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Delhi District Court

Cc No.9/2016 Cbi vs . S.C. Pathak & Ors. Page 1 Of 95 on 7 January, 2017

                    IN THE COURT OF SANJAY GARG-I:
                  SPECIAL JUDGE-IV, (PC ACT) CBI: DELHI

     CC No. 9/2016

     Central Bureau of Investigation (CBI)

                      Versus

     1. S. C. Pathak s/o late Sh. Ram Das Pathak
        R/o 171-C, First Floor, Chhoti Barandari
        Part-II, Jalandhar (Punjab)
        Permanent Address Vill & Post -Tarsooh,
        Tehsil Shri Naina Devi, District Bilaspur, (HP).

     2. Ravi Kumar Bharti s/o Sh. Gopi Chand
        634, Ground Floor, West Permanand Colony,
        Near Kingsway Camp, Delhi-9
        Permanent Address 12, Gandhi Ashram,
        Near Kingsway Camp, Delhi 9.

     3. Dev Kumar Tyagi s/o Sh. Ramesh Chand Tyagi
        C-6/203, Yamuna Vihar, Delhi 110053.
        Permanent Address Vill & Post- Mohamedpur,
        PS Shivara, Tehsil Dhampur, District Bijnour, UP.

     Case arising out of:                  FIR No. EOU-I-2009-E-0002

     Date of FIR                : 29.04.2009
     Date of Institution        : 31.03.2010
     Date of conclusion of Final
     Arguments                  : 03.12.2016
     Date of Judgment           : 22.12.2016
     JUDGMENT

FACTS 1.0. Brief facts of the case are that on the basis of written complaint of Sh. Sanjiv Sharda, Chief Manager, Punjab National CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  1 of  95 Bank, Shalimar Bagh Branch, Delhi dated 28.4.2009, this case was registered. It is alleged in the complaint that M/s D. S. Enterprises, a sole proprietorship firm of Dev Kumar Tyagi (hereinafter mentioned as A-3) engaged in manufacturing of Ayurvedic Medicines, ittar (fragrance), essential oils etc. was sanctioned a cash credit limit of Rs. 240.00 lakhs. The loan was processed and recommended by Ravi Bharti (hereinafter mentioned as A-2), officer of the branch and sanctioned by S. C. Pathak, (hereinafter mentioned as A-1), the then Chief Manager of the branch. The credit limit was secured by primary security of stocks hypothecated to the bank. The personal guarantee of one Sh. Raghuraj Singh Yadav was also obtained. The credit facility was further secured by equitable mortgage of property of Sh. Raghuraj Singh Yadav, i.e. the agricultural land bearing Khata No. 124, Khasra No. 266 situated at village Gohari, Tehsil Chatta, District Mathura, UP. Affidavit dated 6.8.2008 was submitted by Sh. Raghuraj Singh stating that he has already taken change of land use (CLU) in respect of this land and copy of the same will be submitted to the bank shortly but no such copy was submitted. The equitable mortgage was created by the branch officials without obtaining CLU and no registered mortgage was created though advised by the advocate. There are two valuation reports dated 2.8.2008 of the bank regarding mortgaged property, one report is signed by A-1 and other is signed by A-2. In the valuation report of A-1 it is mentioned that report is assessed as per the valuation report dated 2.8.2008 given by Sh. S. N. Bansal ( Engineer) whereas CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  2 of  95 report of Sh. S. N. Bansal is dated 6.8.2008. A-2 has also shown exaggerate value of the property in his report as Rs. 320 lakhs as shown by A-1 in his report. Accordingly, report of A-2 and A-1 was prepared by them prior to issuance of valuation report by Sh S. N. Bansal. The branch officials also visited the factory premises of M/s D. S. Enterprises on 3.10.2008 and found that there was a small room and no board displaying the name of the unit was found at that place. On enquiry from the neighbourers, it was found that party was engaged in the manufacturing of dhoop/masala at a very low level and no manufacturing activities were taking place there as proposed in the loan application dated 30.7.2008.

1.1. On the date of sanction of the limit itself, the party transferred the entire sanctioned amount of Rs. 240 lakhs to two different accounts. The amount of Rs. 140 lakhs was transferred to the current account of M/s Natural Enterprises and amount of Rs. 100 lakhs was transferred to the current account of M/s V. K. Trading Co. The amount of Rs. 140 lakhs was further transferred from the account of M/s Natural Enterprises to M/s Shyam Traders, who was availing limit of Rs. 350 lakhs at Shalimar Bagh branch, Delhi. Similarly amount of Rs. 100 lakhs from V.K. Trading Company was transferred to CC account to M/s Varun International availing the limit of Rs. 389 lakhs at the branch office Shalimar Bagh These transactions in the account of M/s D.S. Enterprises are not genuine transactions and Rs. 240 lakhs was siphoned off by the party on the same day of credit facility and not utilized the amount for which it was CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  3 of  95 sanctioned. The above mentioned facts indicate that A-3 with dishonest intention has entered into criminal conspiracy and in connivance with the bank officials, i.e. A-1 and A-2 to siphon off the bank fund. The party has also diverted the bank's fund by disposing off the stock hypothecated to the bank and thus misappropriated the amount for unlawful gains and cheated the bank to the tune of Rs. 175.71 lakhs including interest upto 31.1.2009.

1.2. The investigation revealed that A-1 Chief Manager was posted and functioning as incumbent incharge at Punjab National Bank, Shalimar Bagh branch, Delhi during the period 16.6.2008 to 20.08.2008. He was competent to sanction CC limit/ loan upto Rs. 4 crores. A-2 was posted and functioning as Deputy Manager (Loans) in the same branch during the period 15.10.2007 to 5.8.2008. He was supposed to process the loan application and recommend the eligibility, after proper verification of credentials of the applicant for CC limit and the guarantor. He had to physically visit and verify the immovable property to be mortgaged as collateral security against the loan, factory premises and ensure that payments are to be made directly to the suppliers through accounts and verify the end use of the funds after sanction and disbursement of the CC limit. Both A-1 and A-2 were required to follow detailed guidelines/checklist contained in the Loans & Advances Circular No. 144 dated 6.10.2004 and Loans & Advance Circular No. 12 dated 5.2.2007 of the bank, while processing loan application for the CC limit to a party.

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1.3. The investigation revealed that A-3 proprietor of M/s D.S. Enterprises applied for CC Limit of Rs. 240 lakhs with PNB, Shalimar Bagh branch on 30.7.2008 and submitted false and fabricated audit reports and balance sheets in respect of his aforesaid firm, along with loan application form. In the application, he has mentioned that his firm is engaged in manufacture of Medicines Herbs & Aromatics Herbs, Attar Compound, Essential oils etc. He has also submitted false and fabricated audit reports and balance sheets purportedly issued by M/s M.K. Aggarwal & Co. Chartered Accountants, Darya Ganj along with his loan application, whereas no such firm existed at the given place during the relevant period. A-3 has fraudulently showed property no. 475, 3rd Floor, Haider Quli, Chandni Chowk, Delhi as the office of M/s D. E. Enterprises. In fact Sh. Suman Kishore, proprietor of M/s Jyoti Fragrances (P) Ltd. had hired the aforesaid property from Ram Dev Sharma for the period from August, 2007 to February 2009. It was used by him for the office purpose and A-3 was working as an employee of M/s Jyoti Fragrances (P) Ltd. from 2006 to 30.9.2008.

1.4. The investigation revealed that A-3 started proprietary firm in the name of M/s D. S. Enterprises engaged in manufacturing "Attar Compound" being used in Gutka in April, 2006, having factory premises at Main Patrampur Road, Jaspur, District Uddam Singh Nagar, Uttrakhand. He has also submitted application dated 19.4.2006 in the office of Assistant Commissioner, Commercial Tax Department, for registration of his firm for Central Sales Tax registration. TIN number and CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  5 of  95 Central Tax Registration certificates were issued in favour of M/s D. S. Enterprises. Investigation revealed that A-3 neither made any production nor manufactured any material during the period 2.4.2006 to 31.3.2009 as mentioned in the State Commercial Tax Certificate and Central Sales Tax Certificate. A-3 has falsely shown purported sale of Rs. 13,25,70,145/- by his firm in the trading account and profit account submitted to the bank during the year 2006-07 whereas he has filed return for sale of Rs. 2,23,30,000/- only with Commercial Tax Department of Uttrakhand for the aforesaid period. He has also falsely shown purported sale of Rs. 17,10,45,478/- for the period 2007-08. He has also falsely shown purposed sale in the trading and profit account for the quarter, i.e. 1.4.08 to 30.6.08.

1.5. The investigation revealed that on receipt of loan application dated 30.7.2008 of A-3, A-2 prepared a supersedes confidential report dated 1.8.2008 without verification about the financial status of the guarantor Sh. Raghuraj Singh from PNB, Mall road branch, Delhi with regard to satisfactory running of CC limit of Rs. 390 lakhs available in the name of his firm M/s Shree Om Trading Company. This report was accepted by A-1. A-2 submitted false immovable property verification visit report dated 2.8.2008 declaring approximate value of the property, i.e. land 4840 sq. yards in the name of Sh. Raghuraj Singh Yadav at Khata No. 124, Khasra No. 266, Village Gohari, Chhata, Mathura (UP), as Rs. 399.30 lakhs without physically visiting on 1.8.2008 and 2.8.2008, whereas as per attendance register, he was present in the branch.

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1.6. Investigation revealed that on the request of Raghuraj Singh, this property at Village Gohari, Chhata, Mathura, UP was evaluated by Sh. S. N. Bansal, registered Govt. valuer through M/s Verma & Associates for the purpose of private finance and preparation of project report. In valuation report dated 6.8.2008, the realizable value of the property was declared as Rs. 2,49,39,000/-. This report was released by Sh. S.N. Bansal to Dharmander Verma, Consultant & Proprietor of M/s Verma & Associates, who handed over the same to A-3. The said report was manipulated by A-3 by replacing page no.4 thereby showing realizable value of the property as Rs. 3,20,00,000/- instead of Rs. 2,49,39,000/-, bearing forged seal and signature of Sh. S. N. Bansal.

1.7. Investigation revealed that the said land was shown residential land, whereas sale deed dated 12.3.2008 in favour of Sh. Raghuraj Singh Yadav is for agricultural land. Sh. Rohit Verma, panel advocate of the bank has submitted that change of use of the land should be permitted/done by the Director, Town Planning (UP) in accordance with law . Before sanctioning and releasing the CC limit of Rs. 240 lakhs to M/s D. S. Enterprises, A-1 and A-2 neither they obtained certificate of "Change of Land use" from Sh. Raghu Raj Singh, guarantor nor they created registered mortgage. He simply created mortgage by depositing the original sale deed. Guarantor Raghuraj Singh was availing CC Limit of Rs. 220 lakhs in the name of his firm M/s Shree Om Trading Company from PNB, Mall road, Delhi which was enhanced to Rs. 390 lakhs on 23.2.2008, this fact CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  7 of  95 was mentioned in the loan application but no confidential report was obtained by A-1 and A-2. A-2 had submitted a false supersedes confidential report dated 1.8.2008 in respect of guarantor without obtaining confidential report.

1.8. Investigation further revealed that A-1 and A-2 did not extract the report from Credit Information Bureau (India) Ltd. (CIBIL) in respect of M/s D. S. Enterprises and M/s Shree Om Trading Company of Sh. Raghuraj Singh, guarantor before sanctioning the CC limit. A-1 also did not inspect the office premises mentioned in stock statement and accepted the stock statement dated 5.8.2008 knowing the fact that M/s D.S. Enterprises was not in existence at the given address at Delhi during the relevant period.

1.9. Investigation revealed that on 5.8.2008, when CC Limit was sanctioned to M/s D. S. Enterprises, the entire amount of Rs. 240 lakhs was credited in the account of M/s D.S. Enterprises, out of this amount Rs. 140 lakhs was transferred to the current account of M/s Natural Enterprises and further transferred to current account of M/s Shyam Traders on the same day. Investigation revealed that M/s Natural Enterprises is a proprietary firm of Sh. Adesh Kumar Tyagi, brother of A-3. Sh. Adesh Kumar Tyagi stated that the said transaction from the account of its firm took place without his knowledge and he did not sign any voucher in this regard. The GEQD opinion also confirm this fact.

1.10. Investigation further revealed that on 18.7.2008, an CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  8 of  95 amount of Rs. 150 lac was debited from the account of M/s Shyam Traders with PNB, Shalimar Bagh Branch without knowledge and authorization by Sh. Vishal Mittal or Jagmohan Mittal. On enquiry by Sh. Jagmohan Mittal about this transaction, A-2 had told him that this was due to some error in the computer system. This amount was fraudulently and unauthorizedly transferred by A-2 and subsequently an amount of Rs. 140 lakhs was deposited in the account of M/s Shyam Traders on 5.8.2008 through the account of M/s D. S. Enterprises and M/s Natural Enterprises. Thereafter, on being enquired about the balance amount of Rs. 10 lakhs and RTGS charges, A-2 had paid an amount of Rs. 10 lakhs and RTGS charges in cash to Sh. Jag Mohan Mittal.

1.11. Investigation further revealed that amount of Rs. 100 lakhs was transferred to the current account of M/s V. K. Trading Co. from the account of M/s D. S. Enterprises and from there to M/s Shree Trading Company. M/s Varun International have a CC account with PNB Shalimar Bagh Branch and have a CC limit of Rs. 389 lakhs. M/s Shree Trading Co. was having CC account with PNB Shalimar Bagh branch and had availed CC limit of Rs. 150 lakhs. These firms did not have any business dealing with M/s D. S. Enterprises. The transaction of Rs. 100 lakhs in the account of M/s V.K. Trading Company and M/s.Varun International on 5.8.2008 took place without the knowledge of Sh. Vijay Kumar, proprietor of M/s V.K. Trading Co. and he did not sign any debit voucher in this regard. GEQD report also confirmed that he is not signatory of the vouchers in respect of CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  9 of  95 the said amount from the account of M/s V.K. Trading Co. to the account of M/s Varun International.

1.12. Investigation revealed that A-2 as Deputy Manager (Loans) had financial powers to pass and verify the transaction upto Rs. 10 lakhs. Subsequently, M/s D. S. Enterprises moved a request for one time settlement (OTS) which was agreed by management committee of PNB with the condition that the compromise will have no bearing on the cases pending in CBI/Police/Other Agency and same would proceed as per law and guidelines contained in OTS policy circular No. 7/2009 dated 12.6.2009. The entire OTS amount and the account has been adjusted and closed on 30.7.2009 by way of compromise.

1.13. In the background of these facts, CBI has filed the charge sheet for offences punishable under Section 120-B read with Section 468 & 471 IPC and 13(2) read with 13(1)(d) P. C. Act against A-1 to A-3; for substantive offices under Section 13(2) read with 13(1)(d) P. C. Act against A-1 and A-2 and further for substantive offences under Section 420, 109 read with 468 and 471 IPC against A-3.

Charge 2.0. All the three accused persons were jointly charged for commission of offences under Sections 120-B IPC read with Section 420 and 471 IPC and Section 13(2) read with Section 13(1)(d) P.C. Act, to these charges, they pleaded not guilty and claimed trial.

2.1. A-2 was separately charged for commission of offences CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  10 of  95 under Sections 13(2) read with Section 13(1)(d) P. C. Act, 420, 468 and 471 IPC to which he pleaded not guilty and claimed trial. Charge for offence under Section 468 IPC was amended vide order of Ld. predecessor of this court dated 15.10.2014 and, accordingly, amended charge under Section 468 IPC was given to him on 28.10.2014.

2.2. A-1 was separately charged for commission of offences under Sections 13(2) read with Section 13(1)(d) P. C. Act, 420,468 and 471 IPC to which he pleaded not guilty and claimed trial. Charge for offence under Section 468 IPC was amended vide order of Ld. predecessor of this court dated 15.10.2014 and, accordingly, amended charge under Section 468 IPC was given to him on 28.10.2014.

2.3. A-3 was also separately charged for commission of offences under Sections 420, 468 & 471 IPC to which he pleaded not guilty and claimed trial. Charge for offence under Section 468 IPC was amended vide order of Ld. predecessor of this court dated 15.10.2014 and, accordingly, amended charge under Section 468 IPC was given to him on 28.10.2014.

Prosecution Evidence 3.0. To prove its case, prosecution examined 46 witnesses to support its case.

3.1. PW-1 B. P. Sharma was working as General Manager, (HR Division), Punjab National Bank, Delhi. He proved his sanction order Ex. PW 1/1 for prosecution of A-1.

3.2. PW-2 S.D. Sharma, was working as Dy. General CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  11 of  95 Manager, Punjab National Bank, Circle Office, The Mall, Shimla, has proved sanction order Ex. PW 2/1 for prosecution of A-2.

