Bangalore District Court
State By Cbi/Acb vs ) Shri. R. Chitharanjan Das on 7 February, 2022
KABC010006532016
IN THE COURT OF THE XLVI ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AND SPECIAL JUDGE FOR
CBI CASES AT BENGALURU CITY (CCH-47).
PRESENT: SRI SANTHOSH GAJANAN BHAT, B.A.L., LL.B.,
XLVI Addl. City Civil and Sessions Judge &
Special Judge for CBI Cases, Bengaluru.
DATED THIS THE 7 th DAY OF FEBRUARY 2022
Spl. C.C. No. 24/2016
Complainant : State by CBI/ACB, Bengaluru
V/s
Accused : 1) Shri. R. Chitharanjan Das
S/o V.K.Ramana Gatti,
the then Branch Manager,
Central Bank of India,
Kodigehalli Branch,
Bengaluru.
R/o No.2-58/2, Sy.No.43-P,
Pilikoor House,
Talapady, Mangalore
2) Shri. Gunde Gowda,
(dead)
(A-1 by pleader Sri.P.P.Hegde)
---
2
Spl.C.C.No.24/2016
JUDGMENT
The Inspector of Police of CBI/ACB, Bengaluru has filed the charge sheet against the accused persons contending that they have committed the offences punishable under Sec.120-B, 420, 409 of IPC and Under Sec. 13(2) r/w Sec.13(1)(c) and (d) of Prevention of Corruption Act, 1988.
2. It is the case of the Prosecution/Complainant that the accused No.1 was working as Scale-I Officer of Central Bank of India, Kodigehally Branch, Bengaluru, for the period from 25.06.2011 to 26.08.2013. The accused No.1 being Branch Head of the office was entrusted with role of sanctioning and release of loans which he was required to disburse officially in accordance with law. It is also been contended that at the time of disbursement and lending of loan, the accused No.1 had committed serious irregularities and violated all the established procedures and all the banking rules and regulations and had acting against the interest of the bank. The other allegations which has been leveled against accused No.1 is that at the time of sanctioning of the loans under different categories, he had colluded with several 3 Spl.C.C.No.24/2016 borrowers and resorted to reckless financing flouting all the norms under the scheme and the loan policy of Central Bank of India. The accused No.2 who was the borrower of the said Bank was the beneficiary of the illegal act committed with Branch Manager. As such an enquiry was conducted and it was noticed during the course of enquiry that due to the act of accused No.1 a wrongful loss of approximately Rs.6.27 Crores to the Bank and corresponding wrongful gain to other accused persons was made by accused No.1. On the basis of the same, initially the written information came to be lodged before the concerned CBI authorities who had taken up the case for investigation.
3. The CBI authorities on the Registration of FIR had commenced the investigation and had visited the branch and collected the relevant documents. The CBI authorities had also recorded the statement of witnesses and it was found that accused No.1 had flouted all the Rules and Regulations of the Bank and had not complied with the terms and conditions. Due to the reckless act of accused No.1 the same had caused huge loss to the banking activities and also a wrongful gain to 4 Spl.C.C.No.24/2016 accused persons was made due to his act. On the receipt of the same, necessary sanction was obtained by the competent authority who after verifying the records and thought it fit to grant sanction to prosecute accused No.1. However during the pendency of proceedings the accused No.1 was terminated from the services of the Bank hence the question of granting of sanction had become redundant. Subsequently, there afterwards on receipt of the necessary materials and also on collection of materials the Investigation Officer had arrived at the conclusion that the guilt of the accused persons were proved and charge sheet came to be filed.
4. On the basis of the charge sheet the court after verifying the records and also by looking into the statement of the witnesses had found that necessary materials were available for taking cognizance and as such my predecessor in office had taken cognizance for the aforesaid offences. The accused persons were summoned and secured before the court who had appeared in pursuance of the same and were admitted to bail. Further the copies of the charge sheet were supplied to the accused persons and as such the proceedings under Sec. 5
Spl.C.C.No.24/2016 207 of Cr.P.C. came to be complied with. The court had proceeded to hear the accused persons with respect to framing of charges and since necessary materials were found before the court, it had proceed to frame necessary charges against the persons who had pleaded not guilty and claimed to be tried. The accused No.2 had died during the pendency of the case and hence the same was reported to the court and accordingly the case against accused No.2 came to be abated.
5. The prosecution in order to prove their case had examined totally 11 witnesses as PWs.1 to 11 and Exs.P.1 to P.72 came to be marked. On completion of the prosecution evidence, the statement of the accused No.1 was recorded under Sec.313 of Cr.P.C. wherein he had denied all the incriminating materials available against him. The accused had submitted that he had discharged his duties with due diligence and no loss was caused to the Bank and in fact the higher authorities had pressurized and harassed him and he was dismissed from the services on 28.07.2014 after putting in a service of 30 years. It is his contention that he had worked for the benefit of the Bank for more than 12 hours every day and 6 Spl.C.C.No.24/2016 struggled to improve the Bank and he had never let down and inspite of the same he was falsely implicated in the above case. On completion of the statement of the accused person he had preferred to lead defence evidence and documents were summoned on his behalf by filing necessary application and he had got himself examined DW.1 and Exs. D.1 to D.5 came to be marked on his behalf.
6. The learned PP appearing for the CBI authorities has vehemently argued that the prosecution was successful in establishing their case. It is her contention that at the time of filing of charge sheet already the accused No.1 was discharged from the services of the Bank and as such the question of obtaining necessary sanction would not arise. She has also pointed out that at the inception of the case i.e. on the filing of the Ex.P.6 complaint and FIR Ex.P.70, the investigation had commences against several persons since the written information at EX P6 indicates of arraying several accused persons, however in the above case the final report was filed against two persons and with respect to other persons seperate charge sheet was filed. She has highlighted to the court with 7 Spl.C.C.No.24/2016 respect to the loss to an extent of Rs. 50.14 lakhs and in order to substantiate the same she has vehemently argued that the accused No.1 was working as Scale-I Officer at the relevant point of time wherein he was sanctioned limit of Rs.50 lakhs as per Ex.P.17. Though he was Scale-I Officer, he was delegated with powers of Scale-II Officer as per Ex.P.19 and it is her submission that the accused No.1 had intentionally over leaped his lending capacity and financed accused No.1 and also helped him to take over the loan at Citizen Co-operative Bank at Bengaluru without following the due process of law and without obtaining any documents. It is her contention that the act of accused No.1 to help accused No.2 for closing his loan account at Citizen Bank of Bengaluru without verifying the documents and also obtaining necessary security would indicate the fact of conspiracy prevailing between them. Subsequently the said loan account was transferred to Central Bank of India where accused No.1 was working and with an intention to obtain pecuniary advantage to accused No.2 in financial transaction had sanctioned and disbursed the loan amount to accused No.2 without obtaining necessary security or necessary documents. 8
Spl.C.C.No.24/2016 It is her contention that the documents which were collected by the CBI authorities would indicate that on several dates the loan was released in favour of accused No.2 without obtaining documents as accused No.2 was working as Contractor with BBMP authorities. As such it was the duty of accused No.1 to obtain and collect necessary documents for disbursement of loan under Cent Sahayog Scheme. No work order or coverage of credit quantity of term loan to Micro and Small Entrepreneurs were followed by the concerned Branch Manager i.e. accused No.1. It has also been argued at length that the intentional act of accused No.1 could be deciphered from the act of non- collecting collateral security and even though he had deviated with the rules and regulations of the Banking authority he was required to obtain necessary collateral security. However the complete act of accused No.1 in flouting all the norms and procedures of the bank would clearly indicate that accused No.1 had indeed committed the offences which attracted rigors of above said offences. In order to butters her contention she has relied upon the decisions as mentioned below:- 9
Spl.C.C.No.24/2016
1.Mir Nagvi Askari Vs CBI, Crl.A. No.1477/2004 dtd.07.08.2009.
2. Ganesh Santa Ram Sirur Vs State Bank of India and another Civil Appeal No.7058/02 dtd 17.11.2004.
3. Central Bureau of Investigation Vs Hari Singh Ranka Crl.A.No.1289/17 dtd. 18.07.2017.
4. Central Crime Branch Vs R.Vasanthi Stanley Crl.A.No.2006-2009/14 dtd. 15.09.2015.
5. Parbathbhai Aahir Vs State of Gujarat Crl.A.No.1723/17.
6. Central Bureau of Investigation Vs Maninder Singh Crl.A.No.1496/09 dtd. 28.09.2015.
7. Sushil Suri Vs CBI and Anr Crl. A. No.1109/2011.
8. Central Bureau of Investigation Vs A.Ravishankar Prasad and Others (2009) 6 SCC
351.
9. Chittarajan Shetty Vs State by CBI, Bengaluru (2016)3 SCC (Cri) 299.10
Spl.C.C.No.24/2016
10. R.Venkatkrishnan Vs Central Bureau of Investigation (2009) 11 SCC 737.
11. Hardeo Singh Vs State of Bihar and another Crl.A.No.477/2000.
7. Per contra, the Learned Senior counsel for accused No.1 has stoutly denied the allegations leveled against accused No.1. It is specifically argued that the contention of CBI authorities has to be rejected in limine. It has also been argued at length that the Learned senior counsel for accused that in order to bring home the guilt of accused under Sec. 120-B of IPC, firstly the nature and mode of conspiracy between accused No.1 and 2 is to be established by the prosecution. If the conspiracy part is established by the prosecution that the accused No.1 had intended to cause wrongful loss or in other words the wrongful gain to accused No.1 and accused No.2, then the Provisions of Sec. 13(1)(d) of the Prevention of Corruption Act could be attracted. However, when the entire case is scrutinized along with the documents which has been filed by the prosecution, it would clearly indicate that not even the single incidence with respect to conspiracy theory was 11 Spl.C.C.No.24/2016 proved by the prosecution. It has also been argued that no take over loan was sanctioned by Accused No.1 pertaining to Accused No.2 from The Citizen's Co-operative Bank as contended by the prosecution and in order to justify his contention he has pointed out to the evidence of PW.10 wherein he was the Manager of the Citizen Co-operative Bank and during the course of his cross-examination he has deposed that the account at Ex.P.57 was standing in the name of Gundappa S/o Girigowda and by pointing out the said Learned Senior counsel for accused had argued that the account holder in Citizen Co-operative Bank was Gundappa and not present accused No.2 Gundaiah @ Gundegowda, though they were entirely different persons, the investigating authorities had filed the charge sheet in a callous manner only to file false case against accused No.1. Apart from that he has argued at length that the Investigation Officer himself was confused with respect to the name of the person who had availed loan in Citizen Co- operative Bank. He has pointed out to the relevant paragraphs of the cross-examination and also documents at Ex.P.57 and P.58 and has highlighted the documents given by the 12 Spl.C.C.No.24/2016 Investigation Officer with respect to the fact that the account of Gundappa and accused No.2. By pointing out the said aspects, the learned counsel for accused argued that credibility of the investigation itself was demolished by the cross-examination of PW.11 who was the Investigation Officer. It is submitted the Accused No.1 had diligently disbursed the loan to the Accused No.2 and further it was elucidated that there was no necessity to furnish security under Cent Sahayog Scheme. Firstly it is his contention that accused No.2 had availed loan for the purpose of his contracts activities which he had obtained from KRIDL who were allotted with the tender works from BBMP. Under the circumstances, the accused No.2 had availed loan on various dates and subsequently a document which indicates that the accused No.2 had obtained contract works from the Governmental agencies as Sub-contractor is furnished to the court by the prosecution which clearly vindicates the contention of the Accused rather than that of the prosecution. By pointing out the said aspects the Learned Senior counsel for accused No.1 has argued that the contention of the prosecution cannot be accepted in this regard. Apart from that he has 13 Spl.C.C.No.24/2016 argued that the loan was considered as non-performing assets on 31.03.2014, but prior to that accused No.1 was transferred from the said Bank. Apart from that he has also argued that as per the audit report several other individuals account were also indicated also as NPA, however since they had repaid the amount no criminal proceedings were initiated against them, but the same was initiated against Accused No.2 would clearly indicate the vindictive conduct of the CBI authorities. Under the circumstances, it is his submission that CBI authorities cannot act as recovery agents of the bank and in case certain irregularities are found in the rules and regulations and only when a criminal act is committed by corresponding with the intention of the accused persons only then the Provision of Prevention of Corruption Act would be attracted. Apart from that, the Learned Senior counsel for accused has also argued that the documents at Exs. P.46 to P.48 would clearly indicate the defence of accused No.1 as such there was no force in the submission by the learned Public Prosecutor with respect to commission of offence by the accused. In order to substantiate 14 Spl.C.C.No.24/2016 his contention, the Learned counsel for accused No.1 has relied upon the following authorities:-
1. P.Sathyanarayana Murthy Vs District Inspector of Police, State of AP and Another -
(2015) 10 SCC 152.
2. Radha Pisharassiar Amma Vs State of Kerala- (2007) 13 SCC.
3. A.Shivaprakash Vs State of Kerala (2016) 12 SCC 273.
4. Abdulla Mohammed Pagarkar Vs State -
(1980) 3 SCC 110.
5. C.Chenga Reddy and Ors. Vs State of A.P.- (1996)10 SCC 193.
6. C.K. Jaffer Sharief Vs State (2013) 1 SCC
205.
7. Judgment dated 14/11/2018 passed by the Hon'ble High Court of Karnataka, Bengaluru in Crl.A.780/2007-C.V.Krishnamurthy Vs State.
8. Particularly the Learned Senior counsel for accused has relied upon the judgment of the Hon'ble High Court of Karnataka in Crl. Appeal No.780/2007-C.V.Krishnamurthy Vs State wherein the Hon'ble High Court of Karnataka was 15 Spl.C.C.No.24/2016 pleased to observe that the conspiracy of irregularity cannot be considered in par with a departmental enquiry and the degree proof is entirely different in the Crimnal proceedings which is on the higher scale. The Hon'ble High Court of Karnataka in the said judgment has opined that the essential ingredients of the offences alleged against the accused would indicate commission of irregularity, however the foundation has to be led by the prosecution to indicate that the irregularities was committed for the purpose of committing an offences under Penal Provisions of Law. By relying upon the said authorities the Learned Senior counsel for accused has argued that the prosecution has utterly failed to prove the extent of loss or any benefits accrued to the Accused no.1 or to any other persons while discharging his duty as public servant. Hence by relying upon all the above said aspects, he sought for acquittal of accused No.1.
9. The points that would arise for my consideration are as follows:-
1) Whether the prosecution proves beyond all reasonable doubt that there was no necessity to obtain sanction for prosecuting accused No.1?16
Spl.C.C.No.24/2016
2) Whether the prosecution proves beyond all reasonable doubt that the accused No.1 during the period 25.06.2011 to 26.08.2013 while working as Scale-I Officer at Central Bank of India, Kodigehally Branch, Bengaluru had entered into Criminal Conspiracy with accused No.2 to do illegal act by illegal means and in pursuance of the same had sanctioned and enhanced O.D. facility by disbursing several loans under different schemes beyond his delegated power causing wrongful loss of Rs.50.14 lakhs and thereby committed an offence punishable u/S.120-B of IPC?
3) Whether the prosecution proves beyond all reasonable doubt that during the said period accused No.1 entered into Criminal Conspiracy with accused No.2 had dishonestly, enhanced O.D. Limit to Rs.90 lakhs without verifying the repayment of the loan account maintained with Citizen Co-
operative Bank and also without obtaining pre sanction for OD account and had enhanced O.D. facility and thereby committed an offence punishable u/S.420 of IPC?
4) Whether the prosecution proves beyond all reasonable doubt that the accused No.1 being a Public Servant during the above said period and in view of Criminal Conspiracy with accused No.2 had accepted the property offered by accused No.2, which was already given as security towards the loan obtained by him at Citizen Co-operative Bank and committed criminal breach of trust and thereby committed an offence punishable u/S.409 of IPC?
17
Spl.C.C.No.24/2016
5) Whether the prosecution proves beyond all reasonable doubt that the accused No.1 being a Public Servant as a Branch Manager at Central Bank of India, during the aforesaid period accepted illegal gratification and by abusing his powers had sanctioned and enhanced O.D. facility to accused No.2 exceeding his limit with dishonest intention obtained valuable thing as pecuniary advantage without any public interest and caused wrongful loss of Rs.50.14 lakhs to the Central Bank of India, Kodigehally Branch, Bengaluru and thereby committed an offence punishable u/S.13(2) R/w. Sec.13(1)(c) & (d) of Prevention of Corruption Act, 1988?
6) What Order ?
10. My findings on the above points are as under:-
Point No.1: In the Affirmative Point No.2: In the Negative Point No.3: In the Negative Point No.4: In the Negative Point No.5: In the Negative Point No.6 : As per the final order for the following:-
R E A SON S
11. Point No.1 : With to the above aspect it is contended by the prosecution i.e. CBI Authorities that the accused No.1 was working as Branch Manager of Kodigehally Branch, Central Bank of India, Bengaluru, during the relevant 18 Spl.C.C.No.24/2016 period i.e. from 2011-2013 as such the provisions of the Prevention of Corruption Act would be attracted. Apart from that it is also been highlighted by CBI Authority at the time of presentation of the charge-sheet before the Court, the accused No.1 was removed from the services as being dismissed on 28.07.2014 had hence no sanction for prosecution was required. It is pertinent to note that the accused No.2 B. Gunde Gowda was a private person. Accordingly, the complainant has contended that no prior permission to prosecute him was required since he has a private person. By considering these aspects and since there is not much dispute with respect to fact that the accused No.1- R.Chittaranjan Das was the Branch Manager of Kodigehally, Central Bank of India, Bengaluru during the relevant period of time was subsequently dismissed from the service on 28.07.2014, the contention of prosecution that no prior sanctioned is required is apt. Accordingly, this Point No.1 is answered in the Affirmative. 19
Spl.C.C.No.24/2016
12. POINT No.2, 3 & 4:- These points are interlinked with each other, therefore are taken together for common discussion and consideration, to avoid repetition of facts.
13. Before adumbrating to the contention urged by the both parties, the entire evidence lead before the Court is recapitulated for the sake of convenience.
14. PW.1 - Raj Kumar Yadav has deposed before the Court that he had worked as Asst. Manager, along with accused No.1, when was the Branch Manager of Kodigehally Branch, Bengaluru from 03.12.2012 to November, 2013. It is his evidence that he had furnished the Account Opening Form of accused No.2 - B.Gunde Gowda and also the Process Notes and documents by produced by him to do the concerned authorities. Accordingly, the same they were marked at Ex.P.1 to P.5. He has not subjected to cross-examination by the learned counsel for the accused.
15. PW.2 - K.Manjunath who had worked as Dy. Regional Manager of Central Bank of India has deposed that he had lodged complaint before the CBI authorities against 20 Spl.C.C.No.24/2016 accused No.1-Chittaranjan Das and 10 other borrowers. Accordingly, he had identified the written information at Ex.P.6. Further, he has deposed that original documents were produced by them in another connected case. He has deposed that he has furnished the documents i.e.
a) Certified copy of circular pertaining to Direct Housing Finance Scheme.
b) Circular of Sanctioning Power of Scale-II Manager.
c) Loan Policy effect from 31.03.2011 with respect to credit sanction procedure.
d) Methods for Assessment for Working Capital Requirements and Term Loan Assessment.
e) Due Diligence, appraisal prevailing.
f) Methods of Assessment of Working Capital.
g) Loan Policy about credits sanction procedures.
h) Group Concept, Method of Assessment of Working Capital.
i) Term Loan Assessment certified copy of Loan Policy along with Lending Power Deligated to various categories of all officers.
j) Norms of Taken Over of loan from other Bank.
k) Instruction to Exercise Delegated Power of Scale-
II Branch Manager.
21
Spl.C.C.No.24/2016
16. During the course of his cross-examination he had admitted that no enquiry was conducted personally by him. However, as per procedure Regional Manager was supposed to appoint other officers to conduct enquiry and he had not initiated any enquiry prior to lodging complaint to CBI authorities. He has admitted that after collecting the letters with reports from concerned officers he had lodged the complaint and has voluntarily deposed that on verifying the same he had lodged the same and apart from that nothing much has been elicited.
