Bangalore District Court
Cbi Ps vs N Sathyababu on 18 March, 2024
1 Spl.C.No.483/2017
KABC010235872017
IN THE COURT OF XLVII ADDL. CITY CIVIL & SESSIONS
JUDGE AND SPECIAL JUDGE FOR CBI CASES, BENGALURU
(CCH-48)
DATED THIS THE 15th DAY OF MARCH, 2024
PRESENT
Sri Santhosh Gajanan Bhat, B.A.L., LL.B. ,
LXXXI Addl. City Civil & Sessions Judge,
Bengaluru City (CCH-82)
(Special Court exclusively to deal with criminal cases related to elected
former and sitting Mps/ MLAs in the State of Karnataka)
C/c of XLVII Addl. City Civil and Sessions Judge and Judge for CBI Cases,
Bengaluru (CCH-48)
SPL.CC.No.483/2017
COMPLAINANT: The State of Karnataka by
CBI, ACB, Bangalore
(By CBI Public Prosecutor)
Vs.
ACCUSED : 1. Sri. N. Satyababu
S/o. Late. Narayanappa Gownipally
Nagappa
Aged 51 years, R/at.No.306/1,
2nd Main, 3rd Cross,
Muniyappa Garden, K.R.Puram,
Bengaluru-560 036.
2. Sri. Prince Neshan
S/o. Santosh Neshan
2 Spl.C.No.483/2017
Aged about 30 years
R/at. No.133, 3rd Cross,
Shingapura Layout,
Bengaluru -560 090.
(A.1 by Sri.YBM, Advocate)
(A.2 by Sri. TP, Advocate)
1.Date of Commission of Offence : 16.06.2014 to 23.03.2015
2. Date of Report of Offence : 29.02.2016
3. Arrest of Accused Accused are on bail
4. Name of the complainant : Sri. G.C.Matolli
5. Date of recording of Evidence : 07.03.2022
6. Date of closing Evidence : 12.02.2024
7. Offences complained of : Sec.120(B) R/w. Sec.420,
467, 468, 471 of IPC and
Sec.13(1)(d) R/w. Sec.13(2)
of the Prevention of
Corruption Act, 1988
8. Opinion of the Judge : As per the final order
(Santhosh Gajanan Bhat)
LXXXI Addl. City Civil & Sessions Judge,
Bengaluru City (CCH-82)
C/c of XLVII Addl. City Civil and Sessions Judge and Judge for
CBI Cases, Bengaluru (CCH-48)
*****
3 Spl.C.No.483/2017
JUDGMENT
The Police Inspector of CBI has filed charge sheet against accused No.1 and 2 for offences punishable U/s.420, 467, 468, 471 r/w 120B of IPC and under Sec.13(1)(d) r/w 13(2) of the Prevention of Corruption Act, 1988 (hereinafter referred to as 'P.C.Act').
2 As noticed from the records a case came to be registered in RC 03(A)/2016 against accused No.1 N.Satyababu and accused No.2 Prince Neshan on the written information filed by PW1 G.C.Matolli, Deputy General Manager, Syndicate Bank, Regional Office-North, Bangalore. It has been contended that the accused No.1 N.Satyababu who was working as Senior Manager, Syndicate Bank, Jalahalli Branch, Bengaluru during the period from 16.06.2014 to 20.03.2015, had entered into criminal conspiracy with accused No.2 Prince Neshan who was the partner of M/s.T and T Concrete Bricks to cheat and defraud the Bank and in furtherance of the same, the accused No.2 had availed term loan of Rs.9 lakhs and OD facility of Rs.16 lakh under Micro and Small Enterprise 4 Spl.C.No.483/2017 Scheme ('MSE Scheme' for short) by furnishing quotation and cash receipt issued by the supplier i.e., M/s Technic and Technicians Industries. The accused No.1 being the Manager, was duty bound to comply with the procedures and guidelines as laid down by the Reserve Bank of India and by the Bank at the relevant point time, had not adhered to the same and without conducting pre and post inspection visit to the units, prior to sanction of loan, had disbursed the loan amount in favour of accused No.2 who in turn had siphoned off the loan amount which was to be disbursed towards purchasing of machinery. Further it is also alleged that the accused No.1 had not ensured the end usage of the sanctioned loan amount and accused No.2 had utilised the said amount without purchasing any machinery or materials as claimed by him. It is further submitted that the supplier of the machinery i.e., M/s.Technic and Technicians Industries was the company which was run by the father of accused No.2 and as such the Manager should not have entertained disbursal of the loan amount in favour of a company which intended to purchase from their own sister concern. By pointing out the said aspects, subsequently an inspection was 5 Spl.C.No.483/2017 carried out by the Bank. During the course of internal investigation, it was noticed that the accused persons had entered into criminal conspiracy to cheat and defraud the Bank and accordingly, they had directed PW1 G.C.Matolli to lodge a complaint. On the basis of the said direction, PW1 G.C.Matolli had filed written information before the CBI authorities and based on he said written information a complaint came to be registered in RC 3(A)/2016.
3 The Investigating Agency, on the receipt of the FIR, had commenced investigation and had recorded statement of the witnesses and the I.O. had also collected Internal Audit Report as furnished by the Bank through PW3 Nagesh and PW4 Guruprasad and during the course of his investigation, he had also visited the units i.e., M/s. Technic and Technicians Industries being run by Santosh Neshan. It was found by the Investigating Agency that M/s. T & T Concrete Bricks unit was not at all in existence, in fact they do not have adequate power supply also. It was also noticed by the Investigating officer that no machinery as claimed by the accused No.2 were supplied to M/s. T & T Concrete Bricks Unit by M/s.Technic & Technicians Industries and also end usage of the 6 Spl.C.No.483/2017 loan amount was not utilized for the purpose for which the loan was availed. The Investigating Officer subsequently had collected loan document from the Bank and had also sent the same for scientific examination to the hand writing expert and PW9 Balasami who had conducted examination of the same abd had furnished his report. Thereafter, Investigating Agency had visited the place of unit and had recorded proceedings and on completion of investigation, it was noticed by the Investigating Agency that the accused No.1 and 2 had entered into criminal conspiracy and in furtherance of the same, they had cheated and defrauded the Bank by disbursing and availing loan under MSE Scheme for a sum of Rs.9 lakhs for purchasing machinery and OD facility for a sum of Rs.16 lakh towards working capital. Accordingly, the charge sheet came to be filed before this Court.
4 On the receipt of the charge sheet filed against the accused persons, the court had perused entire materials on record and had found that there were necessary materials to take cognizance for the offences as alleged in the charge sheet. By passing a reasoned order, necessary cognizance was taken against 7 Spl.C.No.483/2017 accused No.1 and 2 and they were summoned to appear before the court. In pursuance of the summons the accused No.1 N.Satya Babu and accused No.2 Prince Neshan appeared before the court and they were admitted to bail. It is also noticed that the accused had filed necessary applications seeking for their discharge which came to be rejected and charges against the accused persons were framed for the aforesaid offences, wherein they had pleaded not guilty and claimed to be tried. As such, the prosecution in order to prove their case had examined totally 17 witnesses as PW1 to PW17 and got marked documents as exhibits Ex.P.1 to Ex.P.76. On completion of prosecution evidence, the statement of accused came to be recorded as contemplated under Sec.313 of Cr.P.C., wherein the accused No.1 and 2 had denied all the incriminating materials appearing against them. The accused No.1 and 2 had not preferred to lead any defence evidence, however, they got marked Ex.D.1 to D.13 during the course of cross-examination of witnesses by means of confrontation.
5 Heard the arguments of learned Public Prosecutor who has filed written synopsis along with list of authorities. It is the 8 Spl.C.No.483/2017 first contention of the learned Public Prosecutor that the contention of the Investigating Agency of entering into criminal conspiracy by accused No.1 N.Satya Babu the then Manager of Syndicate Bank and accused No.2 Prince Neshan who was the proprietor of M/s T and T Concrete Bricks is required to be considered on the basis of the circumstantial materials which has been produced before the court. It is his contention that the conspiracy always be hatched up in darkness as such no direct materials will be available to prove the same. By pointing out the same, the learned Public Prosecutor has vehemently argued that the documents which are furnished by the accused No.1 and 2 should be considered in proper perspective. It is his submission that the report furnished by the Internal Auditor at Ex.P.4 would indicate that the Manager had not complied with the KYC Norms nor had he bothered to make a pre and post sanction visit to the units. When public money is being disbursed, a fundamental duty is caste upon the Manager to ascertain the purpose of loan and also end usage of the loan. It is argued by the learned Public Prosecutor that the I.O. had clearly collected information about the non-existence of the unit in the name of M/s. 9 Spl.C.No.483/2017 T & T Concrete Bricks. That apart, the evidence of the land owner where the alleged industry was being run was examined before the court as PW11 Srinivas.B.R. who has specifically deposed that there was no power facility being provided and due to non- availability of power supply, the work of M/s. T & T Concrete Bricks was not continued and only during December 2015 for some period of time they had run the industry. It is the submission of the learned Public Prosecutor that non running of industry would indicate of a malafide intention on the part of the accused No.2. Further, he has submitted that the question of malafide could be noticed right from the inception wherein they had availed the loan with respect to purchase of machinery which was to be supplied by the father of accused No.2 i.e., PW15 Santosh Neshan and it has been argued at length that PW15 was the proprietor of M/s Technic and Technician Industries and the invoice was to be signed by PW15. Whereas in the instant case, the invoice as well as pre- receipt for receiving the difference amount was signed by accused No.2 instead of PW15. That apart the loan application itself disclosed that the industry was open about six months prior to 10 Spl.C.No.483/2017 availing of loan. But it was mentioned in their application as the one which was being run for last 14 years prior to availing of loan. By pointing out all these aspects, it has been submitted by the learned Public Prosecutor that the prosecution had established their case beyond reasonable doubt.
6 With respect to the offences alleged under Sec.13(1)
(d) r/w 13(2) of P.C.Act, the learned Public Prosecutor has submitted that the prosecution are able to establish the fact that the conduct of accused No.1 Manager cannot be termed as a minor misnomer which would be considered as an act attracting the Departmental Enquiry. It is his contention that since a criminal conspiracy was hatched by both the accused persons, wherein they had entertained malafide intention right from inception, which was proved during the course of evidence and accordingly, the act of accused No.1 was considered to be an act attracting the provisions of Sec.13(1)(d) r/w Sec.13(2) of P.C.Act. In order to butters his submission he has relied upon the judgments of the Hon'ble Apex Court as detailed below:
11 Spl.C.No.483/2017
1) (2002) 7 SCC 334 (Mohammed Khalid Vs. State of West Bengal) wherein the Hon'ble Apex Court had discussed about the modalities of ascertaining the existence of criminal conspiracy as per sec.120B of IPC.
2) (2023) SCC OnLine SC 1261 (Balvir Singh Vs. State of Uttarkhand) wherein once again the Hon'ble Apex Court has discussed and held that the concept of conspiracy is hatched in darkness and at the time of trial the court is required to consider the same by looking in to the circumstantial materials which has been produced on the basis of circumstances indicated therein.
3) (2020) 2 SCC 153 (SHO, CBI/ACB, Bangalore Vs. B.A.Srinivasan and another) wherein it has been held that the mandate of Sec.19 of obtaining prior sanction against an employee who has been retired or dismissed from the services, is not required.
4) (2019) 16 SCC 687 (CBI Vs. Hari Singh Ranka and Others) wherein Hon'ble Apex Court held that when the loan obtained from Bank by fraud and the accused 12 Spl.C.No.483/2017 entering in to one - time settlement with Bank, in view of the serious allegations made with regard to defrauding and cheating committed with the help of forged documents, criminal action is maintainable.
5) (2005) 9 SCC 15 (Devender Kumar Singla Vs. Baldev Krishan Singla) wherein it was held that the provision of section 420 of IPC would indicate the necessity of dishonest inducement to deliver a property and the essential ingredients are making of a false representation and it is not necessary that a false pretense should be made in express words, but it may be inferred from all circumstances including the conduct of accused in obtaining the property. It is also been held that the proof of direct evidence was not possible in respect of considering the existence of mens rea and also requirement under sec.415 of IPC to indicate that cheating was that deception of a new person whereby he was fraudulently and dishonestly induced to deliver a property.
7 By pointing out the said authorities, the learned Public Prosecutor has sought for convicting the accused persons. 13 Spl.C.No.483/2017
8 Sri Venkataramana N.Nayak and Miss.
Yashodha.B.M have vehemently argued that the prosecution has utterly failed to prove their case beyond reasonable doubt. It has been submitted that the act of accused No.2 himself affixing signature to the receipt which was required to be issued by PW15 was not pre-requisite factor. It is submitted that the end usage of the amount is required to be considered. The learned counsel for accused has also taken this court through the entire evidence which was recorded and also deposition of PW15 Santhosh Neshan.It has been submittedthat during the course of cross-examination, PW15 has specifically deposed that he had received amount and due to oversight the accused No.2 might have affixed his signature to the receipts. Further, the learned counsel for accused has also argued that the accused No.2 at the time of availing of loan was a young entrepreneur, who was not having much worldly knowledge about the account transactions and if viewed from that point, it would indicate that no such malafide can be attached to the act of the accused No.2. That apart, the evidence of PW14 Rajendra Kumar.S would indicate that majority of the irregularities pointed out in the 14 Spl.C.No.483/2017 Inspection Report at Ex.P.4 was rectified. Under the circumstances, the allegations which are leveled against the accused No.1 and 2 were not proved beyond all reasonable doubt and hence, have sought for acquittal.
9 In order butters their arguments, the learned counsel for accused No.1 has further relied upon various authorities of Hon'ble Apex Court reported in:
1) (2021) 18 SCC 70 (N.Raghavender Vs. State of Andhra Pradesh, CBI) wherein the principles of Sec.420 of IPC has been discussed by the Hon'ble Apex Court and it has been held that mens rea of the accused at the time of inducement is a condition precedent. By pointing out the same, the learned counsel for accused has argued that the accused No.2 had never entertained any idea nor mens rea to commit the offences.
2) (2016) 12 SCC 273 (K.Sivaprakash Vs. State of Kerala) wherein it was held that in the matters pertaining to committing criminal misconduct by abusing the position by the public servant the evidence of obtaining pecuniary 15 Spl.C.No.483/2017 advantage for himself was mandatory and the mandatory ingredients to attract the provisions of Sec.13(1)(d)(i) was also succinctly discussed.
3) (1980) 3 SCC 110 (Abdulla Mohammed Pagarkar vs State (Union Territory Of Goa, Daman And Diu) wherein Hon'ble Apex Court has held that mere disregard of relevant provisions of general financial rule as well as ordinary norms of procedural behaviour of Government officials would not be construed as an offence coming within the purview of the Prevention of Corruption of Act.
4) (2007) 13 SCC 410 (Radha Pisharassiar Amma vs State Of Kerala) wherein the same principles with respect to attracting criminal conspiracy and rigors of the P.C.Act was succinctly discussed.
10 By pointing out the said authorities along with the infirmities in the above case, the learned counsel for accused No.1 has vehemently argued that the prosecution has utterly failed to 16 Spl.C.No.483/2017 prove their case beyond reasonable doubt and has accordingly sought for acquittal of accused person.
11 In order to butters his contention, learned counsel for accused No.2 has relied upon certain authorities of Hon'ble Apex Court and Hon'ble High Court of Karnataka as follows:
i) (2019) 9 SCC 148 (Satishchandra Ratanlal Shah Vs. State of Gujarat and another) wherein Hon'ble Apex Court has held that mere inability of the appellant to return the amount cannot give raise to criminal prosecution for cheating unless fraudulent and dishonest intention is shown right from the beginning.
ii) Crl.P.No.4346/2022 (Vilas Deore Vs. State of Karnataka and others) wherein Hon'ble High Court of Karnataka was pleased to discuss ingredients of Sec.415 of IPC.
iii) AIR 2021 SC 5298 (Mitesh Kumar J.Sha Vs. The State of Karnataka and others) Wherein Hon'ble Apex Court had clearly held that distinction between mere breach of contract and offence of cheating.17 Spl.C.No.483/2017
iv) W.P.No.12325/2020 (GM-RES) (M/s.Alila Infrastructure Development Company Pvt Ltd., Vs. CBI and another) wherein Hon'ble High Court of Karnataka was pleased to hold that the loanee had repaid the amount and if no loss was caused to the Bank, continuation of criminal case would be a abuse of process of law.
v) Lastly he has relied upon another authority in Crl.A.No.207/2011 (H.S.Seetharam Vs. State, Dy.SP/CBI/ACB) wherein it has been held that if loanee offers immovable property as collateral security then there cannot be any conspiracy between accused No.1 and 2.
