Bangalore District Court
Cbi/Acb vs No.1 Sri.K.Shivarama Shetty on 24 June, 2019
1
SPL.C.C.No:117/2001
IN THE COURT OF THE XXI ADDL.CITY CIVIL & SESSIONS
JUDGE AND PRL. SPL. JUDGE FOR CBI CASES,
BANGALORE CITY, CCH.NO.4
Dated this the 24th day of June 2019
Present : Sri.Rajashekar Venkanagouda Patil, B.A., LLM.,
XXI Addl.City Civil and Sessions Judge
& Prl. Special Judge for CBI Cases,
Bengaluru.
SPL.C.C.NO:117/2001
Complainant CBI/ACB, Bengaluru.
By Special Public Prosecutor
Vs
A
Accused No.1 Sri.K.Shivarama Shetty, Aged 68 years, S/o Late
K.B.Shetty, the then Executive Director,Vijaya
Bank, Head Office, Bangalore,
R/o No.1154, 12th Main Road, HAL II Stage,
Bangalore-8.
No.2 Sri.H.B.R.Shetty, Aged 58 years, S/o Late
H.Vittal Shetty, the then Asst. General Manager,
Vijaya Bank, Zonal Office, Madras,
R/o No.42, 11th Cross, Indira Nagar, Bangalore-
38.
No.3 Sri.M.Jayarajan, Aged 53 years, S/o
Sri.M.N.Nair, the then Divisional Manager,
Vijaya Bank, Moore Street Branch, Madras,
R/o No.383/2, Green Garden, L Block, 26th
Street, Anna Nagar (East), Chennai-102.
No.4 M/s Mevida Steels (P) Ltd., Old Mahabalipuram
Road, Perungudi, Madras-96. (Pvt. Firm).
(Discharged)
No.5 Sri.Gopu Sheshasayee, Aged 64 years, S/o Late
Sheshasayee, Managing Director, M/s Mevida
Steels (P) Ltd., No.4/360, Old Mahabalipuram
Road, Perungudi, Madras-96. (Pvt. person)
(Discharged)
2
SPL.C.C.No:117/2001
No.6 Sri.S.R.Kamath, Aged 70 years, S/o Late
Baburaya Kamath, Director, M/s Mevida Steels
(P) Ltd., 'Sree Ganesh', No.107/1, 8th Main
Road, Malleswaram, Bangalore-560 055 (Pvt.
Person). (Dead) (Abated)
No.7 Sri.M.Thyagarajan, Aged 51 years, S/o Late
S.Muthukrishnan, Director, M/s Mevida Steels
(P) Ltd., No.16, Sadayappan Street, Mandavelli,
Madras-78. (Pvt. Person). (Dead) (Abated)
No.8 Sri.G.Sundararajan, Aged 52 years, S/o
Shri.T.S.Gopal, Accountant, M/s Mevida Steels
(P) Ltd., No.14, Narayana Chetty Lane,
R.K.Mutt Road, Mandavelli, Madras-28. (Pvt.
Person) (Discharged)
(A1 by Sri.RNN,Advocate)
(A2 by Sri.CL, Advocate)
(A3 by Sri.CVN, Advocate)
JUDGMENT
Sri.V.Ashok Kumar, Inspector of Police, CBI/ACB, Bangalore has submitted charge sheet against accused 1 to 8 for the offences punishable under Sections.120B r/w 420, 468,471 IPC and Section.13(2) r/w 13(1)(d) of Prevention of Corruption Act, 1988.
2. In nutshell case of the prosecution is that;
Accused no.1 K.Shivarama was the Executive Director of Vijaya Bank Head Office, Bangalore in the year 1990. During that period he entered into criminal conspiracy with Sri.H.B.R.Shetty A2, Asst. General Manager and Zonal Incharge, Vijaya Bank, Madras and Sri.M.Jayarajan A3, who was the Divisional Manager, Vijaya Bank, Moore Steet Branch, Madras in order to enable A4 Company named as M/s Mevida Steels Private Limited, Madras, 3 SPL.C.C.No:117/2001 which was earlier a Partnership Firm held by one A5 Sri.Gopu Sheshasayee and A7 Sri.M.Thyagarajan, subsequently said firm was converted into A4 Company named as M/s Mevida Steels Private Limited, for which Sri.Gopu Sheshasayee was the Managing Director and Sri.S.R.Kamath A6 and Sri.M.Thyagarajan A7 were the Directors and Sri.G.Sundararajan, A8 was the Accountant for A4 Company in order to provide loan for Rs.60 lakhs by LC facility though A4 Company was not entitled.
3. A5 Sri.Gopu Sheshasayee, Managing Director of A4 Company opened current account with Vijaya Bank, Moore Street Branch, Madras where A3 was the Divisional Manager of Vijaya Bank and A3 facilitated A5 and Directors of A4 Company in opening current account in the name of A4 Company M/s Mevida Steels Private Limited, which was not introduced by any one, but repeatedly account opening was introduced by one Mr.Ahuja. Nothing was shown on record about his presence or his investment in the bank as an introducer to A4 Company account. On 23.2.1990 A4 Company submitted a proposal for Inland Letter of Credit (ILC) to A3 Branch and limit sought was Rs.60 lakhs for procurement of steel material from one M/s Annapoorna Agencies and M/s Shivashakthi Steels, Madras. While submitting these proposals, A5 Managing Director of A4 Company had submitted false profit and loss account, balance sheet with the help of A8 to convince the bank that his company was creditworthy to extend ILC facility.
4SPL.C.C.No:117/2001
4. It is further alleged in the charge sheet that, in pursuance of said conspiracy, A3 being the Head of Branch, Moore Street Branch, Madras processed the proposal for grant of ILC for Rs.60 lakhs in favour of A4 Company, knowing fully well that A4 Company was already saddled with the liability of Rs.1.20 crores in UCO Bank and Company was a new constituent of Vijaya Bank and dishonestly and fraudulently by abusing his position, on the same day of opening of account recommended for grant of ILC facilities for Rs.60 lakhs favourably and forwarded the same to the Zonal Office of Madras where A2 was Assistant General Manager of Zone. A2 knowing fully well about the liability of UCO Bank existing as against A4 Company and it's Directors, by abusing his official position processed the proposal on 24.2.1990 in favour of A4 Company and it's Directors recommended for grant of ILC facility for Rs.60 lakhs.
5. Further in pursuance of criminal conspiracy A1, the then Executive Director of Vijaya Bank also sanctioned Letter of Credit limit of Rs.60 lakhs in favour of A4 Company on the basis of revised and favourable note submitted by Credit Department as directed by A1 though earlier proposal was not considered by Company officials themselves. When A5 Managing Director of A4 Company and A6 Director managed to secure the processed sanction of ILC for Rs.60 lakhs in conspiracy with A1 with the help of one Sri.A.D.Punja and Sri.M.Balachandran, Assistant General Manager of Vijaya Bank, further in the said discussion between A1 and Assistant General Manager without any valid reason, A1 5 SPL.C.C.No:117/2001 exercising his powers beyond the limit of statutory obligations recommended the grant of ILC in favour of A4 Company by abusing his official position and power and by prevailing over subordinates and further these accused A1 to A3 being public servants knowing fully well that A4 Company and it's Directors were a new constituent of Vijaya Bank and were already facing liability of Rs.1.20 crores to UCO Bank and the Company was incorporated of overall assets and liabilities of M/s Meenakshi Steels, Partnership Firm of Sri.Gopu Sheshasayee A5 and Sri.M.Thyagarajan A7 and no establishment as M/s Meenakshi Steels was existing and it was dishonestly and fraudulently by abusing their official position permitted to change the beneficiary as Meenakshi Steels and got released Letter of Credit for Rs.60 lakhs to the Company in favour of M/s Meenakshi Steels, Madras, which was owned by A5 and A7 instead of original sanction in favour of M/s Annapaoorna Agencies and Shivashakthi Steels, Madras. Thus shown favour to accused Company, Managing Director and Directors and caused huge loss to Vijaya Bank and corresponding wrongful gain to themselves.
6. In pursuance of the said conspiracy A5 received Letter of Credit facility and encashed through A4 Company in the name of Meenakshi Steels and Pay Order was encashed through A/c No:556 with Vysya Bank, Mount Road, Madras where except for margin money of Rs.9,40,000/ was the balance amount was used for personal purpose. Further A5 Sri.Gopu Sheshasayee repaid Rs.38,35,000/ at different intervals and there was an outstanding 6 SPL.C.C.No:117/2001 due of Rs.41 lakhs, which was wrongful loss caused to bank.