17. PW.3 - Dayanand A. Shenoy who is also the Internal Auditor of the complainant Bank, has deposed about conducting of auditing by the Regular Auditor and Compliance Audit during the said period from August, 2013 to March, 2014. He has deposed that on furnishing Internal Audit Report at Ex.P.21 and also he has deposed that during previous audit his predecessor had verified about the correctness of about 295 documents and they have found no compliance in loan account and also deposed about irregularities found in the account of 22 Spl.C.C.No.24/2016 some persons not connected to the above case. He has also deposed that the account No.3224590797 wherein O.D. limit under Cent Sahayog Scheme was enhanced to Rs.90 lakhs and also take over of loan from Citizen Co-operative Bank for Rs.17.80 lakhs passed without the Branch having authority. In view Take over loan and also Process Note, O.D. facility under Cent Sahayog Scheme to Civil Contractor was not in order and also various other irregularities with respect to property in the name of Gundappa S/o Late. Giri Gowda was found. He was cross-examined at length by the learned counsel for the accused and he has admitted that the irregularities which he had found at the time of his verification were the irregularities which were found by the previous Internal Auditor and outstanding of these two accounts were not closed i.e. Account No.3224590797 & 3226470173. Apart from that nothing has been elicited.
18. PW.4 - Gopi Srinivas Challa who was the Chief Manager (Vigilance) has deposed that in the year 2013 from the month of August. He had conducted surprise inspection and 23 Spl.C.C.No.24/2016 random verification at Kodigehally Branch, Bengaluru and had found that several number of accounts sanctioned under Cent Sahayog Scheme were other gross irregularities with respect to sanctioning procedure by violating the said scheme and also the rules prescribed Chittaranjan Das was also noticed by him. He has also deposed that the sanctioning procedure was not followed and the application were incomplete and further no proper bills and quotations of the purpose for which the loans were sanctioned were not obtained by the concerned officer. He has also deposed of forwarding the original report to Chief Vigilance Office, Central Office, Mumbai as per Ex.P.22 and particularly he has deposed about the irregularities in the accounts pertaining to B.Gangadhar, Kishore G. Pandit, G.S.Yogeshwari and Anil Kumar who are not the accused in the above case. He was not subjected to cross-examination by the learned counsel for the accused.
19. PW.5 - M.Murugesan was Chief Manager Vigilance at Regional Office of Central Bank of India. He has deposed that on 27.02.2015 he was advised to conduct inspection of 24 Spl.C.C.No.24/2016 Kodigehally Branch were irregularities occurred in sanctioning of advances by the then Manager Chittarajan Das, the Accused No.1. Accordingly, in the month of March, 2015 he had visited the said branch and conducted inspection to find out likely loss to the bank due to irregularities of sanctioning of advances by him. He has deposed of randomly verifying two accounts namely belonging to B.Gunde Gowda and his guarantor Gundappa and found that O.D. Facility of B.Gunde Gowda were sanctioned to him on 19.12.2012 and it was enhanced from Rs.30 lakhs within 5 months without obtaining any financial proposition and also assets and liabilities of guarantor Gundappa and CIBIL was not generated for guarantor. He has deposed that the guarantor Gundappa had also availed term loan for vehicle and entire process was completed by accused No.1 and account was considered as NPA. On the basis of the audit conducted by him he had opined that likely loss to the bank was around of Rs.20.24 Crores by accused No.1 due to his act of sanctioning and disbursing loans. He has also deposed that Branch Manager had not adhered to the established Norms and Guidelines of 25 Spl.C.C.No.24/2016 the Bank and also the procedure. During the course of cross- examination he has admitted that the loan pertaining to Gundappa to his A/c No.3230927054 was sanctioned by Central Credit Processing Center and not by Accused No.1 and Gundappa was having a guarantor to the loan who was none other than Gunde Gowda and also he has admitted that to disburse loan under Cent Sahayog Scheme no collateral security was required, however the Branch Manager had taken security from Gundappa.
20. PW.6 - C.H.Nagaraj who is Senior Manager of Central Bank of India has deposed that he has visited the allotted branches for internal audit and to report if any irregularities with respect to branches situated in Karnataka, Andrapradesh and Telangana and has deposed of conducting audit in the month of August and September 2013 and submitting report to Chief Internal Auditor. It has been deposed by him that during audit several irregularities like loan sanctioned beyond delegated powers, new loan advanced by closing old problematic loan accounts, crediting the amount 26 Spl.C.C.No.24/2016 directly to the Savings Bank account of the customer advance of loan recklessly without following rules were found. He has also deposed of submitting the audit report as per Ex.P.24 and has deposed that during the said period the accused No.1 was the Manager of Central Bank of India, Kodigehalli Branch. It is his specific evidence that accused No.1 had taken over the loan from Citizen Co-operative Bank which was not permitted for him to take over the loan without obtaining necessary permission and he had advanced Rs.30 lakhs as against 17.80 lakhs. He has also deposed that accused No.1 had increased loan limit as advance to the extent of Rs.90 lakhs under Cent Sahayog Scheme to accused No.2 and further he had no authority to enhance original loan of Rs.17.08 lakhs. Apart from that no work orders and documents pertaining to Gunde Gowda were obtained under Cent Sahayog Scheme and also accused No.2 had availed term loan through his Account No. 3230927054 for Rs.5 lakhs towards vehicle loan. It is his evidence that there was outstanding of Rs.94,82,00,004/- and also with respect to vehicle loan a sum of Rs.10,607/- was pending. Subsequently, the witness was recalled and he had 27 Spl.C.C.No.24/2016 identified the documents which he had produced before the concerned authorities and also Ex.P.1, P.2 were identified by him. He has deposed that as per Ex.P.2 accused Gunde Gowda was not having work order for more than 1 Crore of rupees and in the process note of Cent Sahayog Scheme, accused No.1 had recommended that accused No.2 was having work order to an extent of Rs.1.5 Crores and sanctioned Rs.30 lakhs as OD facility which was subsequently enhanced to Rs.90 lakhs and also the DP Note and letter of continuity at Ex.P.1 were blank at the time of audit. Once again he has reiterated of enhancing the OD facility to an extent of Rs.90 lakhs to the accused No.2 and also not filling up any documents which were left blank. During the course of cross-examination he was specifically questioned about the nature of OD facility and loan facility and also he was questioned that whether a sum of Rs.90 lakhs sanctioned to Gunde Gowda was OD or take over loan for which he has deposed of it being extended OD facility. During the course of his cross-examination he has admitted that the Branch Manager was having power to sanction OD facility to an extent of Rs.1 Crore under Cent Sahayog Scheme and also 28 Spl.C.C.No.24/2016 he had admitted that the OD facility which was sanctioned was under the same scheme. He has also deposed voluntarily that it was with deviation and also he has feigned his ignorance with respect to the guarantor consent at the time of availing OD facility. Further he has admitted that term loan of Rs.5 lakhs was sanctioned to Gundappa under Centralized Processing Cell and not by accused No.1 and to the specific question that the irregularities observed would be rectified, he has deposed categorically admitting the same and has deposed that the some irregularities which could not be rectified would have to be answered by the concerned officers. It is his evidence that he had not conducted any audit at Kodigehalli branch after the audit which was conducted in the month of August and also he has admitted that the Successor Branch Manager could have rectified the irregularities which was permissible. He has also feigned his ignorance with respect to clearance of loan by Gunde Gowda subsequently.
21. PW.7 B.K.Bhaskar is the Branch Manager of Central Bank of India for the relevant period from June 2014 to May 29 Spl.C.C.No.24/2016 2016. He has deposed of producing the documents and has deposed that the documents which were produced by him consisted of the borrower's accounts with respect to the accounts of the Gunde Gowda and also the vehicle loan account and OD facility account. During the course of his chief-examination he has deposed that OD facilities would be sanctioned to the customers for the purpose of working capital needs like purchasing of loan materials payment of wages, cheques, and bill etc., and the same cannot be made use for other purposes than the purposes for which it was sanctioned. He has also deposed that in case of more than one officer in the branch one of them has to recommend and Branch Manager would sanctioned the loan. Further it could not have been sanctioned by the Branch Manager unless it was recommended by the other Officers and lastly he has deposed that the take over loan from other financial institution was permitted subject to prior approval by the controlling Office. During the course of cross-examination he has deposed that Gunde Gowda had applied loan under Cent Sahayog Scheme and also he has admitted that he does not remember the extent 30 Spl.C.C.No.24/2016 of cheque and also the authorization given for passing of the cheque issued by Gunde Gowda. Apart from that nothing much has been elicited from him.
22. PW.8 T.Sriram was the Senior Manager in the Regional Office of Central Bank of India and he has deposed of producing documents pertaining to loan advance made by the Kodigehalli Branch. During the course of cross-examination apart from denial nothing much has been elicited from him.
23. PW.9 R.J. Raja was the Assistant Manager of Central Bank of India and has deposed that accused No.1 was the Manager of Central Bank of India, Kodigehalli branch and has identified his signatures on Ex.P.4 and P.5 and also the circulars at Ex.P.8 with respect to loan sanctioning norms under Cent Sahayog Scheme. During the course of cross- examination he has admitted of consigning the account opening form at Ex.P.1 on 16.06.2012 in the capacity of the Officer of the Bank and also he has admitted that at Ex.P.51 and P.52 another official had affixed his signature to the said document along with accused.
31
Spl.C.C.No.24/2016
24. PW.10 Pergade Gowda D. was the Manager of Citizen Co-operative Bank has deposed that one Kempe Gowda was the Manager of the Bank from the year 1993 to 2017 i.e. till his death and he had worked along with him. Further he has deposed and identified the Account Opening Form of Gundappa S/o Gunde Gowda at Ex.P.57 and also at Ex.P.1, EC furnished by Gundappa. It is his evidence that Gundaiah has changed his name as B.Gunde Gowda and as such the account No.12905 statement was furnished by him as per Ex.P.60. He has also produced the loan account statement with respect to Account No. 905429 in the name of Gundappa and the DD amount of Rs. 9 lakhs and Rs.8,80,000/- was credited to his account as per Ex.P.64 and the relevant entries were marked as Ex.P.64 (a) and (b) respectively. They have also produced the Account Statement pertaining to the account of Gundappa with account No.42788 at Ex.P.68 and also account opening forms pertaining to B.Gundaiah @ Gunde Gowda and also Gundappa S/o Gunde Gowda. During the course of his cross-examination apart from denials nothing much has been elicited. 32
Spl.C.C.No.24/2016
25. PW.11 S.Hariharan is the Investigation Officer and has deposed that on 30.04.2015 he was entrusted with the FIR at Ex.P.70 for the purpose of investigation and he had conducted search at the residence of accused No.1 at Mangaluru. He has also deposed that he had sent notice to Central Bank of India and collected documents from PW.2 Manjunath as per Ex,.P.7 to P.19 which were circulars, guidelines and instructions pertaining to sanction and disbursement of various kind of loans and has deposed about collecting the internal audit report and other statement of witnesses and on completion of investigation he had found the allegations against accused Nos.1 and 2 were proved and as such he had arrived at a conclusion that accused No.1 had sanctioned loan beyond his financial powers and conceded the said aspects in his process note and also loan raised in favour of accused No.2 was not take over loan and accused No.1 had conceded the said fact in his process note also and accused No.2 had diverted the funds for the purpose other than one which were sanctioned and he had single handedly processed the entire loan transactions without the recommendation of 33 Spl.C.C.No.24/2016 mandatory two officials. The witness was cross-examined at length by the Learned counsel for accused and he has admitted to the crucial suggestions which were put forth by the counsel for accused. He has also admitted that the irregularities were rectified with respect to other accounts by making repayment of the amount which was due. He has also deposed that they had not appointed any special team for conducting audit inspection and according to him the statement of accounts and audit reports were suffice to investigate and file the report. He has also admitted that one of the allegations against accused No.1 was that he had taken over the loan on his own even though he was not authorized to do so without obtaining prior approval from higher authorities which was vindicated in Ex.P.8 at Sl. No.12. He was confronted with the entries in Ex.P.8 by pointing out that the entries mentioned therein were not pertaining to procedure for take over loan, but it was the sanctioning power, for which he has admitted categorically. He has also deposed of conducting several fraud cases and as it was suggested that take over loan from another Bank and re- financing was general norm for which he has deposed that 34 Spl.C.C.No.24/2016 Central Bank of India has stated about delegation of financial powers as per Ex.P.18. Further he was confronted with Ex.P.51 and P.52 and he has deposed that they were pertaining to repayment of loan and also it was suggested to him that the DD's were obtained in the name of Gundappa for which the witness has voluntarily deposed that Gundappa was accused No.2 in the above case. It was also suggested to him that the allegations were levelled against accused No.2 of obtaining loan from Central Bank of India and using the same for repayment of loan at Citizen Co-operative Bank. The witness has deposed that while sanctioning the said loan accused No.1 had concealed the fact of taking over the loan and investigation had revealed that the total outstanding loan of accused No.2 with Citizen Co-operative Bank was Rs.17.80 lakhs. He was specifically confronted about investigating about the relationship between accused No.2 and Gundappa for which he has specifically and unambiguous deposed that Gundappa and accused No.2 were one and the same. It was confronted to him that the investigation revealed that accused No.2 was Gundegowda and he was also known by the name Gundaiah. 35
Spl.C.C.No.24/2016 Though it was suggested to him that Gundappa and Gunde Gowda were different persons and witness has denied the same. There afterwards the witness was confronted with the Account Opening Form of Gundappa S/o Boregowda at Ex.P.59 at Citizen Co-operative Bank and also admitted and he had identified the other documents which were produced along with the same. He was subsequently confronted with Ex.P.58 which shows the transfer of amount covered under the DD's at Ex.P.51 and P.52 respectively and Ex.P.58 was pertaining to the account of Gundappa with No.42788 which was opened on 21.09.2005. He was confronted with the Account opening form at Ex.P.57 and also the introducer Gundappa i.e. accused No.2. It was suggested that Gundappa was the uncle of accused No.2 and though he was aware of the same and he has not verified the same for which he had denied the said suggestion. It was specifically suggested to him that Gundappa and accused No.2 were different persons for which the witness has denied and also it was suggested to him that he had not visited the address given by Gundappa Ex.P.57 for which the witness has admitted. During the course of his further cross- 36
Spl.C.C.No.24/2016 examination he has deposed that the Account holder by name Gundappa was alive and also he has admitted of not verifying the address mentioned in Ex.P.1 pertaining to Gundappa. He has also admitted of not examining or enquiring of the BBMP officials or the officials of the Karnataka Rural Infrastructure Development Limited with respect to issuance of work orders presented by accused No.2 and also he has deposed that as per the contents of Ex.P.19 accused No.1 was the Branch Manager of Kodigehalli Branch with powers of Scale II Manager. He has also admitted that there was no law prohibiting of scrutinizing the applications by the Branch Manager alone and has specifically admitted that the investigation did not reveal of any illegal gratification by accused No.1. He has also admitted that the above case was pertaining to discrepancy in the sanctioning and disbursement of loan and which was an illegality committed by the accused. Further he has deposed that he had arrived at the said conclusion on the basis of various circular issued by the Bank and also the statement of witnesses. He was confronted about verifying the loan accounts of Central Bank of India becoming NPA and has tendered his 37 Spl.C.C.No.24/2016 evidence stating that he had confined his investigation to loan accounts which were outstanding as on the date of investigation. He has also admitted that some violation of circulars by the Manager was not an offence and also he has admitted that the accused No.1 had the powers of sanctioning the loan amounts upto Rs. 1 Crore. He has admitted of not finding any violation with respect to CIBIL report of Accused No.1. He was confronted with meaning of take over loan for which he has deposed that the same was settling of the loan in other bank in the name of the borrower and transferring to the present bank. The witness was also exhaustively cross- examined with respect to statement of accounts furnished by him and the witness has deposed that a wrongful loss to an extent of Rs.50.14 lakhs was caused to the Bank. However it is his evidence that a sum of Rs.90 lakhs was the loss caused to the Bank. It is his evidence that as per the charge sheet the sole illegality was pertaining to OD facility which was enhanced to Rs.90 Lakhs and lastly he has admitted that he had filed the charge sheet against both accused persons for the reason that the outstanding loan was not repaid by accused No.2 and since 38 Spl.C.C.No.24/2016 it had became NPA. To the specific question put forth by the court itself that whether accused No.2 Gunde Gowda @ B.Gundaiah and Gundappa were one and the same witness has deposed that they were different persons. Further during the course of cross-examination the witness has admitted that Ex.P.51 and P.52 DD's were taken from the loan amount and credited the same to Ex.P.58 account which was in the name of Gundappa and not accused No.2. Lastly he has deposed that accused No.2 had utilized the loan amount to clear off the dues of Gundappa who was other than accused No.2.
26. On completion of the 313 statement of the accused he had preferred to lead defence evidence and has summoned DW.1 Shailesh Kumar who is Senior Manager of Central Bank of India. During the course of his chief-examination he had produced the documents pertaining to accused No.2 Gunde Gowda which was summoned in accordance with law. As per the said document he has deposed that the outstanding balance of the accounts bearing No.3224590797 under Cent Sahayog Scheme was Rs.12,55,050/-. He has also deposed that accused No.2 Gunde Gowda was having 3 bank account 39 Spl.C.C.No.24/2016 loans which was completely discharged under one time settlement scheme and he has produced the documents which were marked as Ex.D.2 to D.5. During the course of cross- examination by the Learned Public Prosecutor nothing much was elicited from him and he was subjected to re-examination wherein he has deposed that the accounts pertaining to Gunde Gowda at Ex.D.2 and D.3 were closed before his death.
27. On the basis of the said evidence the court will have to examine whether the offences alleged against him is proved beyond reasonable doubt by the prosecution. Once again at the cost of repetition, the allegations which are leveled against accused No.1 is required to be looked into and as per the allegations in the charge sheet it is noticed that the accused No.1 Chittaranjan Das was acting and discharging his duty as Branch Manager of Kodigehalli branch of Central Bank of India during the period 2011 to 2013 and he was a Scale I Officer. The main allegations which has been leveled against him is that with respect to entering into criminal conspiracy with accused No.2 B.Gunde Gowda and in furtherance of the said 40 Spl.C.C.No.24/2016 conspiracy he had agreed to do illegal act by illegal means and he had sanctioned and enhanced OD facility and also disbursed several loans under different schemes causing wrongful loss to an extent of Rs.50.14 lakhs and also without verifying the documents and had got the OD amount sanctioned with out obtaining necessary permission from the higher authorities of Central Bank of India, he had disbursed loan and induced accused No.2 to divert the enhanced OD facility to another account maintained with Citizen Co- operative Bank and hence he had committed the offences punishable under Sec. 120-B, 420 of IPC and also as he had not properly verified with respect to prior availing of loan from Citizen Co-operative Bank by accused No.2 had accepted the documents and caused criminal breach of trust. Apart from that it is also alleged that he had with dishonest intention had committed criminal misconduct by accepting illegal gratification and abused his powers and sanctioned and enhanced OD facility to accused No.2 with an intention of obtaining valuable thing as pecuniary advantage without any public interest and thereby an offence under Sec. 13 (2) r/w 41 Spl.C.C.No.24/2016 Sec. 13 (1)(c) and (d) of Prevention of Corruption Act 1988 was made out.