12 By relying upon the said authorities, learned counsel for accused No.2 has argued that a mere inability to repay the loan amount cannot be construed as an act of cheating and also prosecution should have established that the accused No.1 and 2 had entertained malafide intention right from the beginning. Lastly it has been submitted that the accused No.2 had already offered collateral security at the time of availing loan from the Bank and as 18 Spl.C.No.483/2017 such the last judgment of the Hon'ble Court would be squarely applicable to the case on hand. By relying upon the same, he has sought for acquittal of accused.
13 Heard the arguments of both the parties and perused materials. The points that would arise for my consideration are as follows:-
1) Whether the prosecution proves that obtaining of prior sanction to prosecute accused No.1 N.Satya Babu under Sec.19 of Cr.P.C., is not required in the wake of his dismissal from service of the Bank as a public servant?
2) Whether the prosecution proves beyond reasonable doubt that accused No.1 being public servant and working as the then Senior Manager of Syndicate Bank, Jalahalli Branch between 16.6.2014 and 20.03.2015 had entered in to a criminal conspiracy with accused No.2 Prince Neshan, Partner of M/s. T & T Concrete Bricks and had sanctioned a sum of Rs.9 lakh as loan towards purchase of machinery and OD facility of Rs.16 lakhs as working capital under MSE scheme without verifying the veracity of such 19 Spl.C.No.483/2017 claim to an extent of Rs.24,87,145.14/- and caused wrongful gain for themselves and thereby accused No.1 and 2 have committed offence punishable under Sec.120-B of IPC?
3) Whether the prosecution proves beyond reasonable doubt that the accused No.1 and 2, in furtherance of criminal conspiracy to cheat and defraud the Bank and accused No.1, being the Manager of the Syndicate Bank during the aforesaid period, had processed and sanctioned loan pertaining to accused No.2 Prince Neshan, proprietor of M/s. T & T Concrete Bricks to an extent of Rs.9 lakhs for purchasing machinery and Rs.16 lakh as OD facility towards working capital on the basis of the forged and fabricated documents, wherein the accused No.1 knowing very well that the availing of loan itself was with malafide intention to cheat and defraud the Bank and inspite of it, he had sanctioned the same without ensuring end usage of funds and thereby accused No.1 and 2 have committed offence for the offences punishable under Sec.420 r/w 120B of IPC?20 Spl.C.No.483/2017
4) Whether the prosecution proves beyond reasonable doubt that during the aforesaid period of time, the accused No.1 and 2 in furtherance of criminal conspiracy to cheat and defraud the Bank, accused No.2 had furnished a quotation and cash receipt depicting himself as proprietor of M/s.Technic & Technicians Industries owned by his father-PW15 Santosh Neshan and had induced accused No.1 to act upon the same knowing fully well that it was forged document and thereby accused No.2 committed offence punishable under Sec.467 r/w 120-B of IPC?
5) Whether the prosecution proves beyond reasonable doubt that during the aforesaid period of time, the accused No.1 and 2 in furtherance of criminal conspiracy to cheat and defraud the Bank, accused No.2 had forged quotation and cash receipt depicting himself as proprietor of M/s.Technic & Technicians Industries owned by his father and had induced accused No.1 to act upon the same knowing fully well that it was forged document and thereby accused No.2 committed offences punishable under Sec.468 r/w 120-B of IPC?21 Spl.C.No.483/2017
6) Whether the prosecution proves beyond reasonable doubt that during the aforesaid period of time, the accused No.1 and 2 in furtherance of criminal conspiracy to cheat and defraud the Bank, accused No.2 had forged quotation and cash receipt depicting himself as proprietor of M/s.Technic & Technicians Industries owned by his father-PW15 Santosh Neshan and had used the said forged documents as genuine documents to avail credit facility from the Bank and you accused No.1 used above said fake and fabricated quotation and cash receipt produced by accused No.2 to extend credit facility and thereby accused No.1 and 2 have committed offences punishable under Sec.471 r/w 120-B of IPC?
7) Whether the prosecution proves beyond reasonable doubt that during the aforesaid period of time, the accused No.1, in furtherance of criminal conspiracy and by gross abuse of his official position with dishonest intention to cheat and defraud the Bank, had sanctioned loan of Rs.9 lakhs for purchase of machinery and extended OD facility of Rs.16 lakhs as working capital under MSE Scheme to accused No.2 without following Banking procedures, circulars, guidelines issued 22 Spl.C.No.483/2017 by the Reserve Bank of India and by the Syndicate Bank from time to time and without making pre and post sanction visits to the units and caused loss to the Bank and thereby accused No.1 had committed an offence of criminal misconduct punishable under Sec.13(1)(d) r/w 13(2) of the Prevention of Corruption Act, 1988?
8) What order?
14 My answer to the above points are as follows:-
Point No.1: In the Affirmative Point No.2: In the Affirmative Point No.3: In the Affirmative Point No.4: In the Affirmative Point No.5: In the Affirmative Point No.6: In the Affirmative Point No.7: In the Affirmative Point No.8: As per final order for the following:-
REASONS
15 Before adumbrating to the factual aspects of the case, the facts in narrow compass is that the accused No.1 N.Satya Babu being the Senior Manager of Syndicate Bank of Jalahalli Branch during the period 16.6.2014 to 20.3.2015, had sanctioned 23 Spl.C.No.483/2017 loan amount of Rs.9 lakhs towards purchase of machinery and Rs.16 lakhs as OD towards working capital in favour of M/s.T and T Concrete Bricks of accused No.2 Prince Neshan who was the proprietor of the said firm. It is alleged that the said loan was sanctioned without adhering to the settled principle of law and without following the Banking guidelines and circulars and without verifying the veracity and genuineness of the documents which were supplied to the Bank by the accused No.2. Since the loan amount was processed and disbursed in derogation of settled principle of law and also the guidelines issued by the Bank, it was found out during the course of internal audit conducted by the Bank about the ill-deeds and malafide intention entertained by the accused No.1 and 2 and subsequently a case came to be registered.
16 Before adverting to the factual aspects of the case, the entire evidence which has been lead before the court by the prosecution is to be recapitulated. The case came to be registered on the basis of written information filed by PW1 G.C.Matolli, who has deposed that he was the Deputy General Manager of the Syndicate Bank during the relevant period of time and at the 24 Spl.C.No.483/2017 instance of the Chief Vigilance Officer, who had authorized him, he had lodged the complaint against accused No.1 and 2 on the grounds of cheating, fraud, misrepresentation, false and fabricated information, creating and submission of false documents, criminal breach of trust and misappropriation of public money. It is his contention that the complaint at Ex.P.1 consisted of his signature and during the course of his cross-examination he had admitted that he does not know anything about the acts committed by accused No.1 and 2 personally and he had acted only upon the directions being issued upon him.
17 PW2 Venkatesh is the Asst. General Manager of the Syndicate Bank, deposed of receiving directions by the office at Ex.P.2, wherein the accused No.1 was dismissed from service. Apart from denial, nothing has been elicited from him.
18 PW3 Nagesh.S.H., was the Senior Manager, Vigilance, at Syndicate Bank and he has deposed that he was authorized by Senior officials to conduct internal investigation of Jalahalli Branch for the period of June-2014 to March-2015 when 25 Spl.C.No.483/2017 acused No.1 was working as Senior Branch Manager of Jalahalli Branch and at that point of time, he has recovered certain documents and transactions which were made during the tenure of accused No.1 and had found that the accused No.1 had not followed the Banking principles and he had also not followed the KYC Norms and sanctioning authority was not at all appraised of disbursal of loan and nor necessary permission were obtained and on completion of his internal investigation, he had furnished report. He has also identified his signature on the seizure memo at Ex.P.3 and the report at Ex.P.4. Further he has produced several circulars with respect to the functioning of the Bank which were issued by the higher authorities and RBI and he has also identified the loan application which was filed by the M/s T and T Concrete Bricks as per Ex.P.23 and he has deposed that the loan was sought for a sum of Rs.9 lakhs towards purchase of machinery from M/s.Technic & Technicians Industries as per the quotation at Ex.P.24 and a pre-receipt as per Ex.P.25 and the stock statement, loan review format, business loan model and process note were filed as per Ex.P.26 to 29. It is his contention that the said loan 26 Spl.C.No.483/2017 documents were processed by accused No.1 single handedly. He has also identified the joint inspection report as per Ex.P.30 and it is his specific evidence that during inspection he found the machinery to be in a dilapidated condition and it was not working and for long period the unit was not working. He has explained in detail about the procedure to be adopted by the Bank authorities with respect to processing of loan and its disbursing. During the course of his cross-examination, he has deposed that as per the oral instructions, he has conducted the internal investigation, which had taken 6 months for him to submit his report to the higher authorities and in order to do so he has taken the assistance of PW4 Guruprasad. He has also admitted that the accused No.1 at that point of time had power of sanctioning the loans pertaining to the above case and also for sanctioning MSE scheme loans and term loan. He has further admitted that all the borrowers were the existing customers of the Bank and they had availed several facilities from the Bank. He has also admitted of taking assistance of accused No.1 to visit the units for which the loan was processed and disbursed. Further, he has admitted that the higher authorities 27 Spl.C.No.483/2017 were satisfied with the reports submitted by him. Further, it is his evidence that he had visited the M/s. T & T Concrete Bricks at the address bearing No.365/3, Near Muneshwara Temple, Bagalur on 03.08.2015. Apart from that nothing much has been elucidated from him.
19 During the course of cross-examination by accused No.2, it was suggested to PW3 Nagesh that M/s T and T Concrete Bricks firm was existing customer of the Bank for about 25 years, which was denied by the witness. It was also suggested that accused No.1 was having power to sanction loan of Rs.9 lakhs and though the witness had admitted the same, he has deposed that the same was to be looked in to in accordance with the procedures of the Bank. Further the witness was confronted with the project report of M/s T and T Concrete Bricks and marked the same as Ex.D1 and the photographs of M/s Technic and Technician Industries which were marked by way of confrontation as Ex.D2 and D3. Further, he had admitted the suggestion that the annual income tax returns and auditor report were also submitted along with project report. The witness had also admitted the suggestion 28 Spl.C.No.483/2017 that the borrower had taken the property for lease to establish the unit and the said lease document was marked as Ex.D4. That apart the witness had also admitted to the suggestion that M/s. T & T Concrete Bricks registered with the Directorate of Industries and Commerce and the Registrar of Firms issued acknowledgment for registration as per Ex.D.5 and D6. He has also admitted that the supplier was registered with concerned authority and also it is his assertion that there were no documents to indicate that the borrower and the supplier should not be associated with each other. However, the witness admitted that the borrower had mortgaged immovable property towards the loan.
20 PW4 Guruprasad was the Assistant Manager of Syndicate Bank, who had deposed of assisting PW3 in conducting the Internal Investigation and also he had deposed of furnishing several circulars. He has also deposed about furnishing statement of account of the M/s. T & T Concrete Bricks pertaining to the period 01.06.2014 to 14.08.2015 as per Ex.P.41. During the course of cross-examination, he has admitted that he was not working at said branch at the time of disbursal of the amount, nor he had any 29 Spl.C.No.483/2017 personal knowledge with respect to the loan amount. During the course of cross-examination by accused No.2 it has been deposed by him that he had inspected the unit about 3 times and had feigned his ignorance with respect to the date of his visit. Further he has admitted that Ex.D.1 was the Project Report submitted by M/s T and T Concrete Bricks and the firm was registered under Department of Industries and Commerce as per Ex.D5 and also the Firm was registered in the Registrar of Firms as per Ex.D6. Apart from that nothing much has been elicited from him.
21 PW5 A.N.Vasudevan is the Senior Manager of Syndicate Bank, Jalahalli Branch and he has produced loan document pertaining to CW1 and had issued the acknowledgment. Nothing much was elicited from him.
22 PW6 S.P.Ramachandra was the approved Panel Valuer of Syndicate Bank. He has deposed that he being the valuer had visited the premises to inspect the asset / machinery on 17.12.2015 and at that time he had visited the address No.36/3, Near Muneshwara Temple, Bagaluru along with PW4 Guruprasad 30 Spl.C.No.483/2017 and there was only one machine in the firm and the other machines were not found as mentioned in the quotation and he valued the said machinery to the extent of Rs.35,000/- and taken photographs of the site where the machinery was laid down. He further deposed that he furnished report as per Ex.P.32. During the course of cross- examination he feigned about conducting pre-inspection and post sanction report by the Bank. He has also admitted that he had not collected statement of proprietor of the firm. However, it is his evidence that when he had visited the said premises the units were closed. During the course of cross-examination by accused No.2 he has admitted that he had not telephonically contacted the proprietor of M/s. T & T Concrete Bricks prior to his visit nor he produced any documents in this regard. It was suggested to him that he had furnished false report which was promptly denied by the witness.
23 PW7 Amar Devendrappa Nasi was the Manager in Regional Inspectorate, Syndicate Bank, Bengaluru, who has deposed about collecting certain documents with respect to internal audit.
31 Spl.C.No.483/2017
24 PW8 Anand was the photographer, who has deposed of visiting the units along with the CBI authorities.
25 PW9 A.Balasami is the scientific expert who has deposed of working as Deputy Director and Scientist at CFSL, Hyderabad and had deposed about verifying and inspecting the specimen signature of accused No.2 Prince Neshan along with the loan application. He has further deposed that he had examined the questioned signatures of accused No.2 Prince Neshan which were marked as Q-50 and Q-51 with the specimen signatures marked as S-216 to S-223. He had examined the questioned and specimen signatures in general writing, habits of movement, speed, alignment and termination of strokes etc., and he had arrived at the conclusion that the accused No.2 Prince Neshan wrote the questioned and admitted signatures and they were one and the same. Apart from nothing much has been elicited during the course of his cross-examination.
26 PW10 Hanumanthappa Babu has deposed that he knew M/s. T & T Concrete Bricks which is situated at Chocolate 32 Spl.C.No.483/2017 Bagalur and accused No.2 was the proprietor of the said firm and in the year 2014 he had requested him to sign Bank loan documents as Guarantor. He has also identified his signatures on the guarantee agreement at Ex.P.52 and Ex.P.53. He was considered as partly hostile and the learned Public Prosecutor cross-examined him after obtaining permission of the court. During the course of cross-examination by the learned Public Prosecutor he had deposed of receiving an amount of Rs.2.38 lakh through cheque from accused No.2. During the course of cross- examination he has deposed of knowing accused No.2 and his father for the last 20 years and they were doing separate business by opening separate firms by name M/s. T and T Concrete Bricks and M/s.Technic and Technician Industries and the business was looked after by both of them. Further, he has deposed that he had stood as guarantor of accused No.2 and the firm was closed due to non-availability of power supply. Apart from that nothing much was elicited from him.
27 PW11 Srinivas B.R. has deposed that about 8 years back in the year 2014, accused No.2 and his father had met him for 33 Spl.C.No.483/2017 establishing hallow brick factory in the land bearing Sy.No.365/3 measuring 2.00 acres situated at Bagalur. Out of which, his father has leased 20 gunta of land to accused No.2 for establishing the hallow brick factory. He has also deposed that initially a concrete bed was put up to establish the bricks work, but due to non- availability of power supply, the work was dis-continued. During the course of cross-examination, he has admitted the rental agreement at Ex.D.4 and also the machinery which are forthcoming in the photographs at Ex.D.8 to D.10. He has also admitted that the accused No.2 and his father were running the business by taking power supply from neighboring land owners and accused No.2 had filed necessary application for electricity connection.
28 PW12 Madesha.N is the Asst. Commissioner of Commercial Tax, who has deposed about providing Vat Certificate to M/s.Technic and Technician Industries and also of producing entire file with documents which were marked as Ex.P.62 and P.66. He has deposed that the input tax mentioned in Ex.P.65 discloses about the tax paid by the Proprietor on purchases and Out 34 Spl.C.No.483/2017 Put Tax mentioned in the documents reveal about the tax paid for sale of goods. Further, he has deposed that as per Ex.P.65 for the period from August 2014 to March 2015 the returns was not submitted regarding purchase and sales and maximum output tax was shown as Rs.62,771/-. During the course of cross-examination of accused No.2 nothing much has been elicited from him.
29 PW13 Sridhar.S. is the employee of Commercial Tax Department and he had identified receipt memo marked as Ex.P.67 and entire file pertaining to Vat Transactions came to be marked as Ex.P.69 and 70. Apart from denying nothing much has been elicited from him.
