Bombay High Court
Dy. Supdt. Of Police Cbi-Bsc 11 New Delhi ... vs R. Sitraman And Ors on 1 November, 2018
OSK
Presented on : 12.10.1993
Decided on : 01.11.2018
Duration : 25 Years 19 Days
IN THE SPECIAL COURT AT BOMBAY
( Constituted under the Special Court [Trial of Offences Relating to
Transactions in Securities] Act, 1992 )
(Presided Over By : Hon'ble Dr. Justice Shalini Phansalkar-Joshi)
SPECIAL CASE NO.4 OF 1993
Central Bureau of Investigation, ]
] ... Complainant.
Mumbai.
Versus
1 Rama Subramanian Sitaraman s/o. ]
Krishnaswamy Rama Subramanian, ]
the then JMG-I, SBI, Mumbai (since ]
dismissed), present R/o. 14, ]
Subarbina, M.G. Road, Goregaon ]
(West), Mumbai-62 and permanent ]
R/o.C/o Mrs.Janaki Ammal, ]
Mullakudy Village, Tamil Nadu, ]
]
2 Harshad Mehta (Abated) ]
Proprietor M/s.Harshad S. Mehta, ]
Stock, Securities & Finance Broker, ]
1205-6, Maker Chamber-V, 221, ]
Nariman Point, Mumbai. ]
]
3 Coodli Ravi Kumar s/o. Coodli ]
1
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Chandrashekhara, ]
R/o. Present A-1, Flat No. 186, ]
Snehdhara Co-operative Housing ]
Society, Dadabhai Cross Road No.3, ]
Vile Parle (W), Bombay-56, ]
Permanent : No.648, 14, Cross, 14th ]
Main J.P. Nagar 2nd Phase, Bangalore- ]
78, Asst. General Manager ]
]
4 Ashok Agarwal s/o. Gopal Das ]
Agarwal, ]
the then Chief Manager, SBI Caps, ]
Mumbai (since resigned), ]
R/o. D.R.-8/4, Paper Mill Colony, ]
Lucknow (U.P.) ]
]
5 Janardan Bandopadhyay s/o. S.N. ]
Banerjee, ]
AGM, SBI (presently AGM), Central ]
Office, Mumbai, present R/o.Flat No.2, ]
Saroj, SBI Officers' Quarters, Sarojini ]
Road, Santacruz (West), Mumbai-54 ]
and permanent R/o.48, Dingshaipara ]
Road, P.O. Bally, District Howrah, West ]
Bangal. ]
]
6 Mayuram Subramanian Srinivasan ]
s/o. P. Subramanian (Discharged) ]
R/o.Present C/o.S. Ganeshan, 70-J/5 ]
Central Avenue Road, Andhra Bank ]
Building Chembur, Bombay-71, ]
Permanent : Plot No.2, 23rd St., Thillai ]
Bandra-51 ]
Manager (Fund Management Cell), ]
State Bank of Saurashtra, Fort, ]
Bombay. ]
]
7 Hiten Bhupatrai Mehta(Discharged) ]
R/o. 6-B, Baria Apartment, Opposite ]
Telephone Exchange, Marwadi Chawl, ]
S.V. Road, Malad (West), Mumbai-64. ]
2
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Permanent : 3rd Floor, Madhuli, ]
Shivsagar Estate, Worli, Bombay-18, ]
Prop. of M/s.Ashwin S. Mehta, ]
Director of M/s.Growmore Research & ]
Assets Management Ltd., 1205-6, ]
Maker Chambers V, Nariman Point, ]
Bombay-21. ]
]
8 Ashwin Shantilal Mehta s/o. Shantilal ]
Monji Mehta ]
R/o. 3rd Floor, Madhuli, Shivsagar ]
Estate, Worli, Bombay-18, ]
Prop. of M/s.Ashwin S. Mehta, ]
Director of M/s.Growmore Research & ]
Assets Ltd., 1205-6, Maker Chambers- ]
V, Nariman Point, Bombay-21. ]
]
9 Sudhir Shantilal Mehta (Discharged) ]
Director, M/s.Growmore Research & ]
Assets Management Ltd., R/o.3rd ]
Floor, Madhuli, Shivsagar Estate, ]
Worli, Mumbai-18. ]
]
10 Pankaj Vrajlal Shah (Discharged) ]
R/o. 16, Rajshree Kutir, 37, Jadushah ]
Nagar, Ghatkopar (W), Bombay-86. ]
Asst. Vice President, M/s.Growmore ]
Research & Assets Management Ltd. ]
]
11 Atul Manubhai Parekh (Discharged) ]
Assistant Vice President, M/s. ]
Growmore Research & Assets ]
Management Ltd., R/o.207/5627, ]
Anita Kutir 'A', R.N. Narkar Marg, ]
Ghatkopar (East), Mumbai-75. ]
]
12 Seetapathy Suresh Babu ]
R/o. Present B-9, Shaakya Vihar Co- ]
operative Housing Society, Behind ]
Usha Apartment, 90 Feet Road, ]
3
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Mulund (East), Bombay-81, ]
Permanent : No.1, Ragore St., Ayapa ]
Nagar, Thiruchirapalli - 620021, ]
Tamilnadu, Asst. Managere, National ]
Housing Bank, Bombay. ]
]
13 Kalimuthu Kailasam s/o. M. ]
Kalimuthu Pillai (Discharged ) ]
Asst. General Manager, SBI Securities ]
Division, Mumbai, ]
R/o. B-3, SmrudhiSane Guruji Nagar, ]
Mulund (East), Mumbai-81. ]
]
14 Arun Narendra Bavdekar ]
(Discharged) ]
Dy. Manager, SBI Securities Division, ]
Mumbai, R/o. Flat No.A-4, Yasodam, ]
SBI Officer's Quarters, T.P.S.-III, 4th ]
Road, Santacruz (East), Permanent : ]
R/o. 4014, Narainpet, Poona-30. ]
]
15 Shyamsunder Ramlal Gupta ]
Officer, State Bank of Saurashtra, ]
Bhavnagar, Gujrat, R/o. Yogi Swamy ]
Co-op. Housing Socicety Ltd., Flat ]
No.203 (2nd Floor), 'A' Wing Building ]
No.12, Borivili (West), Mumbai-92 and ]
Permanent : R/o. Asha Ramka ]
Darwaja, Naya Bazar, Bhiwani, ]
Haryana. ]
]
16 Bhushan Damodar Raut ]
Dy. Manager, SBI, NRI Branch, ]
Mumbai, R/o. Anuradha Eksar Road, ]
Borivli (West), Mumbai-92. ]
]
17 P. Murlidharan s/o. M. Prabhakaran ]
Nair, Executive Secretary, then ]
working in SBI Caps, Mumbai and ]
present in SBI Caps Chennai, ]
4
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Permanent R/o. Komal Vilas, P.O. ]
Kodnad, District Ernakulam, Kerala. ] ... Accused.
Mr. R.S. Mhamane, Special P.P., for the Complainant - C.B.I.
Mr.R. Sitaraman, Accused No.1 in-person.
Mr.P.G. Sabnis, Advocate, for Accused No.3.
Mr.D.U. Mirajkar i/b. Mr.Sachin Joshi, Advocate, for Accused
No.4, 5 and 17.
Mr.Vivek Sharma, Advocate, for Accused No.8.
Mr.S. Suresh Babu, Accused No.12 in-person.
Mr.R. Satyanarayanan, Advocate, for Accused Nos.15.
Mr.Prashant Sawardekar, Advocate, for Accused No.16.
CORAM : DR. SHALINI PHANSALKAR-JOSHI, J.
RESERVED ON : 09 th OCTOBER, 2018.
PRONOUNCED ON : 01 st NOVEMBER, 2018.
JUDGMENT :
1. This Special Case is a fall out of the security scam, that rocked the nation in the year 1992 and shattered its economy for the years to come. Accused No.2 Harshad S. Mehta, who is no more and in whose name the scam came to be known, is one of the main Accused in this case, against whom the case however stands abated on account of his untimely death in the year 2001. The other Accused were at the relevant time the Officers in the State Bank of 5 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:27 ::: India, Main Branch, Mumbai (for short, "SBI Main Branch") and its subsidiary, State Bank of India Capital Markets Ltd. (for short, "SBI Caps"), except Accused No.8 Ashwin Mehta, who was Broker and the Constituted Attorney of Accused No.2 Harshad Mehta and Accused No.3 C. Ravi Kumar and Accused No.12 Suresh Babu, who were the Officers of National Housing Bank (for short, "NHB"). Prosecution Case - As set out in the 'Charge-Sheet' :-
2. According to the Prosecution, these Accused-persons had conspired together for the benefit of Accused No.2 Harshad Mehta. Hence, all of them are prosecuted and are tried under the umbrella charge of criminal conspiracy, punishable under Section 120-B of The Indian Penal Code (for short, "IPC"), along with the charge for the offence punishable under Section 420 of IPC, in the alternate Section 409 of IPC.
3. Accused Nos.1, 3, 4, 5, 15, 16 and 17, who are alleged to be the public servants, are also tried for the offence punishable under Section 13(2) read with Section 13(1) (c) (d) of The Prevention of Corruption Act, 1988; whereas Accused No.8 is charged for the offence of abetment under Section 109 of IPC in 6 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:27 ::: respect of these offences.
4. Accused No.1 R. Sitaraman and Accused No.16 Bhushan Raut are further charged for the offence punishable under Section 477(A) of IPC and Accused Nos.3 Coodli Ravi Kumar and Accused No.12 Seetapathy Suresh Babu are additionally charged for the offence punishable under Section 467 and 471 of IPC.
5. Accused No.8 Ashwin Mehta and Accused No.15 S.R. Gupta are also charged for the offences punishable under Section 411 and 414 read with Section 120B of IPC.
6. All these charges are in respect of in all 24 transactions of purchase of securities by SBI Caps through the Broker late Mr.Harshad Mehta.
7. Accused Nos.1 R. Sitaraman and Accused No.16 Bhushan Raut were at the relevant time the Officer in-charge and Deputy Manager of the Securities Division of SBI Main Branch.
8. Accused Nos.3 Coodli Ravi Kumar and Accused No.12 Seetapathy Suresh Babu were the Officers in-charge of Funds 7 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:27 ::: Management Group of National Housing Bank.
9. Accused Nos.4 Ashok Agarwal, Accused No.5 Janardan Bandopadhyay and Accused No.15 Shyamsunder Gupta were the 'Dealers' and Accused No.17 P. Murlidharan was the 'Executive Secretary' of SBI Caps.
10. Accused No.8 Ashwin Mehta is the Broker and has acted as 'Constituted Attorney' of late Harshad Mehta in some of the transactions.
11. The case of the Prosecution, in brief, is that the accused persons have in pursuance of the criminal conspiracy hatched by them, cheated SBI Caps to the tune of Rs.105.11 crores in 'sale and purchase transactions of securities' during the year 1991-92, as per the following transactions :
(a) Transaction dated 29th July 1991 for purchase of 25 lakh units of Rs.3,37,75,000/- from UCO Bank by SBI Caps.
(b) Transaction dated 2nd September 1991 for purchase of 5 crore units of Rs.67,83,00,000/- 8 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:27 ::: from National Housing Bank by SBI Caps.
(c) Transaction dated 31st March 1992 for purchase of 1.25 crore units of Rs.18,75,00,000/- from CANBANK Financial Services Ltd. by SBI Caps.
(d) Transaction dated 6th April 1992 for purchase of 1 crore units of Rs.15,15,00,000/- from CANFINA by SBI Caps.
12. The complaint for this offence was lodged by Accused No.5 Janardan Bandopahyay himself on behalf of SBI Capital Markets, in consequence of which the Crime was registered. The case was initially registered against Accused No.1-R. Sitaraman, Accused No.2-Harshad S. Mehta (since deceased) and Accused No.3- Coodli Ravi Kumar only, for the offences punishable under Section 120B of IPC, r/w. Sections 420, 467, 471 and 477A of IPC and Section 13(1) (c) and (d) r/w. Section 13(2) of the Prevention of Corruption Act, 1988.
13. The investigation of the crime was conducted by PW-34 Deokumar Choudhary, Deputy Superintendent of Police in the Bank Securities and Fraud Division of CBI. He was assisted by PW-36 9 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:27 ::: Partha Mukherjee, attached to the Bank Securities Cell, CBI, New Delhi. During the course of investigation, they verified the Bank Records and collected the relevant documents from different agencies, like, State Bank of India, other Banks and Private Parties. More than 1000 documents were collected. The statements of about 154 witnesses were recorded. Some of the Accused persons were arrested. The search was conducted at the residence of Accused No.4 Ashok Agarwal. Some documents were also referred to the Handwriting Expert for his opinion. In due course, the sanction for Prosecution of the Accused, who are public servants, was obtained.
14. In the course of investigation, involvement of nine more persons, namely, Accused Nos.4 to 12, was transpired in the alleged offences and, accordingly, the Charge-Sheet came to be filed against, in all, twelve accused on 12/10/1993. In the course of further investigation, that was carried out under Section 173(8) of the Criminal Procedure Code, the involvement of five more persons, namely, Accused Nos.13 to 17 was disclosed and, as such, the Supplementary Charge-Sheet came to be filed against them on 05/04/1999. In the Supplementary Charge-Sheet, the CBI has given details of similar such 20 transactions, elaborating the role of each 10 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:28 ::: of the respective accused and the offences, alleged to be committed by them. As per the order passed by this Court, both the Charge- Sheets were merged into one and then the common Charge-Sheet came to be filed on 20/09/1999.
15. The allegation of prosecution is that, in all these 24 transactions, while the account of SBI Caps, Mumbai, maintained in the State Bank of India, Mumbai Main Branch was debited, neither the physical securities nor the Bank Receipts were credited into its account. One Bank Receipt was issued by the National Housing Bank, Mumbai, in respect of the transaction dated 2 nd September 1991, but it was a forged one. It has been alleged that several serious irregularities were committed in the State Bank of India, Mumbai Main Branch, by unauthorizedly crediting funds into the account of Accused No.2-Harshad S. Mehta by debiting SBI Caps account. It was done by netting the credit and debit entries in the account of SBI Caps, instead of recording the entries on transaction to transaction basis, as per the instructions from the SBI Caps.
16. The Police Report gives various details of the transactions, by which dishonest and fraudulent gains were allegedly made by the accused persons. It also elaborates the modus 11 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:28 ::: operandi adopted by them and the details of the criminal acts of the different accused persons.
17. After the Charge-sheet was filed, Accused No.2 Harshad Mehta died on 31/12/2001 and therefore, the case against him was abated on 17/01/2002.
18. Accused No.6 M. Subramaniam, Accused No.13 K. Kailasam and Accused No.14 Arun N. Bavdekar came to be discharged from the case as per the orders passed by this Court (Coram : Abhay M. Thipse, J.) on 13/02/2015, 11/06/2015 and 17/08/2015 respectively.
19. Accused No.7 Hiten B. Mehta, Accused No.9 Sudhir S. Mehta, Accused No.10 Pankaj V. Shah and Accused No.11 Atul M. Parekh came to be discharged by the separate orders passed by this Court on 23/02/2017.
20. Thus, as on today, the case stands against Accused No.1 R. Sitaraman, Accused No.3 Coodli Ravi Kumar, Accused No.4 Ashok Agarwal, Accused No.5 Janardan Bandopadhyay, Accused No.8 Ashwin S. Mehta, Accused No.12 Seetapathy Suresh Babu, Accused 12 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:28 ::: No.15 Shyamsunder R. Gupta, Accused No.16 Bhushan D. Raut and Accused No.17 P. Murlidharan only.
21. The 'Charge' is framed against these remaining nine accused as per Exhibit-02 on 28/04/2017. The 'Charge' contains totally 158 heads. It was read over and explained to them. All the accused pleaded not guilty and claimed trial, raising the defence of denial and false implication.
22. In support of its case, the Prosecution has examined in all 38 witnesses. Majority of them are the Officers from SBI Main Branch and SBI Caps. Remaining witnesses are the Sanctioning Authorities, the Brokers and the Investigating Officers. These witnesses can be categorized as follows.
' Officers from SBI Caps'
( 05 Witnesses)
PW-1 Ashish Ambadas Sable [Exhibit -12]
PW-23 Smt.Nalini Anil Prabhu [Exhibit -313]
PW-25 Rahul Shyambihari Shukla [Exhibit-429]
PW-29 R.V. Panchapakeshan [Exhibit -452]
PW-38 Deepak Sogani [Exhibit -579]
13
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' Officers from SBI, Main Branch, Mumbai'
( 12 Witnesses)
PW-6 Mrs.Malini Ashok Save [Exhibit -80]
PW-7 Suresh Chandrashekhar Kale [Exhibit -104]
PW-13 Smt.Harsha Rajesh Shah [Exhibit -260]
PW-14 Arvind Gajanan Rane [Exhibit -262 ]
PW-15 Ashok Vasudeo Virkar [Exhibit -264 ]
PW-16 Anil Diwakar Padhye [Exhibit-267]
PW-21 Arun Ramchandra Advalkar [Exhibit-305]
PW-22 Girish Balwant Patel [Exhibit-306]
PW-28 Ulhas R. Wakade [Exhibit-448]
PW-30 Mohan Trimbak Vijapurkar [Exhibit-467]
PW-31 Dhiraj Mohanlal Shah [Exhibit-472]
PW-33 Anil Vinayak Joshi [Exhibit-477]
'Sanctioning Authorities '
( 06 Witnesses)
PW-2 Birendra Kumar s/o.Devendra Kumar [Exhibit-46]
PW-3 Ravi Vira Gupta [Exhibit-73]
PW-4 B. Muthuswamy [Exhibit-76]
14
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PW-5 N.G. Pillai [Exhibit-78]
PW-11 N.R. Sampath [Exhibit-244]
PW-18 Yagnaswami Radhakrishnan [Exhibit-271]
Witnesses to prove the Bank Accounts of
'Harshad Mehta Associates + Relatives '
( 03 Witnesses)
PW-10 Smt.Jeroo Shapur Dalal (from ANZ Grindlays Bank)
[Exhibit-240]
PW-12 T.R. Gopalkrishnan (from ANZ Grindlays Bank)
[Exhibit-246]
PW-24 Satyanarayanan Subramaniam
(From State Bank of Mysore) [Exhibit-330]
'Delivery Boys' of Harshad Mehta and Associates ( 03 Witnesses) PW-17 Dattaram Padmakar Patil [Exhibit268] PW-20 Ramesh Shantaram Dabholkar [Exhibit-283] PW-37 Tukaram Dhondu Sitap [Exhibit-536] ' Officers from various other Banks' ( 06 Witnesses) PW-8 Chandar Shivaldas Lalla, Deputy Chief Manager (Deposits), Bank of India. [Exhibit-230] 15 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:28 ::: PW-9 Smt.Sindhu Bhatt, Funds Management Cell, State Bank of Saurashtra. [Exhibit-237] PW-19 B. Murlidharan, Accounts Department, National Housing Bank. [Exhibit-273] PW-26 R.K. Bijlani, Bank of India. [Exhibit-430] PW-27 Dhundiraj G. Vernekar, Canara Bank Funds and Investment Sector. [Exhibit-433] PW-32 Premshankar Mukund Joshi, UCO Bank.
[Exhibit-473] 'Broker ' ( 01 Witness) PW-35 Pravin Babulal Parekh [Exhibit-529] 'Investigating Officer(s) ' ( 02 Witnesses) PW-34 Dy.S.P. Deokumar Choudhary [Exhibit-520] PW-36 Dy.S.P. Partha Mukherjee [Exhibit-530]
23. After the Prosecution has closed its case, the statements of Accused-persons were recorded u/s. 313 of Cr.P.C. In their statements, Accused have denied all the incriminating evidence brought on record by the Prosecution against them and to substantiate their defence of false implication, relied upon their own 16 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:28 ::: documentary evidence, which will be considered and referred to as and when required.
24. In support of his defence, Accused No.1 has examined the broker, by name, M.Z. Rehman (Exhibit-D-5).
25. Whereas, Accused No.3 Coodli Ravi Kumar has examined one witness, by name, Gopal Shankar Iyer (Exhibit-D-4), who is a Chartered Accountant and has worked with Fairgrowth Financial Services Ltd. in its office at Mumbai.
26. Accused No.8 Ashwin Mehta has examined himself as DW-2 (Exhibit-D-3) and also one witness, by name, Vishvesh P. Bhatt (Exhibit-D-1), who was working as 'Computer Operator' in the firm of M/s.Harshad S. Mehta.
27. At the end of this marathon trial, which was initiated with filing of 'Charge-Sheet' on 12 th October, 1993, commenced with framing of 'Charge' on 28 th April, 2017, proceeded with recording of evidence on 18 th August, 2017 and concluded on 31 st August, 2018, I have heard at length the oral submissions advanced by learned Special P.P. Mr. Mhamane and learned counsel 17 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:28 ::: for various Accused persons. Accused No.1 R. Sitaraman, Accused No.12 Suresh Babu and Accused No.8 Ashwin Mehta have advanced their oral submissions in-person. All of them, including learned Special P.P., have also placed on record their written submissions, which are running in volumes and in short and concise notes, respectively, prepared meticulously and rendering great assistance to this Court for appreciating the voluminous oral and documentary evidence relied upon by the Prosecution and the defence.