28. With this adumbration the court has to appreciate the evidence which has been led before the court. In order to attract the ingredients of Sec.120-B of IPC necessarily a conspiracy should have been formed and acted upon by the accused persons. It is well settled principles of law that the conspiracy will be hatched upon in darkness and will be executed and the same requires to be determined only on the basis of the prevailing incident and also the facts and circumstances of the case. It is an undisputed fact that accused No.1 was working as Scale I Manager of Kodigehalli branch and accused No.2 B.Gunde Gowda against whom the case came to be abated due to his death during the pendency of the above case had opened several accounts and also had availed OD facility in the aforesaid branch. The main aspect which requires to be determined is the question of conspiracy being levelled and acted upon by accused No.1 and 2. In order to determine the same, the motive and intention has to be deciphered from the evidence which has been led before the 42 Spl.C.C.No.24/2016 court. As already discussed supra, the opening of account and also availing OD facility by itself will not constitute an offence. It is also an undisputed fact that on several occasions the limit of OD facility came to be enhanced by accused No.1 who was the authorized Officer of the said branch. Now at this juncture the main allegations urged against by the complainant, CBI authorities are to be looked into. As per the charge sheet and also as per the tenor of the evidence which was placed before the court it is noticed that the conduct of accused No.1 in enhancing the OD facility without any documents being furnished is pointed out by the prosecution to contend the act of criminal conspiracy. Initially, a sum of Rs.10 lakhs was sanctioned to accused No.2 on 31.07.2012 and subsequently on 18.12.2012 the OD again came to be closed and subsequently on 19.12.2012 the OD limit was enhanced to Rs.30 lakhs. The allegation which has been leveled against accused No.1 is that he was a Scale I Officer and he did not had any authority to enhance the OD facility and as such by enhancing the same Rs.90 lakhs he had flouted the established norms and procedures of the Bank. In this regard the relevant 43 Spl.C.C.No.24/2016 date on which the OD limit was enhanced to Rs.90 lakhs is to be looked into and as per the records the same was enhanced on 27.04.2013. The learned PP appearing for CBI, ACB, Bengaluru has vehemently canvassed her arguments and has submitted that there was no iota of materials to justify the contention of accused No.1 in enhancing the OD facility. She has also tried to impress upon the court that the OD facility came to be enhanced by accused No.1 without following the due procedure of law and also against the guidelines laid down in the circular at Ex.P.8 which is produced before the court. She has also pointed out that during the course of the evidence of PW.2 it is clearly established that the guidelines in Ex.P.8 i.e. three circulars of which one was the main circular and two amendments was not considered by accused No.1. At this juncture, it would be appropriate to note that as per the circular at Ex.P.10 which speaks about the sanctioning authority of the Branch Manager it was noticed that the limit was enhanced to Rs. 1 Crore i.e. 100 lakhs vide Ex.P.19 dated 03.01.2012. As per the said exhibit the office order was issued by the Central Bank of India which clearly indicates that 44 Spl.C.C.No.24/2016 accused No.1 Chittaranjan Das was delegated with the power of Scale II branch with immediate effect and it is also relevant to note that in order to exercise the power of Scale II Branch Manager the limit would be Rs.1 Crore. Once again at the cost of repetition, the relevant date on which the OD facility was enhanced from Rs.30 lakhs to Rs.90 lakhs is to be appreciated and on 19.12.2011 the OD limit was enhanced to Rs.30 lakhs and subsequently on 27.12.2011 i.e. after issuance of the office order at Ex.P.19 the OD limit was enhanced to Rs.90 lakhs. At this juncture the submission of the learned PP that the contention of the prosecution of enhancing the OD limit without obtaining necessary documents is to be considered. As per her submission the accused No.1 had enhanced the OD facility without there being any necessary documents and it is her contention that under Cent Sahayog Scheme necessary documents should have been obtained by the accused No.1 and it was sanctioned with deviation. It is her contention that the evidence of PW.6 C.H. Nagaraj who was the Senior Manager (Internal audit) would clarify the necessary ingredients which is to be considered. When the evidence of PW.6 is carefully 45 Spl.C.C.No.24/2016 appreciated, he has deposed of conducting an audit at Kodigehalli branch in the month of August and September 2013 along with Sri. H.R. Kulakarni and had furnished a special audit report as per Ex.P.24. It is his evidence that the OD facility to the extent of Rs. 30 lakhs was sanctioned on 19.12.2012 and at that point of time accused No.2 Gunde Gowda had furnished two work orders dated 20.06.2012 only to an extent of Rs. 10 lakhs. The court has carefully looked into the said documents which are produced at page Nos.64 and 65 of Ex.P.1. The work orders are being addressed to accused No.2 dated 20.06.2012 which indicates that he was entrusted with the work of construction of compound wall and providing water supply by BBMP to an extent of Rs.5,23,698.23 and also another work order for providing concrete inside the Government hospital at Luggere for Rs.5,24,488.75 is to be looked into. However, the learned Senior counsel Sri.P.P. Hegde appearing for accused No.1 had vehemently canvassed his arguments that the court cannot shut its eye by looking into only two work orders to arrive at a conclusion that there were no documents in favour of accused No.2. In order to point out 46 Spl.C.C.No.24/2016 the said discrepancy he has canvassed his arguments that several work orders were issued in favour of accused No.2 Gunde Gowda. However as per the norms, BBMP had instructed and assigned the work orders in favour of the Technical Manager of Karnataka Rural Infrastructure Development Limited who in turn had entrusted piece work to accused No.2 Gunde Gowda. In order to butters his submission he has pointed out the relevant order at Ex.P.1 itself which is produced by the prosecution at Page No.72 wherein the certificate has been issued by KRIDL confirming that and certifying that accused No.2 had executed the following work by acting as group leader wherein he had completed the works mentioned below:-
a) Construction of SSM drain in Ward No.115 with estimate of Rs.30 lakhs.
b) Providing cement concrete to road at Siddarth road with estimate of Rs.16 lakhs.
c) Providing cement concrete in ward No.115 with estimate of Rs. 35 lakhs.47
Spl.C.C.No.24/2016
d) Construction of SSM drain in Ward No.115 with estimate of Rs. 22 lakhs.
29. It is his submission that the work order which has been issued in favour of the Technical Manager readily has to be considered. However the learned PP has vehemently argued that the schedule date of completion of the said work orders was of the year 2014 and whereas OD limit was enhanced in the year 2013 which clearly requires an explanation and also indicate towards the guilt of the accused. It is her submission that the documents were obtained only with connivance of the concerned authorities to overcome the guilt of the accused. However in order to consider the rival contention the necessary work orders which have been produced at page No.42 in favour of accused No.2 at Ex.P.1 is to be appreciated, which would indicate that he was PWD contractor and he was initially entrusted with the work orders. The relevant work orders issued in favour of Technical Manager East, KRIDL is also to be looked into are mentioned below:-
Sl.No. Date Exhibits Page No. Amount
1 13.09.2012 Ex.P.1 66 5 lakhs
48
Spl.C.C.No.24/2016
2 25.02.2012 Ex.P.1 48 22 lakhs
3 09.01.2013 Ex.P.1 45 30 lakhs
4 09.01.2013 Ex.P.1 61 25 lakhs
5 09.01.2013 Ex.P.1 62 20 lakhs
6 09.01.2013 Ex.P.1 60 20 lakhs
7 09.01.2013 Ex.P.1 63 30 lakhs
30. No doubt the work orders which are mentioned above dated 09.01.2013 cannot be accepted as the same was not issued in favour of accused No.2. However by considering the letter which has been issued by KRIDL and also the concerned BBMP authorities confirming of issuing piece work in favour of accused No.2 would clearly indicate that accused No.2 was working as a group leader of BBMP and as per the settled norms the work orders will be issued only in favour of KRIDL by BBMP which will be subsequently dispersed as piece work by them. When the said aspect is carefully appreciated the construction of SSM drain work at Page No.45 by BBMP in favour of KRIDL East clearly tallies with the letter which has been issued confirming the work of accused No.2 to an extent of Rs.30 lakhs would indicate that the OD limit was enhanced on 03.01.2013 and whereas work order was issued for Rs.30 49 Spl.C.C.No.24/2016 lakhs on 09.01.2013. Even otherwise the work order issued on 25.02.2012 as per page No.48 at Ex.P.1 indicates that BBMP had issued work order in favour of KRIDL, Technical Manager- East for construction of SSM drain at 5 th cross of Vannerpet layout, in ward No.15 for Rs. 22 lakhs and the same has been confirmed in the certificate issued by KRIDL at page No.72 of Ex.P.1. This particular aspect would clearly indicate that two work orders as admitted by the prosecution was for Rs.5 lakhs and Rs.5,24,000/- and when compared with the work order at page No.48 and page No.35 for Rs.16 lakhs would indicate of possessing necessary work orders in favour of accused No.2 at the time of enhancing the OD facility to Rs.30 lakhs. Admittedly till 03.01.2013 the accused was having admitted OD facility at Rs. 30 lakhs and it is pertinent to note that on 19.12.2012 the OD limit was enhanced to Rs.30 lakhs which indicates of obtaining work orders on 25.12.2012. No doubt of learned PP has argued that there is deviation since the report at Ex.P.24 furnished by the internal auditor would indicate that the accused No.1 had not obtained necessary documents and also permission for enhancing the same is to be looked 50 Spl.C.C.No.24/2016 into. The exhibit at Ex.P.24 which was produced through PW.6 indicates that the accused No.1 had no authority to enhance the OD limit, however in the wake of the office order being issued in favor of the Accused No.1 wherein he was entrusted with Branch Manager of Scale-II, the same would nullify their contention. The learned PP has also argued that as per the work orders at page Nos.64 and 65 of Ex.P.1, the same was required to be completed within 60 days from the order dated 20.06.2012 but loan was sanctioned on 19.12.2012 which was beyond the date fixed for completion of work. At this juncture itself, it is required to be clarified that the entire burden of proving the guilt of accused is on prosecution and however strong may be the suspicion will not take place of proof. It is also relevant to note that the evidence of PW.6 during his chief- examination at Para No.11 has deposed that at page No.25 and at page No.27 and also page No.31 the OD limit which was available to Gunde gowda were blank at the time of audit which were filled up subsequently. By pointing out the said aspect the learned Sr. Counsel has vehemently argued that the mere non filing of the applications or the documents will not be 51 Spl.C.C.No.24/2016 suffice to hold that the said deviation amounted to criminality. It is also well settled principles of law that the irregularities will not be considered as an illegality and only if it is established that the irregularity was committed with an intention and motive to commit the criminal act, the said irregularity will be converted into illegality. Hence the thin line which separates irregularity from illegality is to be considered. If only the prosecution is able to establish the culpability of the accused then the contention of conspiracy and also irregularity being converted into illegality can be accepted. Why the said conspiracy of irregularity being converted into illegality is to be considered is for the simple reason that the internal auditor who had conducted audit were examined as PW.6 and during the course of his cross-examination he has specifically admitted that the irregularity can be rectified when the superior officers would instruct the Branch Manager to rectify the irregularities and in case of irregularities which cannot be rectified the superiors would issue show cause notice to the Branch Manager to give explanation has been deposed. However no such materials are forthcoming in the entire 52 Spl.C.C.No.24/2016 evidence or during the course of investigation that Accused No.1 was issued with show cause notice since the above said irregularities could not be rectified. It is also relevant to note that the alleged conspiracy and act by Accused No.1 was committed during the year 2011 to 2013 and also the audit was conducted in the year 2013, and it is rather surprising that no show cause notice were issued to Accused No.1. With this back ground once again the evidence of PW.11 the Investigation Officer is to be appreciated. No where in his evidence he has specifically identified and pointed out when the irregularity was converted into illegality. Suppose if it is to be accepted that accused No.1 at the inception was acting with a criminal motive and intention to cheat and defraud the bank and had conspired with accused No.2 then the question of irregularity being converted into illegality is to be accepted. There are two different aspects in the above case through which the prosecution is intending to establish their case and also the act of criminal conspiracy and fraudulent act of accused No.1 is being tried to be proved. In other words the prosecution is mainly canvassing that the OD limit was 53 Spl.C.C.No.24/2016 enhanced without there being any power on the part of accused No.1 for enhancing it to Rs.90 Lakhs and by utilizing the said OD facility a loan in the name of accused No.2 prevailing at Citizen Co-operative Bank was taken over by accused No.1 by issuing DD to an extent of Rs.17.80 lakhs which was also not in accordance with the circular or any other authorities.
31. At this juncture it is required to consider the take over loan concept which has been alleged against accused No.1 and 2. The charge sheet indicates that the Branch Manager of Citizen Co-operative Bank i.e. one Sri.Kempe Gowda by looking into the photograph of two persons i.e. one Gundaiah who had availed loan by mortgaging his property to an extent of Rs.17.80 lakhs and B.Gunde Gowda were one and the same. A lot of confusion has been created with respect to identity of Gundaiah and accused No.2 Gunde Gowda. It seems that the Investigation Officer has completely mis-read the papers and also in a callous manner has placed the charge sheet and also deposed before the court that Gundaiah and Gunde Gowda 54 Spl.C.C.No.24/2016 (A.2) were one and the same. If for the sake of arguments the same is to be accepted the documents which are produced at Ex.P.57 and Ex.P.59 is to be considered. Ex.P.57 is with respect to the account of one Gundappa S/o Late Giri Gowda and the address which has been mentioned is as residing at No.377, 3rd Stage, 4th Block, 8th main, Basaveshwaranagar and also the occupation has been shown as retired KPTCL employee who is aged about 58 years. Whereas the account opening form of B.Gundaiah who is said to be accused No.2 is at Ex.P.59 and it reveals that he is aged about 36 years and S/o Bore Gowda who is residing at No.376, 3 rd Stage, 4th Block, 8th main, Basaveshwarnagar. Along with the account opening form at Ex.P.59 he has also furnished copy of ration card and also the specimen signature form, copy of Driving license. When both these documents are carefully considered it is relevant to note that Gundappa S/o late Giri Gowda and Gundaiah B @ Gunde Gowda S/o Bore Gowda, cannot be considered as one and the same person. The question why their identity is very much essential assumes importance as the prosecution has mainly contended that Gunde Gowda B 55 Spl.C.C.No.24/2016 and also Gundaiah are one and the same and as per the charge sheet the Investigation Officer has specifically contended that the then Manager of Citizen Co-operative Bank i.e. Kempe Gowda had confirmed by looking into photograph of Gundaiah available in Central Bank of India and confirmed that Gundaiah and Gunde Gowda were one and the same. In order to substantiate these aspects they had secured additional witness who was examined as PW.10 Sri. Pergade Gowda D. who has deposed that the then Manager Kempe gowda had died in the year 2017 and it is his evidence that Gundappa S/o Giri Gowda had opened an account as per Ex.P.57 with account No.12905 whereas Ex.P.58 is the SB account of Gundappa with account No.42788 and it is his evidence that Gundappa had raised loan of Rs.7 lakhs which was closed on 26.02.2010 as per Ex.P.58 and on the same day he had availed another loan of Rs.15 lakhs by taking collateral property security of the property No.376, 3rd stage, 4th block, West of Chord Road, Kamalanagar, Bengaluru-79 as per the EC at Ex.P.1. Further he has deposed that the account opening form at Ex.P.59 pertains to B.Gundaiah with account No.12905 and 56 Spl.C.C.No.24/2016 later on B.Gundaiah had changed his name to Gunde Gowda B and the account statement was marked as Ex.P.60. It is relevant to note that the loan account of B.Gunde Gowda i.e. accused No.2 herein was having account No.905380 and also the witness has deposed that Gundaiah had deposited DD with No.001457 for a sum of Rs.9 lakhs and another DD with No.001458 for a sum of Rs.8,80,000/- on 29.04.2013 which is as per the pay-in-slip at Ex.P.62 and EX. P.63. It is also relevant to note that Ex.P.64 is the loan account statement pertaining to Gundappa which indicates the deposit of DD in the aforesaid sum of Rs. 9 lakhs and Rs.8,80,000/-. Now the main aspect which is required to be considered is whether the DD which was deposited into the account of Gundappa was belonging to accused No.2 Gunde Gowda himself and whether it was towards take over loan. It is also an allegation which is leveled against accused No.1 Chittaranjandas that he had not verified the documents of accused No.2 and in fact the property was mortgaged to Citizen Co-operative Bank and in case of granting take over loan he should have obtained necessary permission from the higher authorities. In normal parlance the 57 Spl.C.C.No.24/2016 take over loan means a loan which the account holder is having in another bank will be taken over by the present bank by discharging the outstanding liabilities. If for a moment it is to be accepted that accused No.2 B.Gunde Gowda was initially called by the name B.Gundaiah and he had got his OD facility enhanced and accused No.1 had conspired with him to take over his loan pending at Citizen Co-operative Bank, the same is to be established by producing necessary documents. The account opening form at Ex.P.57 pertaining to Gundappa as already discussed above, clearly indicates that he is Son of one late Giri Gowda and also it was elucidated from the Manager and also the other witnesses that Gundappa had availed loan in Citizen Co-operative Bank with account No.905429 for which a sum of Rs.17,80,000/- was paid. Under the circumstances, the main question is whether Gundappa and B.Gundaiah @ Gunde Gowda B are one and the same is to be established.
32. In this regard the evidence of PW.11 Hariharan who is the Investigation Officer assumes much importance. PW.11 58 Spl.C.C.No.24/2016 S.Hariharan during the course of his chief-examination has deposed that the loan of accused no.2 was a take over loan and accused No.1 had sanctioned loan beyond his financial power and also he had concealed the process note and without obtaining necessary permission from the higher authorities he had taken over the loan. During the course of his cross- examination he has admitted that separate charge sheet were filed against accused No.1 with respect to the audit/inspection report and also he has categorically admitted that with respect to the irregularities that were found in the audit report the same was rectified by making repayment of the due amount and he has voluntarily deposed that he was not sure about the said aspect. What is relevant in the above case is the truth being elucidated from PW.11 S. Hariharan who is also the Investigation Officer. It is pertinent to note that PW.11 S. Hariharan has deposed that no special team of an auditor were appointed by them for conducting the audit or inspection and they are basing their investigation on the basis of the earlier audit report which was produced at Ex.P.24. With respect to the audit report at Ex.P.24 the veracity of the same will 59 Spl.C.C.No.24/2016 considered and discussed in the later part of the judgment. However the Investigation Officer has deposed that the take over loan was not authorized since accused No.1 Chittaranjan Das had not obtained prior approval from the higher authorities and flouted the procedures at Ex.P.8 Circular. When he was specifically confronted to point out the relevant circular he has deposed that at Ex.P.8 Circular in Sl. No.12 table speaks of the procedures with respect to take over loan was mentioned. For better appreciation of the case the court has extracted the relevant portion of Ex.P.8 at Sl. No.12 column which reads as below:-
"Sanctioning Authority (As Manager Scale II ........... Upto per the lending powers) Rs.25.00 lakhs Sr. Manager Scale-III ...
Upto Rs.75.00 lakhs
RM/Scale-IV/CM-CCPC ....
Upto Rs.100.00 lakhs
(Maximum as per the
scheme)"
33. Once again the witness was confronted with Ex.P.8 and it was suggested that it was not pertaining to take over loan but it was pertaining to the sanctioning power of Scale II Manager which was to an extent of Rs.25 lakhs. However the 60 Spl.C.C.No.24/2016 said suggestion was not admitted by the witness. When the said circular is carefully appreciated it indicates that at column No.12 only the sanctioning power and authority has been mentioned. It was also suggested to the Investigation Officer that accused No.1 had not sanctioned the taking over of loan of accused No.2 B.Gunde Gowda from Citizen Co-operative Bank.
Once again at the cost of repetition it would be appropriate to clarify the amount which has been paid through two pay-in-
slips by DD drawn on to the account of Gundappa i.e. for a sum of Rs.9 lakhs and Rs.8,80,000/-. Both these account numbers are 905429 and the account extract is produced and marked at Ex.P.64 also indicates that Gundappa who was the resident of No.377, 4th Block, 8th main, Basaveshwaranagar, Bengaluru had deposited a sum of Rs.17,80,000/- to his account. The DDs which were purchased is also produced before the court at Ex.P.51 and P.52 also indicates of the same.
Now the question which assumes importance is whether the loan account No.905429 pertaining to Gundappa is belonging to accused No.2 B.Gunde Gowda @ Gundaiah. If, for a moment the evidence of PW.10 Sri. Pergade Gowda who is the present 61 Spl.C.C.No.24/2016 Manager of the Citizen Co-operative Bank is accepted that B.Gundaiah had got his name changed into Gunde Gowda B then also the account opening form will not match with each other. The document at Ex.P.56 which was a letter addressed to the Inspector of Police, CBI, by the Manager of Citizen Co-
operative Bank, indicates that Gunde Gowda B was having account in their bank with account No.12905 and also Gundappa was having account with No.42788 and also they have produced the original vouchers dated 02.05.2013 for Rs.9 lakhs and Rs.8,80,000/- with respect to his account at No.905429 and also the covering letter itself indicates that Gunde Gowda who was accused No.2 was sanctioned with Rs.50,000/- as hand loan which was closed by him and whereas Gundappa was sanctioned loan for a sum of Rs.7 lakhs and Rs. 15 lakhs with account No.902570. All these aspects would indicate that Gundappa and B.Gundaiah @ Gunde Gowda B were not one and the same persons. If it is to be accepted that Gundappa and B.Gunde Gowda are different persons then how the Investigation Officer can file the charge sheet by alleging that accused No.1 had taken over the loan 62 Spl.C.C.No.24/2016 pertaining to accused No.2 prevailing at Citizen Co-operative Bank without obtaining necessary sanction from his higher authorities is to be considered. It is also pertinent to note that Investigation Officer himself is not clear with respect to the identity of Gundappa and Gundaiah @ B.Gunde Gowda.
