Delhi District Court
Cbi vs 1. Kul Prakash Singh on 25 February, 2012
Kul Prakash Singh etc.
IN THE COURT OF SH. VINOD KUMAR
SPECIAL JUDGEII (PREVENTION OF CORRUPTION ACT, CBI),
ROHINI, DELHI
CC No. 3/2009
CBI Vs 1. Kul Prakash Singh
Dy. Commissioner of Excise Custom,
F.P.O., New Delhi.
2. Smt. Bhavana Singh
W/o Sh. K. P. Singh
Both R/o A26, Preet Vihar, Delhi.
Permanent Address
Village Ka Purba
PO, Kaithaula, Distt. Paratpagarh,
U.P.230303.
Date of arguments : 17.2.2012
Date of judgement : 25.2.2012
JUDGEMENT
1. Accused Kul Prakash Singh (A1), an IRS officer, is facing prosecution along with his wife i.e. accused Smt. Bhavana Singh (A2) for amassing assets having the value of Rs.1,13,95,991/. It is alleged that these assets are disproportionate to his known source of income to the extent of Rs.87,49,961/ for the check period from 4.2.1991 to 9.6.2001. Accused Kul Prakash Singh (A1) had married Smt. Bhavana Singh (A2) on 24.1.1995. Her CC No. 3/2009 Page 1 / 28 Kul Prakash Singh etc. assets are included by prosecution in computing the total value of assets of Kul Prakash Singh (A1).
2. The investigation revealed the following assets, income and expenditure of Sh. Kul Prakash Singh (A1) and his wife Smt. Bhavana Singh (A2) during the check period as under : Income of K. P. Singh (A1)
1. Net salary 920,308
2. Bank interest 6,545
3. Reward 8,000
4. Uniform Allowance 3,800
5. Gift from father (as shown in I/T during 199798 15,000
6. LIC maturity 37,500 Total income 991,153 Income of Bhavana Singh (A2) Smt. Bhavana Singh has claimed that she was having assets worth Rs.7.22 lakhas on 1.1.1995 prior to her marriage with K. P. Singh on 24.1.1995 as per the balance sheet enclosed with the Income Tax Return. Ld. Public Prosecutor submits that therefore, while computing the total assets of A1 and A2, the aforesaid assets of Rs.7.22 lakhs were not taken into account in order to give her the benefit. The portion of assets liquidated during the check period have been taken into CC No. 3/2009 Page 2 / 28 Kul Prakash Singh etc. consideration for calculating her income as mentioned in the Income Tax Return filed by her from time to time. The details of such assets as per the balance sheet as on 31.3.1995 are as under : Capital : Rs.7,22,000.52 Investment Sh. B. B. Singh : Rs.75,000 Lucknow Dev. Authority : Rs.20,000 Cash and Bank Balance Cash in hand : Rs.23,784 SB S/A 43970 : Rs.1,48,216.52 FDR with SBI : Rs.4,50,000 Rs.7,22,000.52
3. Following income has been earned by her during the period of check as per I/T returns: CC No. 3/2009 Page 3 / 28 Kul Prakash Singh etc. 199495
1) Interest of FDR : Rs.12,365
2) Saving Bank Account : Rs.2,667
3) Petty cash gifts during marriage : Rs.26,070 Rs.41,102 199596
1) Sale of jewellery(114.85 gms.) : Rs.50,650
2) S. B. Interest : Rs.3,161
3) Salary : Rs.26,000
4) FDR interest : Rs.31,923 Rs.1,11,734 199697
1) Sale of jewellery(812.75 gms.) : Rs.3,99,241
2) SB Account Interest : Rs.11,462
3) Salary : Rs.31,200
4) Interest from LDA : Rs.4,800
5) Gain of shares of TMF & others : Rs.10,536 Rs.4,57,239 CC No. 3/2009 Page 4 / 28 Kul Prakash Singh etc. 199798
1) Gift from fatherinlaw : Rs.25,000
