sunita Sharma was filed on record.
238. Last but not the least Ex.PW41/D/A12A2/ZX2 is the notice dated 5.8.2005 issued in SARFAESI Act by Canara Bank to Sunrise Trading Company restraining it from dealing with any of the secured asset in the schedule i.e. plot no.3, khasra no.389 i.e. property in question. Possession notice dated 18.3.2009 mark PW41/DA/A1/2 was put to PW41 to which he answered that the same pertained to year 2009 which was after filing of the charge sheet,therefore he was unable to answer. Order of attachment dated 28.1.2010 by DRT 1, Delhi mark PW41/DA/A1/5 was also put to PW41 which is regarding the attachment of the property in question i.e. plot no.3, area measuring 1000 sq.yds out of khasra no.389, situated in revenue estate of Masudabad. Vide mark PW41/DA/A1/2 which is possession notice, it was informed to Sunrise Trading Company , A1 and A2 that the authorized officer of Canara Bank under SARFAESI Act has taken possession of the property i.e Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:38:44 +0530 CBI Vs. R.K. Verma & Ors. 116/145 plot no.3, land measuring 1000 sq.yds, out of Khasra no.389 (subject property).
239. Repeatedly in form of evidence on record, complainant bank itself has confirmed and raised no dispute regarding identification of the property and so much so of having taken over the possession of the said property. Therefore as far as the bank is concerned and particularly the officers charge sheeted for the lapses i.e.A6 and A7, no fault is found with them in view of the undisputed identification/possession reports on record coupled with the registered documentation with the chain of documents in favor of A1 as mortgaged with the Canara Bank.
240. As far as A1 is concerned, he purchased the property from A3 on the basis of another registered sale deed in favour of A3. A1 had been provided the complete chain of documents which property was purchased by him against the payment of sale consideration as noted in the registered sale deed. House tax receipt in name of A1 coupled with the receipt of electricity bill and water bill in his possession also point out towards A1 being bonafide purchaser of the said property which had been mortgaged by him with the bank. So far as controversy qua role of A1 , A6 and A7 regarding submitting and obtaining collateral security in form of property measuring 1000 sq yds, bearing plot no.3, Village Masudabad is concerned, the abovesaid accused persons are not held liable for having committed any wrongful act or forgery of documents.
241. Ld. counsel for A1 and A2 in support of his argument that if the CC No. 07/16 Digitally signed SAVITA by SAVITA RAO Date:
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substantive offence of cheating is not proved, then forgery for the purpose of cheating cannot be proved or vice versa, placed reliance upon Guru Bipin Singh Vs. Sh. Chongtham Manihar Singh & Anr. AIR 1997 SC 1448, Parshadi Lal Vs. State of Govt. of NCT of Delhi MANU/DE/1775/2012 wherein interalia it was observed that " Forgery is the principal allegation and cheating being a consequential office, if forgery goes, cheating cannot stand ."
242. With respect to the offence of cheating, Ld. Counsel for A1 and A2 placed reliance upon International Advanced Research Centre for Power Metallurgy and New Materials (ARCI) & Ors. Vs. Nimra Cerglass Technics P. Ltd. & Ors (2016) 1 SCC 348, Vesa Holdings P. Ltd. & Ors. Vs. State of Kerala (2015) 8 SCC 293, J. Sesha Ratna Kumar & Ors. Vs. State of A.P. & Ors. 2016 (1) ALT (Crl.) 394 (A.P.) and Uma Shankar Gopalika Vs. State of Bihar (2005) 10 SCC 336 wherein interalia it was observed that " offence of cheating would depend upon the intention of the accused at the time of alleged inducement. If it is established that the intention of accused was dishonest at the very time when he made the promise and entered into a transaction with the complainant to part with his property or money, then the liability is criminal and the accused is guilty of the offence of cheating. On the other hand, if all that is established that a representation made by accused has subsequently not been kept, criminal liability cannot be foisted on the accused . Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown at the Digitally signed SAVITA by SAVITA RAO CC No. 07/16 Date:
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beginning of the transaction".
243. As discussed above, A1 has not been held liable for having committed any wrongful act or forgery of documents. The fact still remains that sale deed which was executed by A4 in favour of A3 was based upon the GPA allegedly not executed by Sudershan Kumar in favour of A4 which as brought on record by prosecution was forged document. Executant of document i.e. Sudershan Kumar PW4 has declined having executed any such GPA. He had purchased the property measuring 1000 sq. yds out of Khasra no. 389 way back in year 1988 and had sold the same in two portions in favour of Bimla Kumari and Surender kumar Mangla. . Sudershan Kumar having sold the property in year 1992 itself , he did not continue to be owner of the said property till the year 2002 nor was left with any right to execute GPA in favour of anyone's else .
244. Ld. Counsel for A1 submitted that PW41 accepted that plot no.17 of 1010 sq. yds sold by Rajeev Gupta to Jai Kishan Garg was out of Khasra no. 389 and 391 which could only lead backwards to the chain originating out of sale made by Chander Mohan Singh to Subhash Bhatia on 16.8.1998. PW41 also accepted that plot no.3 of 1000 sq. yds sold by Manoj Garg to A1 on 6.5.2002 was out of khasra no. 389 which could only lead backwards to the chain originating out of sale made by Chander Mohan Singh to Sudarshan Kumar Chopra on 16.8.1998, thereby chain of documents seized by him from Jai Kishan Garg and the chain seized by him from Canara Bank are two Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:39:08 +0530 CBI Vs. R.K. Verma & Ors. 119/145 different chains, both originating on 16.8.1998 by virtue of two genuine sale deeds. As further submitted, plot no.3 is only in khasra no. 389 and hence has to be on main road whereas plot no. 391 is at the back meaning thereby that any plot in both khasras shall have major portion of plot at the back with only the passage from 389 to reach 391. The said contention of Ld. Counsel for A1 and A2 is not found correct as per the evidence available on record, as discussed in subsequent paras.