7. It is further alleged that A1 to A3 being bank officials have committed criminal misconduct by exercising fraud, misused/misappropriated LC facility amount and committed offence under Section Sections.120B r/w 420, 468,471 IPC and Section.13(2) r/w 13(1)(d) of Prevention of Corruption Act, 1988 and thereby committed criminal misconduct as public servant by dishonestly, fraudulently exercising corrupt or illegal means.
8. With regard to the above allegations and crime, the CBI/ACB, Bangalore had registered suomoto complaint and registered FIR on the basis of the preliminary enquiry conducted by the officials at RC No:32/A/98 on 19.11.1998 itself and CW31, the then Inspector of Police, CIB/ACB, Bangalore ordered to take up the investigation.
9. Accordingly CW31 having taken up the investigation obtained search warrant from the court to search the residential premises of A5 and conducted search and recovered three rubber stamps from the residence with the help of his colleagues and six documents and submitted report to the court with search list and also conducted search of house of A5 by preparing search list and examined one Sundarajan on 23.7.1999, on 23.1.1999 examined Sundarajan again and recorded his further statement and interrogated A5 further and recorded his statement and on 14.9.1999 examined and recorded the statement of CW2 and collected four documents pertaining to UCO bank limited and 7 SPL.C.C.No:117/2001 enquired A1 and collected 13 documets from Vijaya Branch, Chennai and also examined CW22 on 21.2.2000 and CW24 on 21.5.2000 and CW7, CW8, CW22, CW28, CW29 and other bank officials and one Govinda Kumar and Sundarajan and recorded their statements and also examined one Thayagarajan and Ramesh and recorded their statements on 10.3.2000 and recorded the statement of CW26 and on 11.3.2000 recorded the statement of CW19 Manager and on 18.3.2000 enquired A2 again and recorded his further statement and examined CW13 recorded his statement, Chief of Credit Department, Vijaya Bank and further questioned A3 on 22.3.2000 recorded his statement and examined CW3 and CW15 and recorded their statements and also recorded the statement of one J.C.Bhashkaran and collected 13 documents from him and further on 25.3.2000 examined and recorded the statement of Manjaiah and on 5.4.2000 recorded the statement of CW1 and collected 16 documents from him, on 6.4.2000 examined CW8, CW9 and CW11 and recorded their statements, on 7.4.2000 examined CW18 and Armugam and recorded their statements, on 8.4.2000 recorded the statement of CW14 and interrogated A6 on 9.4.2000 and also recorded his statement, on 2.5.2000 examined and recorded statement of CW15, CW17, CW22 and recorded their statements, and on 3.5.2000 recorded statement of CW4 and other witnesses like CW20 and bank officials like A.D.Punja, Sripathy. After collecting all these documents submitted the investigation report to Superintendent of Police, CBI/ACB, Bangalore. As he was transferred handed over the records to his next superior in office. Additional witness PW16 8 SPL.C.C.No:117/2001 one V.Ashok Kumar, Additional Superintendent of Police, CBI, Goa having taken up investigation on 10.6.2001 as per the order of superiors continued investigation, received the sanction order of accused no.2 and 3 and having found sufficient materials against the accused, submitted charge sheet to the court on 20.6.2001 for the offences punishable under Section Sections.120B r/w 420, 468,471 IPC and Section.13(2) r/w 13(1)(d) of Prevention of Corruption Act, 1988.
10. After submitting of charge sheet, in the course of trial case against A4, A5 and A8 is quashed by the Hon'ble High Court of Karnataka vide it's order dt:14.10.2014 in Crl. R.P. No:1022/2010. A6 and A7 dead and abated and trial was continued to be faced by A1 to A3 as public servants.
11. Court took cognizance of the case and secured the presence of the accused. Accused 1 to 3 appeared and contested the case by engaging their counsel. After hearing the learned Public Prosecutor and the learned counsel for the accused persons, charge was framed under Section.120B r/w 420, 468,471 IPC and Section.13(2) r/w 13(1)(d) of Prevention of Corruption Act, 1988. Subsequently as per order dt:14.10.2013 by this court, charge leveled against A5 for the offence punishable under Section 120B r/w 468 IPC was deleted for which accused pleaded not guilty and claimed to be tried. Thereupon the case stood posted for trail. The prosecution in order to prove its case got examined PWs.1 to 16 and got marked Ex.P1 to Ex.P44. Ex.D1 to D5 were marked for the defence.
9SPL.C.C.No:117/2001
12. After closure of the prosecution evidence, accused have been examined under Section 313 Cr.P.C., and statement of the accused was recorded. Accused have not chosen to lead any defence evidence on their behalf.
13. Thereafter arguments of both learned Public Prosecutor and the learned counsel for the accused were heard.
14. On the case putforth by the prosecution, the points that would arise for my consideration are :
1. Whether prosecution proves beyond all reasonable doubt that the accused No.1 Sri.K.Shivarama Shetty, the then Executive Director, Vijaya Bank, Head Office, Bangalore, Accused No.2 Sri.H.B.R.Shetty, the then Assistant General Manager, Vijaya Bank, Zonal Office, Madras and accused No.3 Sri.M.Jayarajan, the then Divisional Manager, Vijaya Bank, Moore Street Street Branch, Madras, Accused No.5 Sri.Gopu Sheshasayee, Managing Director, M/s Mevida Steels (P) Ltd., Madras and Accused No.8 Sri.G.Sundararajan, Accountant of M/s Mevida Steels (P) Ltd., Madras along with deceased Accused No.6 Sri.S.R.Kamath and Accused No.7 Sri.M.Thyagarajan, Directors, M/s Mevida Steels (P) Ltd., Madras during 1990 at Bangalore agreed to cheat Vijaya Bank in the matter of sanctioning and releasing of Inland Letter of Credit 10 SPL.C.C.No:117/2001 (ILC) for Rs.60 lakhs in the name of M/s Mevida Steels Private Limited., Old Mahabalipuram Road, Perungudi, Madras and that in pursuance of criminal conspiracy the account was opened in the name of A4 Company without an introducer and on the basis of false addresses of suppliers in the proposal and the fabricated list of shareholders, A1 and A3 in connivance with the beneficiaries sanctioned ILC of Rs.60 lakhs to A4 Company fraudulently despite the knowledge of existing liability of Rs.1.20 Crores of the A4 Company with UCO Bank and thereby you have committed an offence punishable under Section 120B IPC?
2. Whether prosecution further proves that during the above said date, time and place in furtherance of criminal conspiracy, A4 Company was formed by converting M/s Meenakshi Steels, a Partnership Firm under the partnership of A5 and deceased A7 M.Thyagarajan and A4 Company constituting A5 and A6 and deceased A7 and A8 as directors and A5 as Managing Director opened a Current Account with Vijaya Bank, Moore Street Branch where A3 were Branch Head and facilitated the opening of Current Account in the name of A4 Company which account was not introduced by any one and on 23.2.1990 A4 Company submitted a proposal for 11 SPL.C.C.No:117/2001 sanction of ILC to the said branch and the limits sought was for Rs.60 lakhs for procurement of steel materials from M/s Annapoorna Agency and M/s Shivashakthi Steels, Madras and A5 gave false addresses of the suppliers in the proposal and further submitted false and fabricated list of shareholders for Rs.33 lakhs where the shareholders were only the family members and relatives of A5.
Further A5 intentionally used fabricated financial statement, Balance Sheet and Profit and Loss account statements as genuine for the purpose of cheating and you A3 abused your official position knowing fully well that A4 Company had liability of Rs.1.20 crores to UCO Bank on the date of opening of account processed the proposal with favourable recommendation and forwarded the same to Zonal Office, Madras where A2 being the Zonal Head and with the full knowledge of the liability of A4 Company with UCO bank, further abused official position and favourably recommended the proposal received on 24.2.1990 and forwarded the same to HO, Bangalore for sanction as a Special Case. Further A1 sanctioned the ILC limit of Rs.60 lakhs to A4 Company on the basis of revised and favourable note submitted by Credit Department as directed by you. A1 fraudulently recommended the facilities in favour of A5 and deceased A6 by 12 SPL.C.C.No:117/2001 abusing your official position as Executive Director of the Bank. Further the note was modified to get over the first note dt.20.3.1990 prepared by A.D.Kunja, the then Deputy Manager and the modified note incorporating the gist of the discussion was resubmitted for consideration and A1 sanctioned said ILC to A4 Company and by these overt acts caused wrongful loss to the tune of Rs.41 lakhs to the Bank and thereby committed an offence punishable under Section 420 IPC?