2) SB interest : Rs.10,523
3) Deb. Interest : Rs.23,654
4) FDR interest : Rs.4,425 Rs.63,602 199899
1) SB A/c interest : Rs.4,162.11
2) Deb. Interest : Rs.304
3) Interest of Inv. : Rs.1,176 : Rs.5,642.11 19992000
1) SB interest : Rs.2,989.80
2) Short term capital gain : Rs.15,30,616.90
3) FDR interest : Rs.21,367
4) Interest on FDR with FIs : Rs.24,845 Rs.15,79,818.70 CC No. 3/2009 Page 5 / 28 Kul Prakash Singh etc. 20002001
1) House rent received @ Rs.40,000/pm. : Rs.4,80,000
2) Short term gain on society flat : Rs.33,919
3) Income from Sh. K. P. Singh - loan : Rs.65,200
4) Interest on FDR : Rs.44,694
5) Misc. Income : Rs.3,878
6) Interest on SB account : Rs.10,030 Rs.6,37,721.00 Total income of A2 : Rs.28,96,858 Add House rent of April and May,2001 @ Rs.40,000/ per month. : Rs.80,000 ADD a. Loan received from Smt. Rajmani Singh : Rs.2,75,000 (mother of Smt. B. Singh) b. Loan received from Sh. C. P. Singh : Rs.4,00,000 (uncle of Smt. B. Singh) c. Loan received from Sh. B. B. Singh : Rs.3,05,000 (fatherinlaw of Smt. B. Singh) Total income of Smt. Bhavana Singh : Rs.39,56,858 CC No. 3/2009 Page 6 / 28 Kul Prakash Singh etc. Less Income from fraudulent share transaction : Rs.15,30,616 during 19992000 Overall total income of Smt. Bhavana Singh : Rs.24,26,242 total income of Sh. K. P. Singh : Rs.9,91,153 Total income of K.P. Singh and Bhavana Singh : Rs.34,17,395
4. Expenditure
a) Verifiable The details of verifiable expenditure of A1 and A2 are as under :
1. Telephone : Rs.39,933
2. Schooling : Rs.24,010
3. House rent : Rs.1,35,600
4. LIC Premium : Rs.1,27,840
5. House Tax : Rs.56,528
6. Income Tax : Rs.80,684 Rs.4,64,595 CC No. 3/2009 Page 7 / 28 Kul Prakash Singh etc.
5. As per charge sheet, Smt. Bhavana Singh had paid an amount of Rs.5 lakhs approximately on income from share transaction to the tune of Rs.15.30 lakhs which were found fraudulent during investigation. The benefit of the said income was not given and hence the income tax paid has also been excluded from expenditure.
b) Noneverifiable = 1/3 of net salary
Rs.9,20,308 x 1/3 = Rs.3,06,769
Total expenditure of Sh. K. P. Singh and Smt. Bhavana Singh (Verifiable + nonverifiable) = Rs.7,71,364/ (C) Assets Ld. Public Prosecutor submits that A1 and A2 were found in possession of the following assets in their names during the check period : Immovable assets
1) Plot A2/24, Vishal Khand, Gomtinagar, : Rs.7,50,000/ Lucknow, in the name of Sh. K. P. Singh
2) Plot B2/156, Vishes Khand, Gomtinagar,: Rs.1,73,000/ Lucknow in the name of Smt. Bhavana Singh
3) A26, Preet Vihar, Delhi : Rs.96,33,100/ Smt. Bhavana Singh Rs.1,05,56,100 CC No. 3/2009 Page 8 / 28 Kul Prakash Singh etc. Movable Assets Bank Deposit : Rs.2,43,152.46 Household items : Rs.2,44,604 Cash : Rs.24,135 NSC : Rs.10,000 Jewellery : Rs.3,18,000 Total : Rs.8,39,891.46 Total Assets : Movable + Immovable 8,39,891 + 1,05,56,100 = Rs.1,13,95,991 Calculation of Disproportionate Assets Total Income : Rs.34,17,395 Total Expenditure : Rs.7,71,364 Likely Savings(incomeexpenditure): Rs.26,46,031 Assets : Rs.1,13,95,991 DA (Assets - Savings) : Rs.87,49,960 % DA : 256% (DA x 100/Inc.)