28. On these facts of the case and the evidence on record, following points arise for my determination and I record my findings thereon for the reasons stated below :-
Sr. Points Findings No. 1 Whether Prosecution proves that, the Accused-persons had hatched the criminal conspiracy to commit various illegal acts or the legal acts by means, like criminal Negative.
breach of trust, in the alternate the cheating, forgery and falsification of Accounts and thereby committed the offence punishable u/s. 120-B of IPC ?
2 Whether the Prosecution proves that in prosecution of the common object of the criminal conspiracy, the Accused persons Negative.
18 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:28 ::: Sr. Points Findings No. have committed the offence of cheating or in the alternate, the offence of criminal breach of trust, by diverting the funds of SBI Caps to the account of Accused No.2 Harshad Mehta, being entrusted or having dominion over those funds and thereby committed the offence punishable under Section 420 or in the alternate under Section 409 read with 120B of IPC ?
3 Whether the Prosecution proves that Accused persons, except Accused No.8 Ashwin Mehta, being the public servants have committed the offence of criminal misconduct by dishonestly or fraudulently misappropriating or otherwise converting Negative.
for their own use the funds of the SBI Caps, entrusted to them or under their control as public servants, and thereby committed the offence under Section 13(1)(c) r/w.
Section 13(2) of the Prevention of Corruption Act?
4 Whether the Prosecution proves that the Accused persons, except Accused No.8 Ashwin Mehta, being the public servants, by abusing their position as public Negative. servants, obtained for them or for accused No.2 Harshad Mehta or Accused No.8 19 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:28 ::: Sr. Points Findings No. Ashwin Mehta, the pecuniary gains and advantages and thereby committed the offence under Section 13(1) (d) read with 13(2) of the Prevention of Corruption Act?
5 Whether the Prosecution proves that Accused No.1 R. Sitaraman and Accused No.16 B.D. Raut have committed the offence of falsification of the accounts of SBI with dishonest and fraudulent Negative.
intention and thereby committed the offence under Section 477A read with 120B of IPC?
6 Whether the Prosecution proves that Accused No.3 Ravi Kumar and 12 Suresh Babu have in prosecution of the common object of criminal conspiracy committed the offence of forgery of the Bank Receipt Negative.
and used the said BR as genuine, knowing fully well that it was a forged document and thereby committed the offence under Sections 467 and 471 read with 120B of IPC?
7 Whether the Prosecution proves that in prosecution of the common object of criminal conspiracy Accused No.8 Ashwin Negative. Mehta and Accused No.15 S.R. Gupta dishonestly received the stolen property 20 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:28 ::: Sr. Points Findings No. and assisted in concealment of stolen property, knowing it to be so and thereby committed the offence under Section 411 and 414 read with Section 120B of IPC?
8 What Order ? As per final order.
" Reasons"
29. The case of the Prosecution, unfolded through the evidence of its witnesses, can be stated in nutshell to the effect that SBI Caps was a lawfully owned subsidiary Company of State Bank of India, with 100% shares held by State Bank of India itself. It was dealing in securities transactions through its 'Dealers', namely, Accused No.4 Ashok Agarwal, Accused No.5 Janardan Bandopadhyyay and Accused No.15 Shyamsunder R. Gupta. They used to finalize the deals for 'sale' and 'purchase' transactions in securities on behalf of SBI Caps, by contacting various Brokers, Bankers and Financial Institutions. After the deal was finalized, the debit 'Instruction Letters' were prepared and duly signed by the two authorized signatories, such as Assistant General Manager and General Manager (Treasury Group) of the SBI Caps. These debit 21 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:28 ::: Instruction Letters were then sent to the Manager, State Bank of India, Securities Division. There Accused No.1 R. Sitaraman used to issue Credit Vouchers and the Bankers Cheques for payment to the counter parties from the current account of SBI Caps, which was maintained in the Institutional Banking Division of SBI.
30. Thus, the deals were finalized at SBI Caps but they were executed at the end of SBI. SBI has to act as per SBI Caps's instructions, by making payments to the counter parties on acceptance of Banker's Receipts or Physical Securities. SBI Main Branch was also required to send computerized statement of Bank accounts, showing debits and credits to SBI Caps and the same were to be reconciled by SBI Caps in consultation with SBI Securities Division, Main Branch, regularly.
31. Thus, according to the Prosecution, for execution of the securities transactions, the equal responsibility lied with the Officers of SBI Caps and the Officers of SBI Main Branch. The deal was to be struck by the dealers in SBI Caps, processing of the deals, like its entry in the Blue Diary and preparation and issuance of the debit instruction authorization letter was to be done by the Back Office of 22 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:28 ::: SBI Caps, where Accused No.17 P. Murlidharan was working. On the basis of this work done by the Officers of SBI Caps, further execution was to be done by Accused No.1 R. Sitaraman and in his absence by Accused No.16 Bhushan Raut at SBI Main Branch. They had to issue the cheques for these transactions, by debiting or crediting the account of the broker or the counter party and further to collect the Banker's Receipt (BR) or Physical Securities. At the end of the day, they were to send the statement of accounts of the transactions entered into on that day and that statement of account was required to be tallied with the account of SBI Caps. In all these transactions in this case Accused No.2 Harshad Mehta was the broker of SBI Caps.
32. As per the Prosecution, all these twenty four transactions entered into by SBI Caps were the transactions of purchase of securities, for which the deals were struck by either Accused No.4 Ashok Agarwal, Accused No.5 Janardan Bandopadhyay or Accused No.15 S.R. Gupta. The debit authorization letters were prepared, after entering these deals in the Blue Diary by Accused No.17 P. Murlidharan and on the basis of those authorization letters, Accused No.1 was expected to make payments to the counter parties and to collect either the BRs or Physical 23 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:28 ::: Securities. The contention of the Prosecution is that, in this case, none of such BRs or the physical securities were received from the counter parties or from the brokers. In effect no such deals were entered into with the counter party mentioned in the deal-slips viz. CANFINA, UCO Bank or NHB. These bogus deal slips were prepared by the Accused persons in connivance with each other to divert the funds of SBI Caps to the account of Accused No.2 Harshad Mehta. It was done by netting the debit and credit amounts and some times by splitting the said amount. Thus the case of the Prosecution is that by entering into such fraudulent and bogus transaction of securities, the total loss caused by the Accused persons to the SBI Caps was Rs.105.11 crores and hence, all of them are liable for Prosecution and conviction.
33. The details of these twenty four transactions as given in the Charge-sheet and in written submissions of learned Special P.P. Mr.Mhamane are as follows :
- : Twenty-Four Transactions :-
1] Transaction No.1 dated 29/07/1991 The very first transaction pertains to the purchase of 25 lakh Units for the amount of Rs.3,37,75,000=00 from UCO Bank by 24 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:28 ::: SBI Caps. It was a ready-forward transaction.
Accused No.4 Ashok Agarwal has finalized this deal but has not issued the Deal Ticket for this transaction. He has also not made any entry thereof in the Blue Diary, but issued Debit Authorization Letter (Art.N) and sent it to Accused No.1 R. Sitaraman and accordingly, Accused No.1 R. Sitaraman has debited the account of SBI Caps for the amount of Rs.3,37,75,000=00 vide Debit Voucher Exhibit-487 and made entries in Purchase Slip Book vide Exhibit-478. In this entry, initially, 'Vijaya' was written. It is cancelled and in place thereof 'Canara' is written. However, instead of making the payment of the said amount to UCO Bank, as per Debit Authorization Letter, it was credited to the account of Accused No.2 Harshad Mehta, by Accused No.1 R. Sitaraman, mixing it up with other amounts and totaling the amount to Rs.5,46,16,577=33, so that it should not be traced. The Contract Note Exhibit-284 in this case is signed by Accused No.8 Ashwin Mehta, as Constituted Attorney of Accused No.2 Harshad Mehta. As per the case of the Prosecution, in respect of this transaction, Accused No.1 R. Sitaraman did not obtain any BR nor received any physical securities. The entry thereof is also not made in the Security 25 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: Transaction Register of CANFINA Exhibit-434, as deposed by PW-27 D.G. Vernekar. In the Dealing Operation Report Exhibit-315 and in the Statement of Account Exhibit-320 of SBI, however, there is mention of this transaction.
According to the Prosecution case, thus, Accused No.4 Ashok Agarwal is liable for this transaction, as he has issued the Debit Authorization Letter without there being Deal Ticket and without making entry of this transaction in the Blue Diary. Accused No.8 Ashwin Mehta is involved therein as he has signed the Contract Note; whereas Accused No.1 R. Sitaraman is liable for this transaction, as he has issued the Debit Voucher for this transaction by mixing the amount of this transaction with other amount and diverted the said funds to the account of Accused No.2 Harshad Mehta. He has also cancelled the name of 'Vijaya' and substituted it with 'Canara' in Purchase Slip Book.
On factual aspects, however, it has to be stated that, admittedly there is no Deal Ticket of this transaction. The Prosecution has also failed to prove the debit authorization letter, alleged to be signed by Accused No.4 Ashok Agarwal. What is 26 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: produced is its photocopy. Hence, it is marked as Article-N. Factually, as pointed out by learned counsel for the Accused, it is also not correct that the name 'Vijaya' is cancelled and substituted with 'Canara' Bank, as that scoring appears to be against the initial two entries, which pertain to transaction of IRFC Bonds and not against this entry. Not a single witness has stated that the Bank Statement for this transaction (Exhibit-320) is sent by Accused No.1 R. Sitaraman. PW-23 Nalini Prabhu has admitted that she cannot say whether this statement of account (Exhibit-320) is of SBI Caps. Though it is alleged by the Prosecution that in normal course two Contract Notes are issued, one for Purchaser and the other for Seller, not a single witness has deposed to that effect. Contract Note is dated 29/05/1991, which even does not appear to be of this transaction, as it was a ready-forward transaction. Hence, there are several missing links in the evidence on record as regards this transaction, which make it difficult to hold that the Prosecution has proved incriminating ingredients thereof against the Accused.
It may be stated that this transaction will be discussed in detail while considering the case of the Prosecution against Accused No.8 Ashwin Mehta.
27 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: 2] Transaction No.2 dated 02/09/1991
The second transaction pertains to the purchase of 5 crore Units of UTI for Rs.67,83,00,000=00 on outright basis from National Housing Bank. It is Accused No.4 Ashok Agarwal, who has prepared the Deal Slip No.559 vide Exhibit-13 for this transaction, mentioning the name of the counter party as NHB. According to the Prosecution, there was no such transaction with NHB on that day, even then he has made the entry thereof in the Blue Diary vide Exhibit-539, which is initialed by Accused No.5 Janardan Bandopadhyay. Though, it was a transaction of purchase on outright basis, no Contract Note, physical security or BR thereof was received from NHB. Despite that, Accused No.4 Ashok Agarwal has issued the Debit Instruction Letter vide Exhibit-15 to SBI for making payment of the amount of Rs.67,83,00,000=00 to NHB. Accused No.1 R. Sitaraman has, instead of making payment to NHB, diverted the said amount, by mixing it up with other amount, totaling to Rs.93,64,68,150=68, by issuing Banker's Cheque Exhibit-115, favouring Canara Bank. Accused No.1 R. Sitaraman has got the entries made in the Purchase Slip Book for this transaction. However, the initial entry was scratched and it was substituted with 28 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: CANFINA. Thus, he concealed the fact about diversion of amount to CANFINA. Accused No.2 Harshad Mehta has issued the Contract Note for this transaction; whereas the Delivery Order was issued by Accused No.11 Atul Parekh, since discharged.
It is further case of the Prosecution that to cover up this fraudulent diversion of amount of Rs.67,83,00,000=00, Accused No.12 Suresh Babu, Assistant Manager of NHB prepared a false BR Exhibit-274 for 5 crore Units for the amount of Rs.67,95,00,000=00 in favour of SBI. It was signed by Accused No.3 C. Ravi Kumar, though they were fully aware that no such transaction was executed with NHB. According to the Prosecution, Accused No.1 R. Sitaraman dishonestly and fraudulently retained the said forged BR to cover up fraudulent diversion of the amount of Rs.67,83,00,000=00 to the account of Accused No.2 Harshad Mehta. It is also the case of the Prosecution that Accused No.1 R. Sitaraman did not make any entry of this BR in the BR Register and falsely shown this transaction as the ready-forward transaction between SBI Caps and CANFINA for purchase of 5 crore Units of UTI to be reversed on 17/09/1991 by CANFINA.
29 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: Thus, according to the Prosecution, in this transaction Accused No.4 Ashok Agarwal, Accused Nos.1 R. Sitaraman, Accused No.3 C. Ravi Kumar and Accused No.12 Suresh Babu along with Accused No.8 Ashwin Mehta, who is alleged to have received certain amount into his account with State Bank of Mysore from this transaction vide Exhibit-331 and Exhibit-332 are all involved. It was a bogus transaction and these documents were created only for diversion of the amount of Rs.67,83,00,000=00 to the account of Accused No.2 Harshad Mehta.
It may be stated that the evidence relating to this transaction is discussed and analyzed in detail while considering the Prosecution case against Accused No.3 C. Ravi Kumar and Accused No.12 Suresh Babu.
3] Transaction No.3 dated 31/03/1992 This transaction pertains to the purchase of 1.25 crore Units for Rs.18,75,00,000=00 on ready-forward basis and it was to be reversed on 30/04/1992 at the rate of 27% interest. The counter party was CANFINA. Accused No.5 Janardan Bandopadhyay has finalized this deal through the broker Accused No.2 Harshad Mehta 30 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: and issued the Deal Ticket Exhibit-17. He had also issued Debit Authorization Letter vide Exhibit-580 addressed to Securities Division SBI Main Branch for making this payment. However, he did not obtain any BR or physical securities from the counter party. As per the Prosecution case, two Contract Notes, one for delivery of the securities on 31/03/1992 and another for delivery of the securities on 30/04/1992 Exhibit-269 (Colly) were prepared by the Accused No.11 Atul Paresh, since discharged. On the basis of the Debit Authorization Letter (Exhibit-580), Accused No.1 R. Sitaraman debited the account of SBI Caps by preparing a single Debit Voucher Exhibit-488 for Rs.54,47,57,260=27 including the amount of Rs.18,75,00,000=00. However, instead of crediting the said amount to CANFINA, it was credited in to the account of Accused No.2 Harshad Mehta, lying in ANZ Grindlays Bank by Accused No.1 R. Sitaraman by issuing the Credit Voucher/Banker's Cheque for the amount of Rs.18,75,00,000=00 vide Exhibit-518.
According to the Prosecution, therefore, in this case, Accused Nos.1 R. Sitaraman and Accused No.5 Janardan Bandopadhyay are equally liable for making false entries of this transaction and diverting the funds of SBI Caps to the account of 31 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: Accused No.2 Harshad Mehta.
However, to prove that the amount was credited in the account of Accused No.2 Harshad Mehta, the Prosecution has not produced Certified Copy of the Statement of the Account of Accused No.2 Harshad Mehta. What is produced is photocopy, which is marked as Article-F. Hence, no evidence to prove, that amount was credited to the account of Accused No.2 Harshad Mehta. The Debit Voucher is also for consolidated amount.
4] Transaction No.4 dated 06/04/1992 This transaction is pertaining to the purchase of 1 crore Units for Rs.15,15,00,000=00 on ready-forward basis. The transaction was to be reversed on 21/05/1992. In this transaction also the CANFINA was shown to be the counter party. This transaction was finalized by Accused No.5 Bandopadhyay. The Deal Ticket (Exhibit-20) was prepared and signed by him. He also issued Debit Authorization Letter Exhibit-21 for the said amount without obtaining the BR or physical securities for the same from CANFINA. The Contract Note for the same was prepared by Accused No.10 Pankaj Shah and signed by Accused No.9 Sudhir Mehta, both of 32 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: whom are discharged. Accused No.1 R. Sitaraman has, on the basis of the Debit Authorization Letter, debited the account of SBI by issuing Debit Voucher Exhibit-489, but instead of making the payment to CANFINA, credited the same to the account of Accused No.2 Harshad Mehta with ANZ Grindlays Bank.
According to the Prosecution, as deposed by PW-27 Vernekar, there is no entry of this transaction in the CANFINA register and therefore, the name of CANFINA as counter party shown in this transaction was not correct. Thus, Accused No.1 R. Sitaraman and Accused No.5 Bandopadhyay have actively connived with each other in this transaction for diverting the funds of SBI Caps to the account of Accused No.2 Harshad Mehta with ANZ Grindlays Bank by issuing the two Banker's Cheques Exhibit-221 and 220 payable for the amount of Rs.11,26,74,414=67 and the Cheque of Rs.4,00,00,000=00. This amount was utilized by Accused No.2 Harshad Mehta, Accused No.9 Sudhir Mehta, since discharged and Accused No.8 Ashwin Mehta. However, no iota of evidence is produced on record to that effect. Alleged Contract Note is also not proved or marked as exhibit.
33 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: 5] Transaction No.5 dated 15/02/1992
This transaction is in respect of purchase of 30 lakh Units of UTI by SBI Caps, at the rate of 14% interest. It was a ready- forward transaction and it was to be reversed on 17/02/1992 at the interest rate of 21%. The counter party was shown as CANFINA and the name of Accused No.2 Harshad Mehta was written in the Deal Ticket Exhibit-601 as a Broker. The transaction was for the amount of Rs.4,20,00,000=00. Accused No.17 P. Murlidharan has issued Debit Authorization Letter Exhibit-596. The Debit Voucher was however issued by Accused No.1 R. Sitaraman for the amount of Rs.61,70,55,658=50, including this amount of Rs.4,20,00,000=00. Instead of making payment to CANFINA, the amount was credited to the account of Accused No.2 Harshad Mehta, as per Debit Voucher Exhibit-468. Accused No.17 P. Murlidhar falsely mentioned in the BR Issued and Receipt Register Exhibit-421 maintained in SBI Caps that BR of CANFINA was received and on due date the same was discharged. But infact no such BR was received, as there was no such transaction with CANFINA. All the documents created are only to divert the funds of SBI Caps to the account of Accused No.2 Harshad Mehta under the pretext of the security transaction. 34 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: Hence, Accused No.1 R. Sitaraman and Accused No.17 P. Murlidharan are equally liable in this transaction. However, it is not made clear by the Prosecution as to who has finalized the deal. Its Deal Ticket is not produced or proved on record. Moreover, there is no document produced on record to show that in the Debit Voucher (Exhibit--468) this amount of Rs.4,20,00,000=00 is included.
6] Transaction No.6 dated 07/06/1991 It is in respect of the purchase of 9% IRFC Bonds of the face value of Rs.15 crore. The transaction was on ready-forward basis and it was to be reversed on 13/06/1991. The name of the counter party was shown as UCO Bank. The total amount, on reversal was stated to be Rs.15,24,78,082=19. Accused No.15 S.R. Gupta has acted as a Dealer in this transaction. He has finalized this deal vide Deal Ticket Exhibit-356. The Debit Authorization Letter is issued vide Exhibit-466 and the Dealing Operation Report Exhibit-
357. Accused No.15 S.R. Gupta did not obtain the Contract Note for this transaction from Accused No.2 Harshad Mehta. Accused No.1 R. Sitaraman prepared the Debit Voucher vide Exhibit-216 for the amount of Rs.32,62,79,811=33 which included the amount of Rs.15,24,78,082=19. He has also prepared the Credit Banker Cheque 35 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: Voucher Exhibit-265 for the amount of Rs.12,19,57,070=75 and then issued the Banker's Cheque for the said amount (Exhibit-217).
Another Credit Voucher Exhibit-266 was issued for the amount of Rs.3,05,21,011=44. As per the Prosecution case, in this transaction also, therefore without there being any Contract Note or without the UCO Bank as such entering into this transaction, all the documents were prepared just to divert the funds of SBI Caps to the account of Accused No.2 Harshad Mehta.
Hence, according to the Prosecution, Accused No.1 R. Sitaraman and Accused No.15 S.R. Gupta are both liable for this transaction. However, at the outset itself, it has to be stated that the Debit Voucher Exhibit-216 and the Credit Banker Voucher Exhibit- 217, in this case are signed by PW-15 Virkar and not by Accused No.1 R. Sitaraman.
It may be stated that, the evidence relating to this transaction and transaction No.7 is discussed in detail while considering the case against Accused No.15 S.R. Gupta.