3.3. PW-3 Sagar Dutta was posted as Assistant Manager in State Bank of Bikaner & Jaipur, Zonal Office, Delhi in the year 2009. He joined as independent witness during investigation by CBI on 12.6.2009 and 23.6.2009. He proved Ex. PW 3/1 (colly.) sheets containing specimen handwriting/signatures of A-2; Ex. PW 3/2 (colly.) specimen handwriting/signatures of one Vijay Kumar and Ex. PW 3/3 containing specimen handwriting/signatures of one Adesh Kumar.

3.4. PW-4 Om Prakash was posted as Sr. Telephone Office Assistant (General) in the office of GM (Vig.), MTNL in 2009 and joined as independent witness by CBI on 23.6.2009. He has identified his signatures on Ex. PW 3/1 and Ex. PW 3/2 respectively.

3.5. PW-5 Vijay Kumar was posted as Sr. Supervisor in the office of GM (Vig.), MTNL in 2009. On 12.6.2009, he has joined as independent witness by CBI. He identified his signatures on Ex. PW 3/3.

3.6. PW-6 Sanjeev Sharda is the complainant. He remained posted as Chief Manager, Punjab National Bank, Shalimar Bagh Branch, Delhi from 20.8.2008 to 7.8.2009. Prior to him, A- 1 was working as Chief Manager of the said branch. He proved his complaint Ex. PW 6/1 in respect of irregularities and illegalities committed by all the three accused persons. He elaborated the procedure for process loan application for CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  12 of  95 sanction of CC Limit. He has further elaborated various deficiencies in process loan application of A-3 on the part of A-1 and A-2. He has further proved seizure memo Ex. PW 6/2 vide which circular was handed over to CBI by Sh. M. S. Rawat. He also proved seizure memo Ex. PW 6/3 vide which he had handed over various documents, i.e. loan application of A-3 (Ex. PW 6/4), agreement of guarantee (Ex. PW 6/5), agreement of hypothecation of goods and book debts (Ex. PW 6/6), two sale deeds regrading land at village Gohari, Tehsil Chhata, District Mathura (Ex. PW 6/7 & 6/8), valuation report dated 6.8.2008 of Sh. S.N. Bansal, Govt. Registered Valuer (Ex. PW 6/9), valuation report prepared by A-1 (Ex. PW 6/10), verification visit report dated 2.8.2008 bearing signature of A-2 (Ex. PW 6/11), non-encumbrance certificate dated 5.8.2008 (Ex. PW 6/12), appraisal note dated 5.8.2008 bearing signature of A-2 (Ex. PW 6/13), six debit vouchers in respect of M/s D. S. Enterprises, six debit vouchers in respect of M/s V.K. Trading Company and Natural Enterprises, four debit vouchers in respect of M/s V.K. Trading Company and M/s Natural Enterprises and four credit vouchers in respect of M/s Shyam Traders and M/s Varun International (Ex. PW 6/14 to 6/33 respectively). He has further proved forwarding letter of D.K. Kashyap, Internal Chief Auditor of PNB, Shalimar Bagh (Ex. PW 6/34) and his forwarding letter (Ex. PW 6/35), statement of accounts bearing signatures of Sh. D.K. Kashyap (Ex. PW 6/38). He has further proved passbook of M/s D.S. Enterprises (Ex. PW 6/37) with PNB Shalimar Bagh branch (Ex. PW 6/37), attendance register maintained with the CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  13 of  95 bank (Ex. PW 6/38), photo copies of the documents filed by A-3 with his signatures in the branch (Ex. PW 6/39 to Ex. PW 6/42).

3.7. PW-7 S. N. Bansal is the Govt. Approved Valuer of Properties. He proved production-cum-seizure memo Ex. PW 7/A bearing his signature. He also proved his report Ex. PW 7/A- 1 and valuation part Ex. PW 7/A-2.

3.8. PW-8 Surender Singh was working as postman, Inderaparasth Head Post Office, New Delhi. He was partially examined but thereafter he was not called.

3.9. PW-9 Imran Akhtar had purchased property no. 2242, Darya Ganj along with one Mohd. Azhar in August, 2007. In Feb. 2009, they had sold it to Mohd. Niaz. He used this property for office of his firm M/s World Fashion Inc. They had not rented it out to any Mahesh Kumar or M/s M. K. Aggarwal & Co. or any on else.

3.10. PW-10 Desh Raj, in the year 2008-9, was posted as Patwari in Tehshil Chhatta, District Mathura, UP. He proved copy of Khasra Ex. PW 10/A bearing his signature in respect of Khasra No. 266, Khatoni no. 124, Village Gohari, Tehsil Chhatta, District Mathura.

3.11. PW-11 Suman Kishore is running business in the name of M/s Jyoti Fragrances Pvt. Ltd. having registered office at village & post Dawarikhal, Distt. Pauri, Uttrakhand. He had an office at 475, 3rd floor, Haiderquli, Chandni Chowk, Delhi. A-3 was his employee in the said concern working with him during the year 2007-08. He had vacated Haiderquli Office in September, 2008 CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  14 of  95 and thereafter he did not maintain any business or any other dealing with A-3. He deposed to have seen writing and signing A-3 during his course of employment with him. He identified signatures of A-3 on Ex. PW 6/4, Ex. PW 6/6, Ex. PW 6/14 to 6/19, Ex. PW 6/39 to 42. He identified photograph of his brother Vijay Kumar on document D-85. M/s V. K. Trading Company having office at D-1145, Shop No. 4, Gali No. 7, Ashok Nagar, Delhi was in the name of his brother Vijay Kumar but he was looking after the affairs of the company. Neither he nor his brother had any dealing with A-3 or M/s D. S. Enterprises. He deposed that documents Ex. PW 6/26 to 29 does not bear signature of his brother.

3.12. PW -12 Rohit Verma, advocate was on the penal of Punjab National Bank. He identified his signatures on search report dated 5.8.2008 which is already exhibited as Ex. PW 6/12.

3.13. PW-13 Vishal Mittal was the sole proprietor of M/s Shyam Traders having office at 4195, Gali Barna, Sadar Bazar, Delhi. He used to deal with trading of milk powder. His firm had an account with PNB, Shalimar Bagh Branch. He was student at that time and bank account used to be operated by him but work of the firm used to be looked after his father Jagmohan Mittal. His firm was given CC Limit of Rs. 3.5 crores from the bank. He identified his photographs and signatures on account opening form Ex. PW 13/A. He deposed that when they obtained statement of account for the month of July, 2008, it transpired that wrong entries were mentioned therein. Total amount debited in the account due to the said entries was Rs. 1.5 crores. His CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  15 of  95 father had talked with bank officer regarding wrong debit entry and he was informed that same had occurred due to technical fault. Subsequently, some of Rs. 1.4 crores was credited in their account on 5.8.2008. The balance amount of Rs. 10 lakhs was given in cash by A-2. A-2 was the concerned officer who was officiating while account of M/s Shyam Trading was opened. A-2 had got his signatures on a bunch of papers which might have about 50-60 papers. Besides that some blank credit/debit vouchers were also got signed from him by A-2 claiming that same was banking requirement and those vouchers remained with the bank and had never been used by him.

3.14. PW-14 Jag Mohan Mittal used to look after the business of M/s Shyam Traders. Their firm had bank account with Punjab National Bank and had taken CC limit of Rs. 3.5 crores. He used to visit bank on the first day of the month and used to obtain statement of account of the proceeding month. On 1.8.2008 he approached the bank for obtaining statement of account for the month of July, 2008. He asked A-2 to inform about the used balance of the firm. Amount told by A-2 had difference of Rs. 1.5 crores. He informed that he has not used that amount. A-2 claimed that there had been some mistake in the account and the amount would be refunded back in his account within couple of days. On 5.8.2008, some of Rs. 1.4 crores was credited in the account of M/s Shyam Traders. Remaining balance of Rs. 10 lakhs was given by A-2 after 2-3 days.

3.15. PW-15 Mohd. Azhar had purchased property no. 2242, CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  16 of  95 Daryaganj along with his friend Imran Akhtar from Mohd. Idrees on 2.8.2007. Thereafter, they sold it on 2.3.2009 to Nyaz Khan. Between 2.8.2008 to 2.3.2009, his friend Imran Akhtar used to run an export company in the name of World Fashion Inc from the said property. The said property had never been let out to any Chartered Accountant. He was running Handicraft business at a distance of about 100 steps from property no. 2242 in Darya Ganj. He is not aware of any company in the name of M.K. Aggarwal & Co., Chartered Account in the said area.

3.16. PW-16 Virender Singh is the owner of shop near Inspection Bungalow PWD in Jaspur. In the year 2006, he had let out a shop to A-3 on rent of Rs. 900/- per month. A-3 remained tenant for 3 years. A-3 kept his chair, table and computer in the said shop for his work. A-3 did not run any factory from their nor he did installed any machine there. A-3 did not do any business in the said shop.

3.17. PW-17 Roshan Singh was working as Chowkidar at Inspection Bungalow for the last 10 years. He deposed that owner of the shop had let out this shop in the year 2006. No business was conducted from the said shop. Only one table and computer used to be kept there.

3.18. PW-18 Ram Dev Sharma was running Adarsh Bhojnalay at 482, Haider Quli Corner, Haweli Haider Quli, Chandni Chowk, Delhi. As per him, his wife Nisha Sharma is the owner of property no. 475, Third Floor, Haider Quli, Chandni Chowk, Delhi. In the month of August, 2007, the said property had been CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  17 of  95 let out to to one Sh. Suman Kumar at the rate of Rs. 13,500/- per month, who remained there as tenant till Feb. 2009. He does not know A-3. As per him, this property was never let out to A-3.

3.19. PW-19 Anil Bhatnagar was posted as Manager in PNB, Shalimar Bagh Branch from 19.9.2009 to 24.12.2010. He deposed that there are prescribed guidelines for the procedure to be followed in respect of loan apparitions for evaluation of immovable property. He proved copy of circular no. 12/07 dated 5.2.2007 in respect of policy on valuation of properties in respect of PNB along with annexures and appendixes mark P- 19/1.

3.20. PW-20 Anil Kumar Oberio had remained posted in Khari Baoli Branch of PNB from 2006-2010. He proved seizure memo Ex. PW 20/A bearing his signature. He proved his authorization to open the account Ex. PW 20/B on account opening form, statement of account Ex. PW 20/C, certificate under Bankers Books of Evidence Act as Ex. PW 20/C1, statement of account for the period 30.4.2007 to 18.9.2008 as Ex. PW 20/D, certificate under Bankers Books of Evidence Act as Ex. PW 20/D1.

3.21. PW-21 Nishikant Singh in the year 2009 was posted as Assistant Commissioner, Mobile Quad, Rudrpur. He proved seizure memo Ex. PW 21/1 vide which he handed over documents to CBI.

3.22. PW-22 Jitender Tyagi is distant cousin of A-3. As per him CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  18 of  95 he had worked with A-3 around 2005-06. He used to look after factory premises of A-3 situated at Jaspur, District Udham Singh Nagar. He was declared hostiled and cross-examined by Ld. PP CBI. He admitted that premises was small shop measuring 25 ft. x 12 ft. A-3 had taken the said premises on rent on 2.4.2006 and vacated the same in the year 2009. He has stated that there was a machine on which motor was installed in the said premises.

3.23. PW-23 Adesh Kumar Tyagi is the elder brother of A-3. As per him about 4-5 years back he had started work under the name of M/s Natural Enterprises and stopped it about 3 years back. His firm has an account in PNB, Khari Baoli branch. He has no knowledge in respect of debit and credit entry of Rs. 1.40 crores in the said account of his firm on 5.8.2008. As per him voucher Ex. PW 6/29 is not bearing his signature.

3.24. PW-24 Devender Singh in the year 2009 was posted as Sub Registrar, Chatta, Mathura. As per him, sale deed Ex. PW 6/7 was registered and same bears his signatures. It relates to agricultural property. He proved his letter dated 19.8.2009 Ex. PW 24/A, attested copy of rate list of the land Ex. PW 24/B. 3.25. PW-25 T. Joshi was working as Assistant Government Examiner of Questioned Documents at CFSL, Chandigarh. Documents in respect of handwriting in this case were received in his office on 14.9.2009. He proved the joint report given by him and his senior Sh. M. C. Joshi, Dy. GEQD Ex. PW 25/A. Reasons for opinion is Ex. PW 25/A-1.

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3.26. PW-26 Sh. Vijay Kumar was doing the business of Mewa & Kiryana under the name of M/s V. K. Trading Company at D- 1145, Gali No. 787, Ashok Nagar, Delhi. His firm had open an account with PNB, Khari Baoli Branch. He used to run business under supervision of his brother Sh. Sumit Kishore. He identified his photo and signature on the account opening form Ex. PW 9/DA. He denied his signature on vouchers Ex. PW 6/26 to 29. As per him, he had never business dealing with A-3 who was employee of his brother.

3.27. PW-27 V. K. Gupta was posted at PNB Shalimar Bagh Branch from Oct. 2007 till July, 2010. He was Chief Manager in the said branch from June, 2008 to August, 2008. A-2 was loan officer in the said branch and he has identified signatures of A-1 and A-2 on various documents.

3.28. PW-28 Surendra Desaraju in the year 2009 was posted as Assistant General Manager, PNB, Mall Road, Delhi. He proved seizure memo Ex. PW 28/1 bearing his signature vide which he had handed over some documents from the office record of the bank to CBI. He also proved statement of account Ex. PW 28/2.

3.29. PW-29 Y. C. Srivastava was posted at PNB, Mall Road Branch in the year 2009. He identified his signature on account opening form Ex. PW 29/1.

3.30. PW-30 N.K. Jairath was posted as Chief Manager, PNB, Mall Road Branch on 25.5.2009. He proved letter Ex. PW 30/1 bearing his signature. Vide this letter he provided certified CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  20 of  95 copies of statement of account Ex. PW 30/2 to CBI.

3.31. PW-31 Atul Aggarwal is Chartered Accountant by Profession and partner in M/s M. K. Aggarwal & Company, having office at 4598/12-B, First Floor, Ansari Road, New Delhi. He and his father M.K. Aggarwal are partners in the said firm. M/s Das Enterprises had never been their client. He deposed that documents (D-30 to D-33) Ex. PW 6/39 to Ex. PW 6/42 do not bear the seal of their firm and signatures are not of him or his father.

3.32. PW-32 Manjit Singh Rawat was posted as clerk during the year 2008-09. He identified signatures of A-2 on vouchers part of D-20 & 21 Ex. PW 32/1 to 6. He also proved seizure memo Ex. PW 30/7 vide which some print outs were handed over by him to CBI officials.

3.33. PW-33 Varun Bhatia is the proprietor of M/s Varun International. His firm had CC limit of Rs. 389 lakhs with PNB Shalimar Bagh Branch. M/s Gaurav International is owned by his Gaurav Bhatia who also had CC Limit of Rs. 175 lakhs with PNB Shalimar Bagh Branch. He identified his signature on vouchers which are part of D-20 as Ex. PW 33/1 to 33/7, on voucher (D-57) Ex. PW 33/8.

3.34. PW-34 Neha Gupta was posted in PNB Shalimar Bagh Branch in the year 2008. She proved the documents as Ex. PW 34/A (1 to 5) which are in her handwriting.

3.35. PW-35 Govind Swaroop was Chief Internal Auditor with PNB in the year 2008-09. He had conducted investigation CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  21 of  95 regarding some of the accounts maintained at Shalimar Bagh Branch of PNB. He conducted investigation of account of M/s D. S. Enterprises. He proved his investigation as Ex. PW 35/B vide which report had been handed over by him to CBI.

3.36. PW-36 Mohd. Niyaz Khan had purchased House No. 2242, Darya Ganj from Mohd. Azhar and Imran Akhtar in the year 2009. As per him he never seen or observed any Chartered Accountant by the name of Mahesh Kumar nor any firm M/s M.K. Aggarwal & Co. Chartered Accountant at 2242, Daryaganj.

3.37. PW-37 Inspt. Kishan Chander is the IO of this case. He proved FIR Ex. PW 37/1, production-cum-seizure memo Ex. PW 37/2, production-cum-seizure memo Ex. PW 35/3 to 6. He identified his signature on file Ex. PW 37/7. Supplementary statements of PW Shanjiv Sharda Ex. PW 37/8, statement of Govind Swaroop Ex. PW 37/9, statement of Suman Kishore Ex. PW 37/10, statement of Jitender Tyagi Ex. PW 37/11, statement of Vijay Kumar Ex. PW 37/12, statement of Adesh Kumar Ex. PW 37/13.

