Kerala High Court
Vincent Antony vs Delhi Police Establishment on 7 June, 2019
Equivalent citations: AIRONLINE 2019 KER 970
Author: P.Ubaid
Bench: P.Ubaid
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.UBAID
FRIDAY, THE 07TH DAY OF JUNE 2019 / 17TH JYAISHTA, 1941
CRL.A.No.114 of 2011
JUDGMENT IN CC 1/2004 of SPECIAL COURT (SPE/CBI)-I, ERNAKULAM
DATED 31-12-2010
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APPELLANT/2ND ACCUSED :-
VINCENT ANTONY, S/O.ANTONY,
KACHAPPILLY HOUSE,
CHAPPEL LANE, ALUVA.
BY ADV. SRI.K.JAGADEESACHANDRAN NAIR
RESPONDENTS/PETITIONERS :-
1 DELHI POLICE ESTABLISHMENT, CBI,
ERNAKULAM - 682 016.
2 STATE OF KERALA
REPRESENTED BY THE PUBLIC PROSECUTOR,
HIGH COURT OF KERALA, ERNAKULAM.
BY SRI.SASTHAMANGALAM S. AJITHKUMAR, SPL.P.P.
FOR C.B.I.
THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 4.7.2018,
ALONG WITH CRL.A.118/2011, THE COURT ON 7.6.2019 DELIVERED THE
FOLLOWING:
CRL.A.Nos.114 & 118/2011
-: 2 :-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.UBAID
FRIDAY, THE 07TH DAY OF JUNE 2019 / 13TH ASHADHA, 1940
CRL.A.No.118 of 2011
JUDGMENT IN CC 1/2004 of SPECIAL COURT (SPE/CBI)-I, ERNAKULAM
DATED 31-12-2010
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APPELLANT/1ST ACCUSED :-
K.P.VASUDEVAN, AGED 54 YEARS,
S/O.K.KUMARAN KARTHA,'NARAYANEEYAM',
NEAR SREEKRISHNA TEMPLE,
SOUTH CHITTOOR, COCHIN - 27.
BY ADVS. SRI.P.JACOB VARGHESE (SR.)
SRI.VIVEK VARGHESE P.J.
SRI.VARUGHESE M.EASO
SRI.MANEESHA KUMAR
RESPONDENT/COMPLAINANT :-
CENTRAL BUREAU OF INVESTIGATION,
REPRESENTED BY SUPERINTENDENT,
ERNAKULAM.
BY SRI.SASTHAMANGALAM S. AJITHKUMAR, SPL.P.P.
FOR C.B.I.
THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 4.7.2018
ALONG WITH CRL.A.No.114/2011, THE COURT ON 7.6.2019 DELIVERED
THE FOLLOWING:
CRL.A.Nos.114 & 118/2011
-: 3 :-
JUDGMENT
The appellant in Crl.A No.118/2011 is the 1st accused in C.C No.1/2004 of the Special Court (SPE/CBI)-I, Ernakulam and the appellant in Crl.A No.114/2011 is the 2nd accused therein. The 2 nd accused is the Managing Partner of M/s.Mudra Silks and Fashions, Aluva, and the 1st accused was the Senior Manager of the Aluva Branch of the Bank of Baroda (the Bank) during 1989-2000. The two accused faced trial before the learned trial Judge under Section 13(1) (d) read with Section 13(2) of the Prevention of Corruption Act, 1988 (for short "the P.C Act"), and also under Sections 420 and 120B I.P.C on the allegation that without authority, and as part of a conspiracy, the 1st accused sanctioned huge amount of overdrafts to the 2nd accused for business purposes, far in excess of his authority as Senior Manager and consequently, the bank sustained heavy loss. The crime was registered at the Kochi office of the Central Bureau of Investigation on some source CRL.A.Nos.114 & 118/2011 -: 4 :- information. After investigation, the CBI submitted final report in court.