7] Transaction No.7 dated 28/06/1991 This transaction is in respect of purchase of 9% IRFC 36 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: Bonds of the face value of Rs.25 crore. This transaction was on the ready-forward basis to be reversed on 29/07/1991. It was for the amount of Rs.25,29,24,657=54. Accused No.15 S.R. Gupta, the Dealer, has finalized this deal by showing UCO Bank as a counter party. However, he has not obtained the Contract Note from Accused No.2 Harshad Mehta, who has acted as Broker in this transaction. He even did not obtain any physical securities, nor the BR from UCO Bank, as he was fully aware that there was no such transaction. On the basis of the Deal Ticket Exhibit-23 prepared by him, he issued the Debit Authorization Letter vide Exhibit-324 for the amount of Rs.2023,39,736=03 and another Debit Authorization Letter Exhibit- 325 for the amount of Rs.5,05,84,931=51. Accused No.1 R. Sitaraman has, on the basis of these two Debit Authorization Letters debited the account of SBI Caps in SBI to the tune of Rs.25,29,24,657=53. The Credit Vouchers prepared by him for issuance of Cheque favouring UCO Bank are produced on record at Exhibit-123 and 124 respectively; one for the amount of Rs.22,32,36,564=03 and another for the amount of Rs.3,97,50,000=00, favouring UCO Bank and ANZ Grindlays Bank. The proceeds of the cheque favouring UCO Bank i.e. Exhibit-84 were credited to the account of Accused No.2 Harshad Mehta in his 37 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: Current Account No.1028 with UCO Bank. Similarly, the credits of the Banker's Cheque i.e. Exhibit-85 favouring ANZ Grindlays Bank were also credited to the account of Accused No.2 Harshad Mehta in the said Bank.
According to the Prosecution, there were no written instructions for crediting these two Cheques to the account of Accused No.2 Harshad Mehta, but despite that, the funds were diverted to his account. In this case therefore the Prosecution has implicated Accused No.15 S.R. Gupta, who has finalized the deal and prepared the Deal Ticket, issued Debit Instruction Note and Accused No.1 R. Sitaraman, who has issued the Banker's Cheques in favour of the UCO Bank and ANZ Grindlays Bank for diverting funds to the account of Accused No.2 Harshad Mehta, knowing fully well that no such transaction had taken place with UCO Bank.
8] Transaction No.8 dated 26/07/1991 This transaction is in respect of purchase of 9% IRFC Bonds for Rs.125 crore. It was a ready-forward transaction to be reversed on 26/08/1991. The counter party was shown as UCO Bank. The Broker was Harshad Mehta and the total transaction was for the 38 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: amount of Rs.15,27,90,410=96. This transaction was finalized by Accused No.4 Ashok Agarwal. He has issued the Deal Ticket Exhibit- 25 and the Dealing Operation Report Exhibit-26. He has done so, without obtaining the Contract Note from Accused No.2 Harshad Mehta. Accused No.1 R. Sitaraman has debited the amount of Rs.15,27,90,410=96 from SBI account by preparing consolidated Debit Voucher (Exhibit-485) for the sum of Rs.25,46,50,684=93 and issued the Banker's Cheque (Not Exhibited) signed by him and the counter signed by Accused No.16 B.D. Raut. However, instead of making payment to UCO Bank, this amount was credited to the account of Accused No.2 Harshad Mehta in the UCO Bank. Accused No.17 Murlidharan has calculated the transaction amount on the Deal Ticket and also made entries thereof in the Blue Diary at Exhibit-543. Therefore, the Prosecution has, in this transaction, implicated Accused No.1 R. Sitaraman, Accused No.4 Ashok Agarwal, Accused No.16 B.D. Raut and Accused No.17 Murlidharan for their respective roles as described above.
9] Transaction No.9 dated 13/12/1991 This transaction is in respect of purchase of 50 lakh Units of UTI by SBI Caps from CANFINA at the rate of 13.40 per Unit 39 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: on ready-forward basis. The transaction was to be reversed on 30/12/1991 for the sum of Rs.6,70,00,000=00. The name of Accused No.2 Harshad Mehta was written as a Broker in this transaction. This transaction was finalized by Accused No.5 Bandopadhyay. He has prepared the Deal Ticket Exhibit-27 and the Debit Authorization Letter Exhibit-583 and it was done without obtaining BR or physical securities. The Contract Note in this transaction was issued by Accused No.2 Harshad Mehta and signed by Accused No.9 Sudhir Mehta and Accused No.11 Atul Parekh vide Exhibit-285. Deal Operation Report Exhibit-28 is signed by Accused No.5 Bandopadhyay and PW-23 Nalini Prabhu. The Bank Statement thereof is at Exhibit-364. No entry of this transaction is found in the register of CANFINA Exhibit-434.
Accused No.1 R. Sitaraman has however on the basis of the Debit Authorization Letter prepared Debit Voucher for the amount of Rs.6,70,00,000=00 vide Exhibit-133 and for the amount of Rs.23,00,000=00 vide Exhibit-134. He has issued Credit Banker Cheque Voucher for the sum of Rs.69,00,000=00 vide Exhibit-136. He has further issued Banker's Cheque for the sum of Rs.50,00,000=00 favouring ANZ Grindlays Bank vide Exhibit-105 40 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: and another Cheque for the sum of Rs.19,00,000=00 vide Exhibit-
106. Thus, the said amount was ultimately credited to the account of Accused No.2 Harshad Mehta in ANZ Grindlays Bank. Accused No.17 Murlidharan has fraudulently mentioned in the BR Received Register (Exhibit-421) of SBI Caps Exhibit-423 that the BR for this transaction was received on 13/12/1991 and discharged on 30/12/1991, though there was no such transaction. PW-27 Vernekar has flatly denied having issued any BR in favour of SBI Caps or having received any payment of Rs.6,70,00,000=00 from SBI Caps. According to the Prosecution, Accused No.17 Murlidharan has therefore falsified the account and record of SBI Caps.
Hence, in this transaction the Prosecution has implicated Accused No.1 R. Sitaraman, Accused No.5 Bandopadhyay and Accused No.17 Murlidharan.
10] Transaction No.10 dated 20/12/1991 This transaction is in respect of purchase of UTI Units for Rs.15,00,00,000=00. It was Accused No.4 Ashok Agarwal who has finalized the deal for purchase of these Units and issued the Deal Ticket Exhibit-29 for the amount of Rs.20,25,00,000=00 and further 41 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: Deal Ticket (Not Exhibited) for the amount of Rs.11,47,50,000=00. Both the Deals were totaling for the amount of Rs.31,72,50,000=00. The Debit Authorization Letter (Exhibit-31) was accordingly issued by him and on the basis thereof, Accused No.1 R. Sitaraman has issued two Debit Vouchers Exhibit-137 and Exhibit-138 for the amount of Rs.20,25,00,000=00 and Rs.11,47,50,000=00, though no such transaction was executed. He has also issued the Credit Voucher for Rs.10 lakhs Exhibit-142 and Banker's Cheque (Exhibit-
107) for the said amount favouring Bank of America. Accused No.17 Murlidharan has falsely mentioned that BR of the said transaction was received and discharged on 30/12/1991. Thus in this transaction also in addition to Accused No.1 R. Sitaraman, Accused No.4 Ashok Agarwal, Accused No.17 Murlidharan is also implicated by the Prosecution.
11] Transaction No.11 dated 26/12/1991 This transaction is in respect of purchase of Units for total value of Rs.16,87,50,000=00. Accused No.4 Ashok Agarwal has finalized this deal and issued the Deal Ticket Exhibit-32. The UCO Bank is shown as counter party and Accused No.2 Harshad Mehta as a Broker. Accused No.4 has also issued the Debit Authorization 42 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: Letter vide Exhibit-584. However, no such transaction was actually entered into as Accused No.4 Ashok Agarwal had not obtained securities or the BR from the UCO Bank. Accused No.1 R. Sitaraman has debited the amount of Rs.16,87,50,000=00 vide Exhibit-143 by issuing a Voucher for Rs.18,48,38,356=16 including this amount. Another Voucher (Exhibit-144) for the amount of Rs.6,57,53,800=28 was also issued by him. One of the Banker's Cheque Exhibit-147 crediting amount of Rs.20 lakhs favouring Grindlays Bank in this transaction was counter signed by Accused No.16 B.D. Raut. Accused No.17 Murlidharan has made the entry in the BR register about the receipt of the BR, though no such transaction was infact effected with UCO Bank and UCO Bank had clarified that they had stopped transaction with SBI Caps with effect from 06/05/1990. The Credit Voucher Exhibit-146 and Banker's Cheques Exhibit-147, Exhibit-108 and Exhibit-109 were issued for various amounts in favour of the account of Accused No.2 Harshad Mehta in ANZ Grindlays Bank, Branch of Madurai etc. In this transaction thus Accused No.1 R. Sitaraman, Accused No.16 B.D. Raut and Accused No.17 Murlidharan are implicated by the Prosecution.
43 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: 12] Transaction No.12 dated 30/12/1991 This transaction is in respect of 5 deals by SBI Caps with CANFINA for the amount of Rs.60,47,50,000=00. In this respect, all the Deal Tickets were issued by Accused No.4 Ashok Agarwal vide Exhibit-35 to 39. The Debit Authorization Letters are also issued by him and they are marked as Exhibit-585 to 589. He has however not obtained any securities or BR from the UCO Bank, as infact there was no such transaction. On the basis of the Debit Authorization Letters issued by him, Accused No.1 R. Sitaraman has debited the account of SBI Caps with SBI for the total sum of Rs.60,97,50,000=00 by preparing a single Debit Voucher (Exhibit-
149) for Rs.57,58,75,000=00 and another single Debit Voucher (Exhibit-150) for the amount of Rs.3,38,75,000=00. The amount was again diverted to the account of Accused No.2 Harshad Mehta. Accused No.17 Murlidharan has falsely mentioned in the BR register that the BR was received, although there was no such transaction.
According to the Prosecution, therefore, Accused No.1 R. Sitaraman, Accused No.4 Ashok Agarwal and Accused No.17 are involved in this transaction.
44 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: 13] Transaction No.13 dated 01/01/1992 This transaction is for purchase of Units of 8.50 crore for the total amount of Rs.11,56,00,000=00 and 30 crore Units of Rs.40,89,50,000=00. The total value of the two deals is Rs.52,45,00,000=00. Accused No.4 Ashok Agarwal has prepared the Deal Tickets for these two transactions vide Exhibit-44 and 45 and issued the Debit Authorization Letter Exhibit-590. He has done so without obtaining BR or the securities. Though the name of CANFINA was shown as counter party in the deal, PW-27 Vernekar, has clarified that no such transaction has taken place. Accused No.1 R. Sitaraman has debited the SBI Caps account by preparing single Debit Voucher for Rs.78,20,00,000=00 including the amount of Rs.52,45,00,000=00. The Banker's Cheques for the various amounts to that effect are signed by Accused No.1 R. Sitaraman and counter signed by Accused No.16 B.D. Raut vide Exhibit-164 and 166 favouring Canara Bank and ANZ Grindlays Bank respectively. The Credit Vouchers for the same were prepared vide Exhibit-165 and Exhibit-163 respectively. Accused No.17 Murlidharan has, in the BR Register fraudulently mentioned that the BR for the same was received. However, there is no entry in transaction register confirming this transaction.
45 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:29 ::: Thus, Accused No.1 R. Sitaraman, Accused No.4 Ashok Agarwal, Accused No.16 B.D. Raut and Accused No.17 Murlidharan are implicated in this transaction by the Prosecution.
14] Transaction No.14 dated 02/01/1992 This transaction is in respect of purchase of Units. Accused No.4 Ashok Agarwal has issued the Deal Ticket Exhibit-48 and Debit Authorization Letter (which is not proved). The counter party is shown as CANFINA. Accused No.1 R. Sitaraman has prepared the Credit Voucher Exhibit-170 and the amount was diverted to the account of Accused No.2 Harshad Mehta by Credit Voucher. The Cheque are signed by Accused No.16 Bhushan Raut (Exhibit-170 and 110) to the tune of Rs.1,80,00,000=00 and in the name of CANARA Bank to the tune of Rs.59,07,06,757=34 with Credit Voucher No.171 and Cheque No.172. The Credit Voucher was prepared by Accused No.16 B.R. Raut with narration "Purchase of Securities on account of H.S. Mehta". Accused No.17 Murlidharan has fraudulently mentioned the receipt of BR and its discharge.
15] Transaction No.15 dated 13/01/1992 It is a purchase transaction wherein Accused No.5 46 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:30 ::: Bandopadhyay has finalized the deal vide Deal Ticket (Not Exhibited) and issued the Debit Authorization Letter (Exhibit-599). The counter party was shown as CANFINA. Accused No.1 R. Sitaraman has debited the amount of Rs.6,32,07,123=28, but instead of making the payment to CANFINA, credited the said amount in the account of Accused No.2 Harshad Mehta in SBI by issuing various Cheques in favour of ANZ Grindlays Bank.
16] Transaction No.16 dated 14/01/1992 This transaction is for the purchase of the Units for the amount of Rs.6,77,50,000=00. The Deal Ticket Exhibit-51 for the same was prepared and signed by Accused No.5 Bandopadhyay. Debit Authorization Letter is at Exhibit-593. On the basis thereof, the amount was diverted to the account of Accused No.2 Harshad Mehta by Accused No.1 R. Sitaraman issuing several Banker's Cheques Exhibit-93 and 97 of different amounts favouring ANZ Grindlays Bank and Bank of India respectively.
17] Transaction No.17 dated 15/01/1992 It is a purchase transaction by SBI Caps. The counter party is shown as CANFINA. The Deal Ticket Exhibit-358 is 47 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:30 ::: prepared by Accused No.5 Bandopadhyay. On the basis of the same, Accused No.1 R. Sitaraman has issued the Banker's Cheque Exhibit- 113 of Rs.15,60,75,000=00 favouring the ANZ Grindlays Bank for crediting amount to the account of Accused No.2 Harshad Mehta. Hence, as per the Prosecution case, both Accused No.1 R. Sitaraman and Accused No.5 Bandopadhyay are involved in this transaction.
18] Transaction No.18 dated 16/01/1992 It consists of 3 deals, which are as follows:
(i) Purchase of 6 lakh Units by SBI Caps from SBI, Total value Rs.81,30,000=00 with SBI.
(ii) Purchase transaction of Units by SBI Caps from SBI, Total value Rs.30,93,75,000=00 with CANFINA.
(iii) Purchase transaction of Units by SBI Caps from SBI through Accused No.2 H.S. Mehta, Total value Rs.27,50,00,000=00 with CANFINA.
Total value of these three transactions comes to Rs.59,25,05,000=00.
Accused No.4 Ashok Agarwal has finalized the transaction No.(iii) and transaction Nos.(i) and (ii) are finalized by Accused No.5 Bandopadhyay. The Deal Tickets thereof are produced 48 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:30 ::: at Exhibit-55, 54 and 53 respectively. Accordingly, Debit Authorization Letters (Not Exhibited) were also issued. The name of CANFINA was shown as counter party and the name of Accused No.2 Harshad Mehta as a Broker. However, neither the securities nor the BR's were issued on the basis of these Deal Tickets or Debit Authorization Letters. However, Accused No.1 R. Sitaraman has debited the account of SBI Caps with total sum of Rs.59,25,05,000=00 and Rs.1,72,36,31,095=87. The Cheques therefore were counter signed by Accused No.16 B.D. Raut. In these transactions also, instead of making payment to SBI and CANFINA, the amount was credited to the account of Accused No.2 Harshad Mehta. Accused No.17 Murlidharan has fraudulently mentioned the receipt of BRs from CANFINA and SBI and its discharge.
19] Transaction No.19 dated 21/01/1992 This transaction is in respect of purchase of the Units of the total value of Rs.13,55,00,000=00. The deal was finalized by Accused No.5 Bandopadhyay. He has issued Deal Ticket vide Exhibit-
58. This amount was debited by Accused No.1 R. Sitaraman from the account of SBI Caps. However, instead of making the payment to CANFINA, the amount was credited to the account of Accused No.2 49 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:30 ::: Harshad Mehta by Banker's Cheques Exhibit-209 to 213 for the various amounts totaling to Rs.44,30,36,142=71 inclusive of the amount of Rs.13,55,00,000=00. The Cheque was signed by Accused No.1 R. Sitaraman and counter signed by Accused No.16 B.D. Raut.
20] Transaction No.20 dated 29/01/1992 It is again a purchase transaction. The deal was finalized and the Deal Ticket Exhibit-60 and Debit Authorization Letter Exhibit-594 were issued by Accused No.5 Bandopadhyay. It pertains to purchase of 3 crore UTI Units of Rs.21,00,00,000=00. Accused No.1 R. Sitaraman has issued the Debit Voucher (Exhibit-506) for the amount of Rs.66,89,94,171=23 inclusive of this amount of Rs.21,00,00,000=00. The said amount was debited from the account of SBI Caps, but credited to the account of Accused No.2 Harshad Mehta by various Cheques Exhibit-500, 502 and 507 issued for different amounts. Accused No.17 Murlidharan has made the entry about receipt of BR, though there was actually no such BR received, as there was no such transaction.
21] Transaction No.21 dated 30/01/1992 It was a purchase transaction and the counter party was 50 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:30 ::: shown as Syndicate Bank. Accused No.5 Bandopadhyay has issued the Deal Ticket Exhibit-62 and Debit Authorization Letter Exhibit- 594 for this transaction for the amount of Rs.30,93,75,000=00. Accused No.1 R. Sitaraman has debited this amount from the account of SBI Caps vide Debit Voucher (Exhibit-506) and issued the Banker's Cheque (Not Exhibited) for Rs.40,96,39,000=00 inclusive of Rs.30,93,75,000=00, but instead of making the payment to Syndicate Bank, credited the amount of Rs.40,96,39,000=00 inclusive of the amount of Rs.30,93,75,000=00 to the account of Accused No.2 Harshad Mehta with Personal Banking Division in SBI. Accused No.17 P. Murlidharan made entry of receipt of the BR without getting the said BR.
22] Transaction No.22 dated 07/02/1992 It is a purchase transaction for which the Deal Ticket Exhibit-66 and Debit Authorization Letter Exhibit-595 were prepared by Accused No.5 Bandopadhyay for the amount of Rs.16,54,73,972=60, without receipt of the BR or securities. Accused No.1 R. Sitaraman debited the said amount from the SBI Caps account, but instead of making payment to the counter party CANFINA, credited the said amount in the account of Accused No.2 51 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:30 ::: Harshad Mehta in SBI. Accused No.16 B.D. Raut has counter signed the said Cheque.
23] Transaction No.23 dated 19/02/1992 It is a purchase transaction for which the Deal Ticket Exhibit-68 was prepared by Accused No.4 Ashok Agarwal. It pertains to purchase of Units from CANFINA for the amount of Rs.18,20,00,000=00. Accused No.1 R. Sitaraman has issued the Banker's Cheque for the said amount. It was counter signed by Accused No.16 B.D. Raut, but instead of the payment being made to the counter party, it was diverted to the account of Accused No.2 Harshad Mehta. Accused No.17 P. Murlidharan has made false entry of the receipt of the BR in respect of this transaction also, which was infact not executed at all.
24] Transaction No.24 dated 04/03/1992 This transaction pertains to the purchase of the Units for the amount of Rs.25,43,36,986=30 and Rs.14,50,00,000=00, totaling for the amount of Rs.39,93,36,986=30. Accused No.5 Bandopadhyay has issued the Deal Ticket No.4055 (Exhibit-70) and the Deal Ticket No.4056 (Exhibit-71). Accused No.1 R. Sitaraman 52 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:30 ::: has debited the account of SBI Caps for the said amount, but diverted the said amount to the account of Accused No.2 Harshad Mehta.
34. To give details of the procedure, which was followed for executing these transactions at SBI Caps, Prosecution has relied upon the evidence of the four witnesses, namely, PW-Ashish Sable, PW-23 Smt.Nalini Prabhu, PW-25 Rahul Shukla and PW-38 Deepak Sogani, who were working in SBI Caps in different capacities at the relevant time.
Evidence led by the Prosecution
35. The evidence of PW-1 Ashish Sable goes to prove that in the month of September or October 1991 he was working in the Treasury Department of SBI Caps, where the securities related transactions used to be undertaken. Accused No.4 Ashok Agarwal, Accused No.5 Janardan Bandopadhyay and Accused No.15 S.R. Gupta were working as Dealers in the said Department; Whereas PW-23 Smt.Nalini Prabhu was working there as Manager of the Back Office. The said Department was headed by Mr.S.V. Naik. In the Back Office, Accused No.17 P. Murlidharan was working along with one Mr.Srikant and PW-38 Deepak Sogani.
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36. According to evidence of these four witnesses, in case of purchase of securities one of the Dealer, out of the three Dealers, namely, Accused No.4 Ashok Agarwal, Accused No.5 Janardan Bandopadhyay and Accused No.15 S.R. Gupta, used to negotiate with the counter party on telephone and discuss the details of the deal. After the deal was finalized, the Deal Ticket was prepared by the said Dealer. Thereafter, the Deal Ticket was sent to the Back Office, where it was entered into the Blue Diary. The debit Instructions Letter accordingly was issued to the State Bank of India, Main Branch. In State Bank of India, Main Branch, Accused No.1 R. Sitaraman, who was looking after these securities transactions used to issue the cheques along with the Credit and Debit Vouchers.