6. Investigation has further revealed that Smt. Bhavana Singh (A2) became a client of M/s Abhipra Capital Ltd. by agreement dated 16.11.1999. At this point of time M/s Abhipra CC No. 3/2009 Page 9 / 28 Kul Prakash Singh etc. Capital Ltd. was authorized broker of National Stock Exchange only. Code no. CSG23 was allotted to her at NSE and the transactions of sale / purchase of share at NSE are reflected in her name. She incurred a loss of Rs.66 thousand approximately at NSE. As per aforesaid agreement and SEBI rules and regulations M/s Abhipra Capital Ltd. was authorized to transact in shares etc. on behalf of Smt. Bhavana Singh only at NSE.
7. Ld. Public Prosecutor submits that as per the records of M/s Abhipra Capital Ltd. the scrip wise net position of Bhavana Singh (client no. CSG23) at NSE during the financial year from 1.4.1999 to 31.3.2000 was () Rs.66,298.55 i.e. net loss. Since Bhavana Singh invested the amount in Nov./December 1999, as such the net loss has been caused to Smt. Bhavana Singh in trading of shares between Nov./December, 1999 to 31.3.2000. Surprisingly, the statement of account of M/s Abhipra Capital Ltd. during the aforesaid financial year show the following payment to Smt. Bhavana Singh.
Date Amount Mode Date on which the amount credited in the account of Smt. Bhavana Singh 3.2.2000 400,000 Cheque 5.2.2000 29.2.2000 500,000 Cheque 3.3.2000 17.3.2000 967,966.9 Cheque 24.3.2000 Total 1,867,966.9 CC No. 3/2009 Page 10 / 28 Kul Prakash Singh etc. This statement further shows that M/s Abhipra Capital Ltd. transferred the following amount as transfer from BSE to the account of Smt. Bhavana Singh, maintained with them.
Date Amount 5.2.2000 506,048,84 16.3.2000 1,097,932.68 Total 1,603,981.52
8. Ld. Public Prosecutor submits that M/s Abhipra Capital Ltd. was not an authorized broker registered with BSE and DSE during this period. However, M/s Abhipra Securities Pvt. Ltd. (a sister concern of M/s Abhipra Capital Ltd.) is a client of M/s TCP broker Ltd., 17, Netaji Subhash Marg, Darya Ganj, New Delhi which is registered as a member of Bombay stock exchange, Mumbai) as per agreement dated 1.8.98 between M/s Abhipra Securities Pvt. Ltd. and M/s TCP Stock Broker Ltd. for the purpose of investing / trading in securities. As per the records of M/s TCP Stock brokers Ltd., they have traded in shares and securities during the relevant period on behalf of M/s Abhipra Securities Pvt. Ltd. and not on behalf of Smt. Bhavana Singh who does not figure either on the records of M/s CC No. 3/2009 Page 11 / 28 Kul Prakash Singh etc. TCP Stock Broker Ltd. or M/s Abhipra Securities Pvt. Ltd. Thus, it is alleged that the aforesaid transactions of Rs.16.03,981.52 on the record of M/s Abhipra Capital ltd. are fraudulent transactions and subsequent transfer of money of Rs. 1,867,966.90 to Smt. Bhavana Singh by M/s Abhipra Capital Ltd. for the purposes of money laundering. Hence, this amount has been deducted from the income. Since Smt. Bhavana Singh has paid a tax of Rs.5 lakhs (approx.) for the said income, the same has also not been taken as an expenditure. Total Income received from M/s Abhipra : 18,67,966.90 Total amount paid to M/s Abhipra by Smt. Bhavana Singh : 3,37,350 Net gain of Smt. Bhavana : 15,30,616.90
9. Ld. Public Prosecutor submits that investigation has established that the said income of Rs.15,30,616,90 earned from share and securities was not from bonafide sale and purchase of shares but merely transfer of funds from M/s Abhipra Capital Ltd. Investigation has established that such transfer of funds is not legal as per SEBI rules and regulations. The buying and selling of shares is to be done as per SEBI rule and regulations. The buying and selling of shares is to be done as per instructions CC No. 3/2009 Page 12 / 28 Kul Prakash Singh etc. of the client and the broker on his own could not transfer funds to the client. Neither any margin money was paid to M/s TCP and M/s SMC by Smt. Bhavana Singh nor she entered into any agreement with them. Also the transaction on which the alleged profit was claimed are not in the name of Smt. Bhavana Singh. Further, M/s Abhipra Capital Ltd. used to send contract notes / bills to Smt. Bhavana Singh regularly which contained details of sale / purchase of shares. So she had the knowledge of the transactions. M/s Abhipra Capital Ltd. did not maintain any order book for orders placed by the clients. SEBI has also inspected the transactions of the company during the relevant period during which it observed several irregularities including nonmaintenance of order book, transfer of funds from one client to the other etc. Thus gain of Rs.15,30,616.90 was therefore not a genuine gain and is rather illegal and therefore, cannot be given benefit while calculating the income of Smt. Bhavana Singh.