30 PW14 Rajendra Kumar.S was the Senior Manager, Inspection Department, Syndicate Bank, who has deposed of conducting verification of papers and during the course of cross- examination he has admitted that with respect to the loan pertaining M/s. T & T Concrete Bricks, necessary securities were obtained and apart from that nothing has been elicited. 35 Spl.C.No.483/2017
31 PW15 Santosh Neshan is the proprietor of M/s.Technic and Technician Industries, has deposed that accused No.2 Prince Neshan is his son. In the year 2014 they had intended to open a concrete hallow bricks business and also he has identified the signature found in Ex.P.25 Pre-receipt as the one belonging to his son accused No.2 Prince Neshan. It is his evidence that the receipt was issued on 25.6.2014. He has also deposed that M/s.Technic and Technician Industries were registered with the Tax Department and as per rule all the transactions were reflected in books of accounts. He has also deposed that his son Prince Neshan had signed the receipt at Ex.P.24 in the authorized signatory column. He has feigned his ignorance with respect to other contents. He has also categorically admitted that the tax amount mentioned in the invoice at Ex.P.24 was Rs.1,62,835/- . He has also categorically admitted that the VAT returns at Ex.P.65. However, he has deposed that he cannot produce VAT Certificate on behalf of M/s.Technic and Technician Industries for having collected Rs.,62,835/-. He has also deposed that Sri Suresh Babu was the employee of his M/s.Technic and 36 Spl.C.No.483/2017 Technician Industries and he was paid Rs.25,000/-, another sum of Rs.60,000/- and Rs.1 lakh by accused No.2 Prince Neshan on his directions for the factory use and material purchases. Apart from that nothing much has been elicited from him.
32 PW15 Santosh Neshan was considered as partly hostile witness and during the course of cross-examination by the learned Public Prosecutor he has admitted that Ex.D.6 is the document of commencement of partnership firm on 01.07.2014.
33 Subsequently, PW15 was recalled by accused No.2 and he was also subjected to cross-examination. In the cross- examination he has deposed that he would sign the quotation, whenever, he was not present and if was unavailable, his son Prince Neshan would sign the quotation as authorized signatory. He has further stated that if he was present, he would receive the payment and in his absence, his son Prince Neshan would receive the payment by signing on the printed form as authorized signatory. He has specifically deposed that his son helped him to run his proprietorship business. He was permitted to sign quotation 37 Spl.C.No.483/2017 and also receipts issued. Similarly he has affixed his signature to the receipt at Ex.P.24 and 25 in the above case. He has also deposed that his son Prince Neshan has paid Rs.1,64,000/- to him by way of cash and the Bankers have initially transferred the machinery loan to M/s. T & T Concrete Bricks and subsequently re-transferred the money to M/s.Technic and Technician Industries. He has deposed that as per Ex.P.44 a sum of Rs.2,38,000/- was transferred to PW10-Hanumanthappa Babu by his son accused No.2 Prince Neshan which he had received back. Further, towards the other transactions with Suresh Babu it is his evidence that the same was made towards purchase of materials and lastly he has deposed that his son Prince Neshan has paid entire loan borrowed from the Bank as per Ex.D.11.
34 PW16 R.K.Shivanna was the Inspector of Police, who had deposed of registering of FIR as per direction issued by his higher authorities in RC 3(A)/2016 as per Ex.P.76. He has deposed of commencing investigation and recording statement of various witnesses and also collecting of materials. 38 Spl.C.No.483/2017
35 PW17 Rakesn Ranjan is the Investigating Officer who had received the case file on 2.9.2016 and verified the same. It is his evidence that he had recorded the statement of witnesses and also he had visited the premises of M/s.T and T Concrete Bricks on 22.11.2016 and found that in the said premises M/s.HNV Hollow Bricks was functioning. He has deposed of drawing proceedings as per Ex.P.33 and also after completion of the investigation he has deposed about filing of the charge sheet. Apart from denial nothing much was elicited from him during the course of cross-examination. During the course of cross- examination by accused No.2 it was suggested to him that the Bank had obtained collateral security towards sanctioning of loan which was admitted by the witness. However, he has denied the suggestion that the machinery supplied to accused No.2 and it was lying at the spot itself. Apart from that nothing much was elicited from him.
36 Point No.1:- In the instant case, it has been specifically contended that the accused No.1 N.Satya Babu at the time of commission of offence was working as Senior Manager at 39 Spl.C.No.483/2017 Jalahalli Branch of the then Syndicate Bank. It is not in dispute that the alleged incident had taken place during the period 2014-
15. Under the circumstances, when the provision of Prevention of Corruption Act is invoked, it would be bounden duty of the prosecution to establish the fact that the question of obtaining sanction is not required in the instant case. The learned Public Prosecutor has vehemently argued that the evidence of PW2 Venkatesh would clarify the position of law in this regard. It is his contention that PW2 Venkatesh who had appeared before the court has specifically deposed that accused No.1 N.Satya Babu was dismissed from the service which is evident from the letter marked as Ex.P.2 in the instant case. On perusal of the said document, it indicates that the correspondence had taken place between the Investigating Agency and also with the competent authority of the Bank. It has been stated that upon initiation of Departmental proceedings against accused No.1, he was found guilty and accordingly, he was dismissed from the services as per the orders passed by the Disciplinary Authority in No.117/PD-IRD/DA-6 dated 22.3.2017. Hence, it is stated that the question of according 40 Spl.C.No.483/2017 sanction to prosecute him does not arise. The provision of law with respect to according of sanction under Sec.19 of Cr.P.C., is also very clear, which would indicate that only if the persons are in service, then necessary sanction is required. By considering the said aspect, it is crystal clear that no sanction is required to prosecute accused No.1 as he was already dismissed from the services. Accordingly, the Point No.1 is answered in the Affirmative.
37 Point No.2 to 7: Since these points are related to each other they are taken up for discussion together. With respect to the facts which are alleged in the above case, it is required to appreciate the allegations leveled against the accused persons. At the cost of repetition, it is the first and foremost contention alleged by the Investigating Agency that the accused No.1 N.Satya Babu who was the then Senior Manager of Syndicate Bank, Jalahalli branch, Bengaluru, had entered into criminal conspiracy with accused No.2 Prince Neshan who was the proprietor of M/s.T & T Concrete Bricks. In furtherance of the said criminal conspiracy to cheat and defraud the Bank, accused No.1 sanctioned loan of Rs.9 41 Spl.C.No.483/2017 lakhs towards purchase of machinery and extended OD facility to an extent of Rs.16 lakhs towards working capital under MSE Scheme without following due process of law and he had not adhered to the guidelines and circulars issued by the RBI and Syndicate Bank from time to time. Hence, the main aspect which is to be appreciated at the first instance is entering into criminal conspiracy between accused No.1 and 2. It is well settled principles of law that criminal conspiracy will be hatched up in darkness and will be executed for which there will not be any direct evidence. It is also relevant to appreciate that when criminal conspiracy is alleged, the same is required to be considered on the basis of the materials available on record and at times, the circumstantial evidence is also required to be looked into.
38 The learned Public Prosecutor has vehemently argued that the material which has been placed before the court i.e., the loan application at Ex.P.23 would indicate that the accused No.2 had filed necessary application to borrow the loan amount, which he never intended to utilize for the purpose for which it was sought. It is his contention that if at all the Manager i.e., accused 42 Spl.C.No.483/2017 No.1 had acted diligently and in accordance with the circulars and guidelines issued by the RBI and by the Bank from time to time, question of granting of such amount would not have arose. In order to point out the said aspect, he has relied upon the report filed by PW3 Nagesh which is marked as Ex.P.4. On perusal of the report Ex.P.4 which is Internal Investigation Report, would indicate that several allegations has been leveled against the Manager-accused No.1. It is pertinent to note that the main allegation which has been leveled against accused No.1 and 2 in the above case is that the Branch Manager was required to consider about the veracity of the supplier of the machinery and his existence as well the existence and performance of the unit. Learned Public Prosecutor has argued that the application itself would disclose that the Unit was established from 1.7.2014 and further the partnership deed which was reduced into writing indicates that it was executed on 5.7.2014. Immediately, the application was filed before the competent Bank wherein the accused No.1 was the Manager seeking financial accommodation. It was mentioned in the application that the unit was in existence for the last 20 years and 43 Spl.C.No.483/2017 also the details of the transactions pertaining to previous years would falsify their contention of being established in the year 2014 itself. The scrutiny of the documents was not made by the accused No.1 N.Satya Babu intentionally as he had entered into criminal conspiracy to commit to cheat and defraud the Bank.
39 By looking in to the said evidence, the allegations indicate entering of criminal conspiracy between accused No.1 and
2. In the instant case, as already noticed the allegation of conspiracy is required to be proved on the basis of the circumstances which are prevailing in the above case. It is the settled principles of law that the concept of criminal conspiracy cannot be proved in normal circumstances by way of direct evidence. However, the same may be proved by indicating the circumstances which would lead to draw inference that it was not a minor irregularity but indeed it was an act of criminal conspiracy. In the instant case as noticed above, some irregularities were being committed by accused No.1. Under the circumstances, the moot aspect which is required to be determined is whether such irregularity amounts to entering into criminal conspiracy. In this 44 Spl.C.No.483/2017 regard, the authority which has been relied upon by the learned Public Prosecutor is required to be considered which is reported in (2002) 7 SCC 334 (Mohammed Khalid Vs. State of West Bengal) wherein the Hon'ble Apex Court has held as follows:
"17. It would be appropriate to deal with the question of conspiracy. Section 120B of IPC is the provision which provides for punishment for criminal conspiracy. Definition of 'criminal conspiracy' given in Section 120A reads as follows:
"120A-When two or more persons agree to do, or cause to be done,- (1) all illegal act, or (2) an act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy;
Provided that no agreement except an agreement to commit an offence shall amount to a criminal conspiracy unless some act besides the agreement is done by one or more parties to such agreement in pursuance thereof.' The elements of a criminal conspiracy have been stated to be: (a) an object to be accomplished, (b) a plan or scheme embodying means to accomplish that object, (c) an agreement or understanding between two or more of the accused persons whereby, they become definitely committed to co-operate for the 45 Spl.C.No.483/2017 accomplishment of the object by the means embodied in the agreement, or by any effectual means, (d) in the jurisdiction where the statute required an overt act. The essence of a criminal conspiracy is the unlawful combination and ordinarily the offence is complete when the combination is framed. From this, it necessarily follows that unless the statute so requires, no overt act need be done in furtherance of the conspiracy, and that the object of the combination need not be accomplished, in order to constitute an indictable offence. 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. The conspiracy is held to be continued and renewed as to all its members wherever and whenever any member of the conspiracy acts in furtherance of the common design. (See: American Jurisprudence Vol. II Sec. 23, p. 559). For an offence punishable under section 120-B, prosecution need not necessarily prove that the perpetrators expressly agree to do or cause to be done illegal act; the agreement may be proved by necessary implication. Offence of criminal conspiracy has its 46 Spl.C.No.483/2017 foundation in an agreement to commit an offence. A conspiracy consists not merely in the intention of two or more, but in the agreement of two or more to do an unlawful act by unlawful means. So long as such a design rests in intention only, it is not indictable. When two agree to carry it into effect, the very plot is an act in itself, and an act of each of the parties, promise against promise, actus contra actum, capable of being enforced, if lawful, punishable if for a criminal object or for use of criminal means.
18. No doubt in the case of conspiracy there cannot be any direct evidence. The ingredients of offence are that there should be an agreement between persons who are alleged to conspire and the said agreement should be for doing an illegal act or for doing illegal means an act which itself may not be illegal, Therefore, the essence of criminal conspiracy is an agreement to do an illegal act and such an agreement can be proved either by direct evidence or by circumstantial evidence or by both, and it is a matter of common experience that direct evidence to prove conspiracy is rarely available. Therefore, the circumstances proved before, during and after the occurrence have to be considered to decide about the complicity of the accused."47 Spl.C.No.483/2017
40 On appreciating the above said dictum, it is clear that the prosecution is required to prove the circumstances under which an offence is committed which would be construed as conspiracy i.e., there should be an object to be accomplished, plan or scheme embodying means to accomplish the object, an agreement or understanding between 2 or more accused persons and in the juxtaposition where the statue is required to commit an overt act. In other words, the essence of criminal conspiracy is the unlawful combination and ordinarily the offence is complete when the combination is framed. In the instant case it requires to be considered that whether the sanctioning of the loan with some irregularities would amount to conspiracy. Time and again it has been held by various dictums that the criminal conspiracy is an independent offence. Further the prosecution is required to prove the same by producing necessary materials to indicate criminal misconduct on the part of the accused. In other words, the acts, which have been committed by the accused persons, should be the one, wherein the accused has to take definite steps to an agreement which they had entered upon to do an illegal act or to do an act 48 Spl.C.No.483/2017 which is legal, but with illegal means. Hence, in simple manner the concept of conspiracy can be explained if it consists following ingredients.
a) that there should be an agreement between 2 or more persons
b) that the said agreement should be for doing of an illegal act or for doing by illegal means an act which by itself may not be illegal.
41 When the said ingredients are established, then only the prosecution may contend that the accused persons had entertained an intention to commit an offence. At this juncture it would be appropriate to appreciate and rely upon the passage of Russell on Crimes (12th 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".49 Spl.C.No.483/2017
42 If the said aspect is appreciated with the case on hand, it would indicate that the accused No.1 had sanctioned loan which was sought by the accused No.2 on behalf of the partnership firm. In this regard, reliance is placed on the loan application Ex.P.23 which indicates that the accused No.2 had filed application seeking for financial accommodation to an extent of Rs.9 lakhs towards purchase of machinery and OD facility of Rs.16 lakhs towards working capital under MSE Scheme. In fact Ex.P.23 loan application clearly describes that the accused No.2 Prince Neshan is partner of the firm M/s T & T Concrete Bricks. Further, accused No.2 had sought for a term loan of Rs.9 lakhs for purchase of machinery and OD facility of Rs.16 lakhs as working capital to run the industry.
43 When the said postulates of criminal conspiracy is carefully appreciated it indicates that the prosecution in order to establish the fact of conspiracy has to firstly establish either directly or through circumstantial evidences that the persons alleged to have conspired had meeting of minds towards commission of an illegal act or an act which is not illegal, by 50 Spl.C.No.483/2017 illegal means. It is settled principle of law that criminal conspiracy is an independent offence and it is punishable separately. Further, criminal conspiracy must be put into action for so long as crime is generated in the mind of accused and had the same does not become punishable. Thoughts, even criminal in nature, often involuntarily cannot be construed as commission of an illegal act. However with respect to drawing inference of criminal conspiracy, the Hon'ble Apex Court has cautioned that the court has to base its inferences on the materials which have been brought on record to arrive at a finding that whether a criminal conspiracy has been established by the prosecution. In this regard, the judgment of the Hon'ble Apex Court reported in (2009) 15 SCC 643 (Mir Nagvi Askari Vs. CBI) wherein it is held as:
60. Criminal conspiracy, it must be noted in this regard, is an independent offence. It is punishable separately. A criminal conspiracy must be put to action; for so long as a crime is generated in the mind of the accused, the same does not become punishable. Thoughts even criminal in character, often involuntary, are not crimes but when they take a concrete shape of an agreement to 51 Spl.C.No.483/2017 do or caused to be done an illegal act or an act which is not illegal, by illegal means then even if nothing further is done, the agreement would give rise to a criminal conspiracy.
61. The ingredients of the offence of criminal conspiracy are:
(i) an agreement between two or more persons
(ii) an agreement must relate to doing or causing to be done either (a) an illegal act; (b) an act which is not illegal in itself but is done by illegal means.
Condition precedent for holding the accused persons to be guilty of a charge of criminal conspiracy must, therefore, be considered on the anvil of the fact which must be established by the prosecution viz. meeting of minds of two or more persons for doing or causing to be done an illegal act or an act by illegal means.
62. The courts, however, while drawing an inference from the materials brought on record to arrive at a finding as to whether the charges of the criminal conspiracy have been proved or not, must always bear in mind that a conspiracy is hatched in secrecy and it is difficult, if not impossible, to obtain 52 Spl.C.No.483/2017 direct evidence to establish the same. The manner and circumstances in which the offences have been committed and the accused persons took part are relevant. For the said purpose, it is necessary to prove that the propounders had expressly agreed to it or caused it to be done, and it may also be proved by adduction of circumstantial evidence and/or by necessary implication. (See Mohd. Usman Mohammad Hussain Maniyar v. State of Maharashtra [(1981) 2 SCC 443 : 1981 SCC (Cri) 477] .) 44 At the cost of repetition the provisions of criminal conspiracy is to be appreciated with the allegations of fraud and cheating being committed by accused No.1 and 2. It is the definite case of the prosecution that accused No.1 N Sathya Babu, the then Manager of Syndicate Bank, Jalahalli Branch, during the period 2014-15, had entered into criminal conspiracy with accused No.2, who was the Partner of M/s T & T Concrete Bricks to cheat and defraud the Bank and in furtherance of the same the loan sought by Accused No.2 was processed, released and disbursed. Under the circumstances, the allegations which is leveled against accused No.2 with respect to commission of offence under Sec.420 of IPC 53 Spl.C.No.483/2017 that he had cheated and defrauded the bank is required to be appreciated along with that of criminal conspiracy. No doubt the provision of Sec.120-B of IPC is construed as standalone provision, wherein an accused can be convicted for the commission of offence, however, at the same time the prosecution has to establish that the said criminal conspiracy was entered into by the parties in furtherance of an intention to cheat and defraud. In the instant case it is contended that accused No.2 Prince Neshan, being the Partner of M/s T & T Concrete Bricks had developed the intention to cheat and defraud the Bank right from the inception which was equally shared and entertained by accused No.1 N.Satya Babu, in other words there was a meeting of mind between both the accused persons. In order to appreciate the said aspects, firstly the court has to appreciate whether the ingredients of cheating as contemplated under Sec.415 of IPC is made out by the prosecution. For the sake of convenience, provision of Sec.415 of IPC is extracted as follows:-
"Sec.415 Cheating: Whoever, by deceiving any person, fraudulently or dishonestly in-54 Spl.C.No.483/2017
duces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intention- ally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause dam- age or harm to that person in body, mind, reputation or property, is said to "cheat".