245. Ld. Counsel for A3 submitted that CBI has failed to prove or even trace the ownership, plot size, plot description, plot location or the complete chain of documents with respect to the various plots that comprise Khasra no. 389 and 391, Village Masudabad, Delhi. As further argued, PW1 himself personally visited plot no.3, Khasra no. 389, Village Masudabad whereas PW6 was unable to state as who was the owner of Khasra where he had purchased the plot. PW15 confirmed that A3 had purchased the plot bearing no. 3 forming part of Khasra no. 389 and PW41 did not investigate the total area of Khasra no. 389, or 391 of Village Masudabad, Delhi who also did not independently record/make any site plan of either khasra no. 389 and 391 of Village Masudabad, Delhi and merely relied upon the site plan prepared by PW8, whereas PW8 himself did not know where the property lay i.e. whether in North, South, East or West. He admitted that he only noted the details of the property and did not notice as to what was there on left or right. It was further submitted that since the investigation of CBI is silent as to the exact location and description of the property i.e. the subject matter of allegations and charge framed against the accused persons including A3 , therefore, a person Digitally signed CC No. 07/16 SAVITA by SAVITA RAO RAO Date: 2018.03.27 11:39:15 +0530 CBI Vs. R.K. Verma & Ors. 120/145 cannot be convicted on a charge that is either vague or that remains vague as a result of the failure of the prosecution to prove their case during trial.
246. Qua the said aspect, on behalf of A1, it was submitted that PW41 has not brought on record the total area in Khasra no. 389 and 391 of Masudabad Village, Najafgarh, Delhi nor there is any document on judicial file suggesting or confirming the total area in khasra no. 389 and 391 of Masudabad. PW41 had also not taken any assistance of CPWD for either the valuation or survey of the properties in khasra nos 389 and 391 of Masudabad who had also not prepared any site plan of khasra or the property mortgaged by Sunrise Trading Company to Canara Bank and also had not made out any inquiry to find out total number of plots in the said area owned by the family of Jai Kishan Garg and Vijay Kumar Gupta, thereby he had no knowledge about the said area which he was to investigate thoroughly.
247. It was also submitted that PW41 started his investigation with assumption that Chander Mohan Singh owned only 2000 sq. yds in khasra no. 389 and 391 of Masudabad Village , Najafgarh simply because PW41 had come across two sale deeds of 1000 sq. yds (one bigha) each to Sudershan Kumar and Subhash Bhatia on 16.8.1988, therefore there is no investigation if apart from the sale of land vide two sale deeds dated 16.8.1988, there is any document regarding Chander Mohan selling more land to Sudershan Kumar, Subhash Bhatia, Kuldeep Kumar or any other person out of total land holding in khasra no. 389 and 391. Chander Mohan himself was not examined by the prosecution.
248. It was also submitted by counsel for A1 that PW41 started investigation Digitally signed CC No. 07/16 SAVITA Date:
by SAVITA RAO CBI Vs. R.K. Verma & Ors. 121/145 RAO 2018.03.27 11:39:23 +0530 with assumption that plot no.3 was sold out of plot of 1700 sq. yds whereas PW37 himself had never visited local MCD office or even sub registrar office to find out if the plot measuring 1000 sq. yds was purchased by A1 out of plot measuring 1700 sq. yds while admitting that in D14, it was not mentioned that size of plot no.3 was 1700 sq. yds besides the fact that no other person has claimed ownership of plot no.3 and as accepted by IO, he did not record statement of any person during investigation who claimed that plot no.3 of this area abadi known as Shivaji Road of Masudabad was owned by him and not by A1, nor there was any challenge to the ownership of A1 before DRT despite advertisements in newspapers. Based upon the same, it was submitted by counsel for A1 that he was bonafide purchase of the property from A3 and had no reason to suspect any foul play . Payment was duly made for the property by A1 and the possession was duly taken.
249. It was submitted by Ld. Counsel for A4 that PW12 had signed document D13 Ex. PW11/A and D14 Ex. PW11/B as witness who also stated that he could identify the parties on whose request, he signed as witness. But he identified accused Vijay Gupta as R.K. Verma and thus he incorrectly identified them.
250. The identification by PW12 of accused Vijay Gupta as R.K. Verma goes against the very case of A4 only. Considering that it is the case of impersonation, in that circumstances, it would be accused Vijay Gupta who was impersonating R.K. Verma, in terms of identification by PW12.
251. It was further submitted by counsel for A4 that at the time of execution of sale deed, signatures of both the seller and buyer before concerned authority are CC No. 07/16 Digitally signed SAVITA by SAVITA RAO Date:
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basic requirements. Ex. PW7/DA did not bear the signatures and thumb impression of buyer/vendee, which clearly depicted the modus operandi adopted by the person concerned which was also adopted to get the work done from Sub Registrar concerned without complying due formalities and documents were executed in absence of parties concerned. Besides that, PW26 has specifically stated that he did not receive any consideration mentioned in Ex. PW7/DA and on the instructions of his maternal uncle Jai Kishan Garg, he merely executed sale deed Ex. PW7/DA in favour of Vipin Garg, his cousin brother .
252. The reference given by counsel for A4 is to the property located at Bindapur which was found mortgaged with both the banks but during the trial it was confirmed that both the properties mortgaged with the different banks were the different properties and same property had not been mortgaged by the parties concerned. With regard to signatures of vendee upon the documents, in terms of record, A4 himself had derived the title of the property without there being signatures of vendee upon those documents, therefore cannot put this plea unless he wants his own ownership to be at stake. The authenticity of document Ex. PW7/DA is not disputed by its own executant i.e PW26 . The transaction even if it was sham or benami transaction, yet the documents were prepared in name of PW26 who has not disputed execution of the sale deed of the said property by him though on the instructions of his maternal uncle only. Since the execution of said document is not disputed by the executant himself, therefore the parity being drawn by Ld. Counsel for defence with regard to the execution of Ex. PW7/DA is not available for execution of sale deed in favour of A3.