3. Whether prosecution further proves that on the said date, time and place you A1 to A3 being public servants with the knowledge of the liability of Rs.1.20 crores of A4 Company with UCO bank and the Company being incorporated after taking over the Assets and Liabilities of M/s Meenakshi Steels Pvt. Ltd., which was the partnership firm under the partnership of A5 and deceased A7, by dishonestly and fraudulently and by abusing your official position permitted to change the beneficiary as Meenakshi Steels and caused release of Rs.60 lakhs to A4 Company in favour of Meenakshi Steels, Madras which was owned by A5 and deceased A7, instead of original sanction in favour of M/s Annapoorna Agencies and Shivashakthi Steels, Madras and thus showed undue favours to A4 13 SPL.C.C.No:117/2001 Company and it's Directors causing wrongful loss to Vijaya Bank and corresponding wrongful gain to yourselves, thereby committed an offence punishable under Section 120B r/w 420 IPC?
4. Whether prosecution further proves that on the above said date, time and place in furtherance of criminal conspiracy to commit the offence you A1 to A3 and A5 and A8 along with deceased A6 and A7 used as genuine the said forged documents knowing at that time you used them, to be forged documents for the purpose of cheating and thereby committed an offence punishable under Section 120B r/w 471 IPC?
5. Whether prosecution further proves that on the above said date, time and place in furtherance of criminal conspiracy to commit the offence, you A1 to A3 being public servants abused your official position for making wrongful gain in connivance with other accused by committing the said overt acts and thereby committed an offence punishable under Section 13(2) r/w 13(1)(d) of Prevention of Corruption Act, 1988?
6. Whether prosecution further proves that the sanction accorded to prosecute accused is valid?
7. What order?
14SPL.C.C.No:117/2001
15. My findings on the above points are as under :
Point No.1 - In the negative Point No.2 - In the negative Point No.3 - In the negative Point No.4 In the negative Point No.5 - In the negative Point No.6 - In the negative Point No.7 As per final order for the following:
REASONS Point Nos.1 to 6:
16. For the sake of convenience and to avoid repetation of facts, I have taken points 1 to 6 at a time for discussion.
17. The learned Public Prosecutor argued that CBI/ACB, Bangalore has registered suomoto complaint after holding preliminary enquiry against A1 to A3 Government/bank officials of A4 Company and A5 to A7 Managing Director and Directors and A8 Chartered Accountant have allegedly placed a false proposal before A3 Divisional Manager, Vijaya Bank, Moore Street Branch, Madras to secure ILC facility of Rs.60 lakhs. Same was placed before A2, Assistant General Manager, Vijaya Bank, Zonal Office, Madras. He also recommended with notes to grant ILC facility to A4 Company. Then forwarded to A1 Executive Director, Vijaya Bank, who had returned it twice for reconsideration. For third time he accepted and recommended for grant of loan. All the 15 SPL.C.C.No:117/2001 three bank officials knowing fully well that A4 Company was already having liability of more than Rs.1.20 crores with UCO Bank and the potential ability of A4 Company was not sufficient and enough to receive the facility of Rs.60 lakhs ILC from Vijaya Bank of A1 to A3.
18. Further A4 Company and it's Managing Director and Directors have falsely changed the beneficiaries of the transactions and A5 Managing Director of A1 Vijaya Bank has given false address and documents also fabricating list of shareholders of it's company and secured loan with ILC facility, which has been sufficiently established by examination of PW1 to PW3, PW5, PW7, PW8, PW13 and PW16, who are all bank officials and have stated with regard to Current Account of A4 Company being opened with the help of A3 and ILC facility of Rs.60 lakhs was communicated on the same day by A3 and in short span of time A2 Asst.General Manager of Vijaya Bank, Zonal Office, Madras have sanctioned ILC facility to A3 though they have huge liability of Rs.1.20 crores to UCO Bank. Prosecution has established the misconduct of A1 to A3 by way of abusing their power and position with corrupt practices to A4 Company in enabling them to secure ILC facility. Hence prays to convict the accused for the alleged offences for which they have chargesheeted.
19. Per contra advocate for A1 has argued that A1 is the Executive Director of Vijaya Bank working in Head Office, Bangalore. The loan papers were processed by A3 Branch Manager 16 SPL.C.C.No:117/2001 and they were considered and recommended by A2 Assistant General Manager. On the basis of the said documents relied by A2 and A3 he has only placed a note and he has initially had cautioned A2 and A3 on the ground that A4 Company is new constituent and may be having financial liability to UCO Bank, the same may be verified and subsequently on being satisfied by the collection of potential documents relating to the credibility of A4 Company, he has recommended for sanction of said loan. From the available oral and documentary evidence, no witness has spoken about A1 entering into conspiracy with bank officials like A2 and A3 and private Company A4 and it's Managing Director and Directors A5, A6 and A7 and it's Chartered Accountant A8.
20. Further the act of alleged A1 Executive Director, Vijaya Bank, HO, Bangalore in granting loan does not disclose anything with regard to tampering or fabricating loan documents by A1. Further argued that A4 Company and Managing Director A5 and Directors A6 and A7 have prepared the entire loan amount due from Vijaya Bank and case against them have been dropped as the loan amount was settled out of court.
21. Further argued that no public or officials in responsible posts have complained against A1 to CBI office being aggrieved persons in bank institution as well as from public.
22. Suomoto complaint was registered by CBI in 1990. FIR was returned in 1998. Again in 1992 investigation was opened up by the order of the superior officer of CBI and investigation was 17 SPL.C.C.No:117/2001 taken up and charge sheet was submitted in 2001 and earlier same nature of complaints was made against A1 to A3, same were closed by CBI officials and subsequently it reopened for re investigation for want of sufficient evidence for alleged involvement of A1 in entering into criminal conspiracy with A2 and A3 in granting ILC facility to A4 Company by misusing his power by receiving pecuniary advantage and for allegedly inducing A4 Company to enable them to secure loan in order to commit cheating, prays for acquittal of A1.
23. Counsel for A2 has argued that A2 was working as Assistant General Manager. He was only asked to obtain opinion from the UCO Bank where A4 Company had already raised loan and opinion was secured by him as per Ex.P23 and P24, which disclose about the credibility of A4 in returning the loan due to them and the opinion was furnished in Ex.P26 and baring this participation, no evidence is available against A2 for allegedly committing misconduct as a public servant by receiving pecuniary advantage to do favour to A4 Company and it's Managing Director and Directors.
24. Further argued that since the loan account of ILC of A4 Company remained NPA for suffering loss, CBI officials have reopened the case against A1 to A3 and A4 Company and it's Managing Director and Directors, which was already closed and have conducted false investigation without collecting sufficient materials made A2 to be involved in the case and A2 has not 18 SPL.C.C.No:117/2001 received any pecuniary advantage while recommending loan to A4 Company. Hence prays for acquittal of A2.
25. Counsel for A3 Divisional Manager, Vijaya Bank, Madras argued that A3 is alleged to have helped A5 Managing Director of A4 Company by opening account and recommending loan on the same day of opening of account and A3 has no power to grant loan except sending the proposal to A2 Assistant General Manager and A1 Executive Director.
26. Further argued that the sanction accorded against A2 and A3 to proceed under Prevention of Corruption Act, 1988 is illegal and defective because the person who accorded sanction to prosecute A2 and A3 was not competent.
27. Further the loan due from A4 Company has been repaid and settled out of court and submits that CBI have failed to prove the guilt against A1 to A3 for violation of Section.13(2) r/w 13(1)
(d) of Prevention of Corruption Act, 1988 beyond all reasonable doubt and prays to acquit A3.
28. After hearing both sides primarily, prosecution has to prove that A1 to A3 being public servants/bank officials have exercised fraud and abused their power in sanctioning Rs.60 lakhs ILC facility to A4 Company, which was not worthy of the said sanction of ILC facility on the ground that the said A4 Company was new constituent and did not have regular transactions with Vijaya Bank and A4 Company had liability of Rs.1.20 crores to 19 SPL.C.C.No:117/2001 UCO Bank and inspite of knowing these things, A3 as Bank Manager had helped them in opening account and sent the loan processed documents to A2 Assistant General Manager, who in turn collected opinion of UCO Bank about the existing loan of A4 Company to them and then forwarded the file to A1 Executive Director of Head Office, Vijaya Bank, Bangalore. They initially declined and returned the file to reconsider the same on the ground that A4 Company is newly established and did not have much dealings with their bank and subsequently the said loan processed file on being sent to A1 office, he has recommended for sanctioning of ILC facility.