2. The two accused appeared before the learned trial Judge and pleaded not guilty to the charge framed against them. The prosecution examined twelve witnesses and proved Exts.P1 to P85 documents in the trial court. When examined under Section 313 Cr.P.C, both the accused denied the incriminating circumstances and projected a defence that the loan was sanctioned by the 1st accused without any dishonest or mala fide intention, that overdrawal was sanctioned in dishcharge of his official functions bona fide, that the Bank has not in fact sustained any loss and the Bank has already initiated proceedings for recovery of the amount due from the 2nd accused. In defence, the accused examined a witness as DW1 and proved Exts.D1 to D35 documents.
3. On an appreciation of the evidence, the trial court found the two accused not guilty under Section 420 I.P.C in the absence of the required elements under Section 420 I.P.C, and accordingly, they were CRL.A.Nos.114 & 118/2011 -: 5 :- acquitted of the said offence charged with the aid of Section 120B I.P.C. However, the first accused was found guilty and convicted by the trial court under Section 13 (1)(d) read with Section 13(2) of the P.C Act and the 2nd accused was also convicted thereunder with the aid of Section 120B I.P.C. Aggrieved by the judgmemnt of conviction dated 31.12.2010, the two accused have come up in appeal.
4. When the appeals came up for final hearing, the learned counsel submitted that the crime in this case was registered without any basis or complaint, that the CBI has not so far revealed the information that led to the crime, though the source as such may have to be kept secret, and that just because the Bank Manager sanctioned business loan in excess of his authority or beyond the permitted limits, a prosecution cannot be initiated under the P.C Act when nobody is actually unlawfully benefitted.
5. Finding some substance in the contention raised by the defence as regards the FIR, the court directed the CBI to furnish the details of the CRL.A.Nos.114 & 118/2011 -: 6 :- information that led to the registration of the crime. Of course, a crime can be registered on source information and in such case, we will call it a suo motu crime or a suo motu FIR. Whether the FIR is a suo motu one or on direct information or complaint, there must be a definite complaint or information disclosing a cognizable offence, and a crime can be registered under Section 154 Cr.P.C only on the basis of such definite complaint or information. Of course, in cases of suo motu crimes, the Police Officer or the prosecuting agency cannot be compelled or directed to disclose the source from which information was received. But the actual information will have to be disclosed and revealed by the CBI, because a crime can be registered only if the information discloses a cognizable offence. In this case, the Bank has admittedly not made any complaint, or the crime was not registered on the basis of any complaint from any authority of the Bank of Baroda. The Bank Officials examined by the prosecution have no case that any responsible CRL.A.Nos.114 & 118/2011 -: 7 :- officer of the Bank of Baroda had made any complaint to the CBI or any other authority against the 1st accused or the 2nd accused. In such a circumstance, fairness in prosecution demands that the information received by the CBI will have to be disclosed. It is not known whether the Bank had conducted any inhouse enquiry regarding the factual allegations. In the above circumstances, I find substance in the contention raised by the accused that the crime in this case was registered without any solid basis, or without any sort of complaint from the Bank of Baroda.
6. PW1 to PW3 are the material witnesses examined by the prosecution to prove the factual aspects. PW4 and PW7 are two of the partners of M/s.Mudra Silks and Fashions. PW7 has proved the account opening form signed by him and the 2 nd accused, and the bank officials have proved the loan transaction between the 2nd accused and the Bank. Of course, evidence well proves that overdrawal at various stages was sanctioned by the 1st accused. CRL.A.Nos.114 & 118/2011 -: 8 :- PW10 has proved the FIR, but he has not proved the actual information that led to the registration of the crime, or that disclosed any cognizable offence. When the crime is registered on a definite complaint, the complainant will have to prove the complaint and the contents. When a crime is registered suo motu on direct knowledge or information, or some other source information, the officer, who registered the crime will have to prove the information that led to the registration of the crime. PW6 was the Senior Manager of the Bank, and he was examined to prove the overdraft details contained in Ext.P29. Of course, the defence has no dispute regarding the amount of loan sanctioned by the 1st accused to M/s.Mudra Silks. One contention raised by the defence is that Mudra Silks, as a partnership firm is not an accused, and the other partners, who had active involvement in the business of the firm are also not made accused by the CBI. Any way, let it be assumed that the entire dealings on behalf of the firm were made by the 2 nd accused, and the loan amount was also received by him CRL.A.Nos.114 & 118/2011 -: 9 :- from the Bank on behalf of the firm. On factual aspects, there is the evidence of PW1 to PW3 and PW6. They are the bank officials, including Bank Managers examined to prove the loan transaction between the 2 nd accused on behalf of the firm, and the 1st accused on behalf of the Bank. These officers have also given evidence regarding the lending power of the 1st accused at the relevant time, or regarding the maximum amount, which he could sanction as loan in exercise of his powers as Bank Manager. In fact the 1st accused has no dispute regarding the actual amount of overdrawal sanctioned by him, and admittedly, a huge amount was sanctioned by him at different stages. The prosecution case is that the lending capacity of the 1st accused was only upto Rs.25 lakhs, but far in excess of it huge amount was sanctioned to the 2nd accused, and a huge amount remained unpaid. PW2 has proved the statements of accounts sent from the Bank to the superior officers. He has no case that anything wrong on the part of the 1st accused was CRL.A.Nos.114 & 118/2011 -: 10 :- detected on verification, or at the time of sending statements of accounts.