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253. Since there is presumption about the correctness of the Registered documents, it was for A4 to rebut the presumption with regard to non execution of documents or the documents having not been registered in his presence. Reliance is placed upon Prem Singh & Ors. Vs. Birbal & Ors. , (2006) 5 SCC 353 , Govind Anant Goltekar & Ors. Vs. Dasharath Deoba Goltekar, AIR 2006 Bom 142 and Pancha Devi & Ors. Vs. Rameshwar Pandey & Ors. MANU/BH/0402/2016, wherein interalia it was observed that " there is a presumption that a registered document is validly executed. A registered sale deed carries presumption of genuineness and burden of proof lies on a person who alleges it as not genuine . Section 105 of Land Revenue Code, 1968 deals with presumption of correctness of entries in the record of rights and register of mutations and provides that an entry in the record of rights and a certified copy in the register of mutation shall be presumed to be true until the contrary is proved or a new entry is lawfully substituted therefor".
254. A4 admitted regarding non execution of GPA Ex. PW4/G in his favour, based upon which the further sale deed was executed by A4 in favour of A3. The plot bearing no.17 was in ownership of A4, whereas the property sold to A3 was bearing no.3. The question arises if the said property i.e plot no.3 was not itself in existence as contended by A4, how the possession of the same can be received by A1 while also taking over of the possession of the same by the bank under SARFAESI Act, besides the inspection of the said property on many occasions by the empanelled advocates/consultants/valuer and the concurrent audit team of the bank. Digitally signed by SAVITA RAO SAVITA Date:
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255. However, A4 himself answers this. Sale deed in favour of Sudershan Kumar is not in dispute which is also the registered sale deed . As per the established evidence on record, the property measuring 1000 sq.yds alongwith another 685 sq.yds of the property ultimately reached in the hands of A4. In the initial documents, property was not numbered but in the subsequent documents, the property number was mentioned as 17. So far as intention of A4 to sell the property measuring 1000 sq.yds out of Khasra no.389 is concerned, it is reflected from the documents and found admitted by him on record. His signatures on Ex.PW11/A are not disputed. He was the owner of property measuring 1000 sq.yds out of Khasra no.389 is also not disputed by him. It may be noted that GPA and other documents vide which A4 purchased 1685 sq. yds of property out of khasra no. 389 and 391 from Harinder Kumar was numbered as plot no.17. Harinder Kumar had also purchased 1685 sq. yds of property bearing no.17 from Surender Kumar Mangla , as per Ex. PW9/B1 to Ex. PW9/B7. Surender Kumar Mangla had purchased half portion of plot no.17 which was measuring 500 sq. yds from Ashok Kumar vide documents Ex. PW5/F to Ex. PW5/I and the piece of land measuring 500 sq. yds out of total land measuring one bigha out of khasra no. 389 from Sudershan Kumar which was not numbered as well as the purchase made by Sudershan Kumar from Chander Mohan was not numbered. The area of 500 sq. yds which was sold by Sudershan Kumar in favour of Bimla Rani as noted in sale documents was the half portion of plot no. 17, land measuring 500 sq. yds out of total land measuring 1000 sq. yds, meaning thereby, area of both the half portions of plot no. 17 cumulatively was 1000 sq. yds. The other land measuring 685 sq. Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date:
2018.03.27 CBI Vs. R.K. Verma & Ors. 125/145 11:39:54 +0530 yds in ownership of A4 , starting from Chander Mohan to Subhash Bhatia with 342 and ½ sq. yds reaching in the hands of S.K. Mangla through K.C. Sharma and Kuldeep Kumar and the other 342 and ½ sq. yds reaching directly to S.K. Mangla from Subhash Bhatia did not contain any number assigned to the property . S.K. Mangala sold the said land of 1685 sq. yds in favour of Harinder Kumar when the number to the entire property was assigned as 17, thereby the area consisting of 685 sq. yds besides 1000 sq. yds was also assigned number as 17.
256. In terms of report called from SDM , Najafgarh, it was reported that the suit property falls in unauthorized colony and the plot numbers were given by the private builders . In the statement of A4 recorded u/s 313 Cr.P.C., he stated that he and A3 were in talks to sell off certain portion of his property situated at village Masudabad and he had also given few original papers to A3. In order to purchase the property, A3 got prepared the documents i.e. (D13) Ex. PW11/A . After getting prepared (D13) Ex. PW11/A, A3 approached A4 and as they were having very good family relations , A4 signed Ex. PW 11/A in good faith and when he checked the credentials/details of Ex. PW11/A with the title documents, he found the name of Sudershan Kumar in place of Harinder Kumar and also noticed that the number of plot was also different. He asked A3 to get it rectified after which A3 took Ex. PW11/A to get the particulars changed from the concerned authorities. But lateron A3 could not arrange for the consideration amount , thus A4 never visited the registrar office to execute the sale deed in favour of A3 and the alleged sale deed in favour of A3 was registered in absence of A4 and without his knowledge. He never visited the sub registrar office and Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date:
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257. It was submitted by counsel for A4 that the house tax receipt mark PW8/DA was not part of the report of PW8, house tax receipt of only one year was placed on record by A1 which was never proved by virtue of leading evidence and no subsequent or previous house tax receipt or any document was filed or placed on record, that PW12 identified Vijay Gupta as R.K. Verma, that PW15 did not file any suit against the accused persons for cancellation of documents or for possession of the property allegedly purchased by him, that coaccused persons used to get the work done from office of sub registrar concerned without complying due formalities and even in absence of the parties concerned in view of the deposition of PW12 and PW20 since PW20 has deposed that at the time of execution of sale deed, signatures of both the seller and buyer before concerned authority are not taken. Ex. PW7/DA was shown to PW20 to which he stated that same did not bear the signatures/thumb impression of buyer/vendee. It was also submitted that vide deposition of DW4, D12 Ex. PW04/G was found to be forged by A3 whereas A4 was never present at the time of execution of D13 Ex. PW11/A as is evident from deposition of PW12 and the signatures of A4 on D13 Ex. PW11/A were obtained by A3 on the pretext of purchase of the same and when A4 pointed out the irregularities regarding the name of attorney Sudarshan Kumar in place of Harinder Kumar and different plot number, then A3 who was having very good family relations with A4 took away those papers with him to get the same rectified but A3 never returned to purchase the property nor any suit was ever filed in order to take the possession of the property.