29. In order to prove that A4 Company is a registered Company under The Companies Act approached A3 then Divisional Manager of Vijaya Bank and that it was a registered company to prove that they have examined PW1 Sri.R.Rangaraman, who is Registrar of Companies has stated before the court with regard to A4 Company named as M/s Mevida Steels (P) Ltd., was registered and incorporated under Companies Act and he has produced Ex.P1 MOA and AOA of A4 Company and also certified copy of Certificate of Incorporation marked at Ex.P2 and the copy of the Partnership Firm of A5 and A7, he submitted No Objection to ROC.
30. Plain reading of evidence of PW1 makes it clear that A4 Company was statutorily registered and incorporated under Companies Act evidence of witness has remained undisputed that 20 SPL.C.C.No:117/2001 A4 Company was incorporated Company, A5 Managing Director and A6 and A7 Directors, which was established by converting their Partnership Firm into Company. From the evidence of PW1 it is established that A4 Company was registered under the Companies Act.
31. Basic allegation of prosecution is that, A4 Company approached A3 then Divisional Manager to process the extension of ILC facilities for an amount of Rs.60 lakhs by manipulating the documents and in order to prove that an account was opened by A4 Company, prosecution has examined PW3 Divakar Hegde, an employee of the bank. He has stated that he was authorized by A3 then Divisional Manager to open an account in favour of A4 Company and it was his responsibility to check the account. Through him Ex.P15 account opening form in the name of A4 Company is got marked and specimen signature card Ex.P16 has been got marked. Witness has stated with regard to opening of account by A4 Company under authorization of A3. Witness has been crossexamined by defence counsel in which he has admitted that if the customer of the bank is known to the Divisional Manager, there should not be anything wrong in instructing to open the account in the name of such person and also witness has been crossexamined relating to board guidelines provided by bank authorities to follow the rules.
32. Further he has admitted that as per the board guidelines confronted to him marked at Ex.P1 witness was entrusted with the responsibility of opening current account of the customer and he 21 SPL.C.C.No:117/2001 was to take all precautions and further admits that if the current account is opened by a Registered Company and the documents like MOA, AOA and Balance Sheet of the Company is furnished, there should not be any difficulty to open current account and in the end he has admitted that bank has not given any endorsement to A4 Company that required documents were not furnished to open current account and he has admitted that for the purpose of introduction of A4 he has acted as "Known to DM". Even if the evidence of PW3 is comprehensively considered, what comes out from scrutinizing his evidence is that he has opened the current account of A4 Company under authorization of A3 then Divisional Manager being satisfied about the board guidelines of the bank for opening a current account being customer. That A4 Company opened Current Account is not a disputed fact. What is disputed by the prosecution is under the influence of A5 Managing Director of A4 Company, A3 has prevailed upon bank officials like PW3 and got the current account opened without following the procedures relied by bank. But PW3 witness has admitted that he was satisfied about the compliance of production of documents to open account by A4 Company. So, evidence of PW3 is of not much significance to consider for holding accused involved in offence of cheating and misusing the power as a public servants.
33. Prosecution in order to prove that how account is opened in nationalized bank on behalf of A4 Company, they have examined PW5. He has stated about the procedure to be followed to open a current account if the customer is Registered Company.
22SPL.C.C.No:117/2001 He has stated that on the instruction of A3, then Divisional Manager he has submitted a form for sanction. He deposed that the Companies MOA and AOA were not produced along with Ex.P15 account opening form and resolution of the Company was not furnished along with account opening form.
34. Credibility of this witness has been put to test by the defence counsel and it has been elicited in the crossexamination that he was receiving the loan applications and refer the same to Senior Manager and the proposal of A4 Company for grant of ILC was not within his limit of power for grant of loan and then Divisional Manager A3 referred the same to Regional Office with his note on the ground that it was not within the limit of power to grant loan to A3 and no option was left open to then Manager A3 except to refer the same to Regional Office.
35. So perusal of entire evidence of PW5 also makes it clear that he has acted as per rules of bank and has recommended for grant of loan to Regional Office only on the ground that grant of loan was Rs.60 lakhs by opening ILC was not within his financial power of limit. Perusal of his evidence does not disclose anything with regard to irregularity or illegality committed by A4 Company and it's Directors.
36. Prosecution in order to prove about the significance of Letter of Credits, they have examined PW2 Sri.K.Chandravarma Hegde working then as Concurrent Auditor of Vijaya Bank and also working as Vigilance Officer of Head Office of Vijaya Bank 23 SPL.C.C.No:117/2001 and he has stated with regard to meaning of LC (Letter of Credit) that LC is given by the bank to the beneficiary usually for the suppliers of goods ensuring prompt payment of such supplier and he has stated about the rules for providing LC facility at Sl.No.1 to 4 and has stated that the Manager has to find out in whose favour LC is issued, who is called as beneficiary and these LCs are routed through bank which are called Advising Bank and some are called Negotiating Bank and in the present case M/s Mevida Steels Private Limited A4 Company had opened the account and beneficiary of LC is M/s Meenakshi Steels. As per sanction memo, M/s Annapoorna Agency and M/s Shivashakthi Steels are beneficiaries, but LC was opened in favour of M/s Meenakshi Steels and he has spoken about Ex.P4 Book of Instruction of Vijaya Bank and has stated about the sanction order being misused by issuing LC in favour of M/s Meenakshi Steels, which is stranger to the case. Though the sanction order was in respect of M/s Shivashakthi Steels as well as M/s Annapoorna Agency, he has also stated about issue of LC in favour of M/s Meenakshi Steels invoice issued in the name of same Company and delivery of goods by Meenakshi Steels and use of LC and has spoken about use and spoken of LC by bank.
37. Evidence of PW2 reveals about the scope of opening of LCs how and in what manner they have to be used to avail the facilities has been tested in the crossexamination by the defence. He has stated in the crossexamination that he is not personally aware about the transaction that had taken place between A4 24 SPL.C.C.No:117/2001 Company and the bank and also relating to the limits of loan sanctioned by their bank to A4 Company. He has clearly admitted that "there is a provision to change the name of the beneficiary in the Letter of Credit". This admission goes to show that that Letter of Credit was opened in the name of M/s Shivashakthi Steels and M/s Annapoorna Agency, but LC was opened in the name of M/s Meenakshi Steels is not an illegal but mere irregularity.
38. So, the basic allegation of prosecution that opening of LC in the name of M/s Meenakshi Steels as a beneficiary though the LC was granted in the name of M/s Annapoorna Agency and M/s Shivashakthi Steels is not considered to be a materially fatal to the credible act committed by A3 then Divisional Manager, A2 then Assistant General Manager and A1 then Executive Director.
39. Prosecution in order to prove the procedure relating to establishing the Letter of Credit have got examined one PW7 S.Kannan, Chief Manager, Vijaya Bank who has stated regarding procedure of establishing of Letter of Credit by bank by granting loan facilities under ILC.
40. PW7 has stated before the court that in order to secure Letter of Credit facility and to establish that Letter of Credit was granted, customer/applicant has to fulfill conditions like he must have account in the bank, secondly credit limit of establishing Letter of Credit should be fixed by the bank and there are different types of Letter of Credits. Witness has not been crossexamined because it is admitted fact that LC facility was granted to A4 Company and Directors to promote their business and trade.
25SPL.C.C.No:117/2001
41. Further prosecution in order to prove that how credit vouchers for Rs.9,40,000/ was created in the account of A4 Company and how the amount was debited. He has stated before the court that he was working in Vijaya Bank, Moore Street, Chennai. On enquiry being made by CBI authorities he has stated that a credit voucher was created on 26.3.1990 in the current account of A4 Company and the said voucher is marked as Ex.P30 and amount was debited to the extent of Rs.9,35,065/ and the difference amount remained in the account of A4 Company. Prosecution has got marked the voucher and credit slip at Ex.P30 and P31. It is undisputed fact that loan facility under LC was granted in favour of A4 Company to the extent of Rs.60 lakhs to show that part transaction has been entered in the account of A4 Company has taken place this witness is examined and evidence of this witness only establishes relating to debiting of amount in the account of A4 Company in pursuance of grant of loan under LC Scheme. So, no credible importance can be attached to this witness relating to the disputed fact of fraud and misconduct as public servants committed by A1 to A3.
42. Prosecution in order to prove further guilt of the accused they have examined one PW9, then working as Senior Manager, Vysya Bank and he was enquired by the CIB authorities. A passbook of Vysya Bank was confronted to him and there was credit entry of Rs.58,19,599.24 in the account of Meenakshi Steels and cheques presented were encashed in the course of the day and he has stated that relevant entry is made with regard to credit of 26 SPL.C.C.No:117/2001 Rs.58 lakhs in the account of beneficiary Meenakshi Steels. This witness is examined to show that the loan granted under LC Scheme by Vijaya Bank, cheques were issued in the name of Meenakshi Steels in their Vysya Bank and the relevant cheques placed for encashment have been honoured. He has further admitted in crossexamination that no irregularity was committed by Meenakshi Steels except one entry relating to Rs.45,000/ and rest of the amount was debited. Witness has been examined to show that debit entries made in the account of Meenakshi Steels relating to debit of Rs.58 lakhs by presenting three cheques.