Explanation.--A dishonest concealment of facts is a deception within the meaning of this section.
45 The case of the prosecution is required to be looked into right from the time when the application for availing loan was presented to the bank. At the first instance, the loan application which came to be presented has been produced at Ex.P.23. The loan application at Ex.P.23 clearly indicates that the said Partner- ship firm was established on 01.07.2014. The corresponding docu- ment i.e., the Partnership deed has been produced by the prosecu- tion and also by the accused person by way of confrontation and for the purpose of convenience if the Partnership deed is carefully 55 Spl.C.No.483/2017 appreciated which is more fully marked along with Ex.D.6 which is acknowledgment issued by the Registrar of Firms on 23.7.2014 indicates that the Partnership deed was executed on 05.07.2014 and in the relevant paragraph it has been specifically mentioned that the Partnership had commenced from 01.07.2014. Subse- quently, the Partnership was reduced into writing on 05.07.2014 and on 23.07.2014 it was registered with the Registrar of Firms. At this stage it would be appropriate to look in to the application at Ex.P.23 which discloses the sales and profit estimates which was made by the said Partnership firm. As already mentioned above, the Partnership firm came into existence only on 5.7.2014 and the loan application was submitted to Bank immediately on forming the Partnership firm in the month of July 2014. On perusal of the said application at column No.14 with respect to the performance of the Firm indicate of having turnover for the last 3 years.
46 The question which arises at this juncture is whether any representations being made before the Bank authorities could be construed as amounting to fraud. In this regard, the court has re- lied upon the Judgment of the Hon'ble Apex Court reported in 56 Spl.C.No.483/2017 (2003) 8 SCC 311 (Ram Preeti Yadav vs U.P. Board of High School And Intermediate Education And Ors) wherein it has been held as:
13. Fraud is a conduct either by letter or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. Although negligence is not fraud but it can be evidence on fraud.
(See Derry v. Peek [(1889) 14 AC 337 : (1886-90) All ER Rep 1 (HL)] .) 47 In the aforesaid judgment the Hon'ble Apex Court has clearly held that the fraud is a conduct which could be construed of being committed either by letter or words which induces the other persons or authority to take a definite determinative stand as a response to the conduct of former either by words or letter. Further in a similar manner Hon'ble Apex Court in another authority reported in (1996) 3 SCC 310 (Gowri Shankar Vs. Joshi Amba Shankar Family Trust) has held as follows:-
8. By "fraud" is meant an intention to deceive;
whether it is from any expectation of advantage to the 57 Spl.C.No.483/2017 party himself or from ill-will towards the other is immaterial. The expression "fraud" involves two elements, deceit and injury to the person deceived. Injury is something other than economic loss, that is, deprivation of property, whether movable or immovable, or of money, and it will include any harm whatever caused to any person in body, mind, reputation or such others. In short, it is a non-economic or non-pecuniary loss. A benefit or advantage to the deceiver, will almost always cause loss or detriment to the deceived. Even in those rare cases where there is a benefit or advantage to the deceiver, but no corresponding loss to the deceived, the second condition is satisfied. [See Vimla (Dr.) v. Delhi Admn. [1963 Supp (2) SCR 585 : AIR 1963 SC 1572 at pp. 1576-77 para 14 : (1963) 2 Cri LJ 434] and Indian Bank v. Satyam Fibres (India) (P) Ltd. [(1996) 5 SCC 550] ]
9. A "fraud" is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. (See S.P. Chengalvaraya Naidu v. Jagannath [(1994) 1 SCC 1].) 10. "Fraud" as is well known vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either 58 Spl.C.No.483/2017 by letter or words, which includes the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by wilfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations, which he knows to be false, and injury enures therefrom although the motive from which the representations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata. (See Ram Chandra Singh v. Savitri Devi [(2003) 8 SCC 319] .)
11. "Fraud" and collusion vitiate even the most solemn proceedings in any civilised system of jurisprudence. It is a concept descriptive of human 59 Spl.C.No.483/2017 conduct. Michael Levi likens a fraudster to Milton's sorcerer, Comus, who exulted in his ability to, 'wing me into the easy-hearted man and trap him into snares'. It has been defined as an act of trickery or deceit.
In Webster's Third New International Dictionary "fraud" in equity has been defined as an act or omission to act or concealment by which one person obtains an advantage against conscience over another or which equity or public policy forbids as being prejudicial to another. In Black's Law Dictionary, "fraud" is defined as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or surrender a legal right. A false representation of a matter of fact, whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury. In Concise Oxford Dictionary, it has been defined as criminal deception, use of false representation to gain unjust advantage; dishonest artifice or trick. According to Halsbury's Laws of England, a representation is deemed to have been false, and therefore a misrepresentation, if it was at the material date false in substance and in fact. Section 17 of the Contract Act, 1872 defines "fraud" as an act committed by a party to a contract with the intent to 60 Spl.C.No.483/2017 deceive another. From dictionary meaning or even otherwise fraud arises out of a deliberate active role of the representator about a fact, which he knows to be untrue yet he succeeds in misleading the representee by making him believe it to be true. The representation to become fraudulent must be of fact with the knowledge that it was false. In a leading English case i.e. Derry v. Peek [(1886-90) All ER Rep 1 : (1889) 14 AC 337 (HL)] what constitutes "fraud" was described thus :
(All ER p. 22 B-C) "[F]raud is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false."
But "fraud" in public law is not the same as "fraud" in private law. Nor can the ingredients, which establish "fraud" in commercial transaction, be of assistance in determining fraud in administrative law. It has been aptly observed by Lord Bridge in Khawaja v. Secy. of State for Home Deptt. [(1983) 1 All ER 765 :
1984 AC 74 : (1982) 1 WLR 948 (HL)] that it is dangerous to introduce maxims of common law as to effect of fraud while determining fraud in relation to statutory law. "Fraud" in relation to statute must be a 61 Spl.C.No.483/2017 colourable transaction to evade the provisions of a statute.
"'If a statute has been passed for some one particular purpose, a court of law will not countenance any attempt which may be made to extend the operation of the Act to something else which is quite foreign to its object and beyond its scope.' Present-day concept of fraud on statute has veered round abuse of power or mala fide exercise of power. It may arise due to overstepping the limits of power or defeating the provision of statute by adopting subterfuge or the power may be exercised for extraneous or irrelevant considerations. The colour of fraud in public law or administrative law, as it is developing, is assuming different shades. It arises from a deception committed by disclosure of incorrect facts knowingly and deliberately to invoke exercise of power and procure an order from an authority or tribunal. It must result in exercise of jurisdiction which otherwise would not have been exercised. That is misrepresentation must be in relation to the conditions provided in a section on existence or non-existence of which power can be exercised. But non-disclosure of a fact not required by a statute to be disclosed may not amount to fraud. Even in commercial transactions non-disclosure of every fact does not vitiate the agreement. 'In a contract every person must look for himself and ensures that he 62 Spl.C.No.483/2017 acquires the information necessary to avoid bad bargain.' In public law the duty is not to deceive." (See Shrisht Dhawan v. Shaw Bros. [(1992) 1 SCC 534] SCC p. 554, para 20.)
14. Suppression of a material document would also amount to a fraud on the court. (See Gowrishankar v. Joshi Amba Shankar Family Trust [(1996) 3 SCC 310] and S.P. Chengalvaraya Naidu case [(1994) 1 SCC 1] .
15. "Fraud" is a conduct either by letter or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter.
Although negligence is not fraud but it can be evidence on fraud; as observed in Ram Preeti Yadav case [(2003) 8 SCC 311] .
48 The Hon'ble Apex Court has held that suppression of material document would amount to fraud on the court. By applying the above said principles to the facts of the case, once again when the factual aspect of the case is appreciated, the application form which is filed at Ex.P.23 indicates that the Partnership firm was having totally 3 Partners. Whereas, as per the 63 Spl.C.No.483/2017 Partnership deed which was collected by the bank on behalf of its Partners, indicates that there are only 2 Partners who are none other than accused No.2 and his father PW15 Santosh Neeshan. At para-16 of the application, it shows the photographs of three persons who are notified as the Partners of the firm. However, no explanation has been tendered as to why the photograph of another person is forthcoming in the application, for which a signature is also obtained that he was the Partner of Vinayaka Industrial Products. If for the sake of arguments, the contention of the accused No.2 that he was the active Partner of M/s T & T Concrete Bricks along with his father PW15 Santosh Neshan, as sleeping Partner then also the role act of accused No.1 in not verifying the documents and obtaining the signature of some unconnected person on the loan application indicates the manner in which he had processed the loan application. That apart, it is rather interesting to note that the project report which has been submitted to the Bank and marked as Ex.D.1 clearly indicates in the project summary column that the M/s T & T Concrete Bricks were the Partnership firm which comprised of two Partners i.e., accused 64 Spl.C.No.483/2017 No.2 Prince Neshan and his father PW15 Santosh Neshan. It is the accused No.2 who has proposed the activity of manufacturing of cement concrete bricks and further in the introduction column it has been stated that the accused No.2 Prince Neshan is of having 20 years experience in trading and marketing of cement concrete blocks. It is relevant to note at this juncture that accused No.2 Prince Neshan was aged only about 28 years at the time of availing the loan. However, the project report which has been prepared indicates that he was having experience in trading and marketing of Cement Concrete Bricks for the last 20 years. Even if for the sake of arguments it is accepted that it was only a typographical error wherein it is noticed that the name of accused No.2 Prince Neshan is mentioned as the one who is having 20 years of experience, the Manager accused No.1 N.Satya Babu before processing and sanctioning of a loan, ought to have verified the contents of the said document. The said document is now being discussed in detail for the simple reason that it has been alleged by the prosecution that a fraud was played by the accused persons and also it is the submission of the learned Public Prosecutor that they 65 Spl.C.No.483/2017 had entertained such a malafide intention right from its inception. Once again at the cost of repetition, the question of entertaining criminal conspiracy can be ascertained by looking into the attending circumstances also. That apart the quotation at Ex.P.24 clearly indicates that the date of its issuance is not mentioned, whereas it is only mentioned as issued in the month of September 2014. The said quotation was issued towards purchasing of 'Little Star Hydraulically operated concrete block making machine' which was quoted at Rs.7,20,000/- and other moulds and machineries are also intended to be purchased and totally it was valued at Rs.11,23,000/- for which a VAT was added at the rate of 14.5% for sum of Rs.1,62,835/- and totally the machinery was quoted at Rs.12,85,835/-. It is very interesting to note that the aforesaid quotation was issued by M/s Technic and Technician Industries which was being run by PW15 Santosh Neshan i.e., father of accused No.2. However, the authorized signatory for the said quotation was accused No.2 himself. In this regard the accused no.2 had tried in vain to give clarification in this regard during the course of cross examination of PW15 wherein it is 66 Spl.C.No.483/2017 stated that he was independently running M/s Technic and Technician Industries for which his son accused No.2 was assisting him, when he was not present in the Industry. Even otherwise, if for the sake of arguments, the same is to be accepted then the pre- receipt which has been issued by M/s Technic and Technician Industries is to be looked into. The receipt for Rs.1,64,000/- towards purchasing of machinery is issued on 25.6.2014 and interestingly the authorized signatory was once again accused No.2 Prince Neshan. At the cost of repetition, it is clarified that accused No.2 Prince Neshan was Partner of M/s T & T Concrete Bricks and not the Partner of M/s Technic and Technician Industries. The machinery is sought to be purchased from M/s Technic and Technician Industries, quotation and receipts are being issued by the said Industry for which the authorized signatory is none other than accused No.2 himself. It is also relevant to note that the loan application was filed in the month of July 2014 and whereas the receipt itself was issued on 25.6.2014. It is also interesting to note that as per the Partnership deed the Partnership firm came in to existence on 1.7.2014 which was reduced into writing on 5.7.2014 67 Spl.C.No.483/2017 and prior to that a receipt was generated on 25.6.2014 in the name of M/s T & T Concrete Bricks for the aforesaid amount of Rs.1,64,000/- towards purchasing of machinery by them. The manner in which the quotation, invoice and receipt has been produced would clearly indicate that the documents were furnished only to cheat and defraud. When the Partnership firm itself had come into existence on 01.07.2014 and when the loan was applied in the month of July 2014, the question of issuing the receipt prior to entering into Partnership would only indicate existence of malice on the part of accused No.2. With respect to the role played by the accused No.1, it would be appropriate to note that when the Partnership deed was furnished to him, at the inception and being Manager, he was duty bound to verify its veracity and also to ascertain at least the quotations and the receipts which were furnished to him. As a Banker, he was the custodian of public trust and faith and he was required to collect all necessary documents from the borrower and only on appreciating the materials produced along with the application and if found eligible for borrowing the amount, he could have processed the loan. At the cost of repetition 68 Spl.C.No.483/2017 it is once again reiterated that Accused No.1 being Manager was duty bound to verify all documents furnished and he could not have acted mechanically. Each and every conduct of the accused person is required to be appreciated at this juncture only for the reason of ascertaining the existence or otherwise of criminal conspiracy between the accused persons to cheat and defraud the Bank. However it is noticed that the Manager had failed to discharge his duty in this regard and the only inference that could be drawn is that he had entered into a criminal conspiracy with Accused No.2.
49 Even otherwise the loan review format for credit sanctions which is marked at Ex.P.27 requires to be appreciated. The said document requires certain criteria to be followed by the sanctioning authority. At the cost of repetition, in the instant case the loan processing and sanctioning authorities were both adorned by accused No.1 himself. In particularly a specific column at Ex.P.27 requires to clarify that whether the dealings of the parties/ their sister concern/ their associate concerns are satisfactory for which the Manager has opined in the Affirmative. This particular 69 Spl.C.No.483/2017 act of the Manager would indicate that he was totally aware of existence of another Partnership firm by his father i.e., Santosh Neshan. If for the sake of arguments it is accepted that PW15 Santosh Neshan was a customer for the last 20 years as it is noticed from the tenor of evidence placed before the court, then also the accused No.1 Manager has to explain that why he has not verified the project report at Ex.D.1 which indicated that even accused No.2 was having experience of 20 years in the said industry. That apart, the business loan model at Ex.P.28 also indicates that the Manager has not appreciated the columns in a proper manner and has not allotted proper scores by looking in to the parameters fixed by the Bank. For instance, in one of the column, it is required to be explained that in case of more than one borrower the fixed obligations as well as the income should be summoned up before calculating the ratio. However, the column has not been answered by the accused No.1 Manager himself. Thereafter, if the loan process note at Ex.P.29 is carefully appreciated, it indicates that the year of commencement as 2014 and also it has been mentioned that the dealings with the Partnership firm was a new account and 70 Spl.C.No.483/2017 also in the brief history and management column, it has been narrated in detail that PW15 Santosh Neshan was into Manufacturing business of machines by name Little Star and also various types of accessories and he was enjoying a working capital limit of Rs.20 lakhs and was also proprietor of M/s Technic and Technician Industries. Further it is stated that he had offered his industrial shed as collateral security and subsequently, it has been stated that he was intending to set up a new Partnership firm in the name and style as M/s T & T Concrete Bricks along with his son Prince Neshan who was aged 28 years and they had also completed preliminary work such as building of platform etc., and then they had approached Bank for financial assistance for purchase of machinery and for working capital. The said aspect would falsify the submission of the Accused No.2 of utilizing the working capital amount of Rs16,00,000/- provided by the Bank towards construction of platform of the unit. It is once again stated at the cost of repetition that at the time of availing loan itself it was mentioned that the unit had laid down platform and hence the 71 Spl.C.No.483/2017 argument of utilizing the OD amount subsequently to put up construction of platform would falsify their contention.
50 It is relevant to note that the rental agreement between PW15 Santosh Neshan and his son accused No.2 Prince Neshan was entered between the owners of the property on 1.6.2014. For the sake of arguments, if the rental agreement is looked into it indicates that no power supply was being provided to the said unit. It is relevant to note that without obtaining necessary power connection, no fruitful activity for an industrial shed can be put up. Even otherwise as per the report of the Internal Valuator, who had inspected the premises as per Ex.P.13 would indicate that it was revenue land. If the same is to be accepted, the project report at Ex.D.6 raises serious question mark over its genuineness and veracity. Once again coming back to the above case, as per the loan process note at Ex.P.29 it indicates that the accused No.2 had already put up a platform for commencing the manufacturing of cement bricks.