37. It is a matter of record that the Account of SBI Caps was maintained in the State Bank of India, Main Branch. According to evidence of these witnesses, there were several Brokers of SBI Caps and deceased Accused No.2 Harshad Mehta was one of the important Broker. The employees of Accused No.2 Harshad Mehta used to come to SBI Caps, either to collect the debit authorization letters or some times to handover the Contract Notes. 54 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:30 :::
38. According to their evidence, at the end of the day, the Deal Operation Report used to be prepared by the Dealer containing all the details of the deals of that day with the names of the Brokers. Dealer used to sign on that Report and then it was put up before PW- 1 Ashish Sable on the same day. After he has signed on it, it was sent to PW-23 Smt.Nalini Prabhu; thereafter to the General Manager, Mr.S.V. Naik. According to their evidence, if the deal was good, he used to make a remark. At the end of the day, Mr.S.V.Naik was also discussing with the Dealers about the deals executed on that day and the deals which were to be undertaken on the next day. After the General Manager, Mr.S.V. Naik, has signed the Deal Operation Report, it used to go to the Executive Director and from there to the Managing Director.
39. According to the evidence of PW-23 Nalini Prabhu, in case of purchase transactions, it was the responsibility of SBI Main Branch, mainly, Accused No.1 R. Sitaraman to receive the Bank Receipts; even the entry of Bank Receipts used to be made in SBI Securities Division along with the entry thereof in SBI Caps. Accused No.17 P. Murlidharan used to make entries of the Banker's Receipts in the Book maintained for that purpose in SBI Caps. It is her evidence that in the Blue Diary, the entries were made 55 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:30 ::: immediately after the deal was struck. In Investment Register also, the entries used to be made accordingly and then the Investment Register used to be placed before the General Manager for approval. It is categorically deposed by her that SBI had to act on the basis of the debit authorization letter issued by SBI Caps and it could not change the name of the counter party of the said deal or even the amount of the deal mentioned in the debit authorization letter, on its own.
40. PW-25 Rahul Shukla who was also at the relevant time in the Back Office of SBI Caps and who used to receive the Deal Slip from the Dealers in the Front Office, has stated that he was entering the details of the Deal Slip in the Register and he used to visit the State Bank of India, Main Branch every day, as it was handling the funds for SBI Caps. There he used to meet Accused No.1 R. Sitaraman and deliver him the Fund Transfer or Debit Authorization Instructions given to him by his seniors.
41. The evidence of PW-38 Deepak Sogani, who was also working in the Back Office of SBI Caps depicts that the debit or credit instruction letters used to be prepared as per the instructions received in the Back Office from the Dealers working in the Front 56 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:30 ::: Office. These letters were required to be signed by two authorized signatories of the Bank, including one Officer from the Treasury Division and the other Officer from outside of the Treasury Division. He used to maintain the Cash Register, which was called as Blue Book/Blue Diary. Accused No.17 P. Murlidharan was mostly making the entries in the Blue Diary. However, if he was not available, this witness Deepak Sogani used to make those entries in the Blue Diary on the basis of the Deal Ticket. He has also confirmed that Deal Ticket would mention the name of counter party and rate of the securities. He has further confirmed that after the deal was struck, there was no chance of changing the name of the counter party or changing the rate mentioned therein. It is his evidence also that after making entries in the Blue Book, the instructions letters were issued in the form of 'debit' or 'credit' notes and they were sent to the SBI Securities Division, namely, to Accused No.1 R. Sitaraman with whom they used to deal. Either he himself used to go there to deliver these instruction letters, or Accused No.17 P. Murlidharan was doing the said job.
42. Thus one fact which clearly emerges from the evidence of these witnesses is that the job of Accused No.17 P. Murlidharan and 57 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:30 ::: PW-38 Deepak Sogani was more or less the same. Both of them were making entries in the Blue Book and also issuing the instruction letters by going personally, and they used to handover these instruction letters to Accused No.1 R. Sitaraman.
43. Their evidence on record is also categorical that Accused No.1 R. Sitaraman from SBI Main Branch has to act on the basis of those instruction letters alone and no one from SBI Main Branch had authority to make any changes in the transaction, either by changing the name of the counter party or even the name and rate of the securities mentioned therein. Once such instructions was received, the responsibility of the Officers in SBI, Main Branch used to commence for completing the further part of the execution of the deal.
44. As regards the procedure adopted in completing the second leg or part of the transaction, which was to be executed at the end of SBI Main Branch, the Prosecution has relied upon the evidence of five witnesses, namely, PW-6 Mrs.Malini Save, PW-7 Suresh Kale, PW-13 Smt.Harsha Shah, PW-15 Ashok Virkar and PW- 28 Ulhas Wakade, who were working in SBI, Main Branch, at the relevant time on different posts.
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45. The evidence of PW-6 Mrs.Malini Save and PW-13 Smt.Harsha Shah is more or less the same. PW-13 Smt.Harsha Shah used to work in the leave absence period of Ms.Savita Bugade. According to their evidence, their immediate superior was Accused No.1 R. Sitaraman, who used to handle all the securities transactions and also the investment of the Bank. On the basis of the instructions given by Accused No.1 R. Sitaraman, they used to prepare the Vouchers and the Banker's Cheques. Accused No.1 used to give them instructions in whose name these cheques or Vouchers were to be prepared by them. Both of them have deposed that all the documents relating to the Bank used to be in possession of Accused No.1 R. Sitaraman alone and he was the whole and sole authority in entire security transactions. They had to follow his instructions and were not in a position to oppose or question his instructions.
46. PW-15 Ashok Virkar has also sometimes worked in the Securities Division of SBI, Main Branch in the absence of Accused No.1 R. Sitaraman. According to him also, during those times, on the basis of the instructions received from SBI Caps, he was issuing the Credit Vouchers and two Credit Vouchers were issued by him when 59 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:30 ::: Accused No.1 R. Sitaraman was on leave. His evidence is mainly on the point that it was the job of Accused No.1 R. Sitaraman to issue the Credit Vouchers on the basis of the instructions received from SBI Caps.
47. The material evidence in this case is that of PW-28 Ulhas Wakade, who was posted in Securities Division on 02/04/1992. As Accused No.1 R. Sitaraman was proceeding on leave, he was directed to familiarize himself with the work Accused No.1 R. Sitaraman was doing. Accordingly, he sat besides Accused No.1 and observed the work of Accused No.1 R. Sitaraman for 3 days from 06/04/1992 to 08/04/1992. Thereafter, as Accused No.1 R. Sitaraman proceeded on leave, hence he was handling the work of Accused No.1 R. Sitaraman from 09/04/1992. He found that Accused No.1 R. Sitaraman was receiving some instructions on phone call, noting them on the note pad and then giving instructions to his staff for preparing Vouchers. According to him, on the instructions of Accused No.1 R. Sitaraman, he had also prepared some Vouchers. After Accused No.1 R. Sitaraman left, this witness has taken over the job of Accused No.1 R. Sitaraman from 09/04/1992 onwards.
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48. According to his evidence, if the Banker's Cheque was for the amount above Rs.50,000/-, it was required to be signed by two Officers of the Bank. The first signature has to be of the Officer authorizing the transaction and preparing the Voucher and the second signature was of the Officer outside the Treasury Department, who was to sign thereon, after verifying that the first Officer has signed on it. According to him, Accused No.1 R. Sitaraman used to do everything in his own handwriting, like, preparing the Vouchers, Cheques etc and Accused No.1 R. Sitaraman was the first signatory of the Cheques. Accused No.16 Bhushan Raut was another Officer working in the said Department in the absence of Accused No.1 R. Sitaraman and he has signed on some of the cheques as first signatory. In evidence before the Court he has identified the signatures of Accused Nos.1 R. Sitaraman and Accused No.16 Bhushan Raut on some of the Cheques and the Vouchers signed by them respectively.
49. The evidence of PW-33 Anil Joshi, at this stage, may be also relevant. He was working at the relevant time in the Sale- Purchase Securities Division of the State Bank of India, Main Branch. According to him also, it was Accused No.1 R. Sitaraman 61 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:30 ::: who used to look-after all the transactions of sale and purchase of securities. He was working with Accused No.1 R. Sitaraman as a Clerk. According to his evidence, in case of purchase of securities by SBI Caps, Accused No.1 R. Sitaraman used to gave them the instructions for preparing Vouchers and Slip Books. There were two types of Slip Books. One was pertaining to sale and another was pertaining to purchase. Those Slip Books were in the custody of Accused No.1 R. Sitaraman. In his evidence before the Court this witness has identified the various slips which were prepared and issued by him as per the instructions of Accused No.1 R. Sitaraman. Through his evidence, the Prosecution has also proved the Debit Vouchers and Banker's Cheques, issued according to instructions of Accused No.1 R. Sitaraman.
50. The evidence of PW-21 Arun Advalkar who was also working in the Securities Division, especially in the Waste Book Section goes to prove that he was making entries in the Waste Book on the basis of the Vouchers received from various Divisions. The Vouchers were in the form of Banker's Cheques and Debit and Credit Vouchers. When SBI was issuing the Cheques, there used to be the Credit Vouchers and when SBI was receiving the Cheques from 62 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:30 ::: others, the Debit Vouchers was prepared. According to his evidence, these Vouchers were received from the Securities Division and he has identified some of those Vouchers.
51. The evidence of PW-22 Girish Patel is also of a similar nature. He was maintaining the Waste Book like PW-21 Arun Advalkar and through his evidence also, the Prosecution has tried to prove some of the Vouchers and the entries in the Waste Book. His evidence also proves that Accused No.2 Harshad Mehta was having account in the Personal Banking Division of SBI Main Branch.
52. The Prosecution has then relied upon the evidence of PW- 14 Arvind Rane, who used to post these Vouchers received from the Securities Division in the Debit and Credit Ledger. The Ledger Folio was maintained date-wise and each customer has a separate ledger folio. Through his evidence, the Prosecution has brought on record, the photocopies of various Vouchers received from the Securities Division for posting.
53. To prove its case against Accused that, though the name of the counter party in most of these transactions was mentioned as 63 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:31 ::: CANFINA, actually no such transactions were effected with CANFINA, the Prosecution has examined PW-27 Dhundiraj Vernekar. According to his evidence, on behalf of the CANFINA, Mr.Ashok Kumar Agarwal and Mr.S. Mohan were finalizing the deals in the CANFINA's registered Office at Bangalore. After the deal was finalized, they were giving the instructions to Mumbai Office. On receipt of the instructions from the Dealers in Bangalore along with the purchase Memos, Banker's Receipts or Physical Securities, in Mumbai Office they were verifying the correctness of the details of the securities and then issuing Banker's Cheque favouring the counter party. They were also making note of the transactions in the Transaction Register and in the BR Purchase and Sale Register on the receipt of the BR.
54. According to his evidence, when the instructions from their Bangalore Office were received on telephone, they were noted in the rough note pad and after completion of the transaction, the details thereof were entered into the Transactions Register. The transaction used to be completed on the very same day before 3 pm. After completion of the transaction, in case of purchase, they used to send the Cost Memo to their Bangalore Office, where Mr.Om 64 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:31 ::: Prakash, Secretary of CANFINA used to make entries in the Transaction Register. The Prosecution has produced on record this Transaction Register for the period from 22/06/1991 to 16/12/1991 at Exhibit-434. According to him, this register was maintained in their Office at Mumbai. It is his evidence that in this Register there is no entry of these relevant transactions, which are impugned in this case, against the Accused, as no such transactions were entered into by the CANFINA and the name of CANFINA was wrongly and fraudulently shown therein.
55. To prove that these cheques issued by Accused No.1 R. Sitaraman in favour of Accused No.2 Harshad Mehta were encashed in the account of Accused No.2 Harshad Mehta, the Prosecution has relied upon the evidence of PW-10 Smt.Jeroo Dalal, who was working in ANZ Grindlays Bank at Mumbai and who has deposed about the receipt of the various Cheques which were credited to the Account of J.H.Mehta maintained in their Bank.
56. The Prosecution has then also relied upon the evidence of PW-12 T.R. Gopalkrishnan, who was also working in ANZ Grindlays Bank at M..G. Road, Mumbai. Accused No.2 Harshad Mehta was 65 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:31 ::: having his account in their Bank and he has deposed about the deposit slips and the current Account Statement of not only the account of Accused No.2 Harshad Mehta but that of J.H. Mehta, Ashwin Mehta and other family members of Harshad Mehta, who were also having the accounts in the said Bank.
57. Lastly, the Prosecution has placed reliance on the evidence of PW-24 Satyanarayan Subramaniam, who was working in State Bank of Mysore at Dalal Street Branch in Mumbai. According to his evidence, Accused No.2 Harshad Mehta, Accused No.8 Ashwin Mehta, their brother Sudhir Mehta were having accounts in their branch. According to his evidence, the various Banker's Cheques which were received from the State Bank of India were credited or debited in the account of the Accused No.2 Harshad Mehta, Accused No.8 Ashwin Mehta, their brother Sudhir Mehta as per the instructions received from the concerned Bank. Through his evidence, the Prosecution has proved the account opening forms of these Accused and also the various Banker's Cheques credited or debited in their account as per the instructions of Accused No.1 R. Sitaraman from SBI Main Branch.
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58. Thus through the evidence of all these witnesses, the Prosecution has tried to prove the procedure which was adopted at the end SBI Caps, then SBI Main Branch and the various Banks so far as the securities transactions are concerned and as to how in the present case though apparently the procedure appears to be followed and the Deal Tickets were issued in the name of CANFINA, actually CANFINA was not the counter party therein and the amounts were credited or diverted to the account of Accused No.2 Harshad Mehta, by netting the debit and credit entries.
59. To prove the effect of all these transactions on the financial status of SBI Caps, the Prosecution has examined PW-29 Panchcapakeshan, the Deputy General Manager of SBI Caps, who has personally verified these transactions after the scam had broken out. According to him, at that time, there was lot of confusion about the exposure of monies to be received by SBI Caps in terms of securities transactions. Therefore, he has taken up the reconciliation work. He went through all the record of SBI Caps, like the Deal Register and the correspondence of the transactions of SBI Caps with SBI. In that process, he found that there were certain BRs which had been issued and there were certain BRs which were held 67 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:31 ::: by SBI Caps. In respect of BRs received by SBI Caps, the amount was yet to be received from the counter parties. Accordingly, he sent letters to the counter parties and he personally verified with the counter parties. He could get confirmation for many of the deals, but there were several deals which counter parties were not confirming. Hence, as per the directions of RBI, a conference was set-up of all the Banks with counter parties. Even after the conference, there were some of the BRs which counter parties were not confirming.
60. It is his categorical evidence that, during those days SBI was also acting as custodian of SBI Caps and it was holding the BRs which were collected on behalf of the SBI Caps. He took possession of these BRs from SBI in the month of June 1992. He had personally gone to SBI Main Branch for verifying actual transactions and in this process of accounting and reconciliation, he found that there were many transactions, which were put through in the account of SBI Caps, but were not actually executed, according to the instructions of SBI Caps. There were also the transactions which were made by direct credit to the broker's account.
61. According to his evidence, he found that nearly about 68 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:31 ::: 100 crores of rupees were due to be received by SBI Caps from SBI on account of BRs which were not honored by the counter parties. Accordingly, he had submitted the 'Memorandum' to the CBI and lodged a claim against SBI. According to him, SBI had agreed to honor and make the payments, but still SBI Caps felt that the transactions were not properly executed and therefore, a complaint was lodged with CBI.
62. He has proved on record the various letters exchanged between him and SBI and also the Debit Vouchers and Deal Tickets. In his cross-examination he has admitted that, during this reconciliation work, he found that some BRs were in possession of SBI Caps, in respect of which there were no transactions. He has informed about the same to Mr.S.S.Zha, Deputy Superintendent of Police, CBI vide letter Exhibit-463.
Submissions of Special P.P. and Defence Counsels
63. According to learned Special P.P. Mr.Mhamane, this oral and documentary evidence on record is more than sufficient to bring home the guilt of the Accused for the offences alleged against them. It is submitted by him that the evidence on record categorically 69 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:31 ::: proves the diversion of the funds belonging to SBI Caps to the account of Accused No.2 Harshad Mehta. In the Civil Suit filed by SBI Caps, SBI has admitted the claim of Rs.105 crores. According to him, this diversion of funds would not have taken place, unless these Accused persons acted in connivance with each other and aided and abetted each other in performance of these transactions. Therefore, in his opinion, the offence of criminal conspiracy is required to be held as proved in the present case. It is submitted by him that, there cannot be any direct evidence to prove the offence of criminal conspiracy and it has to be inferred from the circumstances proved on record. To substantiate this submission, he has relied upon the judgment of Hon'ble Supreme Court in the case of Ram Narain Poply Vs. Central Bureau of Investigation1, which was also arising out of the Special Case decided by this Court. It is urged that as held in this judgment, the conspiracy is never hatched in open but by its nature, it is secretly planned and hence, it can be proved even by circumstantial evidence; the lack of direct evidence relating to conspiracy has no consequence. In this judgment, the reliance was placed by the Hon'ble Supreme Court on its earlier decision in the case of Kehar Singh & Ors. Vs. The State (Delhi Administration) 2, 1 AIR 2003 SCC 2748 2 AIR 1988 SC 1883 70 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:31 ::: wherein it was observed that, "Generally, a conspiracy is hatched in secrecy and it may be difficult to adduce direct evidence of the same. The prosecution will often rely on evidence of acts of various parties to infer that they were done in reference to their common intention. The prosecution will also more often rely upon circumstantial evidence. The conspiracy can be undoubtedly proved by such evidence direct or circumstantial. But the court must enquire whether the two persons are independently pursuing the same end or they have come together to the pursuit of the unlawful object. The former does not render them conspirators, but the latter does. It is, however, essential that the offence of conspiracy require some kind of physical manifestation of agreement. The express agreement, however, need not be proved. Nor actual meeting of the two persons is necessary. Nor it is necessary to prove the actual words of communication. The evidence as to transmission of thoughts sharing the unlawful design may be sufficient. Conspiracy can be proved by circumstances and other materials." (See: State of Bihar v. Paramhans, (1986) Pat LJR 688.)
64. According to learned Special P.P., in a case where agreement is for an act which, by itself constitutes an offence, in that event, no overt act is necessary to be proved by the Prosecution, because in such a situation, the criminal conspiracy is 71 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:31 ::: established by proving such an agreement. It is urged that, it is also not necessary, when the charge is of criminal conspiracy, that each conspirator must know all the details of the scheme, nor he be a participant at every stage. What is necessary is that they should agree for design or object of the conspiracy. It is also immaterial whether they achieve their ultimate object or not; the gist of the offence being the agreement between two or more persons to do an illegal act. The express agreement also need not be proved. Nor the actual meeting of two persons is necessary to be proved. It is also not necessary to prove the actual words of communication. The crux of the offence of agreement is to break the law. Hence, the parties to such an agreement will be guilty of criminal conspiracy, though the illegal act agreed to be done, has not been done.
65. By placing reliance on the judgment of the Hon'ble Supreme Court in the case of Yash Pal Mittal Vs. State of Punjab3, it is submitted by learned Special P.P. that, "The very agreement, concert or league is the ingredient of the offence. It is not necessary that all the conspirators must know each and every detail of the conspiracy as long as they are co-participators in the main object of the conspiracy. There may be so many 3 (1977) 4 SCC 540 72 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:31 ::: devices and techniques adopted to achieve the common goal of the conspiracy and there may be division of performances in the chain of actions with one object to achieve the real end, of which every collaborator must be aware and in which each one of them must be interested. There must be unity of object or purpose but there may be plurality of means, sometimes even unknown to one another, amongst the conspirators. In achieving the goal several offences may be committed by some of the conspirators even unknown to the others. The only relevant factor is that all means adopted and illegal acts done must be and purported to be in furtherance of the object of the conspiracy even though there may be sometimes misfire or overshooting by some of the conspirators."