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258. PW11 Puran Chand Rathi who was working as driver with M/s A to Z Apparels had witnessed the sale deed Ex. PW11/A. He identified photographs of A3 as well as of A4 upon the sale deed as well as their signatures. He had signed the sale deeds and had gone to the office of sub registrar with his employer i.e. A3 and had signed on the sale deed on his asking .
259. PW22 was the witness from the office of Sub Registrar who stated about the sale deed dated 6.2.2002 having been registered in the official course of business. No cross examination of both these witnesses was conducted on behalf of A4 nor any such suggestion regarding non execution of sale deed by A4 in favor of A3 or forgery of the same by A3 was given to these witnesses.
260. PW12 who had witnessed the execution of PW11/A as well as Ex.PW11/B also stated about the stamp papers for GPA having been purchased from his wife who was stamp vendor though he could not say who had purchased the same but the documents were purchased in the name of Sudershan Kumar . He had drafted sale deed Ex.PW11/A as well as Ex.PW11/B and he had drafted the sale deed after going through all the documents referred in the sale deed in original. Both the sale deeds dated 6.2.2002 and 6.5.2002 were witnessed by him and were registered before the sub registrar at Kapashera. PW 12 denied that Vijay Gupta A4 was not allowed to read the sale deed before signing. He rather confirmed that the sale deed Ex. PW11/A and Ex. PW11/B were executed and signed in his presence and presented for registration before the Sub Registrar and all the contents of the documents were read over to the parties by the Sub Registrar who confirmed the same and only thereafter the said papers were registered by the Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:40:26 +0530 CBI Vs. R.K. Verma & Ors. 128/145 Sub registrar. Contention of A4 in these circumstances is falsified on record with regard to the sale deed Ex.PW11/A having been registered in his absence.
261. A1 throughout identified portion of 1000 sq. yds out of same property measuring 1685 sq. yds which was without any number in initial documents but termed as plot no.17 in the subsequent documents. House tax receipt pertaining to plot no.3 out of Khasra no. 389 was also on record as part of the report of PW8 besides the electricity bill and water bill for the same property. Though it is correct that no witness from the department/office concerned was called to prove the house tax receipt and the other bills but at the same time, the correctness or the authenticity of the house tax receipt and other documents was also not challenged on record either by prosecution or other accused persons excep t for the oral objection now taken by A4.
262. With regard to discrepancy in documents i.e. regarding name of Sudershan Kumar having been written instead of Harinder Kumar and plot no.17 having been written as 3, it may be noted that the sale deed was duly registered and was typed on the stamp paper which was admitted to be signed by A4 alongwith the handing over of the original documents to A3. The deal having been fizzled in terms of the defenc e of A4, it was incumbent upon him to seek return of the original documents from A3, some of which were recovered from bank and some from the house of Jai Kishan Garg/Manoj Garg. Same was never done and the property thereafter was sold by A3 in favour of A1 who subsequently mortgaged the said property with the bank. A4 even after having come to know about the alleged misuser of his signatures on Ex.PW11/A did not even seek cancellation of those documents.
PW15 also stated about purchase of plot no.17 but at the same time
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also stated that Vijay Gupta had sold the same plot to his son Manoj Garg though he had sold plot no.3 and not 17 but on papers it was shown that he had sold plot no.17.On behalf of PW4, suggestion was put to this witness that Manoj Garg never took the possession of plot no.17 or plot no.3 as he could not arrange for the consideration, thereby it again stands brought on record that the documentation in favour of Manoj Garg was pertaining to the part of the same plot no.17 though was mentioned as plot no.3, which as per own contention of A4 was wrongly numbered as plot no.3 which was intending to be part of plot no.17. PW15 further stated that he did not file any suit either against Manoj Garg or Vijay Gupta and volunteered to state that Manoj Garg had already sold the same further , thereby he himself also acknowledged the purchase by A3 of the same plot and having been sold by his son further.
263. Vide Letter of Canara Bank Ex. PW10/D/A7/X7, regarding property of 1000 sq. yds at plot no.3, khasra no. 389 in the Revenue Estate of Masudabad, Nangloi, it was noted that at the time of putting through the EMT, the property was informed to be the front portion of an undivided piece of land but it is now observed that the available property is the rear portion of the same undivided piece of land due to the front portion having been occupied by the other person.
264. Vide letter dated 28.12.2005, addressed to Canara Bank,Recovery section, it was informed with regard to taking of possession of the property bearing plot no.3, Khasra no. 389 i.e subject property that while the possession proceedings were being carried out and they reached to fix boundaries and fencing they observed construction activities being undertaken by Mr. Vasudev who claimed to Digitally signed SAVITA CC No. 07/16 by SAVITA RAO RAO Date: 2018.03.27 11:40:43 +0530 CBI Vs. R.K. Verma & Ors. 130/145 have purchased the said property from Vijay Gupta. Meantime, Ankan Gupta , son of A4 arrived at the spot and informed that his father i.e. A4 had sold this property to Vasudev and the portion of 1000 sq. yds which was purchased by Mr. Verma through Manoj Garg was at the rear side. A4 also joined the team after sometime and informed that boundaries for 1000 sq. yds and 685 sq. yds already existed when the property was sold to R.K. Verma. Front portion which was having 685 sq. yds was sold to Mr. Vasudev and the one which was having 1000 sq. yds sold to R.K. Verma was on the rear side. Per contra, it was claimed by R.K. Verma that only front portion belonged to him. Both the parties then decided to approach A3 through whom plot was purchased/sold to resolve the issue but Manoj Garg was not available . The said report is part of D26 Ex. PW37/7 (collectively).