10. Regarding the cost of property at A26, Preet Vihar, Delhi, investigation has revealed that this is a three storey built up constructions on a 190 sq. yrds. (159 sq. mtrs.) plot. It is corner house facing towards east and having parks on eastern and southern sides, meaning thereby that the property is beautifully CC No. 3/2009 Page 13 / 28 Kul Prakash Singh etc. located which is indicative of higher costs. The quality of construction is also highly expensive. Primary observation indicated that the cost of construction must be much higher than the total cost of land and building registered for Rs.19.71 lakhs on 29.3.2000. Hence, it was felt necessary to valuate the property from Govt. Agency. Accordingly, the property was got valued from Valuation Cell of Income Tax Department which assessed the house as :
1. Plot of land : Rs.63,29,459
2. Depreciated value of building: Rs.33,03,640 Total : Rs.96,33,099
11. As it was found during investigation that the cost of the said property was much higher than that of the cost mentioned in registered sale deed, the value calculated by valuation cell of Income Tax Department was taken into account for calculation of DA against Kul Prakash Singh (A1) and his wife Smt. Bhavana Singh (A2). It is alleged that they could not give satisfactory explanation of this transaction.
12. In view of above facts, charge under Section 109 and Section 13 (2) r/w 13 (1) (e) of Prevention of Corruption Act, 1988 against accused Smt. Bhavana Singh (A2) and a charge under Section 13(2) r/w 13(1)(e) of Prevention of Corruption CC No. 3/2009 Page 14 / 28 Kul Prakash Singh etc. Act, 1998 against accused Kul Prakash Singh (A1) were framed to which they pleaded not guilty and claimed trial.
13. In order to prove its case, prosecution examined as many as 23 witnesses.
14. Statement under Section 313 CrPC of both the accused persons were recorded. They also examined two witnesses in defence.
15. Ld. Counsel for accused persons have strongly assailed the sanction granted under Section 19 of Prevention of Corruption Act as being mechanical. It is submitted by Ld. Counsel that PW3 S. P. Roy, under secretary, Ministry of Finance, who proved the sanction, has testified in cross examination dated 5.10.2009 that when the CBI sought sanction to prosecute accused no.1, the Department had recommended on 10.8.2005 to the Central Vigilance Commission that "the Directorate finds no case of disproportionate assets against Sh. K. P. Singh, Joint Commissioner, the then D. C. Under the circumstances, the recommendations of CBI for sanction of prosecution against Sh. K. P. Singh, J. C. does not appear to be on sound footings".
16. It is argued by Ld. Defence Counsel that even after above assertion, the Department changed its view in the joint meeting convened by the CVC in which the CBI and the Department CC No. 3/2009 Page 15 / 28 Kul Prakash Singh etc. participated and sanction was granted by the Department following direction of the CVC as contained in their letter dated 7.11.2005. Ld. Defence Counsel has drawn my attention to the testimony of PW3 Sh. S. P. Roy, who stated that "CVC held that the case of disproportionate assets is fully made out even if the registered value of Preet Vihar property is accepted. The Commission, therefore, advised the department to issue sanction for prosecution against Sh. K. P. Singh."