During the initial course of his cross-examination he has consistently deposed that one of the allegations leveled against accused No.1 was of taking over the loan which he was not authorized and further he has deposed in Para No.17 of his cross-examination that Gundappa and accused No.2 are one and the same. He has voluntarily deposed that accused No.2 had obtained loan from Central Bank of India and used the said amount for the repayment of loan obtained by him in Citizen Co-operative bank and accused No.1 had concealed the fact of taking over of the loan and thereby a loss of Rs.17.80 lakhs has been caused. With respect to the alleged loss caused to the bank the same will be dealt in the later part of the judgment. It was specifically posed to the witness that whether he had verified and investigated the relationship of accused No.2 and Gundappa, the witness has deposed that they are one 63 Spl.C.C.No.24/2016 and the same persons. He has also proceeded to admit the suggestions that the charge sheet was filed against Gunde Gowda and once again he has deposed voluntarily that Gunde Gowda was also called by the name Gundaiah. If only the exhibits at Ex.P.57 and Ex.P.59 is looked into it clearly indicates that Gundappa and B.Gunde Gowda were entirely different persons, however the Investigation Officer is insisting that the accused No.2 Gunde gowda was also known by name Gundaiah. No doubt initially Account opening form of Ex.P.59 pertains to Gundaiah and also account extract at Ex.P.60 is with respect to B.Gunde Gowda for which a clarification has been given by PW.10 Pergade Gowda, the Manager of Citizen Co-operative Bank that Gundaiah has subsequently changed his name as Gunde gowda the same will not establish that the fact with Gundappa and accused No.2 Gunde Gowda B are one and the same. The court is dealing with the identity of Gundappa and Gundaiah @ B. Gunde gowda in detail for the simple reason that the allegation which is leveled against the accused No.1 is with respect to entering into criminal conspiracy with Accused No.2 and had taken over the loan 64 Spl.C.C.No.24/2016 prevailing in the name of Accused No.2 Gunde Gowda at The Citizen Co Operative Bank. At this juncture it is the authority which has been relied upon by the prosecution is to be referred into with respect to the concept of conspiracy. The learned PP by relying upon the judgment of the Hon'ble Apex Court reported in (2009) 11 SCC 737, (R.Venkatkrishnan Vs CBI) has argued at length by relying upon the following extract which reads as under :-
78. We may also notice a decision of this Court being State (NCT of Delhi) Vs. Navjot Sandhu, commonly known as Parliament Attack case, wherein upon taking note of various earlier decisions of this Court, it was opined that as conspiracy is mostly proved by circumstantial evidence, usually both the existence of conspiracy and its objects have to be inferred from the circumstances and the conduct of the accused, stating: (SCC p.691, para 101) "101. One more principle which deserves notice is that the cumulative effect of the proved circumstances should be taken into account in determining the guilt of the accused rather than adopting an isolated approach to each of the circumstances. Of course, each one of the circumstances should be proved beyond reasonable doubt. Lastly, in regard to the appropriation of evidence relating to the conspiracy, the Court must take care to see that the acts or conduct of the parties must be conscious and clear 65 Spl.C.C.No.24/2016 enough to infer their concurrence as to the common design and its execution.
79. In Ram Narayan Papli this Court noted: (SCC p.778, para 342) "342 .... Law making conspiracy a crime is designed to curb immoderate power to do mischief which is gained by a combination of the means. The encouragement and support which co-conspirators give to one another rendering enterprises possible which, if left to individual effort, would have been impossible, furnish the ground for visiting conspirators and abettors with condign punishment."
80. Recently, in Yogesh Vs State of Maharashtra, a Division Bench of this Court held: (SCC p.402, para 25) "25. Thus, it is manifest that the meeting of minds of two or more persons for doing an illegal act or an act by illegal means is sine qua non of the criminal conspiracy but it may not be possible to prove the agreement between them by direct proof, Nevertheless, existence of the conspiracy and its objective can be inferred from the surrounding circumstances and the conduct of the accused. But the incriminating circumstances must form a chain of events from which a conclusion about the guilt of the accused could be drawn. It is well settled that an offence of conspiracy is a substantive offence and renders the mere agreement to commit an offence punishable, even if an 66 Spl.C.C.No.24/2016 offence does not take place pursuant to the illegal agreement."
81. A conspiracy may further be a general one and a separate one. A smaller conspiracy may be a part of a larger conspiracy. It may develop in successive stages. (Nirmal Singh Kahlon Vs State of Punjab) New techniques may be invented and new means may be devised for advancement of common plan. For the said purpose, conduct of the parties would also be relevant.
133. To establish a charge of conspiracy, indulgence in either an illegal act or a legal act by illegal means is necessary. The definition of "illegal" is provided for in Sec.43 of the Penal Code:
"43. 'illegal', 'Legally bound to do'- The word 'illegal' is applicable to everything which is an offence or which is prohibited by law, or which furnishes ground for a civil action; and an person is said to be 'legally bound to do' whatever it is illegal in him to omit".
The word "illegal" in the section has been given a very wide meaning. It consists of three ingredients: (1) everything which is an offence; (2) everything which is prohibited by law; and (3) everything which furnishes ground for civil action.
34. No doubt the ingredients which have been explained upon by the Hon'ble Apex Court would indicate the manner in 67 Spl.C.C.No.24/2016 which the criminal conspiracy is to be considered. Time and again it has been held by various dicta that the criminal conspiracy is an independent offence. Further the prosecution has to prove the same by producing necessary materials to indicate about the criminal misconduct on part of the accused. In other words the act which has been committed by the accused person should be one wherein the accused has to take a concrete steps to an agreement which they had entered upon to do the illegal act or to do an act which is not illegal by illegal means. Hence in a simple manner the concept of criminal conspiracy can be explained as consisting of the following ingredients:
a) an agreement between 2 or more persons
b) the agreement must relate to doing or causing to be done either:
i) an illegal act
ii) an act which is not illegal in itself but is done in an illegal manner.
35. When the said ingredients is carefully appreciated it clearly indicates that the condition precedent must be, that the 68 Spl.C.C.No.24/2016 accused persons should entertain guilty intention and only if it is established by the prosecution that they had acted upon in furtherance of the same then the conspiracy can be proved. At this juncture it would be appropriate to appreciate and rely upon the passage of Russell on Crimes (12 th Edition a Volume No.1) which reads as follows:
" The gist of the offence of conspiracy then lies, not in doing the act, or effecting the purpose for which the conspiracy is formed, nor in attempting to do them, nor in inciting others to do them, but in the forming of the scheme or agreement between the parties. Agreement is essential. Mere knowledge, or even discussion, of the plan is not, per se enough".
36. When the said aspect is once again deduced into the above case, the prosecution has contended that the accused Nos. 1 and 2 had entered into a conspiracy and the agreement between them was to make an unlawful gain at the cost of public money which was entrusted upon accused No.1 Chittaranjan Das being the Branch Manager of Kodigehalli Branch. Now the main aspect which requires to be established is that the accused No.1 had sanctioned loan to the OD 69 Spl.C.C.No.24/2016 account of accused No.2 knowing fully well that he was not competent enough to enhance the same to Rs. 90 lakhs as against his branch power of being Scale I Branch. The said aspect stands diminished on the ground that the evidence of PW.2 who has clearly deposed that the power to sanction the OD limit was enhanced by the Bank itself as per Ex.P.19. As per the said exhibit the power was increased on 03.01.2012 and whereas the OD limit was enhanced on 09.01.2012. At this juncture the submission of the learned PP with respect to other discrepancies is to be considered. Firstly, it has been canvassed that the OD limit enhanced was not in accordance with law and in fact no work orders were received. However, in my earlier discussion it is already discussed about the production of work orders and now to elucidate more in this regard the evidence of PW.11 S.Hariharan who is the Investigation Officer is to be looked into. Sri S.Hariharan who is the Investigation Officer has specifically deposed during the course of his cross-examination that he had not enquired the BBMP authorities or the officials of KRIDL with respect to production of work orders. It clearly indicates that certain 70 Spl.C.C.No.24/2016 documents which were produced by the CBI authorities and that too when the work orders were marked collectively as Ex.P.1, which comprised of various work orders standing in the name of KRIDL which was awarded by BBMP and subsequently the other documents which was produced by the prosecution themselves at page No.72 with respect to confirmation letter of carrying out the work by Accused No.2 would clearly raise serious doubt over the case of prosecution. Though it has been submitted by the learned PP that the said document which was a confirmation letter addressed by KRIDL to the accused No.2 was an after thought does not holds water since the accused No.2 has not produced the said document but in fact it was produced by the Investigation Officer himself along with the charge sheet and that too when it was marked on behalf of the prosecution. Hence the Investigating officer should have verified the authenticity of the said document during the course of investigation and that too before filing of the charge sheet. Now serious question is raised by them with respect to the said document and much hue and cry is voiced with respect to veracity of the documents. The law is well settled 71 Spl.C.C.No.24/2016 that the party cannot be permitted to blow hot and cold in one breath and if at all there was some lacuna in the said documents or on part of the accused himself creating and concocting the said documents the same should have been verified by the Investigation Officer who neither bothered to look into the same nor made any investigation in this regard.
37. Apart from that the other aspect, the prosecution is intending to prove the conspiracy is based on take over of loan from The Citizen Co Operative Bank, which is already dealt by this court in detail supra and since it has been held that there was no take over loan by accused No.1 the contention of conspiracy once again fails. It is also relevant to note that at various pages of cross-examination of Investigation Officer who was examined as PW.11 Hariharan he himself is not clear with respect to identity of accused No.2 and also the take over loan. No doubt a slight confusion might have crept into when the name is looked into in a cursory manner with respect to the names of accused No.2 being called as Gunde Gowda B and also Gundaiah and another account standing in the name of Gundappa. However the account opening form and KYC details 72 Spl.C.C.No.24/2016 which were furnished to the Bank authorities at an undisputed point of time at Ex.P.57 and Ex.P.59 would clearly indicate that Gundappa was S/o Kale Gowda and whereas B.Gunde Gowda @ Gundaiah was S/o Boregowda. All these documents would be sufficient to create a serious doubt about case of the prosecution and the manner in which the investigation is being conducted.
38. The conspiracy of accused persons sharing a guilty mind and also proceeding in furtherance of criminal conspiracy is to be ascertained on the basis of the materials which have been produced before the court. During the course of cross- examination of PW.4 Gopi Srinivas Challa who was the Chief Manager (Vigilance) Zonal Office, Hyderabad and he had conducted a surprise inspection in the year 2013 is to be considered. The contention of the said witness was that the sanctioning procedure was in complete and also the circulars were not adhered to as it was required to be done. He has deposed that after completion of the inspection he had furnished the report at Ex.P.22 and has discussed about the irregularities with respect to the accounts of various persons 73 Spl.C.C.No.24/2016 who have not been arrayed as accused in the present i.e. of B.Gangadhar, K.K. Silks and Sarees, Kishore G Pandit, G.S.Yogeshwari and Anil Kumar. Though they might have committed some wrong and even if it is to be accepted that there were irregularities committed by accused No.1 with respect to the said loan accounts, the entire evidence of PW.4 will not be of much help in the instant case to prove the guilt of the accused since no where he has commented upon the irregularities found in the account of present accused No.2 B Gunde Gowda. However the court itself has verified the document which was marked as Ex.P.22 of which the original was produced in another connected case wherein the present accused No.1 is arrayed as accused along with other account holders. On appreciating the entire documents at Ex.P.22 it is once again noticed that the irregularities of present accused No.2 Gunde Gowda has not been mentioned. However the prosecution has later on examined another witness i.e. PW.5 M.Murugeshan who was also working as Chief Manager, Vigilance at Regional Office, Central Bank of India wherein he was advised on 27.02.2015 to conduct inspection of Kodigehalli 74 Spl.C.C.No.24/2016 Branch where some irregularities had occurred in sanctioning of advances by the then Branch Manager, Accused No.1 Chittaranjan Das. Accordingly, he has furnished the report at Ex.P.23. In his chief evidence he has specifically deposed that the OD account was enhanced to Rs.90 lakhs on 19.12.2012 within 5 months it was enhanced without obtaining any financial propositions and the Assets and Liabilities of guarantor Gundappa was not obtained. Further with respect to the guarantor Gundappa a term loan i.e. vehicle loan of Rs.5 lakhs was sanctioned on 16.01.2013 without obtaining the bills, receipts, B Register extract and also the RC copy. It has also been stated that the CIBIL was generated on 06.07.2013 and on the basis of the above inspection he has observed that Bank might incur a loss of Rs.20.24 Crores. During the course of cross-examination he was specifically confronted with the account number of Gundappa which he has admitted and also he has admitted that the said loan was sanctioned by Central Credit Processing Center and not by accused No.1. Further he has deposed that the OD facility which was sanctioned to accused No.2 Gunde Gowda was under Cent Sahayog Scheme 75 Spl.C.C.No.24/2016 for which no collateral security was required. However he has specifically admitted that the Branch Manager has taken security of property from Gundappa. With this background once again the authority which has been relied upon by the learned PP in the aforesaid case of R.Venkatkrishnan Vs CBI is to be looked into. In the said authority the learned PP has stressed upon the findings of Hon'ble Apex Court with respect to commission of offence under Sec.409 of IPC as per the following extract Para No.146 which reads as:
146. However, Sections 407 to 409 make special provisions for various cases in which property is entrusted to the enumerated categories of persons who commit the offence. Criminal breach of trust by a public servant is dealt with under Section 409:
"409. Criminal breach of trust by public servant, or by banker, merchant or agent.-- Whoever, being in any manner entrusted with property or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine."76
Spl.C.C.No.24/2016 This section classes together public servants, bankers, merchants, factors, brokers, attorneys and agents. The duties of such persons are of a highly confidential character, involving great powers of control, over the property entrusted to them and a breach of trust by such persons may often induce serious public and private calamity. High morality is expected of these persons. They are to discharge their duties honestly. The following are the essential ingredients of the offence under this section:
(1) The accused must be a public servant; (2) He must have been entrusted, in such capacity with the property;
(3) He must have committed breach of trust in respect of such property.
39. In the said authority the Hon'ble Apex Court has specifically held that high morality is expected of the said persons who are discharging their public duty. Even in that case several transactions had taken place in the Bank and they were several incidences wherein a question mark with respect to the conduct and knowledge of the Bank officials were raised and in the said case the Hon'ble Apex Court has held that serious duties are casted upon the public servant and also he has to discharge with it higher morality. When the said fact is applied to the case on hand somewhere the submissions made 77 Spl.C.C.No.24/2016 by the Learned Senior counsel Sri. P.P.Hegde seems to be attractive and plausible that the accused No.1 Chittaranjan Das acted diligently and it has been argued by the learned Senior Counsel that even though it was not required to obtain collateral security of Gundappa under Cent Sahayog Scheme he had obtained the same. When this particular aspect is once again considered with the observations with respect to the deviations that the Accused No.1 had not obtained LSR report pertaining to the property which was produced as security and latest EC was not obtained seems to be of not much importance and also the circular at Ex.P.8 which clearly laid down guidelines with respect to sanctioning advances under various schemes clearly reflects that there was no necessity to obtain collateral security. The court has also considered the report furnished by PW.5 at Ex.P.23 wherein an inspection was carried out by him and several irregularities were noted down. The witness who appeared before the court had observed with respect to the account of accused No.2 B.Gunde Gowda in account No.3224590797 that the OD limit was enhanced without obtaining any financial propositions and also financial 78 Spl.C.C.No.24/2016 report was not prepared and sufficient work orders and POA were not registered with the Government department. Apart from that guarantor photographs and CIBIL was generated after sanctioning of loan was discussed. With respect to the guarantor it was mentioned that Cent Vehicle Scheme was approved and no bill, receipts, B extract from RTO, duplicate key were obtained and entire process was done by accused No.1 Chittaranjan Das himself. If the said audit report at Ex.P.23 is to be accepted, then once again the evidence of PW.5 is at variance at the contentions of the prosecution case, since he himself has admitted that the loan account of Gundappa with No. 3230927054 was sanctioned by Central Credit Processing Center and not by Accused No.1 and once again at the cost of repetition, it is relevant to note that even Gundappa was having a loan account at Central Bank of India and if so, then how the evidence of Investigating Officer consistently that Gundappa and B. Gunde Gowda @ Gundiaha can be justified. In that event, how accused No.1 can be held liable for sanctioning of the loan is required to be explained by the prosecution. The golden Rule of Law which runs through the 79 Spl.C.C.No.24/2016 criminal jurisprudence clearly indicates that however grave may be the suspicion the same cannot be a ground for the purpose of conviction. Further with respect to error in considering the loan by Accused No.1 and also the deviations which was observed in the audit report would constitute criminal misconduct is required to be considered. In the above case as already discussed at the cost of repetition, the fact that the question of criminal conspiracy is to be considered as an independent offence and also the prosecution has to successfully prove the meeting of minds and also the act of accused persons in furtherance of their criminal conspiracy. In this regard the court has relied upon the judgment of the Hon'ble Apex court reported in (2009)8 SCC 617 (State of M.P. v. Sheetla Sahai) wherein it is held as:
37. Criminal conspiracy is an independent offence. It is punishable separately.
Prosecution, therefore, for the purpose of bringing the charge of criminal conspiracy read with the aforementioned provisions of the Prevention of Corruption Act was required to establish the offence by applying the same legal principles which are otherwise applicable for the purpose of bringing a criminal misconduct on the part of an accused.
80
Spl.C.C.No.24/2016
38. A criminal conspiracy must be put to action inasmuch as so long a crime is generated in the mind of an accused, it does not become punishable. What is necessary is not thoughts, which may even be criminal in character, often involuntary, but offence would be said to have been committed thereunder only when that take concrete shape of an agreement to do or cause to be done an illegal act or an act which although not illegal by illegal means and then if nothing further is done the agreement would give rise to a criminal conspiracy. Its ingredients are:
(i) an agreement between two or more persons;
(ii) an agreement must relate to doing or causing to be done either (a) an illegal act; or
(b) an act which is not illegal in itself but is done by illegal means.
39. What is, therefore, necessary is to show meeting of minds of two or more persons for doing or causing to be done an illegal act or an act by illegal means. While saying so, we are not oblivious of the fact that often conspiracy is hatched in secrecy and for proving the said offence substantial direct evidence may not be possible to be obtained. An offence of criminal conspiracy can also be proved by circumstantial evidence.
46. In Inspector Prem Chand v. Govt. of NCT of Delhi [(2007) 4 SCC 566 : (2007) 2 SCC (L&S) 58 : 2007 AIR SCW 2532] this Court observed: (SCC pp. 570-71, paras 10-11) 81 Spl.C.C.No.24/2016 "10. In State of Punjab v. Ram Singh [(1992) 4 SCC 54 : 1992 SCC (L&S) 793 : (1992) 21 ATC 435] it was stated: (SCC pp. 57-58, para
5) '5. Misconduct has been defined in Black's Law Dictionary, 6th Edn., at p. 999, thus:
"Misconduct.--A transgression of some established and definite rule of action, a forbidden act, a dereliction from duty, unlawful behavior, willful in character, improper or wrong behavior; its synonyms are misdemeanor, misdeed, misbehavior, delinquency, impropriety, mismanagement, offense, but not negligence or carelessness."
Misconduct in office has been defined as:
"Misconduct in office.--Any unlawful behavior by a public officer in relation to the duties of his office, willful in character. Term embraces acts which the office holder had no right to perform, acts performed improperly, and failure to act in the face of an affirmative duty to act." '
11. In P. Ramanatha Aiyar's Law Lexicon, 3rd Edn., at p. 3027, the term 'misconduct' has been defined as under:
'Misconduct.--The term "misconduct" implies a wrongful intention, and not a mere error of judgment.
*** Misconduct is not necessarily the same thing as conduct involving moral turpitude. The word "misconduct" is a relative term, and has to be construed with reference to the subject-matter and the context wherein the term occurs, having regard to the scope of the 82 Spl.C.C.No.24/2016 Act or statute which is being, construed.
"Misconduct" literally means wrong conduct or improper conduct.' (See also Bharat Petroleum Corpn. Ltd. v. T.K. Raju [(2006) 3 SCC 143 : 2006 SCC (L&S) 480] .)"