51 At this juncture the submissions made by learned counsel for accused No.2 is required to appreciated. It has been 72 Spl.C.No.483/2017 argued at length by the learned counsel for accused No.2 that a sum of Rs.9 lakhs were transferred towards purchasing of machinery and whereas a sum of Rs.16 lakhs was issued towards working capital which was in the form of OD account. The account extracts with respect to the term loan account and as well as OD account has been placed before the Court as per Ex.P.41 and EX.P.44. Once again when the OD account at Ex.P.44 is carefully appreciated it indicates that a sum of Rs.8,87,861/- was credited on 16.9.2014 and further on 28.9.2014 a sum of Rs.2,38,000/- was withdrawn and transferred in favour of one Hanumanthappa Babu who was also examined before this court as PW10. PW10 Hanumanthappa Babu is none other than the person who has stood as guarantor to the loan account of accused No.2. It has been vehemently argued that the amount was utilized for the purpose of putting up the constructions and other basic amenities. If the said submission of the learned counsel for accused No.2 is to be accepted then once again the loan process note indicates that in the month of July itself, when the loan was being processed, the Platform was constructed. As such it again falsifies the case of the 73 Spl.C.No.483/2017 accused No.2. That apart the terms conditions in the loan application/ loan process note is herewith extracted for the sake of convenience which reads as follows:
"PRE-RELEASE CONDITIONS: "The working capital be released only after the purchase of machinery and its installation."
52 The said specific aspect mentioned in the loan process note itself would indicate that the working capital would only be released after the installation of machinery and its accessories. However, in the instant case, at the cost of repetition, if the loan account Ex.P.41 is carefully appreciated it indicates that on 16.9.2014, a sum of Rs.9 lakh was credited towards purchasing of machinery and subsequently, it was transferred into the OD account and from there it was transferred to M/s Technic and Technician Industries account after deducting the banking charges i.e., a sum of Rs.8,87,861/- was credited to M/s Technic and Technician Industries. It is relevant to note that on the very same day the accused No.2 and his firms were permitted to meddle with the OD account and were permitted to utilize the amount ignoring 74 Spl.C.No.483/2017 the conditions imposed upon at the time of processing the loan. Under the circumstances, it clearly indicates of flouting the procedural aspects. It is also been argued that the margin amount was not at all collected by the Bank authorities. In this regard, in the loan process note it has already been mentioned that the promoters had already invested their contribution and the project was already in the advance stage. The loan process note, release of amount and also crediting it to the account of M/s Technic and Technician Industries would cast a serious question mark over the manner in which the transactions had taken place.
53 The particular findings in the loan process note once again falsifies the contention of the accused that several transactions which are forthcoming in the OD account commencing from 16.9.2014 to 31.12.2014 were towards purchasing of materials for commissioning of the unit. An attempt has been made to introduce a new fact through PW15 Santosh Neshan during the course of cross-examination by the learned counsel for accused No.2 that several materials were purchased for the unit itself. He has also categorically admitted that a sum of 75 Spl.C.No.483/2017 Rs.2,38,000/- was handed over to PW10 Hanumanthappa Babu, which he had subsequently returned. It is his contention that his son accused No.2 Prince Neshan was looking after his business and he used to sign the receipts and collect the amount in his absence. It has been specifically deposed by PW15 that a sum of Rs.1,62,000/- as per the receipt issued at Ex.P.25 was received by him. If for the sake of argument, said contention is to be accepted; than it would once again indicate that the evidence of PW15 Santosh Neshan had created several dents in the contentions urged by the accused persons.
54 At this juncture, it would be beneficial to look into the evidence of PW10 who had appeared before the Court. PW10 Hanumanthappa Babu has deposed in his chief-examination that he had borrowed personal loan of Rs.2,38,000/- from accused No.2 through cheque and he had repaid the loan amount by way of cash. He was considered as partly hostile witness and he had admitted of receiving the amount on 20.09.2014 through cheque and the relevant portion was marked as Ex.P.55. At this juncture, it would be appropriate to hold that there is no dispute with respect to 76 Spl.C.No.483/2017 receiving of Rs.2.38 lakh by PW10. If at all he had received the said amount as a personal loan from accused No.2, then also the accused No.2 requires to give an explanation that why the amount from the working capital was been diverted to an individual person and also there is no material to indicate that the amount came to be returned back to the unit subsequently. Though an attempt has been made during the course of cross-examination that the said amount has been received for the purpose of purchasing materials, which is also forthcoming in the cross-examination of PW15 Santosh Neshan, the same does not have any merits to accept in the absence of any materials to indicate. The clear admission made by PW 10 Hanumanthappa Babu about receiving hand loan from Accused No.2 would only falsify the evidence of PW 15 Santosh Neshan wherein he has deposed that several amounts were transferred from OD account towards purchase of materials as he had received the amount as person loan.
55 If only the witnesses i.e., PW10 Hanumanthappa Babu had stated of his receiving the said amount for purchasing any materials, he should have fortified his evidence by specifically 77 Spl.C.No.483/2017 narrating that for purchasing which item he had received said amount. However, he has specifically deposed that he has received the personal loan. Providing of personal loan from the working capital and that too within 4 days of availing loan and witness standing as Guarantor to the loan account would be a clear violation of the guidelines and the directions stipulated by the RBI and also the Bank. Accused No.1 N.Satya Babu, being at the helm of affairs of the Bank, was supposed to look into all these aspects and verify that whether the said amount was being transferred for the purpose of purchasing materials as sought in the Loan application. As already discussed above and at the cost of repetition the releasing of working capital prior to installation of machinery itself is an erroneous act which could be termed as fraudulent one when coupled with the intention of malice as noticed from the entire materials produced before the court. The evidence of PW15 Santosh Neshan does not inspire confidence of the court for the aforesaid reason and also it is relevant to note at this juncture that the materials which is available on record also 78 Spl.C.No.483/2017 clearly indicates that the Branch Manager had not taken proper care.
56 The court has also appreciated the Joint Inspection Report at Ex.P.30. The Joint Inspection Report was furnished by PW3 Nagesh on 3.8.2015. In the said Joint Inspection Report he has specifically mentioned at (ii)(f) that the unit was required to purchase certain materials i.e., the prescription of the materials which were ten in number, which amounted to Rs.12,85,835/-. At column No. (iii)(h) It has been specifically stated that the branch has mentioned hypothecation of new machinery as security, but the borrower had not purchased any machinery and the amount was diverted. At this juncture, the hypothecation agreement which was produced before the court and marked as Ex.P.52 is required to be looked into. In the hypothecation agreement, it has been specifically mentioned at page No.18, part-B that the machineries were hypothecated. However, that column requires the concerned Bank to describe about the machinery along with model, identification mark, engine No. Chasis No. price, etc. In the instant case, though the said hypothecation agreement at Ex.P.52 indicates 79 Spl.C.No.483/2017 to have been filed up on 15.9.2014, it does not bear any details of the machinery which were purchased. The fact of purchasing the machinery as on that date itself would be impossible for the reason that the amount was disbursed on the very same day. Under the circumstances, the execution of hypothecation agreement also is a fraudulent document or in other words, it was a conspicuous act on behalf of accused No.1 N.Satya Babu and accused No.2 Prince Neshan to commit a fraud on the Bank. The aforesaid acts has to be read conjointly and appreciated together for the reason of ascertaining the existence or otherwise of a criminal conspiracy and also fraudulent malice between the parties. When the aforesaid documents are read conjointly, the unflinching indication which would emerge is of entertaining a malicious intention on the part of accused No.1 and 2.
57 The court has also carefully appreciated the guarantee agreement at Ex.P.52(a). The said document was executed by Mr.Hanumanthappa Babu and even the said document was executed on 15.9.2014. Throughout the evidence of PW10 Hanumanthappa Babu, it has been elucidated that he knew PW15 80 Spl.C.No.483/2017 Santosh Neshan and accused No.2 for the last 20 years and as such he has stood as guarantor for the transaction. However, immediately within 4 days of standing as guarantor he had obtained personal loan of Rs.2.38 lakhs from accused No.2 which is also transferred through a cheque from the O.D. account maintained by the M/s T & T Concrete Bricks, would indicate that he was being paid to stand as guarantor and though it is submitted that subsequently he has returned the aforesaid amount, there are no materials to indicate the return of amount. All the aforesaid acts would indicate of malice on the part of accused No.2. Further, in the Joint Vigilance Report Ex.P.30 it has been specifically mentioned that M/s Technic and Technician Industries were supposed to supply new machineries to M/s T & T Concrete Bricks, however, during their visit it was noticed that unit was not functioning since for a long period of time and except one old mixer drum no other machinery were found. The impugned report is to be compared with the valuation of the machinery report dated 17.12.2015 which is marked as Ex.P.32. Ex.P.32 was furnished by the official Approved Valuer i.e., SPR Associates who had visited 81 Spl.C.No.483/2017 the place and had specifically stated that he had verified with the neighbourers and had noticed that the unit was not functioning for a long period of time. Apart from mixer machine, there was no other machinery in the place where the unit was said to be in existence. Further, he has disclosed that the unit was situated in a village area with agricultural activities and it was set up in agricultural land. Once again when the rental agreement which has been produced at Ex.D.4 is appreciated, it indicates that it was indeed an agricultural land. Admittedly, an industrial unit has been set up and it is of common sense that industry cannot be permitted to be run in an agricultural land and when a person files an application for setting up a unit in the agricultural land, the concerned Branch Manager was duty bound to verify the said aspects. Even otherwise the documents which has been furnished by the accused No.2 and marked by way of confrontation would indicate that there was no electricity connection obtained. In particularly, in one of the documents which is a general licence obtained by the landlord i.e., father of PW11 Srinivas i.e., Sri B.Ramaiah indicates that they had obtained permission to open a 82 Spl.C.No.483/2017 unit in the name of Sri Balaji Concrete Works on 2.1.2014. The details of the land are very much similar to the one at Ex.D.4 which is a rental agreement. Even if it is submitted that subsequently in the month of June-2014 a fresh rental agreement was entered into, once again the Bank was required to appreciate the said aspects and ascertain whether it was feasible to run an industry over an agricultural land.
58 Though an attempt has been made through the evidence of PW15 Santosh Neshan that they were ready to provide necessary details of the machineries installed in their lands and also the witnesses were confronted by showing the photographs at Ex.D.8 to 10 and it was suggested that all the said machineries were available at the unit. On careful appreciation of the photographs would indicate that only a concrete mixer machine and small machinery over the cement bed is forthcoming in the photograph. Once again, at the cost of repetition, if the quotation at Ex.P.24 is re-visited, totally 11 machineries were required to be furnished and in particularly three machinery with name and style as Little Star were required to be purchased by M/s T & T 83 Spl.C.No.483/2017 Concrete Bricks. However, the said aspect is not forthcoming. Further in the Vigilance report at Ex.P.30 indicates that a observation has been made that the term loan was sanctioned for purchasing machineries and Overdraft Facility (O.D.facility) for working capital and without machineries the working capital was released and also the accused No.1 has not confirmed the end use of the funds / financing amounting to Rs.25 lakhs and it was being diverted.
59 Once again the evidence of PW15 is required to be appreciated. Because he being the Partner of M/s T & T Concrete Bricks and also the supplier of machinery and sole proprietor of M/s Technic and Technician Industries assumes importance. During the course of his evidence, he has specifically deposed that though M/s T & T Concrete Bricks was a Partnership firm, it was established for his son accused No.2 Prince Neshan and he was the sole person controlling the functioning of the Unit. Under the circumstances, arraigning of accused No.2 alone by the Investigating Agency is fortified for the reason that he was solely controlling the activities of this unit. That apart, to a specific 84 Spl.C.No.483/2017 question he has admitted of raising the invoice as per Ex.P.24 which would also indicate that the tax towards VAT was to an extent of Rs.1,62,835/- and also he was confronted with Ex.P.65 which is VAT returns filed by M/s Technic and Technician Industries. He has admitted of VAT returns at Ex.P.65 and also he has feigned his ignorance with respect to furnishing of tax as per Ex.P.24.
60 At the cost of repetition, the evidence of competent officer of the Governmental Agency is required to be looked into. PW12 Madesh.N., who is Assistant Commissioner of Commercial Tax has succinctly explained during the course of his evidence that IP (In Put) mentioned in Ex.P.65 discloses about the tax paid by the Proprietor on purchases and likewise O.P. (Out Put) mentioned in the document at Ex.P.65 reveal about the tax paid for sale of goods. Further, the witness has clarified that during the relevant period i.e., August 14 to March 2015 the returns were not submitted with respect to purchase and sale. During the period of April-2015 to August 2016 maximum O.P. Tax was shown to be Rs.62,771/-. All the aforesaid aspects would clearly indicate of 85 Spl.C.No.483/2017 active concealment of a fact by accused No.2 and also the connivance of his father Pw15 Santosh Neshan. The aforesaid evidence would only falsify the evidence of PW15 Santosh Neshan wherein he had intelligently feigned his ignorance with respect to payment of VAT. That apart, PW15 has also specifically deposed that he has supplied machinery, but he does not know whether it was reflected in the returns. Once again if the document at Ex.P.65 and also at Ex.P.70 is appreciated, which is VAT return form, would indicate that the Firm had not paid tax during the Period of September 2014 to December 2014 towards supply of machinery. It is also pertinent to note that as per said document itself, the Company of PW15 i.e., M/s Technic and Technician Industries was Black Listed. Under the circumstances, the conduct of PW15 himself would falsify the contentions urged by the accused persons and rather it fortifies the case of prosecution. He was considered as partly hostile witness and during the course of cross-examination he has acknowledged about registration of M/s T & T Concrete Bricks. It is contention that the firm was established for the benefit of his son and he was taking care of the management of the unit. If 86 Spl.C.No.483/2017 for the sake of arguments, it is to be accepted as true and correct, even then the witness was required to give explanation of the fact why the amount mentioned towards supplying of machinery was not reflected in the O.P. Column of the VAT Form and why they had evaded payment of tax. In normal parlance and circumstances, it could have been accepted that it was only an act committed by an individual person without any malices to cheat and defraud. However, in the wake of attending circumstances in the above case, it would clearly indicate that a definite malice could be noticed.
61 Further, in another case, the Hon'ble Apex Court has clearly held that when the branch Manager exceeds his limits and sanctions over draft facility, the same may be considered as one of the ground fortifying the contention of the prosecution of existence of criminal conspiracy, which could also be considered as circumstance raising suspicion regarding payment of illegal gratification. In this regard, the aforesaid judgment reported in (2000) 5 SCC 623 (Hardeo Singh Vs. State of Bihar and Another) 87 Spl.C.No.483/2017 Apart from the above, the accusation against Shri S.K. Roy and Shri B.N. Choudhary is also of some significance and as such the same is set out herein below:
"The said Shri S.K. Roy and Shri B.N. Choudhary were in habit of receiving illegal gratification from Shri Ved Prakash Agrawal which is evident from the entries made in personal diaries of Ved Prakash Agrawal and the account of Sri Roy." (Emphasis supplied) It is on this score also Mr. Mishra very strongly contended that a specific person has been named in the matter of formation of habit so far as illegal gratification is concerned and since the appellant's name does not find any place, question of continuation of proceedings as against the appellant does not arise. It is no doubt true that only one person has been named to be providing the illegal gratification but does that mean and imply release of another beneficiary of largess of the Branch Manager and it is on this score the totality of the situation shall have to be scrutinised in a little more greater detail. It appears that the appellant herein has obtained some overdraft facilities from the Bank which is stated to be much beyond the financial power of the Branch Manager but paid back the same within 46 days inclusive of all interests therein and the Branch Manager is in the habit of receiving illegal gratification from Shri Ved Prakash Agrawal which is apparent from the entries in the personal diary of 88 Spl.C.No.483/2017 Shri Ved Prakash Agrawal and account of S.K. Roy. The charge pertaining to the appellant, therefore, is restrictive but allowing him overdraft of Rs. 21.5 lacs on different dates which stands repaid alongwith interest and which according to the charge is much beyond the financial powers of the Branch Manager also needs a probe. The chargesheet has been filed against the persons named in the charge, including the appellant under Sections 120B, 420, 418, 467, 477A of the IPC and Sections 5(1 )
(a), 5(l)(c) and 5(1 )(d) of the Prevention of Corruption Act for taking cognizance and the Special Judge did take cognizance in regard to such offences so far as the Appellant is concerned.