3.38. PW-38 Ram Snehi was dropped from the list of witnesses at the request of Ld. PP CBI.

3.39. PW-39 V.K. Vig was working as Deputy Manager, PNB Shalimar Bagh Branch on 7.7.2009. He identified his signatures on the file Ex. PW 37/7 (colly.). having contained specimen writings.

3.40. PW-40 M. P. Sharma was posted as SS(O) in the office of GN(Vig), MTNL, Khurshid Lal Bhawan, New Delhi. He identified CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  22 of  95 his signatures on the sheets containing specimen handwritings as Ex. PW 37/7 (colly).

3.41. PW 41 Khushi Ahmed Khjan was working as Jr. Steno (MCD), A&C Department, Ring Road. He also identified his signatures on the sheets containing specimen writings in file Ex. PW 37/7 (colly).

3.42. PW 42 Vijay Kumar was posted as SS(O) in the office of GM (Vig.), MTNL, Khursheed Lal Bhawan, New Delhi. He identified his signatures on the writings on the file Ex. PW 37/7 (colly).

3.43. PW-43 Pawan Goyal was posted as clerk in PNB, Bhikaji Gama Place, New Delhi in the year 2007 to 2010. He identified his signatures on the memo Ex. PW 37/3 and 37/5. He also identified his signatures on sheets contained in the file Ex. 37/7.

3.44. PW-44 Vinod Kumar Sr. Manager, PNB has proved the attested true copy of the circular no. 12/07 dated 5.2.2007 as Ex. PW 44/1.

3.45. PW-45 P.C. Balutia was working as Assistant Commissioner, Commercial Tax Kashi Pur, Uttrakhand in the year 2003-07. He proved spot inquiry report dated 12.5.2006 Ex. PW 45/A, statement of A-3 recorded by him as Ex. PW 45/B, note sheet in his handwriting as Ex. PW 45/C and his order Ex. PW 45/D. 3.46. PW-46 Gaurav Aggarwal is the Chartered Accountant. He had filed audit report of D. S. Enterprises on one or two occasion. He proved his audit report Ex. PW 46/1.

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STATEMENTS OF ACCUSED PERSONS 4.0. On the basis of incriminating evidence against accused persons, their statements were recorded under Section 313 Cr.P.C.

4.1. A-1 denied the entire evidence against him and took the plea of false implication in this case. He has stated that he has discharged his duties as per prescribed guidelines of the Bank in good faith and without negligence. He opted to lead defence evidence.

4.2. A-2 also denied the entire evidence against him submitting that charge sheet has been filed against him with predetermined mind. He has been implicated falsely. As per procedure loan cannot be disbursed without the ultimate sanction by Competent Authority. He was recommending officer working under supervision and instructions of A-1 and his recommendations were not binding on A-1. All funds had been released in this case through debit and credit vouches at the instructions of Chief Manager. He had complied with the bank guidance and followed the same procedure which he adopted in other loan accounts. A-3 had got compromised approved from the bank and paid entire dues of the bank without any loss to the bank. He also opted to lead defence evidence.

4.3. A-3 also denied the entire evidence against him. He has taken the plea that he was having friendly relations with Sh. Subhash Bhatia, uncle of PW-33 Varun Bhatia. Sh. Subhash Bhatia and Sh. Varun Bhatia are big businessmen and having CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  24 of  95 good will in the market. In July, 2008 Sh. Subhash Bhatia told that he is in financial difficulty and sought his help. On his request, he gave him documents of his firm, i.e. bank statement etc. He had not withdrawn any loan but he had paid the loan by selling his stock and by arranging money from his father and family. He also opted to led defence evidence.

DEFENCE EVIDENCE 5.0. A-1 and A-2 examined 4 defence witnesses.

5.1. DW-1 A. K. Ralhan, retired Chief Manager, PNB proved Inspection and Audit Division Circular dated 21.8.2008 as Ex. DW 1/A. 5.2. DW-2 Rajiv Ranjan, Manager in Inspection & Audit Division of Head Office of PNB, Rajendra Bhawan, Rajendra Place, New Delhi produced and proved the original circular no. 22/2004 dated 8.6.2004 as Ex. DW 2/1, Circular No. 37/2008 dated 2.8.2008 as Ex. DW 2/2, Circular No. 2/2009 dated 12.1.2009 as Ex. DW 2/3 and Circular No. 44/2006 dated 19.8.2006 as Ex. DW 2/4.

5.3. DW 3 Ranweer Kumar, Senior Manager in Integrated Risk Management Division (IRMD) of PNB at PNB Building Bhikaji Cama Place, New Delhi. He produced and proved Circular No. 42/2009 dated 20.3.2009 as Ex. DW 3/1, Chapter-IX of Book of Instructions on Loans as Ex. DW 3/2 (Colly.), Circular No. 103/2003 dated 27.10.2003 as Ex. DW 3/3 (Colly.), Circular No. 12/2007 dated 15.9.2007 as Ex. DW 3/4, Circular No. 125/2007 dated 15.9.2007 as Ex. DW 3/5 (Colly.).

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5.4. DW-4 Ram Kishore Sadh, Sr. Manager in Service Branch of PNB in Central Draft Payable Center (CDPC) office at Pahar Ganj, New Delhi. He has explained the various guidelines and circulars proved by other defence witnesses.

ARGUMENTS 6.0. Heard arguments of Sh. Anil Tanwar, Ld. PP for CBI, Sh. K.G. Mishra, Ld. counsel for A-1, Sh. H. K. Sharma, Ld. counsel for A-2 and Sh. Ramjee Pandey, Ld. counsel for A-3. Both parties have also filed written submissions. I have gone through the record.

6.1. Ld. PP has submitted that one of the contention raised by accused persons especially by Ld. counsel for A-2 is that one time settlement (OTS) had taken place between M/s D. S. Enterprises and PNB, entire amount with interest stands paid by A-3, accordingly in the light of observations made by Hon'ble Delhi High Court in Sanjay Bhandari & ors. vs. CBI (Date of Decision Jun 29, 2015 in Crl. M.C. 5798/2014, the court should not proceed with this case. It is stated that fact of the said case is different from the facts of the present case as in that case settlement entered between borrower/accused and bank was incorporated in the decree passed by DRT and loan was secured by accused persons for business purpose, in fact business started but due to some unforeseen circumstances, project was failed due to rejection of products and no forgery was involved in the said case. It has been stated that as per law and guidelines in this regard contained in OTS police circular CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  26 of  95 no. 7/2009 dated 12.6.2009 and in view of the decision of Apex Court in Gopakuamr B. Nair Vs. CBI & anr. [2014 Scale 659], ratio of Sanjay Bhandari's case (supra) is not applicable to the facts of the present case. It has been state that A-1 and A-2 who were working as Chief Manager and Deputy Manager respective in the said branch which recommended and sanctioned cash credit limit (CC Limit) of Rs. 240 lakhs to M/s D. S. Enterprises stands proved. The signatures of both these officials on various documents concerning sanction of CC Limit in this case stands proved by GEQD report Ex. PW 25/A. It has been stated that from the statement of PW-9, PW-15, PW-31 it stands proved that no firm in the name of M/s M.K. Aggarwal & Co. was running from property no. 2242, Darya Ganj, New Delhi. A-3 has filed audit report sated to have been signed by M/s M.K. Aggarwal & Co. along with his loan application and this fact was not verified by A-1 and A-2 as they were in conspiracy with A-3. Ld. PP has further submitted that PW-6 Sanjeev Sharda who had succeeded A-1 in the said branch, the start witness has stated that he along with D. K. Kashyap had visited the address, i.e. 475, 3rd floor, Haider Quli, Chandni Chowk, Delhi, mentioned that A-3 in his document but they did not found any factor manufacturing itar in existence in the said premises. PW-6 had also visited along with PW 35 address of the chartered accountant mentioned in the balance sheet and no such chartered accountant was found at this address. It has been stated that M/s D. S. Enterprises was also not in existence at village Jaspur address which was given in the loan CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  27 of  95 application. The statements of PW-11 and PW-18 proved this fact. It has been stated that PW- 11 has specifically deposed that he had an office at 475, 3rd Floor, Haider Quli, Chandni Chowk and A-3 was his employee in the said concern for about one year during 2007-08. To establish existence of their factory premises at Jaspur, A-3 has relied upon statements of PW-21 and PW-45 officials of UP Government but it is evidence from their statements that they have not done any physical inspection of the assessee and they have accepted verification of the firm on face value.

6.2. Ld. PP is further submitted that PW-6 has specifically stated that before finalizing relevant proposal A-1 was required to take CIBIL report regarding credit rating of the borrower and its surety to check financial credibility. It has been stated that on the receipt of loan application Ex. PW 6/4 dated 30.7.2008, A-2 prepared supersedes confidential report in respect of M/s D. S. Enterprises and this report was accepted by A-1 and A-2 submitted false immovable property verification visit report dated 2.8.2008. It has been stated that collateral security of agricultural land situated at village Gohari, Chhata, Mathura and as per PW-12 he was penal advocate of the bank. Bank was supposed to create the mortgage only after obtaining the certificate of change of use from competent authority before sanction and release of CC limit. It has been stated that market value of the agricultural land/collateral security was shown much higher by A-1 and A-2 in conspiracy with A-3. A-1 has filed false valuation report dated 5.8.2008. It stands establish that price of CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  28 of  95 this land was much less then the CC Limit sanctioned. It has been stated that A-1 malafidely accepted the valuation report dated 6.8.2008 of PW-7 though he was not instructed by the bank to conduct valuation of the mortgaged agricultural land. It has been stated that conspiracy amongst accused persons is apparent as the loan was sanctioned and disbursed on the same day on 5.8.2008. A sum of Rs. 1.4 Crores was transferred to current account of Natural Enterprises and sum of Rs. 1 Crore to current account of V.K. Trading Co. Accordingly, amount of Rs. 240 lakhs was siphoned off for the purpose other then for which it was granted. It has been stated that 6 credit vouchers Ex. PW 6/20 to Ex. PW 6/26 do not bear signature of A-3 but amount was transferred by A-2 from the CC account of M/s D. S. Enterprises to other account. PW-33, PW- 13 and PW-14 have described the modus operandi of A-1 and A-2 of transferring the funds/loan amount from one account to another. It has been stated that A-1 and A-2 have not physically inspected the mortgaged agricultural land and A-1 has prepared a false valuation report dated 2..8.2008 Ex. PW 6/10. It has been stated that A-2 was not having power to transfer beyond Rs. 10 lakhs but he transferred Rs. 1 Crore and 1.4 Crores from the account of M/s D. S. Enterprises. Both A-1 and A-2 willfully ignored the bank circular no. 42 Ex. PW 3/1 whereby it was mandated that incumbent incharge has to comply with the earlier circular no. 73 dated 31.11.2005 advising the branches to seek confirmation from the concerned chartered accountant about the authenticity of the financial information submitted to CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  29 of  95 the bank under their signature. It has been stated that prosecution has been able to prove its case against the accused persons.

6.3. Sh. K. G. Mishra, ld. counsel for A-1 has submitted that CBI has deliberately overlooked that decision in question is actually a result of multi layered decision making process in the bank. Each and every member of the multi layered decision making official is an independent officer and under an obligation to form and express his own independent opinion on all the aspect of the matter. It is stated that CBI has over looked that the decision in question by no stretch of imagination can be treated as legally invalid as prosecution has failed to establish dishonest intention which is gist of the offence under Section 13(1)(d) of P. C. Act. It has been stated that even the irregularities pointed out are admitted to be curable by the Internal Chief Auditor Sh. G.S. Bhatt (PW 35). It has been stated that material proved on record by prosecution do not remotely suggest commission of the said offences by this accused. It is stated that prosecution sanction which is the foundation of the present case is vitiated on account of gross infirmities. The sanctioning authority, i.e. General Manager, apparently did not apply his mind to the facts on record. Prosecution has failed to establish any irregularity or deviation attributable to the present accused with regard to decision for sanction of credit facility. It is stated that A-1 has performed his duty with all safeguards and precautions in the ordinary course of business. It is stated that there are allegations against A-1 CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  30 of  95 that he had accepted visited report dated 2.8.2008 of appraising officer which is alleged to be false on the basis that appraising officer has marked his presence in the attendance register. It is stated that is is admitted and clarified by PW-6 and PW-28 that any officer and go out for official work after marking his attendance and even on Saturday after 2 PM, being half working day in the bank. It is stated that A-1 has assessed the valuation of the property prior to sanction of facility as per rules and also mentioned the valuation report dated 2.8.2008. It is stated that PW-7 Sh. S. N. Bansal has confirmed in his valuation report that the land is industrial and the surrounding area around the land visited and inspected by him as industrial in nature. It is urged that internal concurrent auditor Sh. D. K. Kashyap has not pointed out any irregularity, alternation, fabrication and discrepancy in the dates of the valuation report dated 2.8.2008 of approved valuer. It is stated that approved valuer Sh. S. N. Bansal PW-7) has admitted that he had visited the plot in question some time in first week of July, 2008, and reported the report during first week of July, 2008. It has been stated that subsequently, he has stated that he had inspected the property on 6.8.2008. It is evidently clear that the valuer had fabricated/manipulated the valuation report. It is stated that all the transaction mentioned in the charge sheet were not on the part or committed by A-1. As per evidence on record, hypothetical stock was very much available during the tenure of A-1 and even on transfer of A-1 from the said branch. It is stated that account of M/s D. S. Enterprises with PNB Kharibawali CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  31 of  95 branch was opened on the basis of said address much prior to this facility. It is stated that there is no evidence on record that Sh. Suman Kishore Director of M/s Jyoti Fragrance Pvt. Ltd. had hired the premises 475, 3rd floor, Haider Quli, Chandni Chowk. IO has not collected any document showing that M/s Jyoti Fragrance Pvt. Ltd. is running its office at the said address. It is stated that A-3 was director and not employee. It is stated that visit dated 2.8.2008 of A-2 was genuine and same was accepted by A-1 as a part of his duty. In support of his submissions, he has relied upon the following judgments:-

(i) Ratnagiri Gas Power P. Ltd. Vs. RDS Project Ltd. & ors. [(2013) 1 SCC 524],

(ii) C. K. Jaffer Shariff Vs. State (Through CBI) [(2013) 1 SCC 205],

(iii) M. Narayanan Nambiar Vs. State of Kerala [AIR 1963 SC 1116],

(iv) Haridaya Ranjan Parsha Verma Vs. State of Bihar & anr. [(2000) 4 SCC 168],

(v) G. V. Rao Vs. LHV Prasad & ors. [(2000) 3 SCC 693],

(vi) S. W. Palanitkar & ors. Vs. State of Bihar & anr. [(2002) 1 SCC 241],

(vii) Mohd. Ibrhim & ors. Vs. State of Bihar& anr. [(2009) 8 SCC 751],

(viii) Major S. K. Kale Vs. State of Maharashtra [AIR 1977 SC 822],

(ix) State (Delhi Administration) Vs. N. S. Giani & ors. [AIR 1990 SC 1190],

(x) Pramatha Nath Vs. State [AIR 1951 Cal. 581],

(xi) Anil Mahajan Vs. Bhor Industries Ltd. & ors. [(2005) 10 SCC 228],

(xii) Ajay Mitra Vs. State of MP & ors. [(2003) 3 SCC 11], CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  32 of  95

(xiii) V. Y. Jose & anr. Vs. State of Gujarat & anr. [(2009) 3 SCC 78],

(xiv) State of Haryana & ors. Vs. Navir Singh [Civil Appeal No. 9030/2013],

(xv) SP Bhatnagar & ors. Vs. State of Maharashtra [AIR 1979 SC 826], (xvi) Satish Kumar Kapoor Vs. PNB & ors. [CWP No. 5998 of 2013 (O&M) D.O. D. March 04, 2016, Punjab & Haryana High Court] 6.4. Sh. H. K. Sharma, Ld. counsel for A-2 has submitted that in the charge sheet itself CBI has admitted that entire money due and payable by the borrower stood paid by him. IO PW-37 has admitted and has mentioned in the charge sheet that borrower has compromised the matter with the bank and has paid one time settlement amount with the bank. It is stated that as per guidelines of RBI dated 29.1.2003, A-3 has compromised with the bank and has paid the entire amount due. It is stated that on this very ground A-2 deserves to be acquitted. In support of his submission, he has relied upon Sanjay Bhandari & anr. Vs. CBI (Date of Decision Jun 29, 2015 in Crl. M.C. 5798/2014). It is stated that prosecution has withheld various documentary evidence which was seized but not relied upon. No reason has been given that why these relevant documents were not relied upon. It is stated that in view of the statement of PW-7 Sh. S.N. Bansal, no reliance can be placed on valuation report for the purpose of deciding as to whether the accused has committed act of criminal misconduct. It is urged that one of the allegation against A-2 is that physical inspection report made by him is bad only because no TA/DA has been claimed by him for CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  33 of  95 this visit. It is stated that since place of visit is less then 1 ½ hours away from Delhi, therefore, it was not essential for A-2 to claim TA/DA to support his visit to the spot. It is stated that evidence on recored reflect that A-1 has authorised A-2 vide the stock statement to release the drawing power of the borrower sanctioned to him in the CC limit against the said stock statement. It is in consequence of the said documents funds were permitted to be released as sought by borrower (A-3). It is urged that document Ex. PW 32/7 and oral deposition of PW-32 prove that vouchers reflecting transfer were in the knowledge of the competent authority and A-1 has approved the same. In support of his submissions he has relied upon the following judgments:

(i) C. Chenga Reddy Vs. State of AP [(1996) 10 SCC 193] and

(ii) A. Sivaparkash Vs. State of Kerala [Crl. A. No. 131/2007, D.O.D. 10.05.2015 (SC)].