7. It is true that on factual aspects, there is clear evidence, and it stands well proved that overdrawal of huge amount was sanctioned by the 1 st accused to M/s.Mudra Silks, in excess of his authority as Bank Manager. The amount sanctioned initially was within limits, but the total liability went upto `82.80 lakhs by March, 2000. It has come out in evidence that the Bank had accepted security deposit by way of Fixed Deposits from the partners of the firm upto `31.5 lakhs. It has also come out in evidence that the security deposit was appropriated by the Bank towards the loan amount due from M/s.Mudra Silks, and after registration of the crime, a huge amount was deposited by the partners of the firm. It is an admitted fact that the partners of M/s.Mudra Silks had made a deposit of `54 lakhs before the Debt Recovery Tribunal towards the amount due from the firm, and the Bank had received more than `34 CRL.A.Nos.114 & 118/2011 -: 11 :- lakhs by way of interest from the firm. These things will have much bearing in deciding the issue, whether the accused can be convicted under the Prevention of Corruption Act (for short, 'the P.C.Act') on the ground of commission of any sort of criminal misconduct as defined under the P.C.Act.
8. PW5 is the General Manager of the Bank examined to prove the Ext.P76 prosecution sanction. His evidence shows that he granted the sanction under Section 19 of the P.C.Act as the officer competent to remove the 1st accused from service, and he granted the sanction after examining the prosecution records in detail, and also on an application of his mind independently to the facts of the case. Regarding the Ext.P76 prosecution sanction, or the authority of PW5, the defence has no dispute.
9. As regards the investigation in this case, the trial court has come to some finding against the prosecution. The defence contention is that the case was not properly investigated by the CBI, or that there was inexcusable failure on the part of the CBI CRL.A.Nos.114 & 118/2011 -: 12 :- to seize some important materials. On this aspect, the learned trial Judge has found, on an appreciation of the facts, that there was some failure on the part of the CBI during the investigation process. The CBI has produced some documents in court, including a circular of the Bank regarding the lending powers of different categories of officials. It is pertinent to note that most of the material documents produced by the CBI are photocopies. Marking of these documents was objected by the defence during trial, but the learned trial Judge allowed the prosecution to mark those documents subject to final decision on merits. Nothing is seen discussed by the trial court about the admissibility of those documents. The prosecution has no explanation for the production of unauthenticated photocopies, when the prosecution could have definitely produced the originals or the certified copies. Even the bank circular produced by the prosecution and relied on by the CBI to prove the lending power of the accused is a photocopy not authenticated by anybody. On the basis of these CRL.A.Nos.114 & 118/2011 -: 13 :- documents, the CBI would contend that the lending power of the 1st accused was only upto `25 lakhs. Of course, the Bank Managers, who gave evidence as PW1 to PW3 have given evidence regarding the factual aspects, and also the lending power of the 1 st accused at the relevant time. They did not rely on any document other than the circular produced by the CBI as a photocopy. Even assuming that the lending power of the 1st accused was only upto `25 lakhs, or that he sanctioned huge amount upto `85 lakhs, the crucial question is whether that by itself would cause a prosecution under the P.C.Act. PW1 is the Bank Manager, who filed a civil proceeding (OA 32/2002) before the Debt Recovery Tribunal against M/s.Mudra Silks, represented by the 2nd accused as the Managing Partner. The said civil proceeding was filed for recovery of the amount due from M/s.Mudra Silks and Fashions, in connection with the loan transaction, which is the subject matter of this prosecution. CRL.A.Nos.114 & 118/2011 -: 14 :-
10. On an analysis of the provisions of Section 13(1)(d) of the P.C.Act, and also the judicial pronouncements on the issue, this Court has explained in State v. K. Mohanachandran (IAS) and Others [2017 (4) KHC 297 = 2017 (4) KLT SN 68], what all things are absolutely necessary for a prosecution under Section 13(1)(d) of the P.C.Act. This Court has explained the essential requirements for clause (d) of Section 13(1) of the P.C.Act. For a successful prosecution on an allegation of criminal misconduct, and for a conviction under Section 13(1)(d) of the P.C.Act, the prosecution must necessarily prove that either the public servant or somebody else had made some gain or pecuniary benefit out of the transaction in question or due to the discharge of functions by the public servant.