As per the dictum, the question which required to be considered is whether the act of Accused No.1 amounts to Misconduct. In the instant case, if the prosecution had established the conduct of Accused No.1 involving moral turpitude, then the same would be looked into for the purpose of ascertaining the criminal conspiracy. Only the fact which is produced by the prosecution before the court is that the Accused No1 had indeed sanctioned take over loan in the name of Accused No.2 Gunde Gowda at The Citizens Co Operative Bank by exceeding his authority. At the cost of repetition, the identity of the persons to whose account the said amount was deposited at The Citizens Co Operative Bank would indicate that it was Gundappa and not Accused No2 and hence the same cannot be termed as take over loan. Further the investigating officer during the course of his cross examination has specifically contended that the Accused No1 had clear 83 Spl.C.C.No.24/2016 knowledge about all the said aspects and he has deposed that if any act is committed with knowledge then the same amounts to illegality. If so, once again the prosecution has to establish about the knowledge of Accused No.1. It is repeatedly discussed in the judgment with respect to take over loan and also the enhancing of the OD facility by the court is for the reason that the factum of criminal conspiracy necessarily requires to be proved on the basis of the circumstances since there cannot be any direct evidence. However in the instant case, no such circumstances are proved and infact the investigation indicates that the IO had tumbled in his very first step of investigation that is with respect to identity and also connecting the deposit of DD into the account of Gundappa at The Citizen Co Operative Bank.
40. On further appreciation of the entire inspection report at Ex.P.23 concludes that in his opinion the likely loss to the Bank was of Rs.20.24 Crores. In that event once again the prosecution and the Investigation Officer have to explain how he had fortified the loss to explain Rs.17.80 lakhs. The initial complaint at Ex.P.6 was lodged against several persons 84 Spl.C.C.No.24/2016 including the present accused No.2 and subsequently separate charge sheet came to be filed against the accused No.2 Gunde Gowda and Chittaranjan Das in the above case. Further the inspection report indicates that the demands which have been made with respect to the other persons and serious deviations were observed but not with respect to the present accused person. It is also relevant to note the evidence of PW.11 S.Hariharan who is the Investigation Officer in the above case wherein he has admitted during the course of his cross- examination that he had not conducted any further auditing of the accounts on receipt of the complaint. That means the prosecution is entirely relying upon Ex.P.22 and Ex.P.23 to arrive at a conclusion that criminal conspiracy was hatched for the purpose of defrauding the public money of the Bank and also no where it is explained that how the Investigation Officer had arrived at a conclusion of forming an opinion with respect to the loss caused to the bank authorities. In this regard once again the court has considered the loan disbursed report at Ex.P.41 the relevant portion which is apt for the case is at Sl. No.18 with respect to the account No.3230927054 and the 85 Spl.C.C.No.24/2016 name of the customer is shown as B.Gunde Gowda. Further the evidence of PW.5 M.Murugeshan who was also the Chief Manager, Vigilance at Regional Office of Central Bank of India has deposed of randomly verifying two accounts pertaining to Gunde Gowda and guarantor Gundappa and has deposed that the OD facility was sanctioned on 19.12.2012. Whereas the document at Ex.P.41 which is loan disbursed report was allegedly scrutinized by the higher officers of the Central Bank of India and in this regard the document at Ex.P.46 which is the visit report of Asst. General Manager clearly indicates of verifying the accounts and also a suggestions being given to the Bank Manager to approach the customers and market the products of the Bank. No doubt the learned PP has argued that the suggestions which was given by the Assistant General Manager was to be construed in a positive manner since he was interested in the growth of the bank in a proper manner. True to the said suggestion, it may be appropriate that the Assistant General Manager being the head would have suggested for the proper growth of the bank and the same does not indicates or directs the Branch Manager to be negligent in 86 Spl.C.C.No.24/2016 discharge of his duty. Once again the fact that why the said document is relevant is for the reasons that the Assistant General Manager's remarks and observations indicate that the performance of the Branch was satisfactory. That apart the document at Ex.P.48 dated 03.04.2013 which was the visit report of Senior Regional Manager also indicates that the branch was doing good business and had added 52 Crores business from 25.06.2011 and was earning profit. At Column No.9 in the said report it was required to observe major irregularities and suggestions for which the Senior Regional Manager/Deputy General Manager has observed that there were no major irregularities. If for a moment it is to be considered that major irregularities was committed by the then Branch Manager, accused No.1 then obviously it should have been noticed by the Regional heads who had verified the accounts. Either the Senior Regional Manager had not cared to look into the details or the prosecution should concede that the irregularities had come to the notice only at the time of auditing or when the accounts were classified as NPA. Once again it is required to be clarified that mere classification of an 87 Spl.C.C.No.24/2016 account as NPA would not indict the Branch Manager, if no misconduct or criminality is attached to his act of sanctioning of the loan. The other report at Ex.P.49 which is also the visit report of Senior Regional Manager indicates of no such irregularities being observed. Once again the surprise inspection and random verification report at Ex.P.22 and also at Ex.P.23 is to be revisited. As per the report at Ex.P.22 and Ex.P.23 the accounts of the accused No.2 was in the first stage of NPA and if at all the surprise inspection and random verification report of Vigilance Officer at Ex.P.22 is to be considered then obviously the visit report of Senior Regional Manager would falsify or in simple words the same could not have been considered as serious irregularities. In this regard the main thrust is to ascertain whether the irregularities were committed with an intention to commit an illegal act and if so what was the repercussion of the said Act. It is also the settled principles of law that the irregularities tainted with the act of illegality and with motive and intention can be considered as an offence. It is also to be settled principles of law that minor irregularities or some sort of deviations cannot be considered 88 Spl.C.C.No.24/2016 as the one which attracts the criminal liability. By pointing out the said observations, the learned Sr. Counsel appearing for the accused Sri. P.P.Hegde has relied upon the Judgment of the Hon'ble Apex Court reported in (1996) 10 SCC 193 (C.Chenga Reddy and others Vs State of Andra Pradesh) wherein it is held as:
22. On a careful consideration of the material on the record, we are of the opinion that though the prosecution has established that the appellants have committed not only codal violations but also irregularities by ignoring various circulars and departmental orders issued from time to time in the matter of allotment or work of jungle clearance on nomination basis and have committed departmental lapse yet, none of the circumstances put together do not lead to the irresistible conclusion that the said circumstances are compatible only with the hypothesis of the guilt of the appellants and wholly incompatible with their innocence. In Abdulla Mohd. Pagarkar Vs State (Union Territory of Goa, Daman and Diu) under somewhat similar circumstances this Court opined that mere disregard of relevant provisions of the Financial Code as well as ordinary norms of procedural behaviour of government officials and contractors, without conclusively establishing, beyond a reasonable doubt, the guilt of the officials and contractors concerned, may give rise to a strong suspicion but that cannot be held to establish the guilt of the accused. The 89 Spl.C.C.No.24/2016 established circumstances in this case also do not establish criminality of the appellants beyond the realm of suspicion and, in our opinion, the approach of the trial court and the High Court to the requirements of proof in relation to a criminal charge was not proper.
That because of the actions of the appellants in breach of codal provisions, instructions and procedural safeguards, the State may have suffered financially, particularly by allotment of work on nomination basis without inviting tenders, but those acts of omission and commission by themselves do not establish the commission of criminal offences alleged against them. We may reiterate that once the report, Ex.P.11, is ruled out of consideration as inadmissible, then it is not safe to rely on the mere impressions of the witnesses to hold the appellants guilty of the offences alleged against them. The prosecution has failed to establish that in 1979-80, no work of jungle clearance in the Gandipalem Project Division was undertaken and that false and fabricated documents were prepared with a view to misappropriate government funds. The prosecution has not even been able to establish that less work of jungle clearance was undertaken but payment was shown to have been made for excessive work and some amount out of the payments made for the work was thus misappropriated by the appellants in connivance with the contractors. The conviction and sentence imposed against the appellants (which had been reduced by the High Court to a token sentence) under the circumstances cannot be sustained and we accordingly accept the appeal and set aside their conviction and 90 Spl.C.C.No.24/2016 sentence. Fine paid by the appellants shall be refunded to them.
37. It appears to us, that influenced by the inadmissible report Ex.P.10, the courts below concluded that the appellants had committed the offence alleged against them. None of the witnesses except PW.8, who as already noticed, was not competent to depose in that behalf before he visited the site only in 1984 and not prior thereto have stated that no work of jungle clearance was done at the site and the allegation with regard to less work having been done is based upon calculations made five years later by PW.8, which does not afford conclusive evidence against the appellants. It is a matter of common sense and even the prosecution witnesses have accepted that it was impossible to know in 1984 whether jungle-clearance work had been carried out and if so to what extent in the year 1979 on the basis of an inspection carried out five years later in the year 1984. The maximum that can be said against the appellants is that they committed some indiscretion in the matter of allotment of jungle-clearance work preparation of estimates, drawing up of the agreements and making payments. These acts of omission and commission do give rise to a strong suspicion that the appellants so acted with a view to misappropriate government funds but suspicion, howsoever strong, cannot take the place of proof. The prosecution has in our opinion failed to establish the case against the appellants beyond a reasonable doubt. The conviction and sentence imposed upon the appellants, 91 Spl.C.C.No.24/2016 under the circumstances, cannot be sustained and we accordingly accept the appeal and set aside their conviction and sentence. Fine shall be refunded to the appellants.
52. The above statement of PW 17, when considered in the light of the inspection report of the Chief Engineer dated 29.7.1979, shows that jungle clearance work was being done in 1979-80, PW 21 a resident of Rajapulan who has his tailoring shop situate on the left bank of Kodavalur tank for the last about 12-13 years deposed at the trial that about 8-9 years ago he had seen some officials getting jungle cleared on the banks of that channel by engaging coolies. The evidence of this witness, thus, also shows that jungle clearance work was being done at the site in question in 1979-80 and to that extent PW 21 corroborates the testimony of Assistant Engineer P 17. It is nobody's case that jungle clearance work was done in 1979-80 through departmental laskars and, therefore, the legitimate inference to be drawn from the evidence of PW 21 is that jungle clearance work was being done at the site in 1979-80 through the appellant. PW 18 is a bus conductor, He has a hut on the Northern bank of the channel since 1977.
According to him villagers used to cut and take away Karratumma plants growing on the channel banks. He denied any knowledge as to whether contractors of the PWD department had cleared Karratumma plants growing on the banks of Kodavalur tank supply channel during 1979-80. As against this material, is the evidence of PW 8 92 Spl.C.C.No.24/2016 who visited the site in 1984 and stated in his report that no work of jungle clearance had been done in 1979 as there was growth of juliflora at the site when he visited it. Finding the growth of Juliflora in 1984 could not lead to an irresistible conclusion that the jungle had not been cleared in 1.1979-80. In this connection, the evidence of PW 11 has significance. This witness admitted during his cross-examination that juliflora grows rather fast and is a wild growth. It could not have stopped growing between 1979 and 1984, Since, the prosecution witnesses PW 17 and 21 have admitted that in 1979-80, work of clearance of juliflora jungle was being done at the site and it is no body's case that it was being done departmentally, the conclusion is irresistible that the same, had been done through the agency of the appellant and the charge of conspiracy must fail. There have been some irregularities committed in the matter of allotment of work to the appellant or breach of codal provisions, circulars and departmental instructions, for preparation of estimates etc. and those irregularities give rise to a strong suspicion in regard to the bonafides of the officials of the department and their link with the appellant, but that suspicion cannot be a substitute of proof. The courts below appear to have drawn inferences by placing the burden of proving innocence on the appellant which is an impermissible course. In our opinion none of the circumstances relied upon by the prosecution against the appellant can be said to have been proved satisfactorily and all those circumstances, which are not of any clinching nature, even if held to be proved do not complete the chain of evidence so complete as to lead to an irresistible 93 Spl.C.C.No.24/2016 conclusion consistent only with the hypothesis of the guilt of the appellant and wholly inconsistent with his innocence. The prosecution has not established the case against the appellant beyond a reasonable doubt. This appeal, there-fore, succeeds and is allowed. The conviction and sentence of the appellant is hereby set aside. Fine, if paid by the appellant shall be refunded to him. The appellant is on bail. His bail bonds shall stand discharged.
The said aspect was clearly discussed by the Hon'ble Apex court in another judgment reported in (1980)3 SCC 110 (Abdulla Mohd. Pagarkar v. State) wherein it is held as:
19. Now this is hardly a proper approach to the requirements of proof in relation to a criminal charge. The onus of proof of the existence of every ingredient of the charge always rests on the prosecution and never shifts. It was incumbent therefore on the State to brief out, beyond all reasonable doubt, that the number of labourers actually employed in carrying out the work was less than that stated in the summaries appended to the bills paid for by the Government. It is true that the total number of labourers working on a single day has been put by the prosecution witnesses mentioned above at 200 or less, while according to the summaries appended to the bills it varied on an average from 370 to 756. But then is it safe to rely on the mere impression of the 94 Spl.C.C.No.24/2016 prosecution witnesses, testified too long after the work had been executed, about the actual number of labourers employed from time to time? The answer must obviously be in the negative and the justification for this answer is furnished by the variation in the number of labour employed from witness to witness.
24. Learned counsel for the State sought to buttress the evidence which we have just above discussed with the findings recorded by the learned Special Judge and detailed as Items (a) to (e) in para 9 and Items (i) and (iii) in para 10 of this judgment. Those findings were affirmed by the learned Judicial Commissioner and we are clearly of the opinion, for reasons which need not be restated here, that they were correctly arrived at. But those findings merely make out that the appellants proceeded to execute the work in flagrant disregard of the relevant rules of the G.F.R. and even of ordinary norms of procedural behaviour of government officials and contractors in the matter of execution of works undertaken by the Government. Such disregard however has not been shown to us to amount to any of the offences of which the appellants have been convicted. The said findings no doubt make the suspicion to which we have above adverted still stronger but that is where the matter rests and it cannot be said that any of the ingredients of the charge have been made out.
41. The said authority is aptly applicable to the case on hand since this case also the Hon'ble Apex Court was pleased 95 Spl.C.C.No.24/2016 to observe that the nodal violations which was committed by ignoring various circulars and departmental orders from time to time in the matter of allotment of work would have resulted in departmental lapse but no dishonest intention on the part of the accused was proved. When the said facts is applied to the case on hand, the prosecution should have established that the accused No.1 had entertained a dishonest intention and in furtherance of the same he had conspired with accused No.2 and as such a loss had incurred to the branch. However, as already discussed supra, the witnesses who had appeared before the court are the employees of the Central Bank of India, who had audited the accounts of accused No.2 and also loan disbursed by accused No.1 has specifically deposed that the irregularities can be rectified by the Branch Managers and their successors in the event of the transfer of the said Branch Manager. In the case of hand, as noticed the accused No.1 was transferred in the year 2015 and subsequently the accounts had attained the status of NPA and there afterwards an enquiry was conducted with respect to the accounts which had attained the status of NPA. However, during the course of evidence it 96 Spl.C.C.No.24/2016 was elucidated that no security was required under Cent Sahayog Scheme. However the accused No.1 had obtained the security of guarantor Gundappa. Even for the sake of arguments if it is argued that intentionally Gundappa was roped in as guarantor since the loan standing in the name of Gundappa at Citizen Co-operative Bank to the extent of Rs.17.80 lakhs can be cleared, then also the prosecution case fails as it would be evident that it was not a take over loan. At the cost of repetition, the prosecution case mainly contends that the loan on Citizen Co-operative bank was a take over loan and it was also availed by the accused No.2 himself. However as discussed supra, the materials indicates that the guarantor Gundappa and B.Gunde Gowda @ Gundaiah were entirely different. Even to the said question put to accused during the course of recording his 313 statement which is at question No.79 he has specifically answered that B.Gundaiah and B.Gunde Gowda are same and to the question No.80 with respect to the evidence of PW.10 he has deposed that Gundappa was the father-in-law of B.Gundaiah @ Gunde Gowda and to question No.91, he has specifically deposed that 97 Spl.C.C.No.24/2016 it was not a take over loan. All these aspects would indicate that there was no dishonest intention with respect to sanctioning of OD facility to accused No.2 by accused No.1.
The sole question once again which requires to be considered is whether the deviations can be considered a mere irregularity or an irregularities which requires to be considered as an illegality. In this regard the judgment of the Hon'ble High Court of Karnataka which is relied upon by learned Senior Counsel for accused act obscruptancely similar situation in Crl. Appeal No. 780/2007 in the case of C.V. Krishnamurthy V/s Superintendent, CBI, Bengaluru dated 14.11.2018 along with connected matter a similar question was posed and the Hon'ble High Court of Karnataka in the said Judgment has held as:
31. If an assessment of evidence is made, what surfaces is violation of banking norms or regulations, that's why the witnesses have spoken that 'irregularities' were noticed. It is not as though these irregularities were not within the knowledge of controlling authority.
PW2 does not appear to be firm in his stand;
rather from his answers, it is possible to draw an inference that some how he does not want to admit the suggestions given to him by defence counsel. From his evasive answers, it is possible to infer that he wanted to suppress something he knew and 98 Spl.C.C.No.24/2016 the probability of truth in the suggestions given to him. The evidence of PW3 gives a clear picture about target being fixed for Pattadur branch and that accused no.2 was known to every official of Pattadur branch. The evidence adduced by PW6 also shows mere irregularity and taking ignorance to a suggestion does not make him truthful witness. Evidence of PW8 does not disclose anything more than mere irregularities. It is quite strange that PW8 did not find it necessary to visit the branch to ascertain about the truth before lodging complaint with CBI. PW10 has given conflicting answers with regard to report to be made in relation to cheque purchase transaction and therefore absolute reliance cannot be placed on his evidence. The evidence of PW-7 requires a special comment here for, he was the authority who accorded sanction for criminal prosecution. It is necessary that the authority according sanction should have prima-facie satisfaction from the materials placed before him that there are materials for prosecuting a public servant. But one answer of PW7 that has been referred to above clearly shows that he too was not convinced about irregularities taking the shape of offence and bank suffering loss owing to these irregularities. He is not definite about intention on the part of first accused to defraud the bank. If evidence given by PW-15 is assessed, it can very well be said that his investigation appears31. If an assessment of evidence is made, what surfaces is violation of banking norms or regulations, that's why the witnesses have spoken that 'irregularities' were noticed. It is not as though these irregularities were not within the knowledge of controlling authority. PW2 99 Spl.C.C.No.24/2016 does not appear to be firm in his stand;
rather from his answers, it is possible to draw an inference that some how he does not want to admit the suggestions given to him by defence counsel. From his evasive answers, it is possible to infer that he wanted to suppress something he knew and the probability of truth in the suggestions given to him. The evidence of PW3 gives a clear picture about target being fixed for Pattadur branch and that accused no.2 was known to every official of Pattadur branch. The evidence adduced by PW6 also shows mere irregularity and taking ignorance to a suggestion does not make him truthful witness. Evidence of PW8 does not disclose anything more than mere irregularities. It is quite strange that PW8 did not find it necessary to visit the branch to ascertain about the truth before lodging complaint with CBI. PW10 has given conflicting answers with regard to report to be made in relation to cheque purchase transaction and therefore absolute reliance cannot be placed on his evidence. The evidence of PW-7 requires a special comment here for, he was the authority who accorded sanction for criminal prosecution. It is necessary that the authority according sanction should have prima-facie satisfaction from the materials placed before him that there are materials for prosecuting a public servant. But one answer of PW7 that has been referred to above clearly shows that he too was not convinced about irregularities taking the shape of offence and bank suffering loss owing to these irregularities. He is not definite about intention on the part of first accused to defraud the bank. If evidence given by PW-15 is assessed, it can very well be said that his 100 Spl.C.C.No.24/2016 investigation appears to be total perfunctory. He did not visit the branch to ascertain the truth, which was very essential. His evidence does not indicate trivial lapses in investigation that can be ignored, but rather shows total non-application of mind to the evidence collected by him. It is not enough if an investigation officer rhetorically proceeds to file charge sheet; but before filing charge sheet he is duty bound to apply his mind to decipher whether the evidence collected by him indicates an offence being committed so that the accused can be prosecuted. The investigator is a trained person capable of distinguishing between an act amounting and not amounting to an offence. This kind of application of mind is not forthcoming from the evidence of PW-15.
32.1. In the case of Sudhir Shantilal Mehta (supra), it is held that an act of omission or commission on the part of any authority of the bank would amount to acting in violation of any direction of law and that a direction of law need not be a law made by a Parliament. It may be made by an authority having the power, and it could be a subordinate legislation also. It is further held in para 69 that a mere error of judgment would not attract the penal provision, and the materials brought on record by the parties must be judged keeping in view the aforesaid legal position.
42. In the said decisions, the Hon'ble High Court of Karnataka has clearly culled out the correct proposition of law and has held that the irregularities cannot be considered as an 101 Spl.C.C.No.24/2016 illegality though there was some sort of deviation. Under the circumstances, it is crystal clear that the prosecution has utterly failed to prove the fact that there were a criminal conspiracy being entertained by accused No.1 and 2 with respect to commission of offence.