6.5. Sh. Ramjee Pandey, Ld. counsel for A-3 has contended that there is no mandate of the accused in the debit vouchers. On the basis of which funds were transferred by A-2. It is stated that PW-6 has admitted that the voucher neither bear the account number nor the name of the party on the basis of which amount was transferred from the account of M/s D. S. Enterprises. It has been stated that the transferred amount of Rs. 100 lakhs by debit voucher Ex. PW 6/26 to 6/28 was improper and unjustified on the part of A-2. It has been stated that accused had a factory of two rooms measuring 27 X 15 CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  34 of  95 square feet. It has been stated that PW-22 has confirmed the existence of factory and manufacturing /production from therein. It is stated that PW-16 Virender Singh was landlord at Jaspur factory of accused and has stated that he has rented his shop in 2006 which remained with accused for three years. It is stated that PW-21 and PW-45 who are government officials have also confirmed the existence of the factory at the said premises. It has been stated that from the evidence of these prosecution witnesses, it stands established that factory unit of two rooms having around of 27 X 15 square feet of M/s D. S. Enterprises was not visited by the IO and allegations of non-existence of factory and non-production in the unit is baseless and not tenable.

6.6. Regarding Siphoning of stock and funds, it is stated that stocks were duly checked by A-2 on 5.8.2008 and by the concurrent auditor as per his report dated 12.9.2008. PW-6 has admitted that insurance charges were paid on the said stock which establish that stocks were not siphoned off. It has been stated that data/figures in the balance sheet submitted by accused are correct as per his bank account and same were not verified by the CBI. It is stated that as per prosecution, IO PW- 37 had failed to locate office of M/s D. S. Enterprises at Haider Quli. Government documents, i.e. export/import licences, telephone bill confirm that M/s D.S. Enterprises was running office from there. It has been stated that PW-9 has wrongly stated that A-3 was an accountant with M/s Jyoti Fragrances (P) Ltd. and IO had not made any attempt to check the antecedents CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  35 of  95 of M/s Jyoti Fragrances (P) Ltd. It has been stated that IO has admitted that he doe not make any attempt to ascertain the sale figures of Delhi office of M/s D. S. Enterprises and sales tax returns in Uttrakhand.

6.7. Regarding allegations of manipulated valuation report, it is stated that the guarantor Raghuraj Singh, who was owner of this property was not cited as witness but as per IO PW-37 he had interrogated Raghuraj Singh and had recorded his statement. It is stated that there is no reason and requirement for A-3 to receive the valuation report dated 6.8.2008 when the facility stood sanctioned and disbursed in his favour on 5.8.2008. It is stated that PW-7 Sh. S. N. Bansal has stated that he had prepared report during first week of July, 2008 but report is dated 6.8.2008. It is stated that statement of PW-7 is not inspiring confidence regarding submission of his report on 6.8.2008. It has been stated that A-3 had applied for credit facility for requirement of his business and had completed all the formalities for this purpose. The credit facility was secured with primary as well as collateral security, sufficient to cover the interest of the bank. It is stated that prosecution has failed to prove that at any point of time A-3 had any intention of cheating the bank and if any stock/funds were siphoned off. The facility was sanctioned as per scheme of the bank, on the verification of process of facts and figures as per documents submitted with the application by A-3.

Appreciation of Evidence CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  36 of  95 7.0 It is well settled that criminal conspiracy is often hatched in secrecy and for proving the offence substantial direct evidence may not be available. An offence of criminal conspiracy can also be proved by circumstantial evidence. However, it cannot be deemed to have been established on mere suspicion and surmises or inferences which are not supported by cogent evidence. Where the prosecution case rests merely on circumstantial evidence, the fact established should be consistent only with the hypothesis of the guilt of the accused, that is to say, they should not be explainable on any other hypothesis except that the accused is guilty. However, on the basis of evidence led by prosecution, if two views are possible, one pointing to the guilt of the accused and other to his innocence, the one in favour of the accused must be accepted. In this regard, reference can be made to Saju Vs. State of Kerala, (2001) 1 SCC 378, Sherimon Vs. State of Kerala, (2001) 10 SCC 768, P. K. Narayanan Vs. State of Kerala, (1995) 1 SCC 142, State of M.P. Vs. Sheetla Sahai, 2009 Cr. L. J. 4436.

7.1 The essence of conspiracy is unlawful combination and the complicity of the accused has to be decided after considering all the circumstances proved, before during and after occurrence. Agreement between the conspirators may also be proved by necessary implication. It is not necessary that each member of a conspiracy must know all the details of the conspiracy. Facts established should be consistent only with the hypothesis of guilt of the accused. It does not mean that each CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  37 of  95 and every hypothesis suggested by accused must be excluded by proved facts. In this regard, reference can be made to Chaman Lal Vs. State of Punjab, AIR 2009 SC 2972, R. K. Dalmia Vs. The Delhi Administration, AIR 1962 SC 1821, Muriappan Vs. State of Tamil Nadu, AIR 2010 SC 3718 and Firozuddin Basheeruddin Vs. State of Kerala, (2001) 7 SCC

596. 7.2 The case of the prosecution is that in processing, sanctioning of loan application of M/s D. S. Enterprises and disbursement of loan amount, various rules and guidelines applicable, at the relevant time, were flouted by A-1 and A-2 as they all were working in conspiracy with A-3, who was sole proprietor of M/s D. S. Enterprises, and caused financial loss to Punjab National Bank.

7.3 Before scrutinizing the procedure followed by A-1 and A-2 in processing and sanctioning loan application of A-3, let us see what are rules and regulations which A-1 and A-2 were required to follow. PW-6 Sanjeev Sharda who succeeded A-1 as Chief Manager Punjab National Bank, Shalimar Bagh branch is the star prosecution witness. He has relied upon the loan and advance circular no. 144 dated 6.10.2004 Ex. PW 1/DD, pertaining to check list, which had to be followed by concerned officers before sanctioning any loan. He has elaborated the procedure for sanctioning of loan followed by bank, which is as follows:-

(i) The borrower used to submit loan application form along CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  38 of  95 with financial data, i.e. balance sheet, profit & loss account, VAT Returns, Income Tax Returns and papers of immovable property which he offers as collateral security to the bank.

(ii) The loan officer used to process the loan application form by visiting the place of business of the said borrower and verify the credentials with reference to documents submitted by him along with application form.

(iii) Before finalising the loan proposal the concerned officer would take out the relevant CIBIL (Credit Information Bureau of India Ltd.) report, i.e. a Credit Rating Agency approved by RBI.

This report has to be taken for applicant and his surety, for checking their financial credibility.

(iii) Non-encumbrance report pertaining to immovable property offered by the said applicant/surety is obtained from the bank's approved advocate and valuation report pertaining to the property is also obtained from the bank's approved valuer.

(iv) Thereafter loan processing officer would prepare an office note in the relevant file mentioning all the above said relevant facts. Thereafter, relevant file would be sent to the sanctioning authority which will be the branch incumbent in case loan amount is up to 4 Crores and in case loan amount exceeds 4 Crores, sanctioning authority would be the Circle Officer.

(v) Considering the facts mentioned in the said note the sanctioning authority may sanction or reject the loan application. In case of sanction, a formal sanction letter CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  39 of  95 containing terms and conditions of loan is issued to the concerned borrower and the borrower is asked to complete the documentation.

(vi) After completion of documentation and sanctioning thereof, cash credit account is opened in the name of borrower wherein the borrowed amount is disbursed.

(vii) Thereafter borrower could issue cheques/ requests for disbursement in the name of suppliers for the relevant purpose for which financial facility is sanctioned.

(viii) The borrower is also bound to submit details of hypothecated goods on the monthly basis regularly.

7.4 Prosecution has relied upon the loans and advances circular no. 144 dated 06.10.2004 issued by Assistant General Manager of Punjab National Bank, Risk Management Division advising the control measures for pre-sanction credit appraisal and post sanction follow up. It has been stated by Ld. PP for CBI that the check list is prescribed to be followed by appraisal authority and sanctioning authority for pre-sanction credit appraisal and post sanction follow up. PW-1 Sh. B.P. Sharma, General Manager (HR Division), Punjab National Bank who has proved his sanction order Ex. PW-1/1 for prosecution of A-1 has proved this circular as Ex. PW-1/DD. He has deposed that Ex. PW-1/DD is a check list for pre-check appraisal and sanction of the loan application, which was to be done by concerned appraisal and sanctioning authority who were A-2 as appraisal authority and A-1 as sanctioning authority in this case. He has CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  40 of  95 further deposed that check list is meant for field functionaries i.e. officials working in the branches.

7.5 The prosecution has also relied upon the prescribed guidelines to be followed in respect of loan applications of evaluation of immovable property. To prove this, prosecution has examined PW-19 Sh. Anil Bhatnagar, Manager Punjab National Bank (Head Quarter). He has proved copy of circular no. 12/07 dated 5.2.2007 in respect of policy of valuation of Punjab National Bank along with annexure and appendixes as mark P-19/1. He has deposed that bank gets immovable property evaluated through authorised valuer which are duly approved by the bank. In case of immovable property being put forth as security for bank loan, it is the bank manager or loan officer/manager who calls for valuation of the property from the approved valuer. Payment to the valuer is made from the account of borrower. Earlier the instructions used to be given to the valuer verbally and some time in writing but now written instructions are issued. He has further deposed that in case the property put forth for mortgage does not belong to the borrower, branch official, i.e. Manager/Loan Manager must visit the property in question and meet the registered owner thereof. He has specified that as per documents in this case no written instructions has been issued to the valuer and no deduction of valuer fee was made from the account of M/s D. S. Enterprises.

7.6 Annexure 'A' of mark P-19/1 which is dated 5.2.2007 prescribed the guidelines which are required to be followed meticulously, in order to ensure that the property taken as CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  41 of  95 primary/collateral security are valued at reasonable prices. It specifically provides that immovable property is required to be valued from the bank's approved valuer. The bank's valuer is required to give valuation report on the bank's prescribed format as per annexure 'A' to ensure completion of due diligence. It further provides that incumbent can do valuation of the property by personally inspecting the property.

7.7 Admittedly by all the three accused, A-3 as sole proprietor of M/s D.S. Enterprises has submitted loan application for cash credit limit of Rs. 240 lakhs with Punjab National Bank, Shalimar Bagh, Delhi on 30.07.2008. In this application he has shown his registered office as 475, 3rd Floor, Haider Haveli Quli, Chandni Chowk, Delhi. In column no. 11 nature of business is mentioned as manufacturing of medicines herbs and aromatic herbs attar compound, essential oil etc. The various documents submitted by A-3 and important dates in processing of loan application in by A-1 & A-2 are as follows:-

(i) Loan application form Ex. PW-6/4 dated 30.07.2008 signed by A-3 as Proprietor of M/s D.S. Enterprises seeking cash credit facility of Rs. 240 lakhs. It is mentioned in this application that the guarantor Sh. Raghuraj Singh has C/C limit of Rs. 390 lakhs from PNB, Mall Road.

(ii) Agreement of Guarantee Ex. PW-6/5 signed by Sh.

Raghuraj Singh agreeing to guarantee due payment of the amount, due to the bank, in respect of said limit of Rs. 240 lakhs of M/s D.S. Enterprises.

(iii) Hypothecation of goods and book debt to secure cash CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  42 of  95 credit facility Ex. PW-6/6 dated 05.08.2008. It is mentioned in this document that stocks/goods shall be brought in and stored in their premises or godown at Chandni Chowk, Delhi.

(iv) Sale Deed Ex. PW-6/7 of the property at Khata No. 124, Khasra No. 266, area 2-210 hectare at Mauja Guhari, Tehsil Chata, jila Mathura executed by Sh. Vijay Gupta in favour of guarantor Sh. Raghuraj Singh Yadav.

(v) Sale Deed Ex. PW-6/8 vide which Sh. Vijay Gupta had purchased the aforesaid land.

(vi) The Valuation Report Ex. PW-6/9 of Sh. S.N. Bansal (PW-7) dated 06.08.2008 mentioning area of plot 4840 Sq. yards, property situated in industrial area. In Valuation Report it is mentioned that realizable value of the property is Rs. 3.20 crores.

(vii) Performa for recording the value of property assessed by incumbent incharge Ex. PW-6/10 i.e. A-1 of Shalimar Bagh Branch, PNB Bank. Here A-1 has mentioned value of property as Rs. 320 crores as per valuation report of Sh. S.N. Bansal (PW-7).

(viii) Immovable property verification visit report Ex. PW-6/11 dated 02.08.2008 of A-2 as Visiting Officer mentioning date of visit as 02.08.2008 and approximate value as per property dealers (at least two) as Rs. 399.30 lakhs.

(ix) Report of Advocate Rohit Verma giving his opinion on investigation of title and obtaining search report in respect of agricultural land measuring 0.405 out of total area of 2-210 hectare bearing Khata No. 124, Khasra No. 266 at Village CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  43 of  95 Gohari, Tehsil Chhata, District Mathura.

(x) Appraisal note Ex. PW-6/13 signed by A-2 as Recommending Officer. On page 7 A-1 has given a note "sanctioned C/C(H) & C/C (BD) limit of Rs. 240 lakhs as recommended". It contains various terms and conditions alongwith it .

(xi) Vide document Ex. PW-37/3 following documents were seized by CBI from Sh. Pawan Kumar , Clerk-cum-Cashier, PNB, Shalimar Bagh Branch, Delhi:-

(a) Customer Master Form Mark P-6/X1 dated 05.08.2008 signed by A-3.

(b) Credit Risk Rating Report for Small Loans given by PNB Mark P-6/X2 for borrower M/s D.S. Enterprises.

(c) Stock statement given by M/s D.S. Enterprises showing total stocks of Rs. 3,16,85,000/- same is signed by A-2 and A-1 has given the remarks "Yes allowed D.P. as per stock inspection". Signatures of A-1 & A-2 are dated 05.08.2008.

(d) Supersedes Confidential Report dated 01.08.2008 Mark P-6/X3 signed by both A-1 & A-2, mentioning their experience and dealings with M/s D.S. Enterprises as satisfactory.

(e) Supersedes Confidential Report dated 01.08.2008 Mark P-6/X4 signed by both A-1 & A-2 for guarantor Sh. Raghuraj Singh Yadav, mentioning their experience and dealings as satisfactory.

(f) Ex. PW-6/39 is the provisional balance sheet of M/s D.S. Enterprises as on 30.06.2008. Ex. PW-6/40 is the audit report u/s 44AB of Income Tax Act, 1961 purported to have been given CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  44 of  95 by M/s M.K. Aggarwal & Co. Chartered Accountants for M/s D.S. Enterprises. Ex. PW-6/41 is again the audit report purported to have been given by M/s M.K. Aggarwal & Co. Chartered Accountants for M/s D.S. Enterprises. Ex. PW-6/42 is the projected balance sheet of M/s D.S. Enterprises as on 31.03.2009 bearing stamp of M/s M.K. Aggarwal & Co. All these documents are signed by A-3 as Proprietor of M/s D.S. Enterprises. This fact is not disputed by A-3. Moreover, CFSL report Ex. PW-25/A proves it to be signed by A-3.

Balance Sheet & Audit Report stated to be prepared by M/s M.K. Aggarwal & Co. Chartered Accountant and submitted by A-3 with his loan application.

8.0 Ex. PW 6/39 to Ex. PW 6/42 are the provisional balance sheets of M/s D. S. Enterprises as on 30.6.2008, audit reports under Section 44 AB of Income Tax Act for the year ending 31.3.2007 and 31.3.2008 and projected balance sheet as on 31.3.2009 respectively stated to be prepared by M/s M. K. Aggarwal & Company Chartered Accountant. These documents bear stamp of M/s M. K. Aggarwal & Company Chartered Accountant and signed by one Mahesh Kumar. Copies of these documents duly attested by A-3 as proprietor of M/s D. S. Enterprises were filed by A-3 with his loan application Ex. PW 6/4. Prosecution has been able to prove that these documents are fabricated as no firm with the name of M/s M. K. Aggarwal & Co. Chartered Accountant existed at the address 2242, Darya Ganj, New Delhi mentioned on Ex. PW 6/40 and not being issued by the firm of M/s M. K. Aggarwal & Company Chartered CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  45 of  95 Accountant. In this regard prosecution has examined PW-9, PW-16 and PW-31.