66. According to the learned Special P.P., in the present case there is sufficient material brought on record by the Prosecution to prove that each of the Accused has acted in-connivance with each other and in prosecution of the end object of diverting the funds of SBI Caps to the account of Accused No.2 Harshad Mehta. Their acts may be different and separate from each other but all these acts taken together, have led to the diversion of the funds of SBI Caps to the account of Accused No.2 Harshad Mehta and therefore, all of them are liable for the umbrella charge of criminal conspiracy. 73 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:31 :::
67. As against it, by placing reliance on this very judgment of Ram Narain Poply (supra), learned counsel for Accused No.15 Mr.Satyanarayanan has submitted that though the charge of criminal conspiracy may be difficult to be proved, it being an offence committed in secrecy, there has to be some evidence at least to prove the essential ingredients, like the meeting of minds of the accused persons and their acting in-connivance with each other. Here in the case, it is submitted that the accused persons, from SBI Caps viz. the Dealers and Accused No.1 R. Sitaraman and Accused No.16 B.D. Raut from SBI Main Branch, were acting totally independently and had no connection with each other. Moreover, the Prosecution has not led any evidence to prove that they had knowledge of each other acting in a particular way. Conversely, the evidence on record proves that the Officers from SBI Caps were carrying out one part of transaction, namely, the finalization of the deal; whereas its execution was done at the end of Accused No.1 R. Sitaraman in SBI Main Branch. Hence, if any default is committed at the end of SBI Main Branch by Accused No.1 R. Sitaraman or by Accused No.16 B.D. Raut, by diverting the funds to the account of Accused No.2 Harshad Mehta, then Accused No.4 Ashok Agarwal, Accused No.5 Bandopadhyay and Accused No.15 S.R. Gupta, who 74 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:31 ::: had finalized the deals at SBI Caps cannot be held liable for the same. Especially when there is no accounting system as such. As admitted by all the witnesses, the Dealers at SBI Caps were not supposed to know or at-least there was no such mechanism available that they should know that their instructions were carried out or not, by the SBI Main Branch. They proceeded on the assumption that their instructions were carried out, as the amount was debited from the account of SBI Caps. It was ultimately the responsibility of Accused No.1 R. Sitaraman in SBI Main Branch to receive the BRs or physical securities. If Accused No.1 R. Sitaraman has not done so and instead, by mixing by netting the said amount with other amounts, diverted the same to the account of Accused No.2 Harshad Mehta, then the Accused No.4 Ashok Agarwal, Accused No.5 Bandopadhyay and Accused No.15 S.R. Gupta cannot be said to have acted in conspiracy in any way. The documentation at their end was perfectly legal and proper. Hence, according to learned counsel for these Accused, the charge of criminal conspiracy, in the present case cannot be held as proved at all.
68. Even as regards the charge for offence under Section 409 of IPC, it is submitted by learned counsel for the Accused that to 75 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:31 ::: attract such charge, in the first place, it has to be established that Accused No.4 Ashok Agarwal, Accused No.5 Bandopadhyay and Accused No.15 S.R. Gupta were having dominion over the funds of the SBI Caps. Admittedly, they were not authorized to issue the Debit Instruction Letters.
69. Learned Special P.P. has, however, by placing reliance on the above said judgment of Ram Narain Poply especially to para No.377 of the said judgment, has submitted that the accused persons cannot take shelter behind the argument that they had followed only the "market practices" in carrying out these transactions. It is submitted that there is no public interest involved in such practices and they cannot be a substitute for compliance with the regularity or statutory prescriptions. According to learned Special P.P., without the Deal Ticket issued by Accused No.4 Ashok Agarwal, Accused No.5 Bandopadhyay and Accused No.15 S.R. Gupta, the Debit Authorization Letters would not have been issued. So the very foundation of the offence was the issuance of the Deal Tickets mentioning the name of the counter party as CANFINA or UCO Bank, knowing fully well that CANFINA or UCO Bank was not the counter party. It is urged that, the starting point of the offence is the act of the Dealers, which has given rise to this entire scam. 76 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:31 ::: Merely, because the Debit Authorization Letters are signed by some other Officers, it does not mean that these Accused can no more be responsible for the subsequent diversion of funds.
70. Learned Special P.P. has in this respect placed reliance on the judgment of the Hon'ble Supreme Court in the case of State of Maharashtra & Ors. Vs. Somnath Thapa & Ors.4, to submit that, when the charge is of criminal conspiracy and when the ultimate offence consists of a chain of circumstances and acts, 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 collaborator would put the goods or service to an unlawful use.
71. Per contra, according to learned counsel for the Accused Mr.Mirajkar, if the charge of criminal conspiracy is to be proved on the basis of the circumstantial evidence, then the settled principles of law require that all the incriminating circumstances alleged against the Accused must be fully established and all the acts so established must be consistent with the hypothesis of the guilt of the Accused alone. By placing reliance on the judgment of the Hon'ble 4 (1996) 4 SCC 659 77 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:31 ::: Supreme Court in the case of Munish Mubar Vs. State of Haryana 5, it is submitted that the circumstances alleged against the Accused must be conclusive in nature and they should exclude every other possible hypothesis except the one sought to be proved. As held in this judgment, "Circumstantial evidence is a close companion of factual matrix, creating a fine network through which there can be no escape for the accused, primarily because the said facts, when taken as a whole, do not permit to arrive at any other inference but one, indicating the guilt of the accused" . It is urged that here in the case such chain of circumstances is not at all established by the Prosecution. Taking a tit-bit from here and there, the Prosecution wants to prove the case, which can never be permitted. It is urged that, some of the documents are not even proved by the Prosecution. Only proving of signature on the said documents cannot be sufficient to hold the contents thereof, as proved.
72. Learned counsel for Accused No.3 Mr.Sabnis has, in this respect relied upon the judgment of the Hon'ble Supreme Court in the case of Ramji Dayawala and Sons (P) Ltd. Vs. Invest Import 6, wherein it was categorically held that, 5 2013 Cri.L.J. 56 6 (1981) 1 SCC 80 78 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: "Undoubtedly, mere proof of the handwriting of a document would not tantamount to proof of all the contents or the facts stated in the document. If the truth of the facts stated in a document is in issue mere proof of the handwriting and execution of the document would not furnish evidence of the truth of the facts or contents of the document. The truth or otherwise of the facts or contents so stated would have to be proved by admissible evidence, i.e. by the evidence of those persons who can vouch safe for the truth of the facts in issue."
73. Here in the case, it is submitted that none of the witness examined by the Prosecution has spoken about the contents of the document; conversely they have admitted that they are not aware of the transactions, which are reflected in those documents. The Prosecution has therefore, only proved the signatures or at times only the handwriting on the said documents but not the contents thereof. It is urged that in some cases, the Prosecution has not even been able to produce the original documents. Hence, the Prosecution case cannot be said to be proved at all.
74. Learned counsel for Accused No.3 Mr.Sabnis has also placed reliance on the judgment of Hon'ble Supreme Court in the 79 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: case of Sait Tarajee Khimchand & Ors. Vs. Yelamarti Satyuam @ Sattteyya & Ors.7, to submit that, mere "exhibiting" of a document does not amount to "proving" of the document. Reliance is also placed on the judgment of the Hon'ble Supreme Court in the case of Maharao Shri Madansinhji Vs. State of Gujrat8, to submit that, for proving the contents of the documents, the person who has knowledge of the contents must give evidence about it. Here in the case, it is urged that the Prosecution has not examined the executants of the documents or the persons who had knowledge of the contents of the documents. Under these circumstances, those contents cannot be read into evidence.
75. In the light of these rival submissions, the evidence on record needs to be categorized as against different Accused persons, as their roles and the acts attributed to them are clearly demarcated.
Prosecution case against Accused No.4 Ashok Agarwal, Accused No.5 Bandopadhyay and Accused No.15 S.R.Gupta
76. Taking up first the case against the Accused No.4 Ashok Agarwal, Accused No.5 Janardan Bandopadhyay and Accused No.15 7 (1972) 4 SCC 562 8 AIR 1969 GUJ 270 80 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: S.R. Gupta, who were working as the Dealers in SBI Caps and who have initiated the transactions and set the ball rolling. Even a cursory glance to the Prosecution case, as alleged against these Accused persons goes to show that the Prosecution case against them proceeds on the assumption that it was the responsibility of the Dealers to obtain the Contract Note from the Brokers and the BRs and physicals from the counter party. Hence, the Dealers are prosecuted for finalizing the deals without obtaining Contract Note and issuing instructions for Debit Authorization Letters, without getting or following up, for recovery of BRs or physicals.
77. However, the evidence of Prosecution witnesses adduced on record as stated above is exactly contrary to this basic premise of the Prosecution case. All the Prosecution witnesses are unanimous and unequivocal to the effect that the job of the Dealers was over the moment they finalized the deal and issued the Deal Ticket. Thereafter, it was the job of the Back Office at SBI Caps to process the said transaction, prepare Debit Authorization Letter and make entry thereof in the Blue Diary or Investment Register. The Debit Authorization Letter was to be signed not by the Dealer but by the two authorized signatories of SBI Caps; one of them was PW-23, Smt.Nalini Prabhu, Assistant General Manager in the Back Office 81 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: and another was the General Manager Mr.S.V. Naik. Debit Authorization Letter was then sent to the SBI, where, it was the responsibility of Accused No.1 R. Sitaraman to issue the Debit Voucher for debiting the account of SBI Caps and Banker' Cheque for disbursal of the amount to the Broker or to the counter party.
78. The evidence on record also proves that the Contract Notes were never received by the Dealers of SBI Caps, but they were to be received by the SBI. PW-23 Nalini Prabhu has deposed that after delivery of the Deal Slip to the SBI Main Branch, the person from the Back Office used to bring from the SBI Main Branch the statement of account and the Contract Notes given by the Brokers. PW-33 Anil Joshi, who is from SBI has also deposed that the Contract Notes from Brokers were received by the Officer in-charge of the securities Division of SBI. The Seizure Panchanama Exhibit- 449 also goes to show that the Contract Notes were seized from the SBI Main Branch. PW-1 Ashish Sable has also admitted that the Contract Notes were received by the Treasury Department of SBI by the person from the Back Office and those Contract Notes were simply filed in the Back Office. There was no system of entering the details thereof in any register or on the back portion of the Deal 82 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: Ticket.
79. Therefore, the evidence on record, in this case, does not go to show that it was the responsibility of the Dealers, to obtain the Contract Notes or to receive the same or to file them properly. They were also not concerned with the follow up, if the Contract Notes were not received. Therefore, they cannot be fastened with the penal liability, on the count that they have completed the transactions, without obtaining the Contract Notes.
80. Similarly as regards the BRs also, it is deposed by PW-1 Ashish Sable from SBI that these BRs were received at SBI and were kept normally till the reversal of the deal. PW-29 Panchapakeshan has also admitted that it was the responsibility of SBI to make and receive payments and to deliver and accept securities, since SBI was the custodian of SBI Caps. PW-33 Anil Joshi has also admitted that the Bank Receipts or physical securities from the counter parties were delivered to the Officers in-charge of the Securities Division and they were kept by those Officers in their custody. The evidence of PW-23 Nalini Prabhu also goes to prove that she used to visit SBI Main Branch to verify the existence of the BRs of SBI Caps. This 83 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: evidence is thus more than sufficient to prove that it was not at all the responsibility of these Accused who are the Dealers from SBI Caps to receive either the BRs or the physical securities. In such situation, these Accused cannot be fastened with the liability, that too criminal, for the acts which were not in their domain.
81. The evidence on record brought in this case by the Prosecution itself proves that, it was the responsibility on the part of the SBI Main Branch to obtain the Contract Notes from the Broker and further the BRs and physical securities from the counter party. Only after SBI had obtained these Contract Notes or BRs, they were collected by SBI Caps Officers therefrom, if required; otherwise they remained in the custody of the SBI Main Branch. Hence, once the deal was struck or finalized, the Dealers, namely, Accused No.4 Ashok Agarwal, Accused No.5 Bandopadhyay and Accused No.15 S.R. Gupta had absolutely no control over the subsequent processing of the deal or the issuance of the Cheques or collection of Contract Note or BRs or physical securities. Their role was only to obtain the best rate for SBI Caps and for that purpose to negotiate with the Broker or the counter parties. The Prosecution has not led any evidence to establish that there was any practice or requirement of 84 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: seeking actual confirmation of the deal from the counter party. On the contrary, the evidence of Prosecution witnesses is categorical that, there was no such requirement or practice of obtaining the counter party confirmation. They have also admitted that, the Dealers used to mention the name of the counter party in the Deal Ticket on the basis of the information given by the Broker. There was no such system of cross checks.
82. Thus, once it is an accepted position on record that the Dealers had no concern with issuance of the Debit Authorization Letters or even collection of the Contract Note or the BR and physical securities, then the question does not arise of holding them liable, if the deal has not been processed, as per details given in the Deal Ticket. The job of the processing was with Back Office initially and thereafter, with the SBI Main Branch. It was entirely the responsibility of the Officers at the SBI Main Branch, to ensure that the amount was disbursed in accordance with the Debit Authorization Letters. It is categorically deposed by PW-23 Nalini Prabhu that SBI had to act on the basis of the Debit Instruction Letter issued by SBI Caps and SBI could not change the name of the counter party or even the amount mentioned in the Debit 85 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: Authorization Letter. If despite that, SBI Main Branch had issued the Cheques for these deals in favour of either Accused No.2 Harshad Mehta or in favour of Bank(s) where Accused No.2 was holding the account, the Dealers in the case cannot be held liable for the same.
83. As a matter of fact, all the Prosecution witnesses in the present case have stated that they have acted on the assumption that the instructions of SBI Caps have been faithfully carried out at the end of SBI Main Branch and on that basis the Daily Dealing Operation Reports were prepared and were sent to the General Manager, Executive Director and Managing Director for their approval. This assumption was on the basis that SBI Caps was the subsidiary Company of SBI Main Branch. Moreover, when there were several such transactions, in which the instructions issued by SBI Caps were followed by SBI Main Branch, there was no reason for any of the Dealers or the Officers from SBI Caps to assume that SBI Main Branch will not follow their instructions in respect of these transactions also.
84. Here in the case, thus the evidence on record proves that none of this dealer, who are the Accused in the case, was having any concern with the actual execution of the deals and it is in the 86 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: execution of the deals, where the things have gone amiss. As rightly submitted by learned counsel for Accused, the Prosecution has proceeded backwards to infer knowledge on the part of the Dealers that without there being any deals with CANFINA or UCO Bank, the Dealers have issued fraudulently or wrongly, these Deal Tickets. The Prosecution cannot proceed in this way, especially when there are several loopholes and missing links in the chain of circumstantial evidence. The acts attributed to the Accused taken simplicitor cannot amount to any offence as alleged, unless this chain of circumstantial evidence is established or unless the charge of criminal conspiracy is proved, which again the Prosecution has miserably failed to do. There is absolutely no evidence on record to show that there was any prior meeting of minds amongst these Accused or they had acted in collusion with each other. As a matter of fact, their roles were so well defined and separated that there was no such scope for them to act in collusion. If there was no possibility of the Dealers coming to know whether the Contract Note or BR or physical securities was received by the Back Office or by the SBI Main Branch, they cannot be blamed or held guilty for not obtaining such Contract note or BR or physical securities. That was the job of SBI Main. Moreover, if on the basis of the instructions received from 87 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: the Broker, they had written the name of counter party in the Deal Ticket and when there was no way of confirmation of these instructions received from the Broker, merely because these transactions ultimately could not take effect, the Dealers cannot be held liable for the same, at-least for the penal offences, in the absence of any evidence of guilty intention or mens rea even assuming that there were certain lapses on their part. It is not even the allegation of the Prosecution that the Dealers had received any pecuniary benefit or wrongful gain in these transactions. These transactions were entered into in normal course of business. Hence, thee is no evidence of mens rea or guilty intention to attract the charge of criminal conspiracy.
85. It is admitted position that the Dealers had no control or dominion over the funds of SBI Caps. The Debit Authorization Letters were not signed by them, as they were not the authorized signatories. The authorized signatories were PW-23 Nalini Prabhu and Mr.S.V. Naik. They were having control or dominion over the funds of SBI Caps. As deposed by PW-23 Nalini Prabhu, the Deal Operation Report prepared by the Dealer, containing all the details of the deals of that day used tobe placed before PW-1 Ashish Sable and thereafter, before her and then before the General Manager 88 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: Mr.S.V. Naik. If the deal was good, he used to put his remark. At the end of the day, he was also discussing with the Dealers about the deals executed on that day and to be executed on the next day. The Daily Deal Operation Report, after signing of Mr.S.V. Naik was placed before the Executive Director and then before the Managing Director. Therefore, there were sufficient checks and control, at the end of SBI Caps on the work of the Dealers. Merely, on the basis of the deals, the funds were not diverted. Hence, if the Dealers had in real effect, no control over the funds of SBI Caps, there is no meaning to the charge under Section 409 or 420 of IPC.
86. As stated above, it is also not the case of the Prosecution, not even a allegation that, as a result of these acts, these Accused- the Dealers have been benefited or there was any wrongful gain for them or wrongful loss to the SBI Caps or SBI Main Branch. In view thereof, as regards the Dealers, it has to be held that there is no sufficient evidence to link them with the acts, on account of which the funds of SBI Caps, according to the Prosecution case, were diverted to the account of Accused No.2 Harshad Mehta. If at all those funds were diverted, they were diverted at the end of SBI Main Branch to the Banks where Accused No.2 Harshad Mehta was holding the accounts. However, it becomes difficult to accept that 89 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: those funds were diverted on account of the Deal Tickets issued by these Dealers or on account of the acts done by them. Even if their role is taken individually or in connection with the role of other Accused, there being several missing links and their role standing far apart from the criminal act which resulted into diversion of funds, applying the essential ingredients of the criminal conspiracy, neither the charge of criminal conspiracy, nor that of cheating or criminal breach of trust, for remain, of the offence under Section 13(1)(c) and (d) read with 13(2) of the Prevention of Corruption Act, can be held to be proved against them beyond reasonable doubt.
87. As regards Accused No.15 S.R. Gupta, he is implicated only in the two transactions dated 07/06/1991 and 28/06/1991. The allegation against him is that in both these transactions, without obtaining any Contract Note from the broker or BR or physical security from the counter party, the UCO Bank, he has finalized the Deal Ticket and issued the Debit Instruction Letter and thereby committed the offence of criminal breach of trust punishable under Section 409 of IPC and also the offence of criminal misconduct punishable under Section 13(2) read with Section 1(c) and (d) of the Prevention of Corruption Act, read with Section 120B of IPC. The 90 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: relevant charges framed against him are Charge Nos.52 to 57.
88. Now, coming first to the transaction dated 07/06/1991 in respect of which Charge Nos.52, 53, and 54 are framed. As deposed by PW-23 Nalini Prabhu, all these transactions were of ready- forward nature and as deposed by PW-38 Deepak Sogani, the decisions in respect of ready-forward transactions in Units and PSU Bonds were taken at higher level by the General Manager Mr.S.V. Naik and the Dealers. According to him, sometimes the deals wre finalized and done by Mr.S.V. Naik also. However, Mr.S.V. Naik being the approving authority, the Deal Tickets were actually not prepared and signed by him, but they were prepared by the Dealers.
89. Here in the case, Accused No.15 S.R. Gupta, was the junior most dealer and had recently joined the SBI Caps on deputation from State Bank of Mysore. It is his contention that he used to prepare such Deal Tickets, though he had not concluded or negotiated those deals. PW-1 Ashish Sable has deposed that the Deal Ticket Exhibit-23 and Exhibit-256 is signed by Accused No.15 S.R. Gupta. However, he has admitted in his cross-examination that he had no occasion to be acquainted with the signature of Accused No.15 S.R. Gupta and he also does not recollect whether these two 91 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: Deal Tickets Exhibit-23 and Exhibit-356 were shown to him when his statement was recorded by CBI. PW-1 Ashish Sable has categorically deposed that as the name of Accused No.15 S.R. Gupta is appearing on these two Deal Tickets, he was saying that they are signed by him.
90. In this respect, learned counsel for Accused No.15 S.R. Gupta has drawn attention of this Court to the documents at Exhibit- 24 and 357 and rightly pointed out that the signatures of Accused No.15 S.R. Gupta thereon are totally different from his signatures alleged to be appearing on Deal Tickets Exhibit-23 and 356. Thus, as rightly submitted by learned counsel for Accused No.15 S.R. Gupta, there is a serious question as to whether these Deal Tickets are properly proved to be signed by Accused No.15 S.R. Gupta, as except for PW-1 Ashish Sable, no one else has established the same or identified the signature of Accused No.15 S.R. Gupta on these two documents.
91. Moreover, even if it is accepted that these two deals were entered into by Accused No.15 S.R. Gupta and they are signed by him, the evidence on record shows that the deal dated 07/06/1991 was done as a completely normal and genuine deal. By this Deal 92 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: Ticket Exhibit-356 the amount of Rs.15,24,78,82=90 has been lent to UCO Bank for 6 days at the rate of 18.25%. PW-9 Sindhu Bhatt has deposed that lending money to UCO Bank was considered safer as UCO Bank was a Nationalized Bank and the solvency of Nationalized Bank is insured by the Government of India.