43. Perusal of evidence of this witness only establishes the fact relating to debiting of amount in their account in the name of beneficiary of LC Meenakshi Steels though they were not shown as beneficiary to the accused bank under LC Scheme. But as admitted by other witnesses already the beneficiary can be changed in the course of transaction after availing facility of ILC from the bank within the limits of loan granted by bank.
44. Prosecution has examined PW12, Chartered Accountant who has deposed that he has acquainted with A4 Company and they were his clients. Earlier he was partner of this firm and the said firm was converted into Company and he has further stated with regard to conducting of audit of accounts of A4 Company and he prepared Profit & Loss account of A4 Company marked Ex.P34 and identified the signatures of Managing Director and Directors of A4 Company.
27SPL.C.C.No:117/2001
45. PW12 witness is only examined by prosecution to show that he was preparing Profit & Loss Account, Balance Sheet of A4 Company and he is acquainted with A5 and A6 and he was able to identify their signatures.
46. Perusal of evidence of PW12 only signify with regard to A4 Company being subjected to audit which is not a disputed fact in the present case because after considering the Balance Sheet submitted by this witness, bank has considered the documents and proposal of loan was accepted by A3 and placed for recommendation before A2, then forwarded to A1 for final consideration and approval. There is no material discrepancy with regard to Balance Sheet prepared by him and with regard to his audit report, prosecution has not made any allegations of doubt and fabrication.
47. In order to prove further how the credit proposal of A4 Company was placed and how it was processized by A3, A2 and A1.
48. PW11 is a star witness of prosecution has stated at length that he was working as Divisional Manager, Domestic Credit Department, Processing Section, Vijaya Bank, Head Office, Bangalore and any credit proposals beyond limit of Branch Manager were to be approved by him and he has further stated that Ex.P26 was approval note dt:14.3.1990, which was submitted to Head Office by Zonal Office, Madras to the credit proposal of A4 Company M/s Mevida Steels Private Limited. It was received in the branch on 23.2.1990, then it was received in Zonal Office on 28 SPL.C.C.No:117/2001 24.2.1990 and same was submitted to Head Office on 13.3.1990. Proposal contains recommendation of Zonal Head to sanction ILC facility in favour of A4 Company with a limit of Rs.60 lakhs with terms and conditions mentioned therein and proposal was received by him for processing and submitting it to the concerned Sanctioning Authority through proper channel and his responsibility as Divisional Manager was to go through the information as contained in the proposal and critically examine various aspects and put up the salient features to the authority concerned for discussion and he has further stated that Ex.P33 is the proposal of loan and note put up by him through Deputy Manager (Credit) to the Executive Director (A1) and he has highlighted the plus and minus points of the loan proposal and recommended that loan application of A4 Company for LC facility. A4 is already a borrower in another UCO Bank and Vijaya Bank does not entertain take over proposal and Vijaya Bank should stay away from the proposal and he has raised four points as objections and in his objection as noted Ex.P3, A4 Company are enjoying large credit limit with UCO Bank and their financial position are satisfactory and UCO Bank confidential opinion has revealed the satisfactory position of A4 Company and applicant/A4 Company has approached Vijaya Bank for the first time and he is not a regular customer and no reasons are assigned that why he is shifting to Vijaya Bank from UCO Bank and assets of UCO Bank are already charged and if Vijaya Bank extend facility for purchase of assets, it will not be able to get maintainable charge on the assets and further it is a matter of discussion.
29SPL.C.C.No:117/2001
49. His observations/objections have been examined by Deputy Manager and DGM (Credit) submitted his note to the Executive Director on 20.3.1990. On 22.3.1990 the DGM (Credit) and himself were called by A1 Executive Director to his chamber, A5 Managing Director of A4 Company and A6 Director of A4 Company were present and discussion took place and the objections were explained to them in detail and they clarified that there is no take over of account by Vijaya Bank and they will continue their financial transaction with UCO Bank and they also proposed that the credit facility is only to purchase raw materials and it will be stored separately and they will not raise any finance against materials from UCO bank or any other bank and they agree to abide by the conditions. After discussion A1 Executive Director observed that since the financial condition of Vijaya Bank was in tight compartment at that time department has to take commercial and clinical view of the whole case and keeping that in mind, department may consider and recommend with note and this note was again considered and placed before A1 passing through AGM (Credit) wherein it was observed that bank may approve the proposal strictly as one time nonrenewal limit and such cases should not be repeated and A1 Executive Director concurred the above observation by putting signature on 22.3.1990.
50. After proposal was processized entire loan papers were placed before Chairman and Managing Director as control return for his perusal, which is a normal procedure. In response to that 30 SPL.C.C.No:117/2001 Managing Director and Chairman observed that the bank transaction of A4 Company in UCO Bank should be closely monitored to ensure that Vijaya Bank of A1 to A3 does not experience any difficulty in recovering dues.
51. Perusal of entire evidence of PW11 makes it clear that how he participated and placed the objections observed in for granting LC facility to A4 Company. With regard to this counsel for defence has argued that PW11 has stated about the proposal of loan placed before A3 being considered on the same day and A2 Asst. General Manager recommending it for grant of LC and further A1 Executive Director recommending the proposal to be accepted for grant of LC to A4 Company with observation note and he has also argued that PW11, then working as Divisional Manager, Domestic Credit Department, Processing Section, Vijaya Bank, Head Office, Bangalore had made some observation in Ex.P33. Witness himself has stated in examinationinchief itself that A1 Executive Director observed that this being a new connection and since the UCO Bank is not in picture, the account should be closely monitored to ensure that Vijaya Bank does not experience any difficulty in recovering the dues.
52. Further he has argued that the proposal of LC to be accepted as special case and approved the proposal. In chief itself he has further argued that his evidence makes it clear that no irregularity has been committed by A1 as Executive Director, after considering loan proposal documents and observations made by A3 and A2 and so also Domestic (Credit), General Manager, he 31 SPL.C.C.No:117/2001 has approved the loan. So, it cannot be said that A1 has committed any criminal misconduct as public servant received any undue advantage.
53. Further in the course of arguments admissions given by PW11 in the crossexamination are brought to the notice of the court. In the crossexamination PW11 has admitted in cross examination that granting of loan credit facility is totally a commercial decision by the bank employees in certain cases. Further he has admitted in crossexamination that A5 Managing Director of A4 Company was a wellknown industrialist and confidential opinion disclosed that UCO Bank in which already Rs.1.20 crores loan was raised as a borrower had the opinion of satisfactory in repayment of loan. Witness has admitted that these aspects were taken into consideration before placing the loan proposal of A4 Company for grant.
54. Further this witness in crossexamination conducted by A2 has also admitted that Ex.P26 being the proposal of loan consists of all negative and positive aspects of availing LC facility and after making observation merits and demerits of the proposal, loan proposal was forwarded to Head Office, then Zonal Office. Further he has admitted that when proposal was received from Zonal Office, six conditions were mentioned in AnnexureF of the proposal and they were taken into account. Adequate conditions were stipulated to safeguard the interest of the bank. Further he has admitted that as disclosed by the documents submitted, there was no intention of A1 to A3 to defraud or cause loss to the bank.
32SPL.C.C.No:117/2001
55. So, crossexamination portion of PW11 if closely scrutinized it makes it clear that A3 as a Divisional Manager has sent the proposal of loan under LC limit of Rs.60 lakhs by opening account on the same day and A2 Asst. General manager has only made recommendation to consider the loan proposal of A4 Company and A1 being Executive Director with observation note in Ex.P33 has accepted the proposal has recommended for accepting the proposal.
56. If the entire evidence is scrutinized and considered, court is unable to find out about criminal misconduct of A1 to A3 committed as public servants in the bank while processing loan.