8.1 PW-9 has deposed that property no. 2242, Darya Ganj, Delhi has been purchased by him along with one Mohd. Azar in August, 2007 and he sold it to Mohd. Nizab in Feb. 2009. They had not rented it out to any one. He has specifically stated that they had not rented out the said property to any Mahesh Kumar or M/s M. K. Aggarwal & Company Chartered Accountant. PW- 15 is another partner with PW-9 and he has also reiterated the version of PW-9. PW-31 Atul Aggarwal is Chartered Accountant and is partner in M/s M. K. Aggarwal & Company Chartered Accountant. He deposed that they have their office at 4598/12- B, First Floor, Asnari Road, New Delhi. He and his father M. K. Aggarwal are partners in the firm along with some other partners. He is active partner in the firm M/s M.K. Aggarwal & Company Chartered Accountant. M/s D. S. Enterprises had never been one of their client. He does not know Sh. Dev Kumar Tyagi (A-3) proprietor of M/s D. S. Enterprises. After seeing the documents Ex. PW 6/39 to Ex. PW 6/42, he has stated that seal/rubber stamp on these documents is not of their firm and the signature/initials are neither of his father nor of his. Their firm never maintained its office at 2242, Darya Ganj, Delhi. As per ICAI, which is regulatory authority in India, there can be no two firm of Chartered Accountant with the same name.

8.2 It thereby stand established that documents Ex. PW 6/39 to Ex. PW 6/42, filed by A-3 with his loan application with the bank, are forged and fabricated.

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If A-3 was having its office at 475, 3rd floor, Haider Quli, Chandni Chowk, Delhi.

9.0 In loan application Ex. PW 6/4, A-3 has given registered office address of its firm M/s D. S. Enterprises as 475, 3rd floor, Haider Quli, Chandni Chowk, Delhi. The case of the prosecution is that he was having no such office at this place, rather he was employee of Sh. Suman Kishore, who was doing business in the name of M/s Jyoti Fragrances Pvt. Ltd. It has been urged that A-1 and A-2 being in conspiracy with A-3 did not verify this fact, which they were supposed to do as per guidelines of the bank. To prove this allegation, prosecution has examined PW-11 and PW-18. PW-11 Suman Kishore has deposed that he did business in the name of M/s Jyoti Fragrances Pvt. Ltd. He started this concern in the year 2005-06. The registered office of his company is in Uttrakhand and he had office at 475, 3rd Floor, Haider Quli, Chandni Chowk, Delhi. A-3 was employee in the said concern. A-3 had worked with him for about one year in the year 2007-08. He had vacated the Haider Quli office in September 2008. A-3 did not maintain any business or any dealing with A-3 after he left his employment. Since he had seen A-3 writing and signing, he identified signatures of A-3 on various documents, i.e. PW 6/4, Ex. PW 6/6, Ex. PW 6/14 to 6/19, Ex. PW 6/39 to 7/42. During his cross-examination by A-3, he has deposed that A-3 was initially employed in his company as accountant but subsequently he became director:

subsequently, without informing him and without his consent A-3 got installed another land-line connection in his own name. As per him,when he came to know about this, he lodged protest CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  47 of  95 against it with A-3 but he did not lodge any complaint with MTNL. A-3 left his company soon thereafter. This office at Chandni Chowk was on rent and he used to pay Rs. 15,000/- rent per month in cash.

9.1 PW-18 Ram Dev Sharma has deposed that he is running Adarsh Bhojnalaya at 482, Haider Quli, Chandni Chowk, Delhi.

His wife Nisha Sharma is the owner of property no. 475, 3rd Floor, Haider Quli, Chandni Chowk, Delhi. In the month of August, 2007, this property was let out to Sh. Suman Kumar (PW-11) at the rent of Rs. 13,500/- per month. Sh. Suman Kumar remained tenant till February 2009. He does not know any Dev Kumar Tyagi (A-3) and this property was never let out to him. During the cross-examination he has stated that he has no knowledge if A-3 was one of the director of M/s Jyoti Fragrances Pvt. Ltd.

9.2 From the evidence discussed above, it stands established that A-3 was using this premises as employee of M/s Jyoti Fragrances Pvt. Ltd. at the relevant time. As per the guidelines of the bank, A-2 and A-1 being loan officers and sanctioning authority respectively, to process the loan application of A-3, were required to verify this fact which they did not do to the reasons best known to them.

The valuation report Ex. PW 6/9 of property situated at Khata no. 124, Khasra No. 266 (2-10) Hector situated at Tehshil Chata, District Mathura. 10.0 One of the main contention raised by prosecution is that valuation report Ex. PW 6/9 is of S. N. Bansal (PW-7), who was CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  48 of  95 not approved valuer of the bank, which was required as per the guidelines, and secondly the report is dated 6.8.2008 whereas CC Limit of Rs. 240 lakhs was sanctioned on 5.8.2008. It is further alleged that the valuation report Ex. PW 6/9 was manipulated by A-3 by replacing page no. 4 thereby showing the realizable value of the property as Rs. 320 lakhs instead of Rs. 2,49,39,000/-. The sanction loan amount was disbursed by the bank on the same date and the total amount was siphoned off to other accounts same day.

10.1 On the other hand, it has been contended on behalf of accused persons that PW-7 was government approved valuer. He had visited the spot and had done valuation after due diligence and out of mistake the date got wrongly mentioned as 6.8.2008 whereas correct date is found mentioned, i.e. 6.7.2008 on his office copy Ex. PW 7/A-1 and Ex. PW 7/A-2.

10.2 PW-7 has deposed that vide seizure memo Ex. PW 7/A, he had handed over his valuation report Ex. PW 7/A-1 and Ex. PW 7/A-2 to CBI. The valuation report had been prepared by him at the instance of the person concerned, who wanted to have loan from private financier, which was not for taking loan from bank or government financial institution. He has deposed that one page mark P7X of valuation report Ex. PW 6/9 does not bear his signature and it is quite different from Ex. PW 7/A-2, which is office copy of the said report. He has deposed that even contents of mark P7X are different from Ex. PW 7/A-2. Even date of making valuation as mentioned in his report Ex. PW 7/A-1 is the correct date which appears to have been CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  49 of  95 altered in Ex. PW 6/9. He has testified that he has not seen any order regarding change of land use at the time of inspection of the property for the purpose of valuation. The surrounding area around the land visited and inspected by him was industrial and he was informed by owner Raghu Raj that the land was to be used for industrial purpose. He has already applied for change of the land use. The land visited by him was a vacant land with boundary wall and with small structure therein. During his cross-examination, he has stated that he had personally visited the land in question and there were number of factories situated within 500 meters from the distance of plot in question but he cannot tell name of those factories or industrial premises.

10.3 It is relevant to mention here that Ex. PW 7/A-1 is stated to be office copy of the valuation report stated to have been prepared by PW-7 and handed over to CBI vide production-cum- seizure memo dated 6.10.2009 Ex. PW 7/A. On it date of making valuation is mentioned as 6.7.2008, whereas at page 3 there is declaration that he had personally got inspected the property on 6.8.2008. The same date is mentioned at the bottom on the left side of this page and above his signature on the right side of the page. Even on Ex. PW 7/A-2 (valuation part-2), the same date 6.8.2008 appears above signatures of PW-7.

10.4 PW-7 has disputed his signature on page 4, i.e. mark P- 7X of Ex. PW 6/9. This signature was not sent for comparison by the prosecution to substantiate its allegation that A-3 manipulated this report by replacing page 4 showing the realizable value of the property as Rs. 320 lakhs instead of Rs.

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2,49,39,000/-. The report of handwriting expert might have clarified that who had signed page 4 of Ex. PW 6/9.

10.5 From the statement of PW-7 and other documents discussed above following facts emerge:

(i) PW-7 was not the bank approved valuer, which was one of the requirement of the guidelines of the bank in this regard.

(ii) He was not asked by the bank to do valuation rather as per him he did valuation of the property at the instance of A-

3.

(iii) The valuation report Ex. PW 7/A1 and 7/A2 is not as per performa for valuation report in respect of immovable property which is marked P7/DA prescribed for this purpose by the bank.

(iv) As per sale deed Ex. PW 6/7 and Ex. PW 6/8, the said proeprty is agricultural land. As per PW-7 owner/guarantor Raghu Raj Singh had telephonically informed that land was to be used for industrial purpose and he had already applied for change of this land use. Without any land use certificte issued by appropriate authority, this land could not be taken as industrial instead of agricultural land which is mentioned in the sale deeds.

(v) As per the sale deed Ex. PW 6/7 valuation of this property is mentioned as Rs. 35 lakhs, whereas as per valuation report Ex. PW 6/9 filed with the bank, the price of the land is exorbitantly shown as Rs. 3,77,52,000/- to suit CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  51 of  95 the requirement of A-3 and other accused persons.

(vi) During his cross-examination PW-7 has stated that he had noticed (while deposing before the court) that date of inspection of the property had been mistyped as 6.8.2008 instead of 6.7.2008 in his report Ex. PW 7/A1. But in his cross-examination he has admitted that he had handed over the report on 6/7 August, 2008.

10.6 From the observations made above, it stands established that valuation report Ex. PW 6/9 was manipulated by A-3 and since he was in agreement with A-1 and A-2, due to this reason, A-1 and A-2 without cross checking its credentials and ignoring other deficiencies in it based their valuation report on. The valuation report Ex. PW 7/A1 and 7/A2 handed over by PW-7 to CBI vide production-cum-seizure memo Ex. PW 7/A, is also self contradictory, as in column no.1 date of making valuation is mentioned as 6.7.2008 whereas above the signature on the last page date is mentioned as 6.8.2008. From these circumstances only conclusion which can be drawn is that valuation report Ex. PW 6/9 was dated 6.8.2008 and submitted by PW 7 on the same date.

10.7 PW 6/12 is the second report dated 5.8.2008 given by PW-12 Sh. Rohit Verma being the panel advocate of Punjab National Bank. As per him, the job of preparing search report was so done by him on instructions from A-2. As per column no. 7 of his report under Section 31(i) of Secularization & Reconstruction of Financial Assets & Enforcement of Security CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  52 of  95 Interest, 2002, bank cannot sell the agricultural land. The provisions of the said Act do not apply where security interest has been created in agricultural land. It further provides that in the event of change of the land use, the said agricultural land is changed into commercial/habitation purposes, then a mortgage can be created by depositing of original title deed with the lending company.

10.8 In this case there is no change of land use issued by appropriate authority regarding this land, statement of PW-7 is found unacceptable that it was industrial land. Under the Secularization & Reconstruction of Financial Assets & Enforcement of Security Interest, 2002, the agricultural land could not be mortgaged with the landing company, i.e. Punjab National Bank.

10.9 PW-10 Desh Raj was posted as patwari village Gohari, Tehsil Chata, District Mathura in the year 2008-09. He has proved copy of khasra as Ex. PW 8/A in respect of Khasra No. 266, Khatoni no. 124, Village Gohari, Tehshil Chata, District Mathura. As per him, it was an abadi land. As per copy of rate list, rate of abadi land in village Gohari was Rs. 2,400 to 3,000/- per square meter in the year 2008-09. He has deposed that rate list was prepared by the concerned collector of the area. He has specifically stated that sale deed Ex. PW 6/7 relates to same land as mentioned in Ex. PW 8/A. It was wrongly mentioned as agricultural land in Ex.PW 6/7. As per rate list, rate of agricultural land of village Gohari was Rs. 6,50,000/- to Rs. 7,50,000/- per acre. During his cross-examination he has CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  53 of  95 admitted that this land is adjoining the national high way and in adjoining lands factories are running. He has volunteered that there is abadi, i.e. residences also.

10.10 Be it abadi land or agricultural land but it was not industrial land.

10.11 The result of the above discussion is that ignoring all the guidelines, the provisions of Secularization & Reconstruction of Financial Assets & Enforcement of Security Interest 2002, valuation report of PW-7 was accepted by A-1 and A-2 being in agreement with the beneficiary of CC Limit, i.e. A-3.

Factory premises at main Patrampur Road, opposite Anaj Mandi, Jaspur, District Kashipur, Uttarakhand 11.0 The case of the prosecution is that there existed no factory premises at village Jaspur as claimed by A-3 and being in agreement with him, both A-1 and A-2 ,had not verified this fact which they were supposed to do before the sanction of loan to A-3. It has been stated that PW-6 who had succeeded A-1 in Shalimar Bagh Branch of Punjab National Bank,had himself visited village Jaspur at Kashipur to locate the factory premises but his statement proved that no such factory ever existed there.

11.1 On the other hand, Ld. counsel for A-2 more specifically Ld. counsel for A-3 stated that prosecution witness, i.e. PW-16, PW-17 and PW-22 proved the existence of factory premises at village Jaspur as claimed by A-3.

11.2 As per PW-6, he along with Sh. D. K. Kashyap, Chief Concurrent Internal Auditor had visited 475, 3rd Floor, Haidar CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  54 of  95 Quli, Chandni Chowk, Delhi, office of M/s D. S. Enterprises for checking hypothecated stock in connection with the loan in question. There they met A-3 but hypothecated stock mentioned in the relevant loan document was not there. On inquiry A-3 told them that hypothecated stock mentioned in the loan documents was not kept there but was kept in the factory situated at main Patram Pur Road, opposite Anaj Mandi, Jaspur, District Kashipur, Uttarakhand. Thereafter on 3.10.2008, he along with D. K. Kashyap, Chief Concurrent International Auditor visited main Patram Pur Road, Jaspur but they did not find any factory manufacturing ittar (fragrances) and essential oils etc. in existence. On enquiry from the neighbors in the area, they learnt that no such factory ever existed at the said address.

11.3 As per PW-16 Virender Singh, he owned a shop near Inspection Bungalow PWD in Jaspur. In the year 2006, he had let out the shop to A-3 on rent of Rs.900/- per month. A-3 has remained tenant under him for a period of about 3 years. A-3 had kept a chair, table and a computer in the shop for his work. He did not run any factory from there nor did he install any machinery there. He did not do any business in the said shop. During his cross by A-3, he stated that shop rented out to A-3 was measuring 15 x 27 feet.

11.4 PW-17 Roshan Singh was working as chowkidar at the Inspection Bungalow. He has deposed that he knows Virender Singh (PW-16) who has a shop near Dak Bungalow. Virender Singh had let out his shop in the year 2006 and it remained on rent for about 3 years. No business was conducted from the CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  55 of  95 said shop.

11.5 PW-22 Jitender Tyagi is another witness examined by prosecution who has deposed that A-3 is his distant cousin brother and he had worked under him from around 2005-06. He used to look after the factory premises of A-3 situated in Jaspur in front of PWD Bungalow. He was initially paid salary of Rs. 1500/- per month which was raised to Rs. 2200/- per month. He does not remember the size of the premises. There was a Copper 'DEG" in the premises and something used to be prepared in it. This witness was declared hostile and cross- examined by Ld. PP CBI. During his cross-examination he has admitted that it was a small shop measuring 25 X 12 feet. A-3 had taken the premises on rent on 2.4.2006 and vacated the same in 2009. He has denied the suggestion that no machine was installed in the factory premises. He had seen some person coming with A-3 and operating the said machine. A form duly filled by A-3 was given to him. He used to fill the form, copying contents thereof and used to take the same to railway station for dispatch of articles contained in small 'dibbis'.

11.6 The other allegations against accused persons is that M/s D. S. Enterprises was in fact not running any factory at village Jaspur, it had got registered with local sales tax department and had taken TIN number, had filed sale tax returns with the sole motive to create evidence that it actually was doing business from there. It has been alleged that A-3 has shown purported State and Central sales in respect of his firm M/s D. S. Enterprises in monthly/quarterly returns for the CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  56 of  95 year 2006-07, 2007-08 and 2008-09 with the office of Assistant Commissioner, Commercial Tax, Kashipur. A-3 had falsely shown huge amount of purported sales by M/s D. S. Enterprises in the trading account and profit account submitted to the bank during this duration. The Ld. PP has submitted that A-1 and A-2 were under duty to check the sales figure reflected by A-3 in his balance sheet submitted with the complainant bank along with his own application but they being in agreement with A-3 deliberately ignored it.