92. The details of this Deal Ticket Exhibit-356 are duly entered in the Blue Diary by the Back Office Officer. The said entry bears the signature of the General Manager Mr.S.V. Naik in the last column. Accordingly, the Back Office has issued the Debit Authorization Letter to SBI Main Branch vide Exhibit-466. The two authorized signatories, being General Manager Mr.S.V. Naik and Assistant General Manager PW-23 Nalini Prabhu have signed on this letter and on the receipt of this letter, the SBI has debited the current account of SBI Caps with exactly the same amount as included in the third entry of the Debit Voucher of Rs.32,62,79,811=33. The statement of account to that effect is duly received and is produced at Exhibit-363. On the receipt of this statement of account, the Back Office has duly passed the entry of payment to UCO Bank in the Investment Register of SBI Caps (Exhibit-377) vide Exhibit-408. This transaction of Rs. 93 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: 15,25,00,000=00 has been duly reflected in daily Deal Operation Report Exhibit-357. This transaction is clubbed with another transaction for the amount of Rs.1,01,00,000=00 which was lent to UCO Bank on the same day, vide Deal Ticket No.2947 and shown as lending of Rs.16,26,00,000=00 through Accused No.2 Harshad Mehta to UCO Bank. The Deal of Rs.1,01,00,000=00 done vide the Deal Ticket No.2947, as per the last entry on the page containing Exhibit-575, could not be completed and had to be cancelled, but the amount remained to be changed in Exhibit-357. Exhibit-357 is then duly approved by General Manager, Executive Director and Managing Director of SBI Caps. As per Exhibit-419 i.e. on 13/06/1991, i.e. the due date of the transaction SBI Caps has duly received the amount from UCO Bank and made a profit of Rs.4,57,417=81. Therefore, on the face of it, it becomes difficult to accept the case of the Prosecution as regards this transaction.
93. Moreover, even if one considers the role attributed to the Accused No.15 S.R. Gupta, it is pertinent to note that PW-15 Virkar has correctly debited the SBI account for the amount of Rs.15,24,78,082=19. This amount is included in Exhibit-216, which was prepared for consolidated amount of Rs.32,62,00,000=00. This transaction has been processed at SBI Main Branch by PW-15 Virkar 94 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: and not by Accused No.1 R. Sitaraman, as alleged by the Prosecution. Ultimately this amount is also credited back to the SBI Caps account with net profit of Rs.4,57,417=81 vide Exhibit-266.
94. What is pertinent to note in this entire transaction is that UCO Bank has received the Cheque Exhibit-217 from SBI without any disposal instructions. Therefore, as per RBI guidelines, if the Cheque was not pertaining to UCO Bank, UCO Bank should have returned it to SBI. However, it is UCO Bank, which has collected the Cheque through clearing in the normal way, as it had granted 'Cheque Routing Facility' to Accused No.2 Harshad Mehta. It is thus the UCO Bank, which has directly credited the said amount in the current account of Accused No.2 Harshad Mehta, though no disposal instructions were issued in this respect by SBI. The Investigating Officer PW-34 D.K. Choudhary has admitted that he has not even made enquiry as to why this amount was credited to the account of Accused No.2 Harshad Mehta, in the absence of disposal instructions.
95. Whatever it may be, the UCO Bank has repaid the said amount to SBI Caps on due date with interest of Rs.4,57,417=81 vide Exhibit-419 on the reversal date. Thus no loss was suffered by SBI 95 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: Caps or even by UCO Bank in this entire transaction.
96. Now as regards the allegation that Accused No.15 S.R. Gupta has, without obtaining the Contract Note from Accused No.2 Harshad Mehta issued the Debit Authorization Letter, on this point there is neither any oral evidence nor any documentary evidence to that effect.
97. In this situation, when none of the witness, nor any document proves that the BR for this transaction was not received, the allegation for this charge cannot be substantiated. Neither the BR issued Register of UCO Bank nor of SBI has been produced on record to prove that such BR was not received.
98. The Investment Register of UCO Bank is also not produced on record to that effect. As regards the BR Register of SBI Caps, it was introduced only from 01/07/1991 and therefore not relevant to the transaction of June-1991.
99. As regards the transaction dated 28/06/1991, it pertains to the lending of money to UCO Bank for 31 days @ 16.25%. The transaction was for Rs.25,29,24,657=54 . It has been brought on 96 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: record through the evidence of PW-38 Deepak Sogani.
100. This Deal Ticket Exhibit-23 is also proved by the Prosecution only through the evidence of PW-1 Ashish Sable and as stated above, he has admitted that he is not acquainted with the signature of Accused No.15 S.R. Gupta. This deal also appears to be executed and processed in normal course of business. The entries thereof are made in the Blue Diary. The Debit Instruction Letters are issued. Therefore, the deal was authorized by two authorized signatories as per Exhibit-324 and 325. The reversal of the transaction took place on due date i.e. 29/07/1991 and the SBI Caps has duly received the total amount lent on 28/06/1991 and also made the profit of Rs.41,88,850=68. There is entry to that effect at Exhibit-328 in the Investment Register. It is also found reflected in the Blue Diary in the entry Exhibit-329. In this transaction also, the same process, which is described above, in respect of transaction dated 07/06/1991, was adopted and there is nothing on record to show that any irregularity was committed. The same allegations which are raised in respect of above said transaction by the Prosecution about non obtaining of the Contract Note or BR and Physical Securities are advanced in respect of this transaction also. Admittedly, the Dealers had no dominion over the funds of the SBI 97 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:32 ::: Caps. There is no evidence proving that UCO Bank had stopped the securities transactions with effect from 06/05/1991. None of the witness has stated so. There are several such transactions executed by the UCO Bank during the said period, as pointed out through the relevant documents Exhibit-411 to 418 and also the fact that there are in all 12 BRs issued by SBI Caps favouring UCO Bank during the said period and all these BRs were duly discharged by the UCO Bank.
101. As regards the charge for the offence under Section 411 read with Section 120B of IPC that Accused had received the amount of Rs.20,20,316=00 from Accused No.2 Harshad Mehta by receiving Cheques in the names of his minor children and wife, as rightly submitted by learned counsel for the Accused, not a single document is produced on record to substantiate this charge. Though the Investigating Officer and the Prosecution has been called upon by the Accused to produce the documents pertaining to the Cheques issued by Accused No.2 Harshad Mehta/Accused No.8 Ashwin Mehta, for substantiating these payments, these documents are not produced. Though the Prosecution has examined PW-35 Pravin Parekh who has deposed that 4 to 5 Cheques were drawn by Accused No.8 Ashwin Mehta for share transactions of Accused No.15 S.R. Gupta, during cross-examination this witness has admitted that he 98 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: had not issued any cheques for the said amount in the name of Accused No.15 S.R. Gupta and he also does not remember whether he had issued any shares of the same value in favour of Accused No15 S.R. Gupta. Thus, in the absence of any evidence produced on record, the Prosecution has failed to prove this charge also.
102. As regards the Charge of criminal conspiracy, the less said is better. If in the entire transaction, it was UCO Bank, which has credited the amount of the Cheques in the account of Accused No.2 Harshad Mehta, that too, without having any disposal instructions to that effect and without informing SBI Caps that the Cheque routing facility was given to Accused No.2 Harshad Mehta by them, when SBI Caps itself has made profit in both these transactions and when it was not the duty or responsibility of Accused No.15 S.R. Gupta either to obtain Contract Note or BRs or physical securities from the counter parties, there is no question of this Accused No.15 S.R. Gupta conspiring with the other Accused, so as to benefit Accused No.2 Harshad Mehta or to cause loss to SBI Caps. At the cost of repetition, it has to be stated that Accused No.15 S.R. Gupta had even no dominion over the funds of the SBI Caps, hence as regards Accused No.15 S.R. Gupta also, it has to be held that the Prosecution has failed to prove its case against him beyond 99 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: reasonable doubt.
Prosecution case against Accused No.17 P. Murlidharan
103. The case of the Prosecution against Accused No.17 P. Murlidharan is that he has made entries in respect of some of these transactions as "BR received and discharged", though there was no such BR received or discharged. He is implicated in this respect in 10 transactions only. Out of that, in 3 transactions viz. Nos.5, 9 and 10, it is alleged that he made the entry of both the "BR received and discharged" and in remaining 7 transactions, viz. 11 to 14 and 20, 21 and 23, he made the entry of "BR received". However, the Prosecution has not brought on record any evidence to prove these entries. As admitted by the witnesses, no separate register was maintained in SBI Caps for the "BR received". The system of maintaining the BR Received Register started only from 01/07/1991. The essential ingredients of the offence under Section 477A of IPC, namely, of engineering the fraud or of deceit and injury is conspicuously lacking in this case, as no loss is proved to have been caused.
104. The second allegation made against him is that he has made entries in the Blue Diary on the basis of the Deal Tickets; that 100 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: is merely the processing of the transaction. He has neither the dominion over the funds of SBI nor his conduct of taking note of these transactions in the Blue Diary has any effect on diversion of the funds. If on the basis of the Deal Ticket, he has made entries in the Blue Diary, he has done so in the normal course of his business and hence, no guilty intention can be attributed to him.
105. Moreover, the evidence on record proves that, PW-38 Deepak Sogani was also doing same work. He has admitted in his evidence that, if Accused No.17 P. Murlidharan was not available, he used tot make the entries in the Blue Diary on the basis of the Deal Tickets. Hence, for the same act, he can be made a witness, the Prosecution has not differentiated the case of Accused No.17 P. Murlidharan to make him Accused in this case.
106. The Prosecution has in this respect failed to prove the mens rea. There is no allegation that he has to derived any wrongful gain or benefit out of the same.
107. As I have discussed above, there is no sufficient evidence on record to prove the incriminating acts on the part of the Officers at SBI Caps, namely, Accused No.4 Ashok Agarwal, Accused No.5 101 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: Bandopadhyay, Accused No.15 S.R. Gupta and Accused No.17 P. Murlidharan, which may have resulted into diversion of the funds. As held by Hon'ble Supreme Court in the case of Kehar Singh & Ors. Vs. The State (Delhi Administration)9, "a few bits here and a few bits there artfully arranged are woefully insufficient to bring home the charge of criminal conspiracy".
108. It is also significant to know that in a suit filed by SBI against Accused No.2 Harshad Mehta and SBI Caps, seeking recovery of the money from Harshad Mehta, SBI Caps had filed a written statement stating that its instructions were not followed in the subject deals by SBI. Therein no fault is alleged against Accused No.4 Ashok Agarwal, Accused No.5 Bandopadhyay or Accused No.17 Murlidharan. Thus, so far as SBI Caps is concerned, it is categorically admitted by them that the fault lied with the SBI Main Branch and not with any of its Officers in SBI Caps and the evidence on record is also categorical to that effect.
Prosecution case against Accused No.16 Bhushan Raut
109. The charge levelled against him is that, he has counter signed the various cheques issued in this case and issued the cheque 9 AIR 1988 SC 1883 102 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: for the transaction dated 02/01/1992 Exhibit-172, which was drawn in favour of the Canara Bank in discharge of liability towards CANFINA.
110. At the outset, it has to be observed that Accused No.16 Bhushan Raut was brought in the place of Accused No.1 R. Sitaraman on 02/01/1992, as Accused No.1R. Sitaraman was proceeding on leave from that day. The leave application of Accused No.1 is produced on record at Exhibit-450 and 451. The evidence on record also goes to prove that Accused No.16 was totally a new Officer brought there, to work in the Securities Department, without any training imparted to him or without there being any Manual of Operating Instructions. Therefore, there is much substance in his contention that he has followed the prevailing practice and procedure and accordingly, signed the Cheque Exhibit-172 on the very first day of his posting and counter signed the other cheques in good faith, without having any guilty intention thereof.
111. This inference can be drawn from the fact that he was posted there only for 8 days from 02/01/1992 to 08/01/1992 and when he realized the danger of the Cheque Routing Facility given to 103 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: Accused No.2 Harshad Mehta by the SBI, he has, during his period from 04/01/1992 to 08/01/1992 not afforded any such facility to Accused No.2 Harshd Mehta. There is entry in the Ledger of the transactions with Accused No.2 Harshad Mehta to that effect, which is admitted by the Prosecution witness PW-14 Arvind Rane. The document at Exhibit-470 which is a letter dated 03/01/1992 also goes to prove and it is admitted by PW-30 Vijapurkar also in his evidence that, this facility of routing was not extended to Accused No.2 Harshad Mehta during the period Accused No.16 B.D. Raut was holding charge. This facility was restarted only from 10/01/1992, after a letter was given from Accused No.2 Harshad Mehta that the facility of single point clearance be restarted. This fact is admitted by PW-16 Anil Padhye also in his evidence.
112. No guilty intention can be inferred from the fact that the Cheque was issued in the name of Canara Bank, as the evidence of PW-27 Vernekar goes to show that the Cheques were to be issued in favour of the Canara Bank, even though the transactions were with CANFINA. Further he has also stated that there was practice of issuing one consolidated cheque for multiple transactions with same counter party Bank. Moreover, once Accused No.16 B.D. Raut has 104 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: issued the cheque in favour of Canara Bank for the amount of that cheque, he had no control thereon. No evidence is also produced on record to show that the amount of this cheque was credited to the account of Accused No.2 Harshad Mehta. Thus, there is no evidence proving the diversion of the funds.
113. It is also pertinent to note that, as admitted by PW-7 Suresh Kale, this Cheque dated 02/01/1992 of Rs.1,80,00,000=00 was prepared by him at the instance of Accused No.14 Arun Bavdekar, since discharged, and as regards the Cheque issued in favour of CANFINA for the amount of Rs.60,87,06,635=34, CANFINA is a subsidiary of Canara Bank and has no account with RBI. Hence, the Cheque was issued, on its instructions in favour of Canara Bank. There is endorsement to that effect at Exhibit-438 and as stated above this fact is admitted by PW-27 Vernekar also. Now how the CANFINA or Canara Bank has disbursed the said amount, when it was a Banker's Cheque, Accused No.16 B.D. Raut has no control over it. Therefore, in respect of this allegation also, it becomes difficult to accept that there was any guilty intention on the part of the Accused No.16 B.D. Raut. Though the Prosecution has relied upon Debit Voucher for SBI Caps dated 02/01/1992, it is not proved by 105 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: examining the relevant witnesses.
114. As regards the allegation that, he has counter signed various Cheques, it is brought on record that the Cheques were required to be counter signed by the two authorized signatories and Accused No.16 B.D. Raut, being one of such authorized signatories, was required to counter sign the same. Admittedly these Cheques Exhibit-126, 129, 131, 147, 155, 156, 157, 159, 164, 166, 168, 192, 181, 198, 199, 201, 209, 210, 211 and 213 were merely counter signed by him, after they were signed by the Officer who prepared the Banker's Cheques and Credit Vouchers. It is brought on record through evidence of PW-28 Ulhas Wakade that it was the responsibility of the first signatory to verify the contents thereof and so far as the second signatory, who has counter signed the same, he has only to verify the signature of the first signatory. That was the normal practice followed during the period.
115. It is pertinent to note that for the similar act of counter signing the Banker's Cheque Exhibit-84, 85, 105, 106, 107, 108, 109 and 113, Accused No.14 Arun Bavdekar was also implicated in this case. However, he has been discharged by this Court vide order dated 17/08/2015 by observing that, "there is difference between 106 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: 'signing' a Cheque and 'counter signing' the same. The Officer counter signing is entitled to feel more assured about the correctness of the issuance of the Cheque and may not make the same kind of enquiry as the one who originally signs it, may be expected to make. Moreover, the Cheques in question were Banker's Cheques, supposed to be credited in the account of the concerned counter party Bank. The degree of caution expected to be exercised by a person signing or counter signing a Banker's Cheque would not be the same as in the case of a Cheque issued in favour of a private party or individual. He has signed the same in the routine manner as a part of his duty. There was nothing unusual in it. Even if it is accepted that he was not diligent or efficient in discharging his official duty, such lapses on his part would not attract the criminal liability, in the absence of any material showing the requisite mens rea on the part of the Accused". The case of the Accused stands at par with Accused No.14 Arun Bavdekar. Accused No.13 K. Kailasam has also been discharged by this Court for playing similar role, vide order dated 11/06/2015.
116. Moreover, it is also brought on record that, there are several other Officers like the Prosecution Witness No.28 U.R. Wakade, who has counter signed the Cheques Exhibit-220 and 221; 107 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: and other Bank Officers viz. Mr.Mahadevan, who has counter signed Cheques Exhibit-228 and 229. Mr.Agnihotri and Mr.D'Souza who have counter signed such Cheque Exhibit-112, 222 and 225, which are produced on record. However none of them is made Accused in this case. As a matter of fact, the present Accused No.16 B.D. Raut was also, in the First Charge-sheet, cited as a witness. Though in the second Charge-sheet, he is implicated as Accused, no attempt is made by the Prosecution to differentiate his case with that of other witnesses who have also counter signed the Banker's Cheques. It is not the Prosecution case that he has signed any of the credit or debit Vouchers. It is not even alleged that he has been benefited in any manner by counter signing the Cheques, to attribute any fraudulent intention to him.
117. It is pertinent to note that, PW-15 Virkar has admitted that he has prepared this Debit Voucher at Exhibit-216 dated 07/06/1991 and also the Banker's Cheque at Exhibit-265 which was drawn in favour of UCO Bank. Further this witness has issued the Banker's Cheque dated 07/06/1991 Exhibit-217 in favour of UCO Bank as well as credited the Voucher of even date at Exhibit-266 in favour of SBI Caps. This transaction which is entered into by PW-15 108 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: Virkar while working in place of Accused No.1 R. Sitaraman stands on the similar footing, as the transaction dated 02/01/1992 done by Accused No.16 B.D. Raut. Again the Prosecution has not brought any evidence on record to differentiate this transaction from the transaction of Accused No.16 B.D. Raut. Moreover, the Prosecution has also not produced on record, the RO Book, nor proved the entry dated 02/01/1992 made in the said RO Book. In such situation, the offence for which this Accused is charged, including the offence under Section 477A as elaborated in Charge No.50 to 54 cannot be said to be proved.
118. As regards the sanction order for his prosecution, less said is better. PW-4 Mr.B. Muthuswamy is examined by the Prosecution to prove the sanction Exhibit-77, but his evidence does not show any application of mind on his part. He has merely stated that on perusal of the papers placed before him by the Department giving the reasons as to why the sanction was necessary, he has signed on the sanction order. However, in his cross-examination, he has categorically admitted that, he has not verified any of the documents. He has not personally met the Accused. He was also not aware of the securities transactions. It is merely on the basis of the statement made by Deputy General Manager, he has stated that the 109 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: Cheques were counter signed by the Accused. He has admitted that he does not remember whether the CBI had informed him that Accused No.16 B.D. Raut was cited as a witness in this case. He also does not remember which documents were placed before him along with the note. Therefore, it is clear that there is total non application of mind on his part, while issuing of the sanction order and hence, on this point also, the benefit of doubt needs to be extended to Accused No.16 B.D. Raut.
Prosecution case against Accused Nos.3 C. Ravi Kumar and Accused No.12 Suresh Babu
119. Accused No.3 Ravi Kumar and Accused No.12 Suresh Babu are tried only in respect of a single transaction dated 02/09/1991 for issuance of BR Exhibit-274. As per the Prosecution case, Accused No.4 Ashok Agarwal finalized the deal with NHB and issued Deal Ticket Exhibit-13. Accordingly, the account of SBI Caps was debited for the amount of Rs.67,83,00,000=00 by Accused No.1 R. Sitaraman and instead of making payment to NHB, diverted the said amount by mixing it up with other amounts, totaling around Rs.93,64,68,150=68 favouring Canara Bank for the credit of CANFINA. According to the Prosecution, Accused Nos.3 Ravi Kumar 110 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: has issued and Accused No.12 Suresh Babu has prepared this BR Exhibit-274 for the amount of Rs.67,95,00,000=00 to cover up this fraudulent diversion of Rs.67,83,00,000=00 by Accused No.1 R. Sitaraman to the account of Accused No.2 Harshad Mehta.
120. In this respect , the basic hypothesis of the Prosecution case is that this transaction was an outright transaction, as stated by Special P.P. in his written notes of argument. However, the evidence of PW-23 Nalini Prabhu, categorically goes to prove that, the SBI Caps used to enter into only ready-forward transactions. Thus, the investigation and the Prosecution has proceeded on a wrong footing.
121. There is also no evidence to show that the BR Exhibit- 274 is linked with the transaction dated 02/09/1991. Even a cursory look to the contents of BR Exhibit-274 and the Deal Ticket Exhibit-13 is enough to show that the amount and the rate mentioned in both these documents is totally different. The Deal Slip Exhibit-13 mentions the amount of consideration as Rs.67,83,00,000=00 for 5 crore Units at the rate of Rs.13.56600 per Unit; whereas the BR Exhibit-274 shows that the amount of consideration is 111 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: Rs.67,95,00,000=00 and the rate is 13.5900 per Unit. It is pertinent to note that the name of NHB is also struck off in the Deal Slip Exhibit-13.
122. In this respect, the evidence of all the Prosecution witnesses is unequivocal to the effect that for the BR and Deal Slip to be part of the same transaction, the amount and the rate mentioned therein must match. PW-19 Murlidharan has categorically stated that, as the amount and the rate of security mentioned in the Deal Ticket Exhibit-13 and the Bank Receipt Exhibit-274, do not match, he cannot say whether they are pertaining to the same transaction. He has further stated that, "generally whatever details are stated in the Bank Receipt should match with details in the Contract Note and the other documents with the counter party". Similarly, PW-23 Nalini Prabhu has also deposed that, "this BR Exhibit-274 does not match with the Deal Slip Exhibit-13 in respect of amount and the rate. According to her evidence also, the amount mentioned in BR Receipt must match with the sale price mentioned in the Deal Ticket.