17. Ld. Counsel has further drawn my attention that between the dates of recommending "no case of D.A." to the CVC, no additional documents were provided by the CBI to the department due to which the department could change its stand in view of those additional submissions. It is submitted that the advice of the CVC is only recommendatory in nature. The sanctioning authority, in its wisdom, may or may not grant sanction depending upon the material evidence on record. It is submitted that in the present case, on basis of the documents already provided by the CBI, the department had already indicated that no case of DA was made out. Thus, it is argued, there was no appreciation of facts and application of mind by the Department in grant of sanction. It is argued that the department was coerced to grant sanction by the CVC and CC No. 3/2009 Page 16 / 28 Kul Prakash Singh etc. therefore, it was not independent decision of the department based on facts of the case, hence, the sanction is illegal and on this ground alone charge sheet is liable to be dismissed.
18. I have considered the submissions of Ld. Defence Counsel. In this regard I have perused the testimony of PW3 Sh. S. P. Roy, who proved the sanction under Section 19 of the Prevention of Corruption Act to prosecute accused Kul Prkash Singh. Although it is correct that the department was initially of the opinion that no case of disproportionate assets is made out, however this witness testifies that as per the records, the case was discussed in a joint committee held by commissioner of the concerned DIG CBI and Additional DG Vigilance CBEC. From the perusal of cross examination of this witness, it transpires that the question of granting the sanction was discussed at various levels including before CVC. Accordingly the commission advised department to issue sanction to prosecute accused Kul Prakash Singh. There is is nothing on record to show that the sanction was accorded in mechanically manner under the pressure of CVC. Rather this shows that the question of grant of sanction by the Central Government was considered as various levels. This itself is a proof that it was not granted mechanically rather it was done after due deliberations and after considerations of all CC No. 3/2009 Page 17 / 28 Kul Prakash Singh etc. the relevant facts. Hence I do not find any illegality in the sanction order under Section 19 of the Prevention of Corruption Act to prosecute the accused.
19. Strongly objecting to the valuation of House No. A26, Preet Vihar, Ld. Defence Counsel has submitted that there exists a Circular No. 21/40/99PD (Pt.) dated 28.11.2001 (DX) issued by Policy & Coordination Division of CBI, North Block, New Delhi in consultation with CVC, Income Tax, CPWS and CBI which prohibits valuation of the immoveable properties acquired through execution of Registered Sale Deed. The relevant portion is reproduced as under :
"Immovable property is to be valued at Registered Deed value. In the case of Power of Attorney route for acquisition, value is to be determined in accordance with standard principles for determination of market value."
20. Ld. Defence Counsel has argued that property no. A26, Preet Vihar has been wrongly valued. It is argued that the Investigating Officer should have calculated the value of this property in accordance with the sale deed, which shows the value of this house to be Rs.19,71,000/ (i.e. Rs.18,25,000/, CC No. 3/2009 Page 18 / 28 Kul Prakash Singh etc. the value of house + Rs.1,46,000/, stamp duty).
21. On the other hand, Ld. Public Prosecutor argues that it is unbelievable that a three storey building on a corner plot in the posh area of Preet Vihar, Delhi was simply available for Rs. 18,25,000/. It is argued by Ld. Public Prosecutor that due to such a low price of the land and building in the sale deed, the CBI deemed it appropriate to get the valuation of the property, which was valued to have the market price of Rs.96,33,100/ at the relevant time of its purchase. It is further argued by Ld. Public Prosecutor that the circular referred to by Ld. Defence Counsel are only for the use of the department and the court is not bound by the said circular and that this court is fully empowered to take a realistic view about the value of this house.