True there is no accusation that the account of Roy depicts a balance which is much higher than the amount shown in the personal diary of Shri Ved Prakash, but two several sums of Rs. 60,000 have been stated to have been deposited on 14.2.85 and 26.3.85 which though by itself not, connote any culpability of the Appellant Hardeo Singh, neither the same however proves his innocence at this juncture. There may not be any direct evidence against the appellant herein as regards the payment of illegal gratification by the appellant to the Branch Manager or the Accountant, but factum of having enjoyed the privilege of having large sums of money on term loans without any authorisation to allow the same obviously 89 Spl.C.No.483/2017 raises some eye-brows somewhere and this is inspite of the fact of repayment of the term loan with interest: The question cannot be avoided as to the reasons for such an act which stands beyond the powers-Is this a purely customer and the Bank relationship or something else- This is what is to be investigated more so having regard to this so-called habit of Roy as noticed above.
Mr. Altaf Ahmed, Additional Solicitor General, contended that there is a charge under Section I20B and as such, question of setting free the Appellant at this stage of" the proceeding does not and cannot arise. Mr. Ahmed contended that the offence under Section 120B, is an independent offence, and while it is true that the gist of the offence, is the agreement between two or more offenders but particular facts of the conspiracy need not even be show in the charge. Some general evidence pertaining to the conspiracy would be sufficient to form part of the charge of conspiracy in the chargesheet. As a matter of fact some connecting link or connecting factor somewhere would be good enough for framing of charge since framing of charge and to establish the charge of conspiracy can not possibly be placed at par: To establish the charge of conspiracy, there is required cogent evidence of meeting of two minds in the matter of commission of an offence-in the absence of which the charge cannot be sustained-This is however not so, in the 90 Spl.C.No.483/2017 matter of framing of charge since the incidence of the offence shall have to be investigated. It is on this count Mr, Additional Solicitor General contended that since conspiracy is generally a matter of inference and since Appellant herein did take advantage of the overdraft facility knowing fully well that the same is beyond the financial limits of the Branch Manager, the natural inference may be drawn that the same must have been done upon some other consideration and it is the assessment of the same which should prompt this Court not to toward such an attempt.
The criminal purpose in the matter cannot possibly be ruled out as against the appellant. The allegation pertains to the factum of the habit of Branch Manager, of receiving illegal gratification from Shri Ved Prakash Agrawal, however, by itself, in our view, may or may not be sufficient to bring home the charge of conspiracy but that by itself would not authorise the court to call it a day in regard to the charge of conspiracy on the wake of the factual matrix of the situation at this stage of proceedings. Criminal prosecution does not necessarily mean harassment and in the event the prosecution of this nature is allowed to be continued, it would not be in our view a travesty of justice or any undue prejudice or even otherwise prejudicial, since ultimately in the event the charge is not proved, he would be acquitted. The Counter 91 Spl.C.No.483/2017 Affidavit filed by the respondents herein does disclose some materials for scrutiny against the appellant as such we are unable to render any assistance to the appellant herein.
62 The principles laid down by the Hon'ble Apex Court in the above case would fortify the contention of the contention of the prosecution.
63 Further, in another judgment of Hon'ble Apex Court reported in (2013)2 SCC 162 (N.V.Subba Rao Vs. State) it has been held as follows:
26. From the above materials in the form of evidence, it is clear that pre-inspection, which is a mandatory requirement according to the Manual of Instructions of Central Bank of India, was not carried out by A-1. A-1 being a Branch Manager cannot delegate the responsibility of pre-inspection and reports thereon to anyone and he was permitted to sanction loans and disburse the amounts only after his satisfaction. About the relationship of A-1 and A-2, PW 5, an employee of A- 2 stated in her deposition that A-1 visited the office of A-2 many a times. In fact, this has been admitted by A-1 in his Section 313 CrPC statement that he visited the office of A-2, though for inspection only.92 Spl.C.No.483/2017
40. Relying on another decision of this Court in State of M.P. v. Sheetla Sahai [(2009) 8 SCC 617 :
(2009) 3 SCC (Cri) 901] the learned counsel for A-1 submitted that the prosecution has not established conspiracy among the accused. Criminal conspiracy has been defined under Section 120-A IPC. It is an independent offence, hence, the prosecution for the purpose of bringing the charge of criminal conspiracy read with the provisions of the PC 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 the accused. In order to establish the guilt what is necessary is to show the meeting of minds of two or more persons for doing or causing to be done an illegal act or an act by illegal means. 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.
41. We have already referred to the evidence led in by the prosecution, particularly, the evidence of the Typist of A-2 which shows several meetings between A-1 and A-2, acceptance of money by A-1 from A-2 on many occasions, transfer of sanctioned loans to the credit of the account of A-2, etc. 93 Spl.C.No.483/2017 64 In the aforesaid judgment the Hon'ble Apex Court had held that disbursing of loan by the Bank Manager to the Railway employees, could be considered as circumstances warranting for conviction under Sec.13(1)(d) r/w 13(2) of the Prevention of Corruption Act. When the above fact is appreciated with the above case, it is noticed that the Bank Manager i.e. Accused No.1 N Sathya Babu had processed, sanctioned and disbursed the loan in favour of Accused No.2 without verifying the credential of the claim of loan made by him and further had not bothered to ascertain the end usage of the loan. Accordingly, the conduct and also act of Accused No.1 could be construed as an act committed under section 13(1)(d) R/w 13(d) of Prevention of Corruption Act, 1988. Herein the instant case also the materials which has been produced before the court would indicate that accused No.2 has availed loan from the Bank without any intention to act in furtherance of the purpose for which it was availed. It is noticed that the accused No.2 had availed loan for purchasing of machinery, which unfortunately, it not been made by the accused 94 Spl.C.No.483/2017 No.2. The act of the accused person would indicate of entertaining a malice and fraudulent intention right from its inception. I have also appreciated the evidence of PW11 Srinivas B.R. who is the son of the land owner and in his evidence he has deposed that the unit was established for manufacturing of bricks, but due to non- availability of power supply the work was not continued. Further, he has deposed that during December 2015 for some period the work was going on, and has feigned his ignorance about the activities that had taken place thereafter. During the course of evidence, the photographs at Ex.D.8 to Ex.D10 were shown to him and enquired that the materials found in the photograph were the machineries for which he has categorically admitted. Now the main aspect which is required to be appreciated is whether the stray admission given by the owner of the land would be considered as having much relevance than that of the report furnished by the Government Approved Valuer. If only materials were produced or elucidated during the course of cross examination that the evidence of approved valuer is arbitrary or biased then such contention could have been taken. However no 95 Spl.C.No.483/2017 such materials are elucidated from the evidence of approved valuer who was examined before the court. As such the evidence tendered by the land owner cannot be given much weightage with respect to existence of machinery. Under the circumstances, the act of accused No.2 himself furnishing the quotation on behalf of M/s Technic and Technician Industries and also signing the receipt at Ex.P.25 would indicate his malafide intention to use a document as genuine one for the purpose of cheating and defrauding the bank. That apart the manner of purchasing of machinery and the act of accused No.1 in disbursing of loan in derogation of settled law, would only indicate of entering of conspiracy with an intention to cheat and defraud the bank.
65 With respect to the act of accused No.1 the court has to appreciate whether the same can be construed as minor misnomer which would attract the disciplinary proceedings. The learned counsel for accused No.1 has relied upon the judgments of Hon'ble Apex Court as follows:-
1) (2021) 18 SCC 70 ( N.Raghavendra Vs. State of A.P.) 96 Spl.C.No.483/2017
2) (2016) 12 SCC 273 ( A.Siva Prakash Vs. state of Kerala)
3) (2007) 13 SCC 410 (Radha Pisharassiar Amma vs State Of Kerala)
4) (1980) 3 SCC 110 (Abdulla Mohammed Pagarkar vs State (Union Territory Of Goa, Daman And Diu) The sum and substance of these aforesaid judgments is that the accused cannot be contemplated to have committed offence amounting to a fraudulent one just because there was some sort of minor irregularities. However, in the instant case when the entire fact and circumstances of the case is conjointly read and appreciated, it does not indicate that it was only a minor misnomer which could be construed as the one attracting a Departmental Enquiry. In this regard, the court has relied upon the judgment of Hon'ble Apex Court in reported in (2009) 15 SCC 643 (Mir Nagvi Askari vs C.B.I) wherein it is held as:
62. The courts, however, while drawing an inference from the materials brought on record to arrive at a finding as to whether the charges of the criminal conspiracy have been proved or not, must always bear in 97 Spl.C.No.483/2017 mind that a conspiracy is hatched in secrecy and it is difficult, if not impossible, to obtain direct evidence to establish the same. The manner and circumstances in which the offences have been committed and the accused persons took part are relevant. For the said purpose, it is necessary to prove that the propounders had expressly agreed to it or caused it to be done, and it may also be proved by adduction of circumstantial evidence and/or by necessary implication. (See Mohd. Usman Mohammad Hussain Maniyar v. State of Maharashtra [(1981) 2 SCC 443 : 1981 SCC (Cri) 477] .)
64. In some cases, intent of unlawful use being made of the goods or services in question may be inferred from the knowledge itself.
This Court in State of Maharashtra v. Som Nath Thapa [(1996) 4 SCC 659 : 1996 SCC (Cri) 820] opined that it is necessary for the prosecution to establish that a particular unlawful use was intended, so long as the goods or services in question could not be put to any lawful use, stating: (SCC p. 668, para 24) "24. The aforesaid decisions, weighty as they are, lead us to conclude that to establish a charge of conspiracy knowledge about indulgence in either an illegal act or a legal act by illegal means is necessary. In some cases, intent of unlawful use being made of the goods or services in question may be inferred from the knowledge itself. This apart, the prosecution has not to 98 Spl.C.No.483/2017 establish that a particular unlawful use was intended, so long as the goods or service in question could not be put to any lawful use. Finally, when the ultimate offence consists of a chain of actions, it would not be necessary for the prosecution to establish, to bring home the charge of conspiracy, that each of the conspirators had the knowledge of what the collaborator would do, so long as it is known that the collaborator would put the goods or service to an unlawful use." (emphasis in original) And also another judgment of Hon'ble Apex Court reported in (2009) 11 SCC 737 (R.Venkatakrishna Vs. CBI) wherein it is held as:
162. The ingredients of sub-clause (iii) of Section 13(1)(d) contemplate that a public servant who while holding office obtains for any person any valuable thing or pecuniary advantage without any public interest would be guilty of criminal misconduct. Sub-section (2) of Section 13 provides for the punishment for such criminal misconduct. Minimum sentence is prescribed under Section 13(2) of the 1988 Act and a public servant who abuses his position as such for obtaining for himself or for any other person any valuable thing or pecuniary advantage cannot be punished for a term of imprisonment, which is less than for the duration of one year.99 Spl.C.No.483/2017
163. For convicting the person under Section 13(1)(d)(iii), there must be evidence on record that the accused "obtained" for any other person any valuable thing or pecuniary advantage without any public advantage.
164. In Dalpat Singh v. State of Rajasthan [AIR 1969 SC 17] , while interpreting an analogous provision in the unamended Prevention of Corruption Act, this (sic Court) opined: (AIR p. 18) "The ingredients of the offence under Section 5(1)
(d) are: (1) that the accused should be a public servant, (2) that he should use some corrupt or illegal means or otherwise abuse his position as a public servant, (3) that he should have obtained a valuable thing or pecuniary advantage, and (4) for himself or any other person."
165. The Madras High Court in B. Ramachandran and S.S. Abdul Hameed v. State [ Criminal Appeal No. 553 of 2000 decided on 23-3-2007] noted thus:
"Section 13(1)(d) of the said Act also deals with the criminal misconduct by a public servant by means of corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage; or by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or while holding office as a public 100 Spl.C.No.483/2017 servant, obtains for any person any valuable thing or pecuniary advantage without any public interest."
166. In the light of the provisions already enumerated by us we as per the law laid down therefore hold that the accused, A-1 to A-3 (officials of UCO Bank) and A-6 (official of NHB) are guilty of criminal misconduct under the Prevention of Corruption Act. For the reasons already mentioned by us we do not find sufficient evidence to bring in the involvement of A-7 Suresh Babu within the fold of the said transaction.
167. All the accused were at the relevant time public servants. Each one of them played a specific role in diversion of funds from NHB to the account of Harshad Mehta, all ostensibly under a call money transaction. They thereby in our opinion facilitated Harshad Mehta to obtain pecuniary advantage within the meaning of the section. The acts were anything but intended to be in public interest. On the contrary the public loss and suffering occasioned thereby was immeasurable. Though it is true, as has been argued before us that all the funds diverted have subsequently been returned to NHB and no actual loss has been occasioned thereby either to UCO Bank or NHB. But it must not be forgotten that white collar crimes of such a nature affect the whole society even though they may not have any immediate victims. We, accordingly, hold 101 Spl.C.No.483/2017 accused A-1 to A-3 and A-6 guilty of criminal misconduct under Section 13(1)(d)(iii) of the Prevention of Corruption Act.
66 With respect to the authorities relied upon by the Learned Counsel for accused No.1 in (2021) 18 SCC 70 (N.Raghavender Vs. State of A.P. CBI), also discussed about the ingredients to prove the concept of cheating and in another judgment reported in (2016) 12 SCC 273 (K. Sivaprakash Vs. State of Kerala), indicates that, in order to attract the provisions of Sec.13(2) R/w. Sec.13(1)(d) of the Prevention of Corruption Act, the mandatory ingredients were to prove that the public servant had obtained pecuniary advantage for himself. In the instant case, the authority of the Hon'ble Apex Court can be distinguished since the Hon'ble Apex Court was discussing about Sec.13(1)(d) and in the case on hand, it is established by the prosecution that the accused No.1 had committed an act which can be termed as criminal misconduct and whereas in the instant case, the facts and circumstances are entirely different. The other authority of the Hon'ble Apex Court relied upon in (1980) 3 SCC 110 (Abdulla 102 Spl.C.No.483/2017 Mohd. Pagarkar Vs. State (Union Territory of Goa, Daman and Diu) is not applicable to the facts and circumstances of the case and also the last judgment of the Hon'ble Apex Court reported in (2007) 13 SCC 410 (Radha Pisharassiar Amma vs State Of Kerala). Hence, the contention of the accused persons cannot be accepted by looking in to the above aspects, the prosecution has successfully proved their case beyond all reasonable doubt.
SUMMATION 67 Prosecution has contended that the accused No.1 N.Satya Babu, Manager had entered into criminal conspiracy with accused No.2 Prince Neshan, who was the proprietor of M/s. T & T Concrete Bricks, who had approached the Bank for availing loan and in turn the partnership firm was established on 1.7.2014 which was reduced into writing on 5.7.2014 and whereas the pre-receipts which were furnished by the M/s.Technic & Technicians Industries for supplying of machinery indicating and receiving the amount in the month of June 2014 itself i.e., prior to forming of Partnership Firm which was a farrago and also it was noticed that the supplier of the machinery Mr.Santhosh Neshan, Proprietor of M/s.Technic 103 Spl.C.No.483/2017 & Technicians Industries, was none other than the father of the accused No.2 and in the quotation and also pre-receipt, signature of accused No.2 Prince Neshan was found instead of his father Santhosh Neshan who was the proprietor of M/s.Technic & Technicians Industries. The accused No.1 Manager without verifying the veracity and also of the fact that the alleged industrial unit was alleged to have set up in agricultural land, had proceeded to sanction the amount and also had not bothered about the end usage of the amount. The machinery were not at all supplied and on the very same day working capital of Rs.16 lakh was also sanctioned which was utilized by the accused No.2 for some other purpose than for the purpose for which it was availed. Non- existence of the unit was clearly established during the inspection of the Unit and also by the Internal Vigilance Department and prosecution has established entertaining of malafide intention right from the inception. The Manager who was required to adhere to the procedures and guidelines and directions issued by the RBI and also by the Bank, had acted in derogation of the same and had entered into criminal conspiracy with accused No.2 to cheat and 104 Spl.C.No.483/2017 defraud the Bank which was established during the course of trial. Accordingly, Points No.2 to 7 are answered in the Affirmative.
68 Point No.8: In view of my findings on point No.1 to 7 supra, I proceed to pass the following order:
ORDER Acting under Sec.235(2) of Cr.P.C., the accused No.1 Sri N.Satya Babu is found guilty of the offences punishable under Sec.120(B), 420 of IPC and Sec.13(1)
(d) R/w. Sec.13(2) of the Prevention of Corruption Act, 1988 and accused No.2 Sri Prince Neshan is found guilty of the offences punishable under Sec.120(B), 420, 467, 468, 471 of IPC.
Bail bonds of the accused No.1 and 2 stands cancelled.
To hear regarding sentence, call on. 16.03.2024. (Dictated to the Stenographer Grade-I, transcribed by him, revised and corrected by me and then pronounced in the Open Court on this the 15th day of March, 2024) (Santhosh Gajanan Bhat) LXXXI Addl. City Civil & Sessions Judge, Bengaluru City (CCH-82) C/c of XLVII Addl. City Civil and Sessions Judge and Judge for CBI Cases, Bengaluru (CCH-48).