123. For that matter, even PW-29 Panchapakeshan, who has carried out the work of reconciliation, has also admitted in his 112 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: evidence that the amount mentioned in BR should tally with the amount mentioned in the Deal Slip. According to him, as the amount mentioned in the BR Exhibit-274 was not tallying with the Deal Ticket Exhibit-13, SBI did not write any letter, asking for the amended BR. PW-1 Ashish Sable has also admitted that BR should be of the same amount, as mentioned in the Deal Ticket.
124. Even PW-34, Investigating Officer, Mr.Deokumar Chowdhary, has also admitted that the purchase price in the Deal Ticket Exhibit-13 and BR Exhibit-274 are different. However, he has connected both these documents only because the name of the security and the date mentioned therein was the same. At the same time, he has also admitted that there used to be thousands of transactions taking place on daily basis and he had not checked NHB Records to verify whether there was no other transaction on the same date of the same quantity for the value mentioned in the BR Exhibit-274. He has also admitted that he did not seize the Investment Register of NHB, which would have shown the transactions in NHB Record on that day.
125. Further, PW-34 Mr.Deokumar Chowdhary, has admitted 113 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: that CANFINA has also issued BR in respect of same transaction as reflected in BR Exhibit-274. He has further admitted that except for BR Exhibit-274, there is no other evidence against Accused No.3 Ravi Kumar. Admittedly, Accused No.3 Ravi Kumar has no role what so ever in SBI making payment to CANFINA. The said payment was made on the basis of the Deal Ticket and the Debit Authorization Letter. Hence, Accused No.3 cannot be said to be having any concern therewith.
126. It is also pertinent to note that the Seizure Memo Exhibit-521 does not contain the BR Exhibit-274. Thus there is no evidence what so ever to show that the said BR was in possession of SBI Caps and it was issued by Accused No.3 Ravi Kumar and Accused No.12 Suresh Babu to cover up the diversion of funds by Accused No.1 R. Sitaraman to CANFINA. Moreover, admittedly the BR Exhibit-274 is a non transferable and non-negotiable instrument, as admitted by PW-19 Murlidharan and PW-27 Vernekar. The language of the BR itself shows that it is non transferable. Hence, the case of the Prosecution that BR was issued to cover up some transaction with CANFINA appears difficult to accept. 114 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 :::
127. As a matter of fact, the evidence of PW-19 Murlidharan and rest of the witnesses read as a whole, clearly prove that the BR Exhibit-274 was never acted upon. It has died a natural death. It has become infructuous, as there was no sale and no payment by either party. It is also not the case of the Prosecution that any loss was suffered by NHB on account of the said BR.
128. It is pertinent to note that the amount debited from the SBI Caps account of Rs.67,83,00,000=00 allegedly on the basis of this BR and the amount paid to Canara Bank for credit to CANFINA of Rs.93,64,68,150=68 is also not matching. There is no evidence to show that this amount of Rs.93,64,68,150=68 includes the amount of Rs.67,83,00,000=00.
129. The evidence on record, on the contrary, shows that there was a transaction for 5 crore Units of UTI between CANFINA and SBI Caps on 02/09/1991 for the amount of Rs.67,50,00,000=00. The evidence PW-27 Vernekar from Canara Bank to prove that Exhibit-437 is the BR issued by CANFINA in favour of SBI Caps for sale of Units, having face value of Rs.50,00,00,000=00 at the rate of 13.5000 per Unit for the sale price of 5 crore Units. Exhibit-438 is 115 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: the Cost Memo, issued by CANFINA for the said transaction. On the same day SBI Caps had another transaction with CANFINA in respect of 9% IRFC Bonds for the price of Rs.26,14,68,150=68 along with accrued interest of Rs.94,93,150=00. For the consolidated amount consisting of 5 crore of UTI Units and IRFC transaction the Cheque for the amount of Rs.93,64,00,000=00 was issued by SBI on behalf of SBI Caps. These two transactions are duly recorded in the Transaction Register Exhibit-434 of CANFINA, as deposed by PW-27 Vernekar.
130. This evidence therefore clearly shows that the credit of the payment of the amount of Rs.93,64,68,150=68 by SBI Caps to CANFINA was towards the aforesaid two transactions and had nothing to do with the BR Exhibit-274. The evidence of PW-27 Vernekar further proves, vide Exhibit-442 and 444 that the said transaction with CANFINA was reversed on 17/09/1991 and both the BRs were returned to CANFINA duly discharged. Thus, the amount paid to the CANFINA was duly repaid on the reversal date. Hence, the question of diversion of funds does not arise. Since CANFINA had issued the BR in favour of SBI Caps vide Exhibit-437, the question of Accused No.3 having issued the BR Exhibit-274 to 116 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: cover up the transaction no more remains.
131. As rightly submitted by learned counsel for Accused No.3, except for proving the signature of Accused No.3 Ravi Kumar, on BR Exhibit-274, the Prosecution has not led any evidence with respect to its contents and circumstances, concerning the issuance of said BR. There is also no evidence to prove that, the BR was acted upon by anyone. As a matter of fact, PW-19 Murlidharan has admitted in his evidence that as NHB has not received the funds of the transaction dated 02/09/1991, the said Bank Receipt Exhibit- 274 has become infructuous. Therefore, the question of discharge of the said Bank Receipt does not arise. He has further deposed that, if the counter party has not made the payment, mere holding of BR does not confer the rights on the party.
132. Further he has also admitted in his evidence that during the said period, the securities transactions were taking place day-to- day and that too on a large scale. The deals used to be often struck on telephone and as the BR is non-transferable negotiable instrument, in these transactions, there was no receipt of money and no sale of Units. Hence, NHB has not suffered any loss. The 117 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:33 ::: evidence of PW-29 Panchapakeshan also goes to prove that, no payment was made by SBI Caps to NHB in pursuance to this BR Exhibit-274. According to him, the right of purchasing party to receive physicals in lieu of BR arises only if the purchasing party makes payment to the counter party. According to him, until May 1992, SBI Caps did not write to NHB, demanding the Units under the said BR. SBI Caps has also not filed any suit against NHB for recovery of the Units under the BR Exhibit-274. The correspondence between the NHB and SBI Caps, namely, the Letters Exhibit-275, 276 and 277 also prove that no payment was made to NHB by SBI Caps.
133. Thus, the evidence on the whole and read together clearly proves that BR at Exhibit-274 was issued in anticipation of the transaction, which did not get completed. Neither any witness from NHB nor any letters addressed by NHB, which are on record allege that the BR Exhibit-274 was issued wrongfully by Accused No.3. Infact NHB as a corporate authority has never disowned the BR, nor made any complaint about the same either with CBI or otherwise.
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134. Though the Prosecution has, in its written submission stated that, in the statement of account of Accused No.2 with SBI Exhibit-263 there is an entry of Rs.67,83,00,000=00, as rightly pointed out by learned counsel for Accused No.3, Exhibit-263 does not show any such entry of Rs.67,83,00,000=00, but shows the amount of Debit on 02/09/1991 for around Rs.30,00,000=00. Thus, on this aspect also there is discrepancy going to the root of the matter.
135. Moreover, as per the Prosecution case, BR was delivered by Accused No.3 Ravi Kumar to Accused No.7 Hiten Mehta, since discharged, for its further delivery to Accused No.1 R. Sitaraman. However, there is absolutely no evidence to that effect. As stated above, the Seizure Memo of the documents seized from SBI does not show that this BR was seized from SBI Caps or SBI. Accused No.7 Hiten Mehta has already been discharged and the Prosecution has not brought evidence about delivery of BR to him. According to the evidence of the defence witness Gopal Shankar Iyer, as per the prevailing practice exchange of BR and Cheque were not simultaneous and it was common that the Cheque was delivered later in time. Considering this, there is reasonable evidence to hold 119 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: that the BR Exhibit-274 was issued in anticipation of the transaction, which was not completed and hence, the said BR ceased to have any effect. Therefore, there was neither any loss caused for issuance of BR to NHB nor any loss caused to SBI Caps by virtue of said BR. There was therefore no pecuniary benefit gained by Accused No.2 Harshad Mehta on account of the said BR. Learned Special P.P. has also fairly conceded that, there is no evidence collected as to what happened to the funds credited to CANFINA. There is also no evidence on record to show that any amount in question went to the account of Accused No.2 Harshad Mehta.
136. In such situation, the possibility cannot be ruled out that SBI Caps tried to enter into the transaction for purchase of 5 crore Units from CANFINA as well as NHB. The BR Exhibit-274 was issued by NHB for such purported transaction. However, as SBI Caps got lower rate from CANFINA that of Rs.67.5 crore as against Rs.67.95 crore quoted by NHB, SBI Caps went ahead with CANFINA deal and did not proceed with NHB deal. Thus the BR Exhibit-274 issued by NHB became infructuous. At-least, from the evidence on record, it cannot be said that this BR Exhibit-274 facilitated any wrongful act by any person. Moreover, a purchasing party cannot hold two BRs in 120 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: respect of a single transaction, for which the payment has been made from its account to only one party. In this case, the payment has been made from the account of SBI Caps to CANFINA and the latter had issued, the BR which was reversed within fifteen days. Therefore the BR Exhibit-274 issued by NHB had become infructuous and carried no value, which could give any right to SBI Caps for making any claim.
137. Learned counsel for Accused No.3, also points out that, the same transaction was the subject matter of Special Case No.1 of 1996, filed on the complaint of SBI Caps against CANFINA. The employees of CANFINA charged in the said transaction are already acquitted in the said case.
138. Otherwise also, the Charge under Section 409 of IPC, as alleged against Accused No.3 Ravi Kumar, cannot be tenable. To prove the offence under Section 409 of IPC, there must be entrustment of property and conversion or misappropriation of the entrusted property with dishonest intention. As held by the Hon'ble Apex Court in the case of S. Mohan Vs. Central Bureau of Investigation10, the charge of criminal breach of trust is not 10 (2008) 7 SCC 1 121 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: maintainable, unless the victim of the alleged breach of trust has a grievance or complaint against the Accused. In the said judgment, which was also arising out of the securities scam, it was held that, "So long as CANFINA has no grievance or complaint against the appellant S. Mohan that he acted contrary to their directions and accepted the CANCIGO units and paid the money to the appellant Hiten P. Dalal, no offence is made out against the appellant S. Mohan either of criminal breach of trust or conspiracy."
139. It was further held that, "Neither Canara Bank nor CANFINA had initiated any disciplinary proceedings against Appellant. They have also not disputed the genuineness of the CANCIGO units which were got encashed by the appellant Hiten P. Dalal..... ....... In the circumstance, no ingredient of criminal breach of trust is made out against either of the appellants."
140. In the present case also, it is admitted position that no loss was caused to the NHB and NHB had not made grievance or complaint about this BR Exhibit-274. There is also no evidence to show that Accused No.3 Ravi Kumar had faced any departmental 122 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: enquiry in respect of this transaction.
141. There is also no evidence to show that there was any entrustment of the property, as required under the law. As held in the judgment of the Common Cause, A Registered Society Vs. Union of India & Ors.11, relied upon by learned counsel for Accused No.3 Mr.Sabnis, the power to do something does not amount to entrustment. Here in the case there is no allegation of the Prosecution or no evidence to the effect that there was entrustment of any property of NHB to Accused No.3 Ravi Kumar. He had only authority to sign the BR. Therefore mere authority or power to sign the BR is not property in itself and hence, cannot constitute entrustment of property within the meaning of Section 409 of CPC.
142. Though the charge is also leveled against Accused No.3 Ravi Kumar that he has committed the forgery by issuing the BR Exhibit-274 without receipt of consideration, the charge of forgery also cannot be attracted in this case, as it is not the Prosecution case that Accused No.3 Ravi Kumar had no authority to sign the BR on behalf of NHB. It is signed by Accused No.3 Ravi Kumar, under his own name and it does not give an impression that it is signed by 11 (1999) 6 SCC 667 123 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: someone else. Therefore, as long as this BR is executed under the name and authority of the authorized signatory, it cannot amount to forgery, even if it may contain a false statement. This point was considered and upheld by this Court in the case of CBI Vs. Raghunath Wadhwa & Ors.12, wherein it was held that, a document containing false recitals or particulars or representations does not amount to forgery.
143. Learned counsel for Accused No.3 Mr.Sabnis has also placed reliance on the judgment of the Hon'ble Supreme Court in the case of Mir Nagvi Askari Vs. Central Bureau of Investigation 13, to submit that the document containing a false recital or statement is not a false document amounting to forgery.
144. It is submitted that, as held in para No.164 of this judgment, "A person is said to make a false document or record, if he satisfies one of the three conditions as noticed hereinbefore and provided for under the said section. The first condition being that the document has been falsified with the intention of causing it to be believed that such document has been made by a person, by 12 Special Case No.4 of 1997 dated 30/11/2007 13 (2009) 15 SCC 643 124 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: whom the person falsifying the document knows that it was not made. Clearly the documents in question in the present case, even if it be assumed to have been made dishonestly or fraudulently, had not been made with the intention of causing it to be believed that they were made by or under the authority of some one else. The second criteria of the section deals with a case where a person without lawful authority alters a document after it has been made. There has been no allegation of alteration of the voucher in question after they have been made. Therefore in our opinion the second criteria of the said section is also not applicable to the present case. The third and final condition of Section 464 deals with a document, signed by a person who due to his mental capacity does not know the contents of the documents which were made i.e because of intoxication or unsoundness of mind etc. Such is also not the case before us. Indisputably therefore the accused before us could not have been convicted with the making of a false document."
145. Further it is submitted that the offence of forgery deals with making of false document with a specific intention enumerated therein. Here in the case, no such evidence is produced on record by the Prosecution about the intention of the Accused.
146. Thus, the evidence on record is not sufficient to prove the charge of Section 409 or 477 of IPC against Accused No..3 Ravi 125 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: Kumar. As stated above, except for this transaction, Accused No.3 Ravi Kumar and Accused No.12 Suresh Babu are not implicated in any other transaction. It is a totally stand alone transaction. There is also no evidence to show that any particular gain was received by Accused No.3 Ravi Kumar, out of any of these transactions so as to implicate him for the offence of criminal conspiracy under Section 120B of IPC. No evidence is at all produced as regards the meeting of minds between these two Accused with other Accused.
147. In view thereof, as regards Accused No.3 Ravi Kumar, it is difficult to hold any of the charge levelled against him in respect of this transaction as proved beyond reasonable doubt.
148. Even as regards Accused No.12 Suresh Babu, the only allegation against him is that he had prepared this BR Exhibit-274. It is also not disputed that he has prepared it in the normal course of his duties and under the instructions from Accused No.3 Ravi Kumar, who was in charge of Funds Management Group at NHB.
149. It is a matter of record that Accused No.12 Suresh Babu was, though holding the post of Assistant Manager, it was in reality the glorified position of Clerk. He has just completed the Probation 126 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: period of 6 months on 07/08/1991 and was working under the direct control and supervision of Accused No.3 Ravi Kumar. Above him, there were several other Officers. His position was in the entire hierarchy of NHB at the lowest level. Taking cognizance of his position in the hierarchy of the organizational set-up of NHB, the Hon'ble Supreme Court has also, in the case of R.Venkatkrishnan Vs. Central Bureau of Investigation14, acquitted this Accused for the similar role played by him.
150. It is admitted position that he was never authorized to undertake any decision and was to act only on the instructions of Accused No.3 Ravi Kumar. This fact is certified by PW-19 Murlidharan also. Mere preparation of BR in the handwriting of Accused No.12 Suresh Babu therefore cannot be called as "issuance" of the BR. Therefore, in the absence of any authority to sign the same, if he has prepared the BR in good faith, under the instructions of his superior, it becomes difficult to accept the case put up by the Prosecution against him.
151. It is also pertinent to note that, NHB has not initiated any disciplinary enquiry against him, nor there is allegation that 14 2009(11) SCC 737 127 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: Accused No.12 Suresh Babu has directly or indirectly derived any benefit from the subject transaction. Thus, considering the overall evidence brought on record, in this case, as regards transaction No.2, which is a stand alone transaction, it has to be held that neither the transaction itself is proved beyond reasonable doubt; nor the Prosecution has succeeded in proving the allegations leveled against these two Accused beyond reasonable doubt. Hence, they deserve to be acquitted.
Want of valid sanction
152. In respect of these five accused Nos.3, 5, 12, 15 and 17 also, who are prosecuted as public servants, there is major lacuna in the Prosecution case, which pertains to lack of valid sanction. The evidence of none of the sanctioning authority goes to show that they have either applied their mind independently to the material placed before them, or were aware of the factual aspects of the case. The evidence of these sanctioning authority, namely PW-2 Birendra Kumar in respect of the sanction of Accused No.17 Murlidharan, PW- 5 N.G. Pillai in respect of sanction for Accused No.5 Bandopadhyay, the less said is better. They have admitted that they had no knowledge of money market transactions or securities transactions 128 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: or its working and had accorded the sanction mechanically.
153. As regards PW-18 Radhakrishnan, he has categorically admitted that he might not have been personally aware of what is stated in the sanction order, but it was stated on the basis of the internal record of the Bank. He was not even aware that the complaint in this case was lodged by Accused No.5 Bandopadhyay and did not remember, whether the documents placed before him contain the complaint. He has further admitted that he was the sanctioning authority for the Officers upto scale-3; whereas Accused No.5 Bandopadhyay was working at scale-5 i.e. higher scale officer, which makes him incompetent to grant sanction also.
154. The evidence of PW-3 Mr.Ravi Gupta, who has issued sanction for prosecution of Accused No.3 C Ravi Kumar also goes to show that only on the basis of the material placed before him and even without consulting the Legal Department, he has issued the sanction order for prosecution of Accused No.3 C. Ravi Kumar and Accused No.12 Suresh Babu. He even was not aware whether CBI has recorded the statement of Accused No.3 C. Ravi Kumar in the matter or whether NHB had initiated any Departmental Enquiry against him.
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155. PW-11 Mr.N.R. Sampath, who has issued sanction order in respect of Accused No.16 B.D. Raut has categorically admitted that, he does not know how the securities transactions were conducted. He was also not aware whether the transactions on behalf of SBI Caps were put through on telephonic instructions. He has further admitted that, he does not remember whether he has personally seen any false entries made by Accused No.16 B.D. Raut in R.O. Register. He does not remember the documents which were placed before him along with note given to him by the SBI Main Branch. However, the said note is not produced along with sanction order.
156. As regards the sanction and its validity, its importance need not be emphasized. Sanction is a solemn and a very serious act. It needs to be done with all the sincerity and application of mind. As held by the Hon'ble Supreme Court in the case of Basdeo Agarwalla Vs. Emperor15, that, "the sanction under the Act is not intended to be, nor is an automatic formality and it is essential that provisions in regard to the sanction should be observed with complete strictness".
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157. In the case of Mohd. Iqbal Ahmed Vs. State of A.P. 16, the Hon'ble Supreme Court has explained the necessity and importance of valid sanction as under :
"Sanction lifts the bar for prosecution. The grant of sanction is not an idle formality or an acrimonious exercise but a solemn and sacrosanct act which affords protection to government servants against frivolous prosecutions. Sanction is a weapon to ensure discouragement of frivolous and vexatious prosecution and is a safeguard for the innocent but not a shield for the guilty."
158. Learned counsel for the Accused has relied upon the judgment of the Hon'ble Supreme Court in the case of Mansukhlal Vithaldas Chauhan Vs. State of Gujrat17, wherein the Hon'ble Supreme Court was pleased to observe in para No.18 and 19 as follows;
"18. The validity of the sanction would, therefore, depend upon the material placed before the sanctioning authority and the fact that all the relevant facts, material and evidence have been considered by the sanctioning authority. Consideration implies application of mind. The order of sanction must ex facie 16 (1979) 4 SCC 172 : 1979 SCC (Cri) 926 17 (1997) 7 SCC 622 131 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: disclose that the sanctioning authority had considered the evidence and other material placed before it. This fact can also be established by extrinsic evidence by placing the relevant files before the Court to show that all relevant facts were considered by the sanctioning authority. (See also: Jaswant Singh vs. The State of Punjab, 1958 SCR 762 = AIR 1958 SC 12; State of Bihar & Anr. vs. P.P. Sharma, 1991 Cr.L.J. 1438 (SC))."
19. Since the validity of "Sanction" depends on the applicability of mind by the sanctioning authority to the facts of the case as also the material and evidence collected during investigation, it necessarily follows, that the sanctioning authority has to apply its own independent mind for the generation of genuine satisfaction whether prosecution has to be sanctioned or not. The mind of the sanctioning authority should not be under pressure from any quarter nor should any external force be acting upon it to take decision one way or the other. Since the discretion to grant or not to grant sanction vests absolutely in the sanctioning authority, its discretion should be shown to have not been affected by any extraneous consideration. If is shown that the sanctioning authority was unable to apply its independent mind for any reason whatsoever or was under an obligation or compulsion or constraint to grant the sanction, the order will be bad for the reason that the discretion of the authority "not to sanction" was taken away and it was compelled to act mechanically to sanction the prosecution."