265. No cross examination was conducted with regard to the contents of said letter and report . Nor the incorrectness of the contents of said letters was sought to be proved on record by any of the accused persons. As per prosecution case, Sudershan Kumar had purchased only one 1000 sq. yds out of khasra no. 389 but in his deposition had referred to sale of 500 sq. yds out of the said property in favour of Bimla Rani and also in the same breath had deposed about the sale of 1685 sq. yds in favour of S.K. Mangla and also in favour of Bimla Rani. However, there is no evidence brought on record by prosecution or by any of the accused persons to show that Sudershan Kumar was owner of any other portion of khasra no. 389. Therefore irrespective of the fact that the GPA allegedly executed by Sudershan kumar whether was the genuine document or not, fact remains that A4 being owner of said area of 1000 sq. yds out of khasra no. 389 besides having ownership CC No. 07/16 SAVITA Digitally signed by SAVITA RAO CBI Vs. R.K. Verma & Ors. 131/145 RAO Date: 2018.03.27 11:42:04 +0530 of 685 sq. yds, signed over the sale deed executed in favour of A3 which was subsequently transferred in favour of A1. Both the sale deeds were duly registered and A4 has also not been able to substantiate his defence regarding the registration of sale deed in his absence before sub registrar, therefore the title in the property measuring 1000 sq. yds out of khasra no. 389 stood transferred in favour of A3 and then in favour of A1 with the registration of subsequent sale deed. A4 having chosen not to file any complaint or the civil proceedings seeking cancellation of those documents, or return of the original documents or proposing any action till date and rather having accepted the ownership and possession of portion of plot no.17 as noted in report dated 28.12.2005, now cannot claim the reversal of the title in his favour. With this, the contention of counsel for A1 that both the properties i.e. plot no.17 & 3 originated from different chains also stands discarded.
266. With regard to alleged forgery of GPA by A4, A4 was already the owner of very same property, chain of which had started from Chander Mohan through Sudershan Kumar and lastly the property had fallen in hands of A4 only, therefore there does not seem any reason for A4 to forge the GPA of the very same land of which he was already the owner. A4 though has alleged that the forgery of GPA was done by A3. GEQD had opined with respect to the signatures not being of Sudershan Kumar on the said GPA but there was no conclusion with regard to the person who had conducted the said forgery by signing over the said GPA in name of Sudershan Kumar. A4 got examined the handwriting expert as DW4 who had examined the documents detailed in his report Ex. DW4/A4/1 SAVITA Digitally signed by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:42:13 +0530 CBI Vs. R.K. Verma & Ors. 132/145 (Colly). In opinion of DW4, the disputed signatures of Sudershan Kumar and signatures and writing of Ram Prakash and Govind Aggarwal alongwith date 2.2.2002 upon the document Ex. PW4/G (D12) had been written by the writer whose specimen writing had been taken by the police and is on record which is of Manoj Garg.
267. It was submitted by counsel for A3 that the belated allegations levelled by A4 was neither the case of CBI in the charge sheet nor was the part of charge framed against A3. Though CBI also examined the same document from Government Expert, CBI did not come to the conclusion even remotely similar to the allegations leveled by A4. It was further submitted that it is undisputed fact that the families of A3 and A4 were neighbours at one point of time and have had a longstanding feud that is presently ongoing with FIRs having been registered which include FIR no. 973/2015 dated 17.12.2015 registered at P.S. Najafgarh u/s 420/468/471/34 IPC and FIR no. 47/16 dated 9.1.2016 registered at P.S. Najafgarh u/s 420/468/471 IPC. A4 had the required motive to make false statement against A3 since transaction between A3 and A4 with regard to plot in question was genuine and at that time A3 had no reason to doubt A4 or the documents given by him that constituted title deed for the said plot. Further PW35 has not made any claim of forgery against A3 even though he had introduced documents by way of detailed reasoning vide Ex. PW35/H nor while conducting cross examination of PW35, A4 suggested any role of A3 in any alleged forgery therefore A4 at this stage cannot be permitted to continually approbate and reprobate. PW35 had sought admitted genuine writings and signatures of Manoj Garg and Sudershan Digitally signed SAVITA by SAVITA RAO Date: CC No. 07/16 RAO 2018.03.27 11:42:24 +0530 CBI Vs. R.K. Verma & Ors. 133/145 Kumar Chopra of contemporary period as occurring in the relevant questioned writings and signatures but no such material/information was provided to PW35/CFSL and no supplementary charge sheet was ever filed before this court in this regard.
268. With regard to DW4, it was submitted that the witness failed to prove that he was the expert since no documents /certificate testimonial etc. was placed on record to prove his qualification and experience. Ld. Counsel for A3 placed reliance upon H.P. Vs. Jai Lal (1999) 7 SCC 280 wherein it was observed that " an expert is not a witness of fact. His evidence is really of an advisory character. The duty of an expert witness is to furnish the judge with the necessary scientific criteria for testing the accuracy of the conclusions so as to enable the judge to form his independent judgment by the application of this criteria to the facts proved by the evidence of the case. The scientific opinion evidence, if intelligible, convincing and tested becomes a factor and often an important factor for consideration alongwith the other evidence of the case. The credibility of such a witness depends on the reasons stated in support of his conclusions and the data and materials furnished which form the basis of his conclusions".