43. Now the court has to consider the charge which has been framed with respect to Sec.409 of IPC. The prosecution has to establish the basic fact that the public servant who is the bank employee herein was entrusted with property and in order to prove the offence under section 409 of IPC the ingredients mentioned under section 405 of IPC are sine qua non for making out the offence. Hence it would be profitable to extract the provisions of section 405 of IPC for the sake of convenience which reads as:
Sec.405. Criminal breach of trust.--Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode 102 Spl.C.C.No.24/2016 in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits "criminal breach of trust".
What could be deduced from the above section applicable to the above case is as follows:
(i) Entrusting any person with property or with any dominion over property;
(ii) That person has dishonestly mis-
appropriated or converted that property to his own use;
(iii) Or that person dishonestly using or disposing of that property or wilfully suffering any other person so to do in violation of any direction of law or a legal contract.
44. When the said postulates are carefully considered it is relevant to note that the important aspect which is required to be considered is the word ' dishonestly' which clearly includes the concept of mens rea. Hence the prosecution has to establish firstly that the Accused persons entertained mens rea and the other significant fact is the act of the accused person in mis appropriating 103 Spl.C.C.No.24/2016 the property so entrusted. When both the above said ingredients are proved successfully by the prosecution only then the Accused can be convicted for the afore said offence. Hence the court has to consider what the property so entrusted was. The Accused No.1 was admittedly, the public servant and there is not much dispute in this regard and only contention which can be deciphered from the charge sheet as well as the case of the prosecution is that he is said to have meddled with public money by enhancing the OD facility and also accepting the property which was already mortgaged with The Citizen's Co Operative Bank. That whether the act of accused in view of his criminal conspiracy with accused No.2 had accepted the property which was offered as security to the previous loan granted by the Citizen Co-operative Bank which would be an offence u/s.409 of IPC. As already discussed when the loan amount pertaining to Gunde Gowda was not a take over loan from Citizen Co-operative Bank, the 104 Spl.C.C.No.24/2016 question of accepting the property which was not at all related to this case would be appropriate fact. Once again for the purpose of clarity the inspection report at Ex.P.23 is to be considered. Ex.P.23 indicates that the observations were made by the concerned officer i.e. PW.5 M.Murugeshan who has deposed of conducting the audit as on 27.02.2015 has deposed of observing certain irregularities. In his chief-examination he has deposed that the assets and liabilities of guarantor Gundappa was not obtained. If that is the case once again it cannot be contrary to the contentions of prosecution that the property of Gunde gowda which was already mortgaged with the Citizen Co-operative Bank was taken as security for the purpose of enhancing the OD limit. Even in the enquiry report at Ex.P.53 the account Number of Gunde gowda which is an OD account with No.3224590797 indicates that the limit was Rs.90 lakhs was sanctioned on 19.12.2012 and it was commented that the assets and 105 Spl.C.C.No.24/2016 liabilities of borrower and guarantor was not obtained and also letter of continuity OD agreement not obtained, CIBIL was generated after sanctioning of the loan. Immediately after the said observations the account of Gundappa with No.3230927054 was also discussed and no where it was stated that Gundappa had offered his property as security to the loan of accused No.2 Gunde gowda. All that it was narrated was that it has to be read together with the OD account of Gunde Gowda and he had obtained the loan to an extent of Rs. 5 lakhs and it was sanctioned by the Central Credit Processing Center. It would clearly indicate that the report of PW.5 and PW.6 at Ex.P.23 and Ex.P.24 does not specifically indicate the commission of offence by accused No.1. Hence it is clear that the prosecution has failed to establish the question of mens rea in the very first step itself. No doubt the learned PP in her marathon arguments has submitted that the documents pertaining to OD account were left unfilled and also obtaining of 106 Spl.C.C.No.24/2016 CIBIL report subsequently, would indicate the existence of mens rea, the same in the opinion of the court cannot be extended to hold that the said act amounted to guilty intention on the part of the accused. No doubt the same raises serious suspicion, the law is well settled that the same cannot be a ground for conviction or it cannot be taken as conclusive proof. In this regard the judgment of the Hon'ble Apex Court relied upon by the Learned counsel for accused reported in (2013) 12 SCC 406 (Sujit Biswas Vs State of Assam) wherein it has been held as:
13. Suspicion, however grave it may be, cannot take the place of proof, and there is a large difference between something that `may be' proved, and something that `will be proved'. In a criminal trial, suspicion no matter how strong, cannot and must not be permitted to take place of proof. This is for the reason that the mental distance between "may be" and "must be" is quite large, and divides vague conjectures from sure conclusions. In a criminal case, the court has a duty to ensure that mere conjectures or suspicion do not take the place of legal proof.
The large distance between `may be true and `must be true, must be covered by way of clear, cogent and unimpeachable evidence 107 Spl.C.C.No.24/2016 produced by the prosecution, before an accused is condemned as a convict, and the basic and golden rule must be applied. In such cases, while keeping in mind the distance between `may be t. Suspicion, however grave it may be, cannot take the place of proof, and there is a large difference between something that `may be proved, and something that `will be proved. In a criminal trial, suspicion no matter how strong, cannot and must not be permitted to take place of proof. This is for the reason that the mental distance between `may be and `must be is quite large, and divides vague conjectures from sure conclusions. In a criminal case, the court has a duty to ensure that mere conjectures or suspicion do not take the place of legal proof. The large distance between `may be true and `must be true, must be covered by way of clear, cogent and unimpeachable evidence produced by the prosecution, before an accused is condemned as a convict, and the basic and golden rule must be applied. In such cases, while keeping in mind the distance between `may be true and `must be true, the court must maintain the vital distance between mere conjectures and sure conclusions to be arrived at, on the touchstone of dispassionate judicial scrutiny, based upon a complete and comprehensive appreciation of all features of the case, as well as the quality and credibility of the evidence brought on record. The court must ensure, that miscarriage of justice is avoided, and if the facts and circumstances of a case so demand, then the benefit of doubt must be given to the accused, keeping in mind that a reasonable doubt is not an imaginary, trivial or a merely probable doubt, but a fair doubt 108 Spl.C.C.No.24/2016 that is based upon reason and common sense. (Vide: Hanumant Govind Nargundkar & Anr. v. State of M.P., AIR 1952 SC 343;
State through CBI v. Mahender Singh Dahiya, AIR 2011 SC 1017; and Ramesh Harijan v. State of U.P., ).
14. In Kali Ram v. State of Himachal Pradesh, AIR 1973 SC 2773, this Court observed as under:
"25.Another golden thread which runs through the web of the 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 adopted. This principle has a special relevance in cases where in the guilt of the accused is sought to be established by circumstantial evidence."
15. In Sharad Birdhichand Sarda v.
State of Maharashtra, AIR 1984 SC 1622, this Court held as under:
"153. (2) the facts so established should be consistent only with the hypothesis of the guilt of the accused. There should not be explainable on any other hypothesis except that the accused is guilty.
(3) the circumstances should be of a conclusive nature and tendency.
(4) there must be a chain of evidence so complete as not to leave any reasonable ground for the conclusion consistent with the innocence of the accused 109 Spl.C.C.No.24/2016 and must show that in all human probability the act must have been done by the accused."
16. In M.G. Agarwal v. State of Maharashtra, this Court held, that if the circumstances proved in a case are consistent either with the innocence of the accused, or with his guilt, then the accused is entitled to the benefit of doubt. When it is held that a certain fact has been proved, then the question that arises is whether such a fact leads to the inference of guilt on the part of the accused person or not, and in dealing with this aspect of the problem, benefit of doubt must be given to the accused, and a final inference of guilt against him must be drawn only if the proved fact is wholly inconsistent with the innocence of the accused, and is entirely consistent with his guilt.
17. Similarly, in Sharad Birdhichand Sarda (Supra), this Court held as under:
Graver the crime, greater should be the standard of proof. An accused may appear to be guilty on the basis of suspicion but that cannot amount to legal proof. When on the evidence two possibilities are available or open, one which goes in the favour of the prosecution and the other benefits an accused, the accused is undoubtedly entitled to the benefit of doubt. The principle has special relevance where the guilt or the accused is sought to be established by circumstantial evidence.
18. Thus, in view of the above, the Court must consider a case of circumstantial 110 Spl.C.C.No.24/2016 evidence in light of the aforesaid settled legal propositions. In a case of circumstantial evidence, the judgment remains essentially inferential. Inferences are drawn from established facts, as the circumstances lead to particular inferences. The Court must draw an inference with respect to whether the chain of circumstances is complete, and when the circumstances therein are collectively considered, the same must lead only to the irresistible conclusion, that the accused alone is the perpetrator of the crime in question. All the circumstances so established must be of a conclusive nature, and insistent only with the hypothesis of the guilt of the accused.
19. This Court in Babu v. State of Kerala, has dealt with the doctrine of innocence elaborately, and held as under:
"27. Every accused is presumed to be innocent unless the guilt is proved. The presumption of innocence is a human right. However, subject to the statutory exceptions, the said principle forms the basis of criminal jurisprudence. For this purpose, the nature of the offence, its seriousness and gravity thereof has to be taken into consideration. The courts must be on guard to see that merely on the application of the presumption, the same may not lead to any injustice or mistaken conviction. Statutes like the Negotiable Instruments Act, 1881; the Prevention of Corruption Act, 1988; and the Terrorist and Disruptive Activities (Prevention) Act, 1987, provide for presumption of guilt if the circumstances provided in those statutes are found to be fulfilled and shift the burden of proof of 111 Spl.C.C.No.24/2016 innocence on the accused. However, such a presumption can also be raised only when certain foundational facts are established by the prosecution. There may be difficulty in proving a negative fact.
28. However, in cases where the statute does not provide for the burden of proof on the accused, it always lies on the prosecution. It is only in exceptional circumstances, such as those of statutes as referred to hereinabove, that the burden of proof is on the accused. The statutory provision even for a presumption of guilt of the accused under a particular statute must meet the tests of reasonableness and liberty enshrined in Articles 14 and 21 of the Constitution".
45. In the said Judgment the Hon'ble Apex Court has clearly held that it is the duty of the court to ensure that the mere conjunctures or suspicion cannot take place of legal proof. Even in this case every where it has been deposed as only committing of irregularity, however, no where it is noticed that manner in which the specific role played by the Accused No.1 attracting the provisions of section 409 of IPC is explained. How the ingredients of section 409 of IPC is required to be proved and the degree of proof which is casted upon the prosecution has been succinctly dealt by the Hon'ble Apex court in the judgment rendered in 2021 SCC Online SC1232( 112 Spl.C.C.No.24/2016 N. Raghavender V/s State of Andhra Pradesh, CBI) wherein it is held as:
Section 409 IPC pertains to criminal breach of trust by a public servant or a banker, in respect of the property entrusted to him. The onus is on the prosecution to prove that the accused, a public servant or a banker was entrusted with the property which he is duly bound to account for and that he has committed criminal breach of trust. (See : Sadupati Nageswara Rao v. State of Andhra Pradesh9).
42. The entrustment of public property and dishonest misappropriation or use thereof in the manner illustrated under Section 405 are a sine qua non for making an offence punishable under Section 409 IPC. The expression 'criminal breach of trust' is defined under Section 405 IPC which provides, inter alia, that whoever being in any manner entrusted with property or with any dominion over a property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property contrary to law, or in violation of any law prescribing the mode in which such trust is to be discharged, or contravenes any legal contract, express or implied, etc. shall be held to have committed criminal breach of trust. Hence, to attract Section 405 IPC, the following ingredients must be satisfied:
(i) Entrusting any person with property or with any dominion over property;113
Spl.C.C.No.24/2016
(ii) That person has dishonestly mis-
appropriated or converted that property to his own use;
(iii) Or that person dishonestly using or disposing of that property or wilfully suffering any other person so to do in violation of any direction of law or a legal contract.
43. It ought to be noted that the crucial word used in Section 405 IPC is 'dishonestly' and therefore, it pre-supposes the existence of mens rea. In other words, mere retention of property entrusted to a person without any misappropriation cannot fall within the ambit of criminal breach of trust. Unless there is some actual use by the accused in violation of law or contract, coupled with dishonest intention, there is no criminal breach of trust. The second significant expression is 'mis- appropriates' which means improperly setting apart for ones use and to the exclusion of the owner.
44. No sooner are the two fundamental ingredients of 'criminal breach of trust' within the meaning of Section 405 IPC proved, and if such criminal breach is caused by a public servant or a banker, merchant or agent, the said offence of criminal breach of trust is punishable under Section 409 IPC, for which it is essential to prove that:
(i) The accused must be a public servant or a banker, merchant or agent;
(ii) He/She must have been entrusted, in such capacity, with property; and
(iii) He/She must have committed breach of trust in respect of such property.114
Spl.C.C.No.24/2016
45. Accordingly, unless it is proved that the accused, a public servant or a banker etc. was 'entrusted' with the property which he is duty bound to account for and that such a person has committed criminal breach of trust, Section 409 IPC may not be attracted. 'Entrustment of property' is a wide and generic expression. While the initial onus lies on the prosecution to show that the property in question was 'entrusted' to the accused, it is not necessary to prove further, the actual mode of entrustment of the property or misappropriation thereof. Where the 'entrustment' is admitted by the accused or has been established by the prosecution, the burden then shifts on the accused to prove that the obligation vis-à-vis the entrusted property was carried out in a legally and contractually acceptable manner.
When the ratio is applied to the case on hand and by looking into the evidence which has been led before the court, it is required to revisit the evidence of PW.5 wherein it would clearly indicate that there was no necessity to obtain collateral security under Cent Sahayog Scheme and the said suggestions has been admitted by the witness. Further the evidence of PW.5, PW.6 is also not indicative of the fact of the exact loss which has been caused to the bank. The charge which has been framed against accused No.1 is with respect to criminal 115 Spl.C.C.No.24/2016 breach of trust causing a loss to the Bank no where the prosecution is able to establish that how the fact of loss to an extent of Rs.50.14 lakhs is proved by them. In the above case the Investigation Officer PW.11 S.Hariharan has deposed that accused No.1 had sanctioned loan to accused No.2 beyond his powers and caused loss of Rs.50.14 lakhs and accordingly he had filed the charge sheet. No doubt the charge sheet also indicates of causing loss to an extent of Rs.50.14 lakhs. However, the main aspect would be ascertaining how the said figure was obtained by the Investigation Officer. The other aspect which is also required to be considered is whether the classification of account as NPA can be the one to arrive at a conclusion of loss caused to the Bank. During the course of cross examination it is noticed that the Investigating officer has admitted that he had verified only NPA accounts and certain persons were dropped since their amount was settled. If the said evidence is accepted then the submission of the learned Senior Counsel that the charge sheet cannot be filed against NPA accounts would be vindicated. Under the circumstances, the act of accused with respect to commission of offence under 116 Spl.C.C.No.24/2016 Sec.409 of IPC is also not established. Accordingly, Points Nos.2 to 4 is answered in Negative.
46. Point No.5 : Now with respect to the allegations of Sec.13(2) r/w 13 (1)(c)and (d) of Prevention of Corruption Act 1988, the main allegation as noticed above is leveled against accused No.1 that he being the public servant had committed a criminal mis-conduct as he had dishonestly and fraudulently misappropriated or otherwise conferred the property entrusted to him by allowing the other person to do so and as per Sec. 13(d) the relevant portion which is applicable is extracted for the sake of convenience which reads as Sec.13 (1)(d)(ii) and (iii).
(ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage ; or
(iii) while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest;
47. When the said aspect is carefully appreciated and deduced to the case on hand, there is no dispute with respect 117 Spl.C.C.No.24/2016 to the fact that the accused No.1 was the Branch Manager of Kodigehalli branch at the relevant point of time and he was the public servant discharging duty by acting as a Branch Manager of Central Bank of India. The other aspect which requires to be appreciated is whether the allegations which are leveled against him are sufficient to hold that he had committed criminal mis-conduct by dishonestly misappropriating the property entrusted to him under his control as a public servant. This particular charge has to be considered with the evidence of PW.11 i.e. the Investigation Officer S.Hariharan who explaining the basis for filing the charge sheet under Sec.13 of the Prevention of Corruption Act. In his evidence at Para No.8 he has specifically deposed that the accused No.1 had sanctioned loan beyond his financial powers and concealing the said facts in the process notes. It is also his contention that the loan of accused No.2 was a take over loan, but accused No.1 had concealed the said fact in process note and sanctioned the loan for which he was not otherwise competent and he had diverted the funds for the purposes other than for which it was sanctioned by single handedly 118 Spl.C.C.No.24/2016 processing the entire loan transaction against mandatory two officers, the same attracted the provision of the Prevention of Corruption Act. It is also been alleged that no work orders were obtained from accused No.2 and as per Cent Sahayog Scheme pending work order was the condition precedent and hence a loss of Rs.50.14 lakhs was caused to Central Bank of India. When the deposition of PW.11 is culled out it indicates that the allegations which are to be deciphered are as follows:-
(i) Sanctioning of the loan beyond financial powers by concealing the same in process note.
(ii) The loan account of accused No.2 was a take over loan.
(iii) He had single handedly process the loan transaction against mandatory two officers.
(iv) Accused No.2 had no work order in his name as on the date of sanctioning loan.