22. I have considered the submissions and I agree that this court is not bound by this circular and may take appropriate view on the price of the property. DW2 Vivek Kumar LDC at the office of Sub RegistrarIII, East District, Gita Colony has proved the other sale deeds of the same area, which show the value of the immoveable properties in Preet Vihar. The value of the said properties as well as house no. A26, Preet Vihar fall almost within the same range. Although I agree with Ld. Public CC No. 3/2009 Page 19 / 28 Kul Prakash Singh etc. Prosecutor that people evade the stamp duties and show the value of land quite less than what is the actual rate of property, but, in the court of law, the prosecution must bring some evidence as to at what rate the property in question was actually purchased. No evidence is forth coming on record to show that A2 had actually paid much more money than shown in the sale deed. There is no evidence to prove that Smt. Bhavana Singh (A2) has purchased this land for a consideration of Rs. 96,00,000/ approximately. In these situation, I am of the opinion that this court is left with no option but to accept the value of the property as given in the sale deed, which is Rs. 19,71,000/ inclusive of the stamp duty. Therefore I am of the opinion that CBI had valued the property no. A26, Preet Vihar excessively by Rs.76,62,100/ (i.e. 96,33,100 - 19,71,000 = 76,62,100).
23. As stated in the charge sheet, the disproportionate assets have been counted by CBI to be of the value of Rs.87,49,960/. In view of above discussion regarding the value of house no. A26, Preet Vihar, the excessive value i.e. Rs.76,62,100/ is to be deducted from this amount. After deduction this amount comes to Rs.10,87,860/ (i.e. 87,49,960 - 76,62,100 = 10,87,860).
CC No. 3/2009 Page 20 / 28Kul Prakash Singh etc.
24. In other words, the burden is upon Kul Prakash Singh (A1) to explain only this amount i.e. Rs.10,87,860/.
25. Ld. Defence Counsel has drawn my attention to the fact that Smt. Bhavana Singh (A2) had received the jewellery worth Rs.3,18,000/ as her Istridhan in her marriage and it should not be included in the assets acquired from the funds of Kul Prakash Singh (A1). This discrepancy was pointed out to the I.O. in cross examination dated 15.3.2011, who admitted that 1998 gram of gold jewellery was received Smt. Bhavana Singh in her marriage on 24.1.1995. In my opinion, this amount should be deducted from the assets because this jewellery was not purchased from the funds of Kul Prakash Singh (A1). Accordingly after deducting this amount from Rs.10,87,860/, the D.A. comes to Rs.7,65,860/
26. Ld. Defence Counsel has drawn my attention to page 3 of the charge sheet in respect of the income of Smt. Bhavana Singh (A2), wherein it is stated that Smt. Bhavana Singh (A2) had claimed that she was having assets worth Rs.7,22,000/ on 1.1.1995 prior to her marriage on 24.1.1995 as per the balance sheet enclosed with income tax return. Ld. Public Prosecutor submits that while computing the total assets of Kul Prakash Singh (A1) and Smt. Bhavana Singh (A2), the aforesaid assets of CC No. 3/2009 Page 21 / 28 Kul Prakash Singh etc. Rs.7,22,000/ were not taken into account in order to give her benefit.
27. Ld. Defence Counsel has strongly criticized this way of computation. It is argued that the CBI had erred in considering the sum of Rs.7,22,000/ as assets rather the same should have been treated by CBI as the income of the accused persons.
28. I have seen the calculation. The amount of Rs. 7,22,000/, as per the charge sheet were the assets of Smt. Bhavana Singh (A2) prior to her marriage. Since we are calculating the total income and the assets of A1 i.e. Kul Prakash Singh (A1) by adding the income and assets of Smt. Bhavana Singh (A2), his wife, it must be remembered that a sum of Rs.7,22,000/ came to the kitty of matrimonial partnership by way of the marriage during the check period. Therefore I fully agree with Ld. Defence Counsel that this amount should have been shown as the income of Kul Prakash Singh (A1). Accordingly the said amount should be added in the head of income. In other words, it should be deducted from the above stated DA amount of Rs. 7,65,860/. Therefore the disproportionate amount only remains to be Rs.43,860/. This Rs.7,65,860 - 7,22,000 = Rs. 43,860 is a very small amount of disproportionateness.