269. Ld. Counsel for A3 also submitted that opinion of handwriting expert is the lowest order of evidence and in support of his contention sought reliance from Magan Bihari Lal Vs. State of Punjab (1977) 2 SCC 210 . Following deposition from Cross examination of DW4 was referred to make the point that he did not conduct a scientific or intellectually rigorous examination :
(a) that he was not aware of the circumstances in which A3 was stated to Digitally signed CC No. 07/16 SAVITA by SAVITA RAO Date:
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have given specimen signatures.
(b) He did not ask for contemporaneous admitted signatures/writings of A3.
(c) He did not examine/analyse the specimen signatures of Sudershan Kumar Chopra, the very signatures that DW4 claimed had been forged by A3.
(d) DW4 did not file or prove the memory chip on which the images of the specimen writings that he claimed he used were saved.
(e) Though he knew that the documents he analysed had already been sent to CFSL examined, he did not seek the report that was on the judicial file.
(f) The query reduced into writing at page 3 of DW4/A4/1 under the heading "Point Under Enquiry" was written by him on the instructions of A4
(g) DW4 did not use any advanced apparatus for his examination and only used a small microscope and hand lens.
(h) DW4 did not examine any of the original record using his small microscope and has variously admitted/noted obvious errors and deviations between the socalled specimen signatures of A3 and the questioned writings.
270. It was also submitted that A4 for the first time in the statement recorded u/s 313 Cr.P.C. stated that A3 might have prepared Ex. PW4/G which allegation was in absence of any prior report from expert and this fact alongwith the query put to DW4 shows that A4 sought and receive biased forensic report with the intention to falsely implicate A3 .
271. DW4 during his cross examination admitted there being no loop as described in MS3 and MS4 and in the letter K in MS2. Besides admitting many Digitally signed CC No. 07/16 SAVITA Date:
by SAVITA RAO CBI Vs. R.K. Verma & Ors. 135/145 RAO 2018.03.27 11:42:43 +0530 such differences regarding the loop formation at the top of letter K in MS5 and MS6, vertical stroke of letter R having no pen lift in R1 but in MS17. This witness was not able to say whether the documents had been prepared contemporaneously or not. While he had not examined the original documents on the record of the court while using microscope or electrostatic detection apparatus nor he had used Video Spectral Comparator and DocuCenter Expert etc. though he volunteered to state that he had small microscope and magnifying lenses. Report of this witness lacked certification u/s 65B of Indian Evidence Act but later on the certificate was produced while the witness admitted that the certificate was not related to the transfer of information from the memory card of the camera used by him to the laptop and the details including serial number of the laptop have not been provided in the certificate. This witness had taken photographs of the disputed documents and specimen signatures/writing of A3 Manoj Garg from the court record but he did not ask for contemporaneous admitted writing/signatures of A3 nor did he ask for admitted writing/signatures of PW Sudershan Kumar. He was not aware whether the specimen signatures /writing of Sudershan Kumar was available on the judicial record nor did he analyse the specimen signatures/writing of Sudershan Kumar. He was not aware that specimen signatures of the accused persons were taken under the supervision of CBI nor was he aware of the condition under which A3 had given his specimen signatures/writing whereas his analysis in report was limited to the comparison that he had carried out which was based upon application made by A4 before this court.
272. Ld. PP for CBI while relying upon Iqbal Moosa Patel v/s State of Gujrat Digitally signed CC No. 07/16 SAVITA by SAVITA RAO Date:
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(2011) 2 SCC 198 , Gurubachan Singh v/s Satpal Singh and Ors. (1990) 1 SCC 445 : 1990 SCC (Cri) 151 and Chaman & Anr. v/s State of Uttarakhand, AIR 2016 SC 1912 submitted that though it is true that the prosecution is required to establish its case beyond a reasonable doubt, but that does not mean that the degree of proof must be beyond a shadow of doubt. It need not reach certainty, but it must carry a high degree of probability. Proof beyond reasonable doubt does not mean proof beyond the shadow of a doubt. As was observed in authorities (supra) " If the evidence is so strong against a man as to leave only a remote possibility in his favour which can be dismissed with sentence 'of course it is possible, but not in the least probable,' the case is proved beyond reasonable doubt. It is true that under our existing jurisprudence in a criminal mater, we have to proceed with presumption of innocence, but at the same time, that presumption is to be judged on the basis of conception of a reasonable prudent man. Smelling doubts for the sake of giving benefit of doubt is not the law of the land. Exaggerated devotion to the rule of benefit of doubt must not nurture fanciful doubts or lingering suspicion and thereby destroy social defence. Justice cannot be made sterile on the plea that it is better to let a hundred guilty escape than punish an innocent and letting the guilty escape is not doing justice according to law. As further observed, the conscience of the court can never be bound by any rule but that is coming itself dictates the consciousness and prudent exercise of the judgment. Reasonable doubt is simply that degree of doubt which would permit a reasonable and just man to come to a conclusion. Reasonableness of the doubt must be commensurate with the nature of the offence to be investigated ".
273. Ld. Counsel for defence placed reliance upon Upendra Pradhan Vs. State Digitally signed SAVITA by SAVITA RAO CC No. 07/16 RAO Date: 2018.03.27 11:43:18 +0530 CBI Vs. R.K. Verma & Ors. 137/145 of Orrisa (2015) Cri.L.J. 2878, State of Rajasthan Vs. Raja Ram (2003) Cri.L.J. 3901, Ghurey Lal Vs. State of U.P. (2008) 10 SCC 450, State of U.P. Vs. Banne@ Bajinath & Ors. (2009) 4 SCC 271, Bhagwan Singh Vs. State of M.P.(2002) 4 SCC 85 and Harijana Thirupal & Ors. Vs. Public Prosecutor, High Court of A.P. Hyderabad (2002) 6 SCC 470 , wherein interalia it was observed that " the golden thread which runs through the web of administration of justice in criminal cases is that if two views are possible on the evidence adduced in the case, one pointing to the guilt of the accused and the other to his innocence, the view which is favourable to the accused should be accepted. The paramount consideration of the court is to ensure that miscarriage of justice is prevented. A miscarriage of justice which may arise from acquittal of the guilty is no less than from the conviction of an innocent".