48. When the above said aspects are considered in seriatim firstly the court has already dealt in detail with respect to the powers of the accused No.1 in sanctioning OD facility. As per the evidence of PW.2 K.Manjunath who was the Deputy Regional Manager it has been elucidated with respect to the sanctioning limit of accused No.1 being enhanced to the 119 Spl.C.C.No.24/2016 grade of Scale II Manager as per Ex.P.10. This clearly indicates that he was having the authority of sanctioning loan upto to an extent of Rs.1 Crore. However the learned PP has vehemently argued that the procedures in enhancing the credit limit was flouted by the accused No.1. In order to butters her submission, she has relied upon the circular produced and marked as Ex.P.11 to P.15 which are with respect to loan sanctioning guidelines and also process of due diligence to be exercised while sanctioning the loan. As noticed from records Ex.P.18 pertains to take over loan and the conditions which requires to be observed. As already discussed supra, the amount of Rs.17.80 lakhs prevailing in the account of Gundappa at Citizen Co-operative Bank cannot be considered as a take over loan for the reason that it was not standing in the name of accused No.2 Gundaiah @ B.Gunde Gowda. It is also relevant to note that the concept and meaning of take over loan was elucidated from the Investigation Officer i.e. PW.11 who has deposed that according to him the factum of take over loan means fully clearing the outstanding dues in one bank and taking over of the same by the other bank. The court has 120 Spl.C.C.No.24/2016 already dealt in detail with respect to the manner of investigation and also the evidence which has been given by the PW.11 Investigation Officer. At the cost of repetition once again the relevant paragraph is revisited which was elucidated during the course of cross-examination. In para No.17 of his cross-examination, PW.11 has deposed that Gundappa and accused No.2 are one and the same and accused No.2 had concealed about the fact of availing loan from Central Bank of India and used the OD facility for the repayment of his loan at Citizen Co-operative Bank. He was also confronted with the account numbers and also the documents which were collected by him and surprisingly the Investigation Officer though admits that Ex.P.59 account opening form belonged to Gundaiah @ Gunde Gowda S/o Bore Gowda who is accused No.2 and also he identifies the account opening forms in Ex.P.57 with account No.42788 standing in the name of Gundappa S/o Giri Gowda and also he admitting the fact that the account holder Gundappa was introduced by Gundaiah he has denied the suggestion that Gundappa was not related to accused No.2 Gundaiah @ Gunde Gowda. It is rather 121 Spl.C.C.No.24/2016 surprising to note that when there was a severe ambiguous and a serious allegation is leveled against accused No.1 and 2 for hatching up of a conspiracy to defraud Central Bank of India by taking over liability from Citizen Co-operative Bank, the Investigation Officer has deposed of not visiting and verifying the address mentioned. If only the documents at Ex.P.57 to P.59 is carefully appreciated, it would clearly indicate that accused No.2 B.Gunde Gowda @ Gundaiah and Gundappa are not one and the same. In the course of entire cross-examination the Investigation Officer has deposed in a manner which seriously affects the case of the prosecution. At several incidences during his cross-examination he himself is confused with respect to identity of Gundappa and B.Gunde Gowda i.e. accused No.2. No doubt it may be accepted that due to passage of time and also since the investigation was conducted several years back there might have been some sort of confusion in the mind of the Investigation Officer. However, when he was specifically confronted by pointing out to the exhibits and also when he was once again recalled to tender his evidence, the state of confusion clearly indicates that he 122 Spl.C.C.No.24/2016 was not sure of the fact with respect to identity of accused. He was specifically questioned subsequently by recalling him for the purpose of cross-examination and was suggested that Gundappa in Ex.P.57 had offered his surety-ship to the loan transaction of accused No.2 that Central Bank of India. Interestingly, the Investigation Officer has categorically admitted by stating that as per Ex.P.1 at page No.80 for the guarantors form Gundappa's name is reflected as guarantor however he is not sure whether the same Gundappa was the one who was mentioned in Ex.P.57. It is also curious to note that he has deposed of not verifying the address mentioned in Ex.P.1 at Page No.80 to find out the identity of Gundappa. The identity of Gundappa would have been a crucial fact for the purpose of this case since the prosecution case indicates that it was a take over loan of Gundaiah @ Gunde Gowda which was standing in Central Bank of India and Accused No.1 had committed breach of trust by misusing his official position and enhancing the OD facility to take over the loan in another Bank. PW.11 S.Hariharan is not a layman and he is a trained person who has conducted the investigation and has filed the 123 Spl.C.C.No.24/2016 charge sheet. At the cost of repetition it has to be brought to notice that the investigation doesn't involves only recording of some statements of witness and collecting some materials and to file the charge sheet. The Investigating officer should be specific when allegation of misconduct is leveled against the public servant. It is time and again reiterated by various dictums of the Hon'ble Apex court and the Hon'ble High court that the corruption and indulging in corrupt practices are bleeding the economy of the country and hence the socio economic offences are to be construed as offences against society at large. When the superior courts have held so, the degree of seriousness and collection of materials by IO should infallible and to ensure that no loose ends are left out by them. It is surprising to note about the manner in which the answer has been given by the Investigation Officer that he was not sure that whether Gundappa in Ex.P.57 i.e. the Account opening form was the same person whose name was reflected in page No.80 of Ex.P.1 i.e. the process note includes of the stamp paper and also the form of guarantee of advancing the credit. No doubt the said forms are not filled up however it 124 Spl.C.C.No.24/2016 indicates that necessary documents were obtained. The question which requires to be considered at this juncture is whether the same can be considered as illegality attracting the criminal liability. The court has also taken into consideration of the submission of the learned PP with respect to the document at Ex.P.2 wherein it has been stated with the accused No.1 had certified that accused No.2 was having a turn over of Rs.1.50 lakhs and also he would receive the payment for his work bill after about three months and it is also been stated that he was having miscellaneous bills for over Rs.40 lakhs and the same was recorded on 19.12.2012. By looking into these documents the contentions of the prosecution with respect to committing of an offence under Sec.13(1)(c) and (d) & 13(2) is also to be considered. The Learned PP has relied upon the Judgment of the Hon'ble Apex Court reported in the case of Mir Nagvi Askari Vs C.B.I. Crl.A.No.1477/2004 dated 07.08.2009. Wherein it has been held that even in case of pecuniary advantages being illegally given to other accused persons the provisions of the Prevention of Corruption Act would be applicable. When the entire 125 Spl.C.C.No.24/2016 judgment is carefully appreciated the facts and circumstances of the said case were entirely different and in the case of hand Manager is said to have enhanced the credit facility without he being empowered to do so and also as per the ratio of the Hon'ble Apex Court in the case cited supra the nature of duties and also the extent of the duty of an officer of the bank is discussed. In the said judgment the Apex Court has specifically held that the accused Nos. 1 and 2 therein had dominion over the funds of the bank and had misappropriated the funds of Andra Bank by issuing credit vouchers to be credited in the account of accused No.3 and in some other cases the cheques were not received or sent for clearance. By pointing out the facts the Apex court has observed in Para No.221 of the said Judgment that accused No.3 did not had any overdraft facility or overdraft limit sanctioned to him and as such he will not have over drawn his account. However in the instant case the evidence of PW.6, PW.2 and also the Investigation Officer PW.11 would indicate that the power of accused No.1 to enhance the OD facility was enhanced by delegating the powers of Scale II Manager by the Office order as per Ex.P.8 dated 126 Spl.C.C.No.24/2016 27.12.2011. Hence the said Judgment would not be applicable to the case of hand and the evidence of Investigation Officer clearly casts the shadow of doubt over the case of the prosecution with respect to the manner in which the investigation is being conducted. As per the allegations, the OD facility was granted without there being any iota of documents for enhancing the OD facility. As already discussed supra, Ex.P.2 endorsement and recommendations are pointed out by the learned PP. However at the cost of repetition, once again the documents which are furnished by the prosecution at Ex.P1 is required to be considered. The work orders annexed with completion report dated 20.01.2015 at Page No.72 indicates that totally a sum of Rs.1.03 lakhs work was being carried out by accused No.1. The relevant page Numbers of Ex.P.1 would be at Page Nos. 73 to 76. Even for the sake of arguments the submission of the learned PP that the schedule date of completion was in the year 2014 and whereas the enhancement was made in the year 2012 and 2013 is to be accepted once again the document at Page No.64 of Ex.P.1, Page No.65, Page No.38 and Page No.42 of Ex.P.1 would 127 Spl.C.C.No.24/2016 indicate that accused No.2 Gunde Gowda was alleged to have had the work orders for Rs.20,71,805.79 and also the work orders in the name of technical manager seized KRIDL is considered the same would indicate of being obtaining work orders to an extent of Rs.2 Crores 33 lakhs. If only accused No.1 had noted that the accused No.2 had already produced the work orders then the same would have been totally in consistent with the stand taken by him. However the letter issued by KRIDL dated 20.01.2015 at page No.72 clearly indicates that the accused No.2 was entrusted with work order of approximately 1 Crore & 8 lakhs and once again if Ex.P.2 is revisited the same clearly indicates that Gunde Gowda who was Class III PWD contractor was having turn over Rs.1,50,00,000/- per annum and he has undertaken to produce the work bill payment after three months. Accordingly, the OD limit was enhanced to Rs.30 lakhs initially and subsequently Rs.90 lakhs. With this background the court has to ascertain the act of accused No.1 was tainted with criminal intention. In this regard the judgment of the Hon'ble Apex Court which is relied upon by the learned counsel for 128 Spl.C.C.No.24/2016 accused (2007) 13 SCC 410 Radha Pisharassiar Amma Vs State of Kerala when it has been held as :-
11. The conviction of Accused 4 to 7 recorded by the High Court under Section 13(1)(c) read with Section 13(2) of the Act, it is urged, is not at all warranted inasmuch as there is no evidence that the accused dishonestly or fraudulently misappropriated or otherwise converted any property entrusted to them or under their control as public servants or allowed any other person to do so. It is further contended that the property was not at all entrusted to A-4 to A- 7 under their control and there is no question of the accused being dishonestly or fraudulently misappropriated it or otherwise allowed any other person to do so.
15. From the evidence of PW 5, it can be revealed that a conspiracy was hatched between A-1, A-10, A-2, A-8 and A-9. As already noticed, A-4 to A-7 were working as Sub-Treasury Officers at Devikulam. The prosecution has failed to prove that a copy of the original sanction letter (Exhibit P-26a) was also sent to STO, Devikulam. On the other hand, the alleged forged allotment letter dated 22-8-1990 (Exhibit P-5) showing that the amount of Rs 1,70,000 under the head "TA" was sent to STO, Devikulam where the accused A-4 to A-7 were working.
It is the specific case of the accused that they did not receive any allotment order other than the allotment letter dated 22-8-1990 (Exhibit P-5) showing the allotment of Rs 1,70,000 under TA to Devikulam Sub-
129
Spl.C.C.No.24/2016 Treasury. The prosecution has miserably failed to establish the essential ingredients of the conspiracy under Section 120-B IPC by leading cogent and convincing evidence against A-4 to A-7.
16. It is by now well-established principle of law that for the offence under Sections 409, 467 and 471, the existence of mens rea (guilty mind) must be proved. It is on record that Respondents 4 to 7 were working as STOs, Devikulam. From the prosecution evidence, it appears that the conspiracy was hatched at Chithirapuram Primary Health Centre. So far with regard to the offence under Section 467 IPC is concerned, there is no evidence to show that the appellants before us, forged a document which purported to be a valuable security. There is also no evidence that the appellants had knowledge of fact that the allotment letter was a forged letter. Again for an offence under Section 409 it must be proved that the person entrusted with the property, or any dominion over property in his capacity as a public servant committed criminal breach of trust in respect of such property as defined in Section 405 IPC. The evidence must show that he dishonestly misappropriated or converted to his own use that property or dishonestly used or dispossessed that property in violation of any direction of law prescribing the mode in which such trust is to be discharged. In the present case, there is no evidence that A-4 to A-7 dishonestly misappropriated or converted to their own use the amount of TA. On record it is established that A-4 to A-7 are not the beneficiaries of the misappropriated amount. 130
Spl.C.C.No.24/2016
49. Likewise the Judgment of the Hon'ble Apex Court which is already cited supra in (1996) 10 SCC 193 (C. Chenga Reddy and others Vs State of A.P), wherein the question of dishonest intention is laid down by the Hon'ble Apex Court is to be appreciated in the case on hand. By looking into the said aspects the first two contentions of the prosecution that the loan account was a take over loan and also the OD limit was sanctioned by accused No.1 beyond his powers cannot be accepted. With respect to concealing of the fact in the process note as already discussed that when the loan itself cannot be termed as taken over loan the question of fixing the criminal liability over the same does not arise. Further the evidence of PW.11 indicates that the accused No.1 had single handedly processed the entire loan transaction against the mandatory two officers. The said evidence has to be read with the evidence of PW.11 Investigation Officer S.Hariharan who in his cross-examination at Para No.13 has deposed about the procedure enumerated under Ex.P.8 circular. Already it has been discussed in detail by this court with respect to the same in the earlier part of the judgment and 131 Spl.C.C.No.24/2016 it is noticed that at Sl. No.12 which is the relevant portion of the circular as per the Investigation Officer indicates about the procedures and not the conditions precedent which were required to be strictly adhered to at the time of sanctioning loan under Cent Sahayog Scheme. Further as per the evidence of PW.6 there was no necessity to obtain guarantee for the loan under Cent Sahayog Scheme however he has categorically denied the suggestion of accused No.1 acting in due diligence. All these aspects would once again cast serious doubt over the case of the prosecution.
50. Now coming to the aspect of according pecuniary advantage to some other person firstly the prosecution has to prove the manner in which pecuniary advantage is being made out to the person other than public servant. The authorities of the Hon'ble Apex Court which has been relied upon by the Learned counsel for accused in (2015) 10 SCC 152 ( P.Sathyanarayana Murthy Vs District Inspector of Police, State of A.P. and another) has discussed about the fact that for the purpose of conviction the proof of demand for illegal 132 Spl.C.C.No.24/2016 gratification is a must to prove the charge under Section 13(1)
(d) of the PC Act by the prosecution. However the said fact are not relevant to the case on hand and with respect to another Judgment relied upon by the Learned counsel for accused in (2016) 12 SCC 273 A.Shivaprakash Vs State of Kerala, wherein it has been held as:-
18. The prosecution has sought to cover the case of the appellant under sub-clause (ii) of Section 13(1)(d) and not under sub-clause (i) and sub-clause (iii). Insofar as sub-clause (ii) is concerned, it stipulates that a public servant is said to commit the offence of criminal misconduct if he, by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage. Thus, the ingredients which will be required to be proved are:
(1) The public servant has abused his position.
(2) By abusing that position, he has obtained for himself or for any other person any valuable thing or pecuniary advantage.
19. It was not even the case set up by the prosecution that the appellant had taken that money from some person and had obtained any pecuniary advantage thereby. It was the obligation of the prosecution to satisfy the aforesaid mandatory ingredients which could implicate the appellant under the provisions 133 Spl.C.C.No.24/2016 of Section 13(1)(d)(ii). The attempt of the prosecution was to bring the case within the fold of sub-clause (ii) alleging that he misused his official position in issuing the certificate utterly fails as it is not even alleged in the charge-sheet and not even an iota of evidence is led as to what kind of pecuniary advantage was obtained by the appellant in issuing the said letter.
51. In the above said case it has been held by the Hon'ble Apex Court that the accused had himself used his official position by issuing the certificate for obtaining pecuniary advantage for himself or for any other person. If only the prosecution intends to establish the fact that the accused No.1 had provided financial accommodation to accused No.2 to drive a pecuniary advantage to him once again the main allegations requires to be revisited wherein the enhancement of OD facility and also the sanctioning of term loan towards purchase of vehicle by Gundappa is alleged. As already discussed in the earlier part of the judgment the term loan pertaining to Gundappa for purchasing the vehicle was not at all sanctioned by accused No.1 but in fact it was sanctioned by Central Credit Processing Center as per the evidence of PW.5 M. 134 Spl.C.C.No.24/2016 Murugeshan. Under the circumstances the admission of PW.5 would also squarely hit the case of prosecution that no security was required under Cent Sahayog Scheme. As noticed from the records and also the report of the auditor at Ex.P.23 which indicates that the property pertaining to Gundappa was obtained as security without obtaining Legal Scrutiny Report (LSR). If the evidence of PW.5 is considered with that of audit report at Ex.P.23 once again much is required to be explained by the Investigation Officer with respect to the accused persons entertaining and hatching criminal conspiracy and also illegality in meddling of the trust imposed upon him. The court has given much importance to the evidence of Investigation Officer for the simple reason that he being the competent officer to investigate the same and allegations of fraud should have explained in detail about the manner in which the alleged economic offences is committed. The duty of Investigation Officer does not terminate merely by recording the statement of some persons and collecting certain documents and placing it before the court. Rather a sacrosanct duty has been imposed upon the Investigation Officer to go into the root of the case and 135 Spl.C.C.No.24/2016 to examine the manner in which the alleged economic offences are committed. Nevertheless to mention the economic offences are time and described as the one which is bleeding the economy of the country. Even the Hon'ble Apex Court has cautioned the trial courts that it should not confuse itself by looking into the quantum of punishment imposed in the event of conviction and a serious approach is to be made while conducting the trial of economic offences. A trial encompasses investigation, inquiry, trial, appeal and retrial. It assures the guarantee under Article 21 of the Indian Constitution and also embarrasses the life and liberty of the accused as well as the interest of the victim, his near and dear ones as well as community at large. Therefore, the investigation process cannot be taken so lightly or alienated from each other with levity. Any criminal offence is one against the society at large casting an onerous responsibility on the State which is the guardian and purveyor of human rights and also protector of law to discharge its sacrosanct role, responsibility and committedly, always accountable to the law abiding citizenry. The role of police is to be one of protection of life, liberty and property of citizens with 136 Spl.C.C.No.24/2016 investigation of offence being one of its foremost duties. That the aim of investigation is ultimately to search for truth and to bring the offender to book. In this regard the court has relied upon the saying of celebrated Lord Denning in his book " The Due Process of Law", first Indian reprint, 1993, Page 102 wherein it has been stated that "25.Lord Denning [The Due Process of Law, First Indian Reprint 1993, p. 102.] has described the role of the police thus:
"In safeguarding our freedoms, the police play a vital role. Society for its defence needs a well-led, well-trained and well-disciplined force of police whom it can trust: and enough of them to be able to prevent crime before it happens, or if it does happen, to detect it and bring the accused to justice.
The police, of course, must act properly. They must obey the rules of right conduct. They must not extort confessions by threats or promises. They must not search a man's house without authority. They must not use more force than the occasion warrants."
52. One of the responsibilities of the police is protection of life, liberty and property of citizens. The investigation of offences is one of the important duties the police has to perform. The aim of investigation is ultimately to search for 137 Spl.C.C.No.24/2016 truth and bring the offender to book. Further, the court has also relied upon the treatise on Criminal Investigation -- Basic Perspectives by Paul B. Weston and Renneth M. Wells which reads as "
"The avowed purpose of a criminal investigation and its efficacious prospects with the advent of scientific and technical advancements have been candidly synopsised in the prefatory chapter dealing with the history of criminal investigation in the treatise on Criminal Investigation -- Basic Perspectives by Paul B. Weston and Renneth M. Wells:
" Criminal investigation is a lawful search for people and things useful in reconstructing the circumstances of an illegal act or omission and the mental state accompanying it. It is probing from the known to the unknown, backward in time, and its goal is to determine truth as far as it can be discovered in any post-factum inquiry. Successful investigations are based on fidelity, accuracy and sincerity in lawfully searching for the true facts of an event under investigation and on an equal faithfulness, exactness, and probity in reporting the results of an investigation. Modern investigators are persons who stick to the truth and are absolutely clear about the time and place of an event and the measurable aspects of evidence. They work throughout their investigation fully recognizing that even a minor contradiction or error may destroy confidence in their investigation. The joining of science with traditional criminal investigation techniques offers new horizons of efficiency in criminal investigation. New perspectives in investigation bypass reliance upon informers and custodial interrogation and concentrate upon a skilled scanning of the crime 138 Spl.C.C.No.24/2016 scene for physical evidence and a search for as many witnesses as possible. Mute evidence tells its own story in court, either by its own demonstrativeness or through the testimony of an expert witness involved in its scientific testing. Such evidence may serve in lieu of, or as corroboration of, testimonial evidence of witnesses found and interviewed by police in an extension of their responsibility to seek out the truth of all the circumstances of crime happening. An increasing certainty in solving crimes is possible and will contribute to the major deterrent of crime--the certainty that a criminal will be discovered, arrested and convicted."
53. Why the court is discussing in detail about the manner of investigation is the evidence of PW.11 himself leads to lot of confusions and he has deposed in Para No.28 of his cross-examination of not examining or enquiring the BBMP officials or the officials of KRIDL regarding the work orders submitted by accused No.2 to Central Bank of India. At the cost of repetition the said documents which are marked collectively in Ex.P.1 indicates of the fact that the said work orders being submitted by the prosecution. Then it is a bounden duty of the Investigation Officer to verify about the authenticity and claim of the Accused persons. Further the Investigating officer has not verified the identity of Gundappa 139 Spl.C.C.No.24/2016 who had availed loan at the Citizen Co-operative Bank, Bengaluru by opening up of the account at Ex.P.57. As rightly argued by the learned Senior counsel for accused No.1 the account opening form with photograph would indicate to the bare eyes that he was not the same person as that of accused No.2 B.Gunde Gowda @ Gundaiah. Probably in order to over come the same additional witness PW.10 Pergade Gowda was secured before the court by the prosecution who has deposed that Gundappa has got his name changed to B.Gunde Gowda. If only the identity of Gundappa and Gunde gowda was in dispute then the same would have been a different manner. However in the instant case the main aspect which is required to be determined is whether Gundappa who had opened the OD account at the Citizen Co-operative Bank with outstanding due of Rs.17.80 lakhs was the same person as that of accused No.2 Gunde Gowda. In fact the charge sheet which has been filed before the court by the very same Investigation Officer indicates that accused No.2 Gunde Gowda on 29.04.2013 had purchased two DD's in favour of Citizen Co-operative Bank loan account No.905429 towards a sum of Rs.17.80 lakhs and 140 Spl.C.C.No.24/2016 had settled the outstanding OD mortgage loan in the name of Gundappa. Hence, it is clear that the evidence of PW.11 is contrary to the charge sheet whereas he has specifically and consistently deposed that Gundappa and Gunde Gowda are one and the same. During the course of his further cross- examination he has deposed that the present case mainly pertains to discrepancy in the sanctioning and disbursement of loan to accused No.2 and also he has deposed of illegality in the sanctioning and disbursement of loan. In that event once again the Investigation Officer should have explained how and in what manner the loss was caused to the Bank. However the said aspect has been seriously refuted by the learned PP who has argued at length by relying upon the authority of the Hon'ble Apex Court in the Judgment reported in Ganesh Santha Ram Sirur Vs State Bank of India and another Civil Appeal No.7058/02 dtd. 17.11.2004. The facts of the said case are entirely different since it was a case wherein an appeal was filed before the Hon'ble Apex Court with respect to dismissal from service and also the main charge was levelled regarding disbursement of loan to his wife in her maiden name 141 Spl.C.C.No.24/2016 and a scheme meant for educated unemployed youth. No doubt in the said Judgment it was observed that the Manager or the Officer is expected to act and discharge his function in accordance with the rules and regulations of the Bank. With this aspect once again the question which requires to be appreciated is whether mere disregard of relevant provisions would amount to illegality. In this regard the Judgment of the Hon'ble Apex Court reported in 1980 (3) SCC 110 (Abdulla Mohammed Pagarkar Vs State) wherein it has been held as:-
19. Now this is hardly a proper approach to the requirements of proof in relation to a criminal charge. The onus of proof of the existence of every ingredient of the charge always rests on the prosecution and never shifts. It was incumbent therefore on the State to brief out, beyond all reasonable doubt, that the number of labourers actually employed in carrying out the work was less than that stated in the summaries appended to the bills paid for by the Government. It is true that the total number of labourers working on a single day has been put by the prosecution witnesses mentioned above at 200 or less, while according to the summaries appended to the bills it varied on an average from 370 to 756. But then is it safe to rely on the mere impression of the prosecution witnesses, testified too long after the work had been executed, about the actual number of labourers employed from 142 Spl.C.C.No.24/2016 time to time? The answer must obviously be in the negative and the justification for this answer is furnished by the variation in the number of labour employed from witness to witness.