29. Ld. Public Prosecutor has strongly questioned the gain of CC No. 3/2009 Page 22 / 28 Kul Prakash Singh etc. Rs.15,30,616.90 received from M/s Abhipra as the gains from dealing in shares. It is argued that the entire transaction is fraudulent. Ld. Public Prosecutor has referred 2009 Crl. L. J. 1769 Supreme Court in his support in which Hon'ble Supreme Court held that gains received from "wind fall" should not be counted as received from the "known source of income" of the public servant.
30. I feel that CBI has erred in excluding this amount of Rs. 15,30,616.90 in the calculation. If this is a fraudulent transaction shown with a view to launder the dirty money, then it should have been shown as disproportionate assets. Otherwise this amount should be calculated as income of accused persons. Therefore its calculation as assets would make the same highly disproportionate to the known source of income, whereas on the other hand, its calculation as income would bail them out. Prosecution had examined PW8 Sh. Ajay Taneja, who was working as a Trading Operator in M/s Abhipra Capital Ltd., Delhi, PW10 Sh. Ajay Kumar Gupta, who was working as TCP in Darya Ganj, New Delhi, PW11 Sh. Mahesh Chand Gupta, Director of SMC Share Broker Ltd., PW12 Sh. Achal Singh, the then Manager SEBI and PW13 Sh. Naval Kishore Aggarwal the Director of M/s Abhipra Capital Ltd..
CC No. 3/2009 Page 23 / 28Kul Prakash Singh etc. PW12 Sh. Achal Singh testified that Smt. Bhavana Singh (A2) could only deal with M/s Abhipra Capital Ltd. as broker of NSE as per the SEBI rules. He testified that perusal of the records shows that M/s Abhipra Capital Ltd. had dealt in BSE and DSE shares. He testified that perusal of letter dated 19.8.2004 Ex.P59 issued by M/s Abhipra Capital Ltd. to CBI giving details of transaction of Smt. Bhavana Singh (A2) shows that there is no evidence that Smt. Bhavana Singh (A2) had entered into an agreement with broker of BSE and DSE. He further testified that there is also no evidence that Smt. Bhavana Singh (A2) had dealt with any share through M/s Abhipra Securities Pvt. Ltd. in BSE and DSE. It is further testified by him that from the records it appears that the transactions in the securities were done by M/s TCP Share Brokers, who is the member of BSE and M/s SMC, who is the member of DSE for their client Abhipra Securities Pvt. Ltd. It is stated by this witness that these brokers had not dealt with Smt. Bhavana Singh (A2). He further testified that the transaction in BSE and DSE were of carry forward nature (Badla Transaction). This witness further testified that in the present case the transactions were done in scrips of Rolta and HDFC Bank in BSE and DSE. Since these shares were also being treated in NSE, so it is questionable why CC No. 3/2009 Page 24 / 28 Kul Prakash Singh etc. these transactions were shown to be executed in BSE and DSE by Abhipra Capital Ltd. for their client Smt. Bhavana Singh (A2). He testified that there is a primafaice case of violation of SEBI Act and rules and regulations by M/s Abhipra Capital Ltd., which require a more detailed examination by SEBI. It is further testified by this witness that the bills are issued by M/s Abhipra Securities (a unit of M/s Abhipra Capital Ltd.). However these bills bear the stamp of M/s Abhipra Capital ltd. As apparent from the record, M/s Abhipra Securities and M/s Abhipra Securities Pvt. Ltd. are two different entities. M/s Abhipra Securities is a unit of M/s Abhipra Capital Ltd. and M/s Abhipra Securities Pvt. Ltd. is a separate legal entity. M/s Abhipra Security Pvt. Ltd. happens to be the client of M/s TCP and M/s SMC for their training in BSE and DSE but this is not the case of M/s Abhipra Securities. He testified that it seems that these bills were issued prima facie to misguide the Investigating Agency by M/s Abhiptra Capital Ltd. It is observed from the financial ledger (statement of account) issued by M/s Abhipra Capital Ltd. to their client Smt. Bhavana Singh (A2) for the period 1.4.1999 to 31.3.2001 that a payment of Rs.4 lacs was made on 3.2.2000 by M/s Abhipra Capital ltd. to their client Smt. Bhavana Singh (A2) when there was a debit balance of Rs.8.83 CC No. 3/2009 Page 25 / 28 Kul Prakash Singh etc. lacs. It has also been observed that a payment of Rs.5 lacs was made on 29.2.2000 by way of cheque by M/s Abhipra Capital Ltd. to their client when there was a debit balance of Rs.1.29 lacs. Ld. Public Prosecutor argues that it is questionable as to why these payments were made when nothing was due to Smt. Bhavana Singh (A2) from M/s Abhipra Capital Ltd.