274. Having noted as above, the conclusion drawn by DW4 with regard to signatures/writing of A3 having been found on the allegedly forged GPA cannot be considered as conclusive proof. Besides the fact, as already noted, regarding absence of A4 in the office of Sub registrar for the purpose of registration of sale deed having not been established and the registration of documents in these circumstances being done in his presence and with his consent , charge of the forgery cannot be conclusively put upon A3 which otherwise was not possible for A3 without the active connivance of A4, whereas A4 without availability of allegedly forged GPA in his favour was already owner of the same property and had every right to transfer the same in favour of A3. A3 and A4 in these circumstances were required to resort to appropriate proceedings with respect to rectification of particulars or cancellation of documents, besides the initiation of appropriate proceedings by PW15 against Rajiv Gupta or vice versa but none of them seem to have adopted the said Digitally signed CC No. 07/16 by SAVITA RAO SAVITA Date:
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course either for the reasons best known to them or because of their own involvement in alleged commission of crime. Complainant bank, nevertheless, on basis of registered documentation in favour of A1 coupled with identification of 1000 sq. yds of property by him which is forming part of land measuring 1685 sq. yds is stated to have taken possession . A3, A4 and PW15 may settle their scores with respect to their ownership rights with each other but in these circumstances, complainant bank's right qua the property measuring 1000 sq. yds is secured . Complainant bank may realise the amount from the sale proceeds of this property but in these circumstances, A3 and A4 both are accorded benefit of doubt qua this aspect.
Allegations Regarding Conspiracy Between Accused Persons
275. It was submitted by counsel for A3 that prosecution has not proved existence of conspiracy between the accused persons for the commission of offence. No witness has shown there being any agreement between the accused persons to perform an illegal act or legal act done illegally nor there was any material on record to show that there was any meeting of mind between the accused persons. It was further submitted that the prosecution has failed to prove that the amount that was paid by M/s Sunrise Trading Company or M/s Glints Global to A3 or to M/s A to Z Apparels was siphoning of funds. As submitted, A3 /A to Z Apparels had introduced A1 to Canara Bank but CBI has failed to prove that introducer of new borrower to a bank has any liability whatsoever with respect to the future liabilities of such a borrower. Significance of any introducer was only to ensure the genuineness of the person intending to open the account while PW2 also admitted that it was not against the banking norms for a supplier, who had a bank account with the bank to Digitally signed CC No. 07/16 SAVITA by SAVITA RAO Date:
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276. On behalf of A1 and A2, it was submitted that CBI has failed to prove by way of cogent evidence that there was a meeting of mind between A1, A2 and A3 and other coaccused persons for the commission of offence as alleged by CBI. Ld. Counsel for defence placed reliance upon State of Madhya Pradesh Vs. Sheetal Sahai (2009) 8 SCC 617, Vijayan Vs. State of Kerala (1999) 3 SCC 54, CBI Vs. K. Narayana Rao (2012) 9 SCC 512 wherein interalia it was observed that " to bring home the charge of conspiracy within the ambit of section 120B of IPC, it is necessary to establish that there was an agreement between the parties for doing an unlawful act. It is no doubt true that it is difficult to establish conspiracy by direct evidence and therefore from the established facts, an inference could be drawn but there must be some material from which it would be reasonable to establish a connection between the alleged conspiracy and the act done pursuant to the said conspiracy".
278. Ld. counsel for defence further placed reliance upon1982 Cri.l.J. 856 Dadasaeb Bapusaheb Naik etc. Vs. State of Maharashtra, wherein it was observed that " in cases of conspiracy, though it is correct that direct evidence other than that furnished by an approver is not generally available, in those cases of conspiracy in which the prosecution relies only on circumstantial evidence to establish a 'criminal agreement' between the accused persons to commit an alleged offence. It is necessary for the prosecution to prove and establish such circumstances as would lead to the only conclusion of existence of a criminal conspiracy. If there are circumstances Digitally signed SAVITA CC No. 07/16 by SAVITA RAO RAO Date: 2018.03.27 11:43:45 +0530 CBI Vs. R.K. Verma & Ors. 140/145 compatible with innocence of the accused persons, the prosecution cannot succeed on the basis of such circumstantial evidence. In a sense, the burden of proving the case placed on the shoulders of prosecution is two fold. The prosecution has to prove every ingredient of the offence in question beyond a shadow of reasonable doubt. This burden includes the burden of proving the mental state of the accused wherever intention or knowledge forms one of the ingredients of the offence. In a case of cheating, the prosecution has to prove that the accused deceived. The prosecution has also to prove that the accused fraudulently or dishonestly induced. Both these ingredients relate to the state of mind of the accused. Therefore , prosecution has to prove that the accused acted intentionally and deliberately for that purpose. This burden requires the prosecution to displace any of the suggested defences affecting the ingredients of the offence by adducing cogent evidence. If the defence relates to a statutory exception, there is no doubt that the burden though lighter, is on the shoulders of the defence to establish the exception. However, if the defence relates to one of the ingredients of the offence and if, because of the said defence, existence of one of the ingredients of the offece becomes doubtful, the burden is still on the shoulders of the prosecution to prove that particular ingredient and it cannot lie in the mouth of prosecution to say that it was for the defence to prove otherwise. In the case (supra), the defence while admitting the default of not acting in the particular way and the irregularity of acting in the way in which the accused had acted, had pleaded that the act was never intended. It was at the most negligent and irregular . As observed, in the case of such a defence, it is not open to the prosecution to say that the defence should establish that the accused were negligent because the general burden of proving that the act was intentional still continues on the shoulders of the prosecution Digitally signed CC No. 07/16 SAVITA by SAVITA RAO Date:
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279. Though it is correct that conspiracy is hatched in secrecy and executed in darkness. In a case of conspiracy, it is not expected from the prosecution that it will produce evidence to show that conspirators executed agreement to commit crime before the witnesses to prove the existence of conspiracy. Conspirators take all precautions to keep their plan secret hence prosecution cannot produce direct evidence to prove agreement to commit conspiracy.