57. Basic allegation of the prosecution is that, A4 Company represented by Managing Director A5 and Directors A6 and A7 were not entitled to grant LC facility loan as they had liability in UCO bank of Rs.1.20 crores. But with regard to this, Vijaya Bank before considering the loan proposal of A5 have called for opinion of UCO Bank wherein A4 Company had already raised loan. To substantiate this aspect, Vijaya Bank had already collected opinion of UCO Bank that the financial credibility of A4 Company is satisfactory they have sanctioned the loan as per sanction letter Ex.P14 by imposing six conditions and Ex.P26 also makes it clear that Zonal Office, Madras sanctioned loan with the signature of A2 Assistant General Manager making detail observation in Ex.P26 that the loan proposal was considered and account is opened in the name of A4 Company and A4 Company had already raised loan in UCO Bank under Cash Credit Facility and they would also 33 SPL.C.C.No:117/2001 filed Form No:8 for collection of charge in respect of the stock received under LC in favour and further in Ex.P26 it is noted that since the facility is for LC limit and for temporary period, the branch has not submitted CAS formats and it is further observed that detail analysis of Balance Sheet of A4 Company is considered and A4 Company is enjoying total working capital investment of Rs.95 lakhs and further observed in Ex.P26 that Divisional Manager A3 has recommended for sanction limit of Rs.50 lakhs and A2 recommended the loan with LC facility as special case within the delegated power of A1 Executive Director. A1 who was working as Executive Director had made detail observation about the loan proposals, it's intrinsics and A4 Company already availed loan with regard to Rs.1.20 crores and present loan proposal by raising LC of Rs.60 lakhs and then with some observation A1 had rectified it subsequently by imposing some conditions like, ILC be granted for 60 days for procuring steel for use in construction from M/s Annapoorna Agencies and Shivashakthi Steels and 15% cash margin of stock and guarantor conditions etc. In the end observation made as "since the field functionaries have committed to the party as to sanction of the proposed facility, we may, as a very special case, approve the proposal strictly as one time non renewable limit" and then file was placed before Chairman and Managing Director for approval.
58. So, contents of Ex.P26 and P33 are carefully considered by the Court, A2 being Assistant General Manager has not acted beyond limit of his power. He has only forwarded the loan 34 SPL.C.C.No:117/2001 proposal documents to the office of A1 Executive Director for considering the same and A1 by making detail notes in Ex.P33 has recommended for grant of loan to A4 Company.
59. Close perusal of evidence of PW11, PW12 and PW13 and the opinion of UCO Bank referred in Ex.P26 for which A3, A4 and A8 relating to recommendation for grant of loan and further the observatory note made in Ex.P33 by A1 as a Executive Director, Court can infer and say that A4 Company and it's Managing Director and Directors have not suppressed any facts relating to misrepresentation to the bank so also A3 as a Divisional Manager, A2 as Assistant General Manager of Vijaya Bank with regard loan already raised in UCO Bank for Rs.1.20 crores.
60. It is also seen from the records that some of the facts elicited in the crossexamination of material witnesses that after availing loan from Vijaya Bank, A4 Company passed through the passage of financial crisis and suffered loss in the business, so they could not repay the loan availed under LC facilities. However the CBI authorities have registered a suomoto case in 1990 and did not proceed with the investigation in orderly way immediately after 1998 and submitted charge sheet in 2001 after nine years. Earlier two complaints with the same loan transactions were registered and they were closed by CBI authorities. Further it is made clear in the cross examination of witnesses that the loan transaction of A4 Company became matter of controversy when the loan account of A4 became NPA having suffered loss of Rs.40 lakhs. It is also clearly established from the records that A4 35 SPL.C.C.No:117/2001 Company and A5 to A7 being Managing Director and Directors and A8 being Chartered Accountant were also charge sheeted. But however charge against these A4 to A8 were dropped as matter was settled under OTS Scheme and this has been satisfactorily established by confronting Ex.D3 to PW4, who has admitted that A4 Company has cleared the entire loan due towards Vijaya Bank.
61. So, on the basis of this case against A4 to A8 were dropped in view of the order passed by the Hon'ble High Court of Karnataka in Crl.R.P.No:1022/2010 dt:14.10.2014. So, close scrutiny of the evidence of PW11 and other witnesses disclose so far as makes it clear that the loan proposal of A4 Company has been considered by bank officials like A3 Divisional Manager, A2 Asst. General Manager and A1 Executive Manager as per the norms of the bank.
62. The defence counsel has also raised credibility of investigation by IO that no appropriate sanction was taken to proceed against A1 to A3. With regard to this it is argued by the defence that sanction obtained to proceed against A2 and A3 is not according to law and IO in this case PW14 has been sufficiently crossexamined with regard to appropriate sanction not being taken against accused.
63. With regard to this advocate for A3 drew the attention of crossexamination portion of PW14 IO, Inspector of Police, CBI, who has stated that during the investigation period from 1998 to 2001 till charge sheet was submitted he has not sought for 36 SPL.C.C.No:117/2001 sanction to prosecute A3 and the defence counsel has sufficiently brought on record to say that FIR Ex.P39 does not show the consent of the State and FIR is registered on the final decision of Superintendent of Police, CBI.
64. It is also elicited in the crossexamination of PW14 that A2 has been exonerated from all charges in departmental enquiry and also admitted that he has seized the rubber stamps used in the present case for fabricating the documents, but has stated that he has not investigated about the involvement of rubber stamps in fabricating the documents.
65. Though PW14 IO has stated about conducting investigation suspecting that fraudulent acts have been committed by A1 to A3 being bank officials in collusion with A4 Company and Managing Director and Directors A5 to A7 and Chartered Accountant A8 with the basic suspicion act of fraud that A3 being Divisional Manager has proposed the loan for A4 by grant of LC by opening account on the same day and A2 recommending with information that A4 Company had already a liability of Rs.1.20 crores with UCO Bank and A1 Executive Director finally granting it in Ex.P33 with some notes and collection of evidence by IO is silent with regard to A1 to A3 fabricating certain documents for the purpose of committing fraud by way of falsely creating document with the use of rubber stamps of Vijaya Bank etc., is not at all established by the prosecution records. None of the documents seized by IO have been forwarded to FSL for opinion 37 SPL.C.C.No:117/2001 that whether these documents relating to loan sanction to A4 Company were falsely fabricated to enable A4 company to secure loan by misusing official power and by way of committing criminal misconduct as public servants with dishonest inducement to the Company like A4 and fraudulently misappropriating the money.
66. Accused persons have been charge sheeted for the offences punishable under Section 120B IPC relating to criminal conspiracy demands that more than one person must enter into criminal conspiracy to commit a crime or do criminal act and further Section.420 IPC deals with offence of cheating where a person, who falsely induce another person to act upon his inducement and fraudulently receive wrongful gain. Sections.467 and 468 IPC deal with fraudulently fabricating documents to commit the offence of cheating to have wrongful gain and further Section.13(1)(d) r/w Sec.13(1)(2) of PC Act deals with public servant committing misconduct by corrupt and illegal means to obtain himself a valuable or pecuniary advantage or abuse his position as public servant to receive valuable thing or pecuniary advantage while holding such office as public servant obtains for any valuable thing or pecuniary advantage without any public interest.
67. If the charge leveled against the accused is closely seen particularly restricting to Section.13(1)(d) of Prevention of Corruption Act, 1988, it is not made clear from the oral or documentary evidence produced by CBI authorities to show that 38 SPL.C.C.No:117/2001 A1 as Divisional Manager, A2 as Assistant General Manager and A3 as Executive Director have obtain themselves any valuable thing or pecuniary advantage by way of corrupt or illegal means, abusing their position by holding their office as public servant. It can infer and say that if no pecuniary advantage or valuable thing is obtained by public servant, it cannot be said that such public officer has committed criminal misconduct. It will lead to hold public servant liable to be punished under Section 13(2) of Prevention of Corruption Act, 1988 for a period of ten years, shall not be less than four years.
68. After perusing the entire evidence on record, court is unable to find out any criminal misconduct committed by these A1 to A3 by receiving pecuniary advantage by misusing their official power while granting loan to A4 Company and further court is unable to see any false fabrication of documents to favour A4 Company in securing the loan to A4 Company.
69. Basic ingredients to attract offence under Section 13(1)
(d) of Prevention of Corruption Act, 1988, the public servant has to abuse or misuse his power of authority and obtain himself a valuable thing or pecuniary advantage by way of corrupt or illegal means or by abusing his position by holding his offence as public servant.
70. So, in this regard counsel for A3 has relied on an authority reported in 2009(6) Supreme Court Cases 587 (A.Subair Vs State of Kerala). Perusal of the observation made in the above 39 SPL.C.C.No:117/2001 said authority it is made clear that there has to be a demand placed by public servant to do favour as a public servant holding office and must receive a pecuniary advantage or transfer property or valuable thing and that is the fundamental requirement to constitute offence under Section 13(1)(d) of Prevention of Corruption Act, 1988.