24. Learned counsel for the State sought to buttress the evidence which we have just above discussed with the findings recorded by the learned Special Judge and detailed as Items (a) to (e) in para 9 and Items (i) and (iii) in para 10 of this judgment. Those findings were affirmed by the learned Judicial Commissioner and we are clearly of the opinion, for reasons which need not be restated here, that they were correctly arrived at. But those findings merely make out that the appellants proceeded to execute the work in flagrant disregard of the relevant rules of the G.F.R. and even of ordinary norms of procedural behaviour of government officials and contractors in the matter of execution of works undertaken by the Government. Such disregard however has not been shown to us to amount to any of the offences of which the appellants have been convicted. The said findings no doubt make the suspicion to which we have above adverted still stronger but that is where the matter rests and it cannot be said that any of the ingredients of the charge have been made out.
54. Another judgment which has been relied upon by the Learned Sr. Counsel for accused No.1 is already dealt in the earlier part of my Judgment in the Judgment reported in (1996) 10 SCC 143 Spl.C.C.No.24/2016
193. The ratio which has been laid down in both the Judgments would clearly indicate that the mere disregard to the procedures would not amount to illegality. Per contra, the contention of the Learned PP with respect to the appreciation of the evidence and documents cannot be accepted and under the circumstances the evidence would indicate that accused No.1's act was cannot be termed as the one amounting to criminal misconduct. The observations are only made with respect to accused No.2 since initially the written information at Ex.P.6 on the basis of which the FIR came to be registered at Ex.P.70 was against several persons and also on the basis of verification of several accounts. At the time of filing of charge sheet the Investigation Officer has filed the same only with respect to accused No.2 by alleging the above said facts against him. Even the inspection report at Ex.P.22 and Ex.P.23 which were conducted by the internal auditors i.e. PW.4 Gopi Srinivas Challa and PW.5 M.Murugeshan would indicate about the said aspect. In fact the evidence of PW.4 was pertaining to the loan accounts of various other persons and accused No.1 is not at all connected to the facts of the above case. It is also appropriate to note at this juncture with respect to the evidence of PW.6 C.H. Nagaraj who was the Sr. 144 Spl.C.C.No.24/2016 Manager of Central Bank of India and he has deposed that the OD facility was sanctioned in favour of Gunde Gowda was enhanced to Rs.90 lakhs and it was a take over loan from Citizen Co-operative bank for a sum of Rs.17.80 lakhs. The said evidence assumes importance since he was the Sr. Manager (internal audit) who was deputed for conducting internal audit and report to know the irregularities. Probably in the first step itself the concerned official had not considered the facts that Gundappa and B.Gunde Gowda are different persons. The audit report at Ex.P.24 which is furnished and marked through him also indicates of the said fact. Further during the course of his chief-examination at Para No.5 he has deposed that as per the take over loan formats, accused No.1 had no authority to enhance the loan and the documents were laminated in the name of Gundappa and no discharge deed were obtained from Citizen Co-operative Bank. He has once again admitted during the course of cross-examination that the irregularities pointed out in the audit report could be rectified. The said audit report at Ex.P.24 was furnished in the year 2013 indicating that they had conducted the audit between 23.08.2013 to 07.09.2013. Whereas the FIR at Ex.P.70 came to be registered on 30.04.2015 and subsequently 145 Spl.C.C.No.24/2016 charge sheet was filed. It was also elucidated from the Investigation Officer during the course of his cross-examination that apart from the audit report at Ex.P.23 and P.24 no independent audit was conducted by the Investigation Officer. Whenever a financial fraud and irregularities amounting to illegality is alleged, it is bounden duty of Investigation Officer to point out the manner in which the economic offences is committed and also a proper assessment of the loss caused to the financial institution is to be gouged. However, in the instant case the evidence of PW.5 indicates that the enhancing of OD loan and taking over of the loan from the Citizen Co-operative Bank to an extent of Rs.17.80 lakhs was an irregularity and the audit report at Ex.P.23 and P.24 collectively indicates that more than 20 crores loss was caused to the Bank, then Investigation Officer should have indicated that how and in what manner he had arrived at a conclusion of loss at Rs.50.14 lakhs as alleged in the charge sheet. In this regard probably the cross-examination of PW.11 S.Hariharan the Investigation Officer throws light to the manner in which the investigation is conducted. He has admitted that during the course of his cross-examination he had concentrated on non- performing of assets account and also he had filed the charge sheet 146 Spl.C.C.No.24/2016 against the accused on the ground that accused No.2 did not repay the entire outstanding amount and it had became NPA. The learned Sr. Counsel has vehemently argued that the concept of fraud and the concept of NPA are entirely different. The classification of a account as NPA may involve the conspiracy of fraud, however the same cannot be considered vice-versa. It is true that the determination of NPA account may have traces of or the element of fraud in it. However, if only the prosecution contends that the NPA account of so classified for the reason and element of fraud in it then it should have been pointed out by the prosecution. Further to the court question that whether Gundappa in Ex.P.57 and accused No.2 Gunde Gowda @ Gundaiah are one and the same, the Investigation Officer has answered that both are different persons. If the same is to be accepted then once again the entire case of the prosecution falls down into pieces since it is specific contention that it was the take over loan from the Citizen Co-operative Bank. It is also to be relevant to rely upon the Judgment of Hon'ble Apex Court which is relied upon by the Learned counsel for accused reported in (2013) 12 SCC 406 Sujit Biswas V/s State of Assam which is already relied upon in the earlier part of the Judgment is applicable to the 147 Spl.C.C.No.24/2016 case on hand. Last but not the least the learned PP has also canvassed her arguments that the accused No.2 after his death had cleared the total outstanding dues under OTS scheme which by itself will not absolve and exonerate him from the offences. The said aspect is correct however at the same time, if the prosecution are able to establish that the accused No.1 Branch Manager had illegally sanctioned loan to cause any pecuniary advantage to accused No.2 and also established the link about the extent and manner of pecuniary advantage being driven by accused No.2 the same would have been correct. The learned Sr. Counsel has also pointed out to the court that totally an amount of Rs. 1,25,62,780/- has been paid by accused No.2 and his legal heirs and the same cannot be considered as relevant to the facts of the case as it is clearly held that mere repayment of amount will not exonerate, however the prosecution has failed to adduce positive evidence with respect to overt act of the Accused person. No doubt the Judgment of the Hon'ble Apex Court which is relied upon by the learned PP in CBI V/s Maninder Singh Crl.A.No.1496/09 dtd.28.09.2015, wherein it has been held that in case of economic offences the proceedings cannot be quashed even when accused has settled his amount with 148 Spl.C.C.No.24/2016 the financial institution since its crime against society at large. The said judgment is not applicable to the case on hand since the prosecution has not proved the alleged economic loss which was committed by accused No.2. Mere classification of a loan account into a NPA cannot be considered as an act attracting the provisions of Sec. 13 (2) of Prevention of Corruption Act. The learned PP has also relied upon another judgment of the Hon'ble Apex Court reported in (2016) 3 SCC (Cri) 299 (Chittaranjan Shetty Vs State by CBI, Bengaluru) wherein it is held as:
22. On a perusal of the abovementioned judgments, it can be concluded that in order to prove the offence under Section 13(1)(d)(ii) of the Act, it must be established that a public servant has abused his position in order to obtain for himself or for any other person, any valuable thing or pecuniary advantage, and that, in this context, the "abuse" of position must involve a dishonest intention.
23. In the present case, it is not disputed that the appellant is a public servant. As regards the element of "obtaining a valuable thing or pecuniary advantage" for himself or another person, the courts below have made concurrent findings that the appellant, by permitting Accused 2 to divert the overdraft facilities towards payment to DW 1, has 149 Spl.C.C.No.24/2016 obtained a pecuniary advantage for DW 1 and we concur with the same.
24. The crucial fact that needs to be determined is whether the appellant, with dishonest intention, abused his position in order to obtain for DW 1, the said pecuniary advantage. It is our considered opinion that, in the present case, there is sufficient evidence on record to prove that the appellant was acting with a dishonest intention. The terms and conditions of the loan granted to the appellant categorically state that the overdraft facilities could be utilised only for the purpose of meeting working capital requirements and for furnishing performance guarantee in favour of the said Corporation and the same could not have been utilised for payment of the debt owed by Accused 2 to DW 1. The courts below have relied on the testimony of PW 18 to conclude that the appellant knowingly and wilfully disregarded the objections of PW 18 and permitted Accused 2 to divert funds from the overdraft facility towards payment to DW 1 and that this fact is proof of dishonest intention on the part of the appellant. We concur with the courts below in this regard.
The testimony of PW 18 has been corroborated by the testimony of the Sub-
Manager of Karnataka Bank (PW 9) who has stated that a cheque of Rs 3,60,000 was deposited in the current account of DW 1 as well as that of the Senior Manager, Corporation Bank, Car Street, Mangalore (PW
10).
150
Spl.C.C.No.24/2016
55. In the said Judgment the Hon'ble Apex Court has clearly held that the abuse of powers by a public servant was in furtherance of obtaining either for himself or any for some another person any valuable under or pecuniary advantage and it has been stressed upon by the Hon'ble Apex Court that the abuse of powers must involve dishonest intention. Once again if the entire cross- examination is re-appreciated it has been adduced from the mouth of witnesses that under Cent Sahayog Scheme no collateral security was required however collateral security of Gundappa was obtained and also the term loan standing in the name of Gundappa who was not connected to the above case and in fact Rs. 5 lakhs was sanctioned by Centralized Credit Processing Committee and not by accused No.1 and also the for enhancement of OD account the Accused No.2 had produced work orders exceeding Rs. 1 Crore which is also been produced before the court by the prosecution themselves at various pages in Ex.P.1 which is already noted down in the earlier part of the Judgment and also the confirmation letter at page No.72 of Ex.P.1 issued by KRIDL indicating of accused No.2 obtaining various work orders in a pieces work manner and executed the same totally to an extent of Rs. 1 Crore 8 lakhs and the 151 Spl.C.C.No.24/2016 Investigation Officer not verifying the veracity or genuineness of the same with the concerned BBMP and KRIDL officials would help the contention of the accused rather than prosecution and hence the question of dishonest intention is not firmly established by the prosecution. Lastly, the golden rule of law which prevails over the criminal jurisprudence would clearly indicate that whenever two views are possible, obviously the view favouring the accused is to be accepted. Sequentially, the prosecution has failed to prove the allegations levelled against accused under Sec. 13(2) r/w 13 (1)(c) &
(d) of Prevention of Corruption Act 1988 and hence, Point No.5 is answered in Negative.
56. Point No.6 : In view of my foregoing reasonings and conclusions arrived at by me, during the discussions of Point No.1 to 5, I proceed to pass the following:-
ORDER Acting U/s. 235(1) of Cr.P.C., the Accused No.1-Chittaranjan Das is hereby acquitted for the offences punishable under Sec.120-B, 420, 409 of IPC and Sec.13(2) r/w 13 (1)(c) 152 Spl.C.C.No.24/2016 and (d) of the Prevention of Corruption Act, 1988.
(Dictated to the Judgment Writer, transcribed and typed by her, corrected and then pronounced by me in the open court this the 7 th day of February 2022) ( Santhosh Gajanan Bhat ) XLVI Addl. City Civil & Sessions Judge and Special Judge for CBI Cases, Bengaluru City.
ANNEXURE List of witnesses examined for the Complainant :
PW.1 : Rajesh Kumar Yadav
PW.2 : K.Manjunath
PW.3 : Dayanand A.Shenoy
PW.4 : Gopi Srinivas Challa
PW.5 : M.Murugesan
PW.6 : C.H.Nagaraj
PW.7 : B.K.Bhaskar
PW.8 : T.Sriram
PW.9 : R.J. Raja
PW.10: Pergade Gowda D
PW.11: S.Hariharan
List of documents exhibited on behalf of the Complainant :
Ex.P.1 : D.No.16 file containing deposit account opening form of B.Gunde Gowda with other 153 Spl.C.C.No.24/2016 documents pertaining to the loan (Pages No.1 to 111).
Ex.P.2 & P.3 : Process Notes for Cent Sahayog Scheme.
Ex.P.2 (a)&(b) & Ex.P.3 (a)&(b) : Writings portion and signatures of A.1 in Ex.P.2 & P.3.
Ex.P.4 and P.5 : Debit and Credit Vouchers dtd.
29.04.2014 for Rs.17,80,000/- each.
P.4 (a) and P.5(a): Signatures of A.1 in a column Ex.P.6 : Certified copy of complaint dtd.
29.04.2015.
Ex.P.7 : Certified copy of Receipt Memo
dtd.16.06.2015.
Ex.P.8 : Certified copies of Instruction Circular of
Retail Banking Department.
Ex.P.9 : Certified copy of circular pertaining to
Direct Housing Finance Scheme.
Ex.P.10: Certified copy of Circular pertaining to
Small Road Transport Operator.
Ex.P.11 : Certified Copy of relevant pages of Loan
Policy effective from 31.03.2011.
Ex.P.12 : Certified copy of Loan Policy effective
from 31.03.2011.
Ex.P.13 : Certified copy of Loan Policy effective
from 31.03.2011.
154
Spl.C.C.No.24/2016
Ex.P.14 : Certified copy of Loan Policy effective from 31.03.2011.
Ex.P.15 : Certified copy of Loan Policy effective from 28.03.2012.
Ex.P.16 : Certified copy of Loan Policy effective from 28.03.2013.
Ex.P.17 : Certified copy of Loan Policy effective from 31.03.2011.
Ex.P.18 : Certified copy of Loan Policy effective from 31.03.2011.
Ex.P.19 : Certified copies of letter with Office Order Ex.P.20 : Certified copy of the letter with 5 reports Ex.P.21 : Attested copies of the letter with Internal audit report.
Ex.P.22 : Certified copy of the attested copy of Chief Vigilance Officer Report, Central Office, Mumbai.
Ex.P.23 : Certified copy of attested copy of Vigilance Officer report to Chief Vigilance Officer, Mumbai.
Ex.P.24 : Certified copy of Special audit report Ex.P.25 : C/c of letter dtd.22.06.2015 along with c/c of description in respect of 11 accounts together.
Ex.P.26 : C/c of letter dtd.10.07.2015 along with c/c of statement of borrowal accounts particulars in respect of Gundegowda.
155
Spl.C.C.No.24/2016 Ex.P.27 : Statement of account along with certificate u/S.2A of Bankers Books Evidence Act.
Ex.P.28 : Statement of OD account along with certificate u/S.2A of Bankers Books Evidence Act.
Ex.P.29 : Statement of Vehicle loan account along with certificate u/s.2A of Bankers Books Evidence Act.
Ex.P.30 : C/c of letter dtd. 07.12.2015.
Ex.P.31 : Statement of OD account along with certificate u/S.2A of Bankers Books Evidence Act.
Ex.P.32 : C/c of letter dtd.05.12.2015 and list of vouchers.
Ex.P.33 : C/c of letter dtd.16.12.2015 along with documents.
Ex.P.34 : C/c of Control Returns along with forwarding letter from the Branch.
Ex.P.35 : C/c of Control Returns along with forwarding letter from the Branch.
Ex.P.36 to P.45 : C/c of Control Returns of Kodigehally branch for the month of Aug 2012 to Dec.2012, Jan 2013 to April 2013 and June 2013 vide letter dtd.16.12.2015.
Ex.P.46 to P.49 : C/c of 4 visit reports dtd. 20.04.12, 21.03.13, 03.04.2013 and 21.05.2013.
156
Spl.C.C.No.24/2016 Ex.P.50 : Audit report along with closure certificate Ex.P.51 & P.52 : 2 DD's of Central Bank of India dtd.29.04.2013 for Rs.9 lakhs and Rs.8,80,000/-.
P.51(a) & P.52(a): Signatures of A.1 in said Dds. Ex.P.53 : C/c of Vigilance report dtd.05.08.2013 to 08.08.2013.
Ex.P.54 : Report pertaining to the loss caused to the Bank.
Ex.P.55 : Internal audit report from 23.08.13 to 07.09.13.
P.55 (a) : Signature on last page.
Ex.P.56 : letter to CBI Office dtd. 19.12.2015
P.56 (a) : Signature of deceased Kempegowda, then
Manager
Ex.P.57 : Account opening form
P.57 (a) : Signature of verifying officer
Ex.P.58 : Statement of Bank account relating to
Gundappa SB A/c No.42788.
Ex.P.59 : Account opening form dtd. 21.06.2001
P.59 (a) : Signature of then Manager Kempegowda
Ex.P.60 : Account statement pertaining to A/c
No.12905.
Ex.P.61 : Loan account statement pertaining to
A/c No.905380.
Ex.P.62 & P.63 : 2 pay-in-slip bank draft bearing
Nos. 001457 and 001458 for Rs.9 lakhs
157
Spl.C.C.No.24/2016
& Rs.8,80,000/- dtd.29.04.2013.
Ex.P.64 : Loan account statement of Gundappa
pertaining to No.905429.
P.64 (a)& (b): Relevant entries of Rs.9 lakhs and
Rs.8,80,000/-.
Ex.P.65 : Loan A/c closing statement
dtd.02.05.2013.
Ex.P.66 : Receipt Memo
P.66 (a) : Signature of PW.10
Ex.P.67 : Bank account statement of
A/c No.12905
Ex.P.68 : Bank account statement of
A/c No.42788
Ex.P.69 : Certificate issued u/s.65 B of Evidence
Act.
Ex.P.70 : C/c of FIR
Ex.P.71 : C/c of RBI Inspection report dtd.
23.07.2014.
Ex.P.72 : Original Internal Audit Report submitted
by PW.3 D.A.Shenoy
List of witness examined for the Accused :
DW.1 : Shailesh Kumar List of documents exhibited on behalf of the Accused :
Ex.D.1 : Statement of Account No.3224590797 for the 158 Spl.C.C.No.24/2016 period from 01.01.12 to 27.03.18 of Gunde Gowda.
Ex.D.2 : Statement of Account No.3193676973 for the period from 01.07.12 to 18.12.12 of Gunde Gowda.
Ex.D.3 : Statement of Account No. 3230927054 for the period from 01.07.11 to 09.07.21 of Gunde Gowda.
Ex.D.4 : Closure form signed by then Bank Manager Ex.D.5 : Saving A/c No.3185030124 of accused No.2.
(Santhosh Gajanan Bhat) XLVI Addl. City Civil & Sessions Judge and Special Judge for CBI Cases, Bengaluru City.
Judgment pronounced in open court vide separate Judgment:
ORDER Acting U/s. 265-E(c) of Cr.P.C., the Accused No.1 is convicted for the offence defined under Sec.13 (1)(e) which is punishable under Sec.13(2) of the Prevention of Corruption Act, 1988 and sentenced to undergo simple imprisonment for one day i.e. till raising of the court and to pay a fine of Rs.30 lakhs, in default, shall undergo simple imprisonment for 1 ½ months.
The amount in the attached bank accounts and also the amount covered under the attached fixed deposits which are described as item Nos. 2 and 3 in the statement 'B' of the charge sheet and also the amount of Rs.10,97,259/- to be deposited by the Accused No.1 towards the amount equivalent to the value of the properties described as item Nos.1 and 4 in the statement 'B' of the charge sheet and the difference amount between dis-proportionate asset and total value of the properties described as item Nos.1 to 17 in the statement 'B' of the charge sheet (i.e. Rs.3,28,458/-), stands forfeited to the State Government.
IA No.13 filed by the Accused No.1 under Sec.265-B of Cr.P.C., is disposed off accordingly.
Office is directed to furnish free copy of this judgment to the Accused No.1, forthwith.
Office is also directed to send a copy of this judgment to the District Magistrate, Bengaluru Urban District and keep a copy of the Judgment in the file of Criminal Miscellaneous case No.5282/2010 pending on the file of this court.
( Santhosh Gajanan Bhat ) XLVI Addl. C.C & S.J. & Spl.
Judge for CBI cases, Bengaluru.