280. As was observed by Hon'ble Apex Court in Central Bureau of Investigation, Hyderabad Vs. K. Naryana Rao, Manu/SC/0774/2012, "agreement to commit an illegal act can be proved either by direct evidence or by circumstantial evidence. It was also observed that direct evidence to prove conspiracy is rarely available. Conspiracy consists in a combination or agreement between two or more person to do an unlawful act or to do a lawful act by unlawful means. A conspiracy is an inference drawn from the circumstances. There cannot always be much direct evidence about it. Conspiracy can be inferred even from the circumstances giving rise to a conclusive or irresistible inference of an agreement between two or more persons to commit an offence. Since Conspiracy is often hatched up in utmost secrecy, it is most impossible to prove conspiracy by direct evidence. It has to be inferred from the acts, statements and conduct of parties to the conspiracy. Thus, if it is proved that the accused pursued, by their acts, the same object often by the same means, one performing one part of the act and the other another part of the same act so as to complete it CC No. 07/16 CBI Vs. R.K. Verma & Ors. 142/145 Digitally signed SAVITA by SAVITA RAO Date:
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with a view to attainment of the object which they were pursuing, the court is at liberty to draw the inference that they conspired together to effect that object. Though to establish the charge of conspiracy there must be agreement, there need not be proof of direct meeting or combination , nor need the parties be brought into each other's presence; the agreement may be inferred from the circumstances raising presumption of a common concerted plan to carry out the unlawful design. Conspiracy need not be established by proof which actually brings the party together; but may be shown like any other fact, by circumstantial evidence".
281. In Kher Singh Vs State AIR 1988 SC 1883 , it was observed that " Generally, a conspiracy is hatched in secrecy and it may be difficult to adduce direct evidence of the same. The prosecution will often rely on th evidence of acts of various parties to infer that they were done in reference to their common intention. The prosecution will also more often rely upon the circumstantial evidence. The conspiracy can be undoubtedly proved by such evidence direct or circumstantial. But the Court must require whether the two persons are independently pursuing the same end or they have come together to the pursuit of the unlawful object. The former does not render them conspirators, but the later does. It is however, essential that the offence of conspiracy required some kind of physical manifestation or agreement the express agreement however need not be proved. Nor mutual meetings of the two persons is necessary. Nor it is necessary to prove the actual words of communication. The evidence Digitally signed CC No. 07/16 SAVITA by SAVITA RAO RAO Date: 2018.03.27 CBI Vs. R.K. Verma & Ors. 143/145 11:44:18 +0530 as to transmission of thoughts sharing the unlawful design may be sufficient. Conspiracy can be proved by circumstances and other material."
282. Hon'ble Supreme Court in P K Narayan Vs. State of Kerala, All India Criminal Law Reporter 1994 (3) 785 held that " conspiracy is an agreement to do an illegal act . Agreement can be proved either by direct evidence or by circumstantial evidence or by both . Circumstances proved before, during and after the occurrence are required to be considered to decide about the complicity of the accused but if the circumstances are compatible with the innocence of the accused persons then it could not be held that the prosecution had successfully established its case."
283. This court has already noted and found A6 and A7 being not responsible for any alleged forgery or misappropriation of funds and having not committed any wrong while discharging their functions pertaining to accounts of M/s Sunrise Trading Company and M/s Glints Global.
284. For A1, it is also already noted that neither the ingredients of cheating nor the intention of cheating is established on record. A2 was introduced as partner in M/s Sunrise Trading Company and the main charge qua functioning of M/s Glints Global and M/s Sunrise Trading Company as well as furnishing of fake properties/forged documents were against A1 who himself has been absolved of all the charges against him qua cheating, forgery, use of forged documents and misappropriation of funds, therefore any accusation accordingly does not stand proved against A2 as well.
285. Pertaining to A3, as already noted on record, merely introducing the CC No. 07/16 Digitally signed CBI Vs. R.K. Verma & Ors. 144/145 SAVITA by SAVITA RAO Date:
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account itself is not an offence. Siphoning of the funds or benefit of any wrongful transaction in favor of A3 or the firm M/s A to Z Apparels being run by him is also not established on record. Qua Masudabad property which was mortgaged by A1 with Canara Bank, A4 and A3 have also been accorded benefit of doubt.
286. Considering the case, even as cumulative, with regard to the sequence of events, no meeting of minds in the doing of illegal act or doing of legal act by illegal means is established on record, particularly when none of the accused persons have been found involved in commission of wrongful acts itself, whereas conspiracy involves agreement between two or more persons to do an illegal act or a legal act by illegal means, therefore allegations of conspiracy are also not proved against the accused persons. Resultantly, A1 , A2, A5, A6 and A7 are acquitted of all the charges levelled against them, whereas A3 and A4 are also acquitted of the charges levelled against them by providing benefit of doubt.
Digitally signed SAVITA by SAVITA RAO
Date:
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Announced in the Open Court (Savita Rao)
Today on 21.03.2018 Spl. Judge (PC Act), CBI01(South)
Saket Courts : New Delhi
CC No. 07/16
CBI Vs. R.K. Verma & Ors. 145/145