71. Close perusal of all the evidence both oral and documentary placed by the prosecution, nowhere it is revealed to the court that this accused no.3 being Divisional Manager, A2 being Assistant General Manager have received any pecuniary advantage in sanctioning the loan proposal in LC Scheme in favour of A4 Company for Rs.60 lakhs by overriding the liability of A4 Company with UCO Bank for Rs.1.20 Crores.
72. On the contrary reading of the contents of Ex.P26 and P33 makes it clear that the bank officials like A1 to A3 have taken required precaution in sanctioning the loan facility to A4 Company under LC Scheme by putting some stringent conditions.
73. Further prosecution has examined PW13, then General Manager (Personnel), Vijaya Bank, Head Office, Bangalore, who has stated that CBI authorities sought sanction to prosecute A2 and A3 and accordingly he examined the investigated report and accorded sanction as per Ex.P37 and P38 to prosecute A2 and A3.
74. With regard to this witness, defence has taken up a contention that PW13 was not a competent person to accord 40 SPL.C.C.No:117/2001 permission against A2 and A3. He has admitted in Para9 of his crossexamination that A3 was a ScaleIV Officer, A2 was a Scale V Officer. Chairman and Managing Director of Vijaya Bank are the Head of the Institution and further admits that he was ScaleVII Officer and further admits that he is not competent to say whether Chairman or the Committee was appointing authority of ScaleIV Officer and further admits that he being ScaleVII Officer was not competent to appoint ScaleIV Officer and further admits that as per Section.20 of Vijaya Bank (Officers' Service Regulation 1982), he was not competent authority to remove ScaleIV Officer and further admits that Managing Director and Chairman of Vijaya Bank have not authorized him with delegated power to accord sanction against A2 and A3 to prosecute them.
75. So, admissions made by PW13 makes it clear that he has only accorded sanction in respect of A2 and A3 though he was not a competent officer to appoint A2 and A3. So, court can hold that sanction accorded by PW13 is inconsistent with Section.20 of Vijaya Bank (Officers' Service Regulation Act, 1982), this aspect also creates doubt in the mind of the court that investigation conducted by IO is shrouded with bias and suspicion.
76. PW15 is examined by prosecution for production of Vijaya Bank Officers Employees' (Conduct) Regulations, 1981 and got it marked as Ex.P43 and P44.
77. PW16 has only submitted charge sheet.
41SPL.C.C.No:117/2001
78. PW14 is the IO, who has conducted entire investigation. In the crossexamination he has admitted that FIR Ex.P39 does not show the consent of State Government and name of accused no.1 was not shown in FIR and admits that much prior to registration of FIR, A1 was retired and further admits that after completing his investigation, final report was prepared by Superintendent of Police.
79. Further admits that he was not aware about the draft sanction order sent to Superintendent of Police, along with report and he has not investigated with regard to use of seized rubber stamps in the course of his investigation and admits that he is not aware about A4 repaying the entire loan and case against being quashed.
80. After closely considering the oral evidence placed by prosecution and also documentary evidence got marked through defence what emerges now the basic allegations as against A1 to A3 about criminal conspiracy under Section.120B of IPC is not established for lack of evidence placed by prosecution and with regard to offence under Section 467 and 471 of IPC falsely fabricating the document by forgery and fabricating for the purpose of cheating is not established. Section 467 IPC deals with forgery of valuable security, will or to receive any money etc., and Section.471 IPC deals with using as genuine a forged document, which is known to be forged. In this regard court is unable to find out from the evidence produced by prosecution both oral and 42 SPL.C.C.No:117/2001 documetnary with regard to forgery of any document or using as genuine a forged document, which is known to be forged because no document is got marked by the prosecution to show that a particular document was or were forged by any of these A1 to A3 officers to enable A4 to secure loan by illegal means.
81. Further IO stated that he has seized rubber stamps of the bank suspecting that they were misused by A1 to A3 to make believe the bank forged document as genuine one.
82. No investigation is conducted in seizing bank loan documents where these bank rubber stamps allegedly have been affixed to make believe the bank forged documents look genuine and real.
83. All the witnesses examined by the prosecution have only speak on about the procedure of grant of loan under LC scheme to A4 Company, whereas in the crossexamination they have given sufficient admissions to say that A1 to A3 have not committed any criminal misconduct as act in clearing loan to A4 Company proposed by Managing Director and Directors of A4 Company like A5 to A7 and PW11 has clearly admitted in his crossexamination that in Ex.P33 while observing the conditions notes on clearing of loan by A3, the borrower has satisfied all the conditions referred in Ex.P33 while granting loan mentioned in AnnexureF.
84. Further it is sufficiently made it clear that with regard to Rs.1.20 crores liability of A4 Company with UCO Bank is held to 43 SPL.C.C.No:117/2001 be not a hurdle for granting loan under LC Scheme because UCO bank has given favourable opinion in favour of A4 Company as reflected in Ex.P25. It is also necessary to note that none of the departments of the bank like Credit Department, Audit Department have raised any objections to clear the loan proposal to A4 Company.
85. It is also relevant to note that FIR is submitted in the year 1998 and charge sheet is submitted on 26.6.2001. Prosecution has not explained with regard to the delay in submitting charge sheet after four years and it is also disclosed that earlier two complaints against these accused persons were closed by CBI authorities and subsequently they were reopened sumoto without receiving any complaint from public or bank Head Office.
86. It is also relevant to note that Hon'ble High Court of Karnataka has dropped the proceedings against A4 Company and Managing Director and Directors as per Order in Crl.R.P.No:1022/2010 dt:14.10.2014, meaning thereby the entire liability of Vijaya Bank has been cleared by A4 Company. So, Vijaya Bank wherein A1 to A3 working in different capacity has not suffered any monetary loss.
87. It is also relevant to note that proceedings against A4, A5 and A8 was quashed by the Hon'ble High Court of Karnataka in Crl.R.P.No:1022/2010, Dt:14.10.2014 and subsequently this court was pleased to adjourn the matter on the submission that CBI 44 SPL.C.C.No:117/2001 authorities that they have preferred SLP (Crl) No:5588/2015 and are awaiting order of SLP. Subsequently case was adjourned for several months awaiting orders of the Hon'ble Supreme Court of India in SLP (Crl) No:5588/2015. But this court after giving adequate notice to learned Public Prosecutor made elaborate order on 5.3.2019 that case against A6 and A7 is abated and in respect of A4, A5 and A8, Hon'ble High Court of Karnataka has quashed the charge sheet against them in Crl.R.P.No:1022/2010 dt:14.10.2014 and no stay order is produced by CBI authorities and no specific order was made by Hon'ble Supreme Court of India that further proceedings of this Spl.C.C.No:117/2001 case was stayed. Whereas Hon'ble Supreme Court of India has passed order in SLP (Crl) No:5588/2015 that 'there shall be stay for impugned judgement and order passed by Hon'ble High Court of Karnataka during the pendency of SLP', so this court observed in order sheet dt:4.6.2019 that stay order passed by the Hon'ble High Court of Karnataka was with regard to order passed by Hon'ble High Court of Karnataka in Crl.R.P.No:1022/2010 not necessarily the proceedings of this Spl.C.C.No:117/2001 were stayed.
88. So by vide order dt:5.3.2019 and 4.6.2019 case was posted for recording 313 Cr.P.C. statement and proceeded with hearing arguments and then posted for pronoumcenting of judgement.
89. Further more sanction accorded by PW13 is found to be defective technically as PW13 K.Amarnath Shetty was not 45 SPL.C.C.No:117/2001 competent person to accord sanction in respect of A2 and A3, which is sufficiently reflected in his crossexamination. Further more it is sufficiently brought on record that change of beneficiaries under LC Scheme is permissible under bank rules after grant of loan.
90. In view of the elaborate discussion made above, court is of the clear opinion that prosecution has miserably failed to prove the case beyond all reasonable doubt against A1 to A3, who were working in A4 Company. The development of facts also makes this court to observe that it is an unfortunate development against senior most officer like A1 then Executive Director, who is facing this trial for the last 19 years even after his retirement and made him to parade to court for the last 1½ decades, may be because of A4 to A8 getting their charged leveled against them dropped by the higher courts for various reasons.
91. Along with him A2 and A3 being bank officers have also suffered this trial for more than 1½ decades, reasons cannot be found in this case after making search and research for the truthful facts, prosecution has not explained as to why they took four years time between 1998 to 2001 to submit charge sheet in a case where Rs.60 lakhs is involved, that too in sanctioning loan to Company under LC Scheme and more importantly it is to be seen that none of these A1 to A3 have obtained any pecuniary advantage of valuable thing or transfer of property by misusing or abusing their power illegally by enabling A4 Company to receive loan of Rs.60 lakhs under LC Scheme.