11. It appears, on an examination of the trial court judgment, that the trial court convicted the accused only because excess overdrawal was sanctioned by the 1st accused to the 2nd accused. The trial court has not gone into the legal requirements and elements CRL.A.Nos.114 & 118/2011 -: 15 :- for a conviction under Section 13(1)(d) of the P.C.Act. It is pertinent to note that the prosecution has no case anywhere that the 1 st accused had made any pecuniary gain or advantage by sanctioning huge amount of loan to the 2 nd accused, or that the 2nd accused had gained any unlawful advantage or benefit by the loan transaction with the Bank. The trial court has already found against the prosecution as regards the allegation under Section 420 IPC. There is clear finding that the 1st accused had no intention to cheat the Bank, or that the 1 st accused had no sort of dishonest intention or fraudulent intention when he sanctioned overdrawal of huge amount to the 2nd accused. Admittedly, the Bank had accepted security from the partners of M/s.Mudra Silks before sanctioning loan. Admittedly, the Bank has initiated civil proceedings for recovering the amount due from M/s.Mudra Silks, and M/s.Mudra Silks has made payment of huge amount to the Debt Recovery Tribunal to satisfy the civil claim.
CRL.A.Nos.114 & 118/2011 -: 16 :-
12. Now, let me see whether the 2nd accused or M/s.Mudra Silks can be said to have been unlawfully benefited by the huge amount of loan sanctioned by the 1st accused. As already observed, there must be definite allegation by the prosecution, and there must also be evidence in support of the allegation, that some unlawful gain or benefit or monitory gain was made by somebody by the alleged transaction or discharge of function by the public servant. The person benefited can either be the public servant or somebody else in whom the public servant is interested. There is absolutely nothing to show that the 1st accused had made any financial gain or benefit out of the loan transaction. Nobody has got a case that the 1st accused had accepted any bribe or other benefit from the 2nd accused for sanctioning overdrawal of huge amount. The prosecution has no such case anywhere in the prosecution records, that the 1st accused had accepted any bribe or unlawful gain or that he had made any benefit out of the loan transaction. If so, the crucial question is whether CRL.A.Nos.114 & 118/2011 -: 17 :- M/s.Mudra Silks or the 2nd accused had made any such gain out of the loan transaction. The amount received by the 2nd accused from the Bank as the Managing Partner of M/s.Mudra Silks is the loan amount. Whether it is within the lending power of the 1st accused or beyond his power, is not the issue here. That must be a very important issue for departmental action. But, that alone will not be sufficient for a prosecution under the P.C.Act. For such a prosecution, there must be evidence to show that somebody was benefited illegally or unlawfully by the discharge of functions by the public servant. There is no doubt that the amount received by the 2nd accused by way of loan is repayable with interest to the Bank. Under the contract, the firm is bound to repay the amount with interest, and when the firm failed in discharging the debt, or when the account became non-operative, the Bank initiated civil action against M/s.Mudra Silks. This aspect is proved by PW1. When the amount of loan received by the 2nd accused on behalf of M/s.Mudra Silks is repayable as CRL.A.Nos.114 & 118/2011 -: 18 :- loan with interest as a contractual liability, which can be enforced under the law, and when the Bank has already initiated civil action to recover the amount due with interest, it cannot be said that the 2nd accused or M/s.Mudra Silks is unlawfully benefited by the loan transaction. Availing loan, whether it is within limits or beyond limits, cannot be said to be an unlawful benefit. When there is failure or breach of contract in making payment, the right and the legal remedy is only to recover the amount in enforcement of the contractual liability. The Bank has already done this, and the Bank has also received huge amount from M/s.Mudra Silks by civil judicial process. When the Bank has already initiated civil action, and has also realised substantial amount by enforcing the civil contractual liability, the benefit made by M/s.Mudra Silks or the 2 nd accused by way of loan under a contract cannot be said to be an unlawful benefit or unlawful gain. No amount was given by the 1st accused to the 2nd accused otherwise than under a loan contract.