11.7. Per contra, Ld. Counsel for A-3 submitted that M/s D. S. Enterprises was very well running a factory, having two rooms measuring 27 X 15 ft. and was manufacturing hina essence, herbs, ittar and essence oil etc. Ld. counsel has urged that books of account/balance sheets of M/s D. S. Enterprises were correctly prepared and IO has admitted of having not taken into account the sales routed from shop-cum-office at Delhi. It has been submitted that balance sheet (D-30 to D-33) were duly verified by A-2 from the books of account maintained by M/s D. S. Enterprises during the processing of the proposal of loan.

11.8 To cover this aspect, prosecution has examined three witnesses, i.e., PW-21, PW-45 and PW-46.

11.9 PW-21 Nishikant Singh, in the year 2009, was posted as Assistant Commissioner Mobile Squad, Rudarpur, with additional charge as Assistant Commissioner, Kashipur, Sector-

1. He identified his signature on seizure memo Ex. PW 21/1 vide which he had handed over relevant documents under orders of CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  57 of  95 his commissioner to CBI. He deposed that file handed over by him to CBI contain documents in respect of registration documents of M/s D. S. Enterprises and returns in respect of commercial tax filed by the said concern in their office.

11.10 PW-45 Sh. P. C. Balutia was posted as Assistant Commissioner, Commercial Tax, Kashipur, Uttarakhand from July, 2003 to July, 2007. As per him any unit engaged in commercial activity with annual turnover of more than Rs. five lakhs is compulsorily required to be registered with Commercial Tax Department. As and when a unit apply for registration with the Commercial Tax Department, it is issued Trade Index Number (TIN). While applying no document regarding turnover is required to be filed and only estimated turnover is required to be informed to the department. After application is received and before issuance of TIN, the department got conducted a spot enquiry. He had conducted a spot enquiry in this matter on 12.5.2006, copy of which is Ex. PW 45/A. The party concerned moved application dated 19.4.2006 for registration with the department. The estimated turnover of goods declared therein was over Rs. five lakhs. It has been shown to be manufacturing unit but as per record at the time of moving application, the party concerned had yet not purchased the machinery. Before conducting spot enquiry, as per procedure, he had recorded statement of A-3 which is Ex. PW 45/B. Vide his order Ex.PW 45/C, he had ordered for issuance of TIN number to the applicant. The party had applied for registration under the Central and State Tax Department. The registration unit for CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  58 of  95 Central and State Tax Department are separate but registration under both are separately issued by the same authority. Only provisional registration for small scale industry in respect of M/s D. S. Enterprises was done as per record and there is no copy of permanent registration certificate in that regard.

11.11 PW-45 has further deposed that as per spot enquiry report Ex. PW 45/A there was no furniture or machinery in the two rooms unit. As per claimed information, manufacturing would start within 15 days. Commercial Tax returns are required to be filed on monthly and quarterly basis, depending on the turn over and on annual basis by all the registered units with the department. Details of purchases, sale along with profit and loss account, trading account are required to be filed along with annual returns. This witness was shown file D-39, D-41 to D-43. As per him, file D-39 of M/s D. S. Enterprises is in respect of Central Sales Tax for the year 2006-07, D-41 is in respect of Central Sales Tax for the year 2007-08, D-42 is in respect of Commercial Tax for the year 2008-09 and D-43 is in respect of Central Sales Tax for the year 2008-09. He has further stated that there is no document in respect of sales/purchases in this file and there is no assessment order on record in these files.

11.12 PW-46 Gaurav Aggarwal is Chartered Accountant doing private practice since 2000. As per him, audit in respect of VAT of a company is done by him under Uttarakhand VAT Act. He had conducted audit of account of M/s D. S. Enterprises on one or two occasions. Ex. PW 46/1 is his audit report of M/s D.S. Enterprises. He has identified signatures of A-3 at point 'D' on CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  59 of  95 his report. As per his report total sale during this period was Rs. 1,61,50,000/-. The sale figure mentioned in the report are on the basis of documents furnished by client. There is nothing in the report to the effect that company was working as on the date of preparation of audit report.

11.13 In the charge sheet CBI has prepared chart of the sales shown by A-3 on behalf of M/s D. S. Enterprises in different financial years, in balance sheets submitted to PNB and sales shown in returns filed by him before Commercial Tax Department. For better appreciation of fact, said chart is reproduced as follows:-

Financial Sales   shows   in   the Sales   shown   in Difference   (In year/ Financials Returns   filed Rs.)   (False Period submitted   to   PNB before   the inflated (In Rs.) commercial   Tax turnedover) Department   (In Rs.) 2006­07 13,25,70,145.00 2,23,30,000.00 11,02,40,145.0 0 2007­08 17,10,45,478.00 1,61,50,000.00 15,48,95,478.0 0 01.04.08 3,50,55,123.00 2,53,00,000.00 97,55,123.00 to 30.06.08 11.14 Perusal of the balance sheet for the year ending 31.3.2007 (part of Ex. PW 6/40), balance sheet for the year ending 31.3.2008 (part of Ex. PW 6/41) and balance sheet for the period 30.6.2008 (part of Ex. PW 6/39) reveal that sales CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  60 of  95 figure mentioned in the chart above are found reflected in it. In above paras, these provisional balance sheets have been held to be fabricated as M/s M. K. Aggarwal & Co. Chartered Accountant, who are shown to have prepared these documents, have refused to have dealt with the accounts of M/s D.S. Enterprises or to have signed these documents.

11.15 From the statements of various witnesses discussed above, at the maximum, it can be taken as proved that A-3 had rented out a small shop measuring 25 x 12 ft in front of PWD Bungalow at Jaspur, had registered M/s D.S. Enterprises as a manufacturing unit, had taken TIN number from the State authority and used to file returns with the concerned department. If actually, he was doing any manufacturing activity there or was indulging in sale/purchase of any material or finished goods, no documentary evidence has come on record to this effect. PW-45 has specifically stated that none of the files in respect of central sales tax of M/s D. S. Enterprises, during the relevant period, contain any document in respect of sale/purchase in the said file. PW-46, who is chartered accountant and had conducted audit of the accounts of M/s D. S. Enterprises has also specifically stated that the sale figure mentioned in the audit report Ex. PW 46/1 filed by him is mandatory document furnished by the client and there is nothing in the report to the effect that the company was working as on the date of preparation of audit report. The various files handed over by PW-21 to CBI contain sales shown in returns filed before Commercial Tax Department by A-3, in the balance CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  61 of  95 sheets. But prosecution has failed to prove all these files.

However, from statement of PW-46, it stands proved that for the financial year 2007-08 sales were shown as Rs. 1,61,50,000/-.

11.16 Ld. counsel for A-3 has further submitted that data/figure in the balance sheets submitted by accused are correct as per his books of account which were not verified by prosecution during investigation. It has been stated that IO (PW-37) has stated that he had tried to locate office of M/s D. S. Enterprises at Haider Quli but no such office could be found there but PW-6, who is complainant in this case being senior officer of Punjab National Bank has admitted that he used to visit the address of A-3, i.e. 475, 3rd Floor, Haider Quli, Chandni Chowk, Delhi. Ld. counsel has further pointed out that PW-6 during his cross- examination has admitted that he had never asked for books of account of sales tax report from A-3 and cannot says if actual facts and figures in the balance sheet were factually correct. It has been stated that for preparation of balance sheets, books of account were handed over to Varun Bhatia, who was close to the said Chartered Accountant i.e. M/s M.K. Aggarwal & Co. and same were found to be in order as per books of account.

11.17 If M/s D. S. Enterprises was doing substantial business at his office address at Haider Quli, same could have been proved by producing books/ledger in this regard. But no such evidence in this record has been brought on record by A-3.

11.18 In view of the evidence discussed above, it appears that A-3 was fudging the balance sheets by filing sales tax return CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  62 of  95 with the State Government without actually manufacturing anything or indulging into any sale of any material. However, even if for the sake of arguments, the sales shown by him before Commercial Tax Department of State of Uttarakhand for the financial year 1.4.2008 to 30.6.2008 are accepted, the sales shown by him in the balance sheets filed along with his loan application are showing exorbitant sales which A-2 being loan officer and A-1 being sanctioning authority of the complainant bank, while posted at Shalimar Bagh branch, were required to verify.

Superseding Confidential Report of M/s D. S. Enterprises and guarantor Raghu Raj Singh Yadav 12.0 It has been alleged by the prosecution that as per the requirements and guidelines of the bank for sanction of CC Limit, both A-1 and A-2 were required to give superseding confidential report regarding M/s D. S. Enterprises and guarantor Raghu Raj Singh. It has been stated that satisfactory report mark P6/X3 & P6/X4 have been given by both these persons mentioning that enquiry was made from Varun Bhatia (PW-33) and Jag Mohan Mittal (PW-14) regarding these two entities and both stated that both these entities are having good reputation. It has been stated that CIBIL report which was mandatory was not sought regarding the guarantor as his firm M/s Shree Om Trading Company was having CC Limit of Rs. 390 lakhs from Mall Road branch of Punjab National Bank.

12.1 PW-14 Jagmohan Mittal used to look after business of M/s Shyam Traders opened by his son Vishal Mittal ((PW-13) CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  63 of  95 having its office at 4195, Gali Barna, Sadar Bazar, Delhi. This firm had bank account with Punjab National Bank, Shalimar Bagh branch and had taken CC Limit to the extent of Rs. 350 lakhs. This witness has specifically stated that their firm had no trading with M/s D. S. Enterprises or any dealing with A-3. Similar, is statement of PW-33 Varun Bhatia regarding M/s D. S. Enterprises. During his cross-examination, he has stated that he has no knowledge if M/s D. S. Enterprises was dealing in fragrances. He has denied the suggestion that he had introduced M/s D. S. Enterprises with Punjab National Bank, Shalimar Bagh branch. From this, it stands established that in Supersedes Confidential Report mark P6/X3 of M/s D. S. Enterprises, names of PW-33 and PW-14 were wrongly mentioned stating that they have acknowledged the reputation of M/s D. S. Enterprises as good.

12.2 PW-30 Sh. N. K. Jairath was posted as Chief Manager, Punjab National Bank, Mall Road branch on 25.5.1990. He has proved Ex. PW 30/1, i.e. certified copy of statement of account of M/s Shree Om Trading Company. He has also proved statement of account of M/s Shree Om Trading Company Ex. PW 30/2 bearing signature of Manager (Loans) Ms. Daman Ghai. As per him on 31.7.2008, as per Ex. PW 30/2, there was debit to the tune of Rs. 3,90,24,097/- in this account. During his cross-examination, he has stated that as per Ex. PW 30/2 balance as on 5.8.2009 was in debit of Rs. 3,82,41,797/- in this account. He has admitted that there had been debit balance of around Rs. 4.00 crores at various stages during the relevant CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  64 of  95 period in this account. From statement of PW-30 it stands established that there was debit balance in the account of the firm M/s Shree Om Trading Company of the guarantor Raghu Raj Singh to the tune of Rs. 390 lakhs at the relevant time. If A-1 and A-2 had taken CIBIL report from the Mall road branch of Punjab National Bank, they might have come to know about the financial status of the firm of the guarantor. But A-1 and A-2 being in agreement with A-3 did not seek the said CIBIL report regarding the firm of guarantor Raghu Raj Singh.

Siphoning of funds 13.0 The case of the prosecution is that on 5.8.2008 when CC Limit of Rs. 240 lakhs was sanctioned to M/s D. S. Enterprises, same day entire amount of Rs. 240 lakhs was credited in the account of the firm and transferred to two accounts. Rs. 140 lakhs was transferred to current account of M/s Natural Enterprises vide three debit vouchers and Rs. 100 lakhs was transferred to current account of M/s V. K. Trading Co., same day vide three debit vouchers. All these debit vouchers were passed by A-2 exceeding his financial powers.

13.1 Ld. PP CBI has submitted that both A-1 and A-2 being in charge and senior officers of Shalimar Bagh branch of Punjab National Bank were indulging into diversion of funds from one account to another to accommodate the different firms and account holders by abusing their official position and causing financial loss to the bank. It has been urged that both A-1 and A-2 deliberately ignored the fact that same day when CC limit is CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  65 of  95 sanctioned, funds are being transferred by A-3 to different firms, are not being utilized for the purpose for which said CC limit was sanctioned.

13.2 PW-6 has deposed that as per pass book Ex. PW 6/37 of M/s D. S. Enterprises, entire loan amount of Rs. 240 lakhs was transferred to other accounts same day by A-2, who had passed the relevant transfer vouchers without verifying the end use of the loan amount. He has proved six debit vouchers all dated 5.8.2008 as Ex. PW 6/14 to Ex. PW 6/19 vide which A-2 had transferred Rs. 40 lakhs, Rs. 40 lakhs, Rs. 50 lakhs, Rs. 40 lakhs, Rs. 50 lakhs and Rs. 20 lakhs respectively under his signatures. Out of this amount sum of Rs. 100 lakhs stood credited in the account of M/s V. K. Trading Company vide three credit vouchers Ex. PW 6/20 to Ex. PW 6/22 dated 5.8.2008. The sum of Rs. 140 lakhs stood credited to account of M/s Natural Enterprises vide three credit vouchers Ex. PW 6/23 to Ex. PW 6/25 by A-2.

13.3 To substantiate the allegations of diversion of funds from different accounts by different firms in Shalimar Bagh branch, prosecution has examined PW-13, 14 and PW-22. PW-13 Vishal Mittal is proprietor of M/s Shyam Traders which deals with trading of milk powder. He had current account with Punjab National Bank, Shalimar Bagh branch and had CC limit of Rs. 350 lakhs from the bank. As per him he was a student, the bank account opened in his name was operated by him but work of M/s Shyam Traders was looked after by his father Sh. Jagmohan Mittal (PW-14). PW-14 has deposed that he used to CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  66 of  95 visit bank on the first day of the month and used to obtain statement of account of the preceding month. He had approached the bank on 1.8.2008 for obtaining statement of account for the month of July 2008, A-2 did not handover the statement of account to him and told him that the same would be given in 2/3 days. He then asked him to inform him about the used balance of the account of his firm. The amount told by A-2 had difference of Rs. 1.5 crores. He informed A-2 that he had not used that amount, A-2 told that there had been some mistake in the account and the amount would be reflected back in his account within couple of days. On 5.8.2008, sum of Rs. 140 lakhs was credited in the account of his firm and remaining balance amount of Rs. 10 lakhs in cash was given by A-2 after about 2-3 days. Around 10/11.8.2008, he received statement of account which revealed that Rs 150 lakhs had been debited on 18.7.2008 in 4 transactions. The bank vouchers which had been got signed earlier by A-2 at the time of opening of the CC limit possibly were used to transfer these funds. He has stated that vouchers (no. 0419 to 0422) dated 18.7.2008 are not in his handwriting and had not been presented by him in the bank. During his cross-examination he has stated that sum of Rs. 140 lakhs which was subsequently credited to account of his firm had come from other account. He has further stated that Rs. 8000/- was deducted from his account as bank charges and no receipt was executed by him when Rs. 10,08,000/- was given by A-2.

13.4 PW-22 Jitender Tyagi is the younger brother of A-3 and CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  67 of  95 doing business in the name of M/s Natural Enterprises in whose account Rs. 140 lakhs was credited after debiting the same from the account of M/s D. S. Enterprises on 5.8.2008. As per him, he has no knowledge in respect of credit and debit entries of Rs. 140 lakhs in the account of his firm.

13.5 PW-33 Varun Bhatia is the proprietor of M/s Varun International. As per him, he had taken CC limit of Rs. 389 lakhs for his firm from Punjab National Bank, Shalimar Bagh branch. He was a regular visitor to Punjab National Bank, Shalimar Bagh branch. On 31.7.2008 he had met both A-1 and A-2 in the bank. He had gone there for the purpose of aforesaid account. A-1 and A-2 had asked him Rs. 100 lakhs but he informed he did not have that much balance in his account. He claimed that they required the money for M/s Bharat Trading Company of Kapil Gupta. They had asked him for transfer of the said fund by cheque from his account. On his refusal, he was asked by them to talk to Sh. Sikka, proprietor of M/s Sheel Trading Company. He had a telephnic talk with Mr. Sikka and told him about it. Mr. Sikka informed him that he was at Vaishno Devi and would give cheque on return. A-2 claimed that amount could be debited by way of debit voucher and the same was already lying with them with signatures of Mr. Sikka. Thereafter, amount was debited by A-2 with consent of Mr. Sikka from the account of M/s Sheel Trading Company. The said amount was credited in the account of his firm M/s Varun International. Accordingly on being asked by A-1 and A-2 he had issued the cheque of Rs. 100 lakhs in favour of M/s Bharat Trading Company. He has identified his CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  68 of  95 signatures on vouchers Ex. PW 33/8. Both A-1 and A-2 had assured him that Rs. 100 lakhs would be credited back in his account in 2-3 days. He had again met A-1 on 3.8.2008 in this regard, who again assured him that the amount would be credited in his account in about 2 days. On 5.8.2008, the amount was accordingly credited in his account and he was telephonically informed by A-2 about. He went to the bank and transferred the said amount of Rs. 100 lakhs from his account to that of M/s Sheel Trading Company by way of debit voucher. He had no trading or relation with M/s Bharat Trading Company and he does not know any Vishal Mittal, Jagmohan Mittal, Adesh Kumar Tyagi and Vijay Kumar. He never had any business dealings with them. During his cross-examination he has admitted that no financial loss was suffered by him or by his firm M/s Varun International at the instance of the bank officials. But from statement of this witness it stands established that both A-1 and A-2 were indulging into diversion of funds from one account to another which is certainly not permissible as per rules and regulations governing transaction of business in the bank.