46SPL.C.C.No:117/2001
92. After evaluating/carefully considering all the oral and documentary evidence placed by prosecution, court is of the constrained view to say that prosecution has failed to prove the guilt against accused beyond reasonable doubt and prosecution case suffers from collection of insufficient evidence to prove the allegations and guilt against the accused. At the end of the day except expressing sympathetic words towards A1 to A3 and after taking deep relief of seigh, this court is inclined to hold that prosecution could not establish the allegations made in the charge sheet beyond reasonable doubt. In the result, court is inclined to answer above points 1 to 6 for consideration in the negative. Point No.7:
93. In view of my findings on the above points, I proceed to pass the following:
ORDER Acting under Section 235(1) Cr.P.C., accused no.1 Sri.K.Shivarama Shetty, accused no.2 Sri.H.B.R.Shetty and accused no.3 Sri.M.Jayarajan are acquitted of the offences punishable under Sections.120B r/w 420, 468, 471 of IPC and Section.13(2) r/w 13(1)(d) of Prevention of Corruption Act, 1988.
Their bail bonds stand cancelled forthwith.
Case against accused no.4 M/s Mevida Steels (P) Ltd., accused no.5 Sri.Gopu Sheshasayee and accused no.8 Sri.G.Sundararajan in the charge sheet 47 SPL.C.C.No:117/2001 is quashed by the Hon'ble High Court of Karnataka in Crl.R.P.No:1022/2010, dt:14.10.2014.
Case against accused no.6 Sri.S.R.Kamath, accused no.7 Sri.M.Thyagarajan is abated as dead.
Accused no.1 to 3 are hereby directed to appear before the appellate court on receipt of summons from the said court in case appeal is preferred by prosecution in accordance with law.
(Dictated to the Judgment Writer, transcription computerized, then corrected and pronounced by me in open Court, this the 24 th day of June 2019) (Rajashekar Venkanagouda Patil), XXI Addl.City Civil and Sessions Judge & Prl. Special Judge for CBI Cases, Bengaluru.
List of witnesses examined for the prosecution:
Sl.No. Name of the witnesses
PW1 R.Rangaraman
PW2 K.C.Hegde
PW3 Diwakar Hegde
PW4 C.K.G.Nair
PW5 S.Janaki Ram
PW6 Dasharathan
PW7 S.Kannan
PW8 N.Sridhara Rao
48
SPL.C.C.No:117/2001
PW9 N.Venkataraman
PW10 V.S.Mani
PW11 M.Balachandran
PW12 P.Ganesh
PW13 K.Amarnath Shetty
PW14 P.K.Ramachandran
PW15 S.Mukundan
PW16 V.Ashok Kumar
List of documents marked for the prosecution:
Exhibit Description
Number
Ex.P.1 Memorandum of Association & Articles of Association of
M/s Mevida Steels
Ex.P2 True copy of the Certificate of Incorporation
Ex.P3 Copy of Letter dt:17.11.86 addressed to ROC, Madras
Ex.P4 Xerox copy of Book of Instructions
Ex.P4(a) Relevant para at page 128
Ex.P4(b) Relevant para at page 129
Ex.P5 Copy of letter of credit dated 26.3.90 (1) sheet
Ex.P6 Invoice No.416 dt.26.3.90 for Rs.59,94,000/ of M/s
Meenakshi Steels
Ex.P6(a) Relevant portion
Ex.P7 Delivery note No:258 dt.15.3.90
Ex.P8 Delivery note No:260 dt.16.3.90
Ex.P9 Delivery note No:261 dt.17.3.90
Ex.P10 Delivery note No:264 dt.19.3.90
Ex.P11 Delivery note No:266 dt.20.3.90
Ex.P12 Delivery note No:268 dt.21.3.90
Ex.P13 Letter dt.26.3.90 addressed to Vijaya Bank
Ex.P14 Original Sanction Letter dt.2.4.90 (2) sheets
Ex.P15 Original A/c Opening Form dt.24.2.90 in the name of M/s
49
SPL.C.C.No:117/2001
Mevida Steels C.A.No:3097
Ex.P15(a) Signature of Br.Manager
Ex.P16 Specimen signature card pertaining to CA A/c No.3097 (1)
sheet
Ex.P17 Original Loan Application form of Mevida Steels (3) sheets
Ex.P18 Letter dt:22.2.90 from Mevida Steels (2) sheets
Ex.P19 Process Note on the loan application of Mevida Steels (2)
sheets
Ex.P19(a) Signature of PW4
Ex.P19(b) Signature of CW3 Janakirao
Ex.P20 Letter dt.24.2.90 (2) sheets
Ex.P20(a) Signature of A3
Ex.P20(b) Signature of CW3
Ex.P20(c) Signature of PW4
Ex.P21 Original letter dt.9.3.90 of A5 to Vijaya Bank (1) sheet
Ex.P22 Letter dt.12.3.90
Ex.P22(a) Signature of
Ex.P22(b) Signature of
Ex.P22(c) Signature of
Ex.P23 Letter dt:13.3.90 of UCO bank (1) sheet
Ex.P24 Credit Report of UCO bank (1) sheet
Ex.P25 Letter dt.8.3.90 of Vijaya Bank (1) sheet
Ex.P26 Process Note dt.14.3.90 of Zonal Office (3) sheets
Signature of A2
Ex.P26(a) Relevant portion in page no.5 & 6
Ex.P26(b) Relevant portion in page no.5 and 6 Ex.P27 Branch Manager's Sanction dt.26.3.90 Ex.P27(a) Signature of Br.Manager Ex.P28 Telex message dt.23.3.90 from Head office Vijaya to Zonal office (1) sheet Ex.P29 Carbon copy of resolution dt.23.3.90 (1) sheet Ex.P30 Credit slip dt.26.3.90 for Rs.9,40,000/. Ex.P30(a) Signature of PW8 Ex.P31 Vijaya Bank Debit Slip dt.29.3.90 Rs.9,35,065/. Ex.P31(a) Signature of PW8 Ex.P32 Vysya Bank Pass Book in the name of Meenakshi Steels CA 50 SPL.C.C.No:117/2001 No A/c No.556.
Ex.P32(a) Relevant entry dt.29.3.90 Ex.P32(b) Relevant entry dt.29.3.90 Ex.P33 File containing notes of HO on the proposal dt.20.3.90 to 22.3.90 and approval of Executive Director Ex.P33(a) Initials of PW10 Ex.P33(b) Relevant portion in first sheet Ex.P33(c) Signatures of PW11 & (d) Ex.P33(e) Initials of PW11 Ex.P34 Copy of Profit & Loss A/c of M/s Mevida Steels as on 31.12.89 (2) sheets Ex.P35 Copy of Balance Sheet as on 31.12.89 of M/s Mevida Steels (4) sheets Ex.P36 Letter dt.27.6.91 of M/s Ganesh & Ramesh Associates Ex.P36(a) Signature of Ramesh Rajangam Ex.P37 Sanction order in respect of A2 Ex.P37(a) Signature of PW13 Ex.P38 Sanction Order in respect of A3 Ex.P38(a) Signature of PW13 Ex.P39 Original FIR (2) sheets Ex.P39(a) Signature of PW14 Ex.P40 Original Search List dt.14.7.99 (3) sheets Ex.P40(a) Signature of PW14 Ex.P41 Original Search List dt.14.7.99 (2) sheets Ex.P41(a) Signature of B.Panneerselvam Ex.P42 Original Seizure Memo dt:5.4.2000 (1) sheet Ex.P42(a) Signature of PW14 Ex.P43 Vijaya Bank Officers Employees (Conduct) Regulations 1981 and Vijaya Bank Officers Employees (D&A) Regulations, 1981. (Produced by PW15) Ex.P44 Copy of Govt. of India Gazette Notification dt.9.6.01 (3) sheets (produced by PW15) List of documents marked for defence:
Exhibit Description
Number
51
SPL.C.C.No:117/2001
Ex.D1 True copy of the guidelines regarding role and
responsibilities of the Managers (2) sheets Ex.D2 True copy of the guidelines regarding role and responsibilities of Divisional Managers (2) sheets Ex.D3 True copy of the letter of M/s Mevida Steels dt.7.2.2004 to Vijaya Bank, RO, Chennai Ex.D4 Relevant portion of 161 statement of CW3/PW5 at page.3 Ex.D5 Copy of Vijaya Bank (Officers) Service Regulations, 1982.
(64) sheets (Rajashekar Venkanagouda Patil), XXI Addl.City Civil and Sessions Judge & Prl.Special Judge for CBI Cases, Bengaluru.