105 Spl.C.No.483/2017ORDER REGARDING SENTENCE ON 18.03.2024
1. Heard the learned Public Prosecutor on behalf of CBI authorities and also the learned counsel appearing for accused persons.
2. Learned Public Prosecutor has vehemently argued that the accused No.1 N.Satya Babu, who was the then Manager of Syndicate Bank, Jalahalli Branch, Bengaluru during the period 2014-15, had entered into criminal conspiracy with accused No.2 Prince Neshan in order to cheat and defraud the Bank. In furtherance of the same, the accused No.1 had intentionally processed and sanctioned loan application filed by accused No.2 ignoring and flouting the directions and guidelines of the RBI and also that of the Syndicate Bank. It has been submitted by the learned Public Prosecutor that the fraudulent act of accused No.1, by entering into criminal conspiracy with accused No.2, has been established by the prosecution and the malice has been proved right from its inception. It is also been vehemently argued by the learned Public Prosecutor that due to the act of the accused No.1 106 Spl.C.No.483/2017 and 2, the bank had incurred losses. Though it has been submitted by the accused persons that the account was not classified as NPA (non-performing asset), the end usage of the amount indicated that the amount was diverted for the purposes other than the one for which it was to be utilised. It is also been submitted at length that the act of the accused persons would have to be considered as white collared crime, which bleeds the economy of the nation. Lastly he has submitted that the accused No.1 being the custodian of the public fund, ought to have taken due care and protection and in derogation of the same, he has committed the act, which was not befitting to his status. Even otherwise, the accused No.2 knowing fully well that no such unit was in existence, had filed application along with forged documents in order to cheat and defraud the bank and accordingly, he has sought that sentence imposed upon the accused should be proportionate to the act committed by them and as such he has sought for awarding maximum sentence and also suitable fine as provided under various provisions of law on the accused persons.
107 Spl.C.No.483/2017
3. The learned counsel for accused No.1 Sri VNN Advocate has vehemently argued that the allegation which has been made against accused No.1 N.Satya Babu was with respect to ignoring guidelines, notifications and directions of the RBI as well as that of the Syndicate Bank. It has been submitted that the accused No.1 N.Satya Babu through out his career had put in unblemished service, except for the aforesaid allegations. It has also been contended that various citations were awarded to him by the Bank for the achievements made by him. He has also contended that the accused No.1 was dismissed from service in the month of March 2017 and his entire benefits including his gratuity was denied by the bank authorities. Further, the learned counsel for accused No.1 has also submitted that accused No.1 is suffering from various heart ailments and his son who is aged 25 years is required to undergo brain surgery. It has also been submitted that his wife is also suffering from various other health issues and he is the sole bread earner in his family.
4. Lastly, the learned counsel for accused has argued that there are no materials to indicate of obtaining any wrongful 108 Spl.C.No.483/2017 gain by the accused No.1 and the allegations which has been proved is of committing criminal misconduct. Accordingly, he has sought for taking a lenient view.
5. It has also been submitted that since the account was not classified as NPA and also for the reason that the entire amount was deposited to the bank, the learned counsel appearing for accused No.1 has argued that a minimum sentence may be imposed upon him.
6. The learned counsel for accused No.2 Sri T.P., Advocate, has also argued that the accused No.2 is an young entrepreneur, who in a fit of enthusiasm and ignorance had affixed his signatures to certain documents and the same cannot be construed as malice entertained by him from inception. It is also been argued that since entire amount has been repaid and also as they have furnished collateral security, he did not had any intention to cheat and defraud the bank.
7. Learned counsel for accused No.2 has also filed application under Sec.4 of the Probation of Offenders Act, 1958 and in the said application he has once again reiterated the 109 Spl.C.No.483/2017 averments which he had made during the course of recording his statement under Sec.313 of Cr.P.C., Repeatedly it has submitted that though he had availed loan of Rs.9 lakhs and OD facility of Rs.16 lakhs, he had promptly repaid the same and he has not cheated the bank nor he had colluded with the Bank Manager. In the written submissions filed along with his statement under Sec.313 of Cr.P.C., he had admitted of affixing signature to the quotation and also the receipt on behalf of his father which were marked before the Court. He has also stated that none of the Bank officials or the Manager had informed him that the supplier should not be his relative. He has also submitted that he had not entertained any malafide intention and hence he had obtained quotation from his father's unit. In para-7 of his written submissions, he had stated that he had constructed cement concrete platform for manufacturing of hallow bricks by utilising the loan amount of Rs.9 lakhs and had also invested Rs.2 lakh for construction of labour shed. He had also stated of taking delivery of machine from his father and installing the same and since he could not get the power supply he had taken temporary connection 110 Spl.C.No.483/2017 and had started business of manufacturing cement bricks and later on since his landlord had not provided regular power supply, he had suffered losses and was unable to pay the installments. It is his submission that he had purchased a truck for shifting concrete bricks by paying an advance of Rs.3,46,314/- on 20.10.2014. By pointing out the same, he has submitted that he may be given the benefit of Sec.4 of the P.O.Act, 1958.
8. In order to butters his submission, he has relied upon the judgment of Hon'ble Apex Court reported in MANU/SC/1951/2009 (Md. Monir Alam Vs. State of Bihar) wherein Hon'ble Apex Court had upheld the release of the accused on Probation by looking in to the educational background of the accused. Further, in another authority reported in MANU/KA/0978/2023 (Hanamanth Vs. The State), Hon'ble High Court of Karnataka was kind enough to admit the accused by granting the benefit of probation in the offences committed under Sec.324 of IPC. Likewise, in another authority reported in MANU/KA/0648/2008 (Bharath Vs. The State), the same ration has been laid down by the Hon'ble High Court of Karnataka. 111 Spl.C.No.483/2017
9. The above said application has been resisted by the prosecution wherein it has been stoutly submitted that the accused No.2 has been convicted under Sec.467 of IPC for which the prescribed punishment is imprisonment for life or imprisonment of either description which may extend to 10 years. The learned Public Prosecutor has submitted that the legal provisions and the serious nature of the offence does not indicate of attracting the provision of the P.O.Act. Further, it is his contention that since the accused No.2 had entered into criminal conspiracy with accused No.1, who is tried for the offences for the offences punishable under the Prevention of Corruption Act, 1988, the P.O. Act of 1958 could not be applicable. In order to butters his contention, he has relied upon the judgment of Hon'ble Apex Court reported in (2004) 13 SCC 217 (N.Bhargavan Pillai (Dead) By LRs and another Vs. State of Kerala) wherein Hon'ble Apex Court has held follows:
"Coming to the plea relating to benefits under the Probation Act, it is to be noted that Section 18 of the said Act clearly rules out application of the Probation Act to a case covered under Section 5(2) of the Act. Therefore, 112 Spl.C.No.483/2017 there is no substance in the accused- appellant's plea relating to grant of benefit under the Probation Act. The decision in Bore Gowda's case (supra) does not even indicate that Section 18 of the Probation Act was taken note of. In view of the specific statutory bar the view, if any, expressed without analysing the statutory provision cannot in our view be treated as a binding precedent and at the most is to be considered as having been rendered per incuriam. Looked at from any angle, the appeal is sans merit and deserves dismissal which we direct."
10. Learned Public Prosecutor relied upon another judgment reported in (1972) 2 SCC 633 (Jugal Koshore Prasad Vs. State of Bihar) wherein Hon'ble Apex Court had held as follows:
"Mr. Misra on behalf of the appellant has urged that as the offence under section 326 read with section 149 Indian Penal Code is punishable not only with imprisonment for life but also with imprisonment which may extend up to ten years, the benefit of section 6 of the Act can be invoked by the appellant. This contention, in our opinion, is not well founded. Plain reading of section 6 makes it manifest that it deals with persons under twenty-one years of age who are found guilty of having committed an offence punishable with imprisonment but 113 Spl.C.No.483/2017 not with imprisonment for life. As imprisonment for life can also be awarded for the offence under section 326 read with section 149 Indian Penal Code, a person found guilty of such an offence would not be entitled to claim the benefit of section 6. To hold otherwise. would have the effect of ignoring the words "but not with imprisonment for life" and treating them to be otiose. Such a construction is plainly not permissible. We also cannot subscribe to the view that the offences excluded from the purview of the section are only those offences wherein punishment prescribed is imprisonment for life and not for a lesser term, for the language used in the section does not warrant such a view. On the contrary, the ,Plain meaning of the section is that the section cannot be invoked by a person who is convicted for an offence punishable with imprisonment for life. The fact that imprisonment for a lesser term can also be awarded for the offence would not take it out of the category of offences punishable with imprisonment for life. The policy underlying the Act appears to be that it is only in cases of not very serious nature, viz., offences not punishable with imprisonment for life that the convicted person should have the benefit of provisions of the Act. Where, however, the offence for which a person has been convicted is of a serious nature punishable with imprisonment for life, the benefit of the Act would not be permissible in his case. Likewise, there are certain offences like those under the 114 Spl.C.No.483/2017 Prevention of Corruption Act wherein the convicted person cannot claim the protection of the Act. Section 18 of the Act expresser excludes such offences from the purview of the Act."
11. Though the allegations are alleged to have been proved against him, he has sought for taking lenient view by considering his youthfulness of age and also having bright future.
12. Heard the parties and the accused have reiterated the submissions of their counsel and the point that requires to be considered is what would be the appropriate sentence that could be imposed on the accused persons.
13. Time and again it has been reiterated by the Hon'ble Apex Court that in matters pertaining to awarding sentence, the court should be cautious and has to sift and weigh all the relevant factors to arrive at a just conclusion. It is a cardinal principle of law that the nature and gravity of crime has to be appreciated and not the criminality to impose suitable punishment. The court at the time of passing an order on qantum of sentence has to look in to the materials in a different manner than that of the appreciating 115 Spl.C.No.483/2017 evidence for passing of judgment. The court is not against the criminal but against the criminality in which the act is committed by an accused person and at the time of considering the quantum of sentence, the court is required to look in to the manner in which the crime is committed. There are no specific legislation with respect to passing of quantum of sentence. However, the parameters which is required to be considered is based on the case laws which is required to be looked in to. Apart from that the Hon'ble Apex Court has also held that at the time of passing of sentence, an exercise has to be made by the court by pointing the aggravating and mitigating factors and balance has to be secured in order to appreciate the appropriate sentence that could be imposed upon the parties. In various authorities, the Hon'ble Apex Court has also held that the economic offences have to be considered as a class apart, which cannot be equated with any other ordinary criminal cases. Though the allegations may not look sever in terms of physical harm being made, at the same time, the matters pertaining to economic offence would have a socio-economic effect on the society at large. By keeping in mind the same, I have 116 Spl.C.No.483/2017 bestowed my anxious reading to the submissions made by the learned Public Prosecutor and the learned counsel appearing for the accused persons. The following aggravating and mitigating factors can be noticed in the instant case, the same has been culled out as follows;
14. Aggravating Factors:
a) The accused No.1 N.Satya Babu being the Manager of the Bank and custodian of public trust has failed to discharge his duty and had entered into criminal conspiracy with accused No.2 Prince Neshan to cheat and defraud the bank.
b) The accused No.1 who was entrusted with the domain over the public property had failed in discharging his public duty and due to his act, the eligible borrower who would have been benefited of law has been debarred from making a claim and whereas an in- eligible borrower has been provided with loan.
c) the accused No.2 had entered into criminal conspiracy with accused No.1 and had created forged documents in order to avail loan which was deviated for other purposes than for which it was availed. The admissions made by the accused No.2 himself in affixing signature to the receipts and other documents 117 Spl.C.No.483/2017 would indicate of entertaining malafide intention.
That apart the Court in detail has explained the manner in which the partnership firm was established to make a claim for the loan. It is not that the court had convicted the accused persons on the ground that the document i.e., pre-receipt and voucher, quotation was signed by the accused No.2 on behalf of his father. The court had in detail discussed that at the time of filing project report itself, it was stated that the concrete bed was laid. However, in the written submissions filed along with the statement recorded under 313 of Cr.P.C., it has been stated that a sum of Rs.9 lakh was utilised for putting up cement concrete bed, which was a fallacy. And also the partnership firm was established on 1.7.2014 and it was reduced in to writing on 5.7.2014, whereas the receipt for receiving advance amount was issued on 25.6.2014, which is prior to forming Partnership Firm. This particular act indicated of malafide intention on the part of the accused No.2 to cheat and defraud the bank and and which was also entertained by the accused No.1. That apart the evidence of Commercial Tax authorities had clearly indicated that the accused No.2 had never received any machinery since, no VAT was paid by his father PW15 Santosh Neshan and even his 118 Spl.C.No.483/2017 firm M/s.Technic & Technicians Industries were playing mischief and the aforesaid acts would indicate of entertaining a malafide intention and it is not a simple case of producing some quotation and availing loan.
d) The act of accused No.1 and 2 erodes the faith and belief of general public in the financial transactions.
e) If any lenient view has to be taken, the act would further erode the faith and may lead to draw inference that the economic offences will be dealt with liberally. Mitigating Factors:
15. The mitigating factors which can be enumerated are as follows:
a) The accused are not habitual offenders and they do not have any criminal antecedents.
b) the accused persons have to take care of family and suffering from various ailments.
c) The accused persons are having deep roots in the society and enjoying good reputation.
16. By looking in to the aforesaid aggravating and mitigating factors and also on consideration of the materials which 119 Spl.C.No.483/2017 has been produced before the court, it indicates that the act of the accused persons could be termed as white collared offence, which bleeds the economy of the nation. Further, the maxim "Nullum crimen sine lege" which means, the principle of legality in the rule of construing criminal statute is to be in favour of citizens and also the approach should be towards the social welfare. The important aspect of socio-economic offence is to be emphasized with the gravity and the harm it has caused to the society and also the nature of the offences themselves. In many instances, the gravity of offence cannot be deciphered easily and the same requires to be considered in a manner which would indicate the mode of execution in secrecy by shrewd and snollygoster person with sophisticated means. Time and again, it has also been held by the Hon'ble Apex Court that the cry of the victim is also required to be appreciated. In the instant case the society at large is to be considered as the main victim due to the fraudulent act of the accused person. I have bestowed my anxious reading to the judgment of Hon'ble Apex Court reported in (2012) 12 SCC 384 (State of Maharashtra through CBI Vs. Balakrishna 120 Spl.C.No.483/2017 Dattatreya Kumbar), wherein Hon'ble Apex Court has held as follows:-
"The aforesaid order is therefore, certainly not sustainable in law if examined in light of the aforementioned judgments of this Court. Corruption is not only a punishable offence but also undermines human rights, indirectly violating them, and systematic corruption, is a human rights' violation in itself, as it leads to systematic economic crimes. Thus, in the aforesaid backdrop, the High Court should not have passed the said order of suspension of sentence in a case involving corruption. It was certainly not the case where damage if done, could not be undone as the employee/respondent if ultimately succeeds, could claim all consequential benefits. The submission made on behalf of the respondent, that this Court should not interfere with the impugned order at such a belated stage, has no merit for the reason that this Court, vide order dated 9.7.2009 has already stayed the operation of the said impugned order."
17. When the said principles are applied to the facts of the case on hand, it indicates that the accused No.1 N.Satya Babu had entered into criminal conspiracy which is punishable under 121 Spl.C.No.483/2017 Sec.120B of IPC to cheat and defraud the bank. Wherein the accused No.2 had created various documents purported to be genuine and by producing the same, had obtained loan which was not necessarily towards the purpose for which it was availed. Though it has been argued vehemently by the learned counsel for accused No.1 that the act of the accused No.1 is to be looked into with respect to the attending circumstances, it indicates that the accused No.1 being the Manager of bank and also custodian of the public funds, was required to act in a manner which would befit his status. With respect to the accused No.2, the court has already observed with respect to the criminality and fraudulent manner in which the documents were created, project report prepared and submitted to the Bank for the purpose of availing the loan. All the said aspects had lead to a situation indicating that accused No.1 and 2 had entered into criminal conspiracy to cheat and defraud the bank which was during the course of evidence. Though the accused persons at this juncture claim to be suffering from various ailments, the same will not be mitigating factor. In this regard, the court has relied upon the judgment of Hon'ble Apex Court reported 122 Spl.C.No.483/2017 in AIR 1996 SC 361 A. Wati Ao vs The State Of Manipur, wherein it has been held as follows:
"This takes us to the question of the sentence. A perusal of the trial court's judgment shows that the sentence of imprisonment till rising of the court was awarded because of : (1) the appellant being a senior IAS Officer and holding of different high posts, which showed that he is a very respectable person; (2) the appellant having a number of dependents; (3) the certainty of appellant's losing his job and requiring him to earn a living for himself and his family members; (4) the present being first offence committed by him; and (5) the spectre of the incident hanging on his head for about half a decade. According to us, none of these factors (except the last, to some extent) make out a case for awarding sentence less than the minimum prescribed by the aforesaid Act - the same being imprisonment for one year. The fact that the appellant is a senior IAS Officer really requires a serious view of the matter to be taken, instead of soft dealing. The fact that he has a number of dependents and is going to lose his job are irrelevant considerations inasmuch as in almost every case a person found guilty would have dependents and 123 Spl.C.No.483/2017 if he be a public servant, he would lose his job. The present being the first offence is also an irrelevant consideration. Though the delay has some relevance, but as in cases of the present nature, investigation itself takes time and then the trial is prolonged, because of the type of evidence to be adduced and number of the witnesses to be examined, we do not think that the fact of delay of about five years could have been a ground to award the sentence of imprisonment till rising of the court, which really makes a mockery of the whole exercise. We, however, think that the delay does require some reduction from the minimum prescribed; and on the facts of this case, ends of justice would be met, according to us, if at this length of time, pursuant to notice of enhancement issued by this Court, a sentence of imprisonment for six months is awarded."