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159. In the present case, as rightly submitted by learned counsel for the Accused, there is no evidence to prove that this act of giving sanction is performed properly by the Sanctioning Authorities. Hence, it constitutes a major lacuna in Prosecution case, the benefit of which goes to these Accused persons. Hence, neither on factual, nor on legal aspects, the Charge for the offences punishable under Section 13(1)(c)(d) read with Section 13(2) of the Prevention of Corruption Act can be held proved against them.
Prosecution case against Accused No.8 Ashwin Mehta
160. Accused No.8 Ashwin Mehta is prosecuted for the offences punishable under Sections 409, 411, 467, 468, 477 read with Section 120B of IPC and Section 13(1)(c) and (1)(d) read with 13(2) of the Prevention of Corruption Act, read with Section 109 of IPC.
161. The main allegation levelled against Accused No..8 Ashwin Mehta is that he has signed the Contract Note dated 29/05/1991 Exhibit-284 (only signature portion is exhibited) in respect of delivery of 25 lakh Units to be made to SBI Caps on 133 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: 29/07/1991 i.e. after the period of two months. According to the Prosecution case, infact no such Units were delivered to SBI Caps on the stipulated date and thus in this transaction Accused No.8 Ashwin Mehta and Accused No.1 R. Sitaraman aided and abetted Accused No.4 Ashok Agarwal in the commission of the offence of criminal breach of trust. It is not disputed by Accused No.8 Ashwin Mehta that he has signed this Contract Note Exhibit-284. However, according to him, he has signed the same as a Constituted Attorney of Accused No.2 Harshad Mehta. To prove this fact, he has examined himself on oath. According to his evidence, he had no relation with Accused No.2 in the impugned money market transactions, save and except this transaction wherein he has signed the Contract Note on behalf of Accused No.2 Harshad Mehta. He has categorically deposed that he was not assisting Accused No.2 Harshad Mehta in Money Market Transactions. He had never undertaken any transaction in Money Market Business. He was active only in Capital Market. Moreover, his office was situated on 15th Floor in Makers Chamber; whereas the Office of Harshad Mehta was situate on different floor. To prove this fact, one witness by name Mr.Vishvesh Bhatt has also been examined. He used to feed the data of the transactions and the deals entered into by the Accused No.2 Harshad Mehta. According to 134 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: his evidence also, both Accused No.2 Harshad Mehta and Accused No.8 Ashwin Mehta were having different Offices and had no concern with each other.
162. As per the case of Accused No.8 Ashwin Mehta, the signing of Contract Note per se is not an illegal act, especially as a Constituted Attorney of Accused No.2 Harshad Mehta. Except for the signing of the said Contract Note, no other role is attributed to him. The contract was to be performed two months thereafter, on 29/07/1991 and at that time he was no where in the picture. He had neither initiated, nor negotiated, nor concluded the said transaction. As a matter of fact, the Prosecution has also not succeeded in proving the contents of this Contract Note, nor attributed any knowledge to Accused No.8 Ashwin Mehta in respect of underlying transaction. The only witness who has deposed about it is PW-20 Ramesh Dabholkar, the delivery boy in the office of Accused No.2 Harshad Mehta, who has only identified the signature of Accused No.8 Ashwin Mehta on this Contract Note. Thus, no Prosecution witness has attributed any knowledge or participation of Accused No.8 Ahswin Mehta in the said transaction. Moreover, his mere signing of the Contract Note cannot make him liable, as the Contract was to be performed after two months by delivery of Units. If there 135 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: was any fraud in subsequent part of execution of the such Contract in payment and delivery of the Units, he cannot be held penally liable.
163. It is necessary to note that, for similar such role played by the other Accused, that of signing of the Contract Note, not only in this case, but in other cases also, those Accused were acquitted or discharged. Reliance can be placed on the order passed by this Court on 23/02/2017, whereby Accused No.7 Hiten Mehta and Accused No.9 Sudhir Mehta have been discharged by this Court on the ground that except for signing of the Contract Note, no other role was attributed to them. Similarly, Accused No.10 Pankaj Shah and Accused No.11 Atul Parekh were also discharged on the same count that except for signing of the Contract Notes, they have not played any other role.
164. Accused No.8 Ashwin Mehta has also produced on record at page No.88 the Chart of the cases in which he himself was acquitted or discharged for playing the same role. For example, in Special Case No.1 of 1996 he came tobe discharged and in Special Case No.4 of 1996, he was acquitted by this Court vide order dated 12/04/2006 and the said order was confirmed by the Hon'ble 136 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: Supreme Court. For the similar role played by one Sudhir Mehta, he was acquitted and discharged in Special Case No.1 of 2001. The certified copies of those orders are also produced on record, which prove that if the other Accused can be acquitted or discharged for the same role, the Accused No.8 Ashwin Mehta also cannot be held liable for the offence, in the absence of any evidence, proving that except for signing the Contract Note, he has played any active role in finalizing the deal or issuance of the Contract Note.
165. In this case, the Accused has tried to produce on record the evidence to probabalise his defence that 25 lakh Units were actually delivered to SBI Caps on 29/07/1991. Accused No.8 Ashwin Mehta has relied upon the BR Register maintained by SBI Caps Exhibit-421 confirming the delivery of 50 lakh Units to SBI Caps on 29/07/1991. Reliance is also placed on the evidence of PW-29 Panchapakeshan, who had confirmed the receipt of securities from SBI on 21/05/1992, as they were personally accepted by him. He has admitted that he has received 3 BRs of 3.5 crore Units in which there is BR No.49 dated 29/07/1991 issued by BOI Finance in favour of SBI Caps. Attention is also drawn to the letter dated 26/09/1992 Exhibit-603 wherein this witness has confirmed that the physical delivery of Units, as per the prevailing market practice, was not 137 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: accepted in respect of this transaction before Book Closure of UTI on 1st June of the next year, when the Annual Statement of all outright Unit transactions was taken up in May 1992. He has also confirmed that he made enquiry of outstanding Units and BRs from various counter parties, but he could not locate the exact counter party to the deal. It is submitted that admittedly on 29/07/1991 BOI Finance has delivered 50 lakh Units by drawing BR No.49 in the name of SBI Caps, which was delivered to SBI on behalf of SBI Caps on 29/07/1991. The payment of Rs.6,78,25,000=00 to BOI Finance was effected on 29/07/1991 by Accused No.2 Harshad Mehta by debit to his account and therefore, against the purchase of 25 lakh Units, SBI Caps has received delivery of 50 lakh Units from Accused No.2 Harshad Mehta and therefore, the allegation of non delivery of 25 lakh Units under the said transaction is not correct. This BR No.49 dated 29/07/1991 was also seized from Mr.S.M. Vaidya, Senior Project Manager of BOI Finance.
166. It is pointed out that the Contract Note Exhibit-284, does not disclose the name of the counter party, much less that of the UCO Bank. It is the imagination of the Prosecution that the counter party was UCO Bank. As a matter of fact, as Contract Notes were entered into by Accused No.2 Harshad Mehta on principal to principal basis, 138 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: it was his prerogative to decide how the delivery of Units would be made to SBI Caps and above evidence on record proves that he has made such delivery of 50 lakh Units from BOI Finance.
167. Be that as it may, there is substance in the submission of Accused No.8 Ashwin Mehta that, even assuming that the Units were not delivered, that does not per se establish the offence alleged by the Prosecution, considering that Accused No.2 Harshad Mehta had regularly undertaken transactions with SBI Caps.
168. It is also the case of Accused No.8 Ashwin Mehta that in respect of the transaction dated 09/08/1991 he was also prosecuted in Special Case No.1 of 1996 on the count that he was signatory thereto, for and on behalf of Accused No.2 Harshad Mehta. However, as the Prosecution failed to establish any prima facie case against him, he came to be discharged from the said case. The CBI challenged the said order by filing Criminal Appeal No.1218 of 1998 which came to be dismissed by the Hon'ble Supreme Court on 19/09/2001.
169. Accused No.8 Ashwin Mehta has also placed reliance on the certified copies of the Civil Suit No. 41 of 1995 and MA No.185 of 139 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: 1993 wherein SBI had sought recovery of Rs.105.11 crores against Accused No.2 Harshad Mehta and SBI Cap; and the Civil Proceeding of MA No.201 of 2011, MA No..195 of 2011 and MA No.136 of 2012 which were filed by Smt.Jyoti Mehta, to submit that, in none of these proceedings it could be established that the Units remained to be delivered or SBI Caps has suffered any loss on account of these transactions.
170. This Court is not concerned with the Civil litigation but in the present case the fact remains that except for the role that he has signed the Contract Note, no other role is attributed to the Accused No.8 Ashwin Mehta and mere signing of the Contract Note as a Constituted Attorney of Accused No.2 Harshad Mehta, especially when there is no evidence of involvement of this Accused in any other transactions, is not sufficient to prove the charges levelled against him, beyond reasonable doubt.
171. Though the Prosecution has also framed the charge of receipt of stolen property punishable under Section 411 and Section 414 of IPC against this Accused in respect of transactions dated 02/09/1991 and 06/04/1992, there is absolutely no evidence to that effect brought on record by the Prosecution. Not a single Prosecution 140 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: witness has deposed about the same. The Prosecution has also failed to prove the further diversion of funds from the Account of Accused No.2 to the account of this Accused. As the offence of criminal conspiracy and the offences under the Prevention of Corruption Act are not established, there is no question of holding this Accused liable for the offence of abatement under Section 109 or under Section 120B of IPC.
Prosecution case against Accused No.1 R. Sitaraman
172. If the entire case and the evidence discussed above is carefully perused, then the inference is inevitable that the ball stops rolling at the end of SBI and that too, at the door step of Accused No.1 R. Sitaraman. As per the Prosecution case, it was Accused No.1 R. Sitaraman, who has, by netting and mixing the amount of the securities transactions, diverted the funds to the account of Accused No.2 Harshad Mehta. However, to prove this charge, the Prosecution has not led any evidence except for producing the statements of accounts of Accused No.2 and his Associates. Their contents are also not proved. Moreover, as per Accused No.1 R. Sitaraman, these transactions were entered into with Accused No.2 Harshad Mehta on principal to principal basis and therefore, the amount was bound 141 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:34 ::: to be credited to his account. Otherwise also, Accused No.1 R. Sitaraman has, as deposed by PW-5 N.G. Pillai, credited the proceeds of sale of securities first in SBI's own account maintained with RBI and subsequently transferred to the account of Accused No.2 Harshad Mehta. The evidence on record also proves that in some transactions, even without instructions of disbursal, the amount was splitted and credited to the account of Accused No.2 Harshad Mehta by his concerned Bank. As rightly submitted by Accused No.1 R. Sitaraman in these transactions, he cannot be held liable for the charge of diverting of the funds.
173. Moreover, on factual aspects, even if the case against Accused No.1 R. Sitaraman appears to be proved, on legal aspects it has to be held that the Prosecution has failed to prove its case against him also beyond reasonable doubt. In the light of the various gaps and the missing links left open by the Prosecution, may be on account of death of Accused No.2 Harshad Mehta and the discharge of many of the Accused in the case from time to time, the fact remains that the charge of conspiracy could not be proved.
174. As regards the charge under Section 409 and 420 of IPC 142 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:35 ::: as rightly submitted by the Accused, both these charges cannot go together hand in hand. They have to be framed in the alternate. The Prosecution has to be sure as to whether it was an entrustment of the property in the hands of Accused No.1 R. Sitarman, which he has misappropriated by diverting it to the account of Accused No.2 Harshad Mehta or whether it was a case of cheating, wherein he has obtained the property by misrepresentation with fraudulent intention. The Prosecution has failed to bring on record the evidence to prove either of the charge beyond reasonable doubts. As regards the charge under Section 477A of IPC, in respect of falsification of accounts, again no evidence is produced on record by the Prosecution. There is also no evidence to show that Accused No.1 R. Sitaraman has dishonestly received any stolen property or concealed the same. Therefore, on legal aspects also, the Prosecution has failed to prove the necessary ingredients of the offences alleged against Accused No.1 R. Sitaraman beyond reasonable doubt.
175. Apart from that, the major defect from which the Prosecution case suffers against Accused No.1 is that the Prosecution has failed to prove the sanction for his prosecution. Admittedly, Accused No.1 R. Sitaraman was a public servant, being 143 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:35 ::: an employee of the public sector bank, like, SBI, at the time of commission of the alleged offence, as well as, at the time, when the Charge-sheet was filed and the cognizance of the offence was taken. As evident from Exhibit-605, Accused No.1 R. Sitaraman was in service till the year 1996 and hence, very much the public servant. He is prosecuted for the acts done by him in discharge of his duty as public servant. Hence, in order to implicate him for the offences under the Prevention of Corruption Act, which are alleged against him, the sanction for his prosecution is must, as laid down under Section 19(1) of the Act, which reads as under, " 19. Previous sanction necessary for prosecution.--
(1) No court shall take cognizance of an offence punishable under sections 7, 10, 11, 13 and 15 alleged to have been committed by a public servant, except with the previous sanction,--
(a) in the case of a person who is employed in connection with the affairs of the Union and is not removable from his office save by or with the sanction of the Central Government, of that Government;
(b) in the case of a person who is employed in connection with the affairs of a State and is not removable from his office save by or with 144 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:35 ::: the sanction of the State Government, of that Government;
(c) in the case of any other person, of the authority competent to remove him from his office."
176. Thus, the plain reading of Section 19(1) of the Prevention of Corruption Act, leaves no manner of doubt that the same is couched in mandatory terms and forbids Courts from taking cognizance of any offence punishable under Sections 7, 10, 11, 13 and 15 against public servants, except with the previous sanction of the competent authority. It is held by the Hon'ble Supreme Court in the case of Nanjappa Vs. State of Karnataka18 relied upon by Accused No.1 R. Sitaraman that, Section 19(1) of the PC Act would operate in absolute terms. The language employeed in Section 19(1) admits of no equivocation and operates as a complete and absolute bar to any Court taking cognizance of any offence punishable under Section 7, 10, 11, 13 and 15 of the Act against a public servant, except with the previous sanction of the competent authority.
177. Even for the offences punishable under Section 409, 420, 177A or 120B of the Code of Indian Procedure, Section 197 of the 18 (2015) 14 SCC 186 145 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:35 ::: Code of Criminal procedure, clearly mandates that without the sanction, no Court shall take cognizance of such offences against public servant. The said section reads as under.
"197. Prosecution of Judges and public servants.
(1) When any person who is or was a Judge or Magistrate or a public servant not removable from his office save by or with the sanction of the Government is accused of any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty, no Court shall take cognizance of such offence except with the previous sanction.
(a) in the case of a person who is employed or, as the case may be, was at the time of commission of the alleged offence employed, in connection with the affairs of the Union, of the Central Government;
(b) in the case of a person who is employed or, as the case may be, was at the time of commission of the alleged offence employed, in connection with the affairs of a State, of the State Government.
... ... ..."
178. As per the law laid down by the Hon'ble Supreme Court, in the absence of a valid sanction, even if any trial is conducted 146 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:35 ::: against the public servant for which the sanction is required, such trial becomes null, void and non est.
179. Here in the case, Investigating Officer has obtained the sanction for prosecution of accused No.1 R. Sitaraman. However, the Prosecution has failed to prove it and therefore, it is as good as not on record. The Prosecution has filed a report dated 30/08/2018 stating that the sanctioning authority Mr.Gordhan Bhojraj Kathuria has expired on 25/01/2018 and therefore, not available for giving evidence.
180. In considered opinion of this Court, if the sanctioning authority was not available, then in that case, the Prosecution could have examined any other witness from the said Department, who was acquainted with the facts of the case or even with the signature of the sanctioning authority and get the sanction proved. The burden was entirely upon the Prosecution to prove the fact that the requisite sanction has been obtained. As held by the Hon'ble Supreme Court in the case of State of Rajasthan Vs. Tarachand Jain19, such burden includes proving that the sanctioning authority had given the sanction in reference to the facts on which the
19 AIR 1973 SCC 2131 147 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:35 ::: Prosecution is based. These facts might appear on the face of the sanction or it might be proved by independent evidence, that the sanction was accorded for prosecution after those facts had been placed before the sanctioning authority.
181. The Prosecution has however not made any attempt to prove the sanction by examining the subordinate officer or the staff, who has seen the sanctioning authority signing the sanction order or who is acquainted with the signature of the sanctioning authority. Merely, filing the order purported to be the sanction order alleged to have been signed by the competent authority, does not discharge the burden on the Prosecution of proving the sanction, according to law. No explanation is offered at all by the Prosecution for non examining any of the witness on this aspect, at-least to state that the sanctioning authority was the competent authority to grant such sanction. The Prosecution has not even proved this sanction through the evidence of Investigating Officer, who had obtained the said sanction.
182. Therefore, the fact remains that there is no sanction proved on record for the prosecution of the Accused No.1 R. Sitaraman and in the absence thereof, the entire trial conducted 148 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:35 ::: against him becomes vitiated as Accused No.1 did not get any opportunity to challenge the said sanction for non-application of mind, absence of competency in the sanctioning authority to accord such sanction etc. As it was not proved by the Prosecution, no questions about its validity could be asked to Accused No.1 R. Sitaraman in his statement recorded under Section 313 of Cr.P.C. for him to offer explanation therefor or to put up his contentions challenging the same. Hence, if such sanction which is not proved on record, is considered by this Court, it is bound to cause great prejudice to Accused No.1 R. Sitaraman and hence, vitiate the trial. Therefore, assuming that on factual aspects, charges leveled against Accused No.1 R. Sitaraman may be proved, Accused No.1 R. Sitaraman will have to be acquitted for this major lacuna in the Prosecution case, by extending him benefit of doubt.
Conclusion :-
183. To sum up therefore, I have no hesitation in holding that the Prosecution has failed to prove its case against all the Accused beyond reasonable doubt. Hence, the order.
(i) Accused No.1 R. Sitaraman, Accused No.3 Ravi Kumar, Accused No.4 Ashok Agarwal, 149 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:35 ::: Accused No.5 Janardan Bandopadhyay, Accused No.8 Ashwin Mehta, Accused No.15 S.R. Gupta, Accused No.16 B.D. Raut and Accused No.17 P. Murlidhar stand acquitted for the offences punishable under Section 120B and 420, in the alternate Section 409 read with Section 120B of IPC.
(ii) Accused No.1 R. Sitaraman, Accused No.3 Ravi Kumar, Accused No.4 Ashok Agarwal, Accused No.5 Janardan Bandopadhyay, Accused No.12 Suresh Babu, Accused No.15 S.R. Gupta, Accused No.16 B.D. Raut and Accused No.17 P. Murlidhar, are further acquitted for the offences punishable under Section 13(1)(c) and (d) read with Section 13(2) of the Prevention of Corruption Act and Accused No.8 Ashwin Mehta stands acquitted for the offence punishable under Section 13(1)(c) and (d), read with Section 13(2) of the Prevention of Corruption Act, read with Section 109 of IPC.
150 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:35 :::
(iii) Accused No.1 R. Sitaraman and Accused No.16 B.D. Raut are further acquitted for the offence punishable under Section 477A read with Section 120B of IPC.
(iv) Accused No.3 Ravi Kumar and Accused No.12 Suresh Babu are acquitted for the offence punishable under Section 467 and 471 read with Section 120B of IPC.
(v) Accused No.8 Ashwin Mehta and Accused No.15 S.R. Gupta stand acquitted for the offence under Section 411 and 414 read with Section 120B of IPC.
(vi) Bail Bonds of all the Accused persons stand cancelled. However, as per Section 437A of Criminal Procedure Code, 1973, they are directed to execute fresh P.R. Bonds and Surety Bonds for the amount of Rs.25,000/-
each for their appearance before the Hon'ble Supreme Court, as and when notice is issued 151 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:35 ::: to them in respect of any Appeal or Petition filed against Judgment and such Bonds shall be in force for six months.
184. Accused No.1 R. Sitaraman, Accused No.3 C. Ravi Kumar, Accused No.4 Ashok Agarwal, Accused No.5 Janardan Bandopadhyay, Accused No.8 Ashwin Mehta and Accused No.12 Suresh Babu are granted three weeks time to furnish cash surety of Rs.25,000/- each.
185. Accused No.15 S.R. Gupta, Accused No.16 B.D. Raut and Accused No.17 P.Murlidharan were released on bail on furnishing PR Bonds and Cash security of Rs.25,000/- each. Same security be continued for the period of six months for their appearance before the Hon'ble Supreme Court, as and when the notice is issued to them in respect of any Appeal or Petition filed against Judgment and such Bonds shall be in force for six months.
[DR. SHALINI PHANSALKAR-JOSHI, J.] 152 SPSC-4-1993.doc ::: Uploaded on - 02/11/2018 ::: Downloaded on - 03/11/2018 01:34:35 :::