13.6 PW-32 Manjit Singh Rawat,who was posted in Punjab National Bank, Shalimar Bagh as clerk during the period 2008- 09 is an important witness.He throws light on the agreement between both bank officials, i.e. A-1 and A-2 with A-3 to whose firm CC limit of Rs. 240 lakhs was sanctioned. He has deposed that in August, 2008, A-1 was branch manager of Shalimar Bagh branch and A-2 was loan officer. Vouchers Ex. PW 6/14 to 6/33 CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  69 of  95 and further six vouchers bearing signatures of A-2 i.e. PW 32/1 to 32/6 (part of D-20 & D-21) were entered by him in the computer system of the branch, being handed over to him by A- 2 for this purpose. It is relevant to mention here that these are vouchers vide which Rs. 240 lakhs was transferred from the account of M/s D. S. Enterprises on 5.8.2008 to the account of M/s V.K. Trading Company and M/s Natural Enterprises. PW-34 Neha was also posted in Punjab National Bank Shalimar Bagh branch in the year 2008. As per her, she used to work in loan section and A-2 was his immediate superior officer. She has further deposed that five forms Ex. PW 34/A (1 to 5) are in her handwriting. These were filled by her as per instructions of A-1. Particulars were filled by her as told to her by A-1. It is relevant to mention here that vide these forms through RTGS an amount of Rs. 150 lakhs was transferred from the account of M/s Shyam Traders to four different accounts. It is further relevant to mention here that PW-13 Vishal Mittal, who is proprietor of this firm and PW-14 Jagmohan Mittal, who was looking after the business of this firm have stated that the amount of Rs.150 lakhs was transferred from this account without their consent. On form Ex. PW 34/A-1 to A-4, only name of applicant as Shyam Traders is mentioned and same are not signed by any one. Ex. PW 34/A-5 is a consolidated transfer voucher bearing signature of PW-13 Vishal Mittal which is Ex. PW 13/DB. PW-13 has admitted his signature on it but has stated that none of the other writing is in his handwriting. He has further stated that it was only blank voucher which had been got signed from him by CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  70 of  95 A-2 while opening the account.

13.7 The other evidence which has come on record to establish the meeting of mind of A-1 and A-2 for diversion of funds from the account of M/s D. S. Enterprises and other accounts of different firms having CC account in the branch is that A-2 being deputy manager was having limited financial powers to pass/verify transactions, however, he unauthorizedly transferred Rs. 100 lakhs and Rs. 150 lakhs from the account of M/s D. S. Enterprises through various vouchers.

13.8 Ex. PW 6/43 is the loan & advances circular no. 57 dated 28.4.2008 laying down loaning powers and guidelines for exercising such powers at various levels. Clause 34 provides in exceptional and deserving cases, part disbursement of term loan may be allowed through current/cash credit account by the sanctioning authority not below the level of CM, subject to maximum of 25% of the sanctioned limit. It is further provided that the disbursement should be made in stages and next installment should be released after verification of end use (through bills/physical inspection etc.) for previous installment. Even in LOANS & ADVANCE Circular no. 144 Ex. PW 1/DD dated 6.10.2004 under the heading "Disbursement" it is mentioned that in case of term loans, payments are to be made directly to the suppliers through pay orders/drafts; whether the same has been delivered to the suppliers directly and end use of the funds so disbursed has been verified.

13.9 PW-27 V.K. Gupta was senior manager with Punjab CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  71 of  95 National Bank, Shalimar Bagh branch from October, 2007 till July 2010. During his cross-examination he has stated that every official has a password and also a DBA password. As loan officer functioning within his financial limits, he uses the password. In case of emergency or urgency when the official exceeds the financial limits, he can use DBA password and such transaction would be recognized and allowed by the bank computer under the exceptional transaction head. Use of DBA password would be reflected in the morning checking. In case DBA password is used, an exceptional transaction report is automatically generated by the computer which is then checked by the then incumbent in charge on the next day morning. He has admitted that financial powers of various officers of different categories, i.e. Special Assistant, JMG-I Officer, Deputy Manager, Scale-II Manager and other senior officers are specifically defined and reflected in the branch computer. Such officers cannot exceed his financial power until and unless he has a DBA password and in absence of DBA password, the computer system would not accept any transaction exceeding the financial limit of the particular officer.

13.10 The incumbent in charge in this case of Shalimar Bagh branch of Punjab National Bank was A-1. In view of the statement of PW-27, vide these transactions A-2 unauthorizedly transferred more money than his authorization. This fact might have come to the knowledge of A-1 being incumbent in charge of the branch next day morning but the absence of any action on his part proves that he was in agreement with A-2 in all this.

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If A-2 had visited land khasra no. 266 at village Guhari, Tehshil Chata, Mathura, U.P. of guarantor Raghuraj Singh 14.0 Ex. PW 6/11 is the immovable property verification report prepared by A-2. As per which he had visited the said property on 2.8.2008 and has given approximate market value of this property as Rs. 399.30 lakhs. Ex. PW 6/38 is the attendance register of the bank, as per which, A-2 was present on 2.8.2008 in the branch as he had put his initial on page-8 of it. The case of the prosecution is that if A-2 had visited the site, his initials would not have been there in the attendance register and he might have claimed TA/DA for this visit. It has been submitted on behalf of A-2 that he had visited the said property after visiting the branch and marking his attendance there. To a specific question, PW-6 has stated that at that time A-1 was the Chief Manager of Shalimar Bagh branch of Punjab National Bank and in the official record no order issued by him is available to show that he had authorised A-2 to visit Chata, Mathura for site inspection. He has further stated that Chata, Mathura is out of Delhi, had A-2 actually visited the said place, he would have definitely claimed TA/DA for the said visit but he has not made any such claim. As per the knowledge of this court, approximate distance of Mathura from Delhi is about 150 Kms. At the relevant time it appears to be not possible for a person to visit Mathura during the working hours and also mark his attendance in the attendance register in his office. Therefore, I do not agree with the contention raised by Ld. Counsel for A-2 that A-2 had in fact visited the site on 2.8.2008.

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14.1 In view of the evidence discussed above, it stands established that A-2 had not visited the site and without visiting the site, he has given the immovable property verification report Ex. PW 6/11.

15.0 One of the contention raised on behalf of accused persons is that allegations of the prosecution that A-3 was having no stock with him and hypothecation of stock mentioned in the relevant loan documents was false statement on his part get negated from the statement of PW-6 as he has stated that in the pass book Ex. PW 6/37 of M/s D. S. Enterprises on page no. 0416, there is debit entry of Rs. 85,955/- dated 18.9.2008 as insurance charges. It is not possible to infer from this debit entry that this was pertaining to the stocks shown to be hypothecated by A-3 with the bank. Moreover even if for the sake of arguments, it is accepted that this insurance premium is against the stocks shown to be existing with A-3 at the relevant time, the other clinching evidence which has come on record to establish that A-3 was not having any permanent office at Haider Quli, Chandi Chowk and no stocks were there either at Chandni Chowk or at so called factory premises at village Jaspur, Kashipur, Uttarakhand, cannot be ignored.

16.0 One of the main contention raised by Sh. Harsh Kumar Sharma, Ld. counsel for A-2 is that it is admitted case of prosecution that borrower had compromised the matter with the bank and had paid one time settlement amount to the bank. As per the guidelines of Reserve Bank of India dated 29.1.2003, the lender bank can reach one time settlement with the CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  74 of  95 borrower. It is stated that in case of Sanjay Bhandari (supra) under similar circumstances where the borrower had entered in to one time settlement with the bank, the criminal case under IPC as well as P.C. Act was quashed by the Hon'ble High Court. It is stated that on this ground accused is entitled to be acquitted.

16.1 On the other hand, Ld. PP CBI has contended that one time settlement between PNB and M/s D. S. Enterprises had taken place on the terms and conditions that the party would pay balance amount of one time settlement (OTS) of Rs. 69,29,113/- within three months and compromise would not have bearing on cases pending with CBI/Police/Other Agency and compromise will proceed as per law and guidelines in this regard contained in OTS policy circular no. 7/2009 dated 12.6.2009. It has been stated that RBI policy clearly stipulated that loan amount acquired fraudulently and dishonestly which attract criminality in it, if paid subsequently, in any manner would not exonerate the borrower from criminal liability. It is stated that facts of the case in Sanjay Bhandari (supra) are different from the facts of this case, as in that case settlement was incorporated and the decree was passed by DRT and the loan was secured by accused persons for business purpose but due to some unforeseen circumstances the project failed and there was no forgery involved in that case.

16.2 This contention raised by Ld. counsel for A-2, relying upon the observations made by court in Sanjay Bhandari (supra) is not tenable, since the order passed by the court in CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  75 of  95 Sanjay Bhadari (supra) is under Section 482 Cr.P.C. exercising inherent powers. The appropriate remedy with A-2 , if he holds opinion that fact of this case are similar to the facts of that case, was to approach the Hon'ble High Court. Moreover, it is specifically mentioned in the OTS scheme dated 29.1.2003 that the guidelines will not cover cases of willful default, fraud and malfeasance; the bank should identify cases of willful default, fraud and malfeasance and initiate prompt action against them.

16.3 In case of State of Maharashtra through CBI Vs. Vikram Anantrai Doshi & ors. (Criminal Appeal No. 2048 of 2014 decided by Hon'ble Supreme Court 19.9.2014), the court has observed that though the amount due has been paid but the same is under private settlement between the parties unlike in Nikhil Merchant(supra) and Narinder Lal Jail (supra) where compromise was part of the decree of the court, there is no acknowledgment on the part of the bank of the exoneration of the criminal liability of the accused unlike the terms of compromise decree in the aforesaid two cases.

16.4 In view of the aforesaid reasons, the accused cannot draw any benefit from the observations made by the court in case of Sanjay Bhandari (supra).

17.0 The other contention raised on behalf of accused persons is that even if some omissions or discrepancies happened on the part of A-1 and A-2, same happened in good faith without having any element of criminal misconduct on their part or with the motive to give any pecuniary advantage to themselves or to CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  76 of  95 A-3. The Ld. counsel for A-1 has submitted that decision in question, taken by A-1 and A-2 is actually a result of multi layered decision making process in the bank. It has been stated that A-1 being the incumbent in charge of the bank and sanctioning authority has taken independent decision on the basis of the documents and appraisal note submitted before him, and merely because the loan advanced became NPA, the colour of criminal misconduct cannot be given to it. It has been stated that prosecution has failed to prove if A-1 had taken any bribe or there was any dishonest intention on his part which is gist of the offence under Section 13(1)(d). It has been urged that at the maximum it falls under the category of administrative lapses or violation of departments circulars and instructions making him liable for departmental action. In support of his submission ld. counsel has drawn attention of this court to the observations of the Court in Ratna Giri Gas Power Ltd. (supra), C. K. Jafer Sharief (supra), M. Narain Nambiar (supra), S. P. Bhatnagar Vs. State of Maharshtra (supra).

17.1 The Ld. counsel for A-2 has submitted that various relied upon documents were withheld by the prosecution which amounts to tempering of documents, the benefit of same needs to be given to the accused. Ld. counsel has pointed out various documents which were seized by CBI during investigation and were relied upon. The criminality of the acts of the accused has to be decided after appreciating the evidence led by prosecution. The documents which as per ld. counsel were withheld by prosecution, if were relevant for the just decision of CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  77 of  95 the case or in establishing the defence of the accused, accused was at liberty to seek directions from the court to bring on record those documents and prove the same as per law. But no such step was taken by accused.

17.2 Ld. counsel for A-2 has further contended that whatever was done by this accused in processing the loan application of A-3 and recommending CC Limit of Rs. 240 lakhs was done after due diligence and no element of abuse of his position was involved. The Ld. counsel has drawn attention of this court to the observations made by Apex court in C. Chenga Reddy (supra). In this case setting aside the conviction of the accused public servants by giving them benefit of doubt, court has observed that their acts and omissions, however, resulting in administrative lapses and violations of departmental circulars and instructions, thus making them vulnerable to departmental enquiry thereby. Ld. counsel has also relied upon the observation made by courts in A. Sivaprakash Vs. State of Kerala (supra) and Abdulla Mohd. Pagarkar (supra).

17.3 In this case prosecution has alleged that loan application of A-3 is dated 30.7.2008 but showing extreme hurry because of the illegal agreement with A-3, A-1 and A-2 recommended, processed, sanctioned and disbursed the CC Limit of Rs. 240 lakhs to the account of A-3 by 5.8.2008. PW-6 has clarified that in case of loan upto Rs. 400 lakhs, the branch incumbent, i.e. A- 1 in this case, was the sanctioning authority. There is nothing wrong if loan was sanctioned in a span of a week but the problem is with the flouting of the rules, circulars and guidelines CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  78 of  95 of the bank applicable for sanctioning and disbursement of loans by A-1 and A-2 being sanctioning authority and loan processing authority in Shalimar Bagh branch of Punjab National Bank. The violation of rules and guidelines is not on one count but on multiple counts which reflect complete disregard to the recommending practices to be followed by the senior bank officials dealing with public money, as A-1 and A-2 were. It stand established on record that account of M/s Shyam Traders at Punjab National Bank, Shalimar Bagh branch was illegally debited for sum of Rs. 150 lakhs on 18.7.2008 without consent of its proprietor by A-2. PW-14 who was looking after accounts of M/s Shyam Traders was putting pressure on A-2 for this debit. Moreover, as discussed in above paras on 31.7.2008, a sum of Rs. 100 lakhs was transferred in the account of M/s Varun International (firm of PW-33) from the accounts of M/s Shree Trading Company, same day from the account of M/s Varun International same amount was transferred to M/s Bharat Trading Company. On 5.8.2008 after disbursement of loan of Rs. 240 lakhs to the account of M/s D. S. Enterprises, immediately Rs. 100 lakhs was transferred to M/s V.K. Trading Company and from their account same day this amount was transferred to M/s. Varun International. From there it was further transferred to M/s Sheel Trading Company. These transfers were made by A-2 on the basis of vouchers kept by the bank with signatures of proprietors of these firms or at some places even without their signatures on the vouchers. Under these circumstances, it was not possible that all this happened without CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  79 of  95 the knowledge and active connivance of A-1, who was incumbent in charge of the said branch. This allegation further get substantiated from the manner in which loan application of A-3 was processed without verifying the forged balance sheets, sales figures mentioned in the balance sheets, the running of office by A-3 at Haider Quli Chandni Chowk and factory premises at village Jaspur, Kashipur, Uttrakhand, without obtaining valuation report from bank's approved valuer, manipulating the valuation report dated 6.8.2008 given by PW-7, i.e. one day after disbursement of the loan, etc. 17.4 In Runu Gosh Vs. P. Rama Rao [2011 Legal Eagle (Del) 1757] court was evaluating the criminality of the acts of the accused persons specifically in context to Section 13(1)(d)(iii) of P. C. Act. The present case though under Section 13(1)(d) but it is not getting covered under (d)(iii) and it falls under (d)(ii). Accordingly same analogy can be applied in the present case. The relevant para 79 is reproduced as follows:

"What then is the behaviour or act which attracts such opprobrium as to result in criminal responsibility? It is not every act which results in loss of public interest, or that is contrary to public interest, that is a prosecutable offence. There can be no doubt that all acts prejudicial to public interest, can be the subject matter of judicial review. In those cases, courts consider whether the decision maker transgressed the zone of reasonableness, or breached the law, in his action. However, it is only those acts done with complete and manifest disregard to the norms, and manifestly injurious to public interest, which were avoidable, but for the public servant''s overlooking CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  80 of  95 or disregarding precautions and not heeding the safeguards he or she was expected to, and which result in pecuniary advantage to another that are prosecutable under Section 13(1)(d)(iii). In other words, if the public servant is able to show that he followed all the safeguards, and exercised all reasonable precautions having regard to the circumstances, despite which there was loss of public interest, he would not be guilty of the offence. The provision aims at ensuring efficiency, and responsible behaviour, as much as it seeks to outlaw irresponsibility in public servant''s functioning which would otherwise go unpunished. The blameworthiness for a completely indefensible act of a public servant, is to be of such degree that it is something that no reasonable man would have done, if he were placed in that position, having regard to all the circumstances. It is not merely a case of making a wrong choice; the decision should be one such as no one would have taken."