18. In the above said judgment, Hon'ble Apex Court has held that the conviction of IAS Officer charged with misuse of office could not be let of leniently since it would give an wrong message to the society at large. Even in the instant case, the act of the accused No.1 and 2 is to be viewed seriously, since the availing 124 Spl.C.No.483/2017 of loan with malafide intention had precluded an eligible person from making a valid claim of loan from the bank. After all the bank consists of funds which it has collected from the general public and on false pretext, if the loan is availed and subsequently, even if it is claimed to be settled by the accused persons, thus an impression will be given to the society at large that deviation of funds could be made by furnishing false and forged documents and the same is not the intention of the legislature nor the intention of the various constitutional authorities. Even otherwise, the loan account though settled by the accused persons, will not be a mitigating factor and the usage of the loan and its deviation for some other purpose would clearly indicate of meddling with the public funds, which cannot not be construed as a minor misnomer. Under the circumstances, the act of criminal misconduct against accused No.1 is to be viewed seriously. By considering the said aspects, it is crystal clear that the court cannot take a lenient view towards the conduct and act committed by the accused No.1 and it has to be strictly viewed as contemplated under Sec.13(1)(d) r/w Sec.13(2) of the P.C.Act.
125 Spl.C.No.483/2017
19. The act of accused No.2 in a way squarely makes an attempt to bleed the economic condition of the country and also the act of creating and forging documents and also by making misrepresentation with an intention to cheat and defraud the bank right from inception, has to be viewed seriously. Though repeated argument has been made about the innocence, age of the accused No.2, it indicates that the materials which were furnished was clear indication of entertaining a malafide intention and in particularly, at the cost of repetition, it could be culled out as follows:
(a) Entering of partnership firm was on 1.7.2014, issuance of quotation and receipt for advance payment on 25.6.2014, was clear act of malafide intention.
(b) Contending that OD amount was obtained and utilised for manufacturing process is also a fallacy since the account statement indicate of providing hand-loan to PW10 Hanumanthappa Babu who has also admitted of obtaining of loan to an extent of Rs.2.38 lakhs immediately within 4 days of sanctioning of loan to accused No.2 and its non-repayment indicates of misusing the funds. 126 Spl.C.No.483/2017
(c) the submission of utilising Rs.9 lakh for putting up concrete bed and labour shed is also a mis-representation and false submission since as per Ex.D1 to D6 indicate that prior to obtaining loan as per their own Project Report furnished by accused No.2 indicates of completing construction of cement concrete bed and other requisites.
(d) Asserting of putting up an industrial shed over an agricultural land without obtaining electricity connection from the authorities, itself is entertaining of malafide intention.
(e) The evidence of Commercial Tax Authorities indicates of non-paying of VAT towards alleged supply of machinery, leads to an inevitable conclusion that no such machinery were purchased.
20. Lastly coming to the application filed under Sec.4 of Probation of Offenders Act, 1958, it is pertinent note that for the aforesaid reasons the provisions of P.O. Act is not applicable to the case on hand. In the instant case, the accused No.1 and 2 have entered into criminal conspiracy to cheat and defraud the bank and the provisions of P.C.Act has been made applicable against the 127 Spl.C.No.483/2017 accused persons. The authorities which have been relied upon by the learned counsel for accused is not applicable to the facts and circumstances of the case. No doubt, whenever a provision of law indicates of imposing of minimum sentence, the same can be made good. However, as per the dictum of Hon'ble Apex Court produced by the learned counsel for accused, it clearly indicates that the same are not applicable to the P.C.Act. Further, the act of accused persons clearly indicates of meddling with the economic activity of the nation which is termed as white collared offences, though no physical harm could be indicated , indication of malafide intention itself would be sufficient to hold that the henious offence has been committed. Once at the cost of repetition, it is stated that the Court is not against the criminal, but against the criminality committed by the accused. Under the circumstances, the application filed under Sec.4 of the Probation of Offenders Act, 1958 is devoid of merits and the same is dismissed.
21. In view of the above said discussion, the submissions made by the learned counsel for accused persons with respect to 128 Spl.C.No.483/2017 taking lenient view cannot be accepted. Accordingly, I proceed to pass the following:
ORDER The accused No.1 N.Satya Babu and accused No.2 Prince Neshan are hereby convicted for the offence punishable under Section 120B of IPC and they are hereby sentenced to undergo a Rigorous Imprisonment for a period of FIVE years and imposed with a fine of Rs.25,000/- each (each Rupees Twenty Five Thousand Only) and in default of payment of fine, they shall undergo a Simple Imprisonment for a period of ONE year.
The accused No.1 N.Satya Babu and accused No.2 Prince Neshan are hereby convicted for the offence for the offences punishable under Sec.420 of IPC and they are sentenced to undergo a Rigorous Imprisonment for a period of FIVE years and they are imposed with a fine of Rs.2 Lakh each (Rupees Two Lakh each) and in default of payment of fine, they are sentenced to undergo a Simple Imprisonment for a period of ONE year each.
The accused No.1 N.Satya Babu is hereby convicted for the offence for the offences punishable 129 Spl.C.No.483/2017 under Sec.13(1)(d) r/w 13(2) of the Prevention of Corruption Act, 1988 and sentenced to undergo rigorous imprisonment for a period of Five years and he is imposed with fine of Rs.50,000/- (Rupees Fifty thousand only) and in default of payment of fine, he is sentenced to undergo a Simple Imprisonment for a period of ONE year.
The accused No.2 Prince Neshan is hereby convicted for the offence for the offences punishable under Sec.467 of IPC and he is sentenced to undergo a Rigorous Imprisonment for a period of Five years and he is imposed with a fine of Rs.1,00,000/- (Rupees One Lakh Only) and in default of payment of fine, he is sentenced to undergo a Simple Imprisonment for a period of ONE year.
The accused No.2 Prince Neshan is hereby convicted for the offence for the offences punishable under Sec.468 of IPC and he is sentenced to undergo a Rigorous Imprisonment for a period of THREE years and he is imposed with a fine of Rs.1,00,000/- (Rupees One Lakh only) and in default of payment of fine, he is sentenced to undergo a Simple Imprisonment for a period of ONE year.130 Spl.C.No.483/2017
The accused No.2 Prince Neshan is hereby convicted for the offence for the offences punishable under Sec.471 of IPC and he is sentenced to undergo a Rigorous Imprisonment for a period of THREE years and he is imposed with a fine of Rs.1,00,000/- (Rupees One Lakh only) and in default of payment of fine, he is sentenced to undergo a Simple Imprisonment for a period of ONE year.
The sentences ordered shall run concurrently and the accused No.1 and 2 shall be entitled for the period of set off as contemplated under Section 428 of Cr.P.C., for the period of detention they had already undergone, if any as Under Trial Prisoners in the above case.
Acting under Section 357(A) of Cr.P.C., suitable compensation requires to be ordered to be paid to the erstwhile Syndicate Bank and now Punjab National Bank, Jalahalli Branch, Bengaluru out of the total fine amount and accordingly, the Syndicate Bank-now Punjab National Bank, Jalahalli Branch, Bengaluru is awarded with a compensation of Rs.7 lakhs (Rupees Seven Lakhs only) and the remaining amount is ordered to be forfeited to the State.131 Spl.C.No.483/2017
In the event of deposit of fine amount, the same shall be forfeited after disbursing the compensation.
Office is hereby directed to furnish the copy of the Judgment to the accused forthwith.
The bail bond and surety bonds executed by the accused stands cancelled.
(Dictated to Stenographer Grade-I, transcribed by him, revised and corrected by me and then pronounced in open court on 18th March, 2024) (Santhosh Gajanan Bhat) LXXXI Addl. City Civil & Sessions Judge, Bengaluru City (CCH-82) C/c of XLVII Addl. City Civil and Sessions Judge and Judge forCBI Cases, Bengaluru (CCH-48) Annexure:-
List of witnesses examined on behalf of Prosecuton:
PW.1 : G.C.Matolli
PW.2 : Venkatesh
PW.3 : Nagesh S.H.
PW.4 : Guruprasad
PW.5 : A.N.Vasudevan
PW.6 : S.P.Ramachandra
PW.7 : Amar Devendrappa Nasi
132 Spl.C.No.483/2017
PW.8 : Anand
PW.9 : A. Balasami
PW.10 : Hanumanthappa Babu
PW.11 : Srinivas B.R.
PW.12 : Madesha N
PW.13 : Sreedhar S
PW.14 : Rajendra Kumar S
PW.15 : Santhosh Neshan
PW.16 : R.K.Shivanna
PW.17 : Rakesh Ranjan
List of Exhibits marked on behalf of Prosecution :
Ex.P.1 : C/c of Complaint Ex.P.1(a) : Signature of PW.1 Ex.P.2 : C/c of Reply Letter. Ex.P.2(a) : Signature of PW.2. Ex.P.3 : Seizure Memo Ex.P.3(a) : Signature of PW.3. Ex.P.4 : Report-inspected Ex.P.4(a) : Signature of PW.3. Ex.P.5 : Seizure Memo dated 3.8.2015. Ex.P.5(a) : Signature of PW.3 Ex.P.6 : Seizure Memo dated 14.08.2015. Ex.P.6(a) : Signature of PW.3. Ex.P.7-13 : Circulars of the Bank. Ex.P.7(a) to 13(a) : Signatures of PW.3. Ex.P.7(b) to 13(b) : Certificates issued under Sec.65(B) of Evidence Act. Ex.P.7(b-i) to 13(b-i) : Signature of PW.3. Ex.P.14-16 : Circulars Ex.P.14(a) : Signatures of PW.3. P.16(a) :
Ex.P.14(b) : Certificates issued under Sec.65(B) of Evidence Act.133 Spl.C.No.483/2017
to 16(b) Ex.P.14(b-i) : Signatures of PW.3 16(b-i) Ex.P.17-21 : Circulars.
P.17(a) : Signatures of PW.3. to 21 :
Ex.P.17(b) : Certificates issued under Sec.65(B) of Evidence Act.
to 21(b) Ex.P.17(b-i) : Signatures of PW.3 21(b-i) Ex.P.22 : Loan Application Ex.P.23 : Quotation. Ex.P.23(a) : Signature of PW.15
Ex.P.23(b) : Signature of A.2 identified by PW.15 Ex.P.23(c) : Signature of A.2 identified by PW.15 Ex.P.24,25 : Receipts Ex.P.24(a) : Signature of A.2 identified by PW.15 Ex.P.25(a) : Signature of PW.15 Ex.P.26 : Confirmation Letter Ex.P.27 : Loan Review Format Ex.P.27(a) : Signature of PW.3 Ex.P.28 : Business Loan Model.
Ex.P.28(a) : Signature of PW.3 Ex.P.29 : Process Note Ex.P.29(a) : Signature of PW.3 Ex.P.30 : Bank Inspection Report.
Ex.P.30(a) : Signature of PW.3 Ex.P.31 : Letter Ex.P.32 : Valuation Report.
Ex.P.32(a) : Zerox copy of the photo Ex.P.32(b) : Certificate U/Sec.2(A) of Banker's Book of Evidence Act.
Ex.P.32(b-i) :
Ex.P.32(c) : Signature of PW.6.
Ex.P.33 : Report Ex.P.33(a) : Signature of PW.3 Ex.P.34 : Memo dated 30.01.2017. 134 Spl.C.No.483/2017 Ex.P.34(a) : Signature of PW.4 Ex.P.35 : Copy of the Circular. Ex.P.35(a) : Signature of PW.4 Ex.P.36 : Receipt Memo Ex.P.36(a) : Signature of PW.4 Ex.P.37 : Receipt Memo Ex.P.37(a) : Signature of PW.4 Ex.P.38 : The letter dated 8.2.2017 Ex.P.39 : Copy of Loan Account Status. Ex.P.39(a) : Signature of PW.4 Ex.P.40 : Receipt Memo Ex.P.40(a) : Signature of PW.4. Ex.P.41 : Statement of Account Ex.P.41(a) : Signature of PW.4. Ex.P.42 : Certificate U/Sec.2(A) of Banker's Book of Evidence Act. Ex.P.42(a) : Signature of PW.4. Ex.P.43 : Certificate U/Sec.2(A) of Banker's Book of Evidence Act. Ex.P.43(a) : Signature of PW.4. Ex.P.44 : The Statement of account. Ex.P.44(a) : Signature of PW.4. Ex.P.45 : Certificate U/Sec.2(A) of Banker's Book of Evidence Act. Ex.P.45(a) : Signature of PW.4. Ex.P.46 : Certificate U/Sec.2(A) of Banker's Book of Evidence Act. Ex.P.46(a) : Signature of PW.4. Ex.P.47 : Statement of account. Ex.P.47(a) : Signature of PW.4. Ex.P.48 : Certificate U/Sec.2(A) of Banker's Book of Evidence Act. Ex.P.48(a) : Signature of PW.4. Ex.P.49 : Certificate U/Sec.2(A) of Banker's Book of Evidence Act. Ex.P.49(a) : Signature of PW.4. Ex.P.49(a) : Signature of PW.4. 135 Spl.C.No.483/2017 Ex.P.50 : Entire Papers of Loan Account pertaining to M/s. T & T Concrete Bricks. Ex.P.50(a) : Signature of PW.4. Ex.P.51 : C/c of Receipt Memo.
Ex.P.52,53 : Hypothecation Agreements executed by T & T Concrete Bricks.
Ex.P.52(a) : Guarantee Agreement.
Ex.P.52(b) : Signature of PW.10 Ex.P.53(a) : Guarantee Agreement.
Ex.P.53(b) : Signature of PW.10 Ex.P.54,55 : Statements of Accounts. Ex.P.54(a) : Signature of witness.
Ex.P.55 : Signature of witness.
Ex.P.56 : Receipt Memo.
Ex.P.57 : Risk Base Internal Audit Report dtd
14.02.2015.
Ex.P.58 : Photo.
Ex.P.58(a) : Signature of PW.8
Ex.P.59 : The Certificate.
Ex.P.59(a) : Signature of PW.8.
Ex.P.60 : Specimen Signatures.
Ex.P.61 : C/c of Report
Ex.P.61(a) : Signature of PW.9.
Ex.P.61(b) : Relevant Portion of report
Ex.P.61(c) : Para No.28
Ex.P.62 : The Receipt Memo.
Ex.P.62(a) : Signature of PW.12.
Ex.P.63 : Covering Letter
Ex.P.64 : The entire File
Ex.P.65 : Copy of Summary of VAT Return Details.
Ex.P.66 : Certificate U/Sec.2(A) of Banker's Book of
Evidence Act.
Ex.P.66(a) : Signature of PW.12.
Ex.P.67 : Receipt Memo
Ex.P.68 : Letter
Ex.P.69 : Entire File.
Ex.P.70-72 : VAT Return Forms
136 Spl.C.No.483/2017
Ex.P.73,74 : C/c of Manual of Instructions.
Ex.P.75 : Portion of statement of witness. Ex.P.75(a) : Portion of statement of witness. Ex.P.75(b) : portion of statement of witness.
Ex.P.76 : C/c of FIR List of Material Objects marked on behalf of Prosecution:
NIL List of witnesses examined on behalf of defence:
NIL List of documents marked on behalf of Defence Side :
Ex.D.1 : Project Report
Ex.D.2,3 : Copies of the photos
Ex.D.4 : Document of credentials (Rental Agreement).
Ex.D.5 : Copy of Registration with Directorate of
Industries and Commerce.
Ex.D.6 : Acknowledgment for registration.
Ex.D.7 : Memorandum of Deposit of Title Deeds.
Ex.D.8-10 : Zerox copies of the photos pertaining to site of T & T Concrete Bricks.
Ex.D.11 : Copy of the Letter Ex.D.12 : Statement.
Ex.D.13 : Valuation Report (Santhosh Gajanan Bhat) LXXXI Addl. City Civil & Sessions Judge, Bengaluru City (CCH-82) C/c of XLVII Addl. City Civil and Sessions Judge and Judge forCBI Cases, Bengaluru (CCH-48)