31. Ld. Defence Counsel has referred to the testimony of PW13 Sh. Naval Kishore Aggarwal, the Director of M/s Abhipra Capital Ltd. He testified that Smt. Bhavana Singh (A2) was allotted a Code No. CSG23 for the purpose of share transaction.. As per this agreement, the firm M/s Abhipra Capital Ltd. was authorized to deal in shares of NSE only. He proved the share trading agreement Ex.PW6/B. He testified that as per the Ex.P50, there is net loss of Rs.66,298.55. He testified that M/s Abhipra Securities Ltd. is a security concern of M/s Abhipra Capital Ltd. He testified that the statement of account for the period 1.4.1999 to 31.3.2000, which is a financial ledger for DSE and BSE combined was issued by M/s Abhipra Securities Ltd. He testified that the M/s Abhipra Capital Ltd. had issued one cheque of Rs.4 lacs dated 3.2.2000, second cheque for Rs.5 lacs and third check for Rs.9,67,966.90 dated 17.3.2000 to Smt. Bhavana Singh (A2). In cross examination he stated that M/s CC No. 3/2009 Page 26 / 28 Kul Prakash Singh etc. Abhipra Securities transacts in TCP and MSP on its client behalf and they have not transacted only Smt. Bhavana Singh (A2) rather it was a normal trade practice. He also testified that Smt. Bhavana Singh (A2) did not make any payment in cash and margin money was issued to M/s Abhipra Capital Ltd. by Smt. Bhavana Singh (A2). The gains earned in securities was internally transferred to the account of M/s Abhipra Capital Ltd. and it was M/s Abhipra Capital Ltd., who issued the cheques to the client Smt. Bhavana Singh (A2). He testified that he found no irregularity on part of Smt. Bhavana Singh (A2). He further testified that Smt. Bhavana Singh (A2) used to inform on telephone intending to transact the shares by telling the client code number. Thereafter depending upon the availability of the shares in a particular exchange as per the rates quoted by the client, the shares are purchased. He testified that normally the client was informed in the evening regarding the transaction made and that the client is only concerned with shares and the rates quoted by him or her. He admitted that the client used to get the name, quantum and rate of the shares only and thereafter they used to purchase the shares on behalf of clients of our own.
32. In view of this testimony, I am of the opinion that there CC No. 3/2009 Page 27 / 28 Kul Prakash Singh etc. might have been irregularities on behalf of the share brokers but normally the clients are hardly concerned as to in what manner the shares are being purchased or sold, specially when it is a dealing in nature of "Badla" transactions. The person, who is dealing in such type of shares transactions, is actually more concerned about the gains of loss than the method and manner of the shares brokers. Accordingly Smt. Bhavana Singh (A2) deserves benefit of reasonable doubt in this case and I hold that prosecution has not been able to prove beyond reasonable doubt that the transactions are fraudulent. Therefore this amount has to be added in the income of the accused persons.
33. If this amount i.e. Rs.15,30,616.90 is added in the income of Smt. Bhavana Singh (A2), the value of the total assets of A1 and A2 becomes much less than their combined total income.
34. Accordingly I hold that prosecution has not been able to prove its case beyond reasonable doubt and therefore I acquit both the accused persons. Bail bonds and surety bond are cancelled. File be consigned to record room. Announced in the open court on 25.2.2012.
(VINOD KUMAR) Special JudgeII, CBI, Rohini, Delhi CC No. 3/2009 Page 28 / 28