17.5 In view of the aforesaid reasons the various acts and omissions on the part of A-1 & A-2 cannot be put in the category of administrative lapses warranting only departmental enquiry. The various proved acts and omissions, on the part of A-1 & A-2 were done with complete and manifest disregard to the norms and various guidelines of the bank for advancing loan.

17.6 Even the sanction order Ex. PW-1/1 and Ex. PW-2/1 of both A-1 & A-2 are assailed with the submissions that sanction orders were given in a mechanical manner without application of mind. PW-1 has specifically stated that for granting sanction, he perused FIR of the present case, investigation report, statements of witnesses and draft sanction order. He had applied his mind and after satisfying himself, he had accorded CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  81 of  95 sanction for prosecution of A-1. Similarly, PW-2 has deposed that he had gone through the material sent by CBI comprising FIR, statements of witnesses and other documents. He had applied his mind and after being satisfied, he had accorded sanction for prosecution of A-2. Therefore, I find no substance in these contentions raised on behalf of A-1 & A-2.

Conclusion 18.0 From the evidence discussed above it stands established beyond doubt that both A-1 & A-2 while working as Chief Manager and Deputy Manager of Punjab National Bank, Shalimar Bagh Branch entered into a criminal conspiracy with A- 3 Proprietor of M/s D.S. Enterprises for sanctioning the loan application of A-3 for C/C limit of Rs. 240 lakhs. It stands further established beyond doubt that under this conspiracy both A-1 & A-2 by abusing their position as a public servant cheated the bank by sanctioning and disbursing the loan amount of Rs. 240 lakhs to the account of M/s D.S. Enterprises on 05.08.2008 by using various forged documents.

18.1 It further stands established beyond doubt that A-1 while working as a Chief Manager by abusing his position induced the bank to deliver loan amount under CC limit of Rs. 240 lakhs to M/s D.S. Enterprises firm of A-3 by forging valuation report (Ex. PW-6/10) and supersedes confidential report (Mark P-6/X3 & X4 of A-3 and guarantor Sh. Raghuraj Singh Yadav). It also stands established that these forged documents were used as genuine knowing the same to be forged.

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18.2 It further stands established beyond doubt that A-2 while working as a public servant by abusing his position induced the bank to deliver loan amount under CC limit of Rs. 240 lakhs to M/s D.S. Enterprises firm of A-3 by forging valuation report (Ex. PW-6/9), immovable property verification visit report (Ex. PW- 6/11) and superseding confidential report (Mark P-6/X3 & X4 of A-3 and guarantor Sh. Raghuraj Singh Yadav). It also stands established that these forged documents were used as genuine knowing the same to be forged.

18.3 It further stands established beyond doubt that A-3 being Proprietor of M/s D.S. Enterprises induced the bank to deliver loan amount under CC limit of Rs. 240 lakhs to M/s D.S. Enterprises by forging valuation report dated 06.08.2008 (Ex. PW-6/9), trading and profit account, balance sheets and audit reports. It also stands established that these forged documents were used as genuine knowing the same to be forged.

18.4 On the basis of the proved allegations against the accused persons, all the three accused are held guilty for the commission of offences under Section 120-B IPC read with Section 420 & 471 IPC and Section 13(1)(d) P. C. Act.

18.5 A-1 is also held guilty for the commission of substantive offenes under Section 13(1)(d) P.C. Act, Section 420, 468, 471 IPC.

18.6 A-2 is also held guilty for the commission of substantive offenes under Section 13(1)(d) P.C. Act, Section 420, 468, 471 IPC.

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18.7 A-3 is held guilty for the commission of substantive offenes under Section 420, 468, 471 IPC.

18.8 All the accused persons be heard on quantum of sentence.

Announced in the open court (SANJAY GARG-I) on 22nd December, 2016 SPECIAL JUDGE-IV, CBI (PC ACT) TIS HAZARI COURTS, DELHI CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  84 of  95 IN THE COURT OF SANJAY GARG-I:

SPECIAL JUDGE-IV, (PC ACT) CBI: DELHI CC No. 9/2016 Central Bureau of Investigation (CBI) Versus Ravi Kumar Bharti s/o Sh. Gopi Chand 634, Ground Floor, West Permanand Colony, Near Kingsway Camp, Delhi-9 Permanent Address 12, Gandhi Ashram, Near Kingsway Camp, Delhi 9. Convict......

ORDER ON SENTENCE

2. Heard Sh. Anil Tanwar, Ld. PP for CBI and Ld. counsels Sh. H. K. Sharma for convict.

3. Ld. PP for CBI has submitted that keeping in view the facts and circumstances in which these offences were committed, convict deserves no leniency.

4. The Ld. Counsel for A-2 submits that convict and his wife are cancer patients. It is stated that his wife is suffering from blood cancer and is on bed for the last two years. It is stated that there is no loss to the exchequer. It is stated that conduct of the convict throughout the trial remained exemplary and he never caused any delay in the trial. It is stated that he has lost his job because of this case. It is requested that a lenient view be taken while awarding sentence. He has relied on the judgment titled K.P. Singh Vs. State of NCT of Delhi, 2015 [4] JCC 2651.

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5. In Santa Singh Vs. State of Punjab, 1976 SCC (Crl) 546, the Hon'ble Apex Court held:

"A proper sentence is the amalgam of many factors such as the nature of the offence, the circumstances-extenuating or aggravating-of the offence, the prior criminal record, if any, of the offender, his age and educational background, his record as to employment, home life, sobriety and social adjustment, his emotional and mental condition, the prospects for his rehabilitation and return to normal life in the community, the possibility of treatment or training of the offender, the possibility that the sentence may serve as a deterrent to crime by the offender or by others and the current community need, if any, for such deterrence in respect of the particular type of offence. These are factors will have to be taken into account by the court in deciding upon the appropriate sentence."

5. In Ved Prakash Vs. State of Haryana, reported as AIR 1981 SC 643, the court has observed that sentencing an accused person is a sensitive exercise of discretion and not a routine or mechanical prescription acting on hunch. The trial court should have collected material necessary to help award a just punishment in the circumstances. The social backgrounds and the personal factors of the crime doer are very relevant.

6. As per record convict was one of the senior official of the bank next to A-1. He is also stated to have been dismissed from service because of this case. In support of his contentions regarding ailments being suffered by convict and his wife, photocopies of the record has been filed. As per this record, histopathology report dated 16.08.2013 of convict opinion is "well differentiated keratinizing squamous cell carcinoma left margin of tongue." As per laboratory investigation report of Radha Bharti, stated to be a wife of the convict dated 06.07.2009 she is stated CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  86 of  95 to be suffering from "chronic myeloid leukemia in chronic phase". It is admitted case of prosecution that entire loan advanced by bank to A-3 was paid back with interest. Hence, there is no financial loss suffered by the bank.

7. Keeping in view all the facts discussed above, age and conduct of the convict, he deserves leniency while awarding sentence. Accordingly, he is sentenced as under:-

(i) For the offence u/s 120B R/w section 420 & 471 IPC and section 13(1)(d) of P.C. Act he is sentenced to Rigorous imprisonment for 2 years and fine of Rs 10,000/-, in default of payment of fine to undergo simple imprisonment for two months,

(ii) For offence under Section 13(2) read with Section 13(1)(d) of P. C. Act. 13(1)(d) of PC Act, he is sentenced to Rigorous imprisonment for 1 ½ year and fine of Rs. 10,000/-, in default of payment of fine to undergo simple imprisonment for two months,

(iii) For the offence u/s 420 IPC he is sentenced to Rigorous imprisonment for 1 year and fine of Rs 3,000/-, in default of payment of fine to undergo simple imprisonment for one month,

(iv) For the offence u/s 468 IPC he is sentenced to Rigorous imprisonment for 1 years and fine of Rs 3,000/-, in default of payment of fine to undergo simple imprisonment for one month,

(v) For the offence u/s 471 IPC he is sentenced to Rigorous imprisonment for 1 years and fine of Rs 3,000/-, in default of payment of fine to undergo simple imprisonment for one month,

8. All the sentences shall run concurrently.

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9. The convict be given benefit of Section 428 Cr.P.C.

10. A copy of the judgment and order on sentence be given to the convict.

11. File be consigned to record room.

Announced in the open court (SANJAY GARG-I) on 7th January, 2017 SPECIAL JUDGE-IV, CBI (PC ACT) TIS HAZARI COURTS, DELHI CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  88 of  95 IN THE COURT OF SANJAY GARG-I:

SPECIAL JUDGE-IV, (PC ACT) CBI: DELHI CC No. 9/2016 Central Bureau of Investigation (CBI) Versus S. C. Pathak s/o late Sh. Ram Das Pathak R/o 171-C, First Floor, Chhoti Barandari Part-II, Jalandhar (Punjab) Permanent Address Vill & Post -Tarsooh, Tehsil Shri Naina Devi, District Bilaspur, (HP).

Convict....

ORDER ON SENTENCE

1. Heard Sh. Anil Tanwar, Ld. PP for CBI and Ld. counsels Sh. K. G. Sharma for convict no.1.

2. Ld. PP for CBI has submitted that keeping in view the facts and circumstances in which these offences were committed, convicts deserves no leniency.

3. Ld. Counsel for A-1 submits that convict is aged 64 years. It is stated that his one daughter is of marriageable age and is likely to be married shortly. It is stated that he is not a previous convict. It is stated that his wife is suffering from depression and BP. It is stated that his wife and daughter are solely dependent upon him for their livelihood. It is stated that he lost his job because of this case. It is stated that no financial loss was caused to the exchequer because of this case. It is stated that he has regularly attended the trial in this case.

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4. In Santa Singh Vs. State of Punjab, 1976 SCC (Crl) 546, the Hon'ble Apex Court held:

"A proper sentence is the amalgam of many factors such as the nature of the offence, the circumstances- extenuating or aggravating-of the offence, the prior criminal record, if any, of the offender, his age and educational background, his record as to employment, home life, sobriety and social adjustment, his emotional and mental condition, the prospects for his rehabilitation and return to normal life in the community, the possibility of treatment or training of the offender, the possibility that the sentence may serve as a deterrent to crime by the offender or by others and the current community need, if any, for such deterrence in respect of the particular type of offence. These are factors will have to be taken into account by the court in deciding upon the appropriate sentence."

5. In Ved Prakash Vs. State of Haryana, reported as AIR 1981 SC 643, the court has observed that sentencing an accused person is a sensitive exercise of discretion and not a routine or mechanical prescription acting on hunch. The trial court should have collected material necessary to help award a just punishment in the circumstances. The social backgrounds and the personal factors of the crime doer are very relevant.

6. As per record convict was senior official of the bank. He is stated to have been dismissed from service because of this case. He has dependence of his young daughter of marriageable age and wife on him. It is admitted case of prosecution that entire dues advanced by bank to A-3 were paid back with interest. Hence, there is no financial loss suffered by the bank.

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7. Keeping in view all the facts discussed above, age and conduct of the convict, he deserves leniency while awarding sentence. Accordingly, he is sentenced as under:-

(i) For the offence u/s 120B R/w section 420 & 471 IPC and section 13(1)(d) of P.C. Act he is sentenced to Rigorous imprisonment for 2 ½ year and fine of Rs 10,000/-, in default of payment of fine to undergo simple imprisonment for two months,

(ii) For offence under Section 13(2) read with Section 13(1)(d) of P. C. Act. 13(1)(d) of PC Act, he is sentenced to Rigorous imprisonment for 2 years and fine of Rs.

10,000/-, in default of payment of fine to undergo simple imprisonment for two months,

(iii) For the offence u/s 420 IPC he is sentenced to Rigorous imprisonment for 1½ years and fine of Rs 5,000/-, in default of payment of fine to undergo simple imprisonment for one month,

(iv) For the offence u/s 468 IPC he is sentenced to Rigorous imprisonment for 1½ years and fine of Rs 5,000/-, in default of payment of fine to undergo simple imprisonment for one month,

(v) For the offence u/s 471 IPC he is sentenced to Rigorous imprisonment for 1½ years and fine of Rs 5,000/-, in default of payment of fine to undergo simple imprisonment for one month,

8. All the sentences shall run concurrently.

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9. The convict be given benefit of Section 428 Cr.P.C.

10. A copy of the judgment and order on sentence be given to the convict.

11. File be consigned to record room.

Announced in the open court (SANJAY GARG-I) on 7th January, 2017 SPECIAL JUDGE-IV, CBI (PC ACT) TIS HAZARI COURTS, DELHI CC No.9/2016          CBI     Vs.  S.C. Pathak & ors.                         Page  92 of  95 IN THE COURT OF SH. SANJAY GARG-I:

SPECIAL JUDGE-IV, (PC ACT) CBI: DELHI CC No. 9/2016 Central Bureau of Investigation (CBI) Versus Dev Kumar Tyagi s/o Sh. Ramesh Chand Tyagi C-6/203, Yamuna Vihar, Delhi 110053.

Permanent Address Vill. & Post- Mohamedpur, PS Shivara, Tehsil Dhampur, District Bijnour, UP.

Convict.......

ORDER ON SENTENCE

1. Heard Sh. Anil Tanwar, Ld. PP for CBI and Ld. counsel Sh. Ramji Pandey, for convict.

2. Ld. PP for CBI has submitted that keeping in view the facts and circumstances in which these offences were committed, convicts deserves no leniency.

3. Ld. Counsel for A-3 submits that convict has disposed his entire business to clear the dues of the bank. It is stated that convict is suffering from depression and other ailments. It is stated that he has wife, one daughter and aged father dependent upon him for their livelihood. It is stated that convict has attended the trial regularly without any exemption. It is requested that while awarded sentence lenient view be taken.

4. Ld. PP for CBI submits that the contention of the convict that he is suffering from depression and other ailments is not supported by any documents.

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5. In Santa Singh Vs. State of Punjab, 1976 SCC (Crl) 546, the Hon'ble Apex Court held:

"A proper sentence is the amalgam of many factors such as the nature of the offence, the circumstances- extenuating or aggravating-of the offence, the prior criminal record, if any, of the offender, his age and educational background, his record as to employment, home life, sobriety and social adjustment, his emotional and mental condition, the prospects for his rehabilitation and return to normal life in the community, the possibility of treatment or training of the offender, the possibility that the sentence may serve as a deterrent to crime by the offender or by others and the current community need, if any, for such deterrence in respect of the particular type of offence. These are factors will have to be taken into account by the court in deciding upon the appropriate sentence."

6. In Ved Prakash Vs. State of Haryana, reported as AIR 1981 SC 643, the court has observed that sentencing an accused person is a sensitive exercise of discretion and not a routine or mechanical prescription acting on hunch. The trial court should have collected material necessary to help award a just punishment in the circumstances. The social backgrounds and the personal factors of the crime doer are very relevant.

7. As per record convict was the sole proprietor of M/s D.S. Enterprises to whom the C/C limit of Rs. 240 lacs was sanctioned by A-1 & A-2. He has failed to produce any document to support his contention regarding his ailments. It is the admitted case of prosecution that entire dues advanced by bank to A-3 were paid back with interest. Hence, there is no financial loss suffered by the bank.

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8. Keeping in view all the facts discussed above, age and conduct of the convict, he is sentenced as under:-

(i) For the offence u/s 120B R/w section 420 & 471 IPC and section 13(1)(d) of P.C. Act he is sentenced to Rigorous imprisonment for 2 ½ years and fine of Rs 10,000/-, in default of payment of fine to undergo simple imprisonment for two months,

(ii) For the offence u/s 420 IPC he is sentenced to Rigorous imprisonment for 2 years and fine of Rs 10,000/-, in default of payment of fine to undergo simple imprisonment for two months,

(iv) For the offence u/s 468 IPC he is sentenced to Rigorous imprisonment for 1½ years and fine of Rs 5,000/-, in default of payment of fine to undergo simple imprisonment for one month,

(v) For the offence u/s 471 IPC he is sentenced to Rigorous imprisonment for 1½ years and fine of Rs 5,000/-, in default of payment of fine to undergo simple imprisonment for one month,

8. All the sentences shall run concurrently.

9. The convict be given benefit of Section 428 Cr.P.C.

10. A copy of the judgment and order on sentence be given to the convict.

11. File be consigned to record room.

Announced in the open court                            (SANJAY GARG-I)
on 7th January, 2017                           SPECIAL JUDGE-IV, CBI (PC ACT)
                                                  TIS HAZARI COURTS, DELHI




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