CRL.A.Nos.114 & 118/2011 -: 19 :-
13. In a loan transaction, where the Bank Manager has exceeded his limits and sanctioned huge amount of loan in excess of his lending capacity, the Bank Manager can be prosecuted under Section 13(1)(d) or Section 7 of the P.C.Act, 1988 only if the Bank Manager had accepted any bribe or illegal gratification for such an act. Sanctioning huge amount of loan beyond capacity cannot by itself be a ground to prosecute a public servant under Section 13(1)(d) or Section 7 of the P.C.Act. If the 1st accused sanctioned loan without accepting any such gratification, or without making or expecting any such unlawful gain, and he only acted in excess of his capacity as Manager and sanctioned huge amount of loan, what is possible is only departmental action against the Bank Manager. In this case, the Bank has already initiated civil action, and has also accepted or recovered substantial amount from the business concern of the 2nd accused. This payment made by M/s.Mudra Silks was considered by the trial court in deciding the quantum of sentence. Money was paid by CRL.A.Nos.114 & 118/2011 -: 20 :- M/s.Mudra Silks to satisfy the civil claim made by the Bank, and not to escape from prosecution. The business concern or the individual, who has not paid any bribe or illegal gratification for getting excess amount of loan sanctioned by the Bank Manager cannot be said to have facilitated any criminal misconduct by abetment when he has not acutally gained anything unlawfully or when he is liable under the law to repay whatever amount received by him as loan, with interest. Whatever be the amount received by the 2nd accused or M/s.Mudra Silks by way of loan; whether it is within or in excess of lending capacity of the Bank Manager, it is liable to be repayed with interest, and it is a civil liability under the contract in between the Bank and the firm. To cause a prosecution under the P.C.Act, or to punish the 1 st accused under the P.C.Act on the ground of sanctioning huge amount of loan without authority, the transaction must involve some criminal element by way of dishonest intention or by accepting any unlawful benefit or bribe for the discharge of CRL.A.Nos.114 & 118/2011 -: 21 :- function in excess of his powers or in breach of the circulars and instructions from the Bank. Here, the prosecution has no such case. Admittedly, the 1 st accused had not accepted any bribe, or has not made any unlawful gain by sanctioning overdrawal of huge amount in excess of his capacity. In the given factual situation, a prosecution is not possible under the P.C.Act. This finding will not in any manner prejudice the administrative action taken by the Bank against the 1st accused. I find that the factual aspects in this case, proved or rather admitted, will not cause a prosecution under Section 13(1)(d) of the P.C.Act, 1988, and so, both the accused are entitled for acquittal.
In the result, both the appeals are allowed. Accordingly, the two appellants are found not guilty of the offence under Section 13(1)(d) read with Section 13(2) of the P.C.Act and under Section 120B of the Indian Penal Code, and they are acquitted of those offences in appeal under Section 386(b)(i) Cr.P.C. Consequently, the conviction and sentence CRL.A.Nos.114 & 118/2011 -: 22 :- against them in C.C.No.1/2004 of the court below will stand set aside, and the appellants will stand released from prosecution. The bail bonds executed by them will stand discharged.
Sd/-
P.UBAID JUDGE //TRUE COPY// P.A. TO JUDGE ma/Jvt